Exhibit 10.1
DynCorp
1999 LONG-TERM INCENTIVE STOCK PLAN
(Adopted March 3, 1999)
1. PURPOSE.
The purposes of the DynCorp 1999 Long-Term Incentive Stock Plan (the "Plan") are
to advance the interests of the Company and its shareholders by strengthening
the ability of the Company to attract, retain, and reward highly qualified
directors, officers, and other employees, to motivate them to achieve business
objectives established to promote the long-term growth, profitability, and
success of the Company, and to encourage their ownership of the Common Stock of
the Company. The Plan authorizes performance-based stock and cash incentive
compensation in the form of stock options, stock appreciation rights, restricted
stock, performance grants and awards, and other stock-based grants and awards.
2. DEFINITIONS.
For the purposes of the Plan, the following terms shall have the following
meanings:
(a) "Adjusted Net Income" means, with respect to any calendar or other fiscal
year of the Company, the amount reported as "Net Income" in the audited
Consolidated Income Statement of the Company and Subsidiaries for such year (as
set forth in the Company's Annual Report to Shareholders for such year),
adjusted to exclude any of the following items: (i) extraordinary items (as
described in Accounting Principles Board Opinion No. 30); (ii) gains or losses
on the disposition of discontinued operations; (iii) the cumulative effects of
changes in accounting principles; (iv) the writedown of any asset; and (v)
charges for restructuring and rationalization programs.
(b) "Annual Net Income Per Share" means, with respect to any calendar or other
fiscal year of the Company in respect of which a determination thereof is being
or to be made, the Adjusted Net Income for such year divided by the average
number of shares of Common Stock outstanding during such year.
(c) "Award" means any payment or settlement in respect of a grant made pursuant
to the Plan, whether in the form of shares of Common Stock or in cash, or in any
combination thereof.
(d) "Board of Directors" means the Board of Directors of the Company.
(e) "Change in Control" means any of the following: (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
DynCorp or its subsidiaries, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
DynCorp representing more than 35% of the combined voting power of DynCorp's
then-outstanding securities; or (ii) during any period of two consecutive years
(not including any period prior to the execution of this Agreement), 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 DynCorp to effect a transaction described in clause (iii) of this
definition) whose election by the Board or nomination for election by DynCorp'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 a majority thereof; or (iii) the shareholders
of DynCorp approve a merger or consolidation of DynCorp with any other
corporation, other than a merger or consolidation which would result in the
voting securities of DynCorp outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders of DynCorp
approve a plan of complete liquidation of DynCorp or an agreement for the sale
or disposition by DynCorp of all or substantially all DynCorp's assets.
(f) "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, or any successor statute thereto, together with the published
rulings, regulations and interpretations duly promulgated thereunder.
(g) "Committee" means the Compensation Committee of the Board of Directors
established and constituted as provided in Section 5 of the Plan.
(h) "Common Stock" means the common stock, par value $0.10 per share, of the
Company, or any security issued by the Company in substitution or exchange
therefor or in lieu thereof.
(i) "Common Stock Equivalent" means a Unit (or fraction thereof, if authorized
by the Committee) substantially equivalent to a hypothetical share of Common
Stock, credited to a Participant and having a value at any time equal to the
Fair Market Value of a share of Common Stock (or such fraction thereof) at such
time.
(j) "Company" means DynCorp, a Delaware corporation, or any successor
corporation.
(k) "Covered Employee" means any person who is a "covered employee" within the
meaning of Section 162(m) of the Code.
(l) "Cumulative Net Income" means, in respect of any Performance Period, the
aggregate cumulative amount of the Adjusted Net Income for the calendar or other
fiscal years of the Company during such Performance Period.
(m) "Cumulative Net Income Per Share" means, in respect of any Performance
Period, the aggregate cumulative amount of the Annual Net Income Per Share for
the calendar or other fiscal years of the Company during such Performance
Period.
(n) "Director" means a member of the Board of Directors who is not an Employee.
(o) "Dividend Equivalent" means, in respect of a Common Stock Equivalent and
with respect to each dividend payment date for the Common Stock, an amount equal
to the cash dividend on one share of Common Stock payable on such dividend
payment date.
(p) "Employee" means any individual, including any officer of the Company or a
Subsidiary, who is on the active payroll of the Company or a Subsidiary falling
within Bands 1 through 4 of the DynCorp Executive/Senior Management Compensation
Program or, in the event the Subsidiary does not participate in such Program,
employed at a level determined by the Committee to be commensurate therewith.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as amended and in
effect from time to time, including all rules and regulations promulgated
thereunder.
