Exhibit 10.11
DIRECTRIX, INC.
STOCK INCENTIVE PLAN
(as adopted July 25, 1998)
1. Purpose of the Plan
This Directrix, Inc. Stock Incentive Plan is intended to promote the
interests of the Company and its stockholders by providing the Company's key
employees and certain consultants to the Company, on whose judgment, initiative
and efforts the successful conduct of the business of the Company largely
depends, and who are largely responsible for the management, growth and
protection of the business of the Company, with appropriate incentives and
rewards to encourage them to continue their Employment with the Company and to
maximize their performance and to provide certain "performance-based
compensation" within the meaning of Section 162(m)(4)(C) of the Code.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Affiliate" shall mean any entity (whether or not incorporated)
controlling, controlled by or under common control with the Company.
(b) "Board of Directors" shall mean the Board of Directors of the
Company.
(c) "Cash Bonus" shall mean an award of a bonus payable in cash
pursuant to Section 13 hereof.
(d) "Cause" shall mean, when used in connection with a Participant's
Termination of Employment:
(i) to the extent that there is an employment, severance or other
agreement governing the relationship between the Participant and the
Company, which agreement contains a definition of "cause", Cause will
consist of those acts or omissions that would constitute "cause" under
such agreement; and otherwise
(ii) the Participant's Termination of Employment by the Company or
an Affiliate on account of any one or more of the following:
(A) any failure by the Participant substantially to perform
the Participant's employment duties;
(B) any excessive unauthorized absenteeism by the
Participant;
(C) any refusal by the Participant to obey the lawful orders
of the Board of Directors or any other person or committee to whom
the Participant reports;
(D) any act or omission by the Participant that is or may be
injurious to the Company, monetarily or otherwise;
(E) any act by the Participant that is competitive with the
best interests of the Company;
(F) the Participant's material violation of any of the
Company's policies, including, without limitation, those policies
relating to discrimination or sexual harassment;
(G) the Participant's unauthorized (a) removal from the
premises of the Company or Affiliate of any document (in any
medium or form) relating to the Company or an Affiliate or the
customers of the Company or an Affiliate or (b) disclosure to any
person or entity of any of the Company's confidential or
proprietary information;
(H) the Participant's commission of any felony, or any other
crime involving moral turpitude; and
(I) the Participant's commission of any act involving
dishonesty or fraud.
Any rights the Company may have hereunder in respect of the events
giving rise to Cause shall be in addition to the rights the Company may have
under any other agreement with a Participant or at law or in equity. Any
determination of whether a Participant's Employment is (or is deemed to have
been) terminated for Cause shall be made by the Committee in its discretion,
which determination shall be final and binding on all parties. If, subsequent to
a Participant's voluntary Termination of Employment or involuntary Termination
of Employment without Cause, it is discovered that the Participant's Employment
could have been terminated for Cause, such Participant's Employment shall be
deemed to have been terminated for Cause. A Participant's Termination of
Employment for Cause shall be effective as of the date of the occurrence of the
event giving rise to Cause, regardless of when the determination of Cause is
made.
(e) "Change in Control" shall mean the occurrence of any of the
following:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) other than an employee benefit plan sponsored or
maintained by the Company (or any trustee of such plan acting as
trustee) (an "Acquiring Person") becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 promulgated under the
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Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding securities;
(ii) A change in the composition of the Board of Directors during
any period of two consecutive years beginning on or after July 25, 1998
such that individuals who, at the beginning of such period, constitute
the Board of Directors cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least three-fourths of the directors then still in office who
were directors at the beginning of the period.
(iii) the Company's stockholders approve an agreement to merge or
consolidate the Company with another corporation (other than a
corporation 50% or more of which is controlled by, or is under common
control with, the Company);
(iv) any individual who is nominated by the Board of Directors for
election of the Board on any date fails to be so elected as a direct or
indirect result of any proxy fight or contested election for positions
on the Board of Directors;
(v) a "change in control" of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act; or
(vi) a majority of the Board of Directors determines in its sole
and absolute discretion that there has been a Change in Control of the
Company or that there will be a Change in Control of the Company upon
the occurrence of certain specified events and such events occur.
Provided, however, that notwithstanding the foregoing, no Change of
Control shall be deemed to have occurred pursuant to either clause (i) or (ii)
above in the event any group comprised of senior officers of the Company
acquires 25% or more of the combined voting power of the Company's then
outstanding securities (notwithstanding any resultant change in the membership
of the Board).
(f) "Code" shall mean the Internal Revenue Code of 1986.
(g) "Committee" shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan; provided, however, that the Committee shall
at all times consist of two or more persons. The Committee shall consist solely
of individuals who are (or grants shall be made by a subcommittee of two or more
persons, each of whom shall be) a "non-employee director" within the meaning of
Rule 16b-3. Each member of the Committee shall be an "outside director" within
the meaning of Section 162(m) of the Code.
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(h) "Company" shall mean Directrix, Inc. or any successor thereto.
(i) "Company Stock" shall mean the common stock of the Company.
(j) "Disability" shall mean, except in connection with an Incentive
Stock Option, any physical or mental condition that would qualify a Participant
for a disability benefit under the long-term disability plan maintained by the
Company or, if there is no such plan, a physical or mental condition that
prevents the Participant from performing the essential functions of the
Participant's position (with or without reasonable accommodation) for a period
of six consecutive months or, in connection with an Incentive Stock Option, a
disability described in Section 422(c)(6) of the Code. The existence of a
Disability shall be determined by the Committee in its absolute discretion.
(k) "Dividend Equivalent Right" shall mean an Incentive Award granted
pursuant to Section 14 hereof of a right to receive an amount equivalent to the
ordinary cash dividends paid in respect to some or all of the shares of Company
Stock underlying an Incentive Award.
(l) "Employment" shall mean, in the case of a Participant who is not an
employee of the Company, the Participant's association with the Company or an
Affiliate as a consultant.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(n) "Fair Market Value" shall mean, with respect to a share of Company
Stock on an applicable date:
(i) If Company Stock is traded on a national securities exchange,
(A) the average of the high and low reported sales price regular way
per share of Company Stock on the principal national securities
exchange on which Company Stock is traded or (B) if no reported sales
take place on the applicable date, the average of the highest bid and
lowest asked price of Company Stock on such exchange or (C) if no such
quotation is made on such date, on the next preceding day (not more
than 10 business days prior to the applicable date) on which there were
reported sales or such quotations.
(ii) If Company Stock is not traded on a national securities
exchange but quotations are available for Company Stock on the
over-the-counter market, (A) the mean between the highest bid and
lowest asked quotation on the over-the-counter market as reported by
the National Quotations Bureau, or any similar organization, on the
applicable date or (B) if no such quotation is made on such date on the
next preceding day (not more than 10 business days prior to the
applicable date) on which there were such quotations.
(iii) If Company Stock is neither traded on a national securities
exchange nor are quotations therefor available on the over-the-counter
market or if there are no sales or
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quotations in the 10 business days immediately prior to the applicable
date, as determined in good faith by the Committee in a manner
consistently applied.
(o) "Incentive Award" shall mean an Option, LSAR, Tandem SAR,
Stand-Alone SAR, Dividend Equivalent Right, share of Restricted Stock, share of
Phantom Stock, Stock Bonus, Cash Bonus or other equity-based award granted
pursuant to the terms of the Plan.
(p) "Incentive Stock Option" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code and that is
identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(q) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued by
the Company pursuant to the terms of Section 10(d) hereof.
(r) "LSAR" shall mean a limited stock appreciation right that is
granted pursuant to the provisions of Section 7 hereof and that relates to an
Option. Each LSAR shall be exercisable only upon the occurrence of a Change in
Control and only in the alternative to the exercise of its related Option.
