HUB GROUP, INC.
1997 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective as of October 28, 1997)
HUB GROUP, INC.
Certificate
I, ______________, _____________ of Hub Group, Inc., having in my custody
and possession the corporate records of said corporation, do hereby certify that
attached hereto is a true and correct copy of the Hub Group, Inc. 1997 Long-Term
Incentive Plan as in effect October 28, 1997.
WITNESS my hand this __ day of ________, 1998.
________________
As Aforesaid
TABLE OF CONTENTS
SECTION 1....................................................................1
GENERAL...................................................................1
1.1 Purpose........................................................1
1.2 Participation..................................................1
1.3 Operation and Administration...................................2
SECTION 2....................................................................2
OPTIONS...................................................................2
2.1 Definition.....................................................2
2.2 Eligibility....................................................2
2.3 Price..........................................................2
2.4 Exercise.......................................................3
2.5 Post-Exercise Limitations......................................4
2.6 Expiration Date................................................4
2.7 Reload of Option. .............................................4
2.8 Dividend Equivalents...........................................4
SECTION 3....................................................................5
STOCK APPRECIATION RIGHTS.................................................5
3.1 Definition.....................................................5
3.2 Eligibility....................................................5
3.3 Exercise.......................................................5
3.4 Settlement of Award............................................6
3.5 Post-Exercise Limitations......................................6
3.6 Expiration Date................................................6
3.7 Dividend Equivalents...........................................6
SECTION 4....................................................................7
RESTRICTED STOCK..........................................................7
4.1 Definition.....................................................7
4.2 Eligibility....................................................7
4.3 Terms and Conditions of Awards.................................7
SECTION 5....................................................................8
PERFORMANCE UNITS.........................................................8
5.1 Definition.....................................................8
5.2 Eligibility....................................................8
5.3 Terms and Conditions of Awards.................................8
5.4 Payment........................................................9
5.5 Termination during Performance Period..........................9
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SECTION 6....................................................................9
DIRECTORS AUTOMATIC OPTION GRANT..........................................9
6.1 Definition.....................................................9
6.2 Participation..................................................9
6.3 Price.........................................................10
6.4 Exercise......................................................10
6.5 Expiration Date...............................................11
6.6 Agreement With Company........................................11
SECTION 7...................................................................12
OPERATION AND ADMINISTRATION.............................................12
7.1 Effective Date...............................................12
7.2 Shares Subject to Plan.......................................12
7.3 Individual Limits on Awards..................................12
7.4 Adjustments to Shares........................................13
7.5 Limit on Distribution........................................15
7.6 Liability for Cash Payments..................................16
7.7 Performance-Based Compensation...............................16
7.8 Withholding..................................................16
7.9 Transferability..............................................17
7.10 Administration...............................................17
7.11 Notices......................................................17
7.12 Form and Time of Elections...................................17
7.13 Agreement With Company.......................................17
7.14 Limitation of Implied Rights.................................17
7.15 Benefits Under Qualified Retirement Plans....................18
7.16 Evidence.....................................................18
7.17 Action by Employers..........................................18
7.18 Gender and Number............................................18
7.19 Defined Terms................................................18
SECTION 8...................................................................20
COMMITTEE................................................................20
8.1 Selection of Committee........................................20
8.2 Powers of Committee...........................................20
8.3 Delegation by Committee.......................................21
8.4 Information to be Furnished to Committee......................22
8.5 Liability and Indemnification of Committee....................22
SECTION 9...................................................................22
AMENDMENT AND TERMINATION................................................22
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HUB GROUP, INC.
1997 LONG-TERM INCENTIVE PLAN
SECTION 1
GENERAL
1.1 Purpose. The Hub Group, Inc. 1997 Long-Term Incentive Plan (the
"Plan") has been established by Hub Group, Inc. (the "Company") to:
(a) attract and retain key executive and managerial employees;
(b) attract and retain the services of experienced and knowledgeable
directors;
(c) motivate participating employees, by means of appropriate incentives,
to achieve long-range goals;
(d) provide incentive compensation opportunities that are competitive with
those of other corporations; and
(e) further identify Participants' interests with those of the Company's other
shareholders through compensation that is based on the Company's common
stock;
and thereby promote the long-term financial interest of the Company and the
Related Companies, including the growth in value of the Company's equity and
enhancement of long-term shareholder return.
1.2 Participation. Participation in the Plan shall be subject to the
following:
(a) Subject to the terms and conditions of the Plan, the Committee shall
determine and designate, from time to time, from among the employees of
the Employers who are key executives or managerial employees, those
persons who will be granted one or more Awards under the Plan, and
thereby become "Participants" in the Plan. In the discretion of the
Committee, and subject to the terms of the Plan, a Participant may be
granted any Award permitted under the provisions of the Plan, and more
than one Award may be granted to a Participant. However, the right to
receive an Option under Section 6 shall be subject to the limitations
of that section.
(b) Subject to the terms and conditions of the Plan, Eligible Directors shall
receive Option Awards in accordance with the provisions of Section 6, and
thereby become "Participants" in the Plan. Individuals shall not be
eligible for Awards under Sections 2, 3, 4 and 5 during the period in
which they are Eligible Directors.
