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EXHIBIT 10.1
FURON COMPANY
1982 STOCK INCENTIVE PLAN
(AMENDED AND RESTATED AS OF MARCH 22, 1994)
This Furon Company 1982 Stock Incentive Plan is amended and
restated effective as of January 1, 1991 to read as follows:
1. DEFINITIONS.
1.1 Definitions.
(a) "Act" shall mean the Securities Exchange Act of 1934.
(b) "Award" shall mean an Option, which may be designated as a
Nonqualified Stock Option or an Incentive Stock Option, a Stock Appreciation
Right, a Restricted Stock Award or Performance Share Award, in each case
granted under this Plan.
(c) "Award Agreement" shall mean a written agreement setting
forth the terms of an Award.
(d) "Award Date" shall mean the date upon which the Committee
took the action granting an Award or such later date as is prescribed by the
Committee.
(e) "Award Period" shall mean the period beginning on an Award
Date and ending on the expiration date of such Award.
(f) "Beneficiary" shall mean the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive the
benefits specified under this Plan in the event of a Participant's death.
(g) "Board" shall mean the Board of Directors of the
Corporation.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(i) "Commission" shall mean the Securities and Exchange
Commission.
(j) "Committee" shall mean the Compensation Committee
appointed by the Board and consisting of three or more members each of whom
shall be Disinterested.
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(k) "Common Stock" shall mean the Common Stock of the
Corporation.
(l) "Company" shall mean, collectively, Furon Company, a
California corporation, and its Subsidiaries.
(m) "Corporation" shall mean Furon Company, a California
corporation, and its successors.
(n) "Disinterested" shall mean disinterested within the
meaning of applicable regulatory requirements, including those promulgated
under Section 16 of the Act.
(o) "Eligible Employee" shall mean an officer or key employee
of the Company.
(p) "Event" shall mean any of the following:
(i) Approval by the shareholders of the Corporation of
the dissolution or liquidation of the Corporation;
(ii) Approval by the shareholders of the Corporation of
an agreement to merge or consolidate, or otherwise reorganize, with or
into one or more entities which are not Subsidiaries, as a result of
which less than 50% of the outstanding voting securities of the
surviving or resulting entity are, or are to be, owned by former
shareholders of the Corporation;
(iii) Approval by the shareholders of the Corporation of
the sale or transfer of substantially all of the Corporation's business
and/or assets to a person or entity which is not a Subsidiary; or
(iv) A Change in Control. A "Change in Control" shall
be deemed to have occurred if:
(A) any "person", alone or together with all "affiliates"
and "associates" of such person, is or becomes (1) an "Acquiring
Person" as defined in the Rights Agreement, dated as of March 21,
1989, by and between the Company and Bank of America National
Trust and Savings Association, Rights Agent or (2) the
"beneficial owner" of 30% of the outstanding voting securities of
the Corporation (the terms "person", "affiliates", "associates"
and "beneficial owner" are used as such terms are used in the
Securities Exchange Act of 1934 and the General Rules and
Regulations thereunder); provided, however, that a "Change in
Control" shall not be deemed to have occurred if such "person" is
the Corporation, any Subsidiary or any
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employee benefit plan or employee stock plan of the Corporation
or of any Subsidiary, or any trust or other entity organized,
established or holding shares of such voting securities by, for
or pursuant to, the terms of any such plan; or
(B) individuals who at the beginning of any period of two
consecutive calendar years constitute the Board cease for any
reason, during such period, to constitute at least a majority
thereof, unless the election, or the nomination for election by
the Corporation's shareholders, of each new Board member was
approved by a vote of at least three-quarters of the Board
members then still in office who were Board members at the
beginning of such period.
(q) "Fair Market Value" shall mean (i) if the stock is listed
or admitted to trade on a national securities exchange, the closing price of
the stock on the Composite Tape, as published in the Western Edition of The
Wall Street Journal, of the principal national securities exchange on which the
stock is so listed or admitted to trade, on such date, or, if there is no
trading of the stock on such date, then the closing price of the stock as
quoted on such Composite Tape on the next preceding date on which there was
trading in such shares; (ii) if the stock is not listed or admitted to trade on
a national securities exchange, the last price for the stock on such date, as
furnished by the National Association of Securities Dealers, Inc. ("NASD")
through the NASDAQ National Market Reporting System or a similar organization
if the NASD is no longer reporting such information; (iii) if the stock is not
listed or admitted to trade on a national securities exchange and is not
reported on the National Market Reporting System, the mean between the bid and
asked prices for the stock on such date, as furnished by the NASD; (iv) if the
stock is not listed or admitted to trade on a national securities exchange, is
not reported on the National Market Reporting System and if bid and asked
prices for the stock are not furnished by the NASD or a similar organization,
the values established by the Committee for purposes of granting Options under
the Plan.
