EXHIBIT 4.2
KINARK CORPORATION
1996 STOCK OPTION PLAN
KINARK CORPORATION
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
ARTICLE II THE PLAN 4
2.1 Name 4
2.2 Purpose 4
2.3 Effective Date 5
ARTICLE III PARTICIPANTS 5
ARTICLE IV ADMINISTRATION 5
4.1 Duties and Powers of the Committee 5
4.2 Interpretation; Rules 5
4.3 No Liability 6
4.4 Majority Rule 6
4.5 Company Assistance 6
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN 6
5.1 Limitations 6
5.2 Antidilution 6
ARTICLE VI OPTIONS 8
6.1 Types of Options Granted 8
6.2 Discretionary Options 8
6.3 Optionee Limitations 8
6.4 $100,000 Limitation 9
6.5 Exercise Price of Discretionary Options 9
6.6 Exercise Period of Discretionary Options 9
6.7 Non-Employee Director Options 9
6.8 Option Exercise 10
6.9 Nontransferability 11
6.10 Termination of Employment or Service 11
6.11 Certain Successor Options 11
6.12 Effect of Change in Control 12
ARTICLE VII STOCK APPRECIATION RIGHTS 12
7.1 SAR Awards 12
7.2 Determination of Price 12
7.3 Exercise of a SAR 12
7.4 Payment of a SAR Spread 12
7.5 Effect of SARs on Stock Subject to Plan 12
7.6 Termination of SARs 13
7.7 Nontransferability 13
7.8 No Stockholder Rights 13
ARTICLE VIII STOCK CERTIFICATES 14
ARTICLE IX TERMINATION AND AMENDMENT 14
9.1 Termination and Amendment 14
9.2 Rule 16b-3 Requirement 14
9.3 Effect on Grantee's Rights 15
ARTICLE X RELATIONSHIP TO OTHER COMPENSATION PLANS 15
ARTICLE XI MISCELLANEOUS 15
11.1 Replacement or Amended Grants 15
11.2 Employment Rights 15
11.3 Section 16 of Exchange Act 15
11.4 Plan Binding on Successors 15
11.5 Singular, Plural, Gender 15
11.6 Headings Not Part of Plan 16
11.7 Interpretation 16
11.8 Governing Law 16
KINARK CORPORATION
1996 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:
"Advisor" or "Consultant" shall mean any person performing services for
the Company or any Subsidiary of the Company, with or without compensation, to
whom the Company chooses to grant Options in accordance with the Plan, provided
that bona fide services must be rendered by such person and such services shall
not be rendered in connection with the offer or sale of securities in a
capital-raising transaction.
"Award" shall mean a grant of a SAR under this Plan.
"Board" shall mean the Board of Directors of the Company.
"Change in Control" shall mean the occurrence of either of the following
events:
(a) A change in the composition of the Board as a result of which fewer
than one-half of the incumbent Directors are Directors who either:
(i) were Directors of the Company twenty-four (24) months prior to
such change, or
(ii) were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Directors who
had been Directors of the Company twenty-four (24) months prior
to such change and who were still in office at the time of the
election or nomination; or
(b) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), by the acquisition or aggregation of securities, is or
becomes the beneficial owner, directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of Directors
(the "Base Capital Stock"); except that any change in the relative
beneficial ownership of the Company's securities by any person
resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock shall be disregarded until
such person increases in any manner, directly or indirectly, such
person's beneficial ownership of any securities of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended, including
effective date and transition rules (whether or not codified). Any reference
herein to a specific section of the Code shall be deemed to include a reference
to any applicable corresponding provision of future law.
"Committee" shall mean a committee of at least three (3) Directors
appointed from time to time by the Board, having the duties and authority set
forth herein in addition to any other authority granted by the Board; provided,
however, that with respect to any Discretionary Options or Awards granted to an
individual who is also a Section 16 Insider, the Committee shall consist of at
least two (2) Directors (who need not be members of the Committee with respect
to Options or Awards granted to any other individuals) who are Disinterested
Persons, and all authority and discretion shall be exercised by such
Disinterested Persons, and references herein to the "Committee" shall mean such
Disinterested Persons insofar as any actions or determinations of the Committee
shall relate to or affect Discretionary Options or Awards made to or held by
any Section 16 Insider. At any time that the Board shall not have appointed a
committee as described above, any reference herein to the Committee shall mean
a reference to the Board.
