Exhibit 4.2
TRIDEX CORPORATION
1997 LONG TERM INCENTIVE PLAN
SECTION 1. Purpose.
The purpose of Tridex Corporation's 1997 Long Term Incentive Plan (the
"Plan") is to promote the interests of the Company and its subsidiaries,
affiliates and shareholders by enabling Tridex Corporation (the "Company")
to attract, retain and reward employees, officers and directors of the
Company and its Subsidiaries and Affiliates, and strengthening the
mutuality of interests between such employees, officers and directors and
the Company's shareholders, by offering such employees, officers and
directors performance-based stock incentives and/or other equity interests
or equity-based incentives in the Company, as well as performance-based
incentives payable in cash.
Certain terms used herein are defined in Section 17 of the Plan.
SECTION 2. Stock Subject to the Plan.
The maximum aggregate number of shares of Stock reserved and available
for distribution under the Plan shall be 600,000 shares of Stock; provided,
however, that at no time may the aggregate number of Incentive Stock
Options issued hereunder exceed said maximum aggregate number of shares.
Such shares may consist, in whole or in part, of authorized and unissued
shares, treasury shares or shares reserved for issuance under the Company's
1989 Long Term Incentive Plan, as amended and restated (the "1989 Plan").
Subject to Section 6(b)(iv) below, if any shares of Stock that have
been optioned under the 1989 Plan, or the Plan cease to be subject to a
Stock Option, or if any such shares of Stock that are subject to any
Restricted Stock or Deferred Stock award, Stock Purchase Right or Other
Stock-Based Award granted hereunder are forfeited or any such award
otherwise terminates, without a payment being made to the participant in
the form of Stock, such shares shall be available for distribution in
connection with future awards under the Plan to the extent permitted under
Rule 16b-3 of the Exchange Act of 1934 (the "Exchange Act").
Notwithstanding any other provision of the Plan, shares issued under the
Plan and later repurchased by the Company shall not become available for
future distribution under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, Stock split or other change in corporate
structure affecting the Stock, such substitution or adjustment shall be
made in the aggregate number of shares reserved for issuance under the
Plan, in the number and option price of shares subject to outstanding
Options granted under the Plan, in the number and purchase price of shares
subject to outstanding Stock Purchase Rights under the Plan, and in the
number of shares subject to other outstanding awards granted under the Plan
as may be determined to be appropriate by the Committee, in its sole
discretion, provided that the number of shares subject to any award shall
always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right or Limited Stock Appreciation Right associated with any
Stock Option.
SECTION 3. Eligibility.
Employees of the Company and its Subsidiaries and Affiliates (but
excluding members of the Committee and any person who serves only as a
director) who are responsible for or contribute to the
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management, growth and/or profitability of the business of the Company
and/or its Subsidiaries and Affiliates are eligible to be granted awards
under the Plan; provided, however, that only Employees of the Company and
its Subsidiaries are eligible to be granted Incentive Stock Options under
the Plan.
SECTION 4. Administration.
The Plan shall be administered by a Committee of not less than two (2)
Disinterested Persons, who shall be appointed by and shall be members of
the Board and who shall serve at the pleasure of the Board. If no
Committee has been appointed to administer the Plan, the functions of the
Committee specified in the Plan shall be exercised by the Board.
The Committee shall have full authority to grant, pursuant to the
terms of the Plan, to Employees eligible under Section 3: (i) Stock
Options, (ii) Stock Appreciation Rights, (iii) Limited Stock Appreciation
Rights, (iv) Restricted Stock, (v) Deferred Stock, (vi) Stock Purchase
Rights and/or (vii) Other Stock-Based Awards.
In particular, the Committee shall have the authority:
(i) to select the Employees of the Company and its Subsidiaries and
Affiliates to whom Stock Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase
Rights and/or Other Stock-Based Awards may from time to time be granted
hereunder;
(ii) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase
Rights and/or Other Stock-Based Awards, or any combination thereof, are to
be granted hereunder to one or more eligible Employees;
(iii) to determine the number of shares to be covered by each such
award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any
vesting acceleration or waiver of forfeiture restrictions regarding any
Stock Option or other award;
(v) to determine whether and under what circumstances a Stock Option
may be settled in cash, Restricted Stock and/or Deferred Stock under
Sections 5(k) or (1), as applicable, instead of Stock;
(vi) to determine whether, to what extent and under what circumstances
grants and/or other awards under the Plan and/or other cash awards made by
the Company are to be made, and operate, on a tandem basis vis-a-vis other
awards under the Plan and/or cash awards made outside of the Plan, or on an
additive basis;
(vii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election
of the participant (including providing for and determining the amount (if
any) of any deemed earnings on any deferred amount during any deferral
period); and
(viii) to determine the terms and restrictions applicable to Stock
Purchase Rights and the Stock purchased by exercising such Rights.
