SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant toss. 240.14a-11(c) or ss. 240.14a-12
SPEEDUS.COM, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SPEEDUS.COM, Inc.
----------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: ________
2) Aggregate number of securities to which transaction applies: ___________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: _______________
5) Total fee paid: _____________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ___________
2) Form, Schedule or Registration Statement No: _____________
3) Filing Party: ___________
4) Date Filed: ____________
<PAGE>
SPEEDUS.COM, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 28, 2000
To the Stockholders of SPEEDUS.COM, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
SPEEDUS.COM, Inc., a Delaware corporation ("SPEEDUS.COM" or the "Company"), will
be held at the Millenium Hilton, Presidential Suite, located at 55 Church
Street, New York, New York 10007, on Friday, July 28, 2000, at 10:00 AM, Eastern
daylight savings time, or at any postponement or adjournment thereof for the
following purposes:
1. To elect four members to the Board of Directors of the Company to
serve until the next annual meeting of stockholders to be held in
2001 (the "2001 Annual Meeting") or until their successors are duly
elected;
2. To appoint independent auditors of the Company for the 2000 fiscal
year to serve until the 2001 Annual Meeting or until their
successors are duly elected;
3. To approve an amendment to the Company's 1995 Stock Incentive Plan
to increase the number of shares of Common Stock available for
issuance by 500,000 shares from 1,750,000 shares to 2,250,000
shares; and
4. To act upon such other business as may properly come before the
Annual Meeting.
In accordance with the provisions of the Company's By-Laws, the Board of
Directors has fixed the close of business on June 26, 2000 as the record date
for the determination of the holders of Common Stock entitled to notice of, and
to vote at, the Annual Meeting.
There are two options for voting your proxy. You can vote by telephoning a
toll-free number or by completing, signing and returning the enclosed proxy card
in the envelope provided. In either case, please follow the instructions on the
proxy card. To ensure that your shares are represented at the Annual Meeting,
you are urged to vote your proxy in one of these fashions. You may revoke your
proxy at any time before it is voted at the Annual Meeting. If you attend the
Annual Meeting, you may vote your shares in person.
Your attention is directed to the accompanying Proxy Statement.
By Order of the Board of Directors
Shant S. Hovnanian
Chairman, President and
Chief Executive Officer
June 27, 2000
<PAGE>
SPEEDUS.COM, Inc.
140 58th Street, Suite 7E
Brooklyn, New York 11220
--------------------------
ANNUAL MEETING OF STOCKHOLDERS
July 28, 2000
--------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of SPEEDUS.COM, Inc. ("SPEEDUS.COM"
or the "Company"), a Delaware corporation, to be voted at the Annual Meeting of
Stockholders of the Company to be held at the Millenium Hilton's Presidential
Suite located at 55 Church Street, New York, New York 10007, on Friday, July 28,
2000, at 10:00 AM, Eastern daylight savings time, or at any postponement or
adjournment thereof. This Proxy Statement, the Notice of Annual Meeting and the
accompanying form of proxy are first being mailed to stockholders on or about
June 29, 2000.
Only holders of record of the Company's common stock, par value $.01 per
share ("Common Stock"), at the close of business on June 26, 2000 (the "Record
Date"), are entitled to vote on the matters to be presented at the Annual
Meeting. The number of shares of Common Stock outstanding on the Record Date and
entitled to vote was 20,004,838. Holders of Common Stock are entitled to one
vote on each matter to be voted upon by the stockholders at the Annual Meeting
for each share held.
At the Annual Meeting, stockholders will be asked to: (1) elect four
directors (the "Nominees") to the Board to serve until the 2001 Annual Meeting
or until their successors are duly elected (the "Board Proposal"); (2) appoint
the firm of PricewaterhouseCoopers LLP, independent auditors, to serve as the
Company's independent auditors for the 2000 fiscal year until the 2001 Annual
Meeting (the "Independent Auditors Proposal"), and (3) approve an amendment to
the Company's 1995 Stock Incentive Plan to increase the number of shares of
Common Stock available for issuance by 500,000 shares from 1,750,000 shares to
2,250,000 shares (the "Stock Incentive Plan Proposal" and, such proposals
collectively, "the Proposals").
At the Annual Meeting, stockholders may also be asked to consider and take
action with respect to such other matters as may properly come before the Annual
Meeting.
QUORUM AND VOTE REQUIREMENTS
The presence, in person or by proxy, of holders of record of a majority of
the shares of Common Stock issued and outstanding and entitled to vote is
required for a quorum to transact business at the Annual Meeting, but if a
quorum should not be present, the Annual Meeting may be adjourned from time to
time until a quorum is obtained. The Proposals will be determined by the
affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the Annual Meeting.
Broker "non-votes" (i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares as to a matter with respect to which the brokers
or nominees do not have discretionary power to vote) and shares
<PAGE>
for which duly executed proxies have been received but with respect to which
holders of shares have abstained from voting will be treated as present for
purposes of determining the presence of a quorum at the Annual Meeting. Broker
"non-votes" are only counted for purposes of determining whether a quorum is
present and, therefore, will not be included in vote totals and will have no
effect on the outcome of the votes on the proposals to be acted upon at the
Annual Meeting. Abstentions will be counted as present and entitled to vote, and
will have the effect of a negative vote with respect to the proposals to be
acted upon at the Annual Meeting.
SOLICITATION AND REVOCATION
PROXIES IN THE FORM ENCLOSED ARE BEING SOLICITED BY, OR ON BEHALF OF, THE
BOARD. THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY HAVE BEEN DESIGNATED
AS PROXIES BY THE BOARD.
All Common Stock represented by properly executed proxies which are
returned and not revoked prior to the time of the Annual Meeting will be voted
in accordance with the instructions given. If no instructions are provided in an
executed proxy, it will be voted (1) FOR the Board Proposal, (2) FOR the
Independent Auditors Proposal, (3) FOR the Stock Incentive Plan Proposal and in
accordance with the proxyholder's best judgment as to any other business raised
at the Annual Meeting. Any stockholder who executes a proxy may revoke it at any
time before it is voted by delivering to the Company a written statement
revoking such proxy, by executing and delivering a later dated proxy, or by
voting in person at the Annual Meeting. Attendance at the Annual Meeting by a
stockholder who has executed and delivered a proxy to the Company shall not in
and of itself constitute a revocation of such proxy.
The Company will bear the costs of soliciting proxies, which will be done
initially by mail. Directors, officers and employees of the Company personally,
by telephone or otherwise, may solicit proxies but will not be specifically
compensated for such services. Arrangements have been made with brokerage firms
and other nominees to forward proxy materials to beneficial owners of the
Company's Common Stock. The Company will pay these entities customary and
reasonable fees and expenses. The Company may also retain third parties for
advisory, information agent and ballot solicitation services. The Company will
pay these third parties customary and reasonable fees and expenses.
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<PAGE>
BOARD OF DIRECTORS; BOARD COMMITTEES
Board of Directors Meetings; Board Committee Meetings
During 1999, the Board met twelve times; the Nominating Committee met
twice; the Audit Committee met one time; and the Compensation Committee met one
time. Mr. Vahak S. Hovnanian did not attend one meeting of the Board. Each of
the Company's other current Directors attended all of the Board and Committee
meetings, as appropriate, during 1999.
Nominating Committee
The Nominating Committee of the Board, which currently consists of Shant
S. Hovnanian and Vahak S. Hovnanian, identifies and submits on an annual basis
to the full Board nominees to be placed on the ballot for election to the Board
at each annual meeting of stockholders. The Nominating Committee will consider
suggested nominees to be placed on the ballot for election to the Board at each
annual meeting of stockholders in accordance with applicable rules and
regulations promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Such rules and regulations provide that the Company is not
required to include a stockholder proposal in its proxy materials unless it is
received by a specified date. Accordingly, all recommended nominations to be
placed on the ballot for election to the Board at the 2001 Annual Meeting of
Stockholders must be in writing and must be received by the Company on or before
its close of business on December 31, 2000.
Audit Committee
The Audit Committee of the Board, which currently consists of Vahak S.
Hovnanian and Catherine Petrossian, provides oversight of the Company's
financial reporting process, reviews the services provided by the Company's
independent auditors, consults with such auditors on audits and proposed audits,
reviews the need for internal auditing procedures and assesses the adequacy of
internal controls.
Compensation Committee; Compensation Committee Interlocks and Insider
Participation
The Compensation Committee of the Board, which currently consists of
Congressman Matthew J. Rinaldo and Catherine Petrossian, establishes, reviews
and approves compensation programs of the Company generally, and approves
salaries and bonuses for officers and certain other salaried employees of the
Company. In addition, the Compensation Committee, as well as the Board of
Directors, administers the Company's Stock Incentive Plan and determines which
eligible employees and consultants of the Company may participate in the Plan
and the type, extent and terms of the awards to be granted to them.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the Exchange Act, the Company's directors and executive officers,
and any persons holding more than 10% of the outstanding Common Stock are
required to report their initial ownership of Common Stock and any subsequent
changes in that ownership to the Commission. Specific due dates for these
reports have been established by the Commission, and the Company is required to
disclose in this Proxy Statement any failure by such persons to file these
reports in a timely manner during the 1999 fiscal year. Based solely upon the
Company's review of copies of such reports furnished to it, the Company believes
that during the 1999 fiscal year its executive officers and directors and the
holders of more than 10% of the outstanding Common Stock complied with all
reporting requirements of Section 16(a) under the Exchange Act.
-3-
<PAGE>
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
Executive Compensation Policy. The Company's compensation policy for all
of its executive officers is formulated and administered by the Compensation
Committee of the Board. The Compensation Committee, as well as the Board of
Directors, also administers the Company's Stock Incentive Plan, under which
grants of various stock-based incentives may be made to employees (including
executive officers), directors and consultants.
The primary goals of the Company's compensation policy are to attract,
retain and motivate skilled executive officers and to incent them to act in the
best interests of the Company's stockholders. In determining the level of
executive compensation, certain quantitative and qualitative factors, including,
but not limited to, the Company's operating and financial performance, the
individual's level of responsibilities, experience, commitment, leadership and
accomplishments relative to stated objectives, and marketplace conditions are
taken into consideration.
Chief Executive Officer's Compensation. For 1999, the compensation of
Shant S. Hovnanian, the Chief Executive Officer of the Company, was set by the
terms of his employment agreement. A summary of the key provisions of Mr.
Hovnanian's employment agreement is included in the Company's 1999 Annual Report
on Form 10-K under "Employment Agreements" in Item 11. Executive Compensation.
