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COGNITRONICS CORPORATION
RESTRICTED STOCK PLAN, AS AMENDED
SECTION 1. PURPOSE.
The purpose of the Cognitronics Corporation Restricted Stock
Plan is:
(a) to increase the proprietary interest in the Company of
those Key Employees whose responsibilities and
decisions directly affect the performance of the
Company and its subsidiaries;
(b) to provide rewards for those Key Employees who make
contributions to the success of the Company and its
subsidiaries; and
(c) to attract and retain persons of superior ability as
Key Employees of the Company and its subsidiaries.
SECTION 2. DEFINITIONS.
"AWARD" means an award of Restricted Stock granted to any
Key Employee in accordance with the provisions of the Plan.
"AWARD AGREEMENT" means the written agreement evidencing
each Award between the Key Employee and the Company.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means (i) the Key Employee is convicted of a felony
involving moral turpitude; or (ii) the Key Employee is
guilty of willful gross neglect or willful gross misconduct
in carrying out his duties, resulting, in either case, in
material economic harm to the Company, unless the Key
Employee believed in good faith that such act or nonact was
in the best interests of the Company.
"CHANGE IN CONTROL" means an event in which:
(a) the stockholders of the Company approve (i) any
consolidation or merger of the Company or any of its
subsidiaries where the stockholders of the Company,
immediately prior to the consolidation or merger, would
not, immediately after the consolidation or merger,
beneficially own, directly or indirectly, shares
representing in the aggregate more than 50% of all
votes to which all stockholders of the corporation
issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any)
would be entitled under ordinary circumstances to vote
in an election of directors or where the members of the
Board, immediately prior to the consolidation or
merger, would not, immediately after the consolidation
or merger, constitute a majority of the Board of
Directors of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate
parent corporation, if any), (ii) any sale, lease,
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exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any
person as a single plan) of all or substantially all of
the assets of the Company or (iii) any plan or proposal
for the liquidation or dissolution of the Company;
(b) persons who, as of the effective date hereof,
constitute the entire Board (as of the date hereof the
"Incumbent Directors") cease for any reason to
constitute at least a majority of the Board, provided,
however, that any person becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's stockholders, is approved by
a vote of at least a majority of the then Incumbent
Directors (other than an election or nomination of a
person whose assumption of office is the result of an
actual or threatened election contest relating to the
election of directors of the Company, as such terms are
used in Rule 14a-11 under the Exchange Act), shall be
considered an Incumbent Director; or
(c) any "person", as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company,
any of its subsidiaries, any employee benefit plan of
the Company or any of its subsidiaries or any entity
organized, appointed or established by the Company for
or pursuant to the terms of such plan), together with
all "affiliates" and "associates" (as such terms are
defined in Rule 12b-2 under the Exchange Act) of such
person, becomes the "beneficial owner" or "beneficial
owners" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of securities of
the Company representing in the aggregate 20% or more
of either (i) the then outstanding shares of Stock or
(ii) the combined voting power of all then outstanding
securities of the Company having the right under
ordinary circumstances to vote in an election of
directors to the Board ("Voting Securities") (in either
such case other than as a result of acquisitions of
such securities directly from the Company).
Notwithstanding the foregoing, a "Change in Control" will
not have occurred for purposes of clause (c) solely as the
result of an acquisition of securities by the Company which,
by reducing the number of shares of Stock or other Voting
Securities outstanding, increases (i) the proportionate
number of shares of Stock beneficially owned by any person
to 20% or more of the shares of Stock then outstanding or
(ii) the proportionate voting power represented by the
Voting Securities beneficially owned by any person to 20% or
more of the combined voting power of all then outstanding
Voting Securities; provided, however, that if any person
referred to in clause (i) or (ii) of this sentence
thereafter becomes the beneficial owner of any additional
shares of Stock or other Voting Securities (other than
pursuant to a stock split, stock dividend or similar
transaction), then a "Change in Control" will have occurred
for purposes of clause (c).
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"COMMITTEE" means the Committee appointed by the Board to
administer the Plan pursuant to Section 4(a) hereof.
"COMPANY" means Cognitronics Corporation and its successors
and assigns.
"CONSTRUCTIVE TERMINATION WITHOUT CAUSE" means a
termination of a Key Employee's employment at his initiative
following the occurrence, without the Key Employee's prior
written consent, of one or more of the following events
(except in consequence of a prior termination):
(i) a reduction in the Key Employee's base salary or
the termination or material reduction of any employee
benefit or perquisite enjoyed by him (other than as
part of an across-the-board reduction applicable to all
executive officers of the Company);
(ii) a material diminution in the Key Employee's duties
or the assignment to the Key Employee of duties which
are materially inconsistent with his duties or which
materially impair the Key Employee's ability to
function in his position with the Company.
