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BAKER, FENTRESS & COMPANY
1998 Incentive Compensation Plan
(as amended and restated)
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BAKER, FENTRESS & COMPANY
1998 Incentive Compensation Plan
(as amended and restated)
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PAGE
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1. Purpose.............................................................. 1
2. Definitions.......................................................... 1
3. Administration....................................................... 3
(a) Authority of the Committee.................................... 3
(b) Manner of Exercise of Committee Authority..................... 3
(c) Limitation of Liability....................................... 3
4. Stock Subject to Plan................................................ 4
(a) Overall Number of Shares of Stock Available for Delivery...... 4
(b) Application of Limitation to Grants of Awards................. 4
(c) Availability of Shares Not Delivered under Awards ............ 4
5. Eligibility; Per-Person Award Limitations............................ 4
6. Specific Terms of Awards............................................. 5
(a) General........................................................ 5
(b) Options........................................................ 5
(c) Stock Appreciation Rights...................................... 5
(d) Restricted Stock............................................... 6
(e) Deferred Stock................................................. 7
(f) Bonus Stock and Awards in Lieu of Obligations.................. 7
(g) Dividend Equivalents........................................... 7
(h) Annual Incentive and Performance Awards........................ 8
7. Certain Provisions Applicable to Awards............................... 8
(a) Stand-Alone, Additional, Tandem, and Substitute Awards ........ 8
(b) Term of Awards................................................. 8
(c) Form and Timing of Payment under Awards; Deferrals ............ 8
(d) Exemptions from Section 16(b) Liability........................ 9
(e) Loan Provisions................................................ 9
(f) General Terms Relating to Awards............................... 9
<PAGE>
BAKER, FENTRESS & COMPANY
1998 Incentive Compensation Plan
(as amended and restated)
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PAGE
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8. Performance and Annual Incentive Awards............................... 9
(a) Performance Conditions......................................... 9
(b) Performance Awards Granted to Designated Covered Employees .... 9
(c) Annual Incentive Awards Granted to Designated Covered Employees 11
(d) Written Determinations......................................... 12
(e) Status of Section 8(b) and 8(c) Awards under Code Section 162(m)12
9. Change in Control......................................................12
(a) Effect of "Change in Control" on Non-Performance Based Awards...12
(b) Effect of "Change in Control" on Performance-Based Awards.......13
(c) Definition of "Change in Control"...............................13
(d) Definition of "Change in Control Price".........................14
10. General Provisions.....................................................14
(a) Compliance with Legal and Other Requirements....................14
(b) Limits on Transferability; Beneficiaries........................14
(c) Adjustments.....................................................15
(d) Taxes...........................................................15
(e) Changes to the Plan and Awards..................................16
(f) Limitation on Rights Conferred under Plan.......................16
(g) Unfunded Status of Awards; Creation of Trusts...................16
(h) Nonexclusivity of the Plan......................................16
(i) Payments in the Event of Forfeitures; Fractional Shares ........17
(j) Governing Law...................................................17
(k) Plan Effective Date and Shareholder Approval....................17
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BAKER, FENTRESS & COMPANY
1998 Incentive Compensation Plan
(as amended and restated)
================================================================================
1. PURPOSE. The purpose of this 1998 Incentive Compensation Plan,
as amended and restated (the "Plan"), is to assist Baker, Fentress & Company
("BKF") and its subsidiaries in attracting, retaining, motivating, and rewarding
high-quality executives, employees, and other persons who provide services to
BKF and/or its subsidiaries, enabling such persons to acquire or increase a
proprietary interest in BKF in order to strengthen the mutuality of interests
between such persons and shareholders of BKF, and providing such persons with
annual and long-term performance incentives to expend their maximum efforts in
the creation of shareholder value. The Plan is also intended to qualify certain
compensation awarded under the Plan for tax deductibility under Code Section
162(m) to the extent deemed appropriate by the Committee (or any successor
committee) of the Board of Directors of BKF. Adoption of the Plan and the grant
of Awards in accordance with the terms of the Plan has been determined by the
Board of Directors of BKF to be in the best interests of BKF and its
shareholders.
2. DEFINITIONS. For purposes of the Plan, the following terms
shall be defined as set forth below, in addition to such terms defined in
Section 1 hereof:
(a) "Annual Incentive Award" means an Award granted to a
Participant which is conditioned upon satisfaction, during a period not
in excess of one year, of performance criteria established by the
Committee.
(b) "Award" means any Option, SAR, Restricted Stock, Deferred
Stock, Stock granted as a bonus or in lieu of another award, Dividend
Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent
written beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant's death or to
which Awards or other rights are transferred if and to the extent
permitted under Section 10(b) hereof. If, upon a Participant's death,
there is no designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary means the Participant's estate.
(d) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 under the Exchange Act and any successor to such
Rule.
(e) "Board" means BKF's Board of Directors.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor
provisions and regulations thereto.
(g) "Committee" means a committee of two or more directors
designated by the Board to administer the Plan, each of whom shall be
(i) a "non-employee director" within the meaning of Rule 16b-3 under
the Exchange Act, and (ii) an "outside director" as defined under Code
Section 162(m), unless administration of the Plan by "outside
directors" is not then required in order to qualify for tax
deductibility under Code Section 162(m).
