[As adopted by the
Board on 3/9/95]
KASH N' KARRY FOOD STORES, INC.
1995 KEY EMPLOYEE STOCK OPTION PLAN
TABLE OF CONTENTS
1. Purpose.. . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions.. . . . . . . . . . . . . . . . . . . . . . . 1
2.1. "Affiliate" . . . . . . . . . . . . . . . . . . . . 1
2.2. "Award" . . . . . . . . . . . . . . . . . . . . . . 1
2.3. "Award Agreement" . . . . . . . . . . . . . . . . . 1
2.4. "Board" . . . . . . . . . . . . . . . . . . . . . . 1
2.5. "Change of Control" . . . . . . . . . . . . . . . . 1
2.6. "Code" . . . . . . . . . . . . . . . . . . . . . . 1
2.7. "Committee" . . . . . . . . . . . . . . . . . . . . 1
2.8. "Common Stock" . . . . . . . . . . . . . . . . . . 1
2.9. "Company" . . . . . . . . . . . . . . . . . . . . . 2
2.10. "Date of Grant" . . . . . . . . . . . . . . . . . . 2
2.11. "Disability" . . . . . . . . . . . . . . . . . . . 2
2.12. "Exchange Act". . . . . . . . . . . . . . . . . . . 2
2.13. "Fair Market Value" . . . . . . . . . . . . . . . . 2
2.14. "Fiscal Year" . . . . . . . . . . . . . . . . . . . 2
2.15. "Incentive Option". . . . . . . . . . . . . . . . . 2
2.16. "Nonqualified Option" . . . . . . . . . . . . . . . 2
2.17. "Original Stockholders" . . . . . . . . . . . . . . 2
2.18. "Participant" . . . . . . . . . . . . . . . . . . . 3
2.19. "Plan" . . . . . . . . . . . . . . . . . . . . . . 3
2.20. "Retirement" . . . . . . . . . . . . . . . . . . . 3
2.21. "SEC" . . . . . . . . . . . . . . . . . . . . . . . 3
2.22. "SEC Rule 16b-3" . . . . . . . . . . . . . . . . . 3
2.23. "Stock Option" . . . . . . . . . . . . . . . . . . 3
2.24. "Subsidiary(ies)" . . . . . . . . . . . . . . . . . 3
2.25. "Termination for Cause" . . . . . . . . . . . . . . 3
2.26. "Voting Interest" . . . . . . . . . . . . . . . . . 4
3. Administration. . . . . . . . . . . . . . . . . . . . . . 4
3.1. The Committee. . . . . . . . . . . . . . . . . . . . 4
3.2. Plan Administration and Plan Rules.. . . . . . . . . 4
3.3. Liability Limitation.. . . . . . . . . . . . . . . . 5
4. Term of Plan/Common Stock Subject to Plan. . . . . . . . . 5
4.1. Term.. . . . . . . . . . . . . . . . . . . . . . . . 5
4.2. Common Stock.. . . . . . . . . . . . . . . . . . . . 5
4.3. Computation of Available Shares. . . . . . . . . . . 6
5. Eligibility.. . . . . . . . . . . . . . . . . . . . . . . 6
6. Awards. . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1. Terms and Conditions.. . . . . . . . . . . . . . . . 6
6.2. Grant. . . . . . . . . . . . . . . . . . . . . . . . 6
6.3. Exercise Price.. . . . . . . . . . . . . . . . . . . 7
6.4. Term.. . . . . . . . . . . . . . . . . . . . . . . . 7
6.5. Incentive Options. . . . . . . . . . . . . . . . . . 7
i
6.6. Method of Exercise.. . . . . . . . . . . . . . . . . 7
6.7. Exercisability.. . . . . . . . . . . . . . . . . . . 8
7. Termination of Employment.. . . . . . . . . . . . . . . . 9
7.1. Unexercisable Options. . . . . . . . . . . . . . . . 9
7.2. Exercisable Options. . . . . . . . . . . . . . . . . 9
7.3. Committee Discretion.. . . . . . . . . . . . . . . . 10
8. Non-transferability of Awards.. . . . . . . . . . . . . . 10
9. Changes in Capitalization and Other Matters.. . . . . . . 10
9.1. No Corporate Action Restriction. . . . . . . . . . . 10
9.2. Recapitalization Adjustments.. . . . . . . . . . . . 11
9.3. Certain Mergers. . . . . . . . . . . . . . . . . . . 11
10. Change of Control.. . . . . . . . . . . . . . . . . . . . 11
10.1. Acceleration of Awards Vesting. . . . . . . . . . . 11
10.2. Change of Control.. . . . . . . . . . . . . . . . . 11
11. Amendment, Suspension, and Termination. . . . . . . . . . 12
11.1. In General. . . . . . . . . . . . . . . . . . . . . 12
11.2. Award Agreement Modifications.. . . . . . . . . . . 12
12. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . 13
12.1. Tax Withholding.. . . . . . . . . . . . . . . . . . 13
12.2. No Right to Perform Services. . . . . . . . . . . . 13
12.3. Unfunded Plan.. . . . . . . . . . . . . . . . . . . 13
12.4. Other Company Benefit and Compensation Programs.. . 13
12.5. Listing, Registration and Other Legal
Compliance. . . . . . . . . . . . . . . . . . . . . 14
12.6. Designation of Beneficiary. . . . . . . . . . . . . 14
12.7. Leaves of Absence/Transfers.. . . . . . . . . . . . 15
12.8. Governing Law.. . . . . . . . . . . . . . . . . . . 15
12.9. Titles and Headings.. . . . . . . . . . . . . . . . 15
12.10. Effective Date.. . . . . . . . . . . . . . . . . . 15
ii
KASH N' KARRY FOOD STORES, INC.
