Exhibit 10 (y)
1998 KEY EMPLOYEE INCENTIVE COMPENSATION PLAN
SECTION 1
GENERAL
1.1 Purpose. The Plan has been established by the Company (i) to attract
and retain persons eligible to participate in the Plan; (ii) motivate
participants, by means of appropriate incentives, to achieve long-range goals;
and (iii) link participants' interests with those of the Company's other
shareholders through compensation that is based on the Company's common stock,
and thereby promote the continued growth and financial success of the Company.
1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Employees, those persons who will be granted one or more awards under
the Plan, and thereby become "Participants" in the Plan. Persons eligible to
participate shall be limited to those officers and key employees of the Company
who, in the opinion of the Committee, are in positions in which their decisions,
actions, and counsel significantly affect the growth and financial success of
the Company. Directors of the Company who are not otherwise officers or
employees of the Company shall not be eligible to participate in the Plan.
1.3 Operation, Administration and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 7).
SECTION 2
OPTIONS AND SARS
2.1 Definitions.
a) The grant of an "Option" entitles the Participant to
purchase shares of Common Stock at an Exercise Price
established by the Committee. Options granted under this
Section 2 may be either Incentive Stock Options or
Non-Qualified Options, as determined in the discretion
of the Committee. An "Incentive Stock Option" is an
Option that is intended to satisfy the requirements
applicable to an "incentive stock option" described in
section 422A of the Code. A "Non-Qualified Option" is an
Option that is not intended to be an "incentive stock
option" as that term is described in section 422A of the
Code.
b) A stock appreciation right (an "SAR") entitles the
Participant to receive, in cash or Stock (as determined
in accordance with subsection 2.5), value equal to all
or a portion of the excess of: (a) the Fair Market Value
of a specified number of shares of Common Stock at the
time of exercise; over (b) an Exercise Price established
by the Committee.
2.2 Exercise Price. The "Exercise Price" of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted; except that the Exercise Price shall not be less than 100
percent of the Fair Market Value of a share of Common Stock as of the Pricing
Date. As used in this subparagraph the "Pricing Date" shall be the date on which
the Option or SAR is granted, except that the Committee may provide that the
Pricing Date is the date on which the recipient is hired or promoted (or similar
event), if the grant of the Option or SAR occurs not more than 90 days after the
date of such hiring, promotion or other event.
2.3 Exercise. An Option and an SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
Committee. The Committee shall have the power to permit in its discretion an
acceleration of the previously determined exercise or vesting periods of, and
the expiration of the applicable restriction period with respect to, any Option
or SAR, under such circumstances, including a change in control of the Company,
and upon such terms and conditions as it deems appropriate.
2.4 Expiration Date. The "Expiration Date" with respect to an Option means
the date established as the Expiration Date by the Committee at the time of the
grant; provided, however, that the Expiration Date with respect to any Option
shall not be later than the earliest to occur of:
a) the ten-year anniversary of the date on which the Option is
granted (the five-year anniversary in the case of an Incentive
Stock Option granted to an individual who owns stock possessing
more than 10 percent of the total combined voting power of all
classes of stock of the Company);
b) if the Participant's Date of Termination occurs by reason of
Retirement, death or disability. the one-year anniversary after
such Termination Date; or
c) if the Participant's Date of Termination occurs by reasons other
than Retirement, death or disability, the 90-day anniversary of
such Date of Termination.
The existence of Retirement and the existence of and the date of
disability shall be determined by the Committee in its sole
discretion.
2.5 Payment of Option Exercise Price. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the following:
a) Subject to the following provisions of this subsection 2.5, the
full Exercise Price for shares of Common Stock purchased upon the
exercise of any Option shall be paid at the time of such exercise
(except that, in the case of an exercise arrangement approved by
the Committee and described in paragraph 2.5 (c), payment may be
made as soon as practical after the exercise).
b) The Exercise Price shall be payable in cash or by tendering
shares of Common Stock (by either actual delivery of shares or by
attestation, with such shares valued at Fair Market Value as of
the date of exercise), or in any combination thereof, as
determined by the Committee. Such determination may include a
restriction on the use of any shares of Common Stock unless they
have been held by the Participant for at least six months before
delivery, and have not been used for another exercise during such
period.
c) The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by authorizing a
third party to sell shares of Common Stock (or a sufficient
portion of the shares) acquired upon exercise and remit to the
Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such
exercise.
