EXHIBIT 10.8
AGREE REALTY CORPORATION
1994 STOCK INCENTIVE PLAN
Table of Contents
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Page
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ARTICLE I
GENERAL
1.1 Purpose......................................................... 1
1.2 Administration.................................................. 1
1.3 Persons Eligible for Awards..................................... 3
1.4 Types of Awards Under Plan...................................... 3
1.5 Shares Available for Awards..................................... 4
1.6 Definitions of Certain Terms.................................... 6
ARTICLE II
AWARDS UNDER THE PLAN
2.1 Agreements Evidencing Awards.................................... 8
2.2 Grant of Stock Options, Stock Appreciation
Rights and Dividend Equivalent Rights......................... 9
2.3 Exercise of Options and Stock Appreciation
Rights........................................................ 13
2.4 Termination of Employment; Death................................ 16
2.5 Grant of Restricted Stock....................................... 17
2.6 Grant of Unrestricted Stock..................................... 19
2.7 Grant of Performance Shares..................................... 20
ARTICLE III
MISCELLANEOUS
3.1 Amendment of the Plan; Modification
of Awards..................................................... 21
3.2 Restrictions.................................................... 23
3.3 Nonassignability................................................ 24
3.4 Requirement of Notification of Election
Under Section 83(b) of the Code............................... 24
3.5 Requirement of Notification Upon
Disqualifying Disposition Under
Section 421(b) of the Code.................................... 24
3.6 Withholding Taxes............................................... 25
3.7 Change in Control............................................... 26
3.8 Right of Discharge Reserved..................................... 28
3.9 Nature of Payments.............................................. 28
3.10 Non-Uniform Determinations...................................... 28
3.11 Other Payments or Awards........................................ 29
3.12 Section Headings................................................ 29
3.13 Effective Date and Term of Plan................................. 29
3.14 Governing Law................................................... 30
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ARTICLE I
GENERAL
1.1 Purpose
The purpose of the 1994 Agree Realty Corporation Stock
Incentive Plan (the "Plan") is to provide for officers and other employees
(including directors who are employees) of Agree Realty Corporation (the
"Company"), employees of joint ventures in which the Company participates,
and consultants to the Company, an incentive (a) to become and remain
associated with the Company, (b) to enhance the long-term performance of the
Company, and (c) to acquire a proprietary interest in the success of the
Company. 1.2 Administration
1.2.1 Subject to Section 1.2.6, the Plan shall be administered
by the Executive Compensation Committee (the "Committee") of the board of
directors of the Company (the "Board"), which shall consist of not less than
two directors and to which the Board shall grant power to authorize the
issuance of the Company's capital stock pursuant to awards granted under the
Plan. The members of the Committee shall be appointed by, and serve at the
pleasure of, the Board. To the extent necessary for transactions under the
Plan to qualify for the exemptions available under Rule 16b-3 ("Rule 16b-3")
promulgated under the Securities Exchange Act of 1934 (the "1934 Act"), no
person may serve on the Committee if, during the year preceding such ser-
vice, he was granted or awarded equity securities of the Company (including
options on such securities) under the Plan or any other plan of the Company
or any affiliate thereof. To the extent necessary for compliance with section
162(m)(4)(C) of the Internal Revenue Code of 1986, members of the Committee
shall be "outside directors" within the meaning thereof.
1.2.2 The Committee shall have the authority (a) to exercise
all of the powers granted to it under the Plan, (b) to construe, interpret
and implement the Plan and any Plan Agreements executed pursuant to Section
2.1, (c) to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules governing its own operations, (d) to make all
determinations necessary or advisable in administering the Plan, (e) to
correct any defect, supply any omission and reconcile any inconsistency in
the Plan, and (f) to amend the Plan to reflect changes in applicable law.
1.2.3 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.
1.2.4 The determination of the Committee on all matters
relating to the Plan or any Plan Agreement shall be final, binding and
conclusive.
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1.2.5 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.
1.2.6 Notwithstanding anything to the contrary contained
herein: (a) until the Board shall appoint the members of the Committee, the
Plan shall be administered by the Board; and (b) the Board may, in its sole
discretion, at any time and from time to time, resolve to administer the
Plan. In either of the foregoing events, the term "Committee" as used herein
shall be deemed to mean the Board.
1.3 Persons Eligible for Awards
Awards under the Plan may be made to such officers and
executive, managerial, professional or administrative employees of the
Company or any subsidiary (including employees who are directors), and to
such consultants to the Company and employees of joint ventures in which the
Company participates (collectively, "key persons") as the Committee shall in
its sole discretion select.