(s) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(t) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof. Each Option shall be identified as either
an Incentive Stock Option or a Non-Qualified Stock Option in the agreement by
which it is evidenced.
(u) "Participant" shall mean an employee of, or consultant to, the
Company or an Affiliate who is eligible to participate in the Plan and to whom
an Incentive Award is granted pursuant to the Plan, and, upon his death, the
employee's successors, heirs, executors and administrators, as the case may be.
(v) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(w) "Phantom Stock" shall mean the right to receive in cash the Fair
Market Value of a share of Company Stock, which right is granted pursuant to
Section 11 hereof and subject to the terms and conditions contained therein.
(x) "Plan" shall mean this Directrix, Inc. Stock Incentive Plan, as it
may be amended from time to time.
(y) "Reload Option" shall mean an Option granted to a Participant in
accordance with Section 6 hereof upon the exercise of an Option.
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(z) "Restricted Stock" shall mean a share of Company Stock that is
granted pursuant to the terms of Section 10 hereof and that is subject to the
restrictions set forth in Section 10(c) hereof for so long as such restrictions
continue to apply to such share.
(aa) "SAR shall mean a Tandem SAR, Stand-Alone SAR or LSAR.
(bb) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
(cc) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 hereof that is not related to any Option.
(dd) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Company Stock pursuant to Section 12 hereof.
(ee) "Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 8 hereof that is related to an Option. Each Tandem SAR shall
be exercisable only to the extent its related Option is exercisable and only in
the alternative to the exercise of its related Option.
(ff) "Termination of Employment" shall mean a Participant's ceasing to
be employed by the Company and any Affiliates or by a corporation assuming
Incentive Awards in a transaction to which section 424(a) of the Code applies.
The Committee may determine, in its absolute discretion (i) whether any leave of
absence or absence in military or government service constitutes a Termination
of Employment for purposes of the Plan, subject to applicable law, (ii) the
effect, if any, of any such leave of absence on Incentive Awards granted under
the Plan, and (iii) when a change in a non-employee's association with the
Company constitutes a Termination of Employment for purposes of the Plan.
(gg) "Vesting Date" shall mean the date established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.
3. Stock Subject to the Plan
(a) Plan Limit
Subject to adjustment as provided in Section 16 hereof, the Committee
may grant Incentive Awards hereunder with respect to a number of shares of
Company Stock that in the aggregate does not exceed 200,000 shares. The grant of
an LSAR, Tandem SAR or Dividend Equivalent Right shall not reduce the number of
shares of Company Stock with respect to which Incentive Awards may be granted
pursuant to the Plan. Incentive Awards granted under the Plan shall count
against the foregoing limits at the time they are granted but shall again become
available for grant under the Plan as follows:
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(i) To the extent that any Options, together with any related
rights granted under the Plan, terminate, expire or are canceled
without having been exercised (including a cancellation resulting from
the exercise of a related LSAR or a Tandem SAR) the shares covered by
such Options shall again be available for grant under the Plan.
(ii) To the extent that any Stand-Alone SARs terminate, expire or
are canceled without having been exercised, the shares covered by such
Stand-Alone SARs shall again be available for grant under the Plan.
(iii) To the extent any shares of Restricted Stock or Phantom
Stock, or any shares of Company Stock granted as a Stock Bonus are
forfeited or canceled for any reason, such shares (together with any
related Cash Bonuses) shall again be available for grant under the
Plan.
Shares of Company Stock issued under the Plan may be either newly
issued shares or treasury shares, at the discretion of the Committee.
(b) Individual Limit
Subject to adjustment as provided in Section 14 hereof, the Committee
shall not, during any calendar year, grant any one Participant Incentive Awards
hereunder with respect to more than 20,000 shares of Company Stock. Such
Incentive Awards may be made up entirely of any one type of Incentive Award or
any combination of types of Incentive Awards available under the Plan, in the
Committee's sole discretion. Once granted to a Participant, Incentive Awards
shall not again be available for grant to that Participant. The grant of an
LSAR, Tandem SAR or Dividend Equivalent Right shall not reduce the number of
shares of Company Stock with respect to which Incentive Awards may be granted to
any Participant pursuant to the Plan.
4. Administration of the Plan
The Plan shall be administered by the Committee. The Committee shall
from time to time designate the key employees of the Company and its Affiliates
who shall be granted Incentive Awards and the amount and type of such Incentive
Awards.
The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Incentive Award issued under it, and to adopt such rules and
regulations for administering the Plan as it may deem necessary or appropriate.
Decisions of the Committee shall be final and binding on all parties. The
Committee's determinations under the Plan may, but need not, be uniform and may
be made on a Participant-by-Participant basis (whether or not two or more
Participants are similarly situated).
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The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or Stand-Alone SAR granted
under the Plan becomes exercisable or otherwise adjust any of the terms of such
Option or Stand-Alone SAR (except that no such adjustment shall, without the
consent of a Participant, reduce the Participant's rights under any previously
granted and outstanding Incentive Award unless the Committee determines that
such adjustment is necessary or appropriate to prevent such Incentive Award from
constituting "applicable employee remuneration" within the meaning of Section
162(m) of the Code), (ii) accelerate the Vesting Date or Issue Date, or waive
any condition imposed hereunder, with respect to any share of Restricted Stock
granted under the Plan or otherwise adjust any of the terms of such Restricted
Stock and (iii) accelerate the Vesting Date or waive any condition imposed
hereunder, with respect to any share of Phantom Stock granted under the Plan or
otherwise adjust any of the terms of such Phantom Stock.
In addition, the Committee may, in its absolute discretion and without
amendment to the Plan, grant Incentive Awards of any type to Participants on the
condition that such Participants surrender to the Committee for cancellation
such other Incentive Awards of the same or any other type (including, without
limitation, Incentive Awards with higher exercise prices or values) as the
Committee specifies. Notwithstanding Section 3(a) hereof, prior to the surrender
of such other Incentive Awards, Incentive Awards granted pursuant to the
preceding sentence of this Section 4 shall not count against the limits set
forth in such Section 3(a).
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.
Notwithstanding anything in the Plan to the contrary, until the Board
of Directors shall have appointed the members of the Committee, the Board of
Directors shall administer the Plan. In addition, the Board of Directors may, in
its sole discretion, at any time and from time to time, grant Incentive Awards
or resolve to administer the Plan in which case, to the extent provided in such
resolutions, the Board of Directors shall have the powers of the Committee.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards pursuant
to the Plan shall be those key employees of the Company and its Affiliates
(including prospective employees, which Incentive Awards shall be conditioned on
the prospective employees actually becoming employees) and certain consultants
to the Company and its Affiliates who are largely responsible for the
management, growth and protection of the business of the Company and its
Affiliates
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(including officers of the Company, whether or not they are directors of the
Company) as the Committee shall select from time to time. Except with respect to
certain consultants to the Company and its Affiliates as noted immediately
above, individuals who are not (or are not expected to be) classified as
employees of the Company or an Affiliate for purposes of the Company's or an
Affiliate's payroll shall not be eligible to receive Incentive Awards under the
Plan.
6. Options
The Committee may grant Options pursuant to the Plan. Such Options
shall be evidenced by agreements in such form as the Committee shall from time
to time approve. Options shall comply with and be subject to the following terms
and conditions:
(a) Identification of Options
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.
(b) Conditions to Issuance and Excercisability
At the time of the grant of any Options under the Plan, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the issuance or excercisability of the Options, as the Committee, in
its absolute discretion, deems appropriate. By way of example and not by way of
limitation, the Committee may require, as a condition to the issuance or
exercisability of any Options, that the Participant or the Company achieve such
performance criteria as the Committee may specify at the time of the grant of
such shares.
