HARRIS
& HARRIS GROUP, INC.
AMENDED
AND RESTATED
EMPLOYEE
PROFIT SHARING PLAN
Adopted
as of July 23, 2002,
effective
as of the Effective Date (as defined herein)
Purpose
of Plan
The
purpose of this Plan is to provide a special incentive for designated key
employees of Harris & Harris Group, Inc., a New York corporation (the
"Company") to increase the future profits of the Company, by allowing such
employees to share in the historical after-tax profits of the Company as set
forth herein. The purpose of this restatement is to provide for the
participation of additional Participants in the Grandfathered Investments (as
defined herein) and to continue to compensate the Grandfathered Participants
with respect to the Grandfathered Investments following termination of such
individuals' employment with the Company for reasons other than Cause (as
defined herein), in each case as set forth herein.
SECTION
1.
Definitions
As
used
herein, unless otherwise required by the context, the following terms shall
have
these meanings:
"Award"
shall mean an award made or due to a Participant pursuant to the provisions
of
the Plan.
"Award
Percentage" shall mean, with respect to any Participant for any Plan Year,
the
percentages established by the Committee for such Participant for such Plan
Year
(or, in the case of a Terminating Participant, for the Plan Year in which the
Participant became a Terminating Participant) with respect to the various
subsets of Qualifying Income contemplated by the Plan; provided,
however,
that
the aggregate Award Percentages for all Participants for any Plan Year may
not
exceed 20% of Qualifying Income; and provided,
further,
that
the Grandfathered Participants' Grandfathered Award Percentages with respect
to
the Grandfathered Investments shall be as set forth in Section 3. Except for
the
Plan Year in which the Effective Date occurs, the Award Percentages with respect
to the various subsets of Qualifying Income contemplated by the Plan shall
be
established no later than January 1 of each Plan Year. In the event that such
Award Percentages are not established by that date, the Award Percentages from
the prior Plan Year shall continue to apply.
"Board"
shall mean the board of directors of the Company.
"Cause"
shall mean: (1) that an employee has materially failed to perform the duties
and
responsibilities of his or her position with the Company for reasons other
than
disability or has been insubordinate; (2) that an employee has violated any
securities law or regulation, lost appropriate required licensing, been
convicted of a felony or a crime involving moral turpitude (regardless of
whether involving the Company), or has not complied to a significant degree
with
any policy of the Company; or (3) that an employee has committed any act of
fraud, embezzlement, or similar conduct against the Company or any of its
shareholders constituting dishonesty, intentional breach of fiduciary
obligation, or intentional and material wrongdoing or gross misfeasance or
that
results in a material economic detriment to the assets, business, or prospects
of the Company or any of its shareholders. Whether there is Cause for the
termination of any person's employment shall be determined by the chief
executive officer of the Company and, with respect to the chief executive
officer or president of the Company, the Board.
"Committee"
shall mean the Compensation Committee of the Board.
"Effective
Date" with respect to the Plan shall be the date on which the Plan is approved
by the shareholders of the Company or, if the Committee so determines, any
date
after such shareholder approval and not later than January 1, 2003.
"Fair
Market Value" shall mean, with respect to any asset of the Company, the value
thereof most recently determined by the Committee, using the valuation
methodologies set forth in the Company's 10-K or other filings under the 1940
Act with respect to the determination of the "net asset value" of the Company's
assets, provided,
however,
that in
no event shall this Plan be interpreted as giving the Committee the power to
determine the "net asset value" of the Company's assets for purposes of the
1940
Act.
"Grandfathered
Investments" shall mean, collectively, the Tiny Technology Investments and
the
Non-Tiny Technology Investments.
"Grandfathered
Non-Tiny Technology Award Percentage" shall mean (a) with respect to each
Grandfathered Participant, the reduced percentage set forth in Section 3 for
such Participant with respect to the Non-Tiny Technology Investments plus,
on a
Plan-Year by Plan-Year basis, any Incremental Percentage (as defined in Section
3) awarded to such Participant for such Plan Year, and (b) with respect to
each
New Participant, the Award Percentage, if any, determined by the Committee
for
such Participant for a particular Plan Year with respect to Grandfathered
Non-Tiny Technology Qualifying Income for such Plan Year.
"Grandfathered
Non-Tiny Technology Qualifying Income" for a Plan Year shall mean the Qualifying
Income of the Company for such Plan Year attributable to the Non-Tiny Technology
Investments, less any Terminating Qualifying Income for such Plan Year
attributable thereto.
