Exhibit 10.1
COMMSCOPE, INC.
2006 LONG TERM INCENTIVE PLAN
(EFFECTIVE MAY 5, 2006)
1. PURPOSE.
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The purpose of the Plan is to strengthen CommScope, Inc., a
Delaware corporation (the "Company"), by providing an incentive to its and
its Subsidiaries' (as defined herein) employees, officers, consultants and
directors, thereby encouraging them to devote their abilities and industry
to the success of the Company's business enterprise. It is intended that
this purpose be achieved by extending to employees (including future
employees who have received a formal written offer of employment),
officers, consultants and directors of the Company and its Subsidiaries an
added incentive for high levels of performance and unusual efforts through
the grant of Restricted Stock, Restricted Stock Units, Options, Stock
Appreciation Rights, Dividend Equivalent Rights, Performance Awards, and
Share Awards (as each term is herein defined).
2. DEFINITIONS.
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For purposes of the Plan:
2.1 "Agreement" means a written or electronic agreement between
the Company and a Participant evidencing the grant of an Option or Award
and setting forth the terms and conditions thereof.
2.2 "Award" means a grant of Restricted Stock, a Restricted Stock
Unit, a Stock Appreciation Right, a Performance Award, a Dividend
Equivalent Right, a Share Award or any or all of them.
2.3 "Beneficiary" means an individual designated as a Beneficiary
pursuant to Section 20.4.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Change in Capitalization" means any increase or reduction in
the number of Shares, any change (including, but not limited to, in the
case of a spin-off, dividend or other distribution in respect of Shares, a
change in value) in the Shares or any exchange of Shares for a different
number or kind of shares or other securities of the Company or another
corporation, by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of warrants,
rights or debentures, stock dividend, stock split or reverse stock split,
cash dividend, property dividend, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise.
2.6 "Change in Control" means the occurrence of any of the
following:
(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any
"Person" (as the term "person" is used for purposes of Section 13(d) or
14(d) of the Exchange Act), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of more than thirty-three percent (33%) of (i) the
then-outstanding Shares or (ii) the combined voting power of the Company's
then-outstanding Voting Securities; provided, however, that in determining
whether a Change in Control has occurred pursuant to this paragraph (a),
the acquisition of Shares or Voting Securities in a Non-Control Acquisition
(as hereinafter defined) shall not constitute a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person the majority of the voting
power, voting equity securities or equity interest of which is owned,
directly or indirectly, by the Company (for purposes of this definition, a
"Related Entity"), (ii) the Company or any Related Entity, or (iii) any
Person in connection with a Non-Control Transaction (as hereinafter
defined);
(b) The individuals who, as of the effective date of the
Plan, are members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the members of the Board or,
following a Merger (as hereinafter defined), the board of directors of (i)
the corporation resulting from such Merger (the "Surviving Corporation"),
if fifty percent (50%) or more of the combined voting power of the
then-outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person (a "Parent
Corporation") or (ii) if there is one or more than one Parent Corporation,
the ultimate Parent Corporation; provided, however, that, if the election,
or nomination for election by the Company's common shareholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of the Plan, be considered a
member of the Incumbent Board; and provided, further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest"), including by reason of any agreement
intended to avoid or settle any Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization (x) with
or into the Company or (y) in which securities of the Company are issued (a
"Merger"), unless such Merger is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a Merger in which:
(A) the shareholders of the Company immediately
before such Merger own directly or indirectly immediately following such
Merger at least a majority of the combined voting power of the outstanding
voting securities of (1) the Surviving Corporation, if there is no Parent
Corporation or (2) if there is one or more than one Parent Corporation, the
ultimate Parent Corporation;
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement
providing for such Merger constitute at least a majority of the members of
the board of directors of (1) the Surviving Corporation, if there is no
Parent Corporation, or (2) if there is one or more than one Parent
Corporation, the ultimate Parent Corporation; and
(C) no Person other than (1) the Company or
another corporation that is a party to the agreement of Merger, (2) any
Related Entity, or (3) any employee benefit plan (or any trust forming a
part thereof) that, immediately prior to the Merger, was maintained by the
Company or any Related Entity, or (4) any Person who, immediately prior to
the Merger had Beneficial Ownership of thirty-three percent (33%) or more
of the then outstanding Shares or Voting Securities, has Beneficial
Ownership, directly or indirectly, of thirty-three percent (33%) or more of
the combined voting power of the outstanding voting securities or common
stock of (x) the Surviving Corporation, if there is no Parent Corporation,
or (y) if there is one or more than one Parent Corporation, the ultimate
Parent Corporation.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken
as a whole to any Person (other than (x) a transfer to a Related Entity or
(y) the distribution to the Company's shareholders of the stock of a
Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding Shares or Voting Securities as a result of the acquisition of
Shares or Voting Securities by the Company which, by reducing the number of
Shares or Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Persons; provided that
if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Shares or Voting Securities by the
Company and, after such share acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Shares or Voting
Securities and such Beneficial Ownership increases the percentage of the
then outstanding Shares or Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
2.7 "Chief Executive Officer" means the Chief Executive Officer
of the Company.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means the Committee which administers the Plan as
provided in Section 3.
2.10 "Company" means CommScope, Inc., a Delaware corporation.
2.11 "Director" means a member of the Board.
2.12 "Disability" means a mental or physical condition which, in
the opinion of the Committee, renders a Participant unable or incompetent
to carry out the job responsibilities which such Participant held or the
duties to which such Participant was assigned at the time the disability
was incurred, and which is expected to be permanent or for an indefinite
duration.
2.13 Division" means any of the operating units or divisions of
the Company designated as a Division by the Committee.
2.14 "Dividend Equivalent Right" means a right to receive cash or
Shares based on the value of dividends that are paid with respect to
Shares.
2.15 "Effective Date" means the date of approval of the Plan by
the Company's shareholders' pursuant to Section 20.5.
2.16 "Eligible Individual" means any of the following
individuals: (a) any Director, officer or employee of the Company or a
Subsidiary, (b) any individual to whom the Company or a Subsidiary has
extended a formal, written offer of employment, and (c) any consultant or
advisor of the Company or a Subsidiary.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.18 "Fair Market Value" on any date means:
(a) if the Shares are listed for trading on the New York
Stock Exchange, the closing price at the close of the primary trading
session of the Shares on such date on the New York Stock Exchange, or if
there has been no such closing price of the Shares on such date, on the
next preceding date on which there was such a closing price;
(b) if the Shares are not listed for trading on the New York
Stock Exchange, but are listed on another national securities exchange, the
closing price at the close of the primary trading session of the Shares on
such date on such exchange, or if there has been no such closing price of
the Shares on such date, on the next preceding date on which there was such
a closing price;
(c ) if the Shares are not listed on the New York Stock
Exchange or on another national securities exchange, the last sale price at
the end of normal market hours of the Shares on such date as quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") or, if no such price shall have been quoted for such date, on
the next preceding date for which such price was so quoted; or
(d) if the Shares are not listed for trading on a national
securities exchange or are not authorized for quotation on NASDAQ, the fair
market value of the Shares as determined in good faith by the Committee,
and in the case of Incentive Stock Options, in accordance with Section 422
of the Code.
2.19 "Full Value Award" means a grant of Restricted Stock, a
Restricted Stock Unit, a Performance Award, a Share Award or any or all of
them.
2.20 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as
an Incentive Stock Option.
2.21 "Nonemployee Director" means a Director who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under
the Exchange Act.
2.22 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.23 "Option" means a Nonqualified Stock Option and/or an
Incentive Stock Option.
