THE RIDGEWOOD POWER GROWTH FUND
KEY EMPLOYEES INCENTIVE PLAN
1. General. This Key Employees Incentive Plan (the "Plan") is adopted by
The Ridgewood Power Growth Fund, a Delaware business trust (the "Fund"). The
Plan will give certain individual key employees designated below ("Incentive
Plan Participants") of the Fund and its subsidiaries and affiliates an incentive
based upon the Fund's Incentive Shares ("Incentive Shares"). The Plan provides
for the grant of non-transferable options ("Share Options") for the purchase of
Incentive Shares, the grant of nontransferable Share appreciation rights based
on the appreciation of Incentive Shares ("SAR's"), the grant of restricted
Incentive Shares ("Restricted Shares") and the grant of bonus Incentive Shares
("Share Bonuses"). Capitalized terms not defined in this Plan shall have the
meanings assigned to them by the Fund's Declaration of Trust, as amended from
time to time.
1.1. Incentive Share Options. Share Options under the Plan may be granted
as incentive Share Options ("Incentive Share Options") that qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or
Share Options that do not so qualify ("Non-qualified Share Options"). No
provision of the Plan is intended or shall be construed to grant employees
alternative rights in any Incentive Share Option granted under the Plan so as to
prevent such Option from qualifying under Section 422 of the Code.
1.2. Federal Securities Laws. The Plan is intended to conform to the extent
necessary with all provisions of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and any and all regulations and rules promulgated by the
Securities and Exchange Commission thereunder, including without limitation,
Rule 16b-3. Notwithstanding anything herein to the contrary, the Plan shall be
administered, and Share Options shall be granted and may be exercised, only in
such a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and Share Options granted hereunder shall
be deemed amended to the extent necessary to conform to such laws, rules and
regulations.
1.3. Definitions. For purposes of the Plan
"affiliate" means any person or entity which is controlled by, controls or
is under common control with the Fund, including without limitation the Managing
Shareholders of the Fund;
"fair market value" of a Incentive Share on a particular date is the
average of the high and low sale prices on that date or the last preceding date
on which the Incentive Shares are traded (the "Trade Date") on the principal
securities exchange on which they are listed. If no such price exists, the fair
market value is computed as the average of the lowest bid price and highest ask
price on the Incentive Shares on the Trade Date in their principal medium of
quotation. If no such price exists, the fair market value shall be determined by
the Fund in good faith in a manner complying with the requirements of the
Internal Revenue Code of 1986, as amended, for valuation in connection with
Share Options, SAR's, Restricted Shares or Share Bonuses;
"Grants" mean grants of Share Options, SAR's, Restricted Shares or Share
Bonuses;
"incentive Share Option requirements" mean the provisions of the Internal
Revenue Code of 1986, as amended, or any successor statute, and all related
regulations, revenue rulings, case law and other legal authority governing the
granting of Incentive Share Options; and
a "subsidiary" consists of any corporation or business entity in which the
Fund directly or indirectly owns or controls 50% or more of the outstanding
stock or equity interests by value.
2. Effective Date of the Plan. The Plan is effective February 9, 1998. Each
Investor in the Fund consents to the Plan as a condition of subscribing for
Investor Shares. No further shareholder approval shall be required with respect
to the making of Grants pursuant to the Plan, except as provided in Section 12
hereof.
3. Administration of the Plan. The Plan shall be administered by the Boards
of Directors of the Managing Shareholders, acting together as a single group
(the "Board") or by a committee selected by the Board. The committee, or the
Board when acting in the absence of the committee, is referred to as the
"Committee" in this Plan.
3.1. Membership after Exchange Act Registration. At any time after
Incentive Shares are registered pursuant to the Exchange Act, (a) at least two
members of the Board must be members of the Committee, (b) the Committee shall
have no member who, during the one-year period immediately preceding such
person's election or appointment to the Committee, has received any Grants under
the Plan or any similar Share Option or stock incentive plan, other than a
formula-based plan as defined in Rule 16b-3 under the Exchange Act, maintained
by the Fund or any subsidiary or affiliated corporation and (c) no member of the
Committee shall be eligible to participate in the Plan while serving on the
Committee.
3.2. Procedure. A majority of the members of the Committee shall constitute
a quorum. The acts of a majority of the members present at any meeting at which
a quorum is present (or acts unanimously approved in writing by the members of
the Committee) shall constitute binding acts of the Committee.