(r) "Fair Market Value" means, in respect of any date on or as of which a
determination thereof is being or to be made, the most recent DynEx Internal
Stock Market valuation, or, if the Common Stock of the Company is publicly
traded on a national stock exchange, the average of the high and low per share
sale prices of the Common Stock reported on such exchange on such date, or, if
the Common Stock was not traded on such date, on the next preceding day on which
sales of shares of the Common Stock were reported on such exchange.
(s) "Incentive Stock Option" means any option to purchase shares of Common Stock
granted pursuant to the provisions of Section 6 of the Plan that is intended to
be and is specifically designated by the Committee as an "incentive stock
option" within the meaning of Section 422A of the Code.
(t) "Non-Qualified Stock Option" means any option to purchase shares of Common
Stock granted pursuant to the provisions of Section 6 of the Plan that is not an
Incentive Stock Option.
(u) "Participant" means any Director of the Company or Employee of the Company
or a Subsidiary who receives a grant or Award under the Plan.
(v) "Performance Award" means the number of shares of Common Stock and/or the
amount of cash earned and payable in settlement of a Performance Grant pursuant
to Section 9.
(w) "Performance Grant" means a grant made pursuant to Section 9 of the Plan,
the Award of which is contingent on the achievement of specific Performance
Goals during a Performance Period, determined using a specific Performance
Measure, all as specified in the grant agreement relating thereto.
(x) "Performance Goals" mean, with respect to any applicable grant made pursuant
to the Plan, the one or more targets, goals or levels of attainment required to
be achieved in terms of the specified Performance Measure during the specified
Performance Period, all as set forth in the related grant agreement.
(y) "Performance Measure" means, with respect to any applicable grant made
pursuant to the Plan, one or more of the criteria identified at Section 9(c) of
the Plan selected by the Committee for the purpose of establishing, and
measuring attainment of, Performance Goals for a Performance Period in respect
of such grant, as provided in the related grant agreement.
(z) "Performance Period" means, with respect to any applicable grant made
pursuant to the Plan, the one or more periods of time, which may be of varying
and overlapping durations, as the Committee may select during which the
attainment of one or more Performance Goals will be measured to determine
whether, and the extent to which, a Participant is entitled to receive payment
of an Award pursuant to such grant.
(aa) "Plan" means this 1999 Long-Term Incentive Stock Plan, as set forth herein
and as hereafter amended from time to time in accordance with the terms hereof.
(bb) "Restricted Stock" means shares of Common Stock issued pursuant to a
Restricted Stock Grant under Section 8 of the Plan so long as such shares remain
subject to the restrictions and conditions specified in the grant agreement
pursuant to which such Restricted Stock Grant is made.
(cc) "Restricted Stock Grant" means a grant made pursuant to the provisions of
Section 8 of the Plan.
(dd) "Stock Appreciation Right" means a grant in the form of a right to benefit
from the appreciation of the Common Stock made pursuant to Section 7 of the
Plan.
(ee) "Stock-Based Grant" means a grant made pursuant to Section 10 of the Plan.
(ff) "Stock Option" means and includes any Non-Qualified Stock Option and any
Incentive Stock Option granted pursuant to Section 6 of the Plan.
(gg) "Subsidiary" means any corporation or entity in which the Company directly
or indirectly owns or controls 50% or more of the equity securities issued by
such corporation or entity having the power to vote for the election of
directors; provided, however, that in the case of Incentive Stock Options,
Grants shall be limited to Employees of corporations.
(hh) "Unit" means a bookkeeping entry used by the Company to record and account
for the grant, settlement or, if applicable, deferral of an Award until such
time as such Award is paid, canceled, forfeited or terminated, as the case may
be, which, except as otherwise specified by the Committee, shall be equal to one
Common Stock Equivalent.
3. EFFECTIVE DATE; TERM.
(a) EFFECTIVE DATE. The Plan shall be effective on March 1, 1999.
(b) TERM. The Plan shall remain in effect until February 29, 2004, unless sooner
terminated by the Board of Directors. Termination of the Plan shall not affect
grants and Awards then outstanding.
