SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ___________________ to ___________________
Commission File No. 0-26072
THCG, INC.
(Exact Name of Registrant as Specified in Its Charter)
Utah 87-0415597
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
650 Madison Avenue, 21st Floor, New York, NY 10022
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (212) 223-0440
Indicate by check [X] whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of May 9, 2000, there were 12,649,669 shares of the registrant's
Common Stock outstanding.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Statements of Financial Condition -
as of March 31, 2000 (unaudited) and
December 31, 1999............................................. 2
Consolidated Statements of Operations - for the
three months ended March 31, 2000 (unaudited)
and March 31, 1999 (unaudited)................................ 3
Consolidated Statement of Changes in
Stockholders' Equity - for the three months
ended March 31, 2000 (unaudited) ............................. 4
Consolidated Statements of Cash Flows - for the
three months ended March 31, 2000 (unaudited) and
March 31, 1999 (unaudited)................................... 5
Notes to Consolidated Financial Statements (unaudited)........ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.... 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................. 11
Item 6. Exhibits and Reports on Form 8-K.............................. 11
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following Consolidated Financial Statements of THCG, Inc. and
its subsidiaries are presented on pages 2 through 7 hereof as set forth below:
Consolidated Statements of Financial Condition - as of
March 31, 2000 (unaudited) and December 31, 1999.......................... 2
Consolidated Statements of Operations - for the three months
ended March 31, 2000 (unaudited) and March 31, 1999 (unaudited)........... 3
Consolidated Statement of Changes in Stockholders' Equity -
for the three months ended March 31, 2000 (unaudited) .................... 4
Consolidated Statements of Cash Flows - for the three months
ended March 31, 1999 (unaudited) and March 31, 2000 (unaudited)......... 5
Notes to Consolidated Financial Statements (unaudited).................... 6
1
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(unaudited)
------------------------------------------
ASSETS
<S> <C> <C>
Marketable and nonmarketable securities $11,032,000 $7,863,000
Partnership, limited liability company and other interests 15,433,000 2,053,000
Cash and cash equivalents 6,552,000 1,592,000
Fees and other receivables, net of allowance 793,000 352,000
Prepaid expenses and other assets 262,000 279,000
Loan receivable, related party 223,000 35,000
Loan receivable, officer 366,000 277,000
Furniture, fixtures and equipment - at cost, less accumulated depreciation 77,000 104,000
Excess of cost over fair value of net assets acquired, net of
accumulated amortization 27,734,000 29,266,000
Assets of discontinued operations ---- 6,537,000
--------------- -------------
Total Assets $62,472,000 $48,358,000
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and others $1,076,000 $131,000
Liabilities of discontinued operations 1,000,000 2,967,000
Deferred income taxes payable 1,916,000 495,000
--------------- -------------
Total Liabilities 3,992,000 3,593,000
--------------- -------------
Stockholders' equity
Common stock, $.01 par value, 50,000,000 shares authorized; 12,603,969 and
11,751,113 issued and outstanding at March 31, 2000 and December 31,
1999, respectively 126,000 118,000
Additional paid-in capital 94,281,000 81,601,000
Accumulated deficit (8,760,000) (9,660,000)
Unearned compensation (27,167,000) (27,294,000)
--------------- -------------
Total Stockholders' equity 58,480,000 44,765,000
--------------- -------------
Total Liabilities and Stockholders' Equity $ 62,472,000 $ 48,358,000
=============== =============
See Notes to Consolidated Financial Statements
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
-------------------------------------------
March 31, March 31,
2000 1999
(unaudited) (unaudited)
-------------------- -----------------
REVENUES
<S> <C> <C>
Venture service fees $ 1,483,000 $ 266,000
Appreciation in securities and interest income 12,812,000 --
------------- ------------
Total Revenues 14,295,000 266,000
EXPENSES
Selling, general and administrative 3,007,000 503,000
Equity-based compensation 2,087,000 --
Amortization of acquired intangibles 1,532,000 --
------------- ------------
Total Expenses 6,626,000 503,000
Income (loss) before discontinued operations and taxes 7,669,000 (237,000)
Provision for income taxes 3,583,000 12,000
------------- ------------
Net income (loss) before discontinued operations 4,086,000 (249,000)
Net (loss) from discontinued operations (3,186,000) --
------------- ------------
Net income (loss) $ 900,000 $ (249,000)
============= ============
BASIC EARNINGS PER SHARE
Basic income (loss) per share from continuing operations $ 0.34 $ (0.07)
Basic (loss) per share from discontinued operations (0.27) --
------------- ------------
Basic income (loss) per share $ 0.07 $ (0.07)
============= ============
DILUTED EARNINGS PER SHARE
Diluted income (loss) per share from continuing operations $ 0.27 $ (0.07)
Diluted (loss) per share from discontinued operations (0.21) --
------------- ------------
Diluted income (loss) per share $ 0.06 $ (0.07)
============= ============
Basic weighted average common shares outstanding 12,139,524 3,723,000
============= ============
Diluted weighted average common shares outstanding 15,374,696 3,723,000
============= ============
See Notes to Consolidated Financial Statements
</TABLE>
3
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
------------------------------------
Number of Paid-in Unearned
Shares Amount Capital Compensation
------------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 11,751,113 $118,000 $81,601,000 $(27,294,000)
Proceeds from exercise of warrants for
common stock 633,373 6,000 5,694,000
Proceeds from exercise of options for
common stock 1,000 3,000
Issuance of common stock in connection
with investment 218,483 2,000 5,023,000
Unearned compensation for stock options
issued to employees 1,960,000 (1,960,000)
Amortization of unearned compensation 2,087,000
Net income
------------------ ---------------- ----------------- ----------------
BALANCE, MARCH 31, 2000 (UNAUDITED) 12,603,969 $126,000 $94,281,000 $ (27,167,000)
================== ================ ================= ================
Accumulated
Deficit Total
--------------- -------------
BALANCE, DECEMBER 31, 1999 $(9,660,000) $44,765,000
Proceeds from exercise of warrants for
common stock 5,700,000
Proceeds from exercise of options for
common stock 3,000
Issuance of common stock in connection
with investment 5,025,000
Unearned compensation for stock options
issued to employees --
Amortization of unearned compensation 2,087,000
Net income 900,000 900,000
-------------- -------------
BALANCE, MARCH 31, 2000 (UNAUDITED) $(8,760,000) $58,480,000
============== =============
See Notes to Consolidated Financial Statements
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended
March 31, March 31,
2000 1999
(unaudited) (unaudited)
----------- -----------
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 900,000 $(249,000)
Adjustment to reconcile net income (loss) to net cash used in
continuing operating activities-
Loss from discontinued operations 3,186,000
Net change in unrealized appreciation of investments (12,632,000)
Gain on sale of marketable securities 1,000
Equity-based compensation 2,087,000
Depreciation and amortization 41,000 4,000
Amortization of intangible assets 1,532,000
Bad debt expense 201,000
Deferred income tax provision 1,421,000
Changes in operating assets and liabilities:
Fees and other receivables (642,000) 200,000
Loan receivable-officer (89,000)
Prepaid expenses and other assets 17,000 (199,000)
Due from related parties (188,000)
Accounts payable and accrued expenses 1,945,000 (181,000)
------------ ---------
Net cash used in operating activities (2,220,000) (425,000)
------------ ---------
Cash flows from investing activities:
Proceeds from sale of marketable securities 2,903,000
Investments (1,385,000)
Purchase of furniture and equipment (14,000)
------------ ---------
Net cash provided by investing activities 1,504,000 --
------------ ---------
Cash flows from financing activities:
Proceeds from the exercise of warrants for common stock 5,700,000
Proceeds from the exercise of options for common stock 3,000
------------ ---------
Net cash provided by financing activities 5,703,000 --
------------ ---------
Net cash used in discontinued operations (27,000)
------------ ---------
Net increase (decrease) in cash and cash equivalents 4,960,000 (425,000)
Cash and cash equivalents - beginning of period 1,592,000 610,000
------------ ---------
Cash and cash equivalents - end of period $ 6,552,000 $ 185,000
============ =========
Supplemental disclosure of cash flow information:
Cash paid:
Interest -- --
Taxes -- $48,000
Supplemental disclosure of noncash investing and financing activities
Issuance of stock in connection with Global Credit Services, Inc. $5,025,000 --
See Notes to Consolidated Financial Statements
</TABLE>
5
<PAGE>
THCG, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements as of March 31, 2000
are unaudited; however, in the opinion of the management of THCG, Inc., a Utah
corporation (the "Company" or "THCG"), such statements include all adjustments
(consisting of normal recurring accruals) necessary to present a fair statement
of the information presented therein. The balance sheet at December 31, 1999 was
derived from the audited financial statements at such date.
Pursuant to accounting requirements of the Securities and Exchange
Commission (the "SEC") applicable to Quarterly Reports on Form 10-Q, the
accompanying financial statements and these Notes do not include all disclosures
required by generally accepted accounting principles for audited financial
statements. Accordingly, these statements should be read in conjunction with the
Company's most recent audited financial statements included in its Annual Report
on Form 10-K for the fiscal year ended December 31, 1999.
Results of operations for interim periods are not necessarily
indicative of those to be achieved for fiscal years.
The financial statements of the Company include the accounts of its
wholly owned subsidiaries, Mercury Coast Inc. ("Mercury Coast") and Tower Hill
Securities, Inc. ("Tower Hill Securities") and its wholly owned subsidiaries,
THCG LLC and THCG Ventures LLC. THCG Ventures LLC is a management company for
two related venture capital companies, THCG Venture Partners I LLC ("Venture I")
and THCG Partners LLC. THCG Ventures LLC has a 0.45% member's interest in THCG
Partners LLC. THCG Partners LLC and THCG LLC have a 15.1% and a 9.9% membership
interest, respectively, in Venture I. All significant intercompany accounts and
transactions are eliminated in consolidation. Pacific Financial Services Corp.
("Pacific Financial") and Inland Financial Corporation ("Inland Financial") are
wholly owned subsidiaries of the Company whose operations have been
discontinued. See Note 3 to Notes to Consolidated Financial Statements.
NOTE 2 - PARTNERSHIP, LIMITED LIABILITY COMPANY AND OTHER INTERESTS
THCG owns 100% of the general partner of Walnut Growth Partners, L.P.
("WGP"). The general partner owns 1% of WGP and manages WGP's assets, for which
services it is entitled to management fees and additional compensation in the
form of a carried interest in 20% of the profits of WGP after the limited
partner's capital is returned.
On February 11, 2000, webMethods, Inc. ("webMethods"), a company in the
WGP portfolio, issued stock to the public. The price of webMethods' stock has
been extremely volatile. On March 31, 2000, the stock price was $241.38 per
share. Subsequently, the stock of webMethods and other Internet companies was
negatively impacted by a change in market sentiment. The price of webMethods'
stock declined to as low as $44.50 per share on April 17, 2000.
Given that the WGP position in webMethods is subject to a lock-up
agreement and that market sentiment towards Internet companies has changed, THCG
has reduced the value of its interest in and unrealized profit from the WGP
portfolio. As of March 31, 2000, THCG's interest in WGP was valued at $13.8
million, assuming a webMethods stock price of approximately $100. This value
reflects a permanent impairment of $20.4 million.
Venture I increased the number of its investments during the first
quarter. As of March 31, 2000, THCG's interest in these venture partner
companies through Venture I and THCG Partners LLC aggregated $1.7 million.
6
<PAGE>
On February 7, 2000, THCG exchanged $5.0 million of its common stock
for a 25% interest in Global Credit Services, Inc. ("Global Credit") and Venture
I simultaneously invested in Global Credit. THCG is accounting for its holdings
in Global Credit using the equity method of accounting.
NOTE 3 - DISCONTINUED OPERATIONS
Two of THCG's subsidiaries, Pacific Financial and Inland Financial,
engage in the factoring business in the state of Washington. THCG has completed
a strategic review and has concluded that the factoring business is not
consistent with THCG's current focus and corporate objectives. Accordingly, THCG
is winding down the operations of these two subsidiaries and has accounted for
these businesses as discontinued operations.
<TABLE>
<CAPTION>
Total Discontinued
Inland Financial Pacific Financial Operations
---------------- ----------------- ------------------
<S> <C> <C> <C>
Total Assets $1,988,000 $4,549,000 $6,537,000
Total Liabilities 770,000 2,197,000 2,967,000
---------- ---------- ----------
Net Assets $1,218,000 $2,352,000 $3,570,000
========== ========== ==========
</TABLE>
NOTE 4 - SUBSEQUENT EVENTS
On April 11, 2000, THCG announced the acquisition of certain businesses
operated under the Giza Group ("Giza") name. This transaction is expected to
close by June 30, 2000 and will be accounted for using the purchase method of
accounting. The businesses acquired are the investment banking and equity
research operations of Giza. Upon the closing of this transaction, THCG will
issue 750,000 shares of common stock. The businesses will be run as THCG Giza
Israel.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
As used in this Item 2, "we," "our" and "us" refer to THCG.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains a number of forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Specifically, all statements
other than statements of historical facts included in this Report, or
incorporated herein by reference, regarding our financial position, business
strategy and the plans and objectives of management for future operations are
forward-looking statements. These forward-looking statements are based on the
beliefs of management, as well as assumptions made by and information currently
available to management. When used in this Report, including the information
incorporated by reference, the words "anticipate," "believe," "estimate,"
"expect," "may," "will," "continue," "intend" and "plan" and words or phrases of
similar import, as they relate to our financial position, business strategy and
plans, or objectives of management, are intended to identify forward-looking
statements. These cautionary statements reflect our current view regarding
future events and are subject to risks, uncertainties and assumptions related to
various factors which include but may not be limited to those listed under the
heading "Factors Affecting our Future Performance" and other cautionary
statements in our Annual Report on Form 10-K for our fiscal year ended December
31, 1999, filed with the SEC, which information is incorporated into this Report
by reference.
Although we believe that our expectations are reasonable, we cannot
assure you that our expectations will prove to be correct. Based upon changing
conditions, should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described in this Report as anticipated, believed,
estimated, expected, intended or planned. All subsequent written and oral
forward-looking statements attributable to us (or to persons acting on our
behalf) are expressly qualified in their entirety by these cautionary
statements.
