Exhibit 10.5
AMERICAN ITALIAN PASTA COMPANY
2000 EQUITY INCENTIVE PLAN AS AMENDED FEBRUARY 2001
SECTION 1
PURPOSE AND DURATION
1.1 Establishment; Effective Date. American Italian Pasta Company hereby
establishes an incentive compensation plan. This Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units and Performance Shares. This Plan shall be effective on the
date of its adoption by the Company's Board of Directors, subject to approval of
the Company's stockholders.
1.2 Purpose of this Plan. This Plan is intended to attract, motivate, and
retain (a) employees of the Company and its Affiliates, (b) consultants who
provide significant services to the Company and its Affiliates, and (c) members
of the Board of Directors of the Company who are employees of neither the
Company nor any Affiliate. This Plan also is designed to further the growth and
financial success of the Company and its Affiliates by aligning the interests of
the Participants, through the ownership of Shares and through other incentives,
with the interests of the Company's stockholders.
SECTION 2
DEFINITIONS
The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:
"1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.
"Affiliate" means any corporation or any other entity (including, but not
limited to, partnerships and joint ventures) controlling, controlled by or under
common control with the Company.
"Affiliated SAR" means an SAR that is granted in connection with a related
Option, and that automatically will be deemed to be exercised at the same time
that the related Option is exercised.
"Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units or Performance Shares.
"Award Agreement" means the written agreement setting forth the terms and
provisions applicable to each Award granted under this Plan.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Board Member" means any individual who is a member of the Board of
Directors of the Company.
"Cause" means, unless otherwise defined in any employment agreement with
the Participant or Award Agreement, any one or more of the following:
(A) A Participant's plea of guilty or no contest to, or finding of
guilty for, commission of a crime that, in the judgment of the
Committee, may result in injury to the Company or a Subsidiary or
to the reputation of the Company or a Subsidiary;
(B) The material violation by the Participant of written policies or
established practices of the Company or a Subsidiary including,
but not limited to, anti-discrimination and anti-harassment
policies and practices;
(C) In the good faith belief of the Company, the habitual neglect by
the Participant in the performance of his or her duties to the
Company or a Subsidiary after notice by the Committee and thirty
days to cure;
(D) Action or inaction by the Participant in connection with his or
her duties to the Company or a Subsidiary resulting, in the
judgment of the Committee, in a material injury to the Company or
a Subsidiary or to the reputation of the Company or a Subsidiary;
(E) The rendering of services by the Participant for any organization
or business engaging directly or indirectly in any business that
is or becomes competitive with the Company or a Subsidiary or
which organization or business, or the rendering of services to
such organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the Company
or a Subsidiary;
(F) Any attempt by the Participant directly or indirectly to induce
any employee of the Company or a Subsidiary to be employed or
perform services elsewhere or any attempt directly or indirectly
to solicit (other than for the account of the Company or a
Subsidiary) the trade or business of any current or prospective
customer, supplier, or partner of the Company or a Subsidiary; or
(G) Any other conduct or act determined by the Committee to be
injurious, detrimental, or prejudicial to any interest of the
Company or a Subsidiary, including, but not limited to, the
reputation of the Company or a Subsidiary.
"Change in Control" shall have the meaning assigned to such term in
Section 12.3.
"Code" means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Committee" means the committee appointed by the Board (pursuant to
Section 3.1) to administer this Plan.
"Common Stock" means the Class A Convertible Common Stock, $.001 par
value, of the Company.
"Company" means American Italian Pasta Company, a Delaware corporation,
and any successor thereto. With respect to the definition of Performance Goals,
the Committee in its sole discretion may determine that "Company" means American
Italian Pasta Company, and/or any of its consolidated subsidiaries.
"Consultant" means any consultant, independent contractor or other person
who provides significant services to the Company or its Affiliates, but who is
neither an Employee nor a Board Member.
"Disability" means a permanent and total disability within the meaning of
Code section 22(e)(3), provided that in the case of Awards other than Incentive
Stock Options, the Committee in its sole discretion may determine whether a
permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Committee from time to time.
"Employee" means any employee of the Company or of an Affiliate, whether
such employee is so employed at the time this Plan is adopted or becomes so
employed subsequent to the adoption of this Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific section of ERISA or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.
"Exercise Price" means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.
"Fair Market Value" means (A) with respect to any property other than
Shares, the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee, and (B)
with respect to Shares, unless otherwise determined in the good faith discretion
of the Committee, as of any date, (i) the closing price on the date of
determination on the New York Stock Exchange (or, if no sale of Shares was
reported for such date, on the next preceding date on which a sale of Shares was
reported), (ii) if the Shares are not listed on the New York Stock Exchange, the
closing price of the Shares on such other national
exchange on which the Shares are principally traded or as reported by the
National Market System, or similar organization, or if no such quotations are
available, the average of the high bid and low asked quotations in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated or similar organizations; or (iii) in the event that there shall be
no public market for the Shares, the fair market value of the Shares as
determined (which determination shall be conclusive) in good faith by the
Committee, based upon the value of the Company as a going concern, as if such
Shares were publicly owned stock, but without any discount with respect to
minority ownership.
"Fiscal Year" means the fiscal year of the Company.
"Freestanding SAR" means a SAR that is granted independently of any
Option.
"Grant Date" means, with respect to an Award, the date that the Award was
granted.
"Incentive Stock Option" means an Option to purchase Shares which is
designated as an Incentive Stock Option and is intended to meet the requirements
of section 422 of the Code.
"Nonemployee Board Member" means a Board Member who is not an employee of
the Company or of any Affiliate.
