BION ENVIRONMENTAL TECHNOLOGIES, INC.
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2000 INCENTIVE PLAN
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1. Purpose of the Plan
The purpose of this Bion Environmental Technologies, Inc. 2000 Incentive
Plan ("Plan") is to create shareholder value. To do so, the Plan provides
incentives to selected employees and directors of the Company and its
Subsidiaries, and selected non-employee consultants and advisors to the
Company and its Subsidiaries, who contribute, and are expected to contribute,
materially to its success. The Plan also provides a means of rewarding
outstanding performance and enhances the interest of such persons in the
Company's success and development by providing them a proprietary interest in
the Company. Further, the Plan is designed to enhance the Company's ability to
maintain a competitive position in attracting and retaining qualified
personnel necessary for the success and development of the Company.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of Bion
Environmental Technologies, Inc.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, for purposes of the Plan, shall
mean the termination of the Participant's employment by the Company on account
of (i) the willful and continued failure by the Participant substantially to
perform his duties and obligations (other than any such failure resulting from
his incapacity due to physical or mental illness) or (ii) the willful engaging
by the Participant in an act or acts which could reasonably be expected to
cause injury to the Company or are contrary to the best interests of the
Company. For purposes of this Section 2(b), no act, or failure to act, on a
Participant's part shall be considered "willful" unless done, or omitted to be
done, by the Participant in bad faith and without reasonable belief that his
action or omission was in the best interests of the Company.
(c) "Cash Bonus" shall mean an award of a bonus payable in cash
pursuant to Section 13 hereof.
(d) "Change in Control" shall mean:
(i) the acquisition at any time by a"person" or "group" (as
that term is used in Sections 13(d)and 14(d)(2) of the Exchange Act)
(excluding, for this purpose, the Company or any Subsidiary or any employee
benefit plan of the Company or any Subsidiary) of beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of
securities representing 20% or more of the combined voting power in the
election of directors of the then-outstanding securities of the Company or any
successor of the Company;
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(ii) the termination of service as directors, for any reason
other than death, disability or retirement from the Board of Directors, during
any period of two consecutive years or less, of individuals who at the
beginning of such period constituted a majority of the Board of Directors,
unless the election of or nomination for election of each new director during
such period was approved by a vote of at least two-thirds of the directors
still in office who were directors at the beginning of the period;
(iii) approval by the shareholders of the Company of any
merger or consolidation or statutory share exchange as a result of which the
Common Shares shall be changed, converted or exchanged (other than a merger or
share exchange with a wholly-owned Subsidiary of the Company), or liquidation
of the Company, or any sale or disposition of 50% or more of the assets or
earning power of the Company; or
(iv) approval by the shareholders of the Company of any
merger, consolidation or statutory share exchange to which the Company is a
party as a result of which the persons who were shareholders of the Company
immediately prior to the effective date of the merger, consolidation or
statutory share exchange shall have beneficial ownership of less than 50% of
the combined voting power in the election of directors of the surviving
corporation following the effective date of such merger, consolidation or
statutory share exchange;
provided, however, that no change in control shall be deemed to have
occurred if, prior to such time as a change in control would otherwise be
deemed to have occurred, the Company's Board of Directors deems otherwise.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" shall mean the committee appointed by the Board of
Directors from time to time to administer the Plan.
(g) "Common Shares" shall mean Bion Environmental Technologies, Inc.
common shares, no par value per share.
(h) "Company" shall mean Bion Environmental Technologies, Inc., a
Colorado corporation, and each of its Subsidiaries.
(i) "Disability" shall mean a Participant's inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) The "Fair Market Value" of Common Shares with respect to any day
shall be (i) the closing sales price on the immediately preceding business day
of Common Shares as reported on the principal securities exchange on which
Common Shares are then listed or admitted to trading, or (ii) if not so
reported, the average of the closing bid and ask prices on the immediately
preceding business day as reported on the National Association of Securities
Dealers Automated Quotation System, or (iii) if not so reported, as furnished
by any member of the National Association of Securities Dealers, Inc. selected
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by the Committee. In the event that the price of Common Shares shall not be so
reported, the Fair Market Value of Common Shares shall be determined by the
Committee in its absolute discretion.
(l) "Incentive Award" shall mean an Option, LSAR, Tandem SAR,
Stand-Alone SAR, share of Phantom Stock, Stock Bonus or Cash Bonus granted
pursuant to the terms of the Plan.
(m) "Incentive Stock Option" shall mean an Option which is an
"incentive stock option" within the meaning of Section 422 of the Code and
which is identified as an Incentive Stock Option in the agreement by which it
is evidenced.
(n) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued by
Bion Environmental Technologies, Inc. pursuant to the terms of Section 10(d)
hereof.
(o) "LSAR" shall mean a limited stock appreciation right which is
granted pursuant to the provisions of Section 7 hereof and which relates to an
Option. Each LSAR shall be exercisable only upon the occurrence of a Change in
Control and only in the alternative to the exercise of its related Option.
(p) "Non-Employee Participant" shall mean a Participant who is not an
employee of the Company.
(q) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified Stock Option
in the agreement by which it is evidenced.
(r) "Option" shall mean an option to purchase Common Shares of Bion
Environmental Technologies, Inc. granted pursuant to Section 6 hereof. Each
Option shall be identified as either an Incentive Stock Option or a
Non-Qualified Stock Option in the agreement by which it is evidenced.
(s) "Participant" shall mean a person who is eligible to participate
in the Plan and to whom an Incentive Award is granted pursuant to the Plan,
and, upon his death, his successors, heirs, executors and administrators, as
the case may be.
(t) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(u) "Phantom Stock" shall mean the right to receive in cash the
Fair Market Value of Common Shares of Bion Environmental Technologies, Inc.,
which right is granted pursuant to Section 11 hereof and subject to the terms
and conditions contained therein.
(v) "Plan" shall mean the Bion Environmental Technologies, Inc. 2000
Incentive Plan, as it may be amended from time to time.
(w) "Restricted Stock" shall mean a Common Share which is granted
pursuant to the terms of Section 10 hereof and which is subject to the
restrictions set forth in Section 10(c) hereof for so long as such
restrictions continue to apply to such share.
(x) "Securities Act" shall mean the Securities Act of 1933, as
amended.