Except as otherwise provided by the Committee and consented to by the
Participant, or except as otherwise provided in the Plan, an Award under the
Plan shall not affect any previous Award under the Plan or an award under any
other plan maintained by the Company or the Related Companies.
1.3 Operation and Administration. The operation and administration of
the Plan, including the Awards made under the Plan, shall be subject to the
provisions of Section 7. Capitalized terms in the Plan shall be defined as set
forth in the Plan (including subsection 7.18 of the Plan).
SECTION 2
OPTIONS
2.1 Definitions. The grant of an Option under this Section 2 entitles
the Participant to purchase shares of Stock at a price fixed at the time the
Option is granted, or at a price determined under a method established at the
time the Option is granted, subject to the terms of this Section 2. Options
granted under this Section 2 may be either Incentive Stock Options or
Non-Qualified Stock Options, as determined in the discretion of the Committee.
A "Non-QualifiedOption" is an Option that is not intended to be an "incentive
stock option" as that term is described in section 422(b) of the Code. An
"Incentive Stock Option" is an Option that is intended to satisfy the
requirements applicable to an "incentive stock option" described in section
422(b) of the Code.
2.2 Eligibility. The Committee shall designate the Participants to whom
Options are to be granted under this Section 2 and shall determine the number of
shares of Stock to be subject to each such Option. Consistent with the
requirements of section 422 of the Code, to the extent that the aggregate fair
market value of Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year (under
all plans of the Company and all Related Companies) exceeds $100,000, such
options shall be treated as Non-Qualified Stock Options.
2.3 Price. The determination and payment of the purchase price of a
share of Stock under each Option granted under this Section 2 shall be subject
to the following:
(a) The purchase price shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option
is granted; provided, however, that in no event shall such price be less
than the greater of (i) 100% of the Fair Market Value of a share of Stock
as of the date on which the Option is granted; or (ii) the par value of a
share of Stock on such date.
(b) Subject to the following provisions of this subsection 2.3, the full
purchase price of each share of Stock purchased upon the exercise of any
Option shall be paid at the time of such exercise and, as soon as
practicable thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto.
(c) The purchase price shall be payable in cash or in shares of Stock (valued
at Fair Market Value as of the day of exercise), or in any combination
thereof, as determined by the Committee.
(d) A Participant may elect to pay the purchase price upon the exercise of
an Option through the following cashless exercise procedures: The
Participant shall notify the Corporate Secretary of the intent to
exercise. Written instructions will then be prepared and delivered to
the Company and the broker indicating the Participant's cashless
election and instructing the Company to deliver to the broker the
Common Stock issuable upon exercise. The exercise of the Option will
be executed on the same day that the broker is able to sell the stock.
The broker will then withhold from the proceeds of the sale and deliver
to the Company an amount, in cash, equal to the Option exercise price.
An additional amount for federal and state tax withholdings may also be
withheld and delivered to the Company at the Participant's election.
2.4 Exercise. Except as otherwise expressly provided in the Plan, an
Option granted under this Section 2 shall be exercisable in accordance with the
following terms of this subsection 2.4:
(a) The terms and conditions relating to exercise of an Option shall be
established by the Committee, and may include, without limitation,
conditions relating to completion of a specified period of service or
achievement of performance standards prior to exercise of the Option.
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(b) No Option may be exercised by a Participant: (i) prior to the date on
which the Participant completes one continuous year of employment with the
Company or any Related Company after the date as of which the Option is
granted (provided, however, that the Committee may permit earlier exercise
following the Participant's Date of Termination by reason of death or
Disability); or (ii) after the Expiration Date applicable to that Option.
(c) The exercise of an Option will result in the surrender of the
corresponding rights under a tandem Stock Appreciation Right, if any.
2.5 Post-Exercise Limitations. The Committee, in its discretion, may
impose such restrictions on shares of Stock acquired pursuant to the exercise of
an Option (including stock acquired pursuant to the exercise of a tandem Stock
Appreciation Right) as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance and such other factors as the
Committee determines to be appropriate.
2.6 Expiration Date. The "Expiration Date" with respect to an Option
means the date established as the Expiration Date by the Committee at the time
of the grant; provided, however, that the Expiration Date with respect to any
Option shall not be later than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Option is granted;
(b) if the Participant's Date of Termination occurs by reason of
Retirement, death or Disability, the one-year anniversary of such Date
of Termination; or
(c) if the Participant's Date of Termination occurs for reasons other than
Retirement, death or Disability, the 60-day period following such Date of
Termination.
2.7 Reload of Option. In the event the Participant exercises an Option
and pays all or a portion of the purchase price in Common Stock, in the manner
permitted by subsection 2.3, such Participant may, in the Committee's
discretion, be issued a new Option to purchase additional shares of Stock equal
to the number of shares of Stock surrendered to the Company in such payment.
Such new Option shall have an exercise price equal to the Fair Market Value per
share on the date such new Option is granted, shall first be exercisable six
months from the date of grant of the new Option and shall have an Expiration
Date on the same date as the Expiration Date of the original Option so exercised
by payment of the purchase price in shares of Stock.
