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EXHIBIT 10.19
TELERGY, INC.
1999 INCENTIVE COMPENSATION PLAN
1.0 DEFINITIONS
The following terms shall have the following meanings unless the context
indicates otherwise:
1.1 "Award" shall mean either a Stock Option, an SAR, a Stock Award, a Stock
Unit, a Performance Share, a Performance Unit, or a Cash Award.
1.2 "Award Agreement" shall mean a written agreement between the Company and
the Participant that establishes the terms, conditions, restrictions
and/or limitations applicable to an Award in addition to those established
by the Plan and by the Committee's exercise of its administrative powers.
1.3 "Board" shall mean the Board of Directors of the Company.
1.4 "Cash Award" shall mean the grant by the Committee to a Participant of an
award of cash as described in Section 11 below.
1.5 "Cause" shall mean (i) willful malfeasance or willful misconduct by the
Employee in connection with his employment, (ii) continuing failure to
perform such duties as are requested by the Company and/or its
subsidiaries, (iii) failure by the Employee to observe material policies
of the Company and/or its subsidiaries applicable to the Employee or (iv)
the commission by the Employee of (x) any felony or (y) any misdemeanor
involving moral turpitude.
1.6 "Change in Control of the Company" shall mean the occurrence of any of the
following events:
(a) any Person, as such term is used for purposes of Section 13(d) or
14(d) of the Exchange Act, or any successor section thereto, (other
than (i) the Company, (ii) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, (iii) any
Subsidiaries of the Company, (iv) any company owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, or (v)
any ▇▇▇▇▇ Family Member) becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 35% or more of
the combined voting power of the Company's then-outstanding
securities; provided however, that the acquisition of securities in
a bona fide public offering or private placement of securities by an
investor who is acquiring such securities for passive investment
purposes only shall not constitute a "Change in Control".
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(b) during any period of twenty-four months, individuals who at the
beginning of such period constitute the Board, and any new director
(other than (i) a director nominated by a Person who has entered
into an agreement with the Company to effect a transaction described
in Sections 1.6 (a), (c) or (d) of the Plan, (ii) a director
nominated by any Person (including the Company) who publicly
announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy
contest) which if consummated would constitute a Change in Control
or (iii) a director nominated by any Person who is the beneficial
owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the
Company's securities) whose election by the Board or nomination for
election by the Company's shareholders is or was approved by a vote
of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously, so approved,
cease for any reason to constitute at least a majority thereof;
(c) the effective date or date of consummation of any transaction or
series of transactions (other than a transaction to which only the
Company and one or more of its subsidiaries are parties) under which
the Company is merged or consolidated with any other company, other
than a merger or consolidation (i) 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
66 2/3% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation and (ii) after which no Person holds 35% or
more of the combined voting power of the then-outstanding securities
of the Company or such surviving entity; or
(d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets;
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.8 "Committee" shall mean (i) the Board or (ii) a committee or subcommittee
of the Board appointed by the Board from among its members. The Committee
may be the Board's Compensation Committee.
1.9 "Common Stock" shall mean the Class A common stock, par value per share,
stated value of $1 per share of the Company.
1.10 "Company" shall mean Telergy, Inc., a New York corporation.
1.11 "Disability" shall mean shall mean the inability to engage in any
substantial gainful activity by reason of a medically determinable
physical or mental impairment which constitutes a permanent and total
disability, as defined in Section 22(e) (3) of the Code
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(or any successor section thereto). The determination whether a
Participant has suffered a Disability shall be made by the Committee based
upon such evidence as it deems necessary and appropriate, and shall be
conclusive and binding on the Participant. A Participant shall not be
considered disabled unless he or she furnishes such medical or other
evidence of the existence of the Disability as the Committee, in its sole
discretion, may require.
1.12 "Dividend Equivalent Right" shall mean the right to receive an amount
equal to the amount of any dividend paid with respect to a share of Common
Stock multiplied by the number of shares of Common Stock underlying or
with respect to a Stock Option, a SAR, a Stock Unit or a Performance Unit,
and which shall be payable in cash, in Common Stock, in the form of Stock
Units or Performance Units, or a combination of any or all of the
foregoing.
1.13 "Effective Date" shall mean the date on which the Plan is adopted by the
Board.
1.14 "Employee" shall mean an employee of the Company or any Subsidiary as
described in Treasury Regulation Section 1.421-7(h).
1.15 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, including applicable regulations thereunder.
1.16 "Fair Market Value of the Common Stock" shall mean:
(a) if the Common Stock is readily tradable on a national securities
exchange or other market system, the closing price of the Common
Stock on the date of calculation (or on the last preceding trading
date if Common Stock was not traded on such date), or
(b) if the Common Stock is not readily tradable on a national securities
exchange or other market system, as determined in good faith by the
Board.
1.17 "Independent Contractor" shall mean a person (other than a person who is
an Employee or a Nonemployee Director) or an entity that renders services
to the Company or any Subsidiary.
1.18 "ISO" shall mean an "incentive stock option" as such term is used in Code
Section 422.
1.19 "▇▇▇▇▇ Family Member" shall means (1) ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., (2) members of the immediate families of any of the
persons referred to in clause (1), (3) any of their respective spouses,
estates, lineal descendants, heirs, executors, personal representatives,
administrators, trusts for any of their benefit and charitable foundations
to which shares of the Company's securities beneficially owned by any of
the foregoing have been transferred and (4) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners,
owners or persons beneficially
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holding an 80% or more controlling interest of which consist of any one or
more of the persons referred to in clauses (1) or (2) above.
1.20 "Nonemployee Director" shall mean a member of the Board or the Board of
Directors of a Subsidiary who is not an Employee.
1.21 "Nonqualified Stock Option" shall mean a Stock Option that does not
qualify as an ISO.
1.22 "Participant" shall mean any Employee, Nonemployee Director or Independent
Contractor to whom an Award has been granted by the Committee under the
Plan.