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(y) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 hereof which is not related to any Option.
(z) "Stock Bonus" shall mean a grant of a bonus payable in Common
Shares pursuant to Section 12 hereof.
(aa) "Subsidiary" shall mean any corporation in which at the time of
reference Bion Environmental Technologies, Inc. owns, directly or indirectly,
stock comprising more than fifty percent of the total combined voting power of
all classes of stock of such corporation.
(bb) "Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 8 hereof which is related to an Option. Each Tandem SAR
shall be exercisable only to the extent its related Option is exercisable and
only in the alternative to the exercise of its related Option.
(cc) "Vesting Date" shall mean the date established by the Committee
on which a share of Restricted Stock or Phantom Stock may vest.
(dd) "Bion Environmental Technologies, Inc." shall mean Bion
Environmental Technologies, Inc., a Colorado corporation, and its successors.
3. Stock Subject to the Plan
Under the Plan, the Committee may grant to Participants (i) Options, (ii)
LSARs, (iii) Tandem SARs, (iv) Stand-Alone SARs, (v) shares of Restricted
Stock, (vi) shares of Phantom Stock, (vii) Stock Bonuses and (viii) Cash
Bonuses; provided, however, that grants under the Plan to non-employee
directors of the Company shall be made by the Board of Directors. When
referring to grants under the Plan to non-employee directors of the Company,
any reference in this Plan to the Committee shall be deemed to refer to the
Board of Directors.
Subject to adjustment as provided in Section 14 hereof, the Committee may
grant Options, Stand-Alone SARs, shares of Restricted Stock, shares of Phantom
Stock and Stock Bonuses under the Plan with respect to a number of Common
Shares that in the aggregate does not exceed 1,000,000 shares. The maximum
number of Common Shares for which Incentive Awards, including Incentive Stock
Options, may be granted to any one Participant shall not exceed 500,000 shares
in any one calendar year; and the total of all cash payments to any one
Participant pursuant to the Plan in any calendar year shall not exceed
$500,000. The grant of an LSAR, Tandem SAR or Cash Bonus shall not reduce the
number of Common Shares with respect to which Options, Stand-Alone SARs,
shares of Restricted Stock, shares of Phantom Stock or Stock Bonuses may be
granted pursuant to the Plan.
In the event that any outstanding Option or Stand-Alone SAR expires,
terminates or is canceled for any reason (other than pursuant to Paragraphs
7(b)(2) or 8(b)(3) hereof), the Common Shares subject to the unexercised
portion of such Option or Stand-Alone SAR shall again be available for grants
under the Plan. In the event that an outstanding Option is canceled pursuant
to Paragraphs 7(b)(2) or 8(b)(3) hereof by reason of the exercise of an LSAR
or a Tandem SAR, the Common Shares subject to the canceled portion of such
Option shall not again be available for grants under the Plan. In the event
that any shares of Restricted Stock or Phantom Stock, or any Common Shares
granted in a Stock Bonus are forfeited or canceled for any reason, such shares
shall again be available for grants under the Plan.
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Common Shares issued under the Plan may be either newly issued shares or
treasury shares, at the discretion of the Committee, and Bion Environmental
Technologies, Inc. hereby reserves 1,000,000 Common Shares for issuance
pursuant to the Plan.
4. Administration of the Plan
The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom shall be a "non-employee
director" within the meaning of Rule 16b-3(b)(3) promulgated under Section 16
of the Exchange Act. The Committee shall from time to time designate the
persons who shall be granted Incentive Awards and the amount and type of such
Incentive Awards, provided, however that any Incentive Awards granted to
non-employee directors of the Company shall be granted by the Board and not by
the Committee. When referring to grants under the Plan to non-employee
directors of the Company, any reference in this Plan to the Committee shall be
deemed to refer to the Board of Directors.
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and the terms of
any Incentive Award issued under it and to adopt such rules and regulations
for administering the Plan as it may deem necessary. Decisions of the
Committee shall be final and binding on all parties.
The Committee may, in its absolute discretion (i) accelerate the date on
which any Option or Stand-Alone SAR granted under the Plan becomes
exercisable, (ii) accelerate the Vesting Date or Issue Date, or waive any
condition imposed pursuant to Section 10(b) hereof, with respect to any share
of Restricted Stock granted under the Plan and (iii) accelerate the Vesting
Date or waive any condition imposed pursuant to Section 11 hereof, with
respect to any share of Phantom Stock granted under the Plan.
In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise prices)
as the Committee specifies. Notwithstanding Section 3 herein, prior to the
surrender of such other Incentive Awards, Incentive Awards granted pursuant to
the preceding sentence of this Section 4 shall not count against the limits
set forth in such Section 3.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and Bion Environmental Technologies, Inc.
shall indemnify and hold harmless each member of the Committee and each other
director or employee of the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been delegated against any
cost or expense (including counsel fees) or liability (including any sum paid
in settlement of a claim with the approval of the Committee) arising out of
any action, omission or determination relating to the Plan, unless, in either
case, such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.
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5. Eligibility
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such persons, including employees, officers, and directors
of the Company and non-employee consultants and advisors to the Company, as
the Committee shall select from time to time.
6. Options
Subject to the provisions of the Plan, the Committee may grant Options,
which Options shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Options shall comply with and be subject to
the following terms and conditions:
(a) Identification of Options
All Options granted under the Plan shall be clearly identified
in the agreement evidencing such Options as either Incentive Stock Options or
as Non-Qualified Stock Options.
(b) Exercise Price
The exercise price of any Non-Qualified Stock Option granted
under the Plan shall be such price as the Committee shall determine on the
date on which such Non-Qualified Stock Option is granted; provided, that such
price may not be less than the minimum price required by applicable law. The
exercise price of any Incentive Stock Option granted under the Plan shall be
not less than 100% of the Fair Market Value of Common Shares on the date on
which such Incentive Stock Option is granted.
(c) Term and Exercise of Option
(1) Each Option shall be exercisable on such date or dates,
during such period and for such number of Common Shares as shall be determined
by the Committee on the day on which such Option is granted and set forth in
the Option agreement with respect to such Option; provided, however, that no
Option shall be exercisable after the expiration of ten years from the date
such Option was granted; and, provided, further, that each Option shall be
subject to earlier termination, expiration or cancellation as provided in the
Plan.