Overview
We are an active Internet accelerator providing V3 global enterprise
enhancing services--a seamless integration of venture development, venture
banking and venture funding services--both to companies in which we acquire
direct or indirect equity interests as well as to third parties to which we
provide services in exchange for fees. We are penetrating new markets by
developing our international operations and by expanding our global coverage of
the Internet industry. Our venture partner and venture portfolio companies
include advanced technology and service companies, established "brick and
mortar" companies implementing an Internet-based strategy and global
Internet-based businesses. By providing our venture partner companies with our
unique V3 services offerings, we believe that we help our venture partner
companies focus on their core strengths, so that they may bring their products
and services to market more rapidly.
On November 1, 1999, Walnut Financial Services, Inc. ("Walnut
Financial Services") acquired Tower Hill Securities. However, for financial
statement purposes, Tower Hill Securities acquired Walnut Financial Services and
is the surviving entity. Tower Hill Securities is the successor to Hambro
America Securities, Inc., the former U.S. investment banking subsidiary of
Hambros, plc, a British merchant banking firm. In March 1998, the investment
banking operations of Hambros, plc were sold to Societe Generale, a French bank.
On April 1, 1998, Joseph D. Mark and Adi Raviv, the principal executives of
Hambro America Securities, Inc., acquired the company from Societe Generale.
As part of our new business strategy, on December 29, 1999, we acquired
Mercury Coast, a corporation engaged in the business of providing business
acceleration services, including strategic planning, operations and marketing
consulting services, to Internet-based businesses.
The financial statements contained in this Report reflect the
operations of THCG for the three months ended March 31, 2000 and the operations
of Tower Hill Securities for the three months ended March 31, 1999.
8
<PAGE>
Three Months Ended March 31, 2000 as compared to the Three Months Ended March
31, 1999
Revenues
Revenues for the three months ended March 31, 2000 increased to $14.3
million from $266 thousand for the three months ended March 31, 1999. The
increase in revenues was primarily due to significant appreciation of our
venture partner and venture portfolio company securities portfolio and an
increase in the sales of our venture banking services.
Venture service fees for the three months ended March 31, 2000
increased to $1.5 million from $266 thousand for the three months ended March
31, 1999. The increase in these fees was primarily due to an increase in fees
earned from providing our venture banking services.
Appreciation in securities and interest income consists of the net
increases (decreases) in the value of the venture partner and venture portfolio
company securities that we acquired or that we received in exchange for
services, as well as interest income. Appreciation in securities was $12.8
million for the three months ended March 31, 2000. The increase was due
primarily to the $12.3 million increase in the value of assets held by our
wholly owned subsidiary that is the general partner of WGP. See Note 2 to Notes
to Consolidated Financial Statements. Tower Hill Securities was not engaged in
these activities during the comparable period in 1999.
Expenses
Selling, general and administrative expenses for the three months ended
March 31, 2000 increased to $3.0 million from $503 thousand for the three months
ended March 31, 1999. The increase was primarily due to increases in
compensation and related benefits and professional fees. Compensation and
related benefits expense increased to $1 million for the three months ended
March 31, 2000 from $306 thousand for the three months ended March 31, 1999.
Compensation expenses included bonuses to professionals related to the improved
results from our venture banking services, as well as our hiring of additional
employees to provide venture development and venture banking services to our
venture partner companies. Professional fees for the three months ended March
31, 2000 increased to $1.3 million from $20 thousand for the three months ended
March 31, 1999. The increase in professional fees primarily related to fees paid
to legal and accounting professional services firms for services in connection
with the preparation and filing of documents with the SEC and for professional
fees related to our provision of venture funding services, which services Tower
Hill Securities did not provide prior to 1999.
Equity-based compensation for the three months ended March 31, 2000 was
$2.1 million. There was no equity-based compensation for the three months ended
March 31, 1999.
Amortization for the three months ended March 31, 2000 increased to
$1.5 million from $7 hundred for the three months ended March 31, 1999. The
increase in amortization expenses is primarily related to the amortization of
goodwill from our merger with Walnut Financial Services on November 1, 1999 and
the acquisition of Mercury Coast on December 29, 1999.
Our provision for income taxes for the three months ended March 31,
2000 increased to $3.6 million from $12 thousand for the three months ended
March 31, 1999. This increase was primarily due to the increase in net income
for the three month period ended March 31, 2000.
We incurred a loss in the three months ended March 31, 2000 from
discontinued operations of $5.4 million ($3.2 million after-tax). We decided to
discontinue the accounts receivable factoring business. See Note 3 to Notes to
Consolidated Financial Statements.
Liquidity and Capital Resources
Our business is capital intensive. In the future, we expect
periodically to raise funds to acquire equity interests in and establish new
venture partner companies, to support our operations and expand our venture
development and venture banking services, and to support the operation and
growth of our venture partner companies. Our future capital requirements will
depend in large part on the number of venture partner companies in
9
<PAGE>
which we acquire equity interests and which we establish, the amounts of capital
we provide to these companies and the timing of these payments. Our plans and
the related capital requirements will be dependent on various factors, such as
changes in the capital markets and investor sentiment, and the availability of
acquisition and entrepreneurial opportunities. If we are successful in selling
additional equity securities, our then existing stockholders may suffer
significant dilution. However, we may not be able to obtain financing on
acceptable terms, or at all, when we need it. If we require, but are unable to
obtain, additional financing in the future on acceptable terms, or at all, we
will not be able to continue to execute our current business strategy, respond
to changing business or economic conditions, withstand adverse operating results
or compete effectively, and our business, financial condition and operating
results may be materially and adversely affected as a result.
In February, 2000, we called for redemption our outstanding Class A
Warrants (the "Warrants"), thereby causing the holders to exercise all of the
Warrants for $9 per share of common stock. This resulted in proceeds to us of
approximately $5.7 million. We issued 633,373 new shares of common stock upon
exercise of the Warrants. We filed a registration statement with the SEC
covering the resale of these shares for a period of 90 days. This period will
end on August 6, 2000.
During the three months ended March 31, 2000, cash used in operating
activities was $2.2 million compared to $425 thousand for the three months ended
March 31, 1999.
Cash provided by financing activities was $5.7 million for the three
months ended March 31, 2000 compared to none for the three months ended March
31, 1999. This consisted primarily of proceeds from the exercise of the
Warrants. We intend to continue to raise capital to finance our strategy of
building dominant venture partner companies.
Certain of our venture partner companies have the right to require that
we purchase additional equity interests in these companies in an aggregate
amount of cash approximating $350,000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary market risk facing THCG is the fluctuation in the market
value of the securities THCG acquires in its venture partner and venture
portfolio companies, and the securities THCG receives in payment of fees for the
venture development and venture banking services it provides to its venture
partner companies. The market prices for those companies that are publicly held
have been very volatile, experiencing wide fluctuations. THCG's profitability
may be materially and adversely affected by period to period declines in the
market values of its venture partner and venture portfolio companies.
Historically, THCG has not generally engaged in hedging transactions to minimize
this risk.
THCG is not subject to market risk associated with risk sensitive
instruments because THCG does not invest in instruments that are not United
States instruments and THCG does not enter into hedging transactions.
Historically, THCG has had very low exposure to changes in foreign
currency exchange rates, and as such, has not used derivative financial
instruments to manage foreign currency fluctuation risk. As THCG develops its
international operations and expands its global coverage of the Internet
industry, THCG's risk of foreign currency exchange rate fluctuation may
dramatically increase. Therefore, in the future, THCG may consider utilizing
derivative instruments to mitigate these risks.
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
With respect to the action brought against Tower Hill Securities by
Yoav Bitter, previously described in THCG's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, Mr. Bitter filed a motion on April 13, 2000
seeking reargument or modification of the March 14, 2000 decision and order of
the New York State Supreme Court Appellate Division, First Department, that
dismissed Mr. Bitter's appeal. In the alternative, the motion sought permission
to appeal to the New York State Court of Appeals. Tower Hill Securities opposed
the motion on April 24, 2000. As of May 15, 2000, no decision has been issued on
Mr. Bitter's motion.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as part of this report:
Exhibit No. Description
----------- -----------
10.1 The 2000 THCG, Inc. Stock Incentive Plan.
10.2 The THCG, Inc. 2000 Employee Stock Purchase
Plan.
10.3 The THCG, Inc. 2000 Non-Employee Director
Stock Option Plan.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
THCG filed a Current Report on Form 8-K, dated December 29, 1999, with
the SEC on January 6, 2000 to report its acquisition of Mercury Coast under Item
2 ("Acquisition or Disposition of Assets") of said report. THCG filed an
amendment to the Current Report on Form 8-K, dated December 29, 1999, with the
SEC on March 13, 2000 to report the historical financial statements of Mercury
Coast and the pro forma financial statements of THCG under Item 7 ("Financial
Statements, Pro Forma Financial Information and Exhibits") of said report.
11
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THCG, Inc.
By: /s/ Shai Novik
---------------------------
Name: Shai Novik
Title: Chief Operating Officer
and Principal Financial
and Accounting Officer
Date: May 15, 2000
<PAGE>
EXHIBIT LIST
Exhibit No. Description
- ----------- -----------
10.1 The 2000 THCG, Inc. Stock Incentive Plan.
10.2 The THCG, Inc. 2000 Employee Stock Purchase Plan.
10.3 The THCG, Inc. 2000 Non-Employee Director Stock Option Plan.
27.1 Financial Data Schedule.
Exhibit 10.1
THE 2000 THCG, INC.
STOCK INCENTIVE PLAN
(as adopted February 15, 2000)
1. Purpose of the Plan
This 2000 THCG, Inc. Stock Incentive Plan is intended to promote the
interests of the Company and its stockholders by providing certain key
individuals, on whose judgment, initiative and efforts the successful conduct of
the business of the Company largely depends, and who are largely responsible for
the management, growth and protection of the business of the Company, with
appropriate incentives and rewards to encourage them to continue their
Employment with the Company and to maximize their performance and to provide
certain "performance-based compensation" within the meaning of Section
162(m)(4)(C) of the Code.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Affiliate" shall mean any entity (whether or not incorporated)
controlling, controlled by or under common control with the Company.
(b) "Board of Directors" shall mean the Board of Directors of the
Company.
(c) "Cash Bonus" shall mean an award of a bonus payable in cash
pursuant to Section 13 hereof.
(d) "Cause" shall mean, when used in connection with a Participant's
Termination of Employment:
(i) to the extent that there is an employment, severance or
other agreement governing the relationship between the Participant
and the Company, which agreement contains a definition of "Cause,"
cause will consist of those acts or omissions that would constitute
"cause" under such agreement; and otherwise
(ii) the Participant's Termination of Employment by the Company
or an Affiliate on account of any one or more of the following:
(A) any failure by the Participant substantially to perform
the Participant's Employment duties;
(B) any excessive unauthorized absenteeism by the
Participant;
(C) any refusal by the Participant to obey the lawful
orders of the Board of Directors or any other person or
committee to whom the Participant reports;
(D) any act or omission by the Participant that is or may
be injurious to the Company, monetarily or otherwise;
(E) any act by the Participant that is inconsistent with
the best interests of the Company;
(F) the Participant's material violation of any of the
Company's policies, including, without limitation, those
policies relating to discrimination or sexual harassment;
(G) the Participant's unauthorized (a) removal from the
premises of the Company or Affiliate of any document (in any
medium or form) relating to the Company or an Affiliate or the
customers
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or clients of the Company or an Affiliate or (b) disclosure to
any person or entity of any of the Company's confidential or
proprietary information;
(H) the Participant's commission of any felony, or any
other crime involving moral turpitude; and
(I) the Participant's commission of any act involving
dishonesty or fraud.
To the extent the definition of Cause herein is determined pursuant
to Section 2(d)(ii) hereof, then solely for the purposes of Sections 6(h), 9(e),
10(g) and 11(e) of this Plan the definition of Cause shall be determined only by
reference to subsections (C), (F), (G), (H) and (I) of such Section 2(d)(ii).
Any rights the Company may have hereunder in respect of the events
giving rise to Cause shall be in addition to the rights the Company may have
under any other agreement with a Participant or at law or in equity. Any
determination of whether a Participant's Employment is (or is deemed to have
been) terminated for Cause shall be made by the Committee in its discretion,
which determination shall be final and binding on all parties. If, subsequent to
a Participant's voluntary Termination of Employment or involuntary Termination
of Employment without Cause, it is discovered that the Participant's Employment
could have been terminated for Cause, such Participant's Employment shall be
deemed to have been terminated for Cause. A Participant's Termination of
Employment for Cause shall be effective as of the date of the occurrence of the
event giving rise to Cause, regardless of when the determination of Cause is
made.
(e) "Change in Control" shall mean the occurrence of any of the
following:
(i) a change in control of a nature that would be required to be
reported in response to Item 5(f) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act shall have occurred, unless such
change in control results in control by the Participant, his
designee(s) or "affiliate(s)" (as defined in Rule 12b-2 under the
Exchange Act) or any combination thereof;
(ii) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Participant, his
designee(s) or "affiliate(s)" (as defined in Rule 12b-2 under the
Exchange Act), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing forty percent (40%) or more of
the combined voting power of the Company's then outstanding
securities;
(iii) during any period of two (2) consecutive years during this
Agreement, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director
at the beginning of such period has been approved in advance by
directors representing at least a majority of the directors then in
office who were directors at the beginning of the period;
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined) acquires
more than 25% of the combined voting power of the Company's then
outstanding securities shall not constitute a Change in Control of
the Company; or
(v) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of, or the Company sells or disposes of,
all or substantially all of the Company's assets.
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(f) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan; provided, however, that the Committee shall
at all times consist of two or more persons. The Committee shall consist solely
of individuals who are (or grants shall be made by a subcommittee of two or more
persons, each of whom shall be) a "non-employee director" within the meaning of
Rule 16b-3. Each member of the Committee shall be an "outside director" within
the meaning of Section 162(m) of the Code.
(h) "Company" shall mean THCG, Inc., a Utah corporation, or any
successor thereto.
(i) "Company Stock" shall mean the common stock , par value $0.01 per
share, of the Company.
(j) "Disability" shall mean, except in connection with an Incentive
Stock Option, any physical or mental condition that would qualify a Participant
for a disability benefit under the long-term disability plan maintained by the
Company or, if there is no such plan, a physical or mental condition that
prevents the Participant from performing the essential functions of the
Participant's position (with or without reasonable accommodation) for a period
of six consecutive months or, in connection with an Incentive Stock Option, a
disability described in Section 422(c)(6) of the Code. The existence of a
Disability shall be determined by the Committee in its absolute discretion.
(k) "Dividend Equivalent Right" shall mean an Incentive Award granted
pursuant to Section 14 hereof of a right to receive an amount equivalent to the
ordinary cash dividends paid in respect to some or all of the shares of Company
Stock underlying an Incentive Award.
