EXHIBIT 10.32
CAPSTEAD MORTGAGE CORPORATION
1997 FLEXIBLE LONG TERM INCENTIVE PLAN
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Section 1. PURPOSE OF THE PLAN
The purposes of the Capstead Mortgage Corporation 1997 Flexible Long Term
Incentive Plan (the "Plan") are to promote the interests of Capstead Mortgage
Corporation (together with any successor thereto, the "Company") and its
stockholders by enabling the Company to attract, motivate, reward and retain
employees and to encourage the holding of proprietary interests in the Company
by employees of the Company or its Affiliates by enabling the Company to offer
such key employees performance-based stock incentives and other equity interests
in the Company and other incentive awards that recognize the creation of value
for the stockholders of the Company and promote the Company's long-term growth
and success. To achieve this purpose, eligible persons may receive stock
options, Stock Appreciation Rights, Restricted Stock, Performance Awards,
performance stock, Dividend Equivalent Rights and any other Awards, or any
combination thereof.
Section 2. DEFINITIONS
As used in this Plan, the following terms shall have the meanings set forth
below unless the content otherwise requires:
2.1 "Affiliate" shall mean (i) any corporation, partnership or other
entity that, directly or indirectly, is controlled by the Company (ii) any
entity in which the Company has a significant equity interest and (iii) any
entity that provides substantial management advisory services for the
Company, in each case as determined by the Committee.
2.2 "Award" shall mean a stock option, Stock Appreciation Right,
Restricted Stock, Performance Award, performance stock, Dividend Equivalent
Right or any other Award under the Plan.
2.3 "Board" shall mean the Board of Directors of the Company, as the
same may be constituted from time to time.
2.4 "Change in Control" shall mean, after the effective date of this
Plan, (i) the occurrence of an event of a nature that would be required to
be reported in response to Item 1 or Item 2 of a Form 8-K Current Report of
the Company promulgated pursuant to Sections 13 and 15(d) of the Securities
Exchange Act of 1934, as amended; provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (a) any "person," as
such term is used in Sections 13(d) and 14(d) of the Exchange Act (other
than the Company, any trustee or other fiduciary holding securities under
any employee benefit plan of the Company, or any company 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 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing twenty-
five percent (25%) or more of the combined voting power of the Company's
then outstanding securities or (b) during any period of two consecutive
years, individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority thereof,
unless the election by the Board or the nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the two-year period or whose election or nomination for
election was previously so approved; (ii) the stockholders of the Company
approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than eighty
percent (80%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation; provided, however, that a merger or consolidation
effected to implement a reorganization or recapitalization of the Company,
or a similar transaction (collectively, a "Reorganization"), in which no
"person" acquires more than twenty percent (20%) of the combined voting
power of the Company's then outstanding securities shall not constitute a
Change in Control of the Company; or (iii) the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of the
Company's assets.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
2.6 "Committee" shall mean a committee of the Board, which shall
consist solely of not less than two (2) members of the Board who are
appointed by, and serve at the pleasure of, the Board and who are (i) "Non-
Employee Directors" within the meaning of Rule 16b-3 of the General Rules
and Regulations of the Exchange Act and (ii) "outside directors," as
required under Section 162(m) of the Code and such Treasury Regulations as
may be promulgated thereunder.
2.7 "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company.
2.8 "Disability" shall mean permanent and total inability to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months, as determined in the sole and absolute
discretion of the Committee.
2.9 "Dividend Equivalent Right" shall mean the right of the holder
thereof to receive credits based on the cash dividends that would have been
paid on the Shares specified in the Award if the Shares were held by the
holder to whom the Award is made.
2.10 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2.11 "Fair Market Value" shall mean with respect to the Shares, as of
any date, (i) the last reported sales price regular way on the New York
Stock Exchange or, if not reported for the New York Stock Exchange, on the
Composite Tape, or, in case no such sale takes place on such day, the
average of the reported closing bid and asked quotations on the New York
Stock Exchange; (ii) if the Shares are not listed on the New York Stock
Exchange or no such quotations are available, the closing price of the
Shares as reported by the National Market System, or similar
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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
organization; 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.
2.12 "Non-Tandem Stock Appreciation Right" shall mean any Stock
Appreciation Right granted alone and not in connection with an Award which
is a stock option.