Mr. Hovnanian also participates in benefit programs that are generally available
to employees of the Company, including medical benefits and a 401(k) savings
plan. During 1999, in recognition of Mr. Hovnanian's past and continuing
contributions to the Company, the Compensation Committee and the Board granted
Mr. Hovnanian options to purchase 250,000 shares of the Company's Common Stock
under the Company's Stock Incentive Plan. The number of shares with respect to
which options were granted to Mr. Hovnanian was based upon the Compensation
Committee's and the Board's subjective evaluation of Mr. Hovnanian's
contribution to the Company.
Executive Officer Compensation. Effective June 1, 1999, the Company had
entered into an employment agreement with Michael Bacon, Executive Vice
President of Operations. A summary of the key provisions of Mr. Bacon's
employment agreement is included in the Company's 1999 Annual Report on Form
10-K under "Employment Agreements" in Item 11. Executive Compensation. Under
this agreement, Mr. Bacon was granted 100,000 options to purchase shares of our
stock at the market value as of the effective date of the agreement. 25,000
options become exercisable each six months after June 1, 1999. During 1999, Mr.
Bacon earned a bonus in the amount of $18,750 based on the attainment of certain
performance goals.
For the year ended December 31, 1999, compensation accrued or paid to the
executive officers of the Company was determined pursuant to the terms of the
employment agreements negotiated by the Company with the executives. During
1999, no discretionary compensation was accrued or paid to executive officers
that is not set by their respective employment agreements.
Section 162(m) of the Code. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), generally limits the deductibility by the Company
of compensation paid in any one year to any executive officer named in the
Summary Compensation Table to $1,000,000. Option awards under the Plan made in
conformity with the "performance-based" exemption from Section 162(m) will be
exempt
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<PAGE>
from the limits of Section 162(m). While the Company's policy has always been to
pursue a strategy of maximizing deductibility of compensation for all of its
employees, the Compensation Committee believes it is important to maintain the
flexibility to take actions it considers to be in the best interest of the
Company and its stockholders, which may be based on considerations in addition
to Section 162(m). None of the executive officers are paid cash compensation in
excess of $1,000,000.
By the Compensation Committee
of the Board of Directors:
Matthew J. Rinaldo
Catherine Petrossian
Performance Graph
The following graph compares the cumulative return on the Company's Common
Stock from February 8, 1996, the first day of trading on the Nasdaq National
Market (the "NNM"), to December 31, 1999 with the Total Return Index for both
The Nasdaq Stock Market (US) (the "NNM Index") and Nasdaq Telecommunications
Stocks (the "Peer Group"), as prepared for Nasdaq by the Center for Research in
Security Prices ("CRSP").
The performance graph assumes (i) $100 was invested on February 8, 1996
and (ii) reinvestment of dividends. Each measurement point on the graph below
represents the cumulative stockholder return as measured by the last sale price
at the end of each quarterly period from February 8, 1996 through December 31,
1999. As depicted in the graph below, the cumulative total return during this
period was 270.4% for the NNM Index, 303.0% for the Peer Group and (68.7)% for
the Company's Common Stock.
[LINE GRAPH]
INDEXED RETURNS [2/8/96 (1)=100]
RETURN RETURN RETURN RETURN
DEC. 1996 DEC. 1997 DEC. 1998 DEC. 1999
---- ---- ---- ----
NNM Index $118.75 $148.29 $205.03 $370.41
Peer Group $96.12 $140.56 $231.43 $403.02
SPEEDUS.COM $45.90 $39.34 $5.94 $31.35
----------
(1) Represents February 8, 1996, the first day of trading of the Common Stock on
the NNM following the Initial Public Offering for which the initial price to
the public was $15.00 per share.
-5-
<PAGE>
PROPOSAL 1--THE BOARD PROPOSAL
The Board currently consists of four directors (with seven vacancies) who
are elected to serve until the next annual meeting of stockholders or until
their successors are duly elected and qualified. The Nominating Committee has
designated the Nominees listed below for election as directors to the Board to
serve until the 2001 Annual Meeting or until their successors are duly elected
and qualified. If any Nominee shall, prior to the Annual Meeting, become
unavailable for election as a director, the persons named in the accompanying
proxy card will vote for such other nominee, if any, in their discretion as may
be recommended by the Nominating Committee.
<TABLE>
<CAPTION>
NOMINEES
Name Age Position
----------------------------------------- ----- ------------------------------------------
<S> <C> <C>
Shant S. Hovnanian................. 40 Chairman of the Board of Directors,
President and Chief Executive Officer
and Chief Financial Officer
Vahak S. Hovnanian................. 68 Director
Matthew J. Rinaldo................. 68 Director
Catherine Petrossian............... 40 Director
</TABLE>
Shant S. Hovnanian has served as our Chairman of the Board of Directors,
President and Chief Executive Officer since October 1995 and as Chief Financial
Officer since June 1998. He has also served as Chief Executive Officer and a
member of the Board of Representatives of SPEEDUSNY since July 1993. Mr.
Hovnanian formerly served as Chief Executive Officer of CellularVision
Technology & Telecommunications, L.P. ("CT&T") from 1993 to 1995 and continues
to serve on its Board of Representatives. From June 1980 until January 1991, Mr.
Hovnanian served as Executive Vice President of the V. S. Hovnanian Group (the
"Hovnanian Group"), consisting of home building operations, real estate
development and utility companies. In 1995, Mr. Hovnanian served as a U.S.
Delegate to the World Radio Conference of the International Telecommunications
Union in Geneva, Switzerland. Mr. Hovnanian is the son of Mr. Vahak S.
Hovnanian.
Vahak S. Hovnanian has served as a Director since October 1995 and as a
member of the Board of Representatives of SPEEDUSNY and CT&T since July 1993.
Mr. Hovnanian has served as a principal of Suite 12 and CellularVision Capital
Corporation since 1986 and 1988, respectively, and as Chairman of the Board and
President of the Hovnanian Group since 1968. Mr. Hovnanian is the father of Mr.
Shant S. Hovnanian.
Matthew J. Rinaldo has served as a Director since February 1996.
Congressman Rinaldo was President of International CellularVision Association
("ICVA"), a Local Multipoint Distribution Service ("LMDS") trade association
from 1993 until its dissolution in 1999. He served as Chairman of the Advanced
Telecommunications Institute of the Stevens Institute of Technology from 1993 to
1996. He was elected to the U.S. House of Representatives in 1973 and re-elected
until his retirement in 1993. During his term in the House of Representatives,
he was the ranking Republican member of the Telecommunications and Finance
Subcommittee of the House Energy and Commerce Committee. Congressman Rinaldo has
been the recipient of numerous honors and awards.
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<PAGE>
Catherine Petrossian has served as a Director since July 1999. Ms.
Petrossian has been a partner at the law firm of Sheridan & Petrossian LLP since
1997 where she concentrates in real estate and civil litigation. From 1993 to
1996, she served as an Assistant District Attorney for the County of Nassau and
from 1992 to 1993 worked for a U.S. District Judge in the Southern District of
New York. From 1988 to 1992, Ms. Petrossian was in private practice and
concentrated in Real Estate and Civil litigation. From 1986 to 1988, Ms.
Petrossian was an associate at a Manhattan law firm that concentrated in real
estate law. Ms. Petrossian is admitted to practice in the Courts of New York
State and the United States District courts for the Southern and Eastern
Districts of New York and in the Courts of the State of New Jersey and the
United States District Court for the District of New Jersey.
Recommendation and Vote
Approval of the election of the Nominees to the Board requires the
affirmative vote of a majority of the shares of Common Stock present, in person
or by proxy, and entitled to vote at the Annual Meeting.
The Board recommends a vote FOR the election of the Nominees to the Board.
PROPOSAL 2--THE INDEPENDENT AUDITORS PROPOSAL
Upon the recommendation of the Audit Committee of the Board, the Board
proposes that the stockholders appoint the firm of PricewaterhouseCoopers LLP
("PwC") to serve as the independent auditors of the Company for the 2000 fiscal
year until the 2001 Annual Meeting. PwC has served as the Company's independent
auditors since the 1996 fiscal year. A representative of PwC will attend the
Annual Meeting, and will be available to respond to questions and may make a
statement if he or she so desires.
Recommendation and Vote
Approval of the Independent Auditors Proposal requires the affirmative
vote of a majority of the shares of Common Stock present, in person or by proxy,
at the Annual Meeting.
The Board recommends a vote FOR the approval of the Independent Auditors
Proposal.
PROPOSAL 3--THE STOCK INCENTIVE PLAN PROPOSAL
In October 1995, the Board adopted the Company's 1995 Stock Incentive
Plan, under which 1,250,000 shares of Common Stock were reserved for issuance
under the Stock Incentive Plan. In July 1999, the Board amended and restated the
Stock Incentive Plan to increase the number of shares of Common Stock available
for issuance under the Incentive Plan by 500,000 shares from 1,250,000 to
1,750,000. This was approved by stockholders at the 1999 Annual Meeting (as
amended through 1999, the "Stock Incentive Plan"). In June 2000, the Board again
amended and restated the Stock Incentive Plan (as amended and restated, the
"Amended Incentive Plan") to increase the number of shares of Common Stock
available for issuance under the Stock Incentive Plan by 500,000 shares from
1,750,000 to 2,250,000.
The Company is seeking stockholder approval of the Amended Incentive Plan
in order to comply with the requirements of Sections 162(m) and 422 of the Code
and the requirements of NASDAQ. The following summary of the Amended Incentive
Plan is qualified in its entirety by express reference to the text of the
Amended Incentive Plan, a copy of which was filed with the Securities and
Exchange Commission. Under the Amended Incentive Plan, Options may be granted
which are qualified as "incentive stock options" within the meaning of Section
422 of the Code ("ISOs") and which are not so qualified ("NQSOs"). In addition,
stock appreciation rights ("SARs"), restricted shares of Common Stock
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<PAGE>
("Restricted Stock"), awards of Common Stock with performance related vesting
criteria ("Performance Shares"), phantom stock units ("Phantom Stock Units") and
Common Stock bonus awards ("Bonus Stock") may be granted (collectively or
individually, "Awards").
Purpose and Eligibility
The purpose of the Amended Incentive Plan is to promote the long-term
financial success of the Company by enhancing the ability of the Company to
attract, retain and reward individuals who can and do contribute to such success
and to further align the interests of the Company's key personnel with its
stockholders. Officers, key employees, directors and consultants of the Company
and its subsidiaries are eligible to receive Awards under, and participate in,
the Amended Incentive Plan. The approximate number of officers, key employees,
directors, and consultants eligible to participate in the Amended Incentive Plan
is currently 25.
