Exhibit 10.8
PUBLIC STORAGE, INC.
1994 STOCK OPTION PLAN
Public Storage, Inc., a California corporation (the "Company") sets
forth herein the terms of this 1994 Stock Option Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to enhance the Company's ability to attract and
retain highly qualified persons to advance the interests of the Company by
providing eligible persons (as designated pursuant to Section 6 below) with
stronger incentives to continue to serve the Company and its affiliates (as
defined herein) and to expend maximum effort to improve the business results and
earnings of the Company, by presenting an opportunity to acquire or increase a
direct proprietary interest in the operations and future success of the Company.
To this end, the Plan provides for the grant of stock options, in accordance
with the terms hereof. Each Option (as defined herein) granted under the Plan is
intended to be a non-qualified stock option, and shall not be an Incentive Stock
Option (as defined herein), except as otherwise specifically provided in the
related Stock Option Agreement entered into hereunder and as further provided in
Section 7 below.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Stock Option Agreements), the following definitions shall apply:
2.1 "affiliate" of, or person "affiliated" with, a person means any
company or other trade or business that is controlled by or under common control
with such person, or an affiliate of such person, within the meaning of Rule 405
of Regulation C under the 1933 Act (as defined herein).
2.2 "Benefit Arrangement" shall have the meaning set forth in Section 13
hereof.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Code" means the Internal Revenue Code of 1986, as now in effect or
as hereafter amended.
2.5 "Committee" means a Committee of, and designated from time to time
by resolution of, the Board, which must consist of no fewer than two members of
the Board, none of whom shall be an officer or other salaried employee of the
Company or any affiliate, and each of whom shall qualify in all respects as a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act
(as defined herein). Commencing on the Effective Date, and until such time as
the Board shall determine otherwise, the Committee shall be the Audit Committee
of the Board.
2.6 "Company" means Public Storage, Inc.
2.7 "Effective Date" means the date of adoption of the Plan by the
Board, as more fully set forth in Section 5 hereof.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.
2.9 "Fair Market Value" means the value of each share of Stock subject
to the Plan determined as follows: if on the Grant Date or other determination
date the shares of Stock are listed on an established national or regional stock
exchange, are admitted to quotation on the Nasdaq National Market, or are
publicly traded on an established securities market, the Fair Market Value of
the shares of Stock shall be the closing price of the shares of Stock on such
exchange or in such market (the highest such closing price if there is more than
one such exchange or market) on the Grant Date or such other determination date
(or if there is no such reported closing price, the Fair Market Value shall be
the mean between the highest bid and lowest asked prices or between the high and
low sale prices on such trading day) or, if no sale of the shares of Stock is
reported for such trading day, on the next preceding day on which any sale shall
have been reported. If the shares of Stock are not listed on such an exchange,
quoted on such System or traded on such a market, Fair Market Value shall be
determined by the Board or the Committee in good faith.
2.10 "Grant" means an award of one or more Options under the Plan.
2.11 "Grant Date" means (a) for Grants other than to Outside Directors,
the later of (i) the date as of which the Committee approves the Grant of one or
more Options or (ii) the date as of which the Optionee and the Company or
Service Provider enter into the relationship resulting in the Optionee being
eligible for such grants, and (b) for Grants to Outside Directors, the Grant
Date shall be as set forth in Section 6.1(c) hereof.
2.12 "Incentive Stock Option" means an "incentive stock option" within
the meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.
2.13 "1933 Act" means the Securities Act of 1933, as now in effect or as
hereafter amended.
2.14 "Option" means an option to purchase one or more shares of Stock
pursuant to the Plan.
2.15 "Optionee" means a person who holds an Option under the Plan.
2.16 "Option Period" means the period during which Options may be
exercised as defined in Section 10 hereof.
2.17 "Option Price" means the purchase price for each share of Stock
subject to an Option.
2.18 "Other Agreement" shall have the meaning set forth in Section 13
hereof.
2.19 "Outside Director" means a member of the Board who is not an
officer or employee of the Company.