1995 KEY EMPLOYEE STOCK OPTION PLAN
* * * * *
1. Purpose. The purpose of the Kash n' Karry Food Stores,
Inc. 1995 Key Employee Stock Option Plan (the "Plan") is (a) to
further and promote the interests of the Company, its
Subsidiaries and its shareholders by enabling the Company and its
Subsidiaries to attract, retain and motivate salaried key
employees or those who will become salaried key employees, and
(b) to align the interests of those individuals and the Company's
shareholders. To do this, the Plan offers equity-based
opportunities to provide such key employees with a proprietary
interest in maximizing the growth, profitability and overall
success of the Company and its Subsidiaries.
2. Definitions. For purposes of the Plan, the following
terms shall have the meanings set forth below:
2.1. "Affiliate" means (a) a member of a controlled
group of corporations of which the Company is a member or (b) an
unincorporated trade or business which is under common control
with the Company as determined in accordance with Section 414(c)
of the Code. For purposes hereof, a "controlled group of
corporations" shall mean a controlled group of corporations as
defined in Section 1563(a) of the Code, determined without regard
to Sections 1563(a)(4) and 1563(e)(3)(C).
2.2. "Award" means an award or grant made to a
Participant under Section 6 of the Plan.
2.3. "Award Agreement" means the agreement executed by
a Participant pursuant to Section 6.2 of the Plan in connection
with the granting of an Award.
2.4. "Board" means the Board of Directors of the
Company, as constituted from time to time.
2.5. "Change of Control" shall have the meaning
ascribed thereto in Section 10.3 of the Plan.
2.6. "Code" means the Internal Revenue Code of 1986, as
in effect and as amended from time to time, or any successor
statute thereto, together with any rules, regulations and
interpretations promulgated thereunder or with respect thereto.
2.7. "Committee" means the committee of the Board
established to administer the Plan, as described in Section 3 of
the Plan.
2.8. "Common Stock" means the common stock, par value
$0.01 per share, of the Company or any security of the Company
issued by the Company in substitution or exchange therefor.
2.9. "Company" means Kash n' Karry Food Stores, Inc., a
Delaware corporation, or any successor corporation to Kash n'
Karry Food Stores, Inc.
2.10. "Date of Grant" means, with respect to an Award,
the date as of when it is granted or awarded to a Participant.
2.11. "Disability" means (a) disability as defined in
the Participant's then effective employment agreement with the
Company or any Subsidiary, or (b) if the Participant is not then
a party to an effective employment agreement with the Company or
a Subsidiary which defines disability, "Disability" shall mean
any physical or mental disability which is determined in writing
to be total and permanent by a medical physician selected in good
faith by the Committee, as a result of which the Participant is
unable to perform for the Company and its Subsidiaries
substantially the same services as he or she performed prior to
incurring such physical or mental disability.
2.12. "Exchange Act" means the Securities Exchange Act
of 1934, as in effect and as amended from time to time, or any
successor statute thereto, together with any rules, regulations
and interpretations promulgated thereunder or with respect
thereto.
2.13. "Fair Market Value" means on, or with respect
to, any given date(s), the mean average of the high bid and low
asked prices of the Common Stock, as reported on the National
Association of Securities Dealers Automated Quotation System,
Inc. ("NASDAQ"), for such date(s) or, if the Common Stock was not
traded on such date(s), on the next preceding day or days on
which the Common Stock was traded. If at any time the Common
Stock is not traded on NASDAQ, the Fair Market Value of a share
of the Common Stock shall be determined in good faith by the
Committee.
2.14. "Fiscal Year" shall mean each of the fiscal
years of the Company ending on the Sunday closest to July 31st,
commencing with the fiscal year of the Company ending on July 30,
1995.