2.8 Dividend Equivalents. The Committee may award Dividend Equivalents
with respect to Options. The award of Dividend Equivalents shall permit the
Participant to earn an amount equal to the dividends payable with respect to the
number of shares of Stock subject to the Option for the period the Option is
outstanding and unexercised. The right to payment of such earned dividends
shall be subject to such restrictions and limitations as may be imposed by the
Committee.
SECTION 3
STOCK APPRECIATION RIGHTS
3.1 Definition. Subject to the terms of this Section 3, a Stock
Appreciation Right granted under the Plan entitles the Participant to receive,
in cash or Stock (as determined in accordance with subsection 3.4), value equal
to all or a portion of the excess of: (a) the Fair Market Value of a specified
number of shares of Stock at the time of exercise; over (b) a specified price
which shall not be less than 100% of the Fair Market Value of the Stock at the
time the Stock Appreciation Right is granted, or, if granted in tandem with an
Option, the exercise price with respect to shares under the tandem Option.
3.2 Eligibility. Subject to the provisions of the Plan, the Committee
shall designate the Participants to whom Stock Appreciation Rights are to be
3
granted under the Plan, shall determine the exercise price or a method by which
the price shall be established with respect to each such Stock Appreciation
Right, and shall determine the number of shares of Stock on which each Stock
Appreciation Right is based. A Stock Appreciation Right may be granted in
connection with all or any portion of a previously or contemporaneously granted
Option or not in connection with an Option. If a Stock Appreciation Right is
granted in connection with an Option, then, in the discretion of the Committee,
the Stock Appreciation Right may, but need not be granted in tandem with the
Option.
3.3 Exercise. The exercise of Stock Appreciation Rights shall be
subject to the following:
(a) If a Stock Appreciation Right is not in tandem with an Option, then the
Stock Appreciation Right shall be exercisable in accordance with the
terms established by the Committee in connection with such rights;
provided, however, that except as otherwise expressly provided in the
Plan, no Stock Appreciation Right may be exercised by a Participant (i)
prior to the date on which he completes one continuous year of
employment with the Company or any Related Company after the date as of
which the Stock Appreciation Right is granted (provided, however, that
the Committee may permit earlier exercise following the Participant's
Date of Termination by reason of death or Disability); or (ii) after
the Expiration Date applicable to that Stock Appreciation Right.
(b) If a Stock Appreciation Right is in tandem with an Option, then the Stock
Appreciation Right shall be exercisable at the time the tandem Option is
exercisable. The exercise of a Stock Appreciation Right will result in
the surrender of the corresponding rights under the tandem Option.
3.4 Settlement of Award. Upon the exercise of a Stock Appreciation
Right, the value to be distributed to the Participant, in accordance with
subsection 3.1, shall be distributed in shares of Stock (valued at their Fair
Market Value at the time of exercise), in cash, or in a combination thereof, in
the discretion of the Committee.
3.5 Post-Exercise Limitations. The Committee, in its discretion, may
impose such restrictions on shares of Stock acquired pursuant to the exercise of
a Stock Appreciation Right as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance and such other factors as the
Committee determines to be appropriate.
3.6 Expiration Date. If a Stock Appreciation Right is in tandem with an
Option, then the "Expiration Date" for the Stock Appreciation Right shall be the
Expiration Date for the related Option. If a Stock Appreciation Right is not in
tandem with an Option, then the "Expiration Date" for the Stock Appreciation
Right shall be the date established as the Expiration Date by the Committee;
provided, however, that subject to the following provisions of this subsection
3.6, the Expiration Date with respect to any Stock Appreciation Right shall not
be later than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Stock Appreciation
Right is granted;
(b) if the Participant's Date of Termination occurs by reason of
Retirement, death or Disability, the one-year anniversary of such Date
of Termination;
(c) if the Participant's Date of Termination occurs by reason other than
Retirement, death, or Disability, 60 days after such Date of Termination.
3.7 Dividend Equivalents. The Committee may award Dividend Equivalents
with respect to Stock Appreciation Rights. The award of Dividend Equivalents
shall permit the Participant to earn an amount equal to the dividends payable
with respect to the number of shares of Stock that are subject to the Stock
Appreciation Rights for the period the Stock Appreciation Rights are outstanding
and unexercised. The right to payment of such earned dividends shall be subject
to such restrictions and limitations as may be imposed by the Committee.
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SECTION 4
RESTRICTED STOCK
4.1 Definition. Subject to the terms of this Section 4, Restricted Stock
Awards under the Plan are grants of Stock to Participants, the vesting of which
is subject to such conditions as may be established by the Committee.
4.2 Eligibility. The Committee shall designate the Participants to whom
Restricted Stock is to be granted, and the number of shares of Stock that are
subject to each such Award.
4.3 Terms and Conditions of Awards. Shares of Restricted Stock granted
to Participants under the Plan shall be subject to the following terms and
conditions:
(a) Restricted Stock granted to Participants may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter
provided, for a period of not less than one year after the time of the
grant of such Stock (the "Restricted Period"). Except for such
restrictions, the Participant as owner of such shares shall have all
the rights of a shareholder, including but not limited to the right to
vote such shares and, except as otherwise provided by the Committee,
the right to receive all dividends paid on such shares. The Committee
may, in its discretion, at any time after the date of the award of
Restricted Stock, adjust the length of the Restricted Period to account
for individual circumstances of a Participant or group of Participants,
but in no case shall the length of the Restricted Period be less than
one year.