(r) "Incentive Stock Option" shall mean an option which is
designated as an incentive stock option within the meaning of Section 422A of
the Code, the award of which contains such provisions as are necessary to
comply with that section.
(s) "Nonqualified Stock Option" shall mean an option which is
not designated as an Incentive Stock Option.
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(t) "Option" shall mean an option to purchase Common Stock
under this Plan. An Option shall be designated by the Committee as a
Nonqualified Stock Option or an Incentive Stock Option.
(u) "Participant" shall mean an Eligible Employee who has been
awarded an Award.
(v) "Performance Share Award" shall mean an award of shares of
Common Stock issuance of which is contingent upon attainment of performance
objectives specified by the Committee.
(w) "Personal Representative" shall mean the person or persons
who, upon the disability or incompetence of a Participant, shall have acquired
on behalf of the Participant by legal proceeding or otherwise the power to
exercise the rights and receive the benefits specified in this Plan.
(x) "Plan" shall mean the Furon Company 1982 Stock Incentive
Plan.
(y) "Restricted Stock" shall mean those shares of Common Stock
issued pursuant to a Restricted Stock Award which are subject to the
restrictions set forth in the related Award Agreement.
(z) "Restricted Stock Award" shall mean an award of a fixed
number of shares of Common Stock to the Participant subject, however, to
payment of such consideration, if any, and such forfeiture provisions, as are
set forth in the Award Agreement.
(aa) "Retirement" shall mean termination of a Participant's
employment with the Company by reason of retirement on or following the
Participant's 60th birthday.
(ab) "Stock Appreciation Right" shall mean a right to receive a
number of shares of Common Stock or an amount of cash, or a combination of
shares and cash, determined as provided in Section 4.3(a).
(ac) "Stock Depreciation Right" shall mean a right to receive a
number of shares of Common Stock or an amount of cash, or a combination of
shares and cash, determined as provided in Section 3.6(a).
(ad) "Subsidiary" shall mean any corporation or other entity a
majority or more of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation.
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(ae) "Tax-Offset Bonus" shall mean a bonus payable pursuant to
a disqualifying disposition of Common Stock acquired pursuant to the exercise
of an Incentive Stock Option, determined as provided in Section 3.6(b).
(af) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
2. THE PLAN.
2.1 Purpose.
The purpose of this Plan is to promote the success of the Company
by providing an additional means to attract and retain key personnel through
added long term incentives for high levels of performance and for significant
efforts to improve the financial performance of the Company by granting Awards.
2.2 Administration.
(a) This Plan shall be administered by the Committee. Action
of the Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or the written consent of a majority of its
members. In the event action by the Committee is taken by written consent, the
action shall be deemed to have been taken at the time specified in the consent
or, if none is specified, at the time specified, at the time of the last
signature. The Committee may delegate administrative functions to individuals
who are officers or employees of the Company.
(b) Subject to the express provisions of this Plan, the
Committee shall have the authority to construe and interpret this Plan and any
agreements defining the rights and obligations of the Company and Participants
under this Plan, to further define the terms used in this Plan, to prescribe,
amend and rescind rules and regulations relating to the administration of this
Plan, to determine the duration and purposes of leaves of absence which may be
granted to Participants without constituting a termination of their employment
for purposes of this Plan and to make all other determinations necessary or
advisable for the administration of this Plan. The determinations of the
Committee on the foregoing matters shall be conclusive.
(c) Any action taken by, or inaction of, the Corporation, any
Subsidiary, the Board or the Committee relating to this Plan shall be within
the absolute discretion of that entity or body and shall be conclusive and
binding upon all persons. No member of the Board or
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Committee, or officer of the Corporation or Subsidiary, shall be liable for any
such action or inaction of the entity or body, of another person or, except in
circumstances involving bad faith, of himself or herself. Subject only to
compliance with the express provisions hereof, the Board and Committee may act
in their absolute discretion in matters related to this Plan.
2.3 Participation.
Awards may be granted only to Eligible Employees. An Eligible
Employee who has been granted an Award may, if otherwise eligible, be granted
additional Awards if the Committee shall so determine. Members of the Board
who are not officers or employees of the Company and members of the Committee
shall not be eligible to receive Awards.