(iii) the failure to continue the Key Employee's
participation in any incentive compensation plan unless
a plan providing a substantially similar opportunity is
substituted; or
(iv) the relocation of the Key Employee's office
location as assigned to him by the Company to a
location more than 50 miles from his prior office
location.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"KEY EMPLOYEE" means an officer or other key employee of any
Participating Company who, in the judgment of the Committee,
is responsible for or contributes to the management, growth,
technology or profitability of the business of any
Participating Company.
"PARTICIPATING COMPANY" means the Company or any subsidiary
or other affiliate of the Company.
"PLAN" means the Cognitronics Corporation Restricted Stock
Plan.
"RESTRICTED STOCK" means Stock delivered under the Plan
subject to the requirements of Section 7 hereof and such
other restrictions as the Committee deems appropriate or
desirable.
"STOCK"means the common stock ($.20 par value) of the
Company.
"TOTAL DISABILITY" means the complete and permanent
inability of a Key Employee to perform substantially all of
his or her duties under the terms of his or her employment
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with any Participating Company, as determined by the
Committee upon the basis of such evidence, including
independent medical reports or data, as the Committee deems
appropriate or necessary.
SECTION 3. EFFECTIVE DATE.
The effective date of the Plan shall be January 1, 1995,
subject to approval of the Plan by a majority of the Company's
stockholders. Notwithstanding anything in the Plan to the
contrary, if the Plan shall have been approved by the Board prior
to such stockholder approval, Key Employees may be selected and
Award criteria may be determined and Awards may be made as
provided herein subject to subsequent stockholder approval.
SECTION 4. PLAN ADMINISTRATION.
(a) COMMITTEE. The Plan shall be administered by a
Committee appointed by the Board and serving at the Board's
pleasure. The Committee shall be comprised of not less than
two (2) members of the Board. Members of the Committee
shall be members of the Board who are "non-employee
directors" within the meaning of Rule 16b-3 under the
Exchange Act or a successor rule or regulation.
(b) POWERS. The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and
regulations as it deems necessary or advisable for the
proper administration of the Plan and to take such other
action in connection with or in relation to the Plan as it
deems necessary or advisable. Each decision made or action
taken pursuant to the Plan, including interpretation of the
Plan and the Awards granted hereunder by the Committee,
shall be final and conclusive for all purposes and upon all
persons, including without limitation, the Participating
Companies, the Committee, the Board, Key Employees and their
respective successors in interest.
(c) INDEMNIFICATION. No member or former member of the
Committee or the Board shall be liable for any action or
determination made in good faith with respect to the Plan or
any Award granted under it. Each member or former member of
the Committee or the Board shall be indemnified and held
harmless by the Company against all costs and expenses
(including counsel fees) and liability (including any sum
paid in settlement of a claim with the approval of the
Board) arising out of any act or omission to act in
connection with the Plan unless arising out of such member's
own fraud or bad faith. Such indemnification shall be in
addition to any rights of indemnification the members or
former members may have as directors or under the by-laws of
the Company.
(d) INDEPENDENT ADVISORS. The Committee may employ such
independent professional advisors, including without
limitation independent legal counsel and counsel regularly
employed by the Company, consultants and agents as the
Committee may deem appropriate for the administration of the
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Plan and may rely upon any opinion received from any such
counsel or consultant and any computations received from any
such consultant or agent. All expenses incurred by the
Committee in interpreting and administering the Plan,
including without limitation meeting fees and expenses and
professional fees, shall be paid by the Company.
SECTION 5. PARTICIPATION.
Participation in the Plan shall be limited to Key Employees
of the Participating Companies 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. No employee shall at any time have any right to be
selected to participate in the Plan. No Key Employee having been
granted an Award shall have any right to be granted an additional
Award in the future. Neither the Plan nor any action taken
thereunder shall be construed as giving any Key Employee any
right to be retained in the employ of the Participating
Companies. The right and power of the Participating Companies to
dismiss or discharge any Key Employee, with or without cause, is
specifically reserved.
SECTION 6. AWARD GRANTS AND AGREEMENTS.
(a) GRANTS. The Chief Executive Officer ("CEO") of the
Company may recommend Key Employees to participate in the
Plan, and may recommend the timing, amount and restrictions,
if any, and other terms and conditions of an Award, subject
to the terms of the Plan. The Committee, in its sole
discretion, has the authority to grant Awards under the
Plan, which may be made in accordance with the
recommendations of the CEO or otherwise.
