SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant X
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Filed by a Party other than the Registrant ___
Check the appropriate box:
___Preliminary Proxy Statement ___Confidential, for Use of the Commission
Only(as permitted by Rule 14a-6(e)(2))
___Definitive Proxy Statement
_X_Definitive Additional Materials
___Soliciting Material Under Rule 14a-12
MUNICIPAL MORTGAGE & EQUITY, LLC
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
_X_No fee required.
___Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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___ Fee paid previously with preliminary materials:
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___ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ADJOURNMENT NOTICE!
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June 15, 2001
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Dear Fellow Shareholder:
Our Annual Meeting of Shareholders was adjourned to allow additional time for
shareholders to vote on Proposals 2 and 3, which we have amended and are
resubmitting for your consideration. The meeting will reconvene on July 19,
2001, at 11:45 a.m., and will be held at the offices of the Company: 218 N.
Charles St., Suite 500, Baltimore, Maryland 21201. Regardless of the number of
shares you own, your vote is very important to us and we need your support. If
you have not already voted, please return the enclosed proxy form as soon as
possible. If you wish to change your vote in consideration of the amended
proposals, you have until July 18 to do so. If you have already voted and do not
wish to change your vote, no action is necessary.
We have amended Proposal 2, regarding the authorization of the issuance of
shares under the 2001 Share Incentive Plan, to reduce the number of shares to be
authorized for issuance under the plan from 1,000,000 to 900,000. This reduces
the percentage of shares represented by the plan to 4.2% of the total shares
outstanding as of March 31, 2001. Proposal 3, relating to the 2001 Non-employee
Directors' Share Plan, is unchanged. However, the total number of shares to be
issued under both plans is now 1,050,000, or 4.88% of the total shares
outstanding as of March 31, 2001. Attached to this letter is the amended
Proposal 2 and its amended Appendix, as well as the original Proposal 3 with its
original Appendix.
With the amendment to Proposal 2, the number of shares authorized for issuance
under the two share incentive plans will be less than 5% of the total
outstanding shares as of March 31, 2001. As a result, the New York Stock
Exchange rules will allow members of the exchange to vote on Proposals 2 and 3
in the absence of specific instructions from the beneficial owners. Accordingly,
if your shares are held of record by a broker or some other entity, and if you
have accepted the discretionary voting option of that broker or entity, then
your shares may be voted in favor of the Board's recommendation. If you object
to the Board's recommendation, please vote using any of the methods stated on
the enclosed proxy card.
Your Board of Directors believes that providing share incentives to employees
and non-employee Directors provides an important means to link compensation to
the Company's performance and to promote continued identity of interests between
the Company's independent Directors, employees and shareholders.
To approve Proposals 2 and 3, 50% or more of our total outstanding shares need
to vote in favor of them. Therefore a significant voting return from our
shareholders is required. Please save your company the expense of additional
solicitation costs by voting in FAVOR of Proposals 2 and 3 as soon as possible.
Proposal 1, regarding the Election of Directors, received the necessary
shareholder approval and as a result will not be resubmitted to shareholders at
the July 19 meeting.
Your Board of Directors recommends a vote in FAVOR
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Your bank or broker allows you to vote your shares telephonically or via the
Internet if you wish. Kindly follow the instructions on the enclosed voting form
to cast your vote. The voting process is quick and easy.
If you have any questions or need assistance in voting your shares, please call
our proxy solicitor Georgeson Shareholder Communications, Inc. toll free at
1-888-383-9839.
Thank you for your time and effort.
Sincerely,
/s/ William S. Harrison
Chief Financial Officer
IF YOU HAVE RECENTLY MAILED YOUR PROXY,
PLEASE ACCEPT OUR THANKS AND DISREGARD THIS REQUEST
PROPOSAL TO APPROVE THE MUNICIPAL MORTGAGE & EQUITY, LLC
2001 SHARE INCENTIVE PLAN
(Proposal No. 2) - Amended June 15, 2001
The following is a brief description of the material features of the 2001 Share
Incentive Plan. The description is qualified in its entirety by reference to
such plan, a copy of which is attached hereto as Appendix A).
In 1996 and 1998 the Company established the 1996 Share Incentive Plan (the
"1996 Plan") and the 1998 Share Incentive Plan (the "1998 Plan" and together
with the 1996 Plan, the "Plans"), respectively, to provide a means to attract,
retain and reward executive officers and other key individuals of the Company,
to link individual compensation to measures of the Company's performance, and to
promote ownership of a greater proprietary interest in the Company. The Board of
Directors believes that the Plans met each of its stated purposes. However,
1,514,269 of the 1,722,033 Common Shares (the "Shares") reserved for issuance in
connection with awards under the Plans have been awarded.
Accordingly, the Board of Directors has adopted and recommends the approval
by Shareholders of a new 2001 Share Incentive Plan (the "2001 Plan") providing
for the issuance of up to 900,000 Shares to executive officers, other key
employees and key independent contractors. Approximately 188 employees and key
independent contractors will be eligible to participate in the 2001 Plan. The
terms of the 2001 Plan will be generally the same as those of the 1996 and 1998
Plans. Subject to approval by the Company's Shareholders, the 2001 Plan will
become effective as of July 19, 2001 and expire when either the Board takes
action to terminate the 2001 Plan or when no Shares remain available for
issuance under the 2001 Plan and the Company and those who have been granted an
award under the 2001 Plan (the "Participants") have no further rights or
obligations under the 2001 Plan. The Board of Directors believes the amount of
shares available under the 2001 Plan is reasonable and fair to the current
Shareholders of the Company and represents less than 5% of the total outstanding
shares as of March 31, 2001.
The 2001 Plan authorizes grants of a broad variety of awards, including
non-qualified stock options, stock appreciation rights, restricted shares,
deferred shares, and shares granted as a bonus or in lieu of other awards. Any
restricted Share or deferred Share awards would need to be approved or ratified
by the Share Incentive Committee (the "Committee"). The 2001 Plan will be
administered by the Committee. The Committee is authorized to select from among
the eligible participants of the Company the individuals to whom awards are to
be granted and to determine the number of Shares to be subject thereto and the
terms and conditions thereof. The Committee may condition the grant, vesting,
exercisability or settlement of any award on the achievement of specified
performance objectives. The Committee is also authorized to adopt, amend and
rescind rules relating to the administration of the 2001 Plan. Awards may be
settled in cash, Common Shares, or other property, in the discretion of the
Committee. The Committee may adjust the number of Shares reserved under the 2001
Plan and the number of Shares relating to outstanding awards and related terms
to reflect share splits of the Common Shares and other extraordinary corporate
events. No member of the Committee will be eligible to participate in the 2001
Plan.
Initially, 900,000 Shares are reserved for issuance in connection with
awards under the 2001 Plan, except that Shares issued as Restricted Shares and
Shares issued as Awards other than Options (including Restricted Shares) will
not exceed 20% and 40% of the total reserved under the 2001 Plan, respectively.
