ROBOCOM SYSTEMS INC.
STOCK OPTION AND
LONG-TERM INCENTIVE COMPENSATION PLAN
Adopted and Effective as of May 15, 1997
ROBOCOM SYTEMS INC. STOCK OPTION AND
LONG-TERM INCENTIVE COMPENSATION PLAN
1. Purpose of the Plan.
This Robocom Systems Inc. Stock Option and Long-Term Incentive
Compensation Plan is intended to promote the interests of the Company and its
shareholders by providing the Company's key employees, on whose judgment,
initiative, and efforts the successful conduct of the business of the Company
depends, and who are responsible for the management, growth, and protection of
the business, with appropriate incentives and rewards to encourage them to
continue in the employ of the Company and to maximize their performance.
2. Definitions.
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Cause" shall mean, when used in connection with the termination of
a Participant's employment, the termination of the Participant's employment on
account of: (i) the willful and continued failure by the Participant
substantially to perform his or her duties and obligations to the Company (other
than any such failure resulting from incapacity due to physical or mental
illness), (ii) the willful violation by the Participant of (A) any federal or
state law or (B) any rule of the Company, which violation would materially
reflect on the Participant's character, competence, or integrity, (iii) a breach
by a Participant of the Participant's duty of loyalty to the Company such as
Participant's solicitation of customers or employees of the Company on behalf of
any other person, (iv) the Participant's unauthorized removal from the Company's
premises of any document (in any medium or form) relating to the Company, its
business, or its customers, provided, however, that no such removal shall be
deemed "unauthorized" if it is in furtherance of an individual's duties and
obligations to the Company and such removal is a common practice at the Company,
(v) the Participant's unauthorized disclosure to any person of any confidential
information regarding the Company, or (vi) the willful engaging by the
Participant in any other misconduct which is materially injurious to the
Company. For purposes of this Section 2(b), no act, or failure to act, on a
Participant's part shall be considered "willful" unless done, or omitted to be
done, by the Participant in bad faith and without reasonable belief
that the action or omission was in the best interests of the Company. 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 the participant or at law or in equity. If, subsequent to the
termination of a Participant's employment without Cause, it is determined that
the Participant's employment could have been terminated for Cause, such
Participant's employment shall, at the election of the Committee in its sole
discretion, be deemed to have been terminated for Cause.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Compensation Committee of the Board;
provided, however, the Compensation Committee shall not take any action under
the Plan unless it is at all times composed solely of not less than three
"Non-Employee Directors" within the meaning of Rule 16b-3, as promulgated under
the Securities Exchange Act of 1934, as amended. In the event the Compensation
Committee is not composed of three Non-Employee Directors when the Company is
subject to the Securities Act, or, in the event the Committee is unable to act,
the Board shall take any and all actions required or permitted to be taken by
the Committee under the Plan and shall serve as the Committee.
(e) "Company" shall mean Robocom Systems Inc., a New York corporation.
(f) "Company Stock" shall mean the common stock, par value $.01 per
share, of the Company.
(g) "Disability" shall mean any physical or mental condition as a
result of which a Participant is disabled within the meaning of Section
422(c)(6) of the Code.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" with respect to a share of Company Stock on any
relevant date shall be determined in accordance with the following provisions:
(1) If the Company Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling price
per share of Company Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing selling price for the Company Stock
on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
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(2) If the Company Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Company Stock on the date in question on the stock exchange determined
by the Committee to be the primary market for the Company Stock, as such price
is officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Company Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(3) For purposes of any option grants made on an underwriting
date, the Fair Market Value shall be deemed to be equal to the price per share
at which the Company Stock is sold in the initial public offering pursuant to
the underwriting agreement.
(4) For purposes of any option grants made prior to an
underwriting date, the Fair Market Value shall be determined by the Committee
after taking into account such factors as the Committee may deem appropriate.
(j) "Incentive Award" shall mean an Option, a SAR, a Restricted Stock,
or Stock Bonus Award granted pursuant to the terms of the Plan.
(k) "Incentive Stock Option" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code and that is
identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(l) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued by
the Company pursuant to the terms of Section 8(d) hereof.
