EXHIBIT 4
TOLL BROTHERS, INC.
STOCK INCENTIVE PLAN
(1998)
1. Purpose. The Toll Brothers, Inc. Stock Incentive Plan (1998) (the
"Plan")
is intended as an additional incentive to employees and non-employee
members of the Board of
Directors (together the "Optionees") to enter into or remain in the employ of
Toll Brothers, Inc.,
a Delaware corporation (the "Company") or any Affiliate (as defined below),
or serve on the
Board of Directors of the Company (the "Board of Directors") or of any
Affiliate, and to devote
themselves to the Company's success by providing such employees and
non-employee members
of the Board of Directors ("Non-employee Directors") with an opportunity to
acquire or increase
their proprietary interest in the Company (a) through receipt of rights (the
"Options") to acquire
the Company's Common Stock, par value $0.01 per share (the "Common
Stock") and (b)
through incentive stock awards involving the transfer or issuance of Common
Stock, which may
be subject to conditions of forfeiture (the "Awards"). Each Option granted
under the Plan to an
employee of the Company or an Affiliate is intended to be an incentive stock
option ("ISO")
within the meaning of section 422(b) of the Internal Revenue Code of 1986,
as amended (the
"Code"), for federal income tax purposes, except to the extent (i) any such
ISO grant would
exceed the limitation of subsection 6(a), (ii) any Option is specifically
designated at the time of
grant (the "Grant Date") as not being an ISO ("Non-Qualified Stock Option"),
and (iii) any
Option is granted under Section 8. No Option granted to a person who is not
an employee of the
Company or any Affiliate on the Grant Date shall be an ISO.
For purposes of the Plan, the term "Affiliate" shall mean a corporation
which is a parent corporation or a subsidiary corporation with respect to the
Company within the
meaning of section 424(e) or (f) of the Code.
2. Administration. The Plan shall be administered by the Board of
Directors,
without participation by any member of the Board of Directors on any matter
pertaining to him.
However, the Board of Directors may designate a committee or committees
composed of two or
more of its members to operate and administer the Plan in its stead. Any such
committee and the
Board of Directors in its administrative capacity with respect to the Plan is
referred to herein as
the "Committee." The members of the Board of Directors shall, however, act
as the Committee
with respect to all grants made to Non-employee Directors pursuant to the
provisions for grants
set forth in Section 8.
The Committee shall hold meetings at such times and places as it may
determine. Acts approved at a meeting by a majority of the members of the
Committee or acts
approved in writing by the unanimous consent of the members of the
Committee shall be the
valid acts of the Committee.
The Committee shall, from time to time at its discretion, direct the
Company to grant Options and Awards pursuant to the provisions of the Plan.
The Committee
shall have plenary authority to determine the Optionees to whom and the
times at which Options
and Awards shall be granted, the number of Option Shares (as defined in
Section 4) or Awards to
be granted and the price and other terms and conditions thereof, including a
specification with
respect to whether an Option is intended to be an ISO subject, however, to the
express provisions
of the Plan. In making such determinations, the Committee may take into
account the nature of
the Optionee's services and responsibilities, the Optionee's present and
potential contribution to
the Company's success and such other factors as it may deem relevant. The
interpretation and
construction by the Committee of any provision of the Plan or of any Option
or Award granted
under it shall be final, binding and conclusive.
No member of the Board of Directors or the Committee shall be
personally liable for any action or determination made in good faith with
respect to the Plan or
any Option or Award granted under it. No member of the Committee shall be
liable for any act
or omission of any other member of the Committee or for any act or omission
on his own part,
including but not limited to the exercise of any power and discretion given to
him under the Plan,
except those resulting from (i) any breach of such member's duty of loyalty to
the Company or
its stockholders, (ii) acts or omissions not in good faith or involving
intentional misconduct or a
knowing violation of law, (iii) acts or omissions that would result in liability
under Section 174
of the General Corporation Law of the State of Delaware, as amended, and
(iv) any transaction
from which the member derived an improper personal benefit.