2.13 "Non-Qualified Stock Option" shall mean any stock option awarded
under this Plan (and no such stock option shall be designated as an
"Incentive Stock Option" under Section 422 of the Code or any successor
provision).
2.14 "Optionee" shall mean any person who has been granted a stock
option under this Plan and who has executed a written stock option
agreement with the Company reflecting the terms of such grant.
2.15 "Plan" shall mean the Capstead Mortgage Corporation 1997 Flexible
Long Term Incentive Plan set forth herein.
2.16 "Performance Award" shall mean any Award hereunder of Shares,
units or rights based upon, payable in, or otherwise related to, Shares
(including Restricted Stock), or cash of an equivalent value, as the
Committee may determine, at the end of a specified performance period
established by the Committee.
2.17 "Reload Option" shall mean a stock option as defined in
subsection 6.6(b) herein.
2.18 "Restricted Stock" shall mean any Award of Shares under this Plan
that are subject to restrictions or risk of forfeiture.
2.19 "Retirement" shall mean termination of employment, other than
discharge for cause, after age 65 or on or before age 65 with the consent
of the Committee.
2.20 "Shares" shall mean shares of the Company's Common Stock and any
shares of capital stock or other securities of the Company hereafter issued
or issuable upon, in respect of or in substitution or exchange for such
Shares.
2.21 "Stock Appreciation Right" shall mean the right of the holder
thereof to receive an amount in cash or Shares equal to the excess of the
Fair Market Value of a Share on the date of exercise over the Fair Market
Value of a Share on the date of the grant (or such other value as may be
specified in the agreement granting the Stock Appreciation Right).
2.22 "Tandem Stock Appreciation Right" shall mean a Stock Appreciation
Right granted in connection with an Award which is a stock option.
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Section 3. ADMINISTRATION OF THE PLAN
3.1 Committee. The Plan shall be administered and interpreted by the
Committee.
3.2 Awards. Subject to the provisions of the Plan and directions
from the Board, the Committee is authorized to:
(a) determine the persons to whom Awards are to be granted;
(b) determine the types and combinations of Awards to be
granted, the number of Shares to be covered by the Award, the pricing
of the Award, the time or times when the Award shall be granted and
may be exercised, the terms, performance criteria or other conditions,
vesting periods or any restrictions for an Award, any restrictions on
Shares acquired pursuant to the exercise of an Award and any other
terms and conditions of an Award;
(c) conclusively interpret the Plan provisions;
(d) prescribe, amend and rescind rules and regulations relating
to the Plan or make individual decisions as questions arise, or both;
(e) determine whether, to what extent and under what
circumstances to provide loans from the Company to participants in
order to purchase Shares subject to Awards under the Plan, and the
terms and conditions of such loans;
(f) rely upon employees of the Company for such clerical and
record-keeping duties as may be necessary in connection with the
administration of the Plan; and
(g) make all other determinations and take all other actions
necessary or advisable for the administration of the Plan.
3.3 Procedures. A majority of the Committee members shall constitute
a quorum. All determinations of the Committee shall be made by a majority
of its members. All questions of interpretation and application of the
Plan or pertaining to any question of fact or Award granted hereunder shall
be decided by the Committee, whose decision shall be final, conclusive and
binding upon the Company and each other affected party.
Section 4. SHARES SUBJECT TO PLAN
4.1 Limitations. The maximum number of Shares that may be issued
with respect to Awards under the Plan shall not exceed 2,000,000 unless
such maximum shall be increased or decreased by reasons of changes in
capitalization of the Company as hereinafter provided. The maximum number
of Shares with respect to which Awards may be granted in any fiscal year to
any participant in the Plan shall not exceed 50,000. The Shares issued
pursuant to the Plan may be authorized but unissued Shares, or may be
issued Shares which have been reacquired by the Company.