1.23 "Performance-Based Award" shall mean an Award subject to the achievement
of certain performance goal or goals as described in Section 12 below.
1.24 "Performance Share" shall mean the grant by the Committee to a Participant
of an Award as described in Section 10.1 below.
1.25 "Performance Unit" shall mean the grant by the Committee to a Participant
of an Award as described in Section 10.2 below.
1.26 "Plan" shall mean the Telergy, Inc. 1999 Incentive Compensation Plan.
1.27 "SAR" shall mean the grant by the Committee to a Participant of a stock
appreciation right as described in Section 8 below.
1.28 "Stock Award" shall mean the grant by the Committee to a Participant of an
Award of Common Stock as described in Section 9.1 below.
1.29 "Stock Option" shall mean the grant by the Committee to a Participant of
an option to purchase Common Stock as described in Section 7 below.
1.30 "Stock Unit" shall mean the grant by the Committee to a Participant of an
Award as described in Section 9.2 below.
1.31 "Subsidiary" shall mean a corporation of which the Company directly or
indirectly owns more than 50 percent of the Voting Stock or any other
business entity in which the Company directly or indirectly has an
ownership interest of more than 50 percent or, other than with respect to
the grant of ISOs, any other business venture designated by the Committee
in which the Company has a significant interest, as determined in the
discretion of the Committee.
1.32 "Treasury Regulations" shall mean the regulations promulgated under the
Code by the United States Department of the Treasury, as amended from time
to time.
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1.33 "Vest" shall mean:
(a) with respect to Stock Options and SARs, when the Stock Option or SAR
(or a portion of such Stock Option or SAR) first becomes exercisable
and remains exercisable subject to the terms and conditions of such
Stock Option or SAR; or
(b) with respect to Awards other than Stock Options and SARs, when the
Participant has:
(i) an unrestricted right, title and interest to receive the
compensation (whether payable in Common Stock, cash or a
combination of both) attributable to an Award (or a portion of
such Award) or to otherwise enjoy the benefits underlying such
Award; and
(ii) a right to transfer an Award subject to no Company-imposed
restrictions or limitations other than restrictions and/or
limitations imposed by Section 14 below.
1.34 "Vesting Date" shall mean the date or dates on which an Award Vests.
1.35 "Voting Stock" shall mean the capital stock of any class or classes having
general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.
2.0 PURPOSE AND TERM OF PLAN
2.1 Purpose. The purpose of the Plan is to motivate certain Employees,
Nonemployee Directors and Independent Contractors to put forth maximum
efforts toward the growth, profitability, and success of the Company and
Subsidiaries by providing incentives to such Employees, Nonemployee
Directors and Independent Contractors either through cash payments and/or
through the ownership and performance of the Common Stock. In addition,
the Plan is intended to provide incentives which will attract and retain
highly qualified individuals as Employees and Nonemployee Directors and to
assist in aligning the interests of such Employees and Nonemployee
Directors with those of its stockholders.
2.2 Term. The Plan shall be effective as of the Effective Date; provided,
however, that the Plan shall be approved by the stockholders of the
Company at an annual meeting or any special meeting of stockholders of the
Company within 12 months before or after the Effective Date, and such
approval by the stockholders of the Company shall be a condition to the
right of each Participant to receive Awards hereunder. Any Award granted
under the Plan prior to the approval by the stockholders of the Company
shall be effective as of the date of grant (unless the Committee specifies
otherwise at the time of grant), but no such Award may Vest, be paid out,
or otherwise be disposed of prior to such stockholder approval. If the
stockholders of the Company fail to approve the Plan in accordance with
this Section 2.2, any Award granted under the Plan shall be cancelled.
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The Plan shall be unlimited in duration and in the event of Plan
termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that to the extent required by the Code,
no ISO may be granted under the Plan on a date that is more than ten years
from the Effective Date.
3.0 ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. All Employees of the Company, all Nonemployee Directors and
all Independent Contractors shall be eligible to participate in the Plan
and to receive Awards.
3.2 Participation. Participants shall consist of such Employees, Nonemployee
Directors and Independent Contractors as the Committee in its sole
discretion designates to receive Awards under the Plan. Subject to Section
7.1, an Award may also be granted to an Employee, in connection with
hiring, retention or otherwise prior to the date the Employee first
performs services for the Company or any Subsidiary, provided that such
Awards shall not become vested prior to the date the Employee first
performs such services. Designation of a Participant in any year shall not
require the Committee to designate such person or entity to receive an
Award in any other year or, once designated, to receive the same type or
amount of Award as granted to the Participant in any other year. The
Committee shall consider such factors as it deems pertinent in selecting
Participants and in determining the type and amount of their respective
Awards.
4.0 ADMINISTRATION
4.1 Responsibility. The Committee shall have the responsibility, in its sole
discretion, to control, operate, manage and administer the Plan in
accordance with its terms.
4.2 Award Agreement. Each Award granted under the Plan shall be evidenced by
an Award Agreement which shall be signed by the Committee and the
Participant; provided, however, that in the event of any conflict between
a provision of the Plan and any provision of an Award Agreement, the
provision of the Plan shall prevail.
4.3 Authority of the Committee. The Committee shall have all the discretionary
authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan, including but not limited to
the following:
(a) to determine eligibility for participation in the Plan;
(b) to determine eligibility for and the type and size of an Award
granted under the Plan;
(c) to supply any omission, correct any defect, or reconcile any
inconsistency in the Plan in such manner and to such extent as it
shall deem appropriate in its sole discretion to carry the same into
effect;
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(d) to issue administrative guidelines as an aid to administer the Plan
and make changes in such guidelines as it from time to time deems
proper;
(e) to make rules for carrying out and administering the Plan and make
changes in such rules as it from time to time deems proper;
(f) to the extent permitted under the Plan, grant waivers of Plan terms,
conditions, restrictions, and limitations;
(g) to accelerate the Vesting of any Award when such action or actions
would be in the best interest of the Company;
(h) to grant Award in replacement of Awards previously granted under
this Plan or any other executive compensation plan of the Company;
and
(i) to take any and all other actions it deems necessary or advisable
for the proper operation or administration of the Plan.