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The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time
to time, deem advisable; to interrupt the terms and provisions of the Plan
and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final
and binding on all persons, including the Company and Plan participants.
SECTION 5. Stock Options.
Stock Options may be granted alone, in addition to or in tandem with
other awards granted under the Plan and/or cash awards made outside of the
Plan. Each 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 of two types: (i)
Incentive Stock Options, and (ii) Non-Qualified Stock Options. The
Committee shall have the authority to grant to any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights or Limited Stock
Appreciation Rights).
Options granted under the Plan 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:
a. Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant but shall not be less than one hundred percent (100%) of the Fair
Market Value of the Stock at the date of grant.
b. Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Stock Option shall be exercisable more than ten (10)
years after the date the Option is granted.
c. Exercisability. Stock Options shall be exercisable in three (3)
equal annual installments and subject to such terms and conditions as shall
be determined by the Committee at or after grant and the Committee may
accelerate the exercisability of an option at any time; provided, however,
that, except as provided in Sections 5(f), 5(g) and 11, unless and
otherwise determined by the Committee at or after grant, no Stock Option
shall be exercisable prior to the six-month anniversary date of the
granting of the Option. If the Committee provides, in its sole discretion,
that any Stock Option is exercisable only in installments, the Committee
may waive such installment exercise provisions at any time at or after
grant in whole or in part, based on such factors as the Committee shall
determine in its sole discretion.
d. Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c), Stock Options may be exercised in
whole or in part at any time during the option period, by giving written
notice of exercise to the Company specifying the number of shares to be
purchased.
Such notice shall be accompanied by payment in full of the purchase
price, either by check, note or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or
after grant, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee or, in the case of the
exercise of a Non-Qualified Stock Option, payment in full or in part may be
made in the form of Restricted Stock or Deferred Stock subject to an award
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hereunder (based, in each case, on the Fair Market Value of the Stock on
the date the option is exercised, as determined by the Committee).
If payment of the option exercise price of Non-Qualified Stock Option
is made in whole or in part in the form of Restricted Stock or Deferred
Stock, such Restricted Stock or Deferred Stock (and any replacement shares
relating thereto) shall remain (or be) restricted or deferred, as the case
may be, in accordance with the original terms of the Restricted Stock award
or Deferred Stock award in question, and any additional Stock received upon
the exercise shall be subject to the same forfeiture restrictions or
deferral limitations, unless otherwise determined by the Committee, in its
sole discretion, at or after grant.
No shares of Stock shall be issued until full payment therefor has
been made. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Stock, and compliance
with the applicable requirements, if any, of Section 14(a), no right to
vote or receive dividends or any other rights as a shareholder shall exist
with respect to such Stock Option.
The Committee, in its sole discretion, may elect, in lieu of accepting
full payment from the Employee and delivering all or a portion of the
shares of Stock for which a Stock Option has been exercised, to pay the
Employee an amount in cash and/or shares of Stock equal in value to the
excess of the Fair Market Value of one share of Stock over the option price
per share specified in the related Stock Option multiplied by the number of
shares in respect of which the Stock Option shall have been exercised, with
the Committee having the right to determine the form of payment. When
payment is to be made in shares of Stock, the number of shares to be paid
shall be calculated on the basis of the average of the highest and lowest
quoted selling price, regular way, of the Stock on NASDAQ as of the date
the Stock Option is exercised. The Committee's election pursuant to this
subparagraph shall be made by giving written notice of such election to the
employee (or other person exercising the option).
e. Non-Transferability of Options. No Stock Option shall be
transferable by the optionee other than as provided below:
(i) Incentive Stock Options: Any Stock Option issued pursuant
to and intended to be an Incentive Stock Option under the Plan shall not be
transferable by the optionee other than by will or the laws of descent and
distribution.
