Exhibit 4.2
BLIMPIE INTERNATIONAL, INC.
2000 OMNIBUS STOCK INCENTIVE PLAN
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ARTICLE I
DEFINITIONS
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1.01. Agreement means a written agreement between the Company and a Participant
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or any written instrument issued by the Company to a Participant (including any
amendment or supplement thereto) specifying the terms and conditions of an award
of Restricted Shares or Performance Shares or a grant of an Option or SAR made
to such Participant.
1.02. Board means the Board of Directors of the Company.
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1.03. Code means the Internal Revenue Code of 1986, as amended.
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1.04. Committee means the Compensation Committee of the Board, consisting
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solely of not less than two non-employee directors who have been appointed to
administer the Plan.
1.05. Common Stock means the Company's common stock, $.01 par value.
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1.06. Company means Blimpie International, Inc.
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1.07. Corresponding SAR means a SAR that is granted in relation to a particular
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Option and that can be exercised only upon the surrender to the Company,
unexercised, of that portion of the Option to which the SAR relates.
1.08. Date of Exercise means (i) with respect to an Option, the date that the
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Option price is received by, and (ii) with respect to a SAR, the date that the
notice of exercise is received by, the Company.
1.09. Fair Market Value of the Common Stock shall be the mean between the
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following prices, as applicable, for the date as of which fair market value is
to be determined, as quoted in The Wall Street Journal (or in such other
reliable publication as the Committee, in its discretion, may determine to rely
upon): (a) if the Common Stock is listed on the New York Stock Exchange, the
highest and lowest sales prices per share of the Common Stock as quoted in the
NYSE-Composite Transactions listing for such date, (b) if the Common Stock is
not listed on such exchange, the highest and lowest sales prices per share of
Common Stock for such date on (or on any composite index including) the
principal United States securities exchange registered under the Exchange Act on
which the Common Stock is listed, or (c) if the Common Stock is not listed on
any such exchange, the highest and lowest sales prices per share of the Common
Stock for such date on the Nasdaq Stock Market or any successor thereto
("Nasdaq"). If there are no such sale price quotations for the date as of which
fair market value is to be determined, but there
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are such sale price quotations within a reasonable period both before and after
such date, then fair market value shall be determined by taking a weighted
average of the means between the highest and lowest sales prices per share of
the Common Stock as so quoted on the nearest date before and the nearest date
after the date as of which fair market value is to be determined. The average
should be weighted inversely by the respective numbers of trading days between
the selling dates and the date as of which fair market value is to be
determined. If there are no such sale price quotations on or within a reasonable
period both before and after the date as of which fair market value is to be
determined, then fair market value of the Common Stock shall be the mean between
the bona fide bid and asked prices per share of Common Stock as so quoted for
such date on Nasdaq, or if none, the weighted average of the means between such
bona fide bid and asked prices on the nearest trading date before and the
nearest trading date after the date as of which fair market value is to be
determined, if both such dates are within a reasonable period. The average is to
be determined in the manner described above in this paragraph. If the fair
market value of the Common Stock cannot be determined on the basis previously
set forth in this paragraph on the date as of which fair market value is to be
determined, the Committee shall in good faith determine the fair market value of
the Common Stock on such date. Fair market value shall be determined without
regard to any restriction other than a restriction which, by its terms, will
never lapse.
1.10. Incentive Stock Option shall have the meaning given to it by Section 422
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of the Code.
1.11. Initial Value means, with respect to a SAR, the Fair Market Value of one
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share of Common Stock on the date of grant, as set forth in an Agreement.
1.12 Involuntary Termination means a Termination of Employment for a reason
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other than death, Retirement, Total Disability or voluntary resignation.
1.13 Nonstatutory Option means any Option granted by the Company pursuant to
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this Plan which is not an Incentive Stock Option.
1.14. Option means any stock option that entitles the holder to purchase from
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the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
1.15. Participant means an employee of the Company, or of a Subsidiary,
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including an employee who is a member of the Board, or a non-employee director,
and any other person who satisfies the requirements of Article IV and is
selected by the Committee or by the Board to receive a Restricted Share or
Performance Share award, an Option, a SAR, or a combination thereof.
1.16 Performance Period means an accounting period of the Company or a
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Subsidiary of not less than one year, as determined by the Committee in its
discretion.
1.17. Performance Share means an award, expressed in dollars or shares of
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Common Stock, granted to a Participant with respect to a Performance Period.