4.4 Action by the Committee. The Committee may act only by a majority of its
members. Any determination of the Committee may be made, without a
meeting, by a writing or writings signed by all of the members of the
Committee. In addition, the Committee may authorize any one or more of its
members to execute and deliver documents on behalf of the Committee.
4.5 Delegation of Authority. The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may
deem advisable; provided, however, that any such delegation shall be in
writing. In addition, the Committee, or any person to whom it has
delegated duties under this Section 4.5, may employ one or more persons to
render advice with respect to any responsibility the Committee or such
person may have under the Plan. The Committee may employ such legal or
other counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion or computation
received from any such counsel, consultant or agent. Expenses incurred by
the Committee in the engagement of such counsel, consultant or agent shall
be paid by the Company, or the Subsidiary whose employees have benefited
from the Plan, as determined by the Committee.
4.6 Determinations and Interpretations by the Committee. All determinations
and interpretations made by the Committee shall be binding and conclusive
on all Participants and their heirs, successors, and legal
representatives.
4.7 Liability. No member of the Board, no member of the Committee and no
employee of the Company shall be liable for any act or failure to act
hereunder, except in circumstances involving his or her bad faith, gross
negligence or willful misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to whom duties
in connection with the administration of the Plan have been delegated.
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4.8 Indemnification. The Company shall indemnify members of the Committee and
any agent of the Committee who is an employee of the Company, against any
and all liabilities or expenses to which they may be subjected by reason
of any act or failure to act with respect to their duties on behalf of the
Plan, except in circumstances involving such person's bad faith, gross
negligence or willful misconduct.
5.0 SHARES SUBJECT TO PLAN
5.1 Available Shares. Subject to the provisions of Section 5.2 and Section
5.3 below, the aggregate number of shares of Common Stock which shall be
available for grants or payments of Awards under the Plan during its term
shall be 1,000,000 shares, plus an annual increase to be added on the
first day of the Company's fiscal year equal to the amount which causes
the aggregate number of shares of Common Stock which shall be made
available for Awards under this Plan to equal five percent (5%) of the
then outstanding shares of Common Stock of the Company. In the event that
(i) an Award (or portion thereof) lapses, expires or is otherwise
terminated without the issuance of the shares subject to such Award, (ii)
shares are tendered to pay the exercise price of a Stock Option or other
Award or (iii) shares are withheld from any award to satisfy a
Participant's tax withholding obligations or, if applicable, to pay the
exercise price of a Stock Option or other Award, such shares shall again
become available for grants or Awards hereunder. Such shares of Common
Stock available for issuance under the Plan may be either authorized but
unissued shares, shares of issued stock held in the Company's treasury, or
both, at the discretion of the Company. For purposes of determining the
number of shares that remain available for issuance under the Plan, the
number of shares subject to outstanding Awards shall be charged against
the limit set forth in the first sentence of this Section 5.1 (the
"Section 5.1 Limit"). In addition, any shares underlying a Conversion
Stock Option shall not be counted against the Section 5.1 Limit. Awards
that are payable only in cash are not subject to this Section 5.1.
5.2 Adjustment to Shares. If there is any change in the Common Stock of the
Company, through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split-up, split-off,
spin-off, combination of shares, exchange of shares, dividend in kind or
other like change in capital structure or distribution (other than normal
cash dividends) to stockholders of the Company, an adjustment shall be
made to each outstanding Award so that each such Award shall thereafter be
with respect to or exercisable for such securities, cash and/or other
property as would have been received in respect of the Common Stock
subject to such Award had such Award been paid, distributed or exercised
in full immediately prior to such change or distribution. Such adjustment
shall be made successively each time any such change shall occur. In
addition, in the event of any such change or distribution, in order to
prevent dilution or enlargement of Participants' rights under the Plan,
the Committee shall have the authority to adjust, in an equitable manner,
the number and kind of shares that may be issued under the Plan, the
number and kind of shares subject to outstanding Awards, the exercise
price applicable to outstanding Stock Options, and the Fair Market Value
of the Common Stock and other value determinations applicable to
outstanding Awards. Appropriate adjustments may also be made by the
Committee in the terms of any Awards granted
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under the Plan to reflect such changes or distributions and to modify any
other terms of outstanding Awards on an equitable basis, including
modifications of performance goals and changes in the length of
performance periods; provided, however, that with respect to
Performance-Based Awards, such modifications and/or changes do not
disqualify compensation attributable to such Awards as "performance-based
compensation" under Code Section 162(m). In addition, the Committee is
authorized to make adjustments to the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Company or the financial statements of the Company,
or in response to changes in applicable laws, regulations, or accounting
principles. Notwithstanding anything contained in the Plan, any adjustment
with respect to an ISO due to a change or distribution described in this
Section 5.2 shall comply with the rules of Code Section 424(a), and in no
event shall any adjustment be made which would render any ISO granted
hereunder other than an incentive stock option for purposes of Code
Section 422.
5.3 The maximum number of shares of Common Stock that may be issued by Stock
Options intended to be ISOs shall be 1,000,000 shares.
6.0 MAXIMUM INDIVIDUAL AWARDS
6.1 Maximum Aggregate Number of Shares Underlying Stock-Based Awards Granted
Under the Plan to Any Single Participant. The maximum aggregate number of
shares of Common Stock underlying all Awards measured in shares of Common
Stock (whether payable in Common Stock, cash or a combination of both)
that may be granted to any single Participant in respect of any fiscal
year of the Company shall be 250,000 shares, subject to adjustment as
provided in Section 5.2 above. For purposes of the preceding sentence,
such Awards that are cancelled or repriced shall continue to be counted in
determining such maximum aggregate number of shares of Common Stock that
may be granted to any single Participant during the life of the Plan.
