WELLSFORD REAL PROPERTIES, INC.
1998 MANAGEMENT INCENTIVE PLAN
WELLSFORD REAL PROPERTIES, INC., a Maryland corporation (the
"Company"), hereby establishes and adopts the following 1998 Management
Incentive Plan (the "Plan").
RECITALS
WHEREAS, the Company desires to encourage high levels of
performance by those individuals who are key to the success of the Company,
to attract new individuals who are highly motivated and who will contribute
to the success of the Company and to encourage such individuals to remain as
directors and/or employees of the Company and its subsidiaries by increasing
their proprietary interest in the Company's growth and success.
WHEREAS, to attain these ends, the Company has formulated the Plan
embodied herein to authorize the granting of incentive awards through grants
of stock options ("Options"), grants of stock appreciation rights, grants of
Stock Purchase Awards (hereafter defined), and grants of Restricted Stock
Awards (hereafter defined) to those individuals whose judgment, initiative
and efforts are responsible for the success of the Company.
NOW, THEREFORE, the Company hereby constitutes, establishes and
adopts the following Plan and agrees to the following provisions:
ARTICLE 10.
PURPOSE OF THE PLAN
10.1. Purpose. The purpose of the Plan is to assist the Company
in attracting and retaining selected individuals to serve as directors,
officers and employees of the Company who will contribute to the Company's
success and to achieve long-term objectives which will inure to the benefit
of all shareholders of the Company through the additional incentive inherent
in the ownership of the Company's Common Stock (the "Shares"). Options
granted under the Plan will be either "incentive stock options," intended to
qualify as such under the provisions of section 422 of the Internal Revenue
Code of 1986, as from time to time amended (the "Code"), or "nonqualified
stock options." For purposes of the Plan, the term "subsidiary" shall mean
"subsidiary corporation," as such term is defined in section 424(f) of the
Code, and "affiliate" shall have the meaning set forth in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). For
purposes of the Plan, the term "Award" shall include a grant of an Option,
stock appreciation rights, a Stock Purchase Award, a Restricted Stock Award,
or any other award made under the terms of the Plan.
ARTICLE 11.
SHARES SUBJECT TO AWARDS
11.1. Number of Shares. Subject to the adjustment provisions of
Section 9.9 hereof, the aggregate number of Shares which may be issued under
Awards under the Plan, whether pursuant to Options, Stock Purchase Awards or
Restricted Stock Awards shall not exceed 2,000,000. No Options to purchase
fractional Shares shall be granted or issued under the Plan. For purposes of
this Section 2.1, the Shares that shall be counted toward such limitation
shall include all Shares:
(1) issued or issuable pursuant to Options that have been or may
be exercised;
(2) issued or issuable pursuant to Stock Purchase Awards; and
(3) issued as, or subject to issuance as a Restricted Stock Award.
11.2. Shares Subject to Terminated Awards. The Shares covered by
any unexercised portions of terminated Options granted under Articles 4 and
6, Shares forfeited as provided in Section 8.2(a) and Shares subject to any
Awards which are otherwise surrendered by the Participant without receiving
any payment or other benefit with respect thereto may again be subject to new
Awards under the Plan. In the event the purchase price of an Option is paid
in whole or in part through the delivery of Shares, the number of Shares
issuable in connection with the exercise of the Option shall not again be
available for the grant of Awards under the Plan. Shares subject to Options,
or portions thereof, which have been surrendered in connection with the
exercise of share appreciation rights shall not again be available for the
grant of Awards under the Plan.
11.3. Character of Shares. Shares delivered under the Plan may be
authorized and unissued Shares or Shares acquired by the Company, or both.
11.4. Limitations on Grants to Individual Participant. Subject to
adjustments pursuant to the provisions of Section 9.9 hereof, the maximum
number of Shares with respect to which Options or stock appreciation rights
may be granted hereunder to any employee during any fiscal year shall be
500,000 Shares (the "Limitation"). If an Option is canceled, the canceled
Option shall continue to be counted toward the Limitation for the year
granted. An Option (or a stock appreciation right) that is repriced during
any fiscal year is treated as the cancellation of the Option (or stock
appreciation right) and a grant of a new Option (or stock appreciation right)
for purposes of the Limitation for that fiscal year.
ARTICLE 12.
ELIGIBILITY AND ADMINISTRATION
12.1. Awards to Employees and Directors. (a) Participants who
receive Options under Articles 4 and 6 hereof (including stock appreciation
rights under Article 5) ("Optionees"), Stock Purchase Awards under Article 7
or Restricted Stock Awards under Article 8 (in either case, a "Participant")
shall consist of such key employees and Directors (hereinafter defined) of
the Company or any of its subsidiaries or affiliates as the Committee shall
select from time to time. The Committee's designation of an Optionee or
Participant in any year shall not require the Committee to designate such
person to receive Awards or grants in any other year. The designation of an
Optionee or Participant to receive Awards or grants under one portion of the
Plan shall not require the Committee to include such Optionee or Participant
under other portions of the Plan.
