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EXHIBIT 4.3
ATLAS AIR, INC.
1995 LONG TERM INCENTIVE AND SHARE AWARD PLAN
(Including Amendments One Through Seven)
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Section Page
1. Purposes...............................................................................................1
2. Definitions............................................................................................1
3. Administration.........................................................................................3
(a) Authority of the Committee......................................................................3
(b) Manner of Exercise of Committee Authority.......................................................4
(c) Limitation of Liability.........................................................................4
4. Shares Subject to the Plan.............................................................................4
5. Specific Terms of Awards...............................................................................5
(a) General.........................................................................................5
(b) Options.........................................................................................5
(c) SARs............................................................................................6
(d) Restricted Shares...............................................................................6
(e) Restricted Share Units..........................................................................7
(f) Performance Shares and Performance Units........................................................8
(g) Dividend Equivalents............................................................................8
(h) Other Share-Based Awards........................................................................9
6. Certain Provisions Applicable to Awards................................................................9
(a) Stand-Alone, Additional, Tandem and Substitute Awards...........................................9
(b) Terms of Awards.................................................................................9
(c) Form of Payment Under Awards....................................................................9
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(d) Nontransferability..............................................................................9
7. Director's Options....................................................................................10
(a) Annual Grant...................................................................................10
(b) Market Value...................................................................................10
(c) Termination of Service.........................................................................10
(d) Time and Method of Exercise....................................................................10
(e) Nontransferability.............................................................................10
(f) Adjustments....................................................................................11
(g) Directors' Fees................................................................................11
(h) Administration.................................................................................11
8. General Provisions....................................................................................11
(a) Compliance with Legal and Trading Requirements.................................................11
(b) No Right to Continued Employment or Service....................................................12
(c) Taxes..........................................................................................12
(d) Changes to the Plan and Awards.................................................................12
(e) No Rights to Awards; No Shareholder Rights.....................................................12
(f) Unfunded Status of Awards......................................................................12
(g) Nonexclusivity of the Plan.....................................................................13
(h) Not Compensation for Benefit Plans.............................................................13
(i) No Fractional Shares...........................................................................13
(j) Governing Law..................................................................................13
(k) Effective Date; Plan Termination...............................................................13
(l) Titles and Headings............................................................................13
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ATLAS AIR, INC.
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1995 LONG TERM INCENTIVE AND SHARE AWARD PLAN
(Including Amendments One Through Seven)
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1. Purposes. The purposes of the 1995 Long Term Incentive and Share
Award Plan are to advance the interests of Atlas Air, Inc. and its shareholders
by providing a means to attract, retain, and motivate employees and directors of
the Company upon whose judgment, initiative and efforts the continued success,
growth and development of the Company is dependent.
2. Definitions. For purposes of the Plan, the following terms
shall be defined as set forth below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board or the Committee as a participating
employer under the Plan, provided that the Company directly or indirectly owns
at least 20% of the combined voting power of all classes of stock of such entity
or at least 20% of the ownership interests in such entity.
(b) "Award" means any Option, SAR, Restricted Share, Restricted Share
Unit, Performance Share, Performance Unit, Dividend Equivalent, or Other
Share-Based Award granted to an Eligible Employee under the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts which
have been designated by such Eligible Employee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits specified
under this Plan upon the death of the Eligible Employee, or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
(g) "Committee" means the Board, the Compensation Committee of the
Board, or such other Board committee as may be designated by the Board to
administer the Plan; provided, however, that the Compensation Committee or such
other Board Committee as may be designated by the Board to administer the Plan
shall consist of two or more directors of the Company, each of whom, to the
extent required, is a "Non-Employee Director" within the meaning of Rule 16b-3
under the Exchange Act.
(h) "Company" means Atlas Air, Inc., a corporation organized under the
laws of Delaware, or any successor corporation.
(i) "Director" means a non-employee member of the Board.
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(j) "Director's option" means a NQSO granted to a Director under
paragraph (a) of Section 7 or Shares delivered to a Director in payment of
Director's fees under paragraph (g) of Section 7.