1.4 Types of Awards Under Plan
Awards may be made under the Plan in the form of (a) incentive
stock options, (b) nonqualified stock options, (c) stock appreciation rights,
(d) dividend equivalent rights, (e) restricted stock, (f) unrestricted stock,
and (g) performance
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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
1.5.1 The total number of shares of common stock of the
Company, par value $0.0001 per share ("Common Stock"), with respect to which
awards may be granted pursuant to the Plan shall not exceed 200,000 shares
plus additional shares determined as follows. As of January 1, 1995 and each
January 1 thereafter, the Board in its discretion may increase the number of
shares authorized under this Section 1.5.1 by an amount not in excess of one
percent (1%) of the total number of shares of Common Stock then issued and
outstanding. The increments authorized pursuant to the preceding sentence
shall be cumulative, so that any amount of permitted increase in shares not
implemented in one year may in the Board's discretion be implemented in a
subsequent year. Notwithstanding the foregoing, no more than 200,000 shares
of Common Stock shall be available for issuance upon the exercise of
incentive stock options. Shares issued pursuant to the Plan may be authorized
but unissued Common Stock or authorized and issued Common Stock held in the
Company's treasury or acquired by the Company for the purposes of the Plan.
The Committee may direct that any stock certificate evidencing shares issued
pursuant to
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the Plan shall bear a legend setting forth such restrictions on
transferability as may apply to such shares pursuant to the Plan.
1.5.2 The maximum number of shares of Common Stock that may be
subject to awards of stock options or stock appreciation rights made to any
one individual pursuant to this Plan in any three-year period shall be
100,000 shares.
1.5.3 If there is any change in the outstanding shares of
Common Stock by reason of a stock dividend or distribution, stock split-up,
recapitalization, combination or exchange of shares, or by reason of any
merger, consolidation, spinoff or other corporate reorganization in which the
Company is the surviving corporation, the number of shares available for
issuance both in the aggregate and with respect to each outstanding award,
the maximum number of shares set forth in Section 1.5.2, and the purchase
price per share under outstanding option awards, shall be equitably adjusted
by the Committee, whose determination shall be final, binding and conclusive.
After any adjustment made pursuant to this Section 1.5.3, the number of
shares subject to each outstanding award shall be rounded to the nearest
whole number.
1.5.4 The following shares of Common Stock shall again become
available for awards under the Plan: any shares subject to an award under the
Plan that remain unissued upon the cancellation or termination of such award
for any reason whatsoever;
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any shares of restricted stock forfeited pursuant to Section 2.5.5, provided
that any dividends paid on such shares are also forfeited pursuant to Section
2.5.5; and any shares in respect of which a stock appreciation right is
settled for cash. Except as provided in this Section 1.5 and in Section
2.2.7, there shall be no limit on the number or the value of the shares of
Common Stock issuable to any individual under the Plan.
1.6 Definitions of Certain Terms
1.6.1 The "Fair Market Value" of a share of Common Stock on
any day shall be determined as follows.
(a) If the principal market for the Common Stock
(the "Market") is a national securities exchange or the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") National Market,
the last sale price or, if no reported sales take place on the applicable
date, the average of the high bid and low asked price of Common Stock as
reported for such Market on such date or, if no such quotation is made on
such date, on the next preceding day on which there were quotations, provided
that such quotations shall have been made within the ten (10) business days
preceding the applicable date;
(b) If the Market is the NASDAQ National List,
the NASDAQ Supplemental List or another market, the average of the high bid
and low asked price for Common Stock on the applicable date, or, if no such
quotations shall have been made on such
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date, on the next preceding day on which there were quotations, provided that
such quotations shall have been made within the ten (10) business days
preceding the applicable date; or,
(c) In the event that neither paragraph (a) nor
(b) shall apply, the Fair Market Value of a share of Common Stock on any day
shall be determined by the Committee.
1.6.2 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 Internal Revenue Code of 1986 (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 Plan Agreement. 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
"nonqualified stock option."
1.6.3 The term "employment" means, in the case of a grantee of
an award under the Plan who is not an employee of the Company, the grantee's
association with the Company as a consultant, as an employee of a joint
venture or otherwise.