2.6 Settlement of Award. Distribution following exercise of an Option or
SAR, and shares of Common Stock distributed pursuant to such exercise, shall be
subject to such conditions, restrictions and contingencies as the Committee may
establish. Settlement of SARs may be made in shares of Common Stock (valued at
their Fair Market Value at the time of exercise), or in any combination thereof,
as determined by the Committee. The Committee, in its discretion, may impose
such conditions, restrictions and contingencies with respect to shares of Common
Stock acquired pursuant to the exercise of an Option or an SAR as the Committee
determines to be desirable.
SECTION 3
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OTHER STOCK AWARDS
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3.1 Definition. A Stock Award is a grant of shares of Common Stock or of a
right to receive shares of Common Stock (or their cash equivalent or a
combination of both) in the future.
3.2 Restrictions on Stock Awards. Each Stock Award shall be subject to such
conditions, restrictions and contingencies as the Committee shall determine.
These may include continuous service and/or the achievement of performance
measures. At any time prior to the payment of the Stock Awards, the Committee
may adjust previously established performance targets and other terms and
conditions, including the Company's financial performance for Plan purposes, to
reflect major unforeseen events such as changes in laws, regulations or
accounting practice, mergers, acquisitions or divestitures or extraordinary,
unusual or nonrecurring items or events.
SECTION 4
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OPERATION AND ADMINISTRATION
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4.1 Effective Date. Subject to the approval of the shareholders of the
Company at the Company's 1998 annual meeting of shareholders, the Plan shall be
effective as of March 10, 1998 (the "Effective Date"); provided, however, that
any Awards made under the Plan prior to its approval by shareholders shall be
contingent on approval of the Plan by the shareholders of the Company. The Plan
shall be unlimited in duration and, in the event of Plan termination, shall
remain in effect as long as any Awards under it are outstanding; provided,
however, that, no Award may be made under the Plan more than ten years from the
Effective Date.
4.2 Shares Subject to the Plan. a)
i) Subject to the following provisions of this subsection 4.2, the
maximum number of shares that may be delivered to Participants
and their beneficiaries under the Plan shall not exceed 1,500,000
shares of Common Stock. Such shares may be authorized and
unissued shares or treasury shares.
ii) Any shares of Common Stock granted under the Plan that are
forfeited because of the failure to meet an Award contingency or
condition shall again be available for delivery pursuant to new
Awards granted under the Plan. To the extent any shares of Common
Stock covered by an Award are not delivered to a Participant or
beneficiary because the Award is forfeited or canceled, or the
shares are not delivered because the Award is settled in cash,
such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Common
Stock available for delivery under the Plan.
iii) If the Exercise Price of any stock option granted under the Plan
is satisfied by tendering shares of Common Stock to the Company
(by either actual delivery or by attestation), only the number of
shares issued net of the shares of Common Stock tendered shall be
deemed delivered for purposes of determining the maximum number
of shares of Common Stock available for delivery under the Plan.
iv) Shares of Common Stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or obligations
to grant future awards) under the plans or arrangements of
another entity shall not reduce the maximum number of shares of
Common Stock available for delivery under the Plan, to the extent
that such settlement, assumption or substitution is a result of
the Company or a Subsidiary acquiring another entity (or an
interest in another entity).
b) Subject to paragraph 4.2 (c), the following additional maximums
are imposed under the Plan.
i) The maximum number of shares of Common Stock that may be issued
by Options intended to be Incentive Stock Options shall be
1,500,000 shares.
ii) The maximum number of shares of Common Stock that may be covered
by Awards granted to any one individual pursuant to Section 2
(relating to Options and SARs) shall be 200,000 shares during any
calendar year.
iii) The maximum payment that can be made for awards granted to any
one individual pursuant to Section 3 (relating to Stock Awards)
shall be $300,000 for any single or combined performance goals
established for any performance period. If an Award granted under
Section 3 is, at the time of grant, denominated in shares, the
value of the shares of Common Stock for determining this maximum
individual payment amount will be the Fair Market Value of a
share of Common Stock on the date of award.
c) In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend or
distribution, stock split, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination or
exchange of shares), the Committee may adjust Awards to preserve
the benefits or potential benefits of the Awards. Action by the
Committee may include adjustments of: (i) the number and kind of
shares that may be delivered under the Plan; (ii) the number and
kind of shares subject to outstanding Awards; and (iii) the
Exercise Price of outstanding Options and SARs; as well as any
other adjustments that the Committee determines to be equitable.
