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MASSBANK CORP.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS.
The name of the plan is the MASSBANK Corp. Amended and Restated 1994 Stock
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the personnel of MASSBANK Corp. (the "Company") and its Subsidiaries upon whose
judgment, initiative and efforts the Company largely depends for the successful
conduct of its business to acquire a proprietary interest in the Company. It is
anticipated that providing such persons with a direct stake in the Company's
welfare will assure a closer identification of their interests with those of the
Company, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards and Performance Share Awards.
"Award Agreement" means the agreement executed and delivered to the
Company by the recipient of an Award.
"Board" means the Board of Directors of the Company.
"Cause" means, for purposes of the Plan, and shall be limited to, a
determination of the Board that the optionee should be dismissed as a result of
(i) dishonesty of the optionee with respect to the Company, MASSBANK (the
"Bank"), or any affiliate thereof; (ii) the optionee's commission of a crime
punishable as a felony; or (iii) the optionee's failure to perform in a
satisfactory manner a substantial portion of such optionee's duties and
responsibilities to the Company or the Bank.
"Change of Control" is defined in Section 14.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Board or any Committee of the Board as described in
Section 2.
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"Disability" means disability as set forth in Section 22(e)(3) of the
Code.
"Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2)(i) promulgated under the Act, or any successor definition under the
Act.
"Effective Date" is defined in Section 16.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related rules, regulations and interpretations.
"Fair Market Value" on any given date means the last sale price at which
Stock is traded on such date or, if no Stock is traded on such date, the most
recent date on which the Stock was traded, as reflected on the NASDAQ National
Market System or, if applicable, any other national stock exchange or trading
system on which the Stock is traded.
"Incentive Stock Option" means any Stock Option designated and qualified
as an "incentive stock option" as defined in Section 422 of the Code.
"Non-Employee Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Normal Retirement" means retirement from active employment with the
Company and its Subsidiaries in accordance with the retirement policies of the
Company and its Subsidiaries then in effect.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means an Award granted pursuant to Section 9(a).
"Restricted Stock Award" means an Award granted pursuant to Section 7(a).
"Stock" means the Common Stock, $0.01 par value, of the Company, subject
to adjustment pursuant to Section 3.
"Stock Appreciation Right" means an Award granted pursuant to Section
6(a).
"Subsidiary" means any bank, corporation or other entity (other than the
Company) in any unbroken chain of banks, corporations or other entities,
beginning with the Company if each of the banks, corporations or entities (other
than the last bank, corporation or entity in the
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unbroken chain) owns stock or other interests possessing 50% or more of the
total combined voting power of all classes of stock or other interests in one of
the other banks, corporations or entities in the chain.
"Unrestricted Stock Award" means an Award granted pursuant to Section 8.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
AND DETERMINE AWARDS, ETC.
(a) Committee. The Plan shall be administered by the Board or a committee
thereof appointed by the Board (such committee, or the Board acting in such
capacity, is hereinafter referred to as the "Committee").
(b) Powers of Committee. The Committee shall have the power and authority
to grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the officers, other employees and directors of the
Company and its Subsidiaries to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Unrestricted Stock and Performance
Shares, or any combination of the foregoing, granted to any one or more
participants;
(iii) to determine the number of shares to be covered by any Award;
(iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award,
which terms and conditions may differ among individual Awards and
participants, and to approve the form of Award Agreements;
(v) to accelerate the exercisability or vesting of all or any
portion of any Award;
(vi) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or credit
amounts equal to interest (at rates determined by the Committee) or
dividends or deemed dividends on such deferrals; and
(vii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including
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related Award Agreements); to make all determinations it deems advisable
for the administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the administration of
the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION.
(a) Shares Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 190,000, subject to adjustment in
accordance with Section 3(b) below. For purposes of this limitation, the shares
of Stock underlying any Awards which are forfeited, cancelled, reacquired by the
Company, satisfied without the issuance of Stock or otherwise terminated (other
than by exercise) shall be added back to the shares of Stock available for
issuance under the Plan so long as the Plan participants to whom such Awards had
been previously granted received no benefits of ownership of the underlying
shares of Stock to which the Award related. Subject to such overall limitation,
shares may be issued up to such maximum number pursuant to any type or types of
Award, including Incentive Stock Options. No more than 70,000 shares may be
issued to any one individual in the form of Options and Stock Appreciation
Rights in any period of three consecutive years, subject to the adjustment of
such number of shares in accordance with Section 3(b) below. Shares issued under
the Plan may be authorized but unissued shares or shares reacquired by the
Company. Upon the exercise of a Stock Appreciation Right settled in stock, the
right to purchase an equal number of shares of Common Stock covered by a related
Stock Option, if any, shall be deemed to have been surrendered and will no
longer be exercisable, and said number of shares shall no longer be available
under the Plan.
