EXHIBIT 10.1
CKE RESTAURANTS, INC.
2005 OMNIBUS INCENTIVE COMPENSATION PLAN
(AS AMENDED, BY RESOLUTION ADOPTED BY THE BOARD OF DIRECTORS ON APRIL 17,
2007, AND APPROVED BY THE STOCKHOLDERS ON JUNE 11, 2007)
Table of Contents
Page
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1. Purpose..................................................................1
2. Definitions..............................................................1
3. Administration...........................................................3
3.1 Committee Members...................................................3
3.2 Committee Authority.................................................3
3.3 Delegation of Authority.............................................3
3.4 Grants to Non-Employee Directors....................................3
3.5 Restrictions on Grants to Certain Service Providers.................4
4. Shares Subject to the Plan...............................................4
4.1 Maximum Share Limitations...........................................4
4.2 Individual Participant Limitations..................................4
4.3 Adjustments.........................................................4
5. Participation and Awards.................................................5
5.1 Designations of Participants........................................5
5.2 Determination of Awards.............................................5
6. Stock Options............................................................5
6.1 Grant of Stock Options..............................................5
6.2 Exercise Price......................................................5
6.3 Vesting of Stock Options............................................5
6.4 Term of Stock Options...............................................5
6.5 Termination of Service..............................................5
6.6 Stock Option Exercise; Tax Withholding..............................6
6.7 Limited Transferability of Nonqualified Stock Options...............6
6.8 Additional Rules for Incentive Stock Options........................6
(a) Eligibility....................................................6
(b) Annual Limits..................................................6
(c) Termination of Employment......................................6
(d) Other Terms and Conditions; Nontransferability.................7
(e) Disqualifying Dispositions.....................................7
6.9 Repricing Prohibited................................................7
7. Stock Appreciation Rights................................................7
7.1 Grant of Stock Appreciation Rights..................................7
7.2 Freestanding Stock Appreciation Rights..............................7
7.3 Tandem Stock Option/Stock Appreciation Rights.......................7
7.4 Payment of Stock Appreciation Rights................................8
7.5 Repricing Prohibited................................................8
7.6 Compliance with Code Section 409A...................................8
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Table of Contents
(continued)
Page
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8. Restricted Stock Awards..................................................8
8.1 Grant of Restricted Stock Awards....................................8
8.2 Vesting Requirements; Repurchase Rights.............................8
8.3 Restrictions........................................................8
8.4 Rights as Shareholder...............................................8
8.5 Section 83(b) Election..............................................8
9. Stock Unit Awards........................................................9
9.1 Grant of Stock Unit Awards..........................................9
9.2 Vesting of Stock Unit Awards........................................9
9.3 Payment of Stock Unit Awards........................................9
9.4 No Rights as Shareholder............................................9
9.5 Compliance with Code Section 409A...................................9
10. Stock Awards.............................................................9
10.1 Grant of Stock Awards..............................................9
10.2 Rights as Shareholder..............................................9
11. Change in Control........................................................9
11.1 Effect of Change in Control........................................9
11.2 Definitions.......................................................10
(a) Cause........................................................10
(b) Change in Control............................................10
(c) Constructive Termination.....................................11
(d) Triggering Event.............................................11
11.3 Excise Tax Limit..................................................11
12. Forfeiture Events.......................................................11
12.1 General...........................................................11
12.2 Termination for Cause.............................................12
13. Performance Measures....................................................12
14. General Provisions......................................................12
14.1 Award Agreement..................................................12
14.2 No Assignment or Transfer; Beneficiaries.........................13
14.3 Deferrals of Payment.............................................13
14.4 Rights as Shareholder............................................13
14.5 Employment or Service............................................13
14.6 Securities Laws..................................................13
14.7 Tax Withholding..................................................13
14.8 Unfunded Plan....................................................14
14.9 Other Compensation and Benefit Plans.............................14
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Table of Contents
(continued)
Page
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14.10 Plan Binding on Transferees......................................14
14.11 Severability.....................................................14
14.12 Foreign Jurisdictions............................................14
14.13 Substitute Awards in Corporate Transactions......................14
14.14 Governing Law....................................................14
15. Effective Date; Amendment and Termination...............................14
15.1 Effective Date....................................................14
15.2 Amendment.........................................................14
15.3 Termination.......................................................15
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CKE RESTAURANTS, INC.
2005 OMNIBUS INCENTIVE COMPENSATION PLAN*
1. PURPOSE. The purpose of CKE Restaurants, Inc.'s 2005 Omnibus
Incentive Compensation Plan is to further align the interests of employees and
directors with those of the shareholders by providing incentive compensation
opportunities tied to the performance of the Common Stock and by promoting
increased ownership of the Common Stock by such individuals. The Plan is also
intended to advance the interests of the Company and its shareholders by
attracting, retaining and motivating key personnel upon whose judgment,
initiative and effort the successful conduct of the Company's business is
largely dependent.
2. DEFINITIONS. Wherever the following capitalized terms are used in the
Plan, they shall have the meanings specified below:
"Affiliate" means (i) and "subsidiary corporation" of the
Company, whether now existing or hereafter created or acquired, as those
terms are defined in Sections 424(e) and 424(f) of the Code,
respectively (ii) any entity that would be treated as an "affiliate" of
the Company for purposes of Rule 12b-2 under the Exchange Act, and (iii)
any joint venture or other entity in which the Company has a direct or
indirect beneficial ownership interest representing at least one-third
(1/3) of the aggregate voting power of the equity interests of such
entity or one-third (1/3) of the aggregate fair market value of the
equity interests of such entity, as determined by the Committee.
"Award" means an award of a Stock Option, Stock Appreciation
Right, Restricted Stock Award, Stock Unit Award or Stock Award granted
under the Plan.
"Award Agreement" means a written or electronic agreement
entered into between the Company and a Participant setting forth the
terms and conditions of an Award granted to a Participant.
"Board" means the Board of Directors of CKE Restaurants, Inc., a
Delaware corporation or the Board of Directors of any Affiliate.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Company's common stock, par value $.01
per share.
"Committee" means the Compensation Committee of the Board, or
such other committee of the Board appointed by the Board to administer
the Plan.
"Company" means CKE Restaurants, Inc., a Delaware corporation
and any Affiliate.
"Consultant" means any consultant or advisor if: (i) the
consultant or advisor renders bona fide services to the Company and (ii)
the services rendered by the consultant or advisor are not in connection
with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the
Company's securities.
"Date of Grant" means the date on which an Award under the Plan
is made by the Committee, or such later date as the Committee may
specify to be the effective date of an Award.
"Disability" means a Participant being considered "disabled"
within the meaning of Section 409A(a)(2)(C) of the Code, unless
otherwise provided in an Award Agreement.
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*As amended, by resolution adopted by the Board of Directors on April 17, 2007,
and approved by the stockholders on June 11, 2007.
