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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of Earliest Event Reported): July 22, 1999 (July 21, 1999)
HEALTHY PLANET PRODUCTS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13048 94-2601764
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1700 Corporate Circle
Petaluma, California 94954
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (707) 778-2280
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
The Annual Meeting of Shareholders of Healthy Planet Products,
Inc. (the "Company") was held on July 21, 1999, at which the following items of
business were transacted: (i) election of John V. Winfield and Robert W.
Sweitzer, Ph.D, to the Board of Directors of the Company, as Class 3 Directors
for terms expiring at the Annual Meeting in the year 2002; and (ii) adoption of
the 1999 Incentive Compensation Plan pursuant to which, among other items, a
total of 400,000 shares of Common Stock have been reserved for issuance, and a
maximum of 5,000 options to purchase shares of Common Stock of the Company may
be granted to non-employee Directors of the Company through automatic annual
grants of 5,000 options upon each anniversary of service.
Holders of the Company's Common Stock and Series D Preferred
Stock were entitled to attend and vote, as a single class, upon the matters at
the Annual Meeting.
The vote on each item of business was as follows:
A. ELECTION OF CLASS 3 DIRECTORS
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JOHN V. WINFIELD
Votes For Votes Against
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2,521,299 84,869
ROBERT W. SWEITZER, PH.D.
Votes For Votes Against
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2,521,299 84,869
B. 1999 INCENTIVE COMPENSATION PLAN
Votes For Votes Against
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1,595,792 130,428
Item 7. Financial Statements, Pro Forma Financial Statements and
Exhibits.
(c) Exhibits
Exhibit No. Description of Exhibit
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99.1 1999 Incentive Compensation Plan
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HEALTHY PLANET PRODUCTS, INC.
By /s/ Bruce A. Wilson
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Bruce A. Wilson, President, Chief
Executive, Chief Operating and Chief
Financial Officer
Dated: July 22, 1999
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HEALTHY PLANET PRODUCTS, INC.
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1999 Incentive Compensation Plan
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TABLE OF CONTENTS
Page
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1. Purpose....................................................................................1
2. Definitions................................................................................1
3. Administration.............................................................................4
(a) Authority of the Committee........................................................4
(b) Manner of Exercise of Committee Authority.........................................4
(c) Limitation of Liability...........................................................5
4. Stock Subject to Plan......................................................................5
(a) Overall Number of Shares Available for Delivery...................................5
(b) Application of Limitation to Grants of Awards.....................................5
(c) Availability of Shares Not Delivered under Awards................................5
5. Eligibility; PerPerson Award Limitations...................................................6
6. Specific Terms of Awards...................................................................6
(a) General...........................................................................6
(b) Options...........................................................................6
(c) Stock Appreciation Rights.........................................................7
(d) Restricted Stock..................................................................7
(e) RSUs..............................................................................8
(f) Bonus Stock and Awards in Lieu of Obligations.....................................9
(g) Dividend Equivalents..............................................................9
(h) Annual Incentive and Performance Awards...........................................9
(i) Other Stock-Based Awards.........................................................10
7. Certain Provisions Applicable to Awards...................................................10
(a) Stand-Alone, Additional, Tandem, and Substitute Awards...........................10
(b) Term of Awards...................................................................10
(c) Form and Timing of Payment under Awards; Deferrals...............................10
(d) Exemptions from Section 16(b) Liability..........................................11
8. Performance and Annual Incentive Awards...................................................11
(a) Performance Conditions...........................................................11
(b) Performance Awards Granted to Designated Covered Employees.......................11
(c) Annual Incentive Awards Granted to Designated Covered Employees..................13
(d) Written Determinations...........................................................14
(e) Status of Section 8(b) and Section 8(c) Awards under Code Section 162(m).........14
</TABLE>
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9. Change in Control.........................................................................15
(a) Effect of "Change In Control."...................................................15
(b) Definition of "Change in Control."...............................................15
(c) Definition of "Change in Control Price"..........................................17
10. Options Granted Automatically to Non-Employee Directors...................................17
(a) Annual Option Grants.............................................................17
(b) Number of Shares Subject to Automatic Option Grants..............................17
(c) Other Non-Employee Director Annual Option Terms..................................17
(d) Method of Exercise...............................................................17
(e) Availability of Shares...........................................................18
11. General Provisions........................................................................18
(a) Compliance with Legal and Other Requirements....................................18
(b) Limits on Transferability; Beneficiaries.........................................18
(c) Adjustments......................................................................18
(d) Taxes............................................................................19
(e) Changes to the Plan and Awards...................................................19
(f) Limitation on Rights Conferred under Plan........................................20
(g) Unfunded Status of Awards, Creation of Trusts....................................20
(h) Nonexclusivity of the Plan.......................................................20
(i) Payments in the Event of Forfeitures; Fractional Shares..........................20
(j) Governing Law....................................................................20
(k) Awards under Preexisting Plan(s).................................................21
(l) Plan Effective Date and Shareholder Approval.....................................21
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HEALTHY PLANET PRODUCTS, INC.