4.2 Changes. To the extent that any Award under the Plan, or any
stock option or performance award granted under any prior incentive plan of
the Company, shall be forfeited, shall expire or shall be canceled, in
whole or in part, then the number of Shares covered by the
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Award or stock option so forfeited, expired or canceled may again be
awarded pursuant to the provisions of this Plan. In the event that Shares
are delivered to the Company in full or partial payment of the exercise
price for the exercise of a stock option granted under the Plan or any
prior incentive plan of the Company, the number of Shares available for
future Awards under the Plan shall be reduced only by the net number of
Shares issued upon the exercise of the option. Awards that may be satisfied
either by the issuance of Shares or by cash or other consideration shall be
counted against the maximum number of Shares that may be issued under the
Plan, even though the Award is ultimately satisfied by the payment of
consideration other than Shares, as, for example, a stock option granted in
tandem with a Stock Appreciation Right that is settled by a cash payment of
the stock appreciation. However, Awards will not reduce the number of
Shares that may be issued pursuant to the Plan if the settlement of the
Award will not require the issuance of Shares, as, for example, a Stock
Appreciation Right that can be satisfied only by the payment of cash.
Section 5. ELIGIBILITY
Eligibility for participation under the Plan shall be open to all officers
and employees of the Company and its Affiliates.
Section 6. STOCK OPTIONS
6.1 Grants. The Committee may grant stock options alone or in
addition to other Awards granted under this Plan to any eligible officer or
employee. Such option shall be a Non-Qualified Stock Option, and the
Committee shall specify any terms or conditions relating to such Award.
Each such person so selected shall have a reasonable period of time within
which to accept or reject the offered option. Failure to accept within the
period so fixed by the Committee may be treated as a rejection. Each
person who accepts an option shall enter into a written agreement with the
Company, in such form as the Committee may prescribe, setting forth the
terms and conditions of the option, consistent with the provisions of the
Plan.
The Committee may require than an Optionee meet certain conditions
before the option or a portion thereof may vest or be exercised, as, for
example, that the Optionee remain in the employ of the Company or one of
its Affiliates for a stated period or periods of time before the option, or
stated portions thereof, may vest or be exercised; provided, however, that
nothing in the Plan or in any option agreement shall confer upon any
Optionee any right to remain in the employ of the Company or one of its
Affiliates, and nothing herein shall be construed in any manner to
interfere in any way with the right of the Company or its Affiliates to
terminate such Optionee's employment at any time.
6.2 Option Price. The option exercise price of the Shares covered by
each stock option shall be determined by the Committee.
6.3 Option Term. The term of a stock option shall be for such period
of months or years from the date of its grant as may be determined by the
Committee. Each option shall be subject to earlier termination as
hereinafter provided (unless the Committee has provided otherwise):
(a) If the Optionee ceases to be an officer or employee of the
Company or any Affiliate by reason of the Optionee's discharge for
cause, as determined solely and exclusively by the Committee, all
rights of the Optionee to exercise an option shall terminate,
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lapse and be forfeited immediately at the time of the Optionee's
discharge for cause.
(b) If the Optionee ceases to be an employee of the Company or
any Affiliate by reason of death, the personal representatives, heirs,
legatees or distributees of the Optionee, as appropriate, shall have
the right up to the earlier of (i) six (6) months from the Optionee's
death or (ii) the remaining term of the option to exercise any such
option.
(c) If the Optionee ceases to be an employee of the Company or
any Affiliate by reason of the Optionee's resignation, Retirement,
Disability or for any reason other than the Optionee's discharge for
cause or death, all rights of the Optionee to exercise an option shall
terminate, lapse, and be forfeited upon the earlier of (i) six (6)
months after the date of the Optionee's termination of employment by
reason of such employee's resignation, Retirement, Disability or such
other reason or (ii) the remaining term of the option, except that in
case the Optionee shall die within six (6) months after the date of
termination of employment by reason of such employee's resignation,
Retirement, Disability or such other reason, the personal
representatives, heirs, legatees or distributees of the Optionee, as
appropriate, shall have the right up to an additional three (3) months
from the date of the Optionee's death to exercise any such option .
6.4 Vesting of Stock Options.
(a) Each stock option granted hereunder may only be exercised to
the extent that the Optionee is vested in such option. Each stock
option shall vest separately in accordance with the option vesting
schedule, if any, determined by the Committee in its sole discretion,
which will be incorporated in the stock option agreement entered into
between the Company and each Optionee. The option vesting schedule
will be accelerated in the event the provisions of paragraphs (b),
(c), (d) or (e) of this subsection apply; or if, in the sole
discretion of the Committee, the Committee determines that
acceleration of the option vesting schedule would be desirable for the
Company.