Shares subject to forfeited or expired awards, as well as shares relating to
awards settled in cash or otherwise terminated without issuance of Shares to the
Participant, again become available under the 2001 Plan.
The price to be paid by Participants for Shares issued under the 2001 Plan
will be determined by the Committee in its sole discretion. The Exercise price
of Share options ("Options") granted may be equal to, greater than or less than
the fair market value of Common Shares on the grant date. As of March 30, 2001,
the fair market value of the Common Shares was $22.40 per Common Share. The
Committee, in its sole discretion, determines the time of Option exercise and
the method and form of payment of the Option.
The Committee is also authorized to grant Share Appreciation Rights (SARs).
The Committee, in its sole discretion, determines the time at which a SAR may be
exercised, the method of exercise, the method of settlement, the form of
consideration, the method by which Shares will be delivered, whether or not a
SAR is granted with any other award, and any other terms and conditions of any
SAR.
Participants receiving Restricted Shares under the 2001 Plan will have all
the rights of a Shareholder (including voting and dividend rights), except that
all such Shares will be subject to such restrictions on transferability and
other restrictions, if any, that the Committee may impose. If a Participant's
employment or contract terminates during the applicable restriction period,
Restricted Shares that are at that time subject to restrictions are forfeited,
unless the Committee determines otherwise, and reacquired by the Company.
Participants receiving Deferred Shares under the 2001 Plan will be issued
the Shares upon the expiration of the deferral period specified in the award.
The Deferred Shares are subject to any restrictions, including forfeiture
conditions, the Committee may impose. The Committee may also provide for
dividend equivalent payments to be credited in respect of Deferred Shares.
Unless the Committee determines otherwise, if a Participant's employment or
contract terminates during the applicable deferral period, all Deferred Shares
subject to forfeiture are forfeited.
Generally, a Participant receiving an Option under the 2001 Plan will not
recognize taxable income as a result of the grant. However, a Participant will
recognize ordinary income at the time of exercise of the Option in the amount
equal to the excess of the fair market value of the Shares at the time of
exercise over the Exercise Price. The amount of ordinary income recognized by a
Participant is generally deductible by the Company. The deduction will be
limited, however, to the extent it represents an expense attributable to the
production of tax-exempt income. In addition, the Company may recognize taxable
gain at the time a Participant exercises an Option.
New Plan Benefits
The number of Shares and other awards that may be granted under the 2001
Share Incentive Plan is undeterminable at this time, as such grants are subject
to the discretion of the Committee.
Vote Required for Approval
The affirmative vote of a majority of the holders of the outstanding Common
Shares, Term Growth Shares, Series I Preferred Shares, Series II Preferred
Shares, Series I Preferred Capital Distribution Shares and Series II Preferred
Capital Distribution Shares (voting as one class) is necessary for the approval
of the 2001 Share Incentive Plan. Shares represented by an executed proxy in the
form enclosed will, unless otherwise directed, be voted for the adoption of the
2001 Share Incentive Plan.
The Board of Directors unanimously recommends that you vote FOR this proposal.
PROPOSAL TO APPROVE THE MUNICIPAL MORTGAGE & EQUITY, LLC
2001 NON-EMPLOYEE DIRECTORS' SHARE PLAN
(Proposal No. 3)
The following is a brief description of the material features of the 2001
Non-Employee Directors' Share Plan. The description is qualified in its entirety
by reference to such plan, a copy of which is attached hereto as Appendix B.
In 1996 and 1998 the Company established the 1996 Non-Employee Directors'
Share Plan (the "1996 Directors' Plan") and the 1998 Non-Employee Directors'
Share Plan (the "1998 Directors' Plan" and together with the 1996 Directors'
Plan, the "Directors' Plans"), respectively, to provide compensation to
non-employee Directors of the Company, and to link Director compensation to
measures of the Company's performance. The Board of Directors believes that the
Directors' Plans have achieved its stated purposes. A total of 100,000 Common
Shares (the "Shares") were reserved for issuance in connection with awards under
the Directors' Plans. As of December 31, 2000, there were no Shares available
for issuance under the Directors' Plans.
Accordingly, the Board of Directors has adopted and recommends the approval
by Shareholders of a new 2001 Non-Employee Directors' Share Plan (the "2001
Directors' Plan") providing for the issuance of up to 150,000 Shares to
non-employee Directors. Approximately six non-employee directors will be
eligible to participate in the 2001 Directors' Plan. The number and kind of
shares reserved and automatically granted under the 2001 Directors' Plan are
subject to adjustment in the event of share splits of the Common Shares and
other extraordinary events. The terms of the 2001 Directors' Plan will be
generally the same as those of the 1996 and 1998 Directors' Plans. Under the
2001 Directors' Plan, non-employee directors will be granted options for Shares,
and may elect to receive Shares in lieu of fees. Subject to approval by the
Company's Shareholders, the 2001 Directors' Plan will become effective as of
July 19, 2001 and expire when either the Board takes action to terminate the
2001 Directors' Plan or when no Shares remain available for issuance under the
2001 Directors' Plan and the Company and those who have been granted an award
under the 2001 Directors' Plan (the "Participants") have no further rights or
obligations under the 2001 Directors' Plan.
Options
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Effective January 1, 2000, the Directors' Plans were amended to provide
that each non-employee director receive an option to purchase 7,000 Common
Shares upon his initial election or appointment and an option to purchase 5,000
Common Shares on the date of each Annual Meeting of Shareholders. Such options
will have exercise prices equal to the fair market value of Common Shares on the
date of grant. As of March 30, 2001, the fair market value of Common Shares was
$22.40 per Common Share. The full exercise price may be paid in cash (including
check) or by surrender of Shares already owned by the Participant (except for
Shares acquired from the Company by exercise of an Option or other award less
than six months before date of surrender) having a fair market value at the time
of exercise equal to the exercise price, or by a combination of cash and Shares.
The options will expire at the earlier of 10 years after the date of grant
or one year after the optionee ceases serving as a director. Options received
upon initial election or appointment will become exercisable in three equal
installments commencing at the earlier of: (a) the next anniversary of the
director's initial election, or (b) the next Annual Meeting of Shareholders.
Options received on the date of each Annual Meeting of Shareholders become
exercisable at the earlier of: (a) the next anniversary of the option grant, or
(b) the next Annual Meeting of Shareholders. Such options are subject to earlier
exercisability in the event of death, disability, or a change in control (as
defined in the Directors' Plans), and will be forfeited in the event of
cessation of service as a director within 10 months after the date of grant. If
an option expires for any reason without having been exercised in full, the
Shares subject to the unexercised portion of such option will again be available
for issuance under the 2001 Directors' Plan.
Generally, a non-employee director receiving an option under the 2001
Directors' Plan will not recognize taxable income as a result of the grant.