(l) "Employment" shall mean, in the case of a Participant who is not
an employee of the Company, the Participant's association with the Company or an
Affiliate as a consultant.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(n) "Fair Market Value" shall mean, with respect to a share of
Company Stock on an applicable date:
(i) If Company Stock is traded on a national securities
exchange, (A) the average of the high and low reported sales price
regular way per share of Company Stock on the principal national
securities exchange on which Company Stock is traded or (B) if no
reported sales take place on the applicable date, the average of the
highest bid and lowest asked price of Company Stock on such exchange
or (C) if no such quotation is made on such date, on the next
preceding day (not more than 10 business days prior to the applicable
date) on which there were reported sales or such quotations.
(ii) If Company Stock is not traded on a national securities
exchange but quotations are available for Company Stock on the
over-the-counter market, (A) the mean between the highest bid and
lowest asked quotation on the over-the-counter market as reported by
the National Quotations Bureau, or any similar organization, on the
applicable date or (B) if no such quotation is made on such date on
the next preceding day (not more than 10 business days prior to the
applicable date) on which there were such quotations.
(iii) If Company Stock is neither traded on a national
securities exchange nor are quotations therefor available on the
over-the-counter market or if there are no sales or quotations in the
10 business days immediately prior to the applicable date, as
determined in good faith by the Committee in a manner consistently
applied.
(o) "Incentive Award" shall mean an Option, LSAR, Tandem SAR,
Stand-Alone SAR, Dividend Equivalent Right, share of Restricted Stock, share of
Phantom Stock, Stock Bonus, Cash Bonus or other equity-based award granted
pursuant to the terms of the Plan.
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(p) "Incentive Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of Section 422 of the Code and that
is identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(q) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued by
the Company pursuant to the terms of Section 10(d) hereof.
(r) "LSAR" shall mean a limited stock appreciation right that is
granted pursuant to the provisions of Section 7 hereof and that relates to an
Option. Each LSAR shall be exercisable only upon the occurrence of a Change in
Control and only in the alternative to the exercise of its related Option.
(s) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(t) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof. Each Option shall be identified as either
an Incentive Stock Option or a Non-Qualified Stock Option in the agreement by
which it is evidenced.
(u) "Participant" shall mean any person who is eligible to
participate in the Plan and to whom an Incentive Award is granted pursuant to
the Plan, and, upon his death, such person's successors, heirs, executors and
administrators, as the case may be.
(v) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(w) "Phantom Stock" shall mean the right to receive in cash the Fair
Market Value of a share of Company Stock, which right is granted pursuant to
Section 11 hereof and subject to the terms and conditions contained therein.
(x) "Plan" shall mean this 2000 THCG, Inc. Stock Incentive Plan, as
it may be amended from time to time.
(y) "Reload Option" shall mean an Option granted to a Participant in
accordance with Section 6(b) hereof upon the exercise of an Option.
(z) "Restricted Stock" shall mean a share of Company Stock that is
granted pursuant to the terms of Section 10 hereof and that is subject to the
restrictions set forth in Section 10(c) hereof for so long as such restrictions
continue to apply to such share.
(aa) "SAR" shall mean a Tandem SAR, Stand-Alone SAR or LSAR.
(bb) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
(cc) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 hereof that is not related to any Option.
(dd) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Company Stock pursuant to Section 12 hereof.
(ee) "Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 8 hereof that is related to an Option. Each Tandem SAR shall
be exercisable only to the extent its related Option is exercisable and only in
the alternative to the exercise of its related Option.
(ff) "Termination of Employment" shall mean a Participant's
Employment by the Company and any Affiliates, or by a corporation assuming
Incentive Awards in a transaction to which section 424(a) of the Code applies,
coming to an end. The Committee may determine, in its absolute discretion, (i)
whether any leave of
4
<PAGE>
absence or absence in military or government service constitutes a Termination
of Employment for purposes of the Plan, subject to applicable law, (ii) the
effect, if any, of any such leave of absence on Incentive Awards granted under
the Plan, and (iii) when a change in any Participant's association with the
Company constitutes a Termination of Employment for purposes of the Plan.
(gg) "Vesting Date" shall mean the date established by the Committee
on which a share of Restricted Stock or Phantom Stock may vest.
3. Stock Subject to the Plan
(a) Plan Limit
Subject to adjustment as provided in Section 16 hereof, the
Committee may grant Incentive Awards hereunder with respect to a number of
shares of Company Stock that in the aggregate does not exceed 5,000,000 shares.
The grant of an LSAR, Tandem SAR or Dividend Equivalent Right shall not reduce
the number of shares of Company Stock with respect to which Incentive Awards may
be granted pursuant to the Plan. Incentive Awards granted under the Plan shall
count against the foregoing limits at the time they are granted but shall again
become available for grant under the Plan as follows:
(i) To the extent that any Options, together with any related
rights granted under the Plan, terminate, expire or are canceled
without having been exercised (including a cancellation resulting
from the exercise of a related LSAR or a Tandem SAR) the shares
covered by such Options shall again be available for grant under the
Plan.
(ii) To the extent that any Stand-Alone SARs terminate, expire
or are canceled without having been exercised, the shares covered by
such Stand-Alone SARs shall again be available for grant under the
Plan.
(iii) To the extent any shares of Restricted Stock or Phantom
Stock, or any shares of Company Stock granted as a Stock Bonus are
forfeited or canceled for any reason, such shares shall again be
available for grant under the Plan.
Shares of Company Stock issued under the Plan may be either
newly issued shares or treasury shares, at the discretion of the Committee.
(b) Individual Limit
Subject to adjustment as provided in Section 14 hereof, the
Committee shall not, during any calendar year, grant any one Participant
Incentive Awards hereunder with respect to more than 1,000,000 shares of Company
Stock. Such Incentive Awards may be made up entirely of any one type of
Incentive Award or any combination of types of Incentive Awards available under
the Plan, in the Committee's sole discretion. Once granted to a Participant,
Incentive Awards shall not again be available for grant to that Participant. The
grant of an LSAR, Tandem SAR or Dividend Equivalent Right shall not reduce the
number of shares of Company Stock with respect to which Incentive Awards may be
granted to any Participant pursuant to the Plan.
4. Administration of the Plan
The Plan shall be administered by the Committee. The Committee shall
from time to time designate the key individuals who shall be granted Incentive
Awards and the amount and type of such Incentive Awards.
The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Incentive Award issued under it, and to adopt such rules and
regulations for administering the Plan as it may deem necessary or appropriate.
Decisions of the Committee shall be final and binding on all parties. Except as
provided in Section 2(n)(iii), the Committee's determinations
5
<PAGE>
under the Plan may, but need not, be uniform and may be made on a
Participant-by-Participant basis (whether or not two or more Participants are
similarly situated).
The Committee may, in its absolute discretion, without amendment to
the Plan, (i) accelerate the date on which any Option or Stand-Alone SAR granted
under the Plan becomes exercisable or otherwise adjust any of the terms of such
Option or Stand-Alone SAR (except that no such adjustment shall, without the
consent of a Participant, reduce the Participant's rights under any previously
granted and outstanding Incentive Award unless the Committee determines that
such adjustment is necessary or appropriate to prevent such Incentive Award from
constituting "applicable employee remuneration" within the meaning of Section
162(m) of the Code), (ii) accelerate the Vesting Date or Issue Date, or waive
any condition imposed hereunder, with respect to any share of Restricted Stock
granted under the Plan or otherwise adjust any of the terms of such Restricted
Stock and (iii) accelerate the Vesting Date or waive any condition imposed
hereunder, with respect to any share of Phantom Stock granted under the Plan or
otherwise adjust any of the terms of such Phantom Stock.
In addition, the Committee may, in its absolute discretion and
without amendment to the Plan, grant Incentive Awards of any type to
Participants on the condition that such Participants surrender to the Committee
for cancellation such other Incentive Awards of the same or any other type
(including, without limitation, Incentive Awards with higher exercise prices or
values) as the Committee specifies. Notwithstanding Section 3(a) hereof, prior
to the surrender of such other Incentive Awards, Incentive Awards granted
pursuant to the preceding sentence of this Section 4 shall not count against the
limits set forth in such Section 3(a).
No member of the Committee shall be liable for any action, omission
or determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.
Notwithstanding anything in the Plan to the contrary, until the
Board of Directors shall have appointed the members of the Committee, the Board
of Directors shall administer the Plan. In addition, the Board of Directors may,
in its sole discretion, at any time and from time to time, grant Incentive
Awards or resolve to administer the Plan in which case, to the extent provided
in such resolutions, the Board of Directors shall have the powers of the
Committee.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards
pursuant to the Plan shall be those key current and former employees of the
Company and its Affiliates (including prospective employees, which Incentive
Awards shall be conditioned on the prospective employees actually becoming
employees) and certain current and former consultants or other independent
contractors (including directors of the Company or any of its Affiliates who are
not employees of the Company or any of its Affiliates) to the Company and its
Affiliates who are largely responsible for the management, growth and protection
of the business of the Company and its Affiliates (including officers of the
Company, whether or not they are directors of the Company) as the Committee
shall select from time to time.
6. Options
The Committee may grant Options pursuant to the Plan. Such Options
shall be evidenced by agreements in such form as the Committee shall from time
to time approve. Options shall comply with and be subject to the following terms
and conditions:
(a) Identification of Options
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All Options granted under the Plan shall be clearly identified
in the agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.
(b) Conditions to Issuance and Exercisability
At the time of the grant of any Options under the Plan, the
Committee may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the issuance or exercisability of the Options, as the
Committee, in its absolute discretion, deems appropriate. By way of example and
not by way of limitation, the Committee may require, as a condition to the
issuance or exercisability of any Options, that the Participant or the Company
achieve such performance criteria as the Committee may specify at the time of
the grant of such shares.
(c) Exercise Price
The exercise price of any Non-Qualified Stock Option granted
under the Plan shall be such price as the Committee shall determine (which may
be equal to, less than or greater than the Fair Market Value of a share of
Company Stock on the date such Non-Qualified Stock Option is granted) on the
date on which such Non-Qualified Stock Option is granted; provided, that such
price may not be less than the minimum price required by law. Subject to Section
6(e), the exercise price-per-share of any Incentive Stock Option granted under
the Plan shall be not less than 100% of the Fair Market Value of a share of
Company Stock on the date on which such Incentive Stock Option is granted
(except as permitted in connection with the assumption or issuance of Options in
a transaction to which Section 424(a) of the Code applies).
(d) Term and Exercise of Options
(i) Each Option shall be exercisable on such date or dates,
during such period and for such number of shares of Company Stock as
shall be determined by the Committee on the day on which such Option
is granted and set forth in the agreement evidencing such Option;
provided, however, that: (A) if such agreement does not specify the
date or dates on which the Option will become exercisable, the shares
subject to the Option shall become exercisable in three equal
installments on each of the first, second and third anniversary of
the day on which the Option is granted; (B) no Option shall be
exercisable after the expiration of ten years from the date such
Option was granted; and (C) each Option shall be subject to earlier
termination, expiration or cancellation as provided in the Plan.
(ii) Each Option shall be exercisable in whole or in part;
provided, that no partial exercise of an Option shall be for an
aggregate exercise price of less than $1,000. The partial exercise of
an Option shall not cause the expiration, termination or cancellation
of the remaining portion thereof. Upon the partial exercise of an
Option, the agreement evidencing such Option and any related LSARs
and Tandem SARs shall be returned to the Participant exercising such
Option together with the delivery of the certificates described in
Section 6(d)(v) hereof.
(iii) An Option shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no
less than five business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the agreement
or agreements evidencing the Option and any related LSARs and Tandem
SARs, shall specify the number of shares of Company Stock with
respect to which the Option is being exercised and the effective date
of the proposed exercise and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close
of business on the business day immediately preceding the effective
date of the proposed exercise, in which case such agreement or
agreements shall be returned to him. Payment for shares of Company
Stock purchased upon the exercise of an Option shall be made on the
effective date of such exercise either:
(A) in cash, by certified check, bank cashier's check or
wire transfer; or
(B) subject to the approval of the Committee, in shares of
Company Stock owned by the Participant and valued at their Fair
Market Value on the effective date of such exercise, or partly
in
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shares of Company Stock with the balance in cash, by
certified check, bank cashier's check or wire transfer; or
(C) subject to the approval of the Committee, pursuant to a
"cashless exercise" pursuant to procedures adopted by the
Committee whereby the Participant, by a properly written notice,
directing (A) an immediate market sale or margin loan respecting
all or a part of the shares of Company Stock to which the
Participant is entitled upon exercise pursuant to an extension
of credit by the Company to the Participant of the exercise
price, (B) the delivery of the shares of Company Stock from the
Company directly to the brokerage firm, and (C) the delivery of
the exercise price from the sale or margin loan proceeds from
the brokerage firm directly to the Company.
Any payment in shares of Company Stock shall be effected by
the delivery of such shares to the Secretary of the Company, duly
endorsed in blank or accompanied by stock powers duly executed in
blank, together with any other documents and evidences as the
Secretary of the Company shall require from time to time.
(iv) Except as otherwise provided in an applicable agreement
evidencing an Option, during the lifetime of a Participant, each
Option granted to a Participant shall be exercisable only by the
Participant and no Option shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
The Committee may, in any applicable agreement evidencing an Option
(other than an Incentive Stock Option to the extent inconsistent with
the requirements of Section 422 of the Code applicable to incentive
stock options), permit a Participant to transfer all or some of the
Options to (A) the Participant's spouse, children or grandchildren
("Immediate Family Members"), (B) a trust or trusts for the exclusive
benefit of such Immediate Family Members, or (C) other parties
approved by the Committee in its absolute discretion. Following any
such transfer, any transferred Options shall continue to be subject
to the same terms and conditions as were applicable immediately prior
to the transfer.
(v) Certificates for shares of Company Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant
or his beneficiary (or permitted transferee), as the case may be, and
delivered to the Participant or his beneficiary (or permitted
transferee), as the case may be, as soon as practicable following the
effective date on which the Option is exercised.
(e) Limitations on Grant of Incentive Stock Options
(i) The aggregate Fair Market Value of shares of Company Stock
with respect to which Incentive Stock Options granted hereunder are
exercisable for the first time by a Participant during any calendar
year under the Plan and any other stock option plan of the Company
(or any "subsidiary corporation" of the Company within the meaning of
Section 424 of the Code) shall not exceed $100,000. Such Fair Market
Value shall be determined as of the date on which each such Incentive
Stock Option is granted. In the event that the aggregate Fair Market
Value of shares of Company Stock with respect to such Incentive Stock
Options exceeds $100,000, then Incentive Stock Options granted
hereunder to such Participant shall, to the extent and in the order
in which they were granted, automatically be deemed to be
Non-Qualified Stock Options, but all other terms and provisions of
such Incentive Stock Options shall remain unchanged.