(b) Stock Dividends, Mergers, Etc. In the event of a stock dividend, stock
split or similar change in capitalization affecting the Stock, the Committee
shall make appropriate adjustments in (i) the number and kind of shares of stock
or securities that may be issued pursuant to the Plan or on which Awards may
thereafter be granted, (ii) the number and kind of shares remaining subject to
outstanding Awards, and (iii) the option or purchase price in respect of such
shares. In the event of any merger, consolidation, dissolution or liquidation of
the Company, the Committee in its sole discretion (and without the consent of
the optionee) may, as to any outstanding Awards, make such substitution
(including the substitution of shares of capital stock of any other entity) or
adjustment in the aggregate number of shares reserved for issuance under the
Plan and in the number and purchase price (if any) of shares subject to such
Awards as it may determine and as may be permitted by the terms of such
transaction, or accelerate, amend or terminate such Awards upon such terms and
conditions as it shall provide (which, in the case of the termination of the
vested portion of any Award, shall require payment or other consideration which
the Committee deems equitable in the circumstances), subject, however, to the
provisions of Section 14.
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(c) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.
SECTION 4. ELIGIBILITY.
Participants in the Plan will be such officers and other employees of the
Company and its Subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its Subsidiaries and who
are selected from time to time by the Committee, in its sole discretion.
Non-Employee Directors are also eligible to participate in the Plan but only to
the extent provided in Section 5(c) and Section 8(c) below.
SECTION 5. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. To the extent that any option does not qualify
as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after January
17, 2004.
(a) Stock Options Granted to Employees. The Committee in its discretion
may grant Stock Options to employees of the Company or any Subsidiary. Stock
Options granted to employees pursuant to this Section 5(a) shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(i) Exercise Price. The per share exercise price of a Stock Option
shall be determined by the Committee at the time of grant but shall be, in
the case of Incentive Stock Options, not less than 100% of Fair Market
Value on the date of grant. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock
of the Company or any Subsidiary or parent corporation and an Incentive
Stock Option is granted to such employee, the option price shall be not
less than 110% of Fair Market Value on the grant date.
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(ii) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable more
than ten years after the date the option is granted. If an employee owns
or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation and an
Incentive Stock Option is granted to such employee, the term of such
option shall be no more than five years from the date of grant.
(iii) Exercisability; Rights of a Shareholder. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee at or after the
grant date. The Committee may at any time accelerate the exercisability of
all or any portion of any Stock Option. An optionee shall have the rights
of a shareholder only as to shares acquired upon the exercise of a Stock
Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or
in part, by giving written notice of exercise to the Company, specifying
the number of shares to be purchased. Payment of the purchase price may be
made by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) Through the delivery (or attestation to the ownership) of
shares of Stock that have been purchased by the optionee in the open
market or that have been held by the optionee for at least six
months and are not then subject to restrictions under any Company
plan, if permitted by the Committee, in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the
exercise date; or
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable
and acceptable to the Company to pay the option purchase price;
provided that in the event the optionee chooses to pay the option
purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure.
The delivery of certificates representing shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt
from the Optionee (or a purchaser acting in his stead in accordance with
the provisions of the Stock Option) by the Company of the full purchase
price for such shares and the fulfillment of any other
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requirements contained in the Stock Option or applicable provisions of
laws. Payment instruments will be received subject to collection. In the
event an optionee chooses to pay the purchase price by previously-owned
shares of Stock through the attestation method, the shares of Stock
transferred to the optionee upon the exercise of the Stock Option shall be
net of the number of shares attested to.
(v) No Stock Option shall be transferable by the optionee otherwise
than by will or by the laws of descent and distribution and all Stock
Options shall be exercisable, during the optionee's lifetime, only by the
optionee. Notwithstanding the foregoing, the Committee, in its sole
discretion, may provide in an Award Agreement that the optionee may
transfer, without consideration for the transfer, his Non-Qualified Stock
Options to members of his immediate family, to trusts for the benefit of
such family members and to partnerships in which such family members are
the only partners; provided that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this Plan and
the applicable Award Agreement.
