SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
_____________
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 25, 1996
RECKSON ASSOCIATES REALTY CORP.
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-13762 11-3233650
(Commission File Number) (IRS Employer Id. Number)
225 Broadhollow Road 11747
Melville, New York (Zip Code)
(Address of principal executive offices)
(516) 694-6900
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On November 7, 1996, the Board of Directors of Reckson Associates
Realty Corp. (the "Company") amended the Company's 1995 Stock Option Plan
in response to amendments to Rule 16b-3 under the Securities Exchange Act
of 1934, as amended.
Also, on such date, the Board adopted a 1996 Employee Stock Option
Plan (the "1996 Plan") pursuant to which employees of the Company may be
granted (i) stock options or (ii) shares of common stock of the Company in
lieu of cash compensation. The exercise price of stock options issued
under the 1996 Plan may not be less than 100% of the fair market value of
the shares of common stock on the date of grant. Existing officers and
directors of the Company are not eligible to participate in the 1996 Plan.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Exhibits
10.1 1995 Amended and Restated Stock Option Plan
10.2 1996 Employee Stock Option Plan
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RECKSON ASSOCIATES REALTY CORP.
/s/ J. Michael Maturo
J. Michael Maturo
Executive Vice President
and Chief Financial Officer
Date: November 25, 1996
RECKSON ASSOCIATES REALTY CORP. AMENDED AND RESTATED
1995 STOCK OPTION PLAN
ARTICLE 1. GENERAL
1.1. Purpose. The purpose of the Reckson Associates Realty Corp. 1995
Stock Option Plan (the "Plan") is to provide for certain officers, directors
and key employees, as defined in Section 1.3, of Reckson Associates Realty
Corp. (the "Company") and certain of its Affiliates (as defined below) an
equity-based incentive to maintain and enhance the performance and
profitability of the Company. It is the further purpose of this Plan to
permit the granting of awards that will constitute performance based
compensation for certain executive officers, as described in Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder.
1.2. Administration.
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), which
Committee shall consist of two or more directors. It is intended that the
directors appointed to serve on the Committee shall be "non-employee
directors" (within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the "Act")) and "outside directors" (within the meaning
of Code Section 162(m)); however, the mere fact that a Committee member shall
fail to qualify under either of these requirements shall not invalidate any
award made by the Committee which award is otherwise validly made under the
Plan. The members of the Committee shall be appointed by, and may be changed
at any time and from time to time in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Plan agreements executed pursuant to the Plan,
(iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to
make any determination necessary or advisable in administering the Plan, and
(v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan. The Committee shall have no authority to
interpret or administer Article 5 of the Plan or to take any action with
respect to any awards thereunder.
(c) The determination of the Committee on all matters relating to the
Plan or any Plan agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
hereunder.
(e) Notwithstanding anything to the contrary contained herein, the Board
may, in its sole discretion, at any time and from time to time, resolve to
administer the Plan, in which case, the term Committee as used herein shall
be deemed to mean the Board.
1.3. Persons Eligible for Awards. Awards under the Plan may be made to
such officers, directors and key employees ("key personnel") of the Company
or its Affiliates as the Committee shall from time to time in its sole
discretion select. No member of the Board who is not an officer or employee
of the Company or an Affiliate (an "Independent Director") shall be eligible
to receive any Awards under the Plan, except for non-qualified stock options
granted automatically under the provisions of Article 5 of the Plan.
1.4. Types of Awards Under Plan.
(a) Awards may be made under the Plan in the form of (i) stock options
("options"), (ii) restricted stock awards, and (iii) unrestricted stock
awards in lieu of cash compensation, all as more fully set forth in Articles
2 and 3.
(b) Options granted under the Plan may be either (i) "nonqualified"
stock options ("NQSOs") or (ii) options intended to qualify for incentive
stock option treatment described in Code Section 422 ("ISOs"). Grants of
options made under the Plan may also be made in lieu of cash fees otherwise
payable to Directors of the Company or cash bonuses payable to employees of
the Company or any Affiliate.
(c) All options when granted are intended to be NQSOs, unless the
applicable Plan agreement explicitly states that the option is intended to
be an ISO. If an option is intended to be an ISO, and if for any reason such
option (or any portion thereof) shall not qualify as an ISO, then, to the
extent of such nonqualification, such option (or portion) shall be regarded
as a NQSO appropriately granted under the Plan provided that such option (or
portion) otherwise meets the Plan's requirements relating to NQSOs.
1.5. Shares Available for Awards.
(a) Subject to Section 4.5 (relating to adjustments upon changes in
capitalization), as of any date the total number of shares of Common Stock
with respect to which awards may be granted under the Plan, shall equal the
excess (if any) of 750,000 shares of Common Stock, over (i) the number of
shares of Common Stock subject to outstanding awards, (ii) the number of
shares in respect of which options have been exercised, or grants of
restricted or unrestricted Common Stock have been made pursuant to the Plan,
and (iii) the number of shares issued subject to forfeiture restrictions
which have lapsed.
In accordance with (and without limitation upon) the preceding sentence,
awards may be granted in respect of the following shares of Common Stock:
shares covered by previously-granted awards that have expired, terminated or
been cancelled for any reason whatsoever (other than by reason of exercise
or vesting).
(b) In any year, a person eligible for awards under the Plan may not be
granted options under the Plan covering a total of more than 75,000 shares
of Common Stock.
(c) Shares of Common Stock that shall be subject to issuance pursuant
to the Plan shall be authorized and unissued or treasury shares of Common
Stock, or shares of Common Stock purchased on the open market or from
shareholders of the Company for such purpose.
(d) Without limiting the generality of the foregoing, the Committee may,
with the grantee's consent, cancel any award under the Plan and issue a new
award in substitution therefor upon such terms as the Committee may in its
sole discretion determine, provided that the substituted award shall satisfy
all applicable Plan requirements as of the date such new award is made.
1.6. Definitions of Certain Terms.
(a) The term "Affiliate" as used herein means Reckson Operating
Partnership, L.P., Reckson FS Limited Partnership, Reckson Executive Centers,
L.L.C., Reckson Finance, Inc., Reckson Management Group, Inc. and Reckson
Construction Group, Inc., and any person or entity as subsequently approved
by the Board which, at the time of reference, directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company.
(b) The term "Cause" shall mean a finding by the Committee that the
recipient of an award under the Plan has (i) acted with gross negligence or
willful misconduct in connection with the performance of his material duties
to the Company or its Affiliates; (ii) defaulted in the performance of his
material duties to the Company or its Affiliates and has not corrected such
action within 15 days of receipt of written notice thereof; (iii) willfully
acted against the best interests of the Company or its Affiliates, which act
has had a material and adverse impact on the financial affairs of the Company
or its Affiliates; or (iv) been convicted of a felony or committed a material
act of common law fraud against the Company, its Affiliates or their
employees and such act or conviction has, or the Committee reasonably
determines will have, a material adverse effect on the interests of the
Company or its Affiliates.
(c) The term "Common Stock" as used herein means the shares of common
stock of the Company as constituted on the effective date of the Plan, and
any other shares into which such common stock shall thereafter be changed by
reason of a recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like.