"Nonqualified Stock Option" means an Option to purchase Shares which is
not an Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonqualified Stock Option.
"Participant" means an Employee, Consultant or Nonemployee Board Member.
"Performance Goals" means the goal(s) (or combined goal(s)) determined by
the Committee (in its sole discretion) to be applicable to a Participant with
respect to an Award. For Awards that are intended to qualify as
"performance-based compensation" under section 162(m) of the Code, as
determined by the Committee, the Performance Goals applicable to an Award may
provide for a targeted level or levels of achievement using one or more of the
following predetermined measurements: (a) earnings (either in the aggregate
or on a per-share basis); (b) net income (before or after taxes); (c) operating
income; (d) cash flow; (e) return measures (including return on assets, equity
or sales); (f) earnings before or after taxes, and before or after depreciation
and amortization; (g) gross revenues; (h) share price (including growth measures
and total stockholder return or attainment by the Shares of a specified value
for a specified period of time); (i) reductions in expense levels in each case
where applicable determined either in a Company-wide basis or in respect of any
one or more business units; (j) net economic value; or (k) market share. The
Performance Goals may differ from Participant to Participant and from Award to
Award.
"Performance Period" shall have the meaning assigned to such term in
Section 8.3.
"Performance Share" means an Award granted to a Participant pursuant to
Section 8.
"Performance Unit" means an Award granted to a Participant pursuant to
Section 8.
"Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions and, therefore, the
Shares are subject to a substantial risk of forfeiture. As provided in Section
7, such restrictions may be based on the passage of time, the achievement of
target levels of performance or the occurrence of other events as determined by
the Committee in its sole discretion.
"Plan" means the American Italian Pasta Company 2000 Equity Incentive
Plan, as set forth in this instrument and as hereafter amended from time to
time.
"Reload Option" shall have the meaning assigned in Section 5.9.
"Restricted Stock" means an Award granted to a Participant pursuant to
Section 7.
"Retirement" means, in the case of an Employee, a Termination of Service
by reason of the Employee's retirement pursuant to any retirement program
instituted by the Company or any Affiliate employer or as otherwise agreed to by
the Employer or the applicable Affiliate employer. With respect to a Consultant,
no Termination of Service shall be deemed to be on account of "Retirement". With
respect to a Nonemployee Board Member, "Retirement" means termination of service
on the Board at or after age sixty-five (65).
"Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, and any
future regulation amending, supplementing or superseding such regulation.
"Section 16 Person" means a person who, with respect to the Shares, is
subject to Section 16 of the 1934 Act.
"Shares" means the shares of Common Stock of the Company.
"Stock Appreciation Right" or "SAR" means an Award, granted alone or in
connection with a related Option, that is designated as a SAR pursuant to
Section 6.
"Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
"Tandem SAR" means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).
"Termination of Service" means (a) in the case of an Employee, a cessation
of the employee-employer relationship between an employee and the Company or an
Affiliate for any reason, including, but not limited to, a cessation by
resignation, discharge, death, Disability, Retirement or the disaffiliation of
an Affiliate, but excluding any such cessation where there is a simultaneous
reemployment by the Company or an Affiliate, and (b) in the case of a Board
Member or Consultant, a cessation of the service relationship between a Board
Member or Consultant and the Company or an Affiliate for any reason, including,
but not limited to, a cessation by resignation, discharge, death, Disability,
Retirement (with respect to a Board Member) or the disaffiliation of an
Affiliate, but excluding any such cessation where there is a simultaneous
reengagement of the Board Member or Consultant by the Company or an Affiliate.
SECTION 3
ADMINISTRATION
3.1 The Committee. Subject to Section 3.2, the Plan shall be administered
by the Board, or a committee appointed by the Board to administer the Plan. Any
references herein to "Committee" are references to the Board, or a committee
established by the Board, as applicable. To the extent the Board considers it
desirable to comply with or qualify under Rule 16b-3 or meet the
performance-based exception under section 162(m) of the Code, the Committee
shall consist of two or more directors of the Company, all of whom qualify as
"outside directors" as defined for purposes of the regulations under Code
section 162(m) and "non-employee directors" within the meaning of Rule 16b-3.
The number of members of the Committee shall from time to time be increased or
decreased, and shall be subject to such conditions, in each case as the Board
deems appropriate to permit transactions in Shares pursuant to the Plan to
satisfy such conditions of Rule 16b-3 and Code section 162(m) as then in effect.
3.2 Authority of the Committee. Subject to the express provisions of the
Plan, the Committee has full and final authority and sole discretion as follows:
(a) To determine when, to whom and in what types and amounts Awards
should be granted and the terms and conditions applicable to each Award,
and whether or not specific Awards shall be granted in connection with
other specific Awards, and if so whether they shall be exercisable
cumulatively with, or alternatively to, such other specific Awards;
(b) To construe and interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;
(c) To make, amend and rescind rules relating to the Plan, including
rules with respect to the exercisability and nonforfeitability of Awards
upon the Termination of Service of a Participant;
(d) To determine the terms and conditions of all Award Agreements
(which need not be identical) and, with the consent of the Participant, to
amend any such Award Agreement at any time, provided that the consent of
the Participant shall not be required for any amendment which (A) does not
adversely affect the rights of the Participant, or (B) is necessary or
advisable (as determined by the Committee) to carry out the purpose of the
Award as a result of any new or change in existing applicable law;
(e) To cancel, with the consent of the Participant, outstanding Awards
and to grant new Awards in substitution therefor;
(f) To accelerate the exercisability (including exercisability within
a period of less than six months after the Grant Date) of, and to
accelerate or waive any or all of the terms and conditions applicable to,
any Award or any group of Awards for any reason and at any time, including
in connection with a Termination of Service;
(g) To make such adjustments or modifications to Awards to
Participants working outside the United States as are advisable to fulfill
the purposes of the Plan;
(h) To impose such additional terms and conditions upon the grant,
exercise or retention of Awards as the Committee may, before or
concurrently with the grant thereof, deem appropriate, including limiting
the percentage of Awards which may from time to time be exercised by a
Participant; and
(i) To take any other action with respect to any matters relating to
the Plan for which it is responsible.