(b) AGREEMENTS. Each Award shall be evidenced by a written
Award Agreement, in a form adopted by the Committee. Each
Award Agreement shall be subject to and incorporate the
express terms and conditions, if any, required by the Plan,
and contain such restrictions, terms and conditions as the
Committee may determine.
SECTION 7. RESTRICTED STOCK.
(a) SHARES SUBJECT TO THE PLAN. An aggregate of 325,000
shares of Stock may be awarded under the Plan as Restricted
Stock. Any share of Restricted Stock that is subject to an
Award but that for any reason does not vest shall again
become available for an Award under the Plan.
(b) ADJUSTMENTS. In the event of any change in the Stock
subject to the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up,
spin-off, combination of shares, exchange of shares,
issuance of rights to subscribe or other change in capital
structure), the Committee shall make appropriate adjustments
in the amount of Stock available for Awards under the Plan
or subject to outstanding Awards, or the terms, conditions
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or restrictions of such Awards as the Committee deems
equitable to prevent the dilution or enlargement of the
benefits intended pursuant to the Plan.
(c) CUSTODY OF SHARES.
(i) Each certificate representing shares of Restricted
Stock issued pursuant to an Award shall be registered
in the name of the Key Employee and held, together with
a stock power endorsed in blank, by the Company.
Unless and until such shares of Restricted Stock fail
to vest and are forfeited as provided herein, the Key
Employee shall be entitled to vote all such shares of
Restricted Stock and receive all cash dividends, if
any, with respect thereto. All other distributions
with respect to such Restricted Stock, including, but
not limited to, Stock received as a result of a stock
dividend, stock split, combination of shares or
otherwise, shall be retained by the Company in escrow.
Each certificate of Restricted Stock issued pursuant to
an Award shall bear the following (or similar) legend:
"The transferability of this
certificate and of the shares of
Common Stock represented hereby are
subject to the terms and conditions
(including vesting) contained in
the Cognitronics Corporation
Restricted Stock Plan and an Award
Agreement entered into between the
registered owner and Cognitronics
Corporation. A copy of such Plan
and Award Agreement is on file in
the office of the Secretary of
Cognitronics Corporation."
In lieu of the foregoing, the Company may issue stop
transfer instructions to its transfer agent or take
such other steps as are necessary to preclude the
transfer of Restricted Stock.
(ii) Certificates representing shares of Restricted
Stock which have become vested pursuant to Section 7
hereof and which have been held by the Company pursuant
to Section 7(c) hereof shall be delivered by the
Company to the Key Employee (or the Key Employee's
legal representative) in the form of a freely
transferable certificate, without legend (provided that
the Key Employee is not an "affiliate" of the Company
within the meaning of Rule 405 adopted pursuant to the
Securities Act of 1933, as amended) promptly after
becoming vested, provided, however, that the Company
need not deliver such certificates to a Key Employee
until the Key Employee has paid or caused to be paid
all taxes required to be withheld pursuant to Section 8
hereof.
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(d) RESTRICTION PERIOD.
(i) Vesting Schedule. Except as provided in Section
7(d)(ii), 7(d)(iii) or 7(d)(iv) hereof, to the extent
that a Key Employee remains continuously employed by a
Participating Company, Restricted Stock received as an
award shall become vested and shall not be subject to
forfeiture in accordance with the following schedule:
PERIOD OF EMPLOYMENT PORTION OF AWARD VESTED
Prior to the second anniversary date of the Award 0%
On or after the second anniversary date, but prior
to the third anniversary date of the Award 20%
On or after the third anniversary date, but prior
to the fourth anniversary date of the Award 40%
On or after the fourth anniversary date, but prior
to the fifth anniversary date of the Award 60%
On or after the fifth anniversary date, but prior
to the sixth anniversary date of the Award 80%
On or after the sixth anniversary date of the Award 100%
(ii) Waiver of Vesting Schedule. Notwithstanding the
provisions of Section 7(d)(i) hereof, with respect to any
Key Employee or group of Key Employees, the Committee may
elect to waive or accelerate the vesting schedule set forth
in Section 7(d)(i) hereof, in whole or in part, at any time
at or after the time an Award is granted.
(iii) Death, Disability and Retirement. Notwithstanding
the provisions of Section 7(d)(i) hereof, upon a Key
Employee's death, Total Disability or retirement on or after
reaching the age of 62, shares of Restricted Stock shall
vest on a pro rata basis, comparing the number of years from
the date of the Award to the date of death, Total Disability
or retirement to six years. Shares of Restricted Stock
which do not so vest shall be forfeited to the Company.
(iv) Termination of Employment Following a Change in
Control. Notwithstanding the provisions of Section 7(d)(i)
hereof, if following a Change in Control, a Key Employee's
employment is terminated without Cause or there is a
Constructive Termination Without Cause, all shares of
Restricted Stock held by that Key Employee shall become
immediately vested.