4. SHARES OF COMMON STOCK SUBJECT TO PLAN.
(a) MAXIMUM NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN. The maximum
aggregate number of shares of Common Stock which may be issued pursuant to the
Plan, subject to adjustment as provided in Section 4(b) of the Plan, shall be
eight hundred thousand (800,000) plus (i) any shares of Common Stock issued
under the Plan that are forfeited back to the Company or are canceled, and (ii)
any shares of Common Stock that are tendered, whether by physical delivery or by
attestation, to the Company by a Participant as full or partial payment of the
exercise price of any Stock Option granted pursuant to the Plan, in connection
with the payment or settlement of any other grant or Award made pursuant to the
Plan, or in payment of any applicable withholding for federal, state, city,
local or foreign income, payroll or other taxes incurred in connection with the
exercise of any Stock Option or Stock Appreciation Right granted under the Plan
or the receipt or settlement of any other grant or Award under the Plan. The
shares of Common Stock which may be issued under the Plan may be authorized and
unissued shares or issued shares which have been reacquired by the Company. No
fractional share of the Common Stock shall be issued under the Plan. Awards of
fractional shares of the Common Stock, if any, shall be settled in cash.
(b) ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event of any change in
the capital structure, capitalization or Common Stock of the Company such as a
stock dividend, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of reorganization, or any other
change affecting the Common Stock, such proportionate adjustments, if any, as
the Board of Directors in its discretion may deem appropriate to reflect such
change shall be made with respect to: (i) the maximum number of shares of Common
Stock which may be (1) issued pursuant to the Plan, (2) the subject of any type
of grant or Award under the Plan, and (3) granted, Awarded or issued to any
Participant pursuant to any provision of the Plan; (ii) the number of shares of
Common Stock subject to any outstanding Stock Option, Stock Appreciation Right
or other grant or Award made to any Participant under the Plan; (iii) the per
share exercise price in respect of any outstanding Stock Options and Stock
Appreciation Rights; (iv) the number of shares of Common Stock and the number of
Units or the value of such Units, as the case may be, which are the subject of
grants and Awards then outstanding under the Plan; and (v) any other term or
condition of any grant affected by any such change.
5. ADMINISTRATION.
(a) THE COMMITTEE. The Plan shall be administered by the Committee. Action
approved in writing by a majority of the members of the Committee then serving
shall be fully as effective as if the action had been taken by unanimous vote at
a meeting duly called and held. The Company shall make grants and effect Awards
under the Plan in accordance with the terms and conditions specified by the
Committee, which terms and conditions shall be set forth in grant agreements
and/or other instruments in such forms as the Committee shall approve.
(b) COMMITTEE POWERS. The Committee shall have full power and authority to
operate and administer the Plan in accordance with its terms. The powers of the
Committee include, but are not limited to, the power to: (i) select Participants
from among the Employees of the Company and Subsidiaries; (ii) establish the
types of, and the terms and conditions of, all grants and Awards made under the
Plan, subject to any applicable limitations set forth in, and consistent with
the express terms of, the Plan; (iii) make grants and pay or otherwise effect
Awards subject to, and consistent with, the express provisions of the Plan; (iv)
establish Performance Goals, Performance Measures and Performance Periods,
subject to, and consistent with, the express provisions of the Plan; (v) reduce
the amount of any grant or Award; (vi) prescribe the form or forms of grant
agreements and other instruments evidencing grants and Awards under the Plan;
(vii) pay and to defer payment of Awards on such terms and conditions, not
inconsistent with the express terms of the Plan, as the Committee shall
determine; (viii) direct the Company to make conversions, accruals and payments
pursuant to the Plan; (ix) construe and interpret the Plan and make any
determination of fact incident to the operation of the Plan; (x) promulgate,
amend and rescind rules and regulations relating to the implementation,
operation and administration of the Plan; (xi) adopt such modifications,
procedures and subplans as may be necessary or appropriate to comply with the
laws of other countries with respect to Participants or prospective Participants
employed in such other countries; (xii) delegate to other persons the
responsibility for performing administrative or ministerial acts in furtherance
of the Plan; (xiii) engage the services of persons and firms, including banks,
consultants and insurance companies, in furtherance of the Plan's activities;
and (xiv) make all other determinations and take all other actions as the
Committee may deem necessary or advisable for the administration and operation
of the Plan.
