EXHIBIT 10.1
CENTURY ALUMINUM COMPANY
AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
I. PURPOSES AND SCOPE OF PLAN
Century Aluminum Company (the "Company") desires to afford certain
salaried officers and other salaried key employees of the Company and its
subsidiaries who are in a position to affect materially the profitability and
growth of the Company and its subsidiaries an opportunity to acquire a
proprietary interest in the Company, and thus to create in such persons interest
in and a greater concern for the welfare of the Company. Non-employee directors
are also eligible to participate in the 1996 Stock Incentive Plan (the "Plan"),
which enables the Company to attract and retain outside directors of the highest
caliber and experience and to provide an incentive for such directors to
increase their proprietary interest in the Company's long-term success. These
objectives will be promoted through the granting to such key employees of equity
instruments including (i) incentive stock options ("Incentive Options") which
are intended to qualify under Section 422 (or any successor provision) of the
Internal Revenue Code of 1986, as amended (the "Code"); (ii) options which are
not intended to so qualify ("NQSOs"); and (iii) performance share units
("Performance Shares").
The awards offered to employees pursuant to this Plan are a matter of
separate inducement and are not in lieu of any salary or other compensation for
services.
The Company, by means of the Plan, seeks to retain the services of persons
now holding key positions and to secure the services of persons capable of
filling such positions.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number of shares of common stock, $0.01 par value, per share, of
the Company, or any other security into which such shares of common stock may be
changed by reason of any transaction or event of the type referred to below in
this Article II (the "Shares") reserved and available for distribution pursuant
to options and awards granted hereunder shall not exceed, in the aggregate,
5,000,000, subject to adjustment described below. All Shares available for
distribution under the Plan may be issued pursuant to Incentive Options, NQSOs
or Performance Shares or a combination of the foregoing.
Shares which may be acquired under the Plan may be either shares of
original issuance or treasury shares, or both, at the discretion of the Company.
Whenever any outstanding option or award or portion thereof expires, is
canceled, is forfeited or is otherwise terminated without having been exercised
or without having fully vested, or the underlying Shares are unissued for any
reason, including those withheld by or surrendered to the Company to satisfy
withholding tax obligations or in payment of the exercise price of an award, the
Shares allocable to the expired, canceled, forfeited or otherwise terminated
portion of the option or award, and any Shares withheld by or surrendered to the
Company, may again be the subject of options or awards granted hereunder. In
addition, any Shares which are available or become available for grant under the
Company's Non-Employee Directors Plan on or after July 1, 2005 shall be
available for grant under this Plan
Upon any stock dividend, stock split, combination or exchange of Shares,
recapitalization or other change in the capital structure of the Company,
corporate separation or division (including, but not limited to, split-up,
split-off, spin-off or distribution to Company shareholders other than a normal
cash dividend), sale by the Company of all or a substantial portion of its
assets, rights offering, merger, consolidation, reorganization or partial or
complete liquidation, or any other corporate transaction or event having an
effect similar to any of the foregoing, the aggregate number of Shares reserved
for issuance under the Plan, the number and option price of Shares subject to
outstanding options, the financial performance goals contained in a Performance
Share award, the number of Shares subject to a Performance Share award and any
other characteristics or terms of the options and awards as the Board of
Directors (as hereinafter defined) or the Committee (as hereinafter defined), as
the case may be, shall deem necessary or appropriate to reflect equitably the
effects of such changes to the holders of options and awards, shall be
appropriately substituted for new shares or other consideration, or otherwise
adjusted, as determined by the Board of Directors or the Committee, as the case
may be, in its discretion. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) (or any successor provision) of the Code, and (ii) in no event
shall any adjustment be made which would render any Incentive Option
-1-
granted hereunder other than an incentive stock option for purposes of Section
422 (or any successor provision) of the Code without the consent of the grantee.