2.15. "Incentive Option" means a Stock Option granted
under this Plan that is intended to qualify as an "incentive
stock option," as defined in Section 422 of the Code.
2.16. "Nonqualified Option" means a Stock Option
granted under this Plan that is not designated as an Incentive
Option.
2.17. "Original Stockholders" means members of (x) any
group consisting of members of the Board, or (y) the unofficial
committee of holders of the Company's 12-3/8% Senior Notes due
2
1999, the Company's Senior Floating Rate Notes due August 2,
1996, and the Company's 14% Subordinated Debentures due February
1, 2001, (the "Bondholder Committee"), which committee
participated in the negotiation of the terms of the Company's
Plan of Reorganization dated as of December 12, 1994, filed in
the United States Bankruptcy Court for the District of Delaware
in respect of Case No. 94-1082 (HSB), or any other group of
holders consisting in whole or in part of members of the
Bondholder Committee.
2.18. "Participant" means any individual eligible
under Section 5 of the Plan who is selected from time to time
under Section 3.2 of the Plan to receive an Award under the Plan.
2.19. "Plan" means the Kash n' Karry Food Stores, Inc.
1995 Key Employee Stock Option Plan, as set forth herein and as
in effect and as amended from time to time (together with any
rules and regulations promulgated by the Committee with respect
thereto).
2.20. "Retirement" means the retirement by the
Participant from active employment with the Company and its
Subsidiaries on or after the attainment of age sixty-five (65).
2.21. "SEC" means the United States Securities and
Exchange Commission.
2.22. "SEC Rule 16b-3" means Rule 16b-3, as
promulgated by the SEC under Section 16(b) of the Exchange Act,
or any successor rule or regulation thereto, as such Rule is
amended or applied from time to time.
2.23. "Stock Option" means an option to purchase
Common Stock from the Company that is granted to a Participant
pursuant to this Plan, whether as an Incentive Option or a
Nonqualified Option.
2.24. "Subsidiary(ies)" means any corporation(s)
(other than the Company) in an unbroken chain of corporations,
including and beginning with the Company, if each of such
corporations, other than the last corporation in the unbroken
chain, owns, directly or indirectly, more than fifty percent
(50%) of the voting stock in one of the other corporations in
such chain.
2.25. "Termination for Cause" means, unless otherwise
defined in the Participant's individual employment agreement with
the Company or any Subsidiary (in which case such employment
agreement definition shall govern), termination of employment as
a result of (a) such Participant's violation of any rule or
policy of the Company or any Subsidiary that results in damage to
the Company or its Subsidiaries or which, after written notice to
3
do so, such Participant fails to correct within a reasonable
time; (b) any material failure by a Participant to comply with a
reasonable direction of the Board or the willful misconduct by a
Participant in the responsibilities reasonably assigned to him or
her; (c) any willful failure by a Participant to perform his or
her job as required to meet the objectives of the Company or its
Subsidiaries; (d) a Participant's performing services for any
other corporation or person which competes with the Company or
its Subsidiaries while he or she is employed by the Company or
its Subsidiaries and without the written approval of the Chief
Executive Officer of the Company (or, in case the Chief Executive
Officer is the Participant, then without the written approval of
the Board); (e) conviction by a court of competent jurisdiction
of a felony; or (f) any other action or condition that may result
in termination of an employee for cause pursuant to any generally
applied standard adopted by the Board from time to time.
2.26. "Voting Interest" means securities of any class
or classes or other ownership interests having general voting
power under ordinary circumstances to elect members of a board of
directors of any entity.
3. Administration.
3.1. The Committee. The Plan shall be administered by
the Committee. The Committee shall be appointed from time to
time by the Board and shall be comprised of not less than two (2)
of the then members of the Board. No member of the Committee
shall be eligible to receive Awards under the Plan. To the
extent required for transactions under the Plan to qualify for
the exemptions available under SEC Rule 16b-3, no person may
serve on the Committee if, during the year preceding such
service, he or she was granted or awarded equity securities of
the Company (including options on such securities) under the Plan
or any other plan of the Company or any Affiliate thereof.
Consistent with the Bylaws of the Company, members of the
Committee serve at the pleasure of the Board and the Board,
subject to the immediately preceding sentence, may at any time
and from time to time remove members from, or add members to, the
Committee. Actions of the Committee shall be taken by the vote
of a majority of its members. Any action may be taken by a
written instrument signed by a majority of the Committee members,
and action so taken shall be fully as effective as if it had been
taken by a vote at a meeting.
3.2. Plan Administration and Plan Rules. The Committee
is authorized to construe and interpret the Plan and to
promulgate, amend, and rescind rules and regulations relating to
the implementation, administration and maintenance of the Plan.