However, a Participant will recognize ordinary income at the time of exercise of
the option in the amount equal to the excess of the fair market value of the
Shares at the time of exercise over the exercise price. The amount of ordinary
income recognized by a non-employee director is generally deductible by the
Company. The deduction will be limited, however, to the extent it represents an
expense attributable to the production of tax-exempt income. In addition, the
Company may recognize taxable gain at the time a non-employee director exercises
an Option.
Share or Deferred Shares in Lieu of Fees
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The 2001 Directors' Plan permits a non-employee director to elect to be
paid any directors' fees in the form of Common Shares having a fair market value
equal to the amount of fees he has elected to forgo, with such Shares issuable
at the time the fees otherwise would have been paid or on a deferred basis.
Whenever dividends are paid or distributions are made with respect to Shares, a
Participant to whom Deferred Shares are then credited in a deferral account
receive dividend equivalents. The interest of each Participant in any fees paid
in the form of Common Shares or Deferred Shares (and any deferral account
relating thereto) at all times will be nonforfeitable.
New Plan Benefits
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The number of Shares that may be granted under the 2001 Non-Employee
Directors' Share Plan to non-employee directors as a group is 150,000.
Vote Required for Approval
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The affirmative vote of a majority of the holders of the outstanding Common
Shares, Term Growth Shares, Series I Preferred Shares, Series II Preferred
Shares, Series I Preferred Capital Distribution Shares and Series II Preferred
Capital Distribution Shares (voting as one class) is necessary for the approval
of the 2001 Non-Employee Directors' Share Plan. Shares represented by an
executed proxy in the form enclosed will, unless otherwise directed be voted for
the adoption of the 2001 Non-Employee Directors' Share Plan.
The Board of Directors unanimously recommends that you vote FOR this proposal.
APPENDIX A
FORM OF MUNICIPAL MORTGAGE & EQUITY, LLC
2001 SHARE INCENTIVE PLAN - (Amended June 15, 2001)
1. Purpose.
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The purpose of this 2001 Share Incentive Plan (the "Plan") of Municipal
Mortgage & Equity, LLC, a Delaware limited liability company (the "Company"), is
to advance the interests of the Company and its shareholders by providing a
means to attract, retain, and reward executive officers and other key
individuals of the Company and its subsidiaries, to link compensation to
measures of the Company's performance in order to provide additional share-based
incentives to such individuals for the creation of shareholder value, and to
promote ownership of a greater proprietary interest in the Company, thereby
aligning such individuals' interests more closely with the interests of
shareholders of the Company.
2. Definitions.
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The definitions of awards under the Plan, including Options, SARs
(including Limited SARs), Restricted Shares, Deferred Shares, and Shares granted
as a bonus or in lieu of other awards are set forth in Section 6 of the Plan.
Such awards, together with any other right or interest granted to a Participant
under the Plan, are termed "Awards." The definitions of terms relating to a
Change in Control of the Company are set forth in Section 8 of the Plan. In
addition to such terms and the terms defined in Section 1, the following are
defined terms under the Plan:
(a) "Award Agreement" means any written agreement, contract, notice to a
Participant, or other instrument or document evidencing an Award.
(b) "Beneficiary" means the person, persons, trust, or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under
this Plan upon such Participant's death. If, upon a Participant's death, there
is no designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the Participant's estate.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code include regulations thereunder and
successor provisions and regulations thereto.
(e) "Committee" means the Share Incentive Committee, or such other Board
committee as may be designated by the Board to administer the Plan.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act include rules
thereunder and successor provisions and rules thereto.
(g) "Fair Market Value" means, with respect to Shares, Awards, or other
property, the fair market value of such Shares, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee. Unless otherwise determined by the Committee, the Fair
Market Value of a Share means, as of any given date, the closing sales price of
a Share reported in the table entitled "New York Stock Exchange Composite
Transactions" contained in The Wall Street Journal (or an equivalent successor
table) for such date or, if no such closing sales price was reported for such
date, for the most recent trading day prior to such date for which a closing
sales price was reported.
(h) "Participant" means a person who, as an executive officer, key employee
or key independent contractor of the Company or a subsidiary, has been granted
an Award under the Plan which remains outstanding.
(i) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(j) "Share" means a Common Share of the Company and such other securities
as may be substituted for such Share or such other securities pursuant to
Section 4.
3. Administration.
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(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
Participant;
(iii) to determine the number of Awards to be granted, the number of
Shares to which an Award will relate, the terms and conditions of any Award
granted under the Plan (including, but not limited to, any exercise price,
grant price, or purchase price, any restriction or condition, any schedule
or performance conditions for the lapse of restrictions or conditions
relating to transferability, forfeiture, exercisability, or settlement of
an Award, and waivers, accelerations, or modifications thereof, based in
each case on such considerations as the Committee shall determine), and all
other matters to be determined in connection with an Award;
(iv) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Shares, other Awards, or other property, or an Award
may be canceled, forfeited, or surrendered;
(v) to determine whether, to what extent, and under what circumstances
cash, Shares, other Awards, or other property payable with respect to an
Award will be deferred either automatically, at the election of the
Committee, or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(vii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(viii) to correct any defect or supply appropriate text for any
omission or reconcile any inconsistency in the Plan and to construe and
interpret the Plan and any Award, rules and regulations, Award Agreement,
or other instrument hereunder; and
(ix) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
(b) Manner of Exercise of Committee Authority. Unless authority is
specifically reserved to the Board under the terms of the Plan, the Company's
Amended and Restated Certificate of Formation and Operating Agreement, or
applicable law, the Committee shall have discretion to exercise authority under
the Plan. Any action of the Committee with respect to the Plan shall be final,
conclusive, and binding on all persons, including the Company, subsidiaries of
the Company, Participants, any person claiming any rights under the Plan from or
through any Participant, and Shareholders. The express grant of any specific
power to the Committee, and the taking of any action by the Committee, shall not
be construed as limiting any power or authority of the Committee. To the extent
permitted by applicable law, the Committee may delegate to officers or employees
of the Company or any subsidiary the authority, subject to such terms as the
Committee shall determine, (i) to perform administrative functions, (ii) with
respect to Participants not subject to Section 16 of the Exchange Act, to
perform such other functions of the Committee as the Committee may determine,
and (iii) with respect to Participants subject to Section 16, to perform such
other functions of the Committee as the Committee may determine to the extent
performance of such functions will not result in the loss of an exemption under
Rule 16b-3 otherwise available for transactions by such persons.