(ii) No Incentive Stock Option may be granted to an individual
if, at the time of the proposed grant: (i) such individual was not an
employee of the company, a parent or subsidiary corporation of the
Company, or a corporation or a parent or subsidiary corporation of
such corporation issuing or assuming a stock option in a transaction
to which Section 424(a) of the Code applies or (ii) such individual
owns stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company or any of its
"subsidiary corporations" (within the meaning of Section 424 of the
Code), unless (A) the exercise price of such Incentive Stock Option
is at least one hundred ten percent (110%) of the Fair Market Value
of a share of Company Stock at the time such Incentive Stock Option
is granted and
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(B) such Incentive Stock Option is not exercisable after the
expiration of five years from the date such Incentive Stock Option is
granted.
(f) Grants of Reload Options
The Committee may, in its discretion, include in any agreement
evidencing an Option (the "Original Option") a provision that a Reload Option
shall be granted to any Participant who, pursuant to Section 6(d)(iii), delivers
shares of Company Stock in partial or full payment of the exercise price of the
Original Option. The Reload Option shall relate to a number of shares of Company
Stock equal to the number of shares of Company Stock delivered, and shall have
an exercise price-per-share equal to the Fair Market Value of a share of Company
Stock on the date of the exercise of the Original Option. In the event that an
agreement evidencing an Original Option provides for the grant of a Reload
Option, such agreement shall also provide that the exercise price-per-share of
the Original Option shall be no less that the Fair Market Value of a share of
Company Stock on its date of grant, and that any shares that are delivered
pursuant to Section 6(d)(iii) in payment of such exercise price shall have been
held for at least six months.
(g) Effect of Termination of Employment
(i) Unless otherwise provided in any agreement evidencing an
Option, in the event that the Employment of a Participant with the
Company and its Affiliates shall terminate for any reason other than
Cause, Disability or death (A) Options granted to such Participant,
to the extent that they were exercisable at the time of such
Termination of Employment, shall remain exercisable until the
expiration of three months after such Termination of Employment, on
which date they shall expire, and (B) Options granted to such
Participant, to the extent that they were not exercisable at the time
of such Termination of Employment, shall expire at the close of
business on the date of such Termination of Employment; provided,
however, that no Option shall be exercisable after the expiration of
its term.
(ii) Unless otherwise provided in any agreement evidencing an
Option, in the event that the Employment of a Participant with the
Company shall terminate on account of the Disability or death of the
Participant (A) Options granted to such Participant, to the extent
that they were exercisable at the time of such Termination of
Employment, shall remain exercisable until the expiration of the
original term as provided for in the Plan or as specified in the
agreement evidencing the Option, and (B) Options granted to such
Participant, to the extent that they were not exercisable at the time
of such Termination of Employment, shall expire at the close of
business on the date of such Termination of Employment.
(iii) Unless otherwise provided in any agreement evidencing an
Option, in the event of a Participant's Termination of Employment for
Cause, all outstanding Options granted to such Participant shall
expire at the commencement of business on the effective date of such
Termination of Employment.
(h) Acceleration of Exercise Date Upon Change in Control
In the event a Participant's Termination of Employment by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the expiration of a six-month period following the Change in
Control, each Option granted under the Plan that is outstanding and
unexercisable immediately prior to such Termination of Employment shall become
fully and immediately exercisable and shall remain exercisable until its
expiration, termination or cancellation pursuant to the terms of the Plan.
7. LSARs
The Committee may grant in connection with any Option granted
hereunder one or more LSARs relating to a number of shares of Company Stock less
than or equal to the number of shares of Company Stock subject to the related
Option. An LSAR may be granted at the same time as, or, in the case of a
Non-Qualified Stock Option, subsequent to the time that, its related Option is
granted. Each LSAR shall be evidenced by an agreement in such form as the
Committee shall from time to time approve. Each LSAR granted hereunder shall be
subject to the following terms and conditions:
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(a) Benefit Upon Exercise
(i) The exercise of an LSAR relating to a Non-Qualified Stock
Option with respect to any number of shares of Company Stock shall
entitle the Participant to a cash payment, for each such share, equal
to the excess of (A) the greater of (x) the highest price-per-share
of Company Stock paid in the Change in Control in connection with
which such LSAR became exercisable and (y) the Fair Market Value of a
share of Company Stock on the date of such Change in Control over (B)
the exercise price of the related Option. Such payment shall be made
as soon as practicable, but in no event later than the expiration of
five business days after the effective date of such exercise.
(ii) The exercise of an LSAR relating to an Incentive Stock
Option with respect to any number of shares of Company Stock shall
entitle the Participant to a cash payment, for each such share, equal
to the excess of (A) the Fair Market Value of a share of Company
Stock on the effective date of such exercise over (B) the exercise
price of the related Option. Such payment shall be made as soon as
practicable, but in no event later than the expiration of five
business days, after the effective date of such exercise.
(b) Term and Exercise of LSARs
(i) An LSAR shall be exercisable only during the period
commencing on the first day following the occurrence of a Change in
Control and terminating on the expiration of sixty days after such
date. Notwithstanding anything else herein, an LSAR relating to an
Incentive Stock Option may be exercised with respect to a share of
Company Stock only if the Fair Market Value of such share on the
effective date of such exercise exceeds the exercise price relating
to such share. Notwithstanding anything else herein, an LSAR may be
exercised only if and to the extent that the Option to which it
relates is exercisable.
(ii) The exercise of an LSAR with respect to a number of shares
of Company Stock shall cause the immediate and automatic cancellation
of the Option to which it relates with respect to an equal number of
shares. The exercise of an Option, or the cancellation, termination
or expiration of an Option (other than pursuant to this Section
(b)(ii)), with respect to a number of shares of Company Stock, shall
cause the cancellation of the LSAR related to it with respect to an
equal number of shares.
(iii) Each LSAR shall be exercisable in whole or in part;
provided, that no partial exercise of an LSAR shall be for an
aggregate exercise price of less than $1,000. The partial exercise of
an LSAR shall not cause the expiration, termination or cancellation
of the remaining portion thereof. Upon the partial exercise of an
LSAR, the agreement evidencing the LSAR, the related Option and any
Tandem SARs related to such Option, marked with such notations as the
Committee may deem appropriate to evidence such partial exercise,
shall be returned to the Participant exercising such LSAR together
with the payment described in Section 7(a)(i) or (ii) hereof, as
applicable.
(iv) Except as otherwise provided in an applicable agreement
evidencing an LSAR, during the lifetime of a Participant, each LSAR
granted to a Participant shall be exercisable only by the Participant
and no LSAR shall be assignable or transferable otherwise than by
will or by the laws of descent and distribution and otherwise than
together with its related Option. The Committee may, in any
applicable agreement evidencing an LSAR, permit a Participant to
transfer all or some of the LSAR to (A) the Participant's Immediate
Family Members, (B) a trust or trusts for the exclusive benefit of
such Immediate Family Members, or (C) other parties approved by the
Committee in its absolute discretion. Following any such transfer,
any transferred LSARs shall continue to be subject to the same terms
and conditions as were applicable immediately prior to the transfer.
(v) An LSAR shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no
less than five business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the applicable
agreement evidencing the LSAR, the related Option and any Tandem SARs
relating to such Option, shall specify the number of shares of
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Company Stock with respect to which the LSAR is being exercised and
the effective date of the proposed exercise and shall be signed by
the Participant. The Participant may withdraw such notice at any time
prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case
such agreement shall be returned to him.
8. Tandem SARs
The Committee may grant in connection with any Option granted
hereunder one or more Tandem SARs relating to a number of shares of Company
Stock less than or equal to the number of shares of Company Stock subject to the
related Option. A Tandem SAR may be granted at the same time as, or subsequent
to the time that, its related Option is granted. Each Tandem SAR shall be
evidenced by an agreement in such form as the Committee shall from time to time
approve. Tandem SARs shall comply with and be subject to the following terms and
conditions:
(a) Benefit Upon Exercise
The exercise of a Tandem SAR with respect to any number of
shares of Company Stock shall entitle a Participant to a cash payment, for each
such share, equal to the excess of (i) the Fair Market Value of a share of
Company Stock on the effective date of such exercise over (ii) the exercise
price of the related Option. Such payment shall be made as soon as practicable,
but in no event later than the expiration of five business days, after the
effective date of such exercise.
(b) Term and Exercise of Tandem SAR
(i) A Tandem SAR shall be exercisable at the same time and to
the same extent (on a proportional basis, with any fractional amount
being rounded down to the immediately preceding whole number) as its
related Option. Notwithstanding the first sentence of this Section
8(b)(i), (A) a Tandem SAR shall not be exercisable at any time that
an LSAR related to the Option to which the Tandem SAR is related is
exercisable and (B) a Tandem SAR relating to an Incentive Stock
Option may be exercised with respect to a share of Company Stock only
if the Fair Market Value of such share on the effective date of such
exercise exceeds the exercise price relating to such share.
(ii) The exercise of a Tandem SAR with respect to a number of
shares of Company Stock shall cause the immediate and automatic
cancellation of its related Option with respect to an equal number of
shares. The exercise of an Option, or the cancellation, termination
or expiration of an Option (other than pursuant to this Section
6(b)(ii)), with respect to a number of shares of Company Stock shall
cause the automatic and immediate cancellation of its related Tandem
SARs to the extent that the number of shares of Company Stock subject
to such Option after such exercise, cancellation, termination or
expiration is less than the number of shares subject to such Tandem
SARs. Such Tandem SARs shall be canceled in the order in which they
became exercisable.
(iii) Each Tandem SAR shall be exercisable in whole or in part;
provided, that no partial exercise of a Tandem SAR shall be for an
aggregate exercise price of less than $1,000. The partial exercise of
a Tandem SAR shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial
exercise of a Tandem SAR, the agreement evidencing such Tandem SAR,
its related Option and LSARs relating to such Option shall be
returned to the Participant exercising such Tandem SAR together with
the payment described in Section 8(a) hereof.
(iv) Except as otherwise provided in an applicable agreement
evidencing a Tandem SAR, during the lifetime of a Participant, each
Tandem SAR granted to a Participant shall be exercisable only by the
Participant and no Tandem SAR shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
The Committee may, in any applicable agreement evidencing a Tandem
SAR, permit a Participant to transfer all or some of the Tandem SAR
to (A) the Participant's Immediate Family Members, (B) a trust or
trusts for the exclusive benefit of such Immediate Family Members, or
(C) other parties approved by the Committee in its absolute
discretion. Following any such transfer, any
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transferred Tandem SARs shall continue to be subject to the same
terms and conditions as were applicable immediately prior to the
transfer.
(v) A Tandem SAR shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no
less than five business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the applicable
agreement evidencing the Tandem SAR, its related Option and any LSARs
related to such Option, shall specify the number of shares of Company
Stock with respect to which the Tandem SAR is being exercised and the
effective date of the proposed exercise and shall be signed by the
Participant. The Participant may withdraw such notice at any time
prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case
such agreement shall be returned to him.
9. Stand-Alone SARs
The Committee may grant Stand-Alone SARs pursuant to the Plan, which
Stand-Alone SARs shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Stand-Alone SARs shall comply with and be
subject to the following terms and conditions:
(a) Exercise Price
The exercise price of any Stand-Alone SAR granted under the Plan
shall be determined by the Committee at the time of the grant of such
Stand-Alone SAR.
(b) Benefit Upon Exercise
(i) The exercise of a Stand-Alone SAR with respect to any number
of shares of Company Stock prior to the occurrence of a Change in
Control shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (A) the Fair Market Value of a share of
Company Stock on the exercise date over (B) the exercise price of the
Stand-Alone SAR.
(ii) The exercise of a Stand-Alone SAR with respect to any
number of shares of Company Stock on or after the occurrence of a
Change in Control shall entitle a Participant to a cash payment, for
each such share, equal to the excess of (A) the greater of (x) the
highest price-per-share of Company Stock paid in connection with such
Change in Control and (y) the Fair Market Value of a share of Company
Stock on the date of such Change in Control over (B) the exercise
price of the Stand-Alone SAR.
(iii) All payments under this Section 9(b) shall be made as soon
as practicable, but in no event later than five business days, after
the effective date of the exercise.
(c) Term and Exercise of Stand-Alone SARs
(i) Each Stand-Alone SAR shall be exercisable on such date or
dates, during such period and for such number of shares of Company
Stock as shall be determined by the Committee and set forth in the
agreement evidencing such Stand-Alone SAR; provided, however, that:
(A) if such agreement does not specify the date or dates on which the
Stand-Alone SAR will become exercisable, the shares subject to the
Stand-Alone SAR shall become exercisable in three equal installments
on each of the first, second and third anniversary of the day on
which the Stand-Alone SAR is granted; (B) no Stand-Alone SAR shall be
exercisable after the expiration of ten years from the date such
Stand-Alone SAR was granted; and (C) each Stand-Alone SAR shall be
subject to earlier termination, expiration or cancellation as
provided in the Plan.
(ii) Each Stand-Alone SAR may be exercised in whole or in part;
provided, that no partial exercise of a Stand-Alone SAR shall be for
an aggregate exercise price of less than $1,000. The partial exercise
of a Stand-Alone SAR shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial
exercise of a Stand-Alone SAR, the agreement evidencing such
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Stand-Alone SAR, marked with such notations as the Committee may deem
appropriate to evidence such partial exercise, shall be returned to
the Participant exercising such Stand-Alone SAR, together with the
payment described in Section 9(b)(i) or 9(b)(ii) hereof.
(iii) A Stand-Alone SAR shall be exercised by delivering notice
to the Company's principal office, to the attention of its Secretary,
no less than five business days in advance of the effective date of
the proposed exercise. Such notice shall be accompanied by the
applicable agreement evidencing the Stand-Alone SAR, shall specify
the number of shares of Company Stock with respect to which the
Stand-Alone SAR is being exercised and the effective date of the
proposed exercise, and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close
of business on the business day immediately preceding the effective
date of the proposed exercise, in which case the agreement evidencing
the Stand-Alone SAR shall be returned to him.