(vi) Termination by Death. If any optionee's employment by the
Company and its Subsidiaries terminates by reason of death, the Stock
Option may thereafter be exercised, to the extent exercisable at the date
of death, by the legal representative or legatee of the optionee, for a
period of one year (or such shorter period as the Committee shall specify
at the time of grant or such longer period as the Committee shall specify
at any time) from the date of death, or until the expiration of the stated
term of the Option, if earlier.
(vii) Termination by Reason of Disability or Normal Retirement.
(A) Any Stock Option held by an optionee whose employment by
the Company and its Subsidiaries has terminated by reason of
Disability may thereafter be exercised, to the extent it was
exercisable at the time of such termination, for a period of one
year (or such shorter period as the Committee shall specify at the
time of grant or such longer period as the Committee shall specify
at any time) from the date of such termination of employment, or
until the expiration of the stated term of the Option, if earlier.
(B) (1) Any Non-Qualified Stock Option held by an optionee
whose employment by the Company and its Subsidiaries has terminated
by reason of Normal Retirement may thereafter be exercised, to the
extent it was exercisable at the time of such termination, for a
period of one year (or such shorter period as the Committee shall
specify at the time of grant or such longer period as the Committee
shall specify at any time) from the date of such termination of
employment, or until the expiration of the stated term of the
Option, if earlier.
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(2) Any Incentive Stock Option held by an optionee whose
employment by the Company and its Subsidiaries has terminated by
reason of Normal Retirement may thereafter be exercised, to the
extent it was exercisable at the time of such termination, for a
period of three months (or such shorter period as the Committee
shall specify at the time of grant or such longer period as the
Committee shall specify at any time) from the date of such
termination of employment, or until the expiration of the stated
term of the Option, if earlier.
(C) The Committee shall have sole authority and discretion to
determine whether a participant's employment has been terminated by
reason of Disability or Normal Retirement.
(D) Except as otherwise provided by the Committee at the time
of grant, the death of an optionee during a period provided in this
Section 5(a)(vii) for the exercise of a Non-Qualified Stock Option
(or during the final year of such period if longer than one year),
shall extend such period for one year following death, subject to
termination on the expiration of the stated term of the Option, if
earlier.
(viii) Termination for Cause. If any optionee's employment by the
Company and its Subsidiaries has been terminated for Cause, any Stock
Option held by such optionee shall immediately terminate and be of no
further force and effect; provided, however, that the Committee may, in
its sole discretion, provide that such Stock Option can be exercised for a
period of up to three months from the date of termination of employment or
until the expiration of the stated term of the Option, if earlier.
(ix) Other Termination. Unless otherwise determined by the
Committee, if an optionee's employment by the Company and its Subsidiaries
terminates for any reason other than death, Disability, Normal Retirement
or for Cause, any Stock Option held by such optionee may thereafter be
exercised, to the extent it was exercisable on the date of termination of
employment, for a period of three months (or such shorter period as the
Committee shall specify at the time of grant or such longer period as the
Committee shall specify at any time) from the date of termination of
employment or until the expiration of the stated term of the Option, if
earlier.
(x) Annual Limit on Incentive Stock Options. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
Stock with respect to which Incentive Stock Options granted under this
Plan and any other plan of the Company or its Subsidiaries become
exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000.
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(xi) Form of Settlement. Shares of Stock issued upon exercise of a
Stock Option shall be free of all restrictions under this Plan, except as
otherwise provided in this Plan.
(b) Reload Options. At the discretion of the Committee, Options granted
under Section 5(a) may include a so-called "reload" feature pursuant to which an
optionee exercising an Option and paying the purchase price by the delivery of a
number of shares of Stock in accordance with Section 5(a)(iv)(B) hereof would
automatically be granted an additional Option (with an exercise price equal to
the Fair Market Value of the Stock on the date the additional Option is granted
and with the same expiration date as the original Option being exercised, and
with such other terms as the Committee may provide) to purchase that number of
shares of Stock equal to the number delivered to pay the purchase price in
connection with the exercise of the original Option.
(c) Stock Options Granted to Non-Employee Directors.