III. ADMINISTRATION
The Compensation Committee (the "Committee") will have the authority to
administer the Plan, provided that the full Board of Directors of the Company
(the "Board of Directors"), at its sole discretion, may exercise any authority
granted to the Committee under this Plan. The Committee shall consist of no
fewer than two members of the Board of Directors, each of whom shall be a
"non-employee Director" within the meaning of Rule 16b-3 or any successor rule
or regulation ("Rule 16b-3") promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Committee shall administer the Plan
so as to comply at all times with Rule 16b-3. A majority of the members of the
Committee shall constitute a quorum, and the act of a majority of the members of
the Committee shall be the act of the Committee. Any member of the Committee may
be removed at any time, either with or without cause, by resolution adopted by a
majority of the Board of Directors, and any vacancy on the Committee may at any
time be filled by resolution adopted by a majority of the Board of Directors.
The Board of Directors or the Committee may delegate to an officer of the
Company the authority to make grants to persons who are not subject to Section
16 of the Exchange Act, provided such authority is limited as to time, aggregate
and individual award amounts and/or such other provisions as the Board of
Directors or Committee deems necessary or desirable.
Subject to the express provisions of the Plan, the Board of Directors or
the Committee, as the case may be, shall have authority, in its discretion, to
(i) select employees of the Company and its subsidiaries as recipients of
options or awards; (ii) determine the number and type of options or awards to be
granted; (iii) determine the terms and conditions, not inconsistent with the
terms hereof, of any options or awards granted; (iv) adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable; (v) interpret the terms and provisions
of the Plan and any option or award granted and any agreements relating thereto;
(vi) otherwise supervise the administration of the Plan; and (vii) establish
sub-plans with such terms as the Board of Directors of the Committee deems
necessary or desirable to comply with, or to qualify for preferred tax treatment
under the laws, rules and regulations of any jurisdiction outside of the United
States.
The determination of the Board of Directors or the Committee, as the case
may be, on matters referred to in this Article III shall be conclusive.
The Board of Directors or the Committee, as the case may be, may employ
such legal counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computation received from any such consultant or
agent. Expenses incurred by the Board of Directors or the Committee in the
engagement of such counsel, consultant or agent shall be paid by the Company. No
member or former member of the Committee or of the Board of Directors shall be
liable for any action or determination made in good faith with respect to the
Plan or any option or award granted hereunder.
The Company shall indemnify each member of the Board of Directors or the
Committee, as the case may be, for all costs and expenses and, to the extent
permitted by applicable law, any liability incurred in connection with defending
against, responding to, negotiation for the settlement of, or otherwise dealing
with any claim, cause of action or dispute of any kind arising in connection
with any actions in administering the Plan or in authorizing or denying
authorization to any transaction hereunder.
IV. ELIGIBILITY
Options and Performance Share awards may be granted only to: (i) certain
salaried officers and other salaried key employees of the Company and its
subsidiaries, and (ii) non-employee directors; provided, that no person shall be
eligible for any award if the granting of such award to such person would
prevent the satisfaction by the Plan of the general exemptive conditions of Rule
16b-3. In no event may any eligible person be granted or awarded stock options
and Performance Shares covering, in the aggregate, more than 300,000 Shares, or
500,000 Shares in the case of a newly hired person (subject to adjustment as
described in Article II above), in any fiscal year of the Company.
-2-
V. STOCK OPTIONS
1. General. Options may be granted alone or in addition to other awards
granted under the Plan. Any options granted under the Plan shall be in such form
as the Board of Directors or the Committee, as the case may be, may from time to
time approve and the provisions of the option grants need not be the same with
respect to each optionee. Options granted under the Plan may be either Incentive
Options or NQSOs. The Board of Directors or the Committee, as the case may be,
may grant to any optionee Incentive Options, NQSOs or a combination of the
foregoing; provided that options granted to non-employee directors may only be
NQSOs.
Options granted under the Plan shall be subject to the terms and
conditions of the Plan and shall contain such additional terms and conditions
not inconsistent with the terms of the Plan, as the Board of Directors or the
Committee, as the case may be, deems appropriate. Each option grant shall be
evidenced by an agreement executed on behalf of the Company by an officer
designated by the Committee and accepted by the optionee. Such agreement shall
describe the options and state that such options are subject to all the terms
and provisions of the Plan and shall contain such other terms and provisions,
consistent with the Plan, as the Board of Directors or the Committee, as the
case may be, may approve.