1999 Incentive Compensation Plan
1. Purpose. The purpose of this 1999 Incentive Compensation Plan
(the "Plan") is to assist Healthy Planet Products, Inc., a Delaware corporation
(the "Corporation"), and its subsidiaries in attracting, retaining, and
rewarding high-quality executives, employees, directors and other persons who
provide services to the Corporation and/or its subsidiaries, enabling such
persons to acquire or increase a proprietary interest in the Corporation to
strengthen the mutuality of interests between such persons and the Corporation's
shareholders, and providing such persons with annual and long-term performance
incentives to expend their maximum efforts in the creation of shareholder value.
The Plan is also intended to qualify certain compensation awarded under the Plan
for tax deductibility under Code Section 162(m) (as hereafter defined) to the
extent deemed appropriate by the Committee (or any successor committee) of the
Board of Directors of the Corporation.
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, RSU, 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 11 (b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(d) "Beneficial Owner"shall have the meaning ascribed to such
term in Rule 13d- 3 under the Exchange Act and any successor to such Rule.
(e) "Board" means the Corporation's Board of Directors.
(f) "Change in Control" means Change in Control as defined
with related terms in Section 9 of the Plan.
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(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 of two or more directors
designated by the Board to administer the Plan; provided, however, that, unless
otherwise determined by the Board, the Committee shall consist solely of two or
more directors, each of whom 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" as defined under Code Section 162(m), unless administration of the
Plan by "outside directors" is not then required to qualify for tax
deductibility under Code Section 162(m).
(j) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 8(e) of the Plan.
(k) "Dividend Equivalent" means a right granted to a
Participant under Section 6(g), 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.
(l) "Effective Date" means July 21, 1999, subject to approval
by stockholders of the Company.
(m) "Eligible Person" means each Executive Officer and other
officers and employees of the Corporation or of any subsidiary, and other
persons who provide services to the Corporation or any of its subsidiaries
including directors of the Corporation. An employee on leave of absence may be
considered as still in the employ of the Corporation or a subsidiary for
purposes of eligibility for participation in the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.
(o) "Executive Officer" means an executive officer of the
Corporation as defined under the Exchange Act.
(p) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of Stock shall be the closing price of a share of Stock, as
quoted on the composite transactions table on the American Stock Exchange, on
the date on which the determination of fair market value is being made, or if no
shares of Stock were traded on such date, then the last trading date prior
thereto.
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(q) "Incentive Stock Option" or "ISO" means any Option
intended to be and designated as an incentive stock option within the meaning of
Code Section 422 or any successor provision thereto.
(r) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.
(s) "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.
(t) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.
(u) "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.
(v) "Performance Award" means a right, granted to a
Participant under Section 8 hereof, to receive Awards based upon performance
criteria specified by the Committee.
(w) "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.
(x) "Preexisting Plan(s)" means the 1991 Senior Management
Incentive Plan and the Non-Employee Director Plan.
(y) "Qualified Member" means a member of the Committee who is
a "Non- Employee Director" within the meaning of Rule 16b-3(b)(3) and an
"outside director" within the meaning of Regulation 1-162-27 under Code Section
162(m).
(z) "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.
(aa) "Restricted Stock Unit or "RSU" 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.
