LSB INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
The Board of Directors of LSB Industries, Inc., a
Delaware corporation (the "Company"), has adopted this 1993 Stock
Option and Incentive Plan (the "Plan"), effective the 5th day of
August, 1993, as follows:
1. Purpose. This Plan permits selected officers and key
employees, prospective employees, consultants and independent
contractors of the Company or any Subsidiary who bear a large
measure of responsibility for the success of the Company to acquire
and retain a proprietary interest in the Company and to participate
in the future of the Company as shareholders. The purpose of this
Plan is to advance the interests of the Company and its share-
holders by enabling the Company and the subsidiaries to offer to
its employee-directors, officers, key employees, consultants and
independent contractors, long-term performance-based stock and/or
other equity interests in the Company, thereby enhancing its
ability to attract, retain and reward such individuals, and by
providing an incentive for employee-directors, officers, key
employees to render outstanding service to the Company and to the
Company's shareholders.
2. Definitions. For purposes of the Plan, the following terms
shall be defined as set forth herein:
2.1 "Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute or statutes
thereto.
2.2 "Agreement" means the agreement between the Company and
the Holder setting forth the terms and conditions of an
award under the Plan.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change of Control" means a change of control of the
Company pursuant to Section 8.2 hereof.
2.5 "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute or
statutes thereto.
2.6 "Committee" means the Stock Option Committee of the
Board or any other committee of the Board which the
Board may designate. In all events, the Committee
shall consist only of non-employee directors of the
Company.
2.7 "Common Stock" means the Common Stock of the Company,
par value $.10 per share.
2.8 "Disability" means disability as determined under the
procedures established by the Committee for purposes of
the Plan.
2.9 "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor
statute or statutes thereto.
2.10 "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations
issued thereunder, means, as of any given date:
2.10.1 the closing price of the Common Stock on the
last preceding day on which the Common Stock
was traded, as reported on a national
securities exchange; and,
2.10.2 if the fair market value of the Common Stock
cannot be determined pursuant to clause (i)
hereof, such price as the Committee shall
determine.
2.11 "Formula Price Per Share" means the highest gross price
(before brokerage commissions, soliciting dealers' fees
and similar charges) paid for any share of Common Stock
at any time during the ninety (90) day period immedi-
ately prior to the Change of Control (whether by way of
exchange, conversion, distribution, liquidation or
otherwise) paid or to be paid for any share of Common
Stock in connection with a Change of Control. If the
consideration paid or to be paid in any transaction
that results in a Change of Control consists, in whole
or in part, of consideration, other than cash, the
Board shall take such action, as in its judgment it
deems appropriate, to establish the cash value of such
consideration, but such valuation shall not be less
than the value, if any, attributed to such consider-
ation by any other party to such transaction that
results in a Change of Control.
2.12 "Holder" means an eligible employee-director, officer,
key employee, consultant or independent contractor of
the Company or a Subsidiary who has received an award
under the Plan.
2.13 "Incentive Stock Option" or "ISO" means any Stock
Option intended to be and designated as an "incentive
stock option" within the meaning of Section 422 of the
Code.
2.14 "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
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2.15 "SAR Value" means the excess of the Fair Market Value
of one share of Common Stock over the exercise price
per share specified in a related Stock Option in the
case of a Stock Appreciation Right granted in tandem
with a Stock Option and the Stock Appreciation Right
price per share in the case of a Stock Appreciation
Right awarded on a free-standing basis multiplied by
the number of shares in respect of which the Stock
Appreciation Right shall be exercised, on the date of
exercise.
2.16 "Section 16(b) Holder" means such officer or director
or ten percent (10%) beneficial owner of Common Stock
subject to Section 16(b) of the Exchange Act.
2.17 "Stock Appreciation Right" means the right, pursuant to
an award granted under Section 7 hereof, to recover an
amount equal to the SAR Value.
2.18 "Stock Option" means any Incentive Stock Option or Non-
Qualified Stock Option to purchase shares of Common
Stock which is awarded pursuant to this Plan.
2.19 "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in
Section 424(f) of the Code.
3. Administration.
3.1 Board; Committee. The Board shall create a committee
consisting of three members of the Board. The Board
may also appoint one member of the Board as an
alternate member of the Committee. Upon such appoint-
ment, the Committee shall have all the powers, privi-
leges and duties set forth herein. The Board may, from
time to time, appoint members of any such Committee in
substitution for, or in addition to, members previously
appointed, may fill vacancies in the Committee and may
discharge 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 shall deem
advisable. A majority of its members shall constitute
a quorum and all determinations shall be made by a
majority of such quorum. Any determination reduced to
writing and signed by a majority of the members of the
Committee, shall be fully effective and a valid act of
the Committee as if it had been made by a majority vote
at a meeting duly called and held. The membership of
the Committee shall at all times be constituted so as
to not adversely affect the compliance of the Plan with
the requirements of Rule 16b-3 under the Exchange Act,
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to the extent it is applicable, or with the require-
ments of any other applicable law, rule or regulation.