(ii) Non-Qualified Stock Options: Any Stock Option issued
pursuant to the Plan which is not intended to qualify as an Incentive Stock
Option, shall not be transferable by the optionee other than by will or the
laws of descent and distribution; provided, however, that to the extent
that transferability pursuant to the following provisions would not
adversely affect the compliance of the Plan with Rule 16b-3, such Stock
Option may also be transferred, for no consideration, by the optionee to
the following transferees ("Transferee"):
(A) a member of the optionee's immediate family. For this
purpose, "immediate family" shall include only brothers and sisters
(whether by the whole or half blood) spouse, parents, and natural or
adopted children;
(B) a trust for the benefit of members of the optionee's
immediate family; or
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(C) a partnership whose only partners are members of the
Optionee's immediate family if the Transferee shall agree to be subject to
the same restrictions and conditions as relate to the optionee pursuant to
the Plan.
f. Termination by Death. Subject to Section 5(j), if an optionee's
employment by the Company and any Subsidiary or Affiliate terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent such option was exercisable at the time of death
or on such accelerated basis as the Committee may determine at or after
grant (or as may be determined in accordance with procedures established by
the Committee), by the legal representative of the estate or by the legatee
of the optionees under the will of the optionee, for a period of one year
(or such other period as the Committee may specify at grant) from the date
of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.
g. Termination by Reason of Disability. Subject to Section 5(j), if
an optionee's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Disability, any Stock Option held by such optionee
may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), for a period of
ninety (90) days (or such other period as the Committee may specify at
grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter, provided, however, that, if the optionee dies within such ninety
(90) days period (or such other period as the Committee shall specify at
grant), any unexercised Stock Option held by such optionee shall thereafter
be exercisable to the extent to which it was exercisable at the time of
death for a period of twelve (12) months, from the date of such death or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of termination of employment by reason
of Disability, if an Incentive Stock Option is exercisable after the
expiration of the exercise periods that apply for purposes of Section 422
of the Code, such Stock Option shall be treated as a Non-Qualified Stock
Option.
h. Termination by Reason of Retirement. Subject to Section 5(j), if
an optionee's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Stock Option held
by such optionee may thereafter be exercised by the optionee, to the extent
it was exercisable at the time of such Retirement or on such accelerated
basis as the Committee may determine at or after grant (or as may be
determined in accordance with procedures established by the Committee), for
a period of ninety (90) days (or such other period as Committee may specify
at grant) from the date of such termination of employment or the expiration
of the stated term of such Stock Option, whichever period is the shorter;
provided, however, that, if the optionee dies within such ninety-day period
(or such other period as the Committee may specify at grant), any
unexercised Stock Option held by such optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of
death, for a period of twelve (12) months from the date of such death or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of termination of employment by reason
of Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422
of the Code, the option will thereafter by treated as a Non-Qualified Stock
Option.
i. Other Termination. Unless otherwise determined by the Committee
(or pursuant to procedures established by the Committee) at or after grant,
if an optionee's employment by the Company and any Subsidiary or Affiliate
terminates for any reason other than death, Disability or Normal or Early
Retirement, the Stock Option shall thereupon terminate, except that such
Stock Option may be exercised, to the extent otherwise then exercisable,
for the lesser of ninety (90) days or the balance of such Stock
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Option's term if the optionee is involuntarily terminated without Cause by
the Company and any Subsidiary or Affiliate. For purposes of the Plan,
"Cause" means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, or a participant's willful
misconduct or dishonesty, any of which is directly and materially harmful
to the business or reputation of the Company or any Subsidiary or
Affiliate.
j. Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options
shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the
optionee(s) affected, to disqualify any Incentive Stock Option under such
Section 422. Incentive Stock Options shall not be treated as "incentive
stock options" to the extent that the aggregate Fair Market Value
(determined at the time the Incentive Stock Option is granted) of Stock
with respect to which Incentive Stock Options meeting the requirements of
Section 422(b) of the Code are exercisable for the first time by any
participant during any calendar year (under all plans of the Company and
its Subsidiaries) exceeds $100,000, and such excess shall be treated as a
Non-Qualified Stock Option.
To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:
(i) if (x) a participant's employment is terminated by reason of
death, Disability or Normal or Early Retirement, and (y) the portion of any
Incentive Stock Option that is otherwise exercisable during the
post-termination period specified under Sections 5(f), (g) or (h) is
greater than the portion of such option that is immediately exercisable as
an "incentive stock option" during such post-termination period under
Section 422, such excess shall be treated as a Non-Qualified Stock Option;
and
(ii) if the exercise of an Incentive Stock Option is accelerated
by reason of a Change in Control, any portion of such option that is not
exercisable as an Incentive Stock Option by reason of the $100,000
limitation contained in Section 422(d) of the Code shall be treated as a
Non-Qualified Stock Option.
k. Buyout Provisions. The Committee may at any time offer to
purchase an Option previously granted for a payment in cash, Stock,
Deferred Stock or Restricted Stock, based on such terms and conditions as
the Committee shall establish and communicate to the optionee at the time
that such offer is made.
l. Settlement Provisions. If the option agreement so provides at
grant or is amended after grant and prior to exercise to so provide (with
the optionee's consent), the Committee may require that all or part of the
shares to be issued with respect to the spread value of an exercised Option
take the form of Deferred or Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value (as determined by
the Committee) of such Deferred or Restricted Stock determined without
regard to the deferral limitations and/or forfeiture restrictions involved.