(c) Exercise Price
The exercise price of any Non-Qualified Stock Option granted under the
Plan shall be such price as the Committee shall determine (which may be equal
to, less than or greater than the Fair Market Value of a share of Company Stock
on the date such Non-Qualified Stock Option is granted) on the date on which
such Non-Qualified Stock Option is granted; provided, that such price may not be
less than the minimum price required by law. Subject to Paragraph (d) of this
Section 6, the exercise price-per-share of any Incentive Stock Option granted
under the Plan shall be not less than 100% of the Fair Market Value of a share
of Company Stock on the date on which such Incentive Stock Option is granted
(except as permitted in connection with the assumption or issuance of Options in
a transaction to which Section 424(a) of the Code applies) and, the exercise
price-per-share of such Option shall be not less than 100% of the Fair Market
Value of a share of Company Stock on the date on which such Option is granted.
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(d) Term and Exercise of Options
(i) Each Option shall be exercisable on such date or dates, during
such period and for such number of shares of Company Stock as shall be
determined by the Committee on the day on which such Option is granted
and set forth in the agreement evidencing such Option; provided,
however, that no Option shall be exercisable after the expiration of
ten years from the date such Option was granted; and, provided,
further, that each Option shall be subject to earlier termination,
expiration or cancellation as provided in the Plan.
(ii) Each Option shall be exercisable in whole or in part;
provided, that no partial exercise of an Option shall be for an
aggregate exercise price of less than $1,000. The partial exercise of
an Option shall not cause the expiration, termination or cancellation
of the remaining portion thereof. Upon the partial exercise of an
Option, the agreement evidencing such Option and any related LSARs and
Tandem SARs shall be returned to the Participant exercising such Option
together with the delivery of the certificates described in Section
6(d)(v) hereof.
(iii) An Option shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no less
than five business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the agreement or
agreements evidencing the Option and any related LSARs and Tandem SARs,
shall specify the number of shares of Company Stock with respect to
which the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close of
business on the business day immediately preceding the effective date
of the proposed exercise, in which case such agreement or agreements
shall be returned to him. Payment for shares of Company Stock purchased
upon the exercise of an Option shall be made on the effective date of
such exercise either:
(A) in cash, by certified check, bank cashier's check or wire
transfer; or
(B) subject to the approval of the Committee, in shares of
Company Stock owned by the Participant and valued at their Fair
Market Value on the effective date of such exercise, or partly in
shares of Company Stock with the balance in cash, by certified
check, bank cashier's check or wire transfer; or
(C) subject to the approval of the Committee, pursuant to a
"cashless exercise" pursuant to procedures adopted by the
Committee whereby the Participant, by a properly written notice,
directing (A) an immediate market sale or margin loan respecting
all or a part of the shares of Company Stock to which the
Participant is entitled upon exercise pursuant to an extension of
credit by the Company to the Participant of the exercise price,
(B) the delivery of the shares of Company Stock from the Company
directly to the brokerage firm, and (C) the
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delivery of the exercise price from the sale or margin loan
proceeds from the brokerage firm directly to the Company.
Any payment in shares of Company Stock shall be effected by the
delivery of such shares to the Secretary of the Company, duly endorsed in blank
or accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time.
(iv) Except as otherwise provided in an applicable agreement
evidencing an Option, during the lifetime of a Participant, each Option
granted to a Participant shall be exercisable only by the Participant
and no Option shall be assignable or transferable otherwise than by
will or by the laws of descent and distribution. The Committee may, in
any applicable agreement evidencing an Option (other than an Incentive
Stock Option to the extent inconsistent with the requirements of
Section 422 of the Code applicable to incentive stock options), permit
a Participant to transfer all or some of the Options to (A) the
Participant's spouse, children or grandchildren ("Immediate Family
Members"), (B) a trust or trusts for the exclusive benefit of such
Immediate Family Members, or (C) other parties approved by the
Committee in its absolute discretion. Following any such transfer, any
transferred Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer.
(v) Certificates for shares of Company Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant or
his beneficiary (or permitted transferee), as the case may be, and
delivered to the Participant or his beneficiary (or permitted
transferee), as the case may be, as soon as practicable following the
effective date on which the Option is exercised.
(e) Limitations on Grant of Incentive Stock Options
(i) The aggregate Fair Market Value of shares of Company Stock
with respect to which Incentive Stock Options granted hereunder are
exercisable for the first time by a Participant during any calendar
year under the Plan and any other stock option plan of the Company (or
any "subsidiary corporation" of the Company within the meaning of
Section 424 of the Code) shall not exceed $100,000. Such Fair Market
Value shall be determined as of the date on which each such Incentive
Stock Option is granted. In the event that the aggregate Fair Market
Value of shares of Company Stock with respect to such Incentive Stock
Options exceeds $100,000, then Incentive Stock Options granted
hereunder to such Participant shall, to the extent and in the order in
which they were granted, automatically be deemed to be Non-Qualified
Stock Options, but all other terms and provisions of such Incentive
Stock Options shall remain unchanged.
(ii) No Incentive Stock Option may be granted to an individual if,
at the time of the proposed grant: (i) such individual was not an
employee of the company, a parent or subsidiary corporation of the
Company, or a coporation or a parent or subsidiary
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corporation of such corporation issuing or assuming a stock option in a
transaction to which Section 424(a) of the Code applies or (ii) such
individual owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or any of
its "subsidiary corporations" (within the meaning of Section 424 of the
Code), unless (A) the exercise price of such Incentive Stock Option is
at least one hundred ten percent (110%) of the Fair Market Value of a
share of Company Stock at the time such Incentive Stock Option is
granted and (B) such Incentive Stock Option is not exercisable after
the expiration of five years from the date such Incentive Stock Option
is granted.
(f) Grants of Reload Options
The Committee may, in its discretion, include in any agreement
evidencing an Option (the "Original Option") a provision that a Reload Option
shall be granted to any Participant who, pursuant to Section 6(d)(iii), delivers
shares of Company Stock in partial or full payment of the exercise price of the
Original Option. The Reload Option shall relate to a number of shares of Company
Stock equal to the number of shares of Company Stock delivered, and shall have
an exercise price-per-share equal to the Fair Market Value of a share of Company
Stock on the date of the exercise of the Original Option. In the event that an
agreement evidencing an Original Option provides for the grant of a Reload
Option, such agreement shall also provide that the exercise price-per-share of
the Original Option shall be no less that the Fair Market Value of a share of
Company Stock on its date of grant, and that any shares that are delivered
pursuant to Section 6(d)(iii) in payment of such exercise price shall have been
held for at least six months.
(g) Effect of Termination of Employment
(i) Unless otherwise provided in any agreement evidencing an
Option, in the event that the Employment of a Participant with the
Company and its Affiliates shall terminate for any reason other than
Cause, Disability or death (A) Options granted to such Participant, to
the extent that they were exercisable at the time of such Termination
of Employment, shall remain exercisable until the expiration of three
months after such Termination of Employment, on which date they shall
expire, and (B) Options granted to such Participant, to the extent that
they were not exercisable at the time of such Termination of
Employment, shall expire at the close of business on the date of such
Termination of Employment; provided, however, that no Option shall be
exercisable after the expiration of its term.
(ii) Unless otherwise provided in any agreement evidencing an
Option, in the event that the Employment of a Participant with the
Company shall terminate on account of the Disability or death of the
Participant (A) Options granted to such Participant, to the extent that
they were exercisable at the time of such Termination of Employment,
shall remain exercisable until the expiration of one year after such
Termination of Employment, on which date they shall expire, and (B)
Options granted to such
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Participant, to the extent that they were not exercisable at the time
of such Termination of Employment, shall expire at the close of
business on the date of such Termination of Employment; provided,
however, that no Option shall be exercisable after the expiration of
its term.
