EXHIBIT 10.1
WORK INTERNATIONAL CORPORATION
1998 INCENTIVE PLAN
(As Effective August 21, 1998)
WORK INTERNATIONAL CORPORATION
1998 INCENTIVE PLAN
SECTION 1
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1 PURPOSE
The purpose of the Plan is to foster and promote the long-term financial
success of WORK International Corporation (the "Company") and its Subsidiaries
and to increase stockholder value by: (a) encouraging the commitment of selected
key Employees, Consultants and Outside Directors, (b) motivating superior
performance of key Employees, Consultants and Outside Directors by means of
long-term performance related incentives, (c) encouraging and providing key
Employees, Consultants and Outside Directors with a program for obtaining
ownership interests in the Company which link and align their personal interests
to those of the Company's stockholders, (d) attracting and retaining key
Employees, Consultants and Outside Directors by providing competitive incentive
compensation opportunities, and (e) enabling key Employees, Consultants and
Outside Directors to share in the long-term growth and success of the Company.
The Plan provides for payment of various forms of incentive compensation
and it is not intended to be a plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended (ERISA). The Plan shall be interpreted,
construed and administered consistent with its status as a plan that is not
subject to ERISA.
Subject to approval by the Company's shareholders pursuant to Section 7.1,
if applicable, the Plan shall become effective as of August 21, 1998 (the
"EFFECTIVE DATE"). The Plan shall commence on the Effective Date, and shall
remain in effect, subject to the right of the Board to amend or terminate the
Plan at any time pursuant to Section 7.7, until all Shares subject to the Plan
have been purchased or acquired according to its provisions. However, in no
event may an Incentive Award be granted under the Plan after the expiration of
ten (10) years from the Effective Date. Any Incentive Award granted prior to
the Effective Date shall be subject to the subsequent receipt of stockholder
approval of the Plan pursuant to Section 7.1 if applicable.
1.2 DEFINITIONS
The following terms shall have the meanings set forth below:
(a) AUTHORIZED OFFICER. The Chairman of the Board or the Chief
Executive Officer of the Company or any other senior officer of the Company
to whom either of them delegate the authority to execute any Incentive
Agreement for and on behalf of the Company. No officer or director shall
be an Authorized Officer with respect to any Incentive Agreement for
himself.
(b) BOARD. The Board of Directors of the Company.
(c) CAUSE. When used in connection with the termination of a
Grantee's Employment, shall mean the termination of the Grantee's
Employment by the Company by reason of (i) the conviction of the Grantee by
a court of competent jurisdiction as to which no further appeal can be
taken of a crime involving moral turpitude or a felony; (ii) the proven
commission by the Grantee of an act of fraud upon the Company; (iii) the
willful and proven misappropriation of any funds or property of the Company
by the Grantee; (iv) the willful, continued and unreasonable failure by the
Grantee to perform the material duties assigned to him; (v) the knowing
engagement by the Grantee in any direct, material conflict of interest with
the Company without compliance with the Company's conflict of interest
policy, if any, then in effect; or (vi) the knowing engagement by the
Grantee, without the written approval of the Board, in any activity which
competes with the business of the Company or which would result in a
material injury to the business, reputation or goodwill of the Company.
(d) CHANGE IN CONTROL. Any of the events described in and subject
to Section 6.7.
(e) CODE. The Internal Revenue Code of 1986, as amended, and the
regulations and other authority promulgated thereunder by the appropriate
governmental authority. References herein to any provision of the Code
shall refer to any successor provision thereto.
(f) COMMITTEE. A committee appointed by the Board consisting of
not less than two directors as appointed by the Board to administer the
Plan. However, if the Company is a Publicly Held Corporation, the Plan
shall be administered by a committee appointed by the Board consisting of
not less than two directors who fulfill the "non-employee director"
requirements of Rule 16b-3 under the Exchange Act and the "outside
director" requirements of Section 162(m) of the Code. In either case, the
Committee may be the Compensation Committee of the Board, or any
subcommittee of the Compensation Committee, provided that the members of
the Committee satisfy the requirements of the previous provisions of this
paragraph. The Board shall have the power to fill vacancies on the
Committee arising by resignation, death, removal or otherwise. The Board,
in its sole discretion, may bifurcate the powers and duties of the
Committee among one or more separate committees, or retain all powers and
duties of the Committee in a single Committee. The members of the
Committee shall serve at the discretion of the Board.
Notwithstanding the preceding paragraph, the term "Committee" as used
in the Plan with respect to any Incentive Award for an Outside Director
shall refer to the entire Board. In the case of an Incentive Award for an
Outside Director, the Board shall have all the powers and responsibilities
of the Committee hereunder as to such Incentive Award, and any actions as
to such Incentive Award may be acted upon only by the Board (unless it
otherwise designates in its discretion). When the Board exercises its
authority to act in the capacity as the Committee hereunder with respect to
an Incentive Award for an Outside Director, it shall so designate with
respect to any action that it undertakes in its capacity as the Committee.
(g) COMMON STOCK. The common stock of the Company, $.001 par value
per share, and any class of common stock into which such common shares may
hereafter be converted, reclassified or recapitalized.
(h) COMPANY. WORK International Corporation, a corporation
organized under the laws of the State of Texas, and any successor in
interest thereto.
(i) CONSULTANT. An independent agent, consultant, attorney, an
individual who has agreed to become an Employee, or any other individual
who is not an Outside Director or employee of the Company (or any Parent or
Subsidiary) and who, in the opinion of the Committee, is in a position to
contribute materially to the growth or financial success of the Company (or
any Parent or Subsidiary).
(j) COVERED EMPLOYEE. Only if the Company is a Publicly Held
Corporation, a named executive officer who is one of the group of covered
employees as defined in Section 162(m) of the Code and Treasury Regulation
(S) 1.162-27(c) (or its successor).
(k) DEFERRED STOCK. Shares of Common Stock to be issued or
transferred to a Grantee under an Other Stock-Based Award granted pursuant
to Section 5 at the end of a specified deferral period, as set forth in the
Incentive Agreement pertaining thereto.
(l) DISABILITY. As determined by the Committee in its discretion
exercised in good faith, a physical or mental condition of the Employee
that would entitle him to payment of disability income payments under the
Company's long term disability insurance policy or plan for employees, as
then effective, if any; or in the event that the Grantee is not covered,
for whatever reason, under the Company's long-term disability insurance
policy or plan, Disability" means a permanent and total disability as
defined in Section 22(e)(3) of the Code. A determination of Disability may
be made by a physician selected or approved by the Committee and, in this
respect, the Grantee shall submit to an examination by such physician upon
request.
(m) EMPLOYEE. Any employee of the Company (or any Parent or
Subsidiary) within the meaning of Section 3401(c) of the Code who, in the
opinion of the Committee, is one of a select group of executive officers,
other officers, or other key personnel of the Company (or any Parent or
Subsidiary), who is in a position to contribute materially to the growth
and development and to the financial success of the Company (or any Parent
or Subsidiary), including, without limitation, officers who are members of
the Board.
(n) EMPLOYMENT. Employment by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Incentive Award
in any transaction described in Section 424(a) of the Code, or by a parent
corporation or a subsidiary corporation of such corporation issuing or
assuming such Incentive Award, as the parent-subsidiary relationship shall
be determined at the time of the corporate action described in Section
424(a) of the Code. In this regard, neither the transfer of a Grantee from
Employment by the Company to Employment by any Parent or Subsidiary, nor
the transfer of a Grantee from Employment by any Parent or Subsidiary to
Employment by the Company, shall be deemed to be a termination of
Employment of the Grantee. Moreover, the Employment of a Grantee shall not
be deemed to have been terminated because of an approved leave of absence
from active Employment on account of temporary illness, authorized vacation
or granted for reasons of professional advancement, education, health, or
government service, or during military leave for any period (if the Grantee
returns to active Employment within 90 days after the termination of
military leave), or during any period required to be treated as a leave of
absence by virtue of any applicable statute, Company personnel policy or
agreement. Whether an authorized leave of absence shall constitute
termination of Employment hereunder shall be determined by the Committee in
its discretion.
Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan will also include compensatory
services performed by a Consultant for the Company (or any Parent or
Subsidiary) as well as membership on the Board by an Outside Director.
(o) EXCHANGE ACT. The Securities Exchange Act of 1934, as
amended.
(p) FAIR MARKET VALUE. If the Company is not a Publicly Held
Corporation at the time a determination of the Fair Market Value of the
Common Stock is required to be made hereunder, the determination of Fair
Market Value for purposes of the Plan shall be made by the Committee in its
discretion exercised in good faith. In this respect, the Committee may
rely on such financial data, valuations or experts as it deems advisable
under the circumstances.