(b) If an Optionee ceases to be an employee of the Company or
any Affiliate by reason of death, the personal representatives, heirs,
legatees or distributees of the Optionee, as appropriate, shall become
fully vested in each stock option granted to the Optionee, effective
on the date of the Optionee's death or on the date that the Optionee
ceases to be an employee, as appropriate, and shall have the immediate
right to exercise any such option to the extent not previously
exercised.
(c) In the event of the dissolution or liquidation of the
Company, each stock option granted under the Plan shall terminate as
of a date to be fixed by the Board; provided, however, that not less
than thirty (30) days' written notice of the date so fixed shall be
given to each Optionee and each such Optionee shall be fully vested in
and shall have the right during such period to exercise the option,
even though such option would not otherwise be exercisable under the
option vesting schedule. At the end of such period, any unexercised
option shall terminate and be of no further effect.
(d) In the event of a Reorganization:
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(1) If there is no plan or agreement respecting the
Reorganization, or if such plan or agreement does not
specifically provide for the change, conversion or exchange of
the Shares under outstanding and unexercised stock options for
other securities then the provisions of the above paragraph (c)
of this subsection shall apply as if the Company had dissolved or
been liquidated on the effective date of the Reorganization; or
(2) If there is a plan or agreement respecting the
Reorganization, and if such plan or agreement specifically
provides for the change, conversion or exchange of the Shares
under outstanding and unexercised stock options for securities of
another corporation, then the Board shall adjust the Shares under
such outstanding and unexercised stock options (and shall adjust
the Shares remaining under the Plan which are then available to
be awarded under the Plan, if such plan or agreement makes no
specific provision therefor) in a manner not inconsistent with
the provisions of such plan or agreement for the adjustment,
change, conversion or exchange of such Shares and such options.
(e) In the event of a Change in Control of the Company, all
stock options and any associated Stock Appreciation Rights shall
become fully vested and immediately exercisable and the vesting of all
performance-based stock options shall be determined as if the
performance period or cycle applicable to such stock options had ended
immediately upon such Change in Control.
6.5 Exercise of Stock Options.
(a) Stock options may be exercised as to Shares only in amounts
and at intervals of time specified in the written option agreement
between the Company and the Optionee. Each exercise of a stock option,
or any part thereof, shall be evidenced by a notice in writing to the
Company. The purchase price of the Shares as to which an option shall
be exercised shall be paid in full at the time of exercise, and may be
paid to the Company either:
(1) in cash (including check, bank draft or money order);
(2) by the delivery (constructive or otherwise) of Shares
having a Fair Market Value equal to the aggregate option price;
(3) by a combination of cash and Shares; or
(4) by arrangement with a broker acceptable to the
Committee in which payment of the exercise price is made pursuant
to an irrevocable direction from the Optionee to the broker to
deliver the Company proceeds from the sale of the option Shares
in an amount equal to the exercise price of the Shares.
(b) If an Optionee delivers Shares (including Shares of
Restricted Stock) already owned by him or her in full or partial
payment of the exercise price for any stock option granted under the
Plan or any prior incentive plan of the Company, the Committee may
authorize the automatic grant of a new option (a "Reload Option") for
that number of Shares as shall equal the number of
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already owned Shares surrendered (including Shares of Restricted
Stock). The grant of a Reload Option will become effective upon the
exercise of the underlying stock option. The option exercise price of
the Reload Option shall be the Fair Market Value of a Share on the
effective date of the grant of the Reload Option. Each Reload Option
shall be exercisable no earlier than six (6) months from the date of
its grant and no later than the time when the underlying stock option
being exercised could be last exercised. The Committee may also
specify additional terms, conditions and restrictions for the Reload
Option and the Shares to be acquired upon the exercise thereof.
(c) The amount, as determined by the Committee, of any federal,
state or local tax required to be withheld by the Company due to the
exercise of a stock option shall be satisfied, at the election of the
Optionee, either (a) by payment by the Optionee to the Company of the
amount of such withholding obligation in cash (the "Cash Method") or
(b) through either the retention by the Company of a number of Shares
out of the Shares being acquired through the exercise of the option or
the delivery of already owned Shares having a Fair Market Value equal
to the amount of the withholding obligation (the "Share Retention
Method"). If an Optionee elects to use the Share Retention Method in
full or partial satisfaction for any tax liability resulting from the
exercise of a stock option, the Committee may authorize the grant of a
Reload Option for that number of Shares as shall equal the number of
Shares used to satisfy the tax liabilities of the stock option being
exercised on the price and terms set forth in subsection (b) above.