Administration
The Amended Incentive Plan is administered by the Board or a Committee
(the entity administering the Amended Incentive Plan hereafter called the
"Committee") appointed by the Board of Directors from among its members. The
Committee, in its sole discretion, determines which individuals may participate
in the Amended Incentive Plan and the type, extent and terms of the Awards to be
granted. In addition, the Committee interprets the Amended Incentive Plan and
makes all other determinations with respect to the administration of the Amended
Incentive Plan.
Awards
The Amended Incentive Plan allows for the discretionary grant of Options,
SARs, Performance Shares, Phantom Stock Units, Restricted Stock and Bonus Stock.
In addition, Board members who are not also employees of the Company
("Non-Employee Directors") are eligible to receive automatic grants of Options
pursuant to the formula set forth below. The terms and conditions of Awards
granted under the Amended Incentive Plan are set out from time to time in
agreements between the Company and the individuals receiving such Awards.
Options. The Committee may grant Options to any eligible person; provided,
however, that only employees of the Company and its subsidiaries may receive
ISOs. The exercise price of the Options will be determined by the Committee at
the time of grant and will be set forth in a Stock Option Agreement between the
Company and the participant; provided, however, that the exercise price of an
ISO will not be less than the fair market value of the Common Stock on the date
of grant and the exercise price of a NQSO will not be less than the par value of
the Common Stock. Options will vest and become exercisable within such period or
periods (not to exceed 10 years) as determined by the Committee and set forth in
the Stock Option Agreement. Unless otherwise set forth in the Stock Option
Agreement, all Options expire on the earlier of (i) ten years after grant, (ii)
three months after (A) retirement, (B) termination of employment or service with
the Company or a subsidiary due to complete and permanent disability, (C) any
termination of employment or service with the written approval of the Committee,
or (D) termination of employment or service by the Company without cause (each a
"Normal Termination"), (iii) immediately upon termination of employment other
than by Normal Termination or death, (iv) twelve months after the death of the
optionee while still employed or within three months of a Normal Termination, or
(v) the expiration date set forth in the Stock Option Agreement. Unless
otherwise set forth in the Stock Option Agreement, Options will vest and become
exercisable only during the period of employment or service with the Company and
its subsidiaries such that upon such termination of employment or service the
unvested
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<PAGE>
portion of any outstanding Option will expire. Options that have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by full payment of the Option exercise price and any
applicable withholding. The Option exercise price may be paid in cash and/or
shares of Common Stock valued at the fair market value at the time of exercise
or, in the discretion of the Committee, either (i) in other property having fair
market value on the date of exercise equal to the Option exercise price, or (ii)
through a brokered exercise.
SARs. The Committee may grant to any eligible person a SAR, either in
conjunction with any Option or independent of the grant of an Option. A SAR
gives the holder the right to receive upon exercise the excess of the fair
market value of one share of Common Stock on the date of exercise over the fair
market value of one share of Common Stock on the date of grant multiplied by the
number of shares underlying the SAR (the "Spread"). Such payment will be made,
at the discretion of the Committee, in shares of Common Stock or cash equal to
the value of the Spread or any combination thereof. A SAR granted in connection
with an Option will become exercisable, be transferable and expire according to
the same schedule as the Option. A SAR granted independent of an Option will
become exercisable, be transferable and expire in accordance with a vesting
schedule established by the Committee. Once a SAR becomes exercisable, the
holder of the SAR may exercise the SAR by filing an irrevocable written notice
with the Committee specifying the number of SARs to be exercised. Unexercised
SARs that are in-the-money just prior to their expiration will automatically be
exercised by the Company and the holders will receive the value of the Spread.
Performance Shares. The Committee may establish Performance Share programs
to be effective over designated periods of not less than three years nor more
than five years ("Award Periods") and will determine the number of performance
share units ("Performance Share Units") to be awarded to each participant who is
selected by the Committee. At the beginning of each Award Period, the Committee
will establish performance goals in writing based upon financial objectives for
the Company for such Award Period and a schedule relating the accomplishment of
such goals to the amount of Performance Share Units to be earned by
participants. Performance goals may include absolute or relative growth in
earnings per share or rate of return on stockholders' equity or other
measurement of corporate performance and may be determined on an individual
basis or by categories of participants. The Committee may adjust performance
goals or performance measurement standards as it deems equitable in recognition
of extraordinary or non-recurring events experienced during an Award Period. At
the completion of an Award Period, or at other times as specified by the
Committee, the Committee will calculate the amount earned with respect to each
participant's Award of Performance Share Units. The amount earned with respect
to such Award will be paid as soon as practicable in shares of Common Stock
having an equal fair market value. The Committee may upon the request of a
participant and at its discretion pay such amount in cash.
Restricted Stock and Phantom Stock. The Committee may grant shares of
Restricted Stock and Phantom Stock Units to eligible persons and may establish
terms, conditions and restrictions applicable thereto.
Subject to the restrictions on such Restricted Stock as set forth below,
holders will generally have all the rights and privileges of a stockholder
including the right to vote such Restricted Stock. Shares of Restricted Stock
will be subject to restrictions on transferability set forth in the Award
agreement and will be subject to forfeiture as set forth below. To the extent
such shares are forfeited, the stock certificates shall be returned to the
Company, and all rights of the holder to such shares and as a shareholder will
terminate.
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<PAGE>
In the case of a Phantom Stock Unit Award, no shares of Common Stock will
be issued at the time the Award is made, and the Company will not be required to
set aside a fund for the payment of any such Award. Until the restrictions on
Phantom Stock Units are lifted or expire, such Awards will be subject to
forfeiture as set forth below.
The restricted period for Restricted Stock and Phantom Stock Units will
commence on the date of grant and will expire from time to time as to that part
of the Restricted Stock and/or Phantom Stock Unit Award indicated in a schedule
established by the Committee and set forth in the respective Award Agreement.
The Committee, in its sole discretion, may remove any or all restrictions on the
Restricted Stock or Phantom Stock Units whenever it determines that such action
is appropriate.
With respect to Awards of both Restricted Stock and Phantom Stock Units,
the following forfeiture provisions will apply. In the event the recipient of
such Award resigns or is discharged from employment or service with the Company
or its subsidiary for cause, the non-vested portion of the Award will be
completely forfeited. Upon the Normal Termination of the recipient of such
Award, the non-vested portion of the Award will be prorated for service during
the restricted period and paid as soon as practicable after termination. If the
recipient of such an Award dies, the non-vested portion of the Award will be
prorated for service during the restricted period and paid to the recipient's
beneficiary as soon as practicable following death.
Upon the expiration of the restricted period with respect to any shares of
Restricted Stock, a stock certificate evidencing the shares of Common Stock will
be delivered without charge to the participant, or his beneficiary, free of all
restrictions under the Plan. Upon the expiration of the restricted period with
respect to any Phantom Stock Units, the Company will deliver to the participant,
or his beneficiary, without charge one share of Common Stock for each Phantom
Stock Unit; provided, however, that the Committee may, in its sole discretion,
pay any portion of such Award in cash and/or shares of Common Stock.
Automatic Option Grants to Non-Employee Directors. Unless otherwise
determined by the Committee, on the date any person first becomes a Non-Employee
Director, such person shall be automatically granted an Option to purchase 5,000
shares of Common Stock. Additionally, unless otherwise determined by the
Committee, for the remainder of the term of the Plan and provided he or she
remains a Non-Employee Director of the Company, on the date of each of the
Company's Annual Meeting of stockholders, each Non-Employee Director shall be
automatically granted an Option to purchase 1,000 shares of Common Stock. All
such Options granted to Non-Employee Directors are hereinafter referred to as
Non-Employee Director Options.
All Non-Employee Director Options have an exercise price per share equal
to the Fair Market Value (as defined in the Plan) of a share of Common Stock on
the date of grant. All Non-Employee Director Options are be fully vested and
exercisable as of the date of grant. The term of each Non-Employee Director
Option ("Term"), after which each such Option shall expire, will be ten years
from the date of grant, unless such Option expires earlier as set forth below.
If prior to the expiration of the Term the Non-Employee Director ceases to
be a member of the Board for any reason other than his death, the Non-Employee
Director Option will expire on the earlier of the expiration of the Term or the
date that is three months after the date of such cessation. If prior to the
expiration of the Term of a Non-Employee Director Option a Non-Employee Director
dies, the Non-Employee Director Option will expire on the earlier of the
expiration of the Term or the date that is one year after the date of death.
Non-Employee Director Options with vesting provisions will vest and become
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exercisable only during a Non-Employee Director's service with the Company.
Therefore, in the event that a Non-Employee Director ceases to be a member of
the Board for any reason, any unexpired Non-Employee Director Option will
thereafter be exercisable until its expiration only to the extent that such
Option was exercisable at the time of such cessation.
Each Non-Employee Director Option will be evidenced by a Stock Option
Agreement, which will contain such provisions as may be determined by the
Committee. Unless otherwise designated by the Committee, Non-Employee Director
Options will not be transferable except by will or the laws of descent and
distribution and will be exercisable during the Non-Employee Director's lifetime
only by him.
Bonus Stock. The Committee may issue shares of unrestricted Common Stock
under the Plan to Eligible Persons, alone or in tandem with other Awards, in
such amounts and subject to such terms and conditions as the Committee from time
to time in its sole discretion determines. Bonus Stock Awards may be granted as,
or in payment of, a bonus, or to provide incentives or recognize special
achievements or contributions.
Adjustments for Recapitalization, Merger, etc. of the Company
Awards, and any agreements evidencing such Awards, and any performance
goals with respect to such Awards, shall be subject to adjustment or
substitution, as determined by the Committee in its sole discretion, as to the
number, price or kind of a share of stock or other consideration subject to such
Awards or as otherwise determined by the Committee to be equitable (i) in the
event of changes in the outstanding Common Stock or in the capital structure of
the Company by reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the date
of grant of any such Award or (ii) in the event of any change in applicable laws
or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for,
participants in the Amended Incentive Plan, or which otherwise warrants
equitable adjustment because it interferes with the intended operation of the
Amended Incentive Plan. In addition, in the event of any such adjustments or
substitution, the aggregate number of shares of Common Stock available under the
Amended Incentive Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive.
Effect of Change in Control
In the event of a Change in Control (as defined in the Amended Incentive
Plan), notwithstanding any vesting schedule provided for in the Plan or by the
Committee with respect to an Award of Options (including Non-Employee Director
Options), SARs, Phantom Stock Units or Restricted Stock, such Option or SAR
shall become immediately exercisable with respect to 100 percent of the shares
subject to such Option or SAR, and the restricted period for Phantom Stock Units
and Restricted Stock shall expire immediately with respect to 100 percent of the
Phantom Stock Units or shares of Restricted Stock subject to restrictions.
