GENERAL MARITIME CORPORATION
2001 STOCK INCENTIVE PLAN
(As amended and restated, effective December 21, 2005)
ARTICLE I
General
1.1 Purpose
The General Maritime Corporation 2001 Stock Incentive Plan (the "Plan") is
designed to provide certain key persons, on whose initiative and efforts the
successful conduct of the business of General Maritime Corporation, a Marshall
Islands Company (known as General Maritime Shipholdings, Ltd., prior to its
initial public offering) (the "Company") depends, and who are responsible for
the management, growth and protection of the business of the Company, with
incentives to: (a) enter into and remain in the service of the Company, a
Company subsidiary or a Company joint venture, (b) acquire a proprietary
interest in the success of the Company, (c) maximize their performance and (d)
enhance the long-term performance of the Company (whether directly or indirectly
through enhancing the long-term performance of a Company subsidiary or a Company
joint venture). The Plan is also designed to provide certain "performance-based"
compensation to these key persons.
1.2 Administration
(a) Administration by Committee; Constitution of Committee. The Plan
shall be administered by the Compensation Committee of the Board of Directors of
the Company (the "Board") or such other committee or subcommittee as the Board
may designate or as shall be formed by the abstention or recusal of a
non-Qualified Member (as defined below) of such committee (the "Committee"). The
members of the Committee shall be appointed by, and serve at the pleasure of,
the Board. While it is intended that at all times that the Committee acts in
connection with the Plan, the Committee shall consist solely of Qualified
Members, the number of whom shall not be less than two, the fact that the
Committee is not so comprised will not invalidate any grant hereunder that
otherwise satisfies the terms of the Plan. For purposes of the foregoing, a
"Qualified Member" is both a "non-employee director" within the meaning of Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934 (the
"1934 Act") and an "outside director" within the meaning of section 162(m) of
the Internal Revenue Code of 1986 (the "Code"). If the Committee does not exist,
or for any other reason determined by the Board, the Board may take any action
under the Plan that would otherwise be the responsibility of the Committee.
(b) Committee's Authority. The Committee shall have the authority (i) to
exercise all of the powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan and any Grant Certificates executed pursuant to
Section 2.1, (iii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules governing its own operations, (iv) to make
all determinations necessary or advisable in administering the Plan, (v) to
correct any defect, supply any omission and reconcile any inconsistency in the
Plan, and (vi) to amend the Plan to reflect changes in applicable law.
(c) Committee Action. Actions of the Committee shall be taken by the
vote of a majority of its members. Any action may be taken by a written
instrument signed by a majority of the Committee members, and action so taken
shall be fully as effective as if it had been taken by a vote at a meeting.
Except to the extent prohibited by applicable law or the applicable rules of a
stock exchange, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities to any person or persons selected by it,
and may revoke any such allocation or delegation at any time.
(d) Determinations Final. The determination of the Committee on all
matters relating to the Plan or any Grant Certificate shall be final, binding
and conclusive.
(e) Limit on Committee Members' Liability. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any award thereunder.
1.3 Persons Eligible for Awards
The persons eligible to receive awards under the Plan are those officers,
directors, and executive, managerial, professional or administrative employees
of, and consultants to, the Company, its subsidiaries and its joint ventures
(collectively, "key persons") as the Committee in its sole discretion shall
select. The Committee may from time to time in its sole discretion determine
that any key person shall be ineligible to receive awards under the Plan.
1.4 Types of Awards Under Plan
Awards may be made under the Plan in the form of (a) incentive stock
options, (b) non-qualified stock options, (c) stock appreciation rights, (d)
dividend equivalent rights, (e) restricted stock, (f) unrestricted stock, and
(g) performance shares, all as more fully set forth in Article II. The term
"award" means any of the foregoing. No incentive stock option may be granted to
a person who is not an employee of the Company on the date of grant.
1.5 Shares Available for Awards
(a) Aggregate Number Available; Certificate Legends. The total number of
shares of common stock of the Company ("Common Stock") with respect to which
awards may be granted pursuant to the Plan shall not exceed 4.4 million shares.
Shares issued pursuant to the Plan may be authorized but unissued Common Stock,
authorized and issued Common Stock held in the Company's treasury or Common
Stock acquired by the Company for the purposes of the Plan. The Committee may
direct that any stock certificate evidencing shares issued pursuant to the Plan
shall bear a legend setting forth such restrictions on transferability as may
apply to such shares.
(b) Adjustment Upon Changes in Common Stock. Upon certain changes in
Common Stock, the number of shares of Common Stock available for issuance with
respect to awards that may be granted under the Plan pursuant to Section 1.5(a),
shall be adjusted pursuant to Section 3.7(a).
(c) Certain Shares to Become Available Again. The following shares of
Common Stock shall again become available for awards under the Plan: any shares
that are subject to an award under the Plan and that remain unissued upon the
cancellation or termination of such award for any reason whatsoever; any shares
of restricted stock forfeited pursuant to Section 2.7(e), provided that any
dividends paid on such shares are also forfeited pursuant to such Section
2.7(e); and any shares in respect of which a stock appreciation right or
performance share award is settled for cash.
(d) Individual Limit. Except for the limits set forth in this Section
1.5(d) and in Section 2.2(h), no provision of this Plan shall be deemed to limit
the number or value of shares with respect to which the Committee may make
awards to any eligible person. Subject to adjustment as provided in Section
3.7(a), the total number of shares of Common Stock with respect to which awards
may be granted to any one employee of the Company or a subsidiary during any one
calendar year shall not exceed 750,000 shares. Stock options and stock
appreciation rights granted and subsequently canceled or deemed to be canceled
in the same calendar year count against the limit for that year even after their
cancellation.
1.6 Definitions of Certain Terms
(a) The "Fair Market Value" of a share of Common Stock on any day shall
be the closing price on the New York Stock Exchange as reported for such day in
The Wall Street Journal or, if no such price is reported for such day, the
average of the high bid and low asked price of Common Stock as reported for such
day. If no quotation is made for the applicable day, the Fair Market Value of a
share of Common Stock on such day shall be determined in the manner set forth in
the preceding sentence using quotations for the next preceding day for which
there were quotations, provided that such quotations shall have been made within
the ten (10) business days preceding the applicable day. Notwithstanding the
foregoing, if deemed necessary or appropriate by the Committee, the Fair Market
Value of a share of Common Stock on any day shall be determined by the
Committee. In no event shall the Fair Market Value of any share of Common Stock
be less than its par value.