Awards of Performace Shares expressed in dollars may be established as fixed
dollar amounts, as a percentage of salary, as a percentage of a pool based on
earnings of the Company, a Subsidiary or Subsidiaries or any
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branch, department or other portion thereof or in any other manner determined by
the Committee in its discretion, provided that the amount thereof shall be
capable of being determined as a fixed dollar amount as of the close of the
Performance Period.
1.18 Performance Target means that level of performance established by the
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Committee which must be met in order for an award of Performance Shares to be
fully earned. The Performance Target may be expressed in terms of earnings per
share, return on assets, asset growth, ratio of capital to assets or such other
level or levels of accomplishment by the Company, a Subsidiary or Subsidiaries,
any branch, department or other portion thereof or the Participant individually
as may be established or revised from time to time by the Committee.
1.19. Plan means the Blimpie International, Inc. 2000 Omnibus Stock Incentive
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Plan.
1.20. Restricted Shares means shares of Common Stock awarded to a Participant
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under Article VII. Shares of Common Stock shall cease to be Restricted Shares
when, in accordance with the terms of the applicable Agreement, they become
transferable and free of substantial risks of forfeiture.
1.21. Retirement means a Termination of Employment by reason of a Participant's
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cessation of employment (or, in the case of a non-employee director, the
cessation of his or her tenure as such), other than by reason of a Total
Disability or Termination for Cause.
1.22. SAR means a stock appreciation right that entitles the holder to receive,
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with respect to each share of Common Stock encompassed by the exercise of such
SAR, the amount determined by the Committee and specified in an Agreement. In
the absence of such a determination, the holder shall be entitled to receive,
with respect to each share of Common Stock encompassed by the exercise of such
SAR, the excess of the Fair Market Value on the Date of Exercise over the
Initial Value. References to "SARs" include both Corresponding SARs and SARs
granted independently of Options, unless the context requires otherwise.
1.23. Subsidiary means any "subsidiary corporation" as such term is defined in
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Code section 424.
1.24 Termination of Employment means with respect to (a) Participants who are
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employees of the Company or a Subsidiary, the time when the employee-employer
relationship between the Participant and the Company ceases to exist for any
reason including, but not limited to termination by resignation, discharge,
death, Total Disability or Retirement; and (b) Participants who are non-employee
directors, the time when the Participant ceases to be a director by reason of
his or her resignation, failure to stand for re-election or dismissal.
1.25 Termination for Cause means an Involuntary Termination of a Participant:
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(a) if the Participant has a written employment agreement with the Company or
any Subsidiary, "for cause" as that or a similar term is defined in the
employment agreement; or (b) if the Participant does not have a written
employment agreement with the Company or any Subsidiary, by reason of (i) the
Participant's dishonesty or misconduct (including substance abuse) in the
performance of his or her duties; or (ii) a willful failure by the Participant
to perform his or her assigned duties
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which adversely affects the Company; of (iii) the conviction of the Participant
of a felony or other criminal act. All determinations of whether or not a
Termination for Employment is "for cause" will be made by the Committee in its
sole and absolute discretion.
1.26 Total Disability means the inability of a Participant to engage in any
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substantial gainful activity by reason of a medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
All determinations as to the date and extent of disability of a Participant will
be made by the Committee in its sole and absolute discretion.
1.27 Non-Employee Director means a director who:
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(a) is not currently an officer of the Company or a parent or
subsidiary of the Company, or otherwise currently employed by the Company or a
parent or subsidiary of the Company;
(b) does not receive compensation, either directly or indirectly, for
services rendered as a consultant or in any capacity other than as a director,
except for an amount which does not exceed the dollar amount for which
disclosure would be required pursuant to any provision of Regulations S-K
promulgated by the Commission;
(c) does not possess an interest in any other transaction for which
disclosure would be required by any provision of said Regulation S-K; and
(d) is not engaged in a business relationship for which disclosure
would be required by any provision of said Regulation S-K.
1.28 1995 Plan means the Blimpie International, Inc. 1995 Omnibus Stock
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Incentive Plan, as amended.
ARTICLE II
PURPOSES
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The Plan is intended to assist the Company in recruiting and retaining
employees and directors with ability and initiative by enabling them to
participate in its future success and to associate their interests with those of
the Company and its shareholders. The Plan is intended to permit the award of
Restricted Shares, the award of Performance Shares, the grant of SARs, and the
grant of both Incentive Stock Options and Nonstatutory Options. The proceeds
received by the Company from the sale of Common Stock pursuant to this Plan
shall be used for general corporate purposes.