If the Company is a Publicly Held Corporation, the Fair Market Value
of one share of Common Stock on the date in question is deemed to be (i)
the closing sales price on the immediately preceding business day of a
share of Common Stock as reported on the principal securities exchange on
which Shares are then listed or admitted to trading, or (ii) if not so
reported, the average of the closing bid and asked prices for a Share on
the immediately preceding business day as quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), or
(iii) if not quoted on NASDAQ, the average of the closing bid and asked
prices for a Share as quoted by the National Quotation Bureau's "Pink
Sheets" or the National Association of Securities Dealers' OTC Bulletin
Board System. If there was no public trade of Common Stock on the date in
question, Fair Market Value shall be determined by reference to the last
preceding date on which such a trade was so reported.
(q) GRANTEE. Any Employee, Consultant or Outside Director who is
granted an Incentive Award under the Plan.
(r) INCENTIVE AWARD. A grant of an award under the Plan to a
Grantee, including any Nonstatutory Stock Option, Incentive Stock Option,
Reload Option, Restricted Stock Award, Performance Unit, Performance Share,
or Other Stock-Based Award, as well as any Supplemental Payment.
(s) INCENTIVE AGREEMENT. The written agreement entered into
between the Company and the Grantee setting forth the terms and conditions
pursuant to which an Incentive Award is granted under the Plan, as such
agreement is further defined in Section 6.1(a).
(t) INCENTIVE STOCK OPTION. A Stock Option granted by the
Committee to an Employee under Section 2 which is designated by the
Committee as an Incentive Stock Option and intended to qualify as an
Incentive Stock Option under Section 422 of the Code.
(u) INSIDER. To the extent that the Company is a Publicly Held
Corporation, an individual who is, on the relevant date, an officer,
director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of
the Exchange Act, all as defined under Section 16 of the Exchange Act.
(v) NONSTATUTORY STOCK OPTION. A Stock Option granted by the
Committee to a Grantee under Section 2 which is not designated by the
Committee as an Incentive Stock Option.
(w) OPTION PRICE. The exercise price at which a Share may be
purchased by the Grantee of a Stock Option.
(x) OTHER STOCK-BASED AWARD. An award granted by the Committee to a
Grantee under Section 5.1 that is valued in whole or in part by reference
to, or is otherwise based upon, Common Stock.
(y) OUTSIDE DIRECTOR. A member of the Board who is not, at the
time of grant of an Incentive Award, an employee of the Company or any
Parent or Subsidiary.
(z) PARENT. Any corporation (whether now or hereafter existing)
which constitutes a "parent" of the Company, as defined in Section 424(e)
of the Code.
(aa) PERFORMANCE-BASED EXCEPTION. If the Company is a Publicly
Held Corporation, the performance-based exception from the tax
deductibility limitations of Section 162(m) of the Code, as prescribed in
Code (S) 162(m) and Treasury Regulation (S) 1.162-27(e) (or its successor).
(bb) PERFORMANCE PERIOD. A period of time determined by the
Committee over which performance is measured for the purpose of determining
a Grantee's right to and the payment value of any Performance Unit,
Performance Share or Other Stock-Based Award.
(cc) PERFORMANCE SHARE OR PERFORMANCE UNIT. An Incentive Award
representing a contingent right to receive cash or shares of Common Stock
(which may be Restricted Stock) at the end of a Performance Period and
which, in the case of Performance Shares, is denominated in Common Stock,
and, in the case of Performance Units, is denominated in cash values.
(dd) PLAN. The WORK International Corporation 1998 Incentive Plan as
set forth herein and as it may be amended from time to time.
(ee) PUBLICLY HELD CORPORATION. A corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act.
(ff) RESTRICTED STOCK. Shares of Common Stock issued or transferred
to a Grantee pursuant to Section 3.
(gg) RESTRICTED STOCK AWARD. An authorization by the Committee to
issue or transfer Restricted Stock to a Grantee.
(hh) RESTRICTION PERIOD. The period of time determined by the
Committee and set forth in the Incentive Agreement during which the
transfer of Restricted Stock by the Grantee is restricted.
(ii) RETIREMENT. The voluntary termination of Employment from the
Company or any Parent or Subsidiary constituting retirement for age on any
date after the Employee attains the normal retirement age of 65 years, or
such other age as may be designated by the Committee in the Employee's
Incentive Agreement.
(jj) SHARE. A share of the Common Stock of the Company.
(kk) SHARE POOL. The number of shares authorized for issuance
under Section 1.4, as adjusted for awards and payouts under Section 1.5 and
as adjusted for changes in corporate capitalization under Section 6.5.
(ll) STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an Incentive
Stock Option granted to an Employee, or (ii) a Nonstatutory Stock Option
granted to an Employee, Consultant or Outside Director, whereunder such
option the Grantee has the right to purchase Shares of Common Stock. In
accordance with Section 422 of the Code, no Consultant or Outside Director
shall be granted an Incentive Stock Option.
(mm) SUBSIDIARY. Any corporation (whether now or hereafter existing)
which constitutes a "subsidiary" of the Company, as defined in Section
424(f) of the Code.
(nn) SUPPLEMENTAL PAYMENT. Any amount, as described in Sections
2.5, 3.4 and/or 4.2, dedicated to payment of income taxes that are payable
by the Grantee on an Incentive Award.
1.3 PLAN ADMINISTRATION
(a) AUTHORITY OF THE COMMITTEE. Except as may be limited by law
and subject to the provisions herein, the Committee shall have full power
to (i) select Grantees who shall participate in the Plan; (ii) determine
the sizes, duration and types of Incentive Awards; (iii) determine the
terms and conditions of Incentive Awards and Incentive Agreements; (iv)
determine whether any Shares subject to Incentive Awards will be subject to
any restrictions on transfer; (v) construe and interpret the Plan and any
Incentive Agreement or other agreement entered into under the Plan; and
(vi) establish, amend, or waive rules for the Plan's administration.
Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan.
The Committee may grant an Incentive Award to an individual who it
expects to become an Employee within the next six months, with such
Incentive Award being subject to such individual actually becoming an
Employee within such time period, and subject to such other terms and
conditions as may be established by the Committee in its discretion.
(b) MEETINGS. The Committee shall designate a chairman from among
its members who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the
Committee, who shall keep the minutes of
the proceedings and all records, documents, and data pertaining to its
administration of the Plan. Meetings shall be held at such times and places
as shall be determined by the Committee and the Committee may hold
telephonic meetings. The Committee may take any action otherwise proper
under the Plan by the affirmative vote, taken with or without a meeting, of
a majority of its members. The Committee may authorize any one or more of
their members or any officer of the Company to execute and deliver
documents on behalf of the Committee.
(c) DECISIONS BINDING. All determinations and decisions made by
the Committee shall be made in its discretion pursuant to the provisions of
the Plan, and shall be final, conclusive and binding on all persons
including the Company, its shareholders, Employees, Grantees, and their
estates and beneficiaries. The Committee's decisions and determinations
with respect to any Incentive Award need not be uniform and may be made
selectively among Incentive Awards and Grantees, whether or not such
Incentive Awards are similar or such Grantees are similarly situated.
(d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to the
stockholder approval requirements of Section 7.7 if applicable, the
Committee may, in its discretion, provide for the extension of the
exercisability of an Incentive Award, accelerate the vesting or
exercisability of an Incentive Award, eliminate or make less restrictive
any restrictions contained in an Incentive Award, waive any restriction or
other provisions of an Incentive Award, or otherwise amend or modify an
Incentive Award in any manner that is either (i) not adverse to the Grantee
to whom such Incentive Award was granted or (ii) consented to by such
Grantee. With respect to an Incentive Award that is an incentive stock
option (as described in Section 422 of the Code), no adjustment to such
option shall be made to the extent constituting a "modification" within the
meaning of Section 424(h)(3) of the Code unless otherwise agreed to by the
optionee in writing.
(e) DELEGATION OF AUTHORITY. The Committee may delegate to the
Chief Executive Officer and to other senior officers of the Company its
duties under this Plan pursuant to such conditions or limitations as the
Committee may establish from time to time, except that, if the Company is a
Publicly Held Corporation, the Committee may not delegate to any person the
authority to (i) grant Incentive Awards, or (ii) take any action which
would contravene the requirements of Rule 16b-3 under the Exchange Act or
the Performance-Based Exception under Section 162(m) of the Code.
(f) EXPENSES OF COMMITTEE. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel
regularly employed by the Company, and other agents as the Committee may
deem appropriate for the administration of the Plan. The Committee may
rely upon any opinion or computation received from any such counsel or
agent. All expenses incurred by the Committee in interpreting and
administering the Plan, including, without limitation, meeting expenses and
professional fees, shall be paid by the Company.