"Company" shall mean Kinark Corporation, a Delaware corporation.
"Director" shall mean a member of the Board and any person who is an
advisory or honorary director of the Company if such person is considered a
director for the purposes of Section 16 of the Exchange Act.
"Disabled Optionee" shall mean a Grantee who suffers a Disability.
"Disability" shall mean a physical or mental infirmity which impairs a
Grantee's ability to substantially perform his duties with the Company or a
Subsidiary for a period of 180 consecutive days, as determined by an
independent physician selected by agreement between the Company and the Grantee
or, failing such agreement, selected by two physicians (one of which shall be
selected by the Company and the other by the Grantee); provided, however,
"Disability" shall have the meaning set forth in Section 22(e)(3) of the Code
and the regulations promulgated thereunder in respect of an Optionee granted
Incentive Stock Options.
"Discretionary Option" shall mean an Option granted under this Plan, at
the discretion of the Committee, in accordance with, and subject to, Section
6.2 hereof, and which may be an Incentive Stock Option or a non-Incentive Stock
Option.
"Disinterested Person" shall have the meaning given such term under Rule
16b-3 of the Exchange Act, as the same may be in effect from time to time, or
in any successor rule thereto.
"Employee" shall mean an employee of the Company, or of any Subsidiary, as
defined under Section 3401(c) of the Code and the regulations thereunder.
Unless the context otherwise indicates, the term "Employee" shall include any
Officers or Directors who are not Non-Employee Directors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
and as the same may be amended from time to time. Any reference herein to a
specific section of the Exchange Act shall be deemed to include a reference to
any corresponding provision of future law.
"Exercise Price" shall mean the price at which an Optionee may purchase a
share of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean the closing sales price of the
Stock on such date on the national securities exchange having the greatest
volume of trading in the Stock during the thirty (30) day period preceding such
date or, if such exchange was not open for trading on such date, the next
preceding date on which it was open.
"For Cause" termination shall mean the termination of the Grantee's
employment as a result of: (i) any act that constitutes, on the part of the
Grantee, fraud, dishonesty, gross malfeasance of duty, or conduct grossly
inappropriate to the Grantee's position of employment; or (ii) the conviction
(from which no appeal may be or is timely taken) of the Grantee of a felony.
"Grantee" shall mean a person who is an Optionee (or his permitted assign)
or a person who has received an Award of a SAR.
"Incentive Stock Option" shall mean an Option that complies with and is
subject to the terms, limitations and conditions of Section 422 of the Code and
the regulations promulgated thereunder.
"Non-Employee Director" shall mean a Director of the Company who has not
been an Officer or an Employee of the Company or any Subsidiary at any time
during the twelve (12) months preceding the grant of a Non-Employee Director
Option.
"Non-Employee Director Option" shall mean an Option granted to a Non-
Employee Director in accordance with, and subject to, Section 6.7 hereof.
"Officer" shall mean a person who constitutes an officer of the Company
for the purposes of Section 16 of the Exchange Act, as the same may be in
effect from time to time, or in any successor rule thereto.
"Option" shall mean an option, including a Discretionary Option and a Non-
Employee Director Option, to purchase Stock granted pursuant to the provisions
of Article VI hereof.
"Optionee" shall mean a person to whom an Option has been granted
hereunder or his permitted assign.
"Plan" shall mean the Kinark Corporation 1996 Stock Option Plan, the terms
of which are set forth herein, as the same may be amended from time to time.
"Qualified Domestic Relations Order" shall have the meaning set forth in
Section 414(p)(1)(A) of the Code and the regulations promulgated thereunder.
"SAR" means a stock appreciation right, which is the right to receive an
amount equal to the SAR Spread.
"SAR Agreement" shall mean a written agreement setting forth the terms of
an Award of a SAR, as provided in Section 7.1 hereof.
"SAR Price" shall mean the base value established by the Committee for a
SAR on the date the SAR is granted and which is used in determining the SAR
Spread.
"SAR Spread" shall mean, with respect to any SAR, an amount equal to (a)
the Fair Market Value of a share of Stock on the date such SAR is exercised,
less (b) the SAR Price of such SAR.