6.2 Maximum Dollar Amount Underlying Cash-Based Awards Granted Under the Plan
to Any Single Participant. The maximum dollar amount that may be paid to
any single Participant with respect to all Awards measured in cash
(whether payable in Common Stock, cash or a combination of both) in
respect of any fiscal year of the Company shall be $2,000,000.
7.0 STOCK OPTIONS
7.1 In General. The Committee may, in its sole discretion, grant Stock Options
to Employees, Nonemployee Directors and Independent Contractors on or
after the Effective Date. The Committee shall, in its sole discretion,
determine the Employees, the Nonemployee Directors and Independent
Contractors who will receive Stock Options and the number of shares of
Common Stock underlying each Stock Option. With respect to Employees who
become Participants, the Committee may grant such Participants ISOs or
Nonqualified Stock Options or a combination of both. With respect to
Nonemployee Directors and Independent Contractors who become Participants,
the Committee may grant such Participants only Nonqualified Stock Options.
Each Stock Option shall be
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subject to such terms and conditions consistent with the Plan as the
Committee may impose from time to time. In addition, each Stock Option
shall be subject to the following terms and conditions set forth in
Sections 7.2 through 7.8 below.
7.2 Exercise Price. The Committee shall specify the exercise price of each
Stock Option in the Award Agreement; provided, however, that (i) the
exercise price of any ISO shall not be less than 100 percent of the Fair
Market Value of the Common Stock on the date of grant, and (ii) the
exercise price of any Nonqualified Stock Option shall not be less than 100
percent of the Fair Market Value of the Common Stock on the date of grant
unless the Committee in its sole discretion determines otherwise on the
date of grant.
7.3 Term of Stock Option. The Committee shall specify the term of each Stock
Option in the Award Agreement; provided, however, that no ISO shall be
exercised after the 10th anniversary of the date of grant of such ISO.
Each Stock Option shall terminate at such earlier times and upon such
conditions or circumstances as the Committee shall, in its sole
discretion, set forth in the Award Agreement on the date of grant.
7.4 Vesting Date. The Committee shall specify the Vesting Date with respect to
each Stock Option in the Award Agreement. The Committee may grant Stock
Options that are Vested, either in whole or in part, on the date of grant.
If the Committee fails to specify a Vesting Date in the Award Agreement,
25 percent of such Stock Option shall become exercisable on each of the
first 4 anniversaries of the date of grant and shall remain exercisable
following such anniversary date until the Stock Option expires in
accordance with its terms under the Award Agreement or under the terms of
the Plan. The Vesting of a Stock Option may be subject to such other terms
and conditions as shall be determined by the Committee, including, without
limitation, accelerating the Vesting if certain performance goals are
achieved.
7.5 Exercise of Stock Options. The Stock Option exercise price may be paid in
cash or, in the sole discretion of the Committee, by the delivery of
shares of Common Stock then owned by the Participant, by the withholding
of shares of Common Stock for which a Stock Option is exercisable, or by a
combination of these methods. In the sole discretion of the Committee,
payment may also be made by delivering a properly executed exercise notice
to the Company together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the exercise price. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or
more brokerage firms. The Committee may prescribe any other method of
paying the exercise price that it determines to be consistent with
applicable law and the purpose of the Plan, including, without limitation,
in lieu of the exercise of a Stock Option by delivery of shares of Common
Stock then owned by a Participant, providing the Company with a notarized
statement attesting to the number of shares owned by the Participant,
where upon verification by the Company, the Company would issue to the
Participant only the number of incremental shares to which the Participant
is entitled upon exercise of the Stock Option. In determining which
methods a Participant may utilize to pay the exercise price, the Committee
may consider such factors as it determines are appropriate; provided,
however, (i) that any method approved by the Committee shall comply with
applicable securities laws and (ii) that with respect
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to ISOs, all such discretionary determinations by the Committee shall be
made at the time of grant and specified in the Award Agreement.
7.6 Restrictions Relating to ISOs. In addition to being subject to the terms
and conditions of this Section 7, ISOs shall comply with this Section 7.6
to the extent required by Code Section 422. Any Award which does not
comply with such requirements shall not be an Award of ISOs but shall be
deemed to be an Award of Nonqualified Stock Options. ISOs may be granted
only to Participants who are employees (as described in Treasury
Regulation Section 1.421-7(h)) of the Company or of any "Parent
Corporation" (as defined in Code Section 424(e)) or of any "Subsidiary
Corporation" (as defined in Code Section 424(f)) on the date of grant. The
aggregate market value (determined as of the time the ISO is granted) of
the Common Stock with respect to which ISOs (under all option plans of the
Company and of any Parent Corporation and of any Subsidiary Corporation)
are exercisable for the first time by a Participant during any calendar
year shall not exceed $100,000. ISOs shall not be transferable by the
Participant otherwise than by will or the laws of descent and distribution
and shall be exercisable, during the Participant's lifetime, only by such
Participant. The Committee shall not grant ISOs to any Employee who, at
the time the ISO is granted, owns stock possessing (after the application
of the attribution rules of Code Section 424(d)) more than 10 percent of
the total combined voting power of all classes of stock of the Company or
of any Parent Corporation or of any Subsidiary Corporation unless the
exercise price of the ISO is fixed at not less than 110 percent of the
Fair Market Value of the Common Stock on the date of grant and the
exercise of such ISO is prohibited by its terms after the 5th anniversary
of the ISO's date of grant. In addition, no ISO shall be issued to a
Participant in tandem with a Nonqualified Stock Option issued to such
Participant in accordance with Treasury Regulation Section 14a.422A-1,
Q/A 39.