(k) "Dividend Equivalent" means a right, granted under Section 5(g),
to receive cash, Shares, or other property equal in value to dividends paid with
respect to a specified number of Shares. Dividend Equivalents may be awarded on
a free-standing basis or in connection with another Award, and may be paid
currently or on a deferred basis.
(l) "Eligible Employee" means any employee of the Company or its
Subsidiaries and Affiliates, including any director who is an employee.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange Act shall
be deemed to include successor provisions thereto and regulations thereunder.
(n) "Fair Market Value" means, with respect to Shares or other
property, the fair market value of such Shares or other property determined by
such methods or procedures as shall be established from time to time by the
Committee. Unless otherwise determined by the Committee in good faith, the Fair
Market Value of Shares as of any given date prior to the existence of a public
market for the Company's Shares shall mean the Company's book value. Thereafter,
unless otherwise determined by the Committee in good faith, the Fair Market
Value of Shares shall mean the mean between the high and low selling prices per
Share on the immediately preceding date (or, if the Shares were not traded on
that day, the next preceding day that the Shares were traded) on the principal
exchange on which the Shares are traded, as such prices are officially quoted on
such exchange.
(o) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(p) "NQSO" means any Option that is not an ISO.
(q) "Option" means a right, granted under Section 5(b) or Section 7,
to purchase Shares.
(r) "Other Share-Based Award" means a right, granted under Section
5(h), that relates to or is valued by reference to Shares.
(s) "Participant" means an Eligible Employee or Director who has been
granted an Award or Director's Option under the Plan.
(t) "Performance Share" means a performance share granted under
Section 5(f).
(u) "Performance Unit" means a performance unit granted under Section
5(f).
(v) "Plan" means this 1995 Long Term Incentive and Share Award Plan.
(w) "Restricted Shares" means an Award of Shares under Section 5(d)
that may be subject to certain restrictions and to a risk of forfeiture.
(x) "Restricted Share Unit" means a right, granted under Section 5(e),
to receive Shares or cash at the end of a specified deferral period.
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(y) "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.
(z) "SAR" or "Share Appreciation Right" means the right, granted under
Section 5(c), to be paid an amount measured by the difference between the
exercise price of the right and the Fair Market Value of Shares on the date of
exercise of the right, with payment to be made in cash, Shares, or property as
specified in the Award or determined by the Committee.
(aa) "Shares" mean common stock, $.01 par value per share, of the
Company.
(bb) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns shares
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
3. Administration.
(a) Authority of the Committee. Except as provided in Section 7, the
Plan shall be administered by the Committee and the Committee shall have full
and final authority to the following actions, in each case subject to and
consistent with the provisions of the Plan:
(i) to select Eligible Employees to whom Awards may be granted;
(ii) to designate Affiliates;
(iii) to determine the type or types of Awards to be granted to each
Eligible Employee;
(iv) to determine the type and number of Awards to be granted, the
number of Shares to which an Award may relate, the terms and
conditions of any Award granted under the Plan (including, but
not limited to, any exercise price, grant price, or purchase
price, and any bases for adjusting such exercise, grant or
purchase price, any restriction or condition, any schedule for
lapse of restrictions or conditions relating to transferability
or forfeiture, exercisability, or settlement of an Award, and
waiver or accelerations thereof, and waivers of performance
conditions relating to an Award, based in each case on such
considerations as the Committee shall determine), and all other
matters to be determined in connection with an Award;
(v) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of
an Award may be paid, in cash, Shares, other Awards, or other
property, or an Award may be cancelled, forfeited, exchanged,
or surrendered;
(vi) to determine whether, to what extent, and under what
circumstances cash, Shares, other Awards, or other property
payable with respect to an Award will be deferred either
automatically, at the election of the Committee, or at the
election of the Eligible Employee;
(vii) to prescribe the form of each Award Agreement, which need not
be identical for each Eligible Employee;
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(viii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the
Plan and any Award, rules and regulations, Award Agreement, or
other instrument hereunder;
(x) to accelerate the exercisability or vesting of all or any
portion of any Award or to extend the period during which an
Award is exercisable; and
(xi) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may
deem necessary or advisable for the administration of the Plan.