(m) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(n) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof. Each Option, or portion thereof, shall be
identified as either an Incentive Stock Option or a Non-Qualified Stock Option
in the agreement by which such Option is evidenced.
(o) "Participant" shall mean an employee, officer, director or outside
director of the Company or a consultant to the Company selected to participate
in the Plan and to whom an Incentive Award is granted pursuant to the Plan, and,
upon his or her death, that person's successors, heirs, executors, and
administrators, as the case may be.
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(p) "Person" shall mean a "person," such as term is used in Sections
13(d) and 14(d) of the Exchange Act.
(q) "Plan" shall mean this Robocom Systems Inc. Stock Option and
Long-Term Incentive Compensation Plan, as it may be amended from time to time.
(r) "Restricted Stock" shall mean a share of Company Stock that is
granted pursuant to the terms of Section 8 hereof and that is subject to the
restrictions set forth in Section 8(c) hereof for as long as such restrictions
continue to apply to such share.
(s) "Retirement" shall mean a Participant's termination of employment
(other than by reason of death or Disability and other than a termination that
is (or is deemed to have been) for Cause) on or after the later of (i) the date
the Participant attains age 65 and (ii) the date the Participant has completed
five years of service with the Company.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended.
(u) "SAR" shall mean a stock appreciation right granted pursuant to
Section 7 hereof.
(v) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Company Stock pursuant to Section 9 hereof.
(w) "Vesting Date" shall mean the date and/or dates established by the
Committee on which an Incentive Award may vest. In the absence of provisions in
an individual grant agreement to the contrary, Options shall vest ratably over a
three (3) year period, at thirty-three and one-third (331/3%) percent per year.
3. Stock Subject to the Plan.
(a) Plan Awards.
Under the Plan, the Committee may, in its sole and absolute
discretion, grant any or all of the following types of Incentive Awards to a
Participant: an Option, a SAR, a Restricted Stock, or Stock Bonus Award.
(b) Individual Awards.
Incentive Awards granted under the Plan may be made up entirely of
one type of Incentive Award or any combination of types of Incentive Awards
available under the Plan, in the Committee's sole discretion.
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(c) Aggregate Plan Share Reserve.
The total number of shares of Company Stock available for grants of
Incentive Awards under the Plan shall be 350,000 subject to adjustment in
accordance with Section 10 of the Plan. These shares may be either authorized
but unissued, newly issued shares, or reacquired shares of Company Stock. If an
Incentive Award or portion thereof shall expire or terminate for any reason
without having been exercised in full, the unexercised shares covered by such
Incentive Award shall be available for future grants of Incentive Awards under
the Plan.
4. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee shall
from time to time designate the employees, officers, directors and outside
directors of the Company or consultants to the Company who shall be granted
Incentive Awards and the amount and type of such Incentive Awards.
The Committee shall have the full authority and discretion to
administer the Plan, including authority to interpret and construe any provision
of the Plan and the terms of any Incentive Award issued under the Plan. The
Committee may also adopt any rules and regulations for administering the Plan as
it may deem necessary or appropriate.
Decisions of the Committee shall be final and binding on all parties.
The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or SAR granted under the Plan
becomes exercisable or otherwise adjust any of the terms of such Option or SAR
(except that no such adjustment shall, without the consent of a Participant,
reduce the Participant's rights under any previously granted and outstanding
Incentive Award), (ii) accelerate the Vesting Date or Issue Date of any share of
Restricted Stock issued under the Plan, or waive any condition imposed
thereunder, and (iii) otherwise adjust or waive any condition imposed on any
Incentive Award made hereunder.
In addition, the Committee may, in its absolute discretion and without
amendment to the Plan, grant Incentive Awards of any type to Participants on the
condition that such Participants surrender to the Committee for cancellation
such other Incentive Awards of the same or any other type (including, without
limitation, Incentive Awards with higher exercise prices or values) as the
Committee specifies. Notwithstanding Section 3(a) herein, prior to the surrender
of such other Incentive Awards, Incentive Awards granted pursuant to the
preceding sentence of this Section 4 shall not count against the limit set forth
in such Section 3(a).
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Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee, subject to applicable laws.