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"Eligible Person" means any person who is an Employee of the
Company, any person to whom an offer of employment with the Company is
extended, as determined by the Committee, any Service Provider or any
Non-Employee Director.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" of a share of Common Stock as of a given
date shall be the average of the highest and lowest of New York Stock
Exchange composite tape market prices at which the shares of Common
Stock shall have been sold regular way on the date as of which fair
market value is to be determined or, if there shall be no such sale on
such date, the next preceding day on which such a sale shall have
occurred. If Common Stock is not listed on New York Stock Exchange on
the date as of which Fair Market Value is to be determined, the
Committee shall determine in good faith the Fair Market Value in
whatever manner it considers appropriate.
"Incentive Stock Option" means a Stock Option granted under
Section 6 hereof that is intended to meet the requirements of Section
422 of the Code and the regulations thereunder.
"Named Executive Officer" shall mean the Chief Executive Officer
of the Company, or any person who is, for the Company's current fiscal
year, or is expected to be for the Company's next fiscal year, one of
the four most highly paid executive officers of the Company, other than
the Chief Executive Officer.
"Non-Employee Director" means any member of the Board who is not
an employee of the Company.
"Nonqualified Stock Option" means a Stock Option granted under
Section 6 hereof that is not an Incentive Stock Option.
"Participant" means any Eligible Person who holds an outstanding
Award under the Plan.
"Performance-Based Exception" means the performance based
exception from the tax deductibility limitations of Code Section 162(m).
"Plan" means CKE Restaurants, Inc.'s 2005 Omnibus Incentive
Compensation Plan as set forth herein, as amended from time to time.
"Restricted Stock Award" means a grant of shares of Common Stock
to an Eligible Person under Section 8 hereof that is issued subject to
such vesting and transfer restrictions as the Committee shall determine
and set forth in an Award Agreement.
"Service" means a Participant's employment with the Company or
any Affiliate, or a Participant's service as a Non-Employee Director
with the Company, as applicable.
"Service Provider" means a Consultant or other person or entity
that the Committee authorizes to become a Participant in the Plan and
who provides services to (i) the Company or (ii) any other business
venture designated by the Committee in which the Company has a
significant ownership interest.
"Stock Award" means a grant of shares of Common Stock to an
Eligible Person under Section 10 hereof that are issued free of transfer
restrictions and repurchase conditions.
"Stock Appreciation Right" means a contractual right granted to
an Eligible Person under Section 7 hereof entitling such Eligible Person
to receive a payment, representing the difference between the base price
per share of the right and the Fair Market Value of a share of Common
Stock, at such time, and subject to such conditions, as are set forth in
the Plan and the applicable Award Agreement.
2
"Stock Option" means a contractual right granted to an Eligible
Person under Section 6 hereof to purchase shares of Common Stock at such
time and price, and subject to such conditions, as are set forth in the
Plan and the applicable Award Agreement.
"Stock Unit Award" means a contractual right granted to an
Eligible Person under Section 9 hereof representing notional unit
interests equal in value to a share of Common Stock to be paid or
distributed at such times, and subject to such conditions, as are set
forth in the Plan and the applicable Award Agreement.
3. ADMINISTRATION.
3.1 Committee Members. The Plan shall be administered by a Committee
comprised of no fewer than two members of the Board. It is intended that each
Committee member shall satisfy the requirements for (i) an "independent
director" for purposes of the Company's Corporate Governance Guidelines and the
Compensation Committee Charter, (ii) an "independent director" under rules
adopted by New York Stock Exchange, (iii) a "nonemployee director" for purposes
of such Rule 16b-3 under the Exchange Act and (iv) an "outside director" under
Section 162(m) of the Code. No member of the Committee shall be liable for any
action or determination made in good faith by the Committee with respect to the
Plan or any Award thereunder.
3.2 Committee Authority. The Committee shall have such powers and
authority as may be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. Subject to the express limitations of the
Plan, the Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards may be granted,
the number of shares, units or other rights subject to each Award, the exercise,
base or purchase price of an Award (if any), the time or times at which an Award
will become vested, exercisable or payable, the performance goals and other
conditions of an Award, the duration of the Award, and all other terms of the
Award. Subject to the terms of the Plan, the Committee shall have the authority
to amend the terms of an Award in any manner that is not inconsistent with the
Plan, provided that no such action shall adversely affect the rights of a
Participant with respect to an outstanding Award without the Participant's
consent. The Committee shall also have discretionary authority to interpret the
Plan, to make factual determinations under the Plan, and to make all other
determinations necessary or advisable for Plan administration, including,
without limitation, to correct any defect, to supply any omission or to
reconcile any inconsistency in the Plan or any Award Agreement hereunder. The
Committee may prescribe, amend, and rescind rules and regulations relating to
the Plan. The Committee's determinations under the Plan need not be uniform and
may be made by the Committee selectively among Participants and Eligible
Persons, whether or not such persons are similarly situated. The Committee
shall, in its discretion, consider such factors as it deems relevant in making
its interpretations, determinations and actions under the Plan, including,
without limitation, the recommendations or advice of any officer or employee of
the Company or such attorneys, consultants, accountants or other advisors as it
may select. All interpretations, determinations and actions by the Committee
shall be final, conclusive, and binding upon all parties.
3.3 Delegation of Authority. The Committee shall have the right, from
time to time, to delegate to one or more officers of the Company the authority
of the Committee to grant and determine the terms and conditions of Awards
granted under the Plan, subject to the requirements of Section 157(c) of the
Delaware General Corporation Law (or any successor provision) and such other
limitations as the Committee shall determine. In no event shall any such
delegation of authority be permitted with respect to Awards to any members of
the Board or to any Eligible Person who is subject to Rule 16b-3 under the
Exchange Act or Section 162(m) of the Code. The Committee shall also be
permitted to delegate, to any appropriate officer or employee of the Company,
responsibility for performing certain ministerial functions under the Plan. In
the event that the Committee's authority is delegated to officers or employees
in accordance with the foregoing, all provisions of the Plan relating to the
Committee shall be interpreted in a manner consistent with the foregoing by
treating any such reference as a reference to such officer or employee for such
purpose. Any action undertaken in accordance with the Committee's delegation of
authority hereunder shall have the same force and effect as if such action was
undertaken directly by the Committee and shall be deemed for all purposes of the
Plan to have been taken by the Committee.
3.4 Grants to Non-Employee Directors. Any Awards or formula for granting
Awards under the Plan made to Non-Employee Directors shall be approved by the
Board. With respect to awards to such directors, all rights, powers and
authorities vested in the Committee under the Plan shall instead be exercised by
the Board, and
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all provisions of the Plan relating to the Committee shall be interpreted in a
manner consistent with the foregoing by treating any such reference as a
reference to the Board for such purpose.
