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EXHIBIT 4.3
HAMILTON BANCORP INC.
1998 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE. The purpose of this Plan is to advance the interests of
Hamilton Bancorp Inc. (the "Company") by providing an additional incentive to
attract and retain qualified and competent persons who are key employees or
directors of the Company or its subsidiaries or affiliated entities, and upon
whose efforts and judgment the success of the Company is largely dependent.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Affiliate" shall mean any corporation other than the Company that
is a member of an affiliated group of corporations, as defined in
Section 1504 (determined without regard to Section 1504(b)) of the
Internal Revenue Code, of which the Company is a member.
(b) "Annual Incentive Award" shall mean a conditional right granted to
a Participant under Section 13(c) hereof to receive a cash payment or
other Award, unless otherwise determined by the Committee, after the
end of a specified fiscal year.
(c) "Award" shall mean any Option, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Committee" shall mean the compensation committee appointed by the
Board (as described in Section 14 hereof) or, if such a committee does
not exist, the Board.
(f) "Common Stock" shall mean the 1 cent par value Common Stock of the
Company.
(g) "Covered Employee" shall mean any individual who, on the last day
of the taxable year of the Company, is (i) the Chief Executive Officer
of the Company or is acting in such capacity (the "CEO"), (ii) among
the four highest compensated officers of the Company and its Affiliates
(other than the CEO), or (iii) otherwise considered to be a "Covered
Employee" within the meaning of Section 162(m) of the Internal Revenue
Code and the regulations promulgated thereunder.
(h) "Director" shall mean a member of the Board.
(i) "Eligible Person" means each Officer of the Company (as defined
under the Exchange Act) and other officers, directors and employees of
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the Company or of any Subsidiary. An employee on leave of absence may
be considered as still in the employ of the Company or a Subsidiary for
purposes of eligibility for participation in the Plan.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Fair Market Value" of a Share on any date of reference shall be
the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding such date or, if there are no sales
on that date, then on the last previous day on which a sale was
reported, unless the Committee in its sole discretion shall determine
otherwise in a fair and uniform manner. For the purpose of determining
Fair Market Value, the "Closing Price" of the Common Stock on any
business day shall be (i) if the Common Stock is listed or admitted for
trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of Common Stock on such
exchange or reporting system, as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on the National
Association of Securities Dealers Automated Quotations System
("Nasdaq"), or any similar system of automated dissemination of
quotations of securities prices in common use, the last reported sale
price of Common Stock for such day on such system, or (ii) if neither
clause (i) or (ii) is applicable, the mean between the high bid and low
asked quotations for the Common Stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have
inserted both bid and asked quotations for Common Stock on at least
five of the ten preceding days. If neither (i), (ii), or (iii) above is
applicable, then Fair Market Value shall be determined in good faith by
the Committee in a fair and uniform manner.
(l) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(m) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(n) "Non-Employee Director" shall refer to a Director who is not an
employee of the Company or any Subsidiary.
(o) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(p) "Officer" shall mean the Company's president, principal financial
officer, principal accounting officer and any other person who the
Company identifies as an executive officer.
(q) "Option" shall mean any option granted under this Plan.
(r) "Outside Director" shall mean a member of the Board who (i) is not
a current employee of the Company or any Affiliate; (ii) is not a
former employee of the Company or any Affiliate who receives
compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the taxable year; (iii) has not
been an officer of the Company or any Affiliate; (iv) does not receive
remuneration either directly or indirectly, in any capacity other than
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as a director; and (v) satisfies any other conditions that shall from
time to time be required to qualify as an "outside director" under
Section 162(m) of the Internal Revenue Code and the regulations
thereunder and as a "Non-Employee Director" under Rule 16b-3
promulgated under the Exchange Act. For this purpose, "Remuneration"
shall have the meaning afforded that term pursuant to Treasury
Regulations issued under Section 162(m) of the Internal Revenue Code,
and shall exclude any de minimis remuneration excluded under those
Treasury Regulations.