(iii) In the event of a Participant's Termination of Employment
for Cause, all outstanding Options granted to such Participant shall
expire at the commencement of business on the effective date of such
Termination of Employment.
(h) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted under
the Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration, termination or
cancellation pursuant to the terms of the Plan.
7. LSARs
The Committee may grant in connection with any Option granted hereunder
one or more LSARs relating to a number of shares of Company Stock less than or
equal to the number of shares of Company Stock subject to the related Option. An
LSAR may be granted at the same time as, or, in the case of a Non-Qualified
Stock Option, subsequent to the time that, its related Option is granted. Each
LSAR shall be evidenced by an agreement in such form as the Committee shall from
time to time approve. Each LSAR granted hereunder shall be subject to the
following terms and conditions:
(a) Benefit Upon Exercise
(i) The exercise of an LSAR relating to a Non-Qualified Stock
Option with respect to any number of shares of Company Stock shall
entitle the Participant to a cash payment, for each such share, equal
to the excess of (A) the greater of (x) the highest price-per-share of
Company Stock paid in the Change in Control in connection with which
such LSAR became exercisable and (y) the Fair Market Value of a share
of Company Stock on the date of such Change in Control over (B) the
exercise price of the related Option. Such payment shall be made as
soon as practicable, but in no event later than the expiration of five
business days after the effective date of such exercise.
(ii) The exercise of an LSAR relating to an Incentive Stock Option
with respect to any number of shares of Company Stock shall entitle the
Participant to a cash payment, for each such share, equal to the excess
of (A) the Fair Market Value of a share of Company Stock on the
effective date of such exercise over (B) the exercise price of the
related Option. Such payment shall be made as soon as practicable, but
in no event later than the expiration of five business days, after the
effective date of such exercise.
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(b) Term and Exercise of LSARs
(i) An LSAR shall be exercisable only during the period commencing
on the first day following the occurrence of a Change in Control and
terminating on the expiration of sixty days after such date.
Notwithstanding anything else herein, an LSAR relating to an Incentive
Stock Option may be exercised with respect to a share of Company Stock
only if the Fair Market Value of such share on the effective date of
such exercise exceeds the exercise price relating to such share.
Notwithstanding anything else herein, an LSAR may be exercised only if
and to the extent that the Option to which it relates is exercisable.
(ii) The exercise of an LSAR with respect to a number of shares of
Company Stock shall cause the immediate and automatic cancellation of
the Option to which it relates with respect to an equal number of
shares. The exercise of an Option, or the cancellation, termination or
expiration of an Option (other than pursuant to this Paragraph (ii)),
with respect to a number of shares of Company Stock, shall cause the
cancellation of the LSAR related to it with respect to an equal number
of shares.
(iii) Each LSAR shall be exercisable in whole or in part;
provided, that no partial exercise of an LSAR shall be for an aggregate
exercise price of less than $1,000. The partial exercise of an LSAR
shall not cause the expiration, termination or cancellation of the
remaining portion thereof. Upon the partial exercise of an LSAR, the
agreement evidencing the LSAR, the related Option and any Tandem SARs
related to such Option, marked with such notations as the Committee may
deem appropriate to evidence such partial exercise, shall be returned
to the Participant exercising such LSAR together with the payment
described in Paragraph 7(a)(i) or (ii) hereof, as applicable.
(iv) Except as otherwise provided in an applicable agreement
evidencing an LSAR, during the lifetime of a Participant, each LSAR
granted to a Participant shall be exercisable only by the Participant
and no LSAR shall be assignable or transferable otherwise than by will
or by the laws of descent and distribution and otherwise than together
with its related Option. The Committee may, in any applicable agreement
evidencing an LSAR, permit a Participant to transfer all or some of the
LSAR to (A) the Participant's Immediate Family Members, (B) a trust or
trusts for the exclusive benefit of such Immediate Family Members, or
(C) other parties approved by the Committee in its absolute discretion.
Following any such transfer, any transferred LSARs shall continue to be
subject to the same terms and conditions as were applicable immediately
prior to the transfer.
(v) An LSAR shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no less
than five business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the applicable
agreement evidencing the LSAR, the related Option and any Tandem SARs
relating to such Option, shall specify the number of shares of Company
Stock with
14
respect to which the LSAR is being exercised and the effective date of
the proposed exercise and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close of
business on the business day immediately preceding the effective date
of the proposed exercise, in which case such agreement shall be
returned to him.
8. Tandem SARs
The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARs relating to a number of shares of Company Stock less
than or equal to the number of shares of Company Stock subject to the related
Option. A Tandem SAR may be granted at the same time as, or subsequent to the
time that, its related Option is granted. Each Tandem SAR shall be evidenced by
an agreement in such form as the Committee shall from time to time approve.
Tandem SARs shall comply with and be subject to the following terms and
conditions:
(a) Benefit Upon Exercise
The exercise of a Tandem SAR with respect to any number of shares of
Company Stock shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (i) the Fair Market Value of a share of Company
Stock on the effective date of such exercise over (ii) the exercise price of the
related Option. Such payment shall be made as soon as practicable, but in no
event later than the expiration of five business days, after the effective date
of such exercise.
(b) Term and Exercise of Tandem SAR
(i) A Tandem SAR shall be exercisable at the same time and to the
same extent (on a proportional basis, with any fractional amount being
rounded down to the immediately preceding whole number) as its related
Option. Notwithstanding the first sentence of this Section 8(b)(i), (A)
a Tandem SAR shall not be exercisable at any time that an LSAR related
to the Option to which the Tandem SAR is related is exercisable and (B)
a Tandem SAR relating to an Incentive Stock Option may be exercised
with respect to a share of Company Stock only if the Fair Market Value
of such share on the effective date of such exercise exceeds the
exercise price relating to such share.
(ii) The exercise of a Tandem SAR with respect to a number of
shares of Company Stock shall cause the immediate and automatic
cancellation of its related Option with respect to an equal number of
shares. The exercise of an Option, or the cancellation, termination or
expiration of an Option (other than pursuant to this Paragraph (ii)),
with respect to a number of shares of Company Stock shall cause the
automatic and immediate cancellation of its related Tandem SARs to the
extent that the number of shares of Company Stock subject to such
Option after such exercise, cancellation, termination or expiration is
less than the number of shares subject to such
15
Tandem SARs. Such Tandem SARs shall be canceled in the order in which
they became exercisable.
(iii) Each Tandem SAR shall be exercisable in whole or in part;
provided, that no partial exercise of a Tandem SAR shall be for an
aggregate exercise price of less than $1,000. The partial exercise of a
Tandem SAR shall not cause the expiration, termination or cancellation
of the remaining portion thereof. Upon the partial exercise of a Tandem
SAR, the agreement evidencing such Tandem SAR, its related Option and
LSARs relating to such Option shall be returned to the Participant
exercising such Tandem SAR together with the payment described in
Section 8(a) hereof.
(iv) Except as otherwise provided in an applicable agreement
evidencing a Tandem SAR, during the lifetime of a Participant, each
Tandem SAR granted to a Participant shall be exercisable only by the
Participant and no Tandem SAR shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution. The
Committee may, in any applicable agreement evidencing a Tandem SAR,
permit a Participant to transfer all or some of the Tandem SAR to (A)
the Participant's Immediate Family Members, (B) a trust or trusts for
the exclusive benefit of such Immediate Family Members, or (C) other
parties approved by the Committee in its absolute discretion. Following
any such transfer, any transferred Tandem SARs shall continue to be
subject to the same terms and conditions as were applicable immediately
prior to the transfer.
