EXHIBIT 10.22
SILGAN HOLDINGS INC.
2004 STOCK INCENTIVE PLAN
(Adopted by the Board of Directors effective as of April 12, 2004)
TABLE OF CONTENTS
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Page
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SECTION 1. ESTABLISHMENT AND PURPOSE....................................1
SECTION 2. DEFINITIONS..................................................1
"162(m) Employee"...................................................1
"Affiliate".........................................................1
"Award".............................................................1
"Award Agreement"...................................................1
"Board of Directors"................................................1
"Cause".............................................................1
"Change in Control".................................................1
"Code"..............................................................3
"Committee".........................................................3
"Company"...........................................................3
"Disability"........................................................3
"Employee"..........................................................3
"Exchange Act"......................................................3
"Exercise Price"....................................................3
"Fair Market Value".................................................3
"Key Employee"......................................................3
"Maximum Amount"....................................................3
"Option"............................................................3
"Outside Director"..................................................3
"Parent"............................................................4
"Participant".......................................................4
"Performance Award".................................................4
"Performance Criteria"..............................................4
"Performance Cycle".................................................4
"Plan"..............................................................4
"Prior Plans".......................................................4
"Purchase Price"....................................................4
"Restricted Share"..................................................4
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"Restricted Stock Unit".............................................4
"Retirement"........................................................4
"SAR"...............................................................4
"Service"...........................................................4
"Share".............................................................4
"Stock".............................................................5
"Stock Unit"........................................................5
"Subsidiary"........................................................5
SECTION 3. ADMINISTRATION...............................................5
(a) Committee Composition...........................................5
(b) Committee Procedures............................................5
(c) Committee Responsibilities......................................5
(d) Delegation......................................................7
SECTION 4. ELIGIBILITY..................................................7
SECTION 5. STOCK SUBJECT TO PLAN........................................7
(a) Basic Limitation................................................7
(b) Application of Limitation.......................................7
(c) Dividends and Dividend Equivalents..............................8
(d) Limits on Individual Grants.....................................8
SECTION 6. RESTRICTED SHARES............................................8
(a) Award Agreement.................................................8
(b) Payment for Awards..............................................8
(c) Vesting.........................................................8
(d) Voting and Dividend Rights......................................9
SECTION 7. OTHER TERMS AND CONDITIONS OF AWARDS OR SALES................9
(a) Duration of Offers and Nontransferability of Rights.............9
(b) Withholding Taxes...............................................9
SECTION 8. TERMS AND CONDITIONS OF OPTIONS..............................9
(a) Award Agreement.................................................9
(b) Exercise Price..................................................9
(c) Withholding Taxes..............................................10
(d) Exercisability.................................................10
(e) Term of the Option.............................................10
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(f) Effect of Change in Control....................................11
(g) No Rights as a Stockholder.....................................11
(h) Prohibition on Repricing.......................................11
SECTION 9. PAYMENT FOR SHARES..........................................11
(a) General Rule...................................................11
(b) Surrender of Stock.............................................11
(c) Cashless Exercise..............................................12
SECTION 10. STOCK APPRECIATION RIGHTS..................................12
(a) Award Agreement................................................12
(b) Exercise Price.................................................12
(c) Exercisability.................................................12
(d) Term of SAR....................................................12
(e) Effect of Change in Control....................................13
(f) Exercise of SARs...............................................13
(g) Prohibition on Repricing.......................................14
SECTION 11. RESTRICTED STOCK UNITS.....................................14
(a) Award Agreement................................................14
(b) Payment for Awards.............................................14
(c) Vesting Conditions.............................................14
(d) Voting and Dividend Rights.....................................14
(e) Settlement of Stock Units......................................15
(f) Creditors' Rights..............................................15
SECTION 12. PERFORMANCE AWARDS.........................................15
(a) Award Agreement................................................15
(b) Eligibility....................................................15
(c) Performance Cycle..............................................15
(d) Earn-Out.......................................................15
(e) Vesting........................................................16
(f) Settlement of Performance Awards...............................16
(g) Dividend Equivalents...........................................16
(h) Section 162(m) of the Code.....................................16
SECTION 13. LEAVES OF ABSENCE..........................................17
SECTION 14. TERMINATION FOR CAUSE......................................17
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SECTION 15. DIRECTOR AWARDS............................................17
(a) Annual Grant...................................................17
(b) Vesting........................................................17
(c) Option Term....................................................17
SECTION 16. DEATH OF RECIPIENT.........................................18
SECTION 17. ADJUSTMENT OF SHARES.......................................18
(a) Adjustments....................................................18
(b) Dissolution or Liquidation.....................................19
(c) Reorganizations................................................19
(d) Reservation of Rights..........................................19
SECTION 18. DEFERRAL OF AWARDS.........................................20
(a) Deferral Forms.................................................20
(b) Deferral Conditions............................................20
(c) Effect of a Change in Control..................................20
(d) Voting and Dividend Rights.....................................20
SECTION 19. FRACTIONAL SHARES..........................................21
SECTION 20. AWARDS UNDER OTHER PLANS...................................21
SECTION 21. NONTRANSFERABILITY OF AWARD................................21
SECTION 22. LEGAL AND REGULATORY REQUIREMENTS..........................21
SECTION 23. WITHHOLDING TAXES..........................................22
(a) General........................................................22
(b) Method of Satisfying Withholding Obligations...................22
SECTION 24. NO EMPLOYMENT RIGHTS.......................................22
SECTION 25. NO SEGREGATION OF ASSETS...................................22
SECTION 26. EFFECT ON OTHER PLANS......................................22
SECTION 27. DURATION AND AMENDMENTS....................................22
(a) Term of the Plan...............................................22
(b) Right to Amend or Terminate the Plan...........................22
(c) Effect of Amendment or Termination.............................23
SECTION 28. CHOICE OF LAW..............................................23
SECTION 29. SEVERABILITY...............................................23
SECTION 30. EXECUTION..................................................23
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SILGAN HOLDINGS INC.
2004 STOCK INCENTIVE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was adopted by the Board of Directors effective as of April 12,
2004. The purpose of the Plan is to promote the long-term success of the Company
and the creation of stockholder value by (a) encouraging officers, other Key
Employees and Outside Directors to focus on critical long-range objectives, (b)
encouraging the attraction and retention of officers, other Key Employees and
Outside Directors with exceptional qualifications and (c) linking officers,
other Key Employees and Outside Directors directly to stockholder interests
through increased stock ownership. The Plan seeks to achieve this purpose by
providing for Awards in the form of Restricted Shares, Options, SARs, Stock
Units and/or Performance Awards. Any Awards granted under the Plan shall be
contingent on the approval of the Plan by the Company's stockholders. If their
approval is not obtained, the Plan will have no effect, and any Awards granted
under the Plan shall be rescinded.
SECTION 2. DEFINITIONS.
"162(m) Employee" shall mean an Employee who is a "covered employee" within
the meaning of Section 162(m)(3) of the Code.
"Affiliate" shall mean any entity other than a Subsidiary, if the Company
and/or one of more Subsidiaries own less than 50% of such entity.
"Award" shall mean any award of a Restricted Share, an Option, a SAR or a
Stock Unit or a Performance Award under the Plan.
"Award Agreement" shall mean the agreement between the Company and the
recipient of an Award, which contains the terms, conditions and restrictions
pertaining to such Award.