"Grandfathered
Participants" shall mean the following persons who are Participants on the
date
of adoption of the Plan: Charles E. Harris, Mel P. Melsheimer, Helene Shavin
and
Jacqueline M. Matthews.
"Grandfathered
Participations" shall have the meaning set forth in Section 3.
"Grandfathered
Tiny Technology Award Percentage" shall mean (a) with respect to each
Grandfathered Participant, the reduced percentage set forth in Section 3 for
such Participant with respect to the Tiny Technology Investments plus, on a
Plan- Year by Plan-Year basis, any Incremental Percentage (as defined in Section
3) awarded to such Participant for such Plan Year, and (b) with respect to
each
New Participant, the Award Percentage, if any, determined by the Committee
for
such Participant for a particular Plan Year with respect to Grandfathered Tiny
Technology Qualifying Income for such Plan Year.
"Grandfathered
Tiny Technology Qualifying Income" for a Plan Year shall mean the Qualifying
Income of the Company for such Plan Year attributable to the Tiny Technology
Investments, less any Terminating Qualifying Income for such Plan Year
attributable thereto.
"Incremental
Percentage" shall have the meaning set forth in Section 3.
"Net
Realized Income" for a Plan Year shall mean the net realized income of the
Company as reflected in the consolidated statement of operations of the Company
for such Plan Year. For greater clarity, such amount shall include investment
income, fee, service, and other income, realized gains and losses, and operating
expenses (including taxes paid or payable by the Company for such Plan Year),
but shall be calculated without regard to dividends paid or distributions made
to shareholders, payments under this Plan, unrealized gains or losses, and
loss
carryovers from other years.
"New
Investment" shall mean any investment that is made by the Company after the
first New Participant Measuring Date that occurs after the date of adoption
of
the Plan, including any additional investment made after such date in a
Grandfathered Investment.
"New
Investment Award Percentage" shall mean the Award Percentage, if any, determined
by the Committee for any Participant for a particular Plan Year with respect
to
New Investment Qualifying Income for such Plan Year.
"New
Investment Qualifying Income" for a Plan Year shall mean the Qualifying Income
of the Company for such Plan Year attributable to the New
Investments.
"New
Participant" shall mean each Participant who begins participation in the Plan
on
or after the Effective Date. The Committee shall determine the date as of which
an individual shall become a New Participant or such other date not earlier
than
the later of the Effective Date or the last day of the year prior to the year
in
which such person became an employee of the Company.
"New
Participant Measuring Date" shall mean, with respect to a New Participant,
such
date as the Committee shall determine in writing on or before the first award
of
an Award Percentage for any subset of Qualifying Income to such New
Participant.
"1940
Act" shall mean the Investment Company Act of 1940, as amended.
"Non-Tiny
Technology Investments" shall mean the Company's investments on the first New
Participant Measuring Date that occurs after the date of adoption of the Plan
in
the following entities: PHZ Capital Partners, L.P.; AlphaSimplex Group, LLC;
Experion Systems, Inc.; Exponential Business Development Company; Kriton
Medical, Inc.; NeuroMetrix, Inc.; Questech Corporation and investments in other
companies that are not involved in nanotechnology, microelectromechanical
systems or microsystems, in any case, which have been made on or prior to the
first New Participant Measuring Date that occurs under the Plan.
"Participant"
shall mean each person who is or was designated by the Committee as a
participant in the Plan, including each Grandfathered Participant, Terminating
Participant, and New Participant.
"Plan"
shall mean the Harris & Harris Group, Inc. Amended and Restated Employee
Profit Sharing Plan, adopted as of July 23, 2002, as amended from time to
time.
"Plan
Year" shall mean the calendar year.
"Post-Participation
Qualifying Income" for any New Participant for a Plan Year shall mean the New
Investment Qualifying Income of the Company for such Plan Year, less the
pre-participation nonqualifying gain, if any, with respect to such New
Participant. With respect to a New Participant, pre-participation nonqualifying
gain is intended to reduce New Investment Qualifying Income for such person
by
the portion of net after-tax realized gains attributable to asset values as
of
such person's New Participant Measuring Date, and shall be so interpreted.