3.5 Restrictions on Grants to Certain Service Providers. In order for a
Participant, who is a Service Provider, to rely on the Form S-8, which the
Company filed with the U.S. Securities and Exchange Commission to register its
Common Stock pursuant to the Securities Act of 1933, as amended, the Service
Provider must be a natural person who has contracted directly with the Company
to render bona fide services that are not in connection with the offer or sale
of securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities. The Common Stock
covered by an Award to a Service Provider who: (i) does not render bona fide
services to the Company, (ii) is not a natural person, or (iii) renders the type
services described in the preceding sentence is not covered by the Company's
Form S-8 filing and will not constitute registered securities under the
Securities Act of 1933, as amended, as a result of such filing. The Committee
shall not grant an Award to such a Service Provider unless the Committee
determines both (i) that such grant (A) shall be registered in another manner
under the Securities Act of 1933, as amended (e.g., on a Form S-3 Registration
Statement) or (B) does not require registration under the Securities Act of
1933, as amended, in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.
4. SHARES SUBJECT TO THE PLAN.
4.1 Maximum Share Limitations. Subject to adjustment pursuant to Section
4.3 hereof, the maximum aggregate number of shares of Common Stock that may be
issued and sold under all Awards granted under the Plan shall be 5,500,000
shares. Of such aggregate, the maximum number of shares of Common Stock that may
be issued under (i) all Incentive Stock Options shall be limited to 5,500,000
shares, and (ii) all Restricted Stock Awards, Stock Unit Award and Stock Awards
under the Plan shall be limited to 2,550,000 shares. Shares of Common Stock
issued and sold under the Plan may be either authorized but unissued shares or
shares held in the Company's treasury. To the extent that any Award involving
the issuance of shares of Common Stock is forfeited, cancelled, returned to the
Company for failure to satisfy vesting requirements or other conditions of the
Award, or otherwise terminates or expires without issuance of shares of Common
Stock being made thereunder, the shares of Common Stock covered thereby will no
longer be counted against the foregoing maximum share limitations and may again
be made subject to Awards under the Plan pursuant to such limitations.
Notwithstanding the foregoing sentence, shares of Common Stock that are (a) used
to pay the exercise price of an Option, (b) used to pay withholding taxes with
respect to any Award, or (c) purchased by the Company on the open market with
the cash tendered for the exercise of an Option or in payment of any purchase
price with respect to a Restricted Stock Award, shall remain counted against the
foregoing maximum share limitations and may not be made subject to future
Awards. Furthermore, for the purpose of determining the affect of the exercise
of a Stock Appreciation Right on the foregoing maximum share limitations, the
Company shall count the total number of shares of Common Stock covered by such
Award and not merely the net shares transferred pursuant to the exercise of the
Stock Appreciation Right, i.e. both (a) the shares of Common Stock actually
transferred by the Company to the holder of the right being exercised and (b)
the difference between the gross number of shares covered by the right and the
shares actually transferred on exercise shall be counted against the foregoing
maximum share limitations and may not be made subject to future Awards.
4.2 Individual Participant Limitations. The maximum number of shares of
Common Stock that may be subject to Stock Options, Stock Appreciation Rights,
Restricted Stock Awards, Stock Unit Awards and Stock Awards, in the aggregate,
granted to any one Participant during any fiscal year period shall be 375,000
shares. The foregoing limitation shall be applied on an aggregate basis taking
into account Awards granted to a Participant under the Plan as well as awards of
the same type granted to a Participant under any other equity-based compensation
plan of the Company or any Affiliate. The foregoing annual Participant
limitation may be exceeded, however, in connection with the new employment of a
Named Executive Officer, if the Board determines that exceeding the limitation
is in the best interests of the Company, but in no event shall the annual
Participant limitation exceed 475,000 shares.
4.3 Adjustments. If there shall occur any change with respect to the
outstanding shares of Common Stock by reason of any recapitalization,
reclassification, stock dividend, extraordinary dividend, stock split, reverse
stock split or other distribution with respect to the shares of Common Stock, or
any merger, reorganization, consolidation, combination, spin-off or other
similar corporate change, or any other change affecting the Common
4
Stock, the Committee may, in the manner and to the extent that it deems
appropriate and equitable to the Participants and consistent with the terms of
the Plan, cause an adjustment to be made in (i) the maximum number and kind of
shares provided in Section 4.1 and Section 4.2 hereof, (ii) the number and kind
of shares of Common Stock, units, or other rights subject to then outstanding
Awards, (iii) the exercise or base price for each share or unit or other right
subject to then outstanding Awards, and (iv) any other terms of an Award that
are affected by the event. Notwithstanding the foregoing, in the case of
Incentive Stock Options, any such adjustments shall, to the extent practicable,
be made in a manner consistent with the requirements of Section 424(a) of the
Code.
5. PARTICIPATION AND AWARDS.
5.1 Designations of Participants. All Eligible Persons are eligible to
be designated by the Committee to receive Awards and become Participants under
the Plan. The Committee has the authority, in its discretion, to determine and
designate from time to time those Eligible Persons who are to be granted Awards,
the types of Awards to be granted and the number of shares of Common Stock or
units subject to Awards granted under the Plan. In selecting Eligible Persons to
be Participants and in determining the type and amount of Awards to be granted
under the Plan, the Committee shall consider any and all factors that it deems
relevant or appropriate.
5.2 Determination of Awards. The Committee shall determine the terms and
conditions of all Awards granted to Participants in accordance with its
authority under Section 3.2 hereof. An Award may consist of one type of right or
benefit hereunder or of two or more such rights or benefits granted in tandem or
in the alternative. In the case of any fractional share or unit resulting from
the grant, vesting, payment or crediting of dividends or dividend equivalents
under an Award, the Committee shall have the discretionary authority to (i)
disregard such fractional share or unit, (ii) round such fractional share or
unit to the nearest lower or higher whole share or unit, or (iii) convert such
fractional share or unit into a right to receive a cash payment. To the extent
deemed necessary by the Committee, an Award shall be evidenced by an Award
Agreement as described in Section 13.1 hereof.
6. STOCK OPTIONS.
6.1 Grant of Stock Options. A Stock Option may be granted to any
Eligible Person selected by the Committee. Subject to the provisions of Section
6.8 hereof and Section 422 of the Code, each Stock Option shall be designated,
in the discretion of the Committee, as an Incentive Stock Option or as a
Nonqualified Stock Option.
6.2 Exercise Price. The exercise price per share of a Stock Option shall
not be less than 100 percent of the Fair Market Value of the shares of Common
Stock on the Date of Grant, provided that the Committee may in its discretion
specify for any Stock Option an exercise price per share that is higher than the
Fair Market Value on the Date of Grant.
6.3 Vesting of Stock Options. The Committee shall, in its discretion,
prescribe the time or times at which, or the conditions upon which, a Stock
Option, or portion thereof, shall become vested and/or exercisable, and may
accelerate the vesting or exercisability of any Stock Option at any time. The
requirements for vesting and exercisability of a Stock Option may be based on
the continued Service of the Participant with the Company or its Affiliates for
a specified time period (or periods), or on the attainment of specified
performance goals established by the Committee in its discretion.
6.4 Term of Stock Options. The Committee shall, in its discretion,
prescribe in an Award Agreement the period during which a vested Stock Option
may be exercised, provided that the maximum term of a Stock Option shall be ten
years from the Date of Grant. Except as otherwise provided in this Section 6 or
as otherwise may be provided by the Committee, no Stock Option may be exercised
at any time during the term thereof unless the Participant is then in the
Service of the Company or one of its Affiliates.