(c) Limitation of Liability. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him by any officer or other employee of the Company or any subsidiary, the
Company's independent certified public accountants, or any executive
compensation consultant, legal counsel, or other professional retained by the
Company to assist in the administration of the Plan. No member of the Committee,
nor any officer or employee of the Company acting on behalf of the Committee,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Committee and any officer or employee of the Company acting on behalf of the
Committee or members thereof shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
4. Shares Available Under Plan; Individual Award Limitations; Adjustments.
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(a) Shares Reserved for Awards. Subject to adjustment as hereinafter
provided, the total number of Shares reserved and available for issuance to
Participants in connection with Awards under the Plan shall be 900,000 Shares;
provided, however, that the number of Shares issued as Restricted Shares shall
not exceed 20% of such total; the number of Shares issued as Awards other than
Options (including Restricted Shares) shall not exceed 40% of such total; and
the number of Shares with respect to which Awards of Options and SARs may be
granted to any Participant shall not exceed 450,000 during any 12 month period.
No Award may be granted if the number of Shares to which such Award relates,
when added to the number of Shares to which other then-outstanding Awards
relate, exceeds an applicable limitation on the number of Shares then remaining
available for issuance under this Section 4. If all or any portion of an Award
is forfeited, settled in cash, or terminated without issuance of Shares to the
Participant, the Shares to which such Award or portion thereof related shall
again be available for Awards under the Plan, and such Award or portion thereof
shall not count against the percentage limitations applicable to Restricted
Shares and Awards other than Options; provided, however, that Shares withheld in
payment of the exercise price of any Option or withholding taxes relating to any
Award and Shares equal to the number of Shares surrendered in payment of the
exercise price of any Option or withholding taxes relating to any Award shall,
for purposes of this provision, be deemed not to have been issued to the
Participant in connection with such Awards under the Plan. The Committee may
adopt procedures for the counting of Shares relating to any Award to ensure
appropriate counting and avoid double counting (in the case of tandem or
substitute awards). Any Shares issued pursuant to an Award may consist, in whole
or in part, of authorized and unissued Shares, treasury Shares, or Shares
acquired in the market for the account of the Participant (which treasury Shares
or acquired Shares will be deemed to have been "issued" pursuant to such Award).
(b) Adjustments. In the event that the Committee shall determine that any
recapitalization, reorganization, merger, consolidation, spin-off, combination,
repurchase, exchange of Shares or other securities of the Company, stock split
or reverse split, extraordinary dividend (whether in the form of cash, Shares,
or other property), liquidation, dissolution, or other similar corporate
transaction or event affects the Shares such that an adjustment is appropriate
in order to prevent dilution or enlargement of each Participant's rights under
the Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of Shares remaining reserved and
available for issuance under Section 4(a), (ii) the number and kind of
outstanding Restricted Shares or Restricted Shares relating to any other
outstanding Award in connection with which Restricted Shares may be issued,
(iii) the number and kind of Shares that may be issued in respect of other
outstanding Awards, and (iv) the exercise price or grant price relating to any
Award (or, if deemed appropriate, the Committee may make provision for a cash
payment with respect to any outstanding Award). In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence) affecting the
Company or any subsidiary or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.
5. Eligibility.
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Executive officers, other key employees and other key independent
contractors of the Company and its subsidiaries, including any director who is
also an executive officer or employee, are eligible to be granted Awards under
the Plan; provided, however, that members of the Committee are not eligible to
be granted Awards under the Plan.
6. Specific Terms of Awards.
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(a) General. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on amy Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 9(f)),
such additional terms and conditions, not consistent with the provisions of the
Plan, as the Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment by the Participant or upon the
occurrence of other events. In addition, the Committee shall require, as the
condition of the issuance of Shares in connection with any Award, that
consideration be received by the Company which meets the requirements of the
Delaware Limited Liability Company act.
(b) Options. The Committee is authorized to grant Options (which are not to
be treated as incentive options under Section 422 of the Code) to Participants
(including "reload" options automatically granted upon the occurrence of
specified exercises of options) on the following terms and conditions:
(i) Exercise Price. The exercise price per Share purchasable
under an Option shall be determined by the Committee without regard to
the Fair Market Value of a Share on the date of grant of the Option.
(ii) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed
to be paid, the form of such payment, including, without limitation,
cash, Shares, other Awards or awards granted under other Company
plans, or other property (including notes or other contractual
obligations of Participants to make payment on a deferred basis, such
as through "cashless exercise" arrangements, to the extent permitted
by applicable law), and the methods by which Shares will be delivered
or deemed to be delivered to Participants.
(iii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment or contract during the
applicable term of the Options, unexercised Options shall be forfeited
and again be available for Award by the Company; provided, however,
that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that forfeiture
conditions relating to the Options will be waived in whole or in part
in the event of terminations resulting from specified causes.
(iv) Dividend Equivalents. The Committee may provide that
payments in the form of dividend equivalents will be credited in
respect of an Option. The amount of the dividend equivalent shall be
credited on the dividend payment date in any of the following forms:
in cash, or in unrestricted Shares having a Fair Market Value equal to
the amount of such dividends, or in options to acquire additional
shares under the Option at no cost based on the dividend payments, or
in a reduction of the exercise price of the Option. If the Committee
provides for crediting dividend equivalents in the form of additional
Options or Shares, such dividend equivalents must be approved by the
Committee before such Options or Shares can be credited to the
Participant.
(c) Share Appreciation Rights.
------------------------------
The Committee is authorized to grant SARs to Participants on the following
terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one Share on the date of
exercise (or, if the Committee shall so determine, the Fair Market
Value of one Share at any time during a specified period before or
after the date of exercise), over (B) the grant price of the SAR as
determined by the Committee as of the date of grant of the SAR.
(ii) Other Terms. The Committee shall determine the time or times
at which a SAR may be exercised in whole or in part, the method of
exercise, method of settlement, form of consideration payable in
settlement, method by which Shares will be delivered or deemed to be
delivered to Participants, whether or not a SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR.
Limited SARs that may only be exercised upon the occurrence of a
Change in Control (as such term is defined in Section 8(b) or as
otherwise defined by the Committee) may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine.
Such Limited SARs may be either freestanding or in tandem with other
Awards.
(iii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment or contract during the
applicable term of the SARs, unexercised SARs shall be forfeited and
again be available for Award by the Company; provided, however, that
the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that forfeiture
conditions relating to the SARs will be waived in whole or in part in
the event of terminations resulting from specified causes.
(d) Restricted Shares.
-------------------
The Committee is authorized to grant Restricted Shares to Participants on
the following terms and conditions:
(i) Grant and Restrictions. Restricted Shares shall be subject to
such restrictions on transferability and other restrictions, if any,
as the Committee may impose, which restrictions may lapse separately
or in combination at such times, under such circumstances, in such
installments, or otherwise as the Committee may determine. Except to
the extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Shares, a Participant granted
Restricted Shares shall have all of the rights of a shareholder
including, without limitation, the right to vote Restricted Shares and
the right to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment during the applicable restriction
period, Restricted Shares that are at that time subject to
restrictions shall be forfeited and reacquired by the Company;
provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating
to Restricted Shares will be waived in whole or in part in the event
of terminations resulting from specified causes.