7.7 Additional Terms and Conditions. The Committee may, by way of the Award
Agreements or otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, of any Stock Option, provided
they are not inconsistent with the Plan, including, without limitation,
any requirement that the Participant not engage in competition with the
Company or any Subsidiary.
7.8 Conversion Stock Options. The Committee may, in its sole discretion, grant
a Stock Option to any holder of an option (hereinafter referred to as an
"Original Option") to purchase shares of the stock of any corporation:
(a) the stock or assets of which were acquired, directly or indirectly,
by the Company or any Subsidiary, or
(b) which was merged with and into the Company or a Subsidiary,
so that the Original Option is converted into a Stock Option (hereinafter
referred to as a "Conversion Stock Option"); provided, however, that such
Conversion Stock Option as of the date of its grant (the "Conversion Stock
Option Grant Date") shall have the same economic value as the Original
Option as of the Conversion Stock Option Grant Date. In
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addition, unless the Committee, in its sole discretion determines
otherwise, a Conversion Stock Option which is converting an Original
Option intended to qualify as an ISO shall have the same terms and
conditions as applicable to the Original Option in accordance with Code
Section 424 and the Treasury Regulations thereunder so that the conversion
(x) is treated as the issuance or assumption of a stock option under Code
Section 424(a) and (y) is not treated as a modification, extension or
renewal of a stock option under Code Section 424(h).
8.0 SARS
8.1 In General. The Committee may, in its sole discretion, grant SARs to
Employees, Nonemployee Directors, and/or Independent Contractors. An SAR
is a right to receive a payment in cash, Common Stock or a combination of
both, in an amount equal to the excess of (x) the Fair Market Value of the
Common Stock, or other specified valuation, of a specified number of
shares of Common Stock on the date the SAR is exercised over (y) the Fair
Market Value of the Common Stock, or other specified valuation (which
shall be no less than the Fair Market Value of the Common Stock), of such
shares of Common Stock on the date the SAR is granted, all as determined
by the Committee; provided, however, that if a SAR is granted
retroactively in tandem with or in substitution for a Stock Option, the
designated Fair Market Value of the Common Stock in the Award Agreement
may be the Fair Market Value of the Common Stock on the date such Stock
Option was granted. Each SAR shall be subject to such terms and
conditions, including, but not limited to, a provision that automatically
converts a SAR into a Stock Option on a conversion date specified at the
time of grant, as the Committee shall impose from time to time in its sole
discretion and subject to the terms of the Plan.
9.0 STOCK AWARDS AND STOCK UNITS
9.1 Stock Awards. The Committee may, in its sole discretion, grant Stock
Awards to Employees, Nonemployee Directors, and/or Independent Contractors
as additional compensation or in lieu of other compensation for services
to the Company. A Stock Award shall consist of shares of Common Stock
which shall be subject to such terms and conditions as the Committee in
its sole discretion determines appropriate including, without limitation,
restrictions on the sale or other disposition of such shares, the Vesting
Date with respect to such shares, and the right of the Company to
reacquire such shares for no consideration upon termination of the
Participant's employment within specified periods. The Committee may
require the Participant to deliver a duly signed stock power, endorsed in
blank, relating to the Common Stock covered by such Stock Award and/or
that the stock certificates evidencing such shares be held in custody or
bear restrictive legends until the restrictions thereon shall have lapsed.
With respect to the shares of Common Stock subject to a Stock Award, the
Participant shall have all of the rights of a holder of shares of Common
Stock, including the right to receive dividends and to vote the shares,
unless the Committee determines otherwise on the date of grant.
9.2 Stock Units. The Committee may, in its sole discretion, grant to
Employees, Nonemployee Directors, and/or Independent Contractor Stock
Units as additional
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compensation or in lieu of other compensation for services to the Company.
A Stock Unit is a hypothetical share of Common Stock represented by a
notional account established and maintained (or caused to be established
or maintained) by the Company for such Participant who receives a grant of
Stock Units. Stock Units shall be subject to such terms and conditions as
the Committee, in its sole discretion, determines appropriate including,
without limitation, determinations of the Vesting Date with respect to
such Stock Units and the criteria for the Vesting of such Stock Units. A
Stock Unit granted by the Committee shall provide for payment in shares of
Common Stock at such time or times as the Award Agreement shall specify.
The Committee shall determine whether a Participant who has been granted a
Stock Unit shall also be entitled to a Dividend Equivalent Right.
9.3 Payout of Stock Units. Subject to a Participant's election to defer in
accordance with Section 17.3 below, upon the Vesting of a Stock Unit, the
shares of Common Stock representing the Stock Unit shall be distributed to
the Participant, unless the Committee, in its sole discretion, provides
for the payment of the Stock Unit in cash (or partly in cash and partly in
shares of Common Stock) equal to the value of the shares of Common Stock
which would otherwise be distributed to the Participant.
10.0 PERFORMANCE SHARES AND PERFORMANCE UNITS
10.1 Performance Shares. The Committee may, in its sole discretion, grant
Performance Shares to Employees, Nonemployee Directors, and/or Independent
Contractors as additional compensation or in lieu of other compensation
for services to the Company. A Performance Share shall consist of a share
or shares of Common Stock which shall be subject to such terms and
conditions as the Committee, in its sole discretion, determines
appropriate including, without limitation, determining the performance
goal or goals which, depending on the extent to which such goals are met,
will determine the number and/or value of the Performance Shares that will
be paid out or distributed to the Participant who has been granted
Performance Shares. Performance goals may be based on, without limitation,
Company-wide, divisional and/or individual performance, as the Committee,
in its sole discretion, may determine, and may be based on the performance
measures listed in Section 12.3 below.