2. Exercise Price and Payment. The price per Share under any option
granted hereunder shall be such amount as the Board of Directors or the
Committee, as the case may be, shall determine, provided, however, that such
price shall not be less than 100% of the fair market value of the Shares subject
to such option, as determined below, at the date the option is granted (110% in
the case of an Incentive Option granted to any person who, at the time the
option is granted, owns stock of the Company or any subsidiary or parent of the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any subsidiary or parent of the Company (a
"10% Shareholder")).
If the Shares are listed on a national securities exchange in the United
States on the date any option is granted, the fair market value per Share shall
be deemed to be the average of the high and low sale price on such national
securities exchange in the United States on the date upon which the option is
granted, but if the Shares are not traded on such date, or such national
securities exchange is not open for business on such date, the fair market value
per Share shall be the average of the high and low sale price determined as of
the closest preceding date on which such exchange shall have been open for
business and the Shares were traded. If the Shares are listed on more than one
national securities exchange in the United States on the date any such option is
granted, the Board of Directors or the Committee, as the case may be, shall
determine which national securities exchange shall be used for the purpose of
determining the fair market value per Share. If the Shares are not listed on a
national securities exchange but are quoted on the NASDAQ National Market
("NASDAQ"), the fair market value per share shall be deemed to be the average of
the high and low sale prices on the date upon which the option is granted as
reported by NASDAQ or, if the Shares are not quoted on such date or NASDAQ is
not open for business on such date, the fair market value per Share shall be the
average of the high and low sale price determined as of the closest preceding
date on which NASDAQ shall have reported the Shares.
For purposes of this Plan, the determination by the Board of Directors or
the Committee, as the case may be, of the fair market value of a Share shall be
conclusive.
3. Term of Options and Limitations on the Right of Exercise. The term of
each option will be for such period as the Board of Directors or the Committee,
as the case may be, shall determine, provided that, except as otherwise provided
herein, in no event may any option granted hereunder be exercisable more than 10
years from the date of grant of such option (five years in the case of an
Incentive Option granted to a 10% Shareholder). Each option shall become
exercisable in such installments and at such times as may be designated by the
Board of Directors or the Committee, as the case may be, and set forth in the
agreement related to the grant of options. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the option expires.
Stock options may provide for acceleration of exercisability in the event of the
death, disability or retirement of the optionee.
The Board of Directors or the Committee, as the case may be, shall have
the right to limit, restrict or prohibit, in whole or in part, from time to
time, conditionally or unconditionally, rights to exercise any option granted
hereunder.
To the extent that an option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
-3-
4. Exercise of Options. Options granted under the Plan shall be exercised
by the optionee as to all or part of the Shares covered thereby by the giving of
written notice of the exercise thereof to the Company's stock plan
administration group, Wells Fargo Bank, NA, or such other nominee as may be
selected by the Company, specifying the number of Shares to be purchased,
accompanied by payment therefore made to the Company for the full purchase price
of such Shares or in such other manner as the Company may direct or as provided
in the applicable option agreement.
Upon the exercise of an option granted hereunder, the Company shall cause
the purchased Shares to be issued only when it shall have received the full
purchase price for the Shares in cash; provided, however, that in lieu of cash,
the holder of an option may, to the extent permitted by applicable law, exercise
an option in whole or in part, by any method permitted by the Committee.
Notwithstanding the foregoing, the Company, in its sole discretion, may
establish cashless exercise procedures whereby an option holder, subject to the
requirements of Rule 16b-3, Regulation T, federal income tax laws, and other
federal, state and local tax and securities laws, can exercise an option or a
portion thereof without making a direct payment of the option price to the
Company, including a program whereby option shares would be sold on behalf of
and at the request of an option holder by a designated broker and the exercise
price would be satisfied out of the sale proceeds and delivered to the Company.
If the Company so elects to establish a cashless exercise program, the Company
shall determine, in its sole discretion, and from time to time, such
administrative procedures and policies as it deems appropriate and such
procedures and policies shall be binding on any option holder wishing to utilize
the cashless exercise program.
