EXHIBIT 10.1
1997 INCENTIVE PLAN
OF
INNOVATIVE VALVE TECHNOLOGIES, INC.
1. ESTABLISHMENT OF THIS PLAN. Innovative Valve Technologies, Inc.,
a Delaware corporation (the "Company"), hereby establishes this 1997 Incentive
Plan of Innovative Valve Technologies, Inc. (this "Plan") effective as of March
6, 1997. References in this Plan to "Paragraphs" are to Paragraphs of this Plan.
2. DEFINITIONS. As used in this Plan, the following terms have the
following respective meanings:
"Annual Director Award Date" means, for each calendar year beginning
on or after the IPO Closing Date, the first business day of the month next
succeeding the date on which the Annual Meeting is held in that year.
"Annual Meeting" means the annual meeting of the stockholders of the
Company which is held pursuant to Section 21 1 (b) of the Delaware General
Corporation Law.
"Authorized Officer" means the CEO (or any other senior officer of
the Company to whom the CEO delegates, by written notice to the Committee
of that delegation, authority to execute any Award Agreement).
"Award" means an Employee Award, a Director Award or an Independent
Contractor Award.
"Award Agreement" means any Employee Award Agreement, Director Award
Agreement or Independent Contractor Award Agreement.
"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"CEO" means at any time the chief executive officer of the Company
at that time.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means the Compensation Committee of the Board or any
other committee of the Board which the Board designates by a written
resolution to administer this Plan.
"Common Stock" means the Common Stock, par value $.001 per share, of
the Company.
"Company" means Innovative Valve Technologies, Inc., a Delaware
corporation.
"Director" means an individual serving as a member of the Board.
"Director Award" means the grant under this Plan of a Director
Option or Director Restricted Stock.
"Director Award Agreement" means a written agreement between the
Company and a Participant who is a Nonemployee Director which sets forth
the terms, conditions and limitations applicable to a Director Award
granted to that Nonemployee Director.
"Director Options" means Nonqualified Options granted to Nonemployee
Directors pursuant to and in accordance with Paragraph 9(b).
"Director Restricted Stock" means Common Stock granted to
Nonemployee Directors pursuant to and in accordance with Paragraph 9(c).
"Disability" of a Nonemployee Director means the Nonemployee
Director is unable to perform the duties of a member of the Board for a
continuous period of more than 90 days by reason of any medically
determinable physical or mental impairment.
"Dividend Equivalents" means, with respect to shares of Restricted
Stock, an amount equal to all dividends and other distributions (or the
economic equivalent thereof) that are payable to stockholders of record
during the Restriction Period applicable to those shares on a like number
of shares of Common Stock.
"Employee" means any salaried employee of the Company or any of its
Subsidiaries.
"Employee Award" means the grant under this Plan of any Option, SAR,
Stock Award, Cash Award or Performance Award, whether granted singly or in
combination or tandem with any other Award, to a Participant who is an
Employee on such terms and subject to such conditions and limitations as
the Committee may establish consistent with the terms of this Plan.
"Employee Award Agreement" means a written agreement between the
Company and a Participant who is an Employee which sets forth the terms,
conditions and limitations applicable to an Employee Award granted to that
Employee.
"Fair Market Value" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price
per share of Common Stock on the consolidated transaction reporting system
for the principal national securities exchange on which shares of Common
Stock are listed on that date, or, if there shall have been no such sale
so reported
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on that date, on the last preceding date on which such a sale was so
reported, (ii) if shares of Common Stock are not so listed but are quoted
on the Nasdaq National Market, the mean between the highest and lowest
sales price per share of Common Stock reported by the Nasdaq National
Market on that date, or, if there shall have been no such sale so reported
on that date, on the last preceding date on which such a sale was so
reported, (iii) if the Common Stock is not so listed or quoted, the mean
between the closing bid and asked price on that date, or, if there are no
quotations available for that date, on the last preceding date for which
those quotations are available, as reported by the Nasdaq Stock Market,
or, if not reported by the Nasdaq Stock Market, by the National Quotation
Bureau Incorporated, or (iv) if shares of Common Stock are not publicly
traded, the most recent value determined by an independent appraiser
appointed by the Company for that purpose.
"Incentive Option" means an Option that is intended to comply with
the requirements set forth in Section 422 of the Code.
