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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 2000
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------
U.S. ENERGY SYSTEMS, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 52-1216347
- -------------------------------- --------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
515 N. FLAGLER DRIVE, SUITE 702, W. PALM BEACH, FLORIDA 33401
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
1996 STOCK OPTION PLAN
1997 STOCK OPTION PLAN
1998 EXECUTIVE INCENTIVE COMPENSATION PLAN
- --------------------------------------------------------------------------------
(FULL TITLES OF THE PLANS)
-----------------
SEYMOUR J. BEDER
CHIEF FINANCIAL OFFICER
U.S. ENERGY SYSTEMS, INC.
515 N. FLAGLER DRIVE, SUITE 702
W. PALM BEACH, FLORIDA 33401
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(NAME AND ADDRESS OF AGENT FOR SERVICE)
(561) 820-9779
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TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE
COPY TO:
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LISA CARSTARPHEN, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------- ------------------------ ----------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value ..... 3,460,000 (2) $6.25 $13,255,875 $3,500
- ---------------------------------- ------------------------ ----------------------- --------------------- ----------------------
================================== ======================== ======================= ===================== ======================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee which
was computed in accordance with Rule 457(h) on the basis of (i) the actual
price of 904,500 options granted under the Registrant's 1996 Stock Option
Plan (561,000 shares at $2.50; 6,000 shares at $3.625; 80,000 shares
at $3.875; and 257,500 shares at $4.00), (ii) the actual price of 253,000
options granted under the Registrant's 1997 Stock Option Plan (10,000
shares at $2.00; 145,000 shares at $2.031; and 98,000 shares at $2.125);
(iii) the actual price of 1,259,450 options granted under the Registrant's
1998 Executive Incentive Compensation Plan (40,000 shares at $2.25; 5,000
shares at $2.375; 415,500 shares at $2.50; 678,150 shares at $2.875; 46,800
shares at $2.938 and 74,000 shares at $3.00); and (ii) an assumed price of
$6.25 per share (based on the average of the high and low sale price of the
Common Stock on February 22, 2000 as reported on the Nasdaq SmallCap
Market) with respect to 1,043,050 shares of Common Stock subject to future
grants of options under the Plans.
(2) Excludes 40,000 shares of Common Stock covered by the 1996 Stock Option
Plan, which were previously registered for resale on Form S-3 (registration
no. 333-36307).
<PAGE> 2
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant hereby incorporates by reference into this Registration
Statement the following documents or portions thereof as indicated:
(a) the Registrant's Annual Report on Form 10-KSBA for the fiscal year
ended January 31, 1999;
(b) the Registrant's Quarterly Reports on Form 10-QSB for the fiscal
quarters ended April 30, July 31 and October 31, 1999;
(c) all other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") since
the end of fiscal year 1999;
(d) the description of the Common Stock contained in the Registrant's
Registration Statement on Form 8-A 12G dated November 26, 1996; and
(e) the Registrant's Certificate of Incorporation, as amended, as filed in
the Registrant's Registration Statement on Form SB-2 dated
February 16, 2000.
In addition, all documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein, or in a subsequently filed document incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation exculpates directors from
personal liability to the fullest extent permitted by Section 102(b)(7) of the
Delaware General Corporation Law. This provision provides that a corporation may
eliminate or limit the personal liability of a director to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company's Certificate of Incorporation and Bylaws provide that the
Registrant shall indemnify, to the fullest extent authorized by the Delaware
General Corporation Law, each person who is involved in any litigation or other
proceeding because he or she is or was a director or officer of the Company
against all expense, loss or liability in connection therewith.
II-1
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Section 145 of the Delaware General Corporation Law permits a
corporation to indemnify any director or officer of the corporation against
expenses (including attorneys' fees), judgements, fines and amounts paid in
settlements actually and reasonably incurred in connection with any action, suit
or proceeding brought by reason of the fact that such person is or was a
director or officer of the corporation, if such person acted in good faith and
in a manner that he or she reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, if he or she had no reason to believe his or her conduct was
unlawful. In a derivative action indemnification may be made only for expenses
actually and reasonably incurred by any director or officer in connection with
the defense or settlement of an action or suit, if such person has acted in good
faith and in a manner that he or she reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification shall
be made if such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which the action or suit was
brought shall determine upon application that the defendant is reasonably
entitled to indemnification for such expenses despite such adjudication of
liability. The right to indemnification includes the right to be paid expenses
incurred in defending any proceeding in advance of its final disposition upon
the delivery to the corporation of an undertaking, by or on behalf of the
director or officer, to repay all amounts so advanced if it is ultimately
determined that such director or officer is not entitled to indemnification.
The Company has directors' and officers' liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS
See "Exhibit Index" on page II-6 below.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
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(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Act, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
West Palm Beach, State of Florida on February 21, 2000.
U.S. ENERGY SYSTEMS, INC.
By: /s/ LAWRENCE I. SCHNEIDER
--------------------------------
Lawrence I. Schneider
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Lawrence I. Schneider and Seymour
J. Beder, and each of them, his true and lawful attorney-in-fact, acting alone,
with full powers of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including any post-effective amendments, to this Registration Statement, and to
file the same, with exhibits thereto, and other documents to be filed in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact or his substitute,
acting alone, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
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SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ THEODORE ROSEN Chairman February 21, 2000
- ------------------------------------------------ of the Board
Theodore Rosen
/s/ LAWRENCE I. SCHNEIDER
- ------------------------------------------------ President and Chief Executive Officer February 21, 2000
Lawrence I. Schneider (Principal Executive Officer)
/s/ SEYMOUR J. BEDER Chief Financial Officer February 21, 2000
- ------------------------------------------------ (Principal Financial and
Seymour J. Beder Accounting Officer)
/s/ HOWARD NEVINS Executive Vice President and February 21, 2000
- ------------------------------------------------ Director
Howard Nevins
/s/ HENRY SCHNEIDER Vice President and Director February 21, 2000
- ------------------------------------------------
Henry Schneider
</TABLE>
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<TABLE>
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SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ ASHER E. FOGEL Director February 21, 2000
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Asher E. Fogel
/s/ ALLEN J. ROTHMAN Director February 21, 2000
- ------------------------------------------------
Allen J. Rothman
/s/ EVAN EVANS Director February 21, 2000
- ------------------------------------------------
Evan Evans
Director February 21, 2000
/s/ RICHARD T. BRANDT II
- ------------------------------------------------
Richard T. Brandt II
</TABLE>
II-5
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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5.1 -- Opinion of Greenberg Traurig, P.A.
10.1 -- 1996 Stock Option Plan
10.2 -- 1997 Stock Option Plan
10.3 -- 1998 Executive Incentive Compensation PlaN
23.1 -- Consent of Richard A. Eisner & Company, LLP
23.2 -- Consent of Greenberg Traurig, P.A. (contained in its
opinion filed as Exhibit 5.1 hereto)
24.1 -- Power of Attorney is included in the Signatures section
of this Registration Statement.
II-6
<PAGE> 1
EXHIBIT 5.1
February 22, 2000
U.S. Energy Systems, Inc.
515 N. Flagler Drive, Suite 707
W. Palm Beach, Florida 33401
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
On the date hereof, U.S. Energy Systems, Inc., a Delaware corporation
(the "Company"), sent for filing with the Securities and Exchange Commission a
Registration Statement on Form S-8 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to the offering and sale by the Company of up to 3,460,000 shares of the
Company's Common Stock, par value $0.01 per share (the "Common Stock") to be
granted under the Company's (i) 1996 Stock Option Plan (the "1996 Plan"), (ii)
1997 Stock Option Plan (the "1997 Plan") or (iii) 1998 Executive Incentive
Compensation Plan (the "1998 Plan," and together with the 1996 Plan and the 1997
Plan, the "Plans"). We have acted as special counsel to the Company in
connection with the preparation and filing of the Registration Statement.