2.24 "Outside Director" means a Director who is an "outside
director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.25 "Parent" means any corporation which is a "parent
corporation" (within the meaning of Section 424(e) of the Code) with
respect to the Company.
2.26 "Participant" means a person to whom an Award or Option has
been granted under the Plan.
2.27 "Performance Awards" means Performance Share Units,
Performance Units, Performance-Based Restricted Stock or any or all of
them.
2.28 "Performance-Based Compensation" means any Option or Award
that is intended to constitute "performance based compensation" within the
meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated
thereunder.
2.29 "Performance-Based Restricted Stock" means Shares issued or
transferred to an Eligible Individual under Section 9.2.
2.30 "Performance Cycle" means the time period specified by the
Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.31 "Performance Objectives" means the objectives set forth in
Section 9.3 for the purpose of determining the degree of payout and/or
vesting of Performance Awards.
2.32 "Performance Share Units" means Performance Share Units
granted to an Eligible Individual under Section 9.1.
2.33 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 9.1.
2.34 "Plan" means the CommScope, Inc. Long-Term Incentive Plan,
as amended from time to time.
2.35 "Prior Plan" means the Amended and Restated CommScope, Inc.
1997 Long-Term Incentive Plan (as amended and restated effective May 7,
2004).
2.36 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 8.
2.37 "Restricted Stock Units" means rights granted to an Eligible
Individual under Section 8 representing a number of hypothetical Shares.
2.38 "Share Award" means an Award of Shares granted pursuant to
Section 10.
2.39 "Shares" means the common stock, par value $.01 per share,
of the Company and any other securities into which such shares are changed
or for which such shares are exchanged.
2.40 "Stock Appreciation Right" means a right to receive all or
some portion of the increase, if any, in the value of the Shares as
provided in Section 6 hereof.
2.41 "Subsidiary" means (a) except as provided in subsection (b)
below, any corporation which is a subsidiary corporation within the meaning
of Section 424(f) of the Code with respect to the Company, and (b) in
relation to the eligibility to receive Options or Awards other than
Incentive Stock Options and continued employment for purposes of Options
and Awards (unless the Committee determines otherwise), any entity, whether
or not incorporated, in which the Company directly or indirectly owns at
least 50% or more of the outstanding equity or other ownership interests.
2.42 "Ten-Percent Shareholder" means an Eligible Individual who,
at the time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, a Parent or a Subsidiary.
2.43 "Termination Date" means the date that is ten (10) years
after the Effective Date, unless the Plan is earlier terminated by the
Board pursuant to Section 16 hereof.
3. ADMINISTRATION.
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3.1 Committees; Procedure. The Plan shall be administered by a
Committee which, until the Board appoints a different Committee, shall be
the Compensation Committee of the Board. The Committee may adopt such
rules, regulations and guidelines as it deems are necessary or appropriate
for the administration of the Plan. The Committee shall consist of at least
two (2) Directors, each of whom shall be a Nonemployee Director and an
Outside Director. For purposes of the preceding sentence, if one or more
members of the Committee is not a Nonemployee Director and an Outside
Director but recuses himself or herself or abstains from voting with
respect to a particular action taken by the Committee, then the Committee,
with respect to that action, shall be deemed to consist only of the members
of the Committee who have not recused themselves or abstained from voting.
3.2 Board Reservation and Delegation. Except to the extent
necessary for any Award or Option intended to qualify as Performance-Based
Compensation to so qualify, the Board may, in its discretion, reserve to
itself or exercise any or all of the authority and responsibility of the
Committee hereunder and may also delegate to another committee of the Board
any or all of the authority and responsibility of the Committee with
respect to Awards or Options to Eligible Individuals who are not subject to
Section 16(b) of the Exchange Act at the time any such delegated authority
or responsibility is exercised. Such other committee may consist of one or
more Directors who may, but need not be officers or employees of the
Company or any of its Subsidiaries. To the extent the Board has reserved to
itself, or exercised the authority and responsibility of the Committee, or
delegated the authority and responsibility of the Committee to such other
committee, all references to the Committee in the Plan shall be to the
Board or to such other committee.
3.3 Committee Powers. Subject to the express terms and conditions
set forth herein, the Committee shall have the power from time to time to:
(a) select those Eligible Individuals to whom Options shall
be granted under the Plan and the number of such Options to be granted and
prescribe the terms and conditions (which need not be identical) of each
such Option, including the exercise price per Share, the vesting schedule
and the duration of each Option, and make any amendment or modification to
any Option Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall
be granted under the Plan and determine the number of Shares or amount of
cash in respect of which each Award is granted, the terms and conditions
(which need not be identical) of each such Award, and make any amendment or
modification to any Agreement consistent with the terms of the Plan;
(c) construe and interpret the Plan and the Options and
Awards granted hereunder and establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable, including so that the Plan and
the operation of the Plan comply with Rule 16b-3 under the Exchange Act,
the Code to the extent applicable and other applicable law, and otherwise
to make the Plan fully effective;
(d) determine the duration and purposes for leaves of
absence which may be granted to a Participant on an individual basis
without constituting a termination of employment or service for purposes of
the Plan;
(e) cancel, with the consent of the Participant, outstanding
Awards and Options;
(f) exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(g) generally, exercise such powers and perform such acts as
are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
All decisions and determinations by the Committee in the exercise
of the above powers shall be final, binding and conclusive upon the
Company, its Subsidiaries, the Participants and all other persons having
any interest therein.
3.4 Notwithstanding anything herein to the contrary, with respect
to Participants working outside the United States, the Committee may
determine the terms and conditions of Options and Awards and make such
adjustments to the terms thereof as are necessary or advisable to fulfill
the purposes of the Plan taking into account matters of local law or
practice, including tax and securities laws of jurisdictions outside the
United States.
3.5 Indemnification. No member of the Committee shall be liable
for any action, failure to act, determination or interpretation made in
good faith with respect to the Plan or any transaction hereunder. The
Company hereby agrees to indemnify each member of the Committee for all
costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiating for the settlement of or otherwise dealing with any claim,
cause of action or dispute of any kind arising in connection with any
actions in administering the Plan or in authorizing or denying
authorization to any transaction hereunder.
3.6 No Repricing of Options or Stock Appreciation Rights. The
Committee shall have no authority to make any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction
where an adjustment is permitted or required under the terms of the Plan)
or amendment, and no such adjustment or amendment shall be made, that
reduces or would have the effect of reducing the exercise price of an
Option or Stock Appreciation Right previously granted under the Plan,
whether through amendment, cancellation or replacement grants, or other
means, unless the Company's shareholders shall have approved such
adjustment or amendment.
4. STOCK SUBJECT TO THE PLAN; GRANT LIMITATIONS.
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4.1 Aggregate Number of Shares Authorized for Issuance. Subject
to any adjustment as provided in the Plan, the Shares to be issued under
the Plan may be, in whole or in part, authorized but unissued Shares or
issued Shares which shall have been reacquired by the Company and held by
it as treasury shares. The aggregate number of Shares that may be made the
subject of Awards or Options granted under the Plan shall not exceed two
million three hundred thousand (2,300,000), (i) no more than 50% of which
may be granted as Incentive Stock Options, and (ii) no more than one
million five hundred thousand (1,500,000) of which may be granted as Full
Value Awards.
4.2 Individual Limit. The aggregate number of Shares that may be
the subject of Options, Stock Appreciation Rights, Performance-Based
Restricted Stock and Performance Share Units granted to an Eligible
Individual in any three calendar year period may not exceed 750,000. The
maximum dollar amount of cash or the Fair Market Value of Shares that any
individual may receive in any calendar year in respect of Performance Units
may not exceed $2,000,000.