(v) A Tandem SAR shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no less
than five business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the applicable
agreement evidencing the Tandem SAR, its related Option and any LSARs
related to such Option, shall specify the number of shares of Company
Stock with respect to which the Tandem SAR is being exercised and the
effective date of the proposed exercise and shall be signed by the
Participant. The Participant may withdraw such notice at any time prior
to the close of business on the business day immediately preceding the
effective date of the proposed exercise, in which case such agreement
shall be returned to him.
9. Stand-Alone SARs
The Committee may grant Stand-Alone SARs pursuant to the Plan, which
Stand-Alone SARs shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Stand-Alone SARs shall comply with and be
subject to the following terms and conditions:
16
(a) Exercise Price
The exercise price of any Stand-Alone SAR granted under the Plan shall
be determined by the Committee at the time of the grant of such Stand-Alone SAR.
(b) Benefit Upon Exercise
(i) The exercise of a Stand-Alone SAR with respect to any number
of shares of Company Stock prior to the occurrence of a Change in
Control shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (A) the Fair Market Value of a share of
Company Stock on the exercise date over (B) the exercise price of the
Stand-Alone SAR.
(ii) The exercise of a Stand-Alone SAR with respect to any number
of shares of Company Stock on or after the occurrence of a Change in
Control shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (A) the greater of (x) the highest
price-per-share of Company Stock paid in connection with such Change in
Control and (y) the Fair Market Value of a share of Company Stock on
the date of such Change in Control over (B) the exercise price of the
Stand-Alone SAR.
(iii) All payments under this Section 9(b) shall be made as soon
as practicable, but in no event later than five business days, after
the effective date of the exercise.
(c) Term and Exercise of Stand-Alone SARs
(i) Each Stand-Alone SAR shall be exercisable on such date or
dates, during such period and for such number of shares of Company
Stock as shall be determined by the Committee and set forth in the
agreement evidencing such Stand-Alone SAR; provided, however, that no
Stand-Alone SAR shall be exercisable after the expiration of ten years
from the date such Stand-Alone SAR was granted; and, provided, further,
that each Stand-Alone SAR shall be subject to earlier termination,
expiration or cancellation as provided in the Plan.
(ii) Each Stand-Alone SAR may be exercised in whole or in part;
provided, that no partial exercise of a Stand-Alone SAR shall be for an
aggregate exercise price of less than $1,000. The partial exercise of a
Stand-Alone SAR shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial
exercise of a Stand-Alone SAR, the agreement evidencing such
Stand-Alone SAR, marked with such notations as the Committee may deem
appropriate to evidence such partial exercise, shall be returned to the
Participant exercising such Stand-Alone SAR, together with the payment
described in Section 9(b)(i) or 9(b)(ii) hereof.
17
(iii) A Stand-Alone SAR shall be exercised by delivering notice to
the Company's principal office, to the attention of its Secretary, no
less than five business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the applicable
agreement evidencing the Stand-Alone SAR, shall specify the number of
shares of Company Stock with respect to which the Stand-Alone SAR is
being exercised and the effective date of the proposed exercise, and
shall be signed by the Participant. The Participant may withdraw such
notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise, in
which case the agreement evidencing the Stand-Alone SAR shall be
returned to him.
(iv) Except as otherwise provided in an applicable agreement
evidencing a Stand-Alone SAR, during the lifetime of a Participant,
each Stand-Alone SAR granted to a Participant shall be exercisable only
by the Participant and no Stand-Alone SAR shall be assignable or
transferable otherwise than by will or by the laws of descent and
distribution. The Committee may, in any applicable agreement evidencing
a Stand-Alone SAR, permit a Participant to transfer all or some of the
Stand-Alone SAR to (A) the Participant's Immediate Family Members, (B)
a trust or trusts for the exclusive benefit of such Immediate Family
Members, or (C) other parties approved by the Committee in its absolute
discretion. Following any such transfer, any transferred Stand-Alone
SARs shall continue to be subject to the same terms and conditions as
were applicable immediately prior to the transfer.
(d) Effect of Termination of Employment
(i) Unless otherwise provided in any agreement evidencing a
Stand-Alone SAR, in the event that the Employment of a Participant with
the Company and its Affiliates shall terminate for any reason other
than Cause, Disability or death (A) Stand-Alone SARs granted to such
Participant, to the extent that they were exercisable at the time of
such Termination of Employment, shall remain exercisable until the
expiration of three months after such Termination of Employment, on
which date they shall expire, and (B) Stand-Alone SARs granted to such
Participant, to the extent that they were not exercisable at the time
of such Termination of Employment, shall expire at the close of
business on the date of such Termination of Employment; provided,
however, that no Stand-Alone SAR shall be exercisable after the
expiration of its term.
(ii) Unless otherwise provided in any agreement evidencing a
Stand-Alone SAR, in the event that the Employment of a Participant with
the Company and its Affiliates shall terminate on account of the
Disability or death of the Participant (A) Stand-Alone SARs granted to
such Participant, to the extent that they were exercisable at the time
of such Termination of Employment, shall remain exercisable until the
expiration of one year after such Termination of Employment, on which
date they shall expire, and (B) Stand-Alone SARs granted to such
Participant, to the extent that they were not exercisable at the time
of such Termination of Employment, shall expire at the close
18
of business on the date of such Termination of Employment; provided,
however, that no Stand-Alone SAR shall be exercisable after the
expiration of its term.
(iii) In the event of a Participant's Termination of Employment
for Cause, all outstanding Stand-Alone SARs granted to such Participant
shall expire at the commencement of business on the effective date of
such Termination of Employment.
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, any Stand-Alone SAR granted
under the Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration, termination or
cancellation pursuant to the terms of the Plan.
10. Restricted Stock
The Committee may grant shares of Restricted Stock pursuant to the
Plan. Each grant of shares of Restricted Stock shall be evidenced by an
agreement in such form and containing such terms and conditions and subject to
such agreements or understandings as the Committee shall from time to time
approve. Each grant of shares of Restricted Stock shall comply with and be
subject to the following terms and conditions:
(a) Issue Date and Vesting Date
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares. The Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for each class. Except as
provided in Sections 10(c) and 10(f) hereof, upon the occurrence of the Issue
Date with respect to a share of Restricted Stock, a share of Restricted Stock
shall be issued in accordance with the provisions of Section 10(d) hereof.
Provided that all conditions to the vesting of a share of Restricted Stock
imposed pursuant to Section 10(b) hereof are satisfied, and except as provided
in Sections 10(c) and 10(f) hereof, upon the occurrence of the Vesting Date with
respect to a share of Restricted Stock, such share shall vest and the
restrictions of Section 10(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting
At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion, deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any class or classes of shares of
Restricted Stock, that the Participant or the Company achieve such performance
criteria as the Committee may specify at the time of the grant of such shares.
19
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately upon any
attempt to transfer such rights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(d) Issuance of Certificates
(i) Except as provided in Sections 10(c) or 10(f) hereof,
reasonably promptly after the Issue Date with respect to shares of
Restricted Stock, the Company shall cause to be issued a stock
certificate, registered in the name of the Participant to whom such
shares were granted, evidencing such shares; provided, that the Company
shall not cause to be issued such a stock certificate unless it has
received a stock power duly endorsed in blank with respect to such
shares. Each such stock certificate shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions
against transfer) contained in the Directrix, Inc. Stock Incentive
Plan and an Agreement entered into between the registered owner of
such shares and Directrix, Inc. A copy of the Plan and Agreement
is on file in the office of the Secretary of Directrix, Inc., 536
Broadway, 6th Floor, New York, New York 10012.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(ii) Each certificate issued pursuant to Section 10(d)(i) hereof,
together with the stock powers relating to the shares of Restricted
Stock evidenced by such certificate, shall be deposited by the Company
with a custodian designated by the Company (which custodian may be the
Company). The Company shall cause such custodian to issue to the
Participant a receipt evidencing the certificates held by it which are
registered in the name of the Participant.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 10(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Section 10(d)(i) hereof, together with
any other property of the Participant held by the custodian pursuant to Section
16(b) hereof.