2.4 Stock Subject to the Plan.
The stock to be offered under this Plan shall be shares of the
Corporation's authorized but unissued Common Stock. The aggregate amount of
Common Stock that may be issued or transferred pursuant to Awards granted under
this Plan shall not exceed 1,650,000 shares, subject to adjustment as set forth
in Section 7.2. If any Option and any related Stock Appreciation Right shall
lapse or terminate without having been exercised in full, or any Common Stock
subject to a Restricted Stock Award shall not vest or any Common Stock subject
to a Performance Share Award shall not have been transferred, the unpurchased
shares subject thereto shall again be available for purposes of this Plan.
2.5 Grant of Awards.
Subject to the express provisions of the Plan, the Committee
shall determine from the class of Eligible Employees those individuals to whom
Awards under the Plan shall be granted, the terms of Awards (which need not be
identical) and the number of shares of Common Stock subject to each Award.
Each Award shall be subject to the terms and conditions set forth in the Plan
and such other terms and conditions established by the Committee as are not
inconsistent with the purpose and provisions of the Plan. The grant of an
Award is made on the Award Date.
2.6 Exercise of Awards.
An Option or Stock Appreciation Right shall be deemed to be
exercised when the Secretary of the Corporation receives written notice of such
exercise from the Participant, together with payment of the purchase price made
in accordance with Section 3.2(a). Notwithstanding any
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other provision of this Plan, the Committee may impose, by rule and in Award
Agreements, such conditions upon the exercise of Awards (including, without
limitation, conditions limiting the time of exercise to specified periods) as
may be required to satisfy applicable regulatory requirements, including
without limitation Rule 16b-3 (or any successor rules) promulgated by the
Commission pursuant to the Act.
3. OPTIONS.
3.1 Grants.
One or more Options may be granted to any Eligible Employee.
Each Option so granted shall be designated by the Committee as either a
Nonqualified Stock Option or an Incentive Stock Option.
3.2 Option Price.
(a) The purchase price per share of the Common Stock covered
by each Option shall be determined by the Committee, but in the case of
Incentive Stock Options shall not be less than 100% (110% in the case of a
Participant who owns more than 10% of the total combined voting power of all
classes of stock of the Company) of the Fair Market Value of the Common Stock
on the date the Incentive Stock Option is granted. The purchase price of any
shares purchased shall be paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash, or by certified or
cashier's check payable to the order of the Corporation, (ii) if authorized by
the Committee or specified in the Option being exercised, by a promissory note
made by the Participant in favor of the Corporation, upon the terms and
conditions determined by the Committee, and secured by the Common Stock
issuable upon exercise in compliance with applicable law (including, without
limitation, state corporate law and federal margin requirements), or (iii) by
shares of Common Stock of the Corporation already owned by the Participant;
provided, however, that any shares delivered which were initially acquired upon
exercise of a stock option must have been owned by the Participant at least six
months as of the date of delivery. Shares of Common Stock used to satisfy the
exercise price of an Option shall be valued at their Fair Market Value on the
date of exercise.
(b) In addition to the payment methods described in subsection
(a), the Option may provide that the Option can be exercised and payment made
by delivering a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Corporation the amount of
sale or loan proceeds necessary to
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pay the exercise price and, unless otherwise allowed by the Committee, any
applicable tax withholding under Section 7.6. The Corporation shall not be
obligated to deliver certificates for the shares unless and until it receives
full payment of the exercise price therefor.
3.3 Option Period.
Each Option and all rights or obligations thereunder shall expire
on such date as shall be determined by the Committee, but not later than ten
years and one day after the Award Date, and shall be subject to earlier
termination as hereinafter provided.
3.4 Exercise of Options.
(a) Except as otherwise provided in Section 7.4 or paragraph
(b) below, an Option may become exercisable, in whole or in part, on the date
or dates specified in the Award Agreement which date(s) shall not be earlier
than six months after the Award Date and thereafter shall remain exercisable
until the expiration or earlier termination of the Participant's Option. The
Committee may, at any time after grant of the Option and from time to time,
increase the number of shares purchasable at any time so long as the total
number of shares subject to the Option is not increased. No Option shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded. Not less than 10 shares of Common Stock may be purchased
at one time unless the number purchased is the total number at the time
available for purchase under the terms of the Option.