2.20 "Plan" means the Public Storage, Inc. 1994 Stock Option Plan,
which, with respect to authorized Grants of Options to Outside Directors, is
intended to constitute a "formula plan" within the meaning, and meeting the
conditions of, Rule 16b-3 under the Exchange Act.
2.21 "Reporting Person" means a person who is required to file reports
under Section 16(a) of the Exchange Act.
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2.22 "Service Provider" means a consultant or adviser to the Company, a
manager of the Company's properties or affairs, or other similar service
provider or affiliate of the Company, and employees of any of the foregoing, as
such persons may be designated from time to time by the Committee pursuant to
Section 6 hereof.
2.23 "Stock" means the shares of common stock, par value $0.10 per
share, of the Company.
2.24 "Stock Option Agreement" means the written agreement between the
Company and an Optionee that evidences and sets out the terms and conditions of
a Grant of one or more Options hereunder.
2.25 "Subsidiary" means any "subsidiary corporation" of the Company
within the meaning of Section 425(f) of the Code.
2.26 "Termination Date" shall be the date upon which an Option shall
terminate or expire, as defined in Section 10.2 hereof.
3. ADMINISTRATION OF THE PLAN
3.1 General. The Plan shall be administered by the Committee. The Board
may remove members, add members, and fill vacancies on the Committee from time
to time, all in accordance with the Company's articles of incorporation and
by-laws, and with applicable law; provided however, that at all times, each
member of the Committee shall qualify in all respects as a "disinterested
person" within the meaning of Rule 16b-3 under the Exchange Act.
3.2 (a) Action by Committee. Subject to clause (c) hereof, the Committee
shall have such powers and authorities related to the administration of the Plan
as are consistent with the Company's articles of incorporation and by-laws and
applicable law. The Committee shall have the full power and authority to take
all actions and to make all determinations required or provided for under the
Plan, any Grant awarded hereunder, or any Stock Option Agreement entered into
hereunder, and shall have the full power and authority to take all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan that the Committee deems to be necessary or appropriate
to the administration of the Plan, any Grant awarded hereunder, or any Stock
Option Agreement entered into hereunder. All such actions and determinations
shall be by the affirmative vote of a majority of the members of the Committee
present at a meeting or by unanimous consent of the Committee executed in
writing in accordance with the Company's articles of incorporation and by-laws,
and with applicable law. The interpretation and construction by the Committee of
any provision of the Plan, any Grant made hereunder, or any Stock Option
Agreement entered into hereunder shall be final and conclusive.
(b) Grants of Options. Subject to the terms and conditions of
the Plan, the Committee may, at any time and from time to time, grant to such
eligible persons as the Committee may determine, Options to purchase such number
of shares of Stock on such terms and conditions as the Committee may determine,
including any terms or conditions which may be necessary to qualify such Options
as Incentive Stock Options. Such authority specifically includes the authority,
in order to effectuate the purposes of the Plan but without amending the Plan,
to modify grants to eligible individuals who are foreign nationals or are
individuals who are employed outside the United States to recognize differences
in local law, tax policy, or custom.
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(c) Grants to Outside Directors. With respect to Grants to
Outside Directors awarded pursuant to Section 6.1(c) hereof, the Committee's
responsibilities under the Plan shall be limited to taking all legal actions
necessary to document the Options so granted, to maintain appropriate records
and reports regarding those Options, and to take all acts authorized by this
Plan or otherwise reasonably necessary to effect the purposes hereof.
3.3 No Liability. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Grant awarded or Stock Option Agreement entered into hereunder.
3.4 Applicability of Rule 16b-3. Those provisions of the Plan that make
express reference to Rule 16b-3 under the Exchange Act shall apply only to
Reporting Persons.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustments made pursuant to Section 16 hereof, the maximum
number of shares of Stock which may be issued pursuant to the Plan shall not
exceed 1,150,000. If any Option expires, terminates or is canceled for any
reason before it is exercised in full, the shares of Stock that were subject to
the unexercised portion of the Option shall be available for future Options
granted under the Plan.