"Board of Directors" shall mean the Board of Directors of the Company, as
constituted from time to time.
"Cause" shall have the definition given to such term in the Employee's
employment agreement if the Employee has such an agreement containing a
definition of "Cause". If the Employee does not have such an agreement, "Cause"
shall mean gross misconduct or willful and material breach of the individual's
duties as an Employee, as determined by the Committee in its sole discretion.
"Change in Control" shall mean the occurrence of any of the following
events:
(i) an acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more
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of either (A) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities") or (B) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock"); excluding, however, the following: (i) any acquisition
directly from the Company, other than an acquisition by virtue of the
exercise of a conversion privilege, unless the security being so converted
was itself directly acquired from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled by
the Company, or (iv) any acquisition pursuant to a transaction that
complies with clauses (A) and (B) of paragraph (iii) of this definition; or
(ii) a change in the composition of the Board of Directors such that
the individuals who, as of the effective date of the Plan, constitute the
Board of Directors (such Board of Directors shall be hereinafter referred
to as the "Incumbent Board") cease for any reason to constitute two thirds
of the Board of Directors; provided, however, for purposes of this
paragraph, that any individual (i) who was nominated to the Board of
Directors in accordance with the procedures described in the Stockholders
Agreement between R. Philip Silver and D. Greg Horrigan and the Board of
Directors, dated as of February 14, 1997, as that agreement may be amended
from time to time, or (ii) whose election or nomination for election by the
Company's stockholders was approved by a vote of a majority of those
individuals who are members of the Board of Directors and who were also
members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual was a member of the
Incumbent Board; but, provided further, that any such individual whose
initial assumption of office occurs as a result of any actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors shall not be so considered as a member of the
Incumbent Board; or
(iii) consummation of a reorganization, merger, consolidation or sale
or other disposition of all or substantially all of the assets of the
Company ("Corporate Transaction"); excluding, however, such a Corporate
Transaction pursuant to which (A) all or substantially all of the
individuals and entities who are beneficial owners of the Outstanding
Company Voting Securities and Outstanding Company Common Stock,
respectively, immediately prior to such Corporate Transaction shall
beneficially own, directly or indirectly, more than 50% of, respectively,
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors or the outstanding
shares of common stock, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a
corporation that as the result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through one
or more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Corporate Transaction of the
Outstanding Company Voting Securities or Outstanding Company Common Stock,
as the case may be, and (B) individuals who were members of the Incumbent
Board shall constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the committee designated by the Board of Directors,
which is authorized to administer the Plan, as described in Section 3 hereof.
"Company" shall mean Silgan Holdings Inc., a Delaware corporation.
"Disability" shall mean a condition entitling an Employee to long-term
disability benefits under a long-term disability plan sponsored by the Company
or a Parent or Subsidiary of the Company, or under the U.S. Social Security Act.
For Outside Directors, "Disability" shall mean the inability by reason of
illness or injury to perform substantially all duties as an Outside Director
during any continuous period of 180 days.
"Employee" shall mean any individual who is classified as an employee on
the payroll records of the Company, a Parent or a Subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exercise Price" shall mean, in the case of an Option, the amount for which
one Common Share may be purchased upon exercise of such Option, as specified in
the applicable Award Agreement. "Exercise Price," in the case of a SAR, shall
mean an amount, as specified in the applicable Award Agreement, which is
subtracted from the Fair Market Value of one Common Share in determining the
amount payable upon exercise of such SAR.
"Fair Market Value" with respect to a Share, shall mean, for any particular
determination date, (i) if the Stock is listed or admitted to trade on a
national securities exchange, the average of the high and low sales prices for
the Stock on such date on the composite tape of the principal national
securities exchange on which the Stock is so listed or admitted to trade, (ii)
if the Stock is not listed or admitted to trade on a national securities
exchange, the average of the high and low sales prices for the Stock on such
date as furnished by the National Association of Securities Dealers, Inc.
through NASDAQ (or a similar organization if NASDAQ is no longer reporting such
information), or (iii) if the Stock is not listed or admitted to trade on a
national securities exchange and if sales prices for the Stock are not so
furnished through NASDAQ or a similar organization, the fair market value of the
Stock on such date as determined in good faith by the Committee, taking into
consideration, among other things, recent sales of the Stock.
"Key Employee" means any Employee (including any officer) who is designated
by the Committee as eligible to receive Awards under the Plan.
"Maximum Amount" shall mean the maximum amount of Performance Awards that
can be earned if the Performance Criteria are satisfied, as determined by the
Committee.
"Option" shall mean a nonstatutory stock option granted under Section 8 of
the Plan and entitling the holder to purchase Shares.
"Outside Director" shall mean a member of the Board of Directors who is not
an Employee of the Company, a Parent or a Subsidiary. Service as an Outside
Director shall be considered Service for all purposes of the Plan.
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"Parent" shall mean any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be a Parent commencing as of such date.
"Participant" shall mean an individual or estate who holds an Award.
"Performance Award" shall mean an Award granted under Section 12 of the
Plan.
"Performance Criteria" shall mean, with respect to any Performance Award,
the business criteria selected by the Committee to measure the level of
performance of the Company during the Performance Cycle. The Committee may
select as the Performance Criteria for a Performance Cycle any one or
combination of the measures set forth on Exhibit A. Any such amendment of the
Performance Criteria shall have no effect on Awards granted before the date of
such amendment.
"Performance Cycle" shall mean, with respect to any Award that vests based
on Performance Measures, the period of 12 months or longer over which the level
of performance will be assessed. The first Performance Cycle under the Plan
shall begin on such date as is set by the Committee, in its discretion, but in
no event earlier than January 1, 2004, provided that 162(m) Employees may not
receive Performance Awards under this Plan for any Performance Cycle beginning
prior to January 1, 2005.
"Plan" shall mean this 2004 Stock Incentive Plan of Silgan Holdings Inc.,
as amended from time to time.
"Prior Plans" shall mean the Silgan Holdings Inc. Fourth Amended and
Restated 1989 Stock Option Plan and the Silgan Holdings, Inc. 2002 Non-Employee
Directors Stock Option Plan.
"Purchase Price" shall mean the consideration for which one Share may be
acquired under the Plan (other than upon exercise of an Option), as specified by
the Committee.
"Restricted Share" shall mean a Share awarded under Section 6 of the Plan.
"Restricted Stock Unit" shall mean a Stock Unit awarded under Section 11 of
the Plan.
"Retirement" shall mean voluntary termination of Service on or after age 60
with 10 years of Service.
"SAR" shall mean a stock appreciation right granted under Section 10 of the
Plan.
"Service" shall mean service as an Employee or Outside Director.
"Share" shall mean one share of Stock, as adjusted in accordance with
Section 17 (if applicable).
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"Stock" shall mean the authorized and issuable common stock of the Company
($.01 par value).
"Stock Unit" shall mean a bookkeeping entry representing the equivalent of
one Share, as awarded under Section 11 of the Plan.
"Subsidiary" shall mean any corporation, if the Company and the other
subsidiaries of the Company own, in the aggregate, not less than 50% of the
total combined voting power of all classes of outstanding stock of such
corporation. A corporation that attains the status of a Subsidiary on a date
after the adoption of the Plan shall be considered a Subsidiary commencing as of
such date.
SECTION 3. ADMINISTRATION.
(a) Committee Composition. The Plan shall be administered by the Committee.