"Independent Contractor" means a person providing services to the
Company or any of its Subsidiaries otherwise than in his capacity as an
Employee or a Nonemployee Director.
"Independent Contractor Award" means the grant under this Plan of
any Nonqualified Stock Option, SAR, Stock Award, Cash Award or Performance
Award, whether granted singly or in combination or tandem with any other
Award, to a Participant who is an Independent Contractor on such terms and
subject to such conditions and limitations as the Committee may establish
consistent with the terms of this Plan.
"Independent Contractor Award Agreement" means a written agreement
between the Company and a Participant who is an Independent Contractor
which sets forth the terms, conditions and limitations applicable to an
Independent Contractor Award granted to that Independent Contractor.
"IPO" means the first time a registration statement filed under the
Securities Act of 1933 and respecting an underwritten primary offering by
the Company of shares of Common Stock is declared effective under that Act
and the shares registered by that registration statement are issued and
sold by the Company (otherwise than pursuant to the exercise of any
overallotment option).
"IPO Closing Date" means the date on which the Company first
receives payment for the shares of Common Stock it sells in the IPO.
"Merger Agreement" means the Agreement and Plan of Merger dated as
of June 27, 1997, as amended, to which the Company and SSI are parties.
"Merger Effective Time" means the time as of which the merger of a
Subsidiary with and into SSI pursuant to the Merger Agreement becomes
effective.
"Nonemployee Director" has the meaning set forth in Paragraph 4(b).
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"Nonqualified Option" means an Option that is not an Incentive
Option.
"Option" means a right to purchase a specified number of shares of
Common Stock at a specified price.
"Participant" means an Employee, Director or Independent Contractor
to whom an Award has been made under this Plan.
"Performance Award" means an award made pursuant to this Plan to a
Participant who is an Employee or Independent Contractor the earning of
which is subject to the attainment of one or more Performance Goals.
"Performance Goal" means a standard established by the Committee to
determine in whole or in part whether a Performance Award will be earned.
"Restricted Stock" means any Common Stock whose transfer is
restricted or which is subject to forfeiture provisions as provided in the
Award Agreement relating thereto.
"Restriction Period" means a period of time beginning as of the
effective date as of which an Award of Restricted Stock is made pursuant
to this Plan and ending as of the date on which the Common Stock subject
to that Award is no longer restricted as to its transfer or subject to
forfeiture provisions.
"SSI" means The Safe Seal Company, Inc., a Texas corporation.
"SSI Options" means the options and warrant to purchase shares of
SSI common stock which have been granted by SSI and are outstanding
immediately prior to the Merger Effective Time.
"SAR" means a right to receive a payment, in cash or Common Stock,
equal to the excess of the Fair Market Value or other specified valuation
of a specified number of shares of Common Stock on the date the right is
exercised over a specified strike price, in each case, as determined by
the Committee.
"Stock Award" means an award in the form of shares of Common Stock
or units denominated in shares of Common Stock.
"Subsidiary" means (i) in the case of a corporation, any corporation
of which the Company directly or indirectly owns shares representing more
than 50% of the combined voting power of the shares of all classes or
series of capital stock of that corporation which have the right to vote
generally on matters submitted to a vote of the stockholders of that
corporation and (ii) in the case of a partnership or other business entity
not organized as a corporation, any such business entity of which the
Company directly or indirectly owns more than 50% of the voting, capital
or profits interests (whether in the form of partnership interests,
membership interests or otherwise).
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3. OBJECTIVES. The Company has designed this Plan (i) to attract and
retain key Employees, qualified Nonemployee Directors and Independent
Contractors, (ii) to encourage the sense of proprietorship of these persons in
the Company and (iii) to stimulate the active interest of these persons in the
development and financial success of the Company and its Subsidiaries by making
Awards under this Plan.
4. ELIGIBILITY. (A) EMPLOYEES. Key Employees eligible for Employee
Awards are Nonemployee Directors and those employees assigned or to be assigned
positions of responsibility and whose performance, in the judgment of the
Committee, can have a significant effect on the success of the Company and its
Subsidiaries.
(b) DIRECTORS. Directors eligible for Director Awards are those
Directors who are not employees of the Company or any of its Subsidiaries
("Nonemployee Directors").
(c) INDEPENDENT CONTRACTORS. Independent Contractors eligible for
Independent Contractor Awards are those Independent Contractors providing
services to, or who will provide services to, the Company or any of its
Subsidiaries.