(d) The "fair market value" (or "FMV") as of any date and in respect of
any share of Common Stock shall be:
(i) if the Common Stock is listed for trading on the New York
Stock Exchange, the closing price, regular way, of the Common Stock as
reported on the New York Stock Exchange Composite Tape, or if no such
reported sale of the Common Stock shall have occurred on such date, on the
next preceding date on which there was such a reported sale; or
(ii) the Common Stock is not so listed but is listed on another
national securities exchange or authorized for quotation on the National
Association of Securities Dealers Inc.'s NASDAQ National Market System
("NASDAQ/NMS"), the closing price, regular way, of the Common Stock on such
exchange or NASDAQ/NMS, as the case may be, on which the largest number of
shares of Common Stock have been traded in the aggregate on the preceding
twenty trading days, or if no such reported sale of the Stock shall have
occurred on such date on such exchange or NASDAQ/NMS, as the case may be, on
the preceding date on which there was such a reported sale on such exchange
or NASDAQ/NMS, as the case may be; or
(iii) if the Stock is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NMS, the average
of the closing bid and asked prices as reported by the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or, if no such
prices shall have been so reported for such date, on the next preceding date
for which such prices were so reported.
1.7. Agreements Evidencing Awards.
(a) Options and restricted stock awards granted under the Plan shall be
evidenced by written agreements. Any such written agreements shall (i)
contain such provisions not inconsistent with the terms of the Plan as the
Committee may in its sole discretion deem necessary or desirable and (ii) be
referred to herein as "Plan Agreements."
(b) Each Plan agreement shall set forth the number of shares of Common
Stock subject to the award granted thereby.
(c) Each Plan agreement with respect to the granting of an option shall
set forth the amount (the "option exercise price") payable by the grantee to
the Company in connection with the exercise of the option evidenced thereby.
The option exercise price per share shall not be less than 100% of the fair
market value of a share of Common Stock on the date the option is granted.
ARTICLE 2. STOCK OPTIONS
2.1. Option Awards.
(a) Grant of Stock Options. The Committee may grant options to
purchase shares of Common Stock in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine, subject to the terms of the Plan.
(b) Dividend Equivalent Rights. To the extent expressly provided by the
Committee at the time of the grant, each NQSO granted under this Section 2.1
shall also generate Dividend Equivalent Rights ("DERs"), which shall entitle
the grantee to receive an additional share of Common Stock for each DER
received upon the exercise of the NQSO, at no additional cost, based on the
formula set forth herein. As of the last business day of each calendar
quarter, the amount of dividends paid by the Company on each share of Common
Stock with respect to that quarter shall be divided by the FMV per share to
determine the actual number of DERs accruing on each share subject to the
NQSO. Such amount of DERs shall be multiplied by the number of shares
covered by the NQSO to determine the number of DERs which accrued during such
quarter. The provisions of this Section 2.1(b) shall not be amended more
than once every six months other than to comport with changes in the Code,
the Employee Retirement Income Security Act ("ERISA") or the rules
thereunder.
For example. Assume that a grantee holds a NQSO to purchase 600 shares
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of Common Stock. Further assume that the dividend per share for the first
quarter was $0.10, and that the FMV per share on the last business day of the
quarter was $20. Therefore, .005 DER would accrue per share for that quarter
and such grantee would receive three DERs for that quarter (600 X .005). For
purposes of determining how many DERs would accrue during the second quarter,
the NQSO would be considered to be for 603 shares of Common Stock.
2.2. Exercisability of Options. Subject to the other provisions of the
Plan:
(a) Exercisability Determined by Plan Agreement. Each Plan agreement
shall set forth the period during which and the conditions subject to which
the option shall be exercisable (including, but not limited to vesting of
such options), as determined by the Committee in its discretion.
(b) Partial Exercise Permitted. Unless the applicable Plan agreement
otherwise provides, an option granted under the Plan may be exercised from
time to time as to all or part of the full number of shares for which such
option is then exercisable, in which event the DERs relating to the portion
of the option being exercised shall also be exercised.
(c) Notice of Exercise; Exercise Date.
(i) An option shall be exercisable by the filing of a written
notice of exercise with the Company, on such form and in such manner as the
Committee shall in its sole discretion prescribe, and by payment in
accordance with Section 2.4.
(ii) Unless the applicable Plan agreement otherwise provides, or
the Committee in its sole discretion otherwise determines, the date of
exercise of an option shall be the date the Company receives such written
notice of exercise and payment.
2.3. Limitation on Exercise. Notwithstanding any other provision of the
Plan, no Plan agreement shall permit an ISO to be exercisable more than 10
years after the date of grant.
2.4. Payment of Option Price.
(a) Tender Due Upon Notice of Exercise. Unless the applicable Plan
agreement otherwise provides or the Committee in its sole discretion
otherwise determines, any written notice of exercise of an option shall be
accompanied by payment of the full purchase price for the shares being
purchased.
(b) Manner of Payment. Payment of the option exercise price shall be
made in any combination of the following:
(i) by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee);
(ii) by personal check (subject to collection), which may in the
Committee's discretion be deemed conditional;
(iii) with the consent of the Committee in its sole discretion, by
delivery of previously acquired shares of Common Stock owned by the grantee
having a fair market value (determined as of the option exercise date) equal
to the portion of the option exercise price being paid thereby, provided that
the Committee may require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would not result
in the grantee incurring any liability under Section 16(b) of the Act and
does not require any Consent (as defined in Section 4.2); and
(iv) with the consent of the Committee in its sole discretion, by
the full recourse promissory note and agreement of the grantee providing for
payment with interest on the unpaid balance accruing at a rate not less than
that needed to avoid the imputation of income under Code Section 7872 and
upon such terms and conditions (including the security, if any, therefor) as
the Committee may determine; and
(v) by withholding shares of Common Stock from the shares
otherwise issuable pursuant to the exercise.
(c) Cashless Exercise. Payment in accordance with Section 2.4(b) may
be deemed to be satisfied, if and to the extent provided in the applicable
Plan agreement, by delivery to the Company of an assignment of a sufficient
amount of the proceeds from the sale of Common Stock acquired upon exercise
to pay for all of the Common Stock acquired upon exercise and an
authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be made at the grantee's direction at the time of
exercise, provided that the Committee may require the grantee to furnish an
opinion of counsel acceptable to the Committee to the effect that such
delivery would not result in the grantee incurring any liability under
Section 16 of the Act and does not require any Consent (as defined in
Section 4.2).
(d) Issuance of Shares. As soon as practicable after receipt of full
payment, the Company shall, subject to the provisions of Section 4.2, deliver
to the grantee one or more certificates for the shares of Common Stock so
purchased, which certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the shares in
accordance with applicable securities laws, rules and regulations or
otherwise.
2.5. Default Rules Concerning Termination of Employment.
Subject to the other provisions of the Plan and unless the applicable
Plan agreement otherwise provides:
(a) General Rule. All options granted to a grantee shall terminate upon
the grantee's termination of employment for any reason except to the extent
post-employment exercise of the option is permitted in accordance with this
Section 2.5.
(b) Termination for Cause. All unexercised or unvested options granted
to a grantee shall terminate and expire on the day a grantee's employment is
terminated for Cause.