3.3 Delegation by the Committee. The Committee, in its sole discretion and
on such terms and conditions as it may provide, may delegate all or any part of
its authority and powers under this Plan to one or more Board Members or
officers of the Company; provided, however, that the Committee may not delegate
its authority and powers in any way which would jeopardize this Plan's or any
Award's qualification under Rule 16b-3 or Code section 162(m).
3.4 Decisions Binding. All determinations and decisions made by the
Committee, the Board and any delegate of the Committee pursuant to Section 3.3
shall be final, conclusive, and binding on all persons, and shall be given the
maximum deference permitted by law.
SECTION 4
SHARES SUBJECT TO THIS PLAN; GENERAL CONDITIONS
4.1 Number of Shares. The Shares for which Awards may be granted under the
Plan shall be subject to the following:
(a) The Shares with respect to which Awards may be made under the Plan
shall be Shares currently authorized but unissued or currently held or
subsequently acquired by the Company as treasury shares, including Shares
purchased in the open market or in private transactions.
(b) Subject to adjustment as provided in Sections 4.2 and 4.3 and to
the following provisions of this Section 4.1, the maximum number of Shares
that may be delivered to Participants and their beneficiaries under the
Plan shall be equal to the sum of: (i) 1,000,000 Shares; and (ii) any
Shares available for future awards under the Company's 1997 Equity
Incentive Plan (the "Prior Plan") as of the effective date of this Plan,
and any Shares that are represented by awards granted under the Prior Plan
which
are forfeited, expire or are canceled without delivery of Shares or which
result in the forfeiture of Shares back to the Company.
(c) If the Exercise Price of, or the tax withholding with respect to
any Award granted under the Plan or the Prior Plan is satisfied by
tendering Shares to the Company (by either actual delivery or by
attestation), such Shares shall also be available for delivery under the
Plan.
(d) Notwithstanding anything to the contrary in this Section 4.1, in
no event, shall grants of Incentive Stock Options exceed 1,000,000 Shares.
4.2 Lapsed Awards. If an Award is settled in cash, or is canceled,
terminates, expires or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award thereafter shall be available to be the subject
of another Award. With respect to an Award that is intended to qualify as
"performance-based compensation" under section 162(m) of the Code, if an Award
is cancelled, the Shares subject to the Award continue to count against the
maximum number of Shares under an Award which may be granted to a Participant in
any fiscal year.
4.3 Adjustments in Awards and Authorized Shares. In the event of any
merger, reorganization, consolidation, _ recapitalization, _ separation,
liquidation, stock dividend, stock split, Share combination, or other change in
the corporate structure of the Company affecting the Shares, the Committee shall
adjust the number and class of Shares which may be delivered under this Plan,
the number, class and price of Shares subject to outstanding Awards, and the
numerical limits of Sections 4.1, 5.1, 6.1, 7.1 and 8.1, or if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award, in such a manner as the Committee (in its sole discretion) shall
determine to be advisable or appropriate to prevent the dilution or diminution
of such Awards. In each case, with respect to Awards of Incentive Stock Options
no such adjustment shall be authorized to the extent that such authority would
cause the Plan to violate section 422(b)(1) of the Code or any successor
provision thereto. Notwithstanding the preceding, the number of Shares subject
to any Award always shall be a whole number.
4.4 Buy-Out Provision. The Committee may at any time offer on behalf of the
Company to buy out, for a payment in cash or Shares, an Award previously
granted, based on such terms and conditions as the Committee, in its sole
discretion, shall establish and communicate to the applicable Participant at the
time such offer is made.
4.5 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Award as it
may deem advisable or appropriate in its sole discretion, including, but not
limited to, restrictions related to applicable Federal securities laws, the
requirements of any national securities exchange or system upon which Shares are
then listed or traded, and any blue sky or state securities laws.
4.6 Cancellation and Rescission of Awards.
(a) Unless the Award Agreement specifies otherwise, the Committee may
cancel, rescind, suspend, withhold or otherwise limit or restrict any
unexercised Award at any time if the Participant is not in compliance with
all applicable provisions of the Award Agreement and the Plan or if the
Participant has a Termination of Service for Cause.
(b) Upon exercise, payment or delivery pursuant to an Award, the
Participant shall certify in a manner acceptable to the Company that he or
she is in compliance with the terms and conditions of the Plan. In the
event a Participant fails to comply with the provisions of this Section 4.6
prior to, or during the six months after, any exercise, payment or delivery
pursuant to an Award, such exercise, payment or delivery may be rescinded
by the Company within two years thereafter. In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the rescinded exercise, payment
or delivery in such manner and on such terms and conditions as may be
required, and the Company shall be entitled to set-off against the amount
of any such gain any amount owed to the Participant by the Company.
4.7 Loans and Guarantees. The Committee may in its discretion allow a
Participant to defer payment to the Company of all or any portion of (i) the
Exercise Price of an Option, (ii) the purchase price of Restricted Stock, if
any, or (iii) subject to applicable law, any taxes associated with the exercise,
nonforfeitability of, or payment of benefits in connection with, an Award, or
cause the Company to guarantee a loan from a third party to the Participant, in
an amount equal to all or any portion of such Exercise Price, or any related
taxes. Any such payment deferral or guarantee by the Company shall be on such
terms and conditions as the Committee may determine.