2
(b) The term "incentive stock option" means an option that is intended
to qualify for special federal income tax treatment pursuant to sections 421 and
422 of the Code as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in the applicable
Grant Certificate. Any option that is not specifically designated as an
incentive stock option shall under no circumstances be considered an incentive
stock option. Any option that is not an incentive stock option is referred to
herein as a "non-qualified stock option."
(c) Except for purposes of Section 2.5(f), a grantee shall be deemed to
have a "termination of employment" upon (i) the date the grantee ceases to be
employed by, or to provide consulting services for, the Company, any Company
subsidiary or Company joint venture, or any corporation (or any of its
subsidiaries) which assumes the grantee's award in a transaction to which
section 424(a) of the Code applies; (ii) the date the grantee ceases to be a
Board member; or (iii) in the case of a grantee who is, at the time of
reference, both an employee or consultant and a Board member, the later of the
dates determined pursuant to subparagraphs (i) and (ii) above. For purposes of
clause (i) above, a grantee who continues his employment or consulting
relationship with: (A) a Company subsidiary subsequent to its sale by the
Company, or (B) a Company joint venture subsequent to the Company's sale of its
interests in such joint venture, shall have a termination of employment upon the
date of such sale. The Committee may in its discretion determine whether any
leave of absence constitutes a termination of employment for purposes of the
Plan and the impact, if any, of any such leave of absence on awards theretofore
made under the Plan. Such determinations of the Committee shall be final,
binding and conclusive. A person whose status changes from consultant, employee,
or member of the Board to any other of such positions without interruption shall
not be considered to have had a termination of employment by reason of such
change. For purposes of Section 2.5(f) a grantee shall have a "termination of
employment" when the grantee ceases to be a common law employee of the Company
or a parent or subsidiary of the Company.
(d) The terms "parent corporation" and "subsidiary corporation" shall
have the meanings given them in section 424(e) and (f) of the Code,
respectively.
(e) The term "employment" shall be deemed to mean an employee's
employment with, or a consultant's provision of services to, the Company, any
Company subsidiary or any Company joint venture and each Board member's service
as a Board member.
(f) The term "cause" in connection with a termination of employment by
reason of a dismissal for cause shall mean:
(i) to the extent that there is an employment, severance or other
agreement governing the relationship between the grantee and the
Company, a Company subsidiary or a Company joint venture, which
agreement contains a definition of "cause," cause shall consist of those
acts or omissions that would constitute "cause" under such agreement;
and otherwise,
(ii) the grantee's termination of employment by the Company or an
affiliate on account of any one or more of the following:
(A) any failure by the grantee substantially to perform the
grantee's employment duties;
(B) any excessive unauthorized absenteeism by the grantee;
(C) any refusal by the grantee to obey the lawful orders of the
Board or any other person or committee to whom the grantee reports;
(D) any act or omission by the grantee that is or may be
injurious to the Company, monetarily or otherwise;
(E) any act by the grantee that is inconsistent with the best
interests of the Company;
3
(F) the grantee's material violation of any of the Company's
policies, including, without limitation, those policies relating to
discrimination or sexual harassment;
(G) the grantee's unauthorized (a) removal from the premises of
the Company or an affiliate of any document (in any medium or form)
relating to the Company or an affiliate or the customers or clients
of the Company or an affiliate or (b) disclosure to any person or
entity of any of the Company's, or its affiliate's, confidential or
proprietary information;
(H) the grantee's commission of any felony, or any other crime
involving moral turpitude; and
(I) the grantee's commission of any act involving dishonesty or
fraud.
Notwithstanding the foregoing, in determining whether a termination of
employment by reason of a dismissal for cause has occurred pursuant to Section
1.6(f)(ii) for the purposes of Section 3.8(b)(iii), reference shall be made
solely to subsections (C), (F), (G), (H), and (I) of Section 1.6 (f)(ii).
Any rights the Company may have hereunder in respect of the events giving
rise to cause shall be in addition to the rights the Company may have under any
other agreement with a grantee or at law or in equity. Any determination of
whether a grantee's employment is (or is deemed to have been) terminated for
cause shall be made by the Committee in its discretion, which determination
shall be final, binding and conclusive on all parties. If, subsequent to a
grantee's voluntary termination of employment or involuntary termination of
employment without cause, it is discovered that the grantee's employment could
have been terminated for cause, the Committee may deem such grantee's employment
to have been terminated for cause. A grantee's termination of employment for
cause shall be effective as of the date of the occurrence of the event giving
rise to cause, regardless of when the determination of cause is made.
ARTICLE II
Awards Under The Plan
2.1 Agreements Evidencing Awards
Each award granted under the Plan (except an award of unrestricted stock)
shall be evidenced by a written certificate ("Grant Certificate") which shall
contain such provisions as the Committee may in its sole discretion deem
necessary or desirable. By accepting an award pursuant to the Plan, a grantee
thereby agrees that the award shall be subject to all of the terms and
provisions of the Plan and the applicable Grant Certificate.
2.2 Grant of Stock Options, Stock Appreciation Rights and Dividend
Equivalent Rights
(a) Stock Option Grants. The Committee may grant incentive stock options
and non-qualified stock options (collectively, "options") to purchase shares of
Common Stock from the Company, to such key persons, and in such amounts and
subject to such vesting and forfeiture provisions and other terms and
conditions, as the Committee shall determine in its sole discretion, subject to
the provisions of the Plan.
(b) Stock Appreciation Right Grants; Types of Stock Appreciation Rights.
The Committee may grant stock appreciation rights to such key persons, and in
such amounts and subject to such vesting and forfeiture provisions and other
terms and conditions, as the Committee shall determine in its sole discretion,
subject to the provisions of the Plan. The terms of a stock appreciation right
may provide that it shall be automatically exercised for a cash payment upon the
happening of a specified event that is outside the control of the grantee, and
that it shall not be otherwise exercisable. Stock appreciation rights may be
granted in connection with all or any part of, or independently of, any option
granted under the Plan. A stock appreciation right granted in connection with a
non-qualified stock option may be granted at or after the time of grant of such
option. A stock appreciation right granted in connection with an incentive stock
option may be granted only at the time of grant of such option.
