EXHIBIT 10.5
DSS 1997 STOCK INCENTIVE PLAN
EFFECTIVE DATE: JANUARY 1, 1997
ARTICLE I
ESTABLISHMENT
The DSS 1997 Stock Incentive Plan ("PLAN") is hereby established by
Diversified Senior Services, Inc. ("COMPANY"). The purpose of the Plan is to
promote the overall financial objectives of the Company and its stockholders by
motivating those persons selected to participate in the Plan to achieve
long-term growth in stockholder equity in the Company and by retaining the
association of those individuals who are instrumental in achieving this growth.
The Plan is adopted effective as of January 1, 1997.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
"AFFILIATE" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other
than the Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.
"AGREEMENT" or "AWARD AGREEMENT" means, individually or collectively, any
agreement entered into pursuant to the Plan pursuant to which an Award is
granted to a Participant.
"AWARD" means a Stock Option, Stock Appreciation Right, Restricted Stock or
Deferred Stock.
"BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of the Company.
"CAUSE" means, for purposes of whether and when a Participant has incurred a
Termination of Employment for Cause, any act or omission which permits the
Company to terminate the written agreement or arrangement between the
Participant and the Company or an Affiliate for Cause as defined in such
agreement or arrangement, or if there is no such agreement or arrangement or the
agreement or arrangement does not define the term "CAUSE," then Cause means,
unless otherwise defined in the Agreement (or Award Agreement) with respect to
the corresponding Award, (a) any act or failure to act deemed to constitute
cause under the Company's established practices, policies or guidelines
applicable to the Participant or (b) the Participant's act or act of omission
which constitutes gross misconduct with respect to the Company or an Affiliate
in any material respect, including, without limitation, an act or act of
omission of a criminal nature, the result of which is detrimental to the
interests of the Company or an Affiliate, or conduct or the omission of conduct
which constitutes a material breach of Participant's duty of loyalty to the
Company or an Affiliate.
"CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE" have the meanings set forth in
Sections 11.2 and 11.3, respectively.
"CODE" or "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, final Treasury Regulations thereunder and any subsequent Internal
Revenue Code.
"COMMISSION" means the Securities and Exchange Commission or any successor
agency.
"COMMITTEE" means the person or persons appointed by the Board of Directors to
administer the Plan, as further described in the Plan.
"COMMON STOCK" means the shares of the Common Stock, no par value, whether
presently or hereafter issued, and any other stock or security resulting from
adjustment thereof as described hereinafter or the common stock of any successor
to the Company which is designated for the purpose of the Plan.
"COMPANY" means Diversified Senior Services, Inc., a North Carolina corporation,
and includes any successor or assignee corporation or corporations into which
the Company may be merged, changed or consolidated; any corporation for whose
securities the securities of the Company are exchanged; and any assignee of or
successor to substantially all of the assets of the Company.
"DEFERRED STOCK" means an award made pursuant to Article IX.
"DISABILITY" means a mental or physical illness that entitles the Participant to
receive benefits under the long term disability plan of the Company or an
Affiliate, or if the Participant is not covered by such a plan or the
Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability will not qualify under this Plan if
it is the result of (i) a willfully self-inflicted injury or willfully
self-induced sickness; or (ii) an injury or disease contracted, suffered, or
incurred, while participating in a criminal offense. The determination of
Disability will be made by the Committee. The determination of Disability for
purposes of this Plan will not be construed to be an admission of disability for
any other purpose.
"DISINTERESTED PERSON" has the meaning set forth in Rule 16b-3(d)(3), or any
successor definition adopted by the Commission, provided the person is also an
"OUTSIDE DIRECTOR" under Section 162(m) of the Code.
"EFFECTIVE DATE" means January 1, 1997.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
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"FAIR MARKET VALUE" means the value determined on the basis of the good faith
determination of the Committee, without regard to whether the Common Stock is
restricted or represents a minority interest, pursuant to the applicable method
described below:
(a) if the Common Stock is listed on a national securities exchange or
quoted on the NASDAQ National Market ("NASDAQ"), the closing price of the
Common Stock on the relevant date, as reported by the principal national
exchange on which such shares are traded (in the case of an exchange) or by
the NASDAQ, as the case may be;
(b) if the Common Stock is not listed on a national securities exchange or
quoted on the NASDAQ, but is actively traded in the over-the-counter
market, the average of the closing bid and asked prices for the Common
Stock on the relevant date, or the most recent preceding date for which
such quotations are reported; and
(c) if, on the relevant date, the Common Stock is not publicly traded or
reported as described in (a) or (b), the value determined in good faith by
the Committee.
"GRANT DATE" means the date that as of which an Award is granted pursuant to the
Plan.
"INCENTIVE STOCK OPTION" means any Stock Option intended to be and designated as
an "INCENTIVE STOCK OPTION" within the meaning of Section 422 of the Code.
"NON-QUALIFIED STOCK OPTION" means an Option to purchase Common Stock in the
Company granted under the Plan other than an incentive stock option within the
meaning of Section 422 of the Code.
"OPTION PERIOD" means the period during which the Option will be exercisable in
accordance with the Agreement and Article VI.
"OPTION PRICE" means the price at which the Common Stock may be purchased under
an Option as provided in Section 6.3.
"PARTICIPANT" means a person who satisfies the eligibility conditions of Article
V and to whom an Award has been granted by the Committee under the Plan, and if
a Representative is appointed for a Participant or a former spouse becomes a
Representative, then the term "PARTICIPANT" means such appointed Representative,
successor Representative, or spouse as the case may be. The term also includes a
trust for the benefit of the Participant, the Participant's parents, spouse or
descendants, or a custodian under a uniform gifts to minors act or similar
statute for the benefit of the Participant's descendants, to the extent
permitted by the Committee and not inconsistent with the Rule 16b-3.
Notwithstanding the foregoing, the term "TERMINATION OF EMPLOYMENT" means the
Termination of Employment of the Participant.
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"PLAN" means the DSS 1997 Stock Incentive Plan, as herein set forth and as may
be amended from time to time.
"REPRESENTATIVE" means (a) the person or entity acting as the executor or
administrator of a Participant's estate pursuant to the last will and testament
of a Participant or pursuant to the laws of the jurisdiction in which the
Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been permissibly transferred; provided that
only one of the foregoing will be the Representative at any point in time as
determined under applicable law and recognized by the Committee.
"RESTRICTED STOCK" means an award under Article VIII.
"RETIREMENT" means the Participant's Termination of Employment after attaining
either the normal retirement age or the early retirement age as defined in the
principal (as determined by the Committee) tax-qualified plan of the Company or
an Affiliate, if the Participant is covered by such plan, and if the Participant
is not covered by such a plan, then age 65, or age 55 with the accrual of 10
years of service.