In connection therewith, we have examined and relied upon the original
or a copy, certified to our satisfaction, of (i) the Certificate of
Incorporation and Bylaws of the Company, each as amended to date; (ii) records
of corporate proceedings of the Company, authorizing the Plans, any amendments
thereto, and the preparation of the Registration Statement and related matters;
(iii) the Registration Statement and exhibits thereto; (iv) the Plans; and (v)
such other documents and instruments as we have deemed necessary for the
expression of the opinions herein contained. In making the foregoing
examinations, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals, and the conformity
to original documents of all documents submitted to us as certified or
photostatic copies. As to various questions of fact material to this opinion, we
have relied, to the extent we deem reasonably appropriate, upon representations
or certificates of officers or directors of the Company and upon documents,
records and instruments furnished to us by the Company, without independently
checking or verifying the accuracy of such documents, records and instruments.
Based upon the foregoing examination, we are of the opinion that,
assuming that (i) the Company maintains an adequate number of authorized and
unissued shares of Common Stock available for issuance to those persons who
exercise Options granted under the Plans, (ii) the consideration for shares of
Common Stock issued pursuant to such Options is actually received by the Company
as provided in the Plans, and (iii) that the shares of Common Stock will be
issued in accordance with the terms of the Plans, the shares of Common Stock
issued pursuant to the exercise of Options granted under the Plans will be duly
and validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
<PAGE> 2
Very truly yours,
/s/ Greenberg Traurig, P.A.
------------------------------------------
GREENBERG TRAURIG, P.A.
<PAGE> 1
EXHIBIT 10.1
U.S. ENERGY SYSTEMS, INC.
1996 STOCK OPTION PLAN
1. STATEMENT OF PURPOSE. This 1996 Stock Option Plan (the "Plan") is intended
to provide certain employees, directors (both employee and non-employee
directors), independent contractors and consultants of U.S. Energy Systems,
Inc., a Delaware corporation (the "Company"), and its subsidiaries with an added
incentive to provide their services to the Company and to induce them to exert
their maximum effort toward the Company's success through the encouragement of
stock ownership in the Company by such persons.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee"), appointed by the Board of Directors, consisting of two or more
outside directors (each of whom qualifies as an "outside director" under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and as a
"non-employee director" under Rule I 6b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), whose interpretation of the terms and
provisions of the Plan shall be final and conclusive. The selection of
employees, directors (both employee and non-employee directors), independent
contractors and consultants for participation in the Plan and all decisions
concerning the timing, pricing and amount of any grant or award under the Plan
shall be made solely by the Committee. In the event a Committee of two or more
qualifying directors cannot be formed, the Plan shall be administered by the
Board of Directors. No member of the Board of Directors or of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any option granted or option agreement entered into hereunder.
The Committee or Board of Directors, as the case may be, may authorize an
executive officer of the Company to execute a stock option agreement on behalf
of the Company and in accordance with the requirements of this Plan and the
specific instructions of the Committee or Board of Directors.
3. ELIGIBILITY. Options shall be granted only to employees (including officers)
and directors (both employee and non-employee directors) of the Company and it
subsidiaries, as well as independent contractors and consultants performing
services for the Company and it subsidiaries (collectively, the "Optionees"),
selected initially and from time to time by the Committee on the basis of their
importance to the business of the Company or its subsidiaries.
4. GRANTING OF OPTIONS. Subject to Section 10 of the Plan, the Company may
grant to Optionees from time to time options to purchase an aggregate of up to
1,000,000 shares of the Company's common stock, par value $.0l per share (the
"Common Stock"). In the event that an option expires or is terminated or
canceled unexercised as to any shares, such released shares may again be
optioned (including a grant in substitution for a canceled option). Shares
subject to options may be made available from authorized and unissued shares of
Common Stock. Options granted under the Plan shall not constitute "incentive
stock options" for purposes of Section 422 of the Code.
The maximum number of shares of Common Stock with respect to which options may
be granted during any calendar year to any person shall be 500,000. All options
granted pursuant to the Plan may be evidenced by agreements, to be executed by
the Company and by the Optionee, in such form or forms as the Committee shall
from time to time determine. option agreements covering options granted from
time to time or at the same time need not contain provisions specified in the
Plan; provided, however, that all such option agreements shall comply with all
terms and provisions of the Plan. The date of grant of an option under this Plan
shall be the date as of which the Committee approves the grant.
5. OPTION PRICE. The option price (the "Option Price") shall be determined by
the Committee and, subject to the provisions of Section 10 hereof, shall be not
less than the fair market value, as determined by the Committee at the time the
option is granted, of the shares of Common Stock subject to the option.
<PAGE> 2
6. DURATION OF OPTIONS, INCREMENTS AND EXTENSIONS. Subject to the provisions of
Section 8 hereof, each option shall be for such term of not more than ten (10)
years, as shall be determined by the Committee at the time the option is
granted. Each option shall become exercisable one (1) year after the date of its
grant with respect to 50% of the total number of shares subject to the option,
and two (2) years after the date of its grant with respect to the remaining 50%
of the total number of shares subject to the option. Notwithstanding the
foregoing, the Committee may in its discretion (i) specifically provide for
another time or times of exercise at the time the option is granted; (ii)
accelerate the exercisability of any option subject to such terms and conditions
as the Committee deems necessary and appropriate; or (iii) at any time prior to
the expiration or termination of any option previously granted, extend the term
of any option (including such options held by officers) for such additional
period as the Committee in its discretion shall determine. In no event, however,
shall the aggregate option period with respect to any option, including the
original term of the option and any extensions thereof, exceed ten (10) years.
Subject to the foregoing and the other provisions of this Plan, all or any part
of the shares to which the right to purchase has accrued may be purchased at the
time of such accrual or at any time or times thereafter during the option
period.
In the event of a Change in Control (as defined below), all outstanding
options shall become immediately exercisable. Notwithstanding any other
provisions hereunder, during the period of 30 days after a Change in Control,
each Optionee shall have the right to require the Company to purchase from such
Optionee any option granted under this Plan at a purchase price equal to the
excess of fair market value per share over the option price multiplied by the
number of option shares specified by the Optionee for purchase in a written
notice to the Company, attention of the Secretary. A "Change in Control" shall
be deemed to occur if any person (i) shall acquire direct or indirect control of
at least 50% of the outstanding voting stock, or (ii) has the power (whether
such power arises as a result of the ownership of capital stock by contract or
otherwise) or the ability to elect or cause the election of directors consisting
at the time of such election of a majority of the Company's Board of Directors.
As used herein, "person" shall mean any person, corporation, partnership, joint
venture or other entity or any group (as such term is defined in Section 13(d)
of the Exchange Act, and the rules promulgated thereunder). For purposes of this
paragraph. "fair market value per share" shall mean the average of the highest
sales price per share of the Common Stock as quoted on The Nasdaq SmallCap
Market, The Nasdaq National Market or by the principal exchange upon which the
Common Stock is listed, on each of the five trading days immediately preceding
the date on which such individual so notifies the Company. The amount payable to
each such individual by the Company shall be in cash or by certified check and
shall be reduced by any taxes required to be withheld.