In addition to such other rights of indemnification as he may have as a
member of the Board of Directors or the Committee, and with respect to
administration of the
Plan and the granting of Options and Awards under it, each member of the
Board of Directors
and of the Committee shall be entitled without further act on his part to
indemnity from the
Company for all expenses (including the amount of any judgment and the
amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to
the Company itself) reasonably incurred by him in connection with or arising
out of any action,
suit or proceeding with respect to the administration of the Plan or the
granting of Options or
Awards under it in which he may be involved by reason of his being or
having been a member of
the Board of Directors or the Committee, whether or not he continues to be
such member of the
Board of Directors or the Committee at the time of the incurring of such
expenses; provided,
however, that such indemnity shall not include any expenses incurred by such
member of the
Board of Directors or the Committee: (i) in respect of matters as to which he
shall be finally
adjudged in such action, suit or proceeding to have been guilty of gross
negligence or willful
misconduct in the performance of his duties as a member of the Board of
Directors or the
Committee; or (ii) in respect of any matter in which any settlement is effected
to an amount in
excess of the amount approved by the Company on the advice of its legal
counsel; and provided
further, that no right of indemnification under the provisions set forth herein
shall be available to
or accessible by any such member of the Board of Directors or the Committee
unless within five
days after institution of any such action, suit or proceeding he shall have
offered the Company in
writing the opportunity to handle and defend such action, suit or proceeding
at its own expense.
The foregoing right of indemnification shall inure to the benefit of the heirs,
executors or
administrators of each such member of the Board of Directors or the
Committee and shall be in
addition to all other rights to which such member of the Board of Directors or
the Committee
would be entitled as a matter of law, contract or otherwise.
3. Eligibility. All employees of the Company or its Affiliates (who may
also
be members of the Board of Directors or of a board of directors of an
Affiliate) shall be eligible
to receive ISOs hereunder. All employees of the Company or its Affiliates
and all members of
the Board of Directors shall be eligible to receive Options that are
Non-Qualified Stock Options
and to receive Awards hereunder. The Committee, in its sole discretion, shall
determine whether
an individual qualifies as an employee or an Optionee. An Optionee may
receive more than one
Option or Award, but only on the terms and subject to the restrictions of the
Plan.
4. Shares Under the Plan. The number of shares of Common Stock
available
for granting Options and Awards under the Plan during the fiscal year of the
Company in which
the Plan is adopted shall be two million five hundred thousand (2,500,000),
subject to adjustment
as provided in Section 9. The number of shares of Common Stock available
for granting Options
and Awards under the Plan for each subsequent fiscal year (commencing as
of November 1,
1998) shall be equal to the sum of (i) the number of shares of Common Stock
available for
granting Options and Awards in the immediately preceding fiscal year
reduced by the number of
shares of Common Stock with respect to which Options and Awards were
granted in such fiscal
year and (ii) two and one-half percent (2.5%) of the outstanding shares of
Common Stock
(including treasury shares) as of the first day of the fiscal year in which such
additional shares of
Common Stock are first to become available; provided, however that no more
than two million
five hundred thousand (2,500,000) shares of Common Stock shall be
available for granting
Options and Awards under the Plan in any single fiscal year. If any shares
subject to any Option
("Option Shares") or shares subject to an Award granted hereunder ("Award
Shares") are
forfeited or such Option otherwise terminates without the issuance of such
shares, the shares
subject to such Option or Award, to the extent of any such forfeiture or
termination, shall again
be available for the grant of Options and Awards under the Plan. Option
Shares and Awards
shall be issued from authorized and unissued Common Stock or Common
Stock held in or
hereafter acquired for the treasury of the Company. If any outstanding
Option granted under the
Plan expires, lapses or is terminated for any reason, or if the shares of
Common Stock that has
been transferred pursuant to an Award under the Plan are forfeited for any
reason, the Option
Shares allocable to the unexercised portion of such Option and the forfeited
shares of Common
Stock may again be the subject of an Option or Award granted pursuant to the
Plan.
5. Term of Plan. The Plan is adopted December 17, 1997, effective as of
January 1, 1998; provided, however that the Plan is approved by vote of a
majority of the
outstanding voting stock of the Company on or before December 17, 1998.
No Option or Award
may be granted under the Plan after December 16, 2007.
6. Terms and Conditions of Options. Options granted pursuant to the
Plan
shall be evidenced by written documents (the "Option Documents") in such
form as the
Committee shall from time to time approve, which Option Documents shall
comply with and be
subject to the following terms and conditions and such other terms and
conditions which the
Committee shall from time to time require which are not inconsistent with the
terms of the Plan.
(a) Number of Option Shares. Each Option Document shall state the
number of Option Shares to which it pertains. In no event shall the aggregate
fair market value
of the Option Shares (determined at the time the ISO is granted) with respect
to which an ISO is
exercisable for the first time by the Optionee during any calendar year (under
all incentive stock
option plans of the Company or its Affiliates) exceed $100,000. In addition,
and anything to the
contrary otherwise contained in the Plan notwithstanding, no employee shall
be granted more
than 1,000,000 Option Shares during any calendar year.