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BAKER, FENTRESS & COMPANY
1998 Incentive Compensation Plan
(as amended and restated)
================================================================================
(h) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 8(e) of the Plan.
(i) "Deferred Stock" means a right, granted to a Participant
under Section 6(e) hereof, to receive Stock, cash or a combination
thereof at the end of a specified deferral period.
(j) "Dividend Equivalent" means a right, granted to a
Participant under Section 6(g), to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a
specified number of shares of Stock, or other periodic payments.
(k) "Effective Date" means the date on which BKF shareholders
approve the adoption of the Plan.
(l) "Eligible Person" means each Executive Officer or director
of BKF and other officers and employees of BKF or any of its
subsidiaries. An employee on leave of absence may be considered as
still in the employ of BKF or a subsidiary for purposes of eligibility
for participation in the Plan. In addition, a person who has been
offered employment by BKF or any of its subsidiaries or agreed to
become a director of BKF is eligible to be granted an Award under the
Plan; provided, however, that such Award shall be canceled if such
person fails to commence such employment or service as a director, and
no payment of value may be made in connection with such Award until
such person has commenced such employment or service.
(m) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.
(n) "Executive Officer" means an executive officer of BKF as
defined under the Exchange Act.
(o) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or under
procedures established by the Committee. Unless otherwise determined by
the Committee, the Fair Market Value of Stock shall be equal to the
closing price per share reported on a consolidated basis on the
principal stock exchange upon which Stock is traded on the date on
which the value is to be determined (or the last immediately preceding
date on which Stock was traded).
(p) "Incentive Stock Option" or "ISO" means any Option
intended to be and designated as an incentive stock option within the
meaning of Code Section 422 or any successor provision thereto.
(q) "Option" means a right, granted to a Participant under
Section 6(b) hereof, to purchase Stock or other Awards at a specified
price during specified time periods.
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(r) "Participant" means a person who has been granted an Award
under the Plan which remains outstanding, including a person who is no
longer an Eligible Person.
(s) "Performance Award" means an Award granted to a
Participant which is conditioned upon satisfaction, during a period in
excess of one year but in no event more than ten years, of performance
criteria established by the Committee.
(t) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, and shall include a "group" as defined in Section 13(d)
thereof.
(u) "Restricted Stock" means Stock granted to a Participant
under Section 6(d) hereof that is subject to certain restrictions and
to a risk of forfeiture.
(v) "Rule 16b-3" means Rule 16b-3, as from time to time in
effect and applicable to the Plan and Participants, promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange
Act.
(w) "Stock" means either BKF Common Stock, and such other
securities as may be substituted (or resubstituted) for BKF Common
Stock pursuant to Section 10(c) hereof.
(x) "Stock Appreciation Rights" or "SAR" means a right granted
to a Participant under Section 6(c) hereof.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered
by the Committee. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by
all of the members, shall be the acts of the Committee. The Committee
shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons
to become Participants, grant Awards, determine the type, number and
other terms and conditions of, and all other matters relating to,
Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of
the Plan, construe and interpret the Plan and Award agreements and
correct defects, supply omissions or reconcile inconsistencies therein,
and to make all other decisions and determinations as the Committee may
deem necessary or advisable for the administration of the Plan. Other
provisions of the Plan notwithstanding, the Board shall perform the
functions of the Committee for purposes of interpreting or otherwise
administering grants to non-employee directors.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Any action of
the Committee shall be final, conclusive and binding on all persons,
including BKF, its subsidiaries, Participants, Beneficiaries,
transferees under Section 11(b) hereof or other persons claiming rights
from or through a Participant, and shareholders. The express grant of
any specific power to the Committee, and the taking of any action by
the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or
managers of BKF or any subsidiary, or committees thereof, the
authority, subject to such terms as the Committee shall determine, to
perform such functions, including administrative functions, as the
Committee may determine, to the extent that such delegation will not
result in the loss of an exemption under Rule 16b-3(d)(1) for Awards
granted to Participants subject to Section 16 of the Exchange Act in
respect of BKF and will not cause Awards intended to qualify as
"performance-based compensation" under
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Code Section 162(m) to fail to so qualify. The Committee may appoint
agents to assist it in administering the Plan.
(c) LIMITATION OF LIABILITY. The Committee and each member
thereof shall be entitled, in good faith, to rely or act upon any
report or other information furnished to him or her by any executive
officer, other officer or employee of BKF or a subsidiary, BKF's
independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and any officer or
employee of BKF or a subsidiary acting at the direction or on behalf of
the Committee shall not be personally liable for any action or
determination taken or made in good faith with respect to the Plan, and
shall, to the extent permitted by law, be fully indemnified and
protected by BKF with respect to any such action or determination;
provided that nothing herein shall be construed to protect any such
person from any liability to BKF or its shareholders to which such
person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his or her duties, or
by reason of reckless disregard of his or her obligations and duties.
4. STOCK SUBJECT TO PLAN.
(a) OVERALL NUMBER OF SHARES OF STOCK AVAILABLE FOR DELIVERY.
Subject to adjustment as provided in Section 10(c) hereof, the total
number of shares of Stock reserved and available for delivery in
connection with Awards under the Plan shall be (i) 1,300,000, plus (ii)
10% of the number of shares of Stock issued or delivered by BKF during
the term of the Plan (excluding any issuance or delivery in connection
with Awards, or any other compensation or benefit plan of BKF);
provided, however, that the total number of shares of Stock with
respect to which ISOs may be granted shall not exceed one million. Any
shares of Stock delivered under the Plan shall consist of authorized
and unissued shares or treasury shares.