(iv) Except as otherwise provided in an applicable agreement
evidencing a Stand-Alone SAR, during the lifetime of a Participant,
each Stand-Alone SAR granted to a Participant shall be exercisable
only by the Participant and no Stand-Alone SAR shall be assignable or
transferable otherwise than by will or by the laws of descent and
distribution. The Committee may, in any applicable agreement
evidencing a Stand-Alone SAR, permit a Participant to transfer all or
some of the Stand-Alone SAR to (A) the Participant's Immediate Family
Members, (B) a trust or trusts for the exclusive benefit of such
Immediate Family Members, or (C) other parties approved by the
Committee in its absolute discretion. Following any such transfer,
any transferred Stand-Alone SARs shall continue to be subject to the
same terms and conditions as were applicable immediately prior to the
transfer.
(d) Effect of Termination of Employment
(i) Unless otherwise provided in any agreement evidencing a
Stand-Alone SAR, in the event that the Employment of a Participant
with the Company and its Affiliates shall terminate for any reason
other than Cause, Disability or death (A) Stand-Alone SARs granted to
such Participant, to the extent that they were exercisable at the
time of such Termination of Employment, shall remain exercisable
until the expiration of three months after such Termination of
Employment, on which date they shall expire, and (B) Stand-Alone SARs
granted to such Participant, to the extent that they were not
exercisable at the time of such Termination of Employment, shall
expire at the close of business on the date of such Termination of
Employment; provided, however, that no Stand-Alone SAR shall be
exercisable after the expiration of its term.
(ii) Unless otherwise provided in any agreement evidencing a
Stand-Alone SAR, in the event that the Employment of a Participant
with the Company and its Affiliates shall terminate on account of the
Disability or death of the Participant (A) Stand-Alone SARs granted
to such Participant, to the extent that they were exercisable at the
time of such Termination of Employment, shall remain exercisable
until the expiration of the original term as provided for in the Plan
or as specified in the agreement evidencing the Stand-Alone SAR, and
(B) Stand-Alone SARs granted to such Participant, to the extent that
they were not exercisable at the time of such Termination of
Employment, shall expire at the close of business on the date of such
Termination of Employment.
(iii) In the event of a Participant's Termination of Employment
for Cause, all outstanding Stand-Alone SARs granted to such
Participant shall expire at the commencement of business on the
effective date of such Termination of Employment.
(e) Acceleration of Exercise Date Upon Change in Control
In the event a Participant's Termination of Employment by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the expiration of a six-month period following the Change in
Control, each Stand-Alone SAR granted under the Plan that is outstanding and
unexercisable immediately prior to such Termination of Employment shall become
fully and immediately exercisable and shall remain exercisable until its
expiration, termination or cancellation pursuant to the terms of the Plan.
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10. Restricted Stock
The Committee may grant shares of Restricted Stock pursuant to the
Plan. Each grant of shares of Restricted Stock shall be evidenced by an
agreement in such form and containing such terms and conditions and subject to
such agreements or understandings as the Committee shall from time to time
approve. Each grant of shares of Restricted Stock shall comply with and be
subject to the following terms and conditions:
(a) Issue Date and Vesting Date
At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such shares. The Committee may divide such shares
into classes and assign a different Issue Date and/or Vesting Date for each
class. If the Committee does not specify a Vesting Date or Vesting Dates at the
time of the grant, the shares shall vest in three equal installments on the
first, second and third anniversary of the Issue Date. Except as provided in
Sections 10(c) and 10(f) hereof, upon the occurrence of the Issue Date with
respect to a share of Restricted Stock, a share of Restricted Stock shall be
issued in accordance with the provisions of Section 10(d) hereof. Provided that
all conditions to the vesting of a share of Restricted Stock imposed pursuant to
Section 10(b) hereof are satisfied, and except as provided in Sections 10(c) and
10(f) hereof, upon the occurrence of the Vesting Date with respect to a share of
Restricted Stock, such share shall vest and the restrictions of Section 10(c)
hereof shall cease to apply to such share.
(b) Conditions to Vesting
At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the vesting of such shares as it, in its absolute
discretion, deems appropriate. By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any class or classes
of shares of Restricted Stock, that the Participant or the Company achieve such
performance criteria as the Committee may specify at the time of the grant of
such shares.
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no transfer
of a Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately upon any
attempt to transfer such rights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(d) Issuance of Certificates
(i) Except as provided in Sections 10(c) or 10(f) hereof,
reasonably promptly after the Issue Date with respect to shares of
Restricted Stock, the Company shall cause to be issued a stock
certificate, registered in the name of the Participant to whom such
shares were granted, evidencing such shares; provided, that the
Company shall not cause to be issued such a stock certificate unless
it has received a stock power duly endorsed in blank with respect to
such shares. Each such stock certificate shall bear the following
legend:
The transferability of this certificate and the
shares of stock represented hereby are subject to the
restrictions, terms and conditions (including forfeiture
provisions and restrictions against transfer) contained in the
2000 THCG, Inc. Stock Incentive Plan and an Agreement entered
into between the registered owner of such shares and THCG, Inc.
A copy of the Plan and Agreement is on file in the office of the
Secretary of THCG, Inc., 650 Madison Avenue, 21st Floor, New
York, New York 10022.
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Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(ii) Each certificate issued pursuant to Section 10(d)(i)
hereof, together with the stock powers relating to the shares of
Restricted Stock evidenced by such certificate, shall be deposited by
the Company with a custodian designated by the Company (which
custodian may be the Company). The Company shall cause such custodian
to issue to the Participant a receipt evidencing the certificates
held by it which are registered in the name of the Participant.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant to the
terms hereof, the restrictions of Section 10(c) hereof shall cease to apply to
such share. Reasonably promptly after a share of Restricted Stock vests pursuant
to the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Section 10(d)(i) hereof, together with
any other property of the Participant held by the custodian pursuant to Section
16(b) hereof.
(f) Effect of Termination of Employment
(i) In the event that the Employment of a Participant with the
Company shall terminate for any reason (other than a termination that
is, or is deemed to have been, for Cause) prior to the vesting of
shares of Restricted Stock granted to such Participant, a proportion
of such shares, to the extent not forfeited or canceled on or prior
to such Termination of Employment pursuant to any provision hereof,
shall vest on the date of such Termination of Employment. The
proportion referred to in the preceding sentence shall initially be
determined by the Committee at the time of the grant of such shares
of Restricted Stock and may be based on the achievement of any
conditions imposed by the Committee with respect to such shares
pursuant to Section 10(b). Such proportion may be equal to zero. In
the absence of any such provision in an agreement evidencing an award
of Restricted Stock, a Participant's Termination of Employment with
the Company and its Affiliates for any reason (including death or
Disability) shall cause the immediate forfeiture of all shares of
Restricted Stock that have not vested as of the date of such
Termination of Employment.
(ii) In the event a Participant's Employment is or is deemed to
have been terminated for Cause, all shares of Restricted Stock
granted to such Participant that have not vested as of the effective
date of such Termination of Employment immediately shall be
forfeited.
(g) Effect of Change in Control
In the event a Participant's Termination of Employment by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the expiration of a six-month period following the Change in
Control, all shares of Restricted Stock which have not vested as of the date
immediately prior to such Termination of Employment (including those with
respect to which the Issue Date has not yet occurred), or have not been canceled
or forfeited pursuant to any provision hereof, immediately shall vest.
11. Phantom Stock
The Committee may grant shares of Phantom Stock pursuant to the Plan.
Each grant of shares of Phantom Stock shall be evidenced by an agreement in such
form as the Committee shall from time to time approve. Each grant of shares of
Phantom Stock shall comply with and be subject to the following terms and
conditions:
(a) Vesting Date
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At the time of the grant of shares of Phantom Stock, the
Committee shall establish a Vesting Date or Vesting Dates with respect to such
shares. The Committee may divide such shares into classes and assign a different
Vesting Date for each class. If the Committee does not specify a Vesting Date or
Vesting Dates at the time of the grant, the shares shall vest in three equal
installments on the first, second and third anniversary of the date on which
such Phantom Stock was granted. Provided that all conditions to the vesting of a
share of Phantom Stock imposed pursuant to Section 11(c) hereof are satisfied,
and except as provided in Section 11(d) hereof, upon the occurrence of the
Vesting Date with respect to a share of Phantom Stock, such share shall vest.
(b) Benefit Upon Vesting
Upon the vesting of a share of Phantom Stock, a Participant
shall be entitled to receive, within 30 days after the date on which such share
vests, an amount in cash in a lump sum equal to the sum of (i) the Fair Market
Value of a share of Company Stock on the date on which such share of Phantom
Stock vests and (ii) the aggregate amount of cash dividends paid with respect to
a share of Company Stock the record date for which occurs during the period
commencing on the date on which the share of Phantom Stock was granted and
terminating on the date on which such share vests.
(c) Conditions to Vesting
At the time of the grant of shares of Phantom Stock, the
Committee may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the vesting of such shares as it, in its absolute
discretion, deems appropriate. By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any class or classes
of shares of Phantom Stock, that the Participant or the Company achieve such
performance criteria as the Committee may specify at the time of the grant of
such shares of Phantom Stock.
(d) Effect of Termination of Employment
(i) In the event that the Employment of a Participant with the
Company and its Affiliates shall terminate for any reason (other than
a termination that is, or is deemed to have been, for Cause) prior to
the vesting of shares of Phantom Stock granted to such Participant, a
proportion of such shares, to the extent not forfeited or canceled on
or prior to such Termination of Employment pursuant to any provision
hereof, shall vest on the date of such Termination of Employment. The
proportion referred to in the preceding sentence initially shall be
determined by the Committee at the time of the grant of such shares
of Phantom Stock and may be based on the achievement of any
conditions imposed by the Committee with respect to such shares
pursuant to Section 11(c). Such proportion may be equal to zero. In
the absence of any such provision in an agreement evidencing an award
of Phantom Stock, a Participant's Termination of Employment with the
Company and its Affiliates for any reason (including death or
Disability) shall cause the immediate forfeiture of all shares of
Phantom Stock that have not vested as of the date of such Termination
of Employment.
(ii) In the event a Participant's Employment is or is deemed to
have been terminated for Cause, all shares of Phantom Stock granted
to such Participant which have not vested as of the date of such
Termination of Employment immediately shall be forfeited.
(e) Effect of Change in Control
In the event a Participant's Termination of Employment by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the expiration of a six-month period following the Change in
Control, all shares of Phantom Stock which have not vested as of the date
immediately prior to such Termination of Employment, or have not been canceled
or forfeited pursuant to any provision hereof, immediately shall vest.
12. Stock Bonuses
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The Committee may grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time (including
a future date selected by the Committee at the time of grant) and subject to
such conditions as the Committee shall determine at the time of the grant of
such Stock Bonus. Certificates for shares of Company Stock granted as a Stock
Bonus shall be issued in the name of the Participant to whom such grant was made
and delivered to such Participant as soon as practicable after the date on which
such Stock Bonus is required to be paid. Prior to the date on which a Stock
Bonus awarded hereunder is required to be paid, such award shall constitute an
unfunded, unsecured promise by the Company to distribute Company Stock in the
future.
13. Cash Bonuses
The Committee may, in its absolute discretion, in connection with any
grant of Restricted Stock or Stock Bonus or at any time thereafter, grant a cash
bonus, payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such grant
of Restricted Stock or Stock Bonus, in such amounts as the Committee shall
determine from time to time; provided, however, that in no event shall the
amount of a Cash Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Stock Bonus on such date. A Cash Bonus shall be subject to
such conditions as the Committee shall determine at the time of the grant of
such Cash Bonus.
14. Grant of Dividend Equivalent Rights
The Committee may, in its absolute discretion, in connection with any
Incentive Award (other than an award of shares of Phantom Stock), grant a
Dividend Equivalent Right entitling the Participant to receive amounts equal to
the ordinary dividends that would be paid on the shares of Company Stock covered
by such Incentive Award if such shares then were outstanding, during the time
such Incentive Award is outstanding and (a) in the case of Options and SARs,
during the time such Options or SARs are unexercised or (b) in the case of
Restricted Stock and Stock Bonuses, prior to the issue date for the related
shares of Company Stock. The Committee shall determine whether any Dividend
Equivalent Rights shall be payable in cash, in shares of Company Stock or in
another form, the time or times at which they shall be made, and such other
terms and conditions as the Committee shall deem appropriate. No Dividend
Equivalent Right shall be conditioned on the exercise of any Option or SAR.
15. Other Equity-Based Awards
The Committee may grant other types of equity-based awards in such
amounts and subject to such terms and conditions, as the Committee shall in its
discretion determine, subject to the provisions of the Plan. Such Incentive
Awards may entail the transfer of actual shares of Company Stock to
Participants, or payment in cash or otherwise of amounts based on the value of
shares of Company Stock.
16. Adjustment Upon Changes in Company Stock
(a) Shares Available for Grants
In the event of any change in the number of shares of Company
Stock outstanding by reason of any stock dividend or split, reverse stock split,
recapitalization, merger, consolidation, combination or exchange of shares or
similar corporate change, the maximum number of shares of Company Stock with
respect to which the Committee may grant Incentive Awards under Section 3 hereof
shall be appropriately adjusted by the Committee. In the event of any change in
the number of shares of Company Stock outstanding by reason of any other event
or transaction, the Committee may, but need not, make such adjustments in the
number and class of shares of Company Stock with respect to which Incentive
Awards may be granted under Section 3 hereof as the Committee may deem
appropriate.
(b) Outstanding Restricted Stock and Phantom Stock
Unless the Committee in its absolute discretion otherwise
determines, any securities or other property (including dividends paid in cash)
received by a Participant with respect to a share of Restricted Stock, the
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Issue Date with respect to which occurs prior to such event, but which has not
vested as of the date of such event, as a result of any dividend, stock split,
reverse stock split, recapitalization, merger, consolidation, combination,
exchange of shares or otherwise will not vest until such share of Restricted
Stock vests, and shall be promptly deposited with the custodian designated
pursuant to Paragraph 10(d)(ii) hereof.
The Committee may, in its absolute discretion, adjust any grant
of shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, or any
grant of shares of Phantom Stock, to reflect any dividend, stock split, reverse
stock split, recapitalization, merger, consolidation, combination, exchange of
shares or similar corporate change as the Committee may deem appropriate to
prevent the enlargement or dilution of rights of Participants under the grant.
(c) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights-- Increase or Decrease in Issued
Shares Without Consideration
Subject to any required action by the stockholders of the
Company, in the event of any increase or decrease in the number of issued shares
of Company Stock resulting from a subdivision or consolidation of shares of
Company Stock or the payment of a stock dividend (but only on the shares of
Company Stock), or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company, the Committee shall
proportionally adjust the number of shares of Company Stock subject to each
outstanding Option, LSAR, Tandem SAR and Stand-Alone SAR, and the exercise
price-per-share of Company Stock of each such Option, LSAR, Tandem SAR and
Stand-Alone SAR and the number of any related Dividend Equivalent Rights.