20
(f) Effect of Termination of Employment
(i) In the event that the Employment of a Participant with the
Company shall terminate for any reason (other than a termination that
is, or is deemed to have been, for Cause) prior to the vesting of
shares of Restricted Stock granted to such Participant, a proportion of
such shares, to the extent not forfeited or canceled on or prior to
such Termination of Employment pursuant to any provision hereof, shall
vest on the date of such Termination of Employment. The proportion
referred to in the preceding sentence shall initially be determined by
the Committee at the time of the grant of such shares of Restricted
Stock and may be based on the achievement of any conditions imposed by
the Committee with respect to such shares pursuant to Section 10(b).
Such proportion may be equal to zero. In the absence of any such
provision in an agreement evidencing an award of Restricted Stock, a
Participant's Termination of Employment with the Company and its
Affiliates for any reason (including death or Disability) shall cause
the immediate forfeiture of all shares of Restricted Stock that have
not vested as of the date of such Termination of Employment.
(ii) In the event a Participant's Employment is or is deemed to
have been terminated for Cause, all shares of Restricted Stock granted
to such Participant that have not vested as of the effective date of
such Termination of Employment immediately shall be forfeited.
(g) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of Restricted
Stock which have not theretofore vested (including those with respect to which
the Issue Date has not yet occurred), or been canceled or forfeited pursuant to
any provision hereof, immediately shall vest.
11. Phantom Stock
The Committee may grant shares of Phantom Stock pursuant to the Plan.
Each grant of shares of Phantom Stock shall be evidenced by an agreement in such
form as the Committee shall from time to time approve. Each grant of shares of
Phantom Stock shall comply with and be subject to the following terms and
conditions:
(a) Vesting Date
At the time of the grant of shares of Phantom Stock, the Committee
shall establish a Vesting Date or Vesting Dates with respect to such shares. The
Committee may divide such shares into classes and assign a different Vesting
Date for each class. Provided that all conditions to the vesting of a share of
Phantom Stock imposed pursuant to Section 11(c) hereof are satisfied, and except
as provided in Section 11(d) hereof, upon the occurrence of the Vesting Date
with respect to a share of Phantom Stock, such share shall vest.
21
(b) Benefit Upon Vesting
Upon the vesting of a share of Phantom Stock, a Participant shall be
entitled to receive, within 30 days after the date on which such share vests, an
amount in cash in a lump sum equal to the sum of (i) the Fair Market Value of a
share of Company Stock on the date on which such share of Phantom Stock vests
and (ii) the aggregate amount of cash dividends paid with respect to a share of
Company Stock the record date for which occurs during the period commencing on
the date on which the share of Phantom Stock was granted and terminating on the
date on which such share vests.
(c) Conditions to Vesting
At the time of the grant of shares of Phantom Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion, deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any class or classes of shares of
Phantom Stock, that the Participant or the Company achieve such performance
criteria as the Committee may specify at the time of the grant of such shares of
Phantom Stock.
(d) Effect of Termination of Employment
(i) In the event that the Employment of a Participant with the
Company and its Affiliates shall terminate for any reason (other than a
termination that is, or is deemed to have been, for Cause) prior to the
vesting of shares of Phantom Stock granted to such Participant, a
proportion of such shares, to the extent not forfeited or canceled on
or prior to such Termination of Employment pursuant to any provision
hereof, shall vest on the date of such Termination of Employment. The
proportion referred to in the preceding sentence initially shall be
determined by the Committee at the time of the grant of such shares of
Phantom Stock and may be based on the achievement of any conditions
imposed by the Committee with respect to such shares pursuant to
Section 11(c). Such proportion may be equal to zero. In the absence of
any such provision in an agreement evidencing an award of Phantom
Stock, a Participant's Termination of Employment with the Company and
its Affiliates for any reason (including death or Disability) shall
cause the immediate forfeiture of all shares of Phantom Stock that have
not vested as of the date of such Termination of Employment.
(ii) In the event a Participant's Employment is or is deemed to
have been terminated for Cause, all shares of Phantom Stock granted to
such Participant which have not vested as of the date of such
Termination of Employment immediately shall be forfeited.
22
(e) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of Phantom Stock
which have not theretofore vested, or been canceled or forfeited pursuant to any
provision hereof, immediately shall vest.
12. Stock Bonuses
The Committee may grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time (including
a future date selected by the Committee at the time of grant) and subject to
such conditions as the Committee shall determine at the time of the grant of
such Stock Bonus. Certificates for shares of Company Stock granted as a Stock
Bonus shall be issued in the name of the Participant to whom such grant was made
and delivered to such Participant as soon as practicable after the date on which
such Stock Bonus is required to be paid. Prior to the date on which a Stock
Bonus awarded hereunder is required to be paid, such award shall constitute an
unfunded, unsecured promise by the Company to distribute Company Stock in the
future.
13. Cash Bonuses
The Committee may, in its absolute discretion, in connection with any
grant of Restricted Stock or Stock Bonus or at any time thereafter, grant a cash
bonus, payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such grant
of Restricted Stock or Stock Bonus, in such amounts as the Committee shall
determine from time to time; provided, however, that in no event shall the
amount of a Cash Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Stock Bonus on such date. A Cash Bonus shall be subject to
such conditions as the Committee shall determine at the time of the grant of
such Cash Bonus.
14. Grant of Dividend Equivalent Rights
The Committee may, in its absolute discretion, in connection with any
Incentive Award (other than an award of shares of Phantom Stock), grant a
Dividend Equivalent Right entitling the Participant to receive amounts equal to
the ordinary dividends that would be paid on the shares of Company Stock covered
by such Incentive Award if such shares then were outstanding, during the time
such Incentive Award is outstanding and (a) in the case of Options and SARs,
during the time such Options or SARs are unexercised or (b) in the case of
Restricted Stock and Stock Bonuses, prior to the issue date for the related
shares of Company Stock. The Committee shall determine whether any Dividend
Equivalent Rights shall be payable in cash, in shares of Company Stock or in
another form, the time or times at which they shall be made, and such other
terms and conditions as the Committee shall deem appropriate. No Dividend
Equivalent Right shall be conditioned on the exercise of any Option or SAR.
23
15. Other Equity-Based Awards
The Committee may grant other types of equity-based awards in such
amounts and subject to such terms and conditions, as the Committee shall in its
discretion determine, subject to the provisions of the Plan. Such Incentive
Awards may entail the transfer of actual shares of Company Stock to
Participants, or payment in cash or otherwise of amounts based on the value of
shares of Company Stock.
16. Adjustment Upon Changes in Company Stock
(a) Shares Available for Grants
In the event of any change in the number of shares of Company Stock
outstanding by reason of any stock dividend or split, reverse stock split,
recapitalization, merger, consolidation, combination or exchange of shares or
similar corporate change, the maximum number of shares of Company Stock with
respect to which the Committee may grant Incentive Awards under Section 3 hereof
shall be appropriately adjusted by the Committee. In the event of any change in
the number of shares of Company Stock outstanding by reason of any other event
or transaction, the Committee may, but need not, make such adjustments in the
number and class of shares of Company Stock with respect to which Incentive
Awards may be granted under Section 3 hereof as the Committee may deem
appropriate.