"RULE 16B-3" means Rule 16b-3, as promulgated under the Exchange Act, as amended
from time to time, or any successor thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"STOCK APPRECIATION RIGHT" means a right granted under Article VII.
"STOCK OPTION" or "OPTION" means an option granted under Article VI.
"TERMINATION OF EMPLOYMENT" means the occurrence of any act or event, whether
pursuant to an employment agreement or otherwise, that actually or effectively
causes or results in the person's ceasing, for whatever reason, to be an
officer, director, employee, consultant or advisor of the Company or of any
Affiliate, or to be an officer, director, employee, consultant or advisor of any
entity that provides services to the Company or an Affiliate, including, without
limitation, death, Disability, dismissal, severance at the election of the
Participant, Retirement, or severance as a result of the discontinuance,
liquidation, sale or transfer by the Company or its Affiliates of all businesses
owned or operated by the Company or its Affiliates. With respect to any person
who is not an employee of the Company or an Affiliate, the Agreement will
establish what act or event will constitute a Termination of Employment for
purposes of the Plan. A Termination of Employment will occur for an employee who
is employed by an Affiliate if the Affiliate ceases to be an Affiliate and the
Participant does not immediately thereafter become an employee of the Company or
an Affiliate.
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In addition, certain other terms used herein have definitions given to them in
the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 COMMITTEE STRUCTURE AND AUTHORITY. The Plan will be administered by the
Committee. After the Company has an effective registration statement under the
Securities Act for the Common Stock, the Committee, except as provided herein,
will be comprised of such number of Disinterested Persons (and no other persons)
as is required for application of Rule 16b-3. In the absence of appointment of
the Committee the entire Board of Directors will constitute the Committee. A
majority of the Committee will constitute a quorum at any meeting thereof
(including telephone conference) and the acts of a majority of the members
present, or acts approved in writing by a majority of the entire Committee
without a meeting, will be the acts of the Committee for purposes of this Plan.
The Committee may authorize any one or more of its members or an officer of the
Company to execute and deliver documents on behalf of the Committee. A member of
the Committee will not exercise any discretion respecting himself or herself
under the Plan. The Board will have the authority to remove, replace or fill any
vacancy of any member of the Committee upon notice to the Committee and the
affected member. Any member of the Committee may resign upon notice to the
Board. The Committee may allocate among one or more of its members, or may
delegate to one or more of its agents, such duties and responsibilities as it
determines.
Among other things, the Committee will have the authority, subject to the terms
of the Plan:
(a) to select those persons to whom Awards may be granted from time to
time;
(b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Restricted Stock and Deferred Stock or any combination
thereof are to be granted hereunder;
(c) to determine the number of shares of Common Stock to be covered by each
Award granted hereunder;
(d) to determine the terms and conditions of any Award granted hereunder
(including, without limitation, the Option Price, the Option Period, any
exercise restriction or limitation and any exercise acceleration,
forfeiture or waiver regarding any Award and the shares of Common Stock
relating thereto);
(e) to adjust the terms and conditions, at any time or from time to time,
of any Award, subject to the limitations of Section 12.1;
(f) to determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award will be deferred;
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(g) to determine under what circumstances an Award may be settled in cash
or Common Stock;
(h) to provide for the forms of Agreement to be utilized in connection with
the Plan;
(i) to determine whether a Participant has a Disability or a Retirement;
(j) to determine what securities law requirements are applicable to the
Plan, Awards, and the issuance of shares of Common Stock and to require of
a Participant that appropriate action be taken with respect to such
requirements;
(k) to cancel, with the consent of the Participant or as otherwise provided
in the Plan or an Agreement, outstanding Awards;
(l) to require as a condition of the exercise of an Award or the issuance
or transfer of a certificate of Common Stock, the withholding from a
Participant of the amount of any federal, state or local taxes as may be
necessary in order for the Company or any other employer to obtain a
deduction or as may be otherwise required by law;
(m) to determine whether and with what effect a Participant has incurred a
Termination of Employment;
(n) to determine whether the Company or any other person has a right or
obligation to purchase Common Stock from a Participant and, if so, the
terms and conditions on which such Common Stock is to be purchased;
(o) to determine the restrictions or limitations on the transfer of Common
Stock;
(p) to determine whether an Award is to be adjusted, modified or purchased,
or is to become fully exercisable, under the Plan or the terms of an
Agreement;
(q) to determine the permissible methods of Award exercise and payment,
including cashless exercise arrangements;
(r) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan; and
(s) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.
The Committee will have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it may,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan. The Committee's policies and
procedures may differ with respect to Awards granted at different times.
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Any determination made by the Committee pursuant to the provisions of the Plan
will be made in its sole discretion, and in the case of any determination
relating to an Award, may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter. All decisions made by the Committee pursuant to the provisions
of the Plan will be final and binding on all persons, including the Company and
Participants. No determination will be subject to DE NOVO review if challenged
in court.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 NUMBER OF SHARES. Subject to the adjustment under Section 4.6, the total
number of shares of Common Stock reserved and available for distribution
pursuant to Awards under the Plan will be 500,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares.
4.2 RELEASE OF SHARES Subject to Section 7.3(f), if any shares of Common Stock
that have been optioned cease to be subject to an Award, if any shares of Common
Stock that are subject to any Award are forfeited or if any Award otherwise
terminates without issuance of shares of Common Stock being made to the
Participant, such shares, in the discretion of the Committee, may again be
available for distribution in connection with Awards under the Plan.
4.3 RESTRICTIONS ON SHARES. Shares of Common Stock issued upon exercise of an
Award will be subject to the terms and conditions specified herein and to such
other terms, conditions and restrictions as the Committee in its discretion may
determine or provide in the Award Agreement. The Company will not be required to
issue or deliver any certificates for shares of Common Stock, cash or other
property prior to (i) the listing of such shares on any stock exchange (or other
public market) on which the Common Stock may then be listed (or regularly
traded), (ii) the completion of any registration or qualification of such shares
under federal or state law, or any ruling or regulation of any government body
which the Committee determines to be necessary or advisable, and (iii) the
satisfaction of any applicable withholding obligation in order for the Company
or an Affiliate to obtain a deduction with respect to the exercise of an Award.
The Company may cause any certificate for any share of Common Stock to be
delivered to be properly marked with a legend or other notation reflecting the
limitations on transfer of such Common Stock as provided in this Plan or as the
Committee may otherwise require. The Committee may require any person exercising
an Award to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
of Common Stock in compliance with applicable law or otherwise. Fractional
shares will not be delivered, but will be rounded to the next lower whole number
of shares.