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SECTION 6. Stock Appreciation Rights.
a. Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan.
In the case of a Non-Qualified Stock Option, such rights may be granted
either at or after the time of the grant of such Stock Option. In the case
of an Incentive Stock Option, such rights may be granted only at the time
of the grant of such Stock Option. A Stock Appreciation Right or
applicable portion thereof granted with respect to a given Stock Option
shall terminate and no longer be exercisable upon the termination or
exercise of the related Stock Option, subject to such provisions as the
Committee may specify at grant where a Stock Appreciation Right is granted
with respect to less than the full number of shares covered by a related
Stock Option.
A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the
Committee for such purpose. Upon such exercise, the optionee shall be
entitled to receive an amount determined in the manner prescribed in
Section 6(b). Stock Options relating to exercised Stock Appreciation
Rights shall no longer be exercisable to the extent that the related Stock
Appreciation Rights have been exercised.
b. Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions, not inconsistent with the provisions of the
Plan, as shall be determined from time to time by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only at such
time or times and to the extent that Stock Options to which they relate
shall be exercisable in accordance with the provisions of Section 5 and
this Section 6 of the Plan; provided, however, that any Stock Appreciation
Right granted to an optionee subject to Section 16(b) of the Exchange Act
subsequent to the grant of the related Stock Option shall not be
exercisable during the first six (6) months of its term unless the grant
has been approved in accordance with the approval requirements of Rule
16b-3(d)(1) or (2), except that this special limitation shall not apply in
the event of death or Disability of the optionee prior to the expiration of
the six-month period. The exercise of Stock Appreciation Rights held by
optionees who are subject to Section 16(b) of the Exchange Act shall comply
with Rule 16b-3 promulgated thereunder, to the extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash and/or shares of Stock equal
in value to the excess of the Fair Market Value of one share of Stock over
the option price per share specified in the related Stock Option multiplied
by the number of shares in respect of which the Stock Appreciation Right
shall have been exercised, with the Committee having the right to determine
the form of payment. When payment is to be made in shares of Stock, the
number of shares to be paid shall be calculated on the basis of the average
of the highest and lowest quoted selling price, regular way, of the Stock
on NASDAQ as of the date of exercise.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be
transferable under Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation
set forth in Section 2 of the Plan on the number of shares of Stock to be
issued under the Plan, but only to the extent of the number of shares
issued under the Stock Appreciation Right at the time of exercise based on
the value of the Stock Appreciation Right at such time.
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(v) In its sole discretion, the Committee may grant "Limited"
Stock Appreciation Rights under this Section 6, i.e., Stock Appreciation
Rights that become exercisable only in the event of a Change in Control
and/or a Potential Change in Control, subject to such terms and conditions
as the Committee may specify at grant. Such Limited Stock Appreciation
Rights shall be settled solely in cash.
(vi) The Committee, in its sole discretion, may also provide
that, in the event of a Change in Control and/or a Potential Change in
Control, the amount to be paid upon the exercise of a Stock Appreciation
Right or Limited Stock Appreciation Right shall be based on the Change of
Control Price, subject to such terms and conditions on the Committee may
specify at grant.
SECTION 7. Restricted Stock.
a. Administration. Shares of Restricted Stock may be issued either
alone, in addition to or in tandem with other awards granted under the Plan
and/or cash awards made outside the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the
price (if any) to be paid by the recipient of Restricted Stock (subject to
Section 7(b)), the time or times within with such awards may be subject to
forfeiture, and all other terms and conditions of the awards.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the
Committee may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with
respect to each recipient.
b. Awards and Certificates. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such
award, unless and until such recipient has executed an agreement evidencing
the award and has delivered a fully executed copy thereof to the Company,
and has otherwise complied with the applicable terms and conditions of such
award.
(i) The purchase price for shares of Restricted Stock shall be
equal to, less than or greater than their par value and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period
of sixty (60) days (or such shorter period as the Committee may specify at
grant) after the award date, by executing a Restricted Stock award
agreement and paying whatever price (if any) is required under Section
7(b)(i).
(iii) Each participant receiving a Restricted Stock award
shall be issued a stock certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of such
participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award.