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ARTICLE III
ADMINISTRATION
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Except as provided in this Article III, the Plan shall be administered by
the Committee. The Committee shall have authority to award Restricted Shares
and Performance Shares and to grant Options and SARs upon such terms (not
inconsistent with the provisions of this Plan) as the Committee may consider
appropriate. Such terms may include conditions (in addition to those contained
in this Plan) on the exercisability of all or any part of an Option or SAR or on
the transferability or forfeitability of Restricted Shares. Notwithstanding any
such conditions, the Committee may, in its discretion, accelerate the time at
which any Option or SAR may be exercised or the time at which Restricted Shares
may become transferable or nonforfeitable. In addition the Committee shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. Any decision
made, or action taken, by the Committee or in connection with the administration
of this Plan shall be final and conclusive. No member of the Committee shall be
liable for any act done in good faith with respect to this Plan or any
Agreement, or Option, SAR, Restricted Share award or Performance Share award.
All expenses of administering this Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers of
the Company all or part of the Committee's authority and duties with respect to
Participants who are not subject to the reporting and other provisions of
Section 16 of the Securities Exchange Act of 1934, as in effect from time to
time (the "Exchange Act"). In the event of such delegation, and as to matters
encompassed by the delegation, references in the Plan to the Committee shall be
interpreted as a reference to the Committee's delegate or delegates. The
Committee may revoke or amend the terms of a delegation at any time, but such
action shall not invalidate any prior actions of the Committee's delegate or
delegates that were consistent with the terms of the Plan.
In addition to, and not in substitution or replacement of, the powers and
authority conferred upon the Committee pursuant to this Plan, the Board shall
also be entitled to award Restricted Shares or Performance Shares and/or to
grant one or more Options, SARs, or Options and SARs to any eligible
Participant, and when it makes such awards and/or grants, all of the provisions
of this Plan which pertain to the Committee shall be construed as though the
word "Board" appeared in place of the word "Committee," and the Board shall
have, and shall be entitled to exercise, all of the powers and authority
conferred upon the Committee when making, amending, modifying canceling,
settling or rescinding any of such awards and/or grants.
ARTICLE IV
ELIGIBILITY
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4.01. General. Any employee of the Company or of any Subsidiary (including any
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corporation that becomes a Subsidiary after the adoption of this Plan) is
eligible to participate in this Plan if
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the Committee, in its sole discretion, determines that such person has
contributed or can be expected to contribute to the profits or growth of the
Company or a Subsidiary. Any such employee may be awarded Restricted Shares or
Performance Shares or may be granted one or more Options, SARs, or Options and
SARs. A director of the Company who is an employee of the Company or a
Subsidiary, and a non-employee director of the Company or a Subsidiary, may be
awarded Restricted Shares and Performance Shares and may be granted Options or
SARs under this Plan. Further, the Committee may from time to time in its sole
discretion award Restricted Shares and Performance Shares and may grant Options
or SARs to non-employees or non-key employees in conjunction with mergers and
acquisition transactions.
4.02. Grants. The Committee will designate individuals to whom Restricted
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Shares and Performance Shares are to be awarded and to whom Options and SARs are
to be granted and will specify the number of shares of Common Stock subject to
each award or grant. An Option may be granted with or without a related SAR.
The Committee may grant Incentive Stock Options and Nonstatutory Options to the
same Participant, but not in tandem. A SAR may be granted with or without a
related Option. All Restricted Shares and Performance Shares awarded, and all
Options and SARs granted, under this Plan shall be evidenced by Agreements which
shall be subject to the applicable provisions of this Plan and to such other
provisions as the Committee may adopt. No Participant may be granted Incentive
Stock Options or related SARs (under all Incentive Stock Option plans of the
Company and its Subsidiaries) which are first exercisable in any year for Common
Stock having an aggregate Fair Market Value (determined as of the date an Option
is granted) exceeding $100,000.
ARTICLE V
COMMON STOCK SUBJECT TO PLAN
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5.01. Source of Shares. Upon the award of Restricted Shares and when a
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Performance Share is earned, the Company may issue authorized but unissued
shares of Common Stock. Upon the exercise of an Option or SAR, the Company may
deliver to the Participant (or the Participant's broker if the Participant so
directs), authorized but unissued Common Stock.
5.02. Maximum Number of Shares. The maximum aggregate number of shares of
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Common Stock that may be issued pursuant to the exercise of Options and SARs and
the award of Restricted Shares and the settlement of Performance Shares under
this Plan is 500,000, subject to increases and adjustments as provided in this
Article V and Article IX.