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4.4 STOCKHOLDER RIGHTS. No person will have any rights of a stockholder as to
shares of Common Stock subject to an Award until, after proper exercise of the
Award or other action required, such shares have been recorded on the Company's
official stockholder records as having been issued or transferred. Upon exercise
of the Award or any portion thereof, the Company will have thirty (30) days in
which to issue the shares, and the Participant will not be treated as a
stockholder for any purpose whatsoever prior to such issuance. No adjustment
will be made for cash dividends or other rights for which the record date is
prior to the date such shares are recorded as issued or transferred in the
Company's official stockholder records, except as provided herein or in an
Agreement.
4.5 BEST EFFORTS TO REGISTER. The Company will register under the Securities Act
the Common Stock delivered or deliverable pursuant to Awards on Commission Form
S-8 if available to the Company for this purpose (or any successor or alternate
form that is substantially similar to that form to the extent available to
effect such registration), in accordance with the rules and regulations
governing such forms, as soon as the Committee, in its sole discretion, deems
such registration appropriate. The Company will use its best efforts to cause
the registration statement to become effective and will file such supplements
and amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the Option Period of the last Option outstanding, (b) the date
the Company is no longer a reporting company under the Exchange Act and (c) the
date all Participants have disposed of all shares delivered pursuant to any
Award.
4.6 ANTI-DILUTION. In the event of any Company stock dividend, stock split,
combination or exchange of shares, recapitalization or other change in the
capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets (measured on either a
stand-alone or consolidated basis), reorganization, rights offering, a partial
or complete liquidation, or any other corporate transaction, Company share
offering or event involving the Company and having an effect similar to any of
the foregoing, then the Committee will adjust or substitute, as the case may be,
the number of shares of Common Stock available for Awards under the Plan, the
number of shares of Common Stock covered by outstanding Awards, the exercise
price per share of outstanding Awards, and any other characteristics or terms of
the Awards as the Committee deems necessary or appropriate to reflect equitably
the effects of such changes to the Participants; provided, however, that any
fractional shares resulting from such adjustment will be eliminated by rounding
to the next lower whole number of shares with appropriate payment for such
fractional share as will reasonably be determined by the Committee.
ARTICLE V
ELIGIBILITY
5.1 ELIGIBILITY. Except as herein provided, the persons who will be eligible to
participate in the Plan and be granted Awards will be those persons who are
officers, directors, employees, consultants or advisors of the Company or any
Affiliate including, without limitation, the
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officers, directors and employeesof any other entity which provides services to
the Company or any Affiliate, who are in a position, in the opinion of the
Committee, to make contributions to the growth, management, protection and
success of the Company and its Affiliates. Of those persons described in the
preceding sentence, the Committee may, from time to time, select persons to be
granted Awards and determine the terms and conditions with respect thereto. In
making any such selection and in determining the form of the Award, the
Committee may give consideration to the functions and responsibilities of the
person's contributions to the Company and its Affiliates, the value of the
individual's service to the Company and its Affiliates and such other factors
deemed relevant by the Committee. The Committee may designate in writing any
person who is not eligible to participate in the Plan if such person would
otherwise be eligible to participate in the Plan.
ARTICLE VI
STOCK OPTIONS
6.1 GENERAL. The Committee will have authority to grant Options under the Plan
at any time or from time to time. Stock Options may be granted alone or in
addition to other Awards and may be either Incentive Stock Options or
Non-Qualified Stock Options. An Option will entitle the Participant to receive
shares of Common Stock upon exercise of such Option, subject to the
Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement (the terms and
provisions of which may differ from other Agreements) including without
limitation, payment of the Option Price.
6.2 GRANT AND EXERCISE. The grant of a Stock Option will occur as of the date
the Committee determines. Each Option granted under this Plan will be evidenced
by an Agreement, in a form approved by the Committee, which will embody the
terms and conditions of such Option and which will be subject to the express
terms and conditions set forth in the Plan. Such Agreement will become effective
upon execution by the Participant. Only a person who is a common-law employee of
the Company, any parent corporation of the Company or a subsidiary of the
Company (as such terms are defined in Section 424 of the Code) on the date of
grant will be eligible to be granted an Option which is intended to be and is an
Incentive Stock Option. To the extent that any Stock Option is not designated as
an Incentive Stock Option or even if so designated does not qualify as an
Incentive Stock Option, it will constitute a Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options will be interpreted, amended or altered, nor
will any discretion or authority granted under the Plan be exercised, so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
Participant affected, to disqualify any Incentive Stock Option under such
Section 422.
6.3 TERMS AND CONDITIONS. Stock Options will be subject to such terms and
conditions as will be determined by the Committee, including the following:
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(a) OPTION PERIOD. The Option Period of each Stock Option will be fixed by
the Committee; provided that no Stock Option will be exercisable more than
10 years after the date the Stock Option is granted. In the case of an
Incentive Stock Option granted to an individual who owns more than 10% of
the combined voting power of all classes of stock of the Company, a
corporation which is a parent corporation of the Company or any subsidiary
of the Company (each as defined in Section 424 of the Code), the Option
Period will not exceed five (5) years from the date of grant. No Option
which is intended to be an Incentive Stock Option will be granted more than
10 years from the date the Plan is adopted by the Company or the date the
Plan is approved by the stockholders of the Company, whichever is earlier.
(b) OPTION PRICE. The Option Price per share of the Common Stock
purchasable under an Option will be determined by the Committee; provided,
however, that the Option Price per share for any Option intended to qualify
as an Incentive Stock Option will be not less than the Fair Market Value
per share on the date the Option is granted. If such Option is intended to
qualify as an Incentive Stock Option and is granted to an individual who
owns or who is deemed to own stock possessing more than 10% of the combined
voting power of all classes of stock of the Company, a corporation which is
a parent corporation of the Company or any subsidiary of the Company (each
as defined in Section 424 of the Code), the Option Price per share will not
be less than 110% of such Fair Market Value per share.
(c) EXERCISABILITY. Subject to Section 11.1, Stock Options will be
exercisable at such time or times and subject to such terms and conditions
as will be determined by the Committee. If the Committee provides that any
Stock Option is exercisable only in installments, the Committee may at any
time waive such installment exercise provisions, in whole or in part. In
addition, the Committee may at any time accelerate the exercisability of
any Stock Option.