For
each New Participant, the pre-participation nonqualifying gain shall be the
aggregate of, with respect to each portfolio investment position or portion
thereof constituting a New Investment sold or otherwise disposed of by the
Company during the Plan Year (determined on a first-in, first-out basis): (1)
the Fair Market Value as of such New Participant's New Participant Measuring
Date of any such position or portion, minus (2) the sum of (a) the tax basis
of
such position or portion as of such date, plus (b) a portion of the costs of
such sale or other disposition equal to the ratio (which shall not be greater
than 1.0) of the excess of (1) above over (2)(a) above, divided by the gain
realized by the Company on the sale or other disposition of such position or
portion (ignoring sale or disposition costs), plus (c) the amount of taxes
payable by the Company for the Plan Year attributable to the excess of (1)
above
over the sum of (2)(a) and (b) above, plus (d) an amount equal to the expenses
of the Company for such Plan Year (other than the amount of taxes attributable
to sales or other dispositions of portfolio investment positions or portions
thereof and expenses of such sales or dispositions) multiplied by a fraction
the
numerator of which is the excess of (1) above over (2)(a) above and the
denominator of which is the aggregate gross income of the Company for such
Plan
Year before expenses and taxes of any sort.
For
purposes of this entire definition, any calculation that would otherwise yield
a
negative number as the solution to the calculation shall be deemed to yield
an
answer of zero.
Solely
for purposes of determining the amount of the pre-participation nonqualifying
gain with respect to any New Participant, if the proceeds received from any
sale
or other disposition of a New Investment position or portion thereof are less
than the Fair Market Value of such position or portion as of the relevant New
Participant Measuring Date, then the Fair Market Value of such position or
portion as of the New Participant Measuring Date shall be deemed to equal the
amount of such proceeds.
In
the
event that multiple portfolio investment positions (or portions thereof) are
sold or otherwise disposed of during a Plan Year, some of which are sold or
disposed of at a gain and some of which are sold or disposed of at a loss,
for
purposes of calculating the pre-participation nonqualifying gain the aggregate
net realized gain, if any, attributable to such sales or dispositions shall
be
allocated between or among the gain positions based on the relative amounts
of
the gains realized on the gain positions, consistent with the purpose of this
Plan.
"Qualifying
Income" for a Plan Year shall mean the Net Realized Income of the Company for
such Plan Year, less the nonqualifying gain, if any. Nonqualifying gain is
intended to reduce Net Realized Income by the portion of net after-tax realized
gains attributable to asset values as of September 30, 1997, and shall be so
interpreted. The nonqualifying gain shall be the aggregate of, with respect to
each portfolio investment position or portion thereof sold or otherwise disposed
of by the Company during the Plan Year (determined on a first-in, first-out
basis) and held by the Company on September 30, 1997: (1) the Fair Market Value
as of September 30, 1997 of such position or portion, minus (2) the sum of
(a)
the tax basis of such position or portion as of September 30, 1997, plus (b)
a
portion of the costs of such sale or disposition equal to the ratio (which
shall
not be greater than 1.0) of the excess of (1) over (2)(a) above, divided by
the
gain realized by the Company on the sale or other disposition of such position
or portion (ignoring sale or disposition costs), plus (c) the amount of taxes
payable by the Company for the Plan Year attributable to the excess of (1)
above
over the sum of (2)(a) and (b) above, plus (d) an amount equal to the expenses
of the Company for such Plan Year (other than the amount of taxes attributable
to sales or other dispositions of portfolio investment positions or portions
thereof and expenses of such sales or dispositions) multiplied by a fraction
the
numerator of which is the excess of (1) above over (2)(a) above and the
denominator of which is the aggregate gross income of the Company for such
Plan
Year before expenses and taxes of any sort.
For
purposes of this entire definition, any calculation (or part thereof) that
would
otherwise yield a negative number as the solution to the calculation (or part)
shall be deemed to yield an answer of zero.
For
purposes of determining the amount of the nonqualifying gain, if the proceeds
received from any sale or other disposition of a portfolio investment position
or portion thereof are less than the Fair Market Value of such position or
portion as of September 30, 1997, then the Fair Market Value of such
position or portion as of September 30, 1997 shall be deemed to equal such
proceeds.
In
the
event that multiple portfolio investment positions (or portions thereof) are
sold or otherwise disposed of during a Plan Year, some of which are sold or
disposed of at a gain and some of which are sold or disposed of at a loss,
for
purposes of calculating the nonqualifying gain the aggregate net realized gain,
if any, attributable to such sales or dispositions shall be allocated between
or
among the gain positions based on the relative amounts of the gains realized
on
the gain positions, consistent with the pur-pose of this Plan.