The Committee shall consist of two or more directors of the Company, who shall
be appointed by the Board of Directors. In addition, the composition of the
Committee shall satisfy
(i) such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act;
(ii) such requirements as the Internal Revenue Service may establish
for outside directors acting under plans intended to qualify for exemption
under Section 162(m)(4)(C) of the Code; and
(iii) such rules as the applicable national securities exchange may
establish for directors serving on the compensation committee of a company
listed on such exchange or, if the Stock is not listed on any national
securities exchange, such rules as the National Association of Securities
Dealers may establish for directors serving on the compensation committee
of a company listed on NASDAQ.
(b) Committee Procedures. The Board of Directors shall designate one of the
members of the Committee as chairman. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
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(iv) To determine when Shares are to be awarded or offered for sale
and when Options are to be granted under the Plan;
(v) To select the Award recipients;
(vi) To determine the number of Shares to be offered to each
Participant or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or sale of
Shares, including (without limitation) the Purchase Price and the vesting
of the Award, and to specify the provisions of the Award Agreement relating
to such award or sale;
(viii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price and the vesting or duration of the
Option, and to specify the provisions of the Award Agreement relating to
such Option;
(ix) To prescribe the terms and conditions of each Performance Award,
including (without limitation) the applicable Performance Criteria, the
vesting of the Award and the timing of distributions, to specify the
provisions of the Award Agreement relating to such Performance Award, to
evaluate the applicable level of performance over a Performance Cycle, and
to certify the level of performance attained with respect to the
Performance Criteria;
(x) To amend any outstanding Award Agreement, subject to applicable
legal restrictions, to applicable stock exchange or stock market rules, and
to the consent of the Participant who entered into such agreement, provided
that the prohibitions on the repricing of Stock Options and Stock
Appreciation Rights, as described in Sections 8(h) and 10(f), respectively,
may not be waived, and the terms and conditions of Awards to officers and
directors subject to Section 16 of the Exchange Act cannot be modified,
amended or waived other than on account of death, disability, retirement, a
change in control, or a termination of employment in connection with a
business transfer;
(xi) To prescribe the consideration for the grant of each Award under
the Plan and to determine the sufficiency of such consideration;
(xii) To make any adjustments to the Plan (including, but not limited
to, adjustment of the number of Shares available under the Plan or any
Award) and any Award granted under the Plan as may be appropriate pursuant
to Section 17;
(xiii) To make any modifications to the Plan that the Committee may
determine to be necessary to implement and administer the Plan in countries
outside the United States;
(xiv) To determine under which circumstances Awards may be deferred by
a Participant and the extent to which a deferral shall be credited with
dividend equivalents, interest or any other form of investment return;
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(xv) To determine the disposition of each Award under the Plan in the
event of a Participant's divorce or dissolution of marriage;
(xvi) To determine whether Awards under the Plan shall be granted in
replacement of other grants under an incentive or other compensation plan
of an acquired business;
(xvii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award Agreement; and
(xviii) To take any other actions deemed necessary or advisable for
the administration of the Plan.
(d) Delegation. The Committee may not delegate any authority or
responsibility granted to the Committee in subsection (c) of this Section 3.
SECTION 4. ELIGIBILITY.
Only officers and other Key Employees shall be eligible for the grant of
SARs and Performance Awards. Officers , other Key Employees and Outside
Directors shall be eligible for the grant of Restricted Shares, Stock Units and
Options.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be authorized but
unissued Shares or treasury Shares. The maximum aggregate number of Shares that
may be issued in connection with Options, SARs, Stock Units, Restricted Shares
and Performance Awards awarded under the Plan shall not exceed 900,000 Shares,
which includes the number of Shares remaining available for future grants under
the Prior Plans as of the date this Plan is approved by stockholders. The
limitation of this Section 5(a) shall be subject to adjustment pursuant to
Section 17.
(b) Application of Limitation. The number of Shares available for future
Awards under the Plan shall be reduced (i) in the case of Awards of Options and
SARs, by the number of Shares issuable upon exercise of such Options, and (ii)
in the case of Awards of Restricted Shares or Stock Units by two Shares for
every one Restricted Share or Stock Unit awarded. For this purpose, when an
Option and SAR are awarded in tandem, so that exercise of one results in
cancellation of the other, the Option and SAR shall be deemed to relate to the
same Share. If Awards are forfeited or cancelled or expire or terminate for any
other reason before being exercised, then the corresponding Shares shall again
become available for Awards under the Plan. Shares granted under this Plan in
connection with Awards that are assumed, converted or substituted as a result of
the acquisition of another business, corporation or other entity by the Company
or a combination of the Company with another business, corporation or entity
shall not reduce the number of Shares available for Awards under the Plan.
Shares granted under the Prior Plans shall not again become available for Awards
under the Plan, even if the Shares expire or terminate or are forfeited,
cancelled, or settled in cash.
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(c) Dividends and Dividend Equivalents. The Committee in its discretion may
provide in any Award Agreement that dividends and dividend equivalents shall be
paid or credited on vested Awards or on all Awards granted under the Award
Agreement. Any dividend equivalents paid or credited under the Plan shall not be
applied against the number of Awards available under the Plan. Dividends and
dividend equivalents may be distributed immediately or credited to a deferred
compensation account established for the Participant by the Committee as an
entry on the Company's books, as elected by the Participant. The Committee shall
determine any terms and conditions on deferral of a dividend or dividend
equivalent, including any interest or other form of investment return.
(d) Limits on Individual Grants. Subject to Section 17, no Participant may
be granted Awards of more than 112,500 Restricted Shares or Stock Units (or any
combination thereof) during any period of 36 consecutive months. Performance
Awards shall be paid in Restricted Shares or Stock Units, and shall be subject
to the limit set forth in the preceding sentence. Subject to Section 17, no
Participant may be granted Awards of Options or SARs (or any combination
thereof) with respect to more than 225,000 Shares during any period of 36
consecutive months (for this purpose, when an Option and SAR are awarded in
tandem, so that exercise of one results in cancellation of the other, the Option
and SAR shall be deemed to relate to the same Shares).
SECTION 6. RESTRICTED SHARES.
(a) Award Agreement. Each grant of Restricted Shares under the Plan shall
be evidenced by an Award Agreement between the recipient and the Company. Such
Restricted Shares shall be subject to all applicable terms of the Plan and may
be subject to any other terms that are not inconsistent with the Plan. The
Committee may condition a Participant's eligibility for a grant of Restricted
Shares on the achievement by the Company or a Subsidiary or business unit of the
Company of a target level of performance for a specified Performance Cycle, in
which case the Award shall be a Performance Award subject to Section 12. The
provisions of the various Award Agreements granting Restricted Shares under the
Plan need not be identical.
(b) Payment for Awards. Subject to the following sentence, Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
past service and future service. To the extent that an Award consists of newly
issued Restricted Shares, the Award recipient shall furnish consideration with a
value not less than the par value of such Restricted Shares in the form of cash,
cash equivalents, or past services rendered to the Company (or a Parent or
Subsidiary), as the Committee may determine.
(c) Vesting. Each Award of Restricted Shares to an Employee shall become
fully vested, in the discretion of the Committee, over a period no shorter than
three years from the date of grant, as specified in the Award Agreement, except
that Restricted Shares granted to a new Employee in the fiscal year of the
Company in which his or her Service first commences may become vested more
quickly, but over a period no shorter than one year from the date of grant.