(b) Notwithstanding any other provision of the Plan, each
Incentive Stock Option with an Award Date earlier than January 1, 1987 shall by
its terms not be exercisable by the Participant at any time while there remains
outstanding any previously awarded Incentive Stock Option.
3.5 Limitations on Grant of Incentive Stock Options.
(a) The aggregate Fair Market Value (determined as of the
Award Date) of the Common Stock for which Incentive Stock Options may first
become exercisable by any Participant during any calendar year under this Plan,
together with that of common stock subject to incentive stock options first
exercisable (other than as a result of acceleration pursuant to Section 7.4 or
7.2) by such Participant under any other plan of the Corporation or any
Subsidiary, shall not exceed $100,000.
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(b) There shall be imposed in the Award Agreement relating to
Incentive Stock Options such terms and conditions as are required in order that
the Option be an "incentive stock option" as that term is defined in Section
422A of the Code.
(c) No Incentive Stock Option may be granted to any person
who, at the time the Incentive Stock Option is granted, owns shares of
outstanding Common Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, unless the exercise price of such
Option is at least 110% of the Fair Market Value of the stock subject to the
Option and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
3.6 Additional Rights.
(a) The Committee may grant Stock Depreciation Rights to an
officer or director subject to Section 16(b) of the Act. Such Stock
Depreciation Rights shall be granted concurrently with the grant of an Option
and shall be evidenced in the Award Agreement. Notwithstanding the preceding
sentence, Stock Depreciation Rights may also be granted subsequent to the grant
of an Option, by means of an amendment to the Award Agreement, in the event an
employee becomes an officer or director subject to Section 16(b) of the Act
subsequent to the date of grant of the Option. A Stock Depreciation Right
shall entitle such officer or director to a payment by the Company, in the
event that the Fair Market Value of Common Stock issued pursuant to the
exercise of an Option declines during the six month period after exercise while
such Common Stock is still held by the Participant. Payment may be made in
cash in an amount per covered share equal to the lesser of (i) the difference
between the Fair Market Value of a share of Common Stock on the date of
expiration of such six month period and the Fair Market Value of a share of
Common Stock on the date of exercise, (ii) the difference between the Fair
Market Value of a share of Common Stock on the date of disposition of the
covered share and the Fair Market Value of a share of Common Stock on the date
of exercise and (iii) the difference between the Fair Market Value of a share
of Common Stock on the date of exercise and the exercise price. This amount
per share shall become payable subsequent to the disposition of the covered
shares on or after the expiration of the six month period subject to such
conditions, limits and rules as the Committee may impose, including, without
limitation, conditions required to satisfy the applicable regulatory
requirements under Rule 16b-3 promulgated by the Commission pursuant to the
Act.
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(b) In its discretion the Committee may, in the Award
Agreement, provide for a Tax-Offset Bonus to any Participant who elects to make
a disqualifying disposition (as defined in Section 422A(a)(1) of the Code) of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option.
The Tax-Offset Bonus shall be in the form of a cash payment equal to a
percentage of the difference between the exercise price and the Fair Market
Value on the date of exercise of the Common Stock with respect to which the
disqualifying disposition occurs. Such percentage shall be set out in the
Award Agreement and shall be designed to offset the impact of additional taxes
which result from the disqualifying disposition. Notwithstanding the preceding
sentence, the Committee may reserve the right to from time to time change the
percentage applicable with respect to the Award Agreement.
4. STOCK APPRECIATION RIGHTS.
4.1 Grants.
In its discretion, the Committee may grant Stock Appreciation
Rights concurrently with the grant of Options. A Stock Appreciation Right
shall extend to all or a portion of the shares covered by the related Option.
A Stock Appreciation Right shall entitle the Participant who holds the related
Option, upon exercise of the Stock Appreciation Right and surrender of the
related Option, or portion thereof, to the extent the Stock Appreciation Right
and related Option each were previously unexercised, to receive payment of an
amount determined pursuant to Section 4.3. Any Stock Appreciation Right
granted in connection with an Incentive Stock Option shall contain such terms
as may be required to comply with the provisions of Section 422A of the Code
and the regulations promulgated thereunder.
4.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right shall be exercisable only at
such time or times, and to the extent, that the related Option shall be
exercisable and only when the Fair Market Value of the stock subject to the
related Option exceeds the exercise price of the related Option.