(g) SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee may, in
its absolute discretion, grant Incentive Awards to Grantees on the
condition that such Grantees surrender to the Committee for cancellation
such other Incentive Awards (including, without limitation, Incentive
Awards with higher exercise prices) as the Committee directs. Incentive
Awards granted on the condition precedent of surrender of outstanding
Incentive Awards shall not count against the limits set forth in Section
1.4 until such time as such previous Incentive Awards are surrendered and
cancelled.
(h) INDEMNIFICATION. Each person who is or was a member of the
Committee, or of the Board, shall be indemnified by the Company against and
from any damage, loss, liability, cost and expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any
claim, action, suit, or proceeding to which he may be a party or in which
he may be involved by reason of any action taken or failure to act under
the Plan, except for any such act or omission constituting willful
misconduct or gross negligence. Such person shall be indemnified by the
Company for all amounts paid by him in settlement thereof, with the
Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS
Subject to adjustment under Section 6.5, there shall be available for
Incentive Awards under this Plan granted wholly or partly in Common Stock
(including rights or Options that may be exercised for or settled in Common
Stock) an aggregate of the greater of (i) one million seven-hundred thousand
shares (1,700,000) Shares of Common Stock or (ii) eleven percent (11%) of the
number of Shares issued and outstanding on the last day of each fiscal quarter
of the Company, of which an aggregate of not more than one million five-hundred
thousand (1,500,000) Shares shall be available for Incentive Awards granted to
Outside Directors. In addition, no more than one million five-hundred thousand
(1,500,000) Shares of Common Stock shall be available for Incentive Stock
Options. The number of Shares of Common Stock that are the subject of Incentive
Awards under this Plan, that are forfeited or terminated, expire unexercised,
are settled in cash in lieu of Common Stock or in a manner such that all or some
of the Shares covered by an Incentive Award are not issued to a Grantee or are
exchanged for Incentive Awards that do not involve Common Stock, shall again
immediately become available for Incentive Awards hereunder. The Committee may
from time to time adopt and observe such procedures concerning the counting of
Shares against the Plan maximum as it may deem appropriate. The Board and the
appropriate officers of the Company shall from time to time take whatever
actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
Shares are available for issuance pursuant to Incentive Awards.
If the Company is a Publicly Held Corporation, then unless and until the
Committee determines that a particular Incentive Award granted to a Covered
Employee is not intended to comply with the Performance-Based Exception, the
following rules shall apply to grants of Incentive Awards to Covered Employees:
(a) Subject to adjustment as provided in Section 6.5, the maximum
aggregate number of Shares of Common Stock (including Stock Options,
Restricted Stock,
Performance Units and Performance Shares paid out in Shares, or Other
Stock-Based Awards paid out in Shares) that may be granted or that may
vest, as applicable, in any calendar year pursuant to any Incentive Award
held by any individual Covered Employee shall be five hundred thousand
(500,000) Shares.
(b) The maximum aggregate cash payout (including Performance Units and
Performance Shares paid out in cash, or Other Stock-Based Awards paid out
in cash) with respect to Incentive Awards granted in any calendar year
which may be made to any Covered Employee shall be Ten Million dollars
($10,000,000).
(c) With respect to any Stock Option granted to a Covered Employee
that is canceled or repriced, the number of Shares subject to such Stock
Option shall continue to count against the maximum number of Shares that
may be the subject of Stock Options granted to such Covered Employee
hereunder and, in this regard, such maximum number shall be determined in
accordance with Section 162(m) of the Code.
(d) The limitations of subsections (a), (b) and (c) above shall be
construed and administered so as to comply with the Performance-Based
Exception.
1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS
The following Incentive Awards and payouts shall reduce, on a one Share for
one Share basis, the number of Shares authorized for issuance under the Share
Pool:
(i) Stock Option;
(ii) Restricted Stock;
(iii) A payout of a Performance Share in Shares;
(iv) A payout of a Performance Unit in Shares; and
(v) A payout of an Other Stock-Based Award in Shares.
The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:
(a) A Payout of a Restricted Stock Award or Other Stock-Based Award in
the form of cash;
(b) A cancellation, termination, expiration, forfeiture, or lapse for
any reason of any Shares subject to an Incentive Award; and
(c) Payment of an Option Price with previously acquired Shares or by
withholding Shares which otherwise would be acquired on exercise (i.e., the
Share Pool shall be increased by the number of Shares turned in or withheld
as payment of the Option Price).
1.6 COMMON STOCK AVAILABLE
The Common Stock available for issuance or transfer under the Plan shall be
made available from Shares now or hereafter (a) held in the treasury of the
Company, (b) authorized but unissued shares, or (c) shares to be purchased or
acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.
1.7 PARTICIPATION
(a) ELIGIBILITY. The Committee shall from time to time designate
those Employees, Consultants and/or Outside Directors, if any, to be
granted Incentive Awards under the Plan, the type of Incentive Awards
granted, the number of Shares, Stock Options, rights or units, as the case
may be, which shall be granted to each such person, and any other terms or
conditions relating to the Incentive Awards as it may deem appropriate to
the extent consistent with the provisions of the Plan. A Grantee who has
been granted an Incentive Award may, if otherwise eligible, be granted
additional Incentive Awards at any time.
(b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or Outside
Director shall be eligible for the grant of any Incentive Stock Option. In
addition, no Employee shall be eligible for the grant of any Incentive
Stock Option who owns or would own immediately before the grant of such
Incentive Stock Option, directly or indirectly, stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company, or any Parent or Subsidiary. This restriction does
not apply if, at the time such Incentive Stock Option is granted, the
Incentive Stock Option exercise price is at least one hundred and ten
percent (110%) of the Fair Market Value on the date of grant and the
Incentive Stock Option by its terms is not exercisable after the expiration
of five (5) years from the date of grant. For the purpose of the
immediately preceding sentence, the attribution rules of Section 424(d) of
the Code shall apply for the purpose of determining an Employee's
percentage ownership in the Company or any Parent or Subsidiary. This
paragraph shall be construed consistent with the requirements of Section
422 of the Code.
1.8 TYPES OF INCENTIVE AWARDS
The types of Incentive Awards under the Plan are Stock Options and
Supplemental Payments as described in Section 2, Restricted Stock and
Supplemental Payments as described in Section 3, Performance Units, Performance
Shares and Supplemental Payments as described in Section 4, Other Stock-Based
Awards and Supplemental Payments as described in Section 5, or any combination
of the foregoing.
SECTION 2
STOCK OPTIONS
2.1 GRANT OF STOCK OPTIONS
The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions,
not inconsistent with the Plan, as the Committee shall determine in its
discretion. Successive grants may be made to the same Grantee whether or not any
Stock Option previously granted to such person remains unexercised.
2.2 STOCK OPTION TERMS
(a) WRITTEN AGREEMENT. Each grant of an Stock Option shall be
evidenced by a written Incentive Agreement. Among its other provisions,
each Incentive Agreement shall set forth the extent to which the Grantee
shall have the right to exercise the Stock Option following termination of
the Grantee's Employment. Such provisions shall be determined in the
discretion of the Committee, shall be included in the Grantee's Incentive
Agreement, need not be uniform among all Stock Options issued pursuant to
the Plan.
(b) NUMBER OF SHARES. Each Stock Option shall specify the number
of Shares of Common Stock to which it pertains.
(c) EXERCISE PRICE. The exercise price per Share of Common Stock
under each Stock Option shall be determined by the Committee; provided,
however, that in the case of an Incentive Stock Option, such exercise price
shall not be less than 100% of the Fair Market Value per Share on the date
the Incentive Stock Option is granted. To the extent that the Company is a
Publicly Held Corporation and the Stock Option is intended to qualify for
the Performance-Based Exception, the exercise price shall not be less than
100% of the Fair Market Value per Share on the date the Stock Option is
granted. Each Stock Option shall specify the method of exercise which
shall be consistent with the requirements of Section 2.3(a).
(d) TERM. In the Incentive Agreement, the Committee shall fix the
term of each Stock Option which shall be not more than ten (10) years from
the date of grant. In the event no term is fixed, such term shall be ten
(10) years from the date of grant.
(e) EXERCISE. The Committee shall determine the time or times at
which a Stock Option may be exercised in whole or in part. Each Stock
Option may specify the required period of continuous Employment and/or the
performance objectives to be achieved before the Stock Option or portion
thereof will become exercisable. Each Stock Option, the exercise of which,
or the timing of the exercise of which, is dependent, in whole or in part,
on the achievement of designated performance objectives, may specify a
minimum level of achievement in respect of the specified performance
objectives below which no Stock Options will be exercisable and a method
for determining the number of Stock Options that will be exercisable if
performance is at or above such minimum but short of full achievement of
the performance objectives. All such terms and conditions shall be set
forth in the Incentive Agreement.