Vesting shall occur, at once or in installments, upon satisfaction of the
conditions specified in the Award Agreement. If the conditions on vesting have
not been satisfied as of the Employee's termination of employment, the unvested
Shares shall be forfeited, provided that an Award
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Agreement may provide for accelerated vesting in the event of the Employee's
death, Disability or Retirement or other events. Restricted Shares shall
immediately become vested in the event of a Change in Control unless the Shares
vest on the basis of the performance of the Company, a Subsidiary or a business
unit, in which case the provisions of Section 12 shall control, or the acquiring
or surviving corporation or its parent or subsidiary assumes the outstanding
Restricted Shares or substitutes its own stock for the outstanding Restricted
Shares or the outstanding Restricted Shares are converted into stock of the
surviving corporation or its parent or subsidiary. If the acquiring or surviving
corporation or its parent or subsidiary assumes the outstanding Restricted
Shares or substitutes its own stock for the Restricted Stock, a Participant's
assumed or substituted Shares shall become fully vested in the event the
Participant's service with the Company or the acquiring or surviving corporation
(or with any of their respective parent or subsidiary corporations) is
terminated involuntarily without Cause within 24 months after the Change in
Control. The vesting requirements of Restricted Shares granted to Outside
Directors shall be subject to Section 15(b).
(d) Voting and Dividend Rights. Participants holding Restricted Shares
awarded under the Plan shall have the same voting, dividend and other rights as
the Company's other stockholders, except that Restricted Shares shall be
forfeited if the Participant attempts to sell, transfer, assign, pledge or
otherwise encumber or dispose of the Shares before the Award vests.
SECTION 7. OTHER TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) Duration of Offers and Nontransferability of Rights. Any right to
acquire Shares under the Plan (other than pursuant to an Option) shall
automatically expire if not exercised by the Participant 30 days after the grant
of such right was communicated to him or her by the Committee. Such right shall
not be transferable and shall be exercisable only by the Participant to whom
such right was granted.
(b) Withholding Taxes. As a condition to the purchase of Shares, the
Participant shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
SECTION 8. TERMS AND CONDITIONS OF OPTIONS.
(a) Award Agreement. Each grant of an Option under the Plan shall be
evidenced by an Award Agreement between the recipient and the Company. All
Options granted under the Plan shall be nonstatutory stock options. Such Option
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions that are not inconsistent with the
Plan and that the Committee deems appropriate for inclusion in an Award
Agreement. The provisions of the various Award Agreements granting Options under
the Plan need not be identical.
(b) Exercise Price. Each Award Agreement granting Options shall specify the
Exercise Price. The Exercise Price of an Option shall not be less than 100% of
the Fair Market Value of a Share on the date of grant, except for Options
granted in connection with Awards that are assumed, converted or substituted as
a result of the acquisition of another business, corporation or other entity by
the Company or a combination of the Company with another business,
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corporation or entity. Subject to the foregoing in this Section 8(b), the
Exercise Price under any Option shall be determined by the Committee at its sole
discretion. The Exercise Price shall be payable in one of the forms described in
Section 9.
(c) Withholding Taxes. As a condition to the exercise of an Option, the
Participant shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such exercise.
(d) Exercisability. Each Award Agreement granting Options shall specify the
date when all or any installment of the Option is to become exercisable. Each
Option granted to an Employee shall become fully vested, in the discretion of
the Committee, over a period no shorter than 12 months. Vesting shall occur, at
once or in installments, upon satisfaction of the conditions specified in the
Award Agreement. If the conditions on vesting have not been satisfied as of the
Employee's termination of employment, the unvested Options shall be forfeited.
Subject to the foregoing in this subsection (d), the Committee at its sole
discretion shall determine when all or any installment of an Option is to become
exercisable. Such provisions need not be uniform among all Options issued
pursuant to the Plan. The vesting requirements of Options granted to Outside
Directors shall be subject to Section 15(b).
(e) Term of the Option. The Award Agreement granting Options to an Employee
shall also specify the term of the Option, which term shall not be longer than
seven years, and shall provide for extension of the Option term or expiration of
the Option prior to the end of the term in the event of the termination of the
Employee's Service, as described below:
(i) In the event of the Employee's termination of Service due to death
or Disability, the term of the Option shall expire as of the earlier of the
first anniversary of such termination of Service or the original expiration
date specified in the Award Agreement; provided , however, that there shall
be a minimum period of six months following such death to exercise any
vested Options, regardless of the original expiration date specified in the
Award Agreement.
(ii) In the event of the Employee's Retirement, the term of the Option
shall expire as of the earlier of the first anniversary of the Employee's
Retirement or the original expiration date specified in the Award
Agreement; provided, however, that if the Employee dies during such
post-Retirement period, there shall be a minimum period of six months
following such death to exercise any vested Options, regardless of the
original expiration date specified in the Award Agreement.
(iii) In the event of the involuntary termination of the Employee's
Service without Cause, the term of the Option shall expire as of the
earlier of 90 days following the date of the Employee's termination or the
original expiration date specified in the Award Agreement; provided,
however, that if the Employee dies during such 90-day period there shall be
a minimum period of six months following such death to exercise any vested
Options, regardless of the original expiration date specified in the Award
Agreement.
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(iv) In the event of the Employee's voluntary resignation (other than
Retirement) or the Employee's involuntary termination of Service for Cause,
all outstanding Options shall immediately be cancelled.
Options granted to an Employee may be awarded in combination with SARs, and such
an Award shall provide that the Options shall not be exercisable unless the
related SARs are forfeited. Subject to the foregoing in this subsection (e), the
Committee at its sole discretion shall determine when an Option is to expire.
Such provisions need not be uniform among all Options issued pursuant to the
Plan.
The term of any Option granted to Outside Directors shall conform to the
requirements of Section 15(c).
(f) Effect of Change in Control. An Option shall become exercisable as to
all of the Shares subject to such Option in the event of a Change in Control,
unless the acquiring or surviving corporation or its parent or subsidiary
assumes the outstanding Options or substitutes its own stock for the Shares
underlying the outstanding Options. If the acquiring or surviving corporation or
its parent or subsidiary assumes the outstanding Options or substitutes its own
stock for the Shares underlying the outstanding Options, a Participant's assumed
Options or substituted options shall become exercisable as to all of the shares
subject to such options in the event the Participant's service with the Company
or the acquiring or surviving corporation (or with any of their respective
parent or subsidiary corporations) is terminated involuntarily without Cause
within 24 months after the Change in Control.
(g) No Rights as a Stockholder. A Participant or a transferee of a
Participant shall have no rights as a stockholder with respect to any Shares
covered by his Option until the date of the issuance of a stock certificate for
such Shares. No adjustments shall be made to the Award, except as provided in
Section 17.
(h) Prohibition on Repricing. The Committee shall not reduce the Exercise
Price of an Option (except for adjustments permitted by Section 17), or cancel
and replace an existing Option with an Option having a lower Exercise Price,
without first obtaining approval for such actions from the Company's
stockholders.
SECTION 9. PAYMENT FOR SHARES.
(a) General Rule. The entire Exercise Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America or an approved
cash equivalent at the time when such Shares are purchased, either alone or in
combination with one or both of the payment methods permitted under Section 9(b)
and 9(c) below.