(b) In the event that a Stock Appreciation Right is exercised,
the number of shares of Common Stock subject to the related Option shall be
charged against the maximum amount of Common Stock that may be issued or
transferred pursuant to Awards under this Plan. The number of shares subject
to the Stock Appreciation Right and the related Option of the Participant shall
be reduced by such number of shares.
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(c) If a Stock Appreciation Right extends to less than all the
shares covered by the related Option and if a portion of the related Option is
thereafter exercised, the number of shares subject to the unexercised Stock
Appreciation Right shall be reduced only if and to the extent that the
remaining number of shares covered by such related Option is less than the
remaining number of shares subject to such Stock Appreciation Right.
4.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and surrender
of an exercisable portion of the related Option, the Participant shall be
entitled to receive payment of an amount determined by multiplying
(i) the difference obtained by subtracting the exercise
price per share of Common Stock under the related Option from the Fair
Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Right, by
(ii) the number of shares with respect to which the
Stock Appreciation Right shall have been exercised.
(b) The Committee, in its sole discretion, may settle the
amount determined under paragraph (a) above solely in cash, solely in shares of
Common Stock (valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in cash, provided that
the Committee shall have determined that such exercise and payment are
consistent with applicable law. In any event, cash shall be paid in lieu of
fractional shares. Absent a determination to the contrary, all Stock
Appreciation Rights shall be settled in cash as soon as practicable after
exercise. The exercise price for the Stock Appreciation Right shall be the
exercise price of the related Option. Notwithstanding the foregoing, the
Committee may, in the Award Agreement, determine the maximum amount of cash or
stock or a combination thereof which may be delivered upon exercise of a Stock
Appreciation Right.
5. RESTRICTED STOCK AWARDS.
5.1 Grants.
Subject to Section 2.4, the Committee may, in its discretion,
grant one or more Restricted Stock Awards to any Eligible Employee. Each
Restricted Stock Award Agreement shall specify the number of shares of Common
Stock to be issued to the Participant, the date of such issuance, the price, if
any, to be paid for such shares by the Participant
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and the restrictions imposed on such shares, which restrictions shall not
terminate earlier than six months after the Award Date. Shares of Restricted
Stock shall be evidenced by a stock certificate registered only in the name of
the Participant, which stock certificate shall bear a legend making appropriate
reference to the restrictions imposed and shall be held by the Corporation
until the restrictions on such shares shall have lapsed and those shares have
thereby vested.
5.2 Restrictions.
(a) Shares of Common Stock included in Restricted Stock Awards
may not be sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until such shares have vested.
(b) Participants receiving Restricted Stock shall be entitled
to dividend and voting rights for the shares issued even though they are not
vested, provided that such rights shall terminate immediately as to any
forfeited Restricted Stock.
(c) In the event that the Participant shall have paid cash in
connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned upon a forfeiture (with
or without an earnings factor).
6. PERFORMANCE SHARE AWARDS.
6.1 Grants.
The Committee may, in its discretion, grant Performance Share
Awards to Eligible Employees based upon such factors as the Committee shall
determine. A Performance Share Award Agreement shall specify the number of
shares of Common Stock subject to the Performance Share Award, the price, if
any, to be paid for such shares by the Participant and the conditions upon
which issuance to the Participant shall be based, which issuance shall not be
earlier than six months after the Award Date.
7. OTHER PROVISIONS.
7.1 Rights of Eligible Employees, Participants and Beneficiaries.
(a) Status as an Eligible Employee shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible Employee
or to Eligible Employees generally.
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(b) Nothing contained in this Plan (or in Award Agreements or
in any other documents related to this Plan or to Awards) shall confer upon any
Eligible Employee or Participant any right to continue in the employ of the
Company or constitute any contract or agreement of employment, or interfere in
any way with the right of the Company to reduce such person's compensation or
to terminate the employment of such Eligible Employee or Participant, with or
without cause, but nothing contained in this Plan or any document related
thereto shall affect any other contractual right of any Eligible Employee or
Participant.
(c) Amounts payable to an Award shall be paid only to the
Participant or, in the event of the Participant's death, to the Participant's
Beneficiary or, in the event of the Participant's Total Disability, to the
Participant's Personal Representative or, if there is none, to the Participant.
Other than by will or the laws of descent and distribution, no benefit payable
under, or interest in, this Plan or in any Award shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge and any such attempted action shall be void and no such benefit or
interest shall be, in any manner, liable for, or subject to, debts, contracts,
liabilities, engagements or torts of any Eligible Employee, Participant or
Beneficiary. The Committee shall disregard any attempted transfer, assignment
or other alienation prohibited by the preceding sentence and shall pay or
deliver such cash or shares of Common Stock in accordance with the provisions
of this Plan.