(b) APPLICATION OF LIMITATION TO GRANTS OF AWARDS. No Award
may be granted if the number of shares of Stock to be delivered in
connection with such Award or, in the case of an Award relating to
shares of Stock but settleable only in cash (such as cash-only SARs),
the number of shares to which such Award relates, exceeds the number of
shares of Stock remaining available under the Plan minus the number of
shares of Stock issuable in settlement of or relating to
then-outstanding Awards. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as,
for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs
from the number of shares previously counted in connection with an
Award.
(c) AVAILABILITY OF SHARES NOT DELIVERED UNDER AWARDS. Shares
of Stock subject to an Award under the Plan that is canceled, expired,
forfeited, settled in cash or otherwise terminated without a delivery
of shares to the Participant, including (i) the number of shares
withheld in payment of any exercise or purchase price of an Award or
taxes relating to Awards, and (ii) the number of shares surrendered in
payment of any exercise or purchase price of an Award or taxes relating
to any Award, will again be available for Awards under the Plan, except
that if any such shares could not again be available for Awards to a
particular Participant under any applicable law or regulation, such
shares shall be available exclusively for Awards to Participants who
are not subject to such limitation.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be
granted under the Plan only to Eligible Persons. In each fiscal year during any
part of which the Plan is in effect, an Eligible Person may not be granted
Awards relating to more than one million shares of Stock,
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subject to adjustment as provided in Section 10(c), under each of Sections 6(b),
6(c), 6(d), 6(e), 6(f), 6(g) and 6(h). For purposes of applying the foregoing
limitation to Sections 6(b) and 6(c), any Option or SAR that is canceled shall
be treated as remaining outstanding, and any amendment to an Option or SAR that
reduces the exercise or grant price (other than customary anti-dilution
adjustments) shall be treated as the cancellation of the original Option or SAR
and the issuance of a new Option or SAR. In addition, the maximum cash Award
that may be earned under the Plan pursuant to Section 6(h) in respect of any
fiscal year shall be $20 million, determined on an annualized basis in the case
of a Performance Award.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition, the Committee may impose on
any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 11(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine, including terms requiring forfeiture of Awards in the event
of termination of employment by the Participant and terms permitting a
Participant to make elections relating to his or her Award. The
Committee shall retain full power and discretion to accelerate, waive
or modify, at any time, any term or condition of an Award that is not
mandatory under the Plan. Except in cases in which the Committee is
authorized to require other forms of consideration under the Plan, or
to the extent other forms of consideration must by paid to satisfy the
requirements of the Delaware General Corporation Law, no consideration
other than services may be required for the grant (but not the
exercise) of any Award.
(b) OPTIONS. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) EXERCISE PRICE. The exercise price per share
of Stock purchasable under an Option shall be determined by
the Committee, provided that such exercise price shall be not
less than the Fair Market Value of a share of Stock on the
date of grant of such Option except as provided under Section
7(a) hereof.
(ii) TIME AND METHOD OF EXERCISE. The Committee
shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole
or in part (including based on achievement of performance
goals and/or future service requirements), the methods by
which such exercise price may be paid or deemed to be paid,
the form of such payment, including, without limitation, cash,
Stock, other Awards, or other property (including notes or
other contractual obligations of Participants to make payment
on a deferred basis), and the methods by or forms in which
Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOS. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of Code
Section 422. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to ISOs
(including any SAR in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify
either the Plan or any ISO under Code Section 422, unless the
Participant has first requested the change that will result in
such disqualification.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized to
grant SARs to Participants on the following terms and conditions:
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(i) RIGHT TO PAYMENT. A SAR shall confer on the
Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of
one share of Stock on the date of exercise over (B) the grant
price of the SAR as determined by the Committee.
(ii) OTHER TERMS. The Committee shall determine
at the date of grant or thereafter, the time or times at which
and the circumstances under which a SAR may be exercised in
whole or in part (including based on achievement of
performance goals and/or future service requirements), the
method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in
which Stock will be delivered or deemed to be delivered to
Participants, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and
conditions of any SAR. SARs may be either freestanding or in
tandem with other Awards.
(d) RESTRICTED STOCK. The Committee is authorized to grant
Restricted Stock to Participants on the following terms and conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock
shall be subject to such restrictions on transferability, risk
of forfeiture and other restrictions, if any, as the Committee
may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including
based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as
the Committee may determine at the date of grant or
thereafter. Except to the extent restricted under the terms of
the Plan and any Award agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all
of the rights of a shareholder, including the right to vote
the Restricted Stock and the right to receive dividends
thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). During the restricted
period applicable to the Restricted Stock, subject to Section
11(b) below, the Restricted Stock may not be sold,
transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.
(ii) FORFEITURE. Except as otherwise determined
by the Committee, upon termination of employment during the
applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited and
reacquired by the issuing company; provided that the Committee
may provide, by rule or regulation or in any Award agreement,
or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock shall be
waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of
Restricted Stock.