(bb) "Rule 16b-3" means Rule 16b-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.
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(cc) "Stock" means the Corporation's Common Stock, $0.01 par
value per share, and such other securities as may be substituted (or
resubstituted) for Stock pursuant to Section 11(c) hereof.
(dd) "Stock Appreciation Rights" or "SAR" means a right
granted to a Participant under Section 6(c) hereof.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered
by the Committee except to the extent the Board elects to administer the Plan,
in which case references herein to the "Committee" shall be deemed to include
references to the "Board." The Committee 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 may deem necessary or advisable for the
administration of the Plan.
(b) Manner of Exercise of Committee Authority. At any time
that a member of the Committee is not a Qualified Member, any action of the
Committee relating to an Award granted or to be granted to a Participant who is
then subject to Section 16 of the Exchange Act in respect of the Corporation, or
relating to an Award intended by the Committee to qualify as "performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder, may be taken either (i) by a subcommittee, designated by the
Committee, composed solely of two or more Qualified Members, or (ii) by the
Committee but with each such member who is not a Qualified Member abstaining or
recusing himself or herself from such action; provided, however, that, upon such
abstention or recusal, the Committee remains composed solely of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such non-Qualified Member(s), shall
be the action of the Committee for purposes of the Plan. Any action of the
Committee shall be final, conclusive and binding on all persons, including the
Corporation, its subsidiaries, Participants, Beneficiaries, transferees under
Section 11(b) hereof or other persons claiming rights from or through a
Participant, and shareholders. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate
to officers or managers of the Corporation or any subsidiary, or committees
thereof, the authority, subject to such terms as the Committee shall determine,
to perform such functions, including administrative functions, as the Committee
may determine, to the extent that such delegation will not result in the loss-of
an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject
to Section 16 of the Exchange Act in respect of the Corporation and will not
cause Awards intended to qualify as "performance-based compensation" under Code
Section 162(m) to fail to so qualify. The Committee may appoint agents to assist
it in administering the Plan.
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(c) Limitation of Liability. The Committee 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 Corporation or a subsidiary, the Corporation's
independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and any officer or employee
of the Corporation or a subsidiary acting at the direction or on behalf of the
Committee 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 Corporation with
respect to any such action or determination.
4. Stock Subject to Plan.
(a) Overall Number of Shares Available for Delivery. Subject
to adjustment as provided in Section 11(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be (i) 400,000 plus (ii) the number of shares of Stock remaining
available under Preexisting Plan(s) immediately prior to the date on which
shareholders of the Corporation approve the adoption of the Plan, plus (iii) the
number of shares of Stock subject to awards under Preexisting Plan(s) which
become available in accordance with Section 4(c) hereof after the date on which
shareholders of the Corporation approve the adoption of the Plan. Any shares of
stock delivered under the Plan shall consist of authorized and unissued shares
or treasury shares.
(b) Application of Limitation to Grants of Awards. No Award
may be granted if the number of shares of Stock to be delivered in connection
with such Award or, in the case of an Award relating to shares of Stock but
settleable only in cash (such as cash-only SARs), the number of shares to which
such Award relates, exceeds the number of shares of Stock remaining available
under the Plan minus the number of shares of Stock issuable in settlement of or
relating to then outstanding Awards. The Committee 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.
(c) Availability of Shares Not Delivered under Awards. Shares
of Stock subject to an Award under the Plan or award under any Preexisting
Plan(s) that are canceled, expired, forfeited, settled in cash or otherwise
terminated without a delivery of shares to the Participant, including (i) the
number of shares withheld in payment of any exercise or purchase price of an
Award or award or taxes relating to Awards or awards, and (ii) the number of
shares surrendered in payment of any exercise or purchase price of an Award or
award or taxes relating to any Award or award, will again be available for
Awards under the Plan, except that if any such shares could not again be
available for Awards to a particular Participant under any applicable law or
regulation, such shares shall be available exclusively for Awards to
Participants who are not subject to such limitation.