(d) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights -- Certain Mergers
Subject to any required action by the stockholders of the
Company, in the event that the Company shall be the surviving corporation in any
merger or consolidation (except a merger or consolidation as a result of which
the holders of shares of Company Stock receive securities of another
corporation), each Option, LSAR, Tandem SAR, Stand-Alone SAR and Dividend
Equivalent Right outstanding on the date of such merger or consolidation shall
pertain to and apply to the securities and/or other property, including cash,
which a holder of the number of shares of Company Stock subject to such Option,
LSAR, Tandem SAR, Stand-Alone SAR or Dividend Equivalent Right would have
received in such merger or consolidation
(e) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights -- Certain Other Transactions
In the event of (i) a dissolution or liquidation of the Company,
(ii) a sale of all or substantially all of the Company's assets, (iii) a merger
or consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which the
Company is the surviving corporation but the holders of shares of Company Stock
receive securities of another corporation and/or other property, including cash,
the Committee shall, in its absolute discretion, have the power to:
(A) cancel, effective immediately prior to the occurrence of
such event, each Option (including each LSAR, Tandem-SAR or Dividend
Equivalent Right related thereto) and Stand-Alone SAR (including each
Dividend Equivalent Right related thereto) outstanding immediately
prior to such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Participant to whom
such Option or Stand-Alone SAR was granted an amount in cash, for
each share of Company Stock subject to such Option or Stand-Alone
SAR, respectively, equal to the excess of (x) the value, as
determined by the Committee in its absolute discretion, of the
securities and/or other property, including cash received by the
holder of a share of Company Stock as a result of such event over (y)
the exercise price of such Option or Stand-Alone SAR; or
(B) provide for the exchange of each Option (including any
related LSAR, Tandem SAR or Dividend Equivalent Right)
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and Stand-Alone SAR (including any related Dividend Equivalent Right)
outstanding immediately prior to such event (whether or not then
exercisable) for an option on or stock appreciation right and
dividend equivalent right with respect to, as appropriate, some or
all of the securities and/or other property, including cash, which a
holder of the number of shares of Company Stock subject to such
Option or Stand-Alone SAR would have received in such transaction
and, incident thereto, make an equitable adjustment as determined by
the Committee in its absolute discretion in the exercise price of the
option or stock appreciation right, or the number of shares or amount
of property subject to the option, stock appreciation right or
dividend equivalent right or, if appropriate, provide for a cash
payment to the Participant to whom such Option or Stand-Alone SAR was
granted in partial consideration for the exchange of the Option or
Stand-Alone SAR.
In the event that the Committee does not exercise the
discretionary power granted it under this Section 16(e), each Option (including
any related LSAR, Tandem SAR or Dividend Equivalent Right) and Stand-Alone SAR
(including any related Dividend Equivalent Right) outstanding immediately prior
to such event (whether or not then exercisable) shall be converted into an
option on or stock appreciation right and dividend equivalent right, as the case
may be, to acquire for the same exercise price-per-share the securities and/or
other property, including cash, which a holder of the number of shares of
Company Stock subject to such Option or Stand-Alone SAR would have received in
such transaction.
(f) Outstanding Options, LSARs, Tandem SARs, Stand-Alone SARs and
Dividend Equivalent Rights -- Other Changes
In the event of any change in the capitalization of the Company
or a corporate change other than those specifically referred to in Sections
16(c), (d) or (e) hereof, the Committee may, in its absolute discretion, make
such adjustments in the number and class of shares subject to Options, LSARs,
Tandem SARs, Stand-Alone SARs and Dividend Equivalent Rights outstanding on the
date on which such change occurs and in the per-share exercise price of each
such Option, LSAR, Tandem SAR and Stand-Alone SAR as the Committee may consider
appropriate to prevent dilution or enlargement of rights. In addition, if and to
the extent the Committee determines it is appropriate, the Committee may elect
to cancel each Option (including each LSAR, Tandem-SAR or Dividend Equivalent
Right related thereto) and Stand-Alone SAR (including each Dividend Equivalent
Right related thereto) outstanding immediately prior to such event (whether or
not then exercisable), and, in full consideration of such cancellation, pay to
the Participant to whom such Option or Stand-Alone SAR was granted an amount in
cash, for each share of Company Stock subject to such Option or Stand-Alone SAR,
respectively, equal to the excess of (i) the Fair Market Value of Company Stock
on the date of such cancellation over (ii) the exercise price of such Option or
Stand-Alone SAR.
(g) No Other Rights
Except as expressly provided in the Plan, no Participant shall
have any rights by reason of any subdivision or consolidation of shares of stock
of any class, the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution, liquidation, merger
or consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Company Stock subject to an Incentive Award or the exercise
price of any Option, LSAR, Tandem SAR or Stand-Alone SAR.
17. Rights as a Stockholder
No person shall have any rights as a stockholder with respect to any
shares of Company Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date the Participant becomes the registered
owner of such shares. Except as otherwise expressly provided in Section 16
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
18. No Special Employment Rights; No Right to Incentive Award
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Nothing contained in the Plan or any Incentive Award shall confer
upon any Participant any right with respect to the continuation of his
Employment by the Company or interfere in any way with the right of the Company
or an Affiliate, subject to the terms of any separate employment agreement to
the contrary, at any time to terminate such Employment or to increase or
decrease the compensation of the Participant from the rate in existence at the
time of the grant of an Incentive Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
19. Securities Matters
(a) The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any interests in the Plan or any
shares of Company Stock to be issued hereunder or to effect similar compliance
under any state laws. Notwithstanding anything herein to the contrary, the
Company shall not be obligated to cause to be issued or delivered any
certificates evidencing shares of Company Stock pursuant to the Plan unless and
until the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities exchange on which
shares of Company Stock are traded. The Committee may require, as a condition of
the issuance and delivery of certificates evidencing shares of Company Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall be effective
only at such time as counsel to the Company shall have determined that the
issuance and delivery of shares of Company Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Company Stock are
traded. The Committee may, in its sole discretion, defer the effectiveness of
any exercise of an Option granted hereunder in order to allow the issuance of
shares of Company Stock pursuant thereto to be made pursuant to registration or
an exemption from registration or other methods for compliance available under
federal or state securities laws. The Committee shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain a refund of any amount paid with respect thereto.
20. Withholding Taxes
(a) Cash Remittance
Whenever shares of Company Stock are to be issued upon the
exercise of an Option, the occurrence of the Issue Date or Vesting Date with
respect to a share of Restricted Stock or the payment of a Stock Bonus, or in
connection with a Dividend Equivalent Right, the Company shall have the right to
require the Participant to remit to the Company, in cash, an amount sufficient
to satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise, occurrence or payment prior to the delivery of
any certificate or certificates for such shares. In addition, upon the exercise
of an LSAR, Tandem SAR or Stand-Alone SAR, the grant of a Cash Bonus or the
making of a payment with respect to a share of Phantom Stock or a Dividend
Equivalent Right, the Company shall have the right to withhold from any cash
payment required to be made pursuant thereto an amount sufficient to satisfy the
federal, state and local withholding tax requirements, if any, attributable to
such exercise or grant.
(b) Stock Remittance
At the election of the Participant, subject to the approval of
the Committee, when shares of Company Stock are to be issued upon the exercise
of an Option, the occurrence of the Issue Date or the Vesting Date with respect
to a share of Restricted Stock or the grant of a Stock Bonus, or a payment in
connection with a
20
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Dividend Equivalent Right, in lieu of the remittance required by Section 20(a)
hereof, the Participant may tender to the Company a number of shares of Company
Stock, the Fair Market Value of which at the tender date the Committee
determines to be sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise, occurrence, grant or
payment and not greater than the Participant's estimated total federal, state
and local tax obligations associated with such exercise, occurrence, grant or
payment.
(c) Stock Withholding
The Company shall have the right, when shares of Company Stock
are to be issued upon the exercise of an Option, the occurrence of the Issue
Date or the Vesting Date with respect to a share of Restricted Stock or the
grant of a Stock Bonus or a payment in connection with a Dividend Equivalent
Right, in lieu of requiring the remittance required by Section 20(a) hereof, to
withhold a number of such shares, the Fair Market Value of which at the exercise
date the Committee determines to be sufficient to satisfy the federal, state and
local withholding tax requirements, if any, attributable to such exercise,
occurrence, grant or payment and is not greater than the Participant's estimated
total federal, state and local tax obligations associated with such exercise,
occurrence, grant or payment.
21. Amendment or Termination of the Plan
The Board of Directors may, at any time, suspend or discontinue the
Plan or revise or amend it in any respect whatsoever; provided, however, that if
and to the extent required under Section 422 of the Code (if and to the extent
that the Board of Directors deems it appropriate to comply with Section 422) and
if and to the extent required to treat some or all of the Incentive Awards as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, (if and to the extent that the Board of Directors deems it appropriate to
meet such requirements), no amendment shall be effective without the approval of
the stockholders of the Company, that (a) except as provided in Section 16
hereof, increases the number of shares of Company Stock with respect to which
Incentive Awards may be issued under the Plan, (b) modifies the class of
individuals eligible to participate in the Plan or (c) materially increases the
benefits accruing to individuals pursuant to the Plan. Nothing herein shall
restrict the Committee's ability to exercise its discretionary authority
hereunder pursuant to Section 4 hereof, which discretion may be exercised
without amendment to the Plan. No action under this Section 21 may, without the
consent of a Participant, reduce the Participant's rights under any previously
granted and outstanding Incentive Award except to the extent that the Board of
Directors determines that such amendment is necessary or appropriate to prevent
such Incentive Awards from constituting "applicable employee remuneration"
within the meaning of Section 162(m) of the Code.
22. No Obligation to Exercise
The grant to a Participant of an Option, LSAR, Tandem SAR or
Stand-Alone SAR shall impose no obligation upon such Participant to exercise
such Option, LSAR, Tandem SAR or Stand-Alone SAR.
23. Transfers Upon Death
Upon the death of a Participant, outstanding Incentive Awards granted
to such Participant may be exercised only by the executors or administrators of
the Participant's estate or by any person or persons who shall have acquired
such right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgments made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 23, or in any applicable
agreement pursuant to Sections 6(d)(iv), 7(b)(iv), 8(b)(iv), or 9(c)(iv) of the
Plan, no Incentive Award shall be transferable, and Incentive Awards shall be
exercisable only by a Participant during the Participant's lifetime.
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24. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
25. Limitations Imposed by Section 162(m)
Notwithstanding any other provision hereunder, prior to a Change in
Control, if and to the extent that the Committee determines the Company's
federal tax deduction in respect of an Incentive Award may be limited as a
result of Section 162(m) of the Code, the Committee may take the following
actions:
(a) With respect to Options, Tandem SARs, Stand-Alone SARs or
Dividend Equivalent Rights, the Committee may delay the exercise or payment, as
the case may be, in respect of such Options, Tandem SARs, Stand-Alone SARs or
Dividend Equivalent Rights until a date that is within 30 days after the earlier
to occur of (i) the date that compensation paid to the Participant no longer is
subject to the deduction limitation under Section 162(m) of the Code and (ii)
the occurrence of a Change in Control. In the event that a Participant exercises
an Option, Tandem SAR or Stand-Alone SAR or would receive a payment in respect
of a Dividend Equivalent Right at a time when the Participant is a "covered
employee," and the Committee determines to delay the exercise or payment, as the
case may be, in respect of any such Incentive Award, the Committee shall credit
cash or, in the case of an amount payable in Company Stock, the Fair Market
Value of the Company Stock, payable to the Participant to a book account. The
Participant shall have no rights in respect of such book account and the amount
credited thereto shall not be transferable by the Participant other than by will
or laws of descent and distribution. The Committee may credit additional amounts
to such book account as it may determine in its sole discretion. Any book
account created hereunder shall represent only an unfunded unsecured promise by
the Company to pay the amount credited thereto to the Participant in the future.
(b) With respect to Restricted Stock, Phantom Stock and Stock
Bonuses, the Committee may require the Participant to surrender to the Committee
any certificates with respect to Restricted Stock and Stock Bonuses and
agreements with respect to Phantom Stock, in order to cancel the awards of such
Restricted Stock, Phantom Stock and Stock Bonuses (and any related Cash Bonuses
or Dividend Equivalent Rights). In exchange for such cancellation, the Committee
shall credit to a book account a cash amount equal to the Fair Market Value of
the shares of Company Stock subject to such awards. The amount credited to the
book account shall be paid to the Participant within 30 days after the earlier
to occur of (i) the date that compensation paid to the Participant no longer is
subject to the deduction limitation under Section 162(m) of the Code and (ii)
the occurrence of a Change in Control. The Participant shall have no rights in
respect of such book account and the amount credited thereto shall not be
transferable by the Participant other than by will or laws of descent and
distribution. The Committee may credit additional amounts to such book account
as it may determine in its sole discretion. Any book account created hereunder
shall represent only an unfunded unsecured promise by the Company to pay the
amount credited thereto to the Participant in the future.
26. Failure to Comply
In addition to the remedies of the Company elsewhere provided for
herein, a failure by a Participant (or beneficiary or permitted transferee) to
comply with any of the terms and conditions of the Plan or the agreement
executed by such Participant (or beneficiary or permitted transferee) evidencing
an Incentive Award, unless such failure is remedied by such Participant (or
beneficiary or permitted transferee) within ten days after having been notified
of such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part, as the Committee, in
its absolute discretion, may determine.
27. Effective Date of Plan
The Plan was adopted by the Board of Directors on February 15, 2000,
subject to approval by the stockholders of the Company. Incentive Awards may be
granted under the Plan at any time prior to the receipt of such stockholder
approval; provided, however, that each such grant shall be subject to such
approval. Without limitation on the foregoing, no Option, LSAR, Tandem SAR or
Stand-Alone SAR may be exercised prior to the
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receipt of such approval, no share certificate shall be issued pursuant to a
grant of Restricted Stock or Stock Bonus prior to the receipt of such approval
and no Cash Bonus or payment with respect to a Dividend Equivalent Right or
share of Phantom Stock shall be paid prior to the receipt of such approval. If
the Plan is not so approved on or before February 15, 2000 then the Plan and all
Incentive Awards then outstanding under the Plan shall forthwith automatically
terminate and be of no force or effect.