3.2 Power and Authority. The Committee shall have full
power and authority to do all things necessary or
appropriate to administer this Plan according to its
terms and provisions (excluding the power to appoint
members of the Committee and to terminate, modify, or
amend the Plan, except as otherwise authorized by the
Board), including, but not limited to the full power
and authority (subject to the express provisions of
this Plan):
3.2.1 to award Stock Options and Stock Appreciation
Rights, pursuant to the terms of this Plan, to
eligible individuals described under Section 5
hereof;
3.2.2 to select the eligible individuals to whom
Stock Options or Stock Appreciation Rights, or
any combination thereof, if any, may from time
to time be awarded hereunder;
3.2.3 to determine the Incentive Stock Options, Non-
Qualified Stock Options, Stock Appreciation
Rights, or any combination thereof, if any, to
be awarded hereunder to one or more eligible
employees or persons;
3.2.4 to determine the number of shares to be
covered by each award granted hereunder;
3.2.5 to determine the terms and conditions not
inconsistent with the terms of the Plan, of
any award hereunder (including, but not
limited to, share price, any restrictions or
limitations, and any vesting, exchange, sur-
render, cancellation, acceleration, termin-
ation, exercise or forfeiture provisions, as
the Committee shall determine);
3.2.6 to determine any specified performance goals
or such other factors or criteria which need
to be attained for the vesting of an award
granted hereunder;
3.2.7 to determine the terms and conditions under
which awards hereunder are to operate on a
tandem basis and/or in conjunction with or
apart from other equity awarded under this
Plan and cash awards made by the Company or
any Subsidiary outside of this Plan;
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3.2.8 to determine the extent and circumstances
under which Common Stock and other amounts
payable with respect to an award hereunder
shall be deferred, which may be either
automatic or at the election of the Holder;
and
3.2.9 to substitute (i) new Stock Options for pre-
viously granted Stock Options, which previ-
ously granted Stock Options have higher option
exercise prices and/or contain other less
favorable terms, and (ii) new awards of any
other type for previously granted awards of
the same or other type, which previously
granted awards are upon less favorable terms.
3.3 Interpretation of Plan.
3.3.1 Subject to Sections 3.2 and 9 hereof, the
Committee shall have the authority at its
discretion to adopt, alter and repeal such
general and special administrative rules,
regulations, and practices governing the Plan
as it shall, from time to time, deem advis-
able, to construe and interpret the terms and
provisions of this Plan and any award issued
under this Plan (and to determine the form and
substance of all Agreements relating thereto),
and to otherwise supervise the administration
of this Plan.
3.3.2 Anything in this Plan to the contrary notwith-
standing, no term of this Plan relating to
Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion
or authority granted under this Plan be so
exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the
consent of the Holder(s) affected, to dis-
qualify any Incentive Stock Option under
Section 422 of the Code.
3.3.3 Subject to Sections 3.2 and 9 hereof, all
decisions made by the Committee pursuant to
the provisions of this Plan shall be made in
the Committee's sole discretion and shall be
final and binding upon all persons granted
options pursuant to the Plan.
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4. Shares Subject to Plan.
4.1 Number of Shares. The aggregate number of shares of
Common Stock reserved and available for distribution
under this Plan shall be 850,000 shares. If any shares
of Common Stock that are subject to a Stock Option or
Stock Appreciation Right cease to be subject to such
Stock Option or Stock Appreciation Right, or any such
award otherwise terminates without a payment being made
to the Holder in the form of Common Stock, such shares
shall again be available for distribution in connection
with future grants and awards under this Plan. The
number of shares available for distribution under this
Plan shall be reduced by the number of shares of Common
Stock issued under this Plan upon the exercise of a
Stock Option.
4.2 Character of Shares. The Company may elect to satisfy
its obligations to a Holder exercising a Stock Option
entirely by issuing authorized and unissued shares of
Common Stock to such Holder, entirely by transferring
treasury shares to such Holder, or in part by the issue
of authorized and unissued shares and the balance by
the transfer of treasury shares.
5. Eligibility.
5.1 General. Awards under this Plan may be made to: (i)
officers and other key employees of the Company or any
Subsidiary who are at the time of the grant of an award
under this Plan regularly employed by the Company or
any Subsidiary, including any full time salaried
officer or employee who is a member of the Board
(except as provided in the last sentence under Section
3.1); and, (ii) consultants or independent contractors
whom the Board believes have contributed or will
contribute to the success of the Company.
