Exhibit 10.12
DIRECTRIX, INC.
STOCK INCENTIVE PLAN FOR OUTSIDE DIRECTORS
(as adopted November 6, 1998)
1. Purpose of the Plan
This Directrix, Inc. Stock Incentive Plan for Outside
Directors is intended to promote the interests of the Company and its
shareholders by providing the Company's non-employee directors with appropriate
incentives and rewards to encourage them to take a long-term outlook when
formulating Company policy, to encourage such individuals to remain on the Board
of Directors and to provide them with an equity interest in the Company.
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) "Cause," when used in connection with the termination of a
Participant's service as a member of the Board of Directors, shall mean the
Company's termination of such service on account of (i) the willful and
continued failure by the Participant substantially to perform his duties and
obligations to the Company (other than any such failure resulting from his
incapacity due to physical or mental illness) or (ii) the willful engaging by
the Participant in misconduct which is materially injurious to the Company. For
purposes of this Section 2(b), no act, or failure to act, on a Participant's
part shall be considered "willful" unless done, or omitted to be done, by the
Participant in bad faith and without reasonable belief that his action or
omission was in the best interests of the Company.
(d) "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
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
November 6, 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.
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).
(e) "Code" shall mean the Internal Revenue Code of 1986.
(f) "Committee" shall mean such committee as the Board of Directors
shall appoint from time to time to administer the Plan; provided, however, that
no individual eligible to participate in the Plan be a member of the Committee.
In the event no committee is so appointed, the full Board of Directors shall
serve as the Committee, provided, however, that any member of the Board of
Directors who is eligible to participate in the Plan will abstain from any
action taken by the Board of Directors with respect to the Plan.
(g) "Company" shall mean Directrix, Inc. or any successor thereto.
(h) "Company Stock" shall mean the common stock of the Company.
(i) "Disability" shall mean any physical or mental condition that
prevents a Participant from being able to perform the Participant's duties as a
director for a period of twelve consecutive months.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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(k) "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 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.
(l) "Incentive Award" shall mean an Option or LSAR granted pursuant to
the terms of the Plan.
(m) "LSAR" shall mean a limited stock appreciation right that is
granted pursuant to the provisions of Section 7 hereof and which 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.
(n) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof.
(o) "Participant" shall mean a member of the Board of Directors who is
not at the time of reference an employee of the Company or any of its Affiliates
and to whom an Incentive Award is granted pursuant to the Plan, and, upon his
death, his successors, heirs, executors and administrators, as the case may be.
(p) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(q) "Plan" shall mean the Directrix, Inc. Stock Incentive Plan For
Outside Directors, as it may be amended from time to time.
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(r) "Securities Act" shall mean the Securities Act of 1933, as amended.
3. Stock Subject to the Plan
Options shall be granted under the Plan with respect to a
number of shares of Company Stock as set forth in Section 6 that in the
aggregate does not exceed 20,000 shares. The grant of an LSAR shall not reduce
the number of shares of Company Stock with respect to which Options may be
granted pursuant to the Plan.
To the extent Incentive Awards granted under the Plan are
exercised, the shares covered will be unavailable for future grants under the
Plan. To the extent that Options together with any related rights granted under
the Plan terminate, expire or are canceled without having been exercised, or, in
the case of LSARs, exercised for cash, new Incentive Awards may be made with
respect to the shares covered thereby.
Shares of Common Stock issued under the Plan may be either
newly issued shares or treasury shares, at the discretion of the Committee.
4. Administration of the Plan
The Plan shall be administered by the Committee, which 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.
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.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards
pursuant to the Plan shall be members of the Board of Directors who are not, at
the time of any grant hereunder, employees of the Company or its Affiliates.
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6. Formula Grant of Options
On the last trading day of each fiscal year of the Company,
each director who is, on such date, eligible to participate in the Plan, shall
be granted an Option with respect to 1,250 shares of Company Stock.
(a) Identification of Options
All Options granted under the Plan shall be clearly identified
in the agreement evidencing such Options as "non-qualified stock options."
(b) Exercise Price
The exercise price of any Option granted under the Plan shall
be 100% of the Fair Market Value of a share of Company Stock on the date on
which such Option is granted.
(c) Term and Exercise of Options
(i) Each Option shall become exercisable in two installments:
50% on the first anniversary of the date on which the Option was
granted and the remaining 50% on the second such anniversary.
(ii) Each Option shall be exercisable during such period 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.