(b) Manner of Exercise of Committee Authority. The Committee shall
have sole discretion in exercising its authority under the Plan. Any action of
the Committee with respect to the Plan shall be final, conclusive, and binding
on all persons, including the Company, Subsidiaries, Affiliates, Eligible
Employees, any person claiming any rights under the Plan from or through any
Eligible Employee, and shareholders. The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Company or any Subsidiary or Affiliate
the authority, subject to such terms as the Committee shall determine, to
perform administrative functions and, with respect to Awards granted to persons
not subject to Section 16 of the Exchange Act, to perform such other functions
as the Committee may determine, to the extent permitted under Rule 16b-3 (if
applicable) and applicable law.
(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or other employee of the Company or any
Subsidiary or Affiliate, the Company's independent certified public accountants,
or other professional retained by the Company to assist in the administration of
the Plan. No member of the Committee, nor any officer or employee off the
Company acting on behalf of the Committee, shall be personally liable for any
action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Committee and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company with respect to any such
action, determination, or interpretation.
4. Shares Subject to the Plan.
(a) Subject to adjustment as provided in Section 4(c) hereof, the
total number of Shares reserved for issuance in connection with Awards and
Director's Options under the Plan shall be 5,900,000. No Award or Director's
option may be granted if the number of Shares to which such Award or Director's
option relates, when added to the number of Shares previously issued under the
Plan, exceeds the number of Shares reserved under the preceding sentence. If any
Awards or Director's Options are forfeited, cancelled, terminated, exchanged or
surrendered or such Award or Director's Option is settled in cash or otherwise
terminates without a distribution of Shares to the Participant, any Shares
counted against the number of Shares reserved and available under the Plan with
respect to such Award or Director's Option shall, to the extent of any such
forfeiture, settlement, termination, cancellation, exchange or surrender, again
be available for Awards or Director's Options under the Plan; provided, however,
that in the case of forfeiture, cancellation, exchange or surrender of
Restricted Shares or Restricted Share Units with respect to which dividends or
Dividend Equivalents have been paid or accrued, such number of Shares shall not
be available for Awards or Director's Options unless, in the case of Shares with
respect to which dividends or Dividend Equivalents were accrued but unpaid, such
dividends and
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Dividend Equivalents are also forfeited, cancelled, exchanged or
surrendered. Upon the exercise of any Award granted in tandem with any other
Awards, such related Awards shall be cancelled to the extent of the number of
Shares as to which the Award is exercised. Subject to adjustment as provided in
Section 4(c) hereof, the maximum number of Shares with respect to which options
or SARs may be granted during a calendar year to any Eligible Employee under
this Plan shall be 300,000 Shares.
(b) Any Shares distributed pursuant to an Award or Director's Option
may consist, in whole or in part, of authorized and unissued Shares or treasury
Shares including Shares acquired by purchase in the open market or in private
transactions.
(c) In the event that the Committee shall determine that any dividend
in Shares, recapitalization, Share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Eligible Employees under the Plan, then the Committee shall make such
equitable changes or adjustments as it deems appropriate and, in such manner as
it may deem equitable, adjust any or all of (i) the number and kind of shares
which may thereafter be issued under the Plan, (ii) the number and kind of
shares, other securities or other consideration issued or issuable in respect of
outstanding Awards, and (iii) the exercise price, grant price, or purchase price
relating to any Award; provided, however, in each case that, with respect to
ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code, unless the Committee determines otherwise. In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
and performance objectives included in, Awards in recognition of unusual or
non-recurring events (including, without limitation, events described in the
preceding sentence) affecting the Company or any Subsidiary or Affiliate or the
financial statements of the Company or any Subsidiary or Affiliate, or in
response to changes in applicable laws, regulations, or accounting principles;
provided, however, that, if an Award Agreement specifically so provides, the
Committee shall not have discretion to increase the amount of compensation
payable under the Award to the extent such an increase would cause the Award to
lose its qualification as performance-based compensation for purposes of Section
162(m)(4)(C) of the Code and the regulations thereunder.
5. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 5. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
8(d)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
regarding forfeiture of Awards or continued exercisability of Awards in the
event of termination of employment by the Eligible Employee.