No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company (and any affiliate that may
adopt the Plan), jointly and severally, shall indemnify and hold harmless each
member of the Committee and each other director or employee of the Company (or
affiliate) to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination unless such action, omission or determination was taken or made by
such member, director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company and its affiliates, as the case
may be.
5. Eligibility.
The persons who shall be eligible to receive Incentive Awards pursuant
to the Plan shall be those employees, officers, directors and outside directors
of the Company or consultants to the Company who are largely responsible for the
management, growth, and protection of the business of the Company; provided,
however, that only employees of the Company shall be eligible to receive
Incentive Awards made up of Incentive Stock Options.
6. Stock Option Awards.
The Committee may grant Options pursuant to the Plan. Such Options
shall be evidenced by agreements in such form as the Committee shall from time
to time approve. Options shall comply with and be subject to the following terms
and conditions:
(a) Identification of Options.
All Options granted under the Plan shall be clearly identified
in the agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options or a combination of both.
(b) Exercise Price.
The exercise price of any Non-Qualified Stock Option granted
under the Plan shall be such price as the Committee shall determine, which may
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be equal to or less than the Fair Market Value of a share of Company Stock on
the date such Non-Qualified Stock Option is granted; provided, that such price
may not be less than the minimum price required by law. The exercise price of
any Incentive Stock Option granted under the Plan shall be not less than 100% of
the Fair Market Value of a share of Company Stock on the date on which such
Incentive Stock Option is granted.
(c) Term and Exercise of Options.
(i) Each Option shall be exercisable on such date or
dates, during such period, and for such number of shares of Company Stock as
shall be determined by the Committee on the day on which such Option is granted
and set forth in the Option agreement with respect to such Option; provided,
however that no Option shall be exercisable after the expiration of ten years
from the date such Option was granted; and, provided, further, that each Option
shall be subject to earlier termination, expiration or cancellation as provided
in the Plan.
(ii) Each Option shall be exercisable in whole or in
part. The partial exercise of an Option shall not cause the expiration,
termination or cancellation of the remaining portion thereof. Upon the partial
exercise of an Option, the agreement evidencing such Option, marked with such
notations as the Committee may deem appropriate to evidence such partial
exercise, shall be returned to the Participant exercising such Option together
with the delivery of the certificates described in Section 6(c)(v) hereof.
(iii) An Option shall be exercised by delivering a
written notice to the Company's principal office to the attention of its
Secretary, no later than the effective date of the proposed exercise. Such
notice shall be accompanied by the agreement (or agreements) evidencing the
Option, shall specify the number of shares of Company Stock with respect to
which the Option is being exercised, and the effective date of the proposed
exercise, and shall be signed by the Participant. In the event the Participant
provides advance notice of his intention to exercise, the Participant may
withdraw such notice at any time prior to the close of the business day
immediately preceding the effective date of the proposed exercise, in which case
such agreement(s) shall be returned to the Participant. Payment for shares of
Company Stock purchased upon the exercise of an Option shall be made on the
effective date of such exercise in any combination of the following:
(A) in cash, by certified check, bank
cashier's check, or wire transfer,
(B) subject to the approval of the
Committee, in shares of Company Stock owned by the Participant and valued at
their Fair Market Value on the effective date of such exercise,
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(C) subject to the approval of the
Committee, pursuant to a "cashless exercise" pursuant to procedures adopted by
the Committee whereby the Participant, by a properly written notice, directs (a)
an immediate market sale or margin loan respecting all or a part of the shares
of Company Stock to which the Participant is entitled upon exercise pursuant to
an extension of credit by the Company to the Participant of the exercise price,
(b) the delivery of the shares of the Company Stock from the Company directly to
the brokerage firm, and (c) the delivery of the exercise price from the sale or
margin loan proceeds from the brokerage firm directly to the Company, or
(D) such other methods as the Committee may
approve, from time to time.
Any payments in shares of Company Stock shall be effected by the delivery of
such shares to the Secretary of the Company, duly endorsed in blank or
accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time
(d) During the lifetime of a Participant, each Option granted
to him or her shall be exercisable only by him or her. No Option shall be
assignable or transferable otherwise than by will or by the laws of descent and
distribution.