(d) METHOD OF EXERCISE. Subject to the provisions of this Article VI, a
Participant may exercise Stock Options, in whole or in part, at any time
during the Option Period by the Participant's giving written notice of
exercise on a form provided by the Committee (if available) to the Company
specifying the number of shares of Common Stock subject to the Stock Option
to be purchased. Such notice will be accompanied by payment in full of the
purchase price by cash or check or such other form of payment as the
Company may accept. If approved by the Committee, payment in full or in
part may also be made (i) by delivering Common Stock already owned by the
Participant having a total Fair Market Value on the date of such delivery
equal to the Option Price; (ii) by the execution and delivery of a note or
other evidence of indebtedness (and any security agreement thereunder)
satisfactory to the Committee and permitted in accordance with Section
6.3(e); (iii) by authorizing the Company to retain shares of Common Stock
which would otherwise be issuable upon exercise of the Option having a
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total Fair Market Value on the date of delivery equal to the Option Price;
(iv) by the delivery of cash by a broker-dealer to whom the Participant has
submitted a notice of exercise (in accordance with Part 220, Chapter II,
Title 12 of the Code of Federal Regulations, so-called "CASHLESS"
exercise); or (v) by any combination of the foregoing. If payment of the
Option Price of a Non-Qualified Stock Option is made in whole or in part in
the form of Restricted Stock or Deferred Stock, the number of shares of
Common Stock to be received upon such exercise that is equal to the number
of shares of Restricted Stock or Deferred Stock used for payment of the
Option Price will be subject to the same forfeiture restrictions or
deferral limitations to which such Restricted Stock or Deferred Stock was
subject, unless otherwise determined by the Committee. In the case of an
Incentive Stock Option, the right to make a payment in the form of already
owned shares of Common Stock of the same class as the Common Stock subject
to the Stock Option may be authorized only at the time the Stock Option is
granted. No shares of Common Stock will be issued until full payment
therefor has been made. Subject to any forfeiture restrictions or deferral
limitations that may apply if a Stock Option is exercised using Restricted
Stock or Deferred Stock, a Participant will have all of the rights of a
stockholder of the Company holding the class of Common Stock that is
subject to such Stock Option (including, if applicable, the right to vote
the shares and the right to receive dividends), when the Participant has
given written notice of exercise, has paid in full for such shares, and
such shares have been recorded on the Company's official stockholder
records as having been issued or transferred.
(e) COMPANY LOAN OR GUARANTEE. Upon the exercise of any Option and subject
to the pertinent Agreement and the discretion of the Committee, the Company
may at the request of the Participant:
(i) lend to the Participant, with recourse, an amount equal to such
portion of the Option Price as the Committee may determine; or
(ii) guarantee a loan obtained by the Participant from a third-party
for the purpose of tendering the Option Price.
The terms and conditions of any loan or guarantee, including the term,
interest rate, and any security interest thereunder, will be determined by
the Committee, except that no extension of credit or guarantee will
obligate the Company for an amount to exceed the lesser of the aggregate
Fair Market Value per share of the Common Stock on the date of exercise,
less the par value of the shares of Common Stock to be purchased upon the
exercise of the Award, or the amount permitted under applicable laws or the
regulations and rules of the Federal Reserve Board and any other
governmental agency having jurisdiction.
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(f) NON-TRANSFERABILITY OF OPTIONS. Except as provided herein or in an
Agreement, no Stock Option or interest therein will be transferable by the
Participant other than by will or by the laws of descent and distribution,
and all Stock Options will be exercisable during the Participant's lifetime
only by the Participant. If the Committee adopts Securities Exchange Act
Release 34-28869 of the Securities Exchange Commission the Committee may
permit an Award to be transferred pursuant to a domestic relations order
which would be a "QUALIFIED DOMESTIC RELATIONS ORDER" as defined in Section
414 of the Code if such section applied to the Award, but only to the
extent consistent with an Award's intended status as an Incentive Stock
Option.
6.4 TERMINATION BY REASON OF DEATH. Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of Employment
due to death, any unexpired and unexercised Stock Option held by such
Participant will thereafter be fully exercisable for a period of 90 days
following the date of the appointment of a Representative (or such other period
or no period as the Committee may specify) or until the expiration of the Option
Period, whichever period is the shorter.
6.5 TERMINATION BY REASON OF DISABILITY. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Stock Option
held by such Participant will thereafter be fully exercisable by the Participant
for the period of ninety (90) days (or such other period or no period as the
Committee may specify) immediately following the date of such Termination of
Employment or until the expiration of the Option Period, whichever period is
shorter, and the Participant's death at any time following such Termination of
Employment due to Disability will not affect the foregoing. In the event of
Termination of Employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a NonQualified Stock Option.
6.6 OTHER TERMINATION. Unless otherwise provided in an Agreement or determined
by the Committee, if a Participant incurs a Termination of Employment due to
Retirement, or the Termination of Employment is involuntary on the part of the
Participant (but is not due to death or Disability or with Cause), any Stock
Option held by such Participant will thereupon terminate, except that such Stock
Option, to the extent then exercisable, may be exercised for the lesser of the
90-day period commencing with the date of such Termination of Employment or
until the expiration of the Option Period. If the Participant incurs a
Termination of Employment which is either (a) voluntary on the part of the
Participant (and is not due to Retirement) or (b) with Cause, the Option will
terminate immediately. The death or Disability of a Participant after a
Termination of Employment otherwise provided herein will not extend the time
permitted to exercise an Option.
6.7 CASHING OUT OF OPTION. Unless otherwise provided in the Agreement, on
receipt of written notice of exercise, the Committee may elect to cash out all
or part of the portion of any Stock Option to be exercised by paying the
Participant an amount, in cash or Common Stock,
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equal to the excess of the FairMarket Value of the Common Stock that is subject
to the Option over the Option Price times the number of shares of Common Stock
subject to the Option on the effective date of such cash out. Cash outs relating
to Options held by Participants who are actually or potentially subject to
Section 16(b) of the Exchange Act will comply with the "WINDOW PERIOD"
provisions of Rule 16b-3, to the extent applicable, and, in the case of cash
outs of Non-Qualified Stock Options held by such Participants, the Committee may
determine Fair Market Value under the pricing rule set forth in Section 7.3(b).
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 GENERAL. The Committee will have authority to grant Stock Appreciation
Rights under the Plan at any time or from time to time. Subject to the
Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right will entitle the Participant to surrender to the Company the
Stock Appreciation Right and to be paid therefor in shares of the Common Stock,
cash or a combination thereof as herein provided, the amount described in
Section 7.3(b).
7.2 GRANT. Stock Appreciation Rights may be granted in conjunction with all or
part of any Stock Option granted under the Plan, in which case the exercise of
the Stock Appreciation Right will require the cancellation of a corresponding
portion of the Stock Option, and the exercise of a Stock Option will result in
the cancellation of a corresponding portion of the Stock Appreciation Right. In
the case of a Non-Qualified Stock Option, such rights may be granted either at
or after the time of grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right may also be granted on a stand alone basis.