5.03. Replenishment. The maximum number of shares authorized for issuance
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under this Plan pursuant to Section 5.02 shall be increased each year by 8% (the
"Replenishment Percentage") of the amount, if any, by which the total number of
shares of Common Stock outstanding as of the last day of the Company's fiscal
year exceeds the total number of shares of Common Stock outstanding as of the
first day of such fiscal year. Provided, however, that in no event shall the
total number of shares authorized for issuance under this Plan exceed 8% of the
authorized and outstanding shares of Common Stock as of the time of any
replenishment adjustment. The issuance of shares of Common Stock under this
Plan and the application of Article IX shall be disregarded for purposes of
applying the preceding sentence. This Section 5.03 shall first apply with
respect to the fiscal year of the Company beginning on July 1, 2001.
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5.04 Forfeitures, etc. If an Option or SAR is terminated, in whole or in part
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for any reason other than its exercise, the number of shares of Common Stock
allocated to the Option or SAR or portion thereof may be reallocated to other
Options, SARs granted, or Restricted Shares and Performance Share awards to be
granted under this Plan. Any Restricted Shares that are forfeited or
Performance Shares that are unearned may be reallocated to other Options or
SARs granted, or Restricted Shares awarded, under this Plan.
5.05 Reserved but Unissued 1995 Plan Shares. If an option or SAR granted under
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the 1995 Plan is terminated, in whole or in part for any reason other than its
exercise, or any restricted shares or performance shares awarded under the 1995
Plan are forfeited or unearned for any reason, the maximum number of shares
authorized for issuance under this Plan pursuant to Section 5.02 shall be
increased by the number of shares of Common Stock which had been reserved for
issuance pursuant to such terminated 1995 Plan option or SAR grant, or forfeited
1995 Plan restricted share or performance share award.
ARTICLE VI
OPTIONS AND STOCK APPRECIATION RIGHTS
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6.01 Nonstatutory Options. The Committee may grant Nonstatutory Options under
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this Plan. Such Nonstatutory Stock Options must comply with all applicable
requirements of this Plan except for those which pertain solely to Incentive
Stock Options.
6.02 Incentive Stock Options. The Committee may grant Incentive Stock Options
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under this Plan which shall comply with all of the restrictions and limitations
set forth in Section 422 of the Code. To the extent that any Option does not
qualify as an Incentive Stock Option, it shall constitute a Nonstatutory Stock
Option.
6.03 Vesting of Options. The Participant's Agreement shall specify the date
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or dates on which the Participant may begin to exercise all or a portion of his
Option. Subsequent to such dates or dates, the Option shall be deemed "vested."
Notwithstanding the terms of any Agreement, the Committee at any time may
accelerate such date or dates and otherwise waive or amend any conditions of the
grant.
6.04 Grant and Exercise of SARs. SARs may be granted to Participants by the
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Committee independently of any Option granted pursuant to this Article or as a
Corresponding SAR. In the case of a Corresponding SAR granted in tandem with a
Nonstatutory Option, such SAR may be exercised either at or after the time of
the exercise of such Nonstatutory Option. In the case of a Corresponding SAR
granted in tandem with an Incentive Stock Option, such SAR may be exercised only
at the time of the exercise of such Incentive Stock Option.
A Corresponding SAR, shall terminate and no longer be exercisable upon the
termination or exercise of related Option. However, if a Corresponding SAR is
granted with respect to less than the full number of shares covered by a related
Option, such SAR shall terminate only if and to
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the extent that the number of shares covered by the exercise or termination of
the related Option exceeds the number of shares not covered by such SAR.
6.05 Exercise of Options and SARs Conditioned on Continuous Employment.
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Except as otherwise provided in this Plan or by the Compensation Committee, no
Participant may exercise an Option or SAR unless at the time of exercise he or
she has been continuously in the employ of the Company or a Subsidiary since the
date of grant thereof.
6.06 Terms and Conditions of Stock Appreciation Rights. SARs shall be
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subject to such terms and conditions as shall be determined from time to time by
the Committee and embodied in the Agreements and in procedures established by
the Committee. The Committee at any time may accelerate the exercisability of
any SAR and otherwise waive or amend any conditions of the grant of a SAR.