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5. Eligibility; Per-Person Award Limitations. 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 a number of shares of Common Stock recommended by
the Compensation Committee, subject to adjustment as provided in Section 11 (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 cash amount that may be earned under the Plan as a
final Annual Incentive Award or other cash annual Award in respect of any fiscal
year by any one Participant shall not exceed an amount recommended by the
Compensation Committee, and the maximum cash amount that may be earned under the
Plan as a final Performance Award or other cash Award in respect of a
performance period other than an annual period by any one Participant on an
annualized basis shall not exceed an amount recommended by the Compensation
Committee.
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 may impose on any Award
or the exercise thereof, at the date of grant or thereafter (subject to Section
11 (e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee 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 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; provided, however, that the Committee shall not
have any discretion to accelerate, waive or modify any term or condition of an
Award that is intended to qualify as "performance-based compensation" for
purposes of Code Section 162(m) if such discretion would cause the Award not to
so qualify. Except in cases in which the Committee 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 state law, no
consideration other than services may be required for the grant (but not the
exercise) of any Award.
(b) Options. The Committee 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, provided
that such exercise price shall be not less than the Fair Market Value of a share
of Stock on the date of grant of such Option except as provided under Section
7(a) hereof.
(ii) Time and Method of Exercise. The Committee 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 methods by which such
exercise price may be paid or deemed to be paid, the form of such payment,
including, without limitation, cash, Stock, other Awards or awards granted under
other plans of the Corporation or any subsidiary, or other property (including
notes or other contractual
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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. In no event may an Option remain exercisable more than ten
years following the date of grant.
(iii) ISOs. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of Code Section 422.
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 Code Section
422, unless the Participant has first requested the change that will result in
such disqualification.
(c) Stock Appreciation Rights. The Committee 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," 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
provided that such grant price shall not be less than the Fair Market Value of a
share of Stock on the date of grant of such SAR except as provided under Section
7(a) hereof.
(ii) Other Terms. The Committee 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 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 may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine. SARs and
Limited SARs may be either freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee 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 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 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
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the rights of a shareholder, 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). During the
restricted period applicable to the Restricted Stock, subject to Section 11(b)
below, the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment during the applicable restriction
period, Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Corporation; provided that the Committee 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 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 shall
determine. If certificates representing Restricted Stock are registered in the
name of the Participant, the Committee may require that such certificates bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Corporation retain physical
possession of the certificates, and that the Participant deliver a stock power
to the Corporation, 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 may require or permit a
Participant to elect 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, 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) RSUs. The Committee is authorized to grant RSUs 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 RSUs shall occur upon expiration of the deferral period specified for such
RSUs by the Committee (or, if permitted by the Committee, as elected by the
Participant). In addition, RSUs shall be subject to such restrictions (which may
include a risk of forfeiture) as the Committee 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 may determine. RSUs may be satisfied by delivery of
Stock, cash equal to the Fair Market Value of the specified number of shares of
Stock
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covered by the RSUs, or a combination thereof, as determined by the Committee at
the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as provided in
the Award agreement evidencing the RSUs), all RSUs that are at that time subject
to deferral (other than a deferral at the election of the Participant) shall be
forfeited; provided that the Committee, 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 RSUs shall be waived in whole or in part in
the event of terminations resulting from specified causes, and the Committee may
in other cases waive in whole or in part the forfeiture of RSUs.
(iii) Dividend Equivalents. Unless otherwise
determined by the Committee at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of RSUs shall be either
(A) paid with respect to such RSUs at the dividend payment date in cash or in
shares of unrestricted Stock having a Fair Market Value equal to the amount of
such dividends, or (B) deferred with respect to such RSUs and the amount or
value thereof automatically deemed reinvested in additional RSUs, other Awards
or other investment vehicles, as the Committee shall determine or permit the
Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of 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.
(g) Dividend Equivalents. The Committee 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 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 may specify.
(h) Annual Incentive and Performance Awards. The Committee is
authorized to make Annual Incentive Awards and Performance Awards payable in
cash, Shares, or other Awards, on terms and conditions established by the
Committee, subject to Section 8 in the event of Annual Incentive Awards or
Performance Awards intended to qualify as "performance-based compensation" for
purposes of Code Section 162(m).