(2) Each Option shall be exercisable in whole or in part;
provided, that no partial exercise of an Option shall be for an aggregate
exercise price of less than $1,000, unless such partial exercise is for the
last remaining unexercised portion of such Option. The partial exercise of an
Option shall not cause the expiration, termination or cancellation of the
remaining portion thereof. Upon the partial exercise of an Option, the
agreements evidencing such Option and any related LSARs and Tandem SARs shall
be returned to the Participant exercising such Option together with the
delivery of the certificates described in Section 6(c)(5) hereof.
(3) An Option shall be exercised by delivering notice to
Bion Environmental Technologies, Inc.'s principal office, to the attention of
its Secretary, no less than one business day in advance of the effective date
of the proposed exercise. Such notice shall be accompanied by the agreements
evidencing the Option and any related LSARs and Tandem SARs, shall specify the
number of Common Shares with respect to which the Option is being exercised
and the effective date of the proposed exercise and shall be signed by the
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Participant. The Participant may withdraw such notice at any time prior to the
close of business on the business day immediately preceding the effective date
of the proposed exercise, in which case such agreements shall be returned to
him. Payment for Common Shares purchased upon the exercise of an Option shall
be made on the effective date of such exercise either (i) in cash, by
certified check, bank cashier's check or wire transfer or (ii) subject to the
approval of the Committee, in Common Shares owned by the Participant and
valued at their Fair Market Value on the effective date of such exercise, or
partly in Common Shares with the balance in cash, by certified check, bank
cashier's check or wire transfer. Any payment in Common Shares shall be
effected by the delivery of such shares to the Secretary of Bion Environmental
Technologies, Inc., duly endorsed in blank or accompanied by stock powers duly
executed in blank, together with any other documents and evidences as the
Secretary of Bion Environmental Technologies, Inc. shall require from time to
time.
(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the broker-dealer has
received from the Participant or the Company a fully-and-duly-endorsed
agreement evidencing such Option and instructions signed by the Participant
requesting Bion Environmental Technologies, Inc. to deliver the Common Shares
subject to such Option to the broker-dealer on behalf of the Participant and
specifying the account into which such shares should be deposited, (ii)
adequate provision has been made with respect to the payment of any
withholding taxes due upon such exercise and (iii) the broker-dealer and the
Participant have otherwise complied with Section 220.3(e)(4) of Regulation T,
12 CFR Part 220.
(5) Certificates for Common Shares purchased upon the
exercise of an Option shall be issued in the name of the Participant and
delivered to the Participant as soon as practicable following the effective
date on which the Option is exercised.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of Common Shares with
respect to which "incentive stock options" (within the meaning of Section 422
of the Code) are exercisable for the first time by a Participant during any
calendar year under the Plan and any other stock option plan of the Company
(or any "subsidiary" of Bion Environmental Technologies, Inc. as such term is
defined in Section 425 of the Code) shall not exceed $100,000. Such Fair
Market Value shall be determined as of the date on which each such incentive
stock option is granted. In the event that the aggregate Fair Market Value of
Common Shares with respect to such incentive stock options exceeds $100,000,
then Incentive Stock Options granted hereunder to such Participant shall, to
the extent and in the order required by Regulations promulgated under the Code
(or any other authority having the force of Regulations), automatically be
deemed to be Non-Qualified Stock Options, but all other terms and provisions
of such Incentive Stock Options shall remain unchanged. In the absence of such
Regulations (and authority), or in the event such Regulations (or authority)
require or permit a designation of the options which shall cease to constitute
incentive stock options, Incentive Stock Options shall, to the extent of such
excess and in the order in which they were granted, automatically be deemed to
be Non-Qualified Stock Options, but all other terms and provisions of such
Incentive Stock Options shall remain unchanged.
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(2) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed grant, such individual owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of Bion Environmental Technologies, Inc. or any of its
"subsidiaries" (within the meaning of Section 425 of the Code), unless (i) the
exercise price of such Incentive Stock Option is at least one hundred and ten
percent of the Fair Market Value of a Common Share at the time such Incentive
Stock Option is granted and (ii) such Incentive Stock Option is not
exercisable after the expiration of five years from the date such Incentive
Stock Option is granted.
(e) Effect of Termination of Employment
(1) In the event that the employment of a Participant with
the Company shall terminate for any reason other than retirement at age 60 or
later, Cause, Disability or death (i) Options granted to such Participant, to
the extent that they were exercisable at the time of such termination, shall
remain exercisable until the expiration of one month after such termination,
on which date they shall expire, and (ii) Options granted to such Participant,
to the extent that they were not exercisable at the time of such termination,
shall expire at the close of business on the date of such termination;
provided, however, that no Option shall be exercisable after the expiration of
its term.
(2) In the event that the employment of a Participant with
the Company shall terminate on account of the retirement at age 60 or later,
Disability or death of the Participant (i) Options granted to such
Participant, to the extent that they were exercisable at the time of such
termination, shall remain exercisable until the expiration of one year after
such termination, on which date they shall expire, and (ii) Options granted to
such Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of such
termination; provided, however, that no Option shall be exercisable after the
expiration of its term.
(3) In the event of the termination of a Participant's
employment for Cause, all outstanding Options granted to such Participant
shall expire at the commencement of business on the date of such termination.
(4) In the event that a Non-Employee Participant ceases to
provide services to the Company, all Options granted to such Non-Employee
Participant shall remain exercisable in accordance with their terms.
(f) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted
under the Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration, termination or
cancellation pursuant to the terms of the Plan.
7. Limited Stock Appreciation Rights
The Committee may grant in connection with any Option granted hereunder
one or more LSARs relating to a number of Common Shares equal to or less than
the number of Common Shares subject to the related Option. An LSAR may be
granted at the same time as, or subsequent to the time that, its related
Option is granted. Each LSAR shall be evidenced by an agreement in such form
as the Committee shall from time to time approve. Each LSAR granted hereunder
shall be subject to the following terms and conditions:
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(a) Benefit Upon Exercise
(1) The exercise of an LSAR relating to a Non-Qualified
Stock Option with respect to any number of Common Shares shall entitle the
Participant to a cash payment, for each such share, equal to the excess of (i)
the greater of (A) the highest price per Common Share paid in the Change in
Control in connection with which such LSAR became exercisable and (B) the Fair
Market Value of a Common Share on the date of such Change in Control over (ii)
the exercise price of the related Option. Such payment shall be paid as soon
as practical, but in no event later than the expiration of five business days,
after the effective date of such exercise.