"Section 16 Insider" shall mean any person who is subject to the
provisions of Section 16 of the Exchange Act, as provided in Rule 16a-2
promulgated pursuant to the Exchange Act, as the same may be in effect from
time to time, or in any successor rule thereto.
"Stock" shall mean the Common Stock, par value $.10 per share, of the
Company, subject to the provisions of Article V hereof.
"Stock Option Agreement" shall mean a written agreement between the
Company and an Optionee under which the Optionee may purchase Stock hereunder,
as provided in Article VI hereof.
"Subsidiary" shall mean any corporation in which the Company directly or
indirectly owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock of such corporation.
"Vested" shall refer to an Option that may be exercised by an Optionee
under the terms of this Plan on or after a certain date specified in the
applicable Stock Option Agreement.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "Kinark Corporation 1996 Stock
Option Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its Subsidiaries and its stockholders by affording Directors and
Employees of the Company and its Subsidiaries, as well as Consultants and
Advisors to the Company or any Subsidiary, an opportunity to acquire or
increase their proprietary interests in the Company. The objective of the
Options and Awards is to promote the growth and profitability of the Company
and its Subsidiaries by providing the Grantees with an additional incentive to
achieve the Company's objectives through participation in its success and
growth and by encouraging their continued association with or service to the
Company and its Subsidiaries.
2.3 Effective Date. The effective date of this Plan is June 5, 1996,
subject to the approval of this Plan by the stockholders of the Company at the
annual meeting of the stockholders on June 5, 1996, or any adjournment thereof.
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in this Plan shall consist of
all persons whose participation in the Plan the Committee determines to be in
the best interests of the Company which shall include, but not be limited to,
all Directors and Employees of the Company or any Subsidiary, as well as
Consultants and Advisors to the Company or any Subsidiary; provided, however,
that (a) only Employees of the Company or any Subsidiary shall be eligible to
receive grants of Incentive Stock Options and (b) Non-Employee Directors are
only eligible to receive Non-Employee Director Options.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. This Plan shall be administered
by the Committee. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such times and places as it may
determine. The Committee shall keep minutes of its meetings and shall make
such rules and regulations for the conduct of its business as it may deem
necessary. The Committee shall have the power to act by unanimous written
consent in lieu of a meeting, and to meet telephonically. In administering
this Plan, the Committee's actions and determinations shall be binding on all
interested parties. The Committee shall have the power to grant Discretionary
Options and Awards in accordance with the provisions of this Plan and may grant
Discretionary Options and Awards singularly, in combination, or in tandem.
Subject to the provisions of this Plan, the Committee shall have the discretion
and authority to determine those persons to whom Discretionary Options or
Awards will be granted, the number of shares of Stock subject to each
Discretionary Option or Award, such other matters as are specified herein, and
any other terms and conditions of a Stock Option Agreement and SAR Agreement.
To the extent not inconsistent with the provisions of this Plan, the Committee
may give a Grantee an election to surrender a Discretionary Option or Award in
exchange for the grant of a new Discretionary Option or Award, and shall have
the authority to amend or modify an outstanding Stock Option Agreement or SAR
Agreement, or to waive any provision thereof, provided that the Grantee
consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of this
Plan, the Committee shall have complete authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement and SAR Agreement,
and to make all other determinations necessary or advisable for the
administration of this Plan, including, without limitation, the amending or
altering of this Plan and any Options or Awards granted hereunder as may be
required to comply with or to conform to any federal, state or local laws or
regulations.
4.3 No Liability. Neither any Director nor any member of the Committee
shall be liable to any person or entity for any act or determination made in
good faith with respect to this Plan or any Option or Award granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of
the Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary
in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to the antidilution provisions of Section 5.2,
the maximum number of shares of Stock that may be issued hereunder pursuant to
Options or as payment of a SAR Spread shall be eight hundred thousand
(800,000). Any or all shares of Stock subject to the Plan may be issued in
respect of Incentive Stock Options and non-Incentive Stock Options and as
payment of a SAR Spread, or in any combination thereof. Except as otherwise
provided in Section 5.2, the amount of Stock subject to the Plan may not be
increased without stockholder approval, as provided in Article IX hereof.