3.3. Powers of the Committee. Subject to the terms and conditions of the
Plan, the Committee is authorized and empowered (a) To select the Incentive
Plan Participants to whom Grants may be made; (b) To determine the number
of Incentive Shares to be covered by any Grant; (c) To prescribe the terms
and conditions of any Grants made under the Plan, and the forms and
agreements used in connection
with such Grants, which shall include agreements governing the granting of Share
Options, SAR's and Restricted Shares, which may provide that the stock which is
the subject of any such Grant shall be subject to the restrictions on transfer
contained in any agreement in effect among the Fund and one or more of its
shareholders;
(d) To determine the time or times when Share Options and/or SAR's will be
granted and when they will terminate in whole or in part;
(e) To determine the time or times when Share Options and SAR's that are
granted may be exercised;
(f) To determine, at the time a Share Option is granted under the Plan,
whether such Share Option is an Incentive Share Option entitled to the Benefits
of Section 422 of the Code;
(g) To establish any other Share Option agreement provisions not
inconsistent with the terms and conditions of the Plan or, where the Share
Option is an Incentive Share Option, with the terms and conditions of Section
422 of the Code;
(h) To determine whether SAR's will be made part of any Grants consisting
of Share Options;
(i) To determine the terms and conditions of any Grant of Restricted Share
and the conditions under which the Grant vests; and (j) To determine the
circumstances under which the Trust will repurchase Incentive Shares
granted under the Plan upon the
cessation of any Incentive Plan Participant's employment with the Fund or its
Affiliates.
4. Employees Eligible for Grants. Incentive Plan Participants under the
Plan are key employees of the Fund or a subsidiary or an Affiliate whose
business benefits the Fund and who are designated from time to time by the
Committee in its sole and exclusive discretion. The Committee may designate or
terminate the designation of any individual at any time in its sole and complete
discretion. Designation, without more, shall not entitle any Incentive Plan
Participant to a Grant. Incentive Plan Participants may include, but shall not
necessarily be limited to, members of the Board of Directors (excluding members
of the Committee after Exchange Act registration) and officers of the Fund and
any subsidiary or Affiliate. Robert E. Swanson, however, is ineligible to be an
Incentive Plan Participant.
5. Shares Subject to the Plan. A number of Incentive Shares equal to 1/15
of the number of Investor Shares issued and outstanding as of the date the
initial offering of Investor Shares terminates, adjusted thereafter as described
in the Plan, have been reserved for issuance and are available for Grants.
Either Incentive Shares held as treasury stock or authorized and unissued
Incentive Shares, or both, may be so issued, in such amount or amounts within
the maximum limits of the Plan as the Committee shall from time to time
determine.
5.1. Exercised Shares not Available for Further Grant. If SAR's are granted
in tandem with a Share Option pursuant to Section 7 and such SAR's are
thereafter exercised in whole or in part, then such Share Option or the portion
thereof to which the duly exercised SAR's relate shall be deemed to have been
exercised for purposes of such Share Option. In the event SAR's are granted
other than in tandem with a Share Option and such SAR's are thereafter exercised
in whole or in part, the number of Incentive Shares available for issuance under
the Plan shall be reduced by the number of Incentive Shares covered by such
exercised SAR's.
5.2. Adjustments to Number of Shares. If, at any time subsequent to the
date of adoption of the Plan by the Board, the number of Incentive Shares are
increased or decreased, or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Fund or of another
corporation (whether as a result of a stock split, stock dividend, combination
or exchange of shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation, recapitalization or
otherwise):
(a) there shall automatically be substituted for each Incentive Share
available for grant under the Plan or that have been granted as unvested
Restricted Shares, the number and kind of shares of stock or other securities
into which each outstanding Incentive Share shall be changed or for which each
such Incentive Share shall be exchanged;
(b) there shall automatically be substituted for each Incentive Share
subject to an unexercised Share Option or SAR (in whole or in part) granted
under the Plan, the number and kind of shares of stock or other securities into
which each outstanding Incentive Share shall be changed or for which each such
Incentive Share shall be exchanged and
(c) the option price per Incentive Share or unit of securities shall be
increased or decreased proportionately so that the aggregate purchase price for
the securities subject to a Share Option or SAR shall remain the same as
immediately prior to such event.