5.2 Multiple Awards. The Committee shall from time to time
designate such employees, consultants or independent
contractors to whom options are to be granted, and the
number of shares to be subject to each option. The
Committee may at any time grant one or more Stock
Options or Stock Appreciation Rights or a combination
thereof to an individual to whom a Stock Option or
Stock Appreciation Right has previously been granted
under this or any other stock option plan of the
Company, whether or not such previously granted Stock
Option or Stock Appreciation Right has been fully
exercised.
5.3 Ineligibility for Awards. No person designated by the
Board to serve on the Committee, effective at such
future time so that he qualifies as a "disinterested
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person" within the meaning of Rule 16b-3(c) of the
Exchange Act, shall be eligible to receive any awards
under the Plan during the period from the date such
designation is made to the date such designation
becomes effective. Notwithstanding Section 5.1 hereof,
no member of the Committee, while serving as such,
shall be eligible to receive an award under the Plan.
6. Stock Options.
6.1 Grant and Exercise. Stock Options granted under the
Plan may be of two types: (i) Incentive Stock Options
and (ii) Non-Qualified Stock Options. Only full-time
salaried officers or employees may be granted Incentive
Stock Options. Any individual eligible to participate
under this Plan may be granted Non-Qualified Stock
Options. Any Stock Option granted under the Plan shall
contain such terms, not inconsistent with this Plan, as
the Committee may from time to time approve. The
Committee shall have the authority to grant to any
eligible individual Incentive Stock Options, Non-
Qualified Stock Options, or both types of Stock Options
and, in each case, may be granted alone, in tandem
with, or without, or in addition to Stock Appreciation
Rights. To the extent that any Stock Option (or
portion thereof) does not qualify as an Incentive Stock
Option, it shall constitute a separate Non-Qualified
Stock Option. Unless granted in substitution for
another outstanding award, Stock Options shall be
granted for no consideration other than services to the
Company or a Subsidiary.
6.2 Exercise Price.
6.2.1 Less Than 10% Shareholder. The exercise price
in any option granted under this Plan to an
individual who, at the time the Stock Option
is granted, does not own stock possessing more
than ten percent (10%) of the total combined
voting power of all classes of stock of the
Company or of any Subsidiary (computed in
accordance with the provisions applicable to
Section 422(b)(6) of the Code) (a "less than
10% Shareholder") shall be not less than the
Fair Market Value of the shares of Common
Stock subject to the Stock Option at the time
the Stock Option is granted, determined by the
Committee in accordance with the applicable
regulations and rulings of the Commissioner of
the Internal Revenue Service in effect at the
time the Stock Option is granted.
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6.2.2 10% Shareholder. The exercise price in any
option granted under the Plan to an individual
who is not a less than ten percent (10%)
Shareholder (a "10% Shareholder") shall be not
less than one hundred ten percent (110%) of
the Fair Market Value of the shares of Common
Stock subject to the Stock Option at the time
the Stock Option is granted, determined in
accordance with the applicable regulations and
rulings of the Commissioner of the Internal
Revenue Service in effect at the time the
Stock Option is granted.
6.3 Option Term. The term of each Stock Option shall be
fixed by the Board, but no Stock Option shall be exer-
cisable more than ten (10) years (five (5) years, in
the case of an Incentive Stock Option granted to a 10%
Shareholder) after the date on which the Stock Option
is granted.
6.4 Exercise of Non-Qualified Stock Options. Non-Qualified
Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall
be determined by the Committee; provided, however, that
no Non-Qualified Stock Option granted under this Plan
may be exercised until after the expiration of six (6)
months from the date the Stock Option is granted. If
the Committee provides, in its discretion, that any
Stock Option is exercisable only in installments, the
Committee may waive such installment exercise
provisions at any time at or after the time of grant in
whole or in part, based upon such factors as the
Committee shall determine; provided that the Committee
cannot waive the requirement that the Stock Option may
not be exercised until after the expiration of six (6)
months from the date the Stock Option is granted.
6.5 Exercise of Incentive Stock Options.
6.5.1 By an Employee. No Incentive Stock Option
granted under this Plan shall be exercisable
after the expiration of ten (10) years from
the date such ISO is granted, except that no
ISO granted to a person who is not a less than
10% Shareholder shall be exercisable after the
expiration of five (5) years from the date
such option is granted. Employment by a Sub-
sidiary shall be employment by the Company.
Unless such requirements are waived by the
Committee, the employee, while still in the
employment of the Company, may exercise the
options as follows:
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6.5.1.1 at any time after one (1) year of
continuous employment from the date
such ISO is granted, as to twenty
percent (20%) of the shares subject
to the option;
6.5.1.2 at any time after two (2) years of
such continuous employment from the
date such ISO is granted, as to an
additional twenty percent (20%) of
the shares subject to the option;
6.5.1.3 at any time after three (3) years of
such continuous employment from the
date such ISO is granted, as to an
additional thirty percent (30%) of
the shares subject to the option;
and
6.5.1.4 at any time after four (4) years of
such continuous employment from the
date such ISO is granted, as to all
of the shares remaining subject to
the option.