7. EXERCISE OF OPTION. As a condition to the exercise of any option, the Quoted
Price (as defined below) per share of Common Stock on the date of exercise must
be equal to or exceed the Option Price. An option may be exercised by giving
written notice to the Company, attention of the Secretary, specifying the number
of shares to be purchased, accompanied by the full purchase price for the shares
to be purchased (i) in cash, (ii) by check, (iii) to the extent permitted by
applicable law by a promissory note in a form specified by the Company and
payable to the Company no later than 15 business days after the date of exercise
of the option, (iv) if so approved by the Committee, by shares of Common Stock
of the Company, (v) by delivering a written direction to the Company that the
option be exercised pursuant to a "cashless" exercise/sale procedure (pursuant
to which funds to pay for exercise of the option are delivered to the Company by
a broker upon receipt of stock certificates from the Company) or a cashless
exercise/loan procedure (pursuant to which the Optionee would obtain a margin
loan from a broker to fund the exercise) through a licensed broker acceptable to
the Company whereby the stock certificate or certificates for the shares for
which the option is exercised will be delivered to such broker as the agent for
the individual exercising the option and the broker will deliver to the Company
cash (or cash equivalents acceptable to the Company) equal to the option price
for the shares of Common Stock purchased pursuant to the exercise of the option
plus the amount (if any) of federal and other taxes that the Company may. in its
judgment, be required to withhold with respect to the exercise of the option,
(vi) by delivering a written direction to the Company in lieu of payment in cash
by the Optionee, instructing the Company to withhold from the shares otherwise
issuable upon the exercise of the Option that number of shares which have an
aggregate Quoted Price equal to the aggregate cash Option Price of the shares
being purchased, or (vii) by a combination of these methods of payment. The
"Quoted Price" and the per share value of Common Stock for purposes of paying or
off-setting the Option Price in accordance with the immediately preceding
sentence shall equal the closing selling price per share of Common Stock on the
business day immediately prior to the exercise date.
2
<PAGE> 3
At any time of any exercise of any option, the Company may, if it shall
determine it necessary or desirable for any reason, require the Optionee (or his
or her heirs, legatees or legal representative, as the case may be), as a
condition upon the exercise thereof, to deliver to the Company a written
representation of present intention to purchase the shares for investment and
not for distribution. In the event such representation is required to be
delivered, an appropriate legend may be placed upon each certificate delivered
to the Optionee (or his or her heirs, legatees or legal representative, as the
case may be) upon his or her exercise of part or all of the option and a stop
transfer order may be placed with the transfer agent. Each option shall also be
subject to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the shares
subject to the option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of or in connection with, the issuance or purchase
of the shares thereunder, the option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company
in its sole discretion. The Company shall not be obligated to take any
affirmative action in order to cause the exercisability or vesting of an option
or to cause the exercise of an option or the issuance of shares pursuant thereto
to comply with any law or regulation of any governmental authority.
At the time of the exercise of any option, the Committee may require,
as a condition of the exercise of such option, the Optionee (i) to pay the
Company an amount equal to the amount of tax the Company may be required to
withhold to obtain a deduction for federal income tax purposes as a result of
the exercise of such option by the Optionee, or (ii) to make such other
arrangements with the Company which would enable the Company to pay such
withholding tax, including, without limitation, holding back a number of shares
issuable upon exercise of the option equal to the amount of such withholding
tax, or permitting the Optionee to deliver a promissory note in a form specified
by the Committee or withhold taxes from other compensation payable to the
Optionee by the Company, or (iii) a combination of the foregoing.
8. TERMINATION OF RELATIONSHIP AND EXERCISE THEREAFTER. In the event the
employment, directorship, contractor or consulting relationship between the
Company and an Optionee is terminated for any reason other than death, permanent
disability or retirement, such Optionee's options shall expire and all rights to
purchase shares pursuant thereto shall terminate immediately. The Committee may,
in its sole discretion, permit any option to remain exercisable for such period
after such termination as the Committee may prescribe, but in no event after the
expiration date of the option. Unless otherwise determined by the Committee,
temporary absence from employment or as a member of the Board of Directors, an
independent contractor or a consultant because of illness, vacation, approved
leaves of absence and transfers of employment among the Company and its
subsidiaries, shall not be considered to terminate employment, directorship or
contract or consulting relationship or to interrupt continuous employment,
directorship or contract or consulting relationship.
In the event of termination of said relationship because of death,
permanent disability (as that term is defined in Section 22(e)(3) of the Code,
as now in effect or as subsequently amended), or retirement, the option may be
exercised in full, without regard to any installments or vesting schedule
established under Section 6 hereof, by the Optionee or, if he or she is not
living, by his or her heirs, legatees or legal representatives (as the case may
be) during its specific term prior to three years after the date of death,
permanent disability or retirement, or such longer period as the Committee may
prescribe, but in no event after the expiration date of the option.
9. NON-TRANSFERABILITY. During the lifetime of the Optionee, options shall be
exercisable only by the Optionee, and options shall not be assignable or
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution, or pursuant to a qualified domestic relations order as defined
by the Code, or Title I of the Employment Retirement Income Security Act of
1974, as amended, or the rules thereunder.
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10. ADJUSTMENTS. The number of shares subject to the Plan and options granted
under the Plan shall be adjusted as follows: (i) in the event that the number of
outstanding shares of Common Stock is changed by any stock dividend, stock split
or combination of shares, the number of shares subject to the Plan and to
options granted hereunder shall be proportionately adjusted; (ii) in the event
of any merger, consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted, on an equitable basis,
for each share of Common Stock then subject to the Plan, whether or not at the
time subject to outstanding options, the number and kind of shares of stock or
other securities to which the holders of shares of Common Stock will be entitled
pursuant to the transaction; and (iii) in the event of any other relevant change
in the capitalization of the Company, an equitable adjustment shall be made in
the number of shares of Common Stock then subject to the Plan, whether or not
then subject to outstanding options. In the event of any such adjustment, the
purchase price per share shall be proportionately adjusted. The grant of an
option pursuant to the Plan shall not affect or limit in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure or to merge, consolidate, dissolve
or liquidate, or to sell or transfer all or any part of its business or capital.
11. AMENDMENT OF PLAN. The Board of Directors may amend or discontinue the Plan
at any time. However, no amendment or discontinuance shall be made without the
requisite approval of the shareholders of the Company if such approval is
required as a condition to the Plan continuing to comply with the provisions of
Section 162(m) of the Code.
12. CASH PROCEEDS. Any cash proceeds received by the Company from the sale of
shares pursuant to the options granted under the Plan shall be used for general
corporate purposes.
13. NO IMPAIRMENT OF RIGHTS. Nothing contained in the Plan or any option granted
pursuant thereto shall confer upon any Optionee any right to be continued in the
employment of the Company or its subsidiaries or to be continued as an
independent contractor or a consultant to the Company or its subsidiaries, or
interfere in any way with the right of the Company or its subsidiaries to
terminate such employment or contract or consulting relationship and/or to
remove any Optionee who is a director from service on the Board of Directors of
the Company or its subsidiaries at any time in accordance with the Company's
By-Laws or any provisions of applicable law.
14. COMPLIANCE WITH RULE 16B-3. The Plan is intended to comply with all
provisions of Rule 1 6b-3 or its successors promulgated under the Exchange Act
necessary to secure an exemption from Section 16(b) of the Exchange Act for
participating officers and directors, regardless of whether such provisions are
set forth in the Plan. To the extent any provision of the Plan or action of the
Plan administrators fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Plan administrators.