4.3 Calculating Shares Available.
(a) Upon the granting of an Award or an Option, the number
of Shares available under this Section 4 for the granting of further Awards
and Options shall be reduced as follows:
(i) In connection with the granting of an Option, Stock
Appreciation Right (other than a Stock Appreciation Right Related to an
Option), Restricted Stock Unit, Share Award or Award of Restricted Stock,
Performance-Based Restricted Stock or Performance Share Units, the number
of Shares available under this Section 4 for the granting of further
Options and Awards shall be reduced by the number of Shares in respect of
which the Option or Award is granted or denominated.
(ii) In connection with the granting of a Performance
Unit, the number of Shares available under this Section 4 for the granting
of further Options and Awards initially shall be reduced by the Shares
Equivalent number of Performance Units granted, with a corresponding
adjustment if the Performance Unit is ultimately settled in whole or in
part with a different number of Shares. For purposes of this Section 4, the
Share Equivalent number of Performance Units shall be equal to the quotient
of (i) the aggregate dollar amount in which the Performance Units are
denominated, divided by (ii) the Fair Market Value of a Share on the date
of grant.
(iii) In connection with the granting of a Dividend
Equivalent Right, the number of Shares available under this Section 4 shall
not be reduced; provided, however, that if Shares are issued in settlement
of a Dividend Equivalent Right, the number of Shares available for the
granting of further Options and Awards under this Section 4 shall be
reduced by the number of Shares so issued.
(b) Notwithstanding Section 4.3(a), in the event that an
Award is granted that, pursuant to the terms of the Agreement, cannot be
settled in Shares, the aggregate number of Shares that may be made the
subject of Awards or Options granted under the Plan shall not be reduced.
Whenever any outstanding Option or Award or portion thereof expires, is
canceled, is settled in cash or is otherwise terminated for any reason
without having been exercised or payment having been made in respect of the
entire Option or Award, the number of Shares available under this Section 4
shall be increased by the number of Shares previously allocable under
Section 4.3(a) to the expired, canceled, settled or otherwise terminated
portion of the Option or Award.
(c) Notwithstanding anything in this Section 4.3 to the
contrary, (i) Shares tendered as full or partial payment of the Option
Price shall not increase the number of Shares available under this Section
4, (ii) Shares tendered as settlement of tax withholding obligations shall
not increase the number of Shares available under this Section 4, and (iii)
Shares repurchased by the Company using proceeds from the exercise of
Options shall not be available for issuance under the Plan.
(d) Where two or more Awards are granted with respect to the
same Shares, such Shares shall be taken into account only once for purposes
of this Section 4.3.
5. STOCK OPTIONS.
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5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those
Eligible Individuals who will receive Options, and the terms and conditions
of the grant to any such Eligible Individual shall be set forth in an
Agreement. Incentive Stock Options may be granted only to Eligible
Individuals who are employees of the Company or any Subsidiary on the date
the Incentive Stock Option is granted.
5.2 Exercise Price. The purchase price or the manner in which the
exercise price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement; provided,
however, that the exercise price per Share under each Option shall not be
less than the greater of (i) the par value of a Share and (ii) 100% of the
Fair Market Value of a Share on the date the Option is granted (110% in the
case of an Incentive Stock Option granted to a Ten-Percent Shareholder).
5.3 Maximum Duration. Options granted hereunder shall be for such
term as the Committee shall determine; provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from
the date it is granted (five (5) years in the case of an Incentive Stock
Option granted to a Ten-Percent Shareholder) and a Nonqualified Stock
Option shall not be exercisable after the expiration of ten (10) years from
the date it is granted; provided, further, however, that unless the
Committee provides otherwise, an Option (other than an Incentive Stock
Option) may, upon the death of the Participant prior to the expiration of
the Option, be exercised for up to five (5) years following the date of the
Participant's death, and one (1) of such years may extend beyond ten (10)
years from the date the Option is granted. The Committee may, subsequent to
the granting of any Option, extend the term thereof, but in no event shall
the term as so extended exceed the maximum term provided for in the
preceding sentence.
5.4 Vesting. Except as provided in this Section 5.4, no Option
shall vest more rapidly than with respect to one-third of the Shares
subject to such Option on each of the first three anniversaries of the date
such Option is granted. Notwithstanding the foregoing, in the discretion of
the Committee, Options may vest more rapidly than provided in the preceding
sentence in the case of (i) a Participant's death, Disability or
retirement, (ii) grants of Options to new hires and (iii) a Change in
Control. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable,
but not later than the date the Option expires. The Committee may
accelerate the exercisability of any Option or portion thereof at any time.
5.5 Limitations on Incentive Stock Options. To the extent that
the aggregate Fair Market Value (determined as of the date of the grant) of
Shares with respect to which Incentive Stock Options granted under the Plan
and "incentive stock options" (within the meaning of Section 422 of the
Code) granted under all other plans of the Company or its Subsidiaries (in
either case determined without regard to this Section 5.5) are exercisable
by a Participant for the first time during any calendar year exceeds
$100,000, such Incentive Stock Options shall be treated as Nonqualified
Stock Options. In applying the limitation in the preceding sentence in the
case of multiple Option grants, unless otherwise required by applicable
law, Options which were intended to be Incentive Stock Options shall be
treated as Nonqualified Stock Options according to the order in which they
were granted such that the most recently granted Options are first treated
as Nonqualified Stock Options.
5.6 Transferability. Except as otherwise provided in this Section
5.6, no Option shall be transferable by the Participant otherwise than by
will or by the laws of descent and distribution, and an Option shall be
exercisable during the lifetime of such Participant only by the Participant
or his or her guardian or legal representative. The Committee may set forth
in the Agreement evidencing an Option (other than an Incentive Stock
Option) at the time of grant or thereafter, that the Option, or a portion
thereof, may be transferred to any third party, including but not limited
to, members of the Participant's immediate family, to trusts solely for the
benefit of such immediate family members and to partnerships in which such
family members and/or trusts are the only partners. In addition, for
purposes of the Plan, unless otherwise determined by the Committee at the
time of grant or thereafter, a transferee of an Option pursuant to this
Section 5.6 shall be deemed to be the Participant; provided that the rights
of any such transferee thereafter shall be nontransferable except that such
transferee, where applicable under the terms of the transfer by the
Participant, shall have the right previously held by the Participant to
designate a Beneficiary. For this purpose, immediate family means the
Participant's spouse, parents, children, stepchildren and grandchildren and
the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the
Participant. Notwithstanding Section 20.2, or the terms of any Agreement,
the Company or any Subsidiary shall not withhold any amount attributable to
the Participant's tax liability from any payment of cash or Shares to a
transferee or transferee's Beneficiary under this Section 5.6, but may
require the payment of an amount equal to the Company's or any Subsidiary's
withholding tax obligation as a condition to exercise or as a condition to
the release of cash or Shares upon exercise or upon transfer of the option.
