Exhibit 10(d)
Clean Diesel Technologies, Inc.
1994 INCENTIVE PLAN
(as amended through
June 11, 2002)
The 1994 Incentive Plan of Clean Diesel Technologies, Inc.
Index
Page
1. Purpose and Effective Date 1
2. Definitions 1
3. Administration 3
3.1 Committee 3
3.2 Effect of Determinations 4
4. Eligibility 4
5. Shares Subject to This Plan 4
5.1 Maximum Number of Shares 4
5.2 Share Accounting 4
6. Awards 5
6.1 Options 5
6.2 Stock Appreciation Rights 7
6.3 Restricted Shares 8
6.4 Performance Awards 9
6.5 Bonuses 10
6.6 Other Awards 12
7. Adjustments Upon Changes in Capitalization 12
8. Change in Control 13
8.1 Definition of Change in Control 13
8.2 Effect of Change in Control 14
9. Relationship of the Plan to Benefit Plans 14
10. Effect of the Plan on Right to Continued Employment and Interest
In Particular Property 15
11. Withholding Taxes and Deferrals 15
11.1 Cash Withholding 15
11.2 Share Withholding 15
11.3 Deferrals 16
12. Compliance With Applicable Legal Requirements 16
13. Amendments 16
13.1 Plan Amendments 16
13.2 Award Amendments 16
13.3 Rights of Participants 16
13.4 Rule 16b-3 17
14. Miscellaneous Provisions 17
14.1 Awards in Various Countries 17
14.2 Transferability 17
14.3 Cancellation of Awards 17
14.4 Arbitration; Governing Law 17
CLEAN DIESEL TECHNOLOGIES, INC.
1994 INCENTIVE PLAN
1. Purpose and Effective Date
--------------------------
The purpose of this 1994 Incentive Plan of Clean Diesel Technologies, Inc.,
a Delaware corporation ("the Corporation") is to further the interests of the
Corporation and its shareholders by providing incentives in the form of awards
to such directors, officers, employees, consultants or advisors to the
Corporation as the directors shall determine are key to the continued success
and profitability of the Corporation. The Plan is intended to retain
Participants with significant training, experience and ability; to attract new
Participants whose services are considered valuable; and to encourage such
Participants to acquire a proprietary interest in the Corporation. So that the
maximum incentive can be provided each Participant in the Plan by granting to
such participant an Award best suited to the circumstances, the Plan provides
for granting, Non-Qualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Shares, Performance Awards, Bonuses, Other
Awards, or any combination of the foregoing.
This Plan shall become effective upon its adoption by the Board, subject to
approval within one (1) year of such adoption by the Corporation's shareholders,
and shall remain effective until terminated by resolution of the Board.
2. Definitions
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As used in this Plan:
(1) "Award" means the grant hereunder, and by consent of the
Participant, awards or options granted previously by the Corporation of any form
of Option, Stock Appreciation Right, Restricted Share, Performance Award, Other
Award, Bonus, or any other form of Share based or non-Share based Award.
(2) "Award Agreement" means a written agreement between the Corporation
and the Participant that sets forth the terms, conditions and limitations
applicable to an Award.
(3) "Beneficiary" means, where a Participant is within respect to any
Award not forfeitable by its terms on the death of the Participant entitled to
any unpaid portion thereof, such person or persons entitled thereto under the
Participant's will or under the laws of descent and distribution;
(4) "Board" means the Board of Directors of the Corporation.
(5) "Bonus" means any payment under Sec. 6.5.
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(6) "Change in Control" has the meaning set forth in Sec. 8.
(7) "Code" means the United States Internal Revenue Code of 1986, as
amended and in effect from time to time, or any successor statute.
(8) "Committee" means the Committee of the Board or any successor
committee as described in Section 3.1, or, if there shall be no such Committee,
the Board.
(9) "Corporation" means Clean Diesel Technologies, Inc., a Delaware
corporation, or any successor corporation, and its subsidiaries and affiliates,
incorporated or otherwise, in which the Corporation shall own directly or
indirectly at least fifty percent (50%) of the interests.
(10) "Employee" means any individual who is a salaried employee on the
payroll of the Corporation.
(11) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.
(12) "Fair Market Value Per Share" in reference to the common stock of
the Corporation means such value as shall be determined by the Board or a
Committee thereof, as the case may be, responsible from time to time for the
administration of the Plan.
(13) "Non-Qualified Stock Option" shall mean a stock option which is
not an Incentive Stock Option within the meaning of Section 422 of the Code.
(14) "Option" means an Award to purchase Shares granted pursuant to
Sec. 6.1.
(15) "Participant" means any director, officer, employee, consultant or
advisor who is granted an Award under this Plan. Except that consultants and
advisors shall not include those rendering services in connection with the offer
or sale of the Corporation's securities in a capital raising transaction.