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(i) Other Stock-Based Awards. The Committee 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 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 Corporation or any other
factors designated by the Committee, and Awards valued by reference to the book
value of Stock or the value of securities of or the performance of specified
subsidiaries. The Committee 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 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, 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
Corporation, any subsidiary, or any business entity to be acquired by the
Corporation or a subsidiary, or any other right of a Participant to receive
payment from the Corporation 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 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
Corporation or any subsidiary, in which the value of Stock subject to the Award
is equivalent in value to the cash compensation (for example, RSUs 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).
(b) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee; 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 Code Section 422).
(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 Corporation 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
shall determine, including, without limitation, cash, Stock, other Awards or
other property, and may be made in a single payment or transfer, in
installments, or on
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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 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 (subject to Section 11(e) of the Plan, including the consent
provisions thereof in the case of any deferral of an outstanding Award not
provided for in the original Award agreement) or permitted at the election of
the Participant on terms and conditions established by the Committee. Payments
may include, without limitation, provisions for the payment or crediting of
reasonable interest 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 Corporation that the grant of any Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act shall be exempt
from Section 16 pursuant to an applicable exemption (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 as then applicable to any such transaction, such
provision shall be construed or deemed amended to the extent necessary to
conform to the applicable requirements of Rule 16b-3 so that such Participant
shall avoid liability under Section 16(b).
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. The Committee 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 or increase 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).
(b) Performance Awards Granted to Designated Covered
Employees. If 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 Regulation 1.162-27
and successor regulations thereto), including the requirement that the level or
levels of performance targeted by the
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Committee result in the achievement of performance goals being "substantially
uncertain." The Committee may determine that such Performance Awards shall be
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 Corporation, on a consolidated basis, and/or for
specified subsidiaries or business or geographical units of the Corporation
(except with respect to the total shareholder return and earnings per share
criteria), shall be used by the Committee in establishing performance goals for
such Performance Awards: (1) earnings per share, (2) increase in revenues or
margin: (3) increase in cash flow; (4) operating margin; (5) return on net
assets, return on assets, return on investment, return on capital, return on
equity; (6) economic value added; (7) direct contribution; (8) net income;
pretax earnings: pretax earnings before interest; depreciation and amortization
(EBITDA): pretax earnings after interest expense and before extraordinary or
special items; operating income; income before interest income or expense,
unusual items and income taxes (local, state or federal) and excluding budgeted
and actual bonuses which might be paid under any ongoing bonus plans of the
Corporation; (9) working capital; (10) management of fixed costs or variable
costs, (11) identification or consummation of investment opportunities or
completion of specified projects in accordance with corporate business plans,
including strategic mergers, acquisitions or divestitures, (12) total
shareholder return; (13) debt reduction: and (14) any of the above goals
determined on an absolute or relative basis or as compared to the performance of
a published or special index deemed applicable by the Committee including, but
not limited to, the Standard & Poors 500 Stock Index or a group of comparator
companies. 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.
(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 performance of the Corporation 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,
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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.
After the end of each performance period, the Committee shall determine the
amount, if any, of (A) the Performance Award pool, and the maximum amount of
potential Performance Award payable to each Participant in the Performance Award
pool, or (B) the amount of potential Performance Award otherwise payable to each
Participant. 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, but may not exercise
discretion to increase any such amount payable to a Covered Employee in respect
of a Performance Award subject to this Section 8(b). 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 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 a "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).
(i) Annual Incentive Award Pool. The Committee may
establish an Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring performance of the Corporation 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 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.
(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
B(b)(11) hereof in the given performance year, as specified by the Committee; in
other cases, such amount shall be based on such
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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 a final Annual Incentive Award shall be increased
or reduced from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever, but may not
exercise discretion to increase any such amount in the case of an Annual
Incentive Award intended to qualify under Code Section 162(m). 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.
