HA-LO INDUSTRIES, INC.
1997 STOCK PLAN
1. PREAMBLE.
In 1997, HA-LO Industries, Inc. (the "Company") established the HA-LO
Industries, Inc. 1997 Stock Plan (the "Plan") as a means whereby the Company
may, through awards of (i) stock appreciation rights ("SARs"), (ii)
non-qualified stock options ("NSOs"), (iii) restricted stock ("Restricted
Stock"), and (iv) phantom stock ("Phantom Stock"):
(a) provide employees who have substantial responsibilities for the
direction and management of the Company and other employees of the
Company with additional incentive to promote the success of the
Company's business;
(b) enable such employees to acquire proprietary interests in the Company;
(c) encourage such employees to remain in the employ of the Company;
(d) provide Officers and Directors of the Company (who are not otherwise
employees of the Company) with additional incentive to promote the
success of the Company's business; and
(e) provide Sales Representatives with an incentive to remain associated
with the Company and to promote the success of the Company's business.
By action of the Board of Directors of the Company, the Plan was approved.
The terms of the Plan are contained herein.
The provisions of this Plan do not apply to or affect any option, SAR, or
stock heretofore or hereafter granted under any other stock plan of the Company,
and all such options, SARs or stock continue to be governed by and subject to
the applicable provisions of the plan under which they were granted.
2. DEFINITIONS.
2.01 "BOARD" or "BOARD OF DIRECTORS" means the board of directors of the
Company.
2.02 "CAUSE" means, as determined in the sole discretion of the Board, a
Participant's (1) commission of a felony; (2) dishonesty or misrepresentation
involving the Company; (3) serious misconduct in the performance or
non-performance of Participant's
responsibilities to the Company; (4) violation of a material condition of
employment; (5) unauthorized use of trade secrets or confidential information;
(6) aiding a competitor of the Company.
2.03 "CHANGE IN CONTROL" means, the occurrence of any one of the following
events:
(a) any consolidation or merger of the Company is not the continuing
or surviving corporation or which contemplates that all or substantially
all of the business and/or assets of the Company shall be controlled by
another corporation or a recapitalization in which the current controlling
stockholders do not continue to be the controlling stockholders;
(b) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company;
(c) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval;
(d) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act), other than a person who is a stockholder of the
Company on the Option Date, who shall become the beneficial owner of
securities of the Company representing more than 50% of the combined voting
power of the Company's then outstanding securities ordinarily having the
right to vote in the election of directors;
(e) any sale, exchange or transfer (other than transfers affiliated
entities, i.e. entities controlling, controlled by or under common control
with, the transferor) of securities of the Company representing more than
50% of (i) the total fair market value of the Company's then outstanding
equity securities, or (ii) the combined voting power of the Company's then
outstanding securities ordinarily having the right to vote in the election
of directors, whether pursuant to a tender or exchange offer, open market
offering, purchase or sale, privately negotiated purchase and sale or
otherwise; or
(f) if during a period of two consecutive years from the Option Date,
individuals who at the beginning of such period constituted the directors
of the Company cease for any reason to constitute a majority thereof
(unless the election, or nomination for election by the Company's
stockholders, of each director of the Company first elected during such
period was approved by a vote of at least a majority of the directors then
still in office who were directors at the beginning of any such period.
-2-
2.04 "CODE" means the Internal Revenue Code of 1986, as it exists now and
as it may be amended from time to time.
2.05 "COMMITTEE" means the Compensation Committee of the Board of
Directors. Each member of the Committee shall be a member of the Board of
Directors who has not at any time within one year prior thereto, or at any time
during such member's term of service on the Committee, received any stock
options, SARs or allocations of any equity securities under the Plan or any
other plan maintained by the Company or any of its affiliates, except as
permitted pursuant to the provisions of Rule 16b-3(c) (2) (i) of the Securities
and Exchange Commission or any successor rule thereof. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors.
2.06 "COMMON STOCK" means the common stock of the Company, no par value.
2.07 "COMPANY" means HA-LO Industries, Inc., an Illinois corporation, and
any successor thereto.
2.08 "DIRECTOR" means a member of the Board.
2.09 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as it
exists now or from time to time may hereafter be amended.