(b) Option Price. Each Option Document shall state the price at which
Option Shares may be purchased (the "Option Price"), which shall be at least
100% of the fair
market value of the Common Stock on the date the Option is granted as
determined by the
Committee; provided, however, that if an ISO is granted to an Optionee who
then owns, directly
or by attribution under section 424(d) of the Code, shares possessing more
than ten percent of the
total combined voting power of all classes of stock of the Company or an
Affiliate, then the
Option Price shall be at least 110% of the fair market value of the Option
Shares on the date the
Option is granted. If the Common Stock is traded in a public market, then the
fair market value
per share shall be, if the Common Stock is listed on a national securities
exchange or included in
the NASDAQ National Market System, the last reported sale price thereof on
the relevant date,
or, if the Common Stock is not so listed or included, the mean between the
last reported "bid"
and "asked" prices thereof on the relevant date, as reported on NASDAQ or,
if not so reported, as
reported by the National Daily Quotation Bureau, Inc. or as reported in a
customary financial
reporting service, as applicable and as the Committee determines.
(c) Medium of Payment. An Optionee shall pay for Option Shares: (i)
in cash, (ii) by certified check payable to the order of the Company, or (iii)
by such other mode of payment as the Committee may approve, including payment
through a broker in accordance
with procedures permitted by Regulation T of the Federal Reserve Board.
Furthermore, the
Committee may provide in an Option Document that payment may be made
in whole or in part
in shares of the Common Stock held by the Optionee for more than one year.
If payment is made
in whole or in part in shares of the Common Stock, then the Optionee shall
deliver to the
Company certificates registered in the name of such Optionee representing
shares of Common
Stock legally and beneficially owned by such Optionee, free of all liens,
claims and
encumbrances of every kind and having a fair market value on the date of
delivery of such notice
that is not greater than the Option Price of the Option Shares with respect to
which such Option
is to be exercised, accompanied by stock powers duly endorsed in blank by
the record holder of
the shares represented by such certificates. In the event that certificates for
shares of the
Company's Common Stock delivered to the Company represent a number of
shares in excess of
the number of shares required to make payment for the Option Price of the
Option Shares (or
relevant portion thereof) with respect to which such Option is to be exercised
by payment in
shares of Common Stock, the stock certificate issued to the Optionee shall
represent the Option
Shares in respect of which payment is made, and such excess number of
shares. Notwithstanding
the foregoing, the Committee, in its sole discretion, may refuse to accept
shares of Common
Stock in payment of the Option Price. In that event, any certificates
representing shares of
Common Stock which were delivered to the Company shall be returned to the
Optionee with
notice of the refusal of the Committee to accept such shares in payment of the
Option Price. The
Committee may impose such limitations and prohibitions on the use of shares
of the Common
Stock to exercise an Option as it deems appropriate, subject to the provisions
of the Plan.
(d) Termination of Options. No Option shall be exercisable after the
first to occur of the following:
(i) Expiration of the Option term specified in the Option
Document, which for an ISO shall not exceed (A) ten years from the Grant
Date or (B) five years
from the Grant Date if the Optionee on the date of grant owns, directly or by
attribution under
section 424(d) of the Code, shares possessing more than ten percent of the
total combined voting
power of all classes of stock of the Company or of an Affiliate and for any
other Option shall not
exceed ten years and one day from the date of grant;
(ii) Expiration of three months (or such shorter period as the
Committee may select) from the date the Optionee's employment or service
with the Company or its Affiliates terminates for any reason other than:
(a) disability (within the meaning of section 22(e)(3) of the Code) or death
or (b) circumstances described by paragraph (d)(vi), below;
(iii) Expiration of one year from the date the Optionee's
employment or service with the Company or its Affiliates terminates by
reason of the Optionee's
disability (within the meaning of section 22(e)(3) of the Code) or death;
(iv) The date, if any, set by the Committee as an accelerated
expiration date in the event of a "Change in Control" (as defined in
subsection 6(e) below)
provided an Optionee who holds an Option is given written notice at least 30
days before the date
so fixed.
(v) The date set by the Committee to be an accelerated
expiration date after a finding by the Committee that a change in the financial
accounting
treatment for Options from that in effect on the date the Plan was adopted
adversely affects or, in
the determination of the Committee, may adversely affect in the foreseeable
future, the
Company, provided the Committee may take whatever other action, including
acceleration of any
exercise provisions, it deems necessary should it make the determination
referred to hereinabove.