(e) Certificates for shares of Company Stock purchased upon
the exercise of an Option shall be issued in the name of the Participant or his
or her beneficiary, as the case may be, and delivered to the Participant or his
or her beneficiary, as the case may be, as soon as practicable following the
effective date on which the Option is exercised.
(iv) Limitations on Grant of Incentive Stock Options.
(A) The aggregate Fair Market Value of shares of
Company Stock with respect to which
Incentive Stock Options granted hereunder are exercisable for the first time by
a Participant during any calendar year under the Plan and any other stock option
plan of the Company (or any "subsidiary corporation" of the Company within the
meaning of Section 424 of the Code) shall not exceed $100,000. Such Fair Market
Value shall be determined as of the date on which each such Incentive Stock
Option is granted. In the event that the aggregate Fair Market Value of shares
of Company Stock with respect to such Incentive Stock Options exceeds $100,000,
then Incentive Stock Options granted hereunder to such Participant shall, to the
extent and in the order in which they were granted, automatically be deemed to
be Non-Qualified Stock Options, but all other terms and provisions of such
Incentive Stock Options shall remain unchanged.
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(B) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed grant, such individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its "subsidiary corporations" (within the meaning
of Section 424 of the Code), unless (I) the exercise price of such Incentive
Stock Option is at least 110% of the Fair Market Value of a share of Company
Stock at the time such Incentive Stock Option is granted and (II) such Incentive
Stock Option is not exercisable after the expiration of five years from the date
such Incentive Stock Option is granted.
(C) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed grant, such individual is not an
employee of the Company.
(v) Effect of Termination of Employment.
(i) In the event the employment of a Participant with
the Company shall terminate (as determined by the Committee in its sole
discretion) for any reason other than Retirement, Disability, death or for
Cause, (A) Options granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until 90
days after the date of such termination, on which date they shall expire, and
(B) Options granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close of
business on the date of such termination; provided, however, that no Option
shall be exercisable after the expiration of its term.
(ii) In the event that the employment of a
Participant with the Company shall terminate on account of the Retirement,
Disability or death of the Participant, (A) Options granted to such Participant,
to the extent that they were exercisable at the time of such termination, shall
remain exercisable until the expiration of their term and (B) Options granted to
such Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of such
termination. The effect of exercising any Incentive Stock Option on a day that
is more than 90 days after the date of such termination (or, in the case of a
termination of employment on account of Disability, on a day that is more than
one year after the date of such termination) will be to cause such Incentive
Stock Option to be treated as a Non-Qualified Stock Option.
(4) In the event of the termination of a Participant's
employment for Cause, all outstanding Options granted to such Participant shall
automatically expire at the commencement of business as of the date of such
termination.
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7. SARs.
The Committee may grant SARs pursuant to the Plan, which SARs shall be
evidenced by agreements in such form as the Committee shall from time to time
approve. SARs shall comply with and be subject to the following terms and
conditions:
(a) Exercise Price.
The exercise price of any SAR granted under the Plan shall be
determined by the Committee in its discretion at the time of the grant of such
SAR.
(b) Benefit Upon Exercise.
(i) The exercise of a SAR with respect to any number
of shares of Company Stock shall entitle a Participant to a cash payment, for
each such share, equal to the excess of (A) the Fair Market Value of a share of
Company Stock on the exercise date over (B) the exercise price of the SAR
(subject to applicable withholding payment requirements).
(ii) All payments under this Section 7(b) shall be
made as soon as practicable, but in no event later than five business days,
after the effective date of the exercise.
(c) Term and Exercise of SARs.
(i) Each SAR shall be exercisable on such date or
dates, during such period, and for such number of shares of Company Stock as
shall be determined by the Committee and set forth in the SAR agreement with
respect to such SAR; provided, however, that no SAR shall be exercisable after
the expiration of ten years from the date such SAR was granted; and provided,
further, however, that each SAR shall be subject to earlier termination,
expiration or cancellation as provided in the Plan.
(ii) Each SAR may be exercised in whole or in part.