In addition to the foregoing, the Committee shall be entitled in the event of
any such increase, decrease or exchange of Incentive Shares to make other
adjustments to unvested Restricted Shares or the securities subject to a Share
Option or SAR, the provisions of the Plan, and to any related Restricted Share,
Share Option or SAR agreements (including adjustments which may provide for the
elimination of fractional shares), where necessary (under Section 422(a)(2) of
the Code or otherwise) to preserve the terms and conditions of any Grants
hereunder.
6. Share Option Provisions.
6.1. Conditions of Grant.
6.1.1. General. The Committee may grant to Incentive Plan Participants
(also referred to as "optionees") nontransferable Share Options that either
qualify as Incentive Share Options under Section 422 of the Code or do not so
qualify. The Committee may grant more than one Share Option, with or without
SAR's, to the same Incentive Plan Participant. The day on which the Committee
approves the granting of a Share Option shall be considered the date on which
such Option is granted.
6.1.2. Incentive Share Options. Any Incentive Share Option shall only be
granted within 10 years from February 9, 1998. Incentive Share Options shall
only be granted to Incentive Plan Participants while actually employed by the
Fund or a subsidiary or Affiliate.
6.2. Share Option Price.
6.2.1. Incentive Share Options. The option price per Incentive Share which
may be purchased under an Incentive Share Option under the Plan shall be
determined by the Committee at the time of Grant, but shall not be less than
100% of the fair market value of a Incentive Share, determined as of the date
such Option is granted; however, if a Incentive Plan Participant to whom an
Incentive Share Option is granted is, at the time of the grant of such Option,
the owner of more than 10% of the combined voting power of all classes of stock
of the Fund or any parent or subsidiary (a "Substantial Shareholder"), the price
per Incentive Share of such Option shall not be less than 110% of the fair
market value of a Incentive Share on the date such Option is granted.
6.2.2. Other Share Options. The option price per Incentive Share under each
Share Option granted pursuant to the Plan which is not an Incentive Share Option
shall be determined by the Committee at the time of Grant.
6.3. Period of Share Option. The Committee shall determine when each Share
Option is to expire. However, no Incentive Share Option shall be exercisable
after the expiration of 10 years from the date upon which such Option is
granted. Further, no Incentive Share Option granted to an employee who is a
Substantial Shareholder at the time of the grant of such Option shall be
exercisable after the expiration of five years from the date of grant of such
Option.
6.4. Limitation on Exercise and Transfer of Share Options. Only the person
to whom a Share Option is granted may exercise such Option, except where a
guardian or other legal representative has been duly appointed for such person,
and except as otherwise provided in the case of the optionee's death. No Share
Option granted hereunder shall be transferable by an optionee other than by will
or the laws of descent and distribution. No Share Option granted hereunder may
be pledged or hypothecated, nor shall any such Option be subject to execution,
attachment or similar process.
6.5. Employment, Holding Period Requirements For Certain Options. The
Committee may condition any Share Option granted hereunder upon the continued
employment of the optionee by the Fund or by a subsidiary corporation or
affiliated corporation, and may make any such Share Option immediately
exercisable. However, the Committee will require that, from and after the date
of grant of any Incentive Share Option granted hereunder until the day three
months prior to the date such Option is exercised, such optionee must be an
employee of the Fund or of a subsidiary or Affiliate, but always subject to the
right of the Fund or any such subsidiary or Affiliate to terminate such
optionee's employment during such period (except if the optionee's employment is
terminated due to death or permanent and total disability, in which event such
period shall be one year). Each Share Option shall be subject to such additional
restrictions as to the time and method of exercise as shall be prescribed by the
Committee. Upon compliance with any condition or requirement imposed by the
Committee pursuant to the foregoing, a Share Option or the appropriate portion
thereof may be exercised in whole or in part from time to time during the option
period; however, such exercise right(s) shall be limited to whole shares.
6.6. Payment for Share Option Price. A Share Option shall be exercised by
an optionee giving written notice to the Fund of his intention to exercise the
same, the exercise date and sufficient information to allow the Fund to
determine which Grant and the amount of the Grant that are being exercised. The
notice shall be accompanied by full payment of the purchase price in cash or by
check or, with the consent of the Committee, in whole or in part with a
surrender of Incentive Shares having a fair market value on the date of exercise
equal to that portion of the purchase price for which payment in cash or check
is not made. The Committee may, in its sole discretion, approve other methods of
exercise for a Share Option or payment of the option price, provided that no
such method shall cause any option granted under the Plan as an Incentive Share
Option to not qualify under Section 422 of the code, or cause any Incentive
Share issued in connection with the exercise of an option not to be a fully paid
and non-assessable Incentive Share.