"Terminating
Participant" shall mean a person whose full participation in Qualifying Income
has been terminated other than for Cause pursuant to this Plan. Following the
action or event in a Plan Year that results in a Participant becoming a
Terminating Participant, the person shall remain a Participant for that Plan
Year and for succeeding Plan Years for purposes of such Participant's rights
to
Terminating Qualifying Income. A Terminating Participant shall cease to be
a
Participant when all portfolio investments held by the Company at the time
such
person became a Terminating Participant are sold or otherwise disposed of by
the
Company (determined on a first-in, first-out basis). As of the Effective Date,
one Participant, Rachel Pernia, is the sole Terminating
Participant.
"Terminating
Qualifying Income" for any Terminating Participant for a Plan Year shall mean
the Net Realized Income of the Company for such Plan Year, less the terminating
nonqualifying gain, if any. With respect to any Terminating Participant,
terminating nonqualifying gain is intended to reduce Net Realized Income by
the
portion of net after-tax realized gains attributable to increases in asset
values after the time such person becomes a Terminating Participant, as well
as
by the amount of nonqualifying gain (as defined in "Qualifying Income"), and
shall be so interpreted. For each Terminating Participant, the terminating
nonqualifying gain shall be the aggregate of:
(1) with
respect to all or any portion of any portfolio investment position
sold or otherwise disposed of by the Company during the Plan Year (determined
on
a first-in, first-out basis) and held by the Company on September 30, 1997,
(a)(i) the gain realized on such sale or other disposition (ignoring sale or
disposition costs), plus (ii) the excess of the Fair Market Value of such
position or portion as of September 30, 1997 over the tax basis of such position
or portion as of September 30, 1997, minus (iii) the excess of the Fair Market
Value of such position or portion as of the last day of the quarter ending
on or
immediately prior to the date such person became a Terminating Participant
over
the tax basis of such position or portion thereof as of such date, minus (b)
the
sum of (i) a portion of the costs of sale or other disposition equal to the
ratio (which shall not be greater than 1.0) of (a) above divided by the gain
realized by the Company on the sale or other disposition of such position or
portion (ignoring sale or disposition costs), plus (ii) the amount of taxes
payable by the Company for the Plan Year attributable to the excess of (a)
over
(b)(i) above, plus
(2) with
respect to all or any portion of any portfolio investment position sold or
otherwise disposed of by the Company during the Plan Year (determined on a
first-in, first-out basis), acquired by the Company after September 30, 1997,
and held by the Company on the date such person became a Terminating
Participant, (a) the gain realized on such sale or other disposition (ignoring
sale or disposition costs), minus the excess of the Fair Market Value of such
position or portion as of the last day of the quarter ending on or immediately
prior to the date such person became a Terminating Participant over the tax
basis of such position or portion as of such date, minus (b) the sum of (i)
a
portion of the costs of sale or other disposition equal to the ratio (which
shall not be greater than 1.0) of (a) above divided by the gain realized by
the
Company on the sale or other disposition of such position or portion thereof
(ignoring sale or disposition costs), plus (ii) the amount of taxes payable
by
the Company for the Plan Year attributable to the excess of(a) over (b)(i)
above, plus
(3) with
respect to all or any portion of any portfolio investment position sold or
otherwise disposed of by the Company during the Plan Year (determined on a
first-in, first-out basis) and acquired by the Company after the date such
person became a Terminating Participant, (a) the gain realized on such sale
or
other disposition (ignoring sale or disposition costs), minus (b) the sum of(i)
the costs of sale or other disposition, plus (ii) the amount of taxes payable
by
the Company for the Plan Year attributable to such sale or other disposition,
minus
(4) an
amount
equal to the expenses of the Company for such Plan Year (other than the amount
of taxes attributable to sales or other dispositions of portfolio investment
positions or portions thereof and expenses of such sales or dispositions)
multiplied by a fraction the numerator of which is the excess of (a) the
aggregate net realized gain from the sale or other disposition of portfolio
investment positions or portions thereof (ignoring sale or disposition costs)
over (b) the sum of (1)(a) above, (2)(a) above, and (3)(a) above and the
denominator of which is the aggregate gross income of the Company for such
Plan
Year before expenses and taxes of any sort.