The cash payment or the amount equal to the Fair Market Value of the
Shares so withheld, as the case may be, shall be remitted by the
Company to the appropriate taxing authorities. The Committee shall
determine the time and manner in which an Optionee may elect to
satisfy a withholding obligation by either the Cash Method or the
Share Retention Method.
(d) An Optionee shall not have any of the rights of a
stockholder of the Company with respect to the Shares covered by a
stock option except to the extent that one or more certificates of
such Shares shall have been delivered to the Optionee, or the Optionee
has been determined to be a stockholder of record by the Company's
Transfer Agent, upon due exercise of the option.
6.6 Date of a Stock Option Grant. The granting of a stock option
shall take place only when the Committee approves the granting of such
option. Neither any action taken by the Board nor anything contained in the
Plan or in any resolution adopted or to be adopted by the Board or the
stockholders of the Company shall constitute the granting of a stock option
under the Plan.
Section 7. STOCK APPRECIATION RIGHTS
7.1 Grants. The Committee may grant to any eligible officer or
employee either Non-Tandem Stock Appreciation Rights or Tandem Stock
Appreciation Rights. Stock Appreciation Rights shall be subject to such
terms and conditions as the Committee shall impose. The grant of the Stock
Appreciation Right may provide that the holder may be paid for the value of
the Stock Appreciation Right either in cash or in Shares, or a combination
thereof, at the discretion of the Committee. In the event of the exercise
of a Stock Appreciation Right payable in Shares, the holder of the Stock
Appreciation Right shall receive that number of whole Shares of stock of
the Company having an aggregate Fair Market Value on the date of exercise
equal to the value obtained by multiplying
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(i) either (a) in the case of a Tandem Stock Appreciation Right, the
difference between the Fair Market Value of a Share on the date of exercise
over the per share exercise price of the related option, or (b) in the case
of a Non-Tandem Stock Appreciation Right, the difference between the Fair
Market Value of a Share on the date of exercise over the Fair Market Value
on the date of the grant by (ii) the number of Shares as to which the Stock
Appreciation Right is exercised. However, notwithstanding the foregoing,
the Committee, in its sole discretion, may place a ceiling on the amount
payable upon exercise of a Stock Appreciation Right, but any such
limitation shall be specified at the time that the Stock Appreciation Right
is granted.
7.2 Exercisability. A Tandem Stock Appreciation Right may be granted
at the time of the grant of the related stock option or at any time
thereafter during the term of the stock option. The Tandem Stock
Appreciation Right may be transferred at, and only at, the times and to the
extent the related stock option is transferable. If a Tandem Stock
Appreciation Right is granted, there shall be surrendered and canceled from
the option at the time of exercise of the Tandem Stock Appreciation Right,
in lieu of exercise under the option, that number of Shares as shall equal
the number of Shares as to which the Tandem Stock Appreciation Right shall
have been exercised.
7.3 Certain Limitations on Non-Tandem Stock Appreciation Rights. A
Non-Tandem Stock Appreciation Right will be exercisable as provided by the
Committee and will have such other terms and conditions as the Committee
may determine. A Non-Tandem Stock Appreciation Right is subject to
acceleration of vesting or immediate termination in certain circumstances
in the same manner as stock options pursuant to subsections 6.3 and 6.4 of
this Plan.
7.4 Limited Stock Appreciation Rights. The Committee is also
authorized to grant "limited stock appreciation rights," either as Tandem
Stock Appreciation Rights or Non-Tandem Stock Appreciation Rights. Limited
stock appreciation rights would become exercisable only upon the occurrence
of a Change in Control or such other event as the Committee may designate
at the time of grant or thereafter.