6.7. Cancellation and Replacement of Share Options and Related Rights. The
Committee may at any time or from time to time permit the voluntary surrender by
an optionee who is the holder of any outstanding Share Options under the Plan,
where such surrender is conditioned upon the granting to such optionee of new
Share Options for such number of shares as the Committee shall determine, or may
require such a voluntary surrender as a condition precedent to the grant of new
Share Options. The Committee shall determine the terms and conditions of new
Share Options, including the prices at and periods during which they may be
exercised, in accordance with the provisions of the Plan, all or any of which
may differ from the terms and conditions of the Share Options surrendered. Any
such new Share Options shall be subject to all the relevant provisions of this
Plan. The Incentive Shares subject to any Share Option so surrendered, and/or
any Incentive Shares subject to any Share Option that has lapsed, been
forfeited, or been canceled and extinguished in connection with the exercise of
an SAR, shall no longer be charged against the limitation provided in Section 5
of this Plan and may again become shares subject to the Plan. The granting of
new Share Options in connection with the surrender of outstanding Share Options
under this Plan shall be considered for the purposes of the Plan as the granting
of new Share Options and not an alteration, amendment or modification of the
Plan or of the Share Options being surrendered.
6.8. Limitation on Exercisable Incentive Share Options. If the aggregate
fair market value of the Incentive Shares first becoming subject to exercise as
Incentive Share Options by a Incentive Plan Participant during any given
calendar year exceeds the sum of $100,000, such Share Option shall be treated,
to the extent of such excess, as an option which does not qualify as an
Incentive Share Option. Such aggregate fair market value shall be determined as
of the date such Option is granted, taking into account, in the order in which
granted, any other incentive Share Options granted by the Fund, or by a parent
or subsidiary thereof.
6.9. Withholding of Taxes. The Committee may, in its sole discretion,
require, as a condition to any Grant or to the delivery of certificates for
shares issued hereunder, that the optionee pay to the Fund, in cash, any
federal, state or local taxes of any kind required by law to be withheld with
respect to any Grant or any delivery of Incentive Shares upon exercise thereof.
The Committee, in its sole discretion, may permit optionees to pay such taxes
through the withholding of Incentive Shares otherwise deliverable to such
optionee in connection with such Grant or the delivery to the Fund of Incentive
Shares otherwise acquired by the optionee. The Fair Market Value of Incentive
Shares withheld by the Fund or tendered to the Fund for the satisfaction of tax
withholding obligations under this Section 6.10 shall be determined on the date
such Incentive Shares are withheld or tendered. The Fund, to the extent
permitted or required by law, shall have the right to deduct from any payment of
any kind (including salary, bonus, severance or insurance proceeds) otherwise
due to an optionee any federal, state or local taxes of any kind required by law
to be withheld with respect to any Grant or to the delivery of Incentive Shares
under the Plan, or to retain or sell without notice a sufficient number of
Incentive Shares to be issued to such optionee to cover any such taxes, provided
that the Fund shall not sell any such Incentive Shares if such sale would be
considered a sale by such optionee for purposes of Section 16 of the Exchange
Act.
7. Stock Appreciation Rights. A Incentive Plan Participant may be granted
the right to receive a payment based on the increase in the value of Incentive
Shares occurring after the date of such Grant. Such rights shall be known as
Share Appreciation Rights ("SAR's"). SAR's may (but need not) be granted to a
Incentive Plan Participant in tandem with, and exercisable in lieu of
exercising, a Grant of Share Options. No optionee shall be entitled to SAR
rights solely as a result of the grant of a Share Option to him.
7.1. Procedure for Grant. SAR's will be specifically granted upon terms and
conditions specified by the Committee, if the Fund is the employer of the
Incentive Plan Participant, or by a subsidiary or affiliated corporation subject
to the Committee's approval, if such subsidiary or affiliated corporation is the
employer of the Incentive Plan Participant. The terms of SAR's granted in tandem
with a Share Option will be contained in the Share Option agreement in forms
approved by the Committee and not inconsistent with this Plan. Each of those
agreements will include the option price per share, which shall be the "Base
Price" against which the SAR will be valued, the periods during which the SAR
can be exercised, the amounts exercisable at each time and any other conditions.