4.3 Limits on Distribution. Distribution of shares of Common Stock or other
amounts under the Plan shall be subject to the following:
a) Notwithstanding any other provision of the Plan, if at any time
the Committee shall determine that (i) the listing, registration
or qualification of the shares of Common Stock subject or related
thereto upon any securities exchange or under any state or
federal law, (ii) the consent or approval of any government
regulatory body, or (iii) an agreement by the recipient of an
Award with respect to the disposition of shares of Common Stock,
is necessary or desirable as a condition of, or in connection
with the Plan or the granting of such Award or the issue or
purchase of shares of Common Stock thereunder, the Company shall
have no liability to deliver any shares of Common Stock under the
Plan or make any other distribution of benefits under the Plan
unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free
of any conditions not acceptable to the Committee.
b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Common Stock,
the issuance may be effected on a non-certificate basis, to the
extent not prohibited by applicable law or the applicable rules
of any stock exchange.
4.4 Tax Withholding. Whenever the Company proposes or is required to issue
or transfer shares of Common Stock under the Plan, the Company shall have the
right to require the recipient to remit to the Company an amount sufficient to
satisfy any Federal, state or local withholding tax requirements prior to the
delivery of any certificate for such shares, or in the discretion of the
Committee, the Company may withhold from the shares to be delivered shares
sufficient to satisfy all or a portion of such tax withholding requirements.
Whenever under the Plan payments are to be made in cash, such payments may be
net of an amount sufficient to satisfy any Federal, state and local tax
withholding requirements.
4.5 Dividends. An Award may provide the Participant with the right to
receive dividends with respect to Common Stock, which may be either paid
currently or credited to an account for the Participant, and may be settled in
cash or Common Stock as determined by the Committee. Any such settlements, and
any such crediting of dividends or reinvestment in shares of Common Stock, may
be subject to such conditions, restrictions and contingencies as the Committee
shall establish.
4.6 Payments. Awards may be settled through cash payments, the delivery of
shares of Common Stock, or combination thereof as the Committee shall determine.
Any Award settlement may be subject to such conditions, restrictions and
contingencies as the Committee shall determine.
4.7 Transferability. No Awards may be transferred by the Participant
otherwise than by will, by the laws of descent and distribution or pursuant to a
qualified domestic relations order, and during the Participant's lifetime the
Option may be exercised only by him or her; provided, however, that the
Committee, in its discretion, may allow for transferability of Non-Qualified
Options by the Participant to "Immediate Family Members."
"Immediate Family Members" means children, grandchildren, spouse or common
law spouse, siblings or parents of the Participant or to bona fide trusts,
partnerships or other entities controlled by and of which the beneficiaries
are Immediate Family Members of the Participant. Any Option grants that are
transferable are further conditioned on the Participant and Immediate
Family Members agreeing to abide by the Company's then current stock option
transfer guidelines.
4.8 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by a Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Secretary of the Company
or other person designated by the Committee at such times, in such form, and
subject to such restrictions and limitations, not inconsistent with the terms of
the Plan, as the Committee shall require.
4.9 Agreement with the Company. At the time of an Award to a Participant,
the Committee may require a Participant to enter into an agreement with the
Company (the "Agreement") in a form specified by the Committee, agreeing to the
terms and conditions of the Plan and to such additional terms and conditions,
not inconsistent with the Plan, as the Committee may, in its sole discretion,
prescribe.
4.10 Limitation of Implied Rights.
a) Neither a Participant nor any other person shall, by reason of
the Plan, acquire any right in or title to any assets, funds or
property of the Company or any Subsidiary whatsoever, including,
without limitation, any specific funds, assets, or other property
which the Company or any Subsidiary, in their sole discretion,
may set aside in anticipation of a liability under the Plan. A
Participant shall have only a contractual right to the stock or
amounts, if any, payable under the Plan, unsecured by any assets
of the Company or any Subsidiary. Nothing contained in the Plan
shall constitute a guarantee that the assets of such companies
shall be sufficient to pay any benefits to any person.
b) Nothing in the Plan or in any agreement entered into pursuant to
the Plan shall confer upon any Participant the right to continue
in the employment of the Company or any Subsidiary or affect any
right which the Company or any Subsidiary may have to terminate
the employment of such Participant.
4.11 Stock Forfeiture Provision. Notwithstanding any other provision of
this Plan to the contrary, the Committee may provide for the forfeiture of
Awards under the Plan and the benefits derived therefrom, in the event a
Participant engages in conduct deemed to be harmful to, or not in the best
interests of, the Company. Such forfeiture may include, without limitation, the
cancellation of unexercised Options and the forfeiture of gain realized from the
exercise thereof. Such provisions shall be included in the Option agreements
approved from time to time by the Committee. The Committee, or its duly
appointed agent, may waive any or all of the restrictions authorized under this
subsection whenever it (or its duly appointed agent) determines in its sole
discretion that such action is in the best interests of the Company.
SECTION 5
COMMITTEE
5.1 Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee") in
accordance with this Section 5.