(b) Surrender of Stock. To the extent that an Award Agreement so provides,
payment may be made all or in part by surrendering, or attesting to the
ownership of, Shares that have already been owned by the Participant or his
representative for more than six months. Such Shares shall be valued at their
Fair Market Value on the date when the new Shares are purchased under the Plan.
Notwithstanding the foregoing, the Participant shall not surrender, or attest to
the ownership of, Shares in payment of the Exercise Price if such action would
cause the Company
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to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.
(c) Cashless Exercise. To the extent that an Award Agreement so provides,
payment may be made all or in part by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to sell Shares and
to deliver all or part of the sale proceeds to the Company in payment of the
aggregate Exercise Price.
SECTION 10. STOCK APPRECIATION RIGHTS.
(a) Award Agreement. Each grant of a SAR under the Plan shall be evidenced
by an Award Agreement between the recipient and the Company. Such SAR shall be
subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the various
Award Agreements granting SARs under the Plan need not be identical.
(b) Exercise Price. Each Award Agreement granting SARs shall specify the
Exercise Price. The Exercise Price of a SAR shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, except for SARs granted in
combination with Options or in connection with Awards that are assumed,
converted or substituted as a result of the acquisition of another business,
corporation or other entity by the Company or a combination of the Company with
another business, corporation or entity. Subject to the foregoing in this
Section 10(b), the Exercise Price under any SAR shall be determined by the
Committee at its sole discretion.
(c) Exercisability. Each Award Agreement granting SARs shall specify the
date when all or any installment of the SAR is to become exercisable. Each SAR
shall become fully vested, in the discretion of the Committee, over a period no
shorter than 12 months. Vesting shall occur, at once or in installments, upon
satisfaction of the conditions specified in the Award Agreement. If the
conditions on vesting have not been satisfied as of the Participant's
termination of employment, the unvested SAR shall be forfeited. Subject to the
foregoing in this Section 10(c), the Committee at its sole discretion shall
determine when all or any installment of a SAR is to become exercisable. Such
provisions need not be uniform among all SARs issued pursuant to the Plan.
(d) Term of SAR. The Award Agreement granting the SAR shall also specify
the term of the SAR, which term shall not be longer than seven years, and may
provide for extension of the SAR term or expiration prior to the end of the SAR
term in the event of the termination of the Participant's employment.
(i) In the event of the Participant's termination of Service due to
death or Disability, the term of the SAR shall expire as of the earlier of
the first anniversary of such termination of Service or the original
expiration date specified in the Award Agreement; provided , however, that
there shall be a minimum period of six months to exercise any vested SARs
following such termination of Service, regardless of the original
expiration date specified in the Award Agreement.
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(ii) In the event of the Participant's Retirement, the term of the SAR
shall expire as of the earlier of the first anniversary of the
Participant's Retirement or the original expiration date specified in the
Award Agreement; provided, however, that if the Participant dies during
such post-Retirement period, there shall be a minimum period of six months
following such death to exercise any vested SARs, regardless of the
original expiration date specified in the Award Agreement.
(iii) In the event of the involuntary termination of the Participant's
Service without Cause, the term of the SAR shall expire as of the earlier
of 90 days following the date of the Participant's termination or the
original expiration date specified in the Award Agreement; provided,
however, that if the Participant dies during such 90-day period there shall
be a minimum period of six months following such death to exercise any
vested SARs, regardless of the original expiration date specified in the
Award Agreement.
(iv) In the event of the Participant's voluntary resignation (other
than Retirement) or the Participant's involuntary termination of Service
for Cause, all outstanding SARs shall immediately be cancelled.
A SAR may be awarded in combination with an Option either at the time of the
Option grant or any time thereafter. Such an Award shall provide that the SAR
shall not be exercisable unless the related Option is forfeited. A SAR granted
under the Plan may provide that it shall be exercisable only in the event of a
Change in Control. Subject to the foregoing in this Section 10(c), the Committee
at its sole discretion shall determine when a SAR is to expire. Such provisions
need not be uniform among all SARs issued pursuant to the Plan.
(e) Effect of Change in Control. A SAR shall become fully exercisable in
the event of a Change in Control, unless the acquiring or surviving corporation
or its parent or subsidiary assumes the outstanding SAR or substitutes its own
stock for the Shares underlying the outstanding SARs. If the acquiring or
surviving corporation or its parent or subsidiary assumes the outstanding SARs
or substitutes its own stock for the Shares underlying the outstanding SARs, a
Participant's assumed SARs or substituted SARs shall become exercisable as to
all of the shares subject to such SARs in the event the Participant's service
with the Company or the acquiring or surviving corporation (or with any of their
respective parent or subsidiary corporations) is terminated involuntarily
without Cause within 24 months after the Change in Control.
(f) Exercise of SARs. If, on the date when a SAR expires, the Exercise
Price under such SAR is less than the Fair Market Value on such date but any
portion of such SAR has not been exercised or surrendered, then such SAR shall
automatically be deemed to be exercised as of such date with respect to such
portion. Upon exercise of a SAR, the Participant holding the SAR (or any person
having the right to exercise the SAR after his or her death) shall receive from
the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the
Committee shall determine. The amount of any cash or the Fair Market Value of
any Shares received upon exercise of a SAR shall, in the aggregate, be equal to
the amount by which the Fair Market Value (on the date of surrender) of the
Shares subject to the SAR exceeds the Exercise Price.
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(g) Prohibition on Repricing. The Committee shall not reduce the Exercise
Price of a SAR (except for adjustments permitted by Section 17), or cancel and
replace an existing SAR with a SAR having a lower Exercise Price, without first
obtaining approval for such actions from the Company's stockholders.
SECTION 11. RESTRICTED STOCK UNITS.
(a) Award Agreement. Each grant of Restricted Stock Units under the Plan
shall be evidenced by an Award Agreement between the recipient and the Company.
Such Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The Award
Agreement shall specify the number of Restricted Stock Units and the
circumstances (if any) under which the Stock Units can be deferred. The
Committee may condition a Participant's eligibility for a grant of Restricted
Stock Units on the achievement by the Company or a Subsidiary or business unit
of the Company of a target level of performance for a specified Performance
Cycle, in which case the Award shall be a Performance Award subject to Section
12. The provisions of the various Award Agreements granting Stock Units under
the Plan need not be identical.
(b) Payment for Awards. To the extent that an Award is granted in the form
of Stock Units, no cash consideration shall be required of the Award recipients.
(c) Vesting Conditions. Each Award of Restricted Stock Units to an Employee
shall become fully vested, in the discretion of the Committee, over a period no
shorter than three years, as specified in the Award Agreement, except that
Restricted Stock Units granted to a new Employee in the fiscal year of the
Company in which his Service commences may vest more quickly. Vesting shall
occur, at once or in installments, upon satisfaction of the conditions specified
in the Award Agreement. If the conditions on vesting have not been satisfied as
of the Employee's termination of employment or directorship, the unvested Stock
Units shall be forfeited. Restricted Stock Units shall immediately become vested
in the event of a Change in Control unless the Stock Units vest on the basis of
the performance of the Company, a Subsidiary or a business unit, in which case
the provisions of Section 12 shall control, or unless the acquiring or surviving
corporation or its parent or subsidiary assumes the outstanding Stock Units or
substitutes its own stock for the outstanding Stock Units. If the acquiring or
surviving corporation or its parent or subsidiary assumes the outstanding Stock
Units or substitutes its own stock for the Shares underlying the outstanding
Stock Units, a Participant's assumed or substituted Restricted Stock Units shall
become immediately vested in the event the Participant's service with the
Company or the acquiring or surviving corporation (or with any of their
respective parent or subsidiary corporations) is terminated involuntarily
without Cause within 24 months after the Change in Control. The vesting
requirements of Restricted Stock Units granted to Outside Directors shall be
subject to Section 15(b).