If an SAR is granted independent of Share Options, the Base Price will be
determined by the Committee and that price and the other information described
above will be contained in an SAR agreement to be executed by the holder and the
Fund.
7.2. Valuation of SAR's . When granted in tandem with a Share Option, an
SAR shall provide that the holder of a Share Option shall have the right to
receive an amount equal to 100% of the excess, if any, of the fair market value
of the Incentive Shares covered by such Option, determined as of the date of
exercise of such SAR by the Committee (in the same manner as such value is
determined for purposes of the granting of Share Options), over the price to be
paid for such Incentive Shares under such Option. If SAR's are granted
independently of a Share Option, they will be granted with respect to a fixed
number of Incentive Shares available for Grant under the Plan. In that event,
the SAR will entitle its holder to receive the excess, if any, of the fair
market value of the Incentive Shares covered by the SAR as of the exercise date
of the SAR over the SAR Base Price.
7.3. Exercise of SAR's. SAR's, if granted, may only be exercised by the
holder thereof, and, unless otherwise provided in the applicable SAR agreement,
may be exercised either with respect to all, or a portion, of the amount of the
Grant exercisable at that time. A SAR shall be exercised by its holder's giving
written notice to the Fund of the intention to exercise the same, the exercise
date and sufficient information to allow the Fund to determine which Grant and
the amount of the Grant that are being exercised. If a SAR is granted in tandem
with a Share Option, it cannot be exercised unless (i) such person is then
permitted to exercise the Share Option or the portion thereof with respect to
which such SAR's relate, and (ii) the fair market value of the Incentive Shares
covered by the Share Option, determined as provided above, exceeds the option
price of such Incentive Shares.
7.4. Payment under SAR. Payment on exercise of a SAR shall be made by the
employer of the Incentive Plan Participant, in one or more of the following
manners, as determined by the Committee:
(a) cash (or check);
(b) fully paid Incentive Shares having a fair market value equal to such
amount; or (c) a combination of cash (or check) and Incentive Shares.
A SAR granted in tandem with a Share Option shall be modified under Sections
6.7-6.9 at the same time and to the extent that the underlying Share Option is
modified. Other SAR's are subject to Sections 6.7 and 6.9 as if the exercise of
the SAR was the exercise of a Share Option.
7.5. Other Provisions. Upon the exercise of any SAR's, the Share Option, or
that portion thereof to which such SAR's relate, shall be canceled and
automatically extinguished. The granting of a Share Option or SAR shall impose
no obligation upon the optionee to exercise such Share Option or SAR. The Fund's
or a subsidiary corporation's obligation to satisfy SAR's shall not be funded or
secured in any manner. No SAR granted hereunder shall be transferable by the
Incentive Plan Participant granted such SAR, other than by will or the laws of
descent and distribution.
7.6. Section 16 Compliance. After the Grant of an SAR, an optionee
intending to rely on an exemption from Section 16(b) of the Exchange Act shall
be required to hold such SAR for six months from the date the price for such SAR
is fixed to the date of cash settlement. Additionally, in order to remain exempt
from Section 16(b) of the Exchange Act, a SAR must be exercised by an optionee
subject to such Section only during the period beginning on the third business
day following the release of a summary statement of the Fund's quarterly or
annual sales and earnings and ending on the twelfth business day following said
date.
8. Restricted Shares.
(a) Grant. The Committee shall determine the Incentive Plan Participants to
whom, and the time or times at which, Grants of Restricted Shares will be made,
the number of Restricted Shares to be granted, the price (if any) to be paid by
such Incentive Plan Participants (subject to Section 8(b)), the time or times
within which such Restricted Share grants may be subject to forfeiture, and the
other terms and conditions of the grants in addition to those set forth in
Section 8(b). The Committee may condition the grant of Restricted Shares upon
the attainment of specified performance goals or such other factors as the
Committee may determine in its sole discretion.
(b) Terms and Conditions. Restricted Shares granted under the Plan shall
contain any terms and conditions, not inconsistent with the provisions of the
Plan, which are deemed desirable by the Committee. A Incentive Plan Participant
who receives a grant of Restricted Shares shall not have any rights with respect
to such Grant unless and until such Incentive Plan Participant has executed an
agreement evidencing such Grant in the form approved from time to time by the
Committee, has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such Grant. In
addition, Restricted Shares granted under the Plan shall be subject to the
following terms and conditions:
(i) The purchase price for Restricted Shares will be specified by the
Committee.