1.6.4 A grantee shall be deemed to have a "termination
of employment" upon ceasing to be employed by the Company and all
of its subsidiaries. The Committee may in its discretion deter-
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mine (a) whether any leave of absence constitutes a termination of employment
for purposes of the Plan, (b) the impact, if any, of any such leave of
absence on awards theretofore made under the Plan, and (c) when a change in a
non-employee's association with the Company constitutes a termination of
employment for purposes of the Plan. The Committee shall have the right to
determine whether the termination of a grantee's employment is a dismissal
for cause and the date of termination in such case, which date the Committee
may retroactively deem to be the date of the action that is cause for
dismissal. Such determinations of the Committee shall be final, binding and
conclusive.
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 agreement ("Plan
Agreement") 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 Plan Agreement.
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2.2 Grant of Stock Options, Stock Appreciation
Rights and Dividend Equivalent Rights
2.2.1 The Committee may grant incentive stock options and
nonqualified 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 terms and conditions, as the Committee shall determine in its
sole discretion, subject to the provisions of the Plan.
2.2.2 The Committee may grant stock appreciation rights to
such key persons, and in such amounts and subject to such 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 exercisable otherwise. 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 nonqualified 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.
2.2.3 The grantee of a stock appreciation right shall
have the right, subject to the terms of the Plan and the applica-
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ble Plan Agreement, to receive from the Company an amount equal to (a) the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise of the stock appreciation right over (b) 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 (c) 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.
2.2.4 Each Plan Agreement 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,
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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.
2.2.5 Each Plan Agreement 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.
2.2.6 The Committee may in its sole discretion include in any
Plan Agreement 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 Plan Agreement, 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
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at which they shall be made, and such other terms and conditions as the
Committee shall deem appropriate.
2.2.7 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 higher amount as may be
permitted from time to time under section 422 of the Code, such options shall
be treated as nonqualified stock options.
2.2.8 Notwithstanding the provisions of Sections 2.2.4 and
2.2.5, 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 (a) 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 (b) the incentive stock option by its terms is not
exercisable after the expiration of 5 years from the date it is granted.
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2.3 Exercise of Options and Stock Appreciation Rights
Subject to the provisions of this Article II, each
option or stock appreciation right granted under the Plan shall be
exercisable as follows:
2.3.1 Unless the applicable Plan Agreement otherwise provides,
an option or stock appreciation right shall become exercisable in four
substantially equal installments, the first of which shall become exercisable
on the first anniversary of the date of grant and the remaining three of
which shall become exercisable, respectively, on the second, third and fourth
anniversaries of the date of grant.
2.3.2 Unless the applicable Plan Agreement otherwise provides,
once an installment becomes exercisable, it shall remain exercisable until
expiration, cancellation or termination of the award.
2.3.3 Unless the applicable Plan Agreement 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.
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2.3.4 An option or stock appreciation right shall be exercised
by the filing of a written notice with the Company, on such form and in such
manner as the Committee shall in its sole discretion prescribe. In the case
of a grantee of a stock appreciation right whose transactions in Common Stock
are subject to Section 16(b) of the 1934 Act, an election to exercise a stock
appreciation right in whole or in part shall, to the extent required to
conform to applicable interpretations of Rule 16b-3, occur no sooner than six
months after the grant thereof, and shall be made irrevocably at least six
months prior to such exercise unless both the election and the exercise are
made in a single "window period" of 10 business days beginning on the third
day following release of the Company's quarterly or annual summary statement
of sales and earnings.
2.3.5 Any written notice of exercise of an option shall be
accompanied by payment for the shares being purchased. Such payment shall be
made: (a) by certified or official bank check (or the equivalent thereof
acceptable to the Company) for the full option exercise price; or (b) with
the consent of the Committee, by delivery of shares of Common Stock acquired
at least six months prior to the option exercise date and 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) for any remaining portion of
the full option exercise
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price; or (c) 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.
2.3.6 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 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 to deliver the certificate(s) to the optionee's
stockbroker.
2.3.7 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 1.5.2, 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.
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2.4 Termination of Employment; Death
2.4.1 Except to the extent otherwise provided in Section 2.4.2
or 2.4.3 or in the applicable Plan Agreement, all options and stock
appreciation rights not theretofore exercised shall terminate upon
termination of the grantee's employment for any reason (including death).
2.4.2 If a grantee's employment terminates for any reason
other than death or dismissal for cause, the grantee may exercise any
outstanding option or stock appreciation right 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 the date of employment termination; and (b)
exercise must occur within three months after employment terminates, except
that the three-month period shall be increased to one year if the termination
is by reason of disability, but in no event after the expiration date of the
award as set forth in the Plan Agreement. In the case of an incentive stock
option, the term "disability" for purposes of the preceding sentence shall
have the meaning given to it by section 422(c)(7) of the Code.