(iii) Each Option shall be exercisable in whole or in part;
provided, however, 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 shall be returned to the Participant exercising such
Option together with the delivery of the certificates described in
Section 6(c)(vi) hereof.
(iv) An Option shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no less
than one business day in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the agreements evidencing
the Option and any related LSARs, shall specify the number of shares of
Company Stock with respect to which the Option is being exercised and
the effective date of the
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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 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 Board of
Directors, 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. 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.
(v) Except as otherwise provided in an applicable agreement
evidencing an Option, during the lifetime of a Participant, each Option
granted to the 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, 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.
(vi) 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, as the case may be, and delivered to
the Participant or his beneficiary, as the case may be, as soon as
practicable following the effective date on which the Option is
exercised.
(d) Effect of Discontinuance of Director's Term
(i) In the event that the term of a Participant's membership
on the Board of Directors expires because the Participant (A) loses an
election for a position on the Board of Directors, (B) resigns from the
Board of Directors prior to his completing ten years of service as a
director or (C) fails to seek election to the Board of Directors for a
term commencing prior to his completing ten years of service as a
director (in any case, other than on account of death or Disability),
Options granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable
until the expiration of three months after such termination, on which
date they shall expire, and Options granted to such Participant, to the
extent that they were not exercisable at the time of such termination,
shall expire at the close of business on the date of such termination;
provided, however, that no Option shall be exercisable after the
expiration of its term.
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(ii) In the event that the term of a Participant's membership
on the Board of Directors expires (A) because of the Participant's
resignation on or after completing ten years of service, (B) because of
his failure to seek election after completing ten years of service or
(C) because of the Participant's Disability or death, Options granted
to such Participant, to the extent that they were exercisable at the
time of such termination, shall remain exercisable until the expiration
of one year after such termination, on which date they shall expire,
and Options granted to such Participant, to the extent that they were
not exercisable at the time of such termination, shall expire at the
close of business on the date of such termination; provided, however,
that no Option shall be exercisable after the expiration of its term.
(iii) In the event that a Participant is removed from the
Board of Directors by the shareholders of the Company for Cause, all
outstanding Options granted to such Participant shall expire at the
commencement of business on the date of such removal.
(e) 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
Each Option granted hereunder shall include an LSAR relating
to a number of shares of Company Stock equal to the number of shares of Company
Stock subject to the related Option. An LSAR shall be granted at the same time
that its related Option is granted. Each LSAR shall be evidenced by the
agreement evidencing the related Option. Each LSAR shall be subject to the
following terms and conditions:
(a) Benefit Upon Exercise
The exercise of an LSAR relating to an 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 (i) the greater of (A) the
highest price per share of Company Stock paid in the Change in Control in
connection with which such LSAR became exercisable and (B) the Fair Market Value
of a share of Company Stock on the date of such Change in Control 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.
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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 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 7(b)(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, however, 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 and the related 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) hereof.
(iv) Except as otherwise provided in an applicable agreement
evidencing an LSAR, during the lifetime of a Participant, each LSAR
granted to the 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 one business day in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the applicable agreements
evidencing the LSAR and the related Option shall specify the number of
shares of Company Stock with 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 agreements shall be returned to him.
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8. 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 number of shares of Company Stock with respect to
which Options and LSARs are granted under Section 6 hereunder shall be
appropriately adjusted.
(b) Outstanding Options and LSARs -- Increase or Decrease
in Issued Shares Without Consideration
Subject to any required action by the shareholders of the
Company, in the event of any increase or decrease in the number of issued shares
of Company Stock resulting from a subdivision or 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 number of shares
of Company Stock subject to each outstanding Option and LSAR, and the exercise
price-per-share of Company Stock of each such Option and LSAR shall be
appropriately adjusted.
(c) Outstanding Options and LSARs - Certain Mergers
Subject to any required action by the shareholders of the
Company, in the event that the Company shall be the surviving corporation in any
merger or consolidation (except a merger or consolidation as a result of which
the holders of shares of Company Stock receive securities of another
corporation), each Option and LSAR 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 and LSAR would have
received in such merger or consolidation.
(d) Outstanding Options and LSARs - 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, each Option (including each LSAR related thereto) outstanding
immediately prior to such event (whether or not then exercisable) shall be
canceled effective immediately prior to the occurrence of such event, and, in
full consideration of such cancellation, the Participant to whom such Option was
granted shall be paid an amount in cash for each share of Company Stock subject
to such Option, equal to the excess of (A) the value, as determined by an
independent appraisal of the property (including
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cash) received by the holder of a share of Company Stock as a result of such
event over (B) the exercise price of such Option.