10.2 Performance Units. The Committee may, in its sole discretion, grant to
Employees, Nonemployee Directors, and/or Independent Contractors
Performance Units as additional compensation or in lieu of other
compensation for services to the Company. A Performance Unit is a
hypothetical share or shares of Common Stock represented by a notional
account which shall be established and maintained (or caused to be
established or maintained) by the Company for such Participant who
receives a grant of Performance Units. Performance Units shall be subject
to such terms and conditions as the Committee, in its sole discretion,
determines appropriate including, without limitation, determining the
performance goal or goals which, depending on the extent to which such
goals are met, will determine the number and/or value of the Performance
Units that will be accrued with respect to the Participant who has been
granted Performance Units. Performance goals may be based on, without
limitation, Company-wide, divisional and/or
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individual performance, as the Committee, in its sole discretion, may
determine, and may be based on the performance measures listed in Section
12.3 below.
10.3 Adjustment of Performance Goals. With respect to those Performance Shares
or Performance Units that are not intended to qualify as Performance-Based
Awards (as described in Section 12 below), the Committee shall have the
authority at any time to make adjustments to performance goals for any
outstanding Performance Shares or Performance Units which the Committee
deems necessary or desirable unless at the time of establishment of the
performance goals the Committee shall have precluded its authority to make
such adjustments.
10.4 Payout of Performance Shares or Performance Units. Subject to a
Participant's election to defer in accordance with Section 17.3 below,
upon the Vesting of a Performance Share or a Performance Unit, the shares
of Common Stock representing the Performance Share or the Performance Unit
shall be distributed to the Participant, unless the Committee, in its sole
discretion, provides for the payment of the Performance Share or a
Performance Unit in cash (or partly in cash and partly in shares of Common
Stock) equal to the value of the shares of Common Stock which would
otherwise be distributed to the Participant.
11.0 CASH AWARDS
11.1 In General. The Committee may, in its sole discretion, grant Cash Awards
to Employees, Nonemployee Directors, and/or Independent Contractors as
additional compensation or in lieu of other compensation for services to
the Company. A Cash Award shall be subject to such terms and conditions as
the Committee, in its sole discretion, determines appropriate including,
without limitation, determining the Vesting Date with respect to such Cash
Award, the criteria for the Vesting of such Cash Award, and the right of
the Company to require the Participant to repay the Cash Award (with or
without interest) upon termination of the Participant's employment within
specified periods.
12.0 PERFORMANCE-BASED AWARDS
12.1 In General. The Committee, in its sole discretion, may designate Awards
granted under the Plan as Performance-Based Awards (as defined below) if
it determines that such compensation might not be tax deductible by the
Company due to the deduction limitation imposed by Code Section 162(m).
Accordingly, an Award granted under the Plan may be granted in such a
manner that the compensation attributable to such Award is intended by the
Committee to qualify as "performance-based compensation" (as such term is
used in Code Section 162(m) and the Treasury Regulations thereunder) and
thus be exempt from the deduction limitation imposed by Code Section
162(m) ("Performance-Based Awards").
12.2 Qualification of Performance-Based Awards. Awards shall only qualify as
Performance-Based Awards under the Plan if:
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(a) at the time of grant the Committee is comprised solely of two or
more "outside directors" (as such term is used in Code Section
162(m) and the Treasury Regulations thereunder);
(b) with respect to either the granting or Vesting of an Award (other
than (i) a Nonqualified Stock Option or (ii) an SAR, which are
granted with an exercise price at or above the Fair Market Value of
the Common Stock on the date of grant), such Award is subject to the
achievement of a performance goal or goals based on one or more of
the performance measures specified in Section 12.3 below;
(c) the Committee establishes in writing (i) the objective
performance-based goals applicable to a given performance period and
(ii) the individual employees or class of employees to which such
performance-based goals apply no later than 90 days after the
commencement of such performance period (but in no event after 25
percent of such performance period has elapsed);
(d) no compensation attributable to a Performance-Based Award will be
paid to or otherwise received by a Participant until the Committee
certifies in writing that the performance goal or goals (and any
other material terms) applicable to such performance period have
been satisfied; and
(e) after the establishment of a performance goal, the Committee shall
not revise such performance goal (unless such revision will not
disqualify compensation attributable to the Award as
"performance-based compensation" under Code Section 162(m)) or
increase the amount of compensation payable with respect to such
Award upon the attainment of such performance goal.
12.3 Performance Measures. The Committee may use the following performance
measures (either individually or in any combination) to set performance
goals with respect to Awards intended to qualify as Performance-Based
Awards: net sales; pretax income before allocation of corporate overhead
and bonus; budget; cash flow; earnings per share; net income; division,
group or corporate financial goals; return on stockholders' equity; return
on assets; attainment of strategic and operational initiatives;
appreciation in and/or maintenance of the price of the Common Stock or any
other publicly-traded securities of the Company; market share; gross
profits; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization; economic value-added models;
comparisons with various stock market indices; increase in number of
customers; and/or reductions in costs.
13.0 CHANGE IN CONTROL
13.1 Accelerated Vesting. Notwithstanding any other provision of this Plan to
the contrary, if there is a Change in Control of the Company, the
Committee, in its sole discretion, may take such actions as it deems
appropriate with respect to outstanding Awards, including,
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without limitation, accelerating the Vesting Date and/or payout of such
Awards; provided, however, that such action shall not conflict with any
provision contained in an Award Agreement unless such provision is amended
in accordance with Section 16.3 below.
13.2 Cashout. The Committee, in its sole discretion, may determine that, upon
the occurrence of a Change in Control of the Company, all or a portion of
certain outstanding Awards shall terminate within a specified number of
days after notice to the holders, and each such holder shall receive an
amount equal to the value of such Award on the date of the change in
control, and with respect to each share of Common Stock subject to a Stock
Option or SAR, an amount equal to the excess of the Fair Market Value of
such shares of Common Stock immediately prior to the occurrence of such
change in control over the exercise price per share of such Stock Option
or SAR. Such amount shall be payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or
in a combination thereof, as the Committee, in its sole discretion, shall
determine.