The partial exercise of a SAR shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial exercise of a
SAR, the agreement evidencing such SAR, marked with such notations as the
Committee may deem appropriate to evidence such partial exercise, shall be
returned to the Participant exercising such SAR together with the payment
described in Section 7(b) or 7(b)(ii) hereof.
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(iii) A SAR shall be exercised by delivering notice
to the Company's principal office, to the attention of its Secretary, no less
than three business days in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the applicable agreement
evidencing the SAR, shall specify the number of shares of Company Stock with
respect to which the SAR is being exercised and the effective date of the
proposed exercise, and shall be signed by the Participant. In the event a
Participant provides advance notice of his intention to exercise, the
Participant may withdraw such notice at any time prior to the close of business
on the business day immediately preceding the effective date of the proposed
exercise, in which case the agreement evidencing the SAR shall be returned to
the Participant.
(iv) During the lifetime of a Participant, each SAR
granted to him or her shall be exercisable only by him or her. No SAR shall be
assignable or transferable otherwise than by will or by the laws of descent and
distribution.
(d) (i) In the event that the employment of a
Participant with the Company shall terminate (as determined by the Committee in
its sole discretion) for any reason other than Retirement, Disability, death or
for Cause, (A) SARs granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until the
30th day after such termination, on which date they shall expire and (B) SARs
granted to such Participant, to the extent that they were not exercisable at the
time of such termination, shall expire at the close of business on the date of
such termination; provided, however, that no SAR shall be exercisable after the
expiration of its term.
(ii) In the event that the employment of a
Participant with the Company shall terminate on account of the Retirement,
Disability or death of the Participant, (A) SARs granted to such Participant, to
the extent that they were exercisable at the time of such termination, shall
remain exercisable until the expiration of their term and (B) SARs granted to
such Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of such
termination.
(iii) In the event of the termination of the
Participant's employment for Cause, all outstanding SARs granted to such
Participant shall automatically expire at the commencement of business as of the
date of such termination.
(e) Tandem SARs.
SARs may be granted in tandem with Options (or on a
stand-alone basis). To the extent SARs are granted in tandem with Options and
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SARs are exercised, the related Options shall be cancelled. Similarly, if the
Options are exercised, the related SARs shall be cancelled.
8. Restricted Stock.
The Committee may grant shares of Restricted Stock pursuant to the
Plan. Each grant of shares of Restricted Stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Restricted Stock shall comply with and be subject to the
following terms and conditions:
(a) Issue Date and Vesting Date.
At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such shares. The Committee may divide such shares
into classes and assign a different Issue Date and/or Vesting Date for each
class. Except as provided in Sections 8(c) and 8(f) hereof, upon the occurrence
of the Issue Date with respect to a share of Restricted Stock, a share of
Restricted Stock shall be issued in accordance with the provisions of Section
8(d) hereof. Provided that all conditions to the vesting of a share of
Restricted Stock imposed pursuant to Section 8(b) hereof are satisfied, and
except as provided in Sections 8(c) and 8(f) hereof, upon the occurrence of the
Vesting Date with respect to a share of Restricted Stock, such share shall vest
and the restrictions of Section 8(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting.
At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the vesting of such shares as it, in its absolute
discretion, deems appropriate. By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any shares of
Restricted Stock, that the Participant or the Company achieve such performance
criteria as the Committee may specify at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of a share of Restricted Stock, no
transfer of a Participant's rights to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest, or right in, or with respect to, such share, but immediately upon
any attempt to transfer such rights, such share, and all the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
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(d) Issuance of Certificates.
(i) Except as provided in Sections 8(c) or 8(f)
hereof, reasonably promptly after the Issue Date with respect to shares of
Restricted Stock, the Company shall cause to be issued a stock certificate,
registered in the name of the Participant to whom such shares were granted,
evidencing such shares, provided, that the Company shall not cause to be issued
such stock certificate unless it has received a stock power duly endorsed in
blank with respect to such shares. Each such stock certificate shall bear the
following legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS, AND
CONDITIONS (INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST
TRANSFER) CONTAINED IN THE ROBOCOM SYTEMS INC. STOCK OPTION AND
LONG-TERM INCENTIVE COMPENSATION PLAN AND INCENTIVE AWARD AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND ROBOCOM
SYSTEMS INC. A COPY OF THE PLAN AND AGREEMENT IS ON FILE IN THE OFFICE
OF THE SECRETARY OF ROBOCOM SYSTEMS INC., 511 OCEAN AVENUE, MASSAPEQUA,
NEW YORK 11758.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(ii) Each certificate issued pursuant to Section
8(d)(i) hereof, together with the stock powers relating to the shares of
Restricted Stock evidenced by such certificate, shall be deposited by the
Company with a custodian designed by the Company. The Company shall cause such
custodian to issue to the Participant a receipt evidencing the certificates held
by it which are registered in the name of the Participant.
