EXHIBIT 4.2
THE SL GROUP, INC.
1999 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to enable The SL Group, Inc. and its
affiliates to recruit and retain capable employees for the successful conduct of
its business and to provide an additional incentive to directors, officers and
other eligible key employees, consultants and advisors upon whom rest major
responsibilities for the successful operation and management of the Company and
its affiliates.
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the
event of a Change in Control, the greater of (i) the highest price per Share of
Common Stock paid to holders of the Shares of Common Stock in any transaction
(or series of transactions) constituting or resulting in a Change in Control or
(ii) the highest Fair Market Value of a Share during the ninety (90) day period
ending on the date of a Change in Control.
2.2 "Affiliate Corporation" or "Affiliate" shall
mean any corporation, directly or indirectly, through one of more
intermediaries, controlling, controlled by or under common control with the
Company.
2.3 "Agreement" means the written agreement
between the Company and an Optionee evidencing the grant of an
Award.
2.4 "Award" means an Incentive Stock Option,
Nonqualified Stock Option or Stock Appreciation Right granted or to be granted
pursuant to the Plan.
2.5 "Board" means the Board of Directors of the
Company.
2.6 "Cause" means:
(a) Solely with respect to Nonemployee
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Directors, the commission of an act of fraud or an act of
embezzlement, misappropriation or conversion of assets or
opportunities of the Company or any Affiliate, and
(b) For all other purposes, unless otherwise defined in the Agreement
evidencing a particular Award, an Optionee (other than a Nonemployee Director)
(i) intentional failure to perform reasonably assigned duties, (ii) dishonesty
or willful misconduct in the performance of duties, (iii) involvement in a
transaction in connection with the performance of duties to the Company which
transaction is adverse to the interests of the Company and which is engaged in
for personal profit, or (iv) willful violation of any law, rule or regulation in
connection with the performance of duties (other than traffic violations or
similar offenses).
2.7 "Change in Capitalization" means any increase or reduction in the
Number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
2.8 A "Change in Control" shall mean the
occurrence during the term of the Plan of either of any "person" (as such term
is used in Section 13(c) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or a corporation owned directly or indirectly by the stockholders of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of Securities of the Company
representing 50% or more of the total voting power represented by the Company's
then outstanding voting securities, except that the issuance of shares of Common
Stock in a public offering made pursuant to the Securities Act of 1933, as
amended shall not constitute a Change of Control.
2.9 "Code" means the Internal Revenue Code of
1986, as amended.
2.10 "Committee" means a committee, as described in Section 3.1, appointed
by the Board to administer the Plan and to perform the functions set forth
herein.
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2.11 "Company" means Thermo-Mizer Environmental
Corp. (including any and all subsidiaries currently existing or
hereafter acquired or established).
2.12 "Director Option" means an Option for Shares, Stock Appreciation
Rights or Units granted pursuant to Section 6.
2.13 "Disability" means a physical or mental
infirmity which impairs an Optionee's ability to perform substantially his or
her duties for a period of one hundred eighty (180) consecutive days.
2.14 "Disinterested Director" means a director of
the Company who is "disinterested" within the meaning of Rule 16b- 3 under the
Exchange Act.
2.15 "Eligible Individual" means any director (other than a
Nonemployee Director), officer or employee of, or consultant or advisor to, the
Company or an Affiliate who is receiving cash compensation and who is designated
by the Committee as eligible to receive Awards subject to the conditions set
forth herein.
2.16 "Employee Option" means an option granted pursuant to
Section 5.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.18 "Fair Market Value" on any date means the average of the
high and low sales prices of the Shares on such date on the principal securities
exchange on which such Shares are listed, or if such Shares are not so listed or
admitted to trading, the arithmetic mean of the per Share closing bid price and
closing asked price per Share on such date as quoted on the quotation system of
the Nasdaq Stock Market, Inc. or such other market in which such prices are
regularly quoted, or, if there have been no published bid or asked quotations
with respect to Shares on such date, the Fair Market Value as established by the
Board in good faith and, in the case of an Incentive Stock Option, in accordance
with Section 422 of the Code.
2.19 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.20 "Nonemployee Director" means a director of the Company who
is not an employee of the Company or an Affiliate.
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2.21 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.22 "Option" means a Nonqualified Stock Option, an
Incentive Stock Option, a Director Option, an Employee Option or
any or all of them.
2.23 "Optionee" means a person to whom an Option is being granted
under the Plan.