(b) No Option which is intended to qualify as an "incentive
stock option" may be granted to any employee or Director who, at the time of
such grant, owns, directly or indirectly (within the meaning of sections
422(b)(6) and 424(d) of the Code), shares possessing more than ten percent
(10%) of the total combined voting power of all classes of shares of the Com-
pany or any of its subsidiaries or affiliates, unless at the time of such
grant, (i) the option price is fixed at not less than 110% of the Fair Market
Value (as defined below) of the Shares subject to such Option, determined on
the date of the grant, and (ii) the exercise of such Option is prohibited by
its terms after the expiration of five (5) years from the date such Option is
granted.
12.2. Administration. (a) The Plan shall be administered by a
committee (the "Committee") consisting of not fewer than two Directors of the
Company (the directors of the Company being hereinafter referred to as the
"Directors"), as designated by the Directors. The Directors may remove from,
add members to, or fill vacancies in the Committee. Unless otherwise
determined by the Directors, each member of the Committee will be a "Non-
Employee Director" within the meaning of Rule 16b-3 (or any successor rule)
of the Exchange Act and an "outside director" within the meaning of Section
162(m)(4)(C)(i) of the Code and the regulations thereunder.
Any Award to a member of the Committee shall be on terms
consistent with Awards made to other Directors who are not members of the
Committee, except where the Award is approved or ratified by the Compensation
Committee (excluding persons who are also members of the Committee) of the
Board of Directors of the Company.
(b) The Committee is authorized, subject to the provisions of
the Plan, to establish such rules and regulations as it may deem appropriate
for the conduct of meetings and proper administration of the Plan. All
actions of the Committee shall be taken by majority vote of its members. The
Committee is also authorized, subject to the provisions of the Plan, to make
provisions in various Awards pertaining to a "change of control" of the
Company and to amend or modify existing Awards.
(c) Subject to the provisions of the Plan, the Committee
shall have authority, in its sole discretion, to interpret the provisions of
the Plan and, subject to the requirements of applicable law, including Rule
16b-3 of the Exchange Act, to prescribe, amend, and rescind rules and regula-
tions relating to it as it may deem necessary or advisable. All decisions
made by the Committee pursuant to the provisions of the Plan shall be final,
conclusive and binding on all persons, including the Company, its
shareholders, Directors and employees, and Plan participants.
ARTICLE 13.
OPTIONS
13.1. Grant of Options. The Committee shall determine, within the
limitations of the Plan, the Directors and employees of the Company and its
subsidiaries and affiliates to whom Options are to be granted under the Plan,
the number of Shares that may be purchased under each such Option and the
option price, and shall designate such Options at the time of the grant as
either "incentive stock options" or "nonqualified stock options;" provided,
however, that Options granted to employees of an affiliate (that is not also
a subsidiary) or to non-employees of the Company may only be "nonqualified
stock options."
All Options granted pursuant to this Article 4 and Article 6 herein
shall be authorized by the Committee and shall be evidenced in writing by
stock option agreements ("Stock Option Agreements") in such form and
containing such terms and conditions as the Committee shall determine which
are not inconsistent with the provisions of the Plan, and, with respect to
any Stock Option Agreement granting Options which are intended to qualify as
"incentive stock options," are not inconsistent with Section 422 of the Code.
Granting of an Option pursuant to the Plan shall impose no obligation on the
recipient to exercise such option. Any individual who is granted an Option
pursuant to this Article 4 and Article 6 herein may hold more than one Option
granted pursuant to such Articles at the same time and may hold both
"incentive stock options" and "nonqualified stock options" at the same time.
To the extent that any Option does not qualify as an "incentive stock option"
(whether because of its provisions, the time or manner of its exercise or
otherwise) such Option or the portion thereof which does not so qualify shall
constitute a separate "nonqualified stock option."
13.2. Option Price.
(a) Subject to Section 3.1(b), the option price per each
Share purchasable under any "incentive stock option" granted pursuant to this
Article 4 and any "nonqualified stock option" granted pursuant to Article 6
herein shall not be less than 100% of the Fair Market Value (as hereinafter
defined) of such Share on the date of the grant of such Option.
(b) The option price per share of each Share purchasable
under any "nonqualified stock option" granted pursuant to this Article 4
shall be such amount as the Committee shall determine at the time of the
grant of such Option.
13.3. Other Provisions. Options granted pursuant to this
Article 4 shall be made in accordance with the terms and provision of Article
9 hereof and any other applicable terms and provisions of the Plan.
ARTICLE 14.