5.7 Method of Exercise. The exercise of an Option shall be made
only by giving written notice delivered in person or by mail to the person
designated by the Company, specifying the number of Shares to be exercised
and, to the extent applicable, accompanied by payment therefor and
otherwise in accordance with the Agreement pursuant to which the Option was
granted. The exercise price for any Shares purchased pursuant to the
exercise of an Option shall be paid in any or any combination of the
following forms: (a) cash or its equivalent (e.g., a check) or (b) the
transfer, either actually or by attestation, to the Company of Shares that
have been held by the Participant for at least six (6) months (or such
lesser period as may be permitted by the Committee) prior to the exercise
of the Option, such transfer to be upon such terms and conditions as
determined by the Committee or (c) in the form of other property as
determined by the Committee. In addition, Options may be exercised through
a registered broker-dealer pursuant to such cashless exercise procedures
that are, from time to time, deemed acceptable by the Committee. Any Shares
transferred to the Company as payment of the exercise price under an Option
shall be valued at their Fair Market Value on the last business day
preceding the date of exercise of such Option. If requested by the
Committee, the Participant shall deliver the Agreement evidencing the
Option to the Company, which shall endorse thereon a notation of such
exercise and return such Agreement to the Participant. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and
the number of Shares that may be purchased upon exercise shall be rounded
to the nearest number of whole Shares.
5.8 Rights of Participants. No Participant shall be deemed for
any purpose to be the owner of any Shares subject to any Option unless and
until (a) the Option shall have been exercised pursuant to the terms
thereof, (b) the Company shall have issued and delivered Shares (whether or
not certificated) to the Participant, a securities broker acting on behalf
of the Participant or such other nominee of the Participant, and (c) the
Participant's name, or the name of his or her broker or other nominee,
shall have been entered as a shareholder of record on the books of the
Company. Thereupon, the Participant shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms
and conditions as may be set forth in the applicable Agreement.
5.9 Effect of Change in Control. The effect of a Change in
Control on an Option shall be set forth in the applicable Agreement.
6. STOCK APPRECIATION RIGHTS.
-------------------------
6.1 Grant. The Committee may in its discretion, either alone or
in connection with the grant of an Option, grant Stock Appreciation Rights
to Eligible Individuals in accordance with the Plan, the terms and
conditions of which shall be set forth in an Agreement. A Stock
Appreciation Right may be granted (a) at any time if unrelated to an Option
or (b) if related to an Option, either at the time of grant or at any time
thereafter during the term of the Option.
6.2 Stock Appreciation Right Related to an Option. If granted in
connection with an Option, a Stock Appreciation Right shall cover the same
Shares covered by the Option (or such lesser number of Shares as the
Committee may determine) and shall, except as provided in this Section 6,
be subject to the same terms and conditions as the related Option.
(a) Exercise; Transferability. A Stock Appreciation Right
granted in connection with an Option (i) shall be exercisable at such time
or times and only to the extent that the related Option is exercisable,
(ii) shall be exercisable only if the Fair Market Value of a Share on the
date of exercise exceeds the exercise price specified in the Agreement
evidencing the related Incentive Stock Option and (iii) shall not be
transferable except to the extent the related Option is transferable.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the Participant shall be entitled
to receive an amount determined by multiplying (i) the excess of the Fair
Market Value of a Share on the last business day preceding the date of
exercise of such Stock Appreciation Right over the per Share exercise price
under the related Option, by (ii) the number of Shares as to which such
Stock Appreciation Right is being exercised. Notwithstanding the foregoing,
the Committee may limit in any manner the amount payable with respect to
any Stock Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation
Rights Upon Exercise. Upon the exercise of a Stock Appreciation Right
granted in connection with an Option, the Option shall be canceled to the
extent of the number of Shares as to which the Stock Appreciation Right is
exercised, and upon the exercise of an Option granted in connection with a
Stock Appreciation Right, the Stock Appreciation Right shall be canceled to
the extent of the number of Shares as to which the Option is exercised or
surrendered.
6.3 Stock Appreciation Right Unrelated to an Option. A Stock
Appreciation Right unrelated to an Option shall cover such number of Shares
as the Committee shall determine.
(a) Terms; Duration. Stock Appreciation Rights unrelated to
Options shall contain such terms and conditions as to exercisability,
vesting and duration as the Committee shall determine, but in no event
shall they have a term of greater than ten (10) years; provided that unless
the Committee provides otherwise a Stock Appreciation Right may, upon the
death of the Participant prior to the expiration of the Award, be exercised
for up to one (1) year following the date of the Participant's death even
if such period extends beyond ten (10) years from the date the Stock
Appreciation Right is granted.
(b) Amount Payable. Upon exercise of a Stock Appreciation
Right unrelated to an Option, the Grantee shall be entitled to receive an
amount determined by multiplying (i) the excess of the Fair Market Value of
a Share on the last business day preceding the date of exercise of such
Stock Appreciation Right over the Fair Market Value of a Share on the date
the Stock Appreciation Right was granted, by (ii) the number of Shares as
to which the Stock Appreciation Right is being exercised. Notwithstanding
the foregoing, the Committee may limit in any manner the amount payable
with respect to any Stock Appreciation Right by including such a limit in
the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(c) Transferability. (i) Except as otherwise provided in
this Section 6.3(c), no Stock Appreciation Right unrelated to an Option
shall be transferable by the Participant otherwise than by will or the laws
of descent and distribution, and a Stock Appreciation Right shall be
exercisable during the lifetime of such Participant only by the Participant
or his or her guardian or legal representative. The Committee may set forth
in the Agreement evidencing a Stock Appreciation Right at the time of grant
or thereafter, that the Award, or a portion thereof, may be transferred to
any third party, including but not limited to, members of the Participant's
immediate family, to trusts solely for the benefit of such immediate family
members and to partnerships in which such family members and/or trusts are
the only partners. In addition, for purposes of the Plan, unless otherwise
determined by the Committee at the time of grant or thereafter, a
transferee of a Stock Appreciation Right pursuant to this Section 6.3(c)
shall be deemed to be the Participant; provided that the rights of any such
transferee thereafter shall be nontransferable except that such transferee,
where applicable under the terms of the transfer by the Participant, shall
have the right previously held by the Participant to designate a
Beneficiary. For this purpose, immediate family means the Participant's
spouse, parents, children, stepchildren and grandchildren and the spouses
of such parents, children, stepchildren and grandchildren. The terms of a
Stock Appreciation Right shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the
Participant. Notwithstanding Section 20.2, or the terms of any Agreement,
the Company or any Subsidiary shall not withhold any amount attributable to
the Participant's tax liability from any payment of cash or Shares to a
transferee or transferee's Beneficiary under this Section 6.3(c), but may
require the payment of an amount equal to the Company's or any Subsidiary's
withholding tax obligation as a condition to exercise or as a condition to
the release of cash or Shares upon exercise or upon transfer of the Stock
Appreciation Right.
6.4 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Participant only by giving written notice delivered in
person or by mail to the person designated by the Company, specifying the
number of Shares with respect to which the Stock Appreciation Right is
being exercised. If requested by the Committee, the Participant shall
deliver the Agreement evidencing the Stock Appreciation Right being
exercised and the Agreement evidencing any related Option to the Company,
which shall endorse thereon a notation of such exercise and return such
Agreement to the Participant.
6.5 Form of Payment. Payment of the amount determined under
Section 6.2(b) or 6.3(b) may be made in the discretion of the Committee
solely in whole Shares in a number determined at their Fair Market Value on
the last business day preceding the date of exercise of the Stock
Appreciation Right, or solely in cash, or in a combination of cash and
Shares. If the Committee decides to make full payment in Shares and the
amount payable results in a fractional Share, payment for the fractional
Share will be made in cash.
6.6 Effect of Change in Control. The effect of a Change in
Control on a Stock Appreciation Right shall be set forth in the applicable
Agreement.