2.10 "FAIR MARKET VALUE" means, at the discretion of the Company in each
case, either (a) the mean between the bid and asked prices or (b) the last sale
price, as of the close of business on the day Fair Market Value is to be
determined for Common Stock as reported by the NASDAQ System or any other stock
exchange on which the Common Stock is traded. If Common Stock is not traded on
that day, the next preceding day on which such stock was traded. If trading of
the Common Stock is not reported by the NASDAQ System or on a stock exchange,
Fair Market Value will be determined by the Board based upon the best available
data.
2.11 "NAKED SAR" means a SAR issued not in connection with a ISO or NSO.
2.12 "NSO" means non-qualified stock options, which are NOT intended to
qualify under Section 422 of the Code.
2.13 "OFFICER" means a corporate officer of the Company.
2.14 "OPTION" means the right of a participant to purchase a specified
number of shares of Common Stock, subject to the terms and conditions of the
Plan.
-3-
2.15 "OPTION DATE" means the date upon which an Option, SAR, Restricted
Stock or Phantom Stock is awarded to a Participant under the Plan.
2.16 "OPTION PRICE" means the price per share at which an Option may be
exercised.
2.17 "PARTICIPANT" means an individual to whom an Option, SAR, Phantom
Stock or Restricted Stock has been granted under the Plan.
2.18 "PHANTOM STOCK" means a hypothetical share of Common Stock issued as
phantom stock under the Plan.
2.19 "PLAN" means the HA-LO Industries, Inc. 1997 Stock Plan, as set forth
herein and as from time to time amended.
2.20 "RESTRICTED STOCK" means Common Stock awarded to a Participant
pursuant to this Plan and subject to the restrictions contained in Section 8.
2.21 "SALES REPRESENTATIVE" means an independent contractor who has an
arrangement with the Company, whether or not exclusively, to market, promote and
sell the Company's products.
2.22 "SAR" means a stock appreciation right. A SAR may be a Naked SAR or a
Tandem SAR.
2.23 "TANDEM SAR" means a SAR associated with and issued in connection with
an Option.
2.24 RULES OF CONSTRUCTION.
(a) GOVERNING LAW. The construction and operation of this Plan are
governed by the laws of the State of Illinois.
(b) UNDEFINED TERMS. Unless the context requires another meaning, any
term not specifically defined in this Plan is used in the sense given
to it by the Code.
(c) HEADINGS. All headings in this Plan are for reference only and are
not to be utilized in construing the Plan.
(d) GENDER. Unless clearly appropriate, all nouns of whatever gender
refer indifferently to persons or objects of any gender.
(e) SINGULAR AND PLURAL. Unless clearly inappropriate, singular terms
refer also to the plural and VICE VERSA.
(f) SEVERABILITY. If any provision of this Plan is determined to be
illegal or invalid for any reason, the remaining provisions are to
continue in full force and
-4-
effect and to be construed and enforced as if the illegal or invalid
provision did not exist, unless the continuance of the Plan in such
circumstances is not consistent with its purposes.
3. STOCK SUBJECT TO THE PLAN.
Except as otherwise provided in Section 12, the aggregate number of shares
of Common Stock that may be issued under Options or as Restricted Stock, under
this Plan may not exceed One Million Five Hundred Thousand (1,500,000) shares.
Reserved shares may be either authorized but unissued shares or treasury shares,
in the Board's discretion. If any awards hereunder shall terminate or expire,
as to any number of shares, new NSOs, and Restricted Stock may thereafter be
awarded with respect to such shares.
4. ADMINISTRATION.
The Plan is administered by the Committee. In addition to any other powers
set forth in this Plan, the Committee has the following powers:
(a) to construe and interpret the Plan, including the power to remedy any
ambiguities or inconsistencies in the Plan document;
(b) to establish, amend and rescind appropriate rules and regulations
relating to the Plan;
(c) subject to the express provisions of the Plan, to determine the
individuals who will receive awards of Options, Restricted Stock,
Phantom Stock and/or SARs, the times when they will receive them, the
number of shares to be subject to each award and the Option Price,
payment terms, payment method, and expiration date applicable to each
award;
(d) to contest on behalf of the Company or Participants, at the expense of
the Company, any ruling or decision on any matter relating to the Plan
or to any awards of NSOs, Restricted Stock, Phantom Stock and/or SARs;
(e) generally, to administer the Plan, and to take all such steps and make
all such determinations in connection with the Plan and the awards of
NSOs, Restricted Stock, Phantom Stock and/or SARs granted thereunder
as it may deem necessary or advisable;
(f) to determine the form in which payment of a SAR or a Phantom Stock
award granted hereunder will be made (i.e., cash, Common Stock or a
combination thereof) or to approve a participant's election to receive
cash in
-5-
whole or in part in settlement of the SAR or Phantom Stock award; and
(g) to determine the form in which tax withholding under Section 15 of
this Plan will be made.