(iii) CERTIFICATES FOR STOCK. Restricted Stock
granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates
bear an appropriate legend referring to the terms, conditions
and restrictions applicable to such Restricted Stock, that the
issuing company retain physical possession of the
certificates, and that the Participant deliver a stock power
to the issuing company, endorsed in blank, relating to the
Restricted Stock.
(iv) DIVIDENDS, DISTRIBUTIONS AND SPLITS. As a
condition to the grant of an
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Award of Restricted Stock, the Committee may require that any
cash dividends or distributions paid on a share of Restricted
Stock be automatically reinvested in additional shares of
Restricted Stock or applied to the purchase of additional
Awards under the Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split,
Stock dividend or distribution, and other property distributed
as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with
respect to which such Stock or other property has been
distributed.
(e) DEFERRED STOCK. The Committee is authorized to grant
Deferred Stock to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral
period, subject to the following terms and conditions:
(i) AWARD AND RESTRICTIONS. Satisfaction of an Award
of Deferred Stock shall occur upon expiration of the deferral
period specified for such Deferred Stock by the Committee (or,
if permitted by the Committee, as elected by the Participant).
In addition, Deferred Stock shall be subject to such
restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at
the expiration of the deferral period or at earlier specified
times (including based on achievement of performance goals
and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee
may determine. Deferred Stock may be satisfied by delivery of
Stock, cash equal to the Fair Market Value of the specified
number of shares of Stock covered by the Deferred Stock, or a
combination thereof, as determined by the Committee at the
date of grant or thereafter.
(ii) FORFEITURE. Except as otherwise determined by
the Committee, upon termination of employment during the
applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award
agreement evidencing the Deferred Stock), all Deferred Stock
that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be
forfeited; provided that the Committee may provide, by rule or
regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions
relating to Deferred Stock shall be waived in whole or in part
in the event of terminations resulting from specified causes,
and the Committee may in other cases waive in whole or in part
the forfeiture of Deferred Stock.
(iii) DIVIDEND EQUIVALENTS. Unless otherwise
determined by the Committee at date of grant, Dividend
Equivalents on the specified number of shares of Stock covered
by an Award of Deferred Stock shall be either (A) paid with
respect to such Deferred Stock at the dividend payment date in
cash or in shares of unrestricted Stock having a Fair Market
Value equal to the amount of such dividends, or (B) deferred
with respect to such Deferred Stock and the amount or value
thereof automatically deemed reinvested in additional Deferred
Stock, other Awards or other investment vehicles, as the
Committee shall determine or permit the Participant to elect.
(f) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to
Section 16 of the Exchange Act, the amount of such grants remains
within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Stock or other Awards are exempt from
liability under
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Section 16(b) of the Exchange Act. Stock or Awards granted hereunder
shall be subject to such other terms as shall be determined by the
Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to
receive cash, Stock, or other Awards equal in value to dividends paid
with respect to a specified number of shares of Stock, or other
periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee
may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock,
Awards, or other investment vehicles, and subject to such restrictions
on transferability and risks of forfeiture, as the Committee may
specify.
(h) ANNUAL INCENTIVE AND PERFORMANCE AWARDS. The Committee is
authorized to make Annual Incentive Awards and Performance Awards
payable in cash, Stock, or other Awards, on terms and conditions
established by the Committee, subject to Section 8 in the event of
Annual Incentive Awards or Performance Awards intended to qualify as
"performance-based compensation" for purposes of Code Section 162(m).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS.
Awards granted under the Plan may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted
under another plan of BKF, any subsidiary, or any business entity to be
acquired by BKF or any subsidiary, or any other right of a Participant
to receive payment from BKF or any subsidiary. Such additional, tandem,
and substitute or exchange Awards may be granted at any time. If an
Award is granted in substitution or exchange for another Award or
award, the Committee shall require the surrender of such other Award or
award in consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of BKF or any subsidiary, in
which the value of Stock subject to the Award is equivalent in value to
the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price
of the Award in the nature of a right that may be exercised is equal to
the Fair Market Value of the underlying Stock minus the value of the
cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation
surrendered).
(b) TERM OF AWARDS. The term of each Award shall be for such
period as may be determined by the Committee; provided that in no event
shall the term of any Option or SAR exceed a period of ten years (or
such shorter term as may be required in respect of an ISO under Code
Section 422).
(c) FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS.
Subject to the terms of the Plan and any applicable Award agreement,
payments to be made by BKF or any subsidiary upon the exercise of an
Option or other Award or settlement of an Award may be made in such
forms as the Committee shall determine, including, without limitation,
cash, Stock, or other Awards, and may be made in a single payment or
transfer, in installments, or on a deferred basis. The settlement of
any Award may be accelerated, and cash paid in lieu of Stock in
connection with such settlement, in the discretion of the Committee or
upon the occurrence of one or more specified events. Installment or
deferred payments may be required by the Committee to the extent
necessary to qualify payments for deductibility under Code Section
162(m), or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the
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payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents or other
amounts in respect of installment or deferred payments denominated in
Stock. Any payments mandatorily deferred by the Committee to qualify
such payments for deductibility under Code Section 162(m) shall include
a reasonable rate of interest.