(b) Options. The Committee is authorized to grant Options, which may
be NQSOs or ISOs, to Eligible Employees on the following terms and conditions:
(i) Exercise Price. The exercise price per Share purchasable under
an Option shall be determined by the Committee, and the
Committee may, without limitation, set an exercise price that
is based upon achievement of performance criteria if deemed
appropriate by the Committee.
(ii) Time and Method of Exercise. The Committee shall determine at
the date of grant or thereafter the time or times at which an
Option may be exercised in whole or in part (including, without
limitation, upon achievement of performance criteria if deemed
appropriate by the Committee), the methods by which such
exercise price may be paid or deemed to be paid (including,
without limitation, broker-assisted exercise arrangements),
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the form of such payment (including, without limitation, cash,
Shares, notes or other property), and the methods by which
Shares will be delivered or deemed to be delivered to Eligible
Employees.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code,
including but not limited to the requirement that no ISO shall
be granted more than ten years after the earlier of the date of
adoption or shareholder approval of the Plan.
(c) SARs. The Committee is authorized to grant SARs (Share
Appreciation Rights) to Eligible Employees on the following terms and
conditions:
(i) Right to Payment. An SAR shall confer on the Eligible Employee
to whom it is granted a right to receive with respect to each
Share subject thereto, upon exercise thereof, the excess of (1)
the Fair Market Value of one Share on the date of exercise (or,
if the Committee shall so determine in the case of any such
right, the Fair Market Value of one Share at any time during a
specified period before or after the date of exercise) over (2)
the exercise price of the SAR as determined by the Committee as
of the date of grant of the SAR (which, in the case of an SAR
granted in tandem with an option, shall be equal to the
exercise price of the underlying Option).
(ii) Other Terms. The Committee shall determine, at the time of
grant or thereafter, the time or times at which an SAR may be
exercised in whole or in part, the method of exercise, method
of settlement, form of consideration payable in settlement,
method by which Shares will be delivered or deemed to be
delivered to Eligible Employees, whether or not an SAR shall be
in tandem with any other Award, and any other terms and
conditions of any SAR. Unless the Committee determines
otherwise, an SAR (1) granted in tandem with an NQSO may be
granted at the time of grant of the related NQSO or at any time
thereafter or (2) granted in tandem with an ISO may only be
granted at the time of grant of the related ISO.
(d) Restricted Shares. The Committee is authorized to grant Restricted
Shares to Eligible Employees on the following terms and
conditions:
(i) Issuance and Restrictions. Restricted Shares shall be subject
to such restrictions on transferability and other restrictions,
if any, as the Committee may impose at the date of grant or
thereafter, which restrictions may lapse separately or in
combination at such times, under such circumstances (including,
without limitation, upon achievement of performance criteria if
deemed appropriate by the Committee), in such installments, or
otherwise, as the Committee may determine. Except to the extent
restricted under the Award Agreement relating to the Restricted
Shares, an Eligible Employee granted Restricted Shares shall
have all of the rights of a shareholder including, without
limitation, the right to vote Restricted Shares and the right
to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the Committee, at
the date of grant or thereafter, upon termination of employment
during the applicable restriction period, Restricted Shares and
any accrued but unpaid dividends or Dividend Equivalents that
are at that time subject to restrictions shall be forfeited;
provided, however, 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 Shares will
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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
Shares.
(iii) Certificates for Shares. Restricted Shares granted under the
Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Shares are
registered in the name of the Eligible Employee, such
certificates shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such
Restricted Shares, and the Company shall retain physical
possession of the certificate.
(iv) Dividends. Dividends paid on Restricted Shares shall be either
paid at the dividend payment date, or deferred for payment to
such date as determined by the Committee, in cash or in
unrestricted Shares having a Fair Market Value equal to the
amount of such dividends. Shares distributed in connection with
a Share split or dividend in Shares, and other property
distributed as a dividend, shall be subject to restrictions and
a risk of forfeiture to the same extent as the Restricted
Shares with respect to which such Shares or other property has
been distributed.