(b) Except as otherwise determined by the Committee, a Participant whose Date
of Termination occurs prior to the end of the Restricted Period for any
reason shall forfeit all shares of Restricted Stock remaining subject to
any outstanding Restricted Stock Award.
(c) The Committee may, in its discretion, condition the vesting of shares of
Restricted Stock on the achievement of performance goals.
(d) Each certificate issued in respect of shares of Restricted Stock granted
under the Plan shall be registered in the name of the Participant and, at
the discretion of the Committee, each such certificate may be deposited in
a bank designated by the Committee. Each such certificate shall bear the
following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) contained in the Hub Group, Inc. 1997
Long-Term Incentive Plan and an agreement entered into between the
registered owner and Hub Group, Inc. A copy of such plan and
agreement is on file in the office of the Secretary of Hub Group,
Inc., 377 East Butterfield Road, Suite 700, Lombard, Illinois
60148."
(e) Subject to the limitations of the Plan and the Award of Restricted Stock,
at the end of the Restricted Period for Restricted Stock, such Restricted
Stock will be transferred free of all restrictions to a Participant (or
his or her legal representative, beneficiary or heir).
SECTION 5
PERFORMANCE UNITS
5.1 Definition. Subject to the terms of this Section 5, the Award of
Performance Units under the Plan entitles the Participant to receive value for
the units at the end of a Performance Period to the extent provided under the
Award. The number of units earned, and value received for them, will be
contingent on the degree to which the performance measures established at the
time of the initial Award are met.
5
5.2 Eligibility. The Committee shall designate the Participants to whom
Performance Units are to be granted, and the number of units to be the subject
to each such Award.
5.3 Terms and Conditions of Awards. For each Participant, the Committee
will determine the number of units granted; the value of units, which may be
stated either in cash or in shares of Stock; the performance measures used for
determining whether the Performance Units are earned; the Performance Period
during which the performance measures will apply; the relationship between the
level of achievement of the performance measures and the degree to which
Performance Units are earned; whether, during or after the Performance Period,
any revision to the performance measures or Performance Period should be made to
reflect significant events or changes that occur during the Performance Period;
and the number of earned Performance Units that will be paid in cash and/or
shares of Stock.
5.4 Payment. The Committee will compare the actual performance to the
performance measures established for the Performance Period and determine the
number of units to be paid and their value. Payment for units earned shall be
wholly in cash, wholly in Stock or in a combination of the two, in a lump sum or
installments, and subject to vesting requirements and such other conditions as
the Committee shall determine. The Committee will determine the number of
earned units to be paid in cash and the number to be paid in Stock. For
Performance Units valued when granted in shares of Stock, one share of Stock
will be paid for each unit earned, or cash will be paid for each unit earned
equal to either (a) the Fair Market Value of a share of Stock at the end of the
Performance Period or (b) the value of the Stock determined based on the average
Fair Market Value for a number of days determined by the Committee. For
Performance Units valued when granted in cash, the value of each unit earned
will be paid in its initial cash value, or shares of Stock will be distributed
based on the cash value of the units earned divided by (a) the Fair Market Value
of a share of Stock at the end of the Performance Period or (b) the value of a
determined based on the average Fair Market Value for a number of days
share of Stock determined by the Committee.
5.5 Termination during Performance Period. If a Participant's Date of
Termination occurs during a Performance Period with respect to any Performance
Shares granted to him, the Committee may determine that the Participant will be
entitled to receive all or any portion of the Performance Shares that he would
otherwise receive, and may accelerate the determination and payment of the value
of such Performance Shares or make such other adjustments as the Committee, in
its sole discretion, deems desirable.
SECTION 6
DIRECTORS AUTOMATIC OPTION GRANT
6.1 Definition. The grant of an Option under this Section 6 entitles the
Participant to purchase shares of Stock at a price fixed at the time the Option
is granted. An Option granted under this Section 6 shall not affect any Award
previously granted under the Plan or an award under any other plan maintained by
the Company or the Related Companies. An Option granted under this Section 6 is
not intended to satisfy the requirements applicable to an "incentive stock
option" as described in section 422(b) of the Code.
6.2 Participation. Subject to the following provisions of this subsection
6.2, each Director who is an Eligible Director shall be granted an "Option",
which shall be an option to purchase 12,000 shares of Stock (as adjusted
pursuant to subsection 7.4). Each Director who becomes an Eligible Director on
or after the Effective Date (as defined in subsection 7.1) and who has not
previously received an Option award under this Section 6 or under Section 6 of
the Hub Group, Inc. 1996 Long-Term Incentive Plan shall receive the Option Award
described in this subsection 6.2 as of the first business day immediately
following the date he becomes an Eligible Director. A Director may not receive
more than one Option Award under this Section 6 or under Section 6 of the Hub
Group, Inc. 1996 Long-Term Incentive Plan. For purposes of the Plan, each
Director who is not an employee of the Company or any Related Company shall be
an "Eligible Director".