2.24 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.25 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.26 "Plan" means The SL Group, Inc. 1999 Stock
Option Plan.
2.27 "Pooling Transaction" means an acquisition of the Company in
a transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles as defined in Opinion No. 16 of the
Accounting Principles Board and the amendments thereto.
2.28 "Shares" means the common stock, par value
$.001 per share, of the Company and any securities or other consideration
issuable in respect of Shares in connection with a Change in Capitalization or
Change in Control.
2.29 "Stock Appreciation Right" or "SARs" means a
right to receive all or some portion of the increase in the value of the Shares
as provided in Section 8 hereof.
2.30 "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the Company.
2.31 "Successor Corporation" means a corporation,
or a parent or subsidiary thereof within the meaning of 424(a) of the Code,
which issues or assumes a stock option in a transaction to which Section 424(a)
of the Code applies.
2.32 "Ten Percent Stockholder" means an Eligible
Individual, who, at the time an Incentive Stock Option is to be granted to him
or her owns (within the meaning of Section 422(b)
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(6) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, or of a Parent or
a Subsidiary thereof.
3. Administration.
3.1 The Plan shall be administered by the
Committee which shall hold meetings at such times as may be necessary for the
proper administration of the Plan. The Committee shall keep minutes of its
meetings. A quorum shall consist of not fewer than two (2) members of the
Committee and a majority of a quorum may authorize any action. Any decision or
determination reduced to writing and signed by a majority of all of the members
shall be as fully effective as if made by a majority vote at a meeting duly
called and held. The Committee shall consist of at least two (2) directors of
the Company each of whom shall be a Disinterested Director and an Outside
Director. No member of the Committee shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to this
Plan or any transaction hereunder, except for liability arising from his or her
own willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiating for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
3.2 Subject to the express terms and conditions
set forth herein, the Committee shall have the power from time to
time to:
(a) determine those Eligible Individuals to whom Employee
Options shall be granted under the Plan and the number of Employee Options to be
granted and to prescribe the terms and conditions (which need not be identical)
of each such Employee Option, including the purchase price per Share subject to
each Employee Option, and make any amendment or modification to any Option
Agreement consistent with the terms of this Plan;
(b) construe and interpret the Plan and the
Options granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement,
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in the manner and to the extent it shall deem necessary or advisable so that the
Plan complies with applicable law, including Rule 16b-3 under the Exchange Act
and the Code to the extent applicable, and otherwise to make the Plan fully
effective. All decisions and determinations by the Committee or the exercise of
this power shall be final, binding and conclusive upon the Company, its
Affiliate Corporations, the Options, and all other persons having any interest
therein;
(c) determine the duration and purposes for
leaves of absence which may be granted to an Optionee on an individual basis
without constituting a termination of employment or service for purposes of this
Plan;
(d) exercise its discretion with respect to
the powers and rights granted to it as set forth in the Plan; and
(e) exercise such powers and perform such
acts
as it deems necessary or advisable to promote the best interests of the Company
with respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject
of Options granted under the Plan is 500,000. Upon a Change in Capitalization
the maximum number of Shares shall be adjusted in number and kind pursuant to
Section 11. The Company shall reserve for purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be determined by the
Board.
4.2 Upon the granting of an Option, the number of Shares
available under Section 4.1 for the granting of further Options shall be reduced
by the number of shares subject to such Option granted. Whenever any outstanding
Option or portion thereof expires, is canceled or is otherwise terminated for
any reason without having been exercised or payment having been made in respect
of the entire Option, the Shares allocable to the expired, canceled or otherwise
terminated portion of the Option may again be the subject of Options granted
hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, the terms and conditions of which
shall be set forth in
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an Agreement.
5.2 Purchase Price. The purchase price or the manner in which
the purchase price is to be determined for Shares under each Employee Option
shall be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted hereunder shall
be for such term as the Committee shall determine, provided that an Incentive
Stock Option granted hereunder shall not be exercisable after the expiration of
ten (10) years from the date it is granted (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder), and a Nonqualified
Stock Option shall not be exercisable after the expiration of ten (10) years
from the date it is granted. The Committee may, subsequent to the granting of
any Employee Option, extend the term thereof but in no event shall the term as
so extended exceed the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 7.5 hereof, each Employee
Option shall become exercisable in such installments (which need not be equal)
and at such times as may be designated by the Committee and set forth in the
Agreement. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Employee Option expires. The Committee may
accelerate the exercisability of any Option or portion thereof at any time.