The Committee may decide in each case to what
extent leaves of absence for government or
military service, illness, temporary dis-
ability, or other reasons, shall not interrupt
continuous employment.
6.5.2 Termination of Employment. Except as other-
wise expressly provided in Sections 6.5.3 and
6.5.4 of this Plan or in the Agreement, no
Stock Option may be exercised at any time
unless the Holder thereof is then an employee
of the Company or a Subsidiary.
6.5.3 By a Former Employee. No person may exercise
an ISO after he is no longer an employee of
the Company or any Subsidiary; except that if
an employee ceases to be an employee on
account of physical or mental disability as
defined in Section 22(e)(3) of the Code
("Former Employee"), he may exercise the ISO
within twelve (12) months after the date on
which he ceased to be an employee, for the
number of shares for which he could have
exercised at the time he ceased to be an
employee. No ISO granted under this Plan
shall in any event be exercised by such Former
Employee after the expiration of ten (10)
years from the date such ISO is granted,
except that no ISO granted to a person who is
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a 10% Shareholder may be exercisable after the
expiration of five (5) years from the date
such ISO is granted.
6.5.4 In Case of Death. If any employee or Former
Employee who was granted an ISO dies prior to
the termination of such ISO, such ISO may be
exercised within twelve (12) months after the
death of the employee or Former Employee by
his estate, or by a person who acquired the
right to exercise such ISO by bequest or
inheritance, or by reason of the death of such
employee or Former Employee, provided that:
6.5.4.1 such employee died while an employee
of the Company or a Subsidiary; or
6.5.4.2 such Former Employee had ceased to
be an employee of the Company or a
Subsidiary on account of physical or
mental disability and died within
three (3) months after the date on
which he ceased to be such employee.
Such ISO may be exercised only as to the
number of shares for which he could have
exercised at the time the employee or Former
Employee died. No ISO granted under this Plan
shall in any event be exercised in case of
death of an employee or Former Employee after
the expiration of ten (10) years from the date
such ISO is granted, except that no ISO
granted to a 10% Shareholder shall be exer-
cisable after the expiration of five (5) years
from the date such ISO is granted.
6.5.5 The Committee may, in its discretion, waive
the installment exercise provisions at any
time at or after the time of grant, in whole
or in part, based on such factors as the
Committee shall determine; provided that at
all times no ISO may be exercised until the
expiration of six (6) months from the date
that the Stock Option was granted.
6.6 Termination of Options. A Stock Option granted under
this Plan shall be considered terminated, in whole or
in part, to the extent that it can no longer be exer-
cised for shares originally subject to it, provided
that a Stock Option granted shall be considered
terminated at an earlier date upon surrender for
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cancellation by the Holder to whom such Stock Option
was granted.
6.7 Notice of Exercise and Payment. Subject to any
installment, exercise and waiting period provisions
that are applicable in a particular case, Stock Options
granted under this Plan may be exercised, in whole or
in part, at any time during the term of the Stock
Option, by giving written notice of such exercise to
the Company identifying the Stock Option being exer-
cised and specifying the number of shares then being
purchased. Such notice shall be accompanied by payment
in full of the exercise price, which shall be in cash
or, unless otherwise provided in the Agreement, in
whole shares of Common Stock which are already owned by
the Holder of the Stock Option or, unless otherwise
provided in the Agreement, partly in cash and partly in
such Common Stock. Cash payments shall be made by wire
transfer, certified check or bank check or personal
check, in each case payable to the order of the
Company; provided, however, that the Company shall not
be required to deliver certificates for shares of
Common Stock with respect to which a Stock Option is
exercised until the Company has confirmed the receipt
of good and valuable funds in payment of the purchase
price thereof. Payments in the form of Common Stock
(which shall be valued at the Fair Market Value of a
share of Common Stock on the date of exercise) shall be
made by delivery of stock certificates in negotiable
form which are effective to transfer good and valid
title thereto to the Company, free of any liens or
encumbrances, with signature guaranteed by a bank or
investment banking firm.
6.8 Issuance of Shares. As soon as practicable after its
receipt of such notice and payment, the Company shall
cause one or more certificates for the shares so pur-
chased to be delivered to the Holder or his or her
estate, as the case may be. No Holder or estate shall
have any of the rights of a shareholder with reference
to shares of Common Stock subject to a Stock Option
until after the Stock Option has been exercised in
accordance with Section 6.7 and certificates repre-
senting the shares of Common Stock so purchased by the
Holder pursuant to the Stock Option have been delivered
to the Holder or estate.