SECTION 5
STOCK OPTIONS
5.1 Grant of Options. Subject to the terms and provisions of this Plan,
Options may be granted to Participants at any time and from time to time as
determined by the Committee in its sole discretion. The Committee, in its sole
discretion, shall determine the number of Shares subject to each Option;
provided, however, that during any Fiscal Year, no Participant shall be granted
Options covering more than 500,000 Shares. The Committee may grant Incentive
Stock Options, Nonqualified Stock Options, or any combination thereof.
5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement
that shall specify the Exercise Price, the expiration date of the Option, the
number of Shares to which the Option pertains, any conditions to exercise of the
Option and such other terms and conditions as the Committee, in its sole
discretion, shall determine. The Award Agreement also shall specify whether the
Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option.
5.3 Exercise Price. Subject to the provisions of this Section 5.3, the
Exercise Price for each Option shall be determined by the Committee in its sole
discretion.
5.3.1 Non-Qualified Stock Options. In the case of a Nonqualified Stock
Option, the Exercise Price may not be less than the Fair Market Value of a
Share on the Grant Date; provided however, that the Committee may, where a
Nonqualified Stock Option is issued in lieu of a Participant's salary or
cash bonus, set the Exercise Price at no less than 85% of the Fair Market
Value of a Share on the Grant Date.
5.3.2 Nonqualified Stock Options. In the case of a Nonqualified Stock
Option, the Exercise Price may be less than the Fair Market Value of a
Share on the Grant Date.
5.3.3 Incentive Stock Options. In the case of an Incentive Stock
Option, the Exercise Price shall be not less than one hundred percent
(100%) of the Fair Market Value of a Share on the Grant Date; provided,
however, that if on the Grant Date, the Employee (together with persons
whose stock ownership is attributed to the Employee pursuant to section
424(d) of the Code) owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiaries, the Exercise Price shall be not less than one hundred ten
percent (110%) of the Fair Market Value of a Share on the Grant Date.
5.3.4 Substitute Options. Notwithstanding the provisions of Sections
5.3.1 and 5.3.2, in the event that the Company or an Affiliate consummates
a transaction described in section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated corporation), persons
who become Participants on account of such transaction may be granted
Options in substitution for options granted by such former employer or
recipient of services. If such substitute Options are granted, the
Committee, in its sole discretion and consistent with section 424(a) of the
Code, may determine that such substitute Options shall have an exercise
price less than one hundred (100%) of the Fair Market Value of the Shares
on the Grant Date.
5.4 Expiration of Options.
5.4.1 Expiration Dates. Except as provided in Section 5.8 regarding
Incentive Stock Options, each Option shall terminate upon the earlier of
the first to occur of the following events:
(a) The date(s) for termination of the Option set forth in the
Award Agreement; or
(b) The expiration of ten (10) years from the Grant Date.
5.4.2 Committee Discretion. Subject to the limits of Section 5.4.1,
the Committee, in its sole discretion, (a) shall provide in each Award
Agreement when each Option expires and becomes unexercisable, and (b) may,
after an Option is granted,
extend the maximum term of the Option (subject to Section 5.8 regarding
Incentive Stock Options).
5.5 Exercisability of Options. Options granted under this Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine in its sole discretion. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option. If the Committee provides that any Option is
exercisable only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Committee may determine.
5.6 Termination of Service. Each Award Agreement shall set forth the extent
to which the Participant shall have the right to exercise the Option following
Termination of Service. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement, need not
be uniform among all Options granted under the Plan, and may reflect
distinctions based on the reasons for Termination of Service.
5.7 Payment. Options shall be exercised by the Participant's delivery of a
written notice of exercise to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.
Upon the exercise of any Option, the Exercise Price shall be payable to the
Company in full in cash or its equivalent. The Committee, in its sole
discretion, also may permit exercise (a) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the total
Exercise Price, or (b) by any other means which the Committee, in its sole
discretion, determines (i) to provide legal consideration for the Shares, and
(ii) to be consistent with the purposes of this Plan.
As soon as practicable after receipt of a written notification of exercise
and full payment for the Shares purchased, the Company shall deliver to the
Participant (or the Participant's designated broker), Share certificates (which
may be in book entry form) representing such Shares.
5.8 Certain Additional Provisions for Incentive Stock Options.
5.8.1 Exercisability. The aggregate Fair Market Value (determined on
the Grant Date(s)) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by any Employee during any
calendar year (under all plans of the Company and its Subsidiaries) shall
not exceed $100,000.
5.8.2 Termination of Service. No Incentive Stock Option may be
exercised more than three (3) months after the Participant's Termination of
Service for any reason other than Disability or death, unless (a) the
Participant dies during such three-month period, and (b) the Award
Agreement or the Committee permits later exercise. No Incentive Stock
Option may be exercised more than one (1) year after the Participant's
termination of employment on account of Disability, unless (a) the
Participant dies during
such one-year period, and (b) the Award Agreement or the Committee permits
later exercise.
5.8.3 Company and Subsidiaries Only. Incentive Stock Options may
be granted only to persons who are employees of the Company or a
Subsidiary on the Grant Date.
5.8.4 Expiration. No Incentive Stock Option may be exercised
after the expiration of ten (10) years from the Grant Date; provided,
however, that if the Option is granted to an Employee who, together
with persons whose stock ownership is attributed to the Employee
pursuant to section 424(d) of the Code, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of
the Company or any of its Subsidiaries, the Option may not be
exercised after the expiration of five (5) years from the Grant Date.