Section 8. RESTRICTED STOCK
8.1 Grants. The Committee may grant Awards of Restricted Stock for
no cash consideration, for such minimum consideration as may be required by
applicable law, or for such other consideration as may be specified by the
grant. The terms and conditions of the Restricted Stock shall be specified
by the grant agreement. The Committee, in its sole discretion, shall
determine what rights, if any, the person to whom an Award of Restricted
Stock is made shall have in the Restricted Stock during the restriction
period and the restrictions applicable to the particular Award, including,
without limitation, whether the holder of the Restricted Stock shall have
the right to vote the Shares and receive dividends and other distributions
applicable to the Shares, the vesting schedule (which may be based on
service, performance or other factors) and rights to acceleration of
vesting (including, without limitation, whether non-vested Shares are
forfeited or vested upon termination of employment). Further, the
Committee may award performance-based Restricted Stock by conditioning the
grant, or vesting or such other factors, such as the release, expiration or
lapse of restrictions upon any such Award (including the acceleration of
any such conditions or terms) of such Restricted Stock upon the attainment
of specified performance goals or such other factors as the Committee may
determine; provided, however, that notwithstanding the foregoing, upon a
Change in Control, the amount of granting or vesting, as the case may be,
for all
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performance-based Restricted Stock, shall be determined as if the
performance period or cycle applicable to such Restricted Stock had
terminated immediately upon such Change in Control; provided, however, that
to the extent that any such performance period or cycle is shortened
adversely by virtue of the Change in Control, such Restricted Stock shall
be prorated accordingly. The Committee shall also determine when the
restrictions shall lapse or expire and the conditions, if any, under which
the Restricted Stock will be forfeited or sold back to the Company,
provided, however, that notwithstanding the foregoing, upon a Change in
Control, all restrictions applicable to Restricted Stock shall lapse and
expire and Shares of Restricted Stock with vesting provisions shall become
fully vested. Each Award of Restricted Stock may have different
restrictions and conditions. The Committee, in its discretion, may
prospectively change the restriction period and the restrictions applicable
to any particular Award of Restricted Stock. Unless otherwise set forth in
the Plan, Restricted Stock may not be disposed of by the recipient until
the restrictions specified in the Award expire.
8.2 Awards and Certificates. Any Restricted Stock issued hereunder
may be evidenced in such manner as the Committee, in its sole discretion,
shall deem appropriate including, without limitation, book-entry
registration or issuance of a stock certificate or certificates. In the
event any stock certificate is issued in respect of Shares of Restricted
Stock awarded hereunder, such certificate shall bear an appropriate legend
with respect to the restrictions applicable to such Award. The Company may
retain, at its option, the physical custody of any stock certificate
representing any awards of Restricted Stock during the restriction period
or require that the Restricted Stock be placed in escrow or trust, along
with a stock power endorsed in blank, until all restrictions are removed or
expire.
Section 9. PERFORMANCE AWARDS
9.1 Grants. A Performance Award may consist of either or both, as the
Committee may determine, of (i) "Performance Shares," or the right to
receive Shares, Restricted Stock or cash of an equivalent value, or any
combination thereof as the Committee may determine, or (ii) "Performance
Units," or the right to receive a fixed dollar amount payable in cash,
Common Stock, Restricted Stock or any combination thereof, as the Committee
may determine. The Committee may grant Performance Awards to any eligible
employee, for no cash consideration, for such minimum consideration as may
be required by applicable law or for such other consideration as may be
specified at the time of the grant. The terms and conditions of Performance
Awards shall be specified at the time of the grant and may include
provisions establishing the performance period, the performance criteria to
be achieved during a performance period, the criteria used to determine
vesting (including the acceleration thereof), whether Performance Awards
are forfeited or vest upon termination of employment during a performance
period and the maximum or minimum settlement values; provided, however,
that notwithstanding the foregoing, upon a Change in Control, the vesting,
if any, and the determination of the amount earned of a Performance Award
shall be determined as if the performance period or cycle applicable to
such Performance Award had terminated immediately upon such Change in
Control; provided, however, that to the extent that any such performance
period or cycle is shortened adversely by virtue of the Change in Control,
such Performance Award shall be prorated accordingly. Each Performance
Award shall have its own terms and conditions, which shall be determined in
the discretion of the Committee. If the Committee determines, in its sole
discretion, that the established performance measures or objectives are no
longer
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suitable because of a change in the Company's business, operations,
corporate structure or for other reasons that the Committee deems
satisfactory, the Committee may modify the performance measures or
objectives and/or the performance period.