(c) Nature of Stock Appreciation Rights. The grantee of a stock
appreciation right shall have the right, subject to the terms of the Plan and
the applicable Grant Certificate, to receive from the Company an amount
4
equal to (i) the excess of the Fair Market Value of a share of Common Stock on
the date of exercise of the stock appreciation right over the Fair Market Value
of a share of Common Stock on the date of grant (or over the option exercise
price if the stock appreciation right is granted in connection with an option),
multiplied by (ii) the number of shares with respect to which the stock
appreciation right is exercised. Payment upon exercise of a stock appreciation
right shall be in cash or in shares of Common Stock (valued at their Fair Market
Value on the date of exercise of the stock appreciation right) or both, all as
the Committee shall determine in its sole discretion. Upon the exercise of a
stock appreciation right granted in connection with an option, the number of
shares subject to the option shall be reduced by the number of shares with
respect to which the stock appreciation right is exercised. Upon the exercise of
an option in connection with which a stock appreciation right has been granted,
the number of shares subject to the stock appreciation right shall be reduced by
the number of shares with respect to which the option is exercised.
(d) Option Exercise Price. Each Grant Certificate with respect to an
option shall set forth the amount (the "option exercise price") payable by the
grantee to the Company upon exercise of the option evidenced thereby. The option
exercise price per share shall be determined by the Committee in its sole
discretion; provided, however, that the option exercise price of an incentive
stock option shall be at least 100% of the Fair Market Value of a share of
Common Stock on the date the option is granted, and provided further that in no
event shall the option exercise price be less than the par value of a share of
Common Stock.
(e) Exercise Period. Each Grant Certificate with respect to an option or
stock appreciation right shall set forth the periods during which the award
evidenced thereby shall be exercisable, whether in whole or in part. Such
periods shall be determined by the Committee in its sole discretion; provided,
however, that no incentive stock option (or a stock appreciation right granted
in connection with an incentive stock option) shall be exercisable more than 10
years after the date of grant. (See the default exercise period provided for
under Sections 2.3(a) and (b).)
(f) Reload Options. The Committee may in its sole discretion include in
any Grant Certificate with respect to an option (the "original option") a
provision that an additional option (the "reload option") shall be granted to
any grantee who, pursuant to Section 2.3(e)(ii), delivers shares of Common Stock
in partial or full payment of the exercise price of the original option. The
reload option shall be for a number of shares of Common Stock equal to the
number thus delivered, shall have an exercise price equal to the Fair Market
Value of a share of Common Stock on the date of exercise of the original option,
and shall have an expiration date no later than the expiration date of the
original option. In the event that a Grant Certificate provides for the grant of
a reload option, such Agreement shall also provide that the exercise price of
the original option be no less than the Fair Market Value of a share of Common
Stock on its date of grant, and that any shares that are delivered pursuant to
Section 2.3(e)(ii) in payment of such exercise price shall have been held for at
least six months.
(g) Dividend Equivalent Rights. The Committee may in its sole discretion
include in any Grant Certificate with respect to an option, stock appreciation
right or performance shares, a dividend equivalent right entitling the grantee
to receive amounts equal to the ordinary dividends that would be paid, during
the time such award is outstanding and unexercised, on the shares of Common
Stock covered by such award if such shares were then outstanding. In the event
such a provision is included in a Grant Certificate, the Committee shall
determine whether such payments shall be made in cash or in shares of Common
Stock, whether they shall be conditioned upon the exercise of the award to which
they relate, the time or times at which they shall be made, and such other
vesting and forfeiture provisions and other terms and conditions as the
Committee shall deem appropriate. Notwithstanding the foregoing, no dividend
equivalent rights shall be conditioned on the exercise of any option or stock
appreciation right if and to the extent that such dividend equivalent right
would cause the compensation represented by such option or stock appreciation
right not to constitute performance-based compensation under section 162(m) of
the Code and no dividend equivalent right shall be granted if and to the extent
that it would cause the grantee to be subject to tax under section 409A of the
Code.
(h) Incentive Stock Option Limitation: Exercisability. To the extent
that the aggregate Fair Market Value (determined as of the time the option is
granted) of the stock with respect to which incentive stock options are first
exercisable by any employee during any calendar year shall exceed $100,000, or
such other amount as may be specified from time to time under section 422 of the
Code, such options shall be treated as non-qualified stock options.
5
(i) Incentive Stock Option Limitation: 10% Owners. Notwithstanding the
provisions of paragraphs (d) and (e) of this Section 2.2, an incentive stock
option may not be granted under the Plan to an individual who, at the time the
option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of his employer corporation or of its
parent or subsidiary corporations (as such ownership may be determined for
purposes of section 422(b) (6) of the Code) unless (i) at the time such
incentive stock option is granted the option exercise price is at least 110% of
the Fair Market Value of the shares subject thereto and (ii) the incentive stock
option by its terms is not exercisable after the expiration of 5 years from the
date it is granted.
2.3 Exercise of Options and Stock Appreciation Rights
Subject to the other provisions of this Article II, each option or stock
appreciation right granted under the Plan shall be exercisable as follows:
(a) Beginning of Exercise Period. Unless the applicable Grant
Certificate otherwise provides, an option or stock appreciation right shall
become exercisable in four equal installments of 25% of the shares subject to
such option or stock appreciation right; one installment shall become
exercisable on each successive anniversary of the date of grant.
(b) End of Exercise Period. Unless the applicable Grant Certificate
otherwise provides, once an installment becomes exercisable, it shall remain
exercisable until the earlier of (i) the tenth anniversary of the date of grant
of the award or (ii) the expiration, cancellation or termination of the award.
(c) Timing and Extent of Exercise. Unless the applicable Grant
Certificate otherwise provides, an option or stock appreciation right may be
exercised from time to time as to all or part of the shares as to which such
award is then exercisable. A stock appreciation right granted in connection with
an option may be exercised at any time when, and to the same extent that, the
related option may be exercised.
(d) Notice of Exercise. An option or stock appreciation right shall be
exercised by the filing of a written notice with the Company or the Company's
designated exchange agent (the "exchange agent"), on such form and in such
manner as the Committee shall in its sole discretion prescribe.
(e) Payment of Exercise Price. Any written notice of exercise of an
option shall be accompanied by payment for the shares being purchased. Such
payment shall be made: (i) by certified or official bank check (or the
equivalent thereof acceptable to the Company or its exchange agent) for the full
option exercise price; or (ii) with the consent of the Committee, by delivery of
shares of Common Stock having a Fair Market Value (determined as of the exercise
date) equal to all or part of the option exercise price and a certified or
official bank check (or the equivalent thereof acceptable to the Company or its
exchange agent) for any remaining portion of the full option exercise price; or
(iii) at the discretion of the Committee and to the extent permitted by law, by
such other provision, consistent with the terms of the Plan, as the Committee
may from time to time prescribe (whether directly or indirectly through the
exchange agent).