(c) Regular Termination; Leave of Absence. If the grantee's employment
terminates for any reason other than as provided in subsection (b), (d) or
(f) of this Section 2.5, any awards granted to such grantee which were
exercisable immediately prior to such termination of employment may be
exercised, and any awards subject to vesting may continue to vest, until the
earlier of either: (i) 90 days after the grantee's termination of employment
and (ii) the date on which such options terminate or expire in accordance
with the provisions of the Plan (other than this Section 2.5) and the Plan
agreement; provided that the Committee may, in its sole discretion, determine
such other period for exercise in the case of a grantee whose employment
terminates solely because the grantee's employer ceases to be an Affiliate
or the grantee transfers employment with the Company's consent to a purchaser
of a business disposed of by the Company. The Committee may, in its sole
discretion, determine (i) whether any leave of absence (including short-term
or long-term disability or medical leave) shall constitute a termination of
employment for purposes of the Plan and (ii) the effect, if any, of any such
leave on outstanding awards under the Plan.
(d) Retirement. If a grantee's employment terminates by reason of
retirement (i.e., the voluntary termination of employee by a grantee after
attaining the age of 55), the options exercisable by the grantee immediately
prior to the grantee's retirement shall be exercisable by the grantee until
the earlier of (i) 12 months after the grantee's retirement and (ii) the date
on which such options terminate or expire in accordance with the provisions
of the Plan (other than this Section 2.5) and the Plan agreement.
(e) Death After Termination. If a grantee's employment terminates in
the manner described in subsections (c) or (d) of this Section 2.5 and the
grantee dies within the period for exercise provided for therein, the options
exercisable by the grantee immediately prior to the grantee's death shall be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i)
12 months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of subsections (c) or
(d) of this Section 2.5.
(f) Death Before Termination. If a grantee dies while employed by the
Company or any Affiliate, all options granted to the grantee but not
exercised before the death of the grantee, whether or not exercisable by the
grantee before the grantee's death, shall immediately become and be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i)
12 months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of the Plan (other than
this Section 2.5) and the Plan agreement.
2.6. Special ISO Requirements. In order for a grantee to receive
special tax treatment with respect to stock acquired under an option intended
to be an ISO, the grantee of such option must be, at all times during the
period beginning on the date of grant and ending on the day three months
before the date of exercise of such option, an employee of the Company or any
of the Company's parent or subsidiary corporations (within the meaning of
Code Section 424), or of a corporation or a parent or subsidiary corporation
of such corporation issuing or assuming a stock option in a transaction to
which Code Section 424(a) applies. If an option granted under the Plan is
intended to be an ISO, and if the grantee, at the time of grant, owns stock
possessing more than 10% of the total combined voting power of all classes
of stock of the grantee's employer corporation or of its parent or subsidiary
corporation, then (i) the option exercise price per share shall in no event
be less than 110% of the fair market value of the Common Stock on the date
of such grant and (ii) such option shall not be exercisable after the
expiration of five years after the date such option is granted.
ARTICLE 3. RESTRICTED STOCK AND UNRESTRICTED STOCK AWARDS
3.1. Restricted Stock Awards.
(a) Grant of Awards. The Committee may grant restricted stock awards,
alone or in tandem with other awards, under the Plan in such amounts and
subject to such terms and conditions as the Committee shall from time to time
in its sole discretion determine; provided, however, that the grant of any
such restricted stock awards may be made only in lieu of cash compensation
and bonuses. The vesting of a restricted stock award granted under the Plan
may be conditioned upon the completion of a specified period of employment
with the Company or any Affiliate, upon the attainment of specified
performance goals, and/or upon such other criteria as the Committee may
determine in its sole discretion.
(b) Payment. Each Plan agreement with respect to a restricted stock
award shall set forth the amount (if any) to be paid by the grantee with
respect to such award. If a grantee makes any payment for a restricted stock
award which does not vest, appropriate payment may be made to the grantee
following the forfeiture of such award on such terms and conditions as the
Committee may determine.
(c) Forfeiture upon Termination of Employment. Unless the applicable
Plan agreement otherwise provides or the Committee otherwise determines, (i)
if a grantee's employment terminates for any reason (including death) before
all of his restricted stock awards have vested, such awards shall terminate
and expire upon such termination of employment, and (ii) in the event any
condition to the vesting of restricted stock awards is not satisfied within
the period of time permitted therefor, such unvested shares shall be
returned to the Company.
(d) Issuance of Shares. The Committee may provide that one or more
certificates representing restricted stock awards shall be registered in the
grantee's name and bear an appropriate legend specifying that such shares are
not transferable and are subject to the terms and conditions of the Plan and
the applicable Plan agreement, or that such certificate or certificates shall
be held in escrow by the Company on behalf of the grantee until such shares
vest or are forfeited, all on such terms and conditions as the Committee may
determine. Unless the applicable Plan agreement otherwise provides, no share
of restricted stock may be assigned, transferred, otherwise encumbered or
disposed of by the grantee until such share has vested in accordance with the
terms of such award. Subject to the provisions of Section 4.2, as soon as
practicable after any restricted stock award shall vest, the Company shall
issue or reissue to the grantee (or to the grantee's designated beneficiary
in the event of the grantee's death) one or more certificates for the Common
Stock represented by such restricted stock award.
(e) Grantees' Rights Regarding Restricted Stock. Unless the applicable
Plan agreement otherwise provides: (i) a grantee may vote and receive
dividends on restricted stock awarded under the Plan; and (ii) any stock
received as a distribution with respect to a restricted stock award shall be
subject to the same restrictions as such restricted stock.
3.2. Unrestricted Shares. The Committee may issue stock under the Plan,
alone or in tandem with other awards, in such amounts and subject to such
terms and conditions as the Committee shall from time to time in its sole
discretion determine; provided, however, that the grant of any such
unrestricted stock awards may be made only in lieu of cash compensation and
bonuses.
ARTICLE 4. MISCELLANEOUS
4.1. Amendment of the Plan; Modification of Awards.
(a) Plan Amendments. The Board may, without stockholder approval, at
any time and from time to time suspend, discontinue or amend the Plan in any
respect whatsoever, except that no such amendment shall impair any rights
under any award theretofore made under the Plan without the consent of the
grantee of such award. Furthermore, except as and to the extent otherwise
permitted by Section 4.5 or 4.11, no such amendment shall, without
stockholder approval:
(i) materially increase the benefits accruing to grantees under
the Plan;
(ii) increase the maximum number of shares which may be made
subject to awards to an individual as options in any year;
(iii) materially increase, beyond the amounts set forth in Section
1.5, the number of shares of Common Stock in respect of which awards may be
issued under the Plan;
(iv) materially modify the designation in Section 1.3 of the class
of persons eligible to receive awards under the Plan;
(v) provide for the grant of stock options having an option
exercise price per share of Common Stock less than 100% of the fair market
value of a share of Common Stock on the date of grant; or
(vi) extend the term of the Plan beyond the period set forth in
Section 4.13.
(b) Award Modifications. Subject to the terms and conditions of the
Plan (including Section 4.1(a)), the Committee may amend outstanding Plan
agreements with such grantee, including, without limitation, any amendment
which would (i) accelerate the time or times at which an award may vest or
become exercisable and/or (ii) extend the scheduled termination or expiration
date of the award, provided, however, that no modification having a material
adverse effect upon the interest of a grantee in an award shall be made
without the consent of such grantee.