13.3 Assumption or Substitution of Awards. Notwithstanding anything contained
in the Plan to the contrary, the Committee may, in its sole discretion,
provide that an Award may be assumed by any entity which acquires control
of the Company or may be substituted by a similar award under such
entity's compensation plans.
14.0 TERMINATION OF EMPLOYMENT IF PARTICIPANT IS AN EMPLOYEE
14.1 Termination of Employment Due to Death or Disability. Subject to any
written agreement between the Company and a Participant, if a
Participant's employment is terminated due to death or Disability:
(a) all non-Vested portions of Awards held by the Participant on the
date of the Participant's death or the date of the termination of
his or her employment, as the case may be, shall immediately be
forfeited by such Participant as of such date; and
(b) all Vested portions of Stock Options and SARs held by the
Participant on the date of the Participant's death or the date of
the termination of his or her employment, as the case may be, shall
remain exercisable until the earlier of:
(i) the end of the 12-month period following the date of the
Participant's death or the date of the termination of his or
her employment, as the case may be, or
(ii) the date the Stock Option or SAR would otherwise expire.
14.2 Termination of Employment for Cause. Subject to any written agreement
between the Company and a Participant, if a Participant's employment is
terminated by the Company for cause, all Awards held by a Participant on
the date of the termination of his or her employment for Cause, whether
Vested or non-Vested, shall immediately be forfeited by such Participant
as of such date.
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14.3 Other Terminations of Employment. Subject to any written agreement between
the Company and a Participant, if a Participant's employment is terminated
for any reason other than for Cause or other than due to death or
Disability:
(a) all non-Vested portions of Awards held by the Participant on the
date of the termination of his or her employment shall immediately
be forfeited by such Participant as of such date; and
(b) all Vested portions of Stock Options and/or SARs held by the
Participant on the date of the termination of his or her employment
shall remain exercisable until the earlier of (i) the end of the
90-day period following the date of the termination of the
Participant's employment or (ii) the date the Stock Option or SAR
would otherwise expire.
14.4 Committee Discretion. Notwithstanding anything contained in the Plan to
the contrary, the Committee may, in its sole discretion, provide that:
(a) any or all non-Vested portions of Stock Options and/or SARs held by
the Participant on the date of the Participant's death and/or the
date of the termination of his or her employment shall immediately
become exercisable as of such date shall remain exercisable until a
date that occurs on or prior to the date the Stock Option or SAR is
scheduled to expire;
(b) any or all Vested portions of Nonqualified Stock Options and/or SARs
held by the Participant on the date of the Participant's death
and/or the date of the termination of his or her employment shall
remain exercisable until a date that occurs on or prior to the date
the Stock Option or SAR is scheduled to expire; and/or
(c) any or all non-Vested portions of Stock Awards, Stock Units,
Performance Shares, Performance Units, and/or Cash Awards held by
the Participant on the date of the Participant's death and/or the
date of the termination of his or her employment shall immediately
Vest or shall become Vested on a date that occurs on or prior to the
date the Award is scheduled to vest.
15.0 TAXES
15.1 Withholding Taxes. With respect to Employees, the Company, or the
applicable Subsidiary, may require a Participant who has become vested in
his or her Stock Award, Stock Unit, Performance Share or Performance Unit
granted hereunder, or who exercises a Stock Option or SAR granted
hereunder to reimburse the corporation which employs such Participant for
any taxes required by any governmental regulatory authority to be withheld
or otherwise deducted and paid by such corporation or entity in respect of
the issuance or disposition of such shares or the payment of any amounts.
In lieu thereof, the corporation or entity which employs such Participant
shall have the right to withhold the amount of such taxes from any other
sums due or to become due from such corporation or
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entity to the Participant upon such terms and conditions as the Committee
shall prescribe. The corporation or entity that employs such Participant
may, in its discretion, hold the stock certificate to which such
Participant is entitled upon the vesting of a Stock Award, Stock Unit,
Performance Share or Performance Unit or the exercise of a Stock Option or
SAR as security for the payment of such withholding tax liability, until
cash sufficient to pay that liability has been accumulated.
15.2 Use of Common Stock to Satisfy Withholding Obligation. With respect to
Employees, at any time that the Company, Subsidiary or other entity that
employs such Participant becomes subject to a withholding obligation under
applicable law with respect to the vesting of a Stock Award, Stock Unit,
Performance Share or Performance Unit or the exercise of a Nonqualified
Stock Option (the "Tax Date"), except as set forth below, a holder of such
Award may elect to satisfy, in whole or in part, the holder's related
personal tax liabilities (an "Election") by (i) directing the Company,
Subsidiary or other entity that employs such Participant to withhold from
shares issuable in the related vesting or exercise either a specified
number of shares or shares of Common Stock having a specified value (in
each case equal to the related minimum statutory personal withholding tax
liabilities with respect to the applicable taxing jurisdiction in order to
comply with the requirements for a "fixed plan" under Accounting
Principals Board Opinion No. 25), (ii) tendering shares of Common Stock
previously issued pursuant to the exercise of a Stock Option or other
shares of the Common Stock owned by the holder, or (iii) combining any or
all of the foregoing Elections in any fashion. An Election shall be
irrevocable. The withheld shares and other shares of Common Stock tendered
in payment shall be valued at their Fair Market Value of the Common Stock
on the Tax Date. The Committee may disapprove of any Election, suspend or
terminate the right to make Elections or provide that the right to make
Elections shall not apply to particular shares or exercises. The Committee
may impose any additional conditions or restrictions on the right to make
an Election as it shall deem appropriate, including conditions or
restrictions with respect to Section 16 of the Exchange Act.
15.3 No Guarantee of Tax Consequences. No person connected with the Plan in any
capacity, including, but not limited to, the Company and any Subsidiary
and their directors, officers, agents and employees makes any
representation, commitment, or guarantee that any tax treatment,
including, but not limited to, federal, state and local income, estate and
gift tax treatment, will be applicable with respect to amounts deferred
under the Plan, or paid to or for the benefit of a Participant under the
Plan, or that such tax treatment will apply to or be available to a
Participant on account of participation in the Plan.