(b) Outstanding Restricted Stock and Phantom Stock
Unless the Committee in its absolute discretion otherwise determines,
any securities or other property (including dividends paid in cash) received by
a Participant with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested as of the
date of such event, as a result of any dividend, stock split, reverse stock
split, recapitalization, merger, consolidation, combination, exchange of shares
or otherwise will not vest until such share of Restricted Stock vests, and shall
be promptly deposited with the custodian designated pursuant to Paragraph
10(d)(ii) hereof.
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, or any
grant of shares of Phantom Stock, to reflect any dividend, stock split, reverse
stock split, recapitalization, merger, consolidation, combination, exchange of
shares or similar corporate change as the Committee may deem appropriate to
prevent the enlargement or dilution of rights of Participants under the grant.
24
(c) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights -- Increase or Decrease in Issued
Shares Without Consideration
Subject to any required action by the stockholders of the Company, in
the event of any increase or decrease in the number of issued shares of Company
Stock resulting from a subdivision or consolidation of shares of Company Stock
or the payment of a stock dividend (but only on the shares of Company Stock), or
any other increase or decrease in the number of such shares effected without
receipt of consideration by the Company, the Committee shall proportionally
adjust the number of shares of Company Stock subject to each outstanding Option,
LSAR, Tandem SAR and Stand-Alone SAR, and the exercise price-per-share of
Company Stock of each such Option, LSAR, Tandem SAR and Stand-Alone SAR and the
number of any related Dividend Equivalent Rights.
(d) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights -- Certain Mergers
Subject to any required action by the stockholders of the Company, in
the event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Company Stock receive securities of another corporation), each
Option, LSAR, Tandem SAR, Stand-Alone SAR and Dividend Equivalent Right
outstanding on the date of such merger or consolidation shall pertain to and
apply to the securities which a holder of the number of shares of Company Stock
subject to such Option, LSAR, Tandem SAR, Stand-Alone SAR or Dividend Equivalent
Right would have received in such merger or consolidatation
(e) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights -- Certain Other Transactions
In the event of (i) a dissolution or liquidation of the Company, (ii) a
sale of all or substantially all of the Company's assets, (iii) a merger or
consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which the
Company is the surviving corporation but the holders of shares of Company Stock
receive securities of another corporation and/or other property, including cash,
the Committee shall, in its absolute discretion, have the power to:
(A) cancel, effective immediately prior to the occurrence of such
event, each Option (including each LSAR, Tandem-SAR or Dividend
Equivalent Right related thereto) and Stand-Alone SAR (including each
Dividend Equivalent Right related thereto) outstanding immediately
prior to such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Participant to whom such
Option or Stand-Alone SAR was granted an amount in cash, for each share
of Company Stock subject to such Option or Stand-Alone SAR,
respectively, equal to the excess of (x) the value, as determined by
the Committee in its absolute discretion, of the property
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(including cash) received by the holder of a share of Company Stock as
a result of such event over (y) the exercise price of such Option or
Stand-Alone SAR; or
(B) provide for the exchange of each Option (including any related
LSAR, Tandem SAR or Dividend Equivalent Right) and Stand-Alone SAR
(including any related Dividend Equivalent Right) outstanding
immediately prior to such event (whether or not then exercisable) for
an option on or stock appreciation right and dividend equivalent right
with respect to, as appropriate, some or all of the property for which
such Option or Stand-Alone SAR is exchanged and, incident thereto, make
an equitable adjustment as determined by the Committee in its absolute
discretion in the exercise price of the option or stock appreciation
right, or the number of shares or amount of property subject to the
option, stock appreciation right or dividend equivalent right or, if
appropriate, provide for a cash payment to the Participant to whom such
Option or Stand-Alone SAR was granted in partial consideration for the
exchange of the Option or Stand-Alone SAR.
(f) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights -- Other Changes
In the event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in Sections 16(c),
(d) or (e) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options, LSARs, Tandem
SARs, Stand-Alone SARs and Dividend Equivalent Rights outstanding on the date on
which such change occurs and in the per-share exercise price of each such
Option, LSAR, Tandem SAR and Stand-Alone SAR as the Committee may consider
appropriate to prevent dilution or enlargement of rights. In addition, if and to
the extent the Committee determines it is appropriate, the Committee may elect
to cancel each Option (including each LSAR, Tandem-SAR or Dividend Equivalent
Right related thereto) and Stand-Alone SAR (including each Dividend Equivalent
Right related thereto) outstanding immediately prior to such event (whether or
not then exercisable), and, in full consideration of such cancellation, pay to
the Participant to whom such Option or Stand-Alone SAR was granted an amount in
cash, for each share of Company Stock subject to such Option or Stand-Alone SAR,
respectively, equal to the excess of (i) the Fair Market Value of Company Stock
on the date of such cancellation over (ii) the exercise price of such Option or
Stand-Alone SAR
(g) No Other Rights
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Company Stock subject
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to an Incentive Award or the exercise price of any Option, LSAR, Tandem SAR or
Stand-Alone SAR.
17. Rights as a Stockholder
No person shall have any rights as a stockholder with respect to any
shares of Company Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date the Participant becomes the registered
owner of such shares. Except as otherwise expressly provided in Section 16
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
18. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his Employment by
the Company or interfere in any way with the right of the Company or an
Affiliate, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such Employment or to increase or decrease
the compensation of the Participant from the rate in existence at the time of
the grant of an Incentive Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
19. Securities Matters
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of
Company Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
shares of Company Stock pursuant to the Plan unless and until the Company is
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Company Stock are
traded. The Committee may require, as a condition of the issuance and delivery
of certificates evidencing shares of Company Stock pursuant to the terms hereof,
that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee,
in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall be effective
only at such time as counsel to the Company shall have determined that the
issuance and delivery of shares of
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Company Stock pursuant to such exercise is in compliance with all applicable
laws, regulations of governmental authority and the requirements of any
securities exchange on which shares of Company Stock are traded. The Committee
may, in its sole discretion, defer the effectiveness of any exercise of an
Option granted hereunder in order to allow the issuance of shares of Company
Stock pursuant thereto to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Participant in writing of its
decision to defer the effectiveness of the exercise of an Option granted
hereunder. During the period that the effectiveness of the exercise of an Option
has been deferred, the Participant may, by written notice, withdraw such
exercise and obtain a refund of any amount paid with respect thereto.
20. Withholding Taxes
(a) Cash Remittance
Whenever shares of Company Stock are to be issued upon the exercise of
an Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock or the payment of a Stock Bonus, or in connection with
a Dividend Equivalent Right, the Company shall have the right to require the
Participant to remit to the Company, in cash, an amount sufficient to satisfy
the federal, state and local withholding tax requirements, if any, attributable
to such exercise, occurrence or payment prior to the delivery of any certificate
or certificates for such shares. In addition, upon the exercise of an LSAR,
Tandem SAR or Stand-Alone SAR, the grant of a Cash Bonus or the making of a
payment with respect to a share of Phantom Stock or a Dividend Equivalent Right,
the Company shall have the right to withhold from any cash payment required to
be made pursuant thereto an amount sufficient to satisfy the federal, state and
local withholding tax requirements, if any, attributable to such exercise or
grant.