In the event of a Change in Control, all incomplete Award Periods in
effect on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall, (i) determine the extent to which performance
goals with respect to each such Award Period have been met based upon such
audited or unaudited financial information then available as it deems relevant,
and (ii) cause to be paid to each participant partial or full Awards with
respect to performance goals for each such Award Period based upon the
Committee's determination of the degree of attainment of performance goals.
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Notwithstanding anything herein to the contrary, in the event of certain
merger, change in control situations (not necessarily enumerated under the
definition of "Change in Control") or other extraordinary corporate transaction
the Committee may upon at least 10 days advance notice cancel any outstanding
Awards and pay to the holders thereof, in cash, the value of such Awards.
Shares Subject to the Amended Incentive Plan
As noted above, the Company has amended the Stock Incentive Plan to
reserve an additional 500,000 shares of Common Stock. The total number of shares
of Common Stock reserved for issuance under the Amended Incentive Plan is
2,250,000. No more than 500,000 shares of Common Stock may be issued to any one
person pursuant to awards of Options or stock appreciation rights during any one
year.
Market Value
The closing price of the Common Stock on NASDAQ as of June 20, 2000 was $
6.00 per share.
Amendment and Termination
The Board may at any time terminate the Plan. With the express written
consent of an individual participant (subject to any other allowable adjustments
under the Plan to outstanding Awards without the consent of any participant),
the Board or the Committee may cancel or reduce or otherwise alter the
outstanding Awards thereunder if, in its judgment, the tax, accounting, or other
effects of the Plan or potential payouts thereunder would not be in the best
interest of the Company. The Board or the Committee may, at any time, or from
time to time, amend or suspend and, if suspended, reinstate, the Plan in whole
or in part, subject to any limitations set forth in the Plan.
Federal Tax Consequences
The following is a brief discussion of the Federal income tax consequences
of transactions with respect to Options under the Amended Incentive Plan based
on the Code, as in effect as of the date of this summary. This discussion is not
intended to be exhaustive and does not describe any state or local tax
consequences.
ISOs. No taxable income is realized by the optionee upon the grant or
exercise of an ISO. If Common Stock is issued to an optionee pursuant to the
exercise of an ISO, and if no disqualifying disposition of such shares is made
by such optionee within two years after the date of grant or within one year
after the transfer of such shares to such optionee, then (1) upon the sale of
such shares, any amount realized in excess of the Option price will be taxed to
such optionee as a long-term capital gain and any loss sustained will be a
long-term capital loss, and (2) no deduction will be allowed to the Company for
Federal income tax purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally, (1)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the Fair Market Value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the Option price paid for such shares and (2) the Company will be entitled
to deduct such amount for Federal income tax purposes if the amount represents
an ordinary and necessary business expense. Any further gain (or loss) realized
by the optionee upon the sale of the Common Stock will be taxed as short-term or
long-term capital gain (or loss), depending on how long the shares have been
held, and will not result in any deduction by the Company.
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If an ISO is exercised more than three months following termination of
employment (subject to certain exceptions for disability or death), the exercise
of the Option will generally be taxed as the exercise of a NQSO, as described
below.
For purposes of determining whether an optionee is subject to an
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income, and
compute the tax basis in the stock so acquired, in the same manner as if the
optionee had exercised a NQSO. Each optionee is potentially subject to the
alternative minimum tax. In substance, a taxpayer is required to pay the higher
of his/her alternative minimum tax liability or his/her "regular" income tax
liability. As a result, a taxpayer has to determine his/her potential liability
under the alternative minimum tax.
NQSOs. With respect to NQSOs: (1) no income is realized by the optionee at
the time the Option is granted; (2) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the excess, if any, of the Fair
Market Value of the shares on such date over the exercise price, and the Company
is generally entitled to a tax deduction in the same amount, subject to
applicable tax withholding requirements; and (3) at sale, appreciation (or
depreciation) after the date of exercise is treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have been
held.
Special Rules Applicable to Corporate Insiders
As a result of the rules under Section 16(b) of the Exchange Act ("Section
16(b)"), and depending upon the particular exemption from the provisions of
Section 16(b) utilized, officers and directors of the Company and persons owning
more than 10 percent of the outstanding shares of stock of the Company
("Insiders") may not receive the same tax treatment as set forth above with
respect to the grant and/or exercise of Options. Generally, Insiders will not be
subject to taxation until the expiration of any period during which they are
subject to the liability provisions of Section 16(b) with respect to any
particular Option. Insiders should check with their own tax advisers to
ascertain the appropriate tax treatment for any particular Option.
New Plan Benefits
The following table sets forth the Options to be granted to the
Non-Employee Directors under the automatic formula grant provision of the
Amended Incentive Plan at the upcoming Annual Meeting.
Name and Position Dollar Value Number of Units
---------------------------- ------------ ---------------
Non-Executive Director Group N/A 3,000
Except for the automatic formula grant of Options to Non-Employee
Directors, the grant of Awards under the Amended Incentive Plan is entirely
within the discretion of the Committee. The Company cannot forecast the extent
of Awards that will be granted in the future. Therefore, except for the
automatic formula grants to Non-Employee Directors set forth above, the Company
has omitted the tabular disclosure of the benefits or amounts allocated under
the Amended Incentive Plan. Information with respect to compensation paid and
other benefits, including Options, granted in respect of the 1998 fiscal year to
the Named Executive Officers is set forth in the Summary Compensation Table.
Recommendation and Vote
Approval of the Stock Incentive Plan Proposal requires the affirmative
vote of a majority of the shares of Common Stock present, in person or by proxy,
at the Annual Meeting, and entitled to vote thereon. Until such approval is
obtained, the Amended Incentive Plan and any Option, Restricted Stock or
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Other Award granted thereunder shall not be effective. If the Amended Incentive
Plan is not approved, the Stock Incentive Plan will continue in operation and
Awards may continue to be granted thereunder.
The Board recommends a vote FOR the approval of the Stock Incentive Plan
proposal.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's proxy statement with
respect to the 2001 Annual Meeting of Stockholders must be received by the
Company at its executive offices located at 140 58th Street, Suite 7E, Brooklyn,
New York 11220 no later than December 31, 2000.
OTHER BUSINESS OF THE MEETING
The Company is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, since matters which
management of the Company is not now aware of may come before the Annual Meeting
or any adjournment, the proxies confer discretionary authority with respect to
acting on these matters. The persons named in the proxies intend to vote, act
and consent in accordance with their best judgment with respect to these
matters. Upon receipt of proxies in time for voting, the shares represented will
be voted as indicated thereon and in this Proxy Statement.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999 IS INCLUDED IN THIS MAILING WITH THE PROXY STATEMENT.
ADDITIONAL COPIES MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER UPON WRITTEN
REQUEST TO SPEEDUS.COM, INC., 140 58TH STREET, SUITE 7E, BROOKLYN, NEW YORK
11220; BY CALLING US AT 718.567.4300, OR BY VISITING OUR WEBSITE AT
WWW.SPEEDUS.COM.
By Order of the Board of Directors
Shant S. Hovnanian
Chairman, President and
Chief Executive Officer
June 27, 2000
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EXHIBIT A
SPEEDUS.COM, INC.
1995 STOCK INCENTIVE PLAN
(Amended and Restated as of June 2, 2000)
Purpose
The purpose of the Plan is to provide a means through which the Company
and its Subsidiaries may attract able persons to become and remain directors of
the Company and enter and remain in the employ of the Company and its
Subsidiaries and to provide a means whereby employees, directors and consultants
of the Company and its Subsidiaries can acquire and maintain Common Stock
ownership, or be paid incentive compensation measured by reference to the value
of Common Stock, thereby strengthening their commitment to the welfare of the
Company and its Subsidiaries and promoting an identity of interest between
stockholders and these employees, directors and consultants.
So that the appropriate incentive can be provided, the Plan provides for
granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Phantom Stock Unit Awards, Performance Share
Unit Awards and Stock Bonus Awards, or any combination of the foregoing.
Definitions
The following definitions shall be applicable throughout the Plan.
"Award" means, individually or collectively, any Incentive Stock Option,
Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock Award,
Phantom Stock Unit Award, Performance Share Unit Award or Stock Bonus Award.
"Award Period" means a period of time within which performance is measured
for the purpose of determining whether an Award of Performance Share Units
has been earned.
"Board" means the Board of Directors of the Company.
"Cause" means the Company or a Subsidiary having cause to terminate a
Participant's employment or service under any existing employment,
consulting or any other agreement between the Participant and the Company or
a Subsidiary or, in the absence of such an employment, consulting or other
agreement, upon (i) the determination by the Committee that the Participant
has ceased to perform his duties to the Company or a Subsidiary (other than
as a result of his incapacity due to physical or mental illness or injury),
which
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failure amounts to an intentional and extended neglect of his duties to
such party, (ii) the Committee's determination that the Participant has
engaged or is about to engage in conduct materially injurious to the Company
or a Subsidiary or (iii) the Participant having been convicted of a felony.
"Change in Control" shall, unless the Board otherwise directs by resolution
adopted prior thereto or, in the case of a particular award, the applicable
Award agreement states otherwise, be deemed to occur if (i) any "person" (as
that term is used in Sections 13 and 14(d)(2) of the Exchange Act) other
than a Founder (as defined below) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of 30% or more of either the outstanding shares of Common Stock
or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally, (ii) during any period of two
consecutive years beginning on the date of the consummation of the IPO,
individuals who constitute the Board at the beginning of such period cease
for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by the Company's shareholders of
each new director was approved by a vote of at least three-quarters of the
directors then still in office who were directors at the beginning of the
period or (iii) the Company undergoes a liquidation or dissolution or a sale
of all or substantially all of the assets of the Company. Neither the IPO
nor any merger, consolidation or corporate reorganization in which the
owners of the combined voting power of the Company's then outstanding voting
securities entitled to vote generally prior to said combination, own 50% or
more of the resulting entity's outstanding voting securities shall, by
itself, be considered a Change in Control. As used herein, "Founder" means
Shant S. Hovnanian, Vahak S. Hovnanian or Bernard B. Bossard.
"Code" means the Internal Revenue Code of 1986, as amended. Reference in the
Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.
"Committee" means the Board, the Compensation Committee of the Board or such
other committee of at least two people as the Board may appoint to
administer the Plan.
"Common Stock" means the common stock par value $0.01 per share, of the
Company.
"Company" means SPEEDUS.COM, INC.
"Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
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"Disability" means disability as defined in the long-term disability plan of
the Company or a Subsidiary, as may be applicable to the Participant in
question, or, in the absence of such a plan, the complete and permanent
inability by reason of illness or accident to perform the duties of the
occupation at which a Participant was employed or served when such
disability commenced or, if the Participant was retired when such disability
commenced, the inability to engage in any substantial gainful activity, in
either case as determined by the Committee based upon medical evidence
acceptable to it.