15. SEVERABILITY. If any provision of the Plan or any option agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
16. GOVERNING LAW. The validity and construction of this Plan and the
instruments evidencing the options granted hereunder shall be governed by the
laws of the State of Florida (excluding its choice of law rules).
17. EFFECTIVE DATE. On December 16, 1996, the Plan was adopted and authorized by
the Board of Directors. The Plan shall be effective as of the date of adoption
by the Board of Directors.
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EXHIBIT 10.2
U.S. ENERGY SYSTEMS, INC.
--------------------------
1997 STOCK OPTION PLAN
--------------------------
1. STATEMENT OF PURPOSE. This 1997 Stock Option Plan (the "Plan") is
intended to provide certain employees, directors (both employee and non-employee
directors), independent contractors and consultants of U.S. Energy Systems,
Inc., a Delaware corporation (the "Company"), and its subsidiaries with an added
incentive to provide their services to the Company and to induce them to exert
their maximum effort toward the Company's success through the encouragement of
stock ownership in the Company by such persons.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee"), appointed by the Board of Directors, consisting of two or more
outside directors (each of whom qualifies as a "non-employee director" under
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), whose interpretation of the terms and provisions of the Plan shall be
final and conclusive. The selection of employees, directors (both employee and
non-employee directors), independent contractors and consultants for
participation in the Plan and all decisions concerning the timing, pricing and
amount of any grant or award under the Plan shall be made solely by the
Committee. In the event a Committee of two or more qualifying directors cannot
be formed, the Plan shall be administered by the Board of Directors. No member
of the Board of Directors or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
or option agreement entered into hereunder.
3. ELIGIBILITY. Options shall be granted only to employees (including
officers) and directors (employee and non-employee directors) of the Company and
it subsidiaries, as well as independent contractors and consultants performing
services for the Company and it subsidiaries (collectively, the "Optionees"),
selected initially and from time to time by the Committee on the basis of their
importance to the business of the Company or its subsidiaries.
4. GRANTING OF OPTIONS. Subject to Section 10 of the Plan, the Company
may grant to Optionees from time to time options to purchase an aggregate of up
to 1,000,000 shares of the Company's common stock, par value $.01 per share (the
"Common Stock"). In the event that an option expires or is terminated or
canceled unexercised as to any shares, such released shares may again be
optioned (including a grant in substitution for a canceled option). Shares
subject to options may be made available from authorized and unissued shares of
Common Stock. Options granted under the Plan shall not constitute "incentive
stock options" for purposes of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). All options granted pursuant to the Plan shall be
evidenced by agreements, to be executed by the Company and by the Optionee, in
such form or forms as the Committee shall from time to time determine. Option
agreements covering options granted from time to time or at the same time need
not contain provisions specified in the Plan; provided, however, that all such
option agreements shall comply with all terms and provisions of the Plan. The
date of grant of an option under this Plan shall be the date as of which the
Committee approves the grant.
5. OPTION PRICE. The option price shall be determined by the Committee
and, subject to the provisions of Section 10 hereof, shall be not less than the
fair market value, as determined by the Committee at the time the option is
granted, of the shares of Common Stock subject to the option.
6. DURATION OF OPTIONS, INCREMENTS AND EXTENSIONS. Subject to the
provisions of Section 8 hereof, each option shall be for such term of not less
than five years nor more than 10 years, as shall be determined by the Committee
at the time the option is granted. Each option shall become exercisable with
respect to 25% of the total number of shares subject to the option 12 months
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after the date of its grant and with respect to each additional 25% at the end
of each 12-month period thereafter during the succeeding three years.
Notwithstanding the foregoing, the Committee may in its discretion (i)
specifically provide for another time or times of exercise at the time the
option is granted; (ii) accelerate the exercisability of any option subject to
such terms and conditions as the Committee deems necessary and appropriate; or
(iii) at any time prior to the expiration or termination of any option
previously granted, extend the term of any option (including such options held
by officers) for such additional period as the Committee in its discretion shall
determine. In no event, however, shall the aggregate option period with respect
to any option, including the original term of the option and any extensions
thereof, exceed 10 years. Subject to the foregoing and the other provisions of
this Plan, all or any part of the shares to which the right to purchase has
accrued may be purchased at the time of such accrual or at any time or times
thereafter during the option period.
In the event of a Change in Control (as defined below), all outstanding
options shall become immediately exercisable. Notwithstanding any other
provisions hereunder, during the period of 30 days after a Change in Control,
each Optionee shall have the right to require the Company to purchase from such
Optionee any option granted under this Plan at a purchase price equal to the
excess of fair market value per share over the option price multiplied by the
number of option shares specified by the Optionee for purchase in a written
notice to the Company, attention of the Secretary. A "Change in Control" shall
be deemed to occur if any person (i) shall acquire direct or indirect control of
at least 50% of the outstanding voting stock, or (ii) has the power (whether
such power arises as a result of the ownership of capital stock by contract or
otherwise) or the ability to elect or cause the election of directors consisting
at the time of such election of a majority of the Company's Board of Directors.
As used herein, "person" shall mean any person, corporation, partnership, joint
venture or other entity or any group (as such term is defined in Section 13(d)
of the Exchange Act, and the rules promulgated thereunder). For purposes of this
paragraph, "fair market value per share" shall mean the average of the highest
sales price per share of the Common Stock as quoted on the Nasdaq SmallCap
Market, or by the principal exchange upon which the Common Stock is listed, on
each of the five trading days immediately preceding the date on which such
individual so notifies the Company. The amount payable to each such individual
by the Company shall be in cash or by certified check and shall be reduced by
any taxes required to be withheld.
7. EXERCISE OF OPTION. As a condition to the exercise of any option,
the Quoted Price (as defined below) per share of Common Stock on the date of
exercise must be equal to or exceed the option price referred to in Section 5
hereof. An option may be exercised by giving written notice to the Company,
attention of the Secretary, specifying the number of shares to be purchased,
accompanied by the full purchase price for the shares to be purchased (i) in
cash, (ii) by check, (iii) to the extent permitted by applicable law by a
promissory note in a form specified by the Company and payable to the Company no
later than 15 business days after the date of exercise of the option, (iv) if so
approved by the Committee, by shares of Common Stock of the Company, (v) by
delivering a written direction to the Company that the option be exercised
pursuant to a "cashless" exercise/sale procedure (pursuant to which funds to pay
for exercise of the option are delivered to the Company by a broker upon receipt
of stock certificates from the Company) or a cashless exercise/loan procedure
(pursuant to which the Optionee would obtain a margin loan from a broker to fund
the exercise) through a licensed broker acceptable to the Company whereby the
stock certificate or certificates for the shares for which the option is
exercised will be delivered to such broker as the agent for the individual
exercising the option and the broker will deliver to the Company cash (or cash
equivalents acceptable to the Company) equal to the option price for the shares
of Common Stock purchased pursuant to the exercise of the option plus the amount
(if any) of federal and other taxes that the Company may, in its judgment, be
required to withhold with respect to the exercise of the option or (vi) by a
combination of these methods of payment. The "Quoted Price" and the per share
value of Common Stock for purposes of paying the option price in accordance with
the immediately preceding sentence shall equal the closing selling price per
share of Common Stock one business day prior to the exercise date.