7. DIVIDEND EQUIVALENT RIGHTS.
--------------------------
The Committee may in its discretion, grant Dividend Equivalent
Rights either in tandem with an Option or Award or as a separate Award, to
Eligible Individuals in accordance with the Plan. The terms and conditions
applicable to each Dividend Equivalent Right shall be specified in the
Agreement under which the Dividend Equivalent Right is granted. Amounts
payable in respect of Dividend Equivalent Rights may be payable currently
or, if applicable, deferred until the lapsing of restrictions on such
Dividend Equivalent Rights or until the vesting, exercise, payment,
settlement or other lapse of restrictions on the Option or Award to which
the Dividend Equivalent Rights relate. In the event that the amount payable
in respect of Dividend Equivalent Rights are to be deferred, the Committee
shall determine whether such amounts are to be held in cash or reinvested
in Shares or deemed (notionally) to be reinvested in Shares. If amounts
payable in respect of Dividend Equivalent Rights are to be held in cash,
there may be credited at the end of each year (or portion thereof) interest
on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its discretion, may determine. Dividend
Equivalent Rights may be settled in cash or Shares or a combination
thereof, in a single installment or multiple installments, as determined by
the Committee.
8. RESTRICTED STOCK; RESTRICTED STOCK UNITS.
----------------------------------------
8.1 Restricted Stock. The Committee may grant to Eligible
Individuals Awards of Restricted Stock, which shall be evidenced by an
Agreement. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that
an appropriate legend be placed on Share certificates. Awards of Restricted
Stock shall be subject to the terms and provisions set forth below in this
Section 8.1 and in Section 8.3.
(a) Rights of Participant. Shares of Restricted Stock
granted pursuant to an Award hereunder shall be issued in the name of the
Participant as soon as reasonably practicable after the Award is granted
provided that the Participant has executed an Agreement evidencing the
Award, the appropriate blank stock powers and, in the discretion of the
Committee, an escrow agreement and any other documents which the Committee
may require as a condition to the issuance of such Shares. At the
discretion of the Committee, Shares issued in connection with an Award of
Restricted Stock shall be deposited together with the stock powers with an
escrow agent (which may be the Company) designated by the Committee. Unless
the Committee determines otherwise and as set forth in the Agreement, upon
delivery of the Shares to the escrow agent, the Participant shall have all
of the rights of a shareholder with respect to such Shares, including the
right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
(b) Non-transferability. Until all restrictions upon the
Shares of Restricted Stock awarded to a Participant shall have lapsed in
the manner set forth in Section 8.1(c), such Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated.
(c) Lapse of Restrictions.
(i) Generally. Subject to the provisions of Section
8.3, restrictions upon Shares of Restricted Stock awarded hereunder shall
lapse at such time or times and on such terms and conditions as the
Committee may determine. The Agreement evidencing the Award shall set forth
any such restrictions.
(ii) Effect of Change in Control. The effect of a
Change in Control on an Awards of Shares of Restricted Stock shall be set
forth in the applicable Agreement.
(d) Treatment of Dividends. At the time an Award of
Restricted Stock is granted, the Committee may, in its discretion,
determine that the payment to the Participant of dividends, or a specified
portion thereof, declared or paid on such Shares by the Company shall be
(i) deferred until the lapsing of the restrictions imposed upon such Shares
and (ii) held by the Company for the account of the Participant until such
time. In the event that dividends are to be deferred, the Committee shall
determine whether such dividends are to be reinvested in Shares (which
shall be held as additional Shares of Restricted Stock) or held in cash. If
deferred dividends are to be held in cash, there may be credited interest
on the amount of the account at such times and at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends
in respect of Shares of Restricted Stock (whether held in cash or as
additional Shares of Restricted Stock), together with interest accrued
thereon, if any, shall be made upon the lapsing of restrictions imposed on
the Shares in respect of which the deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in respect
of any Shares of Restricted Stock shall be forfeited upon the forfeiture of
such Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions
on Shares of Restricted Stock, the Committee shall cause a stock
certificate or evidence of book entry Shares to be delivered to the
Participant with respect to such Shares of Restricted Stock, free of all
restrictions hereunder.
8.2 Restricted Stock Unit Awards. The Committee may grant to
Eligible Individuals Awards of Restricted Stock Units, which shall be
evidenced by an Agreement. Each such Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine. Awards of Restricted Stock Units shall be subject to the terms
and provisions set forth below in this Section 8.2 and in Section 8.3.
(a) Payment of Awards. Each Restricted Stock Unit shall
represent the right of the Participant to receive a payment upon vesting of
the Restricted Stock Unit or on any later date specified by the Committee
equal to the Fair Market Value of a Share as of the date the Restricted
Stock Unit was granted, the vesting date or such other date as determined
by the Committee at the time the Restricted Stock Unit was granted. The
Committee may, at the time a Restricted Stock Unit is granted, provide a
limitation on the amount payable in respect of each Restricted Stock Unit.
The Committee may provide for the settlement of Restricted Stock Units in
cash or with Shares having a Fair Market Value equal to the payment to
which the Participant has become entitled.
(b) Effect of Change in Control. The effect of a Change in
Control on an Award of Restricted Stock Units shall be set forth in the
applicable Agreement.
8.3 Minimum Vesting for Restricted Stock and Restricted Stock
Unit Award. Except as provided in this Section 8.3, Awards of Restricted
Stock and Restricted Stock Units shall not vest more rapidly than with
respect to one-third of the Shares subject to such Award on each of the
first three anniversaries of the date such Award is granted.
Notwithstanding the foregoing, in the discretion of the Committee, Awards
of Restricted Stock and Restricted Stock Units may vest more rapidly than
provided in the preceding sentence in the case of (i) a Participant's
death, Disability or retirement, (ii) grants of Awards of Restricted Stock
and Restricted Stock Units to new hires and (iii) a Change in Control.
9. PERFORMANCE AWARDS.
------------------
9.1 Performance Units and Performance Share Units. The Committee,
in its discretion, may grant Awards of Performance Units and/or Performance
Share Units to Eligible Individuals, the terms and conditions of which
shall be set forth in an Agreement.
(a) Performance Units. Performance Units shall be
denominated in a specified dollar amount and, contingent upon the
attainment of specified Performance Objectives within the Performance
Cycle, represent the right to receive payment as provided in Sections
9.1(c) and (d) of the specified dollar amount or a percentage of the
specified dollar amount depending on the level of Performance Objective
attained; provided, however, that the Committee may at the time a
Performance Unit is granted specify a maximum amount payable in respect of
a vested Performance Unit. Each Agreement shall specify the number of
Performance Units to which it relates, the Performance Objectives which
must be satisfied in order for the Performance Units to vest and the
Performance Cycle within which such Performance Objectives must be
satisfied.
(b) Performance Share Units. Performance Share Units shall
be denominated in Shares and, contingent upon the attainment of specified
Performance Objectives within the Performance Cycle, each Performance Share
Unit represents the right to receive payment as provided in Sections 9.1(c)
and (d) of the Fair Market Value of a Share on the date the Performance
Share Unit was granted, the date the Performance Share Unit became vested
or any other date specified by the Committee or a percentage of such amount
depending on the level of Performance Objective attained; provided,
however, that the Committee may at the time a Performance Share Unit is
granted specify a maximum amount payable in respect of a vested Performance
Share Unit. Each Agreement shall specify the number of Performance Share
Units to which it relates, the Performance Objectives which must be
satisfied in order for the Performance Share Units to vest and the
Performance Cycle within which such Performance Objectives must be
satisfied.