28. Term of the Plan
The right to grant Incentive Awards under the Plan will terminate
upon the expiration of 10 years after the date the Plan was adopted.
29. Application of Investment Company Act of 1940
Any provision of this Plan that would conflict with a provision of
the Investment Company Act of 1940, to the extent applicable to the Company or
any Affiliate, shall have no force or effect.
30. Forfeiture of Gain from Awards in Certain Events
To the extent that a Participant breaches any restrictive covenant
applicable to the Participant (such as a noncompetition, nonsolicitation or
nondisclosure covenant) within one year after the date on which the Participant
exercises an Option, LSAR, Tandem SAR or Stand-Alone SAR, or the date on which
any Restricted Stock or Phantom Stock vests, or the date on which the
Participant realizes income with respect to any other Incentive Award (each such
event, a "Realization Event"), then any gain realized by the Participant from
the Realization Event shall be paid by the Participant to the Company
immediately upon notice from the Company. Such gain shall be determined as of
the date of the Realization Event, without regard to any subsequent change in
the Fair Market Value of a share of Company Stock. To the fullest extent
permitted by applicable law, the Company shall have the right to offset such
gain against any amounts otherwise owed to the Participant by the Company
(whether as wages, vacation pay or pursuant to any benefit plan or other
compensatory arrangement or otherwise).
31. Applicable Law
Except to the extent preempted by any applicable federal law, the
Plan will be construed and administered in accordance with the laws of the State
of New York, without reference to the principles of conflict of laws.
23
Exhibit 10.2
THCG, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide eligible employees of
the Company and its Designated Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll
deductions. It is the intention of the Company to have the Plan qualify
as an "Employee Stock Purchase Plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation
in a manner consistent with the requirements of that section of the
Code.
2. Definitions.
a. "Board" shall mean the Board of Directors of the Company.
b. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
c. "Common Stock" shall mean the Common Stock, par value $.01, of
the Company.
d. "Company" shall mean THCG, INC., a Delaware corporation, and
any Designated Subsidiary of the Company.
e. "Compensation" shall mean (i) the regular basic earnings paid
to a Participant by one or more Participating Companies, (ii)
any salary deferral contributions made on behalf of the
Participant to the Company's Code Section 401 (k) Plan (iii)
overtime payments, bonuses and commissions. There shall be
excluded from the calculation of Compensation: (I) all
profit-sharing distributions and other incentive-type payments
and (II) all contributions (other than Code Section 401 (k))
made by the Company or its Corporate Affiliates for the
Participant's benefit under any employee benefit or welfare
plan now or hereafter established.
f. "Designated Subsidiary" shall mean any Subsidiary which has
been designated by the Board from time to time in its sole
discretion as eligible to participate in the Plan.
g. "Employee" shall mean any individual who is an Employee of the
Company for tax purposes whose customary employment with the
Company is at least twenty (20) hours per week and more than
five (5) months in any calendar year. For purposes of the
Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or
other leave of absence approved by the Company. Where the
period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave.
h. "Enrollment Date" shall mean the first day of each Offering
Period.
i. "Exercise Date" shall mean the last day of each Offering
Period.
j. "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
i. (1) If the Common Stock is listed on any established
stock exchange or a national market system, including
without limitation the Nasdaq National Market or The
Nasdaq
<PAGE>
SmallCap Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for
the last market trading day on the date of such
determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable, or;
ii. (2) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are
not reported, its Fair Market Value shall be the mean
of the closing bid and asked prices for the Common
Stock on the date of such determination, as reported
in The Wall Street Journal or such other source as
the Board deems reliable, or;
iii. (3) ln the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Board.
k. "Offering Period" shall have the meaning provided in Section
4.
l. "Plan" shall mean this Employee Stock Purchase Plan.
m. "Plan Administrator" shall mean the Board or a committee of
members of the Board appointed by the Board.
n. "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date
or on the Exercise Date, whichever is lower; provided,
however, that the Purchase Price may be adjusted by the Board
pursuant to Section 20.
o. "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been
exercised and the number of shares of Common Stock which have
been authorized for issuance under the Plan but not yet placed
under option.
p. "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now
exists or is hereafter organized or acquired by the Company or
a Subsidiary.
q. "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
a. Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
b. Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the
extent that, immediately after the grant, such Employee (or
any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own
capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of the
capital stock of the Company or of any Subsidiary, or (ii) to
the extent that his or her rights to purchase stock under all
employee stock purchase plans of the Company and its
Subsidiaries accrues at a rate which exceeds Twenty-Five
Thousand Dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is
granted) for each calendar year in which such option is
outstanding at any time.
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4. Offering Periods.
a. Stock shall be offered for purchase under the Plan through a
series of successive offering periods (each, an "Offering
Period"). The first Offering Period under the Plan shall
commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the
Company's Registration Statement effective. The Board shall
have the power to change the duration of Offering Periods
(including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change
is announced at least five (5) days prior to the scheduled
beginning of the first Offering Period to be affected
thereafter.
b. The Plan shall be implemented in a series of consecutive
Offering Periods, each to be of such duration (not to exceed
twenty-four (24) months per Offering Period) as determined by
the Plan Administrator prior to the commencement date of the
Offering Period. Offering Periods may commence at quarterly or
semi-annual intervals over the term of the Plan. Accordingly,
up to four (4) separate Offering Periods may commence in each
calendar year the Plan remains in existence. The Plan
Administrator will announce the date each Offering Period will
commence and the duration of that Offering Period in advance
of the last day of the immediately preceding Offering Period.
c. An Employee may participate in only one Offering Period at a
time. Accordingly, an Employee who wishes to join a new
Offering Period must withdraw from the current Offering Period
in which he/she is participating and must also enroll in the
new Offering Period prior to the start date of that Offering
Period. The Plan Administrator, in its discretion, my require
an Employee who withdraws from one Offering Period to wait one
full Offering Period before re-enrolling in a new Offering
Period under the Plan.
5. Eligibility & Participation.
a. An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll
deductions in the form of Exhibit A to this Plan and filing it
with the Company's payroll office prior to the applicable
Enrollment Date.
b. Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on
the last payroll in the Offering Period to which such
authorization is applicable, unless sooner terminated by the
participant as provided in Section 10 hereof.
6. Payroll Deductions.
a. At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions
made on each pay day during the Offering Period in an amount
not exceeding ten percent 10% of the Compensation which he or
she receives an each pay day during the Offering Period.
b. All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be
withheld in whole percentages only. A participant may not make
any additional payments into such account.
c. A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or
decrease the rate of his or her payroll deductions during the
Offering Period by completing or filing with the Company a new
subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the
number of participation rate changes during any Offering
Period. The change in rate shall be effective with the first
full payroll period following five (5) business days after the
Company's receipt of the new subscription agreement unless the
Company elects to process a given change in participation
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<PAGE>
more quickly. A participant's subscription agreement shall
remain in effect for successive Offering Periods unless
terminated as provided in Section 10 hereof.
d. Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b)
hereof, a participant's payroll deductions may be decreased to
zero percent (0%) at any time during an Offering Period.
Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of
the first Offering Period which is scheduled to end in the
following calendar year, unless terminated by the participant
as provided in Section 10 hereof.
e. At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued
under the Plan is disposed of, the participant must make
adequate provision for the Company's federal, state, or other
tax withholding obligations, if any, which arise upon the
exercise of the option or the disposition of the Common Stock.
At any time, the Company may, but shall not be obligated to,
withhold from the participant's compensation the amount
necessary for the Company to meet applicable withholding
obligations, including any withholding required to make
available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by
the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be
granted an option to purchase on the Exercise Date of such Offering
Period (at the applicable Purchase Price) up to a number of shares of
the Company's Common Stock determined by dividing such Employee's
payroll deductions accumulated prior to such Exercise Date and retained
in the Participant's account as of the Exercise Date by the applicable
Purchase Price; provided that in no event shall an Employee be
permitted to purchase during each Offering Period more than 2,500
shares (subject to any adjustment pursuant to Section 19), and provided
further that such purchase shall be subject to the limitations set
forth in Sections 3(b) and 12 hereof. Exercise of the option shall
occur as provided in Section 8 hereof, unless the participant has
withdrawn pursuant to Section 10 hereof. The Option shall expire on the
last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of
shares shall be exercised automatically on the Exercise Date, and the
maximum number of full shares subject to option shall be purchased for
such participant at the applicable Purchase Price with the accumulated
payroll deductions in his or her account. No fractional shares shall be
purchased; any payroll deductions accumulated in a participant's
account which are not sufficient to purchase a full share shall be
retained in the participant's account for the subsequent Offering
Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any remaining amount in the participant's account
shall be carried over to the next Offering Period. During a
participant's lifetime, a participant's option to purchase shares
hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on which
a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, the shares purchased upon exercise of
his or her option.
10. Withdrawal.
a. A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet
used to exercise his or her option under the Plan at any time
by giving written notice to the Company in the form of Exhibit
B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such
participant promptly after receipt of notice of withdrawal and
such participant's option for the Offering Period shall be
automatically terminated, and no further payroll deductions
for the purchase of shares shall be made for such Offering
Period. If a participant withdraws from an Offering Period,
payroll deductions shall not resume at the beginning of the
succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
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b. A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in
any similar plan which may hereafter be adopted by the Company
or in succeeding Offering Periods which commence after the
termination of the Offering Period from which the participant
withdraws.
11. Termination of Employment. Upon a participant's ceasing to be an
Employee for any reason, he or she shall be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to such
participant's account during the Offering Period but not yet used to
exercise the option shall be returned to such participant or, in the
case of his or her death, to the person or persons entitled thereto
under Section 15 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a
participant who receives payment in lieu of notice of termination of
employment shall be treated as continuing to be an Employee for the
participant's customary number of hours per week of employment during
the period in which the participant is subject to such payment in lieu
of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
a. Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number
of shares of the Company's Common Stock which shall be made
available for sale under the Plan shall be two hundred
thousand (200,000) shares. If, on a given Exercise Date, the
number of shares with respect to which options are to be
exercised exceeds the number of shares then available under
the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner
as shall be practicable and as it shall determine to be
equitable.
b. The participant shall have no interest or voting right in
shares covered by his option until such option has been
exercised.
c. Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of
the participant and his or her spouse.
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Plan
Administrator (whether the Board or the committee) shall have full and
exclusive discretionary authority to construe, interpret and apply the
terms of the Plan, to determine eligibility and to adjudicate all
disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
a. A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such
participant's death subsequent to an Exercise Date on which
the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a
participant may file a written designation of a beneficiary
who is to receive any cash from the participant's account
under the Plan in the event of such participant's death prior
to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent
shall be required for such designation to be effective.
b. Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the
death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of
such participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the
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Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such
other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to
receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 15 hereof) by the
participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds from an Offering Period in
accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll
deductions.
18. Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the
amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.
a. Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the Reserves, the maximum
number of shares each participant may purchase per Offering
Period (pursuant to Section 7), as well as the price per share
and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall
be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase
or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without
receipt of consideration". Such adjustment shall be made by
the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common
Stock subject to an option.
b. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period
then in progress shall be shortened by setting a new Exercise
Date (the "New Exercise Date"), and shall terminate
immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the
Board. The New Exercise Date shall be before the date of the
Company's proposed dissolution or liquidation. The Board shall
notify each participant in writing, at least ten (10) business
days prior to the New Exercise Date, that the Exercise Date
for the participant's option has been changed to the New
Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior
to such date the participant has withdrawn from the Offering
Period as provided in Section 10 hereof.
c. Merger or Asset Sale. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each
outstanding option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the
option, the Offering Period then in progress shall be
shortened by setting a new Exercise Date (the "New Exercise
Date"). The Now Exercise Date shall be before the date of the
Company's proposed sale or merger. The Board shall notify each
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participant in writing, at least ten (10) business days prior
to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date
and that the participant's option shall be exercised
automatically on the New Exercise Date, unless prior to such
date the participant has withdrawn from the Offering Period as
provided in Section 10 hereof.
20. Amendment or Termination.
a. The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in
Section 19 hereof, no such termination can affect options
previously granted, provided that an Offering Period may be
terminated by the Board of Directors on any Exercise Date if
the Board determines that the termination of the Offering
Period or the Plan is in the best interests of the Company and
its stockholders. Except as provided in Section 19 and Section
20 hereof, no amendment may make any change in any option
theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section
423 of the Code (or any other applicable law, regulation or
stock exchange rule), the Company shall obtain shareholder
approval in such a manner and to such a degree as required.
b. Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely
affected," the Board (or its committee) shall be entitled to
change the Offering Periods, limit the frequency and/or number
of changes in the amount withheld during an Offering Period,
establish the exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, permit payroll withholding
in excess of the amount designated by a participant in order
to adjust for delays or mistakes in the Company's processing
of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward
the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant's
Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its
sole discretion advisable which are consistent with the Plan.
c. In the event the Board determines that the ongoing operation
of the Plan may result in unfavorable financial accounting
consequences, the Board may, in its discretion and, to the
extent necessary or desirable, modify or amend the Plan to
reduce or eliminate such accounting consequence including, but
not limited to:
i. altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of
the change in Purchase Price;
ii. shortening any Offering Period so that Offering
Period ends on a new Exercise Date, including an
Offering Period underway at the time of the Board
action; and
iii. allocating shares.
Such modifications or amendments shall not require stockholder approval
or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company for the
receipt thereof.
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22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with
all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon
which the shares may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned applicable
provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 20 hereof.
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EXHIBIT A
THCG, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: _________
_______ Change in Payroll Deduction Rate
_______ Change of Beneficiary(ies)
1. __________________________________ hereby elects to participate in the
THCG, INC. 2000 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribes to purchase shares of the Company's
Common Stock in accordance with this Subscription Agreement and the
Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of _____% of my Compensation on each payday (from 1 to 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to stockholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse only):.
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within 30 days after the date of
any disposition of shares and I will make adequate provision for
Federal, state or other tax withholding obligations, if any, which
arise upon the disposition of the Common Stock. The Company may, but
will not be obligated to, withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of
Common Stock by me. If I dispose of such shares at any time after the
expiration of the 2-year holding period, I understand that I will be
treated for federal income tax purposes as having received income only
at the time of such disposition, and that such income will be taxed as
ordinary income only to the extent of an amount equal to the lesser of
(1) the excess of the fair market value of the shares at the time of
such disposition over the purchase price which I paid for the shares,
or (2) 15% of the fair market value of the shares on the first day of
the Offering Period. The remainder of the gain, if any, recognized on
such disposition will be taxed as capital gain.