(e) Restricted Share Units. The Committee is authorized to grant
Restricted Share Units to Eligible Employees, subject to the following terms and
conditions:
(i) Award and Restrictions. Delivery of Shares or cash, as the case
may be, will occur upon expiration of the deferral period
specified for Restricted Share Units by the Committee (or, if
permitted by the Committee, as elected by the Eligible
Employee). In addition, Restricted Share Units shall be subject
to such restrictions as the Committee may impose, if any
(including, without limitation, the achievement of performance
criteria if deemed appropriate by the Committee), at the date
of grant or thereafter, which restrictions may lapse at the
expiration of the deferral period or at earlier or later
specified times, separately or in combination, in installments
or otherwise, as the Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the Committee at
date of grant or thereafter, upon termination of employment (as
determined under criteria established by the Committee) during
the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award Agreement
evidencing the Restricted Share Units), or upon failure to
satisfy any other conditions precedent to the delivery of
Shares or cash to which such Restricted Share Units relate, all
Restricted Share Units that are at that time subject to
deferral or restriction shall be forfeited; provided, however,
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
Share Units will be waived in whole or in part in the event of
termination resulting from specified causes, and the Committee
may in other cases waive in whole or in part the forfeiture of
Restricted Share Units.
(f) Performance Shares and Performance Units. The Committee is
authorized to grant Performance Shares or Performance Units or both to Eligible
Employees on the following terms and conditions:
(i) Performance Period. The Committee shall determine a performance
period (the "Performance Period") of one or more years and
shall determine the performance objectives for grants of
Performance Shares and Performance Units. Performance
objectives may vary from Eligible Employee to Eligible Employee
and shall be based upon such
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performance criteria as the Committee may deem appropriate.
Performance Periods may overlap and Eligible Employees may
participate simultaneously with respect to Performance Shares
and Performance Units for which different Performance Periods
are prescribed.
(ii) Award Value. At the beginning of a Performance Period, the
Committee shall determine for each Eligible Employee or group
of Eligible Employees with respect to that Performance Period
the range of number of Shares, if any, in the case of
Performance Shares, and the range of dollar values, if any, in
the case of Performance Units, which may be fixed or may vary
in accordance with such performance or other criteria specified
by the Committee, which shall be paid to an Eligible Employee
as an Award if the relevant measure of Company performance for
the Performance Period is met.
(iii) Significant Events. If during the course of a Performance
Period there shall occur significant events as determined by
the Committee which the Committee expects to have a substantial
effect on a performance objective during such period, the
Committee may revise such objective; provided, however, that,
if an Award Agreement so provides, the Committee shall not have
discretion to increase the amount of compensation payable under
the Award to the extent such an increase would cause the Award
to lose its qualification as performance-based compensation for
purposes of Section 162(m)(4)(C) of the Code and the
regulations thereunder.
(iv) Forfeiture. Except as otherwise determined by the Committee, at
the date of grant or thereafter, upon termination of employment
during the applicable Performance Period, Performance Shares
and Performance Units for which the Performance Period was
prescribed shall be forfeited; provided, however, that the
Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in an individual case, that
restrictions or forfeiture conditions relating to Performance
Shares and Performance Units will 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 Performance Shares and Performance Units.
(v) Payment. Each Performance Share or Performance Unit may be paid
in whole Shares, or cash, or a combination of Shares and cash
either as a lump sum payment or in installments, all as the
Committee shall determine, at the time of grant of the
Performance Share or Performance Unit or otherwise, commencing
as soon as practicable after the end of the relevant
Performance Period.
(g) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Eligible Employees. The Committee may provide, at the
date of grant or thereafter, that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Shares, or other investment vehicles as the Committee may specify,
provided that Dividend Equivalents (other than freestanding Dividend
Equivalents) shall be subject to all conditions and restrictions of the
underlying Awards to which they relate.
(h) Other Share-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Employees such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, unrestricted shares awarded purely as a "bonus" and not subject to
any restrictions or conditions, other rights convertible or exchangeable into
Shares,
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purchase rights for Shares, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the
Committee, and Award's valued by reference to the performance of specified
Subsidiaries or Affiliates. The committee shall determine the terms and
conditions of such Awards at date of grant or thereafter. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 5(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Shares,
notes or other property, as the Committee shall determine. Cash awards, as an
element of or supplement to any other Awards under the Plan, shall also be
authorized pursuant to this Section 5(h).