(vi) A finding by the Committee, after full consideration of the
facts presented on behalf of both the Company and the Optionee, that the
Optionee has breached
his employment or service contract with the Company or an Affiliate, or has
been engaged in any
sort of disloyalty to the Company or an Affiliate, including, without
limitation, fraud,
embezzlement, theft, commission of a felony or proven dishonesty in the
course of his
employment or service or has disclosed trade secrets of the Company or an
Affiliate. In such
event, in addition to immediate termination of the Option, the Optionee, upon
a determination by
the Committee, shall automatically forfeit all Option Shares for which the
Company has not yet
delivered the share certificates upon refund by the Company of the Option
Price.
Notwithstanding the foregoing, except as may be specifically provided in
an
Option Document at the discretion of the Committee, no Option shall be
exercisable after the
termination of an Optionee's service or employment with the Company or any
of its Affiliates
except to the extent such Option was exercisable on the date of such
termination of service or
employment. The Committee may extend the period during which an Option
may be exercised
to a date no later than the date of the expiration of the Option term specified
in the Option
Documents.
(e) Change of Control. In the event of a Change of Control (as
defined below), the Committee may take whatever action with respect to the
Options outstanding
that it deems necessary or desirable, including, without limitation,
accelerating the expiration or
termination date in the respective Option Documents to a date no earlier than
thirty (30) days
after notice of such acceleration is given to the Optionees. In addition to the
foregoing, in the
event of a Change of Control, Options granted pursuant to the Plan shall
become immediately
exercisable in full. A "Change of Control" shall be deemed to have occurred
upon the earliest to
occur of the following events: (i) the date the stockholders of the Company
(or the Board of
Directors, if stockholder action is not required) approve a plan or other
arrangement pursuant to
which the Company will be dissolved or liquidated, or (ii) the date the
stockholders of the
Company (or the Board of Directors, if stockholder action is not required)
approve a definitive
agreement to sell or otherwise dispose of substantially all of the assets of the
Company, or (iii)
the date the stockholders of the Company (or the Board of Directors, if
stockholder action is not
required) and the stockholders of the other constituent corporation (or its
board of directors if
stockholder action is not required) have approved a definitive agreement to
merge or consolidate
the Company with or into such other corporation, other than, in either case, a
merger or
consolidation of the Company in which holders of shares of the Common
Stock immediately
prior to the merger or consolidation will hold at least a majority of the
ownership of common
stock of the surviving corporation (and, if one class of common stock is not
the only class of
voting securities entitled to vote on the election of directors of the surviving
corporation, a
majority of the voting power of the surviving corporation's voting securities)
immediately after
the merger or consolidation, which common stock (and, if applicable, voting
securities) is to be
held in the same proportion as such holders' ownership of Common Stock
immediately before
the merger or consolidation, or (iv) the date any entity, person or group,
(within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934,
as amended), (other
than (A) the Company or any of its subsidiaries or any employee benefit plan
(or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (B) any
person who, on the
date the Plan is effective, shall have been the beneficial owner of at least
fifteen percent (15%) of
the outstanding Common Stock), shall have become the beneficial owner of,
or shall have
obtained voting control over, more than fifty percent (50%) of the
outstanding shares of the
Common Stock, or (v) the first day after the date this Plan is effective when
directors are elected
such that a majority of the Board of Directors shall have been members of the
Board of Directors
for less than twenty-four (24) months, unless the nomination for election of
each new director
who was not a director at the beginning of such twenty-four (24) month
period was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the
beginning of such period.
(f) Transfers. No Option granted under the Plan may be transferred,
except by will or by the laws of descent and distribution. During the lifetime
of the person to
whom an Option is granted, such Option may be exercised only by him.
Notwithstanding the
foregoing a Non-qualified Stock Option may be transferred pursuant to the
terms of a "qualified
domestic relations order," within the meaning of Sections 401(a)(13) and
414(p) of the Code or
within the meaning of Title I of the Employee Retirement Income Security
Act of 1974, as
amended.
(g) Other Provisions. The Option Documents shall contain such other
provisions, subject to the provisions of Section 8 including, without
limitation, additional
restrictions upon the exercise of the Option or additional limitations upon the
term of the Option,
as the Committee shall deem advisable.