(iv) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such award.
c. Restrictions and Conditions. The shares of Restricted Stock
awarded pursuant to this Section 7 shall be subject to the following
restrictions and conditions:
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(i) Subject to the provisions of the Plan and the award
agreement, during a period set by the Committee commencing with the date of
such award (the "Restricted Period"), the participant shall not be
permitted to sell, transfer, pledge or assign shares of Restricted Stock
awarded under the Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such restrictions in installments
and may accelerate or waive such restriction in whole or in part, based on
service, performance and/or such other factors or criteria as the Committee
may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i), the participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a shareholder of the Company,
including the right to vote the shares, and the right to receive any cash
dividends. The Committee, in its sole discretion, as determined at the
time of award, may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested, subject to
Section 14(e), in additional Restricted Stock to the extent shares are
available under Section 2, or otherwise reinvested. Pursuant to Section 2
above, Stock dividends issued with respect to Restricted Stock shall be
treated as additional shares of Restricted Stock that are subject to the
same restrictions and other terms and conditions that apply to the shares
with respect to which such dividends are issued.
(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a participant's
employment with the Company and any Subsidiary or Affiliate for any reason
during the Restriction Period, all shares still subject to restriction will
vest, or be forfeited, in accordance with the terms and conditions
established by the Committee at or after grant.
(iv) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Periods,
certificates for an appropriate number of unrestricted shares shall be
delivered to the participant promptly.
d. Minimum Value Provision. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a
tandem performance-based or other award designed to guarantee a minimum
value, payable in cash or Stock to the recipient of a Restricted Stock
award, subject to such performance, future service deferral and other terms
and conditions as may be specified by the Committee.
SECTION 8. Deferred Stock.
a. Administration. Deferred Stock may be awarded either alone, in
additions to or in tandem with other awards granted under the Plan and/or
cash awards made outside the Plan. The Committee shall determine the
eligible persons to whom and the time or times at which Deferred Stock
shall be awarded, the number of shares of Deferred Stock to be awarded to
any person, the duration of period (the "Deferral Period") during which,
and the conditions under which, receipt of the Stock will be deferred, and
the other terms and conditions of the award in addition to those set forth
in Section 8(b).
The Committee may condition the grant of Deferred Stock upon the
attainment of specified performance goals or such other factors or criteria
as the Committee shall determine, in its sole discretion.
The provisions of Deferred Stock awards need not be the same with
respect to each recipient.
b. Terms and Conditions. The shares of Deferred Stock awarded
pursuant to this Section 8 shall be subject to the following terms and
conditions:
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(i) Subject to the provisions of the Plan and the award
agreement referred to in Section 8(b)(vi) below, Deferred Stock awards may
not be sold, assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period (or the
Elective Deferral Period referred to in Section 8(b)(v), where applicable),
share certificates shall be delivered to the participant, or his legal
representative, in a number equal to the shares covered by the Deferred
Stock award.
(ii) Unless otherwise determined by the Committee at grant,
amounts equal to any dividends declared during the Deferral Period with
respect to the number of shares covered by a Deferred Stock award will be
paid to the participant currently, or deferred and deemed to be reinvested
in additional Deferred Stock, or otherwise reinvested, all as determined at
or after the time of the award by the Committee, in its sole discretion.
(iii) Subject to the provision of the award agreement and
this Section 8, upon termination of a participant's employment with the
Company and any Subsidiary or Affiliate for any reason during the Deferral
Period for a given award, the Deferred Stock in question will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after grant.
(iv) Based on service, performance and/or such other factors or
criteria as the Committee may determine, the Committee may, at or after
grant, accelerate the vesting of all or any part of any Deferred Stock
award and/or waive the deferral limitations for all or any part of such
award.
(v) A participant may elect to further defer receipt of an award
(or an installment of an award) for a specified period or until a specified
event (the "Elective Deferral Period"), subject in each case to the
Committee's approval and to such terms as are determined by the Committee,
all in its sole discretion. Subject to any exceptions adopted by the
Committee, such election must generally be made at least twelve (12) months
prior to completion of the Deferral Period for such Deferred Stock award
(or such installment).
(vi) Each award shall be confirmed by, and subject to the terms
of, a Deferred Stock agreement executed by the Company and the participant.
c. Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a
tandem performance-based or other award designed to guarantee a minimum
value, payable in cash or Stock to the recipient of a Deferred Stock award,
subject to such performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
SECTION 9. Stock Purchase Rights.
a. Awards and Administration. Subject to Section 2 above, the
Committee may grant eligible participants Stock Purchase Rights which shall
enable such participants to purchase Stock (including Deferred Stock and
Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at fifty percent (50%) of such Fair Market Value on such
date;
(iii) at an amount equal to Book Value on such date; or
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(iv) at an amount equal to the par value of such Stock on such
date.
The Committee shall also impose such deferral, forfeiture and/or other
terms and conditions as it shall determine, in its sole discretion, on such
Stock Purchase Rights or the exercise thereof.