6.07. Maximum Option or Stock Appreciation Right Period. The maximum period in
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which an Option or SAR may be exercised shall be determined by the Committee on
the date of grant except that no Option that is an Incentive Stock Option and
any Corresponding SAR that relates to such Option shall be exercisable after the
expiration of ten years from the date the Option or SAR was granted. The terms
of any Option or SAR may provide that it is exercisable for a period less than
such maximum period.
6.08 Option Exercise Price. The price per share for Common Stock purchased on
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the exercise of an Option shall not be less than 100% of the Fair Market Value
of the Common Stock on the date the Option is granted.
6.09. Payment of Option Exercise Price. Unless otherwise provided by the
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Agreement, payment of the Option exercise price shall be made in cash or a cash
equivalent acceptable to the Committee. If the Agreement so provides, payment
of all or part of the exercise price may be made by surrendering shares of
Common Stock to the Company. If Common Stock is used to pay all or part of the
exercise price, the shares surrendered must have a Fair Market Value (determined
as of the day preceding the Date of Exercise) that is not less than such price
or part thereof.
6.10. Determination of Payment of Cash and/or Common Stock Upon Exercise of
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SAR. At the Committee's discretion, the amount payable as a result of the
exercise of a SAR may be settled in cash, Common Stock, or a combination of cash
and common Stock. A Fractional share shall not be deliverable upon the exercise
of a SAR but a cash payment will be made in lieu thereof.
6.11 Reload Options. The Committee shall have the authority to specify at the
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time of grant that a Participant shall be granted another Option (a "Reload
Option") in the event such Participant exercises all or part of a Nonstatutory
Option (an "Original Option") by surrendering in accordance with Section 6.08
hereof already owned shares of Common Stock in full or partial payment of the
exercise price under such Original Option, subject to the availability of shares
of Common Stock under the Plan at the time of exercise. Each Reload Option
shall cover a number of shares of Common Stock equal to the number of shares of
Common Stock surrendered in payment of the exercise price, shall have an
exercise price per share of Common Stock equal to
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the Fair Market Value of the Common Stock on the date of grant of such Reload
Option and shall expire on the stated expiration date of the Original Option. A
Reload Option shall be exercisable at any time and from time to time from and
after the date of grant of such Reload Option (or, as the Committee, in its sole
discretion, shall determine at the time of grant, at such time or times as shall
be specified in the Reload Option); provided, however, that a Reload Option
granted to a Participant subject to the provisions of Section 16(b) of the
Exchange Act shall not be exercisable during the first six months from the date
of grant of such Reload Option. The first such Reload Option may provide for the
grant, when exercised, of one subsequent Reload Option to the extent and upon
such terms and conditions, consistent with this Section 6.11, as the Committee,
in its sole discretion, shall specify at or after the time of grant of such
Reload Option. A Reload Option shall contain such other terms and conditions
which may include a restriction on the transferability of the number of shares
of Common Stock received upon exercise of the Original Option reduced by a
number of shares equal in value to the tax liability incurred upon exercise as
the Committee, in its sole discretion, may deem desirable which may be set forth
in the Agreement evidencing the Reload Option.
6.12. Nontransferability. Any Option or SAR granted under this Plan shall be
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nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons or
entity or entities. During the lifetime of a Participant to whom an Option or
SAR is granted, the Option or SAR may be exercised only by the Participant. No
right or interest of a Participant in any Option or SAR shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
6.13 Cancellation and New Grant of Options. The Committee shall have the
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authority to effect, at any time, and from time to time, with the consent of the
affected Participants, the cancellation of any or all outstanding Options under
the Plan and the grant in substitution therefor of new Options under the Plan
covering the same or different numbers of shares of Common Stock having an
Option exercise price per share which may be lower or higher than the exercise
price per share of the canceled Options.
6.14. Shareholder Rights. No Participant shall have any rights as a
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shareholder with respect to shares subject to an Option or SAR until the Date of
Exercise of such Option or SAR.
6.15 Retirement of Holder of Options or Stock Appreciation Rights. If there
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is a Termination of Employment of a Participant to whom an Option and/or SAR has
been granted due to Retirement, each Incentive Stock Option held by the retired
Participant, whether or not then vested, may be exercised until the earlier of
(a) the end of the three month period immediately following the date of such
Termination of Employment; or (b) the expiration of the term specified in the
Option or SAR. In the case of a Nonstatutory Option, there shall be substituted
the words, "the end of the twelve month period" for the words "the end of the
three month period" in the immediately preceding sentence.