5.5 Modification. No modification of an Employee Option shall
adversely alter or impair any rights or obligations under the Employee Option
without the Optionee's consent.
6. Option Grants for Nonemployee Directors.
6.1 Purchase Price. The purchase price for Shares or SARs under each
Director Option shall be not less than to 100% of the Fair Market Value of such
Shares on the date immediately preceding the date of the grant unless
specifically determined to be otherwise by the Committee.
6.2 Vesting. Subject to Sections 6.3 and 7.5 each Director Option shall
become exercisable within four (4) equal
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annual installments beginning on the date of grant; provided, however, that the
Optionee continues to serve as a Director as of such dates. If an Optionee
ceases to serve as a Director for any reason, the Optionee shall have no rights
with respect to that portion of a Director Option which has not then vested
pursuant to the preceding sentence and the Optionee shall automatically forfeit
that portion of the Director Option which remains unvested.
6.3 Limitations on Amendment. The provisions in this Section 6
and Section 7.1 shall not be amended more than once every six (6) months, other
than to comport with changes in the Code or the rules and regulations
thereunder.
7. Terms and Conditions Applicable to All Options.
7.1 Duration. Each Option shall terminate on the date which is
the tenth anniversary of the grant date, unless terminated earlier as follows:
(a) If an Optionee's employment or service
terminates for any reason other than Disability, death or Cause, the Optionee
may for a period of three (3) months after such termination exercise his or her
Option to the extent, and only to the extent, such Option or portion thereof was
vested and exercisable as of the date of the Optionee's employment or service
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's employment or service
terminates by reason of the Optionee's Disability, the Optionee may, for a
period of one (1) year after such termination, exercise his or her Option to the
extent, and only to the extent, such Option or portion thereof was vested and
exercisable as of the date the Optionee's employment or service terminated,
after which time the Option shall automatically terminate in full.
(c) If an Optionee's employment or service
terminates for Cause, the Option granted to the Optionee hereunder shall
immediately terminate in full and no rights thereunder may be exercised.
(d) If an Optionee dies while employed or in the
service of the Company or an Affiliate or within the three (3) month or twelve
(12) month period described in clause (a) or (b), respectively, of this Section
7.1 the Option granted to the Optionee may be exercised at any time within
twelve (12) months after the Optionee's death by the person or persons to whom
such
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rights under the Option shall pass by will, or by the laws of descent and
distribution, after which time the Option shall terminate in full; provided,
however, that an Option may be exercised to the extent, and only to the extent,
such Option or portion thereof was exercisable on the date of death or earlier
termination of the Optionee's services as a Director.
Notwithstanding clauses (a) through (d) above, the Agreement evidencing the
grant of an Employee Option may, in the Committee's sole and absolute
discretion, set forth additional or different terms and conditions applicable to
Employee Options upon a termination or change in status of the employment or
service of an Eligible Individual. Such terms and conditions may be determined
at the time the Employee Option is granted or thereafter.
7.2 Non-transferability. No Option granted
hereunder shall be transferable by the Optionee to whom granted
except by will or the laws of descent and distribution, and an
Option may be exercised during the lifetime of such Optionee only
by the Optionee or his or her guardian or legal representative.
The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee.
7.3 Method of Exercise. The exercise of an option shall be
made only by a written notice delivered in person or by mail to the Secretary or
Chief Financial Officer of the Company at the Company's principal executive
office, specifying the number of Shares to be purchased and accompanied by
payment therefor and otherwise in accordance with the Agreement pursuant to
which the Option was granted. The purchase price for any Shares purchased
pursuant to the exercise of an Option shall be paid in full in cash upon such
exercise. Notwithstanding the foregoing, the Committee shall have discretion to
determine at the time of grant of each Employee Option or at any later date (up
to and including the date of exercise) that the form of payment acceptable in
respect of the exercise of such Employee Option may consist of either of the
following (or any combination thereof): (i) cash or (ii) the transfer of Shares
to the Company upon such terms and conditions as determined by the Committee.
The Optionee shall deliver the Agreement evidencing the Option to the Secretary
or Chief Financial Officer of the Company who shall endorse thereon a notation
of such exercise and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
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7.4 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (i)
the Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered the Shares to the Optionee and (iii) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.