2.4.3 If a grantee dies while employed by the Company or any
subsidiary, or after employment termination but during the period in which
the grantee's awards are exercisable pursuant to Section 2.4.2, any
outstanding option or stock appreciation right shall be exercisable on the
following terms and conditions:
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(a) exercise may be made only to the extent that the grantee was entitled to
exercise the award on the date of death; and (b) exercise must occur by the
earlier of the first anniversary of the grantee's death or the expiration
date of the award. Any such exercise of an award following a grantee's death
shall be made only by the grantee's executor or administrator, 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 Plan
Agreement which would have applied to the grantee including, without
limitation, the provisions of Sections 3.2 and 3.7 hereof.
2.5 Grant of Restricted Stock
2.5.1 The Committee may grant restricted shares of Common
Stock to such key persons, in such amounts, and subject to such 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
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the Committee shall specify by executing a Plan Agreement in such form as the
Committee shall determine and, if the Committee shall so require, makes
payment to the Company by certified or official bank check (or the equivalent
thereof acceptable to the Company) in such amount as the Committee may
determine.
2.5.2 Promptly after a grantee accepts a restricted stock
award, the Company shall issue to the grantee a certificate or certificates
for the shares of Common Stock covered by the award. Upon the issuance of
such certificate(s), the grantee shall have the rights of a stockholder with
respect to the restricted stock, subject also to the nontransferability
restrictions and Company repurchase rights described in Sections 2.5.4 and
2.5.5, subject also in the Committee's discretion to a requirement that any
dividends paid on such shares shall be held in escrow until all restrictions
on such shares have lapsed, and subject also to any other restrictions and
conditions contained in the applicable Plan Agreement.
2.5.3 Unless the Committee shall otherwise determine, any
certificate issued evidencing shares of restricted stock shall remain in the
possession of the Company until such shares are free of any restrictions
specified in the applicable Plan Agreement.
2.5.4 Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or dis-
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posed of except as specifically provided in this Plan or the applicable Plan
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.
2.5.5 During the 90 days following termination of the
grantee's employment for any reason, the Company shall have the right to
require the return of any shares to which restrictions on transferability
apply, in exchange for which the Company shall repay to the grantee (or the
grantee's estate) any amount paid by the grantee for such shares. In the
event that the Company requires such a return of shares, it shall also have
the right to require the return of all dividends paid on such shares, whether
by termination of any escrow arrangement under which such dividends are held,
or otherwise.
2.6 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 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.
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2.7 Grant of Performance Shares
2.7.1 The Committee may grant performance share awards to such
key persons, and in such amounts and subject to such 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 executing a
Plan Agreement at such time and in such form as the Committee shall
determine.
2.7.2 The grantee of a performance share award will have the
rights of a shareholder only as to shares for which a certificate has been
issued pursuant to the award and not with respect to any other shares subject
to the award.
2.7.3 Except as may otherwise be provided by the Committee at
any time prior to termination of employment, the rights of a grantee of a
performance share award shall automatically terminate upon the grantee's
termination of employment for any reason.
2.7.4 At the discretion of the Committee, the applica-
ble Plan Agreement may set out the procedures to be followed in
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exercising a performance share award or it may provide that such exercise
shall be made automatically after satisfaction of the applicable performance
goals.
2.7.5 Except as otherwise specified by the Committee, (a) a
performance share award granted in tandem with an option may be exercised
only while the option is exercisable, (b) 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
Plan Agreement, and (c) 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 Plan Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Amendment of the Plan; Modification of Awards
3.1.1 Except as otherwise provided herein, 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, after 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
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Committee that alters or affects the tax treatment of any award shall not be
considered to materially impair any rights of any grantee.
3.1.2 Shareholder approval shall be required with respect to
any amendment which: (a) 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; or (b) materially increases the
benefits under the Plan to persons whose transactions in Common Stock are
subject to Section 16(b) of the 1934 Act, materially increases the number of
shares which may be issued to such persons, or materially modifies the
eligibility requirements affecting such persons.
3.1.3 The Committee may amend any outstanding Plan Agreement,
including, without limitation, by amendment which would (a) accelerate the
time or times at which the award becomes unrestricted or may be exercised, or
(b) waive or amend any goals, restrictions or conditions set forth in the
Agreement, or (c) extend the scheduled expiration date of the award. However,
any such cancellation or amendment (other than an amendment pursuant to
Section 3.7.2) 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).