9.2 Terms and Conditions. Performance Awards may be valued by
reference to the Fair Market Value of a Share or according to any formula
or method deemed appropriate by the Committee, in its sole discretion,
including, but not limited to, achievement of specific financial,
production, sales, cost or earnings performance objectives that the
Committee believes to be relevant to the Company's business and for
remaining in the employ of the Company for a specified period of time, or
the Company's performance or the performance of its Common Stock measured
against the performance of the market, the Company's industry segment or
its direct competitors. Performance Awards may be paid in cash, Shares
(including Restricted Stock) or other consideration, or any combination
thereof. If payable in Shares, the consideration for the issuance of the
Shares may be the achievement of the performance objective established at
the time of the grant of the Performance Award. Performance Awards may be
payable in a single payment or in installments and may be payable at a
specified date or dates or upon attaining the performance objective, all at
the Committee's discretion. The extent to which any applicable performance
objective has been achieved shall be conclusively determined by the
Committee.
Section 10. DIVIDEND EQUIVALENT RIGHTS
The Committee may grant a Dividend Equivalent Right, either as a component
of another Award or as a separate Award, and, in general, each such holder of a
Dividend Equivalent Right that is outstanding on a dividend record date for the
Company's Common Stock shall be credited with an amount equal to the cash or
stock dividends or other distributions that would have been received had the
Shares covered by the Award been issued and outstanding on the dividend record
date. The terms and conditions of the Dividend Equivalent Right shall be
specified by the grant. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional Shares (which may thereafter accrue additional Dividend
Equivalent Rights). Any such reinvestment shall be at the Fair Market Value at
the time thereof. Dividend Equivalent Rights may be settled in cash or Shares,
or a combination thereof, in a single payment or in installments. A Dividend
Equivalent Right granted as a component of another Award may provide that such
Dividend Equivalent Right shall be settled upon exercise, settlement or payment
for or lapse of restrictions on such other Award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other Award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other Award.
Section 11. OTHER AWARDS
The Committee may grant to any eligible employee other forms of Awards
based upon, payable in or otherwise related to, in whole or in part, Shares if
the Committee, in its sole discretion. determines that such other form of Award
is consistent with the purposes and restrictions of the Plan. The terms and
conditions of such other form of Award shall be specified by the grant,
including, but not limited to, the price, if any, and the vesting schedule, if
any. Such Awards may be granted for no cash consideration, for such minimum
consideration as may be required by applicable law or for such other
consideration as may be specified by the grant.
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Section 12. NON-TRANSFERABILITY OF AWARDS.
A stock option shall not be transferable otherwise than by will or the laws
of descent and distribution, and a stock option may be exercised, during the
lifetime of the Optionee, only by the Optionee; provided, however, that with the
approval of the Committee, the agreement relating to any Award (including,
without limitation, a stock option) may provide that such Award may be
transferred to one or more members of the immediate family of the grantee of the
Award or to a trust for the benefit of such person or as directed under a
qualified domestic relations order. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of a stock option or other Award contrary to
the provisions hereof, or the levy of any execution, attachment or similar
process upon a stock option or other Award shall be null and void and without
effect.
Section 13. COMPLIANCE WITH SECURITIES AND OTHER LAWS
In no event shall the Company be required to sell or issue Shares under any
Award if the sale or issuance thereof would constitute a violation of applicable
federal or state securities laws or regulations or a violation of any other law
or regulation of any governmental or regulatory agency or authority or any
national securities exchange. As a condition to any sale or issuance of Shares,
the Company may place legends on Shares, issue stop transfer orders and require
such agreements or undertakings as the Company may deem necessary or advisable
to assure compliance with any such laws or regulations, including, if the
Company or its counsel deems it appropriate, representations from the person to
whom an Award is granted that he or she is acquiring the Shares solely for
investment and not with a view to distribution and that no distribution of the
Shares will be made unless registered pursuant to applicable federal and state
securities laws, or in the opinion of counsel of the Company, such registration
is unnecessary.
Section 14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR REORGANIZATION
The value of an Award in Shares shall be adjusted from time to time as
follows:
(a) Subject to any required action by stockholders, the number
of Shares covered by each outstanding Award, and the exercise price,
shall be proportionately adjusted for any increase or decrease in the
number of issued Shares of the Company resulting from a subdivision or
consolidation of Shares or the payment of a stock dividend (but only
in Shares) or any other increase or decrease in the number of Shares
effected without receipt of consideration by the Company.