6.9 Partial Exercise. A Stock Option granted under this
Plan may be exercised as to any part of the shares for
which it could be exercised. Such a partial exercise
of a Stock Option shall not affect the right to exer-
cise the Stock Option from time to time in accordance
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with this Plan as to the remaining shares of Common
Stock subject to the Stock Option.
6.10 $100,000 Per Year Limitation. To the extent that the
aggregate Fair Market Value of Common Stock with
respect to which Incentive Stock Options are exer-
cisable for the first time by a Holder during any
calendar year (under all of the Company's plans)
exceeds $100,000, such excess Stock Options shall be
treated as Non-Qualified Stock Options for purposes of
Section 422 of the Code.
6.11 Buyout and Settlement Provisions. The Committee may at
any time offer to buy out for cash or otherwise settle
a Stock Option previously granted, based upon such
terms and conditions as the Committee shall establish
and communicate to the Holder at the time that such
offer is made, including a settlement for exchange of
a different award under the Plan for the surrender of
the Stock Option.
7. Stock Appreciation Rights.
7.1 Grant and Exercise. Stock Appreciation Rights may be
granted in tandem with ("Tandem Stock Appreciation
Right") or in conjunction with all or part of any Stock
Option granted under this Plan or may be granted on a
free-standing basis. In the case of a Non-Qualified
Stock Option, a Tandem Stock Appreciation Right may be
granted either at or after the time of the grant of
such Non-Qualified Stock Option. In the case of an
Incentive Stock Option, a Tandem Stock Appreciation
Right may be granted only at the time of the grant of
such Incentive Stock Option. Unless granted in sub-
stitution for another outstanding award, Stock Apprec-
iation Rights shall be granted for no consideration
other than services to the Company or a Subsidiary.
7.2 Termination. A Tandem Stock Appreciation Right shall
terminate and shall no longer be exercisable upon the
termination or exercise of the related Stock Option,
except that, unless otherwise determined by the Board,
a Tandem Stock Appreciation Right granted with respect
to less than the full number of shares covered by a
related Stock Option shall not be reduced until after
the number of shares remaining under the related Stock
Option equals the number of shares covered by the
Tandem Stock Appreciation Right.
7.3 Method of Exercise. A Tandem Stock Appreciation Right
may be exercised by a Holder, in accordance with
Section 7.4 hereof, by surrendering the applicable
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portion of the related Stock Option. Upon such exer-
cise and surrender, the Holder shall be entitled to
receive such amount in the form of payment determined
in the manner prescribed in Section 7.5 hereof. Stock
Options which have been so surrendered, in whole or in
part, shall no longer be exercisable to the extent
Tandem Stock Appreciation Rights have been exercised.
7.4 Exercisability. Tandem Stock Appreciation Rights shall
be exercisable only at such time or times and to the
extent that the Stock Options to which they relate
shall be exercisable in accordance with the provisions
of Section 6 hereof and this Section 7, and may be
subject to such additional limitations on exercis-
ability as shall be determined by the Committee and set
forth in the Agreement. Other Stock Appreciation
Rights shall be exercisable at such time or times and
subject to such terms and conditions as shall be deter-
mined by the Committee and set forth in the Agreement.
Notwithstanding anything to the contrary contained
herein (including the provisions of Section 8.1
hereof), any Stock Appreciation Right granted to a
Section 16(b) Holder to be settled wholly or partially
in cash (i) shall not be exercisable during the first
six (6) months of the term of such Stock Appreciation
Right, except that this special limitation shall not
apply in the event of death or disability of such
Holder prior to the expiration of the six (6) month
period, and (ii) shall only be exercisable during the
period beginning on the third business day following
the date of release for publication of the Company of
quarterly or annual summary statements of sales and
earnings and ending on the twelfth (12) business day
following such date.
7.5 Receipt of SAR Value. Upon the exercise of a Stock
Appreciation Right, a Holder shall be entitled to
receive up to, but not more than, an amount in cash
and/or shares of Common Stock equal to the SAR Value
with the Committee having the right to determine the
form of payment.
7.6 Shares Affected Under Plan. Upon the exercise of a
Tandem Stock Appreciation Right, the Stock Option or
part thereof to which such Tandem Stock Appreciation
Right is related shall be deemed to have been exercised
for the purpose of the limitation set forth in Section
4.1 hereof on the number of shares of Common Stock to
be issued under the Plan, but only to the extent of the
number of shares, if any, issued under the Tandem Stock
Appreciation Right at the time of exercise based upon
the SAR Value.