(ii) Grants of Restricted Shares shall only be accepted by executing a
Restricted Share agreement and paying, in cash or by check, whatever price (if
any) if required under Section 8(b)(i).
(iii) Each Incentive Plan Participant granted Restricted Shares shall be
issued a Share certificate in respect of such Restricted Shares. Such
certificate shall be registered in the name of such Incentive Plan Participant
and shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Grant.
(iv) Any Share certificates evidencing Restricted Shares shall either (A)
be held in custody by the Fund until the employment and other restrictions
thereon shall all have lapsed; or (B) be affixed with a legend, identifying such
Shares as Restricted Shares and expressly prohibiting the sale, transfer,
tender, pledge, assignment or encumbrance of such Shares, as the Committee shall
determine. With respect to any Restricted Shares held in custody by the Fund,
the Incentive Plan Participant granted such Restricted Share shall deliver to
the Fund a Share power, endorsed in blank, relating to the Restricted Shares.
With respect to any Restricted Shares held by a Incentive Plan Participant under
legend, the Incentive Plan Participant granted such Restricted Shares shall
deliver to the Fund an acknowledgment that such Shares remain subject to a
substantial risk of forfeiture in the event of termination of employment under
certain circumstances, and that the certificates representing ownership of such
Shares will be surrendered to the Fund immediately upon any such termination of
employment.
(v) Subject to the provisions of the Plan and the Restricted Share
agreement, during a temporal period set by the Committee and commencing with the
date of such Grant (the "Restriction Period"), a Incentive Plan Participant
shall not be permitted to sell, transfer, tender, pledge, assign or otherwise
encumber any Restricted Share granted under the Plan. However, the Committee, in
its sole discretion, may provide for the lapse of such transfer or other
restrictions in installments, or accelerate or waive such restrictions in whole
or in part, based on service, performance or other factors and criteria selected
by the Committee.
(vi) Except as provided in this Section 8(b)(vi) and in Section 8(b)(v), a
Incentive Plan Participant shall have, with respect to Restricted Shares granted
to him, all of the rights of a shareholder of the Fund, including the right to
vote such Shares. Any distributions thereon shall be held by the Fund until the
restrictions on those Shares terminate, at which time they shall be paid without
interest to the Incentive Plan Participant. The Committee, in its sole
discretion and as determined at the time of a Grant of Restricted Shares, may
permit or require cash dividends otherwise due and payable to be reinvested
either in additional Restricted Shares (to the extent available). Share
dividends issued with respect to Restricted Shares shall be treated as
additional Restricted Shares. As Restricted Shares, such additional Shares will
be subject to the same restrictions, terms and conditions applicable to the
Restricted Shares with respect to which such additional Shares were issued.
(vii) No Restricted Share shall be transferable by a Incentive Plan
Participant other than by will or by the laws of descent and distribution.
(viii) In the event Restricted Shares are forfeited by a Incentive Plan
Participant, the Fund will refund to such Incentive Plan Participant any
payment(s) made by such Incentive Plan Participant to purchase such Share,
promptly upon such forfeiture (and any corresponding surrender of Share
certificates).
(c) Minimum Value Provisions. To ensure that Grants of Restricted Shares
actually reflect the performance of the Fund and service of the Incentive Plan
Participant, the Committee may provide, in its sole discretion, for a tandem
performance-based award, or other grant, designed to guarantee a minimum value,
payable in cash or Incentive Shares, to the recipient of a Restricted Share
Grant, subject to such performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
9. Share Bonuses. The Committee at any time may award a Share Bonus to an
Incentive Plan Participant. Incentive Plan Participants are not required to make
any payment for Share Bonuses but may be required to pay income taxes on the
fair market value of the Grant. The Fund may require the Participant to make a
cash payment to the Fund equal to the amount of tax withholding required on the
Grant or may withhold a portion of the Share Bonus to fund the withholding
requirement, in the Committee's discretion.