6.16 Total Disability of Holder of Options or Stock Appreciation Rights. If
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there is a Termination of Employment of a Participant to whom an Option and/or a
SAR has been granted by reason of his or her Total Disability, each Option
and/or SAR held by the Participant, whether
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or not then vested, may be exercised until the earlier of: (a) the end of the
twelve month period immediately following the date of such Termination of
Employment; or (b) the expiration of the term specified in the Option or SAR.
6.17 Death of Holder of Options or Stock Appreciation Rights. If there is a
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Termination of Employment of a Participant to whom an Option or SAR has been
granted by reason of his or her death, or (b) the death of a former employee
within three months following the date of his or her Retirement (or, in the
case of a Non-statutory Option, within twelve months following the date of his
or her Retirement), or (c) the death of a former employee within twelve months
following the date of his or her Termination of Employment by reason of Total
Disability, then each Option and SAR held by the person at the time of his or
her death, whether or not then vested, may be exercised by the person or persons
to whom the Option or SAR shall pass by will or by the laws of descent and
distribution (but by no other persons) until the earlier of (i) the end of the
twelve month period immediately following the date of death (or such longer
period as is permitted by the Committee); and (ii) the expiration of the term
specified in the Option or SAR.
6.18 Termination of Employment for Cause: Voluntary Termination Prior to
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Retirement. If there is a Termination of Employment for Cause of a Participant
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to whom an Option or SAR has been granted under this Plan, or if a Participant
voluntarily terminates his or her employment prior to Retirement (other than by
reason of Total Disability), then all Options and SARs held by such Participant,
whether or not then vested, shall automatically be canceled at the time of such
Termination of Employment and shall be of no further force or effect thereafter.
This section shall not affect any Common Stock acquired by the Participant upon
exercise of Options or SARs prior to such Termination of Employment by the
Participant.
ARTICLE VII
RESTRICTED SHARE AWARDS
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7.01. Award. In accordance with the provisions of this Article VII, the
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Committee will designate each individual to whom an award of Restricted Shares
is to be made and will specify the number of shares of Common Stock covered by
the award.
7.02. Vesting. The Committee, on the date of the award, may prescribe that a
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Participant's rights in the Restricted Shares shall be forfeitable or otherwise
restricted for a period of time set forth in the Agreement. By way of example
and not of limitation, the restrictions may postpone transferability of the
shares or may provide that the shares will be forfeited if the Participant
separates from the service of the Company and its Subsidiaries before the
expiration of a stated term or if the Company and its Subsidiaries or the
Participant fail to achieve stated objectives.
7.03. Shareholder Rights; Escrow. Prior to their forfeiture in accordance with
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the terms as the Agreement and while the shares are Restricted Shares, a
Participant will have all rights of a shareholder with respect to Restricted
Shares, including the right to receive dividends and vote the shares; provided,
however, that (a) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of Restricted Shares, (b) the Company shall
retain custody of the certificates evidencing Restricted Shares and (c) the
Participant will deliver to the Company a
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stock power, endorsed in blank, with respect to each award of Restricted Shares.
The limitations set forth in the preceding sentence shall not apply after the
shares cease to be Restricted Shares.
7.04 Restricted Share Agreement. Restricted Share awards shall be evidenced
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by an Agreement in the form prescribed by the Committee which shall set forth
such terms, conditions and restrictions as the Committee in its discretion deems
appropriate. Restricted Share awards shall be effective only upon execution of
the applicable Agreement on behalf of the Company by the Chief Executive Officer
(if other than the President), the President or any Vice President, and by the
Participant.
ARTICLE VIII
PERFORMANCE SHARE AWARDS
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8.01 Award. The Committee may award Performance Shares which shall be earned
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by a Participant based on the level of performance over a specified period of
time by the Company, a Subsidiary or Subsidiaries, any branch, department or
other portion thereof or the Participant individually, as determined by the
Committee.
8.02 Procedure for Earning Award. A Participant shall earn awarded
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Performance Shares in full by meeting the Performance Target for the Performance
Period. If the Minimum Target has not been attained at the end of the
Performance Period, no part of the Performance Share shall have been earned by
the Participant. If the Minimum Target is attained but the Performance Target
is not attained, the portion of the Performance Share award earned by the
Participant shall be determined on the basis of a formula established by the
Committee.
8.03 Adjustments to Awards. At any time prior to the end of a Performance
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Period, the Committee may adjust downward (but not upward) the Performance
Target and/or the Minimum Target as a result of major events unforeseen at the
time of the Performance Share award, such as changes in the economy, the
industry, laws affecting the operations of the Company or a Subsidiary or any
other event the Committee determines would have a significant impact upon the
probability of attaining the previously established Performance Target.