(c) SPECIAL SUBCOMMITTEE. When deemed advisable by the Committee, a special
Subcommittee, consisting solely of members of the Committee who are not "outside
directors" as such term is used in Section 162(m) of the Code or "non-employee
directors" as such term is used in Section 16 of the Exchange Act, may be
designated to act as the Committee and to make grants and Awards under the Plan.
(d) GRANTS BY BOARD OF DIRECTORS. Notwithstanding any other provision of the
Plan. the Board of Directors shall also have the power to make grants and Awards
under the Plan when such grants are to be made to Directors or to Employees who
are designated as "officers" for purposes of Section 16 of the Exchange Act.
(e) COMMITTEE'S DECISIONS FINAL. Any determination, decision or action of the
Committee in connection with the construction, interpretation, administration or
application of the Plan, and of any grant agreement, shall be final, conclusive
and binding upon all Participants, and all persons claiming through
Participants, affected thereby.
(f) ADMINISTRATIVE ACCOUNTS. For the purpose of accounting for Awards deferred
as to payment, the Company shall establish bookkeeping accounts expressed in
Units bearing the name of each Participant receiving such Awards. Each account
shall be unfunded, unless otherwise determined by the Committee in accordance
with Section 15(d) of the Plan.
(g) CERTIFICATIONS. In respect of each grant under the Plan to a Covered Person
which the Committee intends to be "performance based compensation" under Section
162(m) of the Code, the provisions of the Plan and the related grant agreement
shall be construed to confirm such intent, and to conform to the requirements of
Section 162(m) of the Code, and the Committee shall certify in writing (which
writing may include approved minutes of a meeting of the Committee) that the
applicable Performance Goal(s), determined using the Performance Measure
specified in the related grant agreement, was attained during the relevant
Performance Period at a level that equaled or exceeded the level required for
the payment of such Award in the amount proposed to be paid and that such Award
does not exceed any applicable Plan limitation.
6. STOCK OPTIONS.
(a) IN GENERAL. Options to purchase shares of Common Stock may be granted under
the Plan and may be Incentive Stock Options or Non-Qualified Stock Options;
provided however, that Incentive Stock Option may not be granted until the Plan
has been approved by the stockholders of the Company. All Stock Options shall be
subject to the terms and conditions of this Section 6 and shall contain such
additional terms and conditions, not inconsistent with the express provisions of
the Plan, as the Committee shall determine. Stock Options may be granted in
addition to, or in tandem with or independent of Stock Appreciation Rights or
other grants and Awards under the Plan. The Committee may grant Stock Options
that provide for the automatic grant of a replacement Stock Option if payment of
the exercise price and/or any related withholding taxes is made by tendering
(whether by physical delivery or by attestation) shares of Common Stock or by
having shares of Common Stock withheld by the Company. The replacement Stock
Option would cover the number of shares of Common Stock tendered or withheld,
would have a per share exercise price equal to at least 100% of the Fair Market
Value of a share of Common Stock on the date of the exercise of the original
Stock Option, and would have such other terms and conditions as may be specified
by the Committee and set forth in the related grant agreement.
(b) ELIGIBILITY AND LIMITATIONS. Any Director of the Company and any Employee of
the Company or a Subsidiary may be granted Stock Options. The Committee shall
determine, in its discretion, the Employees to whom Stock Options will be
granted, the timing of such grants, and the number of shares of Common Stock
subject to each Stock Option granted; provided, that, in respect of Incentive
Stock Options, the aggregate Fair Market Value (determined as of the date the
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which an Incentive Stock Option becomes exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000, or such other
limit as may be required by the Code, except that, if authorized by the
Committee and provided for in the related grant agreement, any portion of any
Incentive Stock Option that cannot be exercised as such because of this
limitation may be converted into and exercised as a Non-Qualified Stock Option.
In no event shall any Stock Option or Stock Appreciation Right be granted to a
Participant in exchange for the Participant's agreement to the cancellation of
one or more Stock Options or Stock Appreciation Rights then held by such
Participant if the exercise price of the new grant is lower than the exercise
price of the grant to be cancelled and in no event shall any Stock Option or
Stock Appreciation Right be amended to reduce the option price, except as
contemplated by Section 4(b) of the Plan.
(c) OPTION EXERCISE PRICE. The per share exercise price of each Stock Option
granted under the Plan shall be determined by the Committee prior to or at the
time of grant, but in no event shall the per share exercise price of any Stock
Option be less than 100% of the Fair Market Value of the Common Stock on the
date of the grant of such Stock Option.