(i) Grant of Options. The Committee in its discretion may grant
Non-Qualified Stock Options to Non-Employee Directors subject to the
following terms and conditions (it being noted that under the current
Rules under the Act, such grant may result in the members of the Committee
ceasing for a period of time to be Disinterested Persons and the Plan
ceasing to be qualified under Rule 16b-3).
(ii) Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(c) shall be
equal to the Fair Market Value of the Stock on the date the Stock Option
is granted.
(iii) Exercise; Termination; Non-transferability.
(A) No Option granted under this Section 5(c) may be exercised
before the first anniversary of the date upon which it was granted;
provided, however, that any Option so granted shall become
exercisable upon the termination of service of the Non-Employee
Director because of Disability or death or upon the occurrence of a
Change in Control as set forth in Section 14 hereof. No Option
issued under this Section 5(c) shall be exercisable after the
expiration of ten years from the date upon which such Option is
granted.
(B) The rights of a Non-Employee Director in an Option granted
under Section 5(c) shall terminate three months after such Director
ceases to be a Director of the Company or the specified expiration
date, if earlier; provided, however, that if the Non-Employee
Director resigns, is not re-nominated for election or is removed as
a Director and the Committee determines that the primary reason for
such resignation, failure to re-nominate or removal would
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constitute Cause, then the rights shall terminate immediately on the
date on which he ceases to be a Director.
(C) No Stock Option granted under this Section 5(c) shall be
transferable by the optionee otherwise than by will or by the laws
of descent and distribution, and Options granted under this Section
5(c) shall be exercisable, during the optionee's lifetime, only by
the optionee. Notwithstanding the foregoing, the Committee, in its
sole discretion, may provide in an Award Agreement that the optionee
may transfer, without consideration for the transfer, his Stock
Options to members of his immediate family, to trusts for the
benefit of such family members and to partnerships in which such
family members are the only partners; provided that the transferee
agrees in writing with the Company to be bound by all of the terms
and conditions of this Plan and the applicable Award Agreement. Any
Option granted to a Non-Employee Director and outstanding on the
date of his death may be exercised by the legal representative or
legatee of the optionee for a period of one year from the date of
death or until the expiration of the stated term of the Option, if
earlier.
(D) Options granted under this Section 5(c) may be exercised
only by written notice to the Company specifying the number of
shares to be purchased. Payment of the full purchase price of the
shares to be purchased may be made by one or more of the methods
specified in Section 5(a)(iv). An optionee shall have the rights of
a shareholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.
SECTION 6. STOCK APPRECIATION RIGHTS; DISCRETIONARY PAYMENTS.
(a) Nature of Stock Appreciation Right. A Stock Appreciation Right is an
Award entitling the recipient to receive an amount in cash or shares of Stock
(or in a form of payment permitted under Section 6(e) below) or a combination
thereof having a value equal to (or if the Committee shall so determine at time
of grant, less than) the excess of the Fair Market Value of a share of Stock on
the date of exercise over the exercise price per share set by the Committee at
the time of grant (or over the option exercise price per share, if the Stock
Appreciation Right was granted in tandem with a Stock Option) multiplied by the
number of shares with respect to which the Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine the form of
payment.
(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation
Rights may be granted to any employees of the Company or any Subsidiary by the
Committee in tandem with, or independently of, any Stock Option granted pursuant
to Section 5(a) of the Plan. In the case of a Stock Appreciation Right granted
in tandem with a Non-Qualified Stock Option, such Right may be granted either at
or after the time of the grant of such Option. In
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the case of a Stock Appreciation Right granted in tandem with an Incentive Stock
Option, such Right may be granted only at the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, at the
Committee's discretion, a Stock Appreciation Right granted with respect to less
than the full number of shares covered by a related Stock Option shall only so
terminate if and to the extent that the number of shares covered by the exercise
or termination of the related Stock Option exceeds the number of shares not
covered by such Stock Appreciation Right.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Stock Options
shall be exercisable at such time or times and to the extent that the
related Stock Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Stock Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with a Stock
Option shall be transferable only when and to the extent that the
underlying Stock Option would be transferable. Stock Appreciation Rights
not granted in tandem with a Stock Option shall not be transferable
otherwise than by will or the laws of descent or distribution. All Stock
Appreciation Rights shall be exercisable during the participant's lifetime
only by the participant or the participant's legal representative.