4.2. Restrictions.
(a) Consent Requirements. If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the
Plan, the acquisition, issuance or purchase of shares or other rights
hereunder or the taking of any other action hereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan Action shall not
be taken, in whole or in part, unless and until such Consent shall have been
effected or obtained to the full satisfaction of the Committee. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine not to make any payment whatsoever until Consent has been given if
(i) the Committee may make any payment under the Plan in cash, Common Stock
or both, and (ii) the Committee determines that Consent is necessary or
desirable as a condition of, or in connection with, payment in any one or
more of such forms.
(b) Consent Defined. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or other
self-regulatory organization or under any federal, state or local law, rule
or regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local
law, rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary
or desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all
consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies or any parties to any loan agreements
or other contractual obligations of the Company or any Affiliate.
4.3. Nontransferability. No award granted to any grantee under the Plan
or under any Plan agreement shall be assignable or transferable by the
grantee other than by will or by the laws of descent and distribution.
During the lifetime of the grantee, all rights with respect to any award
granted to the grantee under the Plan or under any Plan agreement shall be
exercisable only by the grantee.
4.4. Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to be delivered
pursuant to an award, the Committee may require as a condition of delivery
that the grantee remit an amount sufficient to satisfy all federal, state
and other governmental withholding tax requirements related thereto.
Whenever cash is to be paid under the Plan, the Company may, as a condition
of its payment, deduct therefrom, or from any salary or other payments due
to the grantee, an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto or to the delivery
of any shares of Common Stock under the Plan.
(b) Without limiting the generality of the foregoing, (i) a grantee may
elect to satisfy all or part of the foregoing withholding requirements by
delivery of unrestricted shares of Common Stock owned by the grantee for at
least six months (or such other period as the Committee may determine) having
a fair market value (determined as of the date of such delivery by the
grantee) equal to all or part of the amount to be so withheld, provided that
the Committee may require, as a condition of accepting any such delivery, the
grantee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act and (ii) the Committee may permit
any such delivery to be made by withholding shares of Common Stock from the
shares otherwise issuable pursuant to the award giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed
the date such award was exercised).
4.5. Adjustments Upon Changes in Capitalization. If and to the extent
specified by the Committee, the number of shares of Common Stock which may
be issued pursuant to awards under the Plan, the maximum number of options
which may be granted to any one person in any year, the number of shares of
Common Stock subject to awards, the option exercise price of options
theretofore granted under the Plan, and the amount payable by a grantee in
respect of an award, shall be appropriately adjusted (as the Committee may
determine) for any change in the number of issued shares of Common Stock
resulting from the subdivision or combination of shares of Common Stock or
other capital adjustments, or the payment of a stock dividend after the
effective date of the Plan, or other change in such shares of Common Stock
effected without receipt of consideration by the Company; provided that any
awards covering fractional shares of Common Stock resulting from any such
adjustment shall be eliminated and provided further, that each ISO granted
under the Plan shall not be adjusted in a manner that causes such option to
fail to continue to qualify as an ISO within the meaning of Code Section 422.
Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
4.6. Right of Discharge Reserved. Nothing in the Plan or in any Plan
agreement shall confer upon any person the right to continue in the
employment of the Company or an Affiliate or affect any right which the
Company or an Affiliate may have to terminate the employment of such person.
4.7. No Rights as a Stockholder. No grantee or other person shall have
any of the rights of a stockholder of the Company with respect to shares
subject to an award until the issuance of a stock certificate to him for such
shares. Except as otherwise provided in Section 4.5, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which
the record date is prior to the date such stock certificate is issued. In
the case of a grantee of an award which has not yet vested, the grantee shall
have the rights of a stockholder of the Company if and only to the extent
provided in the applicable Plan agreement.
4.8. Nature of Payments.
(a) Any and all awards or payments hereunder shall be granted, issued,
delivered or paid, as the case may be, in consideration of services performed
for the Company or for its Affiliates by the grantee.
(b) No such awards and payments shall be considered special incentive
payments to the grantee or, unless otherwise determined by the Committee, be
taken into account in computing the grantee's salary or compensation for the
purposes of determining any benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate or (ii) any
agreement between the Company or any Affiliate and the grantee.
(c) By accepting an award under the Plan, the grantee shall thereby
waive any claim to continued exercisability or vesting of an award or to
damages or severance entitlement related to non-continuation of the award
beyond the period provided herein or in the applicable Plan agreement,
notwithstanding any contrary provision in any written employment contract
with the grantee, whether any such contract is executed before or after the
grant date of the award.
4.9. Non-Uniform Determinations. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons
who receive, or are eligible to receive, awards under the Plan (whether or
not such persons are similarly situated). Without limiting the generality
of the foregoing, the Committee shall be entitled, among other things, to
make non-uniform and selective determinations, and to enter into non-uniform
and selective Plan agreements, as to (a) the persons to receive awards under
the Plan, (b) the terms and provisions of awards under the Plan, and (c) the
treatment of leaves of absence pursuant to Section 2.7(c).
4.10. Other Payments or Awards. Nothing contained in the Plan
shall be deemed in any way to limit or restrict the Company, any Affiliate
or the Committee from making any award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter
in effect.
4.11. Reorganization.
(a) In the event that the Company is merged or consolidated with another
corporation and, whether or not the Company shall be the surviving
corporation, there shall be any change in the shares of Common Stock by
reason of such merger or consolidation, or in the event that all or
substantially all of the assets of the Company are acquired by another
person, or in the event of a reorganization or liquidation of the Company
(each such event being hereinafter referred to as a "Reorganization Event")
or in the event that the Board shall propose that the Company enter into a
Reorganization Event, then the Committee may in its discretion, by written
notice to a grantee, provide that his options will be terminated unless
exercised within 30 days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice; provided
that if, and to the extent that, the Committee takes such action with respect
to the grantee's options not yet exercisable, the Committee shall also
accelerate the dates upon which such options shall be exercisable. The
Committee also may in its discretion by written notice to a grantee provide
that all or some of the restrictions on any of the grantee's awards may lapse
in the event of a Reorganization Event upon such terms and conditions as the
Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 4.11(a) may be made conditional upon the consummation of the
applicable Reorganization Event.
4.12. Section Headings. The section headings contained herein are
for the purposes of convenience only and are not intended to define or limit
the contents of said sections.
4.13. Effective Date and Term of Plan.
(a) The Plan shall be deemed adopted and become effective upon the
approval thereof by the shareholders of the Company.
(b) The Plan shall terminate 10 years after the earlier of the date on
which it becomes effective or is approved by shareholders, and no awards
shall thereafter be made under the Plan. Notwithstanding the foregoing, all
awards made under the Plan prior to such termination date shall remain in
effect until such awards have been satisfied or terminated in accordance with
the terms and provisions of the Plan and the applicable Plan agreement.
4.14. Governing Law. The Plan shall be governed by the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state.
ARTICLE 5. STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS
5.1. Automatic Grant of Options. Promptly after the closing of the
Company's initial public offering and the appointment of Independent
Directors, each Independent Director shall automatically be granted NQSOs to
purchase 3,000 shares of Common Stock. Each Independent Director appointed
or elected for the first time (other than in connection with the Company's
initial public offering) shall automatically be granted a NQSO to purchase
3,000 shares of Common Stock on his date of appointment or election. Each
Independent Director who is serving as Director of the Company on the fifth
business day after each annual meeting of shareholders, beginning with the
1996 annual meeting, shall automatically be granted on such day NQSOs to
acquire 1,000 shares of Common Stock; provided, however, that an Independent
Director who is appointed or elected for the first time shall not be eligible
to receive NQSOs pursuant to this sentence for the year of his initial
appointment or election. The exercise price per share for the Common Stock
covered by a NQSO granted pursuant to the first sentence hereof shall be
equal to the greater of the initial public offering price or the FMV of the
Common Stock on the date the NQSO is granted. The exercise price per share
for the Common Stock covered by a NQSO granted pursuant to the second and
third sentences hereof shall be equal to the FMV of the Common Stock on the
date the NQSO is granted.