(d) OPTION TERM. The term of each Stock Option shall be fixed by the Committee;
except that in no event shall the term of any Incentive Stock Option exceed ten
years after the date such Incentive Stock Option is granted.
(e) EXERCISABILITY. A Stock Option shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Committee
at the date of grant; provided, however, that no Stock Option shall be
exercisable during the first six months after the date such Stock Option is
granted. No Stock Option may be exercised unless the holder thereof is at the
time of such exercise an Employee is and has been continuously an Employee since
the date such Stock Option was granted, except as provided below and except that
the Committee may permit the exercise of any Stock Option for any period (not to
exceed 90 days in the case of an Incentive Stock Option except in case of the
Participant's death or disability) following the Participant's termination of
employment not in excess of the original term of the Stock Option on such terms
and conditions as it shall deem appropriate and specify in the related grant
agreement.
A Stock Option may only be exercised by the Participant or, in the case of the
Participant's death or disability, by the Participant's estate or other legal
representative.
Unless otherwise provided by the Committee, a Stock Option may only be exercised
within (i) 360 days following the Participant's retirement on or after age [65],
in the case of a Non-Qualified Stock Option; (ii) 90 days following the
Participant's retirement on or after age [65], in the case of an Incentive Stock
Option; and (iii) 180 days following termination by reason of death or
disability.
(f) METHOD OF EXERCISE. A Stock Option may be exercised, in whole or in part, by
giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, plus any required withholding taxes, in cash or, to
the extent permitted by law, in shares of Common Stock already owned by the
Participant valued at the Fair Market Value of the Common Stock on the date of
exercise. The Committee may also permit Participants, either on a selective or
aggregate basis, to simultaneously exercise Stock Options and sell the shares of
Common Stock thereby acquired pursuant to a brokerage or similar arrangement
approved in advance by the Committee and to use the proceeds from such sale to
pay the exercise price and withholding taxes.
7. STOCK APPRECIATION RIGHTS.
(a) IN GENERAL. Stock Appreciation Rights in respect of shares of Common Stock
may be granted under the Plan alone, in tandem with, in addition to or
independent of a Stock Option or other grant or Award under the Plan. A Stock
Appreciation Right entitles a Participant to receive an amount equal to the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise over the Fair Market Value of a share of Common Stock on the date of
grant of the Stock Appreciation Right, or such other higher price as may be set
by the Committee, multiplied by the number of shares of Common Stock with
respect to which the Stock Appreciation Right shall have been exercised.
(b) ELIGIBILITY. Any Employee of the Company or a Subsidiary selected by the
Committee may be granted Stock Appreciation Rights. The Committee shall
determine, in its discretion, the Employees to whom Stock Appreciation Rights
will be granted, the timing of such grants and the number of shares of Common
Stock in respect of which each Stock Appreciation Right is granted.
(c) EXERCISABILITY; EXERCISE; FORM OF PAYMENT. A Stock Appreciation Right may be
exercised by a Participant at such time or times and in such manner as shall be
authorized by the Committee and set forth in the related grant agreement, except
that in no event shall a Stock Appreciation Right be exercisable within the
first six months after the date of grant. The Committee may provide that a Stock
Appreciation Right shall be automatically exercised on one or more specified
dates.
No Stock Appreciation Right may be exercised unless the holder thereof is at the
time of exercise an Employee and has been continuously an Employee since the
date the Stock Appreciation Right was granted, except that the Committee may
permit the exercise of any Stock Appreciation Right for any period following the
Participant's termination of employment not in excess of the original term of
the Stock Appreciation Right on such terms and conditions as it shall deem
appropriate and specify in the related grant agreement. A Stock Appreciation
Right may be exercised, in whole or in part, by giving the Company a written
notice specifying the number of shares of Common Stock in respect of which the
Stock Appreciation Right is to be exercised. Stock Appreciation Rights may be
paid upon exercise in cash, in shares of Common Stock, or in any combination of
cash and shares of Common Stock as determined by the Committee.
8. RESTRICTED STOCK GRANTS AND AWARDS.
(a) IN GENERAL. A Restricted Stock Grant is the issue of shares of Common Stock
in the name of an Employee, which issuance is subject to such terms and
conditions as the Committee shall deem appropriate, including, without
limitation, restrictions on the sale, assignment, transfer or other disposition
of such shares and the requirement that the Employee forfeit such shares back to
the Company (i) upon termination of employment for specified reasons within a
specified period of time, or (ii) if any specified Performance Goals are not
achieved during a specified Performance Period, or (iii) if such other
conditions as the Committee may specify are not satisfied.