Shares of Stock subject to an Option or issued as payment of a SAR Spread may
be either authorized and unissued shares or treasury shares issued and later
acquired by the Company. The shares of Stock subject to any unexercised
portion of an Option that has terminated for any reason (except as set forth in
the following paragraph) may again be subject to an Option or issued as payment
of a SAR Spread under this Plan, and shall not be considered as having been
optioned or issued in computing the number of shares of Stock remaining
available for issuance under this Plan.
5.2 Antidilution.
(a) If (i) the outstanding shares of Stock are increased, decreased,
or changed into or exchanged for a different number or kind of shares or other
securities of the Company, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or stock
split or stock dividend, (ii) any spin-off, split-off or other distribution of
assets materially affects the price of the Stock, or (iii) there is any
assumption and conversion to this Plan by the Company of an acquired company's
outstanding option grants, then:
(A) the maximum aggregate number and the class or series of
shares of Stock available for issuance hereunder shall be adjusted
appropriately by the Committee; and
(B) the rights of Optionees (concerning the number of shares
subject to Options and the Exercise Price) under outstanding Options
and the rights of the holders of Awards (concerning the terms and
conditions of the lapse of any then-remaining restrictions), shall be
adjusted appropriately by the Committee.
(b) If the Company is a party to any reorganization in which it does
not survive, involving merger, consolidation, or acquisition of the stock or
substantially all the assets of the Company, the Committee, in its discretion,
may:
(i) notwithstanding other provisions hereof, declare that all or a
portion of the Options granted under this Plan shall become exercisable
immediately notwithstanding the provisions of the respective Stock Option
Agreements regarding exercisability, that all such Options shall terminate
thirty (30) days after the Committee gives written notice of the immediate
right to exercise all such Options and of the decision to terminate all
Options not exercised within such 30-day period, and that all then-
remaining restrictions pertaining to all or a portion of the Awards under
this Plan shall immediately lapse; and/or
(ii) notify all Grantees that all or a portion of the Options and
Awards granted under this Plan shall be assumed by the successor
corporation or substituted on an equitable basis with options or stock
appreciation rights issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in connection
with a reorganization described in Section 5.2(b), the provisions of that
Section shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall, notwithstanding other
provisions hereof, cause all then-remaining restrictions pertaining to Options
and Awards under the Plan to lapse, and shall cause every Option and Award
outstanding under the Plan to terminate to the extent not exercised prior to
the adoption of the plan of dissolution or liquidation by the stockholders;
provided that, notwithstanding any other provisions hereof, the Committee may
declare all Options and Awards granted under the Plan to be exercisable at any
time on or before the fifth (5th) business day following such adoption,
notwithstanding the provisions of the respective Stock Option Agreements or SAR
Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of this
Section 5.2, and the manner of their application, shall be determined solely by
the Committee, and any such adjustment may provide for the elimination of
fractional share interests; provided, however, that any adjustment made by the
Committee shall be made in a manner that will not cause an Incentive Stock
Option to be other than an Incentive Stock Option under applicable statutory
and regulatory provisions. The adjustments required under this Article V shall
apply to any successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan, grant
either Incentive Stock Options or Options which do not qualify as Incentive
Stock Options; provided, however, that only Employees of the Company or any
Subsidiary shall be eligible to receive grants of Incentive Stock Options.
Non-Employee Director Options shall be non-Incentive Stock Options. Within the
limitations provided in this Plan, both Incentive Stock Options and non-
Incentive Stock Options may be granted to the same person at the same time, or
at different times, under different terms and conditions, as long as the terms
and conditions of each Option are consistent with the provisions of this Plan.
Without limitation of the foregoing, Discretionary Options may be granted
subject to conditions based on the financial performance of the Company or any
other factor the Committee deems relevant. Neither the Company, nor any
Subsidiary or any Director or Officer of the Company or any Subsidiary warrants
or represents that (i) any Option granted under this Plan shall be considered
an Incentive Stock Option for applicable tax purposes, or (ii) favorable or
desirable tax treatment or characterization will be applicable in respect of
any Options.