5. COMMON STOCK AVAILABLE FOR AWARDS. Subject to the provisions of
Paragraph 15, there will be available for Awards under this Plan granted wholly
or partly in Common Stock (including rights or options that may be exercised for
or settled in Common Stock) an aggregate of the greater of (i) 1,650,000 shares
of Common Stock or (ii) 15% of the number of shares of Stock issued and
outstanding on the last day of each calendar quarter, of which an aggregate of
not more than 275,000 shares will be available for Director Awards. No more than
1,650,000 shares of Common Stock will be used for Awards of Incentive Options.
The number of shares of Common Stock which are the subject of Awards that are
forfeited or terminated, expire unexercised, are settled in cash in lieu of
Common Stock or in a manner such that all or some of the shares covered thereby
are not issued to a Participant or are exchanged for a consideration that does
not involve Common Stock will again immediately become available for Awards
hereunder. The Committee may from time to time adopt and observe such procedures
concerning the counting of shares against the Plan maximum as it may deem
appropriate. The Board and the appropriate officers of the Company will from
time to time take whatever actions are necessary to file any required documents
with governmental authorities, stock exchanges and transaction reporting systems
to ensure that shares of Common Stock are available for issuance pursuant to
Awards.
6. ADMINISTRATION. (a) The Committee will administer this Plan.
(b) Subject to the provisions hereof, the Committee will have full
and exclusive power and authority to administer this Plan and to take all
actions that are specifically contemplated hereby or are necessary or
appropriate in connection with the administration hereof. The Committee also
will have full and exclusive power to interpret this Plan and to adopt such
rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper, all of which powers will be exercised in the best interests
of the Company and in keeping with the objectives of this Plan. The Committee
may, in its discretion, provide for the extension of the exercisability of any
Employee Award or Independent Contractor Award, accelerate the vesting or
exercisability of any Employee Award or Independent Contractor Award, eliminate
or make less restrictive any restrictions
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contained in any Employee Award or Independent Contractor Award, waive any
restriction or other provision of this Plan or any Employee Award or Independent
Contractor Award or otherwise amend or modify any Employee Award or Independent
Contractor Award in any manner that is either (i) not adverse to the Participant
to whom that Employee Award or Independent Contractor Award was granted or (ii)
consented to in writing by that Participant. The Committee may grant an Employee
Award to any individual who has agreed in writing to become an Employee within
six months after the date of that agreement, provided that the effectiveness of
that Award will be subject to the condition that the individual actually becomes
an Employee within that time period. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or in any
Employee Award or Independent Contractor Award in the manner and to the extent
the Committee deems necessary or desirable to further the purposes of this Plan.
Any decision of the Committee in the interpretation and administration of this
Plan will lie within its sole and absolute discretion and will be final,
conclusive and binding on all parties concerned.
(c) No member of the Committee or officer of the Company to whom the
Committee has delegated authority in accordance with the provisions of Paragraph
7 will be liable for anything done or omitted to be done by him or her, by any
member of the Committee or by any officer of the Company in connection with the
performance of any duties under this Plan, except for his or her own willful
misconduct or as expressly provided by statute.
7. DELEGATION OF AUTHORITY. The Committee may delegate to the CEO
and to other senior officers of the Company its duties under this Plan on such
terms and subject to such conditions or limitations as the Committee may
establish.
8. EMPLOYEE AND INDEPENDENT CONTRACTOR AWARDS. (a) The Committee
will determine the type or types of Employee Awards to be made and will
designate from time to time the Employees who are to receive Employee Awards.
Each Employee Award will be evidenced by an Employee Award Agreement containing
such terms, conditions and limitations as the Committee determines in its sole
discretion and signed by the Participant to whom the Employee Award is made and
by an Authorized Officer and on behalf of the Company. Employee Awards may
consist of those listed in this Paragraph 8(a) and may be granted singly or in
combination or tandem with other Employee Awards. Employee Awards also may be
made in combination or tandem with, in replace ment of or as alternatives to
grants or rights under this Plan or any other employee plan of the Company or
any of its Subsidiaries, including the plan of any acquired entity. An Employee
Award may provide for the grant or issuance of additional, replacement or
alternative Employee Awards on the occurrence of specified events, including the
exercise of the original Employee Award granted to a Participant. All or part of
an Employee Award may be subject to conditions established by the Committee,
which may include, but are not limited to, continuous service with the Company
and its Subsidiaries, achievement of specific business objectives, increases in
specified indices, attainment of specified growth rates and other comparable
measurements of performance. If a Participant holding an Employee Award ceases
to be an Employee, any unexercised, deferred, unexercisable, unvested or unpaid
portion of that Employee Award will be treated as set forth in the applicable
Employee Award Agreement.