STOCK APPRECIATION RIGHTS
14.1. Grant and Exercise. Stock appreciation rights may be
granted in conjunction with all or part of any Option granted under the Plan
provided such rights are granted at the time of the grant of such Option. A
"stock appreciation right" is a right to receive cash or Shares, as provided
in this Article 5, in lieu of the purchase of a Share under a related Option.
A share appreciation right or applicable portion thereof shall terminate and
no longer be exercisable upon the termination or exercise of the related
Option, and a stock appreciation right granted with respect to less than the
full number of Shares covered by a related Option shall not be reduced until,
and then only to the extent that, the exercise or termination of the related
Option exceeds the number of Shares not covered by the share appreciation
right. A stock appreciation right may be exercised by the holder thereof
(the "Holder"), in accordance with Section 5.2 of this Article 5, by giving
written notice thereof to the Company and surrendering the applicable portion
of the related Option. Upon giving such notice and surrender, the Holder
shall be entitled to receive an amount determined in the manner prescribed in
Section 5.2 of this Article 5. Options which have been so surrendered, in
whole or in part, shall no longer be exercisable to the extent the related
share appreciation rights have been exercised.
14.2. Terms and Conditions. Stock appreciation rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Committee,
including the following:
(a) Stock appreciation rights shall be exercisable only at
such time or times and to the extent that the Options to which they
relate shall be exercisable in accordance with the provisions of the
Plan.
(b) Upon the exercise of a stock appreciation right, a Holder
shall be entitled to receive up to, but no more than, an amount in cash
or whole Shares equal to the excess of the then Fair Market Value of one
Share over the option price per Share specified in the related Option
multiplied by the number of Shares in respect of which the share appre-
ciation right shall have been exercised. The Holder shall specify in
his written notice of exercise, whether payment shall be made in cash or
in whole Shares. Each share appreciation right may be exercised only at
the time and so long as a related Option, if any, would be exercisable
or as otherwise permitted by applicable law.
(c) Upon the exercise of a stock appreciation right, the
Option or part thereof to which such share appreciation right is related
shall be deemed to have been exercised for the purpose of the limitation
of the number of Shares to be issued under the Plan, as set forth in
Section 2.1 of the Plan.
(d) With respect to stock appreciation rights granted in
connection with an Option that is intended to be an "incentive stock
option," the following shall apply:
(i) No stock appreciation right shall be transferable by
a Holder otherwise than by will or by the laws of descent and
distribution, and stock appreciation rights shall be exercisable,
during the Holder's lifetime, only by the Holder.
(ii) Stock appreciation rights granted in connection
with an Option may be exercised only when the Fair Market Value of
the Shares subject to the Option exceeds the option price at which
Shares can be acquired pursuant to the Option.
ARTICLE 15.
RELOAD OPTIONS
15.1. Authorization of Reload Options. Concurrently with the
award of any Option (such Option hereinafter referred to as the "Underlying
Option") to any participant in the Plan, the Committee may grant one or more
reload options (each, a "Reload Option") to such participant to purchase for
cash or Shares a number of Shares as specified below. A Reload Option shall
be exercisable for an amount of Shares equal to (i) the number of Shares
delivered by the Optionee to the Company to exercise the Underlying Option,
and (ii) to the extent authorized by the Committee, the number of Shares used
to satisfy any tax withholding requirement incident to the exercise of the
Underlying Option, subject to the availability of Shares under the Plan at
the time of such exercise. Any Reload Option may provide for the grant, when
exercised, of subsequent Reload Options to the extent and upon such terms and
conditions consistent with this Article 6, as the Committee in its sole
discretion shall specify at or after the time of grant of such Reload Option.
The grant of a Reload Option will become effective upon the exercise of an
Underlying Option or Reload Option by delivering to the Company Shares in
payment of the exercise price and/or tax withholding obligations.
Notwithstanding the fact that the Underlying Option may be an "incentive
stock option," a Reload Option is not intended to qualify as an "incentive
stock option" under Section 422 of the Code.
15.2. Reload Option Amendment. Each Share Option Agreement shall
state whether the Committee has authorized Reload Options with respect to the
Underlying Option. Upon the exercise of an Underlying Option or other Reload
Option, the Reload Option will be evidenced by an amendment to the underlying
Share Option Agreement.
15.3. Reload Option Price. The option price per Share deliverable
upon the exercise of a Reload Option shall be the Fair Market Value of a
Share on the date the grant of the Reload Option becomes effective.
15.4. Term and Exercise. Each Reload Option is fully exercisable
immediately upon its grant. The term of each Reload Option shall be equal to
the remaining option term of the Underlying Option.
15.5. Termination of Employment. No additional Reload Options
shall be granted to Optionees when Options and/or Reload Options are
exercised pursuant to the terms of this Plan following termination of the
Optionee's employment unless the Committee, in its sole discretion, shall
determine otherwise.
awful Applicability of Other Sections. Except as otherwise
provided in this Article 6, the provisions of Article 9 applicable to Options
shall apply equally to Reload Options.