(2) The exercise of an LSAR relating to an Incentive Stock
Option with respect to any number of Common Shares shall entitle the
Participant to a cash payment, for each such share, equal to the excess of (i)
the Fair Market Value of a Common Share on the effective date of such exercise
over (ii) the exercise price of the related Option. Such payment shall be paid
as soon as practical, but in no event later than the expiration of five
business days, after the effective date of such exercise.
(b) Term and Exercise of LSARs
(1) An LSAR shall be exercisable only during the period
commencing on the first day following the occurrence of a Change in Control
and terminating on the expiration of sixty days after such date.
Notwithstanding the preceding sentence of this Section 7(b), in the event that
an LSAR held by any Participant who is or may be subject to the provisions of
Section 16(b) of the Exchange Act becomes exercisable prior to the expiration
of six months following the date on which it is granted, then the LSAR shall
also be exercisable during the period commencing on the first day immediately
following the expiration of such six month period and terminating on the
expiration of sixty days following such date. Notwithstanding anything else
herein, an LSAR relating to an Incentive Stock Option may be exercised with
respect to a Common Share only if the Fair Market Value of such share on the
effective date of such exercise exceeds the exercise price relating to such
share. Notwithstanding anything else herein, an LSAR may be exercised only if
and to the extent that the Option to which it relates is exercisable.
(2) The exercise of an LSAR with respect to a number of
Common Shares shall cause the immediate and automatic cancellation of the
Option to which it relates with respect to an equal number of shares. The
exercise of an Option, or the cancellation, termination or expiration of an
Option (other than pursuant to this Paragraph (2)), with respect to a number
of Common Shares, shall cause the cancellation of the LSAR related to it with
respect to an equal number of shares.
(3) Each LSAR shall be exercisable in whole or in part;
provided, that no partial exercise of an LSAR shall be for an aggregate
exercise price of less than $1,000, unless such partial exercise is for the
last remaining unexercised portion of such LSAR. The partial exercise of an
LSAR shall not cause the expiration, termination or cancellation of the
remaining portion thereof. Upon the partial exercise of an LSAR, the
agreements evidencing the LSAR, the related Option and any Tandem SARs related
to such Option shall be returned to the Participant exercising such LSAR
together with the payment described in Paragraph 7(a)(1) or (2) hereof, as
applicable.
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(4) An LSAR shall be exercised by delivering notice to Bion
Environmental Technologies, Inc.'s principal office, to the attention of its
Secretary, no less than one business day in advance of the effective date of
the proposed exercise. Such notice shall be accompanied by the applicable
agreements evidencing the LSAR, the related Option and any Tandem SARs
relating to such Option, shall specify the number of Common Shares with
respect to which the LSAR is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of business on the
business day immediately preceding the effective date of the proposed
exercise, in which case such agreements shall be returned to him.
8. Tandem Stock Appreciation Rights
The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARs relating to a number of Common Shares equal to or less
than the number of Common Shares subject to the related Option. A Tandem SAR
may be granted at the same time as, or subsequent to the time that, its
related Option is granted. Each Tandem SAR shall be evidenced by an agreement
in such form as the Committee shall from time to time approve. Tandem SARs
shall comply with and be subject to the following terms and conditions:
(a) Benefit Upon Exercise
The exercise of a Tandem SAR with respect to any number of
Common Shares shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (i) the Fair Market Value of a Common Share on
the effective date of such exercise over (ii) the exercise price of the
related Option. Such payment shall be paid as soon as practical, but in no
event later than the expiration of five business days, after the effective
date of such exercise.
(b) Term and Exercise of Tandem SAR
(1) A Tandem SAR shall be exercisable at the same time and
to the same extent (on a proportional basis, with any fractional amount being
rounded down to the immediately preceding whole number) as its related Option.
Notwithstanding the first sentence of this Paragraph 8(b)(1), (i) a Tandem SAR
shall not be exercisable at any time that an LSAR related to the Option to
which the Tandem SAR is related is exercisable and (ii) a Tandem SAR relating
to an Incentive Stock Option may be exercised with respect to a Common Share
only if the Fair Market Value of such share on the effective date of such
exercise exceeds the exercise price relating to such share.
(2) Notwithstanding the first sentence of Paragraph 8(b)(1)
hereof, the Committee may, in its absolute discretion, grant one or more
Tandem SARs which shall not become exercisable unless and until the
Participant to whom such Tandem SAR is granted is, in the determination of the
Committee, subject to Section 16(b) of the Exchange Act and which shall cease
to be exercisable if and at the time that the Participant ceases, in the
determination of the Committee, to be subject to such Section 16(b).
(3) The exercise of a Tandem SAR with respect to a number
of Common Shares shall cause the immediate and automatic cancellation of its
related Option with respect to an equal number of shares. The exercise of an
Option, or the cancellation, termination or expiration of an Option (other
than pursuant to this Paragraph (3)), with respect to a number of Common
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Shares shall cause the automatic and immediate cancellation of its related
Tandem SARs to the extent that the number of Common Shares subject to such
Option after such exercise, cancellation, termination or expiration is less
than the number of shares subject to such Tandem SARs. Such Tandem SARs shall
be canceled in the order in which they became exercisable.
(4) Each Tandem SAR shall be exercisable in whole or in
part; provided, that no partial exercise of a Tandem SAR shall be for an
aggregate exercise price of less than $1,000, unless such partial exercise is
for the last remaining unexercised portion of such Tandem SAR. The partial
exercise of a Tandem SAR shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial exercise of a
Tandem SAR, the agreements evidencing such Tandem SAR, its related Option and
LSARs relating to such Option shall be returned to the Participant exercising
such Tandem SAR together with the payment described in Section 8(a) hereof.
(5) A Tandem SAR shall be exercised by delivering notice to
Bion Environmental Technologies, Inc.'s principal office, to the attention of
its Secretary, no less than one business day in advance of the effective date
of the proposed exercise. Such notice shall be accompanied by the applicable
agreements evidencing the Tandem SAR, its related Option and any LSARs related
to such Option, shall specify the number of Common Shares with respect to
which the Tandem SAR is being exercised and the effective date of the proposed
exercise and shall be signed by the Participant. The Participant may withdraw
such notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise, in which
case such agreements shall be returned to him.