(e) Status of Section 8(b) and Section 8(c) Awards under Code
Section 162(m). It is the intent of the Corporation that Performance Awards and
Annual Incentive Awards under Sections 8(b) and B(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 (including Regulation
1.162-27 and successor regulations thereto) shall, if so designated by the
Committee, constitute "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 as in effect on the date of
adoption or any agreements relating to Performance Awards or Annual Incentive
Awards that are designated as intended to comply with Code Section 162(m) does
not comply or is inconsistent with the requirements of Code Section 182(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." In the event of a "Change
in Control," the following provisions shall apply unless otherwise provided in
the Award agreement:
(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 and shall remain exercisable and vested
for the balance of the stated term of such Award without regard to any
termination of employment by the Participant, subject only to applicable
restrictions set forth in Section 11 (a) hereof;
(ii) Any optionee who holds an Option shall be
entitled to elect, during the 60 day period immediately following a Change in
Control, in lieu of acquiring the shares of Stock covered by such Option, to
receive, and the Corporation shall be obligated to pay, in cash the excess of
the Change in Control Price over the exercise price of such Option, multiplied
by the number of shares of Stock covered by such Option;
(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 11(a) hereof; and
(iv) With respect to any 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 in the Award agreement relating to such Award.
(b) Definition of "Change in Control." A "Change in Control"
shall be deemed to have occurred if:
(i) any Person (other than the Corporation, any
trustee or other fiduciary holding securities under any employee benefit plan of
the Corporation, or any company owned, directly or indirectly, by the
stockholders of the Corporation immediately prior to the occurrence with respect
to which the evaluation is being made in substantially the same proportions as
their ownership of the common stock of the Corporation) acquires securities of
the Corporation and immediately thereafter is the Beneficial Owner (except that
a Person shall be deemed to be the Beneficial Owner of all shares that any such
Person has the right to acquire pursuant to any agreement or arrangement or upon
exercise of conversion rights, warrants or options or otherwise, without regard
to the sixty day period referred to in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing 20% or
more of the combined voting power of the Corporation's then outstanding
securities (except that an acquisition of securities directly from the
Corporation shall not be deemed an acquisition for purposes of this clause (i));
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(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Corporation to effect a transaction described in clause
(i), (iii), or (iv) of this paragraph) whose election by the Board or nomination
for election by the Corporation's stockholders was approved by a vote of at
least two thirds of the directors then still in office who either were directors
at the beginning of the two-year period or whose election or nomination for
election was previously so approved but excluding for this purpose any such new
director whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 148-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an individual,
corporation, partnership, group, associate or other entity or Person other than
the Board, cease for any reason to constitute at least a majority of the Board;
(iii) the consummation of a merger or consolidation
of the Corporation with any other entity, other than (i) a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or resulting entity) more than 50% of the combined voting power of the
surviving or resulting entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation in which no premium is intended
to be paid to any shareholder participating in the merger or consolidation;
(iv) the stockholders of the Corporation approve a
plan or agreement for the sale or disposition of all or substantially all of the
consolidated assets of the Corporation (other than such a sale or disposition
immediately after which such assets will be owned directly or indirectly by the
stockholders of the Corporation, in substantially the same proportions as their
ownership of the common stock of the Corporation immediately prior to such sale
or disposition) in which case the Board shall determine the effective date of
the Change in Control resulting therefrom; or
(v) any other event occurs which the Board
determines, in its discretion, would materially alter the structure of the
Corporation or its ownership.
For purposes of this definition:
(1) The term "Beneficial Owner" shall have
the meaning ascribed to such term in Rule 13d-3 under
the Exchange Act (including any successor to such
Rule).
(2) The term "Exchange Act" means the
Securities Exchange Act of 1934, as amended from time
to time, or any successor act thereto.
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(3) The term "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, including "group" as defined in Section
13(d) thereof.
(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 transaction triggering the Change in
Control or any liquidation of shares following a sale of substantially all
assets of the Corporation, or (ii) the highest Fair Market Value per share at
any time during the 60-day period preceding and 60-day period following the
Change in Control.
10. Options Granted Automatically to Non-Employee Directors.
(a) Annual Option Grants. A Non-Employee Director Annual
Option will be automatically granted at the close of business on the last
trading day of each July.
(b) Number of Shares Subject to Automatic Option Grants.