6
6.3 Price. The determination and payment of the purchase price of a
share of Stock under each Option granted pursuant to this Section 6 shall be
subject to the following:
(a) The purchase price shall be the greater of (a) 100% of the Fair Market
Value of a share of Stock as of the date on which such Option is granted;
or (b) the par value of a share of such Stock on such date.
(b) The full purchase price of each share of Stock purchased upon the exercise
of any Option shall be paid at the time of such exercise and, as soon as
practicable thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto.
(c) The purchase price shall be payable in cash or in shares of Stock (valued
at Fair Market Value as of the day of exercise), or in any combination
thereof.
(d) A Participant may elect to pay the purchase price upon the exercise of
an Option granted pursuant to this Section 6 through the following
cashless exercise procedures: The Participant shall notify the
Corporate Secretary of the intent to exercise. Written instructions
will then be prepared and delivered to the Company and the broker
indicating the Participant's cashless election and instructing the
Company to deliver to the broker the Common Stock issuable upon
exercise. The exercise of the Option will be executed on the same day
that the broker is able to sell the stock. The broker will then
withhold from the proceeds of the sale and deliver to the Company an
amount, in cash, equal to the Option exercise price. An additional
amount for federal and state tax withholdings may also be withheld and
delivered to the Company at the Participant's election.
6.4 Exercise. An Option granted under this Section 6 shall be first
exercisable with respect to each 1/3 of the number of shares of Stock subject to
the Option on the date of each of the first, second and third annual
anniversaries of the date as of which the Option is granted, respectively, but
only if the Participant continues to serve as a Director until such annual
anniversary (or is employed by the Company or any Related Company until such
anniversary). Notwithstanding the foregoing, 100% of an Option granted to a
Participant under this Section 6 will become fully exercisable on the date the
Participant ceases to be a Director if such cessation occurs by reason of the
Participant's death or Disability. An Option granted under this Section 6 will
not be exercisable after the Expiration Date applicable to that Option, and all
rights to purchase shares of Stock pursuant to the Option shall cease as of the
Option's Expiration Date.
6.5 Expiration Date. The "Expiration Date" with respect to an Option
granted under this Section 6 means the earliest to occur of:
(a) the ten-year anniversary of the date on which the Option is granted;
(b) if the Participant ceases to be a Director by reason of death or
Disability, or ceases to be a Director after attainment of age 65, the
one-year anniversary of the date he ceases to be a Director; and
(c) if the Participant ceases to be a Director prior to age 65 for reasons
other than death or Disability, the three-month anniversary of the date he
ceases to be a Director.
A Participant shall not be permitted to exercise an Option granted under this
Section 6 after the Participant ceases to be a Director except to the extent
that the Option is exercisable immediately prior to such cessation. For purposes
of this subsection 6.5, if, at the time a Participant ceases to be a Director,
he is employed by the Company or a Related Company, then the Expiration Date of
the Participant's Option under this subsection 6.5 shall be determined by
substituting, in paragraphs 6.5(b) and (c), the Participant's Date of
Termination for the date he ceases to serve as a Director.
6.6 Agreement With Company. Each Option granted under this Section 6
shall be evidenced by an Agreement (an "Agreement") duly executed on behalf of
the Company and by the Participant to whom such option is granted and dated as
of the applicable date of grant. Each Agreement shall comply with and be subject
to the terms of the Plan.
7
SECTION 7
OPERATION AND ADMINISTRATION
7.1 Effective Date. The Plan was adopted by the Board effective October
28, 1997, and was further amended and restated in the form herein effective as
of October 28, 1997 (the "Effective Date"); provided however, that to the extent
Awards are made under the Plan on or after April 10, 1998, they shall be
contingent upon shareholder approval of the Plan by the shareholders of the
Company. The Plan shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that no Awards may be granted under the Plan on
a date that is more than ten years from the date the Plan is adopted.
7.2 Shares Subject to Plan. The shares of Stock 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. Subject to the provisions of subsection 7.4, the number of shares
of Stock which may be issued with respect to Awards under the Plan shall not
exceed 150,000 shares in the aggregate. Except as otherwise provided herein, any
shares subject to an Award which for any reason expires or is terminated without
issuance of shares (whether or not cash or other consideration is paid to a
Participant in respect of such shares) shall again be available under the Plan.
7.3 Individual Limits on Awards. Notwithstanding any other provision of
the Plan to the contrary, no Participant shall receive any Award of an Option or
a Stock Appreciation Right under the Plan to the extent that the sum of:
(a) the number of shares of Stock subject to such Award;
(b) the number of shares of Stock subject to all other prior Awards
of Options and Stock Appreciation Rights under the Plan within
the one-year Company fiscal year period that includes the date
of the Award; and
(c) the number of shares of Stock subject to all other prior stock
options and stock appreciation rights granted to the Participant
under other plans or arrangements of the Company and Related
Companies within the one-year Company fiscal year period that
includes the date of the Award;
would exceed the Participant's Individual Limit under the Plan. Subject to the
provisions of paragraph 7.4, the determination made under the foregoing
provisions of this subsection 7.3 shall be based on the shares subject to the
awards at the time of grant, regardless of when the awards become exercisable.