8.04 Payment of Awards. Payment of earned Performance Shares shall be made to
-----------------
Participants following the close of the Performance Period as soon as
practicable after the time the amount payable is determined by the Committee.
Payment in respect of earned Performance Shares, whether expressed in dollars or
shares, may be made in cash, in shares of Common Stock, or partly in cash and
partly in shares of Common Stock, as determined by the Committee at the time of
payment. For this purpose, Performance Shares expressed in dollars shall be
converted to shares, and Performance Shares expressed in shares shall be
converted to dollars, based on the Fair Market Value of the Common Stock as of
the date the amount payable is determined by the Committee.
8.04 Effects of Termination of Employment. If prior to the close of the
------------------------------------
Performance Period the employment of a Participant who received an award of
Performance Shares is voluntarily terminated with the consent of the Company or
a Subsidiary or the Participant retires, or if the
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Participant dies during employment, the Committee may in its absolute discretion
determine to pay all or any part of the Performance Share award based upon the
extent to which the Committee determines the Performance Target or Minimum
Target has been achieved as of the date of termination of employment, retirement
or death, the period of time remaining until the close of the Performance Period
and/or such other factors as the Committee may deem relevant. If the Committee
in its discretion determines that all or any part of the Performance Share award
shall be paid, payment shall be made to the Participant or his or her estate as
promptly as practicable following such determination and may be made in cash, in
shares of Common Stock, or partly in cash and partly in shares of Common Stock,
as determined by the Committee at the time of the payment. For this purpose,
Performance Shares expressed in dollars shall be converted to shares, and
Performance Shares expressed in shares shall be converted to dollars, based on
the Fair Market Value of the Common Stock as of the date the amount payable is
determined by the Committee.
If, prior to the close of a Performance Period, a Termination of
Employment of a Participant who received an award of Performance Shares occurs
for any reason other than voluntary termination with the consent of the Company
or a Subsidiary, Retirement or death, the Performance Shares of the Participant
shall be deemed not to have been earned, and no portion of such Performance
Shares may be paid. Whether Termination of Employment is a voluntary
termination with the consent of the Company or a Subsidiary shall be determined,
in its discretion, by the Committee. Any determination by the Committee on any
matter with respect to Performance Shares shall be final and binding on both the
Company and the Participant.
8.05 Performance Share Agreement. Performance Share awards shall be evidenced
---------------------------
by an Agreement in the form prescribed by the Committee which shall set forth
the amount or manner of determining the amount of the Performance Shares, the
Performance Period, the Performance Target and any Minimum Target and such other
terms and conditions as the Committee in its discretion deems appropriate.
Performance Share awards shall be effective only upon execution of the
applicable Performance Share Agreement on behalf of the Company by the Chief
Executive Officer (if other than the President), the President or any Vice
President, and by the Participant.
ARTICLE IX
ADJUSTMENTS
-----------
The maximum number of shares that may be issued pursuant to the exercise
of Options and SARs and the award of Restricted Shares and the settlement of
Performance Shares under this Plan and the Replenishment Percentage in Section
5.03 shall be proportionately adjusted, and the terms of outstanding Restricted
Share awards, Performance Share Awards, Options, and SARs shall be adjusted, as
the Committee shall determine to be equitably required in the event that (a) the
Company (i) effects one or more stock dividends, stock split-ups, subdivisions
or consolidations of shares or (ii) engages in a transaction to which Code
section 424 applies or (b) there occurs any other event which, in the judgment
of the Committee necessitates such action. Any determination made under this
Article IX by the Committee shall be final and conclusive.
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The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
outstanding awards of Restricted Shares, Performance Shares, Options or SARs.
The Committee may award Restricted Shares and Performance Shares, may
grant Options, and may grant SARs in substitution for stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or a Subsidiary in connection with a
transaction described in the first paragraph of this Article IX. Notwithstanding
any provision of the Plan (other than the limitations of Article V), the terms
of such substituted Restricted Share and Performance Share awards and Option or
SAR grants shall be as the Committee, in its discretion, determines is
appropriate.