6. 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 to
Eligible Employees either alone or in addition to, in tandem with, or in
exchange or substitution for, any other Award granted under the Plan or any
award granted under any other plan or agreement of the Company, any Subsidiary
or Affiliate, or any business entity to be acquired by the Company or a
Subsidiary or Affiliate, or any other right of an Eligible Employee to receive
payment from the Company or any Subsidiary or Affiliate. Awards may be granted
in addition to or in tandem with such other Awards or awards, and may be granted
either as of the same time as or a different time from the grant of such other
Awards or awards. The per Share exercise price of any Option, grant price of any
SAR, or purchase price of any other Award conferring a right to purchase Shares
which is granted, in connection with the substitution of awards granted under
any other plan or agreement of the Company or any Subsidiary or Affiliate or any
business entity to be acquired by the Company or any Subsidiary or Affiliate,
shall be determined by the Committee, in its discretion.
(b) Terms of Awards. The term of each Award granted to an Eligible
Employee shall be for such period as may be determined by the Committee;
provided, however, that in no event shall the term of any ISO or an SAR granted
in tandem therewith exceed a period of ten years from the date of its grant (or
such shorter period as may be applicable under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a
Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may
be made in such forms as the Committee shall determine at the date of grant or
thereafter, including, without limitation, cash, Shares, or other property, and
may be made in a single payment or transfer, in installments, or on a deferred
basis. The Committee may make rules relating to installment or deferred payments
with respect to Awards, including the rate of interest to be credited with
respect to such payments.
(d) Nontransferability. Awards (except for vested Shares) shall not be
transferable by an Eligible Employee except by will or the laws of descent and
distribution (except pursuant to a Beneficiary designation) and shall be
exercisable during the lifetime of an Eligible Employee only by such Eligible
Employee or his guardian or legal representative. An Eligible Employee's rights
under the Plan may not be pledged, mortgaged, hypothecated, or otherwise
encumbered, and shall not be subject to claims of the Eligible Employee's
creditors. Notwithstanding the foregoing, an Option granted hereunder may be
transferred by the Eligible Employee to members of his or her "immediate
family", to a trust or trusts established for the exclusive benefit of solely
one or more members of his or her "immediate family" or to a partnership in
which his or her "immediate family" members are the only partners or to any
similar entity (such as limited liability company) the members (or shareholders)
of which consist solely of one or more persons in his/her immediate family. Any
option held by the transferee will continue to be subject to the same terms and
conditions that were applicable to the Option immediately prior to the transfer,
except that the Option will be transferable by the transferee only by will or
the laws of descent and distribution. For purposes hereof, "immediate family"
means the Eligible Employee's children,
<PAGE>
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stepchildren, grandchildren, parents, stepparents, grandparents,
spouse, siblings (including half brothers and sisters), in-laws, and
relationships arising because of legal adoption.
7. Director's Options.
(a) Annual Grant. On the date of the consummation of the initial
public offering of the Shares (the "IPO") each Director in office on such date
shall automatically be granted a NQSO to purchase 1,000 Shares with an exercise
price per Share equal to the price per Share paid by the public in the IPO. In
addition, (i) on each anniversary of the IPO, beginning with the anniversary
occurring in 1996, each Director in office on such date shall automatically be
granted a NQSO to purchase 1,000 shares with an exercise price per Share equal
to 100 percent of the Market Value of one Share on the date of grant; and (ii)
on and after June 4, 1996, each newly appointed non-employee Director shall
automatically be granted a NQSO to purchase 1,000 Shares upon his(her) initial
election or appointment to the Board of Directors with an exercise price per
Share equal to 100 percent of the Market Value of one Share on the date of
grant; provided, however, that in all events such price shall be at least equal
to the par value of a Share. Each Option granted to a Director under this
paragraph (a) shall become fully exercisable on the date of grant, and shall
expire (unless terminated earlier under paragraph (c) below) on the tenth
anniversary of the date of grant. Effective January 1, 1998, the option grants
to Directors under 7(a)(i) (anniversary of IPO grant) and (ii) (upon initial
appointment to the Board grant) shall each be 2,000 Shares.