5. ELIGIBILITY.
The Committee shall have the power to award Options, SARs, Restricted
Stock, and Phantom Stock. Subject to the provisions of the Plan, the Committee
shall determine from time to time those employees, Directors and Officers of the
Company and Sales Representatives who shall be designated as Participants and
the number, if any, of Options, SARs, Restricted Stock, and Phantom Stock, or
any combination thereof, to be awarded to each such participant.
6. TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION.
The Committee may, in its discretion, grant NSOs to any Participant under
the Plan. Each NSO shall be evidenced by an agreement between the Company and
the Participant. Each NSO agreement, in such form as is approved by the
Committee, shall be subject to the following express terms and conditions and to
such other terms and conditions, not inconsistent with the Plan as the Committee
may deem appropriate:
(a) OPTION PERIOD. Each NSO will expire as of the earliest of:
(i) the date on which it is forfeited under the provisions of
Section 11;
(ii) the date three months after the Participant's termination of
employment, directorship or relationship with the Company,
as applicable, for any reason other than death; or
(iii) the date six months after the Participant's death.
(b) OPTION PRICE. At the time of grant, the Committee will fix the Option
Price, which will be no less than eighty-five percent (85%) of the
Fair Market Value of the shares subject to the NSO on the Option Date.
(c) OTHER OPTION PROVISIONS. The form of NSO authorized by the Plan may
contain such other provisions as the Committee may from time to time
determine.
-6-
7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
The Committee may, in its discretion, grant a SAR to any Participant under
the Plan. Each SAR shall be evidenced by an agreement between the Company and
the Participant, and may be a Naked SAR or a Tandem SAR. Each SAR awarded to
Participants under the Plan shall be subject to the following express terms and
conditions and to such other terms and conditions, not inconsistent with the
Plan, as the Committee shall deem appropriate:
(a) TANDEM SARS. Tandem SARs shall terminate on the same date as the
related NSO. A Tandem SAR shall be exercisable only if the Fair
Market Value of a share of Common Stock on the date of surrender
exceeds the Fair Market Value of the Common Stock on the Option Date,
if related to an NSO, and then shall be exercisable to the extent, and
only to the extent, that the related NSO is exercisable. A Tandem SAR
shall entitle the Participant to whom it is granted the right to
elect, so long as such Tandem SAR is exercisable and subject to such
limitations as the Committee shall have imposed, to surrender any then
exercisable portion of his related NSO, in whole or in part, and
receive from the Company in exchange, without any payment of cash
(except for applicable employee withholding taxes), that number of
shares of Common Stock having an aggregate Fair Market Value on the
date of surrender equal to the product of (i) the excess of the Fair
Market Value of a share of Common Stock on the date of surrender over
the per share Option Price under such NSO or the Fair Market Value of
the Common Stock on the Option Date, if such SAR is related to an NSO
and (ii) the number of shares of Common Stock subject to such NSO or
portion thereof which is surrendered. Any NSO or portion thereof
which is surrendered shall no longer be exercisable. The Committee,
in its sole discretion, may allow the Company to settle all or part of
the Company's obligation arising out of the exercise of a Tandem SAR
by the payment of cash equal to the aggregate Fair Market Value of the
shares of Common Stock which the Company would otherwise be obligated
to deliver.
(b) NAKED SARS. Naked SARs shall terminate as provided in the
Participant's SAR agreement. The Committee may at the time of
granting any Naked SAR add such conditions and limitations to the
Naked SAR as it shall deem advisable, including but not limited to,
limitations on the period within which the Naked SAR shall be
exercisable and the maximum amount of appreciation to be recognized
with regard to such Naked SAR.