At any time of any exercise of any option, the Company may, if it shall
determine it necessary or desirable for any reason, require the Optionee (or his
or her heirs, legatees or legal representative, as the case may be), as a
condition upon the exercise thereof, to deliver to the Company a written
representation of present intention to purchase the shares for investment and
not for distribution. In the event such representation is required to be
delivered, an appropriate legend may be placed upon each certificate delivered
to the Optionee (or his or her heirs, legatees or legal representative, as the
case may be) upon his or her exercise of part or all of the option and a stop
transfer order may be placed with the transfer agent. Each option shall also be
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subject to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the shares
subject to the option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of or in connection with, the issuance or purchase
of the shares thereunder, the option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company
in its sole discretion. The Company shall not be obligated to take any
affirmative action in order to cause the exercisability or vesting of an option
or to cause the exercise of an option or the issuance of shares pursuant thereto
to comply with any law or regulation of any governmental authority.
At the time of the exercise of any option, the Committee may require,
as a condition of the exercise of such option, the Optionee (i) to pay the
Company an amount equal to the amount of tax the Company may be required to
withhold to obtain a deduction for federal income tax purposes as a result of
the exercise of such option by the Optionee, or (ii) to make such other
arrangements with the Company which would enable the Company to pay such
withholding tax, including, without limitation, holding back a number of shares
issuable upon exercise of the option equal to the amount of such withholding
tax, or permitting the Optionee to deliver a promissory note in a form specified
by the Committee or withhold taxes from other compensation payable to the
Optionee by the Company, or (iii) a combination of the foregoing.
8. TERMINATION OF RELATIONSHIP AND EXERCISE THEREAFTER. In the event
the employment, directorship, contractor or consulting relationship between the
Company and an Optionee is terminated for any reason other than death, permanent
disability or retirement, such Optionee's options shall expire and all rights to
purchase shares pursuant thereto shall terminate immediately. The Committee may,
in its sole discretion, permit any option to remain exercisable for such period
after such termination as the Committee may prescribe, but in no event after the
expiration date of the option. Unless otherwise determined by the Committee,
temporary absence from employment or as a member of the Board of Directors, an
independent contractor or a consultant because of illness, vacation, approved
leaves of absence and transfers of employment among the Company and its
subsidiaries, shall not be considered to terminate employment, directorship or
contract or consulting relationship or to interrupt continuous employment,
directorship or contract or consulting relationship.
In the event of termination of said relationship because of death,
permanent disability (as that term is defined in Section 22(e)(3) of the Code,
as now in effect or as subsequently amended), or retirement, the option may be
exercised in full, without regard to any installments or vesting schedule
established under Section 6 hereof, by the Optionee or, if he or she is not
living, by his or her heirs, legatees or legal representatives (as the case may
be) during its specific term prior to three years after the date of death,
permanent disability or retirement, or such longer period as the Committee may
prescribe, but in no event after the expiration date of the option.
9. NON-TRANSFERABILITY. During the lifetime of the Optionee, options
shall be exercisable only by the Optionee, and options shall not be assignable
or transferable by the Optionee otherwise than by will or by the laws of descent
and distribution, or pursuant to a qualified domestic relations order as defined
by the Code, or Title I of the Employment Retirement Income Security Act of
1974, as amended, or the rules thereunder.
10. ADJUSTMENTS. The number of shares subject to the Plan and options
granted under the Plan shall be adjusted as follows: (i) in the event that the
number of outstanding shares of Common Stock is changed by any stock dividend,
stock split or combination of shares, the number of shares subject to the Plan
and to options granted hereunder shall be proportionately adjusted; (ii) in the
event of any merger, consolidation or reorganization of the Company with any
other corporation or corporations, there shall be substituted, on an equitable
basis, for each share of Common Stock then subject to the Plan, whether or not
at the time subject to outstanding options, the number and kind of shares of
stock or other securities to which the holders of shares of Common Stock will be
entitled pursuant to the transaction; and (iii) in the event of any other
relevant change in the capitalization of the Company, an equitable adjustment
shall be made in the number of shares of Common Stock then subject to the Plan,
whether or not then subject to outstanding options. In the event of any such
adjustment, the purchase price per share shall be proportionately adjusted. The
grant of an option pursuant to the Plan shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or capital.
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11. AMENDMENT OF PLAN. The Board of Directors may amend or discontinue
the Plan at any time. However, no amendment or discontinuance shall be made
without the requisite approval of the shareholders of the Company if such
approval is required for the Plan to comply with the provisions of any
applicable law.
12. CASH PROCEEDS. Any cash proceeds received by the Company from the
sale of shares pursuant to the options granted under the Plan shall be used for
general corporate purposes.
13. NO IMPAIRMENT OF RIGHTS. Nothing contained in the Plan or any
option granted pursuant thereto shall confer upon any Optionee any right to be
continued in the employment of the Company or its subsidiaries or to be
continued as an independent contractor or a consultant to the Company or its
subsidiaries, or interfere in any way with the right of the Company or its
subsidiaries to terminate such employment or contract or consulting relationship
and/or to remove any Optionee who is a director from service on the Board of
Directors of the Company or its subsidiaries at any time in accordance with the
Company's By-Laws or any provisions of applicable law.
14. COMPLIANCE WITH RULE 16B-3. The Plan is intended to comply with all
provisions of Rule 16b-3 or its successors promulgated under the Exchange Act
necessary to secure an exemption from Section 16(b) of the Exchange Act for
participating officers and directors, regardless of whether such provisions are
set forth in the Plan. To the extent any provision of the Plan or action of the
Plan administrators fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Plan administrators.
15. SEVERABILITY. If any provision of the Plan or any option agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
16. GOVERNING LAW. The validity and construction of this Plan and the
instruments evidencing the options granted hereunder shall be governed by the
laws of the State of Delaware (excluding its choice of law rules).
17. EFFECTIVE DATE. The Plan shall be effective as of November 13,
1997.
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EXHIBIT 10.3
U.S. ENERGY SYSTEMS, INC.
1998 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE. The purpose of this 1998 Executive Incentive Compensation
Plan (the "Plan") is to assist U.S. ENERGY SYSTEMS, INC., a Delaware corporation
(the "Company") and its subsidiaries in attracting, motivating, retaining and
rewarding high-quality executives and other employees, officers, Directors and
independent contractors by enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with annual and long term performance incentives to expend their
maximum efforts in the creation of stockholder value. The Plan is also intended
to qualify certain compensation awarded under the Plan for tax deductibility
under Section 162(m) of the Code (as hereafter defined) to the extent deemed
appropriate by the Committee (or any successor committee) of the Board of
Directors of the Company.
2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest, granted to a
Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means Change in Control as defined with
related terms in Section 9 of the Plan.
(g) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist of at
least two directors, and each member of which shall be (i) a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by "non-employee directors" is not then required in
order for exemptions under Rule 16b-3 to apply to transactions under the Plan,
and (ii) an "outside director" within the meaning of Section 162(m) of the Code,
unless administration of the Plan by "outside directors" is not then required in
order to qualify for tax deductibility under Section 162(m) of the Code.
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(j) "Corporate Transaction" means a Corporate Transaction as
defined in Section 9(b)(i) of the Plan.
(k) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(l) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.
(m) "Director" means a member of the Board.
(n) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(o) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Stock, or other periodic payments.
(p) "Effective Date" means the effective date of the Plan, which
shall be June 1, 1998.
(q) "Eligible Person" means each Executive Officer of the Company
(as defined under the Exchange Act) and other officers, Directors and employees
of the Company or of any Subsidiary, and independent contractors with the
Company or any Subsidiary. The foregoing notwithstanding, only employees of the
Company or any Subsidiary shall be Eligible Persons for purposes of receiving
any Incentive Stock Options. An employee on leave of absence may be considered
as still in the employ of the Company or a Subsidiary for purposes of
eligibility for participation in the Plan.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(s) "Executive Officer" means an executive officer of the Company
as defined under the Exchange Act.