For
purposes of this entire definition, any calculation that would otherwise yield
a
negative number as the solution to the calculation shall be deemed to yield
an
answer of zero.
Solely
for purposes of determining the amount of the terminating nonqualifying gain
with respect to any Terminating Participant, (i) if the proceeds received from
any sale or other disposition of a portfolio investment position or portion
thereof are less than the Fair Market Value of such position or portion as
of
September 30, 1997, then the Fair Market Value of such position or portion
as of
September 30, 1997 shall be deemed to equal the amount of such proceeds, and
(ii) if the proceeds received from any sale or other disposition of a portfolio
investment position or portion thereof are less than the Fair Market Value
of
such position or portion as of the last day of the quarter ending on or
immediately prior to the date such person became a Terminating Participant,
then
the Fair Market Value of such position or portion as of the last day of the
quarter ending on or immediately prior to the date such person became a
Terminating Participant shall be deemed to equal the amount of such
proceeds.
For
purposes of (2) above, in the event the relevant portfolio investment position
or portion thereof was acquired after the last day of the quarter ending on
or
immediately prior to the date a person became a Terminating Participant, the
Fair Market Value of such position as of the end of such quarter shall be the
acquisition cost.
In
the
event that multiple portfolio investment positions (or portions thereof) are
sold or otherwise disposed of during a Plan Year, some of which are sold or
disposed of at a gain and some of which are sold or disposed of at a loss,
for
purposes of calculating the terminating nonqualifying gain, the aggregate net
realized gain, if any, attributable to such sales or dispositions shall be
allocated between or among the gain positions based on the relative amounts
of
the gains realized on the gain positions, consistent with the purpose of this
Plan.
"Tiny
Technology Investments" shall mean the Company's investment as of the first
New
Participant Measuring Date that occurs after the date of adoption of the Plan
in
NanoOpto Corporation; Nanopharma Corp.; Nantero, Inc.; NeoPhotonics Corporation;
Continuum Photonics, Inc., Nanotechnologies, Inc.; Optiva, Inc. and other
investments in other companies involved in nanotechnology,
microelectromechanical systems or microsystems which have been made on or prior
to the Effective Date.
SECTION
2.
Amount
of Award: Payment of Award
As
soon
as practicable following the end of each Plan Year, the Committee shall
determine whether, and if so, how much, Qualifying Income exists with respect
to
such Plan Year and whether, and if so, how much, Terminating Qualifying Income,
Grandfathered Non-Tiny Technology Qualifying Income, Grandfathered Tiny
Technology Qualifying Income, New Investment Qualifying Income and
Post-Participation Qualifying Income for each New Participant exists. The
Committee shall make a provisional determination, based on accruals provided
by
management, within 45 days after the end of each Plan Year.
Not
later
than 60 days after the end of each Plan Year the Company shall make the
following cash payments:
(1)
to
each Terminating Participant an Award in an amount equal to the product of
(a)
90% of the estimated Terminating Qualifying Income for such Terminating
Participant for such Plan Year, multiplied by (b) such Terminating Participant's
Award Percentage;
(2)
to
each Grandfathered Participant whose employment has not been terminated for
Cause, and to each New Participant who was employed by the Company on December
31 of such Plan Year and whose employment has not been terminated for Cause,
an
Award in an amount equal to the sum of (a) the product of (x) 90% of the
estimated Grandfathered Non-Tiny Technology Qualifying Income for such Plan
Year, multiplied by (y) such Participant's Grandfathered Non-Tiny Technology
Award Percentage, plus (b) the product of (x) 90% of the estimated Grandfathered
Tiny Technology Qualifying Income for such Plan Year, multiplied by (y) such
Participant's Grandfathered Tiny Technology Award Percentage;
(3)
to
each Grandfathered Participant who was employed by the Company on December
31 of
such Plan Year and whose employment has not been terminated for Cause, an Award
in an amount equal to the sum of (a) the product of (x) 90% of the estimated
New
Investment Qualifying Income for such Plan Year, multiplied by (y) such
Grandfathered Participant's New Investment Award Percentage, plus (b) the
product of (x) 90% of the estimated excess of (I) the product of New Investment
Qualifying Income for such Plan Year, multiplied by the aggregate New Investment
Award Percentages for such Plan Year of all New Participants over (II) the
amount, calculated separately for each New Participant and then aggregated,
of
the product of the Post-Participation Qualifying Income for each such New
Participant for such Plan Year, multiplied by such New Participant's New
Investment Award Percentage for such Plan Year, multiplied by (y) the product
of
1.0 multiplied by a fraction, the numerator of which is such Grandfathered
Participant's New Investment Award Percentage for such Plan Year and the
denominator of which is the aggregate of the New Investment Award Percentages
for such Plan Year of all Grandfathered Participants; and
(4)
to
each New Participant who was employed by the Company on December 31 of such
Plan
Year and whose employment has not been terminated for Cause, an Award in an
amount equal to the product of (a) 90% of the estimated Post-Participation
Qualifying Income for such New Participant for such Plan Year, multiplied by
(b)
such New Participant's New Investment Award Percentage.