7.5 Effect of Change in Control. In the event of a
Change in Control, all Options outstanding on the date of such
Change in Control shall become immediately and fully vested and
exercisable. In addition, to the extent set forth in an
Agreement evidencing the grant of an Employee Option, an Optionee
will be permitted to surrender for cancellation within sixty (60)
days after such Change in Control, any Employee Option or portion
of an Employee Option to the extent not yet exercised and the
Optionee will be entitled to receive a cash payment in an amount
equal to the excess, if any of (x) (A) in the case of a
Nonqualified Stock Option, the greater of (1) the Fair Market
Value, on the date preceding the date of surrender, of the Shares
subject to the Employee Option or portion thereof surrendered or
(2) the Adjusted Fair Market Value of the Shares subject to the
Employee Option or portion thereof surrendered or (B) in the case
of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered, over (y) the
aggregate purchase price for such Shares under the Employee Option
or portion thereof surrendered; provided, however, that in the
case of an Employee Option granted within six (6) months prior to
the Change in Control to any Optionee who may be subject to
liability under Section 16(b) of the Exchange Act, such Optionee
shall be entitled to surrender for cancellation his or her Option
during the sixty (60) day period commencing upon the expiration of
six (6) months from the date of grant of any such Employee Option.
In the event an Optionee's employment or service with the Company
is terminated by the Company following a Change in Control, each
Option held by the Optionee that was exercisable as of the date of
termination of the Optionee's employment or service shall remain
exercisable for a period ending not before the earlier of the
first anniversary of the termination of the Optionee's employment
or service or the expiration of the stated term of the Option.
8. Stock Appreciation Rights. The Committee may, in its
discretion, either alone or in connection with the grant of an
Employee Option, grant Stock Appreciation Rights in accordance
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with the Plan, the terms and conditions of which shall be set forth in an
Agreement. If granted in connection with an Option, a Stock Appreciation Right
shall cover the same Shares covered by the Option (or such lesser number of
Shares as the Committee may determine) and shall, except as provided in this
Section 8, be subject to the same terms.
8.1 Time of Grant. A Stock Appreciation Right may be granted
(i) at any time if unrelated to an Option, or (ii) if related to an Option,
either at the time of grant, or at any time thereafter during the term of the
Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. Subject to Section 8.8, a Stock
Appreciation Right granted in connection with an Option shall be exercisable at
such time or times and only to the extent that the related Options are
exercisable, and will not be transferable except to the extent the related
Option may be transferable. A Stock Appreciation Right granted in connection
with an Incentive Stock Option shall be exercisable only if the Fair Market
Value of a Share on the date of exercise exceeds the purchase price specified in
the related Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the holder shall be entitled to receive
an amount determined by multiplying (A) the excess of the Fair Market Value of a
Share on the date preceding the date of exercise of such Stock Appreciation
Right over the per Share purchase price under the related Option, by (B) the
number of Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit, in any manner, the
amount payable with respect to any Stock Appreciation Right by including such a
limit in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(c) Treatment of Related Options and Stock
Appreciation Rights Upon Exercise. Upon the exercise of a
Stock Appreciation Right granted in connection with an Option, the
Option shall be canceled to the extent of the number of Shares as to which the
Stock Appreciation Right is exercised, and upon the exercise of an Option
granted in connection with a Stock Appreciation Right or the surrender of such
Option pursuant to Section 7.3, the Stock Appreciation Right shall be canceled
to the extent of the number of Shares as to which the Option is exercised or
surrendered.
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8.3 Stock Appreciation Right Unrelated to an Option.
The Committee may grant to Eligible Individuals Stock Appreciation Rights
unrelated to Options. Stock Appreciation Rights unrelated to Options shall not
have a term of greater than ten (10) years. Upon exercise of a Stock
Appreciation Right unrelated to an Option, the holder shall be entitled to
contain such terms and conditions as to exercisability (subject to Section 8.8),
vesting and duration as the Committee shall determine, but, in no event, shall
they have a term of greater than ten (10) years. Upon exercise of a Stock
Appreciation Right unrelated to an Option, the holder shall be entitled to
receive an amount determined by multiplying (A) the excess of the Fair Market
Value of a Share on the date preceding the date of exercise of such Stock
Appreciation Right over the Fair Market Value of a Share on the date the Stock
Appreciation Right was granted, by (B) the number of Shares as to which the
Stock Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit, in any manner, the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement evidencing the
same Stock Appreciation Right at the time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be
exercised by a holder only by a written notice delivered in person or by mail to
the Secretary or Chief Financial Officer of the Company at the Company's
principal executive office, specifying the number of Shares with respect to
which the Stock Appreciation Right is being exercised. If requested by the
Committee, the holder shall deliver the Agreement evidencing the Stock
Appreciation Right being exercised and the Agreement evidencing any related
Option to the Secretary or Chief Financial Officer of the Company who shall
endorse thereon a notation of such exercise and return such Agreement to the
holder.