6.2 Discretionary Options. The Committee may grant Discretionary Options
under this Plan upon such restrictions, terms and conditions as the Committee
may prescribe. Each Discretionary Option granted hereunder shall be evidenced
by minutes of a meeting or the written consent of the Committee and by a
written Stock Option Agreement executed by the Company and the Optionee. The
terms of the Discretionary Option, including the Discretionary Option's
duration, vesting schedule, exercise price, and whether it is intended to be an
Incentive Stock Option, shall be determined by the Committee, and stated in the
Stock Option Agreement. No Incentive Stock Option may be granted more than ten
(10) years after the effective date of this Plan. Separate Stock Option
Agreements may be used for Discretionary Options intended to be Incentive Stock
Options and those not so intended, but any failure to use such separate
agreements shall not invalidate, or otherwise adversely affect the Optionee's
interest in, the Discretionary Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an Incentive
Stock Option to any person who, at the time the Incentive Stock Option is
granted:
(a) is not an Employee of the Company or any of its Subsidiaries; or
(b) owns or is considered to own stock possessing at least ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries; provided, however, that this limitation
shall not apply if at the time an Incentive Stock Option is granted the
Exercise Price is at least one hundred ten percent (110%) of the Fair Market
Value of the Stock subject to such Option and such Option by its terms is not
exercisable after five (5) years from the date on which the Option is granted.
For the purpose of this subsection (b), a person shall be considered to own:
(i) the stock owned, directly or indirectly, by or for his or her brothers and
sisters (whether by whole or half blood), spouse, ancestors and lineal
descendants; (ii) the stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust in proportion to such person's stock
interest, partnership interest or beneficial interest therein; and (iii) the
stock which such person may purchase under any outstanding options of the
Company or any Subsidiary.
6.4 $100,000 Limitation. Except as provided below, the Committee shall
not grant an Incentive Stock Option to, or modify the exercise provisions of
any outstanding Incentive Stock Option held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Company and any Subsidiary, such that the
aggregate Fair Market Value (determined as of the respective dates of grant or
modification of each Option) of the Stock with respect to which such Incentive
Stock Options are exercisable for the first time during any calendar year is in
excess of $100,000 (or such other limit as may be prescribed by the Code from
time to time); provided, that the foregoing restriction on modification of
outstanding Incentive Stock Options shall not preclude the Committee from
modifying an outstanding Incentive Stock Option if, as a result of such
modification and with the consent of the Optionee, such Option no longer
constitutes an Incentive Stock Option; and provided further that, if the
$100,000 limitation (or such other limitation prescribed by the Code) described
in this Section 6.4 is exceeded, the Incentive Stock Option, the granting or
modification of which resulted in the exceeding of such limit, shall be treated
as an Incentive Stock Option up to the limitation and the excess shall be
treated as an Option not qualifying as an Incentive Stock Option.
6.5 Exercise Price of Discretionary Options. The Exercise Price of the
Stock subject to each Discretionary Option shall be determined by the
Committee. Subject to the provisions of Section 6.3(b) hereof, the Exercise
Price of an Incentive Stock Option shall not be less than the Fair Market Value
of the Stock as of the date the Discretionary Option is granted (or in the case
of an Incentive Stock Option that is subsequently modified, on the date of such
modification).
6.6 Exercise Period of Discretionary Options. The period for the
exercise of each Discretionary Option granted hereunder shall be determined by
the Committee. The Committee shall have the authority to prescribe in any
Stock Option Agreement that the Discretionary Option may be exercised in
accordance with a vesting schedule set forth in such agreement. The Stock
Option Agreement with respect to each Discretionary Option intended to be an
Incentive Stock Option shall provide that such Discretionary Option shall not
be exercisable after the expiration of ten (10) years from the date of grant
(or modification) of the Discretionary Option. In addition, no Discretionary
Option granted to a Section 16 Insider shall be exercisable prior to the
expiration of six (6) months from the date such Discretionary Option is
granted, other than in the case of the death or disability of the Optionee.
6.7 Non-Employee Director Options.
(a) Commencing on July 1, 1996, and continuing on the first day of
July 1 thereafter for a period of ten years, through and including July 1,
2005, each Non-Employee Director who is a member of the Board on each of such
dates shall automatically receive Non-Employee Director Stock Options to
purchase five thousand (5,000) shares of Stock. Non-Employee Director Options
shall be evidenced by a written Stock Option Agreement. Non-Employee Director
Options shall be non-Incentive Stock Options.
(b) The Exercise Price of Non-Employee Director Options shall be
100% of the Fair Market Value of the Company's Stock as of July 1 of the year
in which the Non-Employee Director Option is granted.