(t) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date shall be the closing sale price per share reported on a
consolidated basis for stock listed on the principal stock exchange or market on
which Stock is traded on the date as of which such value is being determined or,
if there is no sale on that date, then on the last previous day on which a sale
was reported.
(u) "Incentive Stock Option" or "ISO" means any Option intended to
be designated as an incentive stock option within the meaning of Section 422 of
the Code or any successor provision thereto.
(v) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(ii) of the Plan.
(w) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.
(x) "Option" means a right granted to a Participant under Section
6(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
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(y) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.
(z) "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.
(aa) "Participant" means a person who has been granted an Award
under the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(bb) "Performance Award" means a right, granted to an Eligible
Person under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.
(cc) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.
(dd) "Preexisting Plans" means the Company's 1997 Stock Option Plan
and 1996 Stock Option Plan.
(ee) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(ff) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act
(gg) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(hh) "Stock Appreciation Rights" or "SAR" means a right granted to
a Participant under Section 6(c) hereof.
(ii) "Subsidiary" means any corporation or other entity in which
the Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities or interests of
such corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by
the Committee; provided, however, that except as otherwise expressly provided in
this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under the
Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.
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(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee, and
not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive and binding on
all persons, including the Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming
rights from or through a Participant, and stockholders. The express grant of any
specific power to the Committee or the Board, and the taking of any action by
the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee or the Board may delegate
to officers or managers of the Company or any subsidiary, or committees thereof,
the authority, subject to such terms as the Committee or the Board shall
determine, (i) to perform administrative functions, (ii) with respect to
Participants not subject to Section 16 of the Exchange Act, to perform such
other functions as the Committee or the Board may determine, and (iii) with
respect to Participants subject to Section 16, to perform such other functions
of the Committee or the Board as the Committee or the Board may determine to the
extent performance of such functions will not result in the loss of an exemption
under Rule 16b-3 otherwise available for transactions by such persons, in each
case to the extent permitted under applicable law and subject to the
requirements set forth in Section 8(d). The Committee or the Board may appoint
agents to assist it in administering the Plan.
(c) LIMITATION OF LIABILITY. The Committee and the Board, and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any executive officer, other
officer or employee of the Company or a Subsidiary, the Company's independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and the Board, and any officer or employee of the
Company or a subsidiary acting at the direction or on behalf of the Committee or
the Board, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.
4. STOCK SUBJECT TO PLAN.
(a) LIMITATION ON OVERALL NUMBER OF SHARES SUBJECT TO AWARDS.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i) 1,500,000 plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised, expire, are forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or any tax withholding with
regard thereto. Any shares of Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury shares. Subject
to adjustment as provided in Section 10(c) hereof, in no event shall the
aggregate number of shares of Stock which may be issued pursuant to ISOs exceed
1,500,000 shares.
(b) APPLICATION OF LIMITATIONS. The limitation contained in Section
4(a) shall apply not only to Awards that are settleable by the delivery of
shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS.
(a) AWARDS UNDER THE PLAN. Awards may be granted under the Plan
only to Eligible Persons. In each fiscal year during any part of which the Plan
is in effect, an Eligible Person may not be granted Awards relating to more than
250,000 shares of Stock, subject to adjustment as provided in Section 10(c),
under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h), 8(b) and 8(c).
In addition, the maximum amount that may be earned as an Annual Incentive Award
or other cash Award in any fiscal year by any one Participant shall be
$2,000,000, and the maximum amount that may be earned as a Performance Award or
other cash Award in respect of a performance period by any one Participant shall
be $5,000,000. (b) AWARDS UNDER PREEXISTING PLANS. Upon approval of the Plan by
stockholders of the Company, as required under Section 10(k) hereof, no further
Awards shall be granted under the Preexisting Plans.
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6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee or the Board may impose on
any Award or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee or the Board shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee or the Board shall retain
full power and discretion to accelerate, waive or modify, at any time, any term
or condition of an Award that is not mandatory under the Plan. Except in cases
in which the Committee or the Board is authorized to require other forms of
consideration under the Plan, or to the extent other forms of consideration must
be paid to satisfy the requirements of Florida law, no consideration other than
services may be required for the grant (but not the exercise) of any Award.
(b) OPTIONS. The Committee and the Board each is authorized to
grant Options to Participants on the following terms and conditions:
(i) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee or
the Board, provided that such exercise price shall not, in the case
of Incentive Stock Options, be less than 100% of the Fair Market
Value of the Stock on the date of grant of the Option and shall
not, in any event, be less than the par value of a share of Stock
on the date of grant of such Option. If an employee owns or is
deemed to own (by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Parent
Corporation and an Incentive Stock Option is granted to such
employee, the option price of such Incentive Stock Option (to the
extent required by the Code at the time of grant) shall be no less
than 110% of the Fair Market Value of the Stock on the date such
Incentive Stock Option is granted.
(ii) TIME AND METHOD OF EXERCISE. The Committee or the Board
shall determine the time or times at which or the circumstances
under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or future
service requirements), the time or times at which Options shall
cease to be or become exercisable following termination of
employment or upon other conditions, the methods by which such
exercise price may be paid or deemed to be paid (including in the
discretion of the Committee or the Board a cashless exercise
procedure), the form of such payment, including, without
limitation, cash, Stock, other Awards or awards granted under other
plans of the Company or any subsidiary, or other property
(including notes or other contractual obligations of Participants
to make payment on a deferred basis), and the methods by or forms
in which Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOS. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the
Code. Anything in the Plan to the contrary notwithstanding, no term
of the Plan relating to ISOs (including any SAR in tandem
therewith) shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be exercised, so as
to disqualify either the Plan or any ISO under Section 422 of the
Code, unless the Participant has first requested the change that
will result in such disqualification. Thus, if and to the extent
required to comply with Section 422 of the Code, Options granted as
Incentive Stock Options shall be subject to the following special
terms and conditions:
(A) the Option shall not be exercisable more than ten
years after the date such Incentive Stock Option is granted;
provided, however, that if a Participant owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock
of the Company or any Parent Corporation and the Incentive Stock
Option is granted to such Participant, the term of the Incentive
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Stock Option shall be (to the extent required by the Code at the
time of the grant) for no more than five years from the date of
grant; and
(B) The aggregate Fair Market Value (determined as of the
date the Incentive Stock Option is granted) of the shares of stock
with respect to which Incentive Stock Options granted under the
Plan and all other option plans of the Company or its Parent
Corporation during any calendar year exercisable for the first time
by the Participant during any calendar year shall not (to the
extent required by the Code at the time of the grant) exceed
$100,000.
(c) STOCK APPRECIATION RIGHTS. The Committee and the Board each is
authorized to grant SAR's to Participants
on the following terms and conditions:
(i) RIGHT TO PAYMENT. A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of stock on the
date of exercise (or, in the case of a "Limited SAR" that may be
exercised only in the event of a Change in Control, the Fair Market
Value determined by reference to the Change in Control Price, as
defined under Section 9(c) hereof), over (B) the grant price of the
SAR as determined by the Committee or the Board. The grant price of
an SAR shall not be less than the Fair Market Value of a share of
Stock on the date of grant except as provided under Section 7(a)
hereof.