"Disinterested Person" means a person who is (i) a "non-employee director"
within the meaning of Rule 16b-3 under the Exchange Act, or any successor
rule or regulation and (ii) an "outside director" within the meaning of
Section 162(m) of the Code; provided, however, that clause (ii) shall apply
only with respect to grants of Awards with respect to which the Company's
tax deduction could be limited by Section 162(m) of the Code if such clause
did not apply.
"Eligible Person" means any (i) person regularly employed by the Company or
a Subsidiary; provided, however, that no such employee covered by a
collective bargaining agreement shall be an Eligible Person unless and to
the extent that such eligibility is set forth in such collective bargaining
agreement or in an agreement or instrument relating thereto; (ii) director
of the Company or a Subsidiary; or (iii) consultant to the Company or a
Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934.
"Fair Market Value" on a given date means (i) if the Stock is listed on a
national securities exchange, the mean between the highest and lowest sale
prices reported as having occurred on the primary exchange with which the
Stock is listed and traded on the date prior to such date, or, if there is
no such sale on that date, then on the last preceding date on which such a
sale was reported; (ii) if the Stock is not listed on any national
securities exchange but is quoted in the National Market System of the
National Association of Securities Dealers Automated Quotation System on a
last sale basis, the average between the high bid price and low ask price
reported on the date prior to such date, or, if there is no such sale on
that date, then on the last preceding date on which a sale was reported;
(iii) if the Stock is not listed on a national securities exchange nor
quoted in the National Market System of the National Association of
Securities Dealers Automated Quotation System on a last sale basis, the
amount determined by the Committee to be the fair market value based upon a
good faith attempt to value the Stock accurately and computed in accordance
with applicable regulations of the Internal Revenue Service; or (iv)
notwithstanding clauses (i) - (iii) above, with respect to Awards granted as
of the consummation of the IPO, the price at which Stock is sold to the
public in the IPO.
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"Holder" means a Participant who has been granted an Award.
"Incentive Stock Option" means an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an
Incentive Stock Option pursuant to Section 422 of the Code.
"Interest Portion" has the meaning ascribed thereto in Section 9(g).
"IPO" means the initial offering of Common Stock to the public through an
effective registration statement.
"IPO Option" means Non-Employee Director Options granted upon the
consummation of the IPO.
"IPO Price" means the price per share that the Common Stock is first offered
to the public in the IPO.
"Non-Employee Director" means a director of the Company who is not also an
employee of the Company.
"Non-Employee Director Option" means an Option granted automatically to
Non-Employee Directors pursuant to Section 8.
"Nonqualified Stock Option" means an Option granted under the Plan which is
not designated as an Incentive Stock Option.
"Normal Termination" means termination of employment or service with the
Company and all Subsidiaries and Affiliates:
Upon retirement pursuant to the retirement plan of the Company or a
Subsidiary, as may be applicable at the time to the Participant in
question;
On account of Disability;
With the written approval of the Committee; or
By the Company or a Subsidiary without Cause.
"Option" means an Award granted under Section 7 or 8 of the Plan.
"Option Period" means the period described in Section 7(c).
"Option Price" means the exercise price set for an Option described in
Section 7(a).
"Participant" means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Award or a
Non-Employee Director who has received an automatic grant pursuant to
Section 8.
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"Performance Goals" means the performance objectives of the Company, a
Subsidiary or Affiliate during an Award Period or Restricted Period
established for the purpose of determining whether, and to what extent,
Awards will be earned for an Award Period or Restricted Period.
"Performance Share Unit" means a hypothetical investment equivalent equal to
one share of Stock granted in connection with an Award made under Section 10
of the Plan.
"Phantom Stock Unit" means a hypothetical investment equivalent equal to one
share of Stock granted in connection with an Award made under Section 11 of
the Plan, or credited with respect to Awards of Performance Share Units
which have been deferred under Section 9.
"Phantom Stock Unit Portion" has the meaning ascribed thereto in Section
10(g).
"Plan" means the Company's 1995 Stock Incentive Plan.
"Restricted Period" means, with respect to any share of Restricted Stock or
any Phantom Stock Unit, the period of time determined by the Committee
during which such Award is subject to the restrictions set forth in Section
11.
"Restricted Stock" means shares of Stock issued or transferred to a
Participant subject to forfeiture and the other restrictions set forth in
Section 11.
"Restricted Stock Award" means an Award of Restricted Stock granted under
Section 11 of the Plan.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock" means the Common Stock or such other authorized shares of stock of
the Company as from time to time may be authorized for use under the Plan.
"Stock Appreciation Right" or "SAR" means an Award granted under Section 9
of the Plan.
"Stock Bonus" means an Award granted under Section 12 of the Plan.
"Stock Option Agreement" means the agreement between the Company and a
Participant who has been granted an Option pursuant to Section 7 which
defines the rights and obligations of the parties as required in Section
7(d).
"Subsidiary" means any subsidiary of the Company as defined in Section
424(f) of the Code.
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"Term" means the term of a Non-Employee Director Option as set forth in
Section 8.
"Valuation Date" means the last day of an Award Period or the date of death
of a Participant, as applicable.
"Vested Unit" shall have the meaning ascribed thereto in Section 11(e).
Effective Date, Duration and Shareholder Approval
The Plan is effective as of October 18, 1995, the date of adoption of the
Plan by the Board. The effectiveness of the Plan and the validity of any and all
Awards granted pursuant to the Plan is contingent upon approval of the Plan by
the stockholders of the Company in a manner which complies with Rule 16b-3
promulgated pursuant to the Exchange Act and 422(b)(1) of the Code. Unless and
until the stockholders approve the Plan in compliance therewith, no Award
granted under the Plan shall be effective. See Section 18 for the applicability
of the shareholder approval requirements of Section 162(m) of the Code.
The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be October 18, 2005; provided, however, that the administration
of the Plan shall continue in effect until all matters relating to the payment
of Awards previously granted have been settled.
Administration
The Committee shall administer the Plan. Unless otherwise determined by
the Board, each member of the Committee shall, at the time he takes any action
with respect to an Award under the Plan, be a Disinterested Person. The 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 approved in writing by a majority of the Committee shall be deemed the acts
of the Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
Select the Eligible Persons to participate in the Plan;
Determine the nature and extent of the Awards to be made to each Eligible
Person;
Determine the time or times when Awards will be made to Eligible Persons;
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Determine the duration of each Award Period and Restricted Period;
Determine the conditions to which the payment of Awards may be subject;
Establish the Performance Goals for each Award Period;
Prescribe the form of Stock Option Agreement or other form or forms
evidencing Awards; and
Cause records to be established in which there shall be entered, from
time to time as Awards are made to Participants, the date of each Award, the
number of Incentive Stock Options, Nonqualified Stock Options, SARs, Phantom
Stock Units, Performance Share Units, shares of Restricted Stock and Stock
Bonuses awarded by the Committee to each Participant, the expiration date,
the Award Period and the duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any documents evidencing Awards granted pursuant thereto and all decisions
and determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.
Grant of Awards; Shares Subject to the Plan
The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units, Performance Share
Units and/or Stock Bonuses to one or more Eligible Persons and, unless otherwise
determined by the Committee, Non-Employee Directors will automatically receive
Awards pursuant to the formula set forth in Section 8; provided, however, that:
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Subject to Section 14, the aggregate number of shares of Stock made
subject to all Awards may not exceed 1,750,000;
Such shares shall be deemed to have been used in payment of Awards
whether they are actually delivered or the Fair Market Value equivalent of
such shares is paid in cash. In the event any Option, SAR not attached to
an Option, Restricted Stock, Phantom Stock Unit or Performance Share Unit
shall be surrendered, terminate, expire, or be forfeited, the number of
shares of Stock no longer subject thereto shall thereupon be released and
shall thereafter be available for new Awards under the Plan to the fullest
extent permitted by Rule 16b-3 under the Exchange Act (if applicable at
the time);
Stock delivered by the Company in settlement of Awards under the
Plan may be authorized and unissued Stock or Stock held in the treasury of
the Company or may be purchased on the open market or by private purchase;
and
Following the date that the exemption from the application of
Section 162(m) of the Code described in Section 18 (or any other exemption
having similar effect) ceases to apply to Awards, no Participant may
receive Options or SARs under the Plan with respect to more than 500,000
shares of Stock in any one year.
Eligibility
Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan and to
Non-Employee Directors who will receive automatic grants of Nonqualified Stock
Options pursuant to Section 8.
Discretionary Grant of Stock Options
The Committee is authorized to grant one or more Incentive Stock Options
or Nonqualified Stock Options to any Eligible Person; provided, however, that no
Incentive Stock Options shall be granted to any Eligible Person who is not an
employee of the Company or a Subsidiary. Each Option so granted shall be subject
to the following conditions, or to such other conditions as may be reflected in
the applicable Stock Option Agreement.
Option price. The exercise price ("Option Price") per share of Stock for
each Option shall be set by the Committee at the time of grant but shall not
be less than (i) in the case of an Incentive Stock Option, and subject to
Section 7(e), the Fair Market Value of a share of Stock at the Date of
Grant, and (ii) in the case of a Non-Qualified Stock Option, the par value
per share of Stock; provided, however, that following the date that the
exemption from the application of Section 162(m) of the Code described in
Section
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18 (or any other exemption having similar effect) ceases to apply to
Options, all Options intended to qualify as "performance-based compensation"
under Section 162(m) of the Code shall have an Option Price per share of
Stock no less than the Fair Market Value of a share of Stock on the Date of
Grant.
Manner of exercise and form of payment. Options which have become
exercisable may be exercised by delivery of written notice of exercise to
the Committee accompanied by payment of the Option Price. The Option Price
shall be payable in cash and/or shares of Stock valued at the Fair Market
Value at the time the Option is exercised or, in the discretion of the
Committee, either (i) in other property having a fair market value on the
date of exercise equal to the Option Price, or (ii) by delivering to the
Committee a copy of irrevocable instructions to a stockbroker to deliver
promptly to the Company an amount of sale or loan proceeds sufficient to pay
the Option Price.