(b) Stock Remittance
At the election of the Participant, subject to the approval of the
Committee, when shares of Company Stock are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or the Vesting Date with respect to a
share of Restricted Stock or the grant of a Stock Bonus, or a payment in
connection with a Dividend Equivalent Right, in lieu of the remittance required
by Section 20(a) hereof, the Participant may tender to the Company a number of
shares of Company Stock, the Fair Market Value of which at the tender date the
Committee determines to be sufficient to satisfy the federal, state and local
withholding tax requirements, if any, attributable to such exercise, occurrence,
grant or payment and not greater than the Participant's estimated total federal,
state and local tax obligations associated with such exercise, occurrence, grant
or payment.
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(c) Stock Withholding
The Company shall have the right, when shares of Company Stock are to
be issued upon the exercise of an Option, the occurrence of the Issue Date or
the Vesting Date with respect to a share of Restricted Stock or the grant of a
Stock Bonus or a payment in connection with a Dividend Equivalent Right, in lieu
of requiring the remittance required by Section 20(a) hereof, to withhold a
number of such shares, the Fair Market Value of which at the exercise date the
Committee determines to be sufficient to satisfy the federal, state and local
withholding tax requirements, if any, attributable to such exercise, occurrence,
grant or payment and is not greater than the Participant's estimated total
federal, state and local tax obligations associated with such exercise,
occurrence, grant or payment.
21. Amendment or Termination of the Plan
The Board of Directors may, at any time, suspend or discontinue the
Plan or revise or amend it in any respect whatsoever; provided, however, that if
and to the extent required under Section 422 of the Code (if and to the extent
that the Board of Directors deems it appropriate to comply with Section 422) and
if and to the extent required to treat some or all of the Incentive Awards as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, (if and to the extent that the Board of Directors deems it appropriate to
meet such requirements), no amendment shall be effective without the approval of
the stockholders of the Company, that (a) except as provided in Section 16
hereof, increases the number of shares of Company Stock with respect to which
Incentive Awards may be issued under the Plan, (b) modifies the class of
individuals eligible to participate in the Plan or (c) materially increases the
benefits accruing to individuals pursuant to the Plan. Nothing herein shall
restrict the Committee's ability to exercise its discretionary authority
hereunder pursuant to Section 4 hereof, which discretion may be exercised
without amendment to the Plan. No action under this Section 21 may, without the
consent of a Participant, reduce the Participant's rights under any previously
granted and outstanding Incentive Award except to the extent that the Board of
Directors determines that such amendment is necessary or appropriate to prevent
such Incentive Awards from constituting "applicable employee remuneration"
within the meaning of Section 162(m) of the Code.
22. No Obligation to Exercise
The grant to a Participant of an Option, LSAR, Tandem SAR or
Stand-Alone SAR shall impose no obligation upon such Participant to exercise
such Option, LSAR, Tandem SAR or Stand-Alone SAR.
23. Transfers Upon Death
Upon the death of a Participant, outstanding Incentive Awards granted
to such Participant may be exercised only by the executors or administrators of
the Participant's estate or by any person or persons who shall have acquired
such right to exercise by will or by the
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laws of descent and distribution. No transfer by will or the laws of descent and
distribution of any Incentive Award, or the right to exercise any Incentive
Award, shall be effective to bind the Company unless the Committee shall have
been furnished with (a) written notice thereof and with a copy of the will
and/or such evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the transferee to comply with
all the terms and conditions of the Incentive Award that are or would have been
applicable to the Participant and to be bound by the acknowledgments made by the
Participant in connection with the grant of the Incentive Award. Except as
provided in this Section 23, or in any applicable agreement pusuant to Sections
6(d)(iv), 7(b)(iv), 8(b)(iv), or 9(c)(iv) of the Plan, no Incentive Award shall
be transferable, and Incentive Awards shall be exercisable only by a Participant
during the Participant's lifetime.
24. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
25. Limitations Imposed by Section 162(m)
Notwithstanding any other provision hereunder, prior to a Change in
Control, if and to the extent that the Committee determines the Company's
federal tax deduction in respect of an Incentive Award may be limited as a
result of Section 162(m) of the Code, the Committee may take the following
actions:
(a) With respect to Options, Tandem SARs, Stand-Alone SARs or Dividend
Equivalent Rights, the Committee may delay the payment in respect of such
Options, Tandem SARs, Stand-Alone SARs or Dividend Equivalent Rights until a
date that is within 30 days after the earlier to occur of (i) the date that
compensation paid to the Participant no longer is subject to the deduction
limitation under Section 162(m) of the Code and (ii) the occurrence of a Change
in Control. In the event that a Participant exercises an Option, Tandem SAR or
Stand-Alone SAR or would receive a payment in respect of a Dividend Equivalent
Right at a time when the Participant is a "covered employee," and the Committee
determines to delay the payment in respect of any such Incentive Award, the
Committee shall credit cash or, in the case of an amount payable in Company
Stock, the Fair Market Value of the Company Stock, payable to the Participant to
a book account. The Participant shall have no rights in respect of such book
account and the amount credited thereto shall not be transferable by the
Participant other than by will or laws of descent and distribution. The
Committee may credit additional amounts to such book account as it may determine
in its sole discretion. Any book account created hereunder shall represent only
an unfunded unsecured promise by the Company to pay the amount credited thereto
to the Participant in the future.
(b) With respect to Restricted Stock, Phantom Stock and Stock Bonuses,
the Committee may require the Participant to surrender to the Committee any
certificates with respect to Restricted Stock and Stock Bonuses and agreements
with respect to Phantom Stock, in order to
30
cancel the awards of such Restricted Stock, Phantom Stock and Stock Bonuses (and
any related Cash Bonuses or Dividend Equivalent Rights). In exchange for such
cancellation, the Committee shall credit to a book account a cash amount equal
to the Fair Market Value of the shares of Company Stock subject to such awards.
The amount credited to the book account shall be paid to the Participant within
30 days after the earlier to occur of (i) the date that compensation paid to the
Participant no longer is subject to the deduction limitation under Section
162(m) of the Code and (ii) the occurrence of a Change in Control. The
Participant shall have no rights in respect of such book account and the amount
credited thereto shall not be transferable by the Participant other than by will
or laws of descent and distribution. The Committee may credit additional amounts
to such book account as it may determine in its sole discretion. Any book
account created hereunder shall represent only an unfunded unsecured promise by
the Company to pay the amount credited thereto to the Participant in the future.
26. Failure to Comply
In addition to the remedies of the Company elsewhere provided for
herein, a failure by a Participant (or beneficiary or permitted transferee) to
comply with any of the terms and conditions of the Plan or the agreement
executed by such Participant (or beneficiary or permitted transferee) evidencing
an Incentive Award, unless such failure is remedied by such Participant (or
beneficiary or permitted transferee) within ten days after having been notified
of such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part, as the Committee, in
its absolute discretion, may determine.
27. Effective Date of Plan
The Plan was adopted by the Board of Directors on July 25, 1998,
subject to approval by the stockholders of the Company. Incentive Awards may be
granted under the Plan at any time prior to the receipt of such stockholder
approval; provided, however, that each such grant shall be subject to such
approval. Without limitation on the foregoing, no Option, LSAR, Tandem SAR or
Stand-Alone SAR may be exercised prior to the receipt of such approval, no share
certificate shall be issued pursuant to a grant of Restricted Stock or Stock
Bonus prior to the receipt of such approval and no Cash Bonus or payment with
respect to a Dividend Equivalent Right or share of Phantom Stock shall be paid
prior to the receipt of such approval. If the Plan is not so approved on or
before July 24, 1999 then the Plan and all Incentive Awards then outstanding
under the Plan shall forthwith automatically terminate and be of no force or
effect.
28. Term of the Plan
The right to grant Incentive Awards under the Plan will terminate upon
the expiration of 10 years after the date the Plan was adopted.
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29. Applicable Law
Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
New York, without reference to the principles of conflicts of law.
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