The grant of a Stock Appreciation Right will occur as of the date the Committee
determines. Each Stock Appreciation Right granted under this Plan will be
evidenced by an Agreement, which will embody the terms and conditions of such
Stock Appreciation Right and which will be subject to the terms and conditions
set forth in the Plan.
7.3 TERMS AND CONDITIONS. Stock Appreciation Rights will be subject to such
terms and conditions as will be determined by the Committee, including the
following:
(a) PERIOD AND EXERCISE. The term of a Stock Appreciation Right will be
established by the Committee. If granted in conjunction with a Stock
Option, the Stock Appreciation Right will have a term which is the same as
the Option Period and will be exercisable only at such time or times and to
the extent the related Stock Options would be exercisable in accordance
with the provisions of Article VI. A Stock Appreciation Right which is
granted on a stand alone basis will be for such period and will be
exercisable at such times and to the extent provided in an Agreement. Stock
Appreciation Rights will be exercised by the Participant's giving written
notice of exercise on a form provided by the Committee (if available) to
the Company specifying the portion of the Stock Appreciation Right to be
exercised.
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(b) AMOUNT. Upon the exercise of a Stock Appreciation Right granted in
conjunction with a Stock Option, a Participant will be entitled to receive
an amount in cash, shares of Common Stock or both as determined by the
Committee or as otherwise permitted in an Agreement equal in value to the
excess of the Fair Market Value per share of Common Stock over the Option
Price per share of Common Stock specified in the related Agreement
multiplied by the number of shares in respect of which the Stock
Appreciation Right is exercised. In the case of a Stock Appreciation Right
granted on a stand alone basis, the Agreement will specify the value to be
used in lieu of the Option Price per share of Common Stock. The aggregate
Fair Market Value per share of the Common Stock will be determined as of
the date of exercise of such Stock Appreciation Right.
(c) SPECIAL RULES. In the case of Stock Appreciation Rights relating to
Stock Options held by Participants who are actually or potentially subject
to Section 16(b) of the Exchange Act:
(i) The Committee may require that such Stock Appreciation Rights be
exercised only in accordance with the applicable "WINDOW PERIOD"
provisions of Rule 16b-3;
(ii) The Committee may provide that the amount to be paid upon
exercise of such Stock Appreciation Rights (other than those relating
to Incentive Stock Options) during a Rule 16b-3 "WINDOW PERIOD" will
be based on the highest mean sales price of the Common Stock on the
principal exchange on which the Common Stock is traded, NASDAQ or
other relevant market for determining value on any day during such
"WINDOW PERIOD"; and
(iii) No Stock Appreciation Right will be exercisable during the first
six months of its term, except that this limitation will not apply in
the event of death or Disability of the Participant prior to the
expiration of the six-month period.
(d) NON-TRANSFERABILITY OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights will be transferable only when and to the extent that a Stock Option
would be transferable under the Plan unless otherwise provided in an
Agreement.
(e) TERMINATION. A Stock Appreciation Right will terminate at such time as
a Stock Option would terminate under the Plan, unless otherwise provided in
an Agreement.
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(f) EFFECT ON SHARES UNDER THE PLAN. Upon the exercise of a Stock
Appreciation Right, the Stock Option or part thereof to which such Stock
Appreciation Right is related will be deemed to have been exercised for the
purpose of the limitation set forth in Section 4.2 on the number of shares
of Common Stock to be issued under the Plan, but only to the extent of the
number of shares of Common Stock covered by the Stock Appreciation Right at
the time of exercise based on the value of the Stock Appreciation Right at
such time.
(g) INCENTIVE STOCK OPTION. A Stock Appreciation Right granted in tandem
with an Incentive Stock Option will not be exercisable unless the Fair
Market Value of the Common Stock on the date of exercise exceeds the Option
Price. In no event will any amount paid pursuant to the Stock Appreciation
Right exceed the difference between the Fair Market Value on the date of
exercise and the Option Price.
ARTICLE VIII
RESTRICTED STOCK
8.1 GENERAL. The Committee will have authority to grant Restricted Stock under
the Plan at any time or from time to time. Shares of Restricted Stock may be
awarded either alone or in addition to other Awards granted under the Plan. The
Committee will determine the persons to whom and the time or times at which
grants of Restricted Stock will be awarded, the number of shares of Restricted
Stock to be awarded to any Participant, the time or times within which such
Awards may be subject to forfeiture, and any other terms and conditions of the
Awards. Each Award will be confirmed by, and be subject to the terms of, an
Agreement. The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals by the Participant or by the Company
or an Affiliate (including a division or department of the Company or an
Affiliate) for or within which the Participant is primarily employed or upon
such other factors or criteria as the Committee may determine. The provisions of
Restricted Stock Awards need not be the same with respect to any Participant.
8.2 AWARDS AND CERTIFICATES. Notwithstanding the limitations on issuance of
shares of Common Stock otherwise provided in the Plan, each Participant
receiving an Award of Restricted Stock will be issued a certificate in respect
of such shares of Restricted Stock. Such certificate will be registered in the
name of such Participant and will bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award as determined by
the Committee. The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions thereon have
lapsed and that, as a condition of any Award of Restricted Stock, the
Participant must have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.
8.3 TERMS AND CONDITIONS. Shares of Restricted Stock will be subject to the
following terms and conditions:
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(a) LIMITATIONS ON TRANSFERABILITY. Subject to the provisions of the Plan
and the Agreement, during a period set by the Committee, commencing with
the date of such Award (the "RESTRICTION PERIOD"), the Participant will not
be permitted to sell, assign, transfer, pledge or otherwise encumber any
interest in shares of Restricted Stock.
(b) RIGHTS. Except as provided in Section 8.3(a), the Participant will
have, with respect to the shares of Restricted Stock, all of the rights of
a stockholder of the Company holding the class of Common Stock that is the
subject of the Restricted Stock, including, if applicable, the right to
vote the shares and the right to receive any cash dividends. Unless
otherwise determined by the Committee and subject to the Plan, cash
dividends on the class of Common Stock that is the subject of the
Restricted Stock will be automatically deferred and reinvested in
additional Restricted Stock, and dividends on the class of Common Stock
that is the subject of the Restricted Stock payable in Common Stock will be
paid in the form of Restricted Stock of the same class as the Common Stock
on which such dividend was paid.
(c) ACCELERATION. Based on service, performance by the Participant or by
the Company or the Affiliate, including any division or department for
which the Participant is employed, or such other factors or criteria as the
Committee may determine, the Committee may provide for the lapse of
restrictions in installments and may accelerate the vesting of all or any
part of any Award and waive the restrictions for all or any part of such
Award.