(s) "Participant" shall mean a person to whom an Award is granted under
this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person;
(t) "Performance Award" means a right, granted to a Eligible Person
under Section 13 hereof, to receive Awards based upon performance
criteria specified by the Committee or the Board.
(u) "Plan" shall mean this Executive Incentive Compensation Plan.
(v) "Share" shall mean a share of the Common Stock.
(w) "Subsidiary" shall mean any corporation (other than the Company) in
any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing
50 percent or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
3. SHARES AND OPTIONS. The Company may grant to Participants from time
to time Options to purchase an aggregate of up to One Hundred Twenty-two
Thousand Five Hundred (122,500) Shares from Shares held in the Company's
treasury or from authorized and unissued Shares. If any Option granted under the
Plan shall terminate, expire, or be canceled or surrendered as to any Shares,
new Options may thereafter be granted covering such Shares. An Option granted
hereunder shall be either an Incentive Stock Option or a Non-Qualified Stock
Option as determined by the Committee at the time of grant of such Option, and
shall clearly state, whether it is an Incentive Stock Option or Non-Qualified
Stock Option. All Options shall be granted within 10 years from the effective
date of this Plan.
4. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options to the extent
that the aggregate fair market value (determined at the time the Option is
granted) of the Shares, with respect to which Options meeting the requirements
of Internal Revenue Code Section 422(b) are exercisable for the first time by
any individual during any calendar year (under all plans of the Company),
exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee,
provided such terms are not inconsistent with this Plan or any
applicable law. Participants shall be those persons selected by the
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Committee in its sole discretion. Any person who files with the
Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible
to receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee may take into consideration the
contribution the person has made to the success of the Company and its
subsidiaries and such other factors as the Committee shall determine.
The Committee shall also have the authority to consult with and receive
recommendations from Officers and other personnel of the Company with
regard to these matters. The Committee may from time in granting
Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without
limitation, (i) prescribing the date or dates on which the Option
becomes exercisable, (ii) providing that the Option rights accrue or
become exercisable in installments over a period of years, or upon the
attainment of stated goals or both, or (iii) if applicable, relating an
Option to the continued employment of the Participant for a specified
period of time, provided that such terms and conditions are not more
favorable to a Participant than those expressly permitted herein.
(c) If applicable, the Options granted to employees under this Plan
shall be in addition to regular salaries, pension, life insurance or
other benefits related to their employment or other relationship with
the Company. Neither the Plan nor any Option granted under the Plan
shall confer upon any person any right to employment or continuance of
employment by the Company.
(d) Notwithstanding any other provision of this Plan, and in addition
to any other requirements of this Plan, the aggregate number of Shares
with respect to which Options may be granted to any one Participant may
not exceed 61,250, subject to adjustment as provided in Section 10(a)
hereof.
(e) Notwithstanding any other provision of this Plan, and in addition
to any other requirements of this plan, Options may not be granted to a
Covered Employee unless the grant of such Option is authorized by, and
all of the terms of such Options are determined by, a Committee that is
appointed in accordance with Section 14 of this Plan and all of whose
members are Outside Directors.
(f) Incentive Stock Options may not be granted to any Non-Employee
Directors.
6. EXERCISE PRICE. The exercise price per Share of any Option shall be
any price determined by the Committee but shall not be less than the par value
per Share; provided, however, that in no event shall the exercise price per
Share of any Incentive Stock Option be less than the Fair Market Value of the
Shares underlying such Option on the date such Option is granted.
7. EXERCISE OF OPTIONS.
(a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms
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of the Option (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made and (iii)
arrangements that are satisfactory to the Committee, in its sole
discretion, have been made for the Participant's payment to the Company
of the amount that is necessary for the Company employing the
Participant to withhold in accordance with applicable Federal or state
tax withholding requirements.