6.5 Termination of Service. Subject to Section 6.8 hereof with respect
to Incentive Stock Options, the Stock Option of any Participant whose Service
with the Company or one of its Affiliates is terminated for any reason shall
terminate on the earlier of (A) the date that the Stock Option expires in
accordance with its terms or (B) unless otherwise provided in an Award
Agreement, and except for termination for cause (as described in Section 12.2
hereof), the expiration of the applicable time period following termination of
Service, in accordance
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with the following: (1) twelve months if Service ceased due to Disability, (2)
eighteen months if Service ceased at a time when the Participant is eligible to
elect immediate commencement of retirement benefits at a specified retirement
age under a pension plan to which the Company or any of its Affiliates had made
contributions, (3) eighteen months if the Participant died while in the Service
of the Company or any of its Affiliates, or (iv) three months if Service ceased
for any other reason. During the foregoing applicable period, except as
otherwise specified in the Award Agreement or in the event Service was
terminated by the death of the Participant, the Stock Option may be exercised by
such Participant in respect of the same number of shares of Common Stock, in the
same manner, and to the same extent as if he or she had remained in the
continued Service of the Company or any Affiliate during the first three months
of such period; provided that no additional rights shall vest after termination
of Service. The Committee shall have authority to determine in each case whether
an authorized leave of absence shall be deemed a termination of Service for
purposes hereof, as well as the effect of a leave of absence on the vesting and
exercisability of a Stock Option. Unless otherwise provided by the Committee, if
an entity ceases to be an Affiliate of the Company or otherwise ceases to be
qualified under the Plan, or if all or substantially all of the assets of an
Affiliate of the Company are conveyed (other than by encumbrance), such
cessation or action, as the case may be, shall be deemed for purposes hereof to
be a termination of the Service.
6.6 Stock Option Exercise; Tax Withholding. Subject to such terms and
conditions as shall be specified in an Award Agreement, a Stock Option may be
exercised in whole or in part at any time during the term thereof by notice in
the form required by the Company, together with payment of the aggregate
exercise price therefore and applicable withholding tax. Payment of the exercise
price shall be made in the manner set forth in the Award Agreement, unless
otherwise provided by the Committee: (i) in cash or by cash equivalent
acceptable to the Committee, (ii) by payment in shares of Common Stock that have
been held by the Participant for at least six months (or such period as the
Committee may deem appropriate, for accounting purposes or otherwise), valued at
the Fair Market Value of such shares on the date of exercise, (iii) through an
open-market, broker-assisted sales transaction pursuant to which the Company is
promptly delivered the amount of proceeds necessary to satisfy the exercise
price, (iv) by a combination of the methods described above or (v) by such other
method as may be approved by the Committee and set forth in the Award Agreement.
In addition to, and at the time of payment of, the exercise price, the
Participant shall pay to the Company the full amount of any and all applicable
income tax, employment tax and other amounts required to be withheld in
connection with such exercise, payable under such of the methods described above
for the payment of the exercise price as may be approved by the Committee and
set forth in the Award Agreement.
6.7 Limited Transferability of Nonqualified Stock Options. All Stock
Options shall be nontransferable except (i) upon the Participant's death, in
accordance with Section 13.2 hereof or (ii) in the case of Nonqualified Stock
Options only, for the transfer of all or part of the Stock Option to a
Participant's "family member" (as defined for purposes of the Form S-8
registration statement under the Securities Act of 1933), as may be approved by
the Committee in its discretion at the time of proposed transfer. The transfer
of a Nonqualified Stock Option may be subject to such terms and conditions as
the Committee may in its discretion impose from time to time. Subsequent
transfers of a Nonqualified Stock Option shall be prohibited other than in
accordance with Section 13.2 hereof.
6.8 Additional Rules for Incentive Stock Options.
(a) Eligibility. An Incentive Stock Option may only be granted
to an Eligible Person who is considered an employee for purposes of Treasury
Regulation ss. 1.421-7(h) with respect to the Company or any Affiliate that
qualifies as a "subsidiary corporation" with respect to the Company for purposes
of Section 424(f) of the Code.
(b) Annual Limits. No Incentive Stock Option shall be granted to
a Participant as a result of which the aggregate Fair Market Value (determined
as of the Date of Grant) of the stock with respect to which incentive stock
options under Section 422 of the Code are exercisable for the first time in any
calendar year under the Plan and any other stock option plans of the Company or
any subsidiary or parent corporation, would exceed $100,000, determined in
accordance with Section 422(d) of the Code. This limitation shall be applied by
taking stock options into account in the order in which granted.
(c) Termination of Employment. An Award of an Incentive Stock
Option may provide that such Stock Option may be exercised not later than 3
months following termination of employment of the Participant
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with the Company and all Subsidiaries, or not later than one year following a
permanent and total disability within the meaning of Section 22(e)(3) of the
Code, as and to the extent determined by the Committee to comply with the
requirements of Section 422 of the Code.
(d) Other Terms and Conditions; Nontransferability. Any
Incentive Stock Option granted hereunder shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as are deemed necessary
or desirable by the Committee, which terms, together with the terms of the Plan,
shall be intended and interpreted to cause such Incentive Stock Option to
qualify as an "incentive stock option" under Section 422 of the Code. An Award
Agreement for an Incentive Stock Option may provide that such Stock Option shall
be treated as a Nonqualified Stock Option to the extent that certain
requirements applicable to "incentive stock options" under the Code shall not be
satisfied. An Incentive Stock Option shall by its terms be nontransferable other
than by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of a Participant only by such Participant.
(e) Disqualifying Dispositions. If shares of Common Stock
acquired by exercise of an Incentive Stock Option are disposed of within two
years following the Date of Grant or one year following the transfer of such
shares to the Participant upon exercise, the Participant shall, promptly
following such disposition, notify the Company in writing of the date and terms
of such disposition and provide such other information regarding the disposition
as the Company may reasonably require.
6.9 Repricing Prohibited. Subject to the anti-dilution adjustment
provisions contained in Section 4.3 hereof, without the prior approval of the
Company's shareholders, evidenced by a majority of votes cast, neither the
Committee nor the Board shall cause the cancellation, substitution or amendment
of a Stock Option that would have the effect of reducing the exercise price of
such a Stock Option previously granted under the Plan, or otherwise approve any
modification to such a Stock Option that would be treated as a "repricing" under
the then applicable rules, regulations or listing requirements adopted by New
York Stock Exchange.
7. STOCK APPRECIATION RIGHTS.
7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may
be granted to any Eligible Person selected by the Committee. Stock Appreciation
Rights may be granted on a basis that allows for the exercise of the right by
the Participant or that provides for the automatic payment of the right upon a
specified date or event. Stock Appreciation Rights shall be exercisable or
payable at such time or times and upon conditions as may be approved by the
Committee, provided that the Committee may accelerate the exercisability or
payment of a Stock Appreciation Right at any time.