(f) Delivery of Certificates Upon Exercise. Promptly after receiving
payment of the full option exercise price, or after receiving notice of the
exercise of a stock appreciation right for which payment will be made partly or
entirely in shares, the Company or its exchange agent shall, subject to the
provisions of Section 3.2, deliver to the grantee or to such other person as may
then have the right to exercise the award, a certificate or certificates for the
shares of Common Stock for which the award has been exercised. If the method of
payment employed upon option exercise so requires, and if applicable law
permits, an optionee may direct the Company, or its exchange agent as the case
may be, to deliver the stock certificate(s) to the optionee's stockbroker.
(g) No Stockholder Rights. No grantee of an option or stock appreciation
right (or other person having the right to exercise such award) shall have any
of the rights of a stockholder of the Company with respect to shares subject to
such award until the issuance of a stock certificate to such person for such
shares. Except as otherwise provided in Section 1.5(b), no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.
6
2.4 Compensation in Lieu of Exercise of an Option
Upon written application of the grantee of an option, the Committee may in
its sole discretion determine to substitute, for the exercise of such option,
compensation to the grantee not in excess of the difference between the option
exercise price and the Fair Market Value of the shares covered by such written
application on the date of such application. Such compensation may be in cash,
in shares of Common Stock, or both, and the payment thereof may be subject to
conditions, all as the Committee shall determine in its sole discretion. In the
event compensation is substituted pursuant to this Section 2.4 for the exercise,
in whole or in part, of an option, the number of shares subject to the option
shall be reduced by the number of shares for which such compensation is
substituted.
2.5 Termination of Employment; Death Subsequent to a Termination of
Employment
(a) General Rule. Except to the extent otherwise provided in paragraphs
(b), (c), (d) or (e) of this Section 2.5 or Section 3.8(b)(iii), a grantee who
incurs a termination of employment may exercise any outstanding option or stock
appreciation right on the following terms and conditions: (i) exercise may be
made only to the extent that the grantee was entitled to exercise the award on
the termination of employment date; and (ii) exercise must occur within three
months after termination of employment but in no event after the original
expiration date of the award.
(b) Dismissal for Cause; Resignation. If a grantee incurs a termination
of employment as the result of a dismissal for cause or resignation without the
Company's prior consent, all options and stock appreciation rights not
theretofore exercised shall terminate upon the grantee's termination of
employment.
(c) Retirement. If a grantee incurs a termination of employment as the
result of his retirement, then any outstanding option or stock appreciation
right shall be exercisable on the following terms and conditions: (i) exercise
may be made only to the extent that the grantee was entitled to exercise the
award on the termination of employment date; and (ii) exercise must occur by the
earlier of (A) the third anniversary of such termination of employment, or (B)
the original expiration date of the award. For this purpose "retirement" shall
mean a grantee's termination of employment, under circumstances other than those
described in paragraph (b) above, on or after: (x) his 65th birthday, (y) the
date on which he has attained age 60 and completed at least five years of
service with the Company (using any method of calculation the Committee deems
appropriate) or (z) if approved by the Committee, on or after he has completed
at least 20 years of service.
(d) Disability. If a grantee incurs a termination of employment by
reason of a disability (as defined below), then any outstanding option or stock
appreciation right shall be exercisable on the following terms and conditions:
(i) exercise may be made only to the extent that the grantee was entitled to
exercise the award on such termination of employment; and (ii) exercise must
occur by the earlier of (A) the first anniversary of the grantee's termination
of employment, or (B) the original expiration date of the award. For this
purpose "disability" shall mean: (x) except in connection with an incentive
stock option, any physical or mental condition that would qualify a grantee for
a disability benefit under the long-term disability plan maintained by the
Company or, if there is no such plan, a physical or mental condition that
prevents the grantee from performing the essential functions of the grantee's
position (with or without reasonable accommodation) for a period of six
consecutive months and (y) in connection with an incentive stock option, a
disability described in section 422(c)(6) of the Code. The existence of a
disability shall be determined by the Committee in its absolute discretion.
(e) Death.
(i) Termination of Employment as a Result of Grantee's Death. If a
grantee incurs a termination of employment as the result of his death,
then any outstanding option or stock appreciation right shall be
exercisable on the following terms and conditions: (A) exercise may be
made only to the extent that the grantee was entitled to exercise the
award on such termination of employment; and (B) exercise must occur by
the earlier of (1) the first anniversary of the grantee's termination of
employment, or (2) the original expiration date of the award.
7
(ii) Death Subsequent to a Termination of Employment. If a grantee
dies subsequent to incurring a termination of employment but prior to the
expiration of the exercise period with respect to a stock option or a
stock appreciation right (as provided by paragraphs (a), (c), or (d)
above), then the award shall remain exercisable until the earlier to occur
of (A) the first anniversary of the grantee's date of death or (B) the
original expiration date of the award.
(iii) Restrictions on Exercise Following Death. Any such exercise of
an award following a grantee's death shall be made only by the grantee's
executor or administrator or other duly appointed representative
reasonably acceptable to the Committee, unless the grantee's will
specifically disposes of such award, in which case such exercise shall be
made only by the recipient of such specific disposition. If a grantee's
personal representative or the recipient of a specific disposition under
the grantee's will shall be entitled to exercise any award pursuant to the
preceding sentence, such representative or recipient shall be bound by all
the terms and conditions of the Plan and the applicable Grant Certificate
which would have applied to the grantee including, without limitation, the
provisions of Sections 3.2 and 3.8 hereof.
(f) Special Rules for Incentive Stock Options. No option that remains
exercisable for more than three months following a grantee's termination of
employment for any reason other than death or disability (unless death occurs
within the three months or within the one year following termination of
employment for disability), or for more than one year following a grantee's
termination of employment as the result of his becoming disabled, may be treated
as an incentive stock option.
(g) Committee Discretion. The Committee, in the applicable Grant
Certificate, may waive or modify the application of the foregoing provisions of
this Section 2.5.
2.6 Transferability of Options and Stock Appreciation Rights
Except as otherwise provided in an applicable Grant Certificate evidencing
an option or stock appreciation right, during the lifetime of a grantee, each
option or stock appreciation right granted to a grantee shall be exercisable
only by the grantee and no option or stock appreciation right shall be
assignable or transferable otherwise than by will or by the laws of descent and
distribution. The Committee may, in any applicable Grant Certificate evidencing
an option (other than an incentive stock option to the extent inconsistent with
the requirements of section 422 of the Code applicable to incentive stock
options), permit a grantee to transfer all or some of the options to (A) the
grantee's spouse, children or grandchildren ("Immediate Family Members"), (B) a
trust or trusts for the exclusive benefit of such Immediate Family Members, or
(C) other parties approved by the Committee in its absolute discretion.