5. EFFECTIVE DATE AND TERM OF THE PLAN
5.1 Effective Date. The Plan shall be effective as of the date of
adoption by the Board, subject to approval of the Plan within one year of such
Effective Date, by an affirmative vote of the holders of a majority of the
Shares voting, provided that the total votes cast represent a majority of all
Shares entitled to vote. Upon approval of the Plan by the shareholders of the
Company as set forth above, however, all Grants made under the Plan on or after
the Effective Date shall be fully effective as if the shareholders of the
Company had approved the Plan on the Plan's Effective Date. If the shareholders
fail to approve the Plan within one year after such Effective Date, any Grants
made hereunder shall be null and void and of no effect.
5.2 Term. The Plan has no termination date, provided, however, that no
Incentive Stock Option may be granted on or after the tenth anniversary of the
Effective Date.
6. ELIGIBLE PERSONS; GRANT OF OPTIONS
6.1 Subject in each case to Section 6.2 hereof:
(a) Company or Subsidiary Employees. Grants of Options
(including Incentive Stock Options) may be made under the Plan to any employee
of the Company or any Subsidiary (including any such individual who is an
officer or director of the Company or any Subsidiary) as the Committee shall
determine and designate from time to time.
(b) Service Providers. Grants of Options (which, with respect to
Service Providers who are not employees of Subsidiaries of the Company, shall
not be Incentive Stock Options) may be made under the Plan to any Service
Provider whose participation in the Plan is determined by the Committee to be in
the best interests of the Company and is so designated by the Committee.
(c) Outside Directors. (i) Commencing on the Effective Date of
the Plan, each new Outside Director shall, upon the date of his or her initial
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election by the Board or the shareholders of the Company to serve as an Outside
Director, automatically be awarded a Grant of Options, which shall not be
Incentive Stock Options, to purchase 15,000 shares of Stock (which amount shall
be subject to adjustment as provided in Section 16 hereof).
(ii) Commencing with the first Annual Meeting of
Shareholders of the Company held after the Effective Date, on the date of such
Annual Meeting of Shareholders, each Outside Director then duly elected and
serving shall automatically be awarded a Grant of Options, which shall not be
Incentive Stock Options, to purchase 2,500 shares of Stock (which amount shall
be subject to adjustment as provided in Section 16 hereof); provided, however,
that no Outside Director shall be eligible to receive a Grant of Options under
this Section 6.1(c)(ii) unless such person has attended, in person or by
telephone, at least seventy-five percent of the meetings held by the Board
during the immediately preceding calendar year.
(d) Successive Grants. An eligible person may receive more than
one Grant, subject to such restrictions as are provided herein.
6.2 Ineligible Persons. Notwithstanding any of the foregoing provisions,
no Grants may be made under the Plan to B. Wayne Hughes.
7. LIMITATIONS ON OPTIONS
7.1 Limitation on Shares of Stock Subject to Options. The maximum number
of shares of Stock subject to Options that can be awarded under the Plan to any
person eligible for a Grant under Section 6, is 575,000 during the first ten
years after the Effective Date of the Plan and 57,500 per year thereafter.
7.2 Limitations on Incentive Stock Options. An Option shall constitute
an Incentive Stock Option only (i) if the Optionee is an employee of the Company
or any Subsidiary of the Company; (ii) to the extent specifically provided in
the related Stock Option Agreement entered into hereunder; and (iii) to the
extent that the aggregate Fair Market Value (determined at the time the Option
is granted) of the shares of Stock with respect to which Incentive Stock Options
are exercisable for the first time by any Optionee during any calendar year
(under the Plan and all other plans of the Optionee's employer and its parent
and Subsidiary) does not exceed $100,000. This limitation shall be applied by
taking Options into account in the order in which they were granted.