(iii) Certificates for Shares. Restricted Shares granted under
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Shares are
registered in the name of the Participant, such certificates shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Shares, the Company may
retain physical possession of the certificate, and the Participant
shall have delivered a stock power to the Company, endorsed in blank,
relating to the Restricted Shares.
(iv) Dividends and Distributions. Dividends paid on Restricted
Shares shall be either paid at the dividend payment date in the form
the dividends are paid to other shareholders, in cash, or in
unrestricted Shares having a Fair Market Value equal to the amount of
such dividends, or the payment of such dividends shall be deferred
and/or the amount or value thereof automatically reinvested in
additional Restricted Shares, other Awards, or other investment
vehicles, as the Committee shall determine or permit the Participant
to elect. Shares distributed in connection with a Share split or Share
dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Shares with respect to which such Shares or other
property are distributed.
(e) Deferred Shares.
-----------------
The Committee is authorized to grant Deferred Shares to Participants,
subject to the following terms and conditions:
(i) Award and Restrictions. Issuance of Shares will occur upon
expiration of the deferral period specified for an Award of Deferred
Shares by the Committee (or, if permitted by the Committee, as elected
by the Participant). In addition, Deferred Shares shall be subject to
such restrictions as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at
earlier specified times, separately or in combination, under such
circumstances, in such installments, or otherwise as the Committee may
determine.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment during the applicable deferral period
or portion thereof to which forfeiture conditions apply (as provided
in the Award Agreement evidencing the Deferred Shares), all Deferred
Shares that are at that time subject to such risk of forfeiture shall
be forfeited; provided, however, that the Committee may provide, by
rule or regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating
to Deferred Shares will be waived in whole or in part in the event of
terminations resulting from specified causes.
(iii) Dividend Equivalents. The Committee may provide that
payments in the form of dividend equivalents will be credited in
respect of Deferred Shares, which amounts may be paid or distributed
when accrued or deemed reinvested in additional Deferred Shares.
(f) Bonus Shares and Awards in Lieu of Cash Obligations.
------------------------------------------------------
The Committee is authorized to grant Shares as a bonus, or to grant Shares
or other Awards in lieu of Company obligations to pay cash under other plans or
compensatory arrangements; provided, however, that, in the case of Participants
subject to Section 16 of the Exchange Act, the amount of such Shares or Awards
shall be determined by the Committee in a manner conforming to then-applicable
requirements of Rule 16b-3. Shares or Awards granted hereunder shall be subject
to such other terms as shall be determined by the Committee.
7. Certain Povisions Applicable to Awards.
---------------------------------------
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for, any other Award
granted under the Plan or any award granted under any other plan of the Company,
any subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Awards granted in addition to or in tandem with other
Awards or awards may be granted either as of the same time as or a different
time from the grant of such other Awards or awards. The per Share exercise price
of any Option, grant price of any SAR, or purchase price of any other Award
conferring a right to purchase Shares granted in substitution for an outstanding
Award or award may be adjusted to reflect the in-the-money value of the
surrendered Award or award.
(b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee.
(c) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a subsidiary
upon the grant or exercise of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, Shares, other
Awards, or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. Such payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of dividend
equivalents in respect of installment or deferred payments denominated in
Shares.
(d) Rule 16b-3 Compliance. It is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 in connection
with any grant of Awards to or other transaction by a Participant who is subject
to Section 16 of the Exchange Act (except for transactions exempted under
alternative Exchange Act Rules or acknowledged in writing to be non-exempt by
such Participant). Accordingly, if, at such time, any provision of this Plan or
any Award Agreement relating to an Award does not comply with the requirements
of Rule 16b-3 as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
Section 16(b).
(e) Loan Provisions. With the consent of the Committee, and subject at all
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee, or arrange for a
loan or loans to a Participant with respect to the exercise of any Option or
other payment in connection with any Award, including the payment by a
Participant of any or all federal, state, or local income or other taxes due in
connection with any Award. Subject to such limitations, the committee shall have
full authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms, and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and conditions, if any, under which the
loan or loans may be forgiven.
8. Change in Control Provisions.
-----------------------------
(a) In the event of a "Change in Control," as defined in this Section, the
following acceleration provisions shall apply:
(i) any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and
vested, subject only to the restrictions set forth in Sections 7(d)
and 9(a); and
(ii) the restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall
lapse and such Award shall be deemed fully vested, and any performance
conditions imposed with respect to any Award shall be deemed to be
fully achieved, subject to the restrictions set forth in Sections 7(d)
and 9(a).
(b) For purposes of the Plan, a "Change in Control" shall have occurred if,
after consummation of the Transaction:
(i) Any "Person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a subsidiary, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of shares of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding voting securities;
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in clause (i), (iii), or (iv) of this Section 8(b)) whose election by
the Board or nomination for election by the Company's shareholders 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;
(iii) the shareholders of the Company approve a merger,
consolidation, recapitalization, or reorganization of the Company, or
a reverse share split of any class of voting securities of the
Company, or the consummation of any such transaction if shareholder
approval is not obtained, other than any such transaction which would
result in at least 75% of the total voting power represented by the
voting securities of the Company or the surviving entity outstanding
immediately after such transaction being beneficially owned by persons
who together beneficially owned at least 75% of the combined voting
power of the voting securities of the Company outstanding immediately
prior to such transaction, with the relative voting power of each such
continuing holder compared to the voting power of each such continuing
holder not substantially altered as a result of the transaction;
provided that, for purposes of this paragraph (iii), such continuity
of ownership (and preservation of relative voting power) shall be
deemed to be satisfied if the failure to meet such 75% threshold (or
to substantially preserve such relative voting power) is due solely to
the acquisition of voting securities by an employee benefit plan of
the Company or such surviving entity or of any subsidiary of the
Company or such surviving entity; or
(iv) 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 (or
any transaction having a similar effect).
9. General Provisions.
-------------------
(a) Compliance With Laws and Obligations. The Company will not be obligated
to issue or deliver Shares in connection with any Award or take any other action
under the Plan in a transaction subject to the registration requirements of the
Securities Act of 1933, as amended, or any other federal or state securities
law, any requirement under any listing agreement between the Company and any
stock exchange or automated quotation system, or any other law, regulation, or
contractual obligation of the Company, until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been complied with
in full. Certificates representing Shares issued under the Plan will be subject
to such stop-transfer orders and other restrictions as may be applicable under
such laws, regulations, and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
(b) Limitations on Transferability. Awards and other rights under the Plan
will not be transferable by a Participant except by will or the laws of descent
and distribution (or to a designated Beneficiary in the event of the
{Participant's death), and, if exercisable, shall be exercisable during the
lifetime of a Participant only by such Participant or his or her guardian or
legal representative; provided, however, that such Awards and other rights may
be transferred to one or more transferees during the lifetime or the Participant
in connection with the Participant's estate of tax planning, and such
transferees may exercise rights there under in accordance with the terms
thereof, but only if and to the extent consistent with the registration of the
offer and sale of Shares on Form S-8, Form S-3, or such other registration form
of the Securities and Exchange Commission as may then be filed and effective
with respect to the Plan and permitted by the Committee. The Company may rely
upon the beneficiary designation last filed in accordance with this Section
9(b). Awards and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered by a Participant and shall not be subject
to the claims of a Participant's creditors.