(f) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. Notwithstanding
any contrary provision in the Plan, to the extent that the aggregate Fair
Market Value (determined as of the time the Incentive Stock Option is
granted) of the Shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any Grantee during any
single calendar year (under the Plan and any other stock option plans of
the Company and its Subsidiaries or Parent) exceeds the sum of $100,000,
such Incentive Stock
Option shall be treated as a Nonstatutory Stock Option to the extent in
excess of the $100,000 limit, and not an Incentive Stock Option, but all
other terms and provisions of such Stock Option shall remain unchanged.
This paragraph shall be applied by taking Incentive Stock Options into
account in the order in which they are granted and shall be construed in
accordance with Section 422(d) of the Code. In the absence of such
regulations or other authority, or if such regulations or other authority
require or permit a designation of the Options which shall cease to
constitute Incentive Stock Options, then Incentive Stock Options, only to
the extent of such excess and in the order in which they were granted,
shall automatically be deemed to be Nonstatutory Stock Options but all
other terms and conditions of such Incentive Stock Options, and the
corresponding Incentive Agreement, shall remain unchanged.
2.3 STOCK OPTION EXERCISES
(a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be
exercised by the delivery of a signed written notice of exercise to the
Company as of a date set by the Company in advance of the effective date of
the proposed exercise. The notice shall set forth the number of Shares
with respect to which the Option is to be exercised, accompanied by full
payment for the Shares.
The Option Price upon exercise of any Stock Option shall be payable to
the Company in full either: (i) in cash or its equivalent, or (ii) subject
to prior approval by the Committee in its discretion, by tendering
previously acquired Shares having an aggregate Fair Market Value at the
time of exercise equal to the total Option Price (provided that the Shares
which are tendered must have been held for at least six (6) months prior to
their tender to satisfy the Option Price), or (iii) subject to prior
approval by the Committee in its discretion, by withholding Shares which
otherwise would be acquired on exercise having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price, or (iv)
subject to prior approval by the Committee in its discretion, by a
combination of (i), (ii), and (iii) above. Any payment in Shares of Common
Stock shall be effected by the delivery of such Shares to the Secretary of
the Company, duly endorsed in blank or accompanied by stock powers duly
executed in blank, together with any other documents as the Secretary shall
require from time to time.
The Committee, in its discretion, also may allow (i) "cashless
exercise" as permitted under Federal Reserve Board's Regulation T, 12 CFR
Part 220 (or its successor), and subject to applicable securities law
restrictions and tax withholdings, or (ii) by any other means which the
Committee, in its discretion, determines to be consistent with the Plan's
purpose and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to or on behalf of the
Grantee, in the name of the Grantee or other appropriate recipient, Share
certificates for the number of Shares purchased under the Stock Option.
Such delivery shall be effected for all purposes when a stock transfer
agent of the Company shall have deposited such certificates in the United
States mail, addressed to Grantee or other appropriate recipient.
During the lifetime of a Grantee, each Option granted to him shall be
exercisable only by the Grantee (or his legal guardian in the event of his
Disability) or by a broker-dealer acting on his behalf pursuant to a
cashless exercise under the foregoing provisions of this Section 2.3(a).
No Option shall be assignable or transferable by Grantee otherwise than by
will or by the laws of descent and distribution.
(b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may
impose such restrictions on any Shares acquired pursuant to the exercise of
a Stock Option as it may deem advisable, including, without limitation,
restrictions under (i) any buy/sell agreement or right of first refusal,
(ii) any applicable federal securities laws, (iii) the requirements of any
stock exchange or market upon which such Shares are then listed and/or
traded, or (iv) any blue sky or state securities law applicable to such
Shares. Any certificate issued to evidence Shares issued upon the exercise
of an Incentive Award may bear such legends and statements as the Committee
shall deem advisable to assure compliance with federal and state laws and
regulations.
Any Grantee or other person exercising an Incentive Award may be
required by the Committee to give a written representation that the
Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution;
provided, however, that the Committee, in its sole discretion, may release
any person receiving an Incentive Award from any such representations
either prior to or subsequent to the exercise of the Incentive Award.
(c) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM
INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of the
Plan, a Grantee who disposes of Shares of Common Stock acquired upon the
exercise of an Incentive Stock Option by a sale or exchange either (i)
within two (2) years after the date of the grant of the Incentive Stock
Option under which the Shares were acquired or (ii) within one (1) year
after the transfer of such Shares to him pursuant to exercise, shall
promptly notify the Company of such disposition, the amount realized and
his adjusted basis in such Shares.
(d) PROCEEDS OF OPTION EXERCISE. The proceeds received by the
Company from the sale of Shares pursuant to Stock Options exercised under
the Plan shall be used for general corporate purposes.
2.4 RELOAD OPTIONS
At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, replacement Stock Options under the Plan that permit the
Grantee to purchase an additional number of Shares equal to the number of
previously owned Shares surrendered by the Grantee to pay all or a portion of
the Option Price upon exercise of his Stock Options. The terms and conditions
of such replacement Stock Options shall be set forth in the Incentive Agreement.
2.5 SUPPLEMENTAL PAYMENT ON EXERCISE OF NONSTATUTORY STOCK OPTIONS
The Committee, either at the time of grant or as of the time of exercise of
any Nonstatutory Stock Option, may provide in the Incentive Agreement for a
Supplemental Payment by the Company to the Grantee with respect to the exercise
of any such Nonstatutory Stock Option. The Supplemental Payment shall be in the
amount specified by the Committee, which amount shall not exceed the amount
necessary to pay the federal and state income tax payable with respect to both
the exercise of the Nonstatutory Stock Option and the receipt of the
Supplemental Payment, assuming the holder is taxed at either the maximum
effective income tax rate applicable thereto or at a lower tax rate as deemed
appropriate by the Committee. The Committee shall have the discretion to grant
Supplemental Payments that are payable solely in cash or Supplemental Payments
that are payable in cash, Common Stock, or a combination of both, as determined
by the Committee at the time of payment.
SECTION 3
RESTRICTED STOCK
3.1 AWARD OF RESTRICTED STOCK
(a) GRANT. In consideration of the performance of Employment by
any Grantee who is an Employee, Consultant or Outside Director, Shares of
Restricted Stock may be awarded under the Plan by the Committee with such
restrictions during the Restriction Period as the Committee may designate
in its discretion, any of which restrictions may differ with respect to
each particular Grantee. Restricted Stock shall be awarded for no
additional consideration or such additional consideration as the Committee
may determine, which consideration may be less than, equal to or more than
the Fair Market Value of the shares of Restricted Stock on the grant date.
The terms and conditions of each grant of Restricted Stock shall be
evidenced by an Incentive Agreement.
(b) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED
STOCK. Unless otherwise specified in the Grantee's Incentive Agreement,
each Restricted Stock Award shall constitute an immediate transfer of the
record and beneficial ownership of the Shares of Restricted Stock to the
Grantee in consideration of the performance of services as an Employee,
Consultant or Outside Director, as applicable, entitling such Grantee to
all voting and other ownership rights in such Shares.
As specified in the Incentive Agreement, a Restricted Stock Award may
limit the Grantee's dividend rights during the Restriction Period in which
the shares of Restricted Stock are subject to a "substantial risk of
forfeiture" (within the meaning given to such term under Code Section 83)
and restrictions on transfer. In the Incentive Agreement, the Committee
may apply any restrictions to the dividends that the Committee deems
appropriate. Without limiting the generality of the preceding sentence, if
the grant or vesting of Shares of Restricted Stock granted to a Covered
Employee, if applicable, is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it
deems appropriate to the payment of dividends declared with respect to such
Shares of Restricted Stock, such that the dividends and/or the Shares of
Restricted Stock maintain eligibility for the Performance-Based Exception.
In the event that any
dividend constitutes a derivative security or an equity security pursuant
to the rules under Section 16 of the Exchange Act, if applicable, such
dividend shall be subject to a vesting period equal to the remaining
vesting period of the Shares of Restricted Stock with respect to which the
dividend is paid.
Shares awarded pursuant to a grant of Restricted Stock may be issued
in the name of the Grantee and held, together with a stock power endorsed
in blank, by the Committee or Company (or their delegates) or in trust or
in escrow pursuant to an agreement satisfactory to the Committee, as
determined by the Committee, until such time as the restrictions on
transfer have expired. All such terms and conditions shall be set forth in
the particular Grantee's Incentive Agreement. The Company or Committee (or
their delegates) shall issue to the Grantee a receipt evidencing the
certificates held by it which are registered in the name of the Grantee.
3.2 RESTRICTIONS
(a) FORFEITURE OF RESTRICTED STOCK. Restricted Stock awarded to a
Grantee may be subject to the following restrictions until the expiration
of the Restriction Period: (i) a restriction that constitutes a
"substantial risk of forfeiture" (as defined in Code Section 83), or a
restriction on transferability; (ii) unless otherwise specified by the
Committee in the Incentive Agreement, the Restricted Stock that is subject
to restrictions which are not satisfied shall be forfeited and all rights
of the Grantee to such Shares shall terminate; and (iii) any other
restrictions that the Committee determines in advance are appropriate,
including, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Stock to a continuing
substantial risk of forfeiture in the hands of any transferee. Any such
restrictions shall be set forth in the particular Grantee's Incentive
Agreement.