(b) Unless further limited by the Committee in any Option, the option
price of any Shares purchased shall be paid (i) in cash, (ii) by
certified or official bank check, (iii) by money order, (iv) with
Shares owned by the Participant that have been owned by the Participant
for more than 6 months on the date of surrender or such other period as
may be required to avoid a charge to the Company's earnings for
financial accounting purposes, (v) by authorization for the Company to
withhold Shares issuable upon exercise of the Option, (vi) by
arrangement with a broker that is acceptable to the Committee where
payment of the Option price is made pursuant to an irrevocable
direction to the broker to deliver all or part of the proceeds from the
sale of the Option Shares to the Company in payment of the Option
price, or (vii) any combination of the foregoing. The Committee in its
sole discretion may accept a personal check in full or partial payment
of any Shares. If the exercise price is paid in whole or in part with
Shares, the value of the Shares surrendered shall be their Fair Market
Value on the date the Option is exercises. The Company in its sole
discretion may, on an individual basis or pursuant to a general program
established in connection with this Plan, and subject to applicable
law, lend money to a Participant, guarantee a loan to a Participant, or
otherwise assist a Participant to obtain the cash necessary to exercise
all or a portion of an Option granted hereunder or to pay any tax
liability of the Participant attributable to such exercise. If the
exercise price is paid in whole or part with Participant's promissory
note, such note shall (i) provide for full recourse to the maker, (ii)
be collateralized by the pledge of the Shares that the Participant
purchases upon exercise of such option, (iii) bear interest at a rate
no less than the prime rate of the Company's principal bank subsidiary
and (iv) contain such other terms as the Board in its sole discretion
shall reasonably require.
(c) No Participant shall be deemed to be a holder of any Shares subject
to an Option unless and until a stock certificate or certificates for
such Shares are issued to such person(s) under the terms of this Plan.
No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date such stock
certificate is issued, except as expressly provided in Section 10
hereof.
8. EXERCISABILITV OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 8.
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be
exercisable after the expiration of 10 years from the date of grant of
the Option.
(b) Unless otherwise provided in any Option, each outstanding Option
shall become immediately fully exercisable:
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(i) if there occurs any transaction (which shall include
a series of transactions occurring, within 60 days or
occurring pursuant to a plan), that has the result
that stockholders of the Company immediately before
such transaction cease to own at least fifty percent
(50%) of the voting stock of the Company or of any
entity that results from the participation of the
Company in a reorganization, consolidation, merger,
liquidation or any other form of corporate
transaction;
(ii) if the stockholders of the Company shall approve a
plan of merger, consolidation, reorganization,
liquidation or dissolution in which the Company does
not survive (unless the approved merger,
consolidation, reorganization, liquidation or
dissolution is subsequently abandoned); or
(iii) if the stockholders of the Company shall approve a
plan for the sale, lease, exchange or other
disposition of all or substantially all the property
and assets of the Company (unless such plan is
subsequently abandoned).
(c) The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option or previously acquired by the exercise of
any Option.
9. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option granted to a Participant
shall automatically and without notice terminate and become null and
void at the time of the earliest to occur of the following:
(i) three months after the date on which the
Participant's employment with the Company or any
Subsidiary, or service as a Director or as a director
of any Subsidiary, is terminated or, in the case of a
Non-Qualified Stock Option and unless the Committee
shall otherwise determine in writing in its sole
discretion, the date on which the Participant's
employment with the Company or any Subsidiary, or
service as a Director or as a director of any
Subsidiary, is terminated, in either case for any
reason other than by reason of (a) Cause, which shall
mean "Cause" under such Participant's employment
agreement, if any, and which, solely for purposes of
this Plan, also shall mean the termination of the
Participant's employment or the removal of the
Participant as a Director or as a director of any
Subsidiary by reason of the Participant's willful
misconduct or gross negligence, (b) the Participant's
mental or physical disability (within the meaning of
Internal Revenue Code Section 22(e)) as determined by
a medical doctor satisfactory to the Committee or (c)
the Participant's death;
(ii) immediately upon the termination of the Participant's
employment with the Company or any Subsidiary, or
service as a Director or as a director of any
Subsidiary, for Cause;
(iii) twelve months after the date on which the
Participant's employment with the Company or any
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Subsidiary, or service as a Director or as a director
of any Subsidiary, is terminated by reason of mental
or physical disability (within the meaning of
Internal Revenue Code Section 22(e)) as determined by
a medical doctor satisfactory to the Committee, or
(iv) (a) twelve months after the date of the Participant's
death or (b) three months after the date of the
Participant's death if such death shall occur during
the twelve month period specified in Subsection
9(a)(iii) hereof.