(d) Settlement in the Form of Restricted Shares. Shares of Stock issued
upon exercise of a Stock Appreciation Right shall be free of all restrictions
under this Plan, except as otherwise provided in this Plan.
SECTION 7. RESTRICTED STOCK AWARDS.
(a) Nature of Restricted Stock Award. The Committee may grant Restricted
Stock Awards to any employees of the Company or any Subsidiary. In no event
shall the number of shares of Stock issued pursuant to the grant of Restricted
Stock Awards or the award of Unrestricted Stock for consideration less than Fair
Market Value at the time of the award exceed in the aggregate 10% of the maximum
number of shares of Stock reserved and available for issuance under this Plan,
as such number may be adjusted in accordance with Section 3 hereof. A Restricted
Stock Award is an Award entitling the recipient to acquire, at no cost or for a
purchase price determined by the Committee, shares of Stock subject to such
restrictions
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and conditions as the Committee may determine at the time of grant ("Restricted
Stock"). Conditions may be based on continuing employment and/or achievement of
pre-established performance goals and objectives. A Restricted Stock Award may
be granted to an employee by the Committee in lieu of any compensation otherwise
due to such employee.
(b) Award Agreement. A participant who is granted a Restricted Stock Award
shall have no rights with respect to such Award unless the participant shall
have accepted the Award within 60 days (or such shorter date as the Committee
may specify) following the award date by making payment to the Company by
certified or bank check or other instrument or form of payment acceptable to the
Committee in an amount equal to the specified purchase price, if any, of the
shares covered by the Award and by executing and delivering to the Company a
Restricted Stock Award Agreement in such form as the Committee shall determine.
(c) Rights as a Shareholder. Upon complying with Section 7(b) above, a
participant shall have all the rights of a shareholder with respect to the
Restricted Stock including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 7 and subject to such other conditions contained in
the Award Agreement. Unless the Committee shall otherwise determine,
certificates evidencing shares of Restricted Stock shall remain in the
possession of the Company until such shares are vested as provided in Section
7(e) below.
(d) Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment of the
participant by the Company and its Subsidiaries for any reason (including death,
Disability, Normal Retirement and for Cause), the Company shall have the right,
at the discretion of the Committee, to repurchase shares of Restricted Stock
with respect to which conditions have not lapsed at their purchase price, or to
require forfeiture of such shares to the Company if acquired at no cost, from
the participant or the participant's legal representative. The Company must
exercise such right of repurchase or forfeiture not later than the 90th day
following such termination of employment (unless otherwise specified in the
Award Agreement).
(e) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of performance goals, objectives
and other conditions on which the non-transferability of the Restricted Stock
and the Company's right of repurchase or forfeiture shall lapse. Subsequent to
such date or dates and/or the attainment of such pre-established goals,
objectives and other conditions, the shares on which all restrictions have
lapsed shall no longer be Restricted Stock and shall be deemed "vested." The
Committee at any time may accelerate such date or dates and otherwise waive or,
subject to Section 12, amend any conditions of the Award.
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(f) Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock
Award Agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
SECTION 8. UNRESTRICTED STOCK AWARDS.
(a) Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at a purchase price determined by the Committee) to
any employees of the Company or any Subsidiary shares of Stock free of any
restrictions under the Plan ("Unrestricted Stock"). The number of shares of
Stock issued pursuant to all awards of Unrestricted Stock shall be limited as
described in Section 7(a) hereof. Shares of Unrestricted Stock may be granted or
sold as described in the preceding sentence in respect of past services or other
valid consideration, or in lieu of any cash compensation due or payable to such
employee.
(b) Elections to Receive Unrestricted Stock In Lieu of Compensation. Upon
the request of an employee and with the consent of the Committee, each employee
may, pursuant to an irrevocable written election delivered to the Company no
later than the date or dates specified by the Committee, receive a portion of
the cash compensation otherwise due to him in Unrestricted Stock (valued at Fair
Market Value on the date or dates the cash compensation would otherwise be
paid). Such Unrestricted Stock may be paid to the employee at the same time as
the cash compensation would otherwise be paid, or at a later time, as specified
by the employee in the written election.
(c) Elections to Receive Unrestricted Stock in Lieu of Directors' Fees.