(b) Subject to any required action by stockholders, if the
Company shall be the surviving corporation in any Reorganization,
merger or consolidation, each outstanding Award shall pertain to and
apply to the securities to which a holder of the number of Shares
subject to the Award would have been entitled, and if a plan or
agreement reflecting any such event is in effect that specifically
provides for the change, conversion or exchange of Shares, then any
adjustment to Shares relating to an Award hereunder shall not be
inconsistent with the terms of any such plan or agreement.
(c) In the event of a change in the Shares of the Company as
presently constituted, which is limited to a change of par value into
the same number of Shares with a different par value or without par
value, the Shares resulting from any such change shall be deemed to be
the Shares within the meaning of the Plan.
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To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the
Board, whose determination shall be final, binding and conclusive.
Except as hereinbefore expressly provided in the Plan, any person
to whom an Award is granted shall have no rights by reason of any
subdivision or consolidation of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution,
liquidation, reorganization, merger or consolidation or spinoff of
assets or stock of another corporation, and any issue by the Company
of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or exercise price of
Shares subject to an Award.
The grant of an Award pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, Reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell or transfer all or any part of its business or
assets.
Section 15. AMENDMENT OR TERMINATION OF THE PLAN
15.1 Amendment of the Plan. Notwithstanding anything contained in
the Plan to the contrary, all provisions of the Plan may at any time or
from time to time be modified or amended by the Board; provided, however,
that no Award at any time outstanding under the Plan may be modified,
impaired or canceled adversely to the holder of the Award without the
consent of such holder.
15.2 Termination of the Plan. The Board may suspend or terminate the
Plan at any time, and such suspension or termination may be retroactive or
prospective. However, no Award may be granted on or after April 18, 2007,
the tenth anniversary of the adoption of the Plan. Termination of the Plan
shall not impair or affect any Award previously granted hereunder and the
rights of the holder of the Award shall remain in effect until the Award
has been exercised in its entirety or has expired or otherwise has been
terminated by the terms of such Award.
Section 16. AMENDMENTS AND ADJUSTMENTS TO AWARDS
The Committee may amend, modify or terminate any outstanding Award with the
Participant's consent at any time prior to payment or exercise in any manner not
inconsistent with the terms of the Plan, including, without limitation, (i) to
change the date or dates as of which (A) an option becomes exercisable or (B) a
performance-based Award is deemed earned or (ii) to cancel an Award and grant a
new Award in substitution therefor under such different terms and conditions as
it determines in its sole and complete discretion to be appropriate. The
Committee is also authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 14
hereof) affecting the Company, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent reduction or enlargement of the benefits or
potential benefits intended to be made available under the Plan. Any provision
of the Plan or any agreement regarding an Award to the contrary notwithstanding,
the Committee may cause
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any Award granted to be canceled in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in value to
the Fair Market Value of such canceled Award. The determinations of value under
this Section 16 shall be made by the Committee in its sole discretion.
Section 17. GENERAL PROVISIONS
17.1 No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company from adopting or continuing in effect
other compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
17.2 No Right to Employment. The grant of an Award shall not be
construed as giving the recipient thereof the right to be retained in the
employ of the Company. Further, the Company may at any time dismiss a
participant in the Plan from employment, free from any liability or any
claim under the Plan, unless otherwise expressly provided in the Plan or in
any Award agreement. No employee, participant or other person shall have
any claim to be granted any Award, and there is no obligation for
uniformity or treatment of employees, participants or holders or
beneficiaries of Awards.
17.3 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND EFFECT OF THE
PLAN AND ANY RULES AND REGULATIONS RELATING TO THE PLAN SHALL BE DETERMINED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND.
17.4 Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any person or Award, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if
it cannot be construed or deemed amended without, in the sole determination
of the Committee, materially altering the intent of the Plan or the Award,
such provision shall be stricken as to such jurisdiction, person or Award
and the remainder of the Plan and any such Award shall remain in full force
and effect.
17.5 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.
17.6 Headings. Headings are given to the subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
17.7 Effective Date. The Plan shall be effective as of April 18,
1997, the date of its approval by the Board.
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