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7.7 Limited Stock Appreciation Rights. The Committee may
grant "Limited Stock Appreciation Rights", i.e., Stock
Appreciation Rights that become exercisable upon the
occurrence of one or more of the events which trigger
a Change of Control as defined in Section 8.2 hereof,
and shall be settled in an amount equal to the Formula
Price Per Share, subject to such other terms and condi-
tions as the Committee may specify; provided, however,
if any Limited Stock Appreciation Right is granted to
a Section 16(b) Holder such Limited Stock Appreciation
Right (i) shall only be exercisable within sixty (60)
days after the event triggering the Change of Control;
and (ii) may not be exercised during the first six (6)
months after the date of grant of such Limited Stock
Appreciation Right (except in the event of death or
disability of such Holder prior to the expiration of
the six (6) month period); and (iii) shall only be
exercisable in the event that the date of the Change of
Control was outside the control of such Holder; and
(iv) shall only be settled in cash in an amount equal
to the Formula Price Per Share.
8. Acceleration.
8.1 Acceleration Upon Change of Control. Unless the award
Agreement provides otherwise or unless the Holder
waives the application of this Section 8.1 prior to a
Change of Control (as hereinafter defined), in the
event of a Change of Control, each outstanding Stock
Option, Stock Appreciation Right and Limited Stock
Appreciation Right granted under the Plan shall immedi-
ately become exercisable in full notwithstanding the
vesting or exercise provisions contained in the
Agreement.
8.2 Change of Control Defined. A "Change of control" shall
be deemed to have occurred upon any of the following
events:
8.2.1 The consummation of any of the following
transactions: any merger, reverse stock split,
recapitalization or other business combination
of the Company, with or into another corpor-
ation, or an acquisition of securities or
assets by the Company, pursuant to which the
Company is not the continuing or surviving
corporation or pursuant to which shares of
Common Stock would be converted into cash,
securities or other property, other than a
transaction in which the majority of the
holders of Common Stock immediately prior to
such transaction will own at least fifty
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percent (50%) of the total voting power of the
then-outstanding securities of the surviving
corporation immediately after such trans-
action; or
8.2.2 A transaction in which any person (as such
term is defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), corporation or
other entity (other than the Company, or any
profit-sharing, employee ownership or other
employee benefit plan sponsored by the Company
or any Subsidiary, or any trustee of or
fiduciary with respect to any such plan when
acting in such capacity, or any group com-
prised solely of such entities): (i) shall
purchase any Common Stock (or securities con-
vertible into Common Stock) for cash, secur-
ities or any other consideration pursuant to a
tender offer or exchange offer, without the
prior consent of the Board, or (ii) shall
become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act),
directly or indirectly (in one transaction or
a series of transactions), of securities of
the Company representing fifty percent (50%)
or more of the total voting power of the then-
outstanding securities of the Company ordi-
narily (and apart from the rights accruing
under special circumstances) having the right
to vote in the election of directors (cal-
culated as provided in Rule 13d-3(d) in the
case of rights to acquire the Company's
securities); or
8.2.3 If, during any period of two consecutive
years, individuals who at the beginning of
such period constituted the entire Board and
any new director whose election by the Board,
or nomination for election by the Company's
stockholders was approved by a vote of at
least two-thirds of the directors then still
in office who either were directors at the
beginning of the period or whose election or
nomination for election by the stockholders
was previously so approved, cease for any
reason to constitute a majority thereof.
8.3 General Waiver by Board. The Committee may, after
grant of an award, accelerate the vesting of all or any
part of any Stock Option, and/or waive any limitations
or restrictions, if any, for all or any part of an
award.
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8.4 Acceleration Upon Termination of Employment. In the
case of a Holder whose employment or affiliation with
the Company or a Subsidiary is involuntarily terminated
for any reason (other than for cause), the Committee
may, at its option and in its sole discretion, accel-
erate the vesting of all or any part of any award
and/or waive, in whole or in part, any or all of the
remaining deferral limitations or restrictions imposed
hereunder or pursuant to the Agreement.
9. Amendments and Termination.
9.1 Amendments to Plan; Termination. The Board may at any
time, and from time to time, amend any of the pro-
visions of the Plan, and may at any time suspend or
terminate the Plan; provided, however, that no such
amendment shall be effective unless and until it has
been duly approved by the stockholders of the out-
standing shares of Common Stock if (i) such amendment
materially increases the benefits accruing to partici-
pants under this Plan; (ii) such amendment materially
increases the number of securities which may be issued
under this Plan; (iii) such amendment materially modi-
fies the requirements as to eligibility for partici-
pation in this Plan; or, (iv) the failure to obtain
such approval would adversely affect the compliance of
the Plan with the requirements of Rule 16b-3 under the
Exchange Act, or with the requirements of any other
applicable law, rule or regulation.
9.2 Amendments to Individual Awards. The Board may amend
the terms of any award granted under the Plan; pro-
vided, however, that subject to Section 11 hereof, no
such amendment may be made by the Board which in any
material respect impairs the rights of the Holder
without the Holder's consent.