(c) Taxes. The Company and any subsidiary is authorized to withhold from
any Award granted or to be settled, any delivery of Shares in connection with an
Award, any other payment relating to an Award, or any payroll or other payment
to a Participant amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take such
other action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.
(d) No Right to Continued Employment; Leaves of Absence. Neither the Plan,
any Award Agreement, or any action taken hereunder shall be construed as giving
any Participant the right to be retained in the employ or contract of the
Company or any of its subsidiaries, nor shall it interfere in any way with the
right of the Company or any of its subsidiaries to terminate any Participant's
employment or contract at any time. Unless otherwise specified in the applicable
Award Agreement, an approved leave of absence shall not be considered a
termination of employment for purposes of an Award under the Plan.
(e) No Rights to Awards; No Shareholder Rights. No Participant or employee
or independent contractor shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Participants,
employees or independent contractors. No Award shall confer on any Participant
any of the rights of a shareholder of the Company unless and until Shares are
duly issued or transferred and delivered to the Participant in accordance with
the terms of the Award or, in the case of an Option, the Option is duly
exercised.
(f) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders or Participants, except that
any amendment or alteration will be subject to the approval of the Company's
shareholders at or before the next annual meeting of shareholders for which the
record date is after the date of such Board action if such shareholder approval
is required by any applicable federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which Company securities may
then be listed or quoted, and the Board may otherwise determine to submit other
such amendments or alterations to shareholders for approval; provided, however,
that, without the consent of an affected Participant, no such action may
materially impair the rights of such Participant with respect to any Award
theretofore granted to him. The Committee may waive any conditions or rights
under, or amend, alter, suspend, discontinue, or terminate, any Award
theretofore granted and any Award Agreement relating thereto; provided, however,
that, without the consent of an affected Participant, no such action may
materially impair the rights of such Participant under such Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Shares, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including the granting
of awards otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations under the Plan, and any Award Agreement will be determined
in accordance with the Delaware Limited Liability Company Act and other laws
(including those governing contracts) of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.
10. Shareholder Approval, Effective Date, and Plan Termination.
-----------------------------------------------------------
The Plan will be effective upon July 19, 2001, subject to its approval by
the shareholders of the Company. Unless earlier terminated by action of the
Board, the Plan will remain in effect until such time as no Shares remain
available for issuance under the Plan and the Company and Participants have no
further rights or obligations under the Plan.
As adopted by the Board of Directors on March 21, 2001 and subsequently
amended.
APPENDIX B
FORM OF MUNICIPAL MORTGAGE & EQUITY, LLC
2001 NON-EMPLOYEE DIRECTORS' SHARE PLAN
1. Purpose.
--------
The purpose of this 2001 Non-Employee Directors' Share Plan (the "Plan") of
Municipal Mortgage & Equity, LLC, a Delaware limited liability company (the
"Company"), is to advance the interests of the Company and its shareholders by
providing a means to attract and retain highly qualified persons to serve as
non-employee directors of the Company and to promote ownership by such directors
of a greater proprietary interest in the Company, thereby aligning such
directors' interests more closely with the interests of shareholders of the
Company.
2. Definitions.
------------
In addition to terms defined elsewhere in the Plan, the following are
defined terms under the Plan:
(a) "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code include regulations thereunder and
successor provisions and regulations thereto.
(b) For purposes of the Plan, a "Change in Control" shall have occurred if,
after consummation of the Transaction:
(i) Any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a subsidiary, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of shares of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding voting securities;
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in clause (i), (iii), or (iv) of this Section 2(b)) whose election by
the Board or nomination for election by the Company's shareholders 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;
(iii) the shareholders of the Company approve a merger,
consolidation, recapitalization, or reorganization of the Company, or
a reverse share split of any class of voting securities of the
Company, or the consummation of any such transaction if shareholder
approval is not obtained, other than any such transaction which would
result in at least 75% of the total voting power represented by the
voting securities of the Company or the surviving entity outstanding
immediately after such transaction being beneficially owned by persons
who together beneficially owned at least 75% of the combined voting
power of the voting securities of the Company outstanding immediately
prior to such transaction, with the relative voting power of each such
continuing holder compared to the voting power of each other
continuing holder not substantially altered as a result of the
transaction; provided that, for purposes of this paragraph (iii), such
continuity of ownership (and preservation of relative voting power)
shall be deemed to be satisfied if the failure to meet such 75%
threshold (or to substantially preserve such relative voting power) is
due solely to the acquisition of voting securities by an employee
benefit plan of the Company or such surviving entity or of any
subsidiary of the Company or such surviving entity; or
(iv) 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 (or
any transaction having a similar effect).
(c) "Deferred Share" means a credit to a Participant's deferral account
under Section 7 which represents the right to receive one Share upon settlement
of the deferral account. Deferral accounts, and Deferred Shares credited
thereto, are maintained solely as bookkeeping entries by the Company evidencing
unfunded obligations of the Company.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.
(e) "Fair Market Value" of a Share means, as of any given date, the closing
sales price of a Share reported in the table entitled "New York Stock Exchange
Composite Transactions" contained in The Wall Street Journal (or an equivalent
successor table) for such date or, if no such closing sales price was reported
for such date, for the most recent trading day prior to such date for which a
closing sales price was reported.
(f) "Option" means the right, granted to a director under Section 6, to
purchase a specified number of Shares at the specified exercise price for a
specified period of time under the Plan. All Options will be non-qualified stock
Options.
(g) "Participant" means any person who, as a non-employee director of the
Company, has been granted an Option or Deferred Shares which remain outstanding
or who has elected to be paid fees in the form of Shares or Deferred Shares
under the Plan.
(h) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(i) "Share" means a Common Share of the Company and such other securities
as may be substituted for such Share or such other securities pursuant to
Section 8.
3. Shares Available Under the Plan.
--------------------------------
Subject to adjustment as provided in Section 8, the total number of Shares
reserved and available for issuance under the Plan is 150,000. Such Shares may
be authorized but unissued Shares, treasury Shares, or Shares acquired in the
market for the account of the Participant. For purposes of the Plan, Shares that
may be purchased upon exercise of an Option or delivered in settlement of
Deferred Shares will not be considered to be available after such Option has
been granted or Deferred Share credited, except for purposes of issuance in
connection with such Option or Deferred Share; provided, however, that, if an
Option expires for any reason without having been exercised in full, the Shares
subject to the unexercised portion of such Option will again be available for
issuance under the Plan.