The terms of Stock Purchase Rights awards need not be the same with
respect to each participant.
Each Stock Purchase Right award shall be confirmed by, and be subject
to the terms of, a Stock Purchase Rights Agreement.
b. Exercisability. Stock Purchase Rights shall generally be
exercisable for such period after grant as is determined by the Committee
not to exceed thirty (30) days. However, the Committee may provide, in its
sole discretion, that the Stock Purchase Rights of persons potentially
subject to Section 16(b) of the Exchange Act shall not become exercisable
until six (6) months and one (1) day after the grant date, and shall become
exercisable for ten (10) trading days at the purchase price specified by
the Committee in accordance with Section 9(a).
SECTION 10. Other Stock-Based Awards.
a. Administration. Other awards of Stock and other awards that are
valued in whole or in part by reference to, or are otherwise based on,
Stock ("Other Stock-Based Awards"), including, without limitation,
performance shares, convertible preferred stock, convertible debentures,
exchangeable securities and Stock awards or options valued by reference to
Book Value or Subsidiary performance, may be granted alone, in addition to
or in tandem with Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock or Stock Purchase Rights granted under the Plan
and/or cash awards made outside of the Plan.
Subject to the provision of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which
such awards shall be made, the number of shares of Stock, or units in the
case of Other Stock-Based Awards, to be awarded pursuant to such awards,
and all other conditions of the awards. The Committee shall also have the
authority to provide for the payment of any such award upon the completion
of a specified performance period, in cash or Stock, or a combination of
cash or Stock.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
b. Terms and Conditions. Other Stock-Based Awards made pursuant to
this Section 10 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Section 10(b)(v) below, shares subject to awards
made under this Section 10 may not be sold, assigned, transferred, pledged
or otherwise encumbered prior to the date on which the shares are issued,
or, if later, the date on which any applicable restriction, performance or
deferral period lapses.
(ii) Subject to the provisions of the Plan and the award
agreement and unless otherwise determined by the Committee at grant, the
recipient of an award under this Section 10 shall be entitled to receive,
currently or on a deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of shares covered by award,
as determined at the time of the award by the
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Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional
Stock or otherwise reinvested.
(iii) Any award under Section 10 and any Stock covered by any
such award shall vest or be forfeited to the extent so provided in the
award agreements, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or all of an
award under this Section 10.
(v) Each award under this Section 10 shall be confirmed by, and
subject to the terms of, an agreement or other instrument by the Company
and by the participant.
(vi) Stock (including securities convertible into Stock) issued
on a bonus basis under this Section 10 may be issued for no cash
consideration. Stock (including securities convertible into Stock)
purchased pursuant to a purchase right awarded under this Section 10 shall
be priced at least fifty percent (50%) of the Fair Market Value of the
Stock on the date of grant.
SECTION 11. Change in Control Provisions.
a. Impact of Event. In the event of:
(1) a Change in Control; or
(2) a Potential Change in Control, but only if and to the extent
so determined by the Committee or the Board at or after grant (subject to
any right of approval expressly reserved by the Committee or the Board at
the time of such determination); the following acceleration and valuation
provisions shall apply:
(i) Any Stock Appreciation Rights (including, without
limitation, any Limited Appreciation Rights) outstanding for at least
six (6) months and any Stock Options awarded under the Plan not
previously exercisable and vested shall become fully exercisable and
vested.
(ii) The restrictions and deferral limitations applicable to
any Restricted Stock, Deferred Stock, Stock Purchase Rights and Other
Stock-Based Awards, in each case to the extent not already vested under the
Plan, shall lapse and such shares shall be deemed fully vested.
(iii) The value of all outstanding Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase
Rights and Other Stock-Based Awards, in each case to the extent vested,
shall, unless otherwise determined by the Committee in its sole discretion
at or after grant but prior to any Change in Control, be cashed out on the
basis of the Change in Control Price as of the date such Change in Control
or such Potential Change in Control is determined to have occurred or such
other date as the Committee may determine prior to the Change in Control.