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(d) EXEMPTIONS FROM SECTION 16(B) LIABILITY. It is the intent
of BKF and its subsidiaries that the grant of any Awards to or other
transaction by a Participant who is subject to Section 16 of the
Exchange Act shall be exempt under Rule 16b-3 (except for transactions
acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award agreement does
not comply with the requirements of Rule 16b-3 as then applicable to
any such transaction, such provision shall be construed or deemed
amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid
liability under Section 16(b).
(e) LOAN PROVISIONS. With the consent of the Committee, and
subject at all times to, and only to the extent, if any, permitted
under and in accordance with, laws and regulations and other binding
obligations or provisions applicable to BKF and/or any subsidiary, BKF
and/or any subsidiary may make, guarantee or arrange for a loan or
loans to a Participant with respect to the exercise of any Option,
purchase of Stock or other payment in connection with any Award,
including the payment by a Participant of any or all federal, state or
local income or other taxes due in connection with any Award. Subject
to such limitations, the Committee shall have full authority to decide
whether to make a loan or loans hereunder and to determine the amount,
terms and provisions of any such loan or loans, including the interest
rate to be charged in respect of any such loan or loans, the terms on
which the loan is to be repaid and conditions, if any, under which the
loan or loans may be forgiven.
(f) GENERAL TERMS RELATING TO AWARDS. Unless the Committee
provides otherwise at the time of grant or by amendment, an Option,
SAR, grant of Restricted Stock or Deferred Stock will become
exercisable or settleable, as the case may be, in three equal
installments after each of the first, second and third anniversaries of
the date of grant based on the Participant's continued employment with
BKF or any of its subsidiaries. Unless the Committee provides otherwise
at the time of grant or by amendment, an Option or SAR will have a
maximum term of ten years after the date of grant and will expire
immediately upon the Participant's termination of employment with BKF
and its subsidiaries, except if such termination occurs by reason of
the Participant's death, retirement or disability, in which case the
Option or SAR will be immediately exercisable and may be exercised by
the Participant or his or her Beneficiary within one year following
such termination (but in no event later than the maximum term of the
Option or SAR).
8. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.
(a) PERFORMANCE CONDITIONS. The right of a Participant to
exercise or receive a grant or settlement of any Award, and the timing
thereof, may be subject to such performance conditions as may be
specified by the Committee. The Committee may use such business
criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any Award
subject to performance conditions; provided, however, that all
Performance Awards and Annual Incentive Awards shall comply with the
requirements of Sections 8(b) and 8(c) hereof unless the Committee
specifically determines at the time of grant that such Award is not
intended to qualify as "performance-based compensation" under Code
Section 162(m).
(b) PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES. Unless the Committee determines that a Performance Award is
not intended to qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement
of such Performance Award shall be contingent upon achievement of
preestablished performance goals and other terms set forth in this
Section 8(b).
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(i) PERFORMANCE GOALS GENERALLY. The performance
goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of
performance with respect to each of such criteria, as
specified by the Committee consistent with this Section 8(b).
Performance goals shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations
thereunder (including Regulation 1.162-27 and successor
regulations thereto), including the requirement that the level
or levels of performance targeted by the 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 BKF, on a consolidated basis, and/or for
specified subsidiaries, business units, funds or partnerships
of BKF or any of its subsidiaries (except with respect to the
total shareholder return and earnings per share criteria),
shall be used by the Committee in establishing performance
goals for such Performance Awards: (1) earnings per share; (2)
revenues; increase in revenues; the excess of all or a portion
of revenues over operating expenses (excluding expenses
determined by the Committee at the time performance goals are
established); (3) cash flow; (4) cash flow return on
investment; (5) return on net assets, return on assets, return
on investment, return on capital, return on equity; (6)
economic value added; (7) operating margin; (8) net income;
pretax earnings; pretax earnings before interest,
depreciation, amortization and/or incentive compensation;
pretax operating earnings; operating earnings; (9) total
shareholder return; (10) performance of managed fund(s); (11)
increase in market share; (12) assets under management; (13)
reduction in costs; (14) increase in the Fair Market Value of
Stock; and (15) any of the above goals as compared to the
performance of a published or special index deemed applicable
by the Committee including, but not limited to, the Standard &
Poor's 500 Stock Index, the Standard & Poor's Financial Index,
the SNL Investment Advisor Index or a group of comparator
companies. One or more of the foregoing business criteria
shall also be exclusively used in establishing performance
goals for Annual Incentive Awards granted to a Covered
Employee under Section 8(c) hereof.
(iii) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING
PERFORMANCE GOALS. Achievement of performance goals in respect
of such Performance Awards shall be measured over a
performance period of up to ten years, as specified by the
Committee. Performance goals shall be established not later
than 90 days after the beginning of any performance period
applicable to such Performance Awards, or at such other date
as may be required or permitted for "performance-based
compensation" under Code Section 162(m).
(iv) PERFORMANCE AWARD POOL. The Committee may
establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring performance of BKF, any
subsidiary and/or any business unit of BKF and/or any of its
subsidiaries in connection with Performance Awards. The amount
of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or
more of the business criteria set forth in Section 8(b)(ii)
hereof during the given performance period, as specified by
the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Performance Award pool
as a percentage of any of such business criteria, a percentage
thereof in
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excess of a threshold amount, or as another amount which need
not bear a strictly mathematical relationship to such business
criteria, provided that the amount of the Performance Award
pool can be determined by an independent third party in
possession of all the relevant facts.