(b) ISSUANCE OF CERTIFICATES. Reasonably promptly after the date
of grant with respect to Shares of Restricted Stock, the Company shall
cause to be issued a stock certificate, registered in the name of the
Grantee to whom such Shares of Restricted Stock were granted, evidencing
such Shares; provided, however, that the Company shall not cause to be
issued such a stock certificate unless it has received a stock power duly
endorsed in blank with respect to such Shares. Each such stock certificate
shall bear the following legend or any other legend approved by the
Company:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture and restrictions against transfer)
contained in the WORK International Corporation 1998 Incentive Plan
and an Incentive Agreement entered into between the registered owner
of such shares and WORK International Corporation. A copy of the Plan
and Incentive Agreement are on file in the corporate offices of WORK
International Corporation.
Such legend shall not be removed from the certificate evidencing such
Shares of Restricted Stock until such Shares vest pursuant to the terms of
the Incentive Agreement.
(c) REMOVAL OF RESTRICTIONS. The Committee, in its discretion,
shall have the authority to remove any or all of the restrictions on the
Restricted Stock if it determines that, by reason of a change in applicable
law or another change in circumstance arising after the grant date of the
Restricted Stock, such action is appropriate.
3.3 DELIVERY OF SHARES OF COMMON STOCK
Subject to withholding taxes under Section 7.3 and to the terms of the
Incentive Agreement, a stock certificate evidencing the Shares of Restricted
Stock with respect to which the restrictions in the Incentive Agreement have
been satisfied shall be delivered to the Grantee or other appropriate recipient
free of restrictions. Such delivery shall be effected for all purposes when the
Company shall have deposited such certificate in the United States mail,
addressed to the Grantee or other appropriate recipient.
3.4 SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK
The Committee, either at the time of grant or vesting of Restricted Stock,
may provide for a Supplemental Payment by the Company to the holder in an amount
specified by the Committee, which amount shall not exceed the amount necessary
to pay the federal and state income tax payable with respect to both the vesting
of the Restricted Stock and receipt of the Supplemental Payment, assuming the
Grantee is taxed at either the maximum effective income tax rate applicable
thereto or at a lower tax rate as deemed appropriate by the Committee. The
Committee shall have the discretion to grant Supplemental Payments that are
payable solely in cash or Supplemental Payments that are payable in cash, Common
Stock, or a combination of both, as determined by the Committee at the time of
payment.
SECTION 4
PERFORMANCE UNITS AND PERFORMANCE SHARES
4.1 PERFORMANCE BASED AWARDS
(a) GRANT. The Committee is authorized to grant Performance Units
and Performance Shares to selected Grantees who are Employees or
Consultants. Each grant of Performance Units and/or Performance Shares
shall be evidenced by an Incentive Agreement in such amounts and upon such
terms as shall be determined by the Committee. The Committee may make
grants of Performance Units or Performance Shares in such a manner that
more than one Performance Period is in progress concurrently. For each
Performance Period, the Committee shall establish the number of Performance
Units or Performance Shares and their contingent values which may vary
depending on the degree to which performance criteria established by the
Committee are met.
(b) PERFORMANCE CRITERIA. At the beginning of each Performance
Period, the Committee shall (i) establish for such Performance Period
specific financial or non-financial performance objectives that the
Committee believes are relevant to the Company's business objectives; (ii)
determine the value of a Performance Unit or the number of Shares under a
Performance Share grant relative to performance objectives; and (iii)
notify each Grantee in writing of the established performance objectives
and, if applicable, the minimum, target,
and maximum value of Performance Units or Performance Shares for such
Performance Period.
(c) MODIFICATION. If the Committee determines, in its discretion
exercised in good faith, that the established performance measures or
objectives are no longer suitable to the Company's objectives because of a
change in the Company's business, operations, corporate structure, capital
structure, or other conditions the Committee deems to be appropriate, the
Committee may modify the performance measures and objectives to the extent
it considers to be necessary. The Committee shall determine whether any
such modification would cause the Performance Unit or Performance Share to
fail to qualify for the Performance-Based Exception, if applicable.
(d) PAYMENT. The basis for payment of Performance Units or
Performance Shares for a given Performance Period shall be the achievement
of those performance objectives determined by the Committee at the
beginning of the Performance Period as specified in the Grantee's Incentive
Agreement. If minimum performance is not achieved for a Performance
Period, no payment shall be made and all contingent rights shall cease. If
minimum performance is achieved or exceeded, the value of a Performance
Unit or Performance Share may be based on the degree to which actual
performance exceeded the preestablished minimum performance standards. The
amount of payment shall be determined by multiplying the number of
Performance Units or Performance Shares granted at the beginning of the
Performance Period times the final Performance Unit or Performance Share
value. Payments shall be made, in the discretion of the Committee as
specified in the Incentive Agreement, solely in cash or Common Stock, or a
combination of cash and Common Stock, following the close of the applicable
Performance Period.
(e) SPECIAL RULE FOR COVERED EMPLOYEES. The Committee may
establish performance goals applicable to Performance Units or Performance
Shares awarded to Covered Employees in such a manner as shall permit
payments with respect thereto to qualify for the Performance-Based
Exception, if applicable. If a Performance Unit or Performance Share
granted to a Covered Employee is intended to comply with the Performance-
Based Exception, the Committee in establishing performance goals shall be
guided by Treasury Regulation (S) 1.162-27(e)(2) (or its successor).
4.2 SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS OR PERFORMANCE SHARES
The Committee, either at the time of grant or at the time of vesting of
Performance Units or Performance Shares, may provide for a Supplemental Payment
by the Company to the Grantee in an amount specified by the Committee, which
amount shall not exceed the amount necessary to pay the federal and state income
tax payable with respect to both the vesting of such Performance Units or
Performance Shares and receipt of the Supplemental Payment, assuming the Grantee
is taxed at either the maximum effective income tax rate applicable thereto or
at a lower tax rate as seemed appropriate by the Committee. The Committee shall
have the discretion to grant Supplemental Payments that are payable in cash,
Common Stock, or a combination of both, as determined by the Committee at the
time of payment.
SECTION 5
OTHER STOCK-BASED AWARDS
5.1 GRANT OF OTHER STOCK-BASED AWARDS
Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation,
Deferred Stock, purchase rights, Shares of Common Stock awarded which are not
subject to any restrictions or conditions, convertible or exchangeable
debentures, other rights convertible into Shares, Incentive Awards valued by
reference to the value of securities of or the performance of a specified
Subsidiary, division or department, and settlement in cancellation of rights of
any person with a vested interest in any other plan, fund, program or
arrangement that is or was sponsored, maintained or participated in by the
Company or any Parent or Subsidiary. As is the case with other Incentive
Awards, Other Stock-Based Awards may be awarded either alone or in addition to
or in tandem with any other Incentive Awards.
5.2 OTHER STOCK-BASED AWARD TERMS
(a) WRITTEN AGREEMENT. The terms and conditions of each grant of
an Other Stock-Based Award shall be evidenced by an Incentive Agreement.
(b) PURCHASE PRICE. Except to the extent that an Other Stock-Based
Award is granted in substitution for an outstanding Incentive Award or is
delivered upon exercise of a Stock Option, the amount of consideration
required to be received by the Company shall be either (i) no consideration
other than services actually rendered (in the case of authorized and
unissued shares) or to be rendered, or (ii) in the case of an Other Stock-
Based Award in the nature of a purchase right, consideration (other than
services rendered or to be rendered) at least equal to 50% of the Fair
Market Value of the Shares covered by such grant on the date of grant (or
such percentage higher than 50% that is required by any applicable tax or
securities law).
(c) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion, the
Committee may specify such criteria, periods or goals for vesting in Other
Stock-Based Awards and payment thereof to the Grantee as it shall
determine; and the extent to which such criteria, periods or goals have
been met shall be determined by the Committee. All terms and conditions of
Other Stock-Based Awards shall be determined by the Committee and set forth
in the Incentive Agreement. The Committee may also provide for a
Supplemental Payment similar to such payment as described in Section 4.2.
(d) PAYMENT. Other Stock-Based Awards may be paid in Shares of
Common Stock or other consideration related to such Shares, in a single
payment or in installments on such dates as determined by the Committee,
all as specified in the Incentive Agreement.
(e) DIVIDENDS. The Grantee of an Other Stock-Based Award shall be
entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to
the number of Shares covered by the Other Stock-Based Award, as determined
by the Committee and set forth in the Incentive Agreement. The Committee
may also provide in the Incentive Agreement that such amounts (if any)
shall be deemed to have been reinvested in additional Shares of Common
Stock.