Not
later
than 45 days after the filing of the Company's federal income tax return for
such Plan Year, the Committee shall finalize the foregoing determinations and
pay to the Participants any remaining Award amounts owed to the Participants,
determined under principles consistent with the preceding sentence. In the
event
that any portion of the maximum amount payable under this Plan with respect
to
any category of Qualifying Income for a Plan Year is not required to be paid
pursuant to the foregoing provisions because (subject to Section 3) a
Participant's employment terminated on or prior to December 31 of such Plan
Year
or for Cause, the remaining portion of such maximum amount shall be paid to
the
Participants eligible to participate in that category of Qualifying Income
based
on their relative Award Percentages for that category of Qualifying Income,
provided,
however,
that
the aggregate amount payable to all Participants for a Plan Year shall not
exceed 20% of the Qualifying Income for the Plan Year. In the event that the
aggregate amount of all Awards payable for any Plan Year shall be greater than
20% of the Qualifying Income for such Plan Year (a "Plan prohibited payment"),
each Participant's Award for such Plan Year shall be reduced, pro-rata within
each category of Qualifying Income, by the minimum amount necessary to allow
the
aggregate Awards for such Plan Year not to constitute a Plan prohibited payment.
If such a reduction is necessary, each Participant shall unconditionally forfeit
the amount of any reduction made pursuant to this paragraph.
In
order
to be eligible to receive an Award under this Section 2, a Participant must
be
employed by the Company on the final day of the Plan Year to which such Award
relates; provided, however, that the foregoing shall not apply to Grandfathered
Participants with respect to their Grandfathered Participations; and provided,
further, however, if the employment of any Participant was terminated for Cause,
such former employee shall cease to be a Participant and any Awards not yet
paid
to or earned by such person shall automatically be forfeited.
Notwithstanding
any other provision of the Plan, in no event shall the aggregate amount of
all
Awards payable for any Plan Year during which the Company remains a "business
development company" within the meaning of the 1940 Act be greater than the
maximum percentage of the Company's "net income after taxes" (within the meaning
of Section 57(n)(l)(B) of the 1940 Act or any successor provision thereto)
permitted to be paid as profit sharing under the 1940 Act or other applicable
law. In the event that any portion of any Award may not be paid pursuant to
the
limitation set forth in the preceding sentence (a "1940 Act prohibited
payment"), each Participant's Award for such Plan Year shall be reduced,
pro-rata within each category of Qualifying Income, by the minimum amount
necessary to allow the aggregate Awards for such Plan Year not to constitute
a
1940 Act prohibited payment. If such a reduction is necessary, each Participant
shall unconditionally forfeit the amount of any reduction made pursuant to
this
paragraph.
Further,
notwithstanding any provision of this Plan to the contrary, in the case of
any
Participant for any Plan Year, no Award of more than the excess of $1,000,000
over the amount of other compensation paid by the Company to such Participant
for such Plan Year (after any Award reduction described in this Section 2)
shall
be paid unless and until the shareholders of the Company have approved the
making of such Awards pursuant to the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
SECTION
3.
Grandfathered
Participations
As
of the
Effective Date, the Grandfathered Participants' Award Percentages with respect
to the Non-Tiny Technology Investments shall be reduced by ten percent (10%),
as
follows: Charles E. Harris, from 13.790% to 12.411%; Mel P. Melsheimer, from
4.233% to 3.8097%; Helene Shavin, from 1.524% to 1.3716%; and Jacqueline M.
Matthews, from 0.453% to 0.4077%. As of the Effective Date, the Grandfathered
Participants' Award Percentages shall be reduced with respect to the Tiny
Technology Investments by twenty-five percent (25%), as follows: Charles E.