(v) SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS.
Settlement of such Performance Awards shall be in cash, Stock
or other Awards, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such
Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in
respect of a Performance Award subject to this Section 8(b).
The Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end
of a performance period or settlement of Performance Awards.
(c) ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES. Unless the Committee determines that an Annual Incentive
Award is not intended to qualify as "performance-based compensation"
for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Annual Incentive Award shall be contingent upon
achievement of preestablished performance goals and other terms set
forth in this Section 8(c).
(i) ANNUAL INCENTIVE AWARD POOL. The Committee may
establish an Annual Incentive Award pool, which shall be an
unfunded pool, for purposes of measuring performance of BKF,
any subsidiary and/or any business unit of BKF and/or any of
its subsidiaries in connection with Annual Incentive Awards.
The amount of such Annual Incentive Award pool shall be based
upon the achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section
8(b)(ii) hereof during the given performance period, as
specified by the Committee in accordance with Section
8(b)(iii) hereof. The Committee may specify the amount of the
Annual Incentive Award pool as a percentage of any of such
business criteria a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a
strictly mathematical relationship to such business criteria,
provided that the amount of the Annual Incentive Award pool
can be determined by an independent third party in possession
of all the relevant facts.
(ii) POTENTIAL ANNUAL INCENTIVE AWARDS. Not later
than the end of the 90th day of each fiscal year, or at such
other date as may be required or permitted in the case of
Awards intended to be "performance-based compensation" under
Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive
Awards, and the amounts potentially payable thereunder, for
that fiscal year, either out of an Annual Incentive Award pool
established by such date under Section 8(c)(i) hereof or as
individual Annual Incentive Awards. In the case of individual
Annual Incentive Awards intended to qualify under Code Section
162(m), the amount potentially payable shall be based upon the
achievement of a performance goal or goals based on one or
more of the business criteria set forth in Section 8(b)(ii)
hereof in the given performance year, as specified by the
Committee; in other cases, such amount shall be based on such
criteria as shall be established by the Committee.
(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
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discretion, determine that the amount payable to any
Participant as a final Annual Incentive Award shall be
increased or reduced from the amount of his or her potential
Annual Incentive Award, including a determination to make no
final Award whatsoever, but may not exercise discretion to
increase any such amount in the case of an Annual Incentive
Award intended to qualify under Code Section 162(m). The
Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end
of a fiscal year or settlement of such Annual Incentive Award.
Settlement of Annual Incentive Awards shall be in cash, Stock
or other Awards, in the discretion of the Committee.
(d) WRITTEN DETERMINATIONS. All determinations by the
Committee as to the establishment of performance goals, the amount of
any Performance Award pool or potential individual Performance Awards
and as to the achievement of performance goals relating to Performance
Awards under Section 8(b), and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the amount of
final Annual Incentive Awards under Section 8(c), shall be made in
writing in the case of any Award intended to qualify under Code Section
162(m). No Performance Award or Annual Incentive Award intended to
qualify under Code Section 162(m) shall be paid until the Committee has
certified in writing that the applicable performance goals have been
achieved. The Committee may not delegate any responsibility relating to
such Performance Awards or Annual Incentive Awards.
(e) STATUS OF SECTION 8(B) AND SECTION 8(C) AWARDS UNDER CODE
SECTION 162(M). It is the intent of BKF and its subsidiaries that
Performance Awards and Annual Incentive Awards under Sections 8(b) and
8(c) hereof granted to persons who are likely to be Covered Employees
within the meaning of Code Section 162(m) and regulations thereunder
(including Regulation 1.162-27 and successor regulations thereto)
shall, if so designated by the Committee, constitute "performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e),
including the definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent with Code Section
162(m) and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a given
Participant will be a Covered Employee with respect to a fiscal year
that has not yet been completed, the term Covered Employee as used
herein shall mean any Eligible Person who receives a Performance Award
or an Annual Incentive Award unless the Committee determines, at the
time of grant, that such Award is not intended to qualify as
"performance-based compensation" for purposes of Code Section 162(m).
If any provision of the Plan as in effect on the date of adoption or
any agreements relating to Performance Awards or Annual Incentive
Awards that are designated as intended to comply with Code Section
162(m) does not comply or is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements.
9. CHANGE IN CONTROL.
(a) EFFECT OF "CHANGE IN CONTROL" ON NON-PERFORMANCE BASED
AWARDS. In the event of a "Change in Control," the following provisions
shall apply to non-performance based Awards, including Awards as to
which performance conditions previously have been satisfied or are
deemed satisfied under Section 9(b), unless otherwise provided by the
Committee in the Award document:
(i) All deferral of settlement, forfeiture conditions
and other restrictions applicable to Awards granted under the
Plan shall lapse and such Awards shall be fully
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payable as of the time of the Change in Control without regard
to deferral and vesting conditions, except to the extent of
any waiver by the Participant or other express election to
defer beyond a Change in Control and subject to applicable
restrictions set forth in Section 10(a);
(ii) Any Award carrying a right to exercise that was
not previously exercisable and vested shall become fully
exercisable and vested as of the time of the Change in Control
and shall remain exercisable and vested for the balance of the
stated term of such Award without regard to any termination of
employment or service by the Participant other than a
termination for "cause" (as defined in any employment or
severance agreement between the Company or a subsidiary or
affiliate and the Participant then in effect or, if none, as
defined by the Committee and in effect at the time of the
Change in Control), subject only to applicable restrictions
set forth in Section 10(a); and
(iii) The Committee may, in its discretion, determine
to extend to any Participant who holds an Option the right to
elect, during the 60-day period immediately following the
Change in Control, in lieu of acquiring the shares of Stock
covered by such Option, to receive in cash the excess of the
Change in Control Price over the exercise price of such
Option, multiplied by the number of shares of Stock covered by
such Option, and to extend to any Participant who holds other
types of Awards denominated in shares the right to elect,
during the 60-day period immediately following the Change in
Control, in lieu of receiving the shares of Stock covered by
such Award, to receive in cash the Change in Control Price
multiplied by the number of shares of Stock covered by such
Award.