(e) Consequences Upon Vesting.
Upon the vesting of a share of Restricted Stock pursuant to
the terms hereof, the restrictions of Section 8(c) hereof shall cease to apply
to such share. Reasonably promptly after a share of Restricted Stock vests
pursuant to the terms hereof, the Company shall cause to be issued and delivered
to the Participant to whom such shares were granted, a certificate evidencing
such share, free of the legend set forth in Section 8(d)(i) hereof, together
with any other property of the Participant held by the custodian pursuant to
Section 8(d)(ii) hereof.
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(f) Effect of Termination of Employment.
(i) In the event that the employment of a Participant
with the Company shall terminate for any reason other than Cause prior to the
vesting of shares of Restricted Stock granted to such Participant, shall be
forfeited on the date of such termination, provided however, that the Committee
may, in its sole and absolute discretion, vest the Participant in all or any
portion of shares of Restricted Stock which would otherwise be forfeited
pursuant to the provisions of this Section.
(ii) In the event of the termination of a
Participant's employment for Cause, all shares of Restricted Stock granted to
such Participant which have not vested as of the date of such termination shall
immediately be forfeited.
9. Stock Bonuses.
The Committee may grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time and
subject to such conditions as the Committee shall determine at the time of the
grant of such Stock Bonus. Certificates for shares of Company Stock granted as a
Stock Bonus shall be issued in the name of the Participant to whom such grant
was made and delivered to such Participant as soon as practicable after the date
on which such Stock Bonus is required to be paid.
10. Adjustment Upon Changes in Company Stock.
(a) Shares Available for Grants.
In the event of any change in the number of shares of Company
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 Company Stock with
respect to which the Committee may grant Options, SARs, shares of Restricted
Stock, and Stock Bonuses under Section 3 hereof shall be appropriately adjusted
by the Committee. In the event of any change in the number of shares of Company
Stock outstanding by reason of any other event or transaction, the Committee
may, but need not, make such adjustments in the number of shares of Company
Stock with respect to which Options, SARs, shares of Restricted Stock, and Stock
Bonuses may be granted under Section 3 hereof as the Committee may deem
appropriate.
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(b) Outstanding Restricted Stock.
Unless the Committee in its absolute discretion otherwise
determines, any securities or other property (including dividends paid in cash)
received by a Participant with respect to a share of Restricted Stock, the Issue
Date with respect to which occurs prior to such event, but 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 similar corporate exchange will not vest until such share of
Restricted Stock vests and shall be promptly deposited with the custodian
designated pursuant to Section 8(d)(ii) hereof.
The Committee may, in its absolute discretion, adjust any
grant of shares of Restricted Stock, the Issue Date with respect to which has
not occurred as of the date of the occurrence of any of the following events, 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 Participants under the grant.
(c) Outstanding Options and SARs - Increase
or Decrease in Issued Shares Without Consideration.
Subject to any required action by the shareholders of the
Company, in the event of any increase or decrease in the number of issued shares
of Company Stock resulting from a subdivision or consolidations of shares of
Company Stock or the payment of a stock dividend on the shares of Company Stock,
or any other increase or decrease in the number of such shares effected without
receipt of consideration by the Company, the Company shall proportionally adjust
the number of shares of Company Stock subject to each outstanding Option and
SAR, and the exercise price per share of Company Stock of each such Option and
SAR.
(d) Outstanding Options and SARs - Certain Mergers.