5.2. Exercise; Termination; Non-Transferability
(a) All NQSOs granted under this Article 5 shall be immediately
exercisable. No NQSO issued under this Article 5 shall be exercisable after
the expiration of ten years from the date upon which such NQSO is granted.
(b) The rights of an Independent Director in a NQSO granted under this
Article 5 shall terminate twelve months after such Director ceases to be a
Director of the Company or the specified expiration date, if earlier;
provided, however, that such rights shall terminate immediately on the date
on which an Independent Director ceases to be a Director by reason of
termination of his directorship on account of any act of (i) fraud or
intentional misrepresentation or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any Affiliate.
(c) No NQSO granted under this Article 5 shall be transferable by the
grantee otherwise than by will or by the laws of descent and distribution,
and such grantee shall be exercisable during the grantee's lifetime only by
the grantee. Any NQSO granted to an Independent Director and outstanding on
the date of his death may be exercised by the legal representative or
legatee of the grantee for the period of twelve months from the date of
death or until the expiration of the stated term of the option, if earlier.
(d) NQSOs granted under this Article 5 may be exercised only by written
notice to the Company specifying the number of shares to be purchased.
Payment of the full purchase price of the shares to be purchased may be made
by certified or official bank check payable to the Company. A grantee shall
have the rights of a stockholder only as to shares acquired upon the exercise
of a NQSO and not as to unexercised NQSOs.
5.3. Adjustments Upon Changes in Capitalization. The number of shares
of Common Stock subject to awards and the option exercise price of NQSOs
theretofore granted under this Article 5, and the amount payable by a grantee
in respect of an award, shall be appropriately adjusted for any change in the
number of issued shares of Common Stock resulting from the subdivision or
combination of shares of Common Stock or other capital adjustments, or the
payment of a stock dividend after the effective date of the Plan, or other
change in such shares of Common Stock effected without receipt of
consideration by the Company; provided that any awards covering fractional
shares of Common Stock resulting from any such adjustment shall be
eliminated.
5.4 Limited to Independent Directors. The provisions of this Article
5 shall apply only to NQSOs granted or to be granted to Independent
Directors, shall be interpreted as if this Article 5 constituted a separate
plan of the Company and shall not be deemed to modify, limit or otherwise
apply to any other provision of this Plan or to any NQSO issued under this
Plan to a participant who is not an Independent Director of the Company. To
the extent inconsistent with the provisions of any other Section of this
Plan, the provisions of this Article 5 shall govern the rights and
obligations of the Company and Independent Directors respecting NQSOs granted
or to be granted to Independent Directors. The provisions of this Article
5 shall not be amended more than once every six months other than to comport
with changes in the Code, ERISA or the rules thereunder.
RECKSON ASSOCIATES REALTY CORP. 1996 EMPLOYEE STOCK OPTION PLAN
ARTICLE 1. GENERAL
1.1. Purpose. The purpose of the Reckson Associates Realty Corp. 1996
Employee Stock Option Plan (the "Plan") is to provide for certain employees,
as defined in Section 1.3, of Reckson Associates Realty Corp. (the "Company")
and certain of its Affiliates (as defined below) an equity-based incentive
to maintain and enhance the performance and profitability of the Company.
It is the further purpose of this Plan to permit the granting of awards that
will constitute performance based compensation for certain executive
officers, as described in Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), and regulations promulgated thereunder.
1.2. Administration.
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), which
Committee shall consist of two or more directors. It is intended that the
directors appointed to serve on the Committee shall be "non-employee
directors" (within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the "Act")) and "outside directors" (within the meaning
of Code Section 162(m)); however, the mere fact that a Committee member shall
fail to qualify under either of these requirements shall not invalidate any
award made by the Committee which award is otherwise validly made under the
Plan. The members of the Committee shall be appointed by, and may be changed
at any time and from time to time in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Plan agreements executed pursuant to the Plan,
(iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to
make any determination necessary or advisable in administering the Plan, and
(v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan.
(c) The determination of the Committee on all matters relating to the
Plan or any Plan agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
hereunder.
(e) Notwithstanding anything to the contrary contained herein, the Board
may, in its sole discretion, at any time and from time to time, resolve to
administer the Plan, in which case, the term Committee as used herein shall
be deemed to mean the Board.
1.3. Persons Eligible for Awards. Awards under the Plan may be made to
any key employee ("key personnel") of the Company or its Affiliates as the
Committee shall from time to time in its sole discretion select and who
either (a) is not an officer or director of the Company at the time of grant
or (b) has not previously been employed by the Company and is being issued
an award hereunder as an inducement essential to his or her entering into an
employment contract with the Company.
1.4. Types of Awards Under Plan.
(a) Awards may be made under the Plan in the form of (i) stock options
("options"), (ii) restricted stock awards, and (iii) unrestricted stock
awards in lieu of cash compensation, all as more fully set forth in Articles
2 and 3.
(b) Options granted under the Plan may be either (i) "nonqualified"
stock options ("NQSOs") or (ii) options intended to qualify for incentive
stock option treatment described in Code Section 422 ("ISOs").
(c) All options when granted are intended to be NQSOs, unless the
applicable Plan agreement explicitly states that the option is intended to
be an ISO. If an option is intended to be an ISO, and if for any reason such
option (or any portion thereof) shall not qualify as an ISO, then, to the
extent of such nonqualification, such option (or portion) shall be regarded
as a NQSO appropriately granted under the Plan provided that such option (or
portion) otherwise meets the Plan's requirements relating to NQSOs.
1.5. Shares Available for Awards.
(a) Subject to Section 4.5 (relating to adjustments upon changes in
capitalization), as of any date the total number of shares of Common Stock
with respect to which awards may be granted under the Plan, shall equal the
excess (if any) of 200,000 shares of Common Stock, over (i) the number of
shares of Common Stock subject to outstanding awards, (ii) the number of
shares in respect of which options have been exercised, or grants of
restricted or unrestricted Common Stock have been made pursuant to the Plan,
and (iii) the number of shares issued subject to forfeiture restrictions
which have lapsed.
In accordance with (and without limitation upon) the preceding sentence,
awards may be granted in respect of the following shares of Common Stock:
shares covered by previously-granted awards that have expired, terminated or
been cancelled for any reason whatsoever (other than by reason of exercise
or vesting).
(b) In any year, a person eligible for awards under the Plan may not be
granted options under the Plan covering a total of more than 75,000 shares
of Common Stock.
(c) Shares of Common Stock that shall be subject to issuance pursuant
to the Plan shall be authorized and unissued or treasury shares of Common
Stock, or shares of Common Stock purchased on the open market or from
shareholders of the Company for such purpose.
(d) Without limiting the generality of the foregoing, the Committee may,
with the grantee's consent, cancel any award under the Plan and issue a new
award in substitution therefor upon such terms as the Committee may in its
sole discretion determine, provided that the substituted award shall satisfy
all applicable Plan requirements as of the date such new award is made.