If an option granted hereunder shall be exercised by the legal
representative of a deceased option holder or former option holder or by a
person who acquired an option granted hereunder by bequest or inheritance or by
reason of the death of any option holder or former option holder, written notice
of such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal representative or
other person to exercise such option.
5. Nontransferability of Options. An Incentive Option granted hereunder
shall not be transferable, whether by operation of law or otherwise, other than
by will or the laws of descent and distribution, and any Incentive Option
granted hereunder shall be exercisable, during the lifetime of the holder, only
by such holder. Except as determined by the Board of Directors of the Committee
or otherwise provided in the applicable option agreement, a NQSO granted
hereunder shall not be transferable, whether by operation of law or otherwise,
other than by will or the laws of descent and distribution, pursuant to a
qualified domestic relations order (as defined under the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder), or for the
benefit of any immediate family member of the option holder. The option of any
person to acquire Shares and all his rights thereunder shall terminate
immediately if the holder: (a) attempts to or does sell, assign, transfer,
pledge, hypothecate or otherwise dispose of the option or any rights thereunder
to any other person except as permitted above; or (b) becomes insolvent or
bankrupt or becomes involved in any matter so that the option or any rights
thereunder becomes subject to being taken from him to satisfy his debts or
liabilities.
6. Termination of Employment or Service. Except as set forth in Article
VII, unless otherwise specified by the Board of Directors or the Committee, as
the case may be, upon termination of employment of any option holder who was an
employee of the Company or its subsidiaries, any option previously granted to
such option holder, shall, to the extent not theretofore exercised, be cancelled
and become null and void, and all of the option holder's rights thereunder shall
terminate provided that:
(a) if the employee option holder shall die while in the employ of
the Company or any subsidiary of the Company, and at a time when such
employee was entitled to exercise an option as herein provided, his estate
or the legatees or distributees of his estate or of the option, as the
case may be, of such option holder, may, within three years following the
date of death, but not beyond that time and in no event later than the
expiration date of the option, exercise such option, to the extent not
theretofore exercised, in respect of any or all of such number of Shares
which the option holder was entitled to purchase;
(b) if an employee option holder terminates his or her employment by
reason of taking retirement with the Company or a subsidiary on or after
the attainment of "normal retirement age" under the Company's Employees
Retirement Plan, or disability (as described in Section 22 (e) (3) of the
Code and in the Company's Employees Retirement Plan), and at a time when
such employee was entitled to exercise an
-4-
option as herein provided, the Optionee shall have the right to exercise
such option up to the earlier of (i) three years following the date of
retirement or disability and (ii) the expiration of the option; and
(c) if an employee option holder terminates his or her employment by
reason of taking retirement with the Company or a subsidiary prior to the
age 62 under the Company's Employees Retirement Plan, and at a time when
such employee was entitled to exercise an option as herein provided, the
Optionee shall have the right to exercise such option up to the earlier of
(i) 90 days following the date of retirement and (ii) the expiration of
the option.
Any options granted to a non-employee director of the Company shall
terminate on the earliest to occur of the following:
(i) Subject to Article VII, three years after the date on which the
optionee ceases to be a director of the Company (during which period the
Option shall be exercisable only to the extent exercisable on the date of
such cessation); and
(ii) 10 years after the date on which the option was granted.
Any options issued or outstanding on or after December 31, 2004 shall
continue to vest in accordance with their terms (for up to one full year, in the
case of non-employee directors) if the option holder terminates his or her
employment with the Company or any of its subsidiaries or, in the case of
non-employee directors, ceases to be a director on or after attaining "Normal
Retirement Age" under the Company's Employee Retirement Plan (for this purpose,
service on the Company's Board shall be deemed service under the Company's
Employee Retirement Plan).
In no event shall any person be entitled to exercise any option after the
expiration of the period of exercisability of such option as specified therein.
For the purposes of the Plan, an employment relationship shall be deemed
to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of an employee from employment by the Company to employment by a
subsidiary of the Company or (ii) the transfer of an employee from employment by
a subsidiary of the Company to employment by the Company or by another
subsidiary of the Company.