5.8.5 Nontransferable. Each Incentive Stock Option shall by its
terms not be assignable or transferable other than by will or the laws
of descent and distribution and may be exercised, during the
Participant's lifetime, only by the Participant; provided, however,
that the Participant may, to the extent provided in the Plan in any
manner specified by the Committee, designate in writing a beneficiary
to exercise his or her Incentive Stock Option after the Participant's
death.
5.9 Repricing of Options. The Company may not reprice, replace or regrant
an outstanding Option either in connection with the cancellation of such Option
or by amending an Award Agreement to lower the Exercise Price of such Option.
5.10 Grant of Reload Options. The Committee may in connection with the
grant of an Option, in the Award Agreement, provide that a Participant who (i)
is a Participant when he or she exercises an Option (the "Exercised Option"),
(ii) has not received a Reload Option (as defined below) within the six (6)
months prior to such exercise, and (iii) satisfies the Exercise Price or any
required tax withholding applicable thereto with Shares which have been held by
the Participant for at least six (6) months, shall automatically be granted,
subject to Section 3, an additional Option ("Reload Option") in an amount equal
to the sum ("Reload Number") of the number of Shares tendered to exercise the
Exercised Option plus, if so provided by the Committee, the number of Shares, if
any, retained by the Company in connection with the exercise of the Exercised
Option to satisfy any federal, state or local tax withholding requirements;
provided that no Reload Option shall be granted in connection with the exercise
of an Option that has been transferred by the initial Participant thereof. All
Reload Options shall be Nonqualified Stock Options.
5.11 Conditions on Reload Options. Reload Options shall be subject to the
following terms and conditions:
(a) The Grant Date for each Reload Option shall be the date of
exercise of the Exercised Option to which it relates.
(b) Unless otherwise determined by the Committee, the Reload Option
shall be fully vested and may be exercised at any time during the remaining
term of the Exercised Option (subject to earlier termination thereof as
provided in the Plan or in the applicable Award Agreement).
(c) Unless otherwise determined by the Committee, the terms of the
Reload Option shall be the same as the terms of the Exercised Option to
which it relates, except that the Exercise Price for the Reload Option
shall, in every case, be 100% of the Fair Market Value of a Share on the
Grant Date of the Reload Option.
(d) Each Award Agreement shall state whether the Committee has
authorized Reload Options with respect to the underlying Stock Options.
Upon the exercise of an Underlying Stock Option or other Reload Option, the
Reload Option will be evidenced by an amendment to the underlying Award
Agreement or a new Award Agreement.
(e) No additional Reload Options shall be granted to Participants when
Stock Options and/or Reload Options are exercised pursuant to the terms of
this Plan following Termination of Service with the Company or a
Subsidiary.
SECTION 6
STOCK APPRECIATION RIGHTS
6.1 Grant of SARs. Subject to the terms and conditions of this Plan, an SAR
may be granted to Participants at any time and from time to time as shall be
determined by the Committee, in its sole discretion. The Committee may grant
Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof.
6.1.1 Number of Shares. The Committee shall have complete discretion
to determine the number of SARs granted to any Participant, provided that
during any Fiscal Year, no Participant shall be granted SARs covering more
than 500,000 Shares.
6.1.2 Exercise Price and Other Terms. The Committee, subject to the
provisions of this Plan, shall have complete discretion to determine the
terms and conditions of SARs granted under this Plan; provided, however,
that the exercise price of a Freestanding SAR shall be not less than one
hundred percent (100%) of the Fair Market Value of a Share on the Grant
Date. The exercise price of Tandem or Affiliated SARs shall equal the
Exercise Price of the related Option.
6.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. With respect to a Tandem SAR granted in connection with an
Incentive Stock Option: (a) the Tandem SAR shall expire no later than the
expiration of the underlying Incentive Stock Option; (b) the value of the payout
with respect to the Tandem SAR shall be for no more than one hundred percent
(100%) of the difference between the Exercise Price of the underlying Incentive
Stock Option and the Fair Market Value
of the Shares subject to the underlying Incentive Stock Option at the time the
Tandem SAR is exercised; and (c) the Tandem SAR shall be exercisable only when
the Fair Market Value of the Shares subject to the Incentive Stock Option
exceeds the Exercise Price of the Incentive Stock Option.
6.3 Exercise of Affiliated SARs. An Affiliated SAR shall be deemed to be
exercised upon the exercise of the related Option. The deemed exercise of an
Affiliated SAR shall not necessitate a reduction in the number of Shares subject
to the related Option.
6.4 Exercise of Freestanding SARs. Freestanding SARs shall be exercisable
on such terms and conditions as the Committee, in its sole discretion, shall
determine.
6.5 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee, in its sole
discretion, shall determine.
6.6 Expiration of SARs. An SAR granted under this Plan shall expire upon
the date determined by the Committee, in its sole discretion, as set forth in
the Award Agreement. Notwithstanding the foregoing, the terms and provisions of
Section 5.4 also shall apply to SARs.
6.7 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The positive difference between the Fair Market Value of a Share
on the date of exercise over the exercise price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the sole discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in any combination thereof.
SECTION 7
RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of this
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee, in its sole
discretion, shall determine. The Committee, in its sole discretion, shall
determine the number of Shares to be granted to each Participant; provided,
however, that during any Fiscal Year, no Participant shall receive more than
500,000 Shares of Restricted Stock. The Committee shall determine the amount, if
any, that a Participant shall pay for Restricted Stock, subject to applicable
requirements of the Delaware General Corporation Law. Restricted Stock which is
awarded to a Participant as an incentive for such Participant to remain employed
by the Company shall have a minimum three year Period of Restriction. Restricted
Stock awarded to a Participant as an incentive for such Participant's
performance as an employee shall have a minimum one year Period of Restriction.