(c) Vesting and Forfeiture. Subject to Sections 9.3(c) and
9.4, a Participant shall become vested with respect to the Performance
Share Units and Performance Units to the extent that the Performance
Objectives for the Performance Cycle and other terms and conditions set
forth in the Agreement are satisfied; provided, however, that, except as
may be provided pursuant to Section 9.4, no Performance Cycle for
Performance Share Units and Performance Units shall be less than one (1)
year.
(d) Payment of Awards. Subject to Sections 9.3(c) and 9.4,
payment to Participants in respect of vested Performance Share Units and
Performance Units shall be made as soon as practicable after the last day
of the Performance Cycle to which such Award relates or at such other time
or times as the Committee may determine, but in no event later than 2 1/2
months after the end of the calendar year in which the Performance Cycle is
completed. Subject to Section 9.4, such payments may be made entirely in
Shares valued at their Fair Market Value, entirely in cash, or in such
combination of Shares and cash as the Committee in its discretion shall
determine at any time prior to such payment; provided, however, that if the
Committee in its discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee must determine the
extent to which such payment will be in Shares of Restricted Stock and the
terms of such Restricted Stock at the time the Award is granted.
9.2 Performance-Based Restricted Stock. The Committee, in its
discretion, may grant Awards of Performance-Based Restricted Stock to
Eligible Individuals, the terms and conditions of which shall be set forth
in an Agreement. Each Agreement may require that an appropriate legend be
placed on Share certificates. Awards of Performance-Based Restricted Stock
shall be subject to the following terms and provisions:
(a) Rights of Participant. Performance-Based Restricted
Stock shall be issued in the name of the Participant as soon as reasonably
practicable after the Award is granted or at such other time or times as
the Committee may determine; provided, however, that no Performance-Based
Restricted Stock shall be issued until the Participant has executed an
Agreement evidencing the Award, the appropriate blank stock powers and, in
the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of
such Performance-Based Restricted Stock. At the discretion of the
Committee, Shares issued in connection with an Award of Performance-Based
Restricted Stock shall be deposited together with the stock powers with an
escrow agent (which may be the Company) designated by the Committee. Except
as restricted by the terms of the Agreement, upon delivery of the Shares to
the escrow agent, the Participant shall have, in the discretion of the
Committee, all of the rights of a shareholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares. Each Agreement
shall specify the number of Shares of Performance-Based Restricted Stock to
which it relates, the Performance Objectives which must be satisfied in
order for the Performance-Based Restricted Stock to vest and the
Performance Cycle within which such Performance Objectives must be
satisfied.
(b) Lapse of Restrictions. Subject to Sections 9.3(c) and
9.4, restrictions upon Performance-Based Restricted Stock awarded hereunder
shall lapse and such Performance-Based Restricted Stock shall become vested
at such time or times and on such terms, conditions and satisfaction of
Performance Objectives as the Committee may, in its discretion, determine
at the time an Award is granted; provided, however, that, except as may be
provided pursuant to Section 9.4, no Performance Cycle for
Performance-Based Restricted Stock shall be less than one (1) year.
(c) Treatment of Dividends. At the time the Award of
Performance-Based Restricted Stock is granted, the Committee may, in its
discretion, determine that the payment to the Participant of dividends, or
a specified portion thereof, declared or paid on Shares represented by such
Award which have been issued by the Company to the Participant shall be (i)
deferred until the lapsing of the restrictions imposed upon such
Performance-Based Restricted Stock and (ii) held by the Company for the
account of the Participant until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to
be reinvested in Shares (which shall be held as additional Shares of
Performance-Based Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited interest on the amount of the
account at such times and at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in respect of
Shares of Performance-Based Restricted Stock (whether held in cash or in
additional Shares of Performance-Based Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of
restrictions imposed on the Performance-Based Restricted Stock in respect
of which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any
Performance-Based Restricted Stock shall be forfeited upon the forfeiture
of such Performance-Based Restricted Stock.
(d) Delivery of Shares. Upon the lapse of the restrictions
on Shares of Performance-Based Restricted Stock awarded hereunder, the
Committee shall cause a stock certificate or evidence of book entry Shares
to be delivered to the Participant with respect to such Shares, free of all
restrictions hereunder.
9.3 Performance Objectives
(a) Establishment. Performance Objectives for Performance
Awards may be expressed in terms of (i) stock price, (ii) earnings per
share, (iii) operating income, (iv) return on equity or assets, (v) cash
flow, (vi) EBITDA, (vii) revenues, (viii) overall revenue or sales growth,
(ix) expense reduction or management, (x) market position, (xi) total
shareholder return, (xii) return on investment, (xiii) earnings before
interest and taxes (EBIT), (xiv) net income, (xv) return on net assets,
(xvi) economic value added, (xvii) shareholder value added, (xviii) cash
flow return on investment, (xix) net operating profit, (xx) net operating
profit after tax, (xxi) return on capital, (xxii) return on invested
capital, or (xxiii) any combination, including one or more ratios, of the
foregoing. Performance Objectives may be in respect of the performance of
the Company, any of its Subsidiaries, any of its Divisions or any
combination thereof. Performance Objectives may be absolute or relative (to
prior performance of the Company or to the performance of one or more other
entities or external indices) and may be expressed in terms of a
progression within a specified range. In the case of a Performance Award
which is intended to constitute Performance-Based Compensation, the
Performance Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (i) the date on
which a quarter of the Performance Cycle has elapsed and (ii) the date
which is ninety (90) days after the commencement of the Performance Cycle,
and in any event while the performance relating to the Performance
Objectives remain substantially uncertain.
(b) Effect of Certain Events. Unless otherwise provided by
the Committee at the time the Performance Objectives in respect of a
Performance Award are established, performance shall be adjusted to omit
the effects of extraordinary items, gain or loss on the disposal of a
business segment (other than provisions for operating losses or income
during the phase-out period), unusual or infrequently occurring events and
transactions that have been publicly disclosed and the cumulative effects
of changes in accounting principles, all as determined in accordance with
generally accepted accounting principles (to the extent applicable). In
addition, at the time of the granting of a Performance Award, or at any
time thereafter, the Committee may provide for the manner in which
performance will be measured against the Performance Objectives (or may
adjust the Performance Objectives) to reflect the impact of specified
corporate transactions (such as a stock split or stock dividend), special
charges, and tax law changes; provided, that in respect of Performance
Awards intended to constitute Performance-Based Compensation, such
provisions shall be permitted only to the extent permitted under Section
162(m) of the Code and the regulations promulgated thereunder without
adversely affecting the treatment of any Performance Award as
Performance-Based Compensation.
(c) Determination of Performance. Prior to the vesting,
payment, settlement or lapsing of any restrictions with respect to any
Performance Award, the Committee shall certify in writing that the
applicable Performance Objectives have been satisfied to the extent
necessary for such Award to qualify as Performance-Based Compensation. In
respect of a Performance Award, the Committee may, in its sole discretion,
reduce the amount of cash paid or number of Shares issued that become
vested or on which restrictions lapse. The Committee shall not be entitled
to exercise any discretion otherwise authorized hereunder with respect to
any Performance Award intended to constitute Performance Based Compensation
if the ability to exercise such discretion or the exercise of such
discretion itself would cause the compensation attributable to such Awards
to fail to qualify as Performance-Based Compensation.
9.4 Effect of Change in Control. The effect of a Change in
Control on a Performance Award shall be set forth in the applicable
Agreement.
9.5 Non-transferability. Until the vesting of Performance Units
and Performance Share Units or the lapsing of any restrictions on
Performance-Based Restricted Stock, as the case may be, such Performance
Units, Performance Share Units or Performance-Based Restricted Stock shall
not be sold, transferred or otherwise disposed of and shall not be pledged
or otherwise hypothecated.