(d) Voting and Dividend Rights. Participants holding Stock Units shall have
no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded
under the Plan may, at the Committee's discretion, carry with it a right to
dividend equivalents. Such right entitles the holder to be credited with an
amount equal to all cash dividends paid on one Share while the Stock Unit is
outstanding. The Committee, in its discretion, may grant dividend equivalents
from the date of grant or only after a Stock Unit is vested.
-14-
(e) Settlement of Stock Units. Settlement of vested Stock Units shall be
made in the form of Shares, except that dividend equivalents credited on Stock
Units shall be paid in cash. Distribution of Shares attributable to Stock Units
may occur or commence when all vesting and settlement conditions applicable to
the Stock Units have been satisfied or have lapsed, or it may be deferred to any
later date in accordance with Section 18. Until an Award of Stock Units is
settled, the number of such Stock Units shall be subject to adjustment pursuant
to Section 17.
(f) Creditors' Rights. A Participant holding Stock Units shall have no
rights thereby other than those of a general creditor of the Company. Stock
Units represent an unfunded and unsecured obligation of the Company, subject to
the terms and conditions of the applicable Award Agreement.
SECTION 12. PERFORMANCE AWARDS.
(a) Award Agreement. Each grant of Performance Awards under this Plan shall
be evidenced by an Award Agreement between the recipient and the Company. Such
Performance Awards shall be subject to all applicable terms of the Plan and may
be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Award Agreements granting Performance Awards under the
Plan need not be identical.
(b) Eligibility. Within 90 days after the commencement of a Performance
Cycle, the Committee shall determine the Employees who are eligible to receive a
Performance Award for the Performance Cycle, provided that the Committee may
determine the eligibility of any Employee other than a 162(m) Employee after the
expiration of this 90-day period.
(c) Performance Cycle. Performance Awards shall be granted in connection
with a Performance Cycle, as determined by the Committee in its discretion,
provided that a Performance Cycle may be no shorter than 12 months and no longer
than 5 years.
(d) Earn-Out.
(i) Within 90 days after the commencement of a Performance Cycle,
the Committee shall fix and establish in writing the Performance Criteria
that shall apply to that Performance Cycle and the Maximum Amount that may
be paid to each recipient of a Performance Award. The Committee shall also
set forth the minimum level of performance, based on objective factors,
that must be attained during the Performance Cycle before any Performance
Award shall be paid, and, if applicable, the maximum amount that may be
earned upon attainment of various levels of performance that equal or
exceed the minimum required level, and any vesting schedule that shall
apply after the Performance Award is earned.
(ii) The Committee may, in its discretion, select Performance
Criteria that measure the performance of the Company or one or more
business units or Subsidiaries of the Company. The Committee may select
Performance Criteria that are absolute or relative to the performance of
one or more comparable companies or an index of comparable companies.
(iii) The Committee, in its discretion, may, on a case-by-case
basis, reduce, but not increase, the Performance Awards payable to any
Employee with respect to any given
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Performance Cycle, provided that no reduction shall result in an increase
in the dollar amount or number of Shares payable under any Performance
Award of another Employee.
(iv) No 162(m) Employee shall be paid any Performance Award until
the Committee certifies in writing the level of performance attained for
the Performance Cycle in relation to the applicable Performance Criteria.
Performance Awards awarded to Participants who are not 162(m) Employees
shall be based on the Performance Criteria and payment formulas that the
Committee, in its discretion, may establish for these purposes. These
Performance Criteria and formulas may be the same as or different than the
Performance Criteria and formulas that apply to 162(m) Employees.
(e) Vesting.
(i) Each Performance Award shall vest, in the discretion of the
Committee, over such period as is specified in the Award Agreement. If the
conditions on vesting have not been satisfied as of the Participant's
termination of employment with respect to any earned Performance Awards,
the unvested Performance Awards shall be forfeited.
(ii) In the event of a Change in Control, any Performance Award
(including any dividend equivalents, interest or other forms of return
credited on the Performance Award) that has been earned but remains
unvested shall immediately become fully vested, unless the acquiring or
surviving corporation or its parent or subsidiary assumes the outstanding
Performance Award, converts the Performance Award to its own stock, or
substitutes its own stock for any Shares underlying the Performance Award.
If the acquiring or surviving corporation or its parent or subsidiary
assumes the outstanding Performance Awards, converts the Performance Award
to its own stock, or substitutes its own stock for any Shares underlying
the Performance Award, a Participant's assumed or substituted Performance
Awards shall become immediately vested in the event the Participant's
service with the Company or the acquiring or surviving corporation (or with
any of their respective parent or subsidiary corporations) is terminated
involuntarily without Cause within 24 months after the Change in Control.
(f) Settlement of Performance Awards. Performance Awards shall be settled
solely in the form of Restricted Shares or Stock Units or any combination of the
foregoing.
(g) Dividend Equivalents. A Performance Award may be credited with dividend
equivalents, interest or any other form of investment return, as determined by
the Committee. These credits shall be distributed to the Participant
immediately.
(h) Section 162(m) of the Code. It is the intent of the Company that
Performance Awards be "performance-based compensation" for purposes of Section
162(m) of the Code, that this Section 12 be interpreted in a manner that
satisfies the applicable requirements of Section 162(m)(C) of the Code and
related regulations, and that the Plan be operated so that the Company may take
a full tax deduction for Performance Awards. If any provision of this Plan or
any Performance Award would otherwise frustrate or conflict with this intent,
the provision shall be interpreted and deemed amended so as to avoid this
conflict.
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SECTION 13. LEAVES OF ABSENCE.
An Employee's Service shall cease when such Employee ceases to be actively
employed by, or a consultant or adviser to, the Company (or any Subsidiary), as
determined in the sole discretion of the Committee. Service does not terminate
when an Employee goes on a bona fide leave of absence that was approved by the
Company in writing, if the terms of the leave provide for continued service
crediting or if continued service crediting is required by applicable law.
Service terminates in any event when the approved leave ends, unless such
Employee immediately returns to active work. The Committee shall determine which
leaves count toward Service and when Service terminates for all purposes under
the Plan.
SECTION 14. TERMINATION FOR CAUSE.
Notwithstanding anything to the contrary herein, if an Employee incurs a
termination of Service for Cause, then all of the Employee's outstanding Options
and SARs, whether vested or unvested, and all of the Employee's unvested
Restricted Shares and Restricted Stock Units shall immediately be cancelled.
SECTION 15. DIRECTOR AWARDS.
(a) Annual Grant. On the first business day following the day of each
annual meeting of the stockholders of the Company, each Outside Director shall
be granted, in the discretion of the Board of Directors, 750 Restricted Shares,
750 Restricted Stock Units or an Option to purchase 1,500 Shares, in each case
subject to adjustment as provided in Section 17. Notwithstanding anything to the
contrary herein, the Board of Directors shall determine the terms of any Award
to an Outside Director, which terms shall be set forth in an Award Agreement
between the recipient and the Company. The terms of any Award of Restricted
Shares shall conform to the provisions of Section 6, the terms of any Award of
Restricted Stock Units shall conform to the provisions of Section 11, and the
terms of any Award of Options shall conform to the provisions of Section 8, in
each case except to the extent specifically modified by this Section 15.