(b) The Committee in its sole discretion may by giving written notice
("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Subsections
8(b)(ii) or (iii) hereof, any Option that remains unexercised on such
date. Such cancellation notice shall be given a reasonable period of
time prior to the proposed date of such cancellation and may be given
either before or after approval of such corporate transaction.
10. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of shares available for grant under the Plan,
so that the same percentage of the Company's issued
and outstanding Shares shall continue to be subject
to being so optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then
subject to any outstanding Option, so that the same
percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same
aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect
to the option price or the number of Shares subject to the Options, or
both, when, in the Committee's sole discretion, such adjustments become
appropriate by reason of a corporate transaction described in
Subsections 8(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants
to subscribe thereof, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to the number of or exercise price of Shares then subject to
outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any
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manner the right or power of the Company to make, authorize or
consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business; (ii) any merger or consolidation of the Company; (iii)
any issue by the Company of debt securities, or preferred or preference
stock that would rank above the Shares subject to outstanding Options;
(iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of
the Company; or (vi) any other corporate act or proceeding, whether of
a similar character or otherwise.
11. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) No Incentive Stock Option, and unless the Committee's prior written
consent is obtained (which consent may be obtained at the time an
Option is granted) and the transaction does not violate the
requirements of Rule 16-B-3 promulgated under the Exchange Act no
Non-Qualified Stock Option, shall be subject to alienation, assignment,
pledge, charge or other transfer other than by the Participant by will
or the laws of descent and distribution, and any attempt to make any
such prohibited transfer shall be void. Each Option shall be
exercisable during the Participant's lifetime only by the Participant,
or in the case of a Non-Qualified Stock Option that has been assigned
or otherwise transferred with the Committee's prior written consent,
only by the assignee consented to by the Committee.
(b) Unless the Committee's prior written consent is obtained (which
consent may be obtained at the time an Option is granted) and the
transaction does not violate the requirements of Rule 16b-3 promulgated
under the Exchange Act, no Shares acquired by an Officer, as that term
is defined under Rule 16b-3, of the Company or Director or a director
of any Subsidiary pursuant to the exercise of an Option may be sold,
assigned, pledged or otherwise transferred prior to the expiration of
the six-month period following the date on which the Option was
granted.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(a) a representation and warranty by the Participant to the Company, at
the time any Option is exercised, that he is acquiring the Shares to be
issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(b) a representation, warranty and/or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law deemed
by the Committee to be applicable to the issuance of the Shares and are
endorsed upon the Share certificates.
13. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may
be subject to such performance conditions as may be specified by the
Committee or the Board. The Committee or the Board may use such
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business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable under any Award
subject to performance conditions, except as limited under Sections
13(b) and 13(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). If and
to the extent required under Code Section 162(m), any power or
authority relating to a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m), shall be exercised by
the Committee and not the Board.
(b) Performance Awards Granted to Designated Covered Employees. If and
to the extent that the Committee determines that a Performance Award to
be granted to an Eligible Person who is designated by the Committee as
likely to be a Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant, exercise
and/or settlement of such Performance Award shall be contingent upon
achievement of preestablished performance goals and other terms set
forth in this Section 13(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 13(b). Performance goals shall be objective
and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including
the requirement that the level or levels of
performance targeted by the Committee result in the
achievement of performance goals being "substantially
uncertain." The Committee may determine that such
Performance Awards shall be granted, exercised and/or
settled upon achievement of any one performance goal
or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or
settlement of such Performance Awards. Performance
goals may differ for Performance Awards granted to
any one Participant or to different Participants.