9. Stand-Alone Stock Appreciation Rights
Subject to the provisions of the Plan, the Committee may grant
Stand-Alone SARs, which Stand-Alone SARs shall be evidenced by agreements in
such form as the Committee shall from time to time approve. Stand-Alone SARs
shall comply with and be subject to the following terms and conditions:
(a) Exercise Price
The exercise price of any Stand-Alone SAR granted under the Plan
shall be determined by the Committee at the time of the grant of such
Stand-Alone SAR.
(b) Benefit Upon Exercise
The exercise of a Stand-Alone SAR with respect to any number of
Common Shares prior to the occurrence of a Change in Control shall entitle a
Participant to a cash payment, for each such share, equal to the excess of (i)
the Fair Market Value of a Common Share on the exercise date over (ii) the
exercise price of the Stand-Alone SAR. The exercise of a Stand-Alone SAR with
respect to any number of Common Shares upon or after the occurrence of a
Change in Control shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (i) the greater of (A) the highest price per
Common Share paid in connection with such Change in Control and (B) the Fair
Market Value of a Common Share on the date of such Change in Control over (ii)
the exercise price of the Stand-Alone SAR. Such payments shall be paid as soon
as practical, but in no event later than five business days, after the
effective date of the exercise.
<PAGE>
(c) Term and Exercise of Stand-Alone SARs
(1) Each Stand-Alone SAR shall be exercisable on such date
or dates, during such period and for such number of Common Shares as shall be
determined by the Committee and set forth in the Stand-Alone SAR agreement
with respect to such Stand-Alone SAR; provided, however, that no Stand-Alone
SAR shall be exercisable after the expiration of ten years from the date such
Stand-Alone SAR was granted; and, provided, further, that each Stand-Alone SAR
shall be subject to earlier termination, expiration or cancellation as
provided in the Plan.
(2) Each Stand-Alone SAR may be exercised in whole or in
part; provided, that no partial exercise of a Stand-Alone SAR shall be for an
aggregate exercise price of less than $1,000, unless such partial exercise is
for the last remaining unexercised portion of such Stand-Alone SAR. The
partial exercise of a Stand-Alone SAR shall not cause the expiration,
termination or cancellation of the remaining portion thereof. Upon the partial
exercise of a Stand-Alone SAR, the agreement evidencing such Stand-Alone SAR
shall be returned to the Participant exercising such Stand-Alone SAR together
with the payment described in Section 9(b) hereof.
(3) A Stand-Alone SAR shall be exercised by delivering
notice to Bion Environmental Technologies, Inc.'s principal office, to the
attention of its Secretary, no less than one business day in advance of the
effective date of the proposed exercise. Such notice shall be accompanied by
the applicable agreement evidencing the Stand-Alone SAR, shall specify the
number of Common Shares with respect to which the Stand-Alone SAR is being
exercised and the effective date of the proposed exercise and shall be signed
by the Participant. The Participant may withdraw such notice at any time prior
to the close of business on the business day immediately preceding the
effective date of the proposed exercise, in which case the agreement
evidencing the Stand-Alone SAR shall be returned to him.
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with
the Company shall terminate for any reason other than retirement at age 60 or
later, Cause, Disability or death, (i) Stand-Alone SARs granted to such
Participant, to the extent that they were exercisable at the time of such
termination, shall remain exercisable until the expiration of one month after
such termination, on which date they shall expire, and (ii) Stand-Alone SARs
granted to such Participant, to the extent that they were not exercisable at
the time of such termination, shall expire at the close of business on the
date of such termination; provided, however, that no Stand-Alone SAR shall be
exercisable after the expiration of its term.
(2) In the event that the employment of a Participant with
the Company shall terminate on account of the retirement at age 60 or later,
Disability or death of the Participant, (i) Stand-Alone SARs granted to such
Participant, to the extent that they were exercisable at the time of such
termination, shall remain exercisable until the expiration of one year after
such termination, on which date they shall expire, and (ii) Stand-Alone SARs
granted to such Participant, to the extent that they were not exercisable at
the time of such termination, shall expire at the close of business on the
date of such termination; provided, however, that no Stand-Alone SAR shall be
exercisable after the expiration of its term.
<PAGE>
(3) In the event of the termination of a Participant's
employment for Cause, all outstanding Stand-Alone SARs granted to such
Participant shall expire at the commencement of business on the date of such
termination.
(4) In the event that a Non-Employee Participant ceases to
provide services to the Company, all Stand-Alone SARs granted to such
Non-Employee Participant shall remain exercisable in accordance with their
terms.
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Stand-Alone SAR
granted under the Plan and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable until its expiration,
termination or cancellation pursuant to the terms of the Plan.
10. Restricted Stock
Subject to the provisions of the Plan, the Committee may grant shares of
Restricted Stock. Each grant of shares of Restricted Stock shall be evidenced
by an agreement in such form as the Committee shall from time to time approve.
Each grant of shares of Restricted Stock shall comply with and be subject to
the following terms and conditions:
(a) Issue Date and Vesting Date
At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such shares. The Committee may divide such
shares into classes and assign a different Issue Date and/or Vesting Date for
each class. Except as provided in Sections 10(c) and 10(f) hereof, upon the
occurrence of the Issue Date with respect to a share of Restricted Stock, a
share of Restricted Stock shall be issued in accordance with the provisions of
Section 10(d) hereof. Provided that all conditions to the vesting of a share
of Restricted Stock imposed pursuant to Section 10(b) hereof are satisfied,
and except as provided in Sections 10(c) and 10(f) hereof, upon the occurrence
of the Vesting Date with respect to a share of Restricted Stock, such share
shall vest and the restrictions of Section 10(c) hereof shall cease to apply
to such share.