ARTICLE 16.
STOCK PURCHASE AWARDS
16.1. Grant of Stock Purchase Award. The term "Stock Purchase
Award" means the right to purchase Shares of the Company and to pay for such
Shares through a loan made by the Company to the Participant (a "Purchase
Loan") as set forth in this Article 7.
16.2. Terms of Purchase Loans.
(a) Purchase Loan. Each Purchase Loan shall be evidenced by
a promissory note. The term of the Purchase Loan shall be for a period of
years, as determined by the Committee, and the proceeds of the Purchase Loan
shall be used exclusively by the Participant for purchase of Shares from the
Company at a purchase price equal to the Fair Market Value on the date of the
Stock Purchase Award.
(b) Interest on Purchase Loan. A Purchase Loan shall be non-
interest bearing or shall bear interest at whatever rate the Committee shall
determine (but not in excess of the maximum rate permissible under applicable
law), payable in a manner and at such times as the Committee shall determine.
Those terms and provisions as the Committee shall determine shall be
incorporated into the promissory note evidencing the Purchase Loan.
(c) Forgiveness of Purchase Loan. Subject to Section 7.4
hereof, the Company may forgive the repayment of up to 100% of the principal
amount of the Purchase Loan, subject to such terms and conditions as the
Committee shall determine and set forth in the promissory note evidencing the
Purchase Loan. A Participant's Purchase Loan can be prepaid at any time, and
from time to time, without penalty.
16.3. Security for Loans.
(a) Stock Power and Pledge. Purchase Loans granted to
Participants shall be secured by a pledge of the Shares acquired pursuant to
the Stock Purchase Award. Such pledge shall be evidenced by a pledge
agreement (the "Pledge Agreement") containing such terms and conditions as
the Committee shall determine. The share certificates for the Shares
purchased by a Participant pursuant to a Stock Purchase Award shall be issued
in the Participant's name, but shall be held by the Company as security for
repayment of the Participant's Purchase Loan together with a stock power
executed in blank by the Participant (the execution and delivery of which by
the Participant shall be a condition to the issuance of the Stock Purchase
Award). The Participant shall be entitled to exercise all rights applicable
to such Shares, including, but not limited to, the right to vote such Shares
and the right to receive dividends and other distributions made with respect
to such Shares. When the Purchase Loan and any accrued but unpaid interest
thereon has been repaid or otherwise satisfied in full, the Company shall
deliver to the Participant the share certificates for the Shares purchased by
a Participant under the Stock Purchase Award. Purchase Loans shall be
recourse or non-recourse with respect to a Participant, as determined by the
Committee.
(b) Release and Delivery of Stock Certificates During the
Term of the Purchase Loan. The Company shall release and deliver to each
Participant certificates for Shares purchased by a Participant pursuant to a
Stock Purchase Award, in such amounts and on such terms and conditions as the
Committee shall determine, which shall be set forth in the Pledge Agreement.
(c) Release and Delivery of Stock Certificates Upon Repayment
of the Purchase Loan. The Company shall release and deliver to each
Participant certificates for the Shares purchased by the Participant under
the Stock Purchase Award and then held by the Company, provided the
Participant has paid or otherwise satisfied in full the balance of the
Purchase Loan and any accrued but unpaid interest thereon. In the event the
balance of the Purchase Loan is not repaid, forgiven or otherwise satisfied
within ninety (90) days after (i) the date repayment of the Purchase Loan is
due (whether in accordance with its term, by reason of acceleration or
otherwise), or (ii) such longer time as the Committee, in its discretion,
shall provide for repayment or satisfaction, the Company shall retain those
Shares then held by the Company in accordance with the Pledge Agreement.
(d) Recourse Purchase Loans. Notwithstanding Sections
7.3(a), (b) and (c) above, in the case of a recourse Purchase Loan, the
Committee may make a Purchase Loan on such terms as it determines, including
without limitation, not requiring a pledge of the acquired Shares.
16.4. Termination of Employment.
(a) Termination of Employment by Death, Disability or by the
Company Without Cause; Change of Control. In the event of a Participant's
termination of employment by reason of death, "disability" or by the Company
without "cause", or in the event of a "change of control", the Committee
shall have the right (but shall not be required) to forgive the remaining
unpaid amount (principal and interest) of the Purchase Loan in whole or in
part as of the date of such occurrence. "Change of Control", "disability"
and "cause" shall have the respective meanings as set forth in the promissory
note evidencing the Purchase Loan.