Following any such transfer, any transferred options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
the transfer.
2.7 Grant of Restricted Stock
(a) Restricted Stock Grants. The Committee may grant restricted shares
of Common Stock to such key persons, in such amounts, and subject to such
vesting and forfeiture provisions and other terms and conditions as the
Committee shall determine in its sole discretion, subject to the provisions of
the Plan. Restricted stock awards may be made independently of or in connection
with any other award under the Plan. A grantee of a restricted stock award shall
have no rights with respect to such award unless such grantee accepts the award
within such period as the Committee shall specify by accepting delivery of a
restricted stock agreement in such form as the Committee shall determine and, in
the event the restricted shares are newly issued by the Company, makes payment
to the Company or its exchange agent as required by the Committee and in
accordance with the Marshall Islands Business Corporations Act.
(b) Issuance of Stock Certificate(s). Promptly after a grantee accepts a
restricted stock award, the Company or its exchange agent shall issue to the
grantee a stock certificate or stock certificates for the shares of Common Stock
covered by the award or shall establish an account evidencing ownership of the
stock in uncertificated form. Upon the issuance of such stock certificate(s), or
establishment of such account, the grantee shall have the rights of a
stockholder with respect to the restricted stock, subject to: (i) the
nontransferability restrictions and forfeiture provision described in paragraphs
(d) and (e) of this Section 2.7; (ii) in the Committee's discretion, to a
requirement that any dividends paid on
8
such shares shall be held in escrow until all restrictions on such shares have
lapsed; and (iii) any other restrictions and conditions contained in the
applicable restricted stock agreement.
(c) Custody of Stock Certificate(s). Unless the Committee shall
otherwise determine, any stock certificates issued evidencing shares of
restricted stock shall remain in the possession of the Company or another
custodian designated by the Company until such shares are free of any
restrictions specified in the applicable restricted stock agreement. The
Committee may direct that such stock certificate(s) bear a legend setting forth
the applicable restrictions on transferability.
(d) Nontransferability. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
otherwise specifically provided in this Plan or the applicable restricted stock
agreement. The Committee at the time of grant shall specify the date or dates
(which may depend upon or be related to the attainment of performance goals and
other conditions) on which the nontransferability of the restricted stock shall
lapse.
(e) Consequence of Termination of Employment. A grantee's termination of
employment for any reason (including death) shall cause the immediate forfeiture
of all shares of restricted stock that have not yet vested prior to, and do not
vest on account of, such termination of employment. All dividends paid on such
shares also shall be forfeited, whether by termination of any escrow arrangement
under which such dividends are held, by the grantee's repayment of dividends he
received directly, or otherwise, unless the Board or the Committee determines
otherwise with respect to dividends paid in respect of shares of restricted
stock granted on or after December 21, 2005.
2.8 Grant of Unrestricted Stock
The Committee may grant (or sell at a purchase price at least equal to par
value) shares of Common Stock free of restrictions under the Plan, to such key
persons and in such amounts and subject to such forfeiture provisions as the
Committee shall determine in its sole discretion. Shares may be thus granted or
sold in respect of past services or other valid consideration.
2.9 Grant of Performance Shares
(a) Performance Share Grants. The Committee may grant performance share
awards to such key persons, and in such amounts and subject to such vesting and
forfeiture provisions and other terms and conditions, as the Committee shall in
its sole discretion determine, subject to the provisions of the Plan. Such an
award shall entitle the grantee to acquire shares of Common Stock, or to be paid
the value thereof in cash, as the Committee shall determine, if specified
performance goals are met. Performance shares may be awarded independently of,
or in connection with, any other award under the Plan. A grantee shall have no
rights with respect to a performance share award unless such grantee accepts the
award by accepting delivery of a Grant Certificate at such time and in such form
as the Committee shall determine.
(b) Stockholder Rights. The grantee of a performance share award will
have the rights of a stockholder only as to shares for which a stock certificate
has been issued pursuant to the award and not with respect to any other shares
subject to the award.
(c) Consequence of Termination of Employment. Except as may otherwise be
provided by the Committee at any time prior to a grantee's termination of
employment, the rights of a grantee of a performance share award shall
automatically terminate upon the grantee's termination of employment by the
Company and its subsidiaries for any reason (including death).
(d) Exercise Procedures; Automatic Exercise. At the discretion of the
Committee, the applicable Grant Certificate may set out the procedures to be
followed in exercising a performance share award or it may provide that such
exercise shall be made automatically after satisfaction of the applicable
performance goals.
9
(e) Tandem Grants; Effect on Exercise. Except as otherwise specified by
the Committee, (i) a performance share award granted in tandem with an option
may be exercised only while the option is exercisable, (ii) the exercise of a
performance share award granted in tandem with any other award shall reduce the
number of shares subject to such other award in the manner specified in the
applicable Grant Certificate, and (iii) the exercise of any award granted in
tandem with a performance share award shall reduce the number of shares subject
to the latter in the manner specified in the applicable Grant Certificate.
(f) Nontransferability. Performance shares may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as otherwise
specifically provided in this Plan or the applicable Grant Certificate. The
Committee at the time of grant shall specify the date or dates (which may depend
upon or be related to the attainment of performance goals and other conditions)
on which the nontransferability of the performance shares shall lapse.
ARTICLE III
Miscellaneous
3.1 Amendment of the Plan; Modification of Awards
(a) Amendment of the Plan. The Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever, except that no
such amendment shall materially impair any rights or materially increase any
obligations under any award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee's death, the person having the right to
exercise the award). For purposes of this Section 3.1, any action of the Board
or the Committee that in any way alters or affects the tax treatment of any
award or that in the sole discretion of the Board is necessary to prevent the
grantee from being subject to tax with respect to an award under section 409A of
the Code shall not be considered to materially impair any rights of any grantee.
(b) Stockholder Approval Requirement. Stockholder approval shall be
required with respect to any amendment to the Plan (i) that increases the
aggregate number of shares which may be issued pursuant to incentive stock
options or changes the class of employees eligible to receive such options; (ii)
that materially increases the benefits under the Plan to persons whose
transactions in Common Stock are subject to section 16(b) of the 1934 Act or
increases the benefits under the Plan to someone who is, or who is anticipated
to be a "162(m) covered employee" (as defined in Section 3.9(a)(i)), materially
increases the number of shares which may be issued to such persons, or
materially modifies the eligibility requirements affecting such persons; or
(iii) to the extent required by law or stock exchange rules.