(i) STOCK OPTION. An Employee Award may be in the form of an Option.
An Option awarded pursuant to this Plan may consist of an Incentive Option
or a Nonqualified
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Option. Unless the Committee specifies otherwise in the case of any
Nonqualified Option, the price at which any share of Common Stock may be
purchased on the exercise of any Option will be not less than the Fair
Market Value of a share of the Common Stock on the date of grant of that
Option, and the Committee will determine the other terms, conditions and
limitations applicable to each Option, including its term and the date or
dates on which it becomes exercisable.
(ii) STOCK APPRECIATION RIGHT. An Employee Award may be in the form
of an SAR. The Committee will determine the terms, conditions and
limitations applicable to each SAR awarded pursuant to this Plan,
including its term and the date or dates on which it becomes exercisable.
(iii) STOCK AWARD. An Employee Award may be in the form of a Stock
Award. The Committee will determine the terms, conditions and limitations
applicable to each Stock Award granted pursuant to this Plan.
(iv) CASH AWARD. An Employee Award may be in the form of a Cash
Award. The Committee will determine the terms, conditions and limitations
applicable to each Cash Award granted pursuant to this Plan.
(v) PERFORMANCE AWARD. Without limiting the type or number of
Employee Awards that may be made under the other provisions of this Plan,
an Employee Award may be in the form of a Performance Award. A Performance
Award will be paid, vested or otherwise deliverable solely on account of
the attainment of one or more pre-established, objective Performance Goals
established by the Committee prior to the earlier to occur of (A) 90 days
after the commencement of the period of service to which the Performance
Goal relates or (B) the lapse of 25% of the period of service (as
scheduled in good faith at the time the goal is established), and in any
event while the outcome is substantially uncertain. A Performance Goal is
objective if a third party having knowledge of the relevant facts could
determine whether the goal is met. A Performance Goal may be based on one
or more business criteria, including, but not limited to, those that apply
to the individual, one or more lines or classes of products or services of
the Company, one or more business divisions, groups or units of the
Company, or the Company as a whole, and may include one or more of the
following: increased revenue, net income, stock price, market share,
earnings per share, return on equity, return on assets or decrease in
costs. Unless otherwise stated, a Performance Goal need not be based on an
increase or positive result under a particular business criterion and
could include, for example, maintaining the status quo or limiting
economic losses (measured, in each case, by reference to specific business
criteria). In interpreting Plan provisions applicable to Performance Goals
and Performance Awards, it is the intent of this Plan to conform with the
standards of Section l 62(m) of the Code and Treasury Regulation ss.
1.162-27(e)(2)(i) or any successor law or regulation, and the Committee in
establishing such goals and interpreting the Plan will be guided by those
provisions. Prior to the payment of any compensation based on the
achievement of Performance Goals, the Committee must certify in writing
that the applicable Performance Goals were, in fact, satisfied. Subject to
the foregoing provisions, the Committee will determine the terms,
conditions and limitations applicable to Performance Awards.
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(b) Notwithstanding anything to the contrary contained in this Plan,
the following limitations will apply to each Employee Award:
(i) no Participant may be granted, during any one-year period,
Employee Awards consisting of Options or SARs that are exercisable for
more than 300,000 shares of Common Stock, exclusive of Options into which
the SSI Options are converted as contemplated by Paragraph 8(d);
(ii) no Participant may be granted, during any one-year period,
Stock Awards covering or relating to more than 10,000 shares of Common
Stock (the limitation set forth in this clause (ii), together with the
limitation set forth in clause (i) above, being hereinafter collectively
referred to as the "Stock-based Awards Limitations"); and
(iii) no Participant may be granted Employee Awards consisting of
cash or in any other form permitted under this Plan (other than Employee
Awards consisting of Options or SARs or otherwise consisting of shares of
Common Stock or units denominated in such shares) in respect of any
one-year period having a value determined on the date of grant in excess
of $1,000,000.