(b) Vesting. Each Award of Restricted Shares, Restricted Stock Units or
Options to an Outside Director shall become fully vested, in the sole discretion
of the Board of Directors, over a period no shorter than six months, as
specified in the Award Agreement. Vesting shall occur, at once or in
installments, upon satisfaction of the conditions set forth in the Award
Agreement. If the conditions on vesting have not been satisfied as of the
termination of the Outside Director's Service, the unvested Awards shall be
forfeited.
(c) Option Term. The Award Agreement granting an Option shall specify the
term of the Award, which term shall not be longer than 10 years, and shall
provide for expiration of the Option prior to the end of the term in the event
of termination of the Outside Director's Service, as described below:
(i) In the event of termination of the Outside Director's Service due
to death or Disability, the term of the Option shall expire as of the
earlier of the first anniversary of such termination of Service or the
original expiration date specified in the Award Agreement.
-17-
(ii) In the event of the Outside Director's involuntary termination of
Service or termination of Service due to the expiration of the Outside
Director's term on the Board of Directors, the term of the Option shall
expire as of the earlier of 90 days following the date of the Outside
Director's termination or the original expiration date specified in the
Award Agreement.
(iii) In the event of the Outside Director's voluntary resignation
prior to the expiration of the Outside Director's term on the Board of
Directors, all outstanding Options shall immediately be cancelled and all
unvested Restricted Shares shall immediately be forfeited.
SECTION 16. DEATH OF RECIPIENT.
Any Award that becomes payable after the recipient's death shall be
distributed to the recipient's beneficiary or beneficiaries. Each recipient of
an Award under the Plan shall designate one or more beneficiaries for this
purpose by filing the prescribed form with the Company. A beneficiary
designation may be changed by filing the prescribed form with the Company at any
time before the Award recipient's death. If no beneficiary was designated or if
no designated beneficiary survives the Award recipient, then any Award that
becomes payable after the recipient's death shall be distributed to the
recipient's estate.
SECTION 17. ADJUSTMENT OF SHARES.
(a) Adjustments. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the price
of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, spin-off or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or more
of:
(i) The number of Shares available for future Awards under Section
5(a);
(ii) The limitation on Shares available for grant to any individual
under Section 5(d);
(iii) The number of Shares covered by each outstanding Option and SAR;
(iv) The Exercise Price under each outstanding Option and SAR; or
(v) The number of Stock Units included in any Award that has not yet
been settled.
Except as provided in this Section 17, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class. No adjustment shall
be made with respect to Awards granted to a 162(m) Employee to the extent the
adjustment
-18-
would cause the Award to fail to qualify as performance-based compensation under
Section 162(m) of the Code.
(b) Dissolution or Liquidation. To the extent not previously exercised or
settled, all Awards shall terminate immediately prior to the dissolution or
liquidation of the Company.
(c) Reorganizations. In the event that the Company is a party to a merger
or other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for the following:
(i) The continuation of the outstanding Awards by the Company, if the
Company is a surviving corporation;
(ii) The assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary, provided that any such Award shall
become immediately and fully vested if the employment of the Participant
holding the Award is involuntarily terminated without Cause within 24
months of the effective date of the reorganization;
(iii) The substitution by the surviving corporation or its parent or
subsidiary of its own awards for the outstanding Awards, provided that any
such Award shall become immediately and fully vested if the employment of
the Participant holding the Award is involuntarily terminated without Cause
within 24 months of the effective date of the reorganization;
(iv) Full exercisability or vesting and accelerated expiration of the
outstanding Awards; or
(v) Settlement of the outstanding Awards (including any dividend
equivalents, interest or other return credited to the Participant's
deferred compensation account) in cash or cash equivalents followed by
cancellation of such Awards.
When an Award is granted or at any time thereafter, the Committee, in its
discretion, may specify how the Award shall be treated in the event of a merger
or other reorganization if the agreement of merger or reorganization does not
make provision for outstanding Awards.
(d) Reservation of Rights. Except as provided in this Section 17, a
Participant shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend or any other
increase or decrease in the number of shares of stock of any class. Any issue by
the Company of shares of stock of any class or securities convertible into
shares of stock of any class shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of Shares subject to an Award
or the Exercise Price of Shares subject to an Option or SAR. The grant of an
Award pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes to
its capital or business structure, to merge or consolidate, or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
-19-
SECTION 18. DEFERRAL OF AWARDS.
(a) Deferral Forms. The Committee (in its sole discretion) may permit an
Employee or Outside Director to:
(i) have Shares that otherwise would be delivered to such Participant
as a result of the exercise of an Option or SAR converted into an equal
number of Stock Units;
(ii) have cash that otherwise would be paid to such Employee as a
result of the exercise of a SAR credited to a deferred compensation account
established for such Employee by the Committee as an entry on the Company's
books; or
(iii) have Shares that otherwise would be delivered to such
Participant as Restricted Shares or as a result of the exercise of an
Option or SAR or the settlement of Stock Units converted into amounts
credited to a deferred compensation account established for such
Participant by the Committee as an entry on the Company's books. Such
amounts shall be determined by reference to the Fair Market Value of such
Shares as of the date when they otherwise would have been delivered to such
Participant.
(b) Deferral Conditions. If the deferral or conversion of Awards is
permitted, the Committee (in its sole discretion) may establish rules,
procedures and forms pertaining to such Awards, including (without limitation)
with respect to the settlement of deferred compensation accounts established
under this Section 18. The Award Agreement may provide that, in the event of the
Participant's death, disability, involuntary termination of Service or
attainment of a particular age, a deferred Award shall be paid to the
Participant, to the extent vested, unless the Participant affirmatively elects
to continue to defer distribution.
(c) Effect of a Change in Control. In the event of a Change in Control, any
amounts credited to a deferred compensation account shall continue to be
deferred if the Stock of the Company continues to be publicly traded following
the Change in Control, except to the extent that the Award Agreement provides
otherwise. If the Stock of the Company is not publicly traded following the
Change in Control, the full value of the deferred amounts shall be settled in
cash or cash equivalents and immediately distributed to the Participant.
(d) Voting and Dividend Rights. A deferred compensation account established
under this Section 18 may be credited with dividend equivalents, interest or
other forms of investment return, as determined by the Committee in its
discretion. Any dividend equivalents issued on the deferred amounts shall be
paid to the Participant immediately. A Participant shall not have voting rights
with respect to deferred Shares until the Shares are distributed to the
Participant. A Participant for whom a deferred compensation account is
established shall have no rights with respect to the deferred amounts other than
the rights of a general creditor of the Company. Such an account shall represent
an unfunded and unsecured obligation of the Company and shall be subject to the
terms and conditions of the applicable agreement between the Participant and the
Company.
-20-
SECTION 19. FRACTIONAL SHARES.
No fractional Shares shall be issued under the Plan. If a Participant
acquires the right to receive a fractional Share under the Plan, the Participant
shall receive, in lieu of the fractional Share, an amount in cash equal to the
Fair Market Value of the fractional Share as of the date of settlement of the
Award.
SECTION 20. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other agreements, plans or programs.