(c) Modification of Awards. The Committee may cancel any award under the
Plan. The Committee also may amend any outstanding Grant Certificate, including,
without limitation, by amendment which would: (i) accelerate the time or times
at which the award becomes unrestricted or may be exercised; (ii) waive or amend
any goals, restrictions or conditions set forth in the Agreement; or (iii) waive
or amend the operation of Section 2.5 with respect to the termination of the
award upon termination of employment. However, any such cancellation or
amendment (other than an amendment pursuant to Sections 3.7 or 3.8(b)) that
materially impairs the rights or materially increases the obligations of a
grantee under an outstanding award shall be made only with the consent of the
grantee (or, upon the grantee's death, the person having the right to exercise
the award). Under no circumstances may the Committee modify an award in a manner
that would cause the grantee to be subject to tax under section 409A of the
Code.
3.2 Consent Requirement
(a) No Plan Action without Required Consent. If the Committee shall at
any time determine that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the granting of any award
under the Plan, the issuance or purchase of shares or other rights thereunder,
or the taking of any other action thereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee.
10
(b) Consent Defined. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or qualifications
in respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies.
3.3 Nonassignability
Except as provided in Sections 2.5(e), 2.6, 2.7(d) and 2.9(f): (a) no
award or right granted to any person under the Plan or under any Grant
Certificate shall be assignable or transferable other than by will or by the
laws of descent and distribution; and (b) all rights granted under the Plan
or any Grant Certificate shall be exercisable during the life of the grantee
only by the grantee or the grantee's legal representative.
3.4 Requirement of Notification of Election Under Section 83(b) of the
Code
If any grantee shall, in connection with the acquisition of shares of
Common Stock under the Plan, make the election permitted under section 83(b) of
the Code (i.e., an election to include in gross income in the year of transfer
the amounts specified in section 83(b) ), such grantee shall notify the Company
of such election within 10 days of filing notice of the election with the
Internal Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under the authority of Code section 83(b).
3.5 Requirement of Notification Upon Disqualifying Disposition Under
Section 421(b) of the Code
The grantee of an incentive stock option shall notify the Company of any
disposition of shares of Common Stock issued pursuant to the exercise of such
option under the circumstances described in section 421(b) of the Code (relating
to certain disqualifying dispositions), within 10 days of such disposition.
3.6 Withholding Taxes
(a) With Respect to Cash Payments. Whenever cash is to be paid pursuant
to an award under the Plan, the Company shall be entitled to deduct therefrom an
amount sufficient in its opinion to satisfy all federal, state and other
governmental tax withholding requirements related to such payment.
(b) With Respect to Delivery of Common Stock. Whenever shares of Common
Stock are to be delivered pursuant to an award under the Plan, the Company shall
be entitled to require as a condition of delivery that the grantee remit to the
Company an amount sufficient in the opinion of the Company to satisfy all
federal, state and other governmental tax withholding requirements related
thereto. With the approval of the Committee, which the Committee shall have sole
discretion whether or not to give, the grantee may satisfy the foregoing
condition by electing to have the Company withhold from delivery shares having a
value equal to the amount of tax to be withheld. Such shares shall be valued at
their Fair Market Value as of the date on which the amount of tax to be withheld
is determined. Fractional share amounts shall be settled in cash. Such a
withholding election may be made with respect to all or any portion of the
shares to be delivered pursuant to an award.
3.7 Adjustment Upon Changes in Common Stock
(a) Shares Available for Grants. In the event of any change in the
number of shares of Common Stock outstanding by reason of any stock dividend or
split, reverse stock split, recapitalization, merger, consolidation, combination
or exchange of shares or similar corporate change, the maximum number of shares
of Common Stock with respect to which the Committee may grant awards under
Article II hereof, as described in Section 1.5(a), and the individual annual
limit described in Section 1.5(d), shall be appropriately adjusted by the
Committee. In the event of any change in the number of shares of Common Stock
outstanding by reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of shares of Common
Stock with respect to which awards may be: (i) granted under Article II hereof
and (ii) granted
11
to any one employee of the Company or a subsidiary during any one calendar year,
in each case as the Committee may deem appropriate, unless such adjustment would
cause any award that would otherwise qualify as performance based compensation
with respect to a "162(m) covered employee" (as defined in Section 3.9(a)(i)),
to cease to so qualify.
(b) Outstanding Restricted Stock and Performance Shares. Unless the
Committee in its absolute discretion otherwise determines, any securities or
other property (including dividends paid in cash) received by a grantee with
respect to a share of restricted stock which has not vested as of the date of
such event, as a result of any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
otherwise will not vest until such share of restricted stock vests, and shall be
promptly deposited with the Company or other custodian designated pursuant to
Section 2.7(c) hereof.
The Committee may, in its absolute discretion, adjust any grant of shares
of restricted stock (with respect to which such shares have not yet been issued
as of the date of the occurrence of any of the following events) or any grant of
performance shares, to reflect any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
similar corporate change as the Committee may deem appropriate to prevent the
enlargement or dilution of rights of grantees.
(c) Outstanding Options, Stock Appreciation Rights and Dividend
Equivalent Rights -- Increase or Decrease in Issued Shares Without
Consideration. Subject to any required action by the stockholders of the
Company, in the event of any increase or decrease in the number of issued shares
of Common Stock resulting from a subdivision or consolidation of shares of
Common Stock or the payment of a stock dividend (but only on the shares of
Common Stock), or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company, the Committee shall
proportionally adjust the number of shares of Common Stock subject to each
outstanding option and stock appreciation right, and the exercise
price-per-share of Common Stock of each such option and stock appreciation right
and the number of any related dividend equivalent rights.
(d) Outstanding Options, Stock Appreciation Rights and Dividend
Equivalent Rights -- Certain Mergers. Subject to any required action by the
stockholders of the Company, in the event that the Company shall be the
surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Common Stock receive
securities of another corporation), each option, stock appreciation right and
dividend equivalent right outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities which a holder of the
number of shares of Common Stock subject to such option, stock appreciation
right or dividend equivalent right would have received in such merger or
consolidation.