Subject to any required action by the shareholders 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 Company Stock receive securities of another
corporation), each Option and SAR 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 Company Stock subject to such Option or SAR would have
received in such merger or consolidation.
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(e) Outstanding Options, SARs - Certain Other Transactions.
In the event of a dissolution or liquidation of the Company; a
sale of substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving corporation; or
a merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of Company Stock receive
securities of another corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the
occurrence of such event, each Option and SAR outstanding immediately prior to
such event (whether or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option or SAR was granted an
amount in cash, for each share of Company Stock subject to such Option or SAR,
respectively, equal to the excess of (A) the value, as determined by the
Committee in its absolute discretion, of the property (including cash) received
by the holder of a share of Company Stock as a result of such event over (B) the
exercise price of such Option or SAR (subject to applicable withholding payment
requirements); or
(ii) provide for the exchange of each Option and SAR
outstanding immediately prior to such event (whether or not then exercisable)
for an option on or stock appreciation right with respect to, as appropriate,
some or all of the property for which such Option or SAR is exchanged 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, if appropriate, provide for a cash payment to the
Participant to whom such Option or SAR was granted in partial consideration for
the exchange of the Option or SAR.
(f) Outstanding Options and SARs - 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
Section 10(c),(d) or (e) hereof, the Committee may in its absolute discretion,
make such adjustments in the number of shares subject to Options or SARs
outstanding on the date on which such change occurs and in the per share
exercise price of each such Option and SAR as the Committee may consider
appropriate to prevent dilution or enlargement or rights.
(g) No Other Rights.
Except as expressly provided in the Plan, no Participant shall
have any rights by reason of any subdivision or consolidation of Company Stock,
the
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payment of any dividend, any increase or decrease in the number of shares of
Company Stock 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 Company Stock, or securities convertible into shares
of Company Stock, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Company Stock subject to an
Incentive Award or the exercise price of any Option or SAR.
11. Rights as a Stockholder.
(a) No Rights as a Stockholder.
No person shall have any rights as a stockholder with respect to
any shares of Company Stock covered by or relating to any Incentive Award
granted pursuant to the Plan until the date the person becomes the owner of
record with respect to such shares. Except as otherwise expressly provided in
Section 10 hereof, no adjustment to any Incentive Award shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
(b) Accrual of Dividends.
Whenever Restricted Shares are paid to a Participant or beneficiary
under the Plan, such Participant or beneficiary shall also be entitled to
receive, with respect to each Restricted Share paid, an amount equal to any cash
dividends, and number of shares of Company Stock equal to any stock dividends,
declared and paid with respect to a share of Company Stock between the date the
relevant Restricted Share award was granted and the date the Restricted Shares
are being distributed. At the discretion of the Committee, interest may be paid
on the amount of cash dividends withheld, including cash dividends on stock
dividends, at a rate and subject to such terms as determined by the Committee.
12. No Special Employment Rights; No Rights to Incentive Award.
Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his or her
employment by or service with the Company or interfere in any way with the right
of the Company, subject to the terms of any separate employment or consulting
agreement to the contrary, at any time to terminate such employment or service
or to increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Incentive Award.
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No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
13. Securities Matters.
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of
Company Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
shares of Company Stock pursuant to the Plan unless and until the Company is
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority, and
the requirements of NASDAQ and any other securities exchange on which shares of
Company Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Company Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements, and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall be effective
only at such time as counsel to the Company shall have determined that the
issuance and delivery of shares of Company Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority, and
the requirements of NASDAQ and any other securities exchange on which shares of
Company Stock are traded. The Committee may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to allow
the issuance of shares of Company Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Committee shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain a refund of any amount
paid with respect thereto.
(c) All Company Stock issued pursuant to the terms of the Plan shall
constitute "restricted securities," as that term is defined in Rule 144
promulgated pursuant to the Securities Act, and may not be transferred except in
compliance
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with the registration requirements of the Securities Act or an exemption
therefrom.
(d) Certificates for shares of Company Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERD FOR SALE, SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE STATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER)
THAT SUCH OFFER SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICATE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Company Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
14. Withholding Taxes.
(a) Cash Remittance.