Option Period and Expiration. Options shall vest and become exercisable in
such manner and on such date or dates determined by the Committee and shall
expire after such period, not to exceed ten years, as may be determined by
the Committee (the "Option Period"); provided, however, that notwithstanding
any vesting dates set by the Committee, the Committee may in its sole
discretion accelerate the exercisability of any Option, which acceleration
shall not affect the terms and conditions of any such Option other than with
respect to exercisability. If an Option is exercisable in installments, such
installments or portions thereof which become exercisable shall remain
exercisable until the Option expires. Unless otherwise stated in the
applicable Option Agreement, the Option shall expire earlier than the end of
the Option Period in the following circumstances:
If prior to the end of the Option Period, the Holder shall
undergo a Normal Termination, the Option shall expire on
the earlier of the last day of the Option Period or the
date that is three months after the date of such Normal
Termination. In such event, the Option shall remain
exercisable by the Holder until its expiration, only to
the extent the Option was exercisable at the time of
such Normal Termination.
If the Holder dies prior to the end of the Option Period
and while still in the employ or service of the Company,
a Subsidiary or Affiliate, or within three months of
Normal Termination, the Option shall expire on the
earlier of the last day of the Option Period or the date
that is twelve months after the date of death of the
Holder. In such event, the Option shall remain
exercisable by the person or persons to whom the
Holder's rights under the Option pass by will or the
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applicable laws of descent and distribution until its
expiration, only to the extent the Option was
exercisable by the Holder at the time of death.
If the Holder ceases employment or service with the Company
and all Subsidiaries and Affiliates for reasons other
than Normal Termination or death, the Option shall
expire immediately upon such cessation of employment or
service.
Stock Option Agreement - Other Terms and Conditions. Each Option granted
under the Plan shall be evidenced by a Stock Option Agreement, which shall
contain such provisions as may be determined by the Committee and, except as
may be specifically stated otherwise in such Stock Option Agreement, which
shall be subject to the following terms and conditions:
Each Option issued pursuant to this Section 7 or portion
thereof that is exercisable shall be exercisable for the
full amount or for any part thereof.
Each share of Stock purchased through the exercise of an
Option issued pursuant to this Section 7 shall be paid
for in full at the time of the exercise. Each Option
shall cease to be exercisable, as to any share of Stock,
when the Holder purchases the share or exercises a
related SAR or when the Option expires.
Subject to Section 13(k), Options issued pursuant to this
Section 7 shall not be transferable by the Holder except
by will or the laws of descent and distribution and
shall be exercisable during the Holder's lifetime only
by him.
Each Option issued pursuant to this Section 7 shall vest and
become exercisable by the Holder in accordance with the
vesting schedule established by the Committee and set
forth in the Stock Option Agreement.
Each Stock Option Agreement may contain a provision that,
upon demand by the Committee for such a representation,
the Holder shall deliver to the Committee at the time of
any exercise of an Option issued pursuant to this
Section 7 a written representation that the shares to be
acquired upon such exercise are to be acquired for
investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares
issued upon exercise of an Option issued pursuant to
this Section 7 shall be a condition precedent to the
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right of the Holder or such other person to purchase any
shares. In the event certificates for Stock are
delivered under the Plan with respect to which such
investment representation has been obtained, the
Committee may cause a legend or legends to be placed on
such certificates to make appropriate reference to such
representation and to restrict transfer in the absence
of compliance with applicable federal or state
securities laws.
Each Incentive Stock Option Agreement shall contain a
provision requiring the Holder to notify the Company in
writing immediately after the Holder makes a
disqualifying disposition of any Stock acquired pursuant
to the exercise of such Incentive Stock Option. A
disqualifying disposition is any disposition (including
any sale) of such Stock before the later of (a) two
years after the Date of Grant of the Incentive Stock
Option or (b) one year after the date the Holder
acquired the Stock by exercising the Incentive Stock
Option.
Incentive Stock Option Grants to 10% Stockholders. Notwithstanding anything
to the contrary in this Section 7, if an Incentive Stock Option is granted
to a Holder who owns stock representing more than ten percent of the voting
power of all classes of stock of the Company or of a Subsidiary, the Option
Period shall not exceed five years from the Date of Grant of such Option and
the Option Price shall be at least 110 percent of the Fair Market Value (on
the Date of Grant) of the Stock subject to the Option.
$100,000 Per Year Limitation for Incentive Stock Options. To the extent the
aggregate Fair Market Value (determined as of the Date of Grant) of Stock
for which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company and its
Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be
treated as Nonqualified Stock Options.
Voluntary Surrender. The Committee may permit the voluntary surrender of all
or any portion of any Nonqualified Stock Option issued pursuant to this
Section 7 and its corresponding SAR, if any, granted under the Plan to be
conditioned upon the granting to the Holder of a new Option for the same or
a different number of shares as the Option surrendered or require such
voluntary surrender as a condition precedent to a grant of a new Option to
such Participant. Such new Option shall be exercisable at an Option Price,
during an Option Period, and in accordance with any other terms or
conditions specified by the Committee at the time the new Option is granted,
all determined in accordance with the provisions of the Plan without
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regard to the Option Price, Option Period, or any other terms and
conditions of the Nonqualified Stock Option surrendered.
Automatic Grant of Options
Upon the consummation of the IPO each Non-Employee Director shall be
automatically granted an IPO Option to purchase 5,000 shares of Stock.
Thereafter, unless otherwise determined by the Committee, on the date any person
first becomes a Non-Employee Director, such person shall be automatically
granted without further action by the Board or the Committee a Nonqualified
Stock Option to purchase 5,000 shares of Stock. Thereafter, unless otherwise
determined by the Committee, for the remainder of the term of the Plan and
provided he remains a Non-Employee Director of the Company, on the date of each
of the Company's Annual Meeting of Stockholders, each Non-Employee Director
shall be automatically granted without further action by the Board or the
Committee a Nonqualified Stock Option to purchase 1,000 shares of Stock. All
such Options granted to Non-Employee Directors shall hereinafter be referred to
as Non-Employee Director Options.
Option Price; Term. IPO Options shall have an Option Price per share equal
to the IPO Price. All other Non-Employee Director Options shall have an
Option Price per share equal to the Fair Market Value of a share of Stock on
the Date of Grant. IPO Options shall vest and become exercisable over a
period of two years at the rate of 50% of each grant annually on each of the
two consecutive anniversaries of the Date of Grant directly following the
Date of Grant provided the Non-Employee Director's services as a director
continues through each such anniversary. All other Non-Employee Director
Options shall be fully vested and exercisable as of the date of grant. The
term of each Non-Employee Director Option ("Term"), after which each such
Option shall expire, shall be ten years from the date of Grant.
Expiration. If prior to the expiration of the Term of a Non-Employee
Director Option the Non-Employee Director shall cease to be a member of the
Board for any reason other than his death, the Non-Employee Director Option
shall expire on the earlier of the expiration of the Term or the date that
is three months after the date of such cessation. If prior to the expiration
of the Term of a Non-Employee Director Option a Non-Employee Director shall
cease to be a member of the Board by reason of his death, the Non-Employee
Director Option shall expire on the earlier of the expiration of the Term or
the date that is one year after the date of such cessation. In the event a
Non-Employee Director ceases to be a member of the Board for any reason, any
unexpired Non-Employee Director Option shall thereafter be exercisable until
its expiration only to the extent that such Option was exercisable at the
time of such cessation.
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Stock Option Agreement. Each Non-Employee Director Option shall be evidenced
by a Stock Option Agreement, which shall contain such provisions as may be
determined by the Committee; provided, however, that such provisions shall
not be inconsistent with the formula grant provisions of Rule
16b-3(c)(2)(ii) pursuant to the Exchange Act.
Nontransferability. Subject to Section 13(k), Non-Employee Director Options
shall not be transferable except by will or the laws of descent and
distribution and shall be exercisable during the Non-Employee Director's
lifetime only by him.
Stock Appreciation Rights
Any Option (other than Non-Employee Director Options) granted under the
Plan may include SARs, either at the Date of Grant or, except in the case of an
Incentive Stock Option, by subsequent amendment. The Committee also may award
SARs independent of any Option. An SAR shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose,
including, but not limited to, the following:
Vesting. SARs granted in connection with an Option shall become exercisable,
be transferable and shall expire according to the same vesting schedule,
transferability rules and expiration provisions as the corresponding Option.
An SAR granted independent of an Option shall become exercisable, be
transferable and shall expire in accordance with a vesting schedule,
transferability rules and expiration provisions as established by the
Committee and reflected in an Award agreement. Notwithstanding the above, an
SAR shall not be exercisable by a person subject to Section 16(b) of the
Exchange Act for at least six months following the Date of Grant.
Automatic exercise. If on the last day of the Option Period (or in the case
of an SAR independent of an Option, the period established by the Committee
after which the SAR shall expire), the Fair Market Value of the Stock
exceeds the Option Price (or in the case of an SAR granted independent of an
Option, the Fair Market Value of the Stock on the Date of Grant), the Holder
has not exercised the SAR or the corresponding Option, and neither the SAR
nor the corresponding Option has expired, such SAR shall be deemed to have
been exercised by the Holder on such last day and the Company shall make the
appropriate payment therefor.
Payment. Upon the exercise of an SAR, the Company shall pay to the Holder an
amount equal to the number of shares subject to the SAR multiplied by the
excess, if any, of the Fair Market Value of one share of Stock on the
exercise date over the Option Price, in the case of an SAR granted in
connection with an Option, or the Fair Market Value of one share of Stock on
the Date of Grant, in the case of an SAR granted independent of an Option.
The Company shall pay
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such excess in cash, in shares of Stock valued at Fair Market Value, or any
combination thereof, as determined by the Committee. Fractional shares shall
be settled in cash.
(d) Method of exercise. A Holder may exercise an SAR after such time as the
SAR vests by filing an irrevocable written notice with the Committee or its
designee, specifying the number of SARs to be exercised, and the date on
which such SARs were awarded. Such time or times determined by the Committee
may take into account any applicable "window periods" required by Rule 16b-3
under the Exchange Act.
(e) Expiration. Except as otherwise provided, in the case of SARs granted
in connection with Options, an SAR shall expire on a date designated by the
Committee which is not later than ten years after the Date of Grant of the
SAR.
Performance Shares
Award grants. The Committee is authorized to establish Performance Share
programs to be effective over designated Award Periods determined by the
Committee. The Committee may grant Awards of Performance Share Units to
Eligible Persons in accordance with such Performance Share programs. At the
beginning of each Award Period, the Committee will establish written
Performance Goals based upon financial objectives for the Company for such
Award Period and a schedule relating the accomplishment of the Performance
Goals to the Awards to be earned by Participants. Performance Goals may
include absolute or relative growth in earnings per share or rate of return
on stockholders' equity or other measurement of corporate performance and
may be determined on an individual basis or by categories of Participants.
The Committee shall determine the number of Performance Share Units to be
awarded, if any, to each Eligible Person who is selected to receive such an
Award. The Committee may add new Participants to a Performance Share program
after its commencement by making pro rata grants.