(e) Outstanding Options, Stock Appreciation Rights and Dividend
Equivalent Rights -- Certain Other Transactions. In the event of (i) a
dissolution or liquidation of the Company, (ii) a sale of all or substantially
all of the Company's assets, (iii) a merger or consolidation involving the
Company in which the Company is not the surviving corporation or (iv) a merger
or consolidation involving the Company in which the Company is the surviving
corporation but the holders of shares of Common Stock receive securities of
another corporation and/or other property, including cash, the Committee shall,
in its absolute discretion, have the power to:
(A) cancel, effective immediately prior to the occurrence of
such event, each option and stock appreciation right (including each
dividend equivalent right related thereto) outstanding immediately
prior to such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the grantee to whom such
option or stock appreciation right was granted an amount in cash,
for each share of Common Stock subject to such option or stock
appreciation right, respectively, equal to the excess of (x) the
value, as determined by the Committee in its absolute discretion, of
the property (including cash) received by the holder of a share of
Common Stock as a result of such event over (y) the exercise price
of such option or stock appreciation right; or
(B) provide for the exchange of each option and stock
appreciation right (including any related dividend equivalent right)
outstanding immediately prior to such event (whether or not then
exercisable) for an option on or stock appreciation right and
dividend equivalent right with respect to, as appropriate, some or
all of the property which a holder of the number of shares of
12
Common Stock subject to such option or stock appreciation right
would have received and, incident thereto, make an equitable
adjustment as determined by the Committee in its absolute discretion
in the exercise price of the option or stock appreciation right, or
the number of shares or amount of property subject to the option,
stock appreciation right or dividend equivalent right or, if
appropriate, provide for a cash payment to the grantee to whom such
option or stock appreciation right was granted in partial
consideration for the exchange of the option or stock appreciation
right.
(f) Outstanding Options, Stock Appreciation Rights and Dividend
Equivalent Rights -- Other Changes. In the event of any change in the
capitalization of the Company or a corporate change other than those
specifically referred to in Sections 3.7(c), (d) or (e) hereof, the Committee
may, in its absolute discretion, make such adjustments in the number and class
of shares subject to options, stock appreciation rights and dividend equivalent
rights outstanding on the date on which such change occurs and in the per-share
exercise price of each such option and stock appreciation right as the Committee
may consider appropriate to prevent dilution or enlargement of rights. In
addition, if and to the extent the Committee determines it is appropriate, the
Committee may elect to cancel each option and stock appreciation right
(including each dividend equivalent right related thereto) outstanding
immediately prior to such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the grantee to whom such option or
stock appreciation right was granted an amount in cash, for each share of Common
Stock subject to such option or stock appreciation right, respectively, equal to
the excess of (i) the Fair Market Value of Common Stock on the date of such
cancellation over (ii) the exercise price of such option or stock appreciation
right.
(g) No Other Rights. Except as expressly provided in the Plan, no
grantee shall have any rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock subject to an award or the
exercise price of any option or stock appreciation right.
3.8 Change in Control
(a) Change in Control Defined. For purposes of this Section 3.8, "Change
in Control" shall mean the occurrence of any of the following:
(i) any "person" (as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act), other than Peter C. Georgiopoulos or entities which he directly or
indirectly controls (as defined in Rule 12b-2 under the Exchange Act),
acquiring "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of fifty percent (50%) or more of
the aggregate voting power of the capital stock ordinarily entitled to
elect directors of the Company;
(ii) the sale of all or substantially all of the Company's assets
in one or more related transactions to a "person" (as such term is used in
Sections 3(a)(9) and 13(d) of the Exchange Act) other than such a sale (x)
to a subsidiary of the Company which does not involve a change in the
equity holdings of the Company or (y) to Peter C. Georgiopoulos or
entities which he directly or indirectly controls; or
(iii) any merger, consolidation, reorganization or similar event of
the Company, as a result of which the holders of the voting stock of the
Company immediately prior to such merger, consolidation, reorganization or
similar event do not directly or indirectly hold at least fifty-one
percent (51%) of the aggregate voting power of the capital stock of the
surviving entity;
(iv) a majority of the members of the Board of Directors are no
longer Continuing Directors; as used herein, a "Continuing Director" means
any member of the Board of Directors who was a member of such Board of
Directors on the date hereof; provided that any person becoming a director
subsequent to
13
such date whose election or nomination for election was supported by a
majority of the directors who then comprised the Continuing Directors
shall be considered to be a Continuing Director; or
(v) the Company adopts any plan of liquidation or dissolution
providing for the distribution of all or substantially all of its assets.
(b) Effect of a Change in Control. Unless the Committee provides
otherwise in a Grant Certificate, upon the occurrence of a Change in Control,
notwithstanding any other provision of this Plan:
(i) any award then outstanding shall become fully vested and
any award in the form of an option or stock appreciation right shall be
immediately exercisable;
(ii) to the extent permitted by law, the Committee may, in its
sole discretion, amend any Grant Certificate in such manner as it deems
appropriate;
(iii) a grantee who incurs a termination of employment for any
reason, other than a dismissal for cause, concurrent with or within one
year following the Change in Control may exercise any outstanding option
or stock appreciation right, but only to the extent that the grantee was
entitled to exercise the award on his termination of employment date,
until the earlier of (A) the original expiration date of the award and (B)
the later of (x) the date provided for under the terms of Section 2.5
without reference to this Section 3.8(b)(iii) and (y) the first
anniversary of the grantee's termination of employment.
(c) Miscellaneous. Whenever deemed appropriate by the Committee, any
action referred to in paragraph (b) (ii) of this Section 3.8 may be made
conditional upon the consummation of the applicable Change in Control
transaction.
3.9 Limitations Imposed by Section 162(m)
(a) Qualified Performance-Based Compensation. To the extent the
Committee determines it is desirable to grant an award to an individual it
anticipates might be a "162(m) covered employee" (as defined below), with
respect to which award the compensation realized by the grantee will or may not
otherwise be deductible by operation of section 162(m) of the Code, the
Committee may, as part of its effort to have such an award treated as "qualified
performance-based compensation" within the meaning of Code section 162(m), make
the vesting of the award subject to the attainment of one or more
pre-established objective performance goals.
(i) An individual is a "162(m) covered employee" if, as of the
last day of the Company's taxable year for which the compensation related
to an award would otherwise be deductible (without regard to section
162(m)), he or she is (A) the chief executive officer of the Company (or
is acting in such capacity) or (B) one of the four highest compensated
officers of the Company other than the chief executive officer. Whether an
individual is described in either clause (A) or (B) above shall be
determined in accordance with applicable regulations under section 162(m)
of the Code.
(ii) If the Committee has determined to grant an award to an
individual it anticipates might be a 162(m) covered employee pursuant to
this Section 3.9(a), then prior to the earlier to occur of (A) the first
day after 25% of each period of service to which the performance goal
relates has elapsed and (B) the ninety first (91st) day of such period
and, in either case, while the performance outcome remains substantially
uncertain, the Committee shall set one or more objective performance goals
for each such 162(m) covered person for such period. Such goals shall be
expressed in terms of (A) one or more corporate or divisional
earnings-based measures (which may be based on net income, operating
income, cash flow, residual income or any combination thereof) and/or (B)
one or more corporate or divisional sales-based measures. Each such goal
may be expressed on an absolute and/or relative basis, may employ
comparisons with past performance of the Company (including one or more
divisions) and/or the current or past performance of other companies, and
in the case of earnings-based measures, may employ comparisons to capital,
stockholders' equity and shares outstanding. The terms of the award shall
state an
14
objective formula or standard for computing the amount of compensation
payable, and shall preclude discretion to increase the amount of
compensation payable, if the goal is attained.