(b) Conditions to Vesting
At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions, not inconsistent with
the provisions hereof, to the vesting of such shares as it, in its absolute
discretion, deems appropriate. By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any class or
classes of shares of Restricted Stock, that the Participant or the Company
achieve certain performance criteria, such criteria to be specified by the
Committee at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no transfer
of a Participant's rights with respect to such shares, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately upon
<PAGE>
any attempt to transfer such rights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(d) Issuance of Certificates
(1) Except as provided in Sections 10(c) or 10(f) hereof,
reasonably promptly after the Issue Date with respect to shares of Restricted
Stock, Bion Environmental Technologies, Inc. shall cause to be issued a stock
certificate, registered in the name of the Participant to whom such shares
were granted, evidencing such shares; provided, that Bion Environmental
Technologies, Inc. shall not cause to be issued such a stock certificate
unless it has received a stock power duly endorsed in blank with respect to
such shares. Each such stock certificate shall bear the following legend:
"The transferability of this certificate and the shares
of stock represented hereby is subject to the
restrictions, terms and conditions (including forfeiture
and restrictions against transfer) contained in the Bion
Environmental Technologies, Inc. 2000 Incentive Plan and
an Agreement entered into between the registered owner
of such shares and Bion Environmental Technologies, Inc.
A copy of the Plan and Agreement is on file in the
office of the Secretary of Bion Environmental
Technologies, Inc. Such legend shall not be removed from
the certificate evidencing such shares until such shares
vest pursuant to the terms hereof."
(2) Each certificate issued pursuant to Paragraph 10(d)(1)
hereof, together with the stock powers relating to the shares of Restricted
Stock evidenced by such certificate, shall be deposited by the Company with a
custodian designated by the Company. The Company shall cause such custodian to
issue to the Participant a receipt evidencing the certificates held by it
which are registered in the name of the Participant.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant to the
terms hereof, the restrictions of Section 10(c) hereof shall cease to apply to
such share. Reasonably promptly after a share of Restricted Stock vests
pursuant to the terms hereof, Bion Environmental Technologies, Inc. shall
cause to be issued and delivered to the Participant to whom such shares were
granted, a certificate evidencing such share, free of the legend set forth in
Paragraph 10(d)(1) hereof, together with any other property of the Participant
held by the custodian pursuant to Section 14(b) hereof.
(f) Effect of Termination of Employment
(1) In the event that the employment of a Participant with
the Company shall terminate for any reason other than Cause prior to the
vesting of shares of Restricted Stock granted to such Participant, a
proportion of such shares, to the extent not forfeited or canceled on or prior
to such termination pursuant to any provision hereof, shall vest on the date
of such termination. The proportion referred to in the preceding sentence
shall be determined by the Committee at the time of the grant of such shares
of Restricted Stock and may be based on the achievement of any conditions
imposed by the Committee with respect to such shares pursuant to Section
10(b). Such proportion may be equal to zero.
<PAGE>
(2) In the event of the termination of a Participant's
employment for Cause, all shares of Restricted Stock granted to such
Participant which have not vested as of the date of such termination shall
immediately be forfeited.
(3) In the event that a Non-Employee Participant ceases to
provide services to the Company, all shares of Restricted Stock granted to
such Non-Employee Participant shall vest in accordance with the terms of the
grant.
(g) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of
Restricted Stock which have not theretofore vested (including those with
respect to which the Issue Date has not yet occurred), or been canceled or
forfeited pursuant to any provision hereof, shall immediately vest.
11. Phantom Stock
Subject to the provisions of the Plan, the Committee may grant shares of
Phantom Stock. Each grant of shares of Phantom Stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Phantom Stock shall comply with and be subject to the
following terms and conditions:
(a) Vesting Date
At the time of the grant of shares of Phantom Stock, the
Committee shall establish a Vesting Date or Vesting Dates with respect to such
shares. The Committee may divide such shares into classes and assign a
different Vesting Date for each class. Provided that all conditions to the
vesting of a share of Phantom Stock imposed pursuant to Section 11(c) hereof
are satisfied, and except as provided in Section 11(d) hereof, upon the
occurrence of the Vesting Date with respect to a share of Phantom Stock, such
share shall vest.
(b) Benefit Upon Vesting
Upon the vesting of a share of Phantom Stock, a Participant
shall be entitled to receive in cash, within 30 days of the date on which such
share vests, an amount in cash in a lump sum equal to the sum of (i) the Fair
Market Value of a Common Share of the Company on the date on which such share
of Phantom Stock vests and (ii) the aggregate amount of cash dividends paid
with respect to a Common Share of the Company during the period commencing on
the date on which the share of Phantom Stock was granted and terminating on
the date on which such share vests.
(c) Conditions to Vesting
At the time of the grant of shares of Phantom Stock, the
Committee may impose such restrictions or conditions, not inconsistent with
the provisions hereof, to the vesting of such shares as it, in its absolute
discretion, deems appropriate. By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any class or
classes of shares of Phantom Stock, that the Participant or the Company
achieve certain performance criteria, such criteria to be specified by the
Committee at the time of the grant of such shares.
<PAGE>
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with
the Company shall terminate for any reason other than Cause prior to the
vesting of shares of Phantom Stock granted to such Participant, a proportion
of such shares, to the extent not forfeited or canceled on or prior to such
termination pursuant to any provision hereof, shall vest on the date of such
termination. The proportion referred to in the preceding sentence shall be
determined by the Committee at the time of the grant of such shares of Phantom
Stock and may be based on the achievement of any conditions imposed by the
Committee with respect to such shares pursuant to Section 11(c). Such
proportion may be equal to zero.
(2) In the event of the termination of a Participant's
employment for Cause, all shares of Phantom Stock granted to such Participant
which have not vested as of the date of such termination shall immediately be
forfeited.
(3) In the event that a Non-Employee Participant ceases to
provide services to the Company, all shares of Phantom Stock granted to such
Non-Employee Participant shall vest in accordance with the terms of the grant.
(e) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of
Phantom Stock which have not theretofore vested, or been canceled or forfeited
pursuant to any provision hereof, shall immediately vest.
12. Stock Bonuses
Subject to the provisions of the Plan, the Committee may grant Stock
Bonuses in such amounts as it shall determine from time to time. A Stock Bonus
shall be paid at such time and subject to such conditions as the Committee
shall determine at the time of the grant of such Stock Bonus. Certificates for
Common Shares granted as a Stock Bonus shall be issued in the name of the
Participant to whom such grant was made and delivered to such Participant as
soon as practicable after the date on which such Stock Bonus is required to be
paid.