5.2 Selection of Committee. The Committee shall be selected by the Board,
and shall consist of two or more members of the Board. The Committee shall be
composed solely of directors who: (i) meet the requirements necessary to be
considered "non-employee directors" as that term is defined in Rule 16b-3 of the
Securities Exchange Act of 1934. In addition, no member of the Committee shall
participate in any compensation decision under the Plan who is not, at the time
of the decision, an "outside director" as that term is defined under Code
section 162(m).
5.3 Powers of Committee. The authority to manage and control the operation
and administration of the Plan shall be vested in the Committee, subject to the
following:
a) Subject to the provisions of the Plan, the Committee will have
the authority and discretion to select from among the Eligible
Employees those persons who shall receive Awards, to determine
the time or times of receipt, to determine the types of Awards
and the number of shares covered by the Awards, to establish the
terms, conditions, performance criteria, restrictions and other
provisions of such Awards, and (subject to the restrictions
imposed by Section 6) to cancel or suspend Awards. In making such
Award determinations, the Committee may take into account the
nature of services rendered by the individual, the individual's
present and potential contribution to the Company's success and
such other factors as the Committee deems relevant.
b) The Committee will have the authority and discretion to interpret
the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and
provisions of any agreements made pursuant to the Plan, and to
make all other determinations that may be necessary or advisable
for the administration of the Plan.
c) Any interpretation of the Plan by the Committee and any decision
made by it under the Plan is final and binding.
5.4 Delegation by Committee. 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 and powers to
any person or persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.
SECTION 6
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AMENDMENT AND TERMINATION
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The Board may amend or terminate the Plan at any time, except that without
shareholder approval, the Board may not increase the maximum number of shares
which may be issued under the Plan (other than increases pursuant to Paragraph
4.2(c) hereof) or change the class of Eligible Employees. The termination or any
modification or amendment of the Plan shall not, without the consent of a
participant, affect a Participant's rights under an Award previously granted.
SECTION 7
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DEFINED TERMS
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For purposes of the Plan, the following terms shall have the meanings set
forth below:
a) "Award" means any award or benefit granted to any Participant under the
Plan, including, without limitation, the grant of Options, SARs, and Stock
Awards.
b) "Board" means the Board of Directors of the Company.
c) "Code" means the Internal Revenue Code of 1986, as amended. A reference to
any provision of the Code shall include reference to any successor
provision of the Code.
d) "Common Stock" means shares of the Company's common stock, $.25 par value
per share.
e) "Date of Termination" means the date on which a Participant ceases to be
employed by the Company or any Subsidiary. In the event of employment
termination due to Retirement, the Date of Termination shall be: (i) with
respect to a Pension Optionee, the date on which such an optionee is
immediately eligible to collect pension benefits under any Pension Plan;
and (ii) with respect to a Non-Pension Optionee, a date determined by the
Committee.
f) "Eligible Employee" means any employee of the Company or a Subsidiary
providing key services to the Company or a Subsidiary.
g) "Fair Market Value" of Common Stock on any given date shall be determined
according to the following rules:
i) If the Common Stock is at the time listed or admitted to trading
on any stock exchange, then the "Fair Market Value" shall be the
mean between the highest and lowest prices of the Common Stock on
the date in question on the principal national securities
exchange on which it is then listed or admitted to trading. If no
reported sale of Common Stock takes place on the date in question
on the principal exchange, then the reported closing asked price
of the Common Stock on such date on the principal exchange shall
be determinative of "Fair Market Value."
ii) If the Common Stock is not at the time listed or admitted to
trading on a stock exchange, the "Fair Market Value" shall be the
mean between the highest reported asked price and lowest reported
bid price of the Common Stock on the date in question in the
over-the-counter market, as such prices are reported in a
publication of general circulation selected by the Committee and
regularly reporting the market price of Common Stock in such
market.
iii) If the Common Stock is not listed or admitted to trading on any
stock exchange or traded in the over-the-counter market, the
"Fair Market Value" shall be as determined in good faith by the
Committee.
h) "Pension Plan" means an individual pension scheme or pension plan sponsored
by the Company or a Subsidiary.
i) "Pension Optionee" means an optionee under the Plan who is an active
participant in any Pension Plan and a "Non-Pension Optionee" means an
optionee under the Plan who is not an active participant in any Pension
Plan.
j) "Subsidiary" means any "subsidiary corporation" (as that term is defined in
Code section 424(f)) with respect to the Company.
k) "Retirement" means: (i) with respect to a Pension Optionee, termination of
employment with the Company or a Subsidiary under the provisions of any
Pension Plan; and (ii) with respect to a Non-Pension Optionee, termination
of employment with the Company or a Subsidiary under the procedures
established by the Committee.