(ii) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated
basis, and/or specified subsidiaries or business
units of the Company (except with respect to the
total stockholder return and earnings per share
criteria), shall be used exclusively by the Committee
in establishing performance goals for such
Performance Awards: (1) total stockholder return; (2)
such total stockholder return as compared to total
return (on a comparable basis) of a publicly
available index such as, but not limited to, the
Standard & Poor's 500 Stock Index or the S&P
Specialty Retailer Index; (3) net income; (4) pretax
earnings; (5) earnings before interest expense,
taxes, depreciation and amortization; (6) pretax
operating earnings after interest expense and before
bonuses, service fees, and extraordinary or special
items; (7) operating margin; (8) earnings per share;
(9) return on equity; (10) return on capital; (11)
return on investment; (12) operating earnings; (13)
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working capital or inventory; and (14) ratio of debt
to stockholders' equity. One or more of the foregoing
business criteria shall also be exclusively used in
establishing performance goals for Annual Incentive
Awards granted to a Covered Employee under Section
13(c) hereof that are intended to qualify as
"performance-based compensation" under Code Section
162(m).
(iii) Performance Period; Timing For Establishing
Performance Goals. Achievement of performance goals
in respect of such Performance Awards shall be
measured over a performance period of up to ten
years, as specified by the Committee. Performance
goals shall be established not later than 90 days
after the beginning of any performance period
applicable to such Performance Awards, or at such
other date as may be required or permitted for
"performance-based compensation" under Code Section
162(m).
(iv) Performance Award Pool. The Committee may establish a
Performance Award pool, which shall be an unfunded
pool, for purposes of measuring Company performance
in connection with Performance Awards. The amount of
such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on
one or more of the business criteria set forth in
Section 13(b)(ii) hereof during the given performance
period, as specified by the Committee in accordance
with Section 13(b)(iii) hereof. The Committee may
specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount,
or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(v) Settlement of Performance Awards; Other Terms.
Settlement of such Performance Awards shall be in
cash, Shares, other Awards or other property, in the
discretion of the Committee. The Committee may, in
its discretion, reduce the amount of a settlement
otherwise to be made in connection with such
Performance Awards. The Committee shall specify the
circumstances in which such Performance Awards shall
be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a
performance period or settlement of Performance
Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees. If
and to the extent that the Committee determines that an Annual
Incentive Award to be granted to an Eligible Person who is designated
by the Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m),
the grant, exercise and/or settlement of such Annual Incentive Award
shall be contingent upon achievement of preestablished performance
goals and other terms set forth in this Section 13(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
Company performance in connection with Annual
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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 13(b)(ii)
hereof during the given performance period, as
specified by the Committee in accordance with Section
13(b)(iii) hereof. The Committee may specify the
amount of the Annual Incentive Award pool as a
percentage of any such business criteria, a
percentage thereof in excess of a threshold amount,
or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the
end of the 90th day of each fiscal year, or at such
other date as may be required or permitted in the
case of Awards intended to be "performance-based
compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who
will potentially receive Annual Incentive Awards, and
the amounts potentially payable thereunder, for that
fiscal year, either out of an Annual Incentive Award
pool established by such date under Section 13(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 13(b)(ii) hereof in the given performance
year, as specified by the Committee; in other cases,
such amount shall be based on such criteria as shall
be established by the Committee.
(iii) Payout of Annual Incentive Awards. After the end of
each fiscal year, the Committee shall determine the
amount, if any, of (A) the Annual Incentive Award
pool, and the maximum amount of potential Annual
Incentive Award payable to each Participant in the
Annual Incentive Award pool, or (B) the amount of
potential Annual Incentive Award otherwise payable to
each Participant. The Committee may, in its
discretion, determine that the amount payable to any
Participant as an Annual Incentive Award shall be
reduced from the amount of his or her potential
Annual Incentive Award, including a determination to
make no Award whatsoever. The Committee shall specify
the circumstances in which an Annual Incentive Award
shall be paid or forfeited in the event of
termination of employment by the Participant prior to
the end of a fiscal year or settlement of such Annual
Incentive Award.