(h) Amendment. Subject to the provisions of the Plan, the Committee
shall have the right to amend Option Documents issued to an Optionee,
subject to the Optionee's
consent if such amendment is not favorable to the Optionee except that the
consent of the
Optionee shall not be required for any amendment made under subsection
6(e).
7. Exercise. No Option shall be deemed to have been exercised prior to
the
receipt by the Company of written notice of such exercise and of payment in
full of the Option
Price for the Option Shares to be purchased. Each such notice shall specify
the number of
Option Shares to be purchased and shall (unless the Option Shares are
covered by a then current
registration statement or a Notification under Regulation A under the
Securities Act of 1933 (the
"Act")), contain the Optionee's acknowledgment in form and substance
satisfactory to the
Company that (a) such Option Shares are being purchased for investment and
not for distribution
or resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the
Company, may be made without violating the registration provisions of the
Act), (b) the
Optionee has been advised and understands that (i) the Option Shares may
not have been
registered under the Act and are "restricted securities" within the meaning of
Rule 144 under the
Act and are subject to restrictions on transfer and (ii) the Company is under
no obligation to
register the Option Shares under the Act or to take any action which would
make available to the
Optionee any exemption from such registration, (c) such Option Shares may
not be transferred
without compliance with all applicable federal and state securities laws, and
(d) an appropriate
legend referring to the foregoing restrictions on transfer and any other
restrictions imposed under
the Option Documents may be endorsed on the certificates. Notwithstanding
the above, should
the Company be advised by counsel that issuance of shares should be delayed
pending (A)
registration under federal or state securities laws (B) the receipt of an
opinion that an appropriate
exemption therefrom is available, (C) the listing or inclusion of the shares on
any securities
exchange or in an automated quotation system or (D) the consent or approval
of any
governmental regulatory body whose consent or approval is necessary in
connection with the
issuance of such Option Shares, the Company may defer exercise of any
Option granted
hereunder until event A, B, C, or D has occurred. No Option granted
pursuant to Section 8 may
be exercised until one year has elapsed from the Grant Date.
8. Grants to Non-employee Directors. Options granted to Non-employee
Directors pursuant to this Section 8 of the Plan shall be granted without
further action by the
Committee, shall be in accordance with the terms set forth in this Section 8,
and shall be
evidenced by Option Documents in such form as the Committee shall from
time to time approve,
which Option Documents shall comply with and be subject to the following
terms and conditions
and such other terms and conditions as the Committee shall from time to time
require which are
not inconsistent with terms of the Plan. Each Option granted under this
Section 8 shall be a Non-qualified Stock Option and shall have an Option
Price equal to 100% of the fair market value (as defined in subsection 6(b)) of
the Common Stock on the Grant Date.
(a) Timing of Grants; Number of Option Shares Subject of Options;
Exercisability of Options; Option Price.
(i) Each Non-employee Director who was a member of the
Board of Directors on December 17, 1997 shall be granted on December 20,
1998, and on each
anniversary thereafter during the term of the Plan, an Option to purchase
Fifteen Thousand
(15,000) Option Shares during the term of the Plan. Each other
Non-employee Director who first
becomes a member of the Board of Directors during the term of the Plan shall
be granted Options
as follows: Any Non-employee Director who first becomes a member of the
Board of Directors
on December 20 of any year shall be granted on the date he or she first
becomes a member of the
Board of Directors, and on each anniversary thereafter during the term of the
Plan, an Option to
purchase Fifteen Thousand (15,000) Option Shares. Any Non-employee
Director who first
becomes a member of the Board of Directors at any time after December 20
of any year and
before September 1 of the following year shall be granted an Option to
purchase Ten Thousand
(10,000) Option Shares at the time he or she first becomes a member of the
Board of Directors,
and shall be granted on each December 20 thereafter during the term of the
Plan, an Option to
purchase Fifteen Thousand (15,000) Option Shares. Any Non-employee
Director who first
becomes a member of the Board of Directors at any time after August 31 of
any year and before
November 30 of the same year shall be granted an Option to purchase Five
Thousand (5,000)
Option Shares at the time he or she first becomes a member of the Board of
Directors, and shall
be granted on each December 20 thereafter during the term of the Plan, an
Option to purchase
Fifteen Thousand (15,000) Option Shares. Any Non-employee Director who
first becomes a
member of the Board of Directors at any time after November 30 of any year
and before
December 20 of the same year shall be granted on each December 20
thereafter during the term
of the Plan, an Option to purchase Fifteen Thousand (15,000) Option Shares.