(16) "Performance Award" has the meaning described in Sec. 6.4.
(17) "Plan" means this 1994 Incentive Plan of Clean Diesel
Technologies, Inc., as amended from time to time.
(18) "Restricted Shares" means Shares which have certain restrictions
attached to the ownership thereof, which may be issued under Sec. 6.3.
(19) "Retirement" means termination of a Participant's employment with
the Corporation by retirement under the normal, mandatory, early and applicable
age plus service or other provision of the applicable retirement plan of the
Corporation or a subsidiary or affiliate of the Corporation, or, if there shall
be no such plan or plans, then
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under such procedures as the Company or its subsidiaries and affiliates may from
time to time establish.
(20) "Rule 16b-3" means such rule as promulgated by the Securities and
Exchange Commission under the Exchange Act as now in force or as such regulation
or successor regulation shall be hereafter amended.
(21) "Share" means shares of common stock of the Corporation.
(22) "Share Unit" means the right to receive a payment equivalent in
value to one Share on the date of payment.
(23) "Stock Appreciation Right" means a right which may be issued under
Sec. 602, the value of which is determined relative to the appreciation in value
of Shares.
(24) "Totally Disabled" means a condition of a Participant found by a
qualified physician selected by the Corporation to be that as described in Sec.
22(e)(3) of the Code or as such Section or successor section shall be hereafter
amended.
(25) "Non-Employee Director" means a director as defined in Rule 16b-3
of the Securities and Exchange Commission.
(26) "Incentive Stock Option" means a stock option satisfying the
requirements of Section 422 of the Code."
3. Administration
--------------
3.1 Committee
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(a) This Plan shall be administered by the Board. The Board may,
however, appoint a Committee to administer the Plan which shall consist of
not less than a sufficient number of disinterested members of the Board so
as to qualify the Committee to administer this Plan as contemplated by Rule
16b-3 and to that end the Board may limit the participation of Committee
members in the Plan to formula based or other awards. The Board may remove
members from or add members to the Committee. Vacancies on the Committee
shall be filled by the Board.
(b) To the extent permitted by Sec. 13.3, the Board or Committee
is authorized to (i) determine the persons who shall be Participants in the
Plan and which Awards shall be granted to Participants, (ii) establish,
amend and rescind rules, regulations and guidelines relating to the Plan as
it deems appropriate, (iii) interpret and administer the Plan, Awards and
Award Agreements, (iv) establish, modify and terminate terms and conditions
of Award Agreements, (v) grant waivers and accelerations of Plan, Award and
Award Agreements restrictions and
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(vi) take any other action necessary for the proper administration and
operation of the Plan.
(c) The Board or Committee may designate persons and entities
other than its members, including but not limited to, and successor
committee, the Chief Executive Officer, and the Corporate Secretary, to
carry out any of its responsibilities under and described in this Plan,
under such conditions or limitations as the Board or Committee may
establish, other than its authority with regard to participants, if any,
who are subject to Sec. 16 of the Exchange Act.
3.2 Effect of Determination
-----------------------
Determination of the Board or Committee and its designee shall be final,
binding and conclusive on the Corporation, its stockholders, Employees and
Participants. No member of the Board or Committee or any of its designee
shall be personally liable for any action or determination made in good
faith with respect to this Plan, any award, or any Award Agreement.
4. Eligibility
-----------
Persons eligible for Awards under this Plan shall consist of key managerial
and other directors, officers, employees, consultants or agents who possess
valuable experience and skills and have contributed, or can be expected to
contribute, materially to the success and profitability of the Corporation.
The Board or Committee shall determine which persons shall be Participants,
the types of Awards to be made to Participants and the terms, conditions
and limitations applicable to the Awards.
5. Shares Subject to This Plan
---------------------------
5.1 Maximum Number of Shares
------------------------
The maximum number of Shares available for Awards under this Plan in each
calendar year during which any part of this Plan shall be in effect shall be
such fixed amount of Shares as the Board shall from time to time determine but
not more than seventeen and one-half percent (17 %) of the issued and
outstanding Shares of the Corporation. Treasury stock shall not be deemed to be
issued and outstanding. Any and all such Shares may be issued in respect of any
of the types of Awards. However, the maximum number of Shares that may be issued
subject to Incentive Stock Options under the Plan shall not exceed two million
(2,000,000) Shares."
5.2 Share Accounting
----------------
Shares related to Awards that are forfeited, terminate, expire unexercised,
exchanged, settled in cash in lieu of Shares or settled in such other manner so
that a portion or all of the Shares included in an Award are not issued to a
Participant shall be
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available for other Awards. Any Shares not so used shall be available for
further Awards; provided, however, that in any calendar year no more than the
amount determined under Sec. 5.1 above, shall be available for Awards. Shares
issued under this Plan shall be authorized and unissued Shares or Shares
reacquired by the Corporation, as determined by the Committee. No fractional
Shares shall be issued under this Plan.