Subject to the provisions of paragraph 7.4, a Participant's "Individual Limit"
shall be 50,000 shares of Stock.
7.4 Adjustments to Shares.
(a) If the Company shall effect any subdivision or consolidation of shares
of Stock or other capital readjustment, payment of stock dividend,
8
stock split, combination of shares or recapitalization or other
increase or reduction of the number of shares of Stock outstanding
without receiving compensation therefor in money, services or property,
then the Committee shall adjust (i) the number of shares of Stock
available under the Plan; (ii) the number of shares available under any
individual or other limits; (iii) the number of shares of Stock subject
to outstanding Awards and the number of shares of Stock subject to
future automatic grant as provided in Section 6; and (iv) the per-share
price under any outstanding Award and the per-share purchase price
under any future automatic grant as provided in Section 6 to the extent
that the Participant is required to pay a purchase price per share with
respect to the Award.
(b) If the Company is reorganized, merged or consolidated or is party to a
plan of exchange with another corporation, pursuant to which
reorganization, merger, consolidation or plan of exchange the
shareholders of the Company receive any shares of stock or other
securities or property, or the Company shall distribute securities of
another corporation to its shareholders, there shall be substituted for
the shares subject to outstanding Awards an appropriate number of
shares of each class of stock or amount of other securities or property
which were distributed to the shareholders of the Company in respect of
such shares, subject to the following:
(1) If the Committee determines that the substitution described in
accordance with the foregoing provisions of this paragraph (b)
would not be fully consistent with the purposes of the Plan or
the purposes of the outstanding Awards under the Plan, the
Committee may make such other adjustments to the Awards to the
extent that the Committee determines such adjustments are
consistent with the purposes of the Plan and of the affected
Awards.
(2) All or any of the Awards may be canceled by the Committee on or
immediately prior to the effective date of the applicable
transaction, but only if the Committee gives reasonable advance
notice of the cancellation to each affected Participant, and
only if either: (A) the Participant is permitted to exercise the
Award for a reasonable period prior to the effective date of the
cancellation; or (B) the Participant receives payment or other
benefits that the Committee determines to be reasonable
compensation for the value of the canceled Awards.
(3) Upon the occurrence of a reorganization of the Company or any
other event described in this paragraph (b), any successor to
the Company shall be substituted for the Company to the extent
that the Company and the successor agree to such substitution.
(c) Upon (or, in the discretion of the Committee, immediately prior to) the
sale to (or exchange with) a third party unrelated to the Company of all
or substantially all of the assets of the Company, all Awards shall be
canceled. If Awards are canceled under this paragraph (c) then, with
respect to any affected Participant, either:
(1) the Participant shall be provided with reasonable advance notice
of the cancellation, and the Participant shall be permitted to
exercise the Award for a reasonable period prior to the
effective date of the cancellation; or
(2) the Participant shall receive payment or other benefits that the
Committee determines to be reasonable compensation for the value
of the canceled Awards.
The foregoing provisions of this paragraph (c) shall also apply to the
sale of all or substantially all of the assets of the Company to a related
party, if the Committee determines such application is appropriate.
(d) In determining what action, if any, is necessary or appropriate under the
foregoing provisions of this subsection 7.4, the Committee shall act in a
manner that it determines to be consistent with the purposes of the Plan
and of the affected Awards and, where applicable or otherwise appropriate,
in a manner that it determines to be necessary to preserve the benefits
and potential benefits of the affected Awards for the Participants and the
Employers.
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(e) The existence of this Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Company or its shareholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business, any merger or consolidation of the Company, any issue of
bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Company's Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(f) Except as expressly provided by the terms of this Plan, the issue by
the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, for cash or property or for labor or
services, either upon direct sale, upon the exercise of rights or
warrants to subscribe therefor or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to Awards then outstanding hereunder.
(g) Awards under the Plan are subject to adjustment under this subsection 7.4
only during the period in which they are considered to be outstanding
under the Plan, with the determination of whether an Award is outstanding
to be made by the Committee.
7.5 Limit on Distribution. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall have no
liability to deliver any shares of Stock under the Plan or make any other
distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws and the applicable
requirements of any securities exchange or similar entity.
(b) In the case of a Participant who is subject to Section 16(a) and 16(b) of
the Securities Exchange Act of 1934, the Committee may, at any time, add
such conditions and limitations to any Award to such Participant, or any
feature of any such Award, as the Committee, in its sole discretion, deems
necessary or desirable to comply with Section 16(a) or 16(b) and the rules
and regulations thereunder or to obtain any exemption therefrom.
7.6 Liability for Cash Payments. Subject to the provisions of this
Section 7, an Employer shall be liable for payment of cash due under the Plan
with respect to any Participant to the extent that such benefits are
attributable to the services rendered for that Employer by the Participant. Any
disputes relating to liability of Employers for cash payments shall be resolved
by the Committee.