b. Definition of "Change in Control". For purposes of Section
ll(a), a "Change in Control" means the happening of any of the following:
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(i) When any "person" as defined in Section 3(a)(9) of the
Exchange Act and as used in Section 13(d) and 14(d) thereof, other than
Alvin Lukash, Leslie Lukash, Mildred Lukash, Seth Lukash, Laura Lukash Knee
or Samuel Knee and their respective heirs (collectively, the "Lukash
Group"), including a "group" as defined in Section 13(d) of the Exchange
Act but excluding the Company and any Subsidiary and any employee benefit
plan sponsored or maintained by the Company or any Subsidiary (including
any trustee of such plan acting as trustee), directly or indirectly,
becomes the "beneficial owner" (as defined in Rule 13(d)-3 under the
Exchange Act, of securities of the Company representing twenty percent
(20%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) When, during any period of twenty-four (24) consecutive
months during the existence of the Plan, the individuals who, at the
beginning of such period, constitute the Board (the "Incumbent Directors")
cease for any reason other than death to constitute at least a majority
thereof, provided, however, that a director who was not a director at the
beginning of such twenty-four (24) month period shall be deemed to have
satisfied such twenty-four (24) month requirement (and be an Incumbent
Director) if such director was elected by, or on the recommendations or
with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually (because they were
directors at the beginning of such twenty-four (24) month period) or by
prior operations of this Section ll(b)(ii); or (iii) The occurrence of a
transaction requiring shareholder approval for the acquisition of the
Company by an entity other than the Company or a Subsidiary through
purchase of assets, or by merger, or otherwise.
c. Definition of Potential Change in Control. For purposes of
Section ll(a), a "Potential Change in Control" means the happening of any
one of the following:
(i) The approval by shareholders of an agreement by the Company,
the consummation of which would result in a Change in Control of the
Company as defined in Section ll(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by an entity, person or group (other than the Company or a
Subsidiary or any Company employee benefit plan (including any trustee or
such plan acting as such trustee), any member or members of the Lukash
Group or the Lukash Group) or securities of the Company representing five
percent (5%) or more of the combined voting power of the Company's
outstanding securities and the adoption by the Board of Directors of a
resolution to the effect that a Potential Change in Control of the Company
has occurred for the purposes of the Plan.
d. Change in Control Price. For purposes of this Section 11,
"Change Control Price" means the highest price per share paid in any
transaction reported on the NASDAQ, or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the
Company at any time during the sixty (60) day period immediately preceding
the occurrence of the Change in Control period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence
of the Potential Change in Control event), in each case as determined by
the Committee except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Stock Options, such price shall be based
only on transactions reported for the date on which the optionee exercises
such Stock Appreciation Rights (or Limited Stock Appreciation Rights) or,
where applicable, the date on which a cashout occurs under Section
ll(a)(ii).
SECTION 12. Amendment and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights
of an optionee or participant under a Stock
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Option, Stock Appreciation Right, Limited Stock Appreciation Right,
Restricted or Deferred Stock award, Stock Purchase Right or Other
Stock-Based Award theretofore granted, without the optionee's or
participant's consent, or which, without the approval of the Company's
shareholders, would:
a. except as generally provided in this Plan, increase the total
number of shares reserved for the purpose of the Plan;
b. decrease the option price of any Stock Option to less than one
hundred percent (100%) of the Fair Market Value on the date of grant, or
change the pricing terms of Section 9(a);
c. change the Employees eligible to participate in the Plan; or
d. extend the maximum option period under Section 5(d) of the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to
Section 2 above, no such amendment shall impair the rights of any holder
without the holder's consent. The Committee may also substitute new Stock
Options for previously granted Stock Options (on a one for one or other
basis), including previously granted Stock Options having higher option
exercise prices.
Subject to the above provisions, the Board shall have broad authority
to amend the Plan to take into account changes in applicable securities and
tax laws and accounting rules, as well as other developments.
SECTION 13. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give
any such participant or optionee any rights that are greater than those of
a general creditor of the Company. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Stock or payments in lieu of
or with respect to awards hereunder, provided, however, that, unless the
Committee determines otherwise with the consent of the affected
participant, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
SECTION 14. General Provisions.
a. The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option or other award under the Plan to represent to
and agree with the Company in writing that the optionee or participant is
acquiring the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to compliance with such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Commission, any stock
exchange upon which the Stock is then listed, and any applicable Federal or
state securities law, and shall further be subject to the approval of
counsel for the Company with respect to such compliance. The Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
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b. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.
c. The adoption of the Plan shall not confer upon any employee of
the Company or any Subsidiary or Affiliate any right to continue employment
with the Company or a Subsidiary or Affiliate, as the case may be, nor
shall it interfere in any way with the right of the Company or a Subsidiary
or Affiliate to terminate the employment of any of its employees at any
time.
d. No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any award under the Plan, the participant shall
pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any Federal, state, or local taxes of any kind
required by law to be withheld with respect to such amount. Unless
otherwise determined by the Committee, withholding obligations may be
settled with Stock, including Stock that is part of the award that gives
rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements and the
Company and its Subsidiaries or Affiliates shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment or any
kind otherwise due to the participant.
e. The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or in Deferred Stock or other
types of Plan awards) at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 2 for
such reinvestment (taking into account then outstanding Stock Options,
Stock Purchase Rights and other Plan awards).
f. The Plan and all awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Connecticut.