1.6. Definitions of Certain Terms.
(a) The term "Affiliate" as used herein means Reckson Operating
Partnership, L.P., Reckson FS Limited Partnership, Reckson Executive Centers,
L.L.C., Reckson Finance, Inc., Reckson Management Group, Inc. and Reckson
Construction Group, Inc., and any person or entity as subsequently approved
by the Board which, at the time of reference, directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company.
(b) The term "Cause" shall mean a finding by the Committee that the
recipient of an award under the Plan has (i) acted with gross negligence or
willful misconduct in connection with the performance of his material duties
to the Company or its Affiliates; (ii) defaulted in the performance of his
material duties to the Company or its Affiliates and has not corrected such
action within 15 days of receipt of written notice thereof; (iii) willfully
acted against the best interests of the Company or its Affiliates, which act
has had a material and adverse impact on the financial affairs of the Company
or its Affiliates; or (iv) been convicted of a felony or committed a material
act of common law fraud against the Company, its Affiliates or their
employees and such act or conviction has, or the Committee reasonably
determines will have, a material adverse effect on the interests of the
Company or its Affiliates.
(c) The term "Common Stock" as used herein means the shares of common
stock of the Company as constituted on the effective date of the Plan, and
any other shares into which such common stock shall thereafter be changed by
reason of a recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like.
(d) The "fair market value" (or "FMV") as of any date and in respect of
any share of Common Stock shall be:
(i) if the Common Stock is listed for trading on the New York
Stock Exchange, the closing price, regular way, of the Common Stock as
reported on the New York Stock Exchange Composite Tape, or if no such
reported sale of the Common Stock shall have occurred on such date, on the
next preceding date on which there was such a reported sale; or
(ii) the Common Stock is not so listed but is listed on another
national securities exchange or authorized for quotation on the National
Association of Securities Dealers Inc.'s NASDAQ National Market System
("NASDAQ/NMS"), the closing price, regular way, of the Common Stock on such
exchange or NASDAQ/NMS, as the case may be, on which the largest number of
shares of Common Stock have been traded in the aggregate on the preceding
twenty trading days, or if no such reported sale of the Stock shall have
occurred on such date on such exchange or NASDAQ/NMS, as the case may be, on
the preceding date on which there was such a reported sale on such exchange
or NASDAQ/NMS, as the case may be; or
(iii) if the Stock is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NMS, the average
of the closing bid and asked prices as reported by the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or, if no such
prices shall have been so reported for such date, on the next preceding date
for which such prices were so reported.
1.7. Agreements Evidencing Awards.
(a) Options and restricted stock awards granted under the Plan shall be
evidenced by written agreements. Any such written agreements shall (i)
contain such provisions not inconsistent with the terms of the Plan as the
Committee may in its sole discretion deem necessary or desirable and (ii) be
referred to herein as "Plan Agreements."
(b) Each Plan agreement shall set forth the number of shares of Common
Stock subject to the award granted thereby.
(c) Each Plan agreement with respect to the granting of an option shall
set forth the amount (the "option exercise price") payable by the grantee to
the Company in connection with the exercise of the option evidenced thereby.
The option exercise price per share shall not be less than 100% of the fair
market value of a share of Common Stock on the date the option is granted.
ARTICLE 2. STOCK OPTIONS
2.1. Option Awards.
(a) Grant of Stock Options. The Committee may grant options to
purchase shares of Common Stock in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine, subject to the terms of the Plan.
(b) Dividend Equivalent Rights. To the extent expressly provided by the
Committee at the time of the grant, each NQSO granted under this Section 2.1
shall also generate Dividend Equivalent Rights ("DERs"), which shall entitle
the grantee to receive an additional share of Common Stock for each DER
received upon the exercise of the NQSO, at no additional cost, based on the
formula set forth herein. As of the last business day of each calendar
quarter, the amount of dividends paid by the Company on each share of Common
Stock with respect to that quarter shall be divided by the FMV per share to
determine the actual number of DERs accruing on each share subject to the
NQSO. Such amount of DERs shall be multiplied by the number of shares
covered by the NQSO to determine the number of DERs which accrued during such
quarter. The provisions of this Section 2.1(b) shall not be amended more
than once every six months other than to comport with changes in the Code,
the Employee Retirement Income Security Act ("ERISA") or the rules
thereunder.
For example. Assume that a grantee holds a NQSO to purchase 600 shares
-----------
of Common Stock. Further assume that the dividend per share for the first
quarter was $0.10, and that the FMV per share on the last business day of the
quarter was $20. Therefore, .005 DER would accrue per share for that quarter
and such grantee would receive three DERs for that quarter (600 X .005). For
purposes of determining how many DERs would accrue during the second quarter,
the NQSO would be considered to be for 603 shares of Common Stock.
2.2. Exercisability of Options. Subject to the other provisions of the
Plan:
(a) Exercisability Determined by Plan Agreement. Each Plan agreement
shall set forth the period during which and the conditions subject to which
the option shall be exercisable (including, but not limited to vesting of
such options), as determined by the Committee in its discretion.
(b) Partial Exercise Permitted. Unless the applicable Plan agreement
otherwise provides, an option granted under the Plan may be exercised from
time to time as to all or part of the full number of shares for which such
option is then exercisable, in which event the DERs relating to the portion
of the option being exercised shall also be exercised.
(c) Notice of Exercise; Exercise Date.
(i) An option shall be exercisable by the filing of a written
notice of exercise with the Company, on such form and in such manner as the
Committee shall in its sole discretion prescribe, and by payment in
accordance with Section 2.4.
(ii) Unless the applicable Plan agreement otherwise provides, or
the Committee in its sole discretion otherwise determines, the date of
exercise of an option shall be the date the Company receives such written
notice of exercise and payment.
2.3. Limitation on Exercise. Notwithstanding any other provision of the
Plan, no Plan agreement shall permit an ISO to be exercisable more than 10
years after the date of grant.
2.4. Payment of Option Price.
(a) Tender Due Upon Notice of Exercise. Unless the applicable Plan
agreement otherwise provides or the Committee in its sole discretion
otherwise determines, any written notice of exercise of an option shall be
accompanied by payment of the full purchase price for the shares being
purchased.
(b) Manner of Payment. Payment of the option exercise price shall be
made in any combination of the following:
(i) by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee);
(ii) by personal check (subject to collection), which may in the
Committee's discretion be deemed conditional;
(iii) with the consent of the Committee in its sole discretion, by
delivery of previously acquired shares of Common Stock owned by the grantee
having a fair market value (determined as of the option exercise date) equal
to the portion of the option exercise price being paid thereby, provided that
the Committee may require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would not result
in the grantee incurring any liability under Section 16(b) of the Act and
does not require any Consent (as defined in Section 4.2); and
(iv) with the consent of the Committee in its sole discretion, by
the full recourse promissory note and agreement of the grantee providing for
payment with interest on the unpaid balance accruing at a rate not less than
that needed to avoid the imputation of income under Code Section 7872 and
upon such terms and conditions (including the security, if any, therefor) as
the Committee may determine; and
(v) by withholding shares of Common Stock from the shares
otherwise issuable pursuant to the exercise.