16.0 AMENDMENT AND TERMINATION
16.1 Termination of Plan. The Board may suspend or terminate the Plan at any
time with or without prior notice; provided, however, that no action
authorized by this Section 16.1 shall reduce the amount of any outstanding
Award or change the terms and conditions thereof without the Participant's
consent.
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16.2 Amendment of Plan. The Board may amend the Plan at any time with or
without prior notice; provided, however, that no amendment or termination
may adversely affect the rights of any participant under any outstanding
Award without the Participant's consent.
16.3 Amendment or Cancellation of Award Agreements. The Committee may amend or
modify any Award Agreement at any time by mutual agreement between the
Committee and the Participant or such other persons as may then have an
interest therein. In addition, by mutual agreement between the Committee
and a Participant or such other persons as may then have an interest
therein, Awards may be granted to an Employee, Nonemployee Director or
Independent Contractor in substitution and exchange for, and in
cancellation of, any Awards previously granted to such Employee,
Nonemployee Director or Independent Contractor under the Plan, or any
award previously granted to such Employee, Nonemployee Director or
Independent Contractor under any other present or future plan of the
Company or any present or future plan of an entity which (i) is purchased
by the Company, (ii) purchases the Company, or (iii) merges into or with
the Company.
17.0 MISCELLANEOUS
17.1 Other Provisions. Awards granted under the Plan may also be subject to
such other provisions (whether or not applicable to the Award granted to
any other Participant) as the Committee determines on the date of grant to
be appropriate, including, without limitation, for the installment
purchase of Common Stock under Stock Options, to assist the Participant in
financing the acquisition of Common Stock, for the forfeiture of, or
restrictions on resale or other disposition of, Common Stock acquired
under any Stock Option, for the acceleration of Vesting of Awards in the
event of a Change in Control of the Company, for the payment of the value
of Awards to Participants in the event of a Change in Control of the
Company, or to comply with federal and state securities laws, or
understandings or conditions as to the Participant's employment in
addition to those specifically provided for under the Plan.
17.2 Transferability. Each Award granted under the Plan to a Participant shall
not be transferable otherwise than by will or the laws of descent and
distribution, and Stock Options and SARs shall be exercisable, during the
Participant's lifetime, only by the Participant. In the event of the death
of a Participant, each Stock Option or SAR theretofore granted to him or
her shall be exercisable during such period after his or her death as the
Committee shall, in its sole discretion, set forth in the Award Agreement
on the date of grant and then only by the executor or administrator of the
estate of the deceased Participant or the person or persons to whom the
deceased Participant's rights under the Stock Option or SAR shall pass by
will or the laws of descent and distribution. Notwithstanding the
foregoing, the Committee, in its sole discretion, may permit the
transferability of a Stock Option by a Participant solely to members of
the Participant's immediate family or trusts or family partnerships or
other similar entities for the benefit of such persons, and subject to
such terms, conditions, restrictions and/or limitations, if any, as the
Committee may establish and include in the Award Agreement.
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17.3 Election to Defer Compensation Attributable to Award. The Committee may,
in its sole discretion, allow a Participant to elect to defer the receipt
of any compensation attributable to an Award under guidelines and
procedures to be established by the Committee after taking into account
the advice of the Company's tax counsel.
17.4 Listing of Shares and Related Matters. If at any time the Committee shall
determine that the listing, registration or qualification of the shares of
Common Stock subject to any Award on any securities exchange or under any
applicable law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of, or in connection
with, the granting of an Award or the issuance of shares of Common Stock
thereunder, such Award may not be exercised, distributed or paid out, as
the case may be, 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 Committee.
17.5 No Right, Title, or Interest in Company Assets. Participants shall have no
right, title, or interest whatsoever in or to any investments which the
Company may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant,
beneficiary, legal representative or any other person. To the extent that
any person acquires a right to receive payments from the Company under the
Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall
be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to
assure payment of such amounts except as expressly set forth in the Plan.
The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.
17.6 No Right to Continued Employment or Service or to Grants. The
Participant's rights, if any, to continue to serve the Company as a
director, officer, employee, independent contractor or otherwise, shall
not be enlarged or otherwise affected by his or her designation as a
Participant under the Plan, and the Company or the applicable Subsidiary
reserves the right to terminate the employment of any Employee or the
services of any Independent Contractor or director at any time. The
adoption of the Plan shall not be deemed to give any Employee, Nonemployee
Director, Independent Contractor or any other individual any right to be
selected as a Participant or to be granted an Award.
17.7 Awards Subject to Foreign Laws. The Committee may grant Awards to
individual Participants who are subject to the tax laws of nations other
than the United States, and such Awards may have terms and conditions as
determined by the Committee as necessary to comply with applicable foreign
laws. The Committee may take any action which it deems advisable to obtain
approval of such Awards by the appropriate foreign governmental entity;
provided, however, that no such Awards may be granted pursuant to this
Section 17.7 and no action may be taken which would result in a violation
of the Exchange Act or any other applicable law.
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7.8 Governing Law. The Plan, all Awards granted hereunder, and all actions
taken in connection herewith shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflict of laws, except as superseded by applicable federal
law or as otherwise provided in any Award Agreement.
17.9 Other Benefits. No Award granted under the Plan shall be considered
compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary nor affect any benefits or compensation
under any other benefit or compensation plan of the Company or any
Subsidiary now or subsequently in effect.
17.10 No Fractional Shares. No fractional shares of Common Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, Common Stock, Stock Options, or other property
shall be issued or paid in lieu of fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
17.11 Authority of the Company and Shareholders. The existence of the Plan, the
Award Agreements and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Company or the shareholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of stock
or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior
to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.
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