SECTION 6
PROVISIONS RELATING TO PLAN PARTICIPATION
6.1 PLAN CONDITIONS
(a) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive Award
is granted shall be required to enter into an Incentive Agreement with the
Company, in such a form as is provided by the Committee. The Incentive
Agreement shall contain specific terms as determined by the Committee, in
its discretion, with respect to the Grantee's particular Incentive Award.
Such terms need not be uniform among all Grantees or any similarly-situated
Grantees. The Incentive Agreement may include, without limitation,
vesting, forfeiture and other provisions particular to the particular
Grantee's Incentive Award, as well as, for example, provisions to the
effect that the Grantee (i) shall not disclose any confidential information
acquired during Employment with the Company, (ii) shall abide by all the
terms and conditions of the Plan and such other terms and conditions as may
be imposed by the Committee, (iii) shall not interfere with the employment
or other service of any employee, (iv) shall not compete with the Company
or become involved in a conflict of interest with the interests of the
Company, (v) shall forfeit an Incentive Award if terminated for Cause, (vi)
shall not be permitted to make an election under Section 83(b) of the Code
when applicable, and (vii) shall be subject to any other agreement between
the Grantee and the Company regarding Shares that may be acquired under an
Incentive Award including, without limitation, an agreement restricting the
transferability of Shares by Grantee. An Incentive Agreement shall include
such terms and conditions as are determined by the Committee, in its
discretion, to be appropriate with respect to any individual Grantee. The
Incentive Agreement shall be signed by the Grantee to whom the Incentive
Award is made and by an Authorized Officer.
(b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any instrument
executed pursuant to the Plan shall create any Employment rights (including
without limitation, rights to continued Employment) in any Grantee or
affect the right of the Company to terminate the Employment of any Grantee
at any time without regard to the existence of the Plan.
(c) SECURITIES REQUIREMENTS. The Company shall be under no
obligation to effect the registration pursuant to the Securities Act of
1933 of any Shares of Common Stock to be issued hereunder or to effect
similar compliance under any state laws. Notwithstanding anything herein
to the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates evidencing Shares pursuant to the Plan unless
and until the Company is advised by its counsel that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities, and the requirements of any
securities exchange on which Shares are traded. The Committee may require,
as a condition of the issuance and delivery of certificates evidencing
Shares of Common Stock pursuant to the terms hereof, that the recipient of
such Shares make such
covenants, agreements and representations, and that such certificates bear
such legends, as the Committee, in its discretion, deems necessary or
desirable.
If the Shares issuable on exercise of an Incentive Award are not
registered under the Securities Act of 1933, the Company may imprint on the
certificate for such Shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act of 1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH
REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR
SUCH SALE OR TRANSFER.
6.2 TRANSFERABILITY
(a) NON-TRANSFERABLE AWARDS AND OPTIONS. No Incentive Award and no
right under the Plan, contingent or otherwise, will be (i) assignable,
saleable, or otherwise transferable by a Grantee except by will or by the
laws of descent and distribution, or (ii) subject to any encumbrance,
pledge, lien, assignment or charge of any nature.
No transfer by will or by the laws of descent and distribution shall
be effective to bind the Company unless the Committee has been furnished
with a copy of the deceased Grantee's enforceable will or such other
evidence as the Committee deems necessary to establish the validity of the
transfer. Any attempted transfer in violation of this Section 6.2(a) shall
be void and ineffective.
(b) ABILITY TO EXERCISE RIGHTS. Subject to a beneficiary
designation pursuant to Section 7.5, only the Grantee (or his legal
guardian in the event of Grantee's Disability), or in the event of his
death, his estate, may exercise Stock Options, receive cash payments and
deliveries of Shares, and otherwise assume the rights of the Grantee.
6.3 RIGHTS AS A STOCKHOLDER
(a) NO STOCKHOLDER RIGHTS. Except as otherwise provided in Section
3.1(b) for grants of Restricted Stock, a Grantee of an Incentive Award (or
a permitted transferee of such Grantee) shall have no rights as a
stockholder with respect to any Shares of Common Stock until the issuance
of a stock certificate for such Shares.
(b) REPRESENTATION OF OWNERSHIP. In the case of the exercise of an
Incentive Award by a person or estate acquiring the right to exercise such
Incentive Award by reason of the death or Disability of a Grantee, the
Committee may require reasonable evidence as to the ownership of such
Incentive Award or the authority of such person and may require such
consents and releases of taxing authorities as the Committee may deem
advisable.
6.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Incentive Award.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Grantee may, by written notice to the Committee, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
6.5 CHANGE IN STOCK AND ADJUSTMENTS
(a) CHANGES IN LAW OR CIRCUMSTANCES. Subject to Section 6.7 (which
only applies in the event of a Change in Control), in the event of any
change in applicable laws or any change in circumstances which results in
or would result in any dilution of the rights granted under the Plan, or
which otherwise warrants equitable adjustment because it interferes with
the intended operation of the Plan, then, if the Committee should
determine, in its absolute discretion, that such change equitably requires
an adjustment in the number or kind of shares of stock or other securities
or property theretofore subject, or which may become subject, to issuance
or transfer under the Plan or in the terms and conditions of outstanding
Incentive Awards, such adjustment shall be made in accordance with such
determination. Such adjustments may include changes with respect to (i)
the aggregate number of Shares that may be issued under the Plan, (ii) the
number of Shares subject to Incentive Awards, and (iii) the price per Share
for outstanding Incentive Awards. Any adjustment under this paragraph of
an outstanding Incentive Stock Option shall be made only to the extent not
constituting a "modification" within the meaning of Section 424(h)(3) of
the Code unless otherwise agreed to by the Grantee in writing. The
Committee shall give notice to each applicable Grantee of such adjustment
which shall be effective and binding.
(b) EXERCISE OF CORPORATE POWERS. The existence of the Plan or
outstanding Incentive Awards hereunder shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalization, reorganization or other changes in
the Company's capital structure or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stocks ahead of or affecting the Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding whether of a similar character or otherwise.
(c) RECAPITALIZATION OF THE COMPANY. Subject to Section 6.7, if
while there are Incentive Awards outstanding, the Company shall effect any
subdivision or consolidation of Shares of Common Stock or other capital
readjustment, the payment of a stock dividend, stock split, combination of
Shares, recapitalization or other increase or reduction in the
number of Shares outstanding, without receiving compensation therefor in
money, services or property, then the number of Shares available under the
Plan and the number of Incentive Awards which may thereafter be exercised
shall (i) in the event of an increase in the number of Shares outstanding,
be proportionately increased and the Fair Market Value of the Incentive
Awards awarded shall be proportionately reduced; and (ii) in the event of a
reduction in the number of Shares outstanding, be proportionately reduced,
and the Fair Market Value of the Incentive Awards awarded shall be
proportionately increased. The Committee shall take such action and
whatever other action it deems appropriate, in its discretion, so that the
value of each outstanding Incentive Award to the Grantee shall not be
adversely affected by a corporate event described in this subsection (c).
(d) REORGANIZATION OF THE COMPANY. Subject to Section 6.7, if the
Company is reorganized, merged or consolidated, or is a party to a plan of
exchange with another corporation, pursuant to which reorganization,
merger, consolidation or exchange, stockholders of the Company receive any
Shares of Common Stock or other securities or property, or if the Company
should distribute securities of another corporation to its stockholders,
each Grantee shall be entitled to receive, in lieu of the number of
unexercised Incentive Awards previously awarded, the number of Stock
Options, Performance Shares or Units, Restricted Stock shares, or Other
Stock-Based Awards, with a corresponding adjustment to the Fair Market
Value of said Incentive Awards, to which he would have been entitled if,
immediately prior to such corporate action, such Grantee had been the
holder of record of a number of Shares equal to the number of the
outstanding Incentive Awards payable in Shares that were previously awarded
to him. For this purpose, Shares of Restricted Stock shall be treated the
same as unrestricted outstanding Shares of Common Stock. In this regard,
the Committee shall take whatever other action it deems appropriate to
preserve the rights of Grantees holding outstanding Incentive Awards.
(e) ISSUE OF COMMON STOCK BY THE COMPANY. Except as hereinabove
expressly provided in this Section 6.5 and subject to Section 6.7, the
issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon any conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of, or Fair Market Value of, any Incentive
Awards then outstanding under previously granted Incentive Awards;
provided, however, in such event, outstanding Shares of Restricted Stock
shall be treated the same as outstanding unrestricted Shares of Common
Stock.