Determination of Award. At the completion of a Performance Share Award
Period, or at other times as specified by the Committee, the Committee shall
calculate the number of shares of Stock earned with respect to each
Participant's Performance Share Unit Award by multiplying the number of
Performance Share Units granted to the Participant by a performance factor
representing the degree of attainment of the Performance Goals.
Partial Awards. A Participant for less than a full Award Period, whether by
reason of commencement or termination of employment or otherwise, shall
receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.
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Payment of Performance Share Unit Awards. Performance Share Unit Awards
shall be payable in that number of shares of Stock determined in accordance
with Section 10(b); provided, however, that, at its discretion, the
Committee may make payment to any Participant in the form of cash upon the
specific request of such Participant. The amount of any payment made in cash
shall be based upon the Fair Market Value of the Stock on the day prior to
payment. Payments of Performance Share Unit Awards shall be made as soon as
practicable after the completion of an Award Period.
Adjustment of Performance Goals. The Committee may, during the Award Period,
make such adjustments to Performance Goals as it may deem appropriate, to
compensate for, or reflect, (i) extraordinary or non-recurring events
experienced during an Award Period by the Company or by any other
corporation whose performance is relevant to the determination of whether
Performance Goals have been attained; (ii) any significant changes that may
have occurred during such Award Period in applicable accounting rules or
principles or changes in the Company's method of accounting or in that of
any other corporation whose performance is relevant to the determination of
whether an Award has been earned or (iii) any significant changes that may
have occurred during such Award Period in tax laws or other laws or
regulations that alter or affect the computation of the measures of
Performance Goals used for the calculation of Awards; provided, however,
that following the date that the exemption from the application of Section
162(m) of the Code described in Section 18 (or any other exemption having
similar effect) ceases to apply to Performance Share Unit Awards, with
respect to such Awards intended to qualify as "performance-based
compensation" under Section 162(m) of the Code, such adjustment shall be
made only to the extent that the Committee determines that such adjustments
may be made without a loss of deductibility for such Award under Section
162(m) of the Code.
Restricted Stock Awards and Phantom Stock Units
Award of Restricted Stock and Phantom Stock Units.
The Committee shall have the authority (1) to grant
Restricted Stock and Phantom Stock Unit Awards, (2) to
issue or transfer Restricted Stock to Eligible Persons,
and (3) to establish terms, conditions and restrictions
applicable to such Restricted Stock and Phantom Stock
Units, including the Restricted Period, which may differ
with respect to each grantee, the time or times at which
Restricted Stock or Phantom Stock Units shall be granted
or become vested and the number of shares or units to be
covered by each grant.
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The Holder of a Restricted Stock Award shall execute and
deliver to the Company an Award agreement with respect to
the Restricted Stock setting forth the restrictions
applicable to such Restricted Stock. If the Committee
determines that the Restricted Stock shall be held in
escrow rather than delivered to the Holder pending the
release of the applicable restrictions, the Holder
additionally shall execute and deliver to the Company (i)
an escrow agreement satisfactory to the Committee, and
(ii) the appropriate blank stock powers with respect to
the Restricted Stock covered by such agreements. If a
Holder shall fail to execute a Restricted Stock agreement
and, if applicable, an escrow agreement and stock powers,
the Award shall be null and void. Subject to the
restrictions set forth in Section 11(b), the Holder shall
generally have the rights and privileges of a stockholder
as to such Restricted Stock, including the right to vote
such Restricted Stock. At the discretion of the
Committee, cash dividends and stock dividends with
respect to the Restricted Stock may be either currently
paid to the Holder or withheld by the Company for the
Holder's account, and interest may be paid on the amount
of cash dividends withheld at a rate and subject to such
terms as determined by the Committee. Cash dividends or
stock dividends so withheld by the Committee shall not be
subject to forfeiture.
Upon the Award of Restricted Stock, the Committee shall cause
a stock certificate registered in the name of the Holder
to be issued and, if it so determines, deposited together
with the stock powers with an escrow agent designated by
the Committee. If an escrow arrangement is used, the
Committee shall cause the escrow agent to issue to the
Holder a receipt evidencing any stock certificate held by
it registered in the name of the Holder.
The terms and conditions of a grant of Phantom Stock Units shall be
reflected in a written Award agreement. No shares of Stock shall be
issued at the time a Phantom Stock Unit Award is made, and the Company
will not be required to set aside a fund for the payment of any such
Award. Holders of Phantom Stock Units shall receive an amount equal to
the cash dividends paid by the Company upon one share of Stock for each
Phantom Stock Unit then credited to such Holder's account ("Dividend
Equivalents"). The Committee shall, in its sole discretion, determine
whether to credit to the account of, or to currently pay to, each Holder
of an Award of Phantom Stock Units such Dividend Equivalents. Dividend
Equivalents credited to a Holder's account shall be subject to
forfeiture on the same basis as the related Phantom Stock Units,
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and may bear interest at a rate and subject to such terms as are determined
by the Committee.
Restrictions.
Restricted Stock awarded to a Participant shall be subject to the
following restrictions until the expiration of the
Restricted Period, and to such other terms and
conditions as may be set forth in the applicable Award
agreement: (1) if an escrow arrangement is used, the
Holder shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the
restrictions on transferability set forth in the Award
agreement; (3) the shares shall be subject to forfeiture
to the extent provided in subparagraph (d) and the Award
Agreement and, to the extent such shares are forfeited,
the stock certificates shall be returned to the Company,
and all rights of the Holder to such shares and as a
shareholder shall terminate without further obligation
on the part of the Company.
Phantom Stock Units awarded to any Participant shall be subject
to (1) forfeiture until the expiration of the Restricted
Period, to the extent provided in subparagraph (d) and
the Award agreement, and to the extent such Awards are
forfeited, all rights of the Holder to such Awards shall
terminate without further obligation on the part of the
Company and (2) such other terms and conditions as may
be set forth in the applicable Award agreement.
The Committee shall have the authority to remove any or all
of the restrictions on the Restricted Stock and Phantom
Stock Units whenever it may determine that, by reason of
changes in applicable laws or other changes in
circumstances arising after the date of the Restricted
Stock Award or Phantom Stock Award, such action is
appropriate.
Restricted Period. The Restricted Period of Restricted Stock and Phantom
Stock Units shall commence on the Date of Grant and shall expire from time
to time as to that part of the Restricted Stock and Phantom Stock Units
indicated in a schedule established by the Committee and set forth in a
written Award agreement.
Forfeiture Provisions. Except to the extent determined by the Committee and
reflected in the underlying Award agreement, in the event a Holder
terminates employment with the Company and all Subsidiaries during a
Restricted Period, that portion of the Award
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with respect to which restrictions have not expired ("Non-Vested Portion")
shall be treated as follows.
Upon the voluntary resignation of a Participant or discharge
by the Company or a Subsidiary for Cause, the Non-Vested
Portion of the Award shall be completely forfeited.
Upon Normal Termination, the Non-Vested Portion of the Award
shall be prorated for service during the Restricted
Period and shall be received as soon as practicable
following termination.
Upon death, the Non-Vested Portion of the Award shall be
prorated for service during the Restricted Period and
paid to the Participant's beneficiary as soon as
practicable following death.
Delivery of Restricted Stock and Settlement of Phantom Stock Units. Upon the
expiration of the Restricted Period with respect to any shares of Stock
covered by a Restricted Stock Award, the restrictions set forth in Section
11(b) and the Award agreement shall be of no further force or effect with
respect to shares of Restricted Stock which have not then been forfeited. If
an escrow arrangement is used, upon such expiration, the Company shall
deliver to the Holder, or his beneficiary, without charge, the stock
certificate evidencing the shares of Restricted Stock which have not then
been forfeited and with respect to which the Restricted Period has expired
(to the nearest full share) and any cash dividends or stock dividends
credited to the Holder's account with respect to such Restricted Stock and
the interest thereon, if any.
Upon the expiration of the Restricted Period with respect to any Phantom
Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver to
the Holder, or his beneficiary, without charge, one share of Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the Restricted Period has expired ("Vested Unit") and cash equal to any Dividend
Equivalents credited with respect to each such Vested Unit and the interest
thereon, if any; provided, however, that, if so noted in the applicable Award
agreement, the Committee may, in its sole discretion, elect to pay cash or part
cash and part Stock in lieu of delivering only Stock for Vested Units. If cash
payment is made in lieu of delivering Stock, the amount of such payment shall be
equal to the Fair Market Value of the Stock as of the date on which the
Restricted Period lapsed with respect to such Vested Unit.
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Stock Restrictions. Each certificate representing Restricted Stock awarded
under the Plan shall bear the following legend until the end of the
Restricted Period with respect to such Stock:
"Transfer of this certificate and the shares represented hereby
is restricted pursuant to the terms of a Restricted Stock Agreement,
dated as of ____________, between SPEEDUS.COM, INC. and _______________.
A copy of such Agreement is on file at the offices of the Company."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
Stock Bonus Awards
The Committee may issue unrestricted Stock under the Plan to Eligible
Persons, alone or in tandem with other Awards, in such amounts and subject to
such terms and conditions as the Committee shall from time to time in its sole
discretion determine. Stock Bonus Awards under the Plan shall be granted as, or
in payment of, a bonus, or to provide incentives or recognize special
achievements or contributions.
General
Additional Provisions of an Award. Awards under the Plan also may be subject
to such other provisions (whether or not applicable to the benefit awarded
to any other Participant) as the Committee determines appropriate including,
without limitation, provisions to assist the Participant in financing the
purchase of Stock upon the exercise of Options, provisions for the
forfeiture of or restrictions on resale or other disposition of shares of
Stock acquired under any Award, provisions giving the Company the right to
repurchase shares of Stock acquired under any Award in the event the
Participant elects to dispose of such shares, and provisions to comply with
Federal and state securities laws and Federal and state tax withholding
requirements. Any such provisions shall be reflected in the applicable Award
agreement.
Privileges of Stock Ownership. Except as otherwise specifically provided in
the Plan, no person shall be entitled to the privileges of stock ownership
in respect of shares of Stock which are subject to Awards hereunder until
such shares have been issued to that person.
Government and Other Regulations. The obligation of the Company to make
payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies
as may be required. Notwithstanding any terms or conditions of any Award to
the contrary, the Company shall be under no obligation to offer to sell or
to sell and shall be prohibited from offering to sell or selling any shares
of Stock
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pursuant to an Award unless such shares have been properly registered for
sale pursuant to the Securities Act with the Securities and Exchange
Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms
and conditions of such exemption have been fully complied with. The Company
shall be under no obligation to register for sale under the Securities Act
any of the shares of Stock to be offered or sold under the Plan. If the
shares of Stock offered for sale or sold under the Plan are offered or sold
pursuant to an exemption from registration under the Securities Act, the
Company may restrict the transfer of such shares and may legend the Stock
certificates representing such shares in such manner as it deems advisable
to ensure the availability of any such exemption.