10. SHARE AWARDS.
------------
The Committee may grant a Share Award to any Eligible Individual
on such terms and conditions as the Committee may determine in its sole
discretion. Share Awards may be made as additional compensation for
services rendered by the Eligible Individual or may be in lieu of cash or
other compensation to which the Eligible Individual is entitled from the
Company.
11. AWARDS TO DIRECTORS.
-------------------
11.1 Authority of Director Committee. Subject to the provisions
of the Plan, the Committee shall have the full and final authority to award
Options and Awards to Directors, and the terms and conditions of any grant
to any such Eligible Individual shall be set forth in an Agreement. This
Section 11 sets forth special provisions that, unless otherwise provided in
an Agreement, shall be applicable to Options and Awards granted to
Directors under the Plan.
11.2 Automatic Grants. Each Nonemployee Director shall be granted
(i) 1,000 Shares upon his or her initial election to the Board, and (ii) a
Nonqualified Stock Option to purchase 7,000 Shares on each August 1st
following such Nonemployee Director's election to the Board as long as such
Nonemployee Director is then still serving on the Board. Notwithstanding
the provisions of Section 11.2(ii), a Nonemployee Director who, in 2005,
received a grant of Nonqualified Stock Options under the Prior Plan will
not be eligible to receive a grant of Nonqualified Stock Options pursuant
to this Section 11.2 until August 1, 2008.
11.3 Vesting. Each Nonqualified Stock Option granted to a
Nonemployee Director pursuant to Section 11.2 will become exercisable with
respect to one-third of the underlying Shares on each of the first, second
and third anniversary of the date of grant. In the event a Nonemployee
Director ceases to serve as a director for any reason other as a result of
his death, Disability or his voluntary retirement after age 55, each
Nonqualified Stock Option granted to a Nonemployee Director pursuant to
Section 11.2 shall be exercisable during its remaining term, to the extent
that the Option or portion thereof was exercisable on the date the Grantee
ceased to be a director. In the event a Nonemployee Director ceases to
serve as a director of the Company by reason of such Director's death,
Disability or retirement after age 55, any portion of the Option that is
not yet vested and exercisable on the date of the termination of service,
shall become immediately vested and fully exercisable on such date, and
shall remain exercisable during its remaining term of the Option, by the
Nonemployee Director or such Director's legatee or legatees under his will,
or by his personal representatives or distributees, as applicable. In the
case of any other Options or Awards granted to a Director under the Plan,
such Option shall become exercisable and the restrictions on an Award shall
lapse at such times as may be designated by the Committee and set forth in
the Agreement. Subject to the foregoing, an Option or Stock Appreciation
Right granted to a Director shall be exercisable, to the extent vested, at
any time in whole or in part (but if in part, in an amount equal to at
least 100 Shares or, if less, the number of Shares remaining to be
exercised under the Award or Option) on any business day of the Company
before the date such Option or Award expires.
11.4 Duration. Each Nonqualified Stock Option granted to a
Nonemployee Director pursuant to Section 11.2 will expire on the tenth
anniversary of the date of grant, provided that such a Nonqualified Stock
Option may, upon the death of a Nonemployee Director prior to the tenth
anniversary of the date of grant, be exercised for up to one (1) year
following the date of such Nonemployee Director's death even if such period
extends beyond the tenth anniversary of the date of grant. Unless otherwise
provided in an Agreement with respect to an Option or Award granted to a
Nonemployee Director pursuant to Section 11.2, an Option or Stock
Appreciation Right granted to a Director shall expire on the earlier of:
(a) the first date on or after the date of grant and prior
to a Change in Control on which the Director (i) resigns from or is not
re-elected to the Board prior to being eligible for retirement or (ii)
resigns as a result of an interest or affiliation which would prohibit
continued service as a director;
(b) the date the Option or Stock Appreciation Right has been
exercised in full; or
(c) one day after the expiration of the ten-year period
which begins on the date of grant of the Option or Stock Appreciation Right
or, in the case of a Director who dies within one (1) year prior to such
day, the last day of the one-year period which begins on the date of the
Director's death.
12. EFFECT OF A TERMINATION OF EMPLOYMENT.
-------------------------------------
The Agreement evidencing the grant of each Option and each Award
shall set forth the terms and conditions applicable to such Option or Award
upon (a) a termination or change in the status of the employment of the
Participant by the Company, a Subsidiary or a Division (including a
termination or change by reason of the sale of a Subsidiary or a Division),
or (b) in the case of a Director, the cessation of the Director's service
on the Board, which, except for Shares or Options granted to Directors
pursuant to Section 11.2, shall be as the Committee may, in its discretion,
determine at the time the Option or Award is granted or thereafter.
13. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
-----------------------------------------
13.1 In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to (a)
the maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted under the Plan, (b) the
maximum number and class of Shares or other stock or securities that may be
issued upon exercise of Incentive Stock Options, (c) the maximum number and
class of Shares or other stock or securities with respect to which Options
or Awards may be granted to any Eligible Individual in any calendar year,
(d) the number and class of Shares or other stock or securities which are
subject to outstanding Options or Awards granted under the Plan and the
exercise price therefore, if applicable and (e) the Performance Objectives.
13.2 Any such adjustment in the Shares or other stock or
securities (a) subject to outstanding Incentive Stock Options (including
any adjustments in the exercise price) shall be made in such manner as not
to constitute a modification as defined by Section 424(h)(3) of the Code
and only to the extent otherwise permitted by Sections 422 and 424 of the
Code or (b) subject to outstanding Options or Awards that are intended to
qualify as Performance-Based Compensation shall be made in such a manner as
not to adversely affect the treatment of the Options or Awards as
Performance-Based Compensation.
13.3 If, by reason of a Change in Capitalization, a Participant
shall be entitled to, or shall be entitled to exercise an Option with
respect to, new, additional or different shares of stock or securities of
the Company or any other corporation, such new, additional or different
shares shall thereupon be subject to all of the conditions, restrictions
and performance criteria which were applicable to the Shares subject to the
Award or Option, as the case may be, prior to such Change in
Capitalization.
14. EFFECT OF CERTAIN TRANSACTIONS.
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Subject to the terms of an Agreement, following (a) the
liquidation or dissolution of the Company or (b) a merger or consolidation
of the Company (a "Transaction"), either (i) each outstanding Option or
Award shall be treated as provided for in the agreement entered into in
connection with the Transaction or (ii) if not so provided in such
agreement, each Optionee and Grantee shall be entitled to receive in
respect of each Share subject to any outstanding Options or Awards, as the
case may be, upon exercise of any Option or payment or transfer in respect
of any Award, the same number and kind of stock, securities, cash, property
or other consideration that each holder of a Share was entitled to receive
in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain
subject to all of the conditions, restrictions and performance criteria
which were applicable to the Options and Awards prior to such Transaction.
Without limiting the generality of the foregoing, the treatment of
outstanding Options and Stock Appreciation Rights pursuant to clause (i) of
this Section 14 in connection with a Transaction may include the
cancellation of outstanding Options and Stock Appreciation Rights upon
consummation of the Transaction provided either (x) the holders of affected
Options and Stock Appreciation Rights have been given a period of at least
fifteen (15) days prior to the date of the consummation of the Transaction
to exercise the Options or Stock Appreciation Rights (whether or not they
were otherwise exercisable) or (y) the holders of the affected Options and
Stock Appreciation Rights are paid (in cash or cash equivalents) in respect
of each Share covered by the Option or Stock Appreciation Right being
cancelled an amount equal to the excess, if any, of the per share price
paid or distributed to stockholders in the transaction (the value of any
non-cash consideration to be determined by the Committee in its sole
discretion) over the exercise price of the Option or Stock Appreciation
Right. For avoidance of doubt, (1) the cancellation of Options and Stock
Appreciation Rights pursuant to clause (y) of the preceding sentence may be
effected notwithstanding anything to the contrary contained in this Plan or
any Agreement and (2) if the amount determined pursuant to clause (y) of
the preceding sentence is zero or less, the affected Option or Stock
Appreciation Right may be cancelled without any payment therefor. The
treatment of any Option or Award as provided in this Section 14 shall be
conclusively presumed to be appropriate for purposes of Section 13.