(b) ELIGIBILITY. Any Employee of the Company or a Subsidiary selected by the
Committee may receive a Restricted Stock Grant. The Committee, in its sole
discretion, shall determine whether a Restricted Stock Grant shall be made, the
Employee to receive the Restricted Stock Grant, and the conditions and
restrictions imposed on the Restricted Stock Grant.
(c) RESTRICTION PERIOD. Restricted Stock Grants shall provide that in order for
a Participant to receive shares of Common Stock free of restrictions, the
Participant must remain in the employment of the Company or its Subsidiaries,
subject to such exceptions as the Committee shall deem appropriate and specify
in the related grant agreement, for a period of not less than three years
commencing on the date of the grant and ending on such later date or dates as
the Committee may designate at the time of the grant (the "Restriction Period").
The Committee, in its sole discretion, may provide for the lapse of restrictions
in installments during the Restriction Period. The Committee may also establish
one or more Performance Goals that are required to be achieved during one or
more Performance Periods within the Restriction Period as a condition to the
lapse of the restrictions.
(d) RESTRICTIONS. The following restrictions and conditions shall apply to each
Restricted Stock Grant during the Restriction Period: (i) the Participant shall
not be entitled to delivery of the shares of the Common Stock; (ii) the
Participant may not sell, assign, transfer, pledge, hypothecate, encumber or
otherwise dispose of or realize on the shares of Common Stock subject to the
Restricted Stock Grant; and (iii) the shares of the Common Stock issued as
Restricted Stock shall be forfeited to the Company if the Participant for any
reason ceases to be an Employee prior to the end of the Restriction Period,
except due to circumstances specified in the related grant agreement or
otherwise approved by the Committee. The Committee may in, its sole discretion,
include such other restrictions and conditions as it may deem appropriate.
(e) PAYMENT. Upon expiration of the Restriction Period and if all conditions
have been satisfied and any applicable Performance Goals attained, the shares of
the Restricted Stock will be made available to the Participant, subject to
satisfaction of applicable withholding tax requirements, free of all
restrictions; provided, that the Committee may, in its discretion, require (i)
the further deferral of any Restricted Stock Grant beyond the initially
specified Restriction Period, (ii) that the Restricted Stock be retained by the
Company, and (iii) that the Participant receive a cash payment in lieu of
unrestricted shares of Common Stock.
(f) RIGHTS AS A SHAREHOLDER. A Participant shall have, with respect to shares of
Restricted Stock, all of the rights of a shareholder of the Company, including
the right to vote the shares and receive any cash dividends paid thereon. Stock
dividends distributed with respect to shares of Restricted Stock shall be
treated as additional shares under the Restricted Stock Grant and shall be
subject to the restrictions and other terms and conditions set forth therein.
9. PERFORMANCE GRANTS AND AWARDS.
(a) ELIGIBILITY AND TERMS. The Committee may grant to Employees of the Company
and its Subsidiaries the prospective contingent right, expressed in Units, to
receive payments of shares of Common Stock, cash or any combination thereof,
with each Unit equivalent in value to one share of Common Stock, or equivalent
to such other value or monetary amount as may be designated or established by
the Committee, based upon Company performance over a specified Performance
Period. The Committee shall, in its sole discretion, determine the officers of
the Company and other key Employees eligible to receive Performance Grants. At
the time each Performance Grant is made, the Committee shall establish the
Performance Period, the Performance Measure, and the Performance Goals to be
attained relative to such Performance Measure in respect of such Performance
Grant. The number of shares of Common Stock and/or the amount of cash earned and
payable in settlement of a Performance Grant shall be determined at the end of
the Performance Period (a "Performance Award").
(b) PERFORMANCE GOALS, PERFORMANCE MEASURES, AND PERFORMANCE PERIODS. Each
Performance Grant shall provide that, in order for a Participant to receive an
Award of all or a portion of the Units subject to such Performance Grant, the
Company must achieve certain Performance Goals over a designated Performance
Period having a minimum duration of one year, with attainment of the Performance
Goals determined using a specific Performance Measure. The Performance Goals and
Performance Period shall be established by the Committee in its sole discretion.