ARTICLE X
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
-----------------------------------------------------
No Option or SAR shall be exercisable, no Common Stock shall be issued,
no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which shares may
be listed. The Company shall have the right to rely on an opinion of its counsel
as to such compliance. Any share certificate issued to evidence Common Stock for
which Restricted Shares are awarded, Performance Shares were earned or for which
an Option or SAR is exercised may bear such legends and statements as the
Committee may deem advisable to assure compliance with federal and state laws
and regulations. No Option or SAR shall be exercisable, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under this Plan until the Company has obtained such consent or approval as
the Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
ARTICLE XI
GENERAL PROVISIONS
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11.01. Effect on Employment. Neither the adoption of this Plan, its operation,
--------------------
nor any documents describing or referring to this Plan (or any part thereof)
shall confer upon any employee any right to continue in the employ of the
Company or a Subsidiary or in any way affect any right and power of the Company
or a Subsidiary to terminate the employment of any employee at any time with or
without assigning a reason therefor.
11.02. Unfunded Plan. The Plan, insofar as it provides for grants and awards,
-------------
shall be unfunded, and the Company shall not be required to segregate any assets
that may at any time be represented by grants or awards under this Plan. Any
liability of the Company to any person
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with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company or any Subsidiary
11.03. Rules of Construction. Headings are given to the articles and sections
---------------------
of this Plan solely as a convenience to facilitate reference. The reference to
any statute, regulation, or other provision of law shall be construed to refer
to any amendment to or successor of such provision of law.
11.04. Employee Status. For purposes of determining the applicability of Code
---------------
section 422 (relating to Incentive Stock Options), or in the event that the
terms of any Option or SAR provide that it may be exercised or that awards of
Restricted Shares or Performance Shares may become vested or earned only during
employment or within a specified period of time after Termination of Employment,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
11.05. Tax Withholding. Each Participant shall, no later than the date as of
---------------
which the value of a grant of an Option or SAR, or an award of any Restricted
Shares or Performance Shares or other amount received thereunder first becomes
includable in the gross income of the Participant for Federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of any Federal, state, or local taxes of any kind required by
law to be withheld with respect to such income. The Committee may permit
payment of such taxes to be made through the tender of cash or Common Stock, the
withholding of Common Stock or cash to be received through grants or awards of
any other arrangement satisfactory to the Committee. The Company and its
Subsidiaries shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.
11.06. Indemnification. No member of the Board or the Committee shall be
---------------
liable for any action or determination taken or made in good faith with respect
to this Plan nor shall any member of the Board or the Committee be liable for
any Agreement issued pursuant to this Plan or any grants or awards made under
it. Each member of the Board and the Committee shall be indemnified by the
Company against any losses incurred in such administration of the Plan, unless
his or her action constitutes serious and willful misconduct.
11.07. Other Compensation Plans. The adoption of the Plan shall not affect any
------------------------
other existing or future incentive or compensation plans for directors, officers
or employees of the Company or its Subsidiaries. Moreover, the adoption of this
Plan shall not preclude the Company or its Subsidiaries from: (a) establishing
any other forms for incentive or other compensation for directors, officers or
employees of the Company or its Subsidiaries; or (b) assuming any forms of
incentives or other compensation of any person or entity in connection with the
acquisition or the business or assets, in whole or in part, of any person or
entity.
11.08. Non-Contravention of Securities Laws. Notwithstanding anything to the
------------------------------------
contrary expressed in this Plan, any provisions hereof that vary from or
conflict with any applicable
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Federal or State securities laws (including any regulations promulgated
thereunder) shall be deemed to be modified to conform to and comply with such
laws.
11.09. Unenforceability of a Particular Provision. The unenforceability of any
------------------------------------------
particular provision of this document shall not affect the other provisions, and
the document shall be construed in all respects as if such unenforceable
provision were omitted.
ARTICLE XII
AMENDMENT
---------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan or (ii) the amendment changes the class
of individuals eligible to become Participants. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
outstanding Restricted Share or Performance Share award or under any Option or
SAR outstanding at the time such amendment is made.
ARTICLE XIII
DURATION OF PLAN
----------------
No Restricted Shares or Performance Shares may be awarded and no Option
or SAR may be granted under this Plan after June 30, 2005. Restricted Share and
Performance Share awards and Option and SAR grants made before that date shall
remain valid in accordance with their terms.
Restricted Shares and Performance Shares may be awarded and Options and
SARs may be granted under this Plan upon its adoption by the Board, provided
that no Restricted Share or Performance Share award, or Option or SAR grant will
be effective unless this Plan is approved by a majority of the Company's
shareholders voting either in person or by proxy at a duly held shareholders'
meeting within twelve months of such adoption.
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