8. OPTION PRICE
The Option Price shall be fixed by the Committee and stated in each
Stock Option Agreement. The Option Price shall be the Fair Market Value of the
shares of Stock on the Grant Date of the Option; provided, however, that in the
event an Optionee would otherwise be ineligible to receive an Incentive Stock
Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code
(relating to stock ownership of more than ten percent), the Option Price of an
Option that is intended to be an Incentive Stock Option shall be not less than
the greater of par value or 110 percent of the Fair Market Value of a share of
Stock at the time such Option is granted. In no case shall the Option Price be
less than the par value of a share of Stock.
9. STOCK OPTION AGREEMENT
Each Grant of Options pursuant to the Plan shall be evidenced by a Stock
Option Agreement, to be executed by the Company and by the Optionee, in such
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form or forms as the Committee shall from time to time determine. Stock Option
Agreements covering Options granted from time to time or at the same time need
not contain similar provisions; provided, however, that each Stock Option
Agreement shall specify whether the Options granted thereunder are intended to
be non-qualified stock options or Incentive Stock Options and that all such
Stock Option Agreements shall comply with all terms of the Plan.
10. VESTING, TERM AND EXERCISE OF OPTIONS
10.1 Vesting and Option Period. For each Grant, Options shall become
exercisable in accordance with the following schedule: (i) prior to the first
anniversary of the Grant Date, no Options shall be exercisable; (ii) commencing
on the first anniversary and up to (but not including) the second anniversary of
the Grant Date, one-third of the Options shall be exercisable; (iii) commencing
on the second anniversary and up to (but not including) the third anniversary of
the Grant Date, two-thirds of the Options shall be exercisable and (iv)
commencing on the third anniversary of the Grant Date, and up to (but not
including) the Termination Date, as defined in Section 10.2 hereof, all of the
Options shall be exercisable. For purposes of this Section 10.1, fractional
numbers of Options shall be rounded down to the next nearest whole number. The
period during which any Option shall be exercisable in accordance with the
foregoing schedule shall constitute the "Option Period" with respect to such
Option.
10.2 Term. Each Option granted under the Plan shall terminate and all
rights to purchase shares of Stock thereunder shall cease upon the expiration of
ten years from the date such Option is granted, or under such circumstances and
on such date prior thereto as may be fixed by the Committee and stated in the
Stock Option Agreement relating to such Option (the "Termination Date");
provided, however, that in the event the Optionee would otherwise be ineligible
to receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than ten
percent), an Option granted to such Optionee that is intended to be an Incentive
Stock Option shall in no event be exercisable after the expiration of five years
from the date it is granted.
10.3 Acceleration. Any limitation on the exercise of an Option contained
in any Stock Option Agreement may be rescinded, modified or waived by the
Committee, in its sole discretion, at any time and from time to time after the
Grant Date of such Option, so as to accelerate the time at which the Option may
be exercised. Notwithstanding any other provisions of the Plan, no Option shall
be exercisable in whole or in part prior to the date the Plan is approved by the
shareholders of the Company as provided above.
10.4 Termination of Employment or Other Relationship. Upon the
termination (i) of the employment of an Optionee with the Company or a Service
Provider; (ii) of a Service Provider's relationship with the Company; or (iii)
of an Outside Director's service to the Company, other than, in the case of
individuals, by reason of the death or "permanent and total disability" (within
the meaning of Section 22(e)(3) of the Code), at the close of business on the
thirtieth day following such termination, any Option granted to an Optionee
pursuant to the Plan that (i) has not vested in accordance with the provisions
of Section 10.1 hereof or (ii) has vested in accordance with the provisions of
Section 10.1 hereof, but has not been exercised, shall terminate, and such
Optionee shall have no further right to purchase shares pursuant to such Option.
Whether a leave of absence or leave on military or government service shall
constitute a termination of employment for purposes of the Plan, shall be
determined by the Committee, which determination shall be final and conclusive.
For purposes of the Plan, a termination of employment with the Company or a
Service Provider shall not be deemed to occur if the Optionee is immediately
thereafter employed with the Company or any other Service Provider, or engaged
as an Outside Director of the Company. Whether a termination of a Service
Provider's or an Outside Director's relationship with the Company shall have
occurred shall be determined by the Committee, which determination shall be
final and conclusive.