Subject to the terms and conditions of the Plan, the Committee
shall make all determinations necessary or advisable for the
implementation, administration and maintenance of the Plan
4
including, without limitation, (a) selecting the Plan's
Participants, (b) making Awards in such amounts and form as the
Committee shall determine, (c) imposing such restrictions, terms
and conditions upon such Awards as the Committee shall deem
appropriate, and (d) correcting any technical defects(s) or
technical omission(s), or reconciling any technical
inconsistency(ies), in the Plan and/or any Award Agreement. The
Committee may designate persons other than members of the
Committee to carry out the day-to-day ministerial administration
of the Plan under such conditions and limitations as it may
prescribe, except that the Committee shall not delegate its
authority with regard to the selection of Participants in the
Plan and/or the granting of any Awards to Participants. The
Committee's determinations under the Plan need not be uniform and
may be made selectively among Participants, whether or not such
Participants are similarly situated. Any determination, decision
or action of the Committee in connection with the construction,
interpretation, administration, implementation or maintenance of
the Plan shall be final, conclusive and binding upon all
Participants and any person(s) claiming under or through any
Participants. The Company shall effect the granting of Awards
under the Plan, in accordance with the determinations made by the
Committee, by execution of written agreements and/or other
instruments in such form as is approved by the Committee.
3.3. Liability Limitation. Neither the Board nor the
Committee, nor any member of either, shall be liable for any act,
omission, interpretation, construction or determination made in
good faith in connection with the Plan (or any Award Agreement),
and the members of the Board and the Committee shall be entitled
to indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expense (including, without
limitation, attorneys' fees) arising or resulting therefrom to
the fullest extent permitted by law and/or under any directors
and officers liability insurance coverage which may be in effect
from time to time.
4. Term of Plan/Common Stock Subject to Plan.
4.1. Term. The Plan shall terminate on December 31,
2005, except with respect to Awards then outstanding. After such
date, no further Awards shall be granted under the Plan.
4.2. Common Stock. The maximum number of shares of
Common Stock in respect of which Stock Options may be granted
under the Plan, subject to adjustment as provided in Section 9.2
of the Plan, shall not exceed 236,946 shares of Common Stock. In
the event of a change in the Common Stock of the Company that is
limited to a change in the designation thereof to "Capital Stock"
or other similar designation, or to a change in the par value
thereof, or from par value to no par value, without increase or
decrease in the number of issued shares, the shares resulting
5
from any such change shall be deemed to be the Common Stock for
purposes of the Plan. Common Stock which may be issued under the
Plan may be either authorized and unissued shares or issued
shares which have been reacquired by the Company (in the open
market or in private transactions) and which are being held as
treasury shares. No fractional shares of Common Stock shall be
issued under the Plan.
4.3. Computation of Available Shares. For the purpose
of computing the total number of shares of Common Stock available
for Stock Options under the Plan, there shall be counted against
the limitations set forth in Section 4.2 of the Plan the maximum
number of shares of Common Stock potentially subject to issuance
upon exercise of Stock Options granted under Section 6 of the
Plan, determined as of the Date of Grant. If any Stock Options
expire unexercised or are forfeited, surrendered, cancelled or
otherwise terminated, or if any shares of Common Stock are
tendered in payment of any Stock Options, the shares of Common
Stock which were theretofore subject to such Stock Options shall
again be available for Stock Options under the Plan to the extent
of such expiration, forfeiture, surrender, cancellation, or other
termination of such Stock Options.
5. Eligibility. Individuals eligible for Awards under the
Plan shall consist of all salaried key employees (including
officers), or those who will become salaried key employees
(including officers), of the Company and/or its Subsidiaries or
Affiliates. A Participant who has been granted an Award under
the Plan may be granted an additional Award or Awards under the
Plan if the Committee shall so determine.
6. Awards.
6.1. Terms and Conditions. Stock Options granted under
the Plan shall be in respect of Common Stock. The Committee may
designate any Stock Option as an Incentive Option, in which case
the Stock Option must comply with the requirements of Section
6.5. If no designation is made, a Stock Option will constitute a
Nonqualified Option. The Committee may grant a Participant both
Incentive Options and Nonqualified Options, at the same time or
at different times. Awards shall be subject to the terms and
conditions set forth in this Section 6, and any additional terms
and conditions, not inconsistent with the express terms and
provisions of the Plan, as the Committee shall set forth in the
relevant Award Agreement. Award Agreements need not be uniform.
No Stock Option granted under the Plan may be exercised prior to
the approval of the Plan by the Company's shareholders.
6.2. Grant. No Award shall be effective unless the
Participant executes and delivers to the Company, within thirty
(30) days following the date when he or she is given written
6
notice of the Award, an Award Agreement (in a form prescribed by
the Committee).