6. Awards
------
(a) Awards may include, but are not limited to, those described in this
Sec. 6. Awards may be granted singly, in combination, or in tandem with other
Awards. Subject to the other provisions of this Plan, Awards may also be made
in combination or in tandem with, in replacement of, or as alternatives to,
grants or rights under this Plan and any other plan of the Corporation,
including any plan of any acquired entity and for the benefit of any present or
former director, officer, consultant or agent of such acquired entity. Subject
to the terms of the Awards described in this Sec. 6 and the related Award
Agreement, the form of payment for Awards may be in cash, in Shares, in Share
Units, or such other form as determined by the Board of the Committee, and may
be made partly in one form or partly in one or more other forms, all as
determined by the Committee. Except as otherwise provided in this Plan, Awards
shall be evidenced by Award Agreements, the terms of which may be amended or
accelerated by the Board or Committee following the grant of any Award and need
not be uniform among Participants. Except as otherwise provided in this Plan,
Awards shall be granted for such minimum consideration as is required by
applicable law, rules and regulations, including without limitation, the then
applicable Rule 16b-3, and such additional consideration, if any, as may be
determined by the Committee.
(b) Notwithstanding anything contained in this Plan, if required by the
ten applicable Rule 16b-3 or any successor provision, any "equity security"
awarded pursuant to this Plan to any participant who is subject to Section 16 of
the Exchange Act must be held by the Participant for at least six (6) months
after the award thereof. In addition, if required by the then applicable Rule
16b-3 or any successor provision, with respect to any Participant who is subject
to Section 16 of the Exchange Act, at least six (6) months must elapse from the
date of acquisition of a "derivative security" hereunder to the date of
disposition of such security. The terms "equity security" and "derivative
security" shall have the meanings described in the then applicable Rule 16b-3.
6.1 Options
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Options may be granted under this Plan from time to time. If Options are
granted they shall be upon the following terms and conditions with such
additional terms and conditions, not inconsistent with the provisions of this
Plan, as the Board or Committee in its discretion shall deem desirable:
(a) Options shall be Non-Qualified Stock Options or Incentive
Stock Options.
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(b) The option price per Share for all Options shall be not less
than one hundred per cent (100%) of the Fair Market Value Per Share on the
date the Option is granted.
(c) Award Agreements for Options shall conform to the requirements
of this Plan, and may contain such other provisions as the Committee shall
deem advisable.
(d) Award Agreements for Options shall specify when an Option may
be exercisable. An option may be exercised, in whole or in part, by giving
written notice of exercise to the corporation specifying the number of
Shares to be purchased. Shares purchased upon exercise of an Option shall
be paid for in full at the time the Option is exercised in cash or, with
the consent of the Board or Committee, consistent with applicable law,
regulations and rules.
(e) A holder of an Option shall have no rights as a stockholder
with respect to any Shares covered by such Option unless and until the date
of the issuance of the stock certificate for such Shares.
(f) (i) If, after completion of any required period of continuous
employment or affiliation in order to exercise an Option as provided in an
Award Agreement, a Participant dies while employed by the Corporation, such
Option shall be exercisable by the Beneficiary thereof, but after the date
of death of the Participant only within the period specified in the Award
Agreement which shall not be later than the expiration date of the Option.
(ii) Following the death of a Participant, the Board or
Committee may at its discretion, upon the request of and in consideration
of the surrender of such Option, pay the amount by which the Fair Market
Value per Share on the date of such request shall exceed the Option price
per Share multiplied by the number of Shares as to which the request was
made.
(g) If, after completion of any required period of continuous
employment in order to exercise an Option as provided in an Award
Agreement, a Participant is Totally Disabled or retires, such Option shall
be exercisable by the Participant, but only within the period specified in
the Award Agreement.
(h) Incentive Stock Options
(i) Each Incentive Stock Option shall not have an aggregate
Fair Market Value Per Share (determined for each Incentive Stock Option at
its grant date) of Shares with respect to which Incentive Options are
exercisable for the first time by a Participant during any calendar year
(under the Plan and any other stock option plan of the Corporation or its
subsidiaries ("Other Plans"), determined in accordance with the provisions
of Section 422 of the Code, which exceeds $100,000;
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(ii) To the extent that the aggregate Fair Market Value Per
Share of stock with respect to which Incentive Stock Options granted under
the Plan and any Other Plans are exercisable by a Participant for the first
time during any calendar year exceeds $100,000, such Incentive Stock
Options shall be treated as Non-Qualified Stock Options to the extent
necessary so that such aggregate Fair Market Value per Share of Stock does
not exceed $100,000. For purposes of the foregoing sentence, Incentive
Stock Options shall be treated as Non-Qualified Stock Options according to
the order in which they were granted such that the most recently granted
Incentive Stock Options are first treated as Non-Qualified Stock Options;
and
(iii) Each Incentive Stock Option shall require the
Participant to notify the Board or the Committee of any disposition of any
Shares issued pursuant to the exercise of the Incentive Stock Option under
the circumstances described in Section 421 of the Code (relating to certain
disqualifying dispositions) within ten (10) days of such disposition.