10. Termination of Employment. If a Incentive Plan Participant ceases to be
an employee of the Fund or any of its subsidiaries or affiliates, for a reason
other then death, retirement, permanent and total disability (as defined below),
his Grants of Stock Options and SAR's shall, unless extended by the Committee on
or before his date of termination of employment, terminate on the effective date
of such termination of employment. Neither the Incentive Plan Participant nor
any other person shall have any right after such date to exercise all or any
part of his Share Options or SAR's.
10.1. Automatic Extension of Exercise Period. If termination of employment
is due to death or permanent and total disability, then outstanding Share
Options and SAR's may be exercised within the one year period ending on the
anniversary of such death or permanent and total disability In the case of
death, such outstanding Share Options and SAR's may be exercised by the holder's
personal representative, or the person designated by such Incentive Plan
Participant by will, or as otherwise designated by the laws of descent and
distribution. Notwithstanding the foregoing, in no event shall any Share Option
or SAR be exercisable after the expiration of the option period, and in the case
of exercises made after a Incentive Plan Participant's death, not to any greater
extent than such Incentive Plan Participant would have been entitled to exercise
such Option or SAR at the time of his death..
10.2. Retirement. Subject to the discretion of the Committee, in the event
a Incentive Plan Participant terminates employment with the Fund and all
subsidiary or affiliated corporations because of normal or early retirement
under any pension plan or retirement plan hereafter adopted by the Fund or the
employer, (a) any then-outstanding Share Options and/or SAR's held by such
Incentive Plan Participant shall lapse at the end of the term of such Share
Option or SAR, or 30 days after such retirement, whichever first occurs.
10.3. Definitions. For purposes hereof, "permanent and total disability"
means a permanent and total disability as defined in Section 22(e)(3) of the
Code. In the event an employee of the Fund or one of its subsidiary corporations
is granted a leave of absence by the Fund or such subsidiary corporation to
enter military service or because of sickness, his employment with the Fund or
such subsidiary corporation shall not be considered terminated, and he shall be
deemed an employee of the Fund or such subsidiary corporation during such leave
of absence or any extension thereof granted by the Fund or such subsidiary
corporation.
11. Amendments to Plan. The Committee is authorized to interpret this Plan
and from time to time adopt any rules and regulations for carrying out this Plan
that it may deem advisable. The Board may at any time amend, modify, suspend or
terminate this Plan or the Committee may take such action with the approval of
the Board. In no event, however, without the approval of shareholders, shall any
action of the Committee or the Board of Directors result in:
(a) Materially amending, modifying or altering the eligibility requirements
provided in Section 4 hereof;
(b) Increasing, except as provided in Section 5 hereof, the maximum number
of Incentive Shares or SAR's that may be made subject to Grants; or
(c) Materially increasing the benefits accruing to participants under
this Plan; except to conform this Plan and any agreements made hereunder to
changes in the Code or required by governing law.
12. Investment Representation, Approvals and Listing. The Committee may, if
it deems appropriate, condition its grant of any
Share Option, SAR, Restricted Shares or Share Bonuses hereunder upon receipt of
the following investment representation from the optionee: "I agree that any
Incentive Shares of [the issuer] (the "Fund") which I may acquire by virtue of
this [Share Option] shall be acquired for investment purposes only and not with
a view to distribution or resale, and may not be transferred, sold, assigned,
pledged, hypothecated or otherwise disposed of by me unless (i) a registration
statement or post-effective amendment to a registration statement under the
Securities Act, with respect to said Incentive Shares has become effective so as
to permit the sale or other disposition of said shares by me; or (ii) there is
presented to the Fund. an opinion of counsel satisfactory to the Fund and its
counsel to the effect that the sale or other proposed disposition of said
Incentive Shares by me may lawfully be made otherwise than pursuant to an
effective registration statement or post-effective amendment to a registration
statement relating to the said shares under the Securities Act of 1933, as
amended." The Fund shall not be required to issue any certificate or
certificates for Incentive Shares on any Grant or upon the exercise of any Share
Option or an SAR granted under this Plan prior to (a) the obtaining of any
approval from any governmental agency which the Committee shall, in its sole
discretion, determine to be necessary or advisable; (b) the admission of such
shares to listing on any national securities exchange on which the Incentive
Shares may be listed; (c) the completion of any registration or other
qualifications of the Incentive Shares under any state or federal law or ruling
or regulations of any governmental body which the Committee shall, in its sole
discretion, determine to be necessary or advisable or the determination by the
Committee, in its sole discretion, that any registration or other qualification
of the Incentive Shares is not necessary or advisable; or (d) the obtaining of
an investment representation from the optionee in the form stated above or in
such other form as the Committee, in its sole discretion, shall determine to be
adequate.