7.7 Performance-Based Compensation. To the extent that the Committee
determines that it is necessary or desirable to conform any Awards under the
Plan with the requirements applicable to "Performance-Based Compensation", as
that term is used in Code section 162(m)(4)(C), it may, at or prior to the time
an Award is granted, take such steps and impose such restrictions with respect
to such Award as it determines to be necessary to satisfy such requirements,
including without limitation:
(a) The establishment of performance goals that must be satisfied prior to the
payment or distribution of benefits under such Awards.
(b) The submission of such Awards and performance goals to the Company's
shareholders for approval and making the receipt of benefits under such
Awards contingent on receipt of such approval.
(c) Providing that no payment or distribution be made under such Awards unless
the Committee certifies that the goals and the applicable terms of the
Plan and Agreement reflecting the Awards have been satisfied.
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To the extent that the Committee determines that the foregoing requirements
relating to Performance-Based Compensation do not apply to Awards under the Plan
because the Awards constitute Options or Stock Appreciation Rights, the
Committee may, at the time the Award is granted, conform the Awards to
alternative methods of satisfying the requirements applicable to
Performance-Based Compensation.
7.8 Withholding. All Awards and other payments under the Plan are
subject to withholding of all applicable taxes, which withholding obligations
may be satisfied, with the consent of the Committee, through the surrender of
shares of Stock which the Participant already owns, or to which a Participant is
otherwise entitled under the Plan.
7.9 Transferability. Awards under the Plan are not transferable except
as designated by the Participant by will or by the laws of descent and
distribution. To the extent that the Participant who receives an Award under
the Plan has the right to exercise such Award, the Award may be exercised during
the lifetime of the Participant only by the Participant. Notwithstanding the
foregoing provisions of this subsection 7.9, the Committee may permit awards
under the Plan to be transferred to or for the benefit of the Participant's
family, subject to such limits as the Committee may establish.
7.10 Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in a committee (the "Committee")
in accordance with Section 8.
7.11 Notices. Any notice or document required to be filed with the
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company, at
its principal executive offices. The Committee may, by advance written notice
to affected persons, revise such notice procedure from time to time. Any notice
required under the Plan (other than a notice of election) may be waived by the
person entitled to notice.
7.12 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
7.13 Agreement With Company. At the time of an Award to a Participant
under the Plan, the Committee will require a Participant to enter into an
agreement with the Company in a form specified by the Committee, agreeing to the
terms and conditions of the Plan and to such additional terms and conditions,
not inconsistent with the Plan, as the Committee may, in its sole discretion,
prescribe.
7.14 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of
the Employers whatsoever, including, without limitation, any specific
funds, assets, or other property which the Employers, in their sole
discretion, may set aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual right to the
amounts, if any, payable under the Plan, unsecured by any assets of the
Employers. Nothing contained in the Plan shall constitute a guarantee
by any of the Employers that the assets of the Employers shall be
sufficient to pay any benefits to any person.
(b) Neither the Plan nor Awards granted under the Plan shall confer any
right upon a Participant to continue as an employee or Director for any
period of time or give any Participant any right or claim to any
benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan. Subject to the provisions of
Section 4 (relating to Restricted Stock Awards), no Award under the
Plan shall confer upon the holder thereof any right as a shareholder of
the Company prior to the date on which he fulfills all service
requirements and other conditions for receipt of shares of Stock under
the Plan.
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7.15 Benefits Under Qualified Retirement Plans. Awards to a Participant
(including the grant and the receipt of benefits) under the Plan shall be
disregarded for purposes of determining the Participant's benefits under any
Qualified Retirement Plan.
7.16 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
7.17 Action by Employers. Any action required or permitted to be taken
by any Employer shall be by resolution of its board of directors, or by action
of one or more members of the board (including a committee of the board) who are
duly authorized to act for the board, or by a duly authorized officer of the
Employer.
7.18 Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
7.19 Defined Terms. For purposes of the Plan, the terms listed below
shall be defined as follows:
(a) Award. The term "Award" shall mean any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of
Options, Stock Appreciation Rights, Restricted Stock, Performance
Units, and Dividend Equivalents.
(b) Board. The term "Board" shall mean the Board of Directors of the
Company.
(c) Code. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference
to any successor provision of the Code.
(d) Date of Termination. A Participant's "Date of Termination" shall be
the date that his employment with all Employers and Related Companies
terminates for any reason; provided that a Date of Termination shall
not be deemed to occur by reason of a transfer of the Participant
between the Company and a Related Company (including an Employer) or
between two Related Companies (including Employers); and further
provided that a Participant's employment shall not be considered
terminated while the Participant is on a leave of absence from an
Employer or a Related Company approved by the Participant's employer.
(e) Director. The term "Director" means a member of the Board of Directors
of the Company.
(f) Disability. A Participant shall be considered to have a "Disability"
during the period in which he is unable, by reason of a medically
determinable physical or mental impairment, to engage in any substantial
gainful activity, which condition, in the opinion of a physician selected
by the Committee, is expected to have a duration of not less than 120
days.
(g) Employer. The Company and each Related Company which, with the consent of
the Company, adopts the Plan for the benefit of its eligible employees are
referred to collectively as the "Employers" and individually as an
"Employer".