6.2 Stock Appreciation Rights
-------------------------
Stock Appreciation Rights may be granted under this Plan from time to time.
If Stock Appreciation Rights are granted they shall be upon the following terms
and conditions, and such additional terms and conditions, not inconsistent with
the provisions of this Plan, as the Board or Committee in its discretion shall
deem desirable:
(a) A Stock Appreciation Right may be granted in tandem with part
of all of, in addition to, or completely independent of, an Option or any
other Award under this Plan. A Stock Appreciation Right issued in tandem
with an Option may be granted at the time of grant of the related Option or
at any time thereafter during the term of the Option.
(b) Award Agreements for Stock Appreciation Rights shall conform
to the requirements of this Plan and may contain such other provisions
(including but not limited to, the permitted form of payment for the
exercise of the Stock Appreciation Right, the requirement of employment for
designated periods of time prior to exercise and the ability of the Board
or Committee to revoke Stock Appreciation Rights which are issued in tandem
with options without compensation to the Participant) as the Board or
Committee shall deem advisable.
(c) Stock Appreciation Rights issued in tandem with Options shall
be subject to the following:
(i) Stock Appreciation Rights shall be exercisable at such
time or times and to the extent, but only to the extent, that the Option to
which they relate shall be exercisable.
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(ii) Upon exercise of Stock Appreciation Rights the holder
thereof shall be entitled to receive a number of Shares equal in aggregate
value to the amount by which the Fair Market Value Per Share on the date of
such exercise shall exceed the option price per Share of the related
Option, multiplied by the number of Shares in respect of which the Stock
Appreciation Right shall have been exercised.
(iii) All or any part of the obligation arising out of an
exercise of Stock Appreciation Rights may, at the discretion of the Board
or Committee, be settled by the payment of cash equal to the aggregate
value of the Shares (or a fraction of a Share) that would otherwise be
delivered under Sec. 6.2(c)(ii).
(iv) Upon exercise of Stock Appreciation Rights the
unexercised tandem options of the Participant shall automatically terminate
upon the exercise of such Stock Appreciation Rights.
(v) Stock Appreciation Rights issued in tandem with Options
shall automatically terminate upon the exercise of such Options.
6.3 Restricted Shares
-----------------
Awards of Restricted Shares may be granted under this Plan from time to
time. If Awards of Restricted Shares are granted they shall be upon the
following terms and conditions and such additional terms and conditions, not
inconsistent with the express provisions of this Plan, as the Committee in its
discretion shall deem desirable:
(a) Restricted Shares are Shares which are subject to such terms,
conditions and restrictions as the Board or Committee deems appropriate,
which may include restrictions upon the sale, assignment, transfer or other
disposition of the Restricted Shares and the requirement of forfeiture of
the Restricted Shares upon termination of employment under certain
specified conditions. The Board or Committee may condition the lapsing of
restrictions on part or all of an Award of Restricted Shares upon the
attainment of specific performance goals or such other factors as the Board
or committee may determine. Awards of Restricted Shares may be granted for
no cash consideration or for such minimum consideration as may be required
by applicable law.
(b) Award Agreements for Restricted Shares shall conform to the
requirements of this Plan, and may contain such other terms and conditions
(including but not limited to, a description of a period during which the
Participant may not transfer the Restricted Shares and limits on
encumbering the Restricted Shares during such period) as the Board or
Committee shall deem desirable. To the extent permitted by Sec. 13.3
hereof, the Board or Committee may provide for the lapse of any such term
or condition in installments and may accelerate or waive any such term or
condition in whole or in part, based on
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service, performance and/or such other factors or criteria as the Board or
Committee may determine.
(c) Award Agreements for Restricted Shares shall provide that the
stock certificates representing Restricted Shares shall be legended, that
such certificates be held by a custodian or the Corporation, or that there
be other mechanisms for maintaining control by the corporation of the
Restricted Shares until the restrictions theron are no longer in effect.
After the lapse, waiver or release of the restrictions imposed pursuant to
the Award Agreement on any Restricted Shares, the corporation shall cause
to be issued in the Participant's name a stock certificate evidencing the
Restricted Shares with respect to which they restrictions have lapsed or
been waived or released, free of any legend, and shall cause such stock
certificate to be delivered to the Participant.