(c) Each Non-Employee Director Option shall vest and become
exercisable upon the expiration of six (6) months from the date such Non-
Employee Director Option is granted.
(d) Each Non-Employee Director Option shall terminate and cease to
be exercisable after the expiration of ten (10) years from the date such Non-
Employee Director Option is granted.
(e) In the event a Non-Employee Director Optionee ceases to be a
Director by reason of his or her death or Disability, the Optionee or the
Optionee's administrators, executors or personal representatives may exercise
the Optionee's Non-Employee Director Options on the earlier of (i) the last day
of the one (1) year period following the Optionee's death or the beginning of
the Optionee's Disability or (ii) the expiration of the Optionee's Non-Employee
Director Options.
(f) In the event a Non-Employee Director Optionee ceases to be a
Director for any reason other than his or her death or Disability, the Optionee
may exercise his or her Non-Employee Director Options on the earlier of (i) the
last day of the two (2) year period following the date the Optionee ceases to
be a Director or (ii) the expiration of the Optionee's Non-Employee Director
Options.
(g) The anti-dilution provisions of Section 5.2 as well as the
provisions of Sections 6.8 and 6.9 shall apply to Non-Employee Director
Options.
6.8 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement or
Section 6.6 hereof, an Option may be exercised at any time or from time to time
during the term of the Option as to any or all Options which have become Vested
under the terms and conditions of the Option, but not at any time as to less
than one hundred (100) shares unless the remaining Options that have become
Vested relate to less than one hundred (100) shares.
(b) An Option shall be exercised by (i) delivery to the Company at
its principal office a written notice of exercise with respect to a specified
number of shares of Stock and (ii) payment to the Company at that office of the
full amount of the Exercise Price for such number of shares in accordance with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with
the involvement of a stockbroker in accordance with the federal margin rules
set forth in Regulation T (in which case the certificates representing the
underlying shares will be delivered by the Company directly to the
stockbroker).
(c) The Exercise Price is to be paid in full in cash upon the
exercise of the Option and the Company shall not be required to deliver
certificates for the shares purchased until such payment has been made;
provided, however, that the Committee may provide in a Stock Option Agreement
(or may otherwise determine in its sole discretion at the time of exercise)
that in lieu of cash, all or any portion of the Exercise Price may be paid by
tendering to the Company shares of Stock duly endorsed for transfer and owned
by the Optionee, or by authorization to the Company to withhold shares of Stock
otherwise issuable upon exercise of the Option, in each case to be credited
against the Exercise Price at the Fair Market Value of such shares on the date
of exercise (however, no fractional shares may be so transferred, and the
Company shall not be obligated to make any cash payments in consideration of
any excess of the aggregate Fair Market Value of shares transferred over the
aggregate Exercise Price); provided further, the Committee may provide in a
Stock Option Agreement (or may otherwise determine in its sole discretion at
the time of exercise) that, in lieu of cash or shares, all or a portion of the
Exercise Price may be paid by the Optionee's execution of a recourse promissory
note the principal amount of which shall be equal to the Exercise Price or the
relevant portion thereof, subject to compliance with applicable state and
federal laws, rules and regulations.
(d) In addition to and at the time of payment of the Exercise Price,
the Company may withhold, or require the Optionee to pay to the Company in
cash, the amount of any federal, state and local income, employment or other
withholding taxes which the Committee determines are required to be withheld
under federal, state or local law in connection with the exercise of an Option;
provided, however, the Committee may provide in a Stock Option Agreement (or
may otherwise determine in its sole discretion at the time of exercise) that
all or any portion of such tax obligations may, upon the election of the
Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable.
(e) The holder of an Option shall not have any of the rights of a
stockholder with respect to the shares of Stock subject to the Option until
such shares have been issued and transferred to the Optionee upon the exercise
of the Option.
6.9 Nontransferability. No Option shall be transferable by an Optionee
other than by will or the laws of descent and distribution; provided, however,
non-Incentive Stock Options may also be transferred pursuant to a Qualified
Domestic Relations Order. During the lifetime of an Optionee, Options shall be
exercisable only by such Optionee (or by such Optionee's guardian or legal
representative, should one be appointed).