(iii) Except as otherwise provided herein, the measures used in
performance goals set under the Plan shall be determined in accordance
with generally accepted accounting principles ("GAAP") and in a manner
consistent with the methods used in the Company's regular reports on Forms
10-K and 10-Q, without regard to any of the following unless otherwise
determined by the Committee consistent with the requirements of section
162(m)(4)(C) and the regulations thereunder: (A) all items of gain, loss
or expense for the period that are related to special, unusual or
nonrecurring items, events or circumstances affecting the Company or the
financial statements of the Company; (B) all items of gain, loss or
expense for the period that are related to (x) the disposal of a business
or discontinued operations or (y) the operations of any business acquired
by the Company during the period; and (C) all items of gain, loss or
expense for the period that are related to changes in accounting
principles or to changes in applicable law or regulations.
(b) Nonqualified Deferred Compensation. Notwithstanding any other
provision hereunder, prior to a Change in Control, if and to the extent that the
Committee determines the Company's federal tax deduction in respect of an award
may be limited as a result of section 162(m) of the Code, the Committee may take
the following actions:
(i) With respect to options, stock appreciation rights or
dividend equivalent rights, the Committee may delay the exercise or
payment, as the case may be, in respect of such options, stock
appreciation rights or dividend equivalent rights until a date that is
within 30 days after the earlier to occur of (A) the date that
compensation paid to the grantee no longer is subject to the deduction
limitation under section 162(m) of the Code and (B) the occurrence of a
Change in Control. In the event that a grantee exercises an option, stock
appreciation right or would receive a payment in respect of a dividend
equivalent right at a time when the grantee is a 162(m) covered employee,
and the Committee determines to delay the exercise or payment, as the case
may be, in respect of any such award, the Committee shall credit cash or,
in the case of an amount payable in Common Stock, the Fair Market Value of
the Common Stock, payable to the grantee to a book account. The grantee
shall have no rights in respect of such book account and the amount
credited thereto shall not be transferable by the grantee other than by
will or laws of descent and distribution. The Committee may credit
additional amounts to such book account as it may determine in its sole
discretion. Any book account created hereunder shall represent only an
unfunded, unsecured promise by the Company to pay the amount credited
thereto to the grantee in the future.
(ii) With respect to restricted stock, unrestricted stock or
performance shares, the Committee may require the grantee to surrender to
the Committee any certificates with respect to restricted stock and
unrestricted stock and agreements with respect to performance shares, in
order to cancel the awards of such restricted stock, unrestricted stock
and performance shares (and any related dividend equivalent rights). In
exchange for such cancellation, the Committee shall credit to a book
account a cash amount equal to the Fair Market Value of the shares of
Common Stock subject to such awards. The amount credited to the book
account shall be paid to the grantee within 30 days after the earlier to
occur of (A) the date that compensation paid to the grantee no longer is
subject to the deduction limitation under section 162(m) of the Code and
(B) the occurrence of a Change in Control. The grantee shall have no
rights in respect of such book account and the amount credited thereto
shall not be transferable by the grantee other than by will or laws of
descent and distribution. The Committee may credit additional amounts to
such book account as it may determine in its sole discretion. Any book
account created hereunder shall represent only an unfunded, unsecured
promise by the Company to pay the amount credited thereto to the grantee
in the future.
3.10 Right of Discharge Reserved
Nothing in the Plan or in any Grant Certificate shall confer upon any
grantee the right to continue his employment or affect any right which the
Company may have to terminate such employment.
3.11 Nature of Payments
15
(a) Consideration for Services Performed. Any and all grants of awards
and issuances of shares of Common Stock under the Plan shall be in consideration
of services performed for the Company by the grantee.
(b) Not Taken into Account for Benefits. All such grants and issuances
shall constitute a special incentive payment to the grantee and shall not be
taken into account in computing the amount of salary or compensation of the
grantee for the purpose of determining any benefits under any pension,
retirement, profit-sharing, bonus, life insurance or other benefit plan of the
Company or under any agreement between the Company and the grantee, unless such
plan or agreement specifically otherwise provides.
3.12 Non-Uniform Determinations
The Committee's determinations under the Plan need not be uniform and may
be made by it selectively among persons who receive, or who are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee shall
be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Grant Certificates,
as to (a) the persons to receive awards under the Plan, (b) the terms and
provisions of awards under the Plan, and (c) the treatment of leaves of absence
pursuant to Section 1.6(c).
3.13 Other Payments or Awards
Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company from making any award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
3.14 Headings
Any section, subsection, paragraph or other subdivision headings contained
herein are for the purpose of convenience only and are not intended to expand,
limit or otherwise define the contents of such subdivisions.
3.15 Effective Date and Term of Plan
(a) Adoption; Stockholder Approval. The Plan was adopted by the Board on
June 10, 2001 and approved by the Company's stockholders on June 12, 2001. The
Plan was amended and restated on December 12, 2002. The Board increased the
number of shares available under the Plan from 2,900,000 to 4,400,000 on
September 14, 2004 and approved the further amendment and restatement of the
Plan on April 25, 2005, subject to approval by the Company's stockholders.
(b) Termination of Plan. Unless sooner terminated by the Board or
pursuant to Paragraph (a) above, the provisions of the Plan respecting the grant
of incentive stock options shall terminate on June 10, 2011 with respect to the
initial 2,900,000 shares authorized under the Plan and on September 14, 2014
with respect to the additional 1,500,000 shares authorized on September 14,
2004. No incentive stock option awards shall be made under the Plan after such
dates. All such awards made under the Plan prior to its termination shall remain
in effect until such awards have been satisfied or terminated in accordance with
the terms and provisions of the Plan and the applicable Grant Certificates.
3.16 Restriction on Issuance of Stock Pursuant to Awards
The Company shall not permit any shares of Common Stock to be issued
pursuant to Awards granted under the Plan unless such shares of Common Stock are
fully paid and non-assessable under applicable law.
3.17 Governing Law
Except to the extent preempted by any applicable federal law, the Plan will be
construed and administered in accordance with the laws of the State of New York,
without giving effect to principles of conflict of laws.
16