(b) EFFECT OF "CHANGE IN CONTROL" ON PERFORMANCE-BASED AWARDS. In
the event of a "Change in Control," with respect to an outstanding Award
subject to achievement of performance goals and conditions, such
performance goals and conditions will be deemed to be met if and to the
extent so provided by the Committee in the Award document governing such
Award or other agreement with the Participant.
(c) DEFINITION OF "CHANGE IN CONTROL." A "Change in Control" shall
be deemed to have occurred if, after the Effective Date, there shall have
occurred any of the following:
(i) any "person" as such term is currently used in
Section 13(d) of the Exchange Act, other than John A. Levin or
any entity directly or indirectly controlled by him, becomes a
"beneficial owner", as such term is currently used in Rule
13d-3 promulgated under that Act, of 50% or more of BKF's
Voting Stock, which term means the issued and outstanding
capital stock or other securities of any class or classes
having general voting power, under ordinary circumstances in
the absence of contingencies, to elect the directors of a
corporation;
(ii) a majority of the Board consists of individuals
other than Incumbent Directors, which term means the members
of the Board on the Effective Date; PROVIDED THAT any
individual becoming a director subsequent to such date whose
election or nomination for election was supported by a
majority of the directors who then comprised the Incumbent
Directors shall be considered an Incumbent Director;
(iii) all or substantially all of the assets or
business of BKF are disposed of pursuant to a merger,
consolidation, or other transaction (other than the asset
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<PAGE>
distribution transactions contemplated in BKF's proxy
statement dated July 22, 1999) unless (A) the shareholders of
BKF immediately prior to such merger, consolidation or other
transaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned BKF's Voting
Stock, all of the Voting Stock or other ownership interests of
the entity or entities, if any, that succeed to the business
of BKF, or (B) a majority of the board of directors of the
surviving corporation in such a transaction consists of
Incumbent Directors or directors appointed by Levin Management
Co., Inc. but excluding directors who were members of the
other entity's board of directors;
(iv) the Board adopts any plan of liquidation
providing for the distribution of all or substantially all of
BKF's assets; or
(v) BKF combines with another company and is the
surviving corporation but, immediately after the combination,
the shareholders of BKF immediately prior to the combination
hold, directly or indirectly, 50% or less of the Voting Stock
of the combined company (there being excluded from the number
of shares held by such shareholders, but not from the Voting
Stock of the combined company, any shares received by
affiliates of such other company in exchange for securities of
such other company).
(d) DEFINITION OF "CHANGE IN CONTROL PRICE." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the
amount of cash and fair market value of property that is the highest
price per share paid (including extraordinary dividends) in any
transaction triggering the Change in Control or any liquidation of
shares following a sale of substantially all assets of the Company, or
(ii) the highest Fair Market Value per share at any time during the
60-day period preceding and 60-day period following the Change in
Control.
10. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. BKF may, to
the extent deemed necessary or advisable by the Committee, postpone the
issuance or delivery of Stock or payment of other benefits under any
Award until completion of such registration or qualification of such
Stock or other required action under any federal or state law, rule or
regulation, listing or other required action with respect to any stock
exchange or automated quotation system upon which the Stock is listed
or quoted, or compliance with any other obligation of BKF as the
Committee may consider appropriate, and may require any Participant to
make such representations, furnish such information and comply with or
be subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Stock or payment of other
benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations.
(b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or
other right or interest of a Participant under the Plan shall be
pledged, hypothecated or otherwise encumbered or subject to any lien,
obligation or liability of such Participant to any party (other than
BKF or a subsidiary), or assigned or transferred by such Participant
otherwise than by will or the laws of descent and distribution or to a
Beneficiary upon the death of a Participant, and such Awards or rights
that may be exercisable shall be exercised during the lifetime of the
Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs
and SARs in tandem therewith) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the
Participant to facilitate estate planning, and may be exercised by such
transferees in accordance with the
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<PAGE>
terms of such Award, but only if and to the extent such transfers are
permitted by the Committee pursuant to the express terms of an Award
agreement (subject to any terms and conditions which the Committee may
impose thereon). A Beneficiary, transferee, or other person claiming
any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award agreement
applicable to such Participant, except as otherwise determined by the
Committee, and to any additional terms and conditions deemed necessary
or appropriate by the Committee.