-7-
(c) OTHER CONDITIONS. If a Participant is subject to Section 16(a) and
Section 16(b) of the Exchange Act, the Committee may at any time add
such additional conditions and limitations to such SAR which, in its
discretion, the Committee deems necessary or desirable in order to
comply with such Section 16(a) or Section 16(b) and the rules and
regulations issued thereunder, or in order to obtain any exemption
therefrom. If a Participant subject to Section 16(a) or Section 16(b)
of the Exchange Act exercises a SAR and receives cash, the exercise
must be made within a ten-day period beginning on the third business
day after the release of quarterly or annual statements of sales and
earnings by the Company and ending on the twelfth business day after
such release of statements.
8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
The Committee, in its discretion, may grant Restricted Stock to any
Participant under the Plan. Each grant of Restricted Stock shall be evidenced
by an agreement between the Company and the Participant. All shares of Common
Stock awarded to Participants under the Plan as Restricted Stock shall be
subject to the following express terms and conditions as to such other terms and
conditions, not inconsistent with the Plan, as the Committee shall deem
appropriate:
(a) RESTRICTED PERIOD. Shares of Restricted Stock awarded to Participants
may not be sold, transferred, pledged or otherwise encumbered before
they vest. Subject to the provisions of subparagraphs (b) and (c)
below and any other restrictions imposed by law, any shares of
Restricted Stock that vest will be transferred, to the Participant or,
in the event of his death, to the beneficiary or beneficiaries
designated by writing filed by the Participant with the Committee for
such purpose or, if none, to his estate. Delivery of shares in
accordance with the preceding sentence shall be made within the
thirty-day period after they vest.
(b) FORFEITURES. A Participant shall forfeit all unpaid accumulated
dividends and all shares of Restricted Stock which have not vested
prior to the date that his employment, membership on the Board, if a
Director, or relationship, if a Sales Representative with the Company
is terminated for any reason.
(c) CERTIFICATES DEPOSITED WITH COMPANY. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant and deposited with the
Company. Each such
-8-
certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) relating to Restricted Stock contained in the HA-LO
Industries, Inc. 1997 Stock Plan and an agreement entered into between
the registered owner and HA-LO Industries, Inc. Copies of such Plan
and agreement are on file at the principal office of HA-LO Industries,
Inc."
(d) STOCKHOLDER RIGHTS. Subject to the foregoing restrictions, each
Participant shall have all the rights of a stockholder with respect to
his shares of Restricted Stock including, but not limited to, the
right to vote such shares.
(e) DIVIDENDS. On each Common Stock dividend payment date, each
Participant shall receive an amount equal to the dividend paid on that
date on a share of Common Stock, multiplied by his number of shares of
Restricted Stock.
9. TERMS AND CONDITIONS OF PHANTOM STOCK.
The Committee may, in its discretion, award Phantom Stock to any
Participant under the Plan. Each award of Phantom Stock shall be evidenced by
an agreement between the Company and the Participant. The Committee may at the
time of awarding any Phantom Stock add such additional conditions and
limitations to the Phantom Stock as it shall deem advisable, including, but not
limited to, the right for Participants to receive payments equivalent to
dividends paid on Common Stock, limitations on the period or periods within
which the Phantom Stock may be surrendered, and the maximum amount of
appreciation to be recognized with regard to such Phantom Stock. If a
Participant is subject to Section 16(a) and Section 16(b) of the Exchange Act,
the Committee may at any time add such additional conditions and limitations to
such Phantom Stock which, in its discretion, the Committee deems necessary or
desirable in order to comply with such Section 16(a) or Section 16(b) and the
rules and regulations issued thereunder, or in order to obtain any exemption
therefrom. An award of Phantom Stock shall entitle the Participant to whom it
is awarded the right to elect, so long as such Phantom Stock is vested and
subject to such limitations as the Committee shall have imposed, to surrender
any then vested portion of the Phantom Stock, in whole or in part, and receive
from the Company in exchange therefor the Fair Market Value on the date of
surrender of the Common Stock to which the surrendered Phantom Stock relates in
cash or in shares of Common Stock as the Committee may determine. If a
Participant subject to Section 16(a) or 16(b) of the Exchange Act receives cash
in exchange for the surrender of Phantom Stock, the surrender of such
-9-
Phantom Stock must be made within a ten-day period beginning on the third
business day after the release of quarterly or annual statements of sales and
earnings by the Company and ending on the twelfth business day after such
release of statements.