(b) Market Value. For purposes of this Section 7, Market Value shall
mean the mean between the high and low selling prices per Share on the
immediately preceding date (or, if the Shares were not traded on that day, the
next preceding day that the Shares were traded) on the principal exchange on
which the Shares are traded, as such prices are officially quoted on such
exchange.
(c) Termination of Service. If a person ceases to be a Director, (i)
due to retirement after attainment of age 65, or (ii) due to death or
disability, all of his or her outstanding Options may be exercised at any time
prior to the expiration dates of such Options. If the Director's service
terminates for any other reason, all of his or her outstanding Options may be
exercised at any time within six months after the date of such termination, but
not later than the expiration date of the Options.
(d) Time and Method of Exercise. The exercise price of a Director's
Option shall be paid to the Company at the time of exercise either in cash, or
in Shares already owned by the optionee and having a total Market Value equal to
the exercise price, or in a combination of cash and such Shares.
(e) Nontransferability. Director's Options granted under the Plan
shall be transferable only (i) by Will or the laws of descent and distribution
and (ii) by the Director to members of his or her "immediate family", to a trust
or trusts established for the exclusive benefit of solely one or more members of
his or her "immediate family" or to a partnership in which his or her "immediate
family" members are the only partners or to any similar entity (such as limited
liability company) the members (or shareholders) of which consist solely of one
or more persons in his/her immediate family. Any Option held by the transferee
will continue to be subject to the same terms and conditions that were
applicable to the Option immediately prior to the transfer, except that the
Option will be transferable by the transferee only by will or the laws of
descent and distribution. For purposes hereof, "immediate family" means the
Director's children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, siblings (including half brothers and sisters), in-laws,
and relationships arising because of legal adoption.
(f) Adjustments. In the event that subsequent to the Effective Date
any dividend in Shares, recapitalization, Share split, reverse split,
reorganization, merger consolidation, spin-off, combination, repurchase, or
share exchange, or other such change, affects the Shares such that they are
increased or decreased or changed into or exchanged for a different number or
kind of shares, other securities of the Company or of another corpo-
<PAGE>
-11-
ration or other consideration, then in order to maintain the proportionate
interest of the Director and preserve the value of the Director's Option, (i)
there shall automatically be substituted for each Share subject to an
unexercised Director's Option and each Share to be issued under Section 7(a)
subsequent to such event the number and kind of shares, other securities or
other consideration into which each outstanding Share shall be changed or for
which each such Share shall be exchanged, and (ii) the exercise price shall be
increased or decreased proportionately so that the aggregate purchase price for
the Shares subject to any unexercised Director's Option shall remain the same as
immediately prior to such event.
(g) Directors' Fees. Each Director shall have the option to receive
all or a portion of his quarterly compensation (including any fees that may be
payable for attending meetings of the Board) payable to such Director in such
capacity in the form of Shares in lieu of cash. Each Director shall be entitled
to elect whether to receive such compensation in (i) cash, (ii) Shares, or (iii)
a combination of cash and Shares. A Director who desires to receive a portion of
his compensation in Shares shall make an election to do so by expressing the
percentage of compensation to be paid in the form of Shares. Once an election is
made, it may be changed only at the beginning of a fiscal quarterly period. The
number of Shares to be transferred to a Director pursuant to this paragraph (g)
shall be determined by the Company by computing the mean between the high and
low selling prices per Share on the date immediately preceding the first meeting
of Directors of each Quarter (or if no meeting is held in the quarter, then the
last day of such quarter) (or, if the Shares were not traded on that day, the
next preceding day that the Shares were traded) on the principal exchange on
which the Shares are traded, as such prices are officially quoted on such
exchange, and dividing the dollar amount of fees owed to such Director in the
form of Shares by such average price. Certificates evidencing such Shares shall
bear such legends deemed to be necessary in the opinion of the Company or its
legal counsel.