Each Non-Employee Director may, pursuant to an irrevocable written election
delivered to the Company no later than the date or dates specified by the
Committee, receive all or a portion of such fees in Unrestricted Stock (valued
at Fair Market Value on the date or dates the directors' fees would otherwise be
paid). Such Unrestricted Stock may be paid to the Non-Employee Director at the
same time the directors' fees would otherwise have been paid, or at a later
time, as specified by the Non-Employee Director in the written election.
(d) Restrictions on Transfers. The right to receive Unrestricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered, other than
by will or the laws of descent and distribution.
SECTION 9. PERFORMANCE SHARE AWARDS.
(a) Nature of Performance Shares. A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independently of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees of
the Company or any Subsidiary, including
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those who qualify for awards under other performance plans of the Company. The
Committee in its sole discretion shall determine whether and to whom Performance
Share Awards shall be made, the performance goals applicable under each such
Award, the periods during which performance is to be measured, and all other
limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Committee may rely on the performance goals and
other standards applicable to other performance based plans of the Company in
setting the standards for Performance Share Awards under the Plan.
(b) Restrictions on Transfer. Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to shares actually received
by the participant under this Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in the performance plan adopted by the Committee).
(d) Termination. Except as may otherwise be provided by the Committee at
any time, a participant's rights in all Performance Share Awards shall
automatically terminate upon the participant's termination of employment by the
Company and its Subsidiaries for any reason (including death, Disability, Normal
Retirement, termination without Cause and termination for Cause).
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment by the Company and its Subsidiaries, the Committee may
in its sole discretion accelerate, waive or, subject to Section 12, amend any or
all of the goals, restrictions or conditions imposed under any Performance Share
Award.
SECTION 10. TAX WITHHOLDING.
(a) Payment by Participant. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, all Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(b) Payment in Shares. Subject to the approval of the Committee, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of
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shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company shares of Stock owned by the participant with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.
SECTION 11. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may at any time amend or discontinue the Plan and the Committee
may at any time amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially granted
under this Plan) for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder's consent.
SECTION 13. STATUS OF PLAN.
With respect to the portion of any Award which has not been exercised and
any payments in cash, stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder;
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.
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SECTION 14. CHANGE OF CONTROL PROVISIONS.
Upon the occurrence of a Change of Control as defined in this Section 14:
(a) Each Stock Option, Stock Appreciation Right and Performance Share
Award shall automatically become fully exercisable unless the Committee shall
otherwise expressly provide at the time of grant.
(b) Restrictions and conditions on Awards of Restricted Stock shall
automatically be deemed waived, and the recipients of such Awards shall become
entitled to receipt of the Stock subject to such Awards.
(c) To the extent Section 14(a) hereof is not applicable to any Stock
Options, Stock Appreciation Rights or Performance Share Awards, the Committee
may at any time prior to or after a Change of Control accelerate the
exercisability of any Stock Options, Stock Appreciation Rights and Performance
Share Awards to the extent it shall in its sole discretion determine.
(d) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Act) becomes a "beneficial owner" (as such term is defined
in Rule 13d-3 promulgated under the Act) (other than the Company, any
trustee or other fiduciary holding securities under any employee benefit
plan of the Company, or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities;
(ii) persons who, as of the date hereof, constitute the Company's
Board (the "Incumbent Board") cease for any reason, including without
limitation as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board; provided that
any person becoming a director of the Company subsequent to the date
hereof whose nomination was approved by at least a majority of the
directors then comprising the Incumbent Board shall, for purposes of this
Plan, be considered a member of the Incumbent Board;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or other entity,
other than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the
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combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined
voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
SECTION 15. GENERAL PROVISIONS.
(a) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring shares pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities laws and other legal and stock exchange requirements have
been satisfied. The Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
(b) Delivery of Stock Certificates. Delivery of Stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable
only in specific cases. Neither the adoption of this Plan nor the grant of any
Award to any employer shall confer upon any employee any right to continued
employment with the Company or any Subsidiary.
SECTION 16. EFFECTIVE DATE OF PLAN.
This Plan shall become effective upon approval by the holders of a
majority of the shares of capital stock of the Company present or represented
and entitled to vote at a meeting of stockholders. Subject to such approval by
the stockholders, and to the requirement that no Stock may be issued hereunder
prior to such approval, Stock Options and other Awards may be granted hereunder
on and after adoption of this Plan by the Board.
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SECTION 17. GOVERNING LAW.
This Plan shall be governed by Massachusetts law except to the extent such
law is preempted by Federal law.