(d) Written Determinations. All determinations by the Committee as to
the establishment of performance goals, the amount of any Performance
Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under
Section 13(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 13(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
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Performance Awards or Annual Incentive Awards if and to the extent
required to comply with Code Section 162(m).
(e) Maximum Performance Award and Annual Incentive Award. The maximum
amount that may be earned as an Annual Incentive Award or other cash
Award in any fiscal year by any one Participant, and the maximum amount
that may be earned as a Performance Award or other cash Award in
respect of a performance period by any one Participant, shall be
$5,000,000.
(f) Status of Section 13(b) and Section 13(c) Awards Under Code Section
162(m). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 13(b) and 13(c) hereof granted to
persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute
"qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the terms of
Sections 13(b), (c), (d), (e) and (f), including the definitions of
Covered Employee and other terms used therein, shall be interpreted in
a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed,
the term Covered Employee as used herein shall mean only a person
designated by the Committee, at the time of grant of Performance Awards
or an Annual Incentive Award, as likely to be a Covered Employee with
respect to that fiscal year. If any provision of the Plan or any
agreement relating to such Performance Awards or Annual Incentive
Awards does not comply or is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements.
14. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which shall
consist of not less than two Directors, each of whom shall be Outside
Directors. The Committee shall have all of the powers of the Board with
respect to the Plan. Any member of the Committee may be removed at any
time, with or without cause, by resolution of the Board and any vacancy
occurring in the membership of the Committee may be filled by
appointment of the Board.
(b) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan. The Committee's
determinations and its interpretation and construction of any provision
of the Plan shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee shall be
made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of
the members of the Committee.
(d) The Board may reserve to itself the power to grant Options to
employees or Directors of the Company or any Subsidiary who are not
Covered Employees. If and to the extent that the Board reserves such
powers, then all references herein to the Committee shall refer to the
Board with respect to the Options granted by the Board.
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15. INCENTIVE OPTIONS FOR 10% STOCKHOLDERS. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Internal Revenue Code) at the date of grant, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (or of its subsidiary [as defined in Section 424 of the
Internal Revenue Code] at the date of grant) unless the option price of such
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of five years from the date such Option is
granted.
16. INTERPRETATION
(a) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under the plan will qualify as
Incentive Stock Options under section 422 of the Internal Revenue Code.
If any provision of the Plan should be held invalid for the granting of
Incentive Stock Options or illegal for any reason, such determination
shall not affect the remaining provisions hereof, but instead the Plan
shall be construed and enforced as if such provision had never been
included in the Plan.
(b) This Plan shall be governed by the laws of the State of Florida.
(c) Headings contained in this Plan are for convenience only and shall
in no manner be construed as part of the Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall be
a reference to such other gender as is appropriate.
(e) As it is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 promulgated under the Exchange Act ("Rule
16b-3"), any ambiguities or inconsistencies in construction of the Plan
shall be interpreted to give effect to such intention, and if any
provision of the Plan is found not to be in compliance with Rule 16b-3,
such provision shall be deemed null and void to the extent required to
permit the Plan to comply with Rule 16b-3. The Board and the Committee
each may from time to time adopt rules and regulations under, and
amend, the Plan in furtherance of the intent of the foregoing.
17. AMENDMENT AND DISCONTINUATION OF THE PLAN. Either the Board or the
Committee may from time to time amend the Plan or any Option; provided, however,
that, except to the extent provided in Section 10, no such amendment may,
without approval by the stockholders of the Company, (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities which may be issued under the Plan, or (c) materially
modify the requirements as to eligibility for participation in the Plan; and
provided further, that, except to the extent provided in Section 9, no amendment
or suspension of the Plan or any Option issued hereunder shall substantially
impair any Option previously granted to any Participant without the consent of
such Participant.
18. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is January 1, 1998, provided that the stockholders of the Company have approved
the Plan on or before September 1, 1998, and the Plan shall terminate on the
10th anniversary of the effective date.
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