10. MANNER OF EXERCISE OF OPTIONS.
To exercise an Option in whole or in part, a Participant (or, after his
death, his executor or administrator) must give written notice to the Committee,
stating the number of shares to which he intends to exercise the Option. The
Company will issue the shares with respect to which the Option is exercised upon
payment in full of the Option Price. Upon receipt of such notice, and prior to
issuance of shares, the Company may require the Participant (or after his death,
his executor or administrator) to pay to the Company any and all amounts which
the Participant may owe the Company on such date. The Option Price may be paid
in cash, certified bank check or by delivery of irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
necessary to pay for all Common Stock acquired through such exercise and any tax
withholding obligations resulting from such exercise. At the discretion of the
Company, the Option Price may also be paid in shares of Common Stock having an
aggregate Fair Market Value, as determined on the date of delivery, equal to the
Option Price. At the discretion of the Company, the Option Price may be paid in
shares of Common Stock which were received by the Participant upon the exercise
of one or more Options, including shares which the Participant directs the
Company to withhold for the purpose of paying the Option Price from shares the
Participant would have received upon the exercise of the Option. At the
discretion of the Company, the Option Price may be paid in shares of Common
Stock which were received by the Participant as an award of Restricted Stock
under the Plan. The Option Price may be paid by surrender of Tandem SARs equal
to the Option Price.
11. VESTING.
(a) A Participant may not exercise an Option or surrender a SAR or
Phantom Stock until it has become vested. The portion of an Option, SAR or
Phantom Stock award that is vested depends upon the period that has elapsed
since the Option Date. The following schedule applies to any Options
granted under this Plan, to Restricted Stock, SARs, and Phantom Stock
awarded under this Plan unless the Committee establishes a different
vesting schedule at the time when an Option is granted or, the Restricted
Stock, SAR or Phantom Stock is awarded:
-10-
Number of Years
Since Option Date Vested Percentage
----------------- -----------------
Fewer than one 0%
One but fewer than two 20%
Two but fewer than three 40%
Three but fewer than four 60%
Four but fewer than five 80%
Five or more 100%
If a Participant terminates employment with, or if a Director, his
membership on the Board, or if a Sales Representative, his relationship
with, the Company for any reason, he will be deemed to have forfeited as of
the date of such termination any Options, Restricted Stock, SARs and/or
Phantom Stock that are not yet vested as of such date. A transfer from the
Company to a subsidiary or affiliate, or VICE VERSA is not a termination of
employment for purposes of this Plan. Notwithstanding the vesting schedule
contained herein or in the Participant's agreement, if the Participant's
employment, or if a Director, his membership on the Board, or if a Sales
Representative, his relationship is terminated for Cause, the Participant's
Vested Percentage shall be 0%, and he shall forfeit all Options, SARs,
Restricted Stock and/or Phantom Stock immediately upon delivery of notice
that his termination was for Cause.
(b) Notwithstanding the provisions of Section 11(a) or anything
contained in a Participant's agreement to the contrary, upon a Change in
Control all Option, Restricted Stock, SARs and/or Phantom Stock shall
become 100% vested and immediately exercisable.
12. ADJUSTMENTS TO REFLECT CHANGES IN CAPITAL STRUCTURE.
If there is any change in the corporate structure or shares of the Company,
the Board of Directors may make any adjustments necessary to prevent accretion,
or to protect against dilution, in the number and kind of shares authorized by
the Plan and, with respect to outstanding Options, Restricted Stock, Phantom
Stock and/or SARs, in the number and kind of shares covered thereby and in the
applicable Option Price. For the purpose of this Section 12, a change in the
corporate structure or shares of the Company includes, without limitation, any
change resulting from a recapitalization, stock split, stock dividend,
consolidation, rights offering, spin-off, reorganization, or liquidation and any
transaction in which shares of Common Stock are changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or another corporation.