15. INTERPRETATION.
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15.1 Section 16 Compliance. The Plan is intended to comply with
Rule 16b-3 promulgated under the Exchange Act and the Committee shall
interpret and administer the provisions of the Plan or any Agreement in a
manner consistent therewith. Any provisions inconsistent with such Rule
shall be inoperative and shall not affect the validity of the Plan.
15.2 Section 162(m). Unless otherwise determined by the Committee
at the time of grant, (i) each Option, Stock Appreciation Right, and
Performance Award granted under the Plan to the Chief Executive Officer is
intended to be Performance-Based Compensation, and (ii) each Option, Stock
Appreciation Right and Performance Award granted under the Plan to any
Participant other than the Chief Executive Officer is not intended to be
Performance-Based Compensation. Unless otherwise determined by the
Committee, if any provision of the Plan or any Agreement relating to an
Option or Award that is intended to be Performance-Based Compensation does
not comply or is inconsistent with Section 162(m) of the Code or the
regulations promulgated thereunder (including IRS Regulation ss. 1.162-27
unless and to the extent it is superseded by an interim or final
regulation), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements, and no provision shall be
deemed to confer upon the Committee discretion to increase the amount of
compensation otherwise payable in connection with any such Option or Award
upon the attainment of the Performance Objectives.
16. TERMINATION AND AMENDMENT OF THE PLAN OR MODIFICATION OF OPTIONS
----------------------------------------------------------------
AND AWARDS.
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16.1 Plan Amendment or Termination. The Board may at any time
terminate the Plan and the Board may at any time and from time to time
amend, modify or suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards
theretofore granted under the Plan, except with the consent of the
Participant, nor shall any amendment, modification, suspension or
termination deprive any Participant of any Shares which he or she may have
acquired through or as a result of the Plan; and
(b) to the extent necessary under any applicable law,
regulation or exchange requirement, no other amendment shall be effective
unless approved by the shareholders of the Company in accordance with
applicable law, regulation or exchange requirement.
16.2 Modification of Options and Awards. No modification of an
Option or Award shall adversely alter or impair any rights or obligations
under the Option or Award without the consent of the Participant.
17. NON-EXCLUSIVITY OF THE PLAN.
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The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or
only in specific cases.
18. LIMITATION OF LIABILITY.
-----------------------
As illustrative of the limitations of liability of the Company,
but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, express
or implied, that the Company will employ any person at any particular rate
of compensation or for any particular period of time.
19. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
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19.1 Except as to matters of federal law, the Plan and the rights
of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.
19.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the
Committee.
19.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock
Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
19.4 Each grant of an Option and Award and the issuance of Shares
or other settlement of the Option or Award is subject to the compliance
with all applicable federal, state or foreign law. Further, if at any time
the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any federal, state or foreign law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option
or Award or the issuance of Shares, no Options or Awards shall be or shall
be deemed to be granted or payment made or Shares issued, in whole or in
part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions that are not acceptable to
the Committee. Any person exercising an Option or receiving Shares in
connection with any other Award shall make such representations and
agreements and furnish such information as the Board or Committee may
request to assure compliance with the foregoing or any other applicable
legal requirements.
19.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required by the
Securities Act and Rule 144 or other regulations promulgated thereunder.
The Committee may require any individual receiving Shares pursuant to an
Option or Award granted under the Plan, as a condition precedent to receipt
of such Shares, to represent and warrant to the Company in writing that the
Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under the Securities Act or
pursuant to an exemption applicable under the Securities Act or the rules
and regulations promulgated thereunder. The certificates evidencing any of
such Shares shall be appropriately amended or have an appropriate legend
placed thereon to reflect their status as restricted securities as
aforesaid.
20. MISCELLANEOUS.
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20.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same
time, or at some other time. The Committee may also grant more than one
Option or Award to a given Eligible Individual during the term of the Plan,
either in addition to, or subject to Section 3.6, in substitution for, one
or more Options or Awards previously granted to that Eligible Individual.
20.2 Withholding of Taxes.
(a) The Company or any Subsidiary shall withhold from any
payment of cash or Shares to a Participant or other person under the Plan
an amount sufficient to cover any withholding taxes which may become
required with respect to such payment or shall take any other action as it
deems necessary to satisfy any income or other tax withholding requirements
as a result of the grant or exercise of any Award under the Plan. The
Company or any Subsidiary shall have the right to require the payment of
any such taxes and require that any person furnish information deemed
necessary by the Company or any Subsidiary to meet any tax reporting
obligation as a condition to exercise or before making any payment pursuant
to an Award or Option. If specified in an Agreement at the time of grant or
otherwise approved by the Committee, a Participant may, in satisfaction of
his or her obligation to pay withholding taxes in connection with the
exercise, vesting or other settlement of an Option or Award, elect to (i)
make a cash payment to the Company, (ii) have withheld a portion of the
Shares then issuable to him or her, or (iii) surrender Shares owned by the
Participant prior to the exercise, vesting or other settlement of an Option
or Award, in each case having an aggregate Fair Market Value equal to the
withholding taxes.
(b) If a Participant makes a disposition, within the meaning
of Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Participant pursuant to the exercise of
an Incentive Stock Option within the two-year period commencing on the day
after the date of the grant or within the one-year period commencing on the
day after the date of transfer of such Share or Shares to the Participant
pursuant to such exercise, the Participant shall, within ten (10) days of
such disposition, notify the Company thereof, by delivery of written notice
to the Company at its principal executive office.
20.3 Plan Unfunded. The Plan shall be unfunded. Except for
reserving a sufficient number of authorized Shares to the extent required
by law to meet the requirements of the Plan, the Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure payment of any Award or Option granted
under the Plan.
20.4 Beneficiary Designation. Each Participant may, from time to
time, name one or more individuals (each, a "Beneficiary") to whom any
benefit under the Plan is to be paid in case of the Participant's death
before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, shall be in a
form prescribed by the Company, and will be effective only when filed by
the Participant in writing with the Company during the Participant's
lifetime. In the absence of any such designation, benefits remaining unpaid
at the Participant's death shall be paid to the Participant's estate.
20.5 Effective Date/Term. The effective date of the Plan shall be
the date on which the Plan is approved by the affirmative vote of the
holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of shareholders duly held in
accordance with the applicable laws of the State of Delaware within twelve
(12) months of the adoption of the Plan by the Board (the "Effective
Date"). Upon such approval of the Plan by the shareholders, no further
awards shall be granted under the Prior Plan.
The Plan shall terminate on the Termination Date. No Option or Award
shall be granted after the Termination Date. The applicable terms of the
Plan, and any terms and conditions applicable to Options and Awards granted
prior to the Termination Date shall survive the termination of the Plan and
continue to apply to such Options and Awards.
20.6 Translations. Any inconsistency between the terms of the
Plan or any Agreement and the corresponding translation thereof into a
language other than English shall be resolved by reference, solely, to the
English language document.