(d) Except as otherwise provided in this Plan or in the Award
Agreement, the participant shall have, with respect to Awards or Restricted
Shares because the Participant dies, becomes Totally Disabled or retires
involuntarily the restrictions on all Restricted Shares awarded to a
participant shall lapse on the date of such termination.
6.4 Performance Awards
------------------
Performance Awards may be granted under this Plan from time to time. If
Performance Awards are granted they shall be upon the following terms and
conditions and such additional terms and conditions, not inconsistent with the
express provisions of this Plan, as the Board or Committee in its discretion
shall deem advisable:
(a) Performance Awards are Awards which are based upon the
long-term performance of all or a portion of the Corporation or which are
based upon the long-term individual performance of a Participant.
Performance Awards may be in the form of performance units, performance
shares and such other forms of Performance Awards which the Board or
Committee shall determine to be desirable. Performance Awards are Awards
which are granted to participants contingent upon (i) the future
performance of all or a portion of the Corporation which may include,
without limitation, performance relative to a group of companies in the
same or relative industries, achievement of specific business objectives,
attainment of certain growth rates, profitability goals and such other
measurements as the Board or Committee determines to be appropriate, (ii)
the future performance of a Participant, which may include, without
limitation, attainment of specified goals and objectives and such other
measurements as the Board or Committee determines to be appropriate, (iii)
the future performance of a combination of all or a portion of the
Corporation and a participant, or (iv) such other measurements and criteria
as may be considered appropriate by the Board or Committee. Performance
Awards may contain multiple performance measurements.
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(b) Award Agreements for Performance Awards shall conform to the
requirements of this Plan and may contain such other terms and conditions
as the Board or Committee shall deem desirable, including but not limited
to, applicable performance measurements are to be used singly or in
combination, a description of whether different performance periods, the
length of performance periods, the ability of the Board or Committee to
amend and adjust measurements, payouts and performance periods of
performance Awards and any requirements of employment during performance
periods.
(c) Award Agreements for Performance Awards shall provide for a
required minimum period of continuous employment during a performance
period of a Performance Award. If such minimum period of continuous
employment shall have elapsed, the Award Agreement may provide, or the
Board or Committee may determine, the portion of the payment of the
Performance Award which participant or the Participant's beneficiary, as
applicable, is to receive at the end of the performance period.
6.5 Bonuses
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Bonuses may be granted under this Plan from time to time on an annual or
one-time basis. The amount of Bonuses which may be awarded shall be as
determined by the Board or Committee. The Board or Committee may establish a
basis upon which aggregate Bonus expenditures for any year shall be determined,
which may include measurements of financial performance of the Corporation or of
a unit or department thereof, relative performance of the Corporation or of a
department thereof within the same or related industries, competitive
considerations and other measurements and criteria.
(a) Each Bonus may be made at the discretion of the Board or
Committee either in cash, in Shares, in Share Units, or in another form as
determined by the Board or Committee and may be made partly in one form and
partly in one or more other forms. In the case of an Award of a Bonus in
Shares or Share Units, the number shall be determined by using the Fair
Market Value Per Share on the date of the Award of the Bonus.
(b) The payment of any Bonus shall be subject to such obligations
or conditions as the Board or Committee may specify in making or
recommending the Award of the Bonus, but Bonuses need not be evidenced by
Award Agreements.
(c) When payment of all or part of a Bonus is deterred in the form
of Shares or Share Units, the account of the Participant to whom the Bonus
was made will be credited with an amount per Share equal to the dividends
payable on each issued and outstanding Share ("dividend equivalents").
Amounts thus credited shall, in the discretion of the Board or Committee,
either:
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(i) be paid in cash as and when each such credit shall be
made, or
(ii) be credited in Shares or Share Units, with the number
determined by using the Fair Market Value Per Share on the date of the
dividend payment and delivered in such form and at such time or times as
may be determined by the Committee.
(d) When payment of all or part of a bonus is deferred in cash,
the Committee may provide that the account of the Participant to whom the
Bonus was made shall be credited with amounts equivalent to interest
("interest equivalents"). Amounts thus credited shall be at the rate
determined by the Committee.
(e) Any Bonus payable in Shares may, in the discretion of the
Board or Committee, be paid in cash, on each date on which payment in
Shares would otherwise have been made, in an amount equal to the Fair
Market Value Per Share on each such date, multiplied by the number of
Shares which would otherwise have been paid on such date.
(f) Bonuses may be awarded in Share Units in accordance with the
following terms and conditions and such other terms and conditions as the
Board or Committee may impose:
(i) The number of Share Units awarded with respect to any
Bonus shall be the number determined by using the Fair Market Value Per
share on the date of the Award of the Bonus.