Each such Option
shall be a Non-qualified Stock Option becoming exercisable over a period of
two (2) years, so
that the Optionee shall have the right to exercise the Option with respect to
fifty percent (50%) of
the Option Shares covered thereby on the first anniversary of the date of
grant, and the right to
exercise the Option with respect to the remainder of such Option Shares on
the second
anniversary of the date of grant. The Option Price shall be equal to the fair
market value of the
Option Shares on the date the Option is granted as determined by the
Committee.
Notwithstanding anything to the contrary set forth in this Section 8(a), in the
event any Non-employee Director receives an option grant under the terms of
the Toll Brothers, Inc. Key
Executives and Non-employee Directors Stock Option Plan (the "1993 Plan")
as of the same date
an Option would otherwise be granted to him or her pursuant to this Section 8
of the Plan, the
number of Option Shares subject to the Option granted to such non-employee
member of the
Board of Directors pursuant to this Section 8 of the Plan shall be reduced by
the number of
shares subject to the option granted under the terms of the 1993 Plan.
(ii) Each Option granted to a Non-employee Director under the
terms of this Section 8 shall be for the number of shares determined in
accordance with
subsection 8(a)(i) above, plus an additional number of shares determined in
accordance with the
following schedule:
Membership on the Audit Committee an additional 1,000 shares
Membership on any other Committee an additional 500 shares
The additional shares for which Options are granted as determined pursuant
to this subsection
8(a)(ii) shall be subject to the following limitations and conditions:
(A) A Non-employee Director shall be treated as
serving on a committee of the Board of Directors only if he or she was, at any
time during the
calendar year in which the Option is granted, a member of the committee and
sat on one or more
meetings of such committee during such calendar year.
(B) The Option granted under this Section 8 to a
Non-employee Director shall be determined by taking into account the
non-employee member's
membership on no more than four committees if one of the committees is the
Audit Committee,
and in all other cases, no more than three committees.
(C) The committees of the Board of Directors that are
taken into account for purposes of this Section 8(a)(ii) shall be those
committees of the Board of
Directors as are listed on Schedule A attached hereto, as that may be amended
by the Board of
Directors from time to time.
(b) Termination of Options Granted Pursuant to Section 8. All
Options granted pursuant to this Section 8 shall be exercisable until the first
to occur of the
following:
(i) Expiration of ten (10) years from the date of grant;
(ii) Expiration of three months from the date the Optionee's
service with the Company or its Affiliates terminates for any reason other
than disability (within
the meaning of section 22(e)(3) of the Code) or death; or
(iii) Expiration of one year from the date the Optionee's
service with the Company or its Affiliates terminates by reason of the
Optionee's disability (within the meaning of section 22(e)(3) of the Code) or
death.
(c) Applicability of Provisions of Section 6 to Options Granted
Pursuant to Section 8. The following provisions of Section 6 shall be
applicable to Options
granted pursuant to this Section 8: Subsection 6(a) (provided that all Options
granted pursuant to
this Section 8 shall be Non-qualified Stock Option's); Subsection 6(b)
(provided, however, that
the Option Price shall in all events be the fair market value of the Option
Shares on the date of
grant; Subsection 6(c) (provided, however, that the Option Document shall in
all events permit
payment to be made in whole or in part in shares of the Common Stock held
by the Optionee for
more than one year; and Subsection 6(g).
9. Adjustments on Changes in Common Stock. The aggregate number of
shares of Common Stock as to which Options or Awards may be granted
hereunder, the number
of Option Shares covered by each outstanding Option and the Option Price
per Option Share
shall be appropriately adjusted in the event of a stock dividend, stock split or
other increase or
decrease in the number of issued and outstanding shares of Common Stock
resulting from a
subdivision or consolidation of the Common Stock or other capital
adjustment (not including the
issuance of Common Stock on the conversion of other securities of the
Company which are
convertible into Common Stock) effected without receipt of consideration by
the Company. The
Committee shall have authority to determine the adjustments to be made
under this Section and
any such determination by the Committee shall be final, binding and
conclusive; provided,
however, that no adjustment shall be made which will cause an ISO to lose its
status as such.
10. Amendment of the Plan. The Board of Directors may amend the
Plan
from time to time in such manner as it may deem advisable. Nevertheless,
the Board of
Directors may not, without obtaining approval by vote of a majority of the
outstanding voting
stock of the Company, within twelve months before or after such action,
change the class of
individuals eligible to receive an ISO, extend the expiration date of the Plan,
decrease the
minimum Option Price of an ISO granted under the Plan or increase the
maximum number of
shares as to which Options may be granted.