7.2 Freestanding Stock Appreciation Rights. A Stock Appreciation Right
may be granted without any related Stock Option and may be subject to such
vesting and exercisability requirements as specified by the Committee in an
Award Agreement. Such vesting and exercisability requirements may be based on
the continued Service of the Participant with the Company or its Affiliates for
a specified time period (or periods) or on the attainment of specified
performance goals established by the Committee in its discretion. A Stock
Appreciation Right will be exercisable or payable at such time or times as
determined by the Committee, provided that the maximum term of a Stock
Appreciation Right shall be ten years from the Date of Grant. The base price of
a Stock Appreciation Right granted without any related Stock Option shall be
determined by the Committee in its sole discretion; provided, however, that the
base price per share of any such freestanding Stock Appreciation Right shall not
be less than 100 percent of the Fair Market Value of the shares of Common Stock
on the Date of Grant.
7.3 Tandem Stock Option/Stock Appreciation Rights. A Stock Appreciation
Right may be granted in tandem with a Stock Option, either at the time of grant
or at any time thereafter during the term of the Stock Option. A tandem Stock
Option/Stock Appreciation Right will entitle the holder to elect, as to all or
any portion of the number of shares subject to such Stock Option/Stock
Appreciation Right, to exercise either the Stock Option or the Stock
Appreciation Right, resulting in the reduction of the corresponding number of
shares subject to the right so exercised as well as the tandem right not so
exercised. A Stock Appreciation Right granted in tandem with a Stock Option
hereunder shall have a base price per share equal to the per share exercise
price of the Stock Option, will be
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vested and exercisable at the same time or times that a related Stock Option is
vested and exercisable, and will expire no later than the time at which the
related Stock Option expires.
7.4 Payment of Stock Appreciation Rights. A Stock Appreciation Right
will entitle the holder, upon exercise or other payment of the Stock
Appreciation Right, as applicable, to receive an amount determined by
multiplying: (i) the excess of the Fair Market Value of a share of Common Stock
on the date of exercise or payment of the Stock Appreciation Right over the base
price of such Stock Appreciation Right, by (ii) the number of shares as to which
such Stock Appreciation Right is exercised or paid. Subject to the requirements
of Section 409A of the Code, payment of the amount determined under the
foregoing may be made, as approved by the Committee and set forth in the Award
Agreement, in shares of Common Stock valued at their Fair Market Value on the
date of exercise or payment, in cash, or in a combination of shares of Common
Stock and cash, subject to applicable tax withholding requirements.
7.5 Repricing Prohibited. Subject to the anti-dilution adjustment
provisions contained in Section 4.3 hereof, without the prior approval of the
Company's shareholders, evidenced by a majority of votes cast, neither the
Committee nor the Board shall cause the cancellation, substitution or amendment
of a Stock Appreciation Right that would have the effect of reducing the base
price of such a Stock Appreciation Right previously granted under the Plan, or
otherwise approve any modification to such a Stock Appreciation Right that would
be treated as a "repricing" under the then applicable rules, regulations or
listing requirements adopted by New York Stock Exchange.
7.6 Compliance with Code Section 409A. Notwithstanding anything in this
Article 7 to the contrary, all Awards of Stock Appreciation Rights must be
structured to satisfy the requirements of Code Section 409A. Without limiting
the generality of the foregoing, all Stock Appreciation Rights which are to be
paid in cash must be exercised immediately upon, and concurrent with, the
vesting of such Stock Appreciation Rights.
8. RESTRICTED STOCK AWARDS.
8.1 Grant of Restricted Stock Awards. A Restricted Stock Award may be
granted to any Eligible Person selected by the Committee. The Committee may
provide that no payment is required, or require the payment by the Participant
of a specified purchase price, in connection with any Restricted Stock Award.
8.2 Vesting Requirements; Repurchase Rights. The restrictions imposed on
shares granted under a Restricted Stock Award shall lapse in accordance with the
vesting requirements specified by the Committee in the Award Agreement, provided
that the Committee may accelerate the vesting of a Restricted Stock Award at any
time. If the vesting requirements of a Restricted Stock Award shall not be
satisfied, the shares of Common Stock subject to the Award may be repurchased by
the Company, at the Company's election, at a repurchase price set forth in the
Restricted Stock Award, but not less than the purchase price paid by the
Participant.
8.3 Restrictions. Shares granted under any Restricted Stock Award may
not be transferred, assigned or subject to any encumbrance, pledge, or charge
until all applicable restrictions are removed or have expired, unless otherwise
allowed by the Committee. The Committee may require in an Award Agreement that
certificates representing the shares granted under a Restricted Stock Award bear
a legend making appropriate reference to the restrictions imposed, and that
certificates representing the shares granted or sold under a Restricted Stock
Award will remain in the physical custody of an escrow holder until all
restrictions are removed or have expired.
8.4 Rights as Shareholder. Subject to the foregoing provisions of this
Section 8 and the applicable Award Agreement, the Participant shall have all
rights of a shareholder with respect to the shares granted to the Participant
under a Restricted Stock Award, including the right to vote the shares and
receive all dividends and other distributions paid or made with respect thereto.
The Committee may provide in an Award Agreement for the payment of dividends and
distributions to the Participant at such times as paid to shareholders generally
or at the times of vesting or other payment of the Restricted Stock Award.
8.5 Section 83(b) Election. If a Participant makes an election pursuant
to Section 83(b) of the Code with respect to a Restricted Stock Award, the
Participant shall file, within 30 days following the Date of Grant, a
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copy of such election with the Company and with the Internal Revenue Service, in
accordance with the regulations under Section 83 of the Code. The Committee may
provide in an Award Agreement that the Restricted Stock Award is conditioned
upon the Participant's making or refraining from making an election with respect
to the Award under Section 83(b) of the Code.
9. STOCK UNIT AWARDS.
9.1 Grant of Stock Unit Awards. A Stock Unit Award may be granted to any
Eligible Person selected by the Committee. The value of each stock unit under a
Stock Unit Award is equal to the Fair Market Value of the Common Stock on the
applicable date or time period of determination, as specified by the Committee.
A Stock Unit Award shall be subject to such restrictions and conditions as the
Committee shall determine. A Stock Unit Award may be granted together with a
dividend equivalent right with respect to the shares of Common Stock subject to
the Award, which may be accumulated and may be deemed reinvested in additional
stock units, as determined by the Committee in its discretion.
9.2 Vesting of Stock Unit Awards. On the Date of Grant, the Committee
shall in its discretion determine any vesting requirements with respect to a
Stock Unit Award, which shall be set forth in the Award Agreement, provided that
the Committee may accelerate the vesting of a Stock Unit Award at any time. A
Stock Unit Award may also be granted on a fully vested basis.
9.3 Payment of Stock Unit Awards. A Stock Unit Award shall become
payable to a Participant at the time or times determined by the Committee and
set forth in the Award Agreement, at the discretion of the Committee, in cash or
in shares of Common Stock, or in a combination thereof, subject to applicable
tax withholding requirements. Any cash payment of a Stock Unit Award shall be
made based upon the Fair Market Value of the Common Stock, determined on such
date or over such time period as determined by the Committee.