10. Term of Plan.
10.1 Effective Date. The Plan shall be effective as of
August 5, 1993 ("Effective Date"), subject to the
approval of the Plan by the stockholders of the
Company within one year after the Effective
Date. Any awards granted under the Plan prior to such
approval shall be effective when made (unless otherwise
specified by the Committee at the time of grant) but
shall be conditioned upon, and subject to, such
approval of the Plan by the Company's stockholders and
approval of the Company's application to list the
shares of the Company's Common Stock covered by the
Plan on the American Stock Exchange (and no awards
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shall vest or otherwise become free of restrictions
prior to such approvals).
10.2 Termination Date. No award shall be granted pursuant
to the Plan on or after the tenth (10th) anniversary of
the Effective Date, but awards granted prior to such
tenth (10th) anniversary may extend beyond that date.
The Plan shall terminate at such time as no further
awards may be granted and all awards granted under the
Plan are no longer outstanding.
11. Adjustment Upon Change of Shares. Subject to any required
action by the stockholders of the Company, the number of
shares of Common Stock for which Stock Options may thereafter
be granted, and the number of shares of Common Stock then sub-
ject to Stock Options previously granted, and the price per
share payable upon exercise of such Stock Option and the
number of shares and exercise price relating to Stock Appreci-
ation Rights, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a subdivision or consoli-
dation of shares of Common Stock or the payment of a stock
dividend (but only on the Common Stock) or any other increase
or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company.
11.1 If the Company is reorganized or consolidated or merged
with another corporation, in which the Company is the
non-surviving corporation, a Holder of an outstanding
Stock Option and/or Stock Appreciation Right granted
under this Plan shall be entitled (subject to the
provisions of this Section 11) to receive options
and/or stock appreciation rights covering shares of
such reorganized, consolidated or merged corporation in
the same proportion as granted to Holder prior to such
reorganization, consolidation or merger at an equiva-
lent exercise price, and subject to the same terms and
conditions as this Plan. For purposes of the preceding
sentence, the excess of the aggregate Fair Market Value
of shares subject to the option immediately after the
reorganization, consolidation or merger over the aggre-
gate exercise price of such shares shall not be more
than the excess of the aggregate Fair Market Value of
all shares of Common Stock subject to the option or
Stock Appreciation Right immediately before such reor-
ganization, consolidation or merger over the aggregate
exercise price of such shares of Common Stock, and the
new stock option or stock appreciation right or assump-
tion of the old Stock Option or old Stock Appreciation
Right by any surviving corporation shall not give the
Holder additional benefits which he did not have under
the old Stock Option or Stock Appreciation Right.
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11.2 To the extent that the foregoing adjustments relate to
the shares of Common Stock of the Company, such adjust-
ments shall be made by the Committee, whose determin-
ation in that respect shall be final, binding and
conclusive, provided that each Incentive Stock Option
granted pursuant to this Plan shall not be adjusted in
a manner that causes the Incentive Stock Option to fail
to continue to qualify as an incentive stock option
within the meaning of Section 422 of the Code.
11.3 Except as expressly provided in this Section 11, the
Holder shall have no rights by reason of any sub-
division or consolidation of shares of stock of any
class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquida-
tion, merger, consolidation, reorganization or spin-off
of assets or stock of another corporation, and any
issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or
price of shares of Common Stock subject to the Stock
Option or the number or price of Stock Appreciation
Rights granted under this Plan.
11.4 The grant of a Stock Option or Stock Appreciation Right
pursuant to this Plan shall not affect in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structure or to merge or to con-
solidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
12. General Provisions.
12.1 Investment Representations. The Committee may require
each person acquiring shares of Common Stock pursuant
to an award under this Plan to represent to and agree
with the Company in writing that the Holder is acquir-
ing the shares for investment without a view to dis-
tribution thereof.
12.2 Additional Incentive Arrangements. Nothing contained
in this Plan shall prevent the Board from adopting such
other or additional incentive arrangements as it may
deem desirable, including, but not limited to, the
granting of Stock Options and the awarding of stock and
cash otherwise than under this Plan; and such arrange-
ments may be either generally applicable or applicable
only in specific cases.
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12.3 No Right of Employment. Nothing contained in this Plan
or in any award hereunder shall be deemed to confer
upon any employee of the Company or any Subsidiary any
right to continued employment with the Company or any
Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.
12.4 Withholding Taxes. Not later than the date as of which
an amount first becomes includible in the gross income
of the Holder for federal income tax purposes with
respect to any award under the Plan, the Holder shall
pay to the Company, or make arrangements satisfactory
to the Company regarding the payment of, any federal,
state and local taxes of any kind required by law to be
withheld or paid with respect to such amount. If per-
mitted by the Board, tax withholding or payment obli-
gations may be settled with Common Stock, including
Common Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the
Company under this Plan shall be conditional upon such
payment or arrangements and the Company shall, to the
extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due
to the Holder from the Company.