SECTION 15. Effective Date of Plan.
The Plan shall be effective upon approval of the Plan by a majority of
the votes cast by the holders of the Company's common stock at the next
annual shareholder's meeting in 1997. Any grants made under the Plan prior
to such approval shall be effective when made (unless otherwise specified
by the Committee at the time of grant), but shall be conditioned on, and
subject to, such approval of the Plan by such shareholders.
SECTION 16. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock award,
Deferred Stock award, Stock Purchase Right or Other Stock-Based Award shall
be granted pursuant to the Plan on or after the tenth anniversary of the
date of shareholder approval, but awards granted prior to such tenth
anniversary may extend beyond that date.
SECTION 17. Definitions.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer
under the Plan, provided that the Company directly or indirectly
25
owns at least twenty percent (20%) of the combined voting power of all
classes of stock of such entity or at least twenty percent (20%) of the
ownership interests in such entity.
b. "Board" means the Board of Directors of the Company.
c. "Book Value" means, as of any given date, on a per share basis,
(i) the shareholders' equity in the Company as of the end of the
immediately preceding fiscal year as reflected in the Company's
consolidated balance sheet, subject to such adjustments as the Committee
shall specify at or after grant, divided by (ii) the number of then
outstanding shares of Stock as of such year-end date (as adjusted by the
Committee for subsequent events).
d. "Cause" shall have the meaning set forth in Section 5(i).
e. "Change in Control" shall have the meaning set forth in Section
ll(b).
f. "Change in Control Price" shall have the meaning set forth in
Section ll(d).
g. "Code" means the Internal Revenue Code of 1986, as from time to
time amended.
h. "Commission" means the Securities and Exchange Commission.
i. "Committee" means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office, then the functions
of the Committee specified in the Plan shall be exercised by the Board.
j. "Company" means Tridex Corporation, a Connecticut corporation.
k. "Deferral Period" shall have the meaning set forth in Section
8(a).
l. "Deferred Stock" means an award made pursuant to Section 8 below
of the right to receive Stock at the end of a specified deferral period.
m. "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.
n. "Elective Deferral Period" shall have the meaning set forth in
Section 8(b)(v).
o. "Employee" means any person, including officers and directors,
employed by the Company or any Affiliate or Subsidiary of the Company. The
payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
p. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
q. "Early Retirement" means retirement, with the express consent of
the Company at or before the time of such retirement, from active
employment with the Company and any Subsidiary or Affiliate pursuant to the
early retirement provisions of the applicable pension plan of such entity.
r. "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the closing price of the Stock
on NASDAQ or, if no such sale of Stock was made
26
on NASDAQ on such date, the fair market value of the Stock as determined by
the Committee in good faith.
s. "Incentive Stock Option" means any Stock Option intended to
qualify as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
t. "Incumbent Directors" shall have the meaning set forth in Section
ll(b)(ii).
u. "Limited Stock Appreciation Right" shall have the meaning set
forth in Section 6(b)(v).
v. "Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3)(i) as promulgated by the Commission under the Exchange Act, or
any successor definition adopted by the Commission.
w. "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
x. "Normal Retirement" means retirement from active employment with
the Company and any Subsidiary or Affiliate on or after age 65.
y. "Other Stock-Based Award" means an award under Section 10 below
that is valued in whole or in part by reference to, or is otherwise based
on, Stock.
z. "Plan" means this Tridex Corporation 1997 Long Term Incentive
Plan, as amended from time to time.
aa. "Potential Change in Control" shall have the meaning set forth in
Section ll(c).
bb. "Restricted Period" shall have the meaning set forth in Section
7(c)(i).
cc. "Restricted Stock" means an award of shares of Stock that is
subject to restrictions under Section 7.
dd. "Retirement" means Normal or Early Retirement.
ee. "Stock" means the common stock, no par value, of the Company.
ff. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 to surrender to the Company all (or a portion) of a
Stock Option in exchange for an amount equal to the difference between (i)
the Fair Market Value, as of the date such Stock Option (or portion
thereof) is surrendered, of the shares of Stock covered by such Stock
Option (or such portion thereof), subject, where applicable, to the pricing
provisions in Section 6(b)(ii), and (ii) the aggregate exercise price of
such Stock Option (or such portion thereof).
gg. "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5.
hh. "Stock Purchase Right" means the right to purchase Stock pursuant
to Section 9.
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ii. "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 425(f) of the Code.
28