(h) Administration. To the extent the Plan relates to Director's
Options granted under paragraph (a) of Section 7 of the Plan, it is intended to
operate automatically and not require administration. However, to the extent
that administration is necessary with respect to such grants, the Plan shall be
administered by the Secretary of the Company. Since the Director's Options are
awarded automatically, this function will be limited to ministerial matters. The
plan administrator will have no discretion with respect to the selection of
Director optionees, the determination of the exercise price of Director's
Options, the timing of such grants or number of Shares covered by the Director's
Options.
8. General Provisions
(a) Compliance with Legal and Trading Requirements. The Plan, the
granting and exercising of Awards or Director's Options thereunder, and the
other obligations of the Company under the Plan and any Award Agreement, shall
be subject to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be required.
The Company, in its discretion, may postpone the issuance or delivery of Shares
under any Award or Director's Option until completion of such stock exchange or
market system listing or registration or qualification of such Shares or other
required action under any state or federal law, rule or regulation as the
Company may consider appropriate, and may require any Participant to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Shares in compliance with applicable
laws, rules and regulations. No provisions of the Plan shall be interpreted or
construed to obligate the Company to register any Shares under federal or state
law.
(b) No Right to Continued Employment or Service. Neither the Plan nor
any action taken thereunder shall be construed as giving any employee or
director the right to be retained in the employ or service of the Company or any
of its Subsidiaries or Affiliates, nor shall it interfere in any way with the
right of the Company or any of its Subsidiaries or Affiliates to terminate any
employee's or director's employment or service at any time.
<PAGE>
-12-
(c) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Employee, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Eligible
Employees 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 Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Employee's tax obligations.
(d) 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 of the Company
or Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the
Company's shareholders to the extent such shareholder approval is required (i)
in order to insure that Awards granted under the Plan are exempt under Rule
16b-3 or (ii) under Section 422 of the Code; provided, however, that, without
the consent of an affected Participant, no amendment, alteration, suspension,
discontinuation, or termination of the Plan may impair the rights or, in any
other manner, adversely affect the rights of such Participant under any Award or
Director's Option theretofore granted to him or her. Notwithstanding the other
provisions of this paragraph, Section 7 and the other provisions of this Plan
applicable to Director's Options may not be amended more than once every six
months other than to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder.
(e) No Rights to Awards; No Shareholder Rights. No Eligible Employee
or employee shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Eligible Employees and
employees. No Award shall confer on any Eligible Employee any of the rights of a
shareholder of the Company unless and until Shares are duly issued or
transferred to the Eligible Employee in accordance with the terms of the Award.
(f) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award or Director's Option, nothing
contained in the Plan or any Award or Director's Option shall give any such
Participant any rights that are greater than those of a general creditor of the
Company; provided, however, that the Committee may authorize the creation of
trusts or make other arrangements to meet the Company's obligations under the
Plan to deliver cash, Shares, other Awards, or other property pursuant to any
Award, which 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.
(g) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of options and other awards otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
(h) Not Compensation for Benefit Plans. No Award payable under this
Plan shall be deemed salary or compensation for the purpose of computing
benefits under any benefit plan or other arrangement of the Company for the
benefit of its employees or directors unless the Company shall determine
otherwise.
(i) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award or Director's Option. In the case of
Awards to Eligible Employees, the Committee shall determine whether cash, other
Awards, or other property shall be issued or paid in lieu of such fractional
Shares or whether
<PAGE>
-13-
such fractional Shares or any rights thereto shall be forfeited or otherwise
eliminated. In the case of Director's Options, cash shall be paid in lieu of
such fractional Shares.
(j) Governing Law. The validity, construction, and effect of the Plan,
any rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of New York without giving effect to
principles of conflict of laws.
(k) Effective Date; Plan Termination. The Plan shall become effective
as of March 13, 1995 (the "Effective Date") upon approval by the affirmative
votes of the holders of a majority of voting securities of the Company. The Plan
shall terminate as to future awards on the date which is ten (10) years after
the Effective Date.
(l) Titles and Headings. The titles and headings of the sections in
the Plan are for convenience of reference only. In the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
<PAGE>