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10.5 Rights in the Event of Death. If an Optionee dies while employed by
the Company or a Service Provider, or while a Service Provider or an Outside
Director, all Options granted to such Optionee shall fully vest on the date of
death, and the executors or administrators or legatees or distributees of such
Optionee's estate shall have the right, at any time within one year after the
date of such Optionee's death and prior to termination of the Option pursuant to
Section 10.2 above, to exercise any Option held by such Optionee at the date of
such Optionee's death, whether or not such Option was exercisable immediately
prior to such Optionee's death.
10.6 Rights in the Event of Disability. If an Optionee terminates
employment with the Company or a Service Provider, or ceases to provide services
to the Company (if the Optionee is a Service Provider who is an individual or is
an Outside Director), by reason of the "permanent and total disability" (within
the meaning of Section 22(e)(3) of the Code) of such Optionee, then such
Optionee shall have the right, at any time within one year after such
termination of employment or service and prior to termination of the Option
pursuant to Section 10.2 above, to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of employment or service,
whether or not such Option was exercisable immediately prior to such termination
of employment or service. Whether a termination of employment is to be
considered by reason of "permanent and total disability" for purposes of this
Plan shall be determined by the Committee, which determination shall be final
and conclusive.
10.7 Limitations on Exercise of Option. Notwithstanding the foregoing
Sections, in no event may Options be exercised, in whole or in part, prior to
the date the Plan is approved by the shareholders of the Company as provided
herein, or after ten years following the date upon which the Option is granted,
as set forth in Section 2 above, or after the occurrence of an event referred to
in Section 16.3 below which results in termination of the Option. In no event
may the Option be exercised for a fractional share.
10.8 Method of Exercise. An Option that is exercisable hereunder may be
exercised by the Optionee's delivery to the Company of written notice of the
exercise and the number of shares of Stock for which the Option is being
exercised. Such delivery shall occur on any business day, at the Company's
principal office, addressed to the attention of the Committee. Such notice shall
specify the number of shares of Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option Price of the
shares for which the Option is being exercised. The minimum number of shares of
Stock with respect to which an Option may be exercised, in whole or in part, at
any time shall be the lesser of (i) 100 shares or such lesser number set forth
in the applicable Stock Option Agreement and (ii) the maximum number of shares
available for purchase under the Option at the time of exercise. Payment of the
Option Price for the shares purchased pursuant to the exercise of an Option
shall be made (i) in cash or in cash equivalents; (ii) through the tender to the
Company of shares of Stock, which shares shall be valued, for purposes of
determining the extent to which the Option Price has been paid thereby, at their
Fair Market Value on the date of exercise; or (iii) by a combination of the
methods described in (i) and (ii). The Committee may provide, by inclusion of
appropriate language in a Stock Option Agreement, that payment in full of the
Option Price need not accompany the written notice of exercise provided the
notice of exercise directs that the certificate or certificates for the shares
of Stock for which the Option is exercised be delivered to a licensed broker
acceptable to the Company as the agent for the individual exercising the Option
and, at the time such certificate or certificates are delivered, the broker
tenders to the Company cash (or cash equivalents acceptable to the Company)
equal to the Option Price for the shares of Stock purchased pursuant to the
exercise of the Option plus the amount (if any) of federal and/or other taxes
which the Company may in its judgment, be required to withhold with respect to
the exercise of the Option. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Unless otherwise stated in the applicable Stock Option Agreement, an individual
holding or exercising an Option shall have none of the rights of a shareholder
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(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 16 below, no adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date of such issuance.
10.9 Transfer of Shares of Stock to Optionees. Promptly after the
exercise of an Option by an Optionee, and the payment in full of the Option
Price of the shares of Stock covered thereby, such Optionee shall be entitled to
the issuance of a Stock certificate or certificates evidencing his or her
ownership of such shares of Stock.