6.3. Exercise Price. The exercise price per share of
Common Stock subject to a Stock Option shall be determined by the
Committee, including, without limitation, a determination based
on a formula determined by the Committee, but shall in no event
be less than the par value per share of Common Stock.
6.4. Term. The term of each Stock Option shall be such
period of time as is fixed by the Committee.
6.5. Incentive Options. Notwithstanding anything in
this Plan to the contrary, an Incentive Option must satisfy the
following additional requirements:
6.5.1. The Incentive Option must be designated
as such by the Committee when it is granted;
6.5.2. This Plan must be approved by the
shareholders of the Company within twelve (12) months before
or after the effective date of the Plan;
6.5.3. The exercise price under the Incentive
Option must equal at least one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Stock
Option;
6.5.4. The Incentive Option must expire not
more than ten (10) years after its Date of Grant; and
6.5.5. If, at the time an Incentive Option is
granted to a Participant, such Participant owns (within the
meaning of Section 422(b)(6) of the Code) stock representing
more than ten percent (10%) of the total combined Voting
Interest of all classes of outstanding stock of either the
Company or any Subsidiary, then: (a) the exercise price
under the Incentive Option must equal at least one hundred
ten percent (110%) of the Fair Market Value of the Common
Stock subject to the Stock Option; (b) the Incentive Option
must expire not more than five (5) years after its Date of
Grant; and (c) in the event of a termination of the
Participant's employment due to death, Retirement or
Disability, the Participant's right to exercise any then
exercisable Stock Options pursuant to Section 7.2 hereof
shall expire on the ninetieth (90th) day following such
termination of employment.
6.6. Method of Exercise. Subject to the provisions of
Section 6.7 of the Plan, a Stock Option may be exercised, in
whole or in part, or in increments, at any time or from time to
time before it expires. A partial exercise of a Stock Option
7
will not affect the Participant's subsequent right to exercise
the Stock Option as to the remaining Common Stock subject to the
Stock Option. Any portion of a Stock Option that is exercised
may not be exercised again. To exercise a Stock Option, a
Participant must do the following: (a) deliver to the Company a
written notice of exercise, specifying the number of shares to be
purchased; (b) tender to the Company payment in full of the
exercise price; and (c) comply with such other reasonable
requirements as the Committee may establish. The exercise date
of a Stock Option will be the date when the Company has received
the notice of exercise and full payment of the exercise price and
all other requirements established by the Committee have been
satisfied. A Participant may pay all or any part of the exercise
price under a Stock Option in cash, by certified check, bank
draft or money order payable to the order of the Company or, if
permitted by the Committee (in its sole discretion) and
applicable law, rule or regulation, by delivery of, alone or in
conjunction with a partial cash or instrument payment, (x) shares
of Common Stock already owned by the Participant for at least six
(6) months, or (y) some other form of payment acceptable to the
Committee. The Committee may also permit Participants (either on
a selective or group basis) to simultaneously exercise Stock
Options and sell the shares of Common Stock thereby acquired
pursuant to a "cashless exercise" arrangement or program,
selected by and approved of in all respects in advance by the
Committee. Payment instruments shall be received by the Company
subject to collection. The proceeds received by the Company upon
exercise of any Stock Option may be used by the Company for
general corporate purposes. No one has the rights of a
shareholder with respect to Common Stock subject to a Stock
Option until a certificate evidencing such Common Stock has been
delivered to the person exercising the Stock Option.
6.7. Exercisability. In respect of any Stock Option
granted under the Plan, unless otherwise determined by the
Committee (in its sole discretion) at any time and from time to
time in respect of any such Stock Option, such Stock Option shall
not be exercisable during the Fiscal Year in which its Date of
Grant occurs, and thereafter will become exercisable in serial
increments after the last day of each Fiscal Year (without any
proration of vesting for a portion of any Fiscal Year) as
follows:
Percent Exercisable
After Fiscal Year Per Year Cumulatively
1* 20% 20%
2 20% 40%
3 20% 60%
4 20% 80%
5 20% 100%
_______________
8
* The Fiscal Year in which the Date of Grant occurs.
For example, with respect to Stock Options granted in the
Fiscal Year ending July 30, 1995, such Stock Options will not be
exercisable on or before July 30, 1995, and will become
exercisable in serial increments after July 30, 1995, and each
successive Fiscal year as follows:
After Fiscal Year
ending on the Sunday
closest to the last Percent Exercisable
day of July in: Per Year Cumulatively
1995 20% 20%
1996 20% 40%
1997 20% 60%
1998 20% 80%
1999 20% 100%
7. Termination of Employment.
7.1. Unexercisable Options. Except as is otherwise
provided in the relevant Award Agreement as determined by the
Committee (in its sole discretion), and subject to any
determination of the Committee pursuant to Section 6.7 of the
Plan, if a Participant's employment with or performance of
services for the Company and its Subsidiaries terminates for any
reason (other than a Termination for Cause) any then
unexercisable Stock Options shall be forfeited and cancelled by
the Company. In the event of a Termination for Cause, all rights
under the terminated Participant's exercisable and unexercisable
Stock Options shall expire and be forfeited and cancelled upon
any such termination.