7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. Unless the Committee, in its
sole discretion, determines otherwise, Shares of Restricted Stock shall be held
by the Company as escrow agent until the end of the applicable Period of
Restriction.
7.3 Transferability. Except as otherwise determined by the Committee, in
its sole discretion, Shares of Restricted Stock may not be sold, transferred,
gifted, bequeathed, pledged, assigned, or otherwise alienated or hypothecated,
voluntarily or involuntarily, until the end of the applicable Period of
Restriction.
7.4 Other Restrictions. The Committee, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate in accordance with this Section 7.4.
7.4.1 General Restrictions. The Committee may set restrictions based
upon (a) the achievement of specific performance objectives (Company-wide,
divisional or individual), (b) applicable Federal or state securities laws,
or (c) any other basis determined by the Committee in its sole discretion.
7.4.2 Section 162(m) Performance Restrictions. For purposes of
qualifying grants of Restricted _ Stock as _ "performance-based
compensation" under section 162(m) of the Code, the Committee, in its sole
discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals shall be set by the Committee on or before the
latest date permissible to enable the Restricted Stock to qualify as
"performance-based compensation" under section 162(m) of the Code. In
granting Restricted Stock that is intended to qualify under Code section
162(m), the Committee shall follow any procedures determined by it in its
sole discretion from time to time to be necessary, advisable or appropriate
to ensure qualification of the Restricted Stock under Code section 162(m)
(e.g., in determining the Performance Goals).
7.4.3 Legend on Certificates. The Committee, in its sole discretion,
may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions. For example, the Committee may
determine that some or all certificates representing Shares of Restricted
Stock shall bear the following legend:
"THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW,
IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
AMERICAN ITALIAN PASTA COMPANY 2001 EQUITY INCENTIVE PLAN, AND IN A
RESTRICTED STOCK AGREEMENT. A COPY OF THIS PLAN AND SUCH
RESTRICTED STOCK AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF
AMERICAN ITALIAN PASTA COMPANY."
7.5 Removal of Restrictions. Except as otherwise provided in this Section
7, Shares of Restricted Stock covered by each Restricted Stock grant made under
this Plan shall be released from escrow as soon as practicable after the end of
the applicable Period of Restriction. The Committee, in its sole discretion, may
accelerate the time at which any restrictions shall lapse and remove any
restrictions. After the end of the applicable Period of Restriction, the
Participant shall be entitled to have any legend or legends under Section 7.4.3
removed from his or her Share certificate, and the Shares shall be freely
transferable by the Participant.
7.6 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares, unless the applicable Award Agreement provides
otherwise.
7.7 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the applicable Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
7.8 Return of Restricted Stock to Company. On the date set forth in the
applicable Award Agreement, the Restricted Stock for which restrictions have not
lapsed shall revert to the Company and thereafter shall be available for grant
under this Plan.
7.9 Termination of Service. Each Restricted Stock Award Agreement shall set
forth the extent to which the Participant shall have the right to receive
unvested Restricted Stock following his or her Termination of Service. Such
provision shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with each Participant, need not be
uniform among all Restricted Stock issued pursuant to the Plan and may reflect
distinctions based on the reasons for termination.
SECTION 8
PERFORMANCE UNITS AND PERFORMANCE SHARES
8.1 Grant of Performance Units/Shares. Performance Units and Performance
Shares may be granted to Participants at any time and from time to time, as
shall be determined by the Committee, in its sole discretion. The Committee
shall have complete discretion in determining the number of Performance Units
and Performance Shares granted to each Participant; provided, however, that
during any Fiscal Year, (a) no Participant shall receive Performance Units
having an initial value greater than the value of 250,000 Shares, and (b) no
Participant shall receive more than 250,000 Performance Shares.
8.2 Value of Performance Units/Shares. Each Performance Unit shall have an
initial value that is established by the Committee on or before the Grant Date.
Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the Grant Date.
8.3 Performance Objectives and Other Terms. The Committee shall set
performance objectives in its sole discretion which, depending on the extent to
which they are met, will determine the number or value of Performance Units or
Performance Shares, or both, that will be paid out to the Participants. The time
period during which the performance objectives must be met shall be called the
"Performance Period". Each Award of Performance Units or Performance Shares
shall be evidenced by an Award Agreement that shall specify the Performance
Period, and such other terms and conditions as the Committee, in its sole
discretion, shall determine. A Performance Period may not be less than one year.
8.3.1 General Performance Objectives. The Committee may set
performance objectives based upon (a) the achievement of Company-wide,
divisional or individual goals, (b) applicable Federal or state securities
laws, or (c) any other basis determined by the Committee in its discretion.
8.3.2 Section 162(m) Performance Objectives. For purposes of
qualifying grants of Performance Units or Performance Shares as
"performance-based compensation" under section 162(m) of the Code, the
Committee, in its sole discretion, may determine that the performance
objectives applicable to Performance Units or Performance Shares, as the
case may be, shall be based on the achievement of Performance Goals. The
Performance Goals shall be set by the Committee on or before the latest
date permissible to enable the Performance Units or Performance Shares, as
the case may be, to qualify as "performance-based compensation" under
section 162(m) of the Code. In granting Performance Units or Performance
Shares which are intended to qualify under Code section 162(m), the
Committee shall follow any procedures determined by it from time to time to
be necessary or appropriate in its sole discretion to ensure qualification
of the Performance Units or Performance Shares, as the case may be, under
Code section 162(m) (e.g., in determining the Performance Goals).