(c) The Committee will have the sole responsibility and authority to
determine the type or types of Independent Contractor Awards to be made and may
make any such Awards as could be made to an Employee, other than Awards
consisting of Incentive Options, but the Stock based Awards Limitations will not
apply to Independent Contractor Awards.
(d) The SSI Options outstanding immediately prior to the Merger
Effective Time automatically will be converted into Nonqualified Options at the
Merger Effective Time as provided in Schedule 2(D) to the Merger Agreement.
9. DIRECTOR AWARDS. (a) Each Nonemployee Director will be granted
Director Awards in accordance with this Paragraph 9 and subject to the
applicable terms, conditions and limitations set forth in this Plan and the
applicable Director Award Agreement. Notwithstanding anything to the contrary
contained herein, Director Awards will not be made in any year in which a
sufficient number of shares of Common Stock are not available under this Plan to
make those Director Awards under this Plan.
(b) DIRECTOR OPTIONS. On the IPO Closing Date, each Nonemployee
Director will be automatically awarded a Director Option that provides for the
purchase of 10,000 shares of Common Stock. In addition, on each Annual Director
Award Date, each Nonemployee Director shall automatically be granted a Director
Option that provides for the purchase of 5,000 shares of Common Stock. Any
individual who first becomes a Nonemployee Director after the IPO Closing Date
otherwise than by election at an Annual Meeting automatically will be granted,
on the date of his or her election, a Director Option that provides for the
purchase of a number of shares of Common Stock (rounded up to the nearest whole
number) equal to the product of (i) 10,000 and (ii) a fraction the numerator of
which is the number of days between the election of that Nonemployee Director
and the next scheduled Annual Director Award Date (or, if that date has not been
scheduled, the first anniversary of the immediately preceding Annual Director
Award Date, if any; provided,
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that for purposes of any Director Options awarded prior to the scheduling of the
1998 Annual Meeting, September 1, 1997 will be the initial Annual Director Award
Date) and the denominator of which is 365. Each Director Option will have a term
of seven years from the date of grant, notwithstanding any earlier termination
of the status of the holder as a Nonemployee Director. The purchase price of
each share of Common Stock subject to each Director Option granted on the IPO
Closing Date will be the initial price to the public per share of the Common
Stock as set forth on the cover page of the final prospectus for the IPO. The
purchase price of each share of Common Stock subject to any other Director
Option will be equal to the Fair Market Value of a share of the Common Stock on
the date of grant of that Director Option. All Director Options will vest and
become exercisable in increments of one-third of the total number of shares of
Common Stock which are subject thereto (rounded up to the nearest whole number)
on the first and second anniversaries of the date of grant and of all remaining
shares of Common Stock which are subject thereto on the third anniversary of the
date of grant. Any Nonemployee Director who resigns as a Director without the
consent of a majority of the other Directors will forfeit all his then
unexercisable Director Options. The Board may determine, at its discretion, to
increase the number of shares of Common Stock to be subject to Director Options
granted on any subsequent Annual Director Award Date to not more than 15,000
shares. Each Award of Director Options will be evidenced by a Director Award
Agreement containing the terms, conditions and limitations set forth above and
signed by the Participant to whom the Director Options are granted and by an
Authorized Officer for and on behalf of the Company.
(c) DIRECTOR RESTRICTED STOCK. Prior to the Annual Director Award
Date in each year, beginning in 1998, a Nonemployee Director may elect to
receive either 50% or 100% (the percentage so elected being the "Elected
Percentage") of the Director's fees (including both annual retainer fees, if
any, and meeting fees) the Company otherwise would pay in cash to the
Nonemployee Director for his service as a Director during the period from and
including that Annual Director Award Date to and excluding the next succeeding
Annual Director Award Date (the "Service Period") in the form of the number of
shares of Director Restricted Stock (rounded up to the nearest whole number)
which equals the quotient of (i) the product of (A) the total amount of those
Director's fees multiplied by (B) the Elected Percentage, divided by (ii) the
Fair Market Value of a share of Common Stock on the first day of that Service
Period. Each annual election made by a Nonemployee Director pursuant to this
Paragraph 9(c) will (i) take the form of a written document signed by the
Nonemployee Director and filed with the Secretary of the Company and (ii)
designate the Elected Percentage of the cash fees the Nonemployee Director
elects to forego in the next Service Period in exchange for Director Restricted
Stock. An Award of Director Restricted Stock at the election of a Nonemployee
Director for any Service Period will be effective on the last day of that
Service Period. Each Award of Director Restricted Stock will be evidenced by a
Director Award Agreement containing the terms, conditions and limitations set
forth above and signed by the Participant to whom the Director Restricted Stock
is granted and by an Authorized Officer for and on behalf of the Company.