8.5 Form of Payment. Payment of the amount determined under
Sections 8.2(b) or 8.3 may be made in the discretion of the Committee, solely in
whole Shares in a number determined at their Fair Market Value in the date
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Committee decides to make
full payment in Shares and the amount payable results in a fractional Share,
payment for the fractional Share will be made in cash. Notwithstanding the
foregoing, no payment in the form of cash may be made upon the exercise of a
Stock Appreciation Right pursuant to Sections 8.2(b) or 8.3 to an officer of the
Company who is subject to liability under Section
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16(b) of the Exchange Act, unless the exercise of such Stock Appreciation Right
is made either (i) during the period beginning on the third business day and
ending on the twelfth business day following the date of release for publication
of the Company's quarterly or annual statements of earnings (the "Window
Period") or (ii) pursuant to an irrevocable election to receive cash made at
least six (6) months prior to the exercise of such Stock Appreciation Right.
8.6 Modification. No modification of an Award shall adversely
alter or impair any rights or obligations under the Agreement without the
holder's consent.
8.7 Effect of Change in Control. In the event of a
Change in Control, all Stock Appreciation Rights shall become
immediately and fully exercisable. In addition, to the extent set
forth in an Agreement evidencing the grant of a Stock Appreciation
Right, a holder will be entitled to receive a payment in cash or
stock, in either case, with a value equal to the excess, if any,
of (A) the greater of (x) the Fair Market Value, on the date
preceding the date of exercise, of the underlying Shares subject
to the Stock Appreciation Right or portion thereof exercised and
(y) the Adjusted Fair Market Value, on the date preceding the date
of exercise, of the Shared over (B) the aggregate Fair Market
Value, on the date the Stock Appreciation Right was granted, of
the Shares subject to the Stock Appreciation Right or portion
thereof exercised; provided, however, that in the case of a Stock
Appreciation Right granted within six (6) months of the Change in
Control to any holder who may be subject to liability under
Section 15(b) of the Exchange Act, such holder shall be entitled
to exercise his or her Stock Appreciation Right during the sixty
(60) day period commencing upon the expiration of six months from
the date of grant of any such Stock Appreciation Right. In the
event of a holder's employment or service with the Company is
terminated by the Company following a Change in Control, each
Stock Appreciation Right held by the holder that was exercisable
as of the date of termination of the holder's employment or
service shall remain exercisable for a period ending but not
before the earlier of the first anniversary of the termination of
the holder's employment or service or the expiration of the stated
term of the Stock Appreciation Right.
9. Adjustment Upon Changes n Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the (i)
maximum number of Shares with respect to which Options may be granted under the
Plan, (ii)
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maximum number of Shares with respect to which Options may be granted to any
Eligible Individual during the term of the Plan, (iii) the number of Shares
which are subject to outstanding Options granted under the Plan, and the
purchase price therefor, if applicable, and (iv) the number of Shares in respect
of which Director Options are to be granted under Section 6.
(b) Any such adjustment in the Shares subject to Incentive
Stock Options (including any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as defined by Section 424(h)(3)
of the Code and only to the extent otherwise permitted by Sections 422 and 424
of the Code.
(c) If, by reason of a Change of Capitalization, an Optionee
shall be entitled to exercise an Option with respect to new, additional or
different shares of stock, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the Shares subject to the Option, prior to
such Change in Capitalization.
10. Effect of Certain Transactions. Subject to Sections
7.5 and 8.7 or as otherwise provided in an Agreement, in the event
of (i) the liquidation or dissolution of the Company or (ii) a
merger or consolidation of the Company, the Plan and the Options
issued hereunder shall continue in effect in accordance with their
respective terms.
11. Interpretation.
(a) The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.
(b) The Director Options described in Section 6 are intended
to qualify as formula awards under Rule 16b-3 promulgated under the Exchange Act
(thereby preserving the disinterested status of Nonemployee Directors receiving
such Awards) and the Committee shall generally interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with the foregoing intent shall be inoperative and shall
interpret and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with the foregoing intent
shall be
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inoperative and shall not affect the validity of the Plan.