7. Maximum Allotment of Incentive Options. If the aggregate fair market
value of Shares with respect to which Incentive Options are exercisable for the
first time by an employee during any calendar year (under all stock option plans
of the Company and any parent or any subsidiary of the Company) exceeds
$100,000, any options which otherwise qualify as Incentive Options, to the
extent of the excess, will be treated as NQSOs.
VI. PERFORMANCE SHARE AWARDS
1. General. Performance Share awards may be granted alone or in addition
to any other awards granted under the Plan. The provisions of Performance Share
awards need not be the same with respect to each recipient. Performance Share
awards granted under the Plan shall be in such form as the Board of Directors or
the Committee, as the case may be, may from time to time approve. Each grant of
a Performance Share award shall be evidenced by an agreement executed on behalf
of the Company by an officer designated by the Board of Directors or the
Committee, as the case may be, and accepted by the recipient. Such agreement
shall describe the Performance Share award and state that such award is subject
to all the terms and provisions of the Plan and shall contain such other terms
and provisions, consistent with the Plan, as the Board of Directors or the
Committee, as the case may be, may approve. Each Performance Share awarded under
the Plan shall entitle the grantee to receive one Share upon vesting of such
Performance Share.
2. Restrictions. Each Performance Share award shall vest upon (A) the
passage of time and/or (B) the attainment by the Company of specified
performance objectives. Company performance objectives may be expressed in terms
of (i) earnings per share, (ii) pre-tax profits (either on the Company or
business unit level), (iii) net earnings or net worth, (iv) return on equity or
assets, (v) any combination of the foregoing, or (vi) any other standard or
standards deemed appropriate by the Board of Directors or the Committee, as the
case may be, at the
-5-
time the award is granted. Such time periods (the "Performance Period") and
performance goals shall be set by the Board of Directors or the Committee, as
the case may be, in its sole discretion.
Performance Share awards shall become vested in a recipient upon the lapse
of the Performance Period, if any, and/or the attainment of the associated
performance goals set forth in the agreement between the recipient and the
Company. Performance Share awards shall vest in such installments and at such
times as may be designated by the Board of Directors or the Committee, as the
case may be, and set forth in the agreement related to the granting of the
Performance Share awards. The agreement evidencing the Performance Share awards
may provide for acceleration of vesting in the event of the death, disability or
retirement of the recipient.
3. Stock Certificate. No stock certificates shall be issued to the
recipient with respect to Performance Share awards until such time as the
Performance Share awards vest.
4. Treatment of Dividends. If any ordinary cash dividends are declared or
paid on Shares, the record date of which is prior to the forfeiture or the
vesting of Performance Share awards, the holder of the Performance Share awards
shall be entitled to receive an amount equal to the amount of the per Share
dividend declared for each Performance Share. Such dividends shall be paid to
such recipients at the same time and in the same manner as dividends are paid to
stockholders of the Company.
5. Nontransferability. Subject to the provisions of this Plan and the
applicable agreement, during the period when the Performance Shares have not
vested, the recipient shall not be permitted to sell, transfer, pledge, assign
or otherwise encumber Performance Shares awarded under the Plan.
6. Shareholder Rights. The recipient shall have no rights with respect to
the Performance Shares or any Shares related thereto until they have vested,
including no right to vote the Performance Shares or such Shares, other than the
right to receive dividends as set forth in the Plan.
7. Termination of Employment. Subject to the provisions of Paragraph 2
above, all unvested Performance Shares shall be forfeited upon termination of
employment.
VII. CHANGE OF CONTROL
Notwithstanding anything to the contrary contained herein, upon a Change
of Control (as defined below) of the Company, (i) all options shall immediately
vest and become exercisable in full during the remaining term thereof, and shall
remain so, whether or not the option holder to whom such options have been
granted remains an employee of the Company or its subsidiaries, and (ii) the
restrictions applicable to any or all Performance Share awards shall lapse and
such awards shall be fully vested.