6.10 Termination of Employment or Service. The Committee shall have the
power to specify, with respect to the Discretionary Options granted to a
particular Optionee, the effect upon such Optionee's right to exercise a
Discretionary Option upon termination of such Optionee's employment or service
under various circumstances, which effect may include immediate or deferred
termination of such Optionee's rights under a Discretionary Option, or
acceleration of the date at which a Discretionary Option may be exercised in
full; provided, however, that in no event may an Incentive Stock Option be
exercised after the expiration of ten (10) years from the date of grant
thereof.
6.11 Certain Successor Options. To the extent not inconsistent with the
terms, limitations and conditions of Code Section 422 and any regulations
promulgated thereunder, an Option issued in respect of an option to acquire
stock of any entity acquired, by merger or otherwise, by the Company or any
Subsidiary, may contain terms that differ from those stated in this Article VI,
but solely to the extent necessary to preserve the rights and benefits
contained in such predecessor option, or to satisfy the requirements of Code
Section 424(a).
6.12 Effect of Change in Control. The Committee may determine, at the
time of granting a Discretionary Option or thereafter, that such Discretionary
Option shall become exercisable on an accelerated basis in the event that a
Change in Control occurs with respect to the Company (and the Committee shall
have the discretion to modify the definition of Change in Control in a
particular Stock Option Agreement). If the Committee finds that there is a
reasonable possibility that, within the succeeding six (6) months, a Change in
Control will occur with respect to the Company, then the Committee may
determine that all outstanding Discretionary Options shall be exercisable on an
accelerated basis.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 SAR Awards. The Committee may grant Awards of SARs under this Plan
upon such restrictions, terms and conditions as the Committee may prescribe;
provided, however, that the Committee may not grant Awards of SARs to Non-
Employee Directors. Each Award shall be governed by a SAR Agreement between
the Company and the Grantee which shall contain the restrictions, terms and
conditions prescribed by the Committee, including, without limitation,
restrictions on the time of exercise of the SAR to specified periods as may be
necessary to satisfy the requirements of Rule 16b-3. Awards of SARs may be
granted singularly, or in combination or in tandem with Options granted under
this Plan, and may be granted at the same time as or later than the grant of
the Option to which it relates.
7.2 Determination of Price. The SAR Price shall be established by the
Committee in its sole discretion. The SAR Price shall not be less than one
hundred percent (100%) of the Fair Market Value of the Stock on the date the
SAR is granted for a SAR issued in tandem with an Incentive Stock Option.
7.3 Exercise of a SAR. A SAR shall be exercisable at such time as may be
determined by the Committee, provided that a SAR issued in tandem with an
Option shall be exercisable to the extent that the related Option is
exercisable. Upon exercise of a SAR, the Grantee shall be entitled, subject to
the terms and conditions of this Plan and the SAR Agreement, to receive an
amount equal to the SAR Spread.
7.4 Payment of a SAR Spread. Payment of the SAR Spread for any SAR shall
be made, at the sole discretion of the Committee, in (a) cash, (b) shares of
Stock, or (c) a combination of both. Shares of Stock used for this payment
shall be valued at their Fair Market Value on the date of exercise of the
applicable SAR.
7.5 Effect of SARs on Stock Subject to Plan. Stock issued in payment of
the SAR Spread shall reduce the number of shares of Stock remaining available
for issuance under this Plan. The exercise of a SAR which results in the
termination of an unexercised Option issued in tandem with such SAR shall also
reduce the number of shares of Stock remaining available for issuance under
this Plan by the number of shares of Stock subject to the terminated Option.
7.6 Termination of SARs. A SAR may be terminated as follows:
(a) During the period of a Grantee's continuous employment with the
Company or a Subsidiary, a SAR will be terminated only if it has been fully
exercised or it has expired by its terms.
(b) Upon termination of a Grantee's employment with the Company or a
Subsidiary, the SAR will terminate upon the earliest of (i) the full exercise
of the SAR, (ii) the expiration of the SAR by its terms, and (iii) not more
than three (3) months following the date of employment termination; provided,
however, should termination of employment (A) result from the death or
Disability of the Grantee, the period referenced in clause (iii) hereof shall
be one (1) year, or (B) be For Cause, the SAR will terminate on the date of
employment termination. For purposes of this Plan, a leave of absence approved
by the Company shall not be deemed to be termination of employment unless
otherwise provided in the SAR Agreement or by the Company on the date of the
leave of absence.