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3.2 Restrictions
3.2.1 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.
3.2.2 The term "Consent" as used herein with respect to any
Plan Action means (a) 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, (b) 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 (c) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies.
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3.3 Nonassignability
No award or right granted to any person under the Plan or
under any Plan Agreement shall be assignable or transferable other than by
will or by the laws of descent and distribution. All rights granted under the
Plan or any Plan Agreement 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
Each Plan Agreement with respect to an incentive stock option
shall require the grantee to notify the Company of any disposition of shares
of Common Stock issued pursuant to the exercise of such option under the
circumstances described in
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section 421(b) of the Code (relating to certain disqualifying dispositions),
within 10 days of such disposition.
3.6 Withholding Taxes
3.6.1 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.
3.6.2 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 it shall have sole discretion to grant, 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 on the date
as of which the amount of tax to be withheld is determined (the "Tax Date").
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. To the extent required for such a withholding
of stock to qualify for the exemption avail-
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able under Rule 16b-3, such an election by a grantee whose transactions in
Common Stock are subject to Section 16(b) of the 1934 Act shall be: (a)
subject to the approval of the Committee in its sole discretion; (b)
irrevocable; (c) made no sooner than six months after the grant of the award
with respect to which the election is made; and (d) made at least six months
prior to the Tax Date unless such withholding election is in connection with
exercise of an option and both the election and the exercise occur prior to
the Tax Date in a "window period" of 10 business days beginning on the third
day following release of the Company's quarterly or annual summary statement
of sales and earnings.
3.7 Change in Control
3.7.1 For purposes of this Section 3.7, a "Change In Control"
shall be deemed to have occurred upon the happening of any of the following
events: (a) any "person," including a "group," as such terms are defined in
Sections 13(d) and 14(d) of the 1934 Act and the rules promulgated
thereunder, becomes the beneficial owner, directly or indirectly, whether by
purchase or acquisition or agreement to act in concert or otherwise, of 15%
or more of the outstanding shares of Common Stock of the Company; (b) a cash
tender or exchange offer for 50% or more of the outstanding shares of Common
Stock of the Company is commenced; (c) the shareholders of the Company
approve an agreement to merge, consolidate, liquidate, or sell all or
substantially all
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of the assets of the Company; or (d) two or more directors are elected to the
Board without having previously been nominated and approved by the members of
the Board incumbent on the day immediately preceding such election.
3.7.2 Upon the happening of a Change in Control:
(a) notwithstanding any other provision of this
Plan, any option or stock appreciation right then outstanding whose date of
grant was at least six months prior to the date of the Change in Control
shall become fully vested and immediately exercisable;
(b) to the extent permitted by law, the Committee
may, in its sole discretion, amend any Plan Agreement in such manner as it
deems appropriate, including, without limitation, by amendments that advance
the dates upon which any or all outstanding shares of restricted stock shall
become free of restrictions or upon which any or all outstanding performance
share awards shall become payable, or that advance the dates upon which any
or all outstanding awards of any type shall terminate.
3.7.3 Whenever deemed appropriate by the Committee, any action
referred to in Section 3.7.2(b) may be made conditional upon the consummation
of the applicable Change in Control transaction.
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3.8 Right of Discharge Reserved
Nothing in the Plan or in any Plan Agreement shall confer upon
any grantee the right to continue in the employ of the Company or affect any
right which the Company may have to terminate such employment.
3.9 Nature of Payments
3.9.1 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.
3.9.2 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 provides otherwise.
3.10 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 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
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entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Plan agreements,
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 1.6.4.
3.11 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.
3.12 Section Headings
The section headings contained herein are for the purpose of
convenience only and are not intended to define or limit the contents of said
sections.
3.13 Effective Date and Term of Plan
3.13.1 The Plan was adopted by the Board on April 6, 1994,
subject to approval by the Company's shareholders. All awards under the Plan
prior to such shareholder approval are subject in their entirety to such
approval. If such approval is not obtained prior to the first anniversary of
the date of adoption of the Plan, the Plan and all awards thereunder shall
terminate on that date.
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3.13.2 Unless sooner terminated by the Board, the provisions
of the Plan respecting the grant of incentive stock options shall terminate
on the tenth anniversary of the adoption of the Plan by the Board, and no
incentive stock option awards shall thereafter be made under the Plan. 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 Plan Agreements.
3.14 Governing Law
All rights and obligations under the Plan shall be construed
and interpreted in accordance with the laws of the State of New York, without
giving effect to principles of conflict of laws.
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