Whenever shares of Company Stock are to be issued upon the
exercise of an Option, the occurrence of the Issue Date or Vesting Date with
respect to a share of Restricted Stock or the payment of a Stock Bonus, the
Company shall have the right to require the Participant to remit to the Company
in cash an amount sufficient to satisfy federal, state, and local withholding
tax requirements, if any, attributable to such exercise, occurrence or payment
prior to the delivery of any certificate or certificates for such shares. In
addition, upon the exercise of an SAR, the Company shall have the right to
withhold from any cash payment required to be made pursuant thereto an amount
sufficient to satisfy the federal, state and local withholding tax requirements,
if any, attributable to such exercise or grant.
(b) Stock Remittance.
Subject to Section 14(c) hereof, at the election of the
Participant, subject to the approval of the Committee, when shares of Company
Stock are to be issued upon the exercise of an Option, the occurrence of the
Issue Date or
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the Vesting Date with respect to a share of Restricted Stock, or the grant of a
Stock Bonus, in lieu of the remittance required by Section 14(a) hereof, the
Participant may tender to the Company a number of shares of Company Stock
determined by such Participant, the Fair Market Value of which at the tender
date the Committee determines to be sufficient to satisfy the minimum federal,
state and local withholding tax requirements, if any, attributable to such
exercise, occurrence or grant and not greater than the Participant's estimated
total federal, state and local tax obligations associated with such exercise,
occurrence or grant.
(c) Stock Withholding.
The Company shall have the right, when shares of Company Stock
are to be issued upon the exercise of an Option, the occurrence of the Issue
Date or the Vesting Date with respect to a share of Restricted Stock or the
grant of a Stock Bonus, in lieu of requiring the remittance required by Section
14(a) hereof, to withhold a number of such shares, the Fair Market Value of
which at the exercise date the Committee determines to be sufficient to satisfy
the federal, state and local withholding tax requirements, if any, attributable
to such exercise, occurrence or grant and is not greater than the Participant's
estimated total, federal, state and local tax obligations associated with such
exercise, occurrence or grant.
15. Amendment or Termination of the Plan.
The Board may at any time, or from time to time, suspend or terminate
the Plan in whole or in part, or amend it in such respects as the Board may deem
appropriate. No amendment, suspension or termination of the Plan shall, without
the Participant's consent, alter or impair any of the rights or obligations
under any Option theretofore granted to an Participant under the Plan. The Board
may amend the Plan, subject to the limitations cited above, in such manner as it
deems necessary to permit the granting of Incentive Awards meeting the
requirements of future amendments or issued regulations, if any, to the Code or
to the Exchange Act.
16. No Obligation to Exercise.
The grant to a Participant of an Option or a SAR shall impose no
obligation upon such Participant to exercise such Option or SAR.
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17. Transfers Upon Death.
Upon the death of a Participant, outstanding Incentive Awards granted
to such Participant may be exercised only by the executors or administrators of
the Participant's estate or by any person or persons who shall have acquired
such right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgments made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 17, no Incentive Award
shall be transferable, and shall be exercisable only by a Participant during the
Participant's lifetime.
18. Expenses and Receipts.
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general purposes.
19. Failure to Comply.
In addition to the remedies of the Company elsewhere provided for
herein, a failure by a Participant (or beneficiary) to comply with any of the
terms and conditions of the Plan or the agreement executed by such Participant
(or beneficiary) evidencing an Incentive Award, unless such failure is remedied
by such Participant (or beneficiary) within ten days after having been notified
of such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part, as the Committee, in
its absolute discretion may determine.
20. Adoption and Effective Date of Plan.
The Plan was adopted by unanimous written consent of the Board of
Directors of the Company, in lieu of a meeting of the Board, effective as of May
15, 1997 and the Plan was subsequently ratified and approved through action
taken by the written consent of a majority of the shareholders of the
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Company dated effective as of May 15, 1997, in lieu of a meeting of such
shareholders, all as permitted under New York law.
21. Term of the Plan.
The right to grant Incentive Awards under the Plan will terminate upon
the expiration of ten years from the date the Plan was initially adopted.
22. Applicable Law.
Except to the extent preempted by an applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
New York, without reference to the principles of conflicts of law.
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