(d) FORFEITURE. Unless otherwise provided in an Agreement or determined by
the Committee, if the Participant incurs a Termination of Employment during
the Restriction Period due to death or Disability, the restrictions will
lapse and the Participant will be fully vested in the Restricted Stock.
Except to the extent otherwise provided in the applicable Agreement and the
Plan, upon a Participant's Termination of Employment for any reason during
the Restriction Period other than death or Disability, all shares of
Restricted Stock still subject to restriction will be forfeited by the
Participant, except the Committee will have the discretion to waive in
whole or in part any or all remaining restrictions with respect to any or
all of such Participant's shares of Restricted Stock.
(e) DELIVERY. If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
unlegended certificates for such shares will be delivered to the
Participant.
(f) ELECTION. A Participant may elect to further defer receipt of the
Restricted Stock for a specified period or until a specified event, subject
in each case to the Committee's approval and to such terms as are
determined by the Committee. Subject to any exceptions adopted by the
Committee, such election must be made one year prior to completion of the
Restriction Period.
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ARTICLE IX
DEFERRED STOCK
9.1 GENERAL. The Committee will have authority to grant Deferred Stock under the
Plan at any time or from time to time. Shares of Deferred Stock may be awarded
either alone or in addition to other Awards granted under the Plan. The
Committee will determine the persons to whom and the time or times at which
Deferred Stock will be awarded, the number of shares of Deferred Stock to be
awarded to any Participant, the duration of the period (the "DEFERRAL PERIOD")
prior to which the Common Stock will be delivered, and the conditions under
which receipt of the Common Stock will be deferred and any other terms and
conditions of the Awards. Each Award will be confirmed by, and be subject to the
terms of, an Agreement. The Committee may condition the grant of Deferred Stock
upon the attainment of specified performance goals by the Participant or by the
Company or an Affiliate, including a division or department of the Company or an
Affiliate for or within which the Participant is primarily employed, or upon
such other factors or criteria as the Committee may determine. The provisions of
Deferred Stock Awards need not be the same with respect to any Participant.
9.2 TERMS AND CONDITIONS. Deferred Stock Awards will be subject to the following
terms and conditions:
(a) LIMITATIONS ON TRANSFERABILITY. Subject to the provisions of the Plan
and the Agreement, Deferred Stock Awards, or any interest therein, may not
be sold, assigned, transferred, pledged or otherwise encumbered during the
Deferral Period. At the expiration of the Deferral Period (or Elective
Deferral Period as defined in Section 9.2(e), where applicable), the
Committee may elect to deliver Common Stock, cash equal to the Fair Market
Value of such Common Stock or a combination of cash and Common Stock, to
the Participant for the shares covered by the Deferred Stock Award.
(b) RIGHTS. Unless otherwise determined by the Committee and subject to the
Plan, cash dividends on the Common Stock that is the subject of the
Deferred Stock Award will be automatically deferred and reinvested in
additional Deferred Stock, and dividends on the Common Stock that is the
subject of the Deferred Stock Award payable in Common Stock will be paid in
the form of Deferred Stock of the same class as the Common Stock on which
such dividend was paid.
(c) ACCELERATION. Based on service, performance by the Participant or by
the Company or the Affiliate, including any division or department for
which the Participant is employed, or such other factors or criteria as the
Committee may determine, the Committee may provide for the lapse of
deferral limitations in installments and may accelerate the vesting of all
or any part of any Award and waive the deferral limitations for all or any
part of such Award.
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(d) FORFEITURE. Unless otherwise provided in an Agreement or determined by
the Committee, if the Participant incurs a Termination of Employment during
the Deferral Period due to death or Disability, the restrictions will lapse
and the Participant will be fully vested in the Deferred Stock. Unless
otherwise provided in an Agreement or determined by the Committee, upon a
Participant's Termination of Employment for any reason during the Deferral
Period other than death or Disability, the rights to the shares still
covered by the Award will be forfeited by the Participant, except the
Committee will have the discretion to waive in whole or in part any or all
remaining deferral limitations with respect to any or all of such
Participant's Deferred Stock.
(e) ELECTION. A Participant may elect to further defer receipt of the
Deferred Stock payable under an Award (or an installment of an Award) for a
specified period or until a specified event, subject in each case to the
Committee's approval and to such terms as are determined by the Committee.
Subject to any exceptions adopted by the Committee, such election must be
made at one year prior to completion of the Deferral Period for the Award
(or of the applicable installment thereof).
ARTICLE X
PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
10.1 TRANSFER OF SHARES. Subject to the restriction in any Agreement or any
other transfer restriction contained in any agreement between a Participant and
the Company, a Participant may at any time make a transfer of shares of Common
Stock received pursuant to the exercise of an Award to his parents, spouse or
descendants or to any trust for the benefit of the foregoing or to a custodian
under a uniform gifts to minors act or similar statute for the benefit of any of
the Participant's descendants. Any transfer of shares received pursuant to the
exercise of an Award will not be permitted or valid unless and until the
transferee agrees to be bound by the provisions of the Plan, and any provision
respecting Common Stock under the Agreement, provided that "TERMINATION OF
EMPLOYMENT" will continue to refer to the Termination of Employment of the
Participant.
10.2 LIMITED TRANSFER DURING OFFERING. If there is an effective registration
statement under the Securities Act pursuant to which shares of Common Stock are
offered for sale in an underwritten offering, a Participant may not, during the
period requested by the underwriters managing the registered public offering,
effect any public sale or distribution of shares received directly or indirectly
pursuant to an exercise of an Award.
10.3 COMMITTEE DISCRETION. The Committee may in its sole discretion include in
any Agreement an obligation that the Company purchase a Participant's shares of
Common Stock received upon the exercise of an Award (including the purchase of
any unexercised Awards
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which have not expired), or may obligate a Participant to sell shares of Common
Stock to the Company upon such terms and conditions as the Committee may
determine and set forth in an Agreement. The provisions of this Article X will
be construed by the Committee in its sole discretion, and will be subject to
such other terms and conditions as the Committee may from time to time
determine. Notwithstanding any provision herein to the contrary, the Company may
upon determination by the Committee assign its right to purchase shares of
Common Stock under this Article X, whereupon the assignee of such right will
have all the rights, duties and obligations of the Company with respect to
purchase of the shares of Common Stock.
10.4 NO COMPANY OBLIGATION. None of the Company, an Affiliate, or the Committee
will have any duty or obligation to affirmatively disclose to a record or
beneficial holder of Common Stock or an Award, and such holder will have no
right to be advised of, any material information regarding the Company or any
Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Award or the Company's purchase of Common Stock or an Award from
such holder in accordance with the terms hereof.