Tax Withholding. Notwithstanding any other provision of the Plan, the
Company or a Subsidiary, as appropriate, shall have the right to deduct from
all Awards cash and/or Stock, valued at Fair Market Value on the date of
payment, in an amount necessary to satisfy all Federal, state or local taxes
as required by law to be withheld with respect to such Awards and, in the
case of Awards paid in Stock, the Holder or other person receiving such
Stock may be required to pay to the Company or a Subsidiary, as appropriate,
prior to delivery of such Stock, the amount of any such taxes which the
Company or Subsidiary is required to withhold, if any, with respect to such
Stock. Subject in particular cases to the disapproval of the Committee, the
Company may accept shares of Stock of equivalent Fair Market Value in
payment of such withholding tax obligations if the Holder of the Award
elects to make payment in such manner and, with respect to a Holder subject
to Section 16(b) of the Exchange Act, if at least six months prior to the
date such tax obligation is determined; provided, however, that such
six-month advance election shall not be required if it is not necessary in
order for the withholding election to be exempt from the application of such
Section 16(b);
Claim to Awards and Employment Rights. No employee or other person shall
have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for a grant of any
other Award. Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ
or service of the Company or a Subsidiary.
Designation and Change of Beneficiary. Each Participant may file with the
Committee a written designation of one or more persons as the beneficiary
who shall be entitled to receive the rights or amounts payable with respect
to an Award due under the Plan upon his death. A Participant may, from time
to time, revoke or change his beneficiary designation without the consent of
any prior beneficiary
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by filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If no beneficiary
designation is filed by the Participant, the beneficiary shall be deemed to
be his or her spouse or, if the Participant is unmarried at the time of
death, his or her estate.
Payments to Persons Other Than Participants. If the Committee shall find
that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has
died, then any payment due to such person or his estate (unless a prior
claim therefor has been made by a duly appointed legal representative) may,
if the Committee so directs the Company, be paid to his spouse, child,
relative, an institution maintaining or having custody of such person, or
any other person deemed by the Committee to be a proper recipient on behalf
of such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Committee and the Company
therefor.
No Liability of Committee Members. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee
nor for any mistake of judgment made in good faith, and the Company shall
indemnify and hold harmless each member of the Committee and each other
employee, officer or director of the Company to whom any duty or power
relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including counsel fees)
or liability (including any sum paid in settlement of a claim) arising out
of any act or omission to act in connection with the Plan unless arising out
of such person's own fraud or willful bad faith; provided, however, that
approval of the Board shall be required for the payment of any amount in
settlement of a claim against any such person. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
Governing law. The Plan shall be governed by and construed in accordance
with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof.
Funding. No provision of the Plan shall require the Company, for the purpose
of satisfying any obligations under the Plan, to purchase assets or place
any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets,
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nor shall the Company maintain separate bank accounts, books, records or
other evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Holders shall have no rights under the
Plan other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.
Nontransferability. A person's rights and interest under the Plan, including
amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged or encumbered except, in the event
of a Holder's death, to a designated beneficiary to the extent permitted by
the Plan, or in the absence of such designation, by will or the laws of
descent and distribution; provided, however, the Committee may, in its sole
discretion, allow for transfer of Awards other than Incentive Stock Options
to other persons or entities, subject to such conditions or limitations as
it may establish to ensure that Awards intended to be exempt from Section
16(b) of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act
continue to be so exempt or for other purposes.
Reliance on Reports. Each member of the Committee and each member of the
Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good
faith, upon any report made by the independent public accountant of the
Company and its Subsidiaries and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
Relationship to Other Benefits. No payment under the Plan shall be taken
into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided in such other plan.
Expenses. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries.
Pronouns. Masculine pronouns and other words of masculine gender shall refer
to both men and women.
Titles and Headings. The titles and headings of the sections in the Plan are
for convenience of reference only, and in the event of any conflict, the
text of the Plan, rather than such titles or headings shall control.
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Termination of Employment. For all purposes herein, a person who transfers
from employment or service with the Company to employment or service with a
Subsidiary or vice versa shall not be deemed to have terminated employment
or service with the Company or a Subsidiary.
Changes in Capital Structure.Awards granted under the Plan and any
agreements evidencing such Awards, the maximum number of shares of Stock
subject to all Awards and the maximum number of shares of Stock with respect
to which any one person may be granted Options or SARs during any year shall
be subject to adjustment or substitution, as determined by the Committee in
its sole discretion, as to the number, price or kind of a share of Stock or
other consideration subject to such Awards or as otherwise determined by the
Committee to be equitable (i) in the event of changes in the outstanding
Stock or in the capital structure of the Company by reason of stock
dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the Date of Grant of any
such Award or (ii) in the event of any change in applicable laws or any
change in circumstances which results in or would result in any substantial
dilution or enlargement of the rights granted to, or available for,
Participants in the Plan, or which otherwise warrants equitable adjustment
because it interferes with the intended operation of the Plan. In addition,
in the event of any such adjustments or substitution, the aggregate number
of shares of Stock available under the Plan shall be appropriately adjusted
by the Committee, whose determination shall be conclusive. Any adjustment in
Incentive Stock Options under this Section 14 shall be made only to the
extent not constituting a "modification" within the meaning of Section
424(h)(3) of the Code, and any adjustments under this Section 14 shall be
made in a manner which does not adversely affect the exemption provided
pursuant to Rule 16b-3 under the Exchange Act. Further, following the date
that the exemption from the application of Section 162(m) of the Code
described in Section 18 (or any other exemption having similar effect)
ceases to apply to Awards, with respect to Awards intended to qualify as
"performance-based compensation" under Section 162(m) of the Code, such
adjustments or substitutions shall be made only to the extent that the
Committee determines that such adjustments or substitutions may be made
without a loss of deductibility for such Awards under Section 162(m) of the
Code. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding
for all purposes.
Notwithstanding the above, in the event of any of the following:
A. The Company is merged or consolidated with another
corporation or entity and, in connection therewith,
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consideration is received by shareholders of the Company in a form
other than stock or other equity interests of the surviving entity;
B. All or substantially all of the assets of the Company are
acquired by another person;
C. The reorganization or liquidation of the Company; or
D. The Company shall enter into a written agreement to undergo
an event described in clauses A, B or C above,
then the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Awards and pay to the
Holders thereof, in cash, the value of such Awards based upon the price per
share of Stock received or to be received by other shareholders of the Company
in the event. The terms of this Section 14 may be varied by the Committee in any
particular Award agreement.
Effect of Change in Control
Except to the extent reflected in a particular Award agreement:
In the event of a Change in Control, notwithstanding any vesting schedule
with respect to an Award of Options, SARs, Phantom Stock Units or Restricted
Stock, such Option or SAR shall become immediately exercisable with respect
to 100 percent of the shares subject to such Option or SAR, and the
Restricted Period shall expire immediately with respect to 100 percent of
such Phantom Stock Units or shares of Restricted Stock.
In the event of a Change in Control, all incomplete Award Periods in effect
on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall (i) determine the extent to which
Performance Goals with respect to each such Award Period have been met based
upon such audited or unaudited financial information then available as it
deems relevant, (ii) cause to be paid to each Participant partial or full
Awards with respect to Performance Goals for each such Award Period based
upon the Committee's determination of the degree of attainment of
Performance Goals, and (iii) cause all previously deferred Awards to be
settled in full as soon as possible.
The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets
and business of the Company. The Company agrees that it will make
appropriate provisions for the preservation of Participant's rights under
the Plan in any agreement or plan which
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it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.
Nonexclusivity of the Plan
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
Amendments and Termination
The Board may at any time terminate the Plan. Subject to Section 14, with
the express written consent of an individual Participant, the Board or the
Committee may cancel or reduce or otherwise alter outstanding Awards if, in its
judgment, the tax, accounting, or other effects of the Plan or potential payouts
thereunder would not be in the best interest of the Company. The Board or the
Committee may, at any time, or from time to time, amend or suspend and, if
suspended, reinstate, the Plan in whole or in part; provided, however, that
without further stockholder approval neither the Board nor the Committee shall
make any amendment to the Plan which would:
Materially increase the maximum number of shares of Stock which may be
issued pursuant to Awards, except as provided in Section 13;
Extend the maximum Option Period;
Extend the termination date of the Plan; or
Change the class of persons eligible to receive Awards under the Plan;
and further provided, however, that provisions of Section 8 shall not be amended
more than once every six months other than to comport with changes in the Code,
the Employee Retirement Income Security Act, or the rules thereunder.
Effect of Section 162(m) of the Code
All Options and SARs issued under the Plan, are intended to be eligible
(as determined by the Committee) for exemption from the application of Section
162(m) of the Code, which restricts under certain circumstances the Federal
income tax deduction for compensation paid by a public company to named
executives in excess of $1 million per year. The exemption is based on Treasury
Regulation Section 1.162-27(e)(2)(vi), with the understanding that such
regulation generally exempts from the application of Section 162(m) of the Code
compensation
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paid by a public company pursuant to options and stock appreciation rights
granted with a strike price equal to the fair market value of the underlying
stock on the date of grant by a compensation committee of "outside directors",
within the meaning of Treasury Regulation Section 1.162-27(e)(3) under a plan
approved by the shareholders of the company. Under Treasury Regulation
1.162-27(e)(4)(vi), this exemption is available to the Plan for the duration of
the period that lasts until the earlier of (i) the expiration or material
modification of the Plan, or (ii) the exhaustion of the maximum number of shares
of Stock available for Awards under the Plan, as set forth in Section 5(a). The
Committee may, without shareholder approval (unless otherwise required to comply
with Rule 16b-3 under the Exchange Act), amend the Plan retroactively and/or
prospectively to the extent it determines necessary in order to comply with any
subsequent clarification of Section 162(m) of the Code required to preserve the
Company's Federal income tax deduction for compensation paid pursuant to the
Plan. To the extent that the Committee determines as of the Date of Grant of an
Award that (i) the Award is intended to comply with Section 162(m) of the Code
and (ii) the exemption described above is no longer available with respect to
such Award, such Award shall not be effective until any stockholder approval
required under Section 162(m) of the Code has been obtained.
* * *
As adopted by the Board of Directors of
SPEEDUS.COM, INC. as of
October 18, 1995, and as amended and
restated as of December 2, 1998, and
as further amended and restated as of
July 28, 1999 and June 2, 2000.
By: Shant S. Hovnanian
Title: Chairman and Chief Executive Officer
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