(d) No Participant, Beneficiary or other person shall have any
right, title or interest in any fund or in any specific asset (including shares
of Common Stock) of the Company by reason of any Award granted hereunder.
Neither the provisions of this Plan (or of any documents related hereto), nor
the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive an Award hereunder, such right shall
be no greater than the right of any unsecured general creditor of the Company.
7.2 Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are increased,
decreased or changed into, or exchanged for, a different number or kind of
shares or securities of the Corporation through a reorganization or merger in
which the Corporation is the surviving entity, or through a
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combination, recapitalization, reclassification, stock split, stock dividend,
stock consolidation or otherwise, an appropriate adjustment shall be made in
the number and kind of shares that may be issued pursuant to Awards. A
corresponding adjustment to the consideration payable with respect to Awards
granted prior to any such change and to the price, if any, paid in connection
with Restricted Stock Awards shall also be made. Any such adjustment, however,
shall be made without change in the total payment, if any, applicable to the
portion of the Award not exercised but with a corresponding adjustment in the
price for each share. Corresponding adjustments shall be made with respect to
Stock Appreciation Rights based upon the adjustments made to the Options to
which they are related.
(b) Upon the dissolution or liquidation of the Corporation, or
upon a reorganization, merger or consolidation of the Corporation with one or
more corporations as a result of which the Corporation is not the surviving
corporation, the Plan shall terminate, and any outstanding Awards shall
terminate and be forfeited. Notwithstanding the foregoing, the Board may
provide in writing in connection with, or in contemplation of, any such
transaction for any or all of the following alternatives (separately or in
combinations): (i) for the assumption by the successor corporation of the
Awards theretofore granted or the substitution by such corporation for such
Awards of awards covering the stock of the successor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices; (ii) for the continuance of the Plan by such successor
corporation in which event the Plan and the Awards shall continue in the manner
and under the terms so provided; or (iii) for the payment in cash or shares of
Common Stock in lieu of and in complete satisfaction of such Awards; provided,
however, that the rights of Participants under Section 7.4 to acceleration of
Awards under certain circumstances shall not in any way be modified, amended,
altered or impaired by virtue of this Section 7.2(b).
(c) In adjusting Awards to reflect the changes described in
this Section 7.2, or in determining that no such adjustment is necessary, the
Board may rely upon the advice of independent counsel and accountants of the
Corporation, and the determination of the Board shall be conclusive. No
fractional shares of stock shall be issued under this Plan on account of any
such adjustment.
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7.3 Termination of Employment.
(a) If the Participant's employment by the Company terminates
for any reason other than Retirement, death or Total Disability, the
Participant shall have, subject to earlier termination pursuant to or as
contemplated by Section 3.3, three months from the date of termination of
employment to exercise any Option to the extent it shall have become
exercisable on that date, and any Option not exercisable on that date shall
terminate. Notwithstanding the preceding sentence, in the event the
Participant is discharged for cause as determined by the Committee in its sole
discretion, all Options shall lapse immediately upon such termination of
employment.
(b) If the Participant's employment by the Company terminates
as a result of Total Disability, the Participant or Participant's Personal
Representative, as the case may be, shall have, subject to earlier termination
pursuant to or as contemplated by Section 3.3, twelve (12) months from the date
of termination of employment to exercise any Option to the extent it shall have
become exercisable by that date and any Option not exercisable on that date
shall terminate. If the Participant's employment by the company terminates as
a result of Retirement, the Participant shall have, subject to earlier
termination pursuant to or as contemplated by Section 3.3, thirty-six (36)
months from the date of termination of employment to exercise any Option.
Provided, further, that upon the date of termination of a Participant's
employment as a result of Retirement all Options outstanding shall become
immediately exercisable, except if such Option has been awarded within six
months of the date of termination of employment as a result of Retirement. In
such case, the Options so awarded shall become fully exercisable after the
expiration of six months from the date of the Award. Provided, further,
notwithstanding any other provision of the Plan, each Incentive Stock Option
with an Award Date earlier than January 1, 1987 shall by its terms not be
exercisable by the Participant at any time while there remains outstanding any
previously awarded Incentive Stock Option.