11. Continued Employment. The grant of an Option or an Award pursuant
to
the Plan shall not be construed to imply or to constitute evidence of any
agreements express or
implied, on the part of the Company or any Affiliate to retain the Optionee in
the employ of the
Company or an Affiliate, as a member of the Board of Directors or in any
other capacity,
whichever the case may be.
12. Withholding of Taxes. Whenever the Company proposes or is
required to
issue or transfer Option Shares pursuant to the terms of an Option or Award
Shares pursuant to
an Award, the Company shall have the right to (i) require the recipient or
transferor to remit to
the Company an amount sufficient to satisfy any federal, state and/or local
withholding tax
requirements prior to the delivery or transfer of any certificate or
certificates for such Option
Shares or Award Shares or (ii) take whatever action it deems necessary to
protect its interests.
The Company's obligation to make any delivery or transfer of Option Shares
or Award Shares
shall be conditioned on the recipient's compliance, to the Company's
satisfaction, with any
withholding requirement. The Committee may establish requirements and
procedures with
respect to the Company's withholding of Option Shares or Award Shares to
satisfy any federal,
state and/or local withholding tax requirements which arise in connection
with the transfer of
Option Shares or Award Shares, as the Committee deems appropriate.
13. Terms and Conditions of Awards. Awards granted pursuant to the
Plan
shall be evidenced by written Award agreements (the "Award Agreements")
in such form as the
Committee shall from time to time approve, which Award Agreements shall
comply with and be
subject to the provisions contained in the Plan and subject to such conditions
and restrictions
(including conditions which may result in a forfeiture) as the Committee may,
from time to time,
require; provided such conditions and restrictions are not inconsistent with
the terms of the Plan.
The Award may provide for the lapse of restrictions on transfer and forfeiture
conditions in
installments. The Committee may, in its sole discretion, shorten or waive any
condition or
restriction with respect to all or any portion of any Award. Notwithstanding
the foregoing, all
restrictions and conditions shall lapse or terminate with respect to shares of
Common Stock
subject to an Award upon the death or disability (within the meaning of
section 22(e)(3) of the
Code) of the recipient of the Award (the "Awardee").
(a) Number of Shares. Each Award Agreement shall state the number
of shares of Common Stock to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify the purchase
price, if any, which applies to the Award. If the Committee specifies a
purchase price, the
Awardee shall be required to make payment on or before the date specified in
the Award
Agreement. An Awardee shall pay for such shares of Common Stock (i) in
cash, (ii) by certified
check payable to the order of the Company, or (iii) by such other mode of
payment as the
Committee may approve.
(c) Transfer of Shares. In the case of an Award which provides for a
transfer of shares of Common Stock without any payment by the Awardee,
the transfer shall take
place on the date specified in the Award Agreement. In the case of an Award
which provides for
a payment, the transfer shall take place on the date the initial payment is
delivered to the
Company, unless the Committee or the Award Agreement otherwise
specifies. Stock certificates
evidencing shares of Common Stock transferred pursuant to an Award shall
be issued in the sole
name of the Awardee. Notwithstanding the foregoing, as a precondition to a
transfer, the
Company may require an acknowledgment by the Awardee as required with
respect to Options
under Section 7 and may further require that the Awardee satisfy any of the
Company's
withholding obligations attributable to any federal, state or local law as a
result of such transfer.
(d) Forfeiture Conditions. The Committee may specify in an Award
Agreement any conditions under which the Awardee shall be required to
convey to the Company
the shares of Common Stock covered by the Award. Upon the occurrence of
any such specified
condition, the Awardee shall forthwith surrender and deliver to the Company
the certificates
evidencing such shares as well as completely executed instruments of
conveyance. The
Committee, in its discretion, may provide that certificates for shares of
Common Stock
transferred pursuant to an Award be held in escrow by the Company's
Treasurer or an
appropriate officer of the Company, together with an undated stock power
executed by the
Awardee, until such time as each and every condition that may result in a
forfeiture has lapsed,
and that the Awardee be required, as a condition of the transfer, to deliver to
such escrow agent
stock powers covering the transferred shares of Common Stock duly
endorsed by the Awardee.