(c) Cashless Exercise. Payment in accordance with Section 2.4(b) may
be deemed to be satisfied, if and to the extent provided in the applicable
Plan agreement, by delivery to the Company of an assignment of a sufficient
amount of the proceeds from the sale of Common Stock acquired upon exercise
to pay for all of the Common Stock acquired upon exercise and an
authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be made at the grantee's direction at the time
of exercise, provided that the Committee may require the grantee to furnish
an opinion of counsel acceptable to the Committee to the effect that such
delivery would not result in the grantee incurring any liability under
Section 16 of the Act and does not require any Consent (as defined in Section
4.2).
(d) Issuance of Shares. As soon as practicable after receipt of full
payment, the Company shall, subject to the provisions of Section 4.2, deliver
to the grantee one or more certificates for the shares of Common Stock so
purchased, which certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the shares in
accordance with applicable securities laws, rules and regulations or
otherwise.
2.5. Default Rules Concerning Termination of Employment.
Subject to the other provisions of the Plan and unless the applicable
Plan agreement otherwise provides:
(a) General Rule. All options granted to a grantee shall terminate upon
the grantee's termination of employment for any reason except to the extent
post-employment exercise of the option is permitted in accordance with this
Section 2.5.
(b) Termination for Cause. All unexercised or unvested options granted
to a grantee shall terminate and expire on the day a grantee's employment is
terminated for Cause.
(c) Regular Termination; Leave of Absence. If the grantee's employment
terminates for any reason other than as provided in subsection (b), (d) or
(f) of this Section 2.5, any awards granted to such grantee which were
exercisable immediately prior to such termination of employment may be
exercised, and any awards subject to vesting may continue to vest, until the
earlier of either: (i) 90 days after the grantee's termination of employment
and (ii) the date on which such options terminate or expire in accordance
with the provisions of the Plan (other than this Section 2.5) and the Plan
agreement; provided that the Committee may, in its sole discretion, determine
such other period for exercise in the case of a grantee whose employment
terminates solely because the grantee's employer ceases to be an Affiliate
or the grantee transfers employment with the Company's consent to a purchaser
of a business disposed of by the Company. The Committee may, in its sole
discretion, determine (i) whether any leave of absence (including short-term
or long-term disability or medical leave) shall constitute a termination of
employment for purposes of the Plan and (ii) the effect, if any, of any such
leave on outstanding awards under the Plan.
(d) Retirement. If a grantee's employment terminates by reason of
retirement (i.e., the voluntary termination of employee by a grantee after
attaining the age of 55), the options exercisable by the grantee immediately
prior to the grantee's retirement shall be exercisable by the grantee until
the earlier of (i) 12 months after the grantee's retirement and (ii) the date
on which such options terminate or expire in accordance with the provisions
of the Plan (other than this Section 2.5) and the Plan agreement.
(e) Death After Termination. If a grantee's employment terminates in
the manner described in subsections (c) or (d) of this Section 2.5 and the
grantee dies within the period for exercise provided for therein, the options
exercisable by the grantee immediately prior to the grantee's death shall be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i) 12
months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of subsections (c) or (d)
of this Section 2.5.
(f) Death Before Termination. If a grantee dies while employed by the
Company or any Affiliate, all options granted to the grantee but not
exercised before the death of the grantee, whether or not exercisable by the
grantee before the grantee's death, shall immediately become and be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i)
12 months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of the Plan (other than
this Section 2.5) and the Plan agreement.
2.6. Special ISO Requirements. In order for a grantee to receive
special tax treatment with respect to stock acquired under an option intended
to be an ISO, the grantee of such option must be, at all times during the
period beginning on the date of grant and ending on the day three months
before the date of exercise of such option, an employee of the Company or any
of the Company's parent or subsidiary corporations (within the meaning of
Code Section 424), or of a corporation or a parent or subsidiary corporation
of such corporation issuing or assuming a stock option in a transaction to
which Code Section 424(a) applies. If an option granted under the Plan is
intended to be an ISO, and if the grantee, at the time of grant, owns stock
possessing more than 10% of the total combined voting power of all classes
of stock of the grantee's employer corporation or of its parent or subsidiary
corporation, then (i) the option exercise price per share shall in no event
be less than 110% of the fair market value of the Common Stock on the date
of such grant and (ii) such option shall not be exercisable after the
expiration of five years after the date such option is granted.
ARTICLE 3. RESTRICTED STOCK AND UNRESTRICTED STOCK AWARDS
3.1. Restricted Stock Awards.
(a) Grant of Awards. The Committee may grant restricted stock awards,
alone or in tandem with other awards, under the Plan in such amounts and
subject to such terms and conditions as the Committee shall from time to time
in its sole discretion determine; provided, however, that the grant of any
such restricted stock awards may be made only in lieu of cash compensation
and bonuses. The vesting of a restricted stock award granted under the Plan
may be conditioned upon the completion of a specified period of employment
with the Company or any Affiliate, upon the attainment of specified
performance goals, and/or upon such other criteria as the Committee may
determine in its sole discretion.
(b) Payment. Each Plan agreement with respect to a restricted stock
award shall set forth the amount (if any) to be paid by the grantee with
respect to such award. If a grantee makes any payment for a restricted stock
award which does not vest, appropriate payment may be made to the grantee
following the forfeiture of such award on such terms and conditions as the
Committee may determine.
(c) Forfeiture upon Termination of Employment. Unless the applicable
Plan agreement otherwise provides or the Committee otherwise determines, (i)
if a grantee's employment terminates for any reason (including death) before
all of his restricted stock awards have vested, such awards shall terminate
and expire upon such termination of employment, and (ii) in the event any
condition to the vesting of restricted stock awards is not satisfied within
the period of time permitted therefor, such unvested shares shall be returned
to the Company.
(d) Issuance of Shares. The Committee may provide that one or more
certificates representing restricted stock awards shall be registered in the
grantee's name and bear an appropriate legend specifying that such shares are
not transferable and are subject to the terms and conditions of the Plan and
the applicable Plan agreement, or that such certificate or certificates shall
be held in escrow by the Company on behalf of the grantee until such shares
vest or are forfeited, all on such terms and conditions as the Committee may
determine. Unless the applicable Plan agreement otherwise provides, no share
of restricted stock may be assigned, transferred, otherwise encumbered or
disposed of by the grantee until such share has vested in accordance with the
terms of such award. Subject to the provisions of Section 4.2, as soon as
practicable after any restricted stock award shall vest, the Company shall
issue or reissue to the grantee (or to the grantee's designated beneficiary
in the event of the grantee's death) one or more certificates for the Common
Stock represented by such restricted stock award.
(e) Grantees' Rights Regarding Restricted Stock. Unless the applicable
Plan agreement otherwise provides: (i) a grantee may vote and receive
dividends on restricted stock awarded under the Plan; and (ii) any stock
received as a distribution with respect to a restricted stock award shall be
subject to the same restrictions as such restricted stock.
3.2. Unrestricted Shares. The Committee may issue stock under the Plan,
alone or in tandem with other awards, in such amounts and subject to such
terms and conditions as the Committee shall from time to time in its sole
discretion determine; provided, however, that the grant of any such
unrestricted stock awards may be made only in lieu of cash compensation and
bonuses.