(c) If the Participant's employment by the Company terminates
as a result of death while the Participant is employed by the Company or during
either the twelve (12) or thirty-six (36) month period referred to in Section
7.3(b) above, the Participant's Option shall be exercisable by the Participant
Beneficiary, subject to earlier termination pursuant to or as contemplated by
Section 3.3, during the twelve (12) month period following the Participant's
death, as to all or any part of the shares for Common Stock covered thereby
including all shares as to which the Option could not otherwise be exercisable.
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(d) Each Stock Appreciation Right shall have the same
termination provisions and exercisability periods as the Option to which it
relates. The exercisability period of a Stock Appreciation Right or of an
Option shall not exceed that provided in Section 3.3 or in the related Award
Agreement. Each Option and Stock Appreciation Right shall expire at the end of
that exercisability period.
(e) In the event of termination of employment with the Company
for any reason, (i) shares of Common Stock subject to the Participant's
Restricted Stock Award shall be forfeited in accordance with the provisions of
the related Award Agreement to the extent such shares have not become vested on
that date; and (ii) shares of Common Stock subject to the Participant's
Performance Share Award shall be forfeited in accordance with the provisions of
the related Award Agreement to the extent such shares have not been issued or
become issuable on that date.
(f) In the event of termination of employment with the Company
for any reason, other than discharge for cause, the Committee may, in its
discretion, increase the portion of the Participant's Award available to the
Participant, or Participant's Beneficiary or Personal Representative, as the
case may be, upon such terms as the Committee shall determine.
(g) If an entity ceases to be a Subsidiary, such action shall
be deemed for purposes of this Section 7.3 to be a termination of employment of
each employee of that entity.
(h) Upon forfeiture of a Restricted Stock Award pursuant to
this Section 7.3, the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, shall transfer to the Corporation the
portion of the Restricted Stock Award not vested at the date of termination of
employment, without payment of any consideration by the Company for such
transfer unless the Participant paid a purchase price in which case repayment,
if any, of that price shall be governed by the Award Agreement.
Notwithstanding any such transfer to the Corporation, or failure, refusal or
neglect to transfer, by the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, such nonvested portion of any Restricted
Stock Award shall be deemed transferred automatically to the Corporation on the
date of termination of employment. The Participant's original acceptance of
the Restricted Stock Award shall constitute his or her appointment of the
Corporation and each of its authorized representatives as attorney(s)-in-fact
to effect such transfer and to execute such documents as the Corporation or
such representatives
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deem necessary or advisable in connection with such transfer.
7.4 Acceleration of Awards.
Except as otherwise explicitly provided in an Award Agreement,
upon the occurrence of an Event (i) each Option and each related Stock
Appreciation Right shall become immediately exercisable to the full extent
theretofore not exercisable, (ii) Restricted Stock shall immediately vest free
of restrictions and (iii) the number of shares covered by each Performance
Share Award shall be issued to the Participant; provided, however, that Awards
shall not in any event be so accelerated to a date less than six months after
the Award Date. Acceleration of Awards shall comply with applicable regulatory
requirements, including without limitation Rule 16b-3 promulgated by the
Commission pursuant to the Act and Section 422A of the Code. Notwithstanding
the foregoing, this Section 7.4 shall not apply to any Participant who alone or
together with one or more other persons acting as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring, holding or
disposing of securities of the Corporation triggers a "Change in Control" under
Section 1.1(p)(iv)(A) which causes the occurrence of the Event.
7.5 Government Regulations.
This Plan, the granting of Awards under this Plan and the
issuance or transfer of shares of Common Stock (and/or the payment of money)
pursuant thereto are subject to all applicable federal and state laws, rules
and regulations and to such approvals by any regulatory or governmental agency
(including without limitation "no action" positions of the Commission) which
may, in the opinion of counsel for the Corporation, be necessary or advisable
in connection therewith. Without limiting the generality of the foregoing, no
Awards may be granted under this Plan, and no shares shall be issued by the
Corporation, nor cash payments made by the Corporation, pursuant to or in
connection with any such Award, unless and until, in each such case, all legal
requirements applicable to the issuance or payment have, in the opinion of
counsel to the Corporation, been complied with. In connection with any stock
issuance or transfer, the person acquiring the shares shall, if requested by
the Corporation, give assurance satisfactory to counsel to the Corporation in
respect of such matters as the Corporation may deem desirable to assure
compliance with all applicable legal requirements.
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7.6 Tax Withholding.