Unless otherwise determined by the Board in a resolution adopted on or prior to
the date of the annual meeting of the Company's shareholders that coincides with
or most recently precedes the date of grant of an Option to a Non-Employee
Director, the number of shares of Stock to be subject to each Annual Option
shall be 5,000, in each case subject to adjustment as provided in Section 11(c).
(c) Other Non-Employee Director Annual Option Terms. Unless
otherwise determined by the Board, other terms of Annual Options shall be as
follows:
(i) The exercise price per share of Stock purchasable
upon exercise of a Non-Employee Director Annual Option will be equal to 100% of
the Fair Market Value of a share of Stock on the date of grant of the Option.
(ii) A Non-Employee Director Annual Option will
expire at the earlier of (A) 10 years after the date of grant or (B) three
months after the date the Participant ceases to serve as a director of the
Company for any reason.
(iii) Each Non-Employee Director Annual Option will
become exercisable in three equal installments after each of the first, second
and third anniversaries of the date of grant.
(d) Method of Exercise. A Participant may exercise a
Non-Employee Director Annual Option, in whole or in part, at such time as it is
exercisable and prior to its expiration, by giving written notice of exercise to
the Secretary of the Company, specifying the Option to be exercised and the
number of shares to be purchased, and paying in full the exercise price in cash
(including by check) or by surrender of shares of Stock already owned by the
Participant (except for shares acquired from the Company by exercise of an
option less than six months before the date of
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surrender) having a Fair Market Value at the time of exercise equal to the
exercise price, or by a combination of cash and shares.
(e) Availability of Shares. If an automatic grant of Options
authorized under Section 10(a) or (b) cannot be made in full due to the
limitation set forth in Section 4(a), such grant shall be made (together with
other automatic grants to occur at the same time) to the greatest extent then
permitted under Section 4(a).
11. General Provisions.
(a) Compliance with Legal and Other Requirements. The
Corporation may, to the extent deemed necessary or advisable by the Committee,
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 securities of the Corporation are
listed or quoted, or compliance with any other obligation of the Corporation, as
the Committee 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 reasons, listing requirements, or other obligations.
(b) Limits on Transferability; Beneficiaries. No Award or
other right or interest granted under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Corporation 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 are permitted by the Committee pursuant to the
express terms of an Award agreement (subject to any terms and conditions which
the Committee may impose thereon). 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,
and to any additional terms and conditions deemed necessary or appropriate by
the Committee.
(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 transaction or event affects the Stock such that an
adjustment is determined by the
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Committee to be appropriate under the Plan, then the Committee shall, in such
manner as it may deem equitable, 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 business unit, or
the financial statements of the Corporation 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 Corporation, 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 regulations
thereunder to otherwise fail to qualify as "performance-based compensation"
under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Corporation 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 may deem advisable to enable the Corporation 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 Participants 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 shareholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Corporation's shareholders not later than the
annual meeting next following such Board action if such shareholder approval is
required by any federal or state law or regulation 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 shareholders 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 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 action may
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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 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 that right which caused the transaction to be ineligible for pooling of
interest accounting. In addition, the Board shall also have the authority to
modify the Plan, to the extent it deems necessary or desirable in its sole
discretion, to minimize the taxes incurred by either the Company or any
Participant relating to any Award.
(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 or service of the Corporation or a subsidiary, (ii)
interfering in any way with the right of the Corporation or a subsidiary to
terminate any Eligible Person's or Participant's employment or service 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
shareholder of the Corporation unless and until the Participant is duly issued
or transferred shares of Stock in accordance with the terms of an Award.
(g) Unfunded Status of Awards, Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for certain incentive awards 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 Corporation.
(h) Nonexclusivity of the Plan. Neither the adoption of the
Plan by the Board nor its submission to the shareholders of the Corporation 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, 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 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
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the laws of the State of New York, without giving effect to principles of
conflicts of laws, and applicable federal law.
(k) Awards under Preexisting Plan(s). Upon approval of the
Plan by shareholders of the Corporation as required under Section 11 (1) hereof,
no further awards shall be granted under the Preexisting Plan(s).
(l) Plan Effective Date and Shareholder Approval. The Plan has
been adopted by the Board effective July 21, 1999, subject to approval by the
shareholders of the Corporation.
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