(c) Subject to the terms of the SAR Agreement with the Grantee, if a
Grantee should die or become subject to a Disability prior to the termination
of employment with the Company or any Subsidiary and prior to the termination
of a SAR, such SAR may be exercised to the extent that the Grantee shall have
been entitled to exercise it at the time of death or Disability, as the case
may be, by the Grantee, the estate of the Grantee or the person or persons to
whom the SAR shall have been transferred by will or by the laws of descent and
distribution.
(d) Except as otherwise expressly provided in the SAR Agreement with
the Grantee, in no event will the continuation of the term of a SAR beyond the
date of termination of employment allow the Employee, or his beneficiaries or
heirs, to accrue additional rights under this Plan, have additional SARs
available for exercise, or receive a higher benefit than the benefit payable as
if the SAR had been exercised on the date of employment termination.
7.7 Nontransferability. No SAR shall be transferable by a Grantee;
provided, however, that a SAR issued in tandem with an Option shall be
transferable, if at all, to the same extent and upon the same terms and
conditions as the related Option.
7.8 No Stockholder Rights. The Grantee of a SAR shall have no rights as
a stockholder with respect to such SAR. In addition, no adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or rights, except as provided in Section 5.2
hereof.
ARTICLE VIII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof prior to fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock exchanges
on which the Stock is then listed;
(b) the completion of any registration or other qualification of
such shares which the Committee shall deem necessary or advisable under any
federal or state law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body;
(c) the obtaining of any approval or other clearance from any
federal or state governmental agency or body which the Committee shall
determine to be necessary or advisable; and
(d) the lapse of such reasonable period of time following the
exercise of the Option as the Board from time to time may establish for reasons
of administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination and Amendment. Subject to Section 9.2 hereof, the Board
may at any time terminate this Plan, and may at any time and from time to time
and in any respect amend this Plan; provided, however, that the Board (unless
its actions are approved or ratified by the stockholders of the Company within
twelve (12) months of the date that the Board amends the Plan) may not amend
this Plan to:
(a) increase the total number of shares of Stock issuable under this
Plan, except as contemplated under Article V hereof;
(b) materially change the class of persons that may participate in
this Plan; or
(c) otherwise materially increase the benefits accruing to
participants under this Plan.
9.2 Rule 16b-3 Requirement. As required by Rule 16b-3 of the Exchange
Act, any provision of this Plan relating to Non-Employee Director Options shall
not be amended more than once every six months, except as is necessary to make
the Plan comport with changes in the Code, the Employment Retirement Income
Security Act, or the rules thereunder.
9.3 Effect on Grantee's Rights. No termination, amendment or
modification of this Plan shall adversely affect a Grantee's rights under a
Stock Option Agreement or SAR Agreement without the consent of the Grantee or
his legal representative.
ARTICLE X
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of this Plan shall not affect any other stock option,
incentive or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for Employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE XI
MISCELLANEOUS
11.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of this Plan, the Committee may modify
outstanding Discretionary Options or Awards or accept the surrender of
outstanding Discretionary Options or Awards and grant new Discretionary Options
or Awards in substitution thereof. However, no modification of a Discretionary
Option or Award shall adversely affect a Grantee's rights under a Stock Option
Agreement or SAR Agreement without the consent of the Grantee or his legal
representative.
11.2 Employment Rights. Nothing in this Plan or in any Stock Option
Agreement or SAR Agreement shall confer on any person any right to continue in
the employ of the Company or any of its Subsidiaries, or shall interfere in any
way with the right of the Company or any of its Subsidiaries to terminate such
person's employment at any time.
11.3 Section 16 of Exchange Act. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3, as the same may be amended
from time to time, or any successor thereto. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
11.4 Plan Binding on Successors. This Plan shall be binding upon the
successors and assigns of the Company.
11.5 Singular, Plural, Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender and vice versa.
11.6 Headings Not Part of Plan. Headings of Articles and Sections hereof
are inserted for convenience and reference, and they do not constitute part of
this Plan.
11.7 Interpretation. With respect to Section 16 Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act, and shall be interpreted
consistent therewith.
11.8 Governing Law. This Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflicts
of laws principles.
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