13. Cash Bonuses
Subject to the provisions of the Plan, the Committee may grant, in
connection with any grant of Restricted Stock or Stock Bonus or at any time
thereafter, a cash bonus, payable promptly after the date on which the
Participant is required to recognize income for federal income tax purposes in
connection with such Restricted Stock or Stock Bonus, in such amounts as the
Committee shall determine from time to time; provided however, that in no
event shall the amount of a Cash Bonus exceed 50% of the Fair Market Value of
the related shares of Restricted Stock or Stock Bonus on such date. A Cash
Bonus shall be subject to such conditions as the Committee shall determine at
the time of the grant of such Cash Bonus.
14. Adjustment Upon Changes in Common Shares
(a) Shares Available for Grants
In the event of any change in the number of Common Shares
outstanding by reason of any stock dividend or split, recapitalization,
<PAGE>
merger, consolidation, combination or exchange of shares or similar corporate
change, the maximum aggregate number of Common Shares with respect to which
the Committee may grant Options, Stand-Alone SARs, shares of Restricted Stock,
shares of Phantom Stock and Stock Bonuses shall be appropriately adjusted by
the Committee. In the event of any change in the number of Common Shares
outstanding by reason of any other event or transaction, the Committee may,
but need not, make such adjustments in the number and class of Common Shares
with respect to which Options, Stand-Alone SARs, shares of Restricted Stock,
shares of Phantom Stock and Stock Bonuses may be granted as the Committee may
deem appropriate.
(b) Outstanding Restricted Stock and Phantom Stock
Unless the Committee in its absolute discretion otherwise
determines, any securities or other property (including dividends paid in
cash) received by a Participant with respect to a share of Restricted Stock,
the Issue Date with respect to which occurs prior to such event, but which has
not vested as of the date of such event, as the result of any dividend, stock
split, recapitalization, merger, consolidation, combination, exchange of
shares or otherwise, will not vest until such share of Restricted Stock vests,
and shall be promptly deposited with the custodian designated pursuant to
Paragraph 10(d)(2) hereof.
The Committee may, in its absolute discretion, adjust any grant
of shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, or
any grant of shares of Phantom Stock, to reflect any dividend, stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
similar corporate change as the Committee may deem appropriate to prevent the
enlargement or dilution of rights of Participants under the grant.
(c) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Certain Increases or Decreases in Issued Shares Without Consideration
Subject to any required action by the shareholders of Bion
Environmental Technologies, Inc., in the event of any increase or decrease in
the number of issued Common Shares resulting from a subdivision or
consolidation of Common Shares or the payment of a stock dividend (but only on
the Common Shares), the Committee shall proportionally adjust the number of
Common Shares subject to each outstanding Option, LSAR, Tandem SAR and
Stand-Alone SAR, and the exercise price per Common Share of each such Option,
LSAR, Tandem SAR and Stand-Alone SAR.
(d) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Certain Mergers
Subject to any required action by the shareholders of Bion
Environmental Technologies, Inc., in the event that Bion Environmental
Technologies, Inc. shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the
holders of Common Shares receive securities of another corporation), each
Option, LSAR, Tandem SAR and Stand-Alone SAR outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities which a
holder of the number of Common Shares subject to such Option, LSAR, Tandem SAR
or Stand-Alone SAR would have received in such merger or consolidation.
<PAGE>
(e) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Certain Other Transactions
In the event of (i) a dissolution or liquidation of Bion
Environmental Technologies, Inc., (ii) a sale of all or substantially all of
Bion Environmental Technologies, Inc.'s assets, (iii) a merger or
consolidation involving Bion Environmental Technologies, Inc. in which Bion
Environmental Technologies, Inc. is not the surviving corporation or (iv) a
merger or consolidation involving Bion Environmental Technologies, Inc. in
which Bion Environmental Technologies, Inc. is the surviving corporation but
the holders of Common Shares receive securities of another corporation and/or
other property, including cash, the Committee shall, in its absolute
discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence
of such event, each Option (including each LSAR and Tandem SAR related
thereto) and Stand-Alone SAR outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option or Stand-Alone SAR
was granted an amount in cash, for each Common Share subject to such Option or
Stand-Alone SAR, respectively, equal to the excess of (A) the value, as
determined by the Committee in its absolute discretion, of the property
(including cash) received by the holder of a Common Share as a result of such
event over (B) the exercise price of such Option or Stand-Alone SAR; or
(ii) provide for the exchange of each Option (including any
related LSAR or Tandem SAR) and Stand-Alone SAR outstanding immediately prior
to such event (whether or not then exercisable) for an option on or stock
appreciation right with respect to, as appropriate, some or all of the
property for which such Option or Stand-Alone SAR is exchanged and, incident
thereto, make an equitable adjustment as determined by the Committee in its
absolute discretion in the exercise price of the option or stock appreciation
right, or the number of shares or amount of property subject to the option or
stock appreciation right or, if appropriate, provide for a cash payment to the
Participant to whom such Option or Stand-Alone SAR was granted in partial
consideration for the exchange of the Option or Stand-Alone SAR.
(f) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Other Changes
In the event of any change in the capitalization of Bion
Environmental Technologies, Inc. or corporate change other than those
specifically referred to in Section 14(c), (d) or (e) hereof, the Committee
may, in its absolute discretion, make such adjustments in the number and class
of shares subject to Options, LSARs, Tandem SARs or Stand-Alone SARs
outstanding on the date on which such change occurs and in the per share
exercise price of each such Option, LSAR, Tandem SAR and Stand-Alone SAR as
the Committee may consider appropriate to prevent dilution or enlargement of
rights.
(g) No Other Rights
Except as expressly provided in the Plan, no Participant shall
have any rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any dividend, any increase or decrease in
the number of shares of stock of any class or any dissolution, liquidation,
merger or consolidation of Bion Environmental Technologies, Inc. or any other
corporation. Except as expressly provided in the Plan, no issuance by Bion
<PAGE>
Environmental Technologies, Inc. of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to the number of
Common Shares subject to an Incentive Award or the exercise price of any
Option, LSAR, Tandem SAR or Stand-Alone SAR.