(b) Termination of Employment. Subject to Section 7.4(a)
above, in the event of a Participant's termination of employment for any
reason, the Participant shall repay to the Company the entire balance of the
Purchase Loan and any accrued but unpaid interest thereon, which amounts
shall become immediately due and payable, provided, however, that if the
Participant voluntarily resigns as an employee in good standing, such amounts
will become due and payable on the ninetieth (90th ) day after the effective
date of such resignation.
16.5. Restrictions on Transfer. No Stock Purchase Award or Shares
purchased through such an Award and pledged to the Company as collateral
security for the Participant's Purchase Loan (and accrued by unpaid interest
thereon) may be otherwise pledged, sold, assigned or transferred (other than
by will or by the laws of descent and distribution).
ARTICLE 17.
RESTRICTED STOCK AWARDS
17.1. Restricted Stock Awards. (a) A grant of Shares made
pursuant to this Article 8 is referred to as a "Restricted Stock Award." The
Committee may grant to any Participant an amount of Shares in such manner,
and subject to such terms and conditions relating to vesting, forfeitability
and restrictions on delivery and transfer (whether based on performance
standards, periods of service or otherwise) as the Committee shall establish
(such Shares, "Restricted Shares"). The terms of any Restricted Stock Award
granted under this Plan shall be set forth in a written agreement (a
"Restricted Stock Agreement") which shall contain provisions determined by
the Committee and not inconsistent with this Plan. The provisions of
Restricted Stock Awards need not be the same for each Participant receiving
such Awards.
(b) Issuance of Restricted Shares. As soon as practicable
after the date of grant of a Restricted Stock Award by the Committee, the
Company shall cause to be transferred on the books of the Company, Shares
registered in the name of the Company, as nominee for the Participant,
evidencing the Restricted Shares covered by the Award, but subject to
forfeiture to the Company retroactive to the date of grant, if a Restricted
Stock Agreement delivered to the Participant by the Company with respect to
the Restricted Shares covered by the Award is not duly executed by the
Participant and timely returned to the Company. All Restricted Shares
covered by Awards under this Article 8 shall be subject to the restrictions,
terms and conditions contained in the Plan and the Restricted Stock Agreement
entered into by and between the Company and the Participant. Until the lapse
or release of all restrictions applicable to an Award of Restricted Shares,
the share certificates representing such Restricted Shares shall be held in
custody by the Company or its designee.
(c) Shareholder Rights. Beginning on the date of grant of
the Restricted Stock Award and subject to execution of the Restricted Stock
Agreement as provided in Sections 8.1(a) and (b), the Participant shall
become a shareholder of the Company with respect to all Shares subject to the
Restricted Stock Agreement and shall have all of the rights of a shareholder,
including, but not limited to, the right to vote such Shares and the right to
receive distributions made with respect to such Shares; provided, however,
that any Shares distributed as a dividend or otherwise with respect to any
Restricted Shares as to which the restrictions have not yet lapsed shall be
subject to the same restrictions as such Restricted Shares and shall be
represented by book entry and held as prescribed in Section 8.1(b).
(d) Restriction on Transferability. None of the Restricted
Shares may be assigned or transferred (other than by will or the laws of
descent and distribution), pledged or sold prior to lapse or release of the
restrictions applicable thereto.
(e) Delivery of Shares Upon Release of Restrictions. Upon
expiration or earlier termination of the forfeiture period without a
forfeiture and the satisfaction of or release from any other conditions
prescribed by the Committee, the restrictions applicable to the Restricted
Shares shall lapse. As promptly as administratively feasible thereafter,
subject to the requirements of Section 10.1, the Company shall deliver to the
Participant or, in case of the Participant's death, to the Participant's
beneficiary, one or more stock certificates for the appropriate number of
Shares, free of all such restrictions, except for any restrictions that may
be imposed by law.
17.2. Terms of Restricted Shares.
(a) Forfeiture of Restricted Shares. Subject to Section
8.2(b), all Restricted Shares shall be forfeited and returned to the Company
and all rights of the Participant with respect to such Restricted Shares
shall terminate unless the Participant continues in the service of the
Company as an employee until the expiration of the forfeiture period for such
Restricted Shares and satisfies any and all other conditions set forth in the
Restricted Stock Agreement. The Committee in its sole discretion, shall
determine the forfeiture period (which may, but need not, lapse in
installments) and any other terms and conditions applicable with respect to
any Restricted Stock Award.
(b) Waiver of Forfeiture Period. Notwithstanding anything
contained in this Article 8 to the contrary, the Committee may, in its sole
discretion, waive the forfeiture period and any other conditions set forth in
any Restricted Stock Agreement under appropriate circumstances (including the
death, disability or retirement of the Participant or a material change in
circumstances arising after the date of an Award) and subject to such terms
and conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate.
ARTICLE 18.