7.2. Exercisable Options. Except as otherwise provided
in this Section 7.2, in the relevant Award Agreement or in
Section 7.3 below, if a Participant's employment with or
performance of services for the Company and its Subsidiaries
terminates for any reason, other than by reason of a Termination
for Cause, such Participant's rights, if any, to exercise any
then exercisable Stock Options shall terminate forty-five (45)
days after the date of such termination (but not beyond the
stated term of any such Stock Option as determined under Section
6.4 of the Plan) and thereafter such Stock Options shall be
forfeited and cancelled by the Company. Notwithstanding the
immediately preceding sentence, except as otherwise provided in
Section 6.5, in the relevant Award Agreement, or in Section 7.3
below, if any termination of employment is due to death,
Retirement or Disability, a Participant (and such Participant's
estate, designated beneficiary or other legal representative, as
the case may be and as determined by the Committee) shall have
the right, to the extent exercisable immediately prior to or as a
9
result of any such termination, to exercise any Stock Option, if
any, at any time within the one hundred eighty (180) day period
following such termination (but not beyond the stated term of any
such Stock Option as determined under Section 6.4 of the Plan).
7.3. Committee Discretion. The Committee, in its sole
discretion, may determine that any Stock Option, to the extent
exercisable immediately prior to or as a result of any
termination of employment, may remain exercisable for an
additional specified period after such forty-five (45) day or one
hundred eighty (180) day period, or such longer period as may be
provided in the relevant Award Agreement, as the case may be,
expires (subject to any other applicable terms and provisions of
the Plan and the relevant Award Agreement), but not beyond the
stated term of any such Stock Option, as determined under Section
6.4 of the Plan.
8. Non-transferability of Awards. No Award under the Plan
or any Award Agreement, and no rights or interests herein or
therein, shall or may be assigned, transferred, sold, exchanged,
encumbered, pledged, or otherwise hypothecated or disposed of by
a Participant or any beneficiary(ies) of any Participant, except
by testamentary disposition by the Participant or the laws of
intestate succession. Upon any attempt to so assign, transfer,
sell, exchange, encumber, pledge or otherwise hypothecate or
dispose of any such Award contrary to the provisions hereof, such
Award shall immediately become null and void and of no further
force and effect. No such interest shall be subject to
execution, attachment or similar legal process, including,
without limitation, seizure for the payment of the Participant's
debts, judgements, alimony or separate maintenance. Stock
Options, if any, are exercisable during the lifetime of a
Participant only by the Participant and after his or her death by
his or her estate, designated beneficiary or other legal
representative, and not otherwise, regardless of any community
property interest therein of the spouse of such Participant or
such spouse's successor in interest.
9. Changes in Capitalization and Other Matters.
9.1. No Corporate Action Restriction. The existence
of the Plan, any Award Agreement and/or the Awards granted
hereunder shall not limit, affect or restrict in any way the
right or power of the Board or the shareholders of the Company to
make or authorize (a) any adjustment, recapitalization,
reorganization or other change in the Company's or any
Subsidiary's capital structure or its business, (b) any merger,
consolidation or change in the ownership of the Company or any
Subsidiary, (c) any issue of bonds, debentures, capital,
preferred or prior preference stocks ahead of or affecting the
Company's or any Subsidiary's capital stock or the rights
thereof, (d) any dissolution or liquidation of the Company or any
10
Subsidiary, (e) any sale or transfer of all or any part of the
Company's or any Subsidiary's assets or business, or (f) any
other corporate act or proceeding by the Company or any
Subsidiary. No Participant, beneficiary or any other person
shall have any claim against any member of the Board or the
Committee, the Company or any Subsidiary, or any employees,
officers or agents of the Company or any Subsidiary, as a result
of any such action.
9.2. Recapitalization Adjustments. If the outstanding
shares of Common Stock of the Company are increased, decreased,
or changed into or exchanged for, a different number or kind of
securities of the Company through a stock dividend,
reclassification, stock split, reverse stock split,
consolidation, subdivision, split-up, spin-off, split-off, or
combination, the Board shall authorize and make such
proportionate adjustments, if any, as the Board deems appropriate
to reflect such change, including, without limitation, with
respect to the aggregate number of shares of the Common Stock for
which Stock Options in respect thereof may be granted under the
Plan, the number of shares of the Common Stock covered by each
outstanding Stock Option, and the exercise price or other price
per share of Common Stock in respect of outstanding Stock
Options.