4. Administration of the Plan.
---------------------------
The Plan will be administered by the Board of Directors of the Company;
provided, however, that any action by the Board relating to the Plan will be
taken only if, in addition to any other required vote, such action is approved
by the affirmative vote of a majority of the directors who are not then eligible
to participate in the Plan.
5. Eligibility.
------------
Each director of the Company who, on any date on which an Option is to be
granted under Section 6 or on which fees are to be paid which could be received
in the form of Shares or deferred in the form of Deferred Shares under Section
7, is not an employee of the Company or any subsidiary of the Company will be
eligible, at such date, to be granted an Option under Section 6 or receive fees
in the form of Shares or defer fees in the form of Deferred Shares under Section
7. No person other than those specified in this Section 5 will be eligible to
participate in the Plan.
6. Options.
---------
An Option to purchase 7,000 Shares, subject to adjustment as provided in
Section 8, will be automatically granted to a person who is first elected or
appointed to serve as a member of the Board of Directors of the Company at or
after the effective date of the Plan, on the date of such election or
appointment, if such director is eligible to be granted an Option at that date
and an option to purchase 5,000 Shares to each member of the Board of Directors
(which may include a director who also will receive a grant under clause (i) of
this sentence), on the date of the final adjournment of the Company's Annual
Meeting of Shareholders each year, if such director is eligible to be granted an
Option at that date.
(a) Exercise Price. The exercise price per Share purchasable upon exercise
of an Option will be equal to 100% of the Fair Market Value of a Share on the
date of grant of the Option.
(b) Option Expiration. A Participant's Option will expire at the earlier of
(i) ten years after the date of grant or (ii) one year after the date the
Participant ceases to serve as a director of the Company for any reason.
(c) Exercisability. No Option may be exercised unless and until it has
become exercisable in accordance with this Section 6(c). A Participant's Option
received upon initial election or appointment will become exercisable in three
equal installments commencing at the earlier of : (a) the next anniversary of
the director's initial election, or (b) at the next Annual Meeting of
Shareholders; Options received on the date of each Annual Meeting of
Shareholders become exercisable at the earlier of: (a) the next anniversary of
the option grant, or (b) at the next Annual Meeting of Shareholders; provided,
however, that a Participant's Option will become immediately exercisable in full
at the time the Participant ceases to serve as a director due to death or
disability or upon a Change in Control; and provided further, that a
Participant's Option may be exercised after the Participant ceases to serve as a
director for any reason other than death or disability only to the extent that
the Option was exercisable at the date he or she ceased to be a director or has
become exercisable pursuant to this Section 6(c) within two months after the
date he or she ceased to be a director.
(d) Method of Exercise. A Participant may exercise an Option, in whole or
in part, at such time as it is exercisable and prior to its expiration, by
giving written notice of exercise to the Secretary of the Company, specifying
the Option to be exercised and the number of Shares to be purchased, and paying
in full the exercise price in cash (including by check) or by surrender of
Shares already owned by the Participant (except for Shares acquired from the
Company by exercise of an Option or other award less than six months before the
date of surrender) having a Fair Market Value at the time of exercise equal to
the exercise price, or by a combination of cash and Shares.
7. Receipt of Shares or Deferred Shares In Lieu of Fees.
------------------------------------------------------
Each director of the Company may elect to be paid fees, in his or her
capacity as a director (including annual retainer fees for service on the Board,
fees for service on a Board committee, fees for service as chairman of a Board
committee, and any other fees paid to directors) in the form of Shares or
Deferred Shares in lieu of cash payment of such fees, if such director is
eligible to do so under Section 5 at the date any such fee is otherwise payable.
If so elected, payment of fees in the form of Shares or Deferred Shares shall be
made in accordance with this Section 7.
(a) Elections. Each director who elects to be paid fees for a given
calendar year in the form of Shares or to defer such payment of fees in the form
of Deferred Shares for such calendar year must file an irrevocable written
election with the Secretary of the Company no later than December 31 of the year
preceding such calendar year; provided, however, that any newly elected or
appointed director may file an election for any year not later than 30 days
after the date such person first became a director, and a director may file an
election for the year in which the Plan became effective not later than 30 days
after the date of effectiveness. An election by a director shall be deemed to be
continuing and therefore applicable to subsequent Plan years unless the director
revokes or changes such election by filing a new election form by the due date
for such form specified in this Section 7(a). The election must specify the
following:
(i) A percentage of fees to be received in the form of Shares or
deferred in the form of Deferred Shares under the Plan; and
(ii) In the case of a deferral, the period or periods during
which settlement of Deferred Shares will be deferred (subject to such
limitations as may be specified by counsel to the Company).
(b) Payment of Fees in the Form of Shares. At any date on which fees are
payable to a Participant who has elected to receive such fees in the form of
Shares, the Company will issue to such Participant, or to a designated third
party for the account of such Participant, a number of Shares having an
aggregate Fair Market Value at that date equal to the fees, or as nearly as
possible equal to the fees (but in no event greater than the fees), that would
have been payable at such date but for the Participant's election to receive
Shares in lieu thereof. If the Shares are to be credited to an account
maintained by the Participant and to the extent reasonably practicable without
requiring the actual issuance of fractional Shares, the Company shall cause
fractional Shares to be credited to the Participant's account. If fractional
Shares are not so credited, any part of the Participant's fees not paid in the
form of whole Shares will be payable in cash to the Participant (either paid
separately or included in a subsequent payment of fees, including a subsequent
payment of fees subject to an election under this Section 7).
(c) Deferral of Fees in the Form of Deferred Shares. The Company will
establish a deferral account for each Participant who elects to defer fees in
the form of Deferred Shares under this Section 7. At any date on which fees are
payable to a Participant who has elected to defer fees in the form of Deferred
Shares, the Company will credit such Participant's deferral account with a
number of Deferred Shares equal to the number of Shares having an aggregate Fair
Market Value at that date equal to the fees that otherwise would have been
payable at such date but for the Participant's election to defer receipt of such
fees in the form of Deferred Shares. The amount of Deferred Shares so credited
shall include fractional Shares calculated to at least three decimal places.
(d) Crediting of Dividend Equivalents. Whenever dividends are paid or
distributions are made with respect to Shares, a Participant to whom Deferred
Shares are then credited in a deferral account shall be entitled to receive, as
dividend equivalents, an amount equal in value to the amount of the dividend
paid or property distributed on a single Share multiplied by the number of
Deferred Shares (including any fractional Share) credited to his or her deferral
account as of the record date for such dividend or distribution. Such dividend
equivalents shall be credited to the Participant's deferral account as a number
of Deferred Shares determined by dividing the aggregate value of such dividend
equivalents by the Fair Market Value of a Share at the payment date of the
dividend or distribution.