GENERALLY APPLICABLE PROVISIONS
18.1. Option Period. Subject to Section 3.1(b), the period for
which an Option is exercisable shall not exceed ten (10) years from the date
such Option is granted, provided, however, in the case of an Option that is
not intended to be an "incentive stock option", the Committee may prescribe a
period in excess of ten years. After the Option is granted, the option
period may not be reduced.
18.2. Fair Market Value. If the Shares are listed or admitted to
trading on a securities exchange registered under the Exchange Act, the "Fair
Market Value" of a Share as of a specified date shall mean the average of the
high and low price of the shares for the day immediately preceding the date
as of which Fair Market Value is being determined (or if there was no re-
ported sale on such date, on the last preceding date on which any reported
sale occurred) reported on the principal securities exchange on which the
Shares are listed or admitted to trading. If the Shares are not listed or
admitted to trading on any such exchange but are listed as a national market
security on the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), traded in the over-the-counter market or listed
or traded on any similar system then in use, the Fair Market Value of a Share
shall be the average of the high and low sales price for the day immediately
preceding the date as of which the Fair Market Value is being determined (or
if there was no reported sale on such date, on the last preceding date on
which any reported sale occurred) reported on such system. If the Shares are
not listed or admitted to trading on any such exchange, are not listed as a
national market security on NASDAQ and are not traded in the over-the-counter
market or listed or traded on any similar system then in use, but are quoted
on NASDAQ or any similar system then in use, the Fair Market Value of a Share
shall be the average of the closing high bid and low asked quotations on such
system for the Shares on the date in question. If the Shares are not
publicly traded, Fair Market Value shall be determined by the Committee in
its sole discretion using appropriate criteria. An Option shall be con-
sidered granted on the date the Committee acts to grant the Option or such
later date as the Committee shall specify.
18.3. Exercise of Options. Options granted under the Plan shall
be exercised by the Optionee thereof (or by his or her executors,
administrators, guardian or legal representative, or by a Permitted Assignee,
as provided in Sections 9.6 and 9.7 hereof) as to all or part of the Shares
covered thereby, by the giving of written notice of exercise to the Company,
specifying the number of Shares to be purchased, accompanied by payment of
the full purchase price for the Shares being purchased. Full payment of such
purchase price shall be made within five (5) business days following the date
of exercise and shall be made (i) in cash or by certified check or bank
check, (ii) with the consent of the Committee, by delivery of a promissory
note in favor of the Company upon such terms and conditions as determined by
the Committee, (iii) with the consent of Committee, by tendering previously
acquired Shares (valued at its Fair Market Value, as determined by the
Committee as of the date of tender), or (iv) with the consent of the
Committee, any combination of (i), (ii) and (iii). In connection with a
tender of previously acquired Shares pursuant to clause (iii) above, the
Committee, in its sole discretion, may permit the Optionee to constructively
exchange Shares already owned by the Optionee in lieu of actually tendering
such Shares to the Company, provided that adequate documentation concerning
the ownership of the Shares to be constructively tendered is furnished in
form satisfactory to the Committee. The notice of exercise, accompanied by
such payment, shall be delivered to the Company at its principal business
office or such other office as the Committee may from time to time direct,
and shall be in such form, containing such further provisions consistent with
the provisions of the Plan, as the Committee may from time to time prescribe.
In no event may any Option granted hereunder be exercised for a fraction of a
Share. The Company shall effect the transfer of Shares purchased pursuant to
an Option as soon as practicable, and, within a reasonable time thereafter,
such transfer shall be evidenced on the books of the Company. No person
exercising an Option shall have any of the rights of a holder of Shares
subject to an Option until certificates for such Shares shall have been
issued following the exercise of such Option. No adjustment shall be made
for cash dividends or other rights for which the record date is prior to the
date of such issuance.
18.4. Transferability. No Option that is intended to qualify as
an "incentive stock option" under Section 422 of the Code shall be assignable
or transferable by the Optionee, other than by will or the laws of descent
and distribution, and such Option may be exercised during the life of the
Optionee only by the Optionee or his guardian or legal representative.
"Nonqualified stock options" and any stock appreciation rights granted in
tandem therewith are transferrable (together and not separately) by the
Optionee or Holder, as the case may be, to any one or more of the following
persons (each, a "Permitted Assignee"): (i) the spouse, parent, issue,
spouse of issue, or issue of spouse ("issue" shall include all descendants
whether natural or adopted) of such Optionee or Holder, as the case may be;
(ii) a trust for the benefit of one or more of those persons described in
clause (i) above or for the benefit of such Optionee or Holder, as the case
may be, or for the benefit of any such persons and such Optionee or Holder,
as the case may be; or (iii) an entity in which the Optionee or Holder or any
Permitted Assignee thereof is a beneficial owner; provided, however, that
such Permitted Assignee shall be bound by all of the terms and conditions of
this Plan and shall execute an agreement satisfactory to the Company
evidencing such obligation; provided further, however that any transfer by an
Optionee or Holder who is not then a Director of the Company to any Permitted
Assignee shall be subject to the prior consent of the Committee; and provided
further, however, that such Optionee or Holder shall remain bound by the
terms and conditions of this Plan. The Company shall cooperate with an
Optionee's Permitted Assignee and the Company's transfer agent in
effectuating any transfer permitted pursuant to this Section 9.4.