15. Rights as a Shareholder
No person shall have any rights as a shareholder with respect to any
Common Shares covered by or relating to any Incentive Award granted pursuant
to this Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 14
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
16. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his employment
by the Company or interfere in any way with the right of the Company, subject
to the terms of any separate employment agreement to the contrary, at any time
to terminate such employment or to increase or decrease the compensation of
the Participant from the rate in existence at the time of the grant of an
Incentive Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to
such Participant or any other Participant or other person at any time nor
preclude the Committee from making subsequent grants to such Participant or
any other Participant or other person.
17. Securities Matters
(a) The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any Common Shares to be issued
hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing
Common Shares pursuant to the Plan unless and until the Company is advised by
its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which Common Shares are traded.
The Committee may require, as a condition of the issuance and delivery of
certificates evidencing Common Shares pursuant to the terms hereof, that the
recipient of such shares make such covenants, agreements and representations,
and that such certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that
the issuance and delivery of Common Shares pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which Common Shares are traded.
The Company may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of
shares of Common Stock pursuant thereto to be made pursuant to registration or
<PAGE>
an exemption from the registration or other methods for compliance available
under federal or state securities laws. The Company shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
(c) With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, transactions under this Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the Exchange
Act. To the extent any provision of the Plan, the grant of an Incentive Award,
or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
18. Withholding Taxes
(a) Cash Remittance
Whenever Common Shares are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock or the payment of a Stock Bonus, the Company shall
have the right to require the Participant to remit to the Company in cash an
amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or payment
prior to the delivery of any certificate or certificates for such shares. In
addition, upon the exercise of an LSAR, Tandem SAR or Stand-Alone SAR, the
grant of a Cash Bonus or the making of a payment with respect to a share of
Phantom Stock, the Company shall have the right to withhold from any cash
payment required to be made pursuant thereto an amount sufficient to satisfy
the federal, state and local withholding tax requirements.
(b) Stock Remittance
At the election of the Participant, subject to the approval of
the Committee, when Common Shares are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or the Vesting Date with respect to a
share of Restricted Stock or the grant of a Stock Bonus, in lieu of the
remittance required by Section 18(a) hereof, the Participant may tender to the
Company a number of Common Shares determined by such Participant, the Fair
Market Value of which at the tender date the Committee determines to be
sufficient to satisfy the federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or grant and
not greater than the Participant's estimated total federal, state and local
tax obligations associated with such exercise, occurrence or grant.
(c) Stock Withholding
At the election of the Participant, subject to the approval of
the Committee, when Common Shares are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or the Vesting Date with respect to a
share of Restricted Stock or the grant of a Stock Bonus, in lieu of the
remittance required by Section 18(a) hereof, the Company shall withhold a
number of such shares determined by such Participant, the Fair Market Value of
which at the exercise date the Committee determines to be sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise, occurrence or grant and is not greater than the
Participant's estimated total federal, state and local tax obligations
associated with such exercise, occurrence or grant.
<PAGE>
19. Amendment of the Plan
The Plan will have no fixed termination date, but may be terminated at
any time by the Board of Directors. Incentive Awards outstanding as of the
date of any such termination will not be affected or impaired by the
termination of the Plan. The Board of Directors may amend, alter, or
discontinue the Plan, but no amendment, alteration or discontinuation shall be
made which would (i) impair the rights of a Participant without the
Participant's consent, except such an amendment which is necessary to cause
any Incentive Award or transaction under the Plan to qualify, or to continue
to qualify, for the exemption provided by Rule 16b-3, or (ii) disqualify any
Incentive Award or transaction under the Plan from the exemption provided by
Rule 16b-3. In addition, no such amendment may be made without the approval of
the Company's shareholders to the extent such approval is required by law or
agreement.
20. No Obligation to Exercise
The grant to a Participant of an Option, LSAR, Tandem SAR or Stand-Alone
SAR shall impose no obligation upon such Participant to exercise such Option,
LSAR, Tandem SAR or Stand-Alone SAR.
21. Nontransferability
Unless the Committee provides otherwise, (i) no right or interest of a
Participant in any Incentive Award may be pledged, encumbered, or hypothecated
to or in favor of any party other than the Company or a Subsidiary, or shall
be subject to any lien, obligation, or liability of such Participant to any
other party other than the Company or a Subsidiary, and (ii) no Incentive
Award shall be assignable or transferable by a Participant other than by will
or the laws of descent and distribution.
22. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used
for general corporate purposes.
23. Suspension or Termination of Incentive Award
In addition to the remedies of the Company elsewhere provided for herein,
if the Committee reasonably believes that a Participant has committed an act
of misconduct as described in this Section, the Committee may suspend the
Participant's rights to exercise any Incentive Award pending a determination
by the Board of Directors. If the Board of Directors determines a Participant
has committed an act of misconduct, including, but not limited to,
embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the
Company, breach of fiduciary duty or deliberate disregard of the Company's
rules resulting in loss, damage or injury to the Company, or a Participant
makes an unauthorized disclosure of any Company trade secret or confidential
information, engages in any conduct constituting unfair competition, induces
any Company customer to breach a contract with the Company, induces any
principal for whom the Company acts as agent to terminate such agency
relationship, or has failed to comply with the terms and conditions of the
Plan or any agreement executed by such Participant evidencing an Incentive
Award, unless such failure has been remedied by such Participant within 10
days after having been notified of such failure by the Committee, neither the
Participant nor his or her estate, executors, administrators, or heirs, shall
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be entitled to exercise any Incentive Award whatsoever. In making such
determination, the Board of Directors shall act fairly and shall give the
Participant an opportunity to appear and present evidence on his or her behalf
at a hearing before a committee of the Board of Directors. For any Participant
who is an "Executive Officer" for the purposes of Section 16 of the Securities
Exchange Act of 1934, as amended, a determination of the Board of Directors
shall be subject to the approval of the Committee.
24. Code Section 162(m).
The Committee, in its sole discretion, may require that one or more
Incentive Awards contain provisions which provide that, in the event Section
162(m) of the Code, or any successor provision relating to excessive employee
remuneration, would operate to disallow a deduction by the Company for all or
part of any Incentive Award under the Plan, a Participant's receipt of the
portion of such Incentive Award that would not be deductible by the Company
shall be deferred until the next succeeding year or years in which the
Participant's remuneration does not exceed the limit set forth in such
provision of the Code.
25. Effective Date of Plan
The Plan shall be effective as of April 15, 2000, subject to approval by
the Company's Shareholders at their next Annual or Special Meeting.