9.3. Certain Mergers. If the Company enters into or
is involved in any merger, reorganization or other business
combination with any person or entity (such merger,
reorganization or other business combination to be referred to
herein as a "Merger Event") and as a result of any such Merger
Event the Company will not be, or is not, the surviving
corporation, all Stock Options then unexercised and outstanding
shall become fully vested and exercisable as of the date of the
consummation of the Merger Event.
10. Change of Control.
10.1. Acceleration of Awards Vesting. Anything in the
Plan to the contrary notwithstanding, if a Change of Control of
the Company (as defined in Section 10.2 of the Plan) occurs, all
Stock Options then unexercised and outstanding shall become fully
vested and exercisable as of the date of the Change of Control.
The immediately preceding sentence shall apply to only those
Participants who are employed by the Company and/or one of its
Subsidiaries as of the date of the Change of Control.
10.2. Change of Control. For the purpose of this
Plan, a "Change of Control" shall have occurred if at any time
11
either (a) any person or any persons acting together (excluding
the Original Stockholders) that constitute a "group" for purposes
of Section 13(d) of the Exchange Act shall beneficially own at
least fifty percent (50%) of the total Voting Interest of the
Company or (b) any person or any persons acting together
(excluding the Original Stockholders) that constitute a "group"
for purposes of Section 13(d) of the Exchange Act shall succeed
in having a sufficient number of its nominees elected to the
Board to constitute a majority of the Board.
11. Amendment, Suspension, and Termination.
11.1. In General. The Board may suspend or terminate
the Plan (or any portion thereof) at any time and may amend the
Plan at any time and from time to time in such respects as the
Board may deem advisable to insure that any and all Awards
conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Participants to
benefit from any change in applicable laws or regulations, or in
any other respect the Board may deem to be in the best interests
of the Company or any Subsidiary; provided, however, that no such
amendment to the Plan shall, without shareholder approval:
(a) except as provided in Section 9 of the Plan, materially
increase the number of shares of Common Stock which may be issued
under the Plan, (b) materially modify the requirements as to
eligibility for participation in the Plan, (c) materially
increase the benefits accruing to Participants under the Plan
(this Section 11.1(c) shall not apply to any amendment or
modification of any Award Agreement permitted under Section 11.2
if such amendment or modification would not require shareholder
approval under SEC Rule 16b-3), (d) extend the termination date
of the Plan, or (e) amend clauses (a) through (d) of this Section
11.1. No such amendment, suspension or termination shall (i)
materially adversely affect the rights of any Participant under
any outstanding Stock Options, without the consent of such
Participant, or (ii) make any change that would disqualify the
Plan, or any other plan of the Company or any Subsidiary intended
to be so qualified, from the exemption provided by SEC Rule 16b-
3, or any successor provisions thereof.
11.2. Award Agreement Modifications. The Committee
may (in its sole discretion) amend or modify at any time and from
time to time the terms and provisions of any outstanding Stock
Options, in any manner to the extent that the Committee under the
Plan or any Award Agreement could have initially determined the
restrictions, terms and provisions of such Stock Options,
including, without limitation, changing or accelerating the date
or dates as of which such Stock Options shall become exercisable.
No such amendment or modification shall, however, materially
adversely affect the rights of any Participant under any such
Award without the consent of such Participant.
12
12. Miscellaneous.
12.1. Tax Withholding. The Company shall have the
right to require the Participant, upon the exercise of any Stock
Option, to remit or otherwise arrange for the payment of any
federal, state, local or other taxes of any kind which the
Committee, in its sole discretion, deems necessary to be withheld
to comply with the Code and/or any other applicable law, rule or
regulation.
12.2. No Right to Perform Services. Neither the
adoption of the Plan, the granting of any Award, nor the
execution of any Award Agreement, shall confer upon any employee
of the Company or any Subsidiary any right to continued
employment with the Company or any Subsidiary, as the case may
be, nor shall it interfere in any way with the right, if any, of
the Company or any Subsidiary to terminate the employment of any
employee at any time for any reason.
12.3. Unfunded Plan. The Plan shall be unfunded and
the Company shall not be required to segregate any assets in
connection with any Awards under the Plan. Any liability of the
Company to any person with respect to any Award under the Plan or
any Award Agreement shall be based solely upon the contractual
obligations that may be created as a result of the Plan or any
such award or agreement. No such obligation of the Company shall
be deemed to be secured by any pledge of, encumbrance on, or
other interest in, any property or asset of the Company or any
Subsidiary. Nothing contained in the Plan or any Award Agreement
shall be construed as creating in respect of any Participant (or
beneficiary thereof or any other person) any equity or other
interest of any kind in the assets of the Company or any
Subsidiary or creating a trust of any kind or a fiduciary
relationship of any kind between the Company, any Subsidiary
and/or any such Participant, any beneficiary thereof or any other
person.