(ii) OTHER TERMS. The Committee or the Board shall determine at
the date of grant or thereafter, the time or times at which and the
circumstances under which a SAR may be exercised in whole or in
part (including based on achievement of performance goals and/or
future service requirements), the time or times at which SARs shall
cease to be or become exercisable following termination of
employment or upon other conditions, the method of exercise, method
of settlement, form of consideration payable in settlement, method
by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not a SAR shall be in tandem
or in combination with any other Award, and any other terms and
conditions of any SAR. Limited SARs that may only be exercised in
connection with a Change in Control or other event as specified by
the Committee or the Board, may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee or the Board
may determine. SARs and Limited SARs may be either freestanding or
in tandem with other Awards.
(d) RESTRICTED STOCK. The Committee and the Board each is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be subject
to such restrictions on transferability, risk of forfeiture and
other restrictions, if any, as the Committee or the Board may
impose, which restrictions may lapse separately or in combination
at such times, under such circumstances (including based on
achievement of performance goals and/or future service
requirements), in such installments or otherwise, as the Committee
or the Board may determine at the date of grant or thereafter.
Except to the extent restricted under the terms of the Plan and any
Award agreement relating to the Restricted Stock, a Participant
granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and
the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee or the
Board). During the restricted period applicable to the Restricted
Stock, subject to Section 10(b) below, the Restricted Stock may not
be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.
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(ii) FORFEITURE. Except as otherwise determined by the
Committee or the Board at the time of the Award, upon termination
of a Participant's employment during the applicable restriction
period, the Participant's Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the
Company; provided that the Committee or the Board may provide, by
rule or regulation or in any Award agreement, or may determine in
any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock shall be waived in whole or in part in
the event of terminations resulting from specified causes, and the
Committee or the Board may in other cases waive in whole or in part
the forfeiture of Restricted Stock.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee or the
Board shall determine. If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee
or the Board may require that such certificates bear an appropriate
legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain
physical possession of the certificates, and that the Participant
deliver a stock power to the Company, endorsed in blank, relating
to the Restricted Stock.
(iv) DIVIDENDS AND SPLITS. As a condition to the grant of an
Award of Restricted Stock, the Committee or the Board may require
that any cash dividends paid on a share of Restricted Stock be
automatically reinvested in additional shares of Restricted Stock
or applied to the purchase of additional Awards under the Plan.
Unless otherwise determined by the Committee or the Board, Stock
distributed in connection with a Stock split or Stock dividend, and
other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property
has been distributed.
(e) DEFERRED STOCK. The Committee and the Board each is authorized
to grant Deferred Stock to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:
(i) AWARD AND RESTRICTIONS. Satisfaction of an Award of
Deferred Stock shall occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee or the Board
(or, if permitted by the Committee or the Board, as elected by the
Participant). In addition, Deferred Stock shall be subject to such
restrictions (which may include a risk of forfeiture) as the
Committee or the Board may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance
goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee or the
Board may determine. Deferred Stock may be satisfied by delivery of
Stock, cash equal to the Fair Market Value of the specified number
of shares of Stock covered by the Deferred Stock, or a combination
thereof, as determined by the Committee or the Board at the date of
grant or thereafter. Prior to satisfaction of an Award of Deferred
Stock, an Award of Deferred Stock carries no voting or dividend or
other rights associated with share ownership.
(ii) FORFEITURE. Except as otherwise determined by the
Committee or the Board, upon termination of a Participant's
employment during the applicable deferral period thereof to which
forfeiture conditions apply (as provided in the Award agreement
evidencing the Deferred Stock), the Participant's Deferred Stock
that is at that time subject to deferral (other than a deferral at
the election of the Participant) shall be forfeited; provided that
the Committee or the Board may provide, by rule or regulation or in
any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock
shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee or the Board may
in other cases waive in whole or in part the forfeiture of Deferred
Stock.
(iii) DIVIDEND EQUIVALENTS. Unless otherwise determined by the
Committee or the Board at date of grant, Dividend Equivalents on
the specified number of shares of Stock covered by an Award of
Deferred Stock shall be either (A) paid with respect to such
Deferred Stock at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount
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of such dividends, or (B) deferred with respect to such Deferred
Stock and the amount or value thereof automatically deemed
reinvested in additional Deferred Stock, other Awards or other
investment vehicles, as the Committee or the Board shall determine
or permit the Participant to elect.
(f) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The Committee
and the Board each is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee or the Board.
(g) DIVIDEND EQUIVALENTS. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, Awards,
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.
(h) OTHER STOCK-BASED AWARDS. The Committee and the Board each is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall determine the terms and conditions of such Awards. Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards or other property, as the Committee or the Board shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Committee or the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company or
a subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee or the Board shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any subsidiary, in which the value of Stock subject to the Award is equivalent
in value to the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price "discounted" by
the amount of the cash compensation surrendered).
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(b) TERM OF AWARDS. The term of each Award shall be for such period
as may be determined by the Committee or the Board; provided that in no event
shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under Section 422 of the
Code).
(c) FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS. Subject to
the terms of the Plan and any applicable Award agreement, payments to be made by
the Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee or the Board
shall determine, including, without limitation, cash, Stock that have been held
for at least 6 months, other Awards or other property, and may be made in a
single payment or transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in lieu of Stock in
connection with such settlement, in the discretion of the Committee or the Board
or upon occurrence of one or more specified events (in addition to a Change in
Control). Installment or deferred payments may be required by the Committee or
the Board (subject to Section 10(e) of the Plan) or permitted at the election of
the Participant on terms and conditions established by the Committee or the
Board. Payments may include, without limitation, provisions for the payment or
crediting of a reasonable interest rate on installment or deferred payments or
the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.
(d) EXEMPTIONS FROM SECTION 16(B) LIABILITY. It is the intent of
the Company that this Plan comply in all respects with applicable provisions of
Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
8. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.
(a) PERFORMANCE CONDITIONS. The right of a Participant to exercise
or receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee or
the Board. The Committee or the Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). If and to the
extent required under Code Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.
(b) PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES. If
and to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).
(i) PERFORMANCE GOALS GENERALLY. The performance goals for such
Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to each
of such criteria, as specified by the Committee consistent with
this Section 8(b). Performance goals shall be objective and shall
otherwise meet the requirements of Code Section 162(m) and
regulations thereunder including the requirement that the level or
levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain."
The Committee may determine that such Performance Awards shall be
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granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must
be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different
Participants.
(ii) BUSINESS CRITERIA. One or more of the following business
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect
to the total stockholder return and earnings per share criteria),
shall be used exclusively by the Committee in establishing
performance goals for such Performance Awards: (1) total
stockholder return; (2) such total stockholder return as compared
to total return (on a comparable basis) of a publicly available
index such as, but not limited to, the Standard & Poor's 500 Stock
Index or the S&P Specialty Retailer Index; (3) net income; (4)
pretax earnings; (5) earnings before interest expense, taxes,
depreciation and amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees, and
extraordinary or special items; (7) operating margin; (8) earnings
per share; (9) return on equity; (10) return on capital; (11)
return on investment; (12) operating earnings; (13) working capital
or inventory; and (14) ratio of debt to stockholders' equity. One
or more of the foregoing business criteria shall also be
exclusively used in establishing performance goals for Annual
Incentive Awards granted to a Covered Employee under Section 8(c)
hereof that are intended to qualify as "performanced-based
compensation under Code Section 162(m).
(iii) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING PERFORMANCE
GOALS. Achievement of performance goals in respect of such
Performance Awards shall be measured over a performance period of
up to ten years, as specified by the Committee. Performance goals
shall be established not later than 90 days after the beginning of
any performance period applicable to such Performance Awards, or at
such other date as may be required or permitted for
"performance-based compensation" under Code Section 162(m).