10. PAYMENT OF AWARDS. (a) GENERAL. Payment of Employee Awards or
Independent Contractor Awards may be made in the form of cash or Common Stock,
or a combination thereof, and may include such restrictions as the Committee may
determine, including, in the case of Common Stock, restrictions on transfer and
forfeiture provisions. If payment of an Employee Award or Independent Contractor
Award is made in the form of shares of Restricted
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Stock, the applicable Award Agreement relating to those shares will specify
whether they are to be issued at the beginning or end of their Restriction
Period. If shares of Restricted Stock are to be issued at the beginning of their
Restriction Period, the certificates evidencing those shares (to the extent that
those shares are so evidenced) will contain appropriate legends and restrictions
that describe the terms and conditions of the restrictions applicable thereto.
If shares of Restricted Stock are to be issued at the end of their Restricted
Period, the right to receive those shares will be evidenced by book entry
registration or in such other manner as the Committee may determine.
(b) DEFERRAL. With the approval of the Committee, amounts payable in
respect of Employee Awards or Independent Contractor Awards may be deferred and
paid either in the form of installments or as a lump-sum payment. The Committee
may permit selected Participants to elect to defer payments of some or all types
of Employee Awards or Independent Contractor Awards in accordance with
procedures the Committee establishes. Any deferred payment of an Employee Award
or Independent Contractor Award, whether elected by the Participant or specified
by the applicable Award Agreement or by the Committee, may be forfeited if and
to the extent that the applicable Award Agreement so provides.
(c) DIVIDENDS AND INTEREST. Rights to dividends or Dividend
Equivalents may be extended to and made part of any Employee Award or
Independent Contractor Award consisting of shares of Common Stock or units
denominated in shares of Common Stock, subject to such terms, conditions and
restrictions as the Committee may establish. The Committee also may establish
rules and procedures for the crediting of interest on deferred cash payments and
Dividend Equivalents for Employee Awards or Independent Contractor Awards
consisting of shares of Common Stock or units denominated in shares of Common
Stock.
(d) SUBSTITUTION OF AWARDS. At the discretion of the Committee, a
Participant who is an Employee or Independent Contractor may be offered an
election to substitute any Employee Award or Independent Contractor Award for
another Employee Award or Independent Contractor Award or Employee Awards or
Independent Contractor Awards of the same or a different type.
11. STOCK OPTION EXERCISE. The price at which shares of Common Stock
may be purchased under an Option will be paid in full at the time of exercise in
cash or, if elected by the optionee, the optionee may purchase those shares by
means of tendering Common Stock or surrendering another Award, including shares
of Restricted Stock or Director Restricted Stock, valued at their Fair Market
Value per share on the date of exercise, or any combination thereof. The
Committee will determine acceptable methods for Participants who are Employees
or Independent Contractors to tender Common Stock or other Employee Awards or
Independent Contractor Awards; provided, that any Common Stock that is or was
the subject of an Employee Award or Independent Contractor Award may be so
tendered only if it has been held by the Participant for six months. The
Committee may provide for procedures to permit the exercise or purchase of
Employee Awards or Independent Contractor Awards by use of the proceeds to be
received from the sale of Common Stock issuable pursuant to an Employee Award or
Independent Contractor Award. Unless otherwise provided in the applicable Award
Agreement, if shares of Restricted Stock are tendered as consideration for the
exercise of an Option, the number of the shares issued on the exercise of the
Option which equals the number of shares of Restricted Stock or Director
Restricted Stock used as
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consideration therefor will be subject to the same restrictions as the
Restricted Stock or Director Restricted Stock so submitted as well as to any
additional restrictions the Committee may impose.