-11-
13. NON-TRANSFERABILITY OF OPTIONS, SARS AND PHANTOM STOCK.
The Options and SARs granted or Phantom Stock awarded under the Plan are
not transferable, voluntarily or involuntarily, other than by will, by the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined in Section 414(p) of the Code. During a Participant's lifetime, his
Options may be exercised only by him.
14. RIGHTS AS STOCKHOLDER.
No Common Stock may be delivered upon the exercise of any Option until full
payment has been made. A Participant has no rights whatsoever as a stockholder
with respect to any shares covered by an Option until the date of the issuance
of a stock certificate for the shares. A Participant who has been granted SARs
or Phantom Stock shall have no rights whatsoever as a stockholder with respect
to such SARs or Phantom Stock.
15. WITHHOLDING TAX.
The Company shall have the right to withhold in cash or shares of Common
Stock with respect to any payments made to Participants under the Plan any taxes
required by law to be withheld because of such payments. With respect to a
Participant subject to Section 16(a) or 16(b) of the Exchange Act, withholding
made in Common Stock upon the exercise of an Option, or the exercise of a SAR or
Phantom Stock which the Participant had the discretion regarding the timing of
exercise, must be made during the period beginning on the third business day
following the release of quarterly or annual statements of sales and earnings by
the Company and ending on the twelfth business day after such release of
statements. Notwithstanding the foregoing, with respect to a Participant
subject to Section 16(a) or 16(b) of the Exchange Act, all amounts required to
be withheld upon either (i) the vesting of Restricted Stock or (ii) the exercise
of a SAR or surrender of Phantom Stock which had a set duration and for which
payment is made in Common Stock, shall automatically be withheld in Common Stock
otherwise deliverable to the Participant and having a Fair Market Value
determined on the date the income is includable in the Participant's income
equal to the amount of taxes required to be withheld.
16. NO RIGHT TO EMPLOYMENT.
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company, or any right or claim to any benefit
under the Plan, unless the right or claim has specifically accrued under the
Plan.
-12-
17. AMENDMENT OF THE PLAN.
The Board of Directors may from time to time amend or revise the terms of
this Plan in whole or in part and may without limitation, adopt any amendment
deemed necessary; provided, however, that no change in any award previously
granted to a Participant may be made that would impair the rights of the
Participant without the Participant's consent.
18. CONDITIONS UPON ISSUANCE OF SHARES.
An Option shall not be exercisable, a share of Common Stock shall not be
issued pursuant to the exercise of an Option, and Restricted Stock shall not be
awarded until such time as the award of Restricted Stock, exercise of such
Option and the issuance and delivery of such share pursuant thereto shall comply
with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares of Common stock may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Common Stock is being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
19. EFFECTIVE DATE AND TERMINATION OF PLAN.
19.01 EFFECTIVE DATE. This Plan is effective as of January 1, 1997.
19.02 TERMINATION OF THE PLAN. The Board of Directors may terminate
the Plan at any time with respect to any shares that are not then subject to
Options or Restricted Stock. Termination of the Plan will not affect the rights
and obligations of any Participant with respect to Options, SARs, Phantom Stock
or Restricted Stock awarded before termination.
20. DIRECTOR STOCK OPTIONS.
(a) Each Director who is not otherwise an employee of the Company from and
after the effective date of the Plan shall, at the first regularly
scheduled meeting of the Board held after January 1 of each calendar
year, automatically be granted NSOs to purchase five thousand (5,000)
shares of Common Stock having an exercise price per share equal to
100% of the Fair Market Value of the Common Stock at the Option Date.
-13-
(b) Each Director's interest in any NSO granted pursuant to this Section
20 shall vest ratably over a period of twelve months from the Option
Date; provided, however, such NSO may not be exercised at any time
prior to six months after the Option Date. NSOs granted pursuant to
this Section 20 shall expire ten years from the Option Date.
(c) In the event that the number of shares of Common Stock available for
future grant under the Plan is insufficient to make all automatic
grants required to be made on such date, then all non-employee
Directors entitled to a grant on such date shall share ratably in the
number of NSOs on shares available for grant under the Plan.
(d) The provisions of paragraph (a) of this Section 20 may not be amended
more often than once every six months. Except as expressly provided
in this Section 20, any NSO granted hereunder shall be subject to the
terms and conditions of the Plan if the grant were made pursuant to
Section 6 hereof.
-14-