8.4 Earning of Performance Units/Shares. After the applicable Performance
Period has ended, the holder of Performance Units or Performance Shares shall be
entitled to receive a payout of the number of Performance Units or Performance
Shares, as the case may be, earned
by the Participant over the Performance Period, to be determined as a function
of the extent to which the corresponding performance objectives have been
achieved. After the grant of a Performance Unit or Performance Share, the
Committee, in its sole discretion, may reduce or waive any performance
objectives for such Performance Unit or Performance Share.
8.5 Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units or Performance Shares shall be made as soon as
practicable after the end of the applicable Performance Period. The Committee,
in its sole discretion, may pay earned Performance Units or Performance Shares
in the form of cash, in Shares (which have an aggregate Fair Market Value equal
to the value of the earned Performance Units or Performance Shares, as the case
may be, at the end of the applicable Performance Period), or in any combination
thereof.
8.6 Cancellation of Performance Units/Shares. On the earlier of the date
set forth in the Award Agreement or the Participant's Termination of Service
(other than by death, Disability or, with respect to an Employee, Retirement),
all unearned or unvested Performance Units or Performance Shares shall be
forfeited to the Company, and thereafter shall be available for grant under this
Plan. In the event of a Participant's death, Disability or, with respect to an
Employee, Retirement, prior to the end of a Performance Period, the Committee
shall reduce his or her Performance Units or Performance Shares proportionately
based on the date of such Termination of Service.
SECTION 9
MISCELLANEOUS
9.1 Deferrals. The Committee, in its sole discretion, may permit a
Participant to defer receipt of the payment of cash or the delivery of Shares
that would otherwise be due to such Participant under an Award. Any such
deferral election shall be subject to such rules and procedures as shall be
determined by the Committee in its sole discretion.
9.2 No Effect on Employment or Service. Nothing in this Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without Cause. For
purposes of this Plan, transfer of employment of a Participant between the
Company and any of its Affiliates (or between Affiliates) shall not be deemed a
Termination of Service. Employment or secure relationship with the Company and
its Affiliates is on an at-will basis only, unless otherwise provided by an
applicable written employment or service agreement between the Participant and
the Company or its Affiliate, as the case may be.
9.3 Participation. No Participant shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
9.4 Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability or expense (including
attorneys' fees) that may be imposed upon or reasonably incurred by him or her
in connection with or resulting from any claim, action, suit
or proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under this Plan or any
Award Agreement, and (b) from any and all amounts paid by him or her in
settlement thereof, with the Company's prior written approval, or paid by him or
her in satisfaction of any judgment in any such claim, action, suit or
proceeding against him or her; provided, however, that he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or Bylaws, by contract, as a matter of law or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.
9.5 Successors. All obligations of the Company under this Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business or assets of the Company.
9.6 Beneficiary Designations. If permitted by the Committee, a Participant
under this Plan may name a beneficiary or beneficiaries to whom any vested but
unpaid Award shall be paid in the event of the Participant's death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Committee. In the
absence of any such designation, any vested benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate and, subject to
the terms of this Plan and of the applicable Award Agreement, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant's estate.
9.7 Transferability of Awards. Unless otherwise provided by the Committee
in an Award Agreement, no Award granted under this Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will, by the laws of descent and distribution, or to the limited extent
provided in Section 9.6.
9.8 No Rights as Stockholder. Except to the limited extent provided in
Sections 7.6 and 7.7, no Participant (nor any beneficiary thereof) shall have
any of the rights or privileges of a stockholder of the Company with respect to
any Shares issuable pursuant to an Award (or the exercise thereof), unless and
until certificates representing such Shares shall have been issued, recorded on
the records of the Company or its transfer agents or registrars, and delivered
to the Participant (or his or her beneficiary).
SECTION 10
AMENDMENT, TERMINATION AND DURATION
10.1 Amendment, Suspension, or Termination. The Board, in its sole
discretion, may amend or terminate this Plan, or any part thereof, at any time
and for any reason; provided, however, that the Board will obtain stockholder
approval for any amendment which materially increases the number of Shares which
may be delivered to Participants under this Plan, materially changes the
categories of Participants who may participate in this Plan, and any other
amendment which would require stockholder approval pursuant to the rules of the
New York Stock Exchange, any other applicable national security exchange, or any
applicable laws or regulations.
10.2 No Award may be granted during any period of suspension or after
termination of this Plan.
10.3 Duration of this Plan. This Plan shall become effective on the date
specified herein, and subject to Section 10.1 (regarding the Board's right to
amend or terminate this Plan), shall remain in effect thereafter; provided,
however, that without further stockholder approval, no Incentive Stock Option
may be granted under this Plan after the tenth anniversary of the effective date
of this Plan.
SECTION 11
TAX WITHHOLDING
11.1 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or the exercise thereof), the Company shall have the power
and the right to deduct or withhold from any amounts due to the Participant from
the Company, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to such
Award (or the exercise thereof).
11.2 Withholding Arrangements. The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part, by
(a) electing to have the Company withhold otherwise deliverable Shares, or (b)
delivering to the Company Shares then owned by the Participant having a Fair
Market Value equal to the amount required to be withheld. The amount of the
withholding requirement shall be deemed to include any amount that the Committee
agrees may be withheld at the time any such election is made, not to exceed the
amount determined by using the maximum federal, state or local marginal income
tax rates applicable to the Participant with respect to the Award on the date
that the amount of tax to be withheld is to be determined. The Fair Market Value
of the Shares to be withheld or delivered shall be determined as of the date
that the taxes are required to be withheld.