9.4 No Rights as Shareholder. The Participant shall not have any rights
as a shareholder with respect to the shares subject to a Stock Unit Award until
such time as shares of Common Stock are delivered to the Participant pursuant to
the terms of the Award Agreement.
9.5 Compliance with Code Section 409A. Notwithstanding anything in this
Article 9 to the contrary, all Awards of Stock Units must be structured to
satisfy the requirements of Code Section 409A. Without limiting the generality
of the foregoing, all Stock Unit Awards which are to be paid in cash must be
exercised immediately upon, and concurrent with, the vesting of such Stock Unit
Award.
10. STOCK AWARDS.
10.1 Grant of Stock Awards. A Stock Award may be granted to any Eligible
Person selected by the Committee. A Stock Award may be granted for past
services, in lieu of bonus or other cash compensation, as directors'
compensation or for any other valid purpose as determined by the Committee. A
Stock Award granted to an Eligible Person represents shares of Common Stock that
are issued without restrictions on transfer and other incidents of ownership and
free of forfeiture conditions, except as otherwise provided in the Plan and the
Award Agreement. The Committee may, in connection with any Stock Award, provide
that no payment is required, or require the payment by the Participant of a
specified purchase price.
10.2 Rights as Shareholder. Subject to the foregoing provisions of this
Section 10 and the applicable Award Agreement, upon the issuance of the Common
Stock under a Stock Award the Participant shall have all rights of a shareholder
with respect to the shares of Common Stock, including the right to vote the
shares and receive all dividends and other distributions paid or made with
respect thereto.
11. CHANGE IN CONTROL.
11.1 Effect of Change in Control. Except to the extent an Award
Agreement provides for a different result (in which case the Award Agreement
will govern and this Section 11 of the Plan shall not be applicable),
notwithstanding anything elsewhere in the Plan or any rules adopted by the
Committee pursuant to the Plan to the
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contrary, if a Triggering Event shall occur within the 12-month period beginning
with a Change in Control of the Company, then, effective immediately prior to
such Triggering Event, (i) each outstanding Stock Option and Stock Appreciation
Right, to the extent that it shall not otherwise have become vested and
exercisable, shall automatically become fully and immediately vested and
exercisable, without regard to any otherwise applicable vesting requirement,
(ii) each Restricted Stock Award shall become fully and immediately vested and
all repurchase rights and transfer restrictions thereon shall lapse, and (iii)
each outstanding Stock Unit Award shall become immediately and fully vested and
payable.
11.2 Definitions.
(a) Cause. For purposes of this Section 11, the term "Cause"
shall mean a determination by the Committee that a Participant (i) has been
convicted of, or entered a plea of nolo contendere to, a crime that constitutes
a felony under Federal or state law, (ii) has engaged in willful gross
misconduct in the performance of the Participant's duties to the Company or an
Affiliate or (iii) has committed a material breach of any written agreement with
the Company or any Affiliate with respect to confidentiality, noncompetition,
nonsolicitation or similar restrictive covenant. Subject to the first sentence
of Section 11.1 hereof, in the event that a Participant is a party to an
employment agreement with the Company or any Affiliate that defines a
termination on account of "Cause" (or a term having similar meaning), such
definition shall apply as the definition of a termination on account of "Cause"
for purposes hereof, but only to the extent that such definition provides the
Participant with greater rights. A termination on account of Cause shall be
communicated by written notice to the Participant, and shall be deemed to occur
on the date such notice is delivered to the Participant.
(b) Change in Control. For purposes of this Section 11, a
"Change in Control" shall be deemed to have occurred upon:
(i) the occurrence of (A) 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
a percentage of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities") (but excluding (1) any
acquisition directly from the Company (other than an acquisition by
virtue of the exercise of a conversion privilege of a security that was
not acquired directly from the Company), (2) any acquisition by the
Company or an Affiliate and (3) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Company or any
Affiliate) (an "Acquisition") that is thirty percent (30%) or more of
the Company Voting Securities; and (B) the termination of employment,
within six (6) months following the Acquisition, of the individual who
is the Chief Executive Officer of the Company immediately prior to the
Acquisition, for any reason other than death, Disability, Cause, or
voluntary resignation (but excluding from voluntary resignation any
termination that constitutes a Constructive Termination or any
resignation that was requested by the Board or any such Person (or its
employees or representatives) that completes an Acquisition);
(ii) at any time during a period of two (2) consecutive
years or less, individuals who at the beginning of such period
constitute the Board (and any new directors whose election by the Board
or nomination for election by the Company's shareholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was so approved) cease for any
reason (except for death, Disability or voluntary retirement) to
constitute a majority thereof;
(iii) an Acquisition that is fifty percent (50%) or more
of the Company Voting Securities;
(iv) the consummation of a merger, consolidation,
reorganization or similar corporate transaction, whether or not the
Company is the surviving company in such transaction, other than a
merger, consolidation, or reorganization that would result in the
Persons who are beneficial owners of the Company Voting Securities
outstanding immediately prior thereto continuing to beneficially own,
directly or indirectly, in substantially the same proportions, at least
fifty percent (50%) of the combined voting power
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of the Company Voting Securities (or the voting securities of the
surviving entity) outstanding immediately after such merger,
consolidation or reorganization;
(v) the sale or other disposition of all or
substantially all of the assets of the Company;
(vi) the approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company; or
(vii) the occurrence of any transaction or event, or
series of transactions or events, designated by the Board in a duly
adopted resolution as representing a change in the effective control of
the business and affairs of the Company, effective as of the date
specified in any such resolution.
(c) Constructive Termination. For purposes of this Section 11, a
"Constructive Termination" shall mean a termination of employment by a
Participant within sixty (60) days following the occurrence of any one or more
of the following events without the Participant's written consent (i) any
reduction in position, title (for Vice Presidents or above), overall
responsibilities, level of authority, level of reporting (for Vice Presidents or
above), base compensation, annual incentive compensation opportunity, aggregate
employee benefits or (ii) a request that the Participant's location of
employment be relocated by more than fifty (50) miles. Subject to the first
sentence of Section 11.1 hereof, in the event that a Participant is a party to
an employment agreement with the Company or any Affiliate (or a successor
entity) that defines a termination on account of "Constructive Termination,"
"Good Reason" or "Breach of Agreement" (or a term having a similar meaning),
such definition shall apply as the definition of "Constructive Termination" for
purposes hereof in lieu of the foregoing, but only to the extent that such
definition provides the Participant with greater rights. A Constructive
Termination shall be communicated by written notice to the Committee, and shall
be deemed to occur on the date such notice is delivered to the Committee, unless
the circumstances giving rise to the Constructive Termination are cured within
five (5) days of such notice.