12.5 Governing Law. This Plan and all awards made and
actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of
Delaware (without regard to choice of law provisions).
12.6 Other Benefit Plans. Any award granted under this Plan
shall not be deemed compensation for purposes of com-
puting benefits under any retirement plan of the Com-
pany or any Subsidiary and shall not affect any bene-
fits under any other benefit plan now or subsequently
in effect under which the availability or amount of
benefits is related to the level of compensation
(unless required by specific reference in any such
other plan to awards under this Plan).
12.7 Employee Status. A leave of absence, unless otherwise
determined by the Board prior to the commencement
thereof, shall not be considered a termination of
employment. Any awards granted under this Plan shall
not be affected by any change of employment, so long as
the Holder continues to be an employee of the Company
or any Subsidiary.
12.8 Non-Transferability. Other than the transfer of a
Stock Option or Stock Appreciation Right by will or by
the laws of descent and distribution, no award under
this Plan may be alienated, sold, assigned, hypothe-
cated, pledged, exchanged, transferred, encumbered or
charged, and any attempt to alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or
charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject
to the debts, contracts, liabilities or torts of the
person entitled to such benefit. Unless otherwise pro-
vided in this Plan or the Agreement, any Stock Option
or Stock Appreciation Right granted under this Plan is
only exercisable during the lifetime of the Holder by
the Holder or by his guardian or legal representative.
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12.9 Applicable Laws. The obligations of the Company with
respect to all awards under this Plan shall be subject
to (i) all applicable laws, rules and regulations,
including, without limitation, the requirements of all
federal securities laws, rules and regulations and
state securities and blue sky laws, rules and regula-
tions, and such approvals by any governmental agencies
as may be required, including, without limitation, the
effectiveness of a registration statement under the
Act, and (ii) the rules and regulations of any national
securities exchange on which the Common Stock may be
listed or the NASDAQ National Market System if the
Common Stock is designated for quotation thereon.
12.10 Conflicts. If any of the terms or provisions of the
Plan conflict with the requirements of Rule 16b-3 under
the Exchange Act, or with the requirements of any other
applicable law, rule or regulation, and/or with respect
to Incentive Stock Options, Section 422 of the Code,
then such terms or provisions shall be deemed inoper-
ative to the extent they so conflict with the require-
ments of said Rule 16b-3, and/or with respect to
Incentive Stock Options, Section 422 of the Code. With
respect to Incentive Stock Options, if this Plan does
not contain any provision required to be included
herein under Section 422 of the Code, such provision
shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out
at length herein.
12.11 Written Agreements. Each award granted under this Plan
shall be confirmed by, and shall be subject to the
terms of the Agreement approved by the Committee and
executed by the Company and the Holder. The Committee
may terminate any award made under this Plan if the
Agreement relating thereto is not executed and returned
to the Company within sixty (60) days after the Agree-
ment has been delivered to the Holder for his or her
execution.
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12.12 Indemnification of Committee. In addition to such
other rights of indemnification as they may have as
directors or as members of the Committee, the members
of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or
any of them may be a party by reason of any action
taken or failure to act under or in connection with the
Plan or any award granted thereunder, and against all
amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal
counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding
that such Committee member is liable for negligence or
misconduct in the performance of his duties; provided
that within sixty (60) days after institution of any
such action, suit or proceeding a Committee member
shall in writing offer the Company the opportunity, at
its own expense, to handle and defend the same.
12.13 Consideration for Common Stock. The Committee may not
grant any awards under this Plan pursuant to which the
Company will be required to issue any shares of Common
Stock unless the Company will receive consideration for
the shares of Common Stock sufficient under the laws of
the State of Delaware so that such shares of Common
Stock will be, when issued, validly issued and fully
paid and nonassessable when issued.
12.14 Common Stock Certificates. All certificates for shares
of Common Stock delivered under this Plan shall be sub-
ject to such stop-transfer orders and other restric-
tions as the Committee may deem advisable under the
rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, any applic-
able federal or state securities law and any applicable
corporate law, and the Committee may cause a legend or
legends to be put on any such certificates to make
appropriate reference to such restrictions. Notwith-
standing anything to the contrary contained herein,
whenever certificates representing shares of Common
Stock subject to an award are required to be delivered
pursuant to the terms of this Plan, the Company may, in
lieu of such delivery requirement, comply with the
provisions of Section 158 of the Delaware General
Corporation Law.
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12.15 Unfunded Status of Plan. This Plan is intended to con-
stitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet
made to a Holder by the Company, nothing contained
herein shall give any such Holder any rights that are
greater than those of a general creditor of the
Company.
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