(iv) PERFORMANCE AWARD POOL. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall
be based upon the achievement of a performance goal or goals based
on one or more of the business criteria set forth in Section
8(b)(ii) hereof during the given performance period, as specified
by the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a percentage thereof
in excess of a threshold amount, or as another amount which need
not bear a strictly mathematical relationship to such business
criteria.
(v) SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS. Settlement
of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise
to be made in connection with such Performance Awards. The
Committee shall specify the circumstances in which such Performance
Awards shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a performance
period or settlement of Performance Awards.
(c) ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES. If and to the extent that the Committee determines that an Annual
Incentive Award to be granted to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Annual Incentive Award shall be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Section 8(c).
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(i) ANNUAL INCENTIVE AWARD POOL. The Committee may establish an
Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool
shall be based upon the achievement of a performance goal or goals
based on one or more of the business criteria set forth in Section
8(b)(ii) hereof during the given performance period, as specified
by the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool
as a percentage of any such business criteria, a percentage thereof
in excess of a threshold amount, or as another amount which need
not bear a strictly mathematical relationship to such business
criteria.
(ii) POTENTIAL ANNUAL INCENTIVE AWARDS. Not later than the end
of the 90th day of each fiscal year, or at such other date as may
be required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who will potentially
receive Annual Incentive Awards, and the amounts potentially
payable thereunder, for that fiscal year, either out of an Annual
Incentive Award pool established by such date under Section 8(c)(i)
hereof or as individual Annual Incentive Awards. In the case of
individual Annual Incentive Awards intended to qualify under Code
Section 162(m), the amount potentially payable shall be based upon
the achievement of a performance goal or goals based on one or more
of the business criteria set forth in Section 8(b)(ii) hereof in
the given performance year, as specified by the Committee; in other
cases, such amount shall be based on such criteria as shall be
established by the Committee. In all cases, the maximum Annual
Incentive Award of any Participant shall be subject to the
limitation set forth in Section 5 hereof.
(iii) PAYOUT OF ANNUAL INCENTIVE AWARDS. After the end of each
fiscal year, the Committee shall determine the amount, if any, of
(A) the Annual Incentive Award pool, and the maximum amount of
potential Annual Incentive Award payable to each Participant in the
Annual Incentive Award pool, or (B) the amount of potential Annual
Incentive Award otherwise payable to each Participant. The
Committee may, in its discretion, determine that the amount payable
to any Participant as an Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive Award,
including a determination to make no Award whatsoever. The
Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a
fiscal year or settlement of such Annual Incentive Award.
(d) WRITTEN DETERMINATIONS. All determinations by the Committee as
to the establishment of performance goals, the amount of any Performance Award
pool or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(c), shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards if and to the
extent required to comply with Code Section 162(m).
(e) STATUS OF SECTION 8(B) AND SECTION 8(C) AWARDS UNDER CODE
SECTION 162(M). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
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9. CHANGE IN CONTROL.
(a) EFFECT OF "CHANGE IN CONTROL." If and to the extent provided in
the Award, in the event of a "Change in Control," as defined in Section 9(b),
the following provisions shall apply:
(i) Any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable
and vested as of the time of the Change in Control, subject only to
applicable restrictions set forth in Section 10(a) hereof;
(ii) Limited SARs (and other SARs if so provided by their
terms) shall become exercisable for amounts, in cash, determined by
reference to the Change in Control Price;
(iii) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan
shall lapse and such Awards shall be deemed fully vested as of the
time of the Change in Control, except to the extent of any waiver
by the Participant and subject to applicable restrictions set forth
in Section 10(a) hereof; and
(iv) With respect to any such outstanding Award subject to
achievement of performance goals and conditions under the Plan,
such performance goals and other conditions will be deemed to be
met if and to the extent so provided by the Committee in the Award
agreement relating to such Award.
(b) DEFINITION OF "CHANGE IN CONTROL. A "Change in Control" shall
be deemed to have occurred upon:
(i) Approval by the stockholders of the Company of a
reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect
to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation
or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or consolidated
company's then outstanding voting securities, or a liquidation or
dissolution of the Company or the sale of all or substantially all
of the assets of the Company (unless such reorganization, merger,
consolidation or other corporate transaction, liquidation,
dissolution or sale (any such event being referred to as a
"Corporate Transaction") is subsequently abandoned);
(ii) Individuals who, as of the date on which the Award is
granted, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date on which
the Award was granted whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act) shall
be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board; or
(iii) The acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act, of more than 50% of
either the then outstanding shares of the Company's Common Stock or
the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors
(hereinafter referred to as the ownership of a "Controlling
Interest") excluding, for this purpose, any acquisitions by (1) the
Company or its Subsidiaries, (2) any person, entity or "group" that
as of the date on which the Award is granted owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act) of a Controlling Interest or (3) any
employee benefit plan of the Company or its Subsidiaries.
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(c) DEFINITION OF "CHANGE IN CONTROL PRICE." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash and
fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.
10. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. The Company may,
to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.
(b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or other
right or interest of a Participant under the Plan, including any Award or right
which constitutes a derivative security as generally defined in Rule 16a-1(c)
under the Exchange Act, shall be pledged, hypothecated or otherwise encumbered
or subject to any lien, obligation or liability of such Participant to any party
(other than the Company or a Subsidiary), or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative, except
that Awards and other rights (other than ISOs and SARs in tandem therewith) may
be transferred to one or more Beneficiaries or other transferees during the
lifetime of the Participant, and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the extent such
transfers and exercises are permitted by the Committee or the Board pursuant to
the express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee or the Board, and to any additional terms and
conditions deemed necessary or appropriate by the Committee or the Board.
(c) ADJUSTMENTS. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
such that a substitution or adjustment is determined by the Committee or the
Board to be appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee or the Board shall, in
such manner as it may deem equitable, substitute or adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if and only to the extent such authority is not required to be
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exercised by the Committee to comply with Code Section 162(m)) is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company, any Subsidiary
or any business unit, or the financial statements of the Company or any
Subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
Subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 8(c) hereof
to Participants designated by the Committee as Covered Employees and intended to
qualify as "performance-based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.
(d) TAXES. The Company and any Subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend,
alter, suspend, discontinue or terminate the Plan, or the Committee's authority
to grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee or the Board may waive
any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee or the Board may modify or adjust the right
so that pooling of interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.
(f) LIMITATION ON RIGHTS CONFERRED UNDER PLAN. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or in
the employ of the Company or a Subsidiary; (ii) interfering in any way with the
right of the Company or a Subsidiary to terminate any Eligible Person's or
Participant's employment at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
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(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).
(i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES. Unless
otherwise determined by the Committee or the Board, in the event of a forfeiture
of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) GOVERNING LAW. The validity, construction and effect of the
Plan, any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) PLAN EFFECTIVE DATE AND STOCKHOLDER APPROVAL; TERMINATION OF
PLAN. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) and 422, Rule
16b-3 under the Exchange Act, applicable NASDAQ requirements, and other laws,
regulations, and obligations of the Company applicable to the Plan. Awards may
be granted subject to stockholder approval, but may not be exercised or
otherwise settled in the event stockholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common Stock remain available for
issuance under the Plan and the Company has no further rights or obligations
with respect to outstanding Awards under the Plan.
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of our report dated March 12, 1999 on our audit of the consolidated
financial statements of U.S. Energy Systems, Inc. and subsidiaries included in
the Annual Report on Form 10-KSB for the year ended January 31, 1999.
Richard A. Eisner & Company, LLP
New York, New York
February 23, 2000