18.5. Termination of Employment. In the event of the termination
of employment of an Optionee or the separation from service of a Director
(who is an Optionee) for any reason (other than death or disability as
provided below), any Option(s) held by such Optionee (or its Permitted
Assignee) under this Plan and not previously exercised or expired shall be
deemed canceled and terminated on the day of such termination or separation,
unless the Committee decides, in its sole discretion, to extend the term of
the Option for a period not to exceed three months after the date of such
termination or separation, provided, however, that in no instance may the
term of the Option, as so extended, exceed the maximum term set forth in
Section 3.1(b)(ii) or 9.1 above. Notwithstanding the foregoing, in the event
of the separation from service of a non-employee Director (who is an
Optionee) by reason of death, disability or under conditions satisfactory to
both the Director and the Company, any nonqualified stock options held by
such Director (or its Permitted Assignee) under the Plan and not previously
exercised or expired shall be exercisable for a period not to exceed five (5)
years after the date of such separation, provided, however, that in no
instance may the term of the Option, as so extended, exceed the maximum term
set forth in Sections 3.1(b)(ii) or 9.1 above.
18.6. Death. In the event an Optionee (other than a non-employee
Director) dies while employed by the Company or any of its subsidiaries or
affiliates any Option(s) held by such Optionee (or its Permitted Assignee)
and not previously expired or exercised shall, to the extent exercisable on
the date of death, be exercisable by the estate of such Optionee or by any
person who acquired such Option by bequest or inheritance, or by the
Permitted Assignee at any time within one year after the death of the
Optionee, unless earlier terminated pursuant to its terms, provided, however,
that if the term of such Option would expire by its terms within six months
after the Optionee's death, the term of such Option shall be extended until
six months after the Optionee's death, provided further, however, that in no
instance may the term of the Option, as so extended, exceed the maximum term
set forth in Section 3.1(b)(ii) or 9.1 above.
18.7. Disability. In the event of the termination of employment
of an Optionee (other than a non-employee Director) due to total disability,
the Optionee, or his guardian or legal representative, or a Permitted
Assignee shall have the unqualified right to exercise any Option(s) which
have not been previously exercised or expired and which the Optionee was eli-
gible to exercise as of the first date of total disability (as determined by
the Committee), at any time within one (1) year after such termination,
unless earlier terminated pursuant to its terms, provided, however, that if
the term of such Option would expire by its terms within six months after
such termination, the term of such Option shall be extended until six months
after such termination, provided further, however, that in no instance may
the term of the Option, as so extended, exceed the maximum term set forth in
Section 3.1(b)(ii) or 9.1 above. The term "total disability" shall, for
purposes of this Plan, be defined in the same manner as such term is defined
in Section 22(e)(3) of the Code.
18.8. Amendment and Modification of the Plan. The Compensation
Committee of the Board of Directors of the Company may, from time to time,
alter, amend, suspend or terminate the Plan as it shall deem advisable,
subject to any requirement for shareholder approval imposed by applicable law
or any rule of any stock exchange or quotation system on which Shares are
listed or quoted; provided that such Compensation Committee may not amend the
Plan, without the approval of the Company's shareholders, to increase the
number of Shares that may be the subject of Options under the Plan (except
for adjustments pursuant to Section 9.9 hereof). In addition, no amendments
to, or termination of, the Plan shall in any way impair the rights of an
Optionee or a Participant (or a Permitted Assignee thereof) under any Award
previously granted without such Optionee's or Participant's consent.
18.9. Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, com-
bination, repurchase, or exchange of Shares or other securities, the issuance
of warrants or other rights to purchase Shares or other securities, or other
similar corporate transaction or event affects the Shares with respect to
which Options have been or may be issued under the Plan, such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in
such manner as the Committee may deem equitable, adjust any or all of (i) the
number and type of Shares that thereafter may be made the subject of Options,
(ii) the number and type of Shares subject to outstanding Options and share
appreciation rights, and (iii) the grant or exercise price with respect to
any Option, or, if deemed appropriate, make provision for a cash payment to
the holder of any outstanding Option; provided, in each case, that with
respect to "incentive stock options," no such adjustment shall be authorized
to the extent that such adjustment would cause such options to violate
Section 422(b) of the Code or any successor provision; and provided further,
that the number of Shares subject to any Option denominated in Shares shall
always be a whole number. In the event of any reorganization, merger,
consolidation, split-up, spin-off, or other business combination involving
the Company (collectively, a "Reorganization"), the Compensation Committee of
the Board of Directors or the Board of Directors may cause any Award
outstanding as of the effective date of the Reorganization to be canceled in
consideration of a cash payment or alternate Award made to the holder of such
canceled Award equal in value to the fair market value of such canceled
Award. The determination of fair market value shall be made by the
Compensation Committee of the Board of Directors or the Board of Directors,
as the case may be, in their sole discretion.