ARTICLE 4. MISCELLANEOUS
4.1. Amendment of the Plan; Modification of Awards.
(a) Plan Amendments. The Board may, without stockholder approval, at
any time and from time to time suspend, discontinue or amend the Plan in any
respect whatsoever, except that no such amendment shall impair any rights
under any award theretofore made under the Plan without the consent of the
grantee of such award.
(b) Award Modifications. Subject to the terms and conditions of the
Plan, the Committee may amend outstanding Plan agreements with such grantee,
including, without limitation, any amendment which would (i) accelerate the
time or times at which an award may vest or become exercisable and/or (ii)
extend the scheduled termination or expiration date of the award, provided,
however, that no modification having a material adverse effect upon the
interest of a grantee in an award shall be made without the consent of such
grantee.
4.2. Restrictions.
(a) Consent Requirements. If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the
Plan, the acquisition, issuance or purchase of shares or other rights
hereunder or the taking of any other action hereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan Action shall not
be taken, in whole or in part, unless and until such Consent shall have been
effected or obtained to the full satisfaction of the Committee. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine not to make any payment whatsoever until Consent has been given if
(i) the Committee may make any payment under the Plan in cash, Common
Stock or both, and (ii) the Committee determines that Consent is necessary
or desirable as a condition of, or in connection with, payment in any one or
more of such forms.
(b) Consent Defined. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or other
self-regulatory organization or under any federal, state or local law, rule
or regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local
law, rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary
or desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all
consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies or any parties to any loan agreements
or other contractual obligations of the Company or any Affiliate.
4.3. Nontransferability. No award granted to any grantee under the Plan
or under any Plan agreement shall be assignable or transferable by the
grantee other than by will or by the laws of descent and distribution.
During the lifetime of the grantee, all rights with respect to any award
granted to the grantee under the Plan or under any Plan agreement shall be
exercisable only by the grantee.
4.4. Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to be delivered
pursuant to an award, the Committee may require as a condition of delivery
that the grantee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. Whenever
cash is to be paid under the Plan, the Company may, as a condition of its
payment, deduct therefrom, or from any salary or other payments due to the
grantee, an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto or to the delivery
of any shares of Common Stock under the Plan.
(b) Without limiting the generality of the foregoing, (i) a grantee may
elect to satisfy all or part of the foregoing withholding requirements by
delivery of unrestricted shares of Common Stock owned by the grantee for at
least six months (or such other period as the Committee may determine) having
a fair market value (determined as of the date of such delivery by the
grantee) equal to all or part of the amount to be so withheld, provided that
the Committee may require, as a condition of accepting any such delivery, the
grantee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act and (ii) the Committee may permit
any such delivery to be made by withholding shares of Common Stock from the
shares otherwise issuable pursuant to the award giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed
the date such award was exercised).
4.5. Adjustments Upon Changes in Capitalization. If and to the extent
specified by the Committee, the number of shares of Common Stock which may
be issued pursuant to awards under the Plan, the maximum number of options
which may be granted to any one person in any year, the number of shares of
Common Stock subject to awards, the option exercise price of options
theretofore granted under the Plan, and the amount payable by a grantee in
respect of an award, shall be appropriately adjusted (as the Committee may
determine) for any change in the number of issued shares of Common
Stock resulting from the subdivision or combination of shares of Common Stock
or other capital adjustments, or the payment of a stock dividend after the
effective date of the Plan, or other change in such shares of Common Stock
effected without receipt of consideration by the Company; provided that any
awards covering fractional shares of Common Stock resulting from any such
adjustment shall be eliminated and provided further, that each ISO granted
under the Plan shall not be adjusted in a manner that causes such option to
fail to continue to qualify as an ISO within the meaning of Code Section 422.
Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
4.6. Right of Discharge Reserved. Nothing in the Plan or in any Plan
agreement shall confer upon any person the right to continue in the
employment of the Company or an Affiliate or affect any right which the
Company or an Affiliate may have to terminate the employment of such person.
4.7. No Rights as a Stockholder. No grantee or other person shall have
any of the rights of a stockholder of the Company with respect to shares
subject to an award until the issuance of a stock certificate to him for such
shares. Except as otherwise provided in Section 4.5, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which
the record date is prior to the date such stock certificate is issued. In
the case of a grantee of an award which has not yet vested, the grantee shall
have the rights of a stockholder of the Company if and only to the extent
provided in the applicable Plan agreement.
4.8. Nature of Payments.
(a) Any and all awards or payments hereunder shall be granted, issued,
delivered or paid, as the case may be, in consideration of services performed
for the Company or for its Affiliates by the grantee.
(b) No such awards and payments shall be considered special incentive
payments to the grantee or, unless otherwise determined by the Committee, be
taken into account in computing the grantee's salary or compensation for the
purposes of determining any benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate or (ii) any
agreement between the Company or any Affiliate and the grantee.
(c) By accepting an award under the Plan, the grantee shall thereby
waive any claim to continued exercisability or vesting of an award or to
damages or severance entitlement related to non-continuation of the award
beyond the period provided herein or in the applicable Plan agreement,
notwithstanding any contrary provision in any written employment contract
with the grantee, whether any such contract is executed before or after the
grant date of the award.
4.9. Non-Uniform Determinations. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons
who receive, or are eligible to receive, awards under the Plan (whether or
not such persons are similarly situated). Without limiting the generality
of the foregoing, the Committee shall be entitled, among other things, to
make non-uniform and selective determinations, and to enter into non-uniform
and selective Plan agreements, as to (a) the persons to receive awards under
the Plan, (b) the terms and provisions of awards under the Plan, and (c) the
treatment of leaves of absence pursuant to Section 2.7(c).
4.10. Other Payments or Awards. Nothing contained in the Plan
shall be deemed in any way to limit or restrict the Company, any Affiliate
or the Committee from making any award or payment to
any person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.
4.11. Reorganization.
(a) In the event that the Company is merged or consolidated with another
corporation and, whether or not the Company shall be the surviving
corporation, there shall be any change in the shares of Common Stock by
reason of such merger or consolidation, or in the event that all or
substantially all of the assets of the Company are acquired by another
person, or in the event of a reorganization or liquidation of the Company
(each such event being hereinafter referred to as a "Reorganization Event")
or in the event that the Board shall propose that the Company enter into a
Reorganization Event, then the Committee may in its discretion, by written
notice to a grantee, provide that his options will be terminated unless
exercised within 30 days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice; provided
that if, and to the extent that, the Committee takes such action with respect
to the grantee's options not yet exercisable, the Committee shall also
accelerate the dates upon which such options shall be exercisable. The
Committee also may in its discretion by written notice to a grantee provide
that all or some of the restrictions on any of the grantee's awards may lapse
in the event of a Reorganization Event upon such terms and conditions as the
Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 4.11(a) may be made conditional upon the consummation of the
applicable Reorganization Event.
4.12. Section Headings. The section headings contained herein are
for the purposes of convenience only and are not intended to define or limit
the contents of said sections.
4.13. Effective Date and Term of Plan.
(a) The Plan shall be deemed adopted and become effective upon the
approval thereof by the Board.
(b) The Plan shall terminate 10 years after the date on which it becomes
effective, and no awards shall thereafter be made under the Plan.
Notwithstanding the foregoing, all awards made under the Plan prior to such
termination date shall remain in effect until such awards have been satisfied
or terminated in accordance with the terms and provisions of the Plan and the
applicable Plan agreement.
4.14. Governing Law. The Plan shall be governed by the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state.