(e) Settlement of Deferred Shares. The Company will settle the
Participant's deferral account by delivering to the Participant (or his or her
beneficiary) a number of Shares equal to the number of whole Deferred Shares
then credited to his or her deferral account (or a specified portion in the
event of any partial settlement), together with cash in lieu of any fractional
share remaining at a time when less than one whole Deferred Share is credited to
such deferral account. Such settlement shall be made at the time or times
specified in the Participant's election filed in accordance with Section 7(a);
provided, however, that a Participant may further defer settlement of Deferred
Shares if counsel to the Company determines that such further deferral likely
would be effective under applicable federal income tax laws and regulations.
(f) Nonforfeitability. The interest of each Participant in any fees paid in
the form of Shares or Deferred Shares (and any deferral account relating
thereto) at all times will be nonforfeitable.
8. Adjustment Provisions.
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(a) Corporate Transactions and Events. In the event any recapitalization,
reorganization, merger, consolidation, spin-off, combination, repurchase,
exchange of Shares or other securities of the Company, share split or reverse
split, extraordinary dividend (whether in the form of cash, Shares, or other
property), liquidation, dissolution, or other similar corporate transaction or
event affects the Shares such that an adjustment is appropriate in order to
prevent dilution or enlargement of each Participant's rights under the Plan,
then an adjustment shall be made, in a manner that is proportionate to the
change to the Shares and otherwise equitable, in (i) the number and kind of
Shares remaining reserved and available for issuance under Section 3, (ii) the
number and kind of Shares to be subject to each automatic grant of an Option
under Section 6, (iii) the number and kind of Shares issuable upon exercise of
outstanding Options, and/or the exercise price per Share thereof (provided that
no fractional Shares will be issued upon exercise of any Option), (iv) the kind
of Shares to be issued in lieu of fees under Section 7, and (v) the number and
kind of Shares to be issued upon settlement of Deferred Shares under Section 7.
The foregoing notwithstanding, no adjustment may be made hereunder except as
will be necessary to maintain the proportionate interest of the Participant
under the Plan and to preserve, without exceeding, the value of outstanding
Options and potential grants of Options and the value of outstanding Deferred
Shares.
(b) Insufficient Number of Shares. If at any date an insufficient number of
Shares are available under the Plan for the automatic grant of Options or the
receipt of fees in the form of Shares or deferral of fees in the form of
Deferred Shares at that date, Options will first be automatically granted
proportionately to each eligible director, to the extent Shares are then
available (provided that no fractional Shares will be issued upon exercise of
any Option) and otherwise as provided under Section 6, and then, if any Shares
remain available, fees shall be paid in the form of Shares or deferred in the
form of Deferred Shares proportionately among directors then eligible to
participate to the extent Shares are then available and otherwise as provided
under Section 7.
9. Changes to the Plan.
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The Board of Directors may amend, alter, suspend, discontinue, or terminate
the Plan or authority to grant Options or pay fees in the form of Shares or
Deferred Shares under the Plan without the consent of shareholders or
Participants, except that any amendment or alteration will be subject to the
approval of the Company's shareholders at or before the next annual meeting of
shareholders for which the record date is after the date of such Board action if
such shareholder approval is required by any applicable federal or state law or
regulation or the rules of any stock exchange or automated quotation system as
then in effect, and the Board may otherwise determine to submit other such
amendments or alterations to shareholders for approval; provided, however, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant with respect to any previously granted
Option or any previous payment of fees in the form of Shares or Deferred Shares.
10. General Provisions.
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(a) Agreements. Options, Deferred Shares, and any other right or obligation
under the Plan may be evidenced by agreements or other documents executed by the
Company and the Participant incorporating the terms and conditions set forth in
the Plan, together with such other terms and conditions not inconsistent with
the Plan, as the Board of Directors may from time to time approve.
(b) Compliance with Laws and Obligations. The Company will not be obligated
to issue or deliver Shares in connection with any Option, in payment of any
directors' fees, or in settlement of Deferred Shares in a transaction subject to
the registration requirements of the Securities Act of 1933, as amended, or any
other federal or state securities law, any requirement under any listing
agreement between the Company and any stock exchange or automated quotation
system, or any other law, regulation, or contractual obligation of the Company,
until the Company is satisfied that such laws, regulations, and other
obligations of the Company have been complied with in full. Certificates
representing Shares issued under the Plan will be subject to such stop-transfer
orders and other restrictions as may be applicable under such laws, regulations,
and other obligations of the Company, including any requirement that a legend or
legends be placed thereon.
(c) Limitations on Transferability. Options, Deferred Shares, and any other
right under the Plan will not be transferable by a Participant except by will or
the laws of descent and distribution (or to a designated beneficiary in the
event of a Participant's death), and will be exercisable during the lifetime of
the Participant only by such Participant or his or her guardian or legal
representative; provided, however, that Options and Deferred Shares (and rights
relating thereto) may be transferred to one or more trusts or other
beneficiaries during the lifetime of the Participant for purposes of the
Participant's estate planning or at the Participant's death, and such
transferees may exercise rights thereunder in accordance with the terms thereof,
but only if and to the extent then permitted under Rule 16b-3 and consistent
with the registration of the offer and sale of Shares related thereto on Form
S-8, Form S-3, or such other registration form of the Securities and Exchange
Commission as may then be filed and effective with respect to the Plan. The
Company may rely upon the beneficiary designation last filed in accordance with
this Section 10(c). Options, Deferred Shares, and other rights under the Plan
may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall
not be subject to the claims of creditors of any Participant.
(d) Compliance with Rule 16b-3. It is the intent of the Company that this
Plan complies in all respects with applicable provisions of Rule 16b-3.
Accordingly, if any provision of this Plan or any agreement hereunder does not
comply with the requirements of Rule 16b-3 as then applicable to a transaction
by a Participant, such provision will be construed or deemed amended to the
extent necessary, to conform to the applicable requirements with respect to such
Participant.
(e) No Right To Continue as a Director. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant any right to continue
to serve as a director of the Company.
(f) No Shareholder Rights Conferred. Nothing contained in the Plan or any
agreement hereunder will confer upon any Participant (or any person or entity
claiming rights by or through a Participant) any rights of a shareholder of the
Company unless and until Shares are in fact issued to such Participant (or
person) or, in the case of an Option, such Option is validly exercised in
accordance with Section 6.
(g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board of Directors nor any submission thereof to the shareholders of the Company
for approval shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements for directors as it may deem
desirable.
(h) Governing Law. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the Delaware
Limited Liability Company Act and other laws (including those governing
contracts) of the State of Delaware, without giving effect to principles of
conflicts of laws, and applicable federal law.
11. Effective Date and Plan Termination.
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The Plan will be effective if, and at such time as, the Company's 2001
Share Incentive Plan has become effective, subject to its approval by the
shareholders of the Company. Unless earlier terminated by action of the Board of
Directors, the Plan will remain in effect until such time as no Shares remain
available for issuance under the Plan and the Company and Participants have no
further rights or obligations under the Plan.
As adopted by the Board of Directors: March 21, 2001