(h) Fair Market Value. The "Fair Market Value" of a share of Stock of the
Company as of any date shall be the closing market composite price for
such Stock as reported for the NASDAQ Stock Exchange on that date or, if
Stock is not traded on that date, on the next preceding date on which
Stock was traded.
(i) Option. The term "Option" shall mean any Incentive Stock Option or
Non-Qualified Stock Option granted under the Plan.
(j) Performance-Based Compensation. The term "Performance-Based
Compensation" shall have the meaning ascribed to it in section
162(m)(4)(C) of the Code.
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(k) Qualified Retirement Plan. The term "Qualified Retirement Plan" means any
plan of the Company or a Related Company that is intended to be qualified
under section 401(a) of the Internal Revenue Code of 1986, as amended.
(l) Related Companies. The term "Related Company" means (i) any corporation,
partnership, joint venture or other entity during any period in which it
owns, directly or indirectly, at least thirty percent of the voting power
of all classes of stock of the Company (or successor to the Company)
entitled to vote; and (ii) any corporation, partnership, joint venture or
other entity during any period in which either:
(A) it is effectively controlled by; or
(B) at least a thirty percent of its voting or profits interest
is owned, directly or indirectly, by;
the Company, any entity that is a successor to the Company or any entity
that is a Related Company by reason of clause (i) next above.
(m) Retirement. "Retirement" of a Participant shall mean the occurrence of
a Participant's Date of Termination under circumstances that
constitutes a retirement under the terms of the Qualified Retirement
Plan of an Employer or Related Company that is extended to the
Participant immediately prior to the Participant's Date of Termination
or, if no such plan is extended to the Participant on his Date of
Termination, under the terms of any applicable retirement policy of the
Participant's employer.
(n) SEC. "SEC" shall mean the Securities and Exchange Commission.
(o) Stock. The term "Stock" shall mean shares of common stock of the
Company.
SECTION 8
COMMITTEE
8.1 Selection of Committee. The Committee shall be selected by the
Board, and shall consist of not less than two members of the Board, or such
greater number as may be required for compliance with SEC Rule 16b-3.
8.2 Powers of Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the Committee,
subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have
authority and discretion to select employees to receive Awards, to
determine the time or times of receipt, to determine the types of
Awards and the number of shares covered by the Awards, to establish the
terms, conditions, performance criteria, restrictions, and other
provisions of such Awards, and to cancel or suspend Awards. In making
such Award determinations, the Committee may take into account the
nature of services rendered by the respective employee, his present and
potential contribution to the Company's success and such other factors
as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have
authority and discretion to determine the extent to which Awards under
the Plan will be structured to conform to the requirements applicable
to Performance-Based Compensation as described in Code section 162(m),
and to take such action, establish such procedures, and impose such
restrictions at the time such Awards are granted as the Committee
determines to be necessary or appropriate to conform to such
requirements.
(c) The Committee will have the authority and discretion to interpret the
Plan, to establish, amend, and rescind any rules and regulations relating
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to the Plan, to determine the terms and provisions of any agreements made
pursuant to the Plan, and to make all other determinations that may be
necessary or advisable for the administration of the Plan.
(d) Any interpretation of the Plan by the Committee and any decision made by
it under the Plan is final and binding on all persons.
(e) Except as otherwise expressly provided in the Plan, where the Committee is
authorized to make a determination with respect to any Award, such
determination shall be made at the time the Award is made, except that the
Committee may reserve the authority to have such determination made by the
Committee in the future (but only if such reservation is made at the time
the Award is granted and is expressly stated in the Agreement reflecting
the Award).
8.3 Delegation by Committee. Except to the extent prohibited by the
provisions of Rule 16b-3, the rules relating to Performance-Based Compensation,
applicable state law, the applicable rules of any stock exchange, or any other
applicable rules, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.
8.4 Information to be Furnished to Committee. The Employers and Related
Companies shall furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the Employers and
Related Companies as to an employee's or Participant's employment, termination
of employment, leave of absence, reemployment and compensation shall be
conclusive on all persons unless determined to be incorrect. Participants and
other persons entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers desirable to carry
out the terms of the Plan.
8.5 Liability and Indemnification of Committee. No member or authorized
delegate of the Committee shall be liable to any person for any action taken or
omitted in connection with the administration of the Plan unless attributable to
his own fraud or willful misconduct; nor shall the Employers be liable to any
person for any such action unless attributable to fraud or willful misconduct on
the part of a director or employee of the Employers. The Committee, the
individual members thereof, and persons acting as the authorized delegates of
the Committee under the Plan, shall be indemnified by the Employers against any
and all liabilities, losses, costs and expenses (including legal fees and
expenses) of whatsoever kind and nature which may be imposed on, incurred by or
asserted against the Committee or its members or authorized delegates by reason
of the performance of a Committee function if the Committee or its members or
authorized delegates did not act dishonestly or in willful violation of the law
or regulation under which such liability, loss, cost or expense arises. This
indemnification shall not duplicate but may supplement any coverage available
under any applicable insurance.
SECTION 9
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that,
subject to subsection 7.4 (relating to certain adjustments to shares), no
amendment or termination may materially adversely affect the rights of any
Participant or beneficiary under any Award made under the Plan prior to the date
such amendment is adopted by the Board.
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