In the event of certain transactions such as those involving a change in
the composition of the Board of Directors, sale of the Company's shares of
capital stock or assets, reorganization, merger, liquidation, etc., the Board of
Directors, in its sole discretion, may, but is not required to, deem such event
to be a "Change of Control." Notwithstanding the foregoing, a Change of Control
shall be deemed to have occurred upon the occurrence of any of the following
events:
(a) any person (which shall mean and include an individual,
corporation, partnership, group, association or other "person", as such
term is used in Sections 13 and 14 of the Exchange Act) which theretofore
beneficially owned less than 20% of the Shares then outstanding, acquires
Shares in a transaction or series of transactions, not previously approved
by the Board of Directors, that results in such person directly or
indirectly owning at least 20% of the Shares then outstanding; or
(b) the election or appointment, within a 12 month period, of
persons to the Board who were not directors at the beginning of such 12
month period, whose election or appointment was not approved by a majority
of those persons who were Board members at the beginning of such period,
and which newly elected or appointed Board members shall constitute a
majority of the Board.
Notwithstanding anything herein to the contrary, no Change of Control
(only with respect to the particular option holder or award grantee referred to
therein in the case of (A)) shall be deemed to have occurred by virtue of any
event which results from the acquisition, directly or indirectly, of 20% or more
of the outstanding Shares by (A)
-6-
the option holder or Performance Share recipient or a person including the
option holder or Performance Share recipient, (B) the Company, (C) a subsidiary
of the Company, or (D) any savings, pension or other employee benefit plan of
the Company or of a subsidiary, or any entity holding securities of the Company
recognized, appointed, or established by the Company or by a subsidiary for or
pursuant to the terms of such plan.
VIII. PURCHASE FOR INVESTMENT
Except as hereafter provided, the Company may require the recipient of
Shares pursuant to an option or award granted hereunder, upon receipt thereof,
to execute and deliver to the Company a written statement, in form satisfactory
to the Company, in which such holder represents and warrants that such holder is
purchasing or acquiring the Shares acquired thereunder for such holder's own
account, for investment only and not with a view to the resale or distribution
thereof, and agrees that any subsequent offer for sale or sale or distribution
of any of such Shares shall be made only pursuant to either (a) a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Act"), which Registration Statement has become effective and is current
with regard to the Shares being offered or sold, or (b) a specific exemption
from the registration requirements of the Act, but in claiming such exemption
the holder shall, prior to any offer for sale or sale of such Shares, obtain a
prior favorable written opinion, in form and substance satisfactory to the
Company, from counsel for or approved by the Company, as to the applicability of
such exemption thereto. The foregoing restriction shall not apply to (i)
issuances by the Company so long as the Shares being issued are registered under
the Act and a prospectus in respect thereof is current or (ii) reofferings of
Shares by affiliates of the Company (as defined in Rule 405 or any successor
rule or regulation promulgated under the Act) if the Shares being reoffered are
registered under the Act and a prospectus in respect thereof is current.
IX. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
The Company may endorse such legend or legends upon the certificates for
Shares issued pursuant to a grant hereunder and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as, in its
discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Act, (ii) implement the provisions of the Plan and any agreement between the
Company and the optionee or grantee with respect to such Shares, or (iii) permit
the Company to determine the occurrence of a disqualifying disposition, as
described in Section 421(b) of the Code, of Shares transferred upon exercise of
an Incentive Option granted under the Plan.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares upon exercise of an option or grant of
Performance Share awards, as well as all fees and expenses necessarily incurred
by the Company in connection with such issuance or transfer, except fees and
expenses which may be necessitated by the filing or amending of a Registration
Statement under the Act, which fees and expenses shall be borne by the recipient
of the Shares unless such Registration Statement has been filed by the Company
for its own corporate purposes (and the Company so states).
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
X. WITHHOLDING TAXES
An employee exercising an Option or acquiring Shares pursuant to the
vesting of Performance Shares may elect to have Shares withheld by the Company
in order to satisfy tax obligations. The amount of such Shares shall not be less
than nor exceed such number as determined by the Committee as appropriate to
avoid the award being subject to variable accounting under Accounting Principle
25 or treatment as a liability award under Financial Accounting Standard 123R.
Any such election shall be made pursuant to a written notice signed by the
employee. The Company may