The Committee shall establish a Performance Measure for each Performance Period
for determining the portion of the Performance Grant which will be earned or
forfeited based on the extent to which the Performance Goals are achieved or
exceeded. In setting Performance Goals, the Committee may use a Performance
Measure based on any one, or on any combination, of the following Company
performance factors as the Committee deems appropriate: (i) stock price; (ii)
earnings per share, (iii) Cumulative Net Income Per Share; (iv) Cumulative Net
Income; (v) return on sales; (vi) total shareholder return; (vii) return on
assets; (viii) economic value added; (ix) cash flow; (x) return on equity; and
(xi) cumulative operating income (which shall equal consolidated sales minus
cost of goods sold and selling, administrative and general expense). Performance
Goals may include minimum, maximum and target levels of performance, with the
size of Performance Award based on the level attained. Once established by the
Committee and specified in the grant agreement, and if and to the extent
provided in or required by the grant agreement, the Performance Goals and the
Performance Measure in respect of any Performance Grant (or any Restricted Stock
Grant or Stock-Based Grant that requires the attainment of Performance Goals as
a condition to the Award) shall not be changed. The Committee may, in its
discretion, eliminate or reduce (but not increase) the amount of any Performance
Award (or Restricted Stock or Stock-Based Award) that otherwise would be payable
to a Participant upon attainment of the Performance Goal(s).
(c) FORM OF GRANTS. Performance Grants may be made on such terms and conditions
not inconsistent with the Plan, and in such form or forms, as the Committee may
from time to time approve. Performance Grants may be made alone, in addition to
in tandem with, or independent of other grants and Awards under the Plan.
Subject to the terms of the Plan, the Committee shall, in its discretion,
determine the number of Units subject to each Performance Grant made to a
Participant and the Committee may impose different terms and conditions on any
particular Performance Grant made to any Participant. The Performance Goals, the
Performance Period or Periods, and the Performance Measure applicable to a
Performance Grant shall be set forth in the relevant grant agreement.
(d) PAYMENT OF AWARDS. Each Participant shall be entitled to receive payment in
an amount equal to the aggregate Fair Market Value (if the Unit is equivalent to
a share of Common Stock), or such other value as the Committee shall specify, of
the Units earned in respect of such Performance Award. Payment in settlement of
a Performance Award may be made in shares of Common Stock, in cash, or in any
combination of Common Stock and cash, and at such time or times, as the
Committee, in its discretion, shall determine.
10. OTHER STOCK-BASED GRANTS AND AWARDS.
(a) IN GENERAL. The Committee may make other Stock-Based Grants pursuant to
which Common Stock is, or in the future may be, acquired by Participants, and
other grants and Awards to Participants denominated in Common Stock Equivalents
or other Units. Such Stock-Based Grants may be granted alone or in addition to,
in tandem with, or independent of any other grant made or Award effected under
the Plan.
(b) ELIGIBILITY AND TERMS. The Committee may make Stock-Based Grants to
Directors of the Company and Employees of the Company and its Subsidiaries.
Subject to the provisions of the Plan, the Committee shall have authority to
determine the Employees to whom, and the time or times at which, Stock-Based
Grants will be made, the number of shares of Common Stock, if any, to be subject
to or covered by each Stock-Based Grant, and any and all other terms and
conditions of each Stock-Based Grant.
(c) FORM OF GRANTS; PAYMENT OF AWARDS. Stock-Based Grants may be made in such
form or forms and on such terms and conditions, including the attainment of
specific Performance Goals, as the Committee, in its discretion, shall approve.
Payment of Stock-Based Awards may be made in cash, in shares of Common Stock, or
in any combination of cash and shares of Common Stock, and at such time or
times, as the Committee shall determine.
11. DEFERRALS.
The Committee may, whether at the time of grant or at anytime thereafter prior
to payment or settlement, require a Participant to defer, or permit (subject to
such conditions as the Committee may from time to time establish) a Participant
to elect to defer, receipt of all or any portion of any payment of cash or
shares of Common Stock that would otherwise be due to such Participant in
payment or settlement of any Award under the Plan. If any such deferral is
required by the Committee (or is elected by the Participant with the permission
of the Committee), the Committee shall establish rules and procedures for such
payment deferrals. The Committee may provide for the payment or crediting of
interest, at such rate or rates as it shall in its discretion deem appropriate,
on such deferred amounts credited in cash and the payment or crediting of
dividend equivalents in respect of deferred amounts credited in Common Stock
Equivalents. Deferred amounts may be paid in a lump sum or in installments in
the manner and to the extent permitted, and in accordance with rules and
procedures established, by the Committee.