(ii) Any Bonus made in Share Units may, in the discretion or
on the recommendation of the Board or Committee, be paid in Shares on each
date on which payment in cash would otherwise be made.
(g) In lieu of the foregoing forms of payment of Bonuses, the
Board or Committee may specify or recommend any other form of payment which
it determines to be of substantially equivalent economic value to the cash
value of the Bonus including, without limitation, forms involving payments
to a trust or trusts for the benefit of one or more Participants.
(h) Each payment of a Bonus that is to be made in cash shall be
from the general funds of the corporation or its respective subsidiary or
affiliate, as the case may be.
(i) In the event of the death of a Participant to whom a Bonus is
to be or shall have been made, the Bonus or any portion thereof remaining
unpaid shall be paid to such Participant's Beneficiary under the
Participant's will or pursuant to the relevant laws of descent and
distribution.
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6.6 Other Awards
------------
(a) The Board or Committee may grant other Share based Awards
under this Plan, including without limitation, those Awards pursuant to
which Share are or may in the future be acquired, Awards denominated in
Share Units, securities convertible into Shares and dividend equivalents.
The Board or Committee shall determine the terms and conditions of such
other Share based Awards. Shares issued in connection with such other Share
based Awards shall be issued for such minimum considerations as shall be
required by applicable Rule 16b-3, and such additional consideration, if
any, as may be determined by the Board or Committee.
(b) The Board or Committee may also grant other non-Share based
Awards under this Plan and shall determine the terms and conditions of such
other non-share based Awards in tandem or combination with other Awards or
each other, in exchange of other Awards, or in tandem or combination with,
or as alternatives to grants or rights under any other employee plan of the
Corporation, including any plan of any acquired entity. The Board or
committee shall have the authority to determine the Participants for such
Awards and all other terms and conditions of such other Awards. No
amendment of this Plan is required for the creation of another type of
Award.
7. Adjustments Upon Changes in Capitalization
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(a) Subject to any required action by the Corporation's stockholders,
in the event of a reorganization, stock split, stock dividend, exchange of
Shares, combination of Shares, merger, consolidation or any other change in
corporate structure of the Corporation affecting the Shares, or in the event of
a sale by the Corporation of all or a significant part of its assets, or any
distribution to its shareholders other than a normal cash dividend, the Board or
Committee may make appropriate adjustment in the number, kind, price and value
of Shares authorized by this Plan and any adjustments to outstanding Awards as
it determines appropriate so as to prevent dilution or enlargement of rights.
(b) The existence of an Award under this Plan shall not affect in any
way the right or power of the Company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior preference
stocks, ahead of or affecting the Stock or rights thereunder or convertible
thereto, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business or any other corporate act
or proceeding, whether of a similar character or otherwise.
(c) Awards granted hereunder during the calendar year 1994 with respect
to Shares shall be adjusted as to the number thereof, in the event of the
issuance or reacquisition of Shares for any reason by the Corporation, so as to
maintain the ration of
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the number of Shares with respect to Awards outstanding on December 31, 1994 to
the number of the Corporation's issued and outstanding Shares on such date;
provided, however, that (i) where options or warrants for purchase of Shares, no
such adjustments shall be required until the conversion of securities into or
the purchase of Shares and (ii) upon any such adjustment the exercise price of
additional Shares upon a Participant's Award shall be the purchase price (or
fair market value of consideration therefore) of Shares issued which initiated
the adjustment and the Shares originally granted by the Award shall carry the
original exercise price thereof.
8. Change in Control
-----------------
8.1 Definition of Change in Control
-------------------------------
A "Change in Control" shall be deemed to have occurred if any one or more
of the events described in paragraphs (a), (b) or (c) below occurs.
(a) Any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (including any group of persons with which any person
or its affiliates or associates, as such terms are defined in Rule 12b-2
under the Exchange Act has any agreement, arrangement or understanding,
oral or written, regarding the acquiring, holding, voting or disposing of
any of the Corporation's securities, but excluding a trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation) (i) becomes the "beneficial owner: (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing fifty one percent (51%) or more of the combined
voting power of the Corporation's then outstanding securities (hereinafter
referred to as an "Acquiring Person"); or
(b) In any two year period persons being a majority of the Board
shall cease to be so unless the nomination of the new directors during such
period was approved by at least a majority of the directors then still in
office who were directors at the beginning of the period; or
(c) A consolidation or merger or "Business Combination," as that
term is defined as of the effective date of this Plan in Section 203(c)(3)
of the General Corporation law of Delaware, of the Corporation shall occur
(with the term "interested shareholder" as used in that Section being
deemed to refer to an Acquiring Person) in which the Corporation is not the
surviving Corporation and pursuant to which the Corporation's shares are
converted to cash, securities or other property, but not a business
combination where shareholders of the Corporation prior to the business
combination have substantially the same proportionate ownership in a
business entity after the merger; or
(d) The Shareholders of the Corporation shall approve any plan for
liquidation or dissolution of the Corporation not otherwise involving a
transaction
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where shareholders of the Corporation prior to the transaction have
substantially the same proportionate ownership of a business entity after
the transaction.