(c) Unless otherwise expressly stated in the relevant
Agreement, each Option granted under the Plan is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C) of the
Code. The Committee shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such Options if the ability to exercise
such discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options to fail to qualify as
performance-based compensation.
12. Pooling Transactions.
Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event of a Change in Control which is also
intended to constitute a Pooling Transaction, the Committee shall take such
actions, if any, which are specifically recommended by an independent public
accounting firm engaged by the Company to the extent reasonably necessary in
order to assure that the Pooling Transaction will qualify as such, including but
not limited to (i) deferring the vesting, exercise, payment or settlement in
respect of any Option, (ii) providing that the payment or settlement in respect
of any Option be made in the form of cash, Shares or securities of a successor
or acquiree of the Company, or a combination of the foregoing, and (iii)
providing for the extension of term of any Option to the extent necessary to
accommodate the foregoing, but not beyond the maximum term permitted for any
Option.
13. Termination and Amendment of the Plan.
The Plan shall terminate on the preceding the tenth
anniversary of the date of its adoption by the stockholders of the Company, and
no Option may be granted thereafter. Subject to Section 6.5, the Board may
sooner terminate the Plan, and the Board may at any time and from time to time
amend, modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Award already granted under the Plan, except
with the consent of the Optionee or holder of an SAR nor shall any amendment,
modification or termination deprive any Optionee or holder of an SAR of any
Shares which he or she may have acquired through or as a result of the Plan; and
(b) To the extent necessary under Section 16(b) of the
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Exchange Act and the rules and regulations promulgated thereunder or other
applicable law, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations.
14. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed
as amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
15. Limitation of Liability.
As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any person any right to be granted an
Option other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or implied,
that the Company will employ any person at any particular rate of compensation
or for any particular period of time.
16. Regulations and Other Approvals; Governing Law.
16.1 Except as to matters of Federal law, this Plan and the
rights of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of New York.
16.2 The obligation of the Company to sell or deliver Shares
with respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable Federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be
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deemed necessary or appropriate by the Committee.
16.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
16.4 Each Option is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval or any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.
16.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require an individual receiving Shares
pursuant to an Award granted under the Plan, as a condition precedent to receipt
of such Shares, to represent and warrant to the Company in writing that the
Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an exemption applicable under the Securities Act as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
17. Miscellaneous.
17.1 Multiple Agreements. The terms of each Award granted to
an Eligible Individual may differ from other Awards granted under the Plan at
the same time, or at some other time. The Committee may also grant more than one
Award to a given Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Awards previously
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granted to that Eligible Individual.
17.2 Withholding of Taxes.
(a) At such times as an Optionee or holder of an
SAR recognizes taxable income in connection with the receipt of Shares or cash
hereunder (a "Taxable Event"), the Optionee or holder shall pay other amounts as
may be required by law to be withheld by the Company in issuance or release from
escrow of such Shares or the payment of such cash. The Company shall have the
right to deduct from any payment of cash to an Optionee or holder an amount
equal to the Withholding Taxes in satisfaction of the obligation to pay
Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to
the Company, the Optionee or holder may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the Committee
to have withheld a portion of the Shares then issuable to him or her having an
aggregate Fair Market Value, on the date preceding the date of such issuance,
equal to the Withholding Taxes, provided that in respect of an Optionee or
holder who may be subject to liability under Section 16(b) of the Exchange Act
either; (i)(A) the Tax Election is made at least six (6) months prior to the
date of the Taxable Event and (B) the Tax Election is irrevocable with respect
to all Taxable Events of a similar nature occurring prior to the expiration of
six (6) months following a revocation of the Tax Election; or (ii)(A) the Tax
Election is made at least six (6) months after the date the Award was granted,
(B) the Award is exercised during the Window Period and (C) the Tax Election is
made during the Window Period in which the related Award is exercised or prior
to such Window Period and subsequent to the immediately preceding Window Period.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify this Section 17.2 (other than as regards Director Options)
or impose such other restrictions or limitations on Tax Elections to be made at
such times and subject to such other conditions as the Committee determines will
constitute exempt transactions under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of Section 424
(c) of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Optionee pursuant to the exercise of an Incentive Stock Option
within the two-year period commencing on the day after the date of the grant or
within the one-year period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the Optionee
shall, within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal executive office.
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17.3 Effective Date. The effective date of the Plan
shall be as determined by the Board, subject only to the approval
by the affirmative vote of the stockholders.
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