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(e) RESTRICTIONS.
Until shares of Restricted Stock have vested in accordance
with Section 7(d) hereof, an Award shall be subject to the
following restrictions:
(i) Nontransferability. Except as otherwise required
by law, Restricted Stock which has not vested may not be
sold, assigned, exchanged, transferred, pledged,
hypothecated or otherwise disposed of, except to the
Company as provided herein.
(ii) Other Restrictions. The Committee may impose such
other restrictions on any Award as it may deem advisable,
including without limitation, stop-transfer orders and
other restrictions set forth in the terms of the Award
Agreement or as the Committee may deem advisable under
the rules and regulations, and other requirements of the
Securities and Exchange Commission, and any applicable
federal or state securities or other laws.
SECTION 8. MISCELLANEOUS.
(a) AWARDS NOT CONSIDERED COMPENSATION. No Award made
under the Plan shall be deemed salary or compensation for
the purpose of computing benefits under any employee benefit
plan or other arrangement of any Participating Company for
the benefit of its employees unless the Company shall
determine otherwise.
(b) ABSENCES. Absence on leave approved by a duly
constituted officer of the Company shall not be considered
interruption or termination of employment for any purposes
of the Plan; provided, however, that no Award may be granted
to an employee while he or she is absent on leave.
(c) DELIVERY TO PERSONS OTHER THAN KEY EMPLOYEE. If
the Committee finds that shares of Restricted Stock are to
be delivered under the Plan to a Key Employee who is unable
to care for his or her affairs because of illness or
accident, then any payment due him or her (unless a prior
claim therefor has been made by a duly appointed legal
representative) may, if the Committee so directs, be paid to
his or her spouse, a child, a 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 delivery. Any
such delivery shall be a complete discharge of the liability
of the Company therefor.
(d) PLAN COPIES. Copies of the Plan and all
amendments, administrative rules and procedures and
interpretations shall be made available to all Key Employees
at all reasonable times at the Company's headquarters.
(e) WITHHOLDING TAXES. The Company may withhold any
taxes in connection with the Plan that the Company
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determines it is required to withhold under the laws and
regulations of any governmental authority, whether federal,
state or local and whether domestic or foreign, including,
without limitation, taxes in connection with the delivery of
shares of Restricted Stock or the vesting of Restricted
Stock. A Key Employee may elect to satisfy such withholding
requirements either by (i) delivery to the Company of a
certified check prior to the delivery of shares of
Restricted Stock which are vested pursuant to Section 7
hereof, (ii) instructing the Company to retain a sufficient
number of shares of Stock to cover the withholding
requirements, or (iii) instructing the Company to satisfy
the withholding requirements from the Key Employee's salary.
(F) GOVERNING LAW. The Plan and all rights hereunder
shall be governed by and construed in accordance with the
law as of the State of New York, without giving effect to
its rules on conflicts of law.
(g) KEY EMPLOYEE COMMUNICATIONS. All elections,
designations, requests, notices, instructions and other
communications from a Key Employee or other person to the
Committee required or permitted under the Plan shall be in
such form as is prescribed from time to time by the
Committee and shall be mailed by first class or delivered to
such location as shall be specified by the Committee.
(h) BINDING ON SUCCESSORS. The terms of the Plan
shall be binding upon the Company and its successors and
assigns.
(i) CAPTIONS. Captions preceding the sections and
clauses hereof are inserted solely as a matter of
convenience and in no way define or limit the scope or
intent of any provisions hereof.
(j) SEVERABILITY. Whenever possible, each provision
of the Plan shall be interpreted in such manner as to be
effective and valid under applicable law. If any provision
of the Plan or the application thereof to any person or
circumstances is prohibited by or invalid under applicable
law, such provision shall be ineffective to the minimal
extent of such prohibition or invalidity without
invalidating the remainder of such provision or the
remaining provisions of the Plan or the application of such
provision to other persons or circumstances.
(k) DURATION, AMENDMENT, AND TERMINATION. The Plan
shall continue in effect until terminated by the Board The
Board may at any time amend or terminate this Plan as of any
date specified in a resolution adopted by the Board. The
Plan may also be amended by the Committee, provided that all
such amendments are reported to the Board. Amendments may
be made without stockholder approval except as required to
satisfy applicable law or stock exchange requirements. No
amendment of the Plan may affect an Award theretofore
granted under the Plan without the written consent of the
Key Employee affected. No Award may be granted after this
Plan has terminated. After the Plan has terminated, the
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functions of the Committee shall be limited to supervising
the administration of Awards previously granted.
Termination of the Plan shall not affect any Award
previously granted.