11. NON-TRANSFERABILITY OF OPTIONS
Each Option granted pursuant to this Plan shall, during an Optionee's
lifetime, be exercisable only by the Optionee, and neither the Option nor any
right thereunder shall be transferable by the Optionee by operation of law or
otherwise other than by will or the laws of descent and distribution and shall
not be pledged or hypothecated (by operation of law or otherwise) or subject to
execution, attachment or similar processes.
12. USE OF PROCEEDS
Cash proceeds realized from the sale of shares of Stock pursuant to
Options granted under the Plan shall constitute general funds of the Company.
13. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
the Optionee with the Company or any Subsidiary, except an agreement, contract,
or understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Optionee (including groups or classes of
participants or beneficiaries of which the Optionee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Optionee (a "Benefit Arrangement"), if the Optionee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option held by that
Optionee and any right to receive any payment or other benefit under this Plan
shall not become exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Optionee under this Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
the Optionee under this Plan to be considered a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute
Payment") and (ii) if, as a result of receiving a Parachute Payment, the
aggregate after-tax amounts received by the Optionee from the Company under this
Plan, all Other Agreements, and all Benefit Arrangements would be less than the
maximum after-tax amount that could be received by Optionee without causing any
such payment or benefit to be considered a Parachute Payment. In the event that
the receipt of any such right to exercise, vesting, payment, or benefit under
this Plan, in conjunction with all other rights, payments, or benefits to or for
the Optionee under any Other Agreement or any Benefit Arrangement would cause
the Optionee to be considered to have received a Parachute Payment under this
Plan that would have the effect of decreasing the after-tax amount received by
the Optionee as described in clause (ii) of the preceding sentence, then the
Optionee shall have the right, in the Optionee's sole discretion, to designate
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those rights, payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the Optionee under this Plan be deemed to be a
Parachute Payment.
14. REQUIREMENTS OF LAW
14.1 General. The Company shall not be required to sell or issue any
shares of Stock under any Grant if the sale or issuance of such shares would
constitute a violation by the Optionee, the individual exercising the Option, or
the Company of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any shares subject to the Option
upon any securities exchange or under any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of shares hereunder, the Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company, and any delay caused thereby shall in no way affect the date of
termination of the Option. Specifically in connection with the 1933 Act, upon
the exercise of any Option, unless a registration statement under such act is in
effect with respect to the shares of Stock covered by Option, the Company shall
not be required to sell or issue such shares unless the Committee has received
evidence satisfactory to it that the holder of such Option, may acquire such
shares pursuant to an exemption from registration under such act. Any
determination in this connection by the Committee shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the 1933 Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Option or the issuance of shares of Stock pursuant thereto to comply with any
law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
14.2 Rule 16b-3. It is the intent of the Company that this Plan is to
qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent any provision of the Plan or action by the Committee does not comply with
the requirements of Rule 16b-3, it shall be deemed inoperative, to the extent
permitted by law and deemed advisable by the Committee, and shall not affect the
validity of the Plan. In the event Rule 16b-3 is revised or replaced, the Board
may exercise its discretion to modify this Plan in any respect necessary to
satisfy the requirements of the revised exemption or its replacement.
15. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any shares of Stock as to which Grants have not been
made; provided, however, that the Board shall not, without approval of the
Company's shareholders, amend the Plan such that it does not comply with Rule
16b-3 under the Exchange Act (or any successor rule or other regulatory
requirements) or the Code, or amend the Plan provisions relating to Grants to
Outside Directors more often than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act, or the
rules thereunder. The Company may retain the right in a Stock Option Agreement
to cause a forfeiture of the gain realized by an Optionee on account of the
Optionee taking actions in "competition with the Company," as defined in the
applicable Stock Option Agreement. Furthermore, the Company may annul the grant
of an Option if the Optionee was an employee of the Company or an affiliate and
is terminated "for cause," as defined in the applicable Stock Option Agreement.
Except as permitted under this Section 15 or Section 16 hereof, no amendment,
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suspension, or termination of the Plan shall, without the consent of the holder
of the Option, alter or impair rights or obligations under any Grant theretofore
awarded under the Plan.