11.3 Notification under Code section 83(b). If the Participant, in
connection with the exercise of any Option, or the grant of Restricted Stock,
makes the election permitted under section 83(b) of the Code to include in such
Participant's gross income in the year of transfer the amounts specified in
section 83(b) of the Code, then such Participant shall notify the Company of
such election within 10 days after filing the notice of the election with the
Internal Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under section 83(b) of the Code. The Committee
may, in connection with the grant of an Award or at any time thereafter,
prohibit a Participant from making the election described above.
SECTION 12
CHANGE IN CONTROL
12.1 Change in Control. In the event of a Change in Control of the Company,
all Awards granted under this Plan that then are outstanding and not then
exercisable or are subject to restrictions, shall, except as provided in Section
12.2, or unless otherwise provided for in the Award Agreements applicable
thereto, become immediately exercisable, and all restrictions shall be removed,
as of the first date that the Change in Control has been deemed to have
occurred, and shall remain as such for the remaining life of the Award as
provided herein and within the provisions of the related Award Agreements.
Notwithstanding the preceding sentence, in the event that the Committee is
advised by the Company's independent auditors that the effect of the preceding
sentence would be to preclude the ability of the Company to account for an
acquisition or merger transaction as a pooling of interests, the Committee may
declare the preceding sentence to be inoperable to such extent as the Committee,
in its sole discretion, deems advisable.
12.2 Adjustments upon Merger or Asset Sale. In the event of a Change in
Control under Section 12.3(c) or (d)(ii) (a "Section 12.2 Event") and the
successor corporation does not either (i) assume each outstanding Award or (ii)
substitute an equivalent award by the successor corporation or a Parent or
Subsidiary of the successor corporation, then the Award shall fully vest and
become immediately exercisable and the Committee shall notify the Participant
that the Award shall be exercisable for a period of twenty-five (25) days from
the date of such notice, and the Award shall terminate upon the expiration of
such period unless exercised. For the purposes of this paragraph, the Award
shall be considered assumed if, following the Section 10.2 Event, the Award
confers the right to purchase or receive, for each Share subject to the Award
immediately prior to the Section 12.2 Event, equal consideration (whether stock,
cash, or other securities or property) as received in the Section 12.2 Event by
holders of each Share of common stock held on the effective date of the
transaction (and if holders of Shares were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Section
12.2 Event was not solely common stock of the successor corporation or its
Parent, the Committee may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Award, for
each Share subject to the award, to be cash and/or other securities equal in
fair market value to the per share consideration received by holders of common
stock in the merger or sale of assets.
12.3 Definition. For purposes of this Section 12, a Change in Control of
the Company shall be deemed to have occurred if the conditions set forth in any
one or more of the following shall have been satisfied, unless such condition
shall have received prior approval of a majority vote of the Continuing
Directors, as defined below, indicating that this Section 12 shall not apply
thereto:
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the 1934 Act (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company), is or becomes the "beneficial owner" (as defined in Rule
13(d)(3) under the Exchange Act), directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the Company's
then outstanding securities or 51% or more of the combined voting power of
the Company's then outstanding securities;
(b) during any period of two consecutive years (not including any
period prior to the Effective Date of this Plan), individuals ("Existing
Directors") who at the beginning of such period constitute the Board of
Directors, and any new board member (an "Approved Director") (other than a
board member designated by a person who has entered into an agreement with
the Company to effect a transaction described in paragraph (a), (b) or (c)
of this Section 12.3) whose election by the Board of Directors or
nomination for election by the Company's shareholders was approved by a
vote of a least two-thirds (2/3) of the board members then still in office
who either were board members at the beginning of the period or whose
election or nomination for election previously was so approved (Existing
Directors together with Approved Directors constituting "Continuing
Directors"), cease for any reason to constitute at least a majority of the
Board of Directors; or
(c) the consummation of the merger or consolidation of the Company
with any other corporation, other than a merger with a wholly-owned
subsidiary, the sale of substantially all of the assets of the Company, or
the liquidation or dissolution of the Company, unless, in the case of a
merger or consolidation, (x) the directors in office immediately prior to
such merger or consolidation will constitute at least majority of the Board
of the surviving corporation of such merger or consolidation and any parent
(as such term is defined in Rule 12b-2 under the Exchange Act) of such
corporation, or (y) the voting securities of the Company outstanding
immediately prior thereto represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than
66-2/3% of the combined voting power of the voting securities of the
Company or such surviving entity and are owned by all or substantially all
of the persons who were the holders of the voting securities of the Company
immediately prior to the transaction in substantially the same proportions
as such holders owned such voting securities immediately prior to the
transaction; or
(d) the stockholders of the Company approve (i) a plan of complete
liquidation of the Company or (ii) an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
SECTION 13
LEGAL CONSTRUCTION
13.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
13.2 Severability. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.
13.3 Requirements of Law. The grant of Awards and the issuance of Shares
under this Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required from time to time.
13.4 Securities Law Compliance. With respect to Section 16 Persons, Awards
under this Plan are intended to comply with all applicable conditions of Rule
16b-3. To the extent any provision of this Plan, Award Agreement or action by
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable or appropriate by the Committee in
its sole discretion.
13.5 Governing Law. This Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Delaware (excluding
its conflict of laws provisions).
13.6 Captions. Captions are provided herein for convenience of reference
only, and shall not serve as a basis for interpretation or construction of this
Plan.
Adopted December 12, 2000