12. TAXES. The Company will have the right to deduct applicable
taxes from any Employee Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, or at the time
otherwise required by applicable law, an appropriate amount of cash or number of
shares of Common Stock or a combination thereof for payment of taxes required
by-law or to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for withholding of those taxes. The Committee
may permit withholding to be satisfied by the transfer to the Company of shares
of Common Stock theretofore owned by the holder of the Employee Award with
respect to which withholding is required. If shares of Common Stock are used to
satisfy tax withholding, those shares will be valued at their Fair Market Value
per share when the tax withholding is required to be made. The Committee may
provide for loans, on either a short-term or demand basis, from the Company to a
Participant who is an Employee or Independent Contractor to permit the payment
of taxes required by law.
13. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board
may amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that no amendment or alteration that would adversely affect the
rights of any Participant under any Award previously granted to that Participant
will be made without the consent of that Participant.
14. ASSIGNABILITY. Unless otherwise determined by the Committee and
provided in the applicable Award Agreement, no Award or any other benefit under
this Plan will be assignable or otherwise transferable except by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder. The Committee may
prescribe and include in any Award Agreement other restrictions on transfer. Any
attempted assignment of an Award or any other benefit under this Plan in
violation of this Paragraph 14 will be null and void.
15. ADJUSTMENTS. (a) The existence of outstanding Awards will not
affect in any manner the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the capital stock of the Company or its business or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
other stock (whether or not that issue is prior to, on a parity with or junior
to the Common Stock) or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding of any kind, whether or not of a character similar
to that of the acts or proceedings enumerated above.
(b) If any subdivision, split or combination of outstanding shares
of Common Stock, or any declaration of a dividend payable in shares of Common
Stock, occurs, then, except with respect to the Awards outstanding immediately
prior to the Closing Date and consisting of Options, (i) the number of shares of
Common Stock reserved under this Plan, (ii) the number of shares of Common Stock
covered by outstanding Awards in the form of Common Stock or units denominated
in Common Stock, (iii) the exercise or other price in respect of such Awards,
(iv) the appropriate Fair Market Value and other price determinations for such
Awards, (v) the number of
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shares of Common Stock covered by Director Options automatically granted
pursuant to Paragraph 9(b), (vi) the number of shares of Restricted Stock
automatically granted pursuant to Paragraph 9(c) and (vii) the Stock-based
Awards Limitations each will be proportionately adjusted by the Board to reflect
the consequences of that occurrence. If any recapitalization or capital
reorganization of the Company, any consolidation or merger of the Company with
another corporation or entity, any adoption by the Company of any plan of
exchange affecting the Common Stock or any distribution to holders of Common
Stock of securities or property (other than normal cash dividends) occurs, the
Board will make appropriate adjustments to the amounts or other items referred
to in clauses (ii), (iii), (iv), (v), (vi) and (vii) of the preceding sentence
to give effect to that transaction; provided, that such adjustments will be only
those as are necessary to maintain the proportionate interest of the holders of
the Awards and preserve, without exceeding, the value of those Awards. In the
event of a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board will be authorized to issue
or assume Awards by means of substitution of new Awards, as appropriate, for
previously issued Awards or to assume previously issued Awards as part of such
adjustment.
16. RESTRICTIONS. No Common Stock or other form of payment will be
issued with respect to any Award unless the Company is satisfied, on the basis
of advice of its counsel, that the issuance will comply with applicable federal
and state securities laws. Certificates evidencing shares of Common Stock
delivered under this Plan (to the extent that the shares are so evidenced) may
be subject to such stop-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any securities exchange or transaction
reporting system on which the Common Stock is then listed or to which it is
admired for quotation and any applicable federal or state securities law. The
Committee may cause a legend or legends to be placed upon those certificates (if
any) to make appropriate reference to those restrictions.
17. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan will be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts will be
used merely as a bookkeeping convenience. The Company will not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto, nor will this Plan be construed as providing for that
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Common Stock or rights thereto to be granted under this
Plan. Any liability or obligation of the Company to any Participant with respect
to an Award of cash, Common Stock or rights thereto under this Plan shall be
based solely on any contractual obligations that may be created by this Plan and
any Award Agreement, and no such liability or obligation of the Company will be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company nor the Board nor the Committee will be required to
give any security or bond for the performance of any obligation that may be
created by this Plan.
18. GOVERNING LAW. This Plan and all determinations made and actions
taken pur suant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, will be
governed by and construed in accordance with the laws of the State of Delaware.
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