16. EFFECT OF CHANGES IN CAPITALIZATION
16.1 Changes in Stock. If the number of outstanding shares of Stock is
increased or decreased or the shares of Stock are changed into or exchanged for
a different number or kind of shares or other securities of the Company on
account of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the Effective
Date of the Plan, the number and kinds of shares for the acquisition of which
Options may be granted under the Plan shall be adjusted proportionately and
accordingly by the Company. In addition, the number and kind of shares for which
Options are outstanding shall be adjusted proportionately and accordingly so
that the proportionate interest of the Optionee immediately following such event
shall, to the extent practicable, be the same as immediately before such event.
Any such adjustment in outstanding Options shall not change the aggregate Option
Price payable with respect to shares that are subject to the unexercised portion
of the Option outstanding but shall include a corresponding proportionate
adjustment in the Option Price per share.
16.2 Reorganization in Which the Company Is the Surviving Entity and in
Which No Change of Control Occurs. Subject to Section 16.3 hereof, if the
Company shall be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities, any Option
theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to such
Option would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger, or consolidation.
16.3 Reorganization, Sale of Assets or Sale of Stock Which Involves a
Change of Control. Subject to the exceptions set forth in the last sentence of
this Section 16.3, fifteen days prior to the scheduled consummation of a Change
of Control, all Options outstanding hereunder shall become immediately
exercisable and shall remain exercisable for a period of fifteen days. Any
exercise of an Option during such fifteen-day period shall be conditioned upon
the consummation of the Change of Control and shall be effective only
immediately before the consummation of the Change of Control. Upon consummation
of any Change of Control, the Plan and all outstanding but unexercised Options
shall terminate. The Committee shall send written notice of an event that will
result in such a termination to all individuals who hold Options not later than
the time at which the Company gives notice thereof to its shareholders. For
purposes of this Section 16.3, a "Change of Control" shall be deemed to occur
upon (i) the dissolution or liquidation of the Company or upon a merger,
consolidation, or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, (ii) a sale of substantially
all of the assets of the Company to another entity, or (iii) any transaction
(including without limitation a merger or reorganization in which the Company is
the surviving corporation) which results in any person or entity (other than B.
Wayne Hughes and members of his family and their affiliates) owning 50% or more
of the combined voting power of all classes of stock of the Company. This
Section 16.3 shall not apply to any Change of Control to the extent that (A)
provision is made in writing in connection with such Change of Control for the
continuation of the Plan or the assumption of the Options theretofore granted,
or for the substitution for such Options of new options covering the stock of a
successor corporation, or a parent, subsidiary or affiliate thereof, with
appropriate adjustments as to the number and kind of shares and exercise prices,
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in which event the Plan and Options theretofore granted shall continue in the
manner and under the terms so provided or (B) a majority of the full Board
determines that such Change of Control shall not trigger application of the
provisions of this Section 16.3.
16.4 Adjustments. Adjustments under this Section 16 related to shares of
Stock or securities of the Company shall be made by the Committee, whose
determination in that respect shall be final, binding, and conclusive. No
fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share.
16.5 No Limitations on Company. The Grant of Options pursuant to the
Plan shall not affect or limit in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations, or changes of its capital
or business structure or to merge, consolidate, dissolve, or liquidate, or to
sell or transfer all or any part of its business or assets.
17. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Grant awarded or Stock Option
Agreement entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ or service of the Company or
any affiliate, or to interfere in any way with any contractual or other right or
authority of the Company or any Service Provider either to increase or decrease
the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company or a Service Provider. No provision in the Plan or in any Grant awarded
or Stock Option Agreement entered into pursuant to the Plan shall be construed
to confer upon any individual the right to remain in the service of the Company
as a director (including as an Outside Director), or shall interfere with or
restrict in any way the rights of the Company's shareholders to remove any
director pursuant to the provisions of the California General Corporation Law,
as from time to time amended. In addition, notwithstanding anything contained in
the Plan to the contrary, unless otherwise stated in the applicable Stock Option
Agreement, no Grant awarded under the Plan shall be affected by any change of
duties or position of the Optionee (including a transfer to or from the Company
or a Service Provider), so long as such Optionee continues to be a director,
officer, consultant, employee, or independent contractor (as the case may be) of
the Company or a Service Provider. The obligation of the Company to pay any
benefits pursuant to this Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein. The Plan shall in no way be interpreted to require
the Company to transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any participant or beneficiary
under the terms of the Plan. No Optionee shall have any of the rights of a
shareholder with respect to the shares of Stock subject to an Option except to
the extent the certificates for such shares of Stock shall have been issued upon
the exercise of the Option.
18. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.
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19. WITHHOLDING TAXES
19.1 Withholding. The Company, a Subsidiary or a Service Provider, as
the case may be, shall have the right to deduct from payments of any kind
otherwise due to an Optionee any Federal, state, or local taxes of any kind
required by law to be withheld with respect to any shares of Stock issued upon
the exercise of an Option under the Plan. At the time of exercise, the Optionee
shall pay to the Company, the Subsidiary or the Service Provider, as the case
may be, any amount that the Company, the Subsidiary or the Service Provider may
reasonably determine to be necessary to satisfy such withholding obligation.
Subject to the prior approval of the Company, the Subsidiary or the Service
Provider, which may be withheld by the Company, the Subsidiary or the Service
Provider, as the case may be, in its sole discretion, the Optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company, the
Subsidiary or the Service Provider to withhold shares of Stock otherwise
issuable pursuant to the exercise of an Option or (ii) by delivering to the
Company, the Subsidiary or the Service Provider shares of Stock already owned by
the Optionee. The shares of Stock so delivered or withheld shall have a Fair
Market Value equal to such withholding obligations. The Fair Market Value of the
shares of Stock used to satisfy such withholding obligation shall be determined
by the Company, the Subsidiary or the Service Provider as of the date that the
amount of tax to be withheld is to be determined. An Optionee who has made an
election pursuant to this Section 19.1 may only satisfy his or her withholding
obligation with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.
19.2 Limitations for Reporting Person. Notwithstanding the foregoing, in
the case of a Reporting Person, no election to use Stock for the payment of
withholding taxes shall be effective unless made in compliance with any
applicable requirements under Rule 16b-3(e) or any successor rule under the
Exchange Act.
20. CAPTIONS
The use of captions in this Plan or any Stock Option Agreement is for
the convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Stock Option Agreement.
21. OTHER PROVISIONS
Each Grant awarded under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Committee,
in its sole discretion.
22. NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.
23. SEVERABILITY
If any provision of the Plan or any Stock Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
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24. GOVERNING LAW
The validity and construction of this Plan and the instruments
evidencing the Grants awarded hereunder shall be governed by the laws of the
State of California.
* * *
[Attestations of the Secretary of the Company as to approval of the Plan by
the Board of Directors and the Shareholders appear on following page.]
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The Plan was duly adopted and approved by the Board of Directors of the
Company as of the 28th day of June, 1994.
/S/ SARAH HASS
---------------------------------
Sarah Hass
Secretary of the Company
The Plan was duly approved by the shareholders on the 21st day of
September, 1994.
/S/ SARAH HASS
---------------------------------
Sarah Hass
Secretary of the Company
The Plan was duly amended by the Board of Directors of the Company on
the 21st day of September, 1994.
/S/ SARAH HASS
---------------------------------
Sarah Hass
Secretary of the Company
The Plan was duly amended by the Board of Directors of the Company on
the 9th day of May, 1995.
/S/ SARAH HASS
---------------------------------
Sarah Hass
Secretary of the Company
The Plan was duly amended by the Board of Directors of the Company on
the 9th day of May, 1996.
/S/ SARAH HASS
---------------------------------
Sarah Hass
Secretary of the Company
The Plan was duly amended by the Board of Directors of the Company on
the 11th day of November, 1997.
/S/ SARAH HASS
---------------------------------
Sarah Hass
Secretary of the Company
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