12. NON-TRANSFERABILITY OF GRANTS AND AWARDS.
No grant or Award under the Plan, and no right or interest therein, shall be (i)
assignable, alienable or transferable by a Participant, except by will or the
laws of descent and distribution, or (ii) subject to any obligation, or the lien
or claims of any creditor, of any Participant, or (iii) subject to any lien,
encumbrance or claim of any party made in respect of or through any Participant,
however arising. During the lifetime of a Participant, Stock Options and Stock
Appreciation Rights are exercisable only by, and shares of Common Stock issued
upon the exercise of Stock Options and Stock Appreciation Rights or in
settlement of other Awards will be issued only to, and other payments in
settlement of any Award will be payable only to, the Participant or his or her
legal representative.
The Committee may, in its sole discretion, authorize written designations of
beneficiaries and authorize Participants to designate beneficiaries with the
authority to exercise Stock Options and Stock Appreciation Rights granted to a
Participant in the event of his or her death. Notwithstanding the foregoing, the
Committee may, in its sole discretion and on and subject to such terms and
conditions as it shall deem appropriate, which terms and conditions shall be set
forth in the related grant agreement: (i) authorize a Participant to transfer
all or a portion of any Non-Qualified Stock Option or Stock Appreciation Right,
as the case may be, granted to such Participant; provided, that in no event
shall any transfer be made to any person or persons other than such
Participant's spouse, children or grandchildren, or a trust for the exclusive
benefit of one or more such persons, which transfer must be made as a gift and
without any consideration; and (ii) provide for the transferability of a
particular grant or Award pursuant to a qualified domestic relations order. All
other transfers and any retransfer by any permitted transferee are prohibited
and any such purported transfer shall be null and void. Each Stock Option or
Stock Appreciation Right which becomes the subject of permitted transfer (and
the Participant to whom it was granted by the Company) shall continue to be
subject to the same terms and conditions as were in effect immediately prior to
such permitted transfer. The Participant shall remain responsible to the Company
for the payment of all withholding taxes incurred as a result of any exercise of
such Stock Option or Stock Appreciation Right.
In no event shall any permitted transfer of a Stock Option or Stock Appreciation
Right create any right in any party in respect of any Stock Option, Stock
Appreciation Right or other grant or Award, other than the rights of the
qualified transferee in respect of such Stock Option or Stock Appreciation Right
specified in the related grant agreement.
13. CHANGE IN CONTROL.
In the event of a Change in Control of the Company, except as the Board of
Directors comprised of a majority of Continuing Directors may expressly provide
otherwise, and notwithstanding any other provision of the Plan to the contrary:
(i) all Stock Options and Stock Appreciation Rights then outstanding shall
become fully exercisable as of the date of the Change in Control, whether or not
then exercisable; (ii) all restrictions and conditions in respect of all
Restricted Stock Grants then outstanding shall be deemed satisfied as of the
date of the Change in Control; and (iii) all Performance Grants and other
Stock-Based Grants shall be deemed to have been fully earned, at the maximum
amount of the award opportunity specified in the grant agreement, as of the date
of the Change in Control.
14. GENERAL PROVISIONS
(a) EFFECT ON EMPLOYMENT. Neither the adoption of this Plan, its operation, nor
any documents describing or referring to this Plan (or any part thereof) shall
confer upon any individual any right to continued employment with the Company or
in any way affect any right and power of the Company to terminate the employment
of any employee at any time with or without assigning a reason thereof.
(b) UNFUNDED PLAN. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by a
pledge of, or other encumbrance on, any property of the Company.
(c) RULES OF CONSTRUCTION. Headings are given to the sections of this Plan
solely as a convenience to facilitate reference. The reference to any statute,
regulation, or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
(d) NO OBLIGATION TO EXERCISE. No grant or Award shall impose any obligation
upon the Participant to exercise such grant or Award.
(e) GOVERNING LAW. The validity, construction and effect of the Plan, of
Agreements entered into pursuant to the Plan, and of any rules, regulations,
determinations or decisions made by the Compensation Committee relating to the
Plan or such Agreements, and the rights of any and all persons having or
claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the
Commonwealth of Virginia, without regard to its conflict of laws rules.