13. General Provisions. The form and substance of Share Option agreements,
SAR agreements and Restricted Stock agreements made hereunder, whether granted
at the same or different times, need not be identical. Nothing in this Plan or
in any Share Option, SAR or Restricted Stock agreement shall confer upon any
employee any right to continue in the employ of the Fund or any of its
subsidiary corporations or Affiliates or to interfere with or limit the right of
the Fund or any subsidiary or Affiliate to terminate his employment at any time,
with or without cause. Nothing contained in this Plan or in any Share Option,
SAR or Restricted Stock agreement shall be construed as entitling any Incentive
Plan Participant to any rights of a shareholder as a result of the Grant of a
Share Option or an SAR, until such time as Incentive Shares are actually issued
to such optionee pursuant to the exercise of such Option or SAR. This Plan may
be assumed by the successors and assigns of the Fund. The liability of the Fund
under this Plan and any sale made hereunder is limited to the obligations set
forth herein with respect to such sale and no term or provision of this Plan
shall be construed to impose any liability on the Fund in favor of any employee
(or any other party acting on his behalf or in his stead) with respect to any
loss, cost or expense which such employee or party may incur in connection with
or arising out of any transaction in connection with this Plan. The expense of
administering this Plan shall be borne by the Fund. The captions and section
numbers appearing in this Plan are inserted only as a matter of convenience.
They do not define, limit, construe or describe the scope or intent of the
provisions of this Plan. This Plan and the agreements issued under it are the
entire agreement among the Fund and the Incentive Plan Participants. This Plan
shall be governed by the law of the State of Delaware. All actions taken by the
Committee or the Fund under the Plan or with respect to Share Options, SAR's,
Restricted Shares or Incentive Shares thereunder are final and binding on all
persons, and no member of the Committee or person acting on behalf of the Fund
or an employer shall be liable for any action taken or determination made
relating to the Plan, except for willful misconduct.
14. Provisions Applicable Solely to Insiders. The following provisions
shall apply only to persons who are subject to Section 16 of the Exchange Act
with respect to securities of the Fund ("Insiders"), and shall apply to Insiders
notwithstanding any provisions of the Plan to the contrary:
14.1 Compliance with Statute. No Insider shall be permitted to transfer any
security of the Fund acquired by him, except to the extent permitted by Section
16(b) of the Exchange Act and the regulations promulgated thereunder.
14.2. Limitation on Satisfying Withholding Obligations with Incentive
Shares. An Insider may elect to have shares withheld from a Grant or tender
shares to the Fund in order to satisfy the tax withholding consequences of a
Grant only during the period beginning on the third business day following the
date on which the Fund releases the financial information specified in 17 C.F.R.
Section 240.16b-3(e)(1)(ii) and ending on the twelfth business day following
such date. Notwithstanding the foregoing, an Insider may elect to have shares
withheld from a Grant in order to satisfy tax withholding consequences thereof
by providing the Fund with a written election to so withhold at least six months
in advance of the withholding of shares otherwise issuable upon exercise of a
Share Option.
15. Provisions Affecting Incentive Plan Participants Prior to Liquidity
Event. If for any reason a Share Option or SAR becomes exercisable and is held
by a person who is not, or who does not claim through, an employee of the Fund
or its successor or an Affiliate or subsidiary of the Fund or its successor, and
if the Incentive Shares are not listed or quoted on a national securities
exchange or a national quotation system during the period beginning 90 days
before the Share Option or SAR becomes exercisable and ending upon an exercise,
the Fund or the employer of the optionee shall have the option but not the
obligation to redeem the Share Option or SAR in cash for an amount equal to the
amount, in the case of a Share Option, payable on an SAR granted in tandem with
the Share Option and exercised on the later of the date the Share Option became
exercisable or the date on which the Fund elected to exercise this right, and,
in the case of an SAR, the value of the SAR.
16. Termination of this Plan. This Plan shall terminate on February 8,
2008, and thereafter no Share Options, Restricted Shares, Share Bonuses or SAR's
shall be granted hereunder. All Share Options, SAR's and Restricted Shares
outstanding at the time of termination of this Plan shall continue in full force
and effect according to their terms and the terms and conditions of this Plan.