Stock certificates evidencing shares of Common Stock subject to forfeiture
shall bear a legend to
the effect that the Common Stock evidenced thereby is subject to repurchase
or conveyance to
the Company in accordance with an Award made under the Plan and that the
shares of Common
Stock may not be sold or otherwise transferred.
(e) Lapse of Conditions. Upon termination or lapse of each and every
forfeiture condition, the Company shall cause certificates without the legend
referring to the
Company's repurchase right (but with any other legends that may be
appropriate, including
legends indicating the restrictions that have been established by the terms of
the Award)
evidencing the shares of Common Stock covered by the Award to be issued
to the Awardee upon
the Awardee's surrender of the legended certificates held by him to the
Company.
(f) Rights as Stockholder. Upon payment of the purchase price, if
any, for shares of Common Stock covered by an Award and compliance with
the
acknowledgment requirement of subsection 13(c), the Awardee shall have all
of the rights of a
stockholder with respect to the shares of Common Stock covered thereby,
including the right to
vote such shares and receive all dividends and other distributions paid or
made with respect
thereto, except to the extent otherwise provided by the Committee or in the
Award Agreement.
(g) Lapse of Restrictions. Upon the expiration or termination of the
restrictions applicable under the terms of an Award, and the satisfaction of
any other conditions
set forth in an Award Agreement by the Committee as permitted under the
Plan, the restrictions
applicable to the shares of Common Stock granted pursuant to an Award shall
lapse and a stock
certificate for the number of shares of Common Stock with respect to which
the restrictions have
lapsed shall be delivered, free of all such restrictions, except any that may be
imposed by law or
pursuant to any shareholders agreement then in effect, to the Awardee or the
beneficiary or estate
of the Awardee, as the case may be. The Company shall not, however, be
required to deliver any
fractional share of Common Stock but will pay, in lieu thereof, the fair
market value (determined
as of the date the restrictions lapse) of such fractional share to the Awardee
or the Awardee's beneficiary or estate, as the case may be.
(h) Section 83(b) Elections. An Awardee who files an election with
the Internal Revenue Service to include the fair market value of any shares of
Common Stock
granted pursuant to an Award in gross income while they are still subject to
restrictions shall
promptly furnish the Company with a copy of such election together with the
amount of any
federal, state, local or other taxes required to be withheld to enable the
Company to claim an
income tax deduction with respect to such election.
(i) Forfeiture for Breach of Duty to Company. Upon a finding by the
Committee, after full consideration of the facts presented on behalf of both
the Company and the
Awardee, that the Awardee has breached his or her employment or service
contract with the
Company or an Affiliate, or has been engaged in disloyalty to the Company
or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven
dishonesty in the course of his or her employment or service, or has disclosed
trade secrets or
confidential information of the Company or an Affiliate, Awardee shall
automatically forfeit all
shares of Common Stock granted pursuant to an Award for which (1) the
Company has not yet
delivered the share certificates to the Awardee or (ii) any restrictions
applicable to such shares
have not lapsed. Notwithstanding anything herein to the contrary, the
Company may withhold
delivery of certificates for shares of Common Stock granted pursuant to an
Award pending the
resolution of any inquiry that could lead to a finding resulting in a
forfeiture.
(j) Amendment. Subject to the provisions of the Plan, the Committee
shall have the right to amend Awards issued to an Awardee, subject to the
Awardee's consent if
such amendment is not favorable to the Awardee, except that the consent of
the Awardee shall
not be required for any amendment made pursuant to Section 10 of the Plan.
(k) Change of Control. In the event of a Change of Control (as
defined in Section 6(f) above), the Committee may take whatever action with
respect to Awards
that have been granted under the Plan that it deems necessary or desirable. In
addition to the
foregoing, in the event of a Change of Control, the restrictions applicable to
shares of Common
Stock issued pursuant to Awards under the Plan shall lapse.
14. Interpretation. The Plan is intended to enable transactions under the
Plan
with respect to directors and officers (within the meaning of Section 16(a)
under the Securities
Exchange Act of 1934, as amended) to satisfy the conditions of Rule 16b-3
promulgated under
the Securities Exchange Act of 1934, as amended; any provision of the Plan
which would cause a
conflict with such conditions shall be deemed null and void to the extent
permitted by applicable
law and in the discretion of the Board of Directors.
15. Effective Date. The Plan shall be effective as of January 1, 1998.
SCHEDULE A
Committees of the Board of Directors
Audit Committee
Compensation Committee
Subordinated Debt-Repurchase Authorization Committee
Shelf Term Committee
Employee Stock Purchase Plan Committee