12.4. Other Company Benefit and Compensation Programs.
Payments and other benefits received by a Participant under an
Award made pursuant to the Plan shall not be deemed a part of a
Participant's compensation for purposes of the determination of
benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Company or any Subsidiary
unless expressly provided in such other plans or arrangements, or
except where the Board expressly determines in writing that an
Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that
an Award has been made in lieu of a portion of competitive annual
base salary or other cash compensation. Awards under the Plan
may be made in addition to, in combination with, or as
alternatives to, grants, awards or payments under any other plans
or arrangements of the Company or its Subsidiaries. The
13
existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs
and additional compensation arrangements as it deems necessary to
attract, retain and motivate employees.
12.5. Listing, Registration and Other Legal
Compliance. No Awards or shares of the Common Stock shall be
required to be granted or issued under the Plan unless legal
counsel for the Company shall be satisfied that such grant or
issuance will be in compliance with all applicable federal and
state securities laws and regulations and any other applicable
laws or regulations. The Committee may require, as a condition
of any payment or share issuance, that certain agreements,
undertakings, representations, certificates, and/or information,
as the Committee may deem necessary or advisable, in its sole
discretion, be executed or provided to the Company to assure
compliance with all such applicable laws or regulations.
Certificates for shares of the Common Stock delivered under the
Plan may be subject to such stock-transfer orders and such other
restrictions as the Committee may deem advisable under the rules,
regulations, or other requirements of the SEC, any stock exchange
or trading system upon which the Common Stock is then listed or
traded, and any applicable federal or state securities law. In
addition, if, at any time specified herein (or in any Award
Agreement or otherwise) for (a) the making of any Award, or the
making of any determination, (b) the issuance or other
distribution of Common Stock, or (c) the payment of amounts to a
Participant with respect to any Award, any law, rule, regulation
or other requirement of any governmental authority or agency
shall require either the Company, any Subsidiary or any
Participant (or any estate, designated beneficiary or other legal
representative thereof, as the case may be, and as determined by
the Committee in its sole discretion) to take any action in
connection with any such determination, any shares to be issued
or distributed, any such payment, or the making of any such
determination, as the case may be, shall be deferred until such
required action is taken.
12.6. Designation of Beneficiary. Each Participant to
whom an Award has been made under the Plan may designate a
beneficiary or beneficiaries to exercise any option or to receive
any payment which, under the terms of the Plan and the relevant
Award Agreement, may become exercisable or payable on or after
the Participant's death. At any time, and from time to time, any
such designation may be changed or cancelled by the Participant
without the consent of any such beneficiary. Any such
designation, change or cancellation must be on a form provided
for that purpose by the Committee and shall not be effective
until received by the Committee. If no beneficiary has been
designated by a deceased Participant, or if the designated
beneficiaries have predeceased the Participant, the beneficiary
shall be the Participant's estate. If the Participant designates
14
more than one (1) such beneficiary, any payments under the Plan
to such beneficiaries shall be made in equal shares unless the
Participant has expressly designated otherwise, in which case the
payments shall be made in the shares designated by the
Participant.
12.7. Leaves of Absence/Transfers. The Committee
shall have the power to promulgate rules and regulations and to
make determinations, as it deems appropriate, under the Plan in
respect of any leave of absence from the Company or any
Subsidiary granted to a Participant. Without limiting the
generality of the foregoing, the Committee may determine whether
any such leave of absence shall be treated as if the Participant
has terminated employment with the Company or any such
Subsidiary. If a Participant transfers within the Company, or to
or from any Subsidiary, such Participant shall not be deemed to
have terminated employment as a result of such transfers.
12.8. Governing Law. The validity, construction,
enforcement and interpretation of this Plan, and all actions
taken hereunder, are governed by, and shall be construed in
accordance with, the laws of the State of Delaware and the
federal laws of the United States of America, excluding the laws
of those jurisdictions pertaining to the resolution of conflicts
with laws of other jurisdictions.
12.9. Titles and Headings. Any titles and headings
herein are for reference purposes only, and shall in no way
limit, define or otherwise affect the meaning, construction or
interpretation of any provisions of the Plan.
12.10. Effective Date. The Plan, which has been
established and approved by the Committee, shall be effective
upon its adoption and ratification by the Board. To the extent
required for compliance with Section 422 of the Code or SEC Rule
16b-3, the Plan is subject to and conditioned upon the approval
of the Plan by the Company's shareholders.
20/LWH/KNK.SEC/S1.95/EX-1016A.ASC
15