Harris, from 13.790% to 10.3425%; Mel P. Melsheimer, from 4.233% to 3.17475%;
Helene Shavin, from 1.524% to 1.143%; and Jacqueline M. Matthews, from 0.453%
to
0.33975%. The reduced Award Percentages set forth in this paragraph of Section
3
are herein referred to as the "Grandfathered Participations." The aggregate
of
the 10% reduction in the Award Percentages with respect to the Non-Tiny
Technology Investments and the 25% reduction in the Award Percentages with
respect to the Tiny Technology Investments is herein referred to as the
"Incremental Percentage".
The
termination of a Grandfathered Participant's employment with the Company shall
have no adverse effect upon such Participant's Grandfathered Participations,
unless such Grandfathered Participant is terminated by the Company for Cause,
in
which case such Grandfathered Participant's Grandfathered Participations (as
well as all other Awards) shall be immediately cancelled and forfeited. The
death of a Grandfathered Participant shall have no adverse effect upon such
Participant's Grandfathered Participations.
A
Grandfathered Participant's rights under the Plan with respect to such
participant's Award Percentage, if any, with respect to a New Investment or
any
other investment made by the Company other than the Grandfathered Investments
shall be as determined by the Committee in its sole discretion and otherwise
subject to the terms of the Plan.
The
Incremental Percentages shall be allocated as Grandfathered Non-Tiny Technology
Award Percentages and Grandfathered Tiny Technology Award Percentages each
Plan
Year among one or more Participants as the Committee shall determine in its
sole
discretion (which allocation may include the Grandfathered Participants).
SECTION
4.
Administration
The
Plan
shall be administered by the Committee with decisions taken in accordance with
its normal procedures. Members of the Committee shall not be liable for any
acts
or omissions to act in the administration of the Plan.
A
secretary selected by the Committee shall keep full and accurate minutes of
all
meetings and records of the actions of the Committee, and these minutes and
records shall be at all times open to inspection by the members of the Board.
The secretary shall periodically transmit to the Board certified copies of
any
statements or schedules prepared in connection with the administration of the
Plan.
SECTION
5.
Amendment,
Termination or Modification of the Plan
The
Plan
at any time and for any reason may be modified, amended, or terminated by the
Committee; provided,
however,
that
the Grandfathered Participations may not be modified or amended. Nothing in
this
Plan shall preclude the Committee from, for any Plan Year, naming additional
Participants in the Plan or changing the Award Percentage for any category
of
Qualifying Income (other than the reduced Grandfathered Non-Tiny Technology
Award Percentages and Grandfathered Tiny Technology Award Percentages set forth
in Section 3) of any Participant or New Participant (subject to the overall
percentage limitations contained herein).
SECTION
6.
Effective
Date
The
Plan
shall be effective on the Effective Date.
SECTION
7.
General
Provisions
Compliance
with Legal Requirements.
The
Plan and the granting and payment of Awards, and the other obligations of the
Company under the Plan shall be subject to all applicable federal and state
laws, rules, and regulations, and to such approvals by any regulatory or
governmental agency as may be required.
Nontransferability.
Awards
not yet earned shall not be transferable or subject to assignment or alienation
under any circumstances. Awards earned but not yet paid shall not be
transferable by a Participant except by will or the laws of descent and
distribution.
No
Right to Continued Employment.
Nothing
in the Plan or in any Award granted or other agreement entered into pursuant
hereto shall confer upon any Participant the right to continue in the employ
of
the Company or to be entitled to any remuneration or benefits not set forth
in
the Plan or other agreement or to interfere with or limit in any way the right
of the Company to terminate such Participant's employment.
Withholding
Taxes.
Where a
Participant or other person is entitled to receive a cash payment pursuant
to an
Award hereunder, the Company shall have the right to withhold any taxes or
to
require the Participant or such other person to pay to the Company the amount
of
any taxes that the Company may be required to withhold before delivery to such
Participant or other person of such payment.
Unfunded
Status of Awards.
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.
Governing
Law.
The
Plan and all determinations made and actions taken pursuant hereto to the extent
not governed by federal law shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles
thereof.
Beneficiary.
A
Participant may file with the Committee a written designation of a beneficiary
on such form as may be prescribed by the Committee and may, from time to time,
amend or revoke such designation. If no designated beneficiary survives the
Participant, the executor or administrator of the Participant's estate shall
be
deemed to be the Participant's beneficiary.