(d) Triggering Event. For purposes of this Section 11, a
"Triggering Event" shall mean (i) the termination of Service of a Participant by
the Company or an Affiliate (or any successor thereof) other than on account of
death, Disability or Cause, (ii) the occurrence of a Constructive Termination or
(iii) any failure by the Company (or a successor entity) to assume, replace,
convert or otherwise continue any Award in connection with the Change in Control
(or another corporate transaction or other change effecting the Common Stock) on
the same terms and conditions as applied immediately prior to such transaction,
except for equitable adjustments to reflect changes in the Common Stock pursuant
to Section 4.3 hereof.
11.3 Excise Tax Limit. In the event that the vesting of Awards together
with all other payments and the value of any benefit received or to be received
by a Participant would result in all or a portion of such payment being subject
to the excise tax under Section 4999 of the Code, then the Participant's payment
shall be either (i) the full payment or (ii) such lesser amount that would
result in no portion of the payment being subject to excise tax under Section
4999 of the Code (the "Excise Tax"), whichever of the foregoing amounts, taking
into account the applicable Federal, state, and local employment taxes, income
taxes, and the Excise Tax, results in the receipt by the Participant, on an
after-tax basis, of the greatest amount of the payment notwithstanding that all
or some portion of the payment may be taxable under Section 4999 of the Code.
All determinations required to be made under this Section 11 shall be made by
the accounting firm that is the Company's then outside auditor (the "Accounting
Firm"). The Company shall cause the Accounting Firm to provide detailed
supporting calculations of its determinations to the Company and the
Participant. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. The Accounting Firm's determinations must be made with
substantial authority (within the meaning of Section 6662 of the Code). For the
purposes of all calculations under Section 280G of the Code and the application
of this Section 11.3, all determinations as to present value shall be made using
120 percent of the applicable Federal rate (determined under Section 1274(d) of
the Code) compounded semiannually, as in effect on December 30, 2004.
12. FORFEITURE EVENTS.
12.1 General. The Committee may specify in an Award Agreement at the
time of the Award that the Participant's rights, payments and benefits with
respect to an Award shall be subject to reduction, cancellation, forfeiture or
recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable
11
vesting or performance conditions of an Award. Such events shall include, but
shall not be limited to, termination of Service for cause, violation of material
Company policies, breach of noncompetition, confidentiality or other restrictive
covenants that may apply to the Participant, or other conduct by the Participant
that is detrimental to the business or reputation of the Company.
12.2 Termination for Cause. Unless otherwise provided by the Committee
and set forth in an Award Agreement, if a Participant's employment with the
Company or any Affiliate shall be terminated for cause, the Company may, in its
sole discretion, immediately terminate such Participant's right to any further
payments, vesting or exercisability with respect to any Award in its entirety.
In the event a Participant is party to an employment (or similar) agreement with
the Company or any Affiliate that defines the term "cause," such definition
shall apply for purposes of the Plan. The Company shall have the power to
determine whether the Participant has been terminated for cause and the date
upon which such termination for cause occurs. Any such determination shall be
final, conclusive and binding upon the Participant. In addition, if the Company
shall reasonably determine that a Participant has committed or may have
committed any act which could constitute the basis for a termination of such
Participant's employment for cause, the Company may suspend the Participant's
rights to exercise any option, receive any payment or vest in any right with
respect to any Award pending a determination by the Company of whether an act
has been committed which could constitute the basis for a termination for
"cause" as provided in this Section 12.2.
13. PERFORMANCE MEASURES
13.1 The Committee may specify that the attainment of the general
performance measures set forth in this Article 13 may determine the degree of
granting, vesting and/or payout with respect to Awards (including any related
dividends or dividend equivalents) that the Committee intends will qualify for
the Performance-Based Exception. The performance goals to be used for such
Awards shall be chosen from among the following performance measure(s): earnings
per share, economic value created, market share (actual or targeted growth), net
income (which may be adjusted for nonrecurring items and before or after taxes),
operating income, adjusted net income after capital charge, return on assets
(actual or targeted growth), return on capital (actual or targeted growth),
return on equity (actual or targeted growth), return on investment (actual or
targeted growth), cash flow, operating margin, share price, share price growth,
total stockholder return, and strategic business criteria, consisting of one or
more objectives based on meeting specified market penetration goals,
productivity measures, geographic business expansion goals, cost targets,
customer satisfaction or employee satisfaction goals, goals relating to merger
synergies, management of employment practices and employee benefits, or
supervision of litigation and information technology, and goals relating to
acquisitions or divestitures of subsidiaries, affiliates or joint ventures. The
targeted level or levels of performance with respect to such performance
measures may be established at such levels and on such terms as the Committee
may determine, in its discretion, including in absolute terms, as a goal
relative to performance in prior periods, or as a goal compared to the
performance of one or more comparable companies or an index covering multiple
companies. Awards (including any related dividends or dividend equivalents) that
are not intended to qualify for the Performance-Based Exception may be based on
these or such other performance measures as the Committee may determine.
14. GENERAL PROVISIONS.
14.1 Award Agreement. To the extent deemed necessary by the Committee,
an Award under the Plan shall be evidenced by an Award Agreement in a written or
electronic form approved by the Committee setting forth the number of shares of
Common Stock or units subject to the Award, the exercise price, base price, or
purchase price of the Award, the time or times at which an Award will become
vested, exercisable or payable and the term of the Award. The Award Agreement
may also set forth the effect on an Award of termination of Service under
certain circumstances. The Award Agreement shall be subject to and incorporate,
by reference or otherwise, all of the applicable terms and conditions of the
Plan, and may also set forth other terms and conditions applicable to the Award
as determined by the Committee consistent with the limitations of the Plan.
Award Agreements evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section 422
of the Code. The grant of an Award under the Plan shall not confer any rights
upon the Participant holding such Award other than such terms, and subject to
such conditions, as are specified in the Plan as being applicable to such type
of Award (or to all Awards) or as are expressly set forth in the Award
Agreement. The Committee need not require the execution of an Award Agreement by
a Participant, in which case, acceptance of the
12
Award by the Participant shall constitute agreement by the Participant to the
terms, conditions, restrictions and limitations set forth in the Plan and the
Award Agreement as well as the administrative guidelines of the Company in
effect from time to time.
14.2 No Assignment or Transfer; Beneficiaries. Except as provided in
Section 6.7 hereof, Awards under the Plan shall not be assignable or
transferable by the Participant, except by will or by the laws of descent and
distribution, and shall not be subject in any manner to assignment, alienation,
pledge, encumbrance or charge. Notwithstanding the foregoing, the Committee may
provide in the terms of an Award Agreement that the Participant shall have the
right to designate a beneficiary or beneficiaries who shall be entitled to any
rights, payments or other benefits specified under an Award following the
Participant's death. During the lifetime of a Participant, an Award shall be
exercised only by such Participant or such Participant's guardian or legal
representative. In the event of a Participant's death, an Award may, to the
extent permitted by the Award Agreement, be exercised by the Participant's
beneficiary as designated by the Participant in the manner prescribed by the
Committee or, in the absence of an authorized beneficiary designation, by the
legatee of such Award under the Participant's will or by the Participant's
estate in accordance with the Participant's will or the laws of descent and
distribution, in each case in the same manner and to the same extent that such
Award was exercisable by the Participant on the date of the Participant's death.