(f) ACQUISITION OF THE COMPANY. Subject to Section 6.7, in the case
of any sale of assets, merger, consolidation or combination of the Company
with or into another corporation other than a transaction in which the
Company is the continuing or surviving corporation and which does not
result in the outstanding Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof
(an "Acquisition"), in the absolute discretion of the Committee, any
Grantee who holds an outstanding Incentive Award shall have the right
(subject to any limitation applicable to the Incentive Award) thereafter
and during the term of the Incentive Award, to receive upon exercise
thereof the Acquisition Consideration (as defined below) receivable upon
the Acquisition by a holder of the number of Shares which would have been
obtained upon
exercise of the Incentive Award immediately prior to the Acquisition. The
term "Acquisition Consideration" shall mean the kind and amount of shares
of the surviving or new corporation, cash, securities, evidence of
indebtedness, other property or any combination thereof receivable in
respect of one Share upon consummation of an Acquisition. The Committee, in
its discretion, shall have the authority to take whatever action it deems
appropriate to effectuate the provisions of this subsection (f).
(g) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS. Not
with-standing any other provision of the Plan, the Committee, in its
absolute discretion, may authorize the assumption and continuation under
the Plan of outstanding and unexercised stock options or other types of
stock-based incentive awards that were granted under a stock option plan
(or other type of stock incentive plan or agreement) that is or was
maintained by a corporation or other entity that was merged into,
consolidated with, or whose stock or assets were acquired by, the Company
as the surviving corporation. Any such action shall be upon such terms and
conditions as the Committee, in its discretion, may deem appropriate,
including provisions to preserve the holder's rights under the previously
granted and unexercised stock option or other stock-based incentive award,
such as, for example, retaining an existing exercise price under an
outstanding stock option. Any such assumption and continuation of any such
previously granted and unexercised incentive award shall be treated as an
outstanding Incentive Award under the Plan and shall thus count against the
number of Shares reserved for issuance pursuant to Section 1.4. With
respect to an incentive stock option (as described in Section 422 of the
Code) subject to this subsection (g), no adjustment to such option shall be
made to the extent constituting a "modification" within the meaning of
Section 424(h)(3) of the Code unless otherwise agreed to by the optionee in
writing.
(h) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Notwithstanding
any other provisions hereof, in the event of a dissolution or liquidation
of the Company, a sale of all or substantially all of the Company's assets,
a merger or consolidation involving the Company in which the Company is not
the surviving corporation, or a merger or consolidation involving the
Company in which the Company is the surviving corporation but the holders
of Shares of Common Stock receive securities of another corporation and/or
other property, including cash, the Committee shall, in its absolute
discretion, have the right and power to:
(i) cancel, effective immediately prior to the occurrence of
such corporate event, each outstanding Incentive Award (whether or not
then exercisable), and, in full consideration of such cancellation,
pay to the Grantee to whom such Incentive Award was granted an amount
in cash equal to the excess of (A) the value, as determined by the
Committee, in its absolute discretion, of the property (including
cash) received by the holder of a Share of Common Stock as a result of
such event over (B) the exercise price of such Incentive Award, if
any; or
(ii) provide for the exchange of each Incentive Award
outstanding immediately prior to such corporate event (whether or not
then exercisable) for an incentive award on some or all of the
property for which such Incentive Award is exchanged and, incident
thereto, make an equitable adjustment as determined by the Committee,
in its absolute discretion, in the exercise price of the incentive
award, if
any, or the number of shares or amount of property (including cash)
subject to the Incentive Award or, if appropriate, provide for a cash
payment to the Grantee to whom such Incentive Award was granted in
consideration for the exchange of the Incentive Award.
The Committee, in its discretion, shall have the authority to take whatever
action it deems appropriate to effectuate the provisions of this subsection
(h).
6.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
(a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly provided
in the Grantee's Incentive Agreement, if the Grantee's Employment is
terminated for any reason other than due to his death, Disability,
Retirement or for Cause, any non-vested portion of any Stock Option or
other applicable Incentive Award at the time of such termination shall
automatically expire and terminate and no further vesting shall occur after
the termination date. In such event, except as otherwise expressly
provided in his Incentive Agreement, the Grantee shall be entitled to
exercise his rights only with respect to the portion of the Incentive Award
that was vested as of the termination date for a period that shall end on
the earlier of (i) the expiration date set forth in the Incentive Agreement
with respect to the vested portion of such Incentive Award or (ii) the date
that occurs ninety (90) calendar days after his termination date.
(b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, in the event of the
termination of a Grantee's Employment for Cause, all vested and non-vested
Stock Options and other Incentive Awards granted to such Grantee shall
immediately expire, and shall not be exercisable to any extent, as of 12:01
a.m. (CST) on the date of such termination of Employment.
(c) RETIREMENT. Unless otherwise expressly provided in the Grantee's
Incentive Agreement, upon the Retirement of any Employee who is a Grantee:
(i) any non-vested portion of any outstanding Option or other
Incentive Award shall immediately terminate and no further vesting
shall occur; and
(ii) any vested Option or other Incentive Award shall expire on
the earlier of (A) the expiration date set forth in the Incentive
Agreement for such Incentive Award; or (B) the expiration of (1) one
year after the date of Retirement in the case of any Incentive Award
other than an Incentive Stock Option, or (2) three months after the
date of Retirement in the case of an Incentive Stock Option.
(d) DISABILITY OR DEATH. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon termination of Employment as a result
of the Grantee's Disability or death:
(i) any nonvested portion of any outstanding Option or other
applicable Incentive Award shall immediately terminate upon
termination of Employment, as applicable, and no further vesting shall
occur; and
(ii) any vested Incentive Award shall expire upon the earlier of
either (A) the expiration date set forth in the Incentive Agreement or
(B) the one year anniversary of the Grantee's termination of
Employment date, as applicable, as a result of his Disability or
death.
In the case of any vested Incentive Stock Option held by an Employee
following termination of Employment, notwithstanding the definition of
"Disability" in Section 1.2, whether the Employee has incurred a
"Disability" for purposes of determining the length of the Option exercise
period following termination of Employment under this paragraph (d) shall
be determined by reference to Section 22(e)(3) of the Code to the extent
required by Section 422(c)(6) of the Code. The Committee shall determine
whether a Disability for purposes of this subsection (d) has occurred.
(e) CONTINUATION. Subject to the conditions and limitations of the
Plan and applicable law and regulation in the event that a Grantee ceases
to be an Employee, Outside Director or Consultant, as applicable, for
whatever reason, the Committee and Grantee may mutually agree with respect
to any outstanding Option or other Incentive Award then held by the Grantee
(i) for an acceleration or other adjustment in any vesting schedule
applicable to the Incentive Award, (ii) for a continuation of the exercise
period following termination for a longer period than is otherwise provided
under such Incentive Award, or (iii) to any other change in the terms and
conditions of the Incentive Award. In the event of any such change to an
outstanding Inventive Award, a written amendment to the Grantee's Incentive
Agreement shall be required.
6.7 CHANGE IN CONTROL
Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below), the following actions shall automatically
occur as of the day immediately preceding the Change in Control date unless
expressly provided otherwise in the Grantee's Incentive Agreement:
(a) all of the Stock Options then outstanding shall become 100%
vested and immediately and fully exercisable;
(b) all of the restrictions and conditions of any Restricted Stock
and any Other Stock-Based Awards then outstanding shall be deemed
satisfied, and the Restriction Period with respect thereto shall be deemed
to have expired; and
(c) all of the Performance Shares, Performance Units and any Other
Stock-Based Awards shall become fully vested, deemed earned in full, and
promptly paid within thirty (30) days to the affected Grantees without
regard to payment schedules and notwithstanding that the applicable
performance cycle, retention cycle or other restrictions and conditions
have not been completed or satisfied.
Notwithstanding any other provision of this Plan, unless expressly provided
otherwise in the Grantee's Incentive Agreement, the provisions of this Section
6.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the
prior written consent of the Grantee with respect to his outstanding Incentive
Awards subject, however, to the last paragraph of this Section 6.7.