ARTICLE XI
CHANGE IN CONTROL PROVISIONS
11.1 IMPACT OF EVENT. An Agreement may provide that in the event of a Change in
Control (as defined in Section 11.2):
(a) Any Stock Appreciation Rights and Stock Options outstanding as of the
date such Change in Control and not then exercisable will become fully
exercisable to the full extent of the original grant.
(b) The restrictions and deferral limitations applicable to any Restricted
Stock and Deferred Stock will lapse, and such Restricted Stock and Deferred
Stock will become free of all restrictions and become fully vested and
transferable to the full extent of the original grant.
(c) After the Company has an effective registration under the Securities
Act (other than on a Form S-8), a Participant will have the right, whether
or not the Award is fully exercisable or may be otherwise realized by the
Participant, by giving notice during the 60-day period from and after a
Change in Control to the Company, to elect to surrender all or part of the
Award to the Company and to receive cash, within 30 days of such notice, in
an amount equal to the amount by which the "CHANGE IN CONTROL PRICE" (as
defined in Section 11.3) per share of Common Stock on the date of such
election exceeds the amount which the Participant must pay to exercise the
Award per share of Common Stock under the Award (the "SPREAD") multiplied
by the number of shares of Common Stock granted under the Award as to which
the right granted under this Section 11.1 have been exercised; provided,
however, that if the end of such 60-day period
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from and after a Change in Control is within six months of the date of
grant of the Award held by a Participant (except a Participant who has died
during such six month period) who is an officer or director of the Company
(within the meaning of Section 16(b) of the Exchange Act), such Award will
be cancelled in exchange for a payment to the Participant, at the time of
the Participant's Termination of Employment, equal to the Spread multiplied
by the number of shares of Common Stock granted under the Award, plus
interest on such amount at the prime rate compounded annually and
determined from time to time. With respect to any Participant who is an
officer or director of the Company (within the meaning of Section 16(b) of
the Exchange Act), the 60-day period will be extended, if necessary, to
include the "WINDOW PERIOD" of Rule 16(b)-3 which first commences on or
after the date of the Change in Control, and the Committee will have sole
discretion, if necessary, to approve the Participant's exercise hereunder
and the date in which the Spread is calculated may be adjusted, if
necessary, to a later date if necessary to avoid liability to such
Participant under Section 16(b).
11.2 DEFINITION OF CHANGE IN CONTROL. For purposes of this Plan, unless
otherwise specified in the Agreement (or Award Agreement) with respect to the
corresponding Award, a "CHANGE IN CONTROL" will be deemed to have occurred if
(a) any corporation, person or other entity (other than the Company, a
majority-owned subsidiary of the Company or any of its subsidiaries, or an
employee benefit plan (or related trust) sponsored or maintained by the
Company), including a "GROUP" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, becomes the beneficial owner of stock
representing more than eighty percent of the combined voting power of the
Company's then outstanding securities; (b)(i) the stockholders of the Company
approve a definitive agreement to merge or consolidate the Company with or into
another corporation other than a majority-owned subsidiary of the Company, or to
sell or otherwise dispose of all or substantially all of the Company's assets,
and (ii) the persons who were the members of the Board of Directors prior to
such approval do not represent a majority of the directors of the surviving,
resulting or acquiring entity or the parent thereof; or (c) the stockholders of
the Company approve a plan of liquidation of the Company.
11.3 CHANGE IN CONTROL PRICE. For purposes of the Plan, unless otherwise
specified in the Agreement (or Award Agreement) with respect to the
corresponding Award, "CHANGE IN CONTROL PRICE" means the higher of (a) the
highest reported sales price of a share of Common Stock in any transaction
reported on the principal exchange on which such shares are listed or on NASDAQ
during the 60-day period prior to and including the date of a Change in Control
or (b) if the Change in Control is the result of a tender or exchange offer or a
Corporate Transaction, the highest price per share of Common Stock paid in such
tender or exchange offer or a Corporate Transaction, except that, in the case of
Incentive Stock Options and Stock Appreciation Rights relating to Incentive
Stock Options, such price will be based only on the Fair Market Value of the
Common Stock on the date such Incentive Stock Option or Stock Appreciation Right
is exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration will
be determined in the sole discretion of the Committee.
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ARTICLE XII
MISCELLANEOUS
12.1 AMENDMENTS AND TERMINATION. The Board may amend, alter, or discontinue the
Plan at any time, but no amendment, alteration or discontinuation may be made
which would (a) impair the rights of a Participant under a Stock Option, Stock
Appreciation Right, Restricted Stock Award or Deferred Stock Award theretofore
granted without the Participant's consent, except such an amendment made to
cause the Plan to qualify for the exemption provided by Rule 16b-3 or (b)
disqualify the Plan from the exemption provided by Rule 16b-3. In addition, no
such amendment may be made without the approval of the Company's stockholders to
the extent such approval is required by law or agreement.
The Committee may amend the Plan at any time provided that (a) no amendment may
impair the rights of any Participant under any Award theretofore granted without
the Participant's consent, (b) no amendment may disqualify the Plan from the
exemption provided by Rule 16b-3 and (c) any amendment may be subject to the
approval or rejection of the Board.
The Committee may amend the terms of any Award or other Award theretofore
granted, prospectively or retroactively, but no such amendment may impair the
rights of any Participant without the Participant's consent, except such an
amendment made to cause the Plan or Award to qualify for the exemption provided
by Rule 16b-3. The Committee may also substitute new Stock Options or Stock
Appreciation Rights for previously granted Stock Options, including previously
granted Stock Options or Stock Appreciation Rights having higher Option Prices
but no such substitution may be made which would impair the rights of the
Participant under such Stock Options or Stock Appreciation Rights theretofore
granted without the Participant's consent.
Subject to the above provisions, the Board will have authority to amend the Plan
to take into account changes in law and tax and accounting rules, as well as
other developments, and to grant Awards which qualify for beneficial treatment
under such rules without stockholder approval.
12.2 UNFUNDED STATUS OF PLAN. It is intended that the Plan be an "UNFUNDED" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that,
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "UNFUNDED" status of the Plan.
12.3 GENERAL PROVISIONS.
(a) REPRESENTATION. The Committee may require each person purchasing or
receiving shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the shares without a view
to the
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distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer.
(b) NO ADDITIONAL OBLIGATION. Nothing in the Plan will prevent the Company
or an Affiliate from adopting other or additional compensation arrangements
for its employees.