ARTICLE 19.
MISCELLANEOUS
19.1. Tax Withholding. All payments or distributions made
pursuant to the Plan to an Optionee or Participant (or a Permitted Assignee
thereof) shall be net of any applicable federal, state and local withholding
taxes arising as a result of the grant of any Award, exercise of an Option or
stock appreciation rights or any other event occurring pursuant to this Plan.
The Company shall have the right to withhold from such Optionee or
Participant (or a Permitted Assignee thereof) such withholding taxes as may
be required by law, or to otherwise require the Optionee or Participant (or a
Permitted Assignee thereof) to pay such withholding taxes. If the Optionee
or Participant (or a Permitted Assignee thereof) shall fail to make such tax
payments as are required, the Company or its subsidiaries or affiliates
shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to such Optionee or
Participant or to take such other action as may be necessary to satisfy such
withholding obligations. In satisfaction of the requirement to pay
withholding taxes, the Optionee or Participant(or Permitted Assignee) make a
written election (the "Tax Election"), which may be accepted or rejected in
the discretion of the Committee, to have withheld a portion of the Shares
then issuable to the Optionee (or Permitted Assignee) pursuant to the Plan,
having an aggregate Fair Market Value equal to the withholding taxes.
19.2. Right of Discharge Reserved. Nothing in the Plan nor the
grant of an Award hereunder shall confer upon any employee, Director or other
individual the right to continue in the employment or service of the Company
or any subsidiary or affiliate of the Company or affect any right that the
Company or any subsidiary or affiliate of the Company may have to terminate
the employment or service of (or to demote or to exclude from future Options
under the Plan) any such employee, Director or other individual at any time
for any reason. Except as specifically provided by the Committee, the
Company shall not be liable for the loss of existing or potential profit from
an Award granted in the event of termination of an employment or other
relationship even if the termination is in violation of an obligation of the
Company or any subsidiary or affiliate of the Company to the employee or
Director.
19.3. Nature of Payments. All Awards made pursuant to the Plan are
in consideration of services performed for the Company or any subsidiary or
affiliate of the Company. Any income or gain realized pursuant to Awards
under the Plan and any share appreciation rights constitutes a special
incentive payment to the Optionee, Participant or Holder and shall not be
taken into account, to the extent permissible under applicable law, as
compensation for purposes of any of the employee benefit plans of the Company
or any subsidiary or affiliate of the Company except as may be determined by
the Committee or by the Directors or directors of the applicable subsidiary
or affiliate of the Company.
19.4. Severability. If any provision of the Plan shall be held
unlawful or otherwise invalid or unenforceable in whole or in part, such
unlawfulness, invalidity or unenforceability shall not affect any other
provision of the Plan or part thereof, each of which remain in full force and
effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or unen-
forceable, such unlawfulness, invalidity or unenforceability shall not
prevent any other payment or benefit from being made or provided under the
Plan, and if the making of any payment in full or the provision of any other
benefit required under the Plan in full would be unlawful or otherwise
invalid or unenforceable, then such unlawfulness, invalidity or unenforce-
ability shall not prevent such payment or benefit from being made or provided
in part, to the extent that it would not be unlawful, invalid or
unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under the Plan.
19.5. Gender and Number. In order to shorten and to improve the
understandability of the Plan document by eliminating the repeated usage of
such phrases as "his or her" and any masculine terminology herein shall also
include the feminine, and the definition of any term herein in the singular
shall also include the plural except when otherwise indicated by the context.
19.6. Governing Law. The Plan and all determinations made and
actions taken thereunder, to the extent not otherwise governed by the Code or
the laws of the United States, shall be governed by the laws of the State of
New York and construed accordingly.
19.7. Termination of Plan. The Plan shall be effective on the date
of the approval of the Plan by the holders of a majority of the shares
entitled to vote thereon, provided such approval is obtained within 12 months
after the date of adoption of the Plan by the Board of Directors. Awards may
be granted under the Plan at any time and from time to time on or prior to
March 10,2008, on which date the Plan will expire except as to Awards and
related share appreciation rights then outstanding under the Plan. Such
outstanding Awards and stock appreciation rights shall remain in effect until
they have been exercised or terminated, or have expired.
19.8. Captions. The captions in this Plan are for convenience of
reference only, and are not intended to narrow, limit or affect the substance
or interpretation of the provisions contained herein.