(e) 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 to an Incentive Award or the exercise
price of any Option or LSAR.
9. 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 of the issuance of a stock
certificate with respect to such shares. Except as otherwise expressly provided
in Section 8 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.
10. 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. Each Participant may be required, 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 appropriate covenants,
agreements and representations, and that such certificates bear appropriate
legends.
(b) The exercise of any Option granted hereunder shall be effective
only at such time as counsel to the Company shall have determined that the
issuance and delivery of shares of Company Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Company Stock are
traded. The effectiveness of any exercise of an Option granted hereunder may be
deferred 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
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Participant shall be informed in writing of any such deferral. 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 the
refund of any amount paid with respect thereto.
11. Withholding Taxes
(a) Cash Remittance
Whenever shares of Company Stock are to be issued upon the
exercise of an Option, the Company shall have the right to require the
Participant to remit to the Company in cash an amount sufficient to satisfy
federal, state and local withholding tax requirements, if any, attributable to
such exercise, occurrence or payment prior to the delivery of any certificate or
certificates for such shares. In addition, upon the exercise of an LSAR, 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 Board of Directors, when shares of Company Stock are to be issued upon the
exercise of an Option, in lieu of the remittance required by Section 11(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 is sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise, occurrence or grant.
(c) Stock Withholding
The Company shall have the right, when shares of Company Stock
are to be issued upon the exercise of an Option, in lieu of requiring the
remittance required by Section 11(a) hereof, to withhold a number of such
shares, the Fair Market Value of which at the exercise date the Committee
determines to be sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise, occurrence or grant.
12. 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 by Rule l6b-3 promulgated under
Section 16(b) of the Exchange Act or by any comparable or successor exemption
under which the Board of Directors believes it is appropriate for the Plan to
qualify, no amendment shall be effective without the approval of the
shareholders of the Company. No action hereunder may, without the consent of a
Participant, reduce the Participant's rights under any previously granted and
outstanding Incentive Award.
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13. No Obligation to Exercise
The grant to a Participant of an Option and LSAR shall impose
no obligation upon such Participant to exercise such Option or LSAR.
14. Transfers Upon Death
Upon the death of a Participant, outstanding Incentive Awards
granted to such Participant may be exercised only by the executors or
administrators of the Participant's estate or by any person or persons who shall
have acquired such right to exercise by will or by the laws of descent and
distribution. No transfer by will or the laws of descent and distribution of any
Incentive Award, or the right to exercise any Incentive Award, shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such evidence
as the Committee may deem necessary to establish the validity of the transfer
and (b) an agreement by the transferee to comply with all the terms and
conditions of the Incentive Award that are or would have been applicable to the
Participant and to be bound by the acknowledgements made by the Participant in
connection with the grant of the Incentive Award. Except as
provided in this Section 14, or in any applicable agreement pursuant to Sections
6(c)(v) or 7(b)(iv) of this Plan, no Incentive Award shall be transferable, and
shall be exercisable only by a Participant during the Participant's lifetime.
15. 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.
16. 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. The Committee may delay the payment in respect of Options 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 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
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.
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17. Certain Board Action
To the extent consistent with Rule 16b-3, any member of the
Board of Directors who is eligible to participate in the Plan will abstain from
any action taken by the Board of Directors with respect to the Plan.
18. Failure to Comply
In addition to the remedies of the Company elsewhere provided
for herein, failure by a Participant (or beneficiary) to comply with any of the
terms and conditions of the Plan or the agreement executed by such Participant
(or beneficiary) evidencing an Incentive Award, unless such failure is remedied
by such Participant (or beneficiary) within ten days after having been notified
of such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part.
19. Effective Date of Plan
The Plan was adopted by the Board of Directors on November 6,
1998, subject to approval by the shareholders of the Company at their next
annual meeting, in accordance with applicable law, and the requirements of Rule
l6b-3 promulgated under Section 16(b) of the Exchange Act. Incentive Awards may
be granted under the Plan at any time prior to the receipt of such shareholder
approval; provided, however, that each such grant shall be subject to such
approval. Without limitation on the foregoing, no Option or LSAR may be
exercised prior to the receipt of such approval. If the Plan is not so approved,
then the Plan and all Incentive Awards then outstanding hereunder shall
forthwith automatically terminate and be of no force and effect.
20. Term of the Plan
The Plan will terminate automatically upon the expiration of 5
years after the date the Plan was adopted.
21. 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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