(a) Upon the disposition by a Participant or other person of
shares of Common Stock acquired pursuant to the exercise of an Incentive Stock
Option prior to satisfaction of the holding period requirements of Section 422A
of the Code, or upon the exercise of a Nonqualified Stock Option, the exercise
of a Stock Appreciation Right, the vesting of a Restricted Stock Award, the
payment of a Performance Share Award, payment pursuant to a Stock Depreciation
Right or payment of a Tax-Offset Bonus, the Company shall have the right to (i)
require such Participant or such other person to pay by cash, or certified or
cashier's check payable to the Company, the amount of any taxes which the
Company may be required to withhold with respect to such transactions or (ii)
deduct from amounts paid in cash the amount of any taxes which the Company may
be required to withhold with respect to such cash amounts. The above
notwithstanding, in any case where a tax is required to be withheld in
connection with the issuance or transfer of shares of Common Stock under this
Plan, the Participant may elect, pursuant to such rules as the Committee may
establish, to have the Company reduce the number of such shares issued or
transferred by the appropriate number of shares to accomplish such withholding;
provided, the Committee may impose such conditions on the payment of any
withholding obligation as may be required to satisfy applicable regulatory
requirements, including, without limitation, Rule 16b-3 promulgated by the
Commission pursuant to the Act.
(b) The Committee may, in its discretion, permit a loan from
the Company to a Participant in the amount of any taxes which the Company may
be required to withhold with respect to shares of Common Stock received
pursuant to a transaction described in subsection (a) above. Such loan will be
for a term, at a rate of interest and pursuant to such other terms and rules as
the Committee may establish.
7.7 Amendment, Termination, and Suspension.
(a) The Board may, at any time, terminate or, from time to
time, amend, modify or suspend this Plan (or any part hereof). In addition,
the Committee may, from time to time, amend or modify any provision of this
Plan except Section 7.4 and, with the consent of the Participant, make such
modifications of the terms and conditions of such Participant's Award as it
shall deem advisable. The Committee, with the consent of the Participant, may
also amend the terms of any Option to provide that the Option price of the
shares remaining subject to the original Award shall be reestablished at a
price not less than 100% of the Fair Market Value of the Common Stock on the
effective date
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of the amendment. No modification of any other term or provision of any Option
which is amended in accordance with the foregoing shall be required, although
the Committee may, in its discretion, make such further modifications of any
such Option as are not inconsistent with or prohibited by the Plan. No Awards
may be granted during any suspension of this Plan or after its termination.
(b) If an amendment would materially (i) increase the benefits
accruing to Participants within the meaning of Rule 16b-3(a) under the Act or
any successor thereto, (ii) increase the aggregate number of shares which may
be issued under this Plan, or (iii) modify the requirements of eligibility for
participation in this Plan, the amendment shall be approved by the Board or the
Committee and by a majority of the shareholders.
(c) In the case of Awards issued before the effective date of
any amendment, suspension or termination of this Plan, such amendment,
suspension or termination of the Plan shall not, without specific action of the
Board or the Committee and the consent of the Participant, in any way modify,
amend, alter or impair any rights or obligations under any Award previously
granted under the Plan.
7.8 Privileges of Stock Ownership; Nondistributive Intent.
A Participant shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock not actually issued to him. Upon
the issuance and transfer of shares to the Participant, unless a registration
statement is in effect under the Securities Act of 1933, as amended ("1933
Act"), relating to such issued and transferred Common Stock and there is
available for delivery a prospectus meeting the requirements of Section 10 of
the 1933 Act, the Common Stock may be issued and transferred to the Participant
only if he represents and warrants in writing to the Corporation that the
shares are being acquired for investment and not with a view to the resale or
distribution thereof. No shares shall be issued and transferred unless and
until there shall have been full compliance with any then applicable regulatory
requirements (including those of exchanges upon which any Common Stock of the
Corporation may be listed).
7.9 Effective Date of the Plan.
This Plan shall be effective upon its approval by the Board,
subject to approval by the shareholders of the Corporation within 12 months
from the date the Plan is adopted by the Board.
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7.10 Term of the Plan.
Unless previously terminated by the Board, this Plan shall
terminate at the close of business on March 8, 1997, and no Award shall be
granted under it thereafter, but such termination shall not affect any Award
theretofore granted.
7.11 Governing Law.
This Plan and the documents evidencing Awards and all other
related documents shall be governed by, and construed in accordance with, the
laws of the State of California. If any provision shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the remaining
provisions of this Plan shall continue to be fully effective.
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