14.3 Deferrals of Payment. The Committee may, in its discretion, permit
a Participant to defer the receipt of payment of cash or delivery of shares of
Common Stock that would otherwise be due to the Participant by virtue of the
exercise of a right or the satisfaction of vesting or other conditions with
respect to an Award. If any such deferral is to be permitted by the Committee,
the Committee shall establish rules and procedures relating to such deferral in
a manner intended to comply with the requirements of Section 409A of the Code,
including, without limitation, the time when an election to defer may be made,
the time period of the deferral and the events that would result in payment of
the deferred amount, the interest or other earnings attributable to the deferral
and the method of funding, if any, attributable to the deferred amount.
14.4 Rights as Shareholder. A Participant shall have no rights as a
holder of shares of Common Stock with respect to any unissued securities covered
by an Award until the date the Participant becomes the holder of record of such
securities. Except as provided in Section 4.3 hereof, no adjustment or other
provision shall be made for dividends or other shareholder rights, except to the
extent that the Award Agreement provides for dividend payments or dividend
equivalent rights.
14.5 Employment or Service. Nothing in the Plan, in the grant of any
Award or in any Award Agreement shall confer upon any Eligible Person any right
to continue in the Service of the Company or any of its Affiliates, or interfere
in any way with the right of the Company or any of its Affiliates to terminate
the Participant's employment or other service relationship for any reason at any
time.
14.6 Securities Laws. No shares of Common Stock will be issued or
transferred pursuant to an Award unless and until all then applicable
requirements imposed by Federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any
exchanges upon which the shares of Common Stock may be listed, have been fully
met. As a condition precedent to the issuance of shares pursuant to the grant or
exercise of an Award, the Company may require the Participant to take any
reasonable action to meet such requirements. The Committee may impose such
conditions on any shares of Common Stock issuable under the Plan as it may deem
advisable, including, without limitation, restrictions under the Securities Act
of 1933, as amended, under the requirements of any exchange upon which such
shares of the same class are then listed, and under any blue sky or other
securities laws applicable to such shares. The Committee may also require the
Participant to represent and warrant at the time of issuance or transfer that
the shares of Common Stock are being acquired only for investment purposes and
without any current intention to sell or distribute such shares.
14.7 Tax Withholding. The Participant shall be responsible for payment
of any taxes or similar charges required by law to be withheld from an Award or
an amount paid in satisfaction of an Award, which shall be paid by the
Participant on or prior to the payment or other event that results in taxable
income in respect of an Award. The Award Agreement may specify the manner in
which the withholding obligation shall be satisfied with respect to the
particular type of Award.
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14.8 Unfunded Plan. The adoption of the Plan and any reservation of
shares of Common Stock or cash amounts by the Company to discharge its
obligations hereunder shall not be deemed to create a trust or other funded
arrangement. Except upon the issuance of Common Stock pursuant to an Award, any
rights of a Participant under the Plan shall be those of a general unsecured
creditor of the Company, and neither a Participant nor the Participant's
permitted transferees or estate shall have any other interest in any assets of
the Company by virtue of the Plan. Notwithstanding the foregoing, the Company
shall have the right to implement or set aside funds in a grantor trust, subject
to the claims of the Company's creditors or otherwise, to discharge its
obligations under the Plan.
14.9 Other Compensation and Benefit Plans. The adoption of the Plan
shall not affect any other share incentive or other compensation plans in effect
for the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of share incentive or other compensation or benefit
program for employees of the Company or any Affiliate. The amount of any
compensation deemed to be received by a Participant pursuant to an Award shall
not constitute includable compensation for purposes of determining the amount of
benefits to which a Participant is entitled under any other compensation or
benefit plan or program of the Company or an Affiliate, including, without
limitation, under any pension or severance benefits plan, except to the extent
specifically provided by the terms of any such plan.
14.10 Plan Binding on Transferees. The Plan shall be binding upon the
Company, its transferees and assigns, and the Participant, the Participant's
executor, administrator and permitted transferees and beneficiaries.
14.11 Severability. If any provision of the Plan or any Award Agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
14.12 Foreign Jurisdictions. The Committee may adopt, amend and
terminate such arrangements and grant such Awards, not inconsistent with the
intent of the Plan, as it may deem necessary or desirable to comply with any
tax, securities, regulatory or other laws of other jurisdictions with respect to
Awards that may be subject to such laws. The terms and conditions of such Awards
may vary from the terms and conditions that would otherwise be required by the
Plan solely to the extent the Committee deems necessary for such purpose.
Moreover, the Board may approve such supplements to or amendments, restatements
or alternative versions of the Plan, not inconsistent with the intent of the
Plan, as it may consider necessary or appropriate for such purposes, without
thereby affecting the terms of the Plan as in effect for any other purpose.
14.13 Substitute Awards in Corporate Transactions. Nothing contained in
the Plan shall be construed to limit the right of the Committee to grant Awards
under the Plan in connection with the acquisition, whether by purchase, merger,
consolidation or other corporate transaction, of the business or assets of any
corporation or other entity. Without limiting the foregoing, the Committee may
grant Awards under the Plan to an employee or director of another corporation
who becomes an Eligible Person by reason of any such corporate transaction in
substitution for awards previously granted by such corporation or entity to such
person. The terms and conditions of the substitute Awards may vary from the
terms and conditions that would otherwise be required by the Plan solely to the
extent the Committee deems necessary for such purpose.
14.14 Governing Law. The Plan and all rights hereunder shall be subject
to and interpreted in accordance with the laws of the State of Delaware, without
reference to the principles of conflicts of laws, and to applicable Federal
securities laws.
15. EFFECTIVE DATE; AMENDMENT AND TERMINATION.
15.1 Effective Date. The Plan shall become effective following its
adoption by the Board and its approval by the Company's shareholders on the date
of the 2005 Annual Meeting of Shareholders. The term of the Plan shall be ten
years from the date of adoption by the Board, subject to Section 14.3 hereof.
15.2 Amendment. The Board may at any time and from time to time and in
any respect, amend or modify the Plan. The Board may seek the approval of any
amendment or modification by the Company's
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shareholders to the extent it deems necessary or advisable in its discretion for
purposes of compliance with Section 162(m) or Section 422 of the Code, the
listing requirements of New York Stock Exchange or other exchange or securities
market or for any other purpose. No amendment or modification of the Plan shall
adversely affect any Award theretofore granted without the consent of the
Participant or the permitted transferee of the Award.
15.3 Termination. The Plan shall terminate on March 22, 2015, which is
the tenth anniversary of the date of its adoption by the Board. The Board may,
in its discretion and at any earlier date, terminate the Plan. Notwithstanding
the foregoing, no termination of the Plan shall adversely affect any Award
theretofore granted without the consent of the Participant or the permitted
transferee of the Award.
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