(e) In no event, however, shall a Change in Control be deemed to
have occurred with respect to a Participant, if that Participant is part of
an Acquiring Person which consummates the change in Control transaction. A
Participant shall be deemed "part of an Acquiring Person" for purposes of
the preceding sentence if the Participant is an equity participant or has
agreed to become an equity participant in the Acquiring Person (except for
(i) passive ownership of less than three percent of the securities of the
Acquiring Person; or (ii) ownership of equity participation in the
Acquiring Person which is otherwise not deemed to be significant, as
determined prior to the Change in Control by a majority of the
disinterested Continuing Directors).
8.2 Effect of Change in Control
---------------------------
Upon the occurrence of an event of Change in Control, unless otherwise with
respect to any Award specifically prohibited by the terms of the second
paragraph of Section 6:
(a) Any and all Options and Stock Appreciation Rights shall become
immediately exercisable.
(b) Any restriction periods and restrictions imposed on Restricted
Shares (except such as may be required by relevant securities laws) shall
lapse, and within ten (10) business days after the occurrence of a Change
in Control, the stock certificates representing Restricted Shares, without
any restrictions or legend thereon (except a legend as may be required by
relevant securities laws), shall be delivered to the applicable
Participants;
(c) The goal, objective, target value or the like, attainable
under all performance Awards shall be deemed to have been fully earned for
the entire performance period as of the effective date of the Change in
Control, except that all performance Awards which shall have been
outstanding less than six (6) months on the effective date of the Change in
Control shall not be deemed to have earned the goal, objective, target
value, or the like; and
(d) Subject to Sec. 14.3 hereof, all such other actions and
modifications to the Awards as determined by the Board or Committee to be
appropriate before the Change in Control of the Corporation shall become
effective.
9. Relationship of the Plan to Benefit Plans
-----------------------------------------
The amount of Bonuses to any Participant under this Plan shall be eligible
for inclusion in the Participant's earnings based for the purpose of determining
the benefits to which the Participant is entitled under retirement, pension,
excess benefit, thrift,
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savings, profit-sharing, insurance, long-term disability and other benefit
plans, if any, of the Corporation as determined by the Board or Committee. No
other income of a Participant attributable to this Plan shall be included in the
Participant's earning for purposes of any benefit plan in which the Participant
may be eligible to participate.
10. Effect of the Plan on Right to Continued Employment and Interest in
-------------------------------------------------------------------
Particular Property
-------------------
(a) None of the existence of this Plan, any Awards granted pursuant
hereto or any Awards granted pursuant hereto or any Award Agreement shall create
any right to continued employment of any Participant by the Corporation. No
Participant shall have, under any circumstances, any interest whatsoever, vested
or contingent, in any particular property or asset of the Corporation or in any
particular Share or Shares of Restricted Shares of the Corporation that may be
held by the Corporation (other than Restricted Shares held by a custodian) by
virtue of any Award. A Participant may be granted additional Awards under this
Plan under such circumstances and at such times as the Board or Committee may
determine; provided, however, that no Participant shall be entitled to any Award
in the absence of a specific grant by the Board or Committee of an Award,
notwithstanding the prior grant of an Award to such Participant.
(b) This Plan shall not be deemed a substitute for, and shall not
preclude the establishment or continuation of any other plan, practice or
arrangement that may now or hereafter be provided for the payment of
compensation, special awards or benefits to directors, officer, employees,
consultants and agents of the corporation and its subsidiaries generally, or to
any class or group of employees, including without limitation, any retirement,
pension, excess benefit, thrift, savings, profit-sharing, insurance, long-term
disability, health care plans or other employee benefit plans. Any such
arrangements may be authorized by the Corporation and payment thereunder made
independently of this Plan.
11. Withholding Taxes and Deferrals
-------------------------------
11.1 Cash Withholding
----------------
The Corporation and its participating subsidiaries shall have the
right to deduct from any cash payment made under Awards under this Plan any
federal, state, provincial or local income, or other taxes required by law to be
withheld with respect to such payment or to take such other action as may be
necessary in the opinion of the Corporation to satisfy all obligations for the
payment of such taxes.
11.2 Share Withholding
-----------------
Any Share based Award may provide by the grant thereof that the recipient
of such Award may elect, in accordance with any applicable law, rules and
regulations, to pay a portion or all of the amount of such minimum required
withholding taxes in Shares. In such event, the Participant shall authorize the
Corporation to withhold, or shall agree to
15
deliver to the Corporation, Shares owned by such Participant or a portion of the
Shares that otherwise would be distributed to such Participant, having a Fair
Market Value equal to the amount of withholding tax liability.