(c) ADJUSTMENTS. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or
event affects the Stock such that an adjustment is determined by the
Committee to be appropriate under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection
with Awards granted thereafter, (ii) the number and kind of shares of
Stock by which annual per-person Award limitations are measured under
Section 5 hereof, (iii) the number and kind of shares of Stock subject
to or deliverable in respect of outstanding Awards and (iv) the
exercise price, grant price or purchase price relating to any Award
and/or make provision for payment of cash or other property in respect
of any outstanding Award. In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria
included in, Awards (including Performance Awards and performance
goals, and Annual Incentive Awards and any Annual Incentive Award pool
or performance goals relating thereto) in recognition of unusual or
nonrecurring events (including, without limitation, events described in
the preceding sentence, as well as acquisitions and dispositions of
businesses and assets) affecting BKF, any subsidiary or any business
unit, or the financial statements of BKF or any subsidiary or business
unit, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions
or in view of the Committee's assessment of the business strategy of
BKF, any subsidiary or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance
of a Participant, and any other circumstances deemed relevant; provided
that no such adjustment shall be authorized or made if and to the
extent that such authority or the making of such adjustment would cause
Options, SARs, Performance Awards granted under Section 8(b) hereof or
Annual Incentive Awards granted under Section 8(c) hereof to
Participants designated by the Committee as Covered Employees and
intended to qualify as "performance-based compensation" under Code
Section 162(m) and regulations thereunder to otherwise fail to qualify
as "performance-based compensation" under Code Section 162(m) and
regulations thereunder.
(d) TAXES. BKF and/or any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other
payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an
Award, and to take such other action as the Committee may deem
advisable to enable BKF and/or any subsidiary and Participants to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant's tax
obligations, either on a mandatory or elective basis in the discretion
of the Committee.
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<PAGE>
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend,
alter, suspend, discontinue or terminate the Plan or the Committee's
authority to grant Awards under the Plan without the consent of
shareholders or Participants, except that any amendment or alteration
to the Plan shall be subject to the approval of BKF's shareholders not
later than the annual meeting next following such Board action if such
shareholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board
may otherwise, in its discretion, determine to submit other such
changes to the Plan to shareholders for approval; provided that,
without the consent of an affected Participant, no such Board action
may materially and adversely affect the rights of such Participant
under any previously granted and outstanding Award. The Committee may
waive any conditions or rights under, or amend, alter, suspend,
discontinue or terminate any Award theretofore granted and any Award
agreement relating thereto, except as otherwise provided in the Plan;
provided that, without the consent of an affected Participant, no such
Committee action may materially and adversely affect the rights of such
Participant under such Award. Notwithstanding anything in the Plan to
the contrary, if any right under this Plan would cause a transaction to
be ineligible for pooling of interest accounting that would, but for
the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest
accounting shall be available, including the substitution of Stock
having a Fair Market Value equal to the cash otherwise payable
hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.
(f) LIMITATION ON RIGHTS CONFERRED UNDER PLAN. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving
any Eligible Person or Participant the right to continue as an Eligible
Person or Participant or in the employ or service of BKF or a
subsidiary, (ii) interfering in any way with the right of BKF or a
subsidiary to terminate any Eligible Person's or Participant's
employment or service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be
treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a shareholder of BKF
unless and until the Participant is duly issued or transferred shares
of Stock in accordance with the terms of an Award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a
Participant or obligation to deliver Stock pursuant to an Award,
nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general
creditor of BKF; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other
property, or make other arrangements to meet BKF's obligations under
the Plan. Such trusts or other arrangements shall be consistent with
the "unfunded" status of the Plan unless the Committee otherwise
determines with the consent of each affected Participant. The trustee
of such trusts may be authorized to dispose of trust assets and
reinvest the proceeds in alternative investments, subject to such terms
and conditions as the Committee may specify and in accordance with
applicable law.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board nor its submission to the shareholders of BKF for
approval shall be construed as creating any limitations on the power of
the Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable including incentive arrangements
and awards which do not qualify under Code Section 162(m).
(i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES.
Unless otherwise determined by the Committee, in the event of a
forfeiture of an Award with respect to which
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a Participant paid cash or other consideration, the Participant shall
be repaid the amount of such cash or other consideration. No fractional
shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards or
other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
(j) GOVERNING LAW. The validity, construction and effect of
the Plan, any rules and regulations under the Plan, and any Award
agreement shall be determined in accordance with the Delaware General
Corporation Law, without giving effect to principles of conflicts of
laws, and applicable federal law.
(k) PLAN EFFECTIVE DATE AND SHAREHOLDER APPROVAL. The Plan (as
amended and restated) has been adopted by the Board, subject to
approval by the shareholders of BKF at its 2000 annual meeting and
receipt from the Securities and Exchange Commission of an order
exempting BKF from the Investment Company Act of 1940. The Plan shall
remain in effect for the year in which it is approved by BKF
shareholders and each of the next four succeeding years unless sooner
terminated by the Board in accordance with Section 10(e). The Plan
shall be submitted for re-approval by BKF shareholders at the first
meeting of shareholders held during such fifth succeeding year, and all
Awards made during such fifth succeeding year shall be contingent upon
such approval. If the Plan is so approved, it shall continue in effect
for such year and the next four succeeding years, at which time it will
again be subject to re-approval by BKF shareholders. The Plan shall
continue in effect in the same manner for successive cycles of five
years, subject to re-approval by BKF shareholders every five years in
accordance with Regulation 1.162-27, until amended or terminated by the
Board.
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