Such awards may be settled in the form of Shares issued under this Plan. Such
Shares shall be treated for all purposes under the Plan as Shares issued in
settlement of Stock Units and shall, when issued, reduce the number of Shares
available under Section 5(a).
The Company may also grant Shares under this Plan in connection with Awards
that are assumed, converted or substituted as a result of the acquisition of
another business, corporation or other entity by the Company or a combination of
the Company with another business, corporation or entity. Such Shares shall not
reduce the number of Shares available under Section 5(a).
SECTION 21. NONTRANSFERABILITY OF AWARD.
No Award under the Plan shall be subject in any manner to alienation,
anticipation, sale, assignment, pledge, encumbrance or transfer, and no other
persons shall otherwise acquire any rights therein, except as provided below:
(a) An Award may be transferred by will or by the laws of descent or
distribution.
(b) Restricted Shares may be freely transferred after the Shares vest and
are delivered to the Participant, provided that Restricted Shares awarded to an
affiliate of the Company may be transferred only pursuant to Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an
effective registration for resale under the Securities Act. For purposes of this
subsection (b), "affiliate" shall have the meaning assigned to that term under
Rule 144.
SECTION 22. LEGAL AND REGULATORY REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, applicable state securities laws
and regulations and the regulations of the National Association of Securities
Dealers or any stock exchange on which the Company's securities may then be
listed, and the Company has obtained the approval or favorable ruling from any
governmental agency that the Company determines is necessary or advisable.
Awards under the Plan are also intended to satisfy the requirements of Rule
16b-3 under the Exchange Act. If any provision of the Plan or any grant of an
Award would otherwise frustrate or conflict with this intent, that provision
shall be interpreted and deemed amended so as to avoid conflict. No Participant
shall be entitled to receive, exercise, transfer or settle any Award if the
grant,
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exercise, transfer or settlement would violate the provisions of the
Sarbanes-Oxley Act of 2002 or any other applicable law.
SECTION 23. WITHHOLDING TAXES.
(a) General. To the extent required by applicable federal, state, local or
foreign law, a Participant shall make arrangements satisfactory to the Company
for the satisfaction of any withholding tax obligations that arise in connection
with the Plan. The Company shall not be required to issue any Shares or make any
cash payment under the Plan until such obligations are satisfied.
(b) Method of Satisfying Withholding Obligations. The Committee, in its
sole discretion, may permit a Participant to satisfy all or part of his or her
withholding or income tax obligations by having the Company withhold all or a
portion of any Shares or cash that otherwise would be issued to him or her, or
by surrendering all or a portion of any Shares that he or she previously
acquired and has held for at least six months. Such Shares shall be valued at
their Fair Market Value as of the date when taxes otherwise would be withheld in
cash. In no event may a Participant have Shares withheld that would otherwise be
issued to him or her in excess of the number necessary to satisfy the legally
required minimum tax withholding.
SECTION 24. NO EMPLOYMENT RIGHTS.
No provision of the Plan nor any right or Option granted under the Plan
shall be construed to give any person the right to become, to be treated as, or
to remain an Employee or director of the Company. The Company and its
Subsidiaries reserve the right to terminate any person's employment at any time
and for any reason, with or without notice.
SECTION 25. NO SEGREGATION OF ASSETS.
Neither the Company nor any Subsidiary shall be required to segregate any
assets that may at any time be represented by Awards granted pursuant to the
Plan.
SECTION 26. EFFECT ON OTHER PLANS.
Any gain realized pursuant to Awards under the Plan constitutes a special
incentive payment to the Participant and shall not be taken into account as
compensation for purposes of any other employee benefit plan of the Company or a
Subsidiary, except as the Committee otherwise provides. The adoption of the Plan
shall have no impact on Awards made or to be made under any other benefit plan
covering an employee of the Company or a Subsidiary or any predecessor or
successor of the Company or a Subsidiary.
SECTION 27. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall terminate
automatically on May 27, 2011, and may be terminated on any earlier date
pursuant to subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend
the Plan at any time and from time to time. Rights and obligations under any
Award granted before
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amendment of the Plan shall not be materially impaired by such amendment, except
with the consent of the person to whom the Award was granted. An amendment of
the Plan shall be subject to the approval of the Company's stockholders only to
the extent required by applicable laws, regulations or rules. Notwithstanding
the foregoing, no material revision to the terms of the Plan shall be effective
until the amendment is approved by the stockholders of the Company. A revision
is "material" for this purpose if, among other changes, it materially increases
the number of Shares that may be issued under the Plan (other than an increase
described in Section 5(b) or Section 17 of the Plan), changes the types of
Awards available under the Plan, materially expands the class of persons
eligible to receive Awards under the Plan, materially extends the term of the
Plan or decreases the Exercise Price at which Options or SARs may be granted
(other than an adjustment in Exercise Price permitted by Section 17).
(c) Effect of Amendment or Termination. The termination of the Plan or any
amendment thereof shall not affect any Share previously issued or any Award
previously granted under the Plan. No Shares shall be issued or sold under the
Plan after the termination thereof, except upon exercise of an Option or SAR or
settlement of a Stock Unit granted prior to such termination.
SECTION 28. CHOICE OF LAW.
The Plan and all determinations made and actions taken under the Plan shall
be governed by the internal substantive laws, and not the choice of law rules,
of the State of Delaware and construed accordingly, to the extent not superseded
by federal law.
SECTION 29. SEVERABILITY.
If any provision of the Plan is held unlawful or otherwise invalid or
unenforceable in whole or in part, the unlawfulness, invalidity or
unenforceability shall not affect any other parts of the Plan, which shall
remain in full force and effect.
SECTION 30. EXECUTION.
To record the adoption of the Plan by the Board of Directors effective as
of April 12, 2004, the Company has caused its authorized officer to execute the
same.
SILGAN HOLDINGS INC.
By /s/ R. Philip Silver
-----------------------------
R. Philip Silver
Chairman of the Board and
Co-Chief Executive Officer
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EXHIBIT A
PERFORMANCE CRITERIA
In establishing performance targets to measure the performance of the Company, a
Subsidiary or a business unit during a specified period pursuant to Section 12
of the Plan, the Committee shall select one or more of the following business
criteria:
(i) pre-tax or after-tax income;
(ii) earnings per Share;
(iii) income from operations;
(iv) earnings before interest expense and provision for income
taxes (EBIT);
(v) earnings before interest expense, provision for income
taxes, depreciation and amortization expenses (EBITDA);
(vi) net income;
(vii) revenue growth;
(viii) economic value added (EVA);
(ix) return on net or total assets;
(x) free cash flow from operations;
(xi) free cash flow per Share;
(xii) return on invested capital;
(xiii) return on stockholders' equity;
(xiv) expense reduction;
(xv) working capital;
(xvi) total stockholder return; and
(xvii) performance of the Company's stock price.
The Committee, in its discretion, may elect to exclude, in calculating
performance under any of the above criteria, (i) unusual gains, unusual losses
and other nonrecurring items, (ii) the amount of all charges and expenses
incurred or income earned in connection with any refinancing, restructuring,
rationalization, recapitalization or reorganization involving the Company and
its Subsidiaries, (iii) the cumulative effects of accounting changes, (iv)
discontinued operations, and (v) any business units, divisions, Subsidiaries or
other entities sold or acquired. The Committee may determine no later than 90
days after the commencement of the applicable Performance
Cycle also to exclude other items, each determined in accordance with generally
accepted accounting principles in the United States (to the extent applicable).
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