For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company shall
mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of thirty percent (30%) or more of the total voting power
of all the Company's then outstanding securities entitled to vote generally
in the election of directors to the Board; provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition by the Company or its
Parent or Subsidiaries, (ii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or its Parent or
Subsidiaries, or (iii) any acquisition consummated with the prior approval
of the Board; or
(b) During the period of two consecutive calendar years, individuals
who at the beginning of such period constitute the Board, and any new
director(s) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office, who either were directors at the beginning
of the two-year period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of
the Board; or
(c) The Company becomes a party to a merger, plan of reorganization,
consolidation or share exchange in which either (i) the Company will not be
the surviving corporation or (ii) the Company will be the surviving
corporation and any outstanding shares of the Company's common stock will
be converted into shares of any other company (other than a reincorporation
or the establishment of a holding company involving no change of ownership
of the Company) or other securities, cash or other property (excluding
payments made solely for fractional shares); or
(d) The shareholders of the Company approve a merger, plan of
reorganization, consolidation or share exchange with any other corporation,
and immediately following such merger, plan of reorganization,
consolidation or share exchange the holders of the voting securities of the
Company outstanding immediately prior thereto hold securities representing
fifty percent (50%) or less of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger, plan of reorganization, consolidation or share exchange;
provided, however, that notwithstanding the foregoing, no Change in Control
shall be deemed to have occurred if one-half (2) or more of the members of
the Board of the Company or such surviving entity immediately after such
merger, plan of reorganization, consolidation or share exchange is
comprised of persons who served as directors of the Company immediately
prior to such merger, plan of reorganization, consolidation or share
exchange or who are otherwise designees of the Company; or
(e) Upon approval by the Company's stockholders of a complete
liquidation and dissolution of the Company or the sale or other disposition
of all or substantially all of the assets of the Company other than to a
Parent or Subsidiary; or
(f) Any other event that a majority of the Board, in its sole
discretion, shall determine constitutes a Change in Control.
Notwithstanding the occurrence of any of the foregoing events of this
Section 6.7 which would otherwise result in a Change in Control, the Board may
determine in its discretion, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change in Control
shall not be deemed a Change in Control hereunder. Such determination shall be
effective only if it is made by the Board prior to the occurrence of an event
that otherwise would be a Change in Control, or after such event if made by the
Board a majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be or probably would lead
to a Change in Control.
6.8 EXCHANGE OF INCENTIVE AWARDS
The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.
6.9 FINANCING
The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Incentive Award upon such terms as are approved by
the Committee in its discretion.
SECTION 7
GENERAL
7.1 EFFECTIVE DATE AND GRANT PERIOD
This Plan is adopted by the Board effective as of August 21, 1998 (the
"EFFECTIVE DATE"), subject to the approval of the shareholders of the Company by
August 20, 1999. Incentive Awards may be granted under the Plan at any time
prior to receipt of such stockholder approval; provided, however, if the
requisite stockholder approval is not obtained then any Incentive Awards granted
hereunder shall automatically become null and void and of no force or effect.
Unless sooner terminated by the Board, no Incentive Award shall be granted under
the Plan after ten (10) years from the Effective Date.
7.2 FUNDING AND LIABILITY OF COMPANY
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash,
Common Stock or rights thereto under the Plan, any such accounts shall be used
merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto. The Plan shall not be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Common Stock or rights thereto. Any liability or obligation
of the Company to any Grantee with respect to an Incentive Award shall be based
solely upon any contractual obligations that may be created by this Plan and any
Incentive Agreement, and no such liability or obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company, the Board nor the Committee shall be required to
give any security or bond for the performance of any obligation that may be
created by the Plan.
7.3 WITHHOLDING TAXES
(a) TAX WITHHOLDING. The Company shall have the power and the right
to deduct or withhold, or require a Grantee to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Plan or an Incentive Award
hereunder.
(b) SHARE WITHHOLDING. With respect to tax withholding required upon
the exercise of Stock Options, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of any Incentive
Awards, Grantees may elect, subject to the approval of the Committee in its
discretion, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date
the tax is to be determined equal to the minimum statutory total tax which
could be imposed on the transaction. All such elections shall be made in
writing, signed by the Grantee, and shall be subject to any restrictions or
limitations that the Committee, in its discretion, deems appropriate.
(c) INCENTIVE STOCK OPTIONS. With respect to Shares received by a
Grantee pursuant to the exercise of an Incentive Stock Option, if such
Grantee disposes of any such Shares within (i) two years from the date of
grant of such Option or (ii) one year after the transfer of such shares to
the Grantee, the Company shall have the right to withhold from any salary,
wages or other compensation payable by the Company to the Grantee an amount
sufficient to satisfy federal, state and local tax withholding requirements
attributable to such disqualifying disposition.
(d) LOANS. The Committee may provide for loans, on either a short
term or demand basis, from the Company to a Grantee who is an Employee or
Consultant to permit the payment of taxes required by law.
7.4 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
7.5 DESIGNATION OF BENEFICIARY BY PARTICIPANT
Each Grantee may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Grantee, shall be in a form prescribed by the Committee, and will be effective
only when filed by the Grantee in writing with the Committee during the
Grantee's lifetime. In the absence of any such designation, benefits remaining
unpaid at the Grantee's death shall be paid to the Grantee's estate.
7.6 DEFERRALS
The Committee may permit a Grantee to defer such Grantee's receipt of the
payment of cash or the delivery of Shares that would, otherwise be due to such
Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with respect
to Performance Units, Performance Shares or Other Stock-Based Awards. If any
such deferral election is permitted, the Committee shall, in its discretion,
establish rules and procedures for such payment deferrals to the extent
consistent with the Code.
7.7 AMENDMENT AND TERMINATION
The Board shall have complete power and authority to terminate or amend the
Plan at any time; provided, however, if the Company is a Publicly Held
Corporation, the Board shall not, without the approval of the stockholders of
the Company within the time period required by applicable law, (a) except as
provided in Section 6.5, increase the maximum number of Shares which may be
issued under the Plan pursuant to Section 1.4, (b) amend the requirements as to
the class of Employees eligible to purchase Common Stock under the Plan, (c) to
the extent applicable, increase the maximum limits on Incentive Awards to
Covered Employees as set for compliance with the Performance-Based Exception,
(d) extend the term of the Plan, or (e) to the extent applicable, decrease the
authority granted to the Committee under the Plan in contravention of Rule 16b-3
under the Exchange Act.
No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.
In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications, then
the Plan shall not be amended in such respect without approval of the Company's
stockholders.
7.8 REQUIREMENTS OF LAW
The granting of Incentive Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required. Certificates evidencing shares of Common Stock delivered under this
Plan (to the extent that such shares are so evidenced) may be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules and regulations of the Securities and Exchange Commission, any
securities exchange or transaction reporting system upon which the Common Stock
is then listed or to which it is admitted for quotation, and any applicable
federal or state securities law, if applicable. The Committee may cause a legend
or legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
7.9 RULE 16B-3 SECURITIES LAW COMPLIANCE
With respect to Insiders to the extent applicable, transactions under the
Plan are intended to comply with all applicable conditions of Rule 16b-3 under
the Exchange Act. Any ambiguities or inconsistencies in the construction of an
Incentive Award or the Plan shall be interpreted to give effect to such
intention. However, to the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee in its discretion.
7.10 COMPLIANCE WITH CODE SECTION 162(M)
If the Company is a Publicly Held Corporation, then unless otherwise
determined by the Committee with respect to any particular Incentive Award, it
is intended that the Plan comply fully with the applicable requirements so that
any Incentive Awards subject to Section 162(m) of the Code that are granted to
Covered Employees shall qualify for the Performance-Based Exception. If any
provision of the Plan or an Incentive Agreement would disqualify the Plan or
would not otherwise permit the Plan or Incentive Award to comply with the
Performance-Based Exception as so intended, such provision shall be construed or
deemed to be amended to conform to the requirements of the Performance-Based
Exception to the extent permitted by applicable law and deemed advisable by the
Committee; provided, however, no such construction or amendment shall have an
adverse effect on the prior grant of an Incentive Award or the economic value to
a Grantee of any outstanding Incentive Award.
7.11 SUCCESSORS
All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
7.12 MISCELLANEOUS PROVISIONS
(a) No Employee, Consultant, Outside Director, or other person shall
have any claim or right to be granted an Incentive Award under the Plan.
Neither the Plan, nor any action taken hereunder, shall be construed as
giving any Employee, Consultant, or Outside Director any right to be
retained in the Employment or other service of the Company or any Parent or
Subsidiary.
(b) No Shares of Common Stock shall be issued hereunder unless
counsel for the Company is then reasonably satisfied that such issuance
will be in compliance with federal and state securities laws, if
applicable.
(c) The expenses of the Plan shall be borne by the Company.
(d) By accepting any Incentive Award, each Grantee and each person
claiming by or through him shall be deemed to have indicated his acceptance
of the Plan.
7.13 SEVERABILITY
In the event that any provision of this Plan shall be held illegal, invalid
or unenforceable for any reason, such provision shall be fully severable, but
shall not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
was not included herein.
7.14 GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used herein
shall include the feminine and neuter, and words used in the singular shall
include the plural. Section headings as used herein are inserted solely for
convenience and reference and constitute no part of the interpretation or
construction of the Plan.
7.15 GOVERNING LAW
The Plan shall be interpreted, construed and constructed in accordance with
the laws of the State of Texas without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.
IN WITNESS WHEREOF, WORK International Corporation has caused this Plan to
be duly executed in its name and on its behalf by its duly Authorized Officer.
WORK INTERNATIONAL CORPORATION
By: /S/ B. Garfield French
--------------------------------
B. Garfield French, President
and Chief Executive Officer