11.3 Deferrals
---------
The Board or Committee may require or permit a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise, the
satisfaction of any requirements or goals or lapse or waiver of restrictions of
an Award made under this Plan. If any such deferment election is required or
permitted, the Board or Committee shall establish rules and procedures for such
payment deferrals.
12. Compliance With Applicable Legal Requirements
---------------------------------------------
No certificate for Shares distributable pursuant to this Plan shall be
issued and delivered unless the issuance of such certificate complies with all
applicable legal requirements including, without limitation, compliance with the
provisions of applicable state securities laws, the Securities Act of 1933, as
amended from time to time or any successor statute, the Exchange Act and the
requirements of the exchanges on which Shares may, at the time, be listed, and
the provisions of any foreign securities laws or the rules of foreign securities
exchanges, where applicable.
13. Amendments
----------
13.1 Plan Amendments
---------------
The Board may, insofar as permitted by law, form time to time, with respect
to any Shares at the time not subject to Awards, suspend or discontinue this
Plan or revise or mend it in any respect whatsoever, provided, however, unless
the Committee or the Board, as appropriate, specifically otherwise provides, any
revision or amendment that would cause this Plan to fail to comply with any
requirement of applicable law, regulation or rule if such amendment were not
approved by the stockholders of the Corporation shall not be effective unless
and until the approval of the stockholders of the Corporation is obtained.
13.2 Award Amendments
----------------
Subject to the terms and conditions and within the limitations of this
Plan, the Board or Committee may amend, cancel, modify, or extend outstanding
Awards granted under this Plan.
13.3 Rights of Participants
----------------------
No amendment, suspension or termination of this Plan nor any amendment,
cancellation or modification of any outstanding Award or Award Agreement that
would
16
adversely affect the right of any Participant with respect to an Award
previously granted under this Plan will be effective without the written consent
of the affected participant. Such written consent may be obtained
simultaneously with the grant of any Award.
13.4 Rule 16b-3
----------
This Plan is intended to comply with Rule 16b-3 with respect to
Participants, if any, who are subject to Sec. 16 of the Exchange Act and in the
event that the Corporation shall become subject to said Sec. 16. Should the
requirements of Rule 16b-3 change, the Board or the Committee, as appropriate,
may amend the Plan to comply with the requirements of the amended Rule 16b-3 or
its successor provision or provisions.
14. Miscellaneous Provisions
------------------------
14.1 Awards in Various Countries
---------------------------
The Board or Committee shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of various countries in which the Corporation
or its subsidiaries may operate to assure the viability of the benefits of
Awards made to participants employed in such countries and to meet the
objectives of this Plan.
14.2 Transferability
---------------
(a) Awards may not be pledged or assigned and may otherwise be
transferred only to the extent provided herein or in an Award Agreement not
inconsistent herewith, provided, however, that an Option or Stock Appreciation
Right or any other benefit or Award hereunder deemed to be a derivative security
shall not be transferable other than by will or the laws of descent and
distribution and shall be exercisable during a Participant's lifetime only by
him or by his guardian or legal representative or pursuant to a "qualified
domestic relations order" as defined by the Code, or such order under the laws
of other jurisdictions as shall be similar in effect to a qualified domestic
relations order.
(b) Notwithstanding the foregoing, however, the Participant may, with
the consent of the Board or Committee and subject to such terms and conditions
as they may impose, assign or transfer an Award to or among immediate family
members, their issue or spouses or to a trust or family partnership of which
such immediate family members, their issue or spouses, are beneficiaries or
partners, as the case may be.
14.3 Arbitration; Governing Law
--------------------------
(a) The Shares are registered in the United States under the Exchange
Act and are listed for trading on the United States stock exchange known as The
NASDAQ Stock Market, Inc. Any and all disputes whatsoever between a Participant
and the Corporation concerning the administration of this Plan, the
interpretation and effect of an Award
17
Agreement or of this Plan or the rights of a Participant under an Award
Agreement shall be finally determined before one neutral arbitrator in the City
of Stamford, Connecticut. U.S.A. under the rules of commercial arbitration of
the American Arbitration Association then in effect and judgment upon any award
by such arbitrator may be entered in any Court having jurisdiction or
application may be made to such court for a judicial acceptance of the award and
an order of enforcement, as the case may be. The arbitrator hereunder shall
have no power or authority to award consequential, punitive or statutory
damages.
(b) This Plan, its administration and all Awards granted hereunder, the
terms and provisions of any related Award Agreements and the rights of all
Participants shall be governed and interpreted in accordance with the laws of
Connecticut U.S.A.
18