(c) WITHHOLDING. No later than the date as of which an amount first becomes
includable in the gross income of the Participant for income tax purposes
with respect to any Award, the Participant will pay to the Company (or
other entity identified by the Committee), or make arrangements
satisfactory to the Company or other entity identified by the Committee
regarding the payment of, any Federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such amount required in
order for the Company or an Affiliate to obtain a current deduction. If the
Participant disposes of shares of Common Stock acquired pursuant to an
Incentive Stock Option in any transaction considered to be a disqualifying
transaction under the Code, the Participant must give written notice of
such transfer and the Company will have the right to deduct any taxes
required by law to be withheld from any amounts otherwise payable to the
Participant. Unless otherwise determined by the Committee, withholding
obligations may be settled with Common Stock, including Common Stock that
is part of the Award that gives rise to the withholding requirement,
provided that any applicable requirements under Section 16 of the Exchange
Act are satisfied. The obligations of the Company under the Plan will be
conditional on such payment or arrangements, and the Company and its
Affiliates will, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participant.
(d) REINVESTMENT. The reinvestment of dividends in additional Deferred or
Restricted Stock at the time of any dividend payment will only be
permissible if sufficient shares of Common Stock are available under the
Plan for such reinvestment (taking into account then outstanding Options
and other Awards).
(e) REPRESENTATION. The Committee will establish such procedures as it
deems appropriate for a Participant to designate a Representative to whom
any amounts payable in the event of the Participant's death are to be paid.
(f) CONTROLLING LAW. The Plan and all Awards made and actions taken
thereunder will be governed by and construed in accordance with the laws of
the State of Illinois (other than its law respecting choice of law) except
to the extent the General Corporation Law of the State of Delaware would be
mandatorily applicable. The Plan will be construed to comply with all
applicable law and to avoid liability to the Company, an Affiliate or a
Participant, including, without limitation, liability under Section 16(b)
of the Exchange Act.
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(g) OFFSET. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value
of any shares of Common Stock, cash or other thing of value under this Plan
or an Agreement to be transferred to the Participant, and no shares of
Common Stock, cash or other thing of value under this Plan or an Agreement
will be transferred unless and until all disputes between the Company and
the Participant have been fully and finally resolved and the Participant
has waived all claims to such against the Company or an Affiliate.
12.4 MITIGATION OF EXCISE TAX. If any payment or right accruing to a Participant
under this Plan (without the application of this Section 12.4), either alone or
together with other payments or rights accruing to the Participant from the
Company or an Affiliate ("TOTAL PAYMENTS") would constitute a "PARACHUTE
PAYMENT" (as defined in Section 280G of the Code and regulations thereunder),
such payment or right will be reduced to the largest amount or greatest right
that will result in no portion of the amount payable or right accruing under the
Plan being subject to an excise tax under Section 4999 of the Code or being
disallowed as a deduction under Section 280G of the Code. The determination of
whether any reduction in the rights or payments under this Plan is to apply will
be made by the Committee in good faith after consultation with the Participant,
and such determination will be conclusive and binding on the Participant. The
Participant will cooperate in good faith with the Committee in making such
determination and providing the necessary information for this purpose. The
foregoing provisions of this Section 12.4 will apply with respect to any person
only if, after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the Total
Payments accruing to such person would be less than the amount of the Total
Payments as reduced, if applicable, under the foregoing provisions of the Plan
and after reduction for only federal income taxes.
12.5 RIGHTS WITH RESPECT TO CONTINUANCE OF EMPLOYMENT. Nothing in this Plan will
be deemed to alter the relationship between the Company or an Affiliate and a
Participant, or the contractual relationship between a Participant and the
Company or an Affiliate if there is a written contract regarding such
relationship. Nothing in this Plan will be construed to constitute a contract of
employment between the Company or an Affiliate and a Participant. The Company or
an Affiliate and each of the Participants continue to have the right to
terminate the employment or service relationship at any time for any reason,
except as provided in a written contract. The Company or an Affiliate will have
no obligation to retain the Participant in its employ or service as a result of
this Plan. There will be no inference as to the length of employment or service
hereby, and the Company or an Affiliate reserves the same rights to terminate
the Participant's employment or service as existed prior to the individual
becoming a Participant in this Plan.
12.6 AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER CORPORATIONS. Awards may
be granted under the Plan from time to time in substitution for awards held by
employees, directors or service providers of other corporations who are about to
become officers, directors or employees of the Company or an Affiliate as the
result of a merger or consolidation of the employing corporation with the
Company or an Affiliate, or the acquisition by the Company or an Affiliate of
the assets of the employing corporation, or the acquisition by the Company or
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Affiliate of the stock of the employing corporation, as the result of which it
becomes a designated employer under the Plan. The terms and conditions of the
Awards so granted may vary from the terms and conditions set forth in this Plan
at the time of such grant as the majority of the members of the Committee may
deem appropriate to conform, in whole or in part, to the provisions of the
awards in substitution for which they are granted.
12.7 PROCEDURE FOR ADOPTION. Any Affiliate of the Company may by resolution of
such Affiliate's board of directors, with the consent of the Board of Directors
and subject to such conditions as may be imposed by the Board of Directors,
adopt the Plan for the benefit of its employees as of the date specified in the
board resolution.
12.8 PROCEDURE FOR WITHDRAWAL. Any Affiliate which has adopted the Plan may, by
resolution of the board of directors of such Affiliate, with the consent of the
Board of Directors and subject to such conditions as may be imposed by the Board
of Directors, terminate its adoption of the Plan.
12.9 DELAY. If at the time a Participant incurs a Termination of Employment
(other than due to Cause) or if at the time of a Change in Control, the
Participant is subject to "SHORT-SWING" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to the
extent necessary to avoid the imposition of liability will be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six months and one day and not to exceed the Option Period, or
the period for exercise of a Stock Appreciation Right as provided in the
Agreement, whichever is shorter. The Company will have the right to suspend or
delay any time period described in the Plan or an Agreement if the Committee
determines that the action may constitute a violation of any law or result in
liability under any law to the Company, an Affiliate or a stockholder of the
Company until such time as the action required or permitted will not constitute
a violation of law or result in liability to the Company, an Affiliate or a
stockholder of the Company. The Committee will have the discretion to suspend
the application of the provisions of the Plan required solely to comply with
Rule 16b- 3 if the Committee determines that Rule 16b-3 does not apply to the
Plan.
12.10 HEADINGS. The headings in this Plan are for reference purposes only and
will not affect the meaning or interpretation of this Plan.
12.11 SEVERABILITY. If any provision of this Plan is for any reason held to be
invalid or unenforceable, such invalidity or unenforceability will not affect
any other provision of this Plan, and this Plan will be construed as if such
invalid or unenforceable provision were omitted.
12.12 SUCCESSORS AND ASSIGNS. This Plan will inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
upon a Participant, and all rights granted to the Company hereunder, will be
binding upon the Participant's heirs, legal representatives and successors.
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12.13 ENTIRE AGREEMENT. This Plan and the Agreement constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of this Plan will control.
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