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7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)
(First) (Middle) (Last)
Relationship
(Address)
Employee's Social
Security Number:
Employee's Address:
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:
Signature of Employee: _______________________________
Spouse's Signature (If beneficiary other than spouse):
__________________________________
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EXHIBIT B
THCG, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the THCG. INC. 2000
Employee Stock Purchase Plan which began on ________________, 20__ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
________________________________
________________________________
________________________________
Signature:
________________________________
Date: __________________________
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Exhibit 10.3
THCG, INC.
2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I - PURPOSE OF THE PLAN
The purpose of the THCG, Inc. 2000 Non-Employee Director Stock
Option Plan ("Plan") is to increase the ownership interest in the Company of
non-employee directors whose services are considered essential to the Company's
continued progress, to align such interests with those of the shareholders of
the Company and to provide a further incentive to serve as a director of the
Company.
ARTICLE II - DEFINITIONS
Unless the context clearly indicates otherwise, the following
terms shall have the following meanings:
2.1. "2000 Annual Meeting" means the annual meeting of
shareholders of the Company scheduled to be held on May 15, 2000, or
any adjournment thereof.
2.2. "Award Summary" means the award summary delivered by the
Administrator to each Non-Employee Director upon grant of an Option
under the Plan.
2.3. "Board" means the Board of Directors of THCG, Inc.
2.4. "Company" means THCG, Inc.
2.5. "Exercise Period" means the date which is ten years after
the Option Grant Date of such Option.
2.6. "Fair Market Value" shall mean, with respect to Shares on
an applicable date:
(i) If the Shares are traded on a national securities
exchange, (A) the average of the high and low reported sales price
regular way per Share on the principal national securities exchange on
which the Shares is traded or (B) if no reported sales take place on
the applicable date, the average of the highest bid and lowest asked
price of the Shares on such exchange or (C) if no such quotation is
made on such date, on the next preceding day (not more than 10 business
days prior to the applicable date) on which there were reported sales
or such quotations.
(ii) If the Shares are not traded on a national securities
exchange but are traded in the NASD National Market ("NASDAQ"), (A) the
average of the high and low reported sales price per Share on NASDAQ or
(B) if no reported sales take place on the applicable date, the average
of the highest bid and lowest asked price of the Shares on NASDAQ or
(C) if no such quotation is made on such date, on the next preceding
day (not more than 10 business days prior to the applicable date) on
which there were reported sales or such quotations.
(iii) If the Shares are not traded on a national securities
exchange or quoted on NASDAQ, but quotations are available for the
Shares on the over-the-counter market, (A) the mean between the highest
bid and lowest asked quotation on the over-the-counter market as
reported by the National Quotations Bureau, or any similar
organization, on the applicable date or (B) if no such quotation is
made on such date on the next preceding day (not more than 10 business
days prior to the applicable date) on which there were such quotations.
(iv) If the Shares are neither traded on a national securities
exchange or quoted on NASDAQ, nor are quotations therefor available on
the over-the-counter market or if there are no sales or
<PAGE>
quotations in the 10 business days immediately prior to the applicable
date, as determined in good faith by the Board in a manner consistently
applied.
2.7. "Option" means an option to purchase Shares awarded under
Article VIII which does not meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, or any successor law.
2.8. "Option Grant Date" means the date upon which an Option
is granted to a Non-Employee Director.
2.9. "Optionee" means a Non-Employee Director of the Company
to whom an Option has been granted.
2.10. "Non-Employee Director" means a director of the Company
who is neither an employee of the Company nor any subsidiary of the
Company.
2.11. "Plan" means the THCG, Inc. 2000 Non-Employee Director
Stock Option Plan, as amended and restated from time to time.
2.12. "Shares" means shares of the Common Stock, par value
$0.01 per share, of the Company.
ARTICLE III - ADMINISTRATION OF THE PLAN
3.1 IN GENERAL. The Plan shall be administered by the Board.
3.2 AUTHORITY OF THE BOARD. Except as otherwise provided
herein, the Board shall have full power and authority to (i) interpret and
construe the Plan and to adopt such rules and regulations it shall deem
necessary and advisable to implement and administer the Plan and (ii) designate
persons to carry out its responsibilities, subject to such limitations,
restrictions and conditions as it may prescribe, such determinations to be made
in accordance with the Board's best business judgment as to the best interests
of the Company and its shareholders and in accordance with the purposes of the
Plan subject to applicable conditions of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). The Board may delegate
administrative duties under the Plan to one or more agents as it shall deem
necessary or advisable.
ARTICLE IV - AWARDS UNDER THE PLAN
Awards in the form of Options shall be granted to Non-Employee
Directors in accordance with Article VIII. Each Option granted under the Plan
shall be evidenced by a stock option agreement in a form approved by the Board.
ARTICLE V - ELIGIBILITY
Non-Employee Directors of the Company shall be eligible to
participate in the Plan in accordance with Article VIII.
ARTICLE VI - SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Article XI, the aggregate
number of Shares which may be issued upon the exercise of Options shall not
exceed 500,000 Shares. To the extent an outstanding Option expires or terminates
unexercised or is canceled or forfeited, the Shares subject to the expired,
unexercised, canceled or forfeited portion of such option shall again be
available for grants of Options under the Plan.
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<PAGE>
ARTICLE VII - NON-TRANSFERABILITY OF OPTIONS
All Options under the Plan will be nontransferable and shall
not be assignable, alienable, salable or otherwise transferable by the Optionee
other than by will or the laws of descent and distribution except pursuant to a
domestic relations order entered by a court of competent jurisdiction or as
otherwise determined by the Administrator. During the life of the Optionee,
Options under the Plan shall be exercisable only by him or her.
Notwithstanding the immediately preceding paragraph, the
Optionee may assign or otherwise transfer his interest without restriction
(subject to the application of any and all relevant state or federal securities
laws) to (i) any trust maintained solely for the benefit of the Optionee, (ii)
the legal guardian of the Optionee, in the event of the Optionee's mental
incapacity, or (iii) the Optionee's Family Group (as hereinafter defined). The
term "Family Group" shall mean (I) the spouse, parents, siblings or descendants
of the Optionee, in each such case, if applicable, whether natural or by
adoption, (II) the parent, siblings, spouses or descendants of any of the
parties listed in clause (I) hereof, in each such case, if applicable, whether
natural or adopted, (III) any trust established for the benefit of any of the
individuals identified in clauses (I) or (II) hereof, (IV) any corporation or
partnership, the principal equity owners of which are, directly or indirectly,
either (x) individuals or entities listed in clauses (I), (II) or (III) hereof
or (y) other corporations or partnerships satisfying the requirements of clauses
(I), (II) or (III) hereof or this clause (IV), or (V) any exempt charitable
organization.
If so permitted by the Board, an Optionee may designate a
beneficiary or beneficiaries to exercise the rights of the Optionee under this
Plan upon the death of the Optionee. However, any contrary requirement of Rule
16b-3 under the 1934 Act or any successor rule shall prevail over the provisions
of this section.
ARTICLE VIII - OPTIONS
Each Non-Employee Director shall be granted Options, subject
to the following terms and conditions:
8.1 TIME OF GRANT. On the date of the 2000 Annual Meeting and,
thereafter, on the date of each annual meeting of shareholders of the Company,
(i) each person who is a Non-Employee Director immediately after such meeting of
shareholders shall be granted an Option to purchase 10,000 Shares, and (ii) each
person who is a Non-Employee Director immediately after such meeting of
shareholders who serves on a committee of the Board shall be granted an
additional Option to purchase 2,500 Shares for each committee on which such
person then serves. Any person elected to the Board subsequent to the 2000
Annual Meeting at a time other than at any other annual meeting of shareholders
who becomes a Non-Employee Director, upon the date of such election, shall be
granted an option to purchase a number of Shares determined by multiplying the
numbers set forth in the preceding sentence by a fraction, the numerator of
which shall be the number of days between the date of such election and the date
which is the first anniversary of the date of the last preceding annual meeting
of shareholders and the denominator of which shall be 365.
8.2 PURCHASE PRICE. The purchase price per Share under each
Option granted pursuant to this Article shall be 100% of the Fair Market Value
per Share on the Option Grant Date.
8.3 OPTION WAITING PERIOD AND EXERCISE DATES. The Shares
subject to an Option may be exercised in full immediately after the Option Grant
Date.
Subject to Article IX, an Option may be exercised until the
end of the Exercise Period. An Option, or portion thereof, may be exercised in
whole or in part only with respect to whole Shares, provided that no partial
exercise may be for less than twenty Shares.
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8.4 METHOD OF EXERCISING OPTION. The Options may be exercised
from time to time by written notice to the Company, which shall state the
election to exercise the Options and the number of shares with respect to which
the Options are being exercised, and shall be signed by the person exercising
the Options. Such notice must be accompanied by a check payable to the Company
in payment of the full purchase price. After receipt of such notice, the Company
will advise the person exercising the Option of the amount of withholding tax
which must be paid under U.S. Federal, and where applicable, U.S., state and
local law resulting from such exercise. Upon receipt of payment of the purchase
price and the withholding tax the Company shall, without transfer or issue tax
to the person exercising the Options, issue a certificate or certificates for
the number of shares covered by such notice of exercise.
ARTICLE IX - TERMINATION OF DIRECTORSHIP
9.1 TERMINATION OF SERVICE. If an Optionee ceases to be a
director of the Company other than by reason of disability, retirement from
service on the Board, or death, each Option held by such Optionee may thereafter
be exercised by such Optionee (or such Optionee's executor, administrator,
guardian, legal representative, beneficiary or similar person) and shall expire
on the earlier of: (i) three months from the date of such termination or (ii)
expiration of the Exercise Period.
9.2 DISABILITY, RETIREMENT OR DEATH. If an Optionee ceases to
be a director of the Company by reason of disability or retirement from service
on the Board, each Option held by such Optionee may thereafter be exercised by
such Optionee in accordance with the provisions of Article VIII. If the Optionee
dies following termination of service from the Board by reason of retirement or
disability, outstanding Options shall be exercisable by such Optionee's
executor, administrator, guardian, legal representative, beneficiary or similar
person and shall expire on the earlier of one year following the date of death
or expiration of the Exercise Period. If the Optionee ceases to be a director as
a result of death, such Option shall be exercisable by the Optionee's legal
representative at any time within one year of the Optionee's death but in no
event after the expiration of the Exercise Period.
ARTICLE X - AMENDMENT AND TERMINATION
The Board may amend the Plan from time to time or terminate
the Plan at any time; provided, however, that no action authorized by this
Article shall adversely change the terms and conditions of an outstanding option
without the Optionee's consent and, subject to Article XI, the number of Shares
subject to an Option granted under Article VIII, the purchase price therefor,
the date of grant of any such Option and the termination provisions relating to
such Option, shall not be amended more than once every six months, other than to
comply with changes in the Internal Revenue Code of 1986, as amended, or any
successor law, or the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, or the rules and regulations thereunder.
ARTICLE XI - ADJUSTMENT PROVISIONS
11.1 If the Company shall at any time change the number of
issued shares without new consideration to the Company (such as by stock
dividend, stock split, recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate structure affecting the
Shares) or make a distribution of cash or property which has a substantial
impact on the value of issued Shares, the total number of Shares reserved for
issuance under the Plan shall be appropriately adjusted and the number of Shares
covered by each outstanding Option and the purchase price per Share under each
outstanding Option shall be adjusted so that the aggregate consideration payable
to the Company and the value of each such Option shall not be changed.
11.2 Notwithstanding any other provision of the Plan, and
without affecting the number of Shares reserved or available hereunder, the
Board shall authorize the issuance, continuation or assumption of outstanding
Options or provide for other equitable adjustments after changes in the Shares
resulting from any merger, consolidation, sale of assets, acquisition of
property or stock, recapitalization, reorganization or similar occurrence in
which the Company is the continuing or surviving corporation, upon such terms
and conditions as it may deem necessary to preserve their rights under the Plan.
4
<PAGE>
11.3 In the case of any sale of assets, merger, consolidation
or combination of the Corporation with or into another corporation other than a
transaction in which the Company is the continuing or surviving corporation and
which does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property, or any combination
thereof (an "Acquisition"), any Non-Employee Director who holds an outstanding
Option shall have the right (subject to the provisions of the Plan and any
limitation applicable to the Option) thereafter and during the term of the
Option, to receive upon exercise thereof the Acquisition Consideration (as
defined below) receivable upon the Acquisition by a holder of the number of
Shares which would have been obtained upon exercise of the Option immediately
prior to the Acquisition. The term "Acquisition Consideration" shall mean the
kind and amount of shares of the surviving or new corporation or other entity,
cash, securities, evidence of indebtedness, other property or any combination
thereof receivable in respect of one Share of the Company upon consummation of
an Acquisition.
ARTICLE XII - EFFECTIVE DATE
The Plan shall be submitted to the shareholders of the Company
for, and, if adopted by a majority of all outstanding shares entitled to vote
thereon at the 2000 Annual Meeting, shall become effective as of the date of
adoption by shareholders.
ARTICLE XIII - MISCELLANEOUS PROVISIONS
13.1 GOVERNING LAW. The validity, construction and effect of
the Plan and any actions taken or relating to the Plan shall be determined in
accordance with the laws of the State of New York and applicable Federal law.
13.2 SUCCESSORS AND ASSIGNS. The Plan shall be binding on ail
successors and permitted assigns of a Non-Employee Director, including, without
limitation, the estate of such Non-Employee Director and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Non-Employee Director's creditors.
13.3 GENERAL RESTRICTION. Each Option shall be subject to the
requirement that, if at any time the Board shall determine, in its sole
discretion, that the listing, registration or qualification of any Option under
the Plan upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of such Options or the
exercise thereof, such Option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
13.4 FUTURE RIGHTS. No Non-Employee Director shall have any
claim or rights to be granted an option under the Plan, and no Non-Employee
Director shall have any rights by reason of the grant of any Options under the
Plan to continue as a Non-Employee Director for any period of time, or at any
particular rate of compensation.
13.5 RIGHTS AS A SHAREHOLDER. A Non-Employee Director shall
have no rights as a shareholder with respect to shares covered by Options
granted hereunder until the date of issuance of a stock certificate therefor,
and no adjustment will be made for dividends or other rights for which the
record date is prior to the date such certificate is issued.
13.6 FRACTIONS OF SHARES. The Company shall not be required to
issue fractions of shares. Whenever under the terms of the Plan a fractional
share would be required to be issued, the Optionee shall be paid in cash for
such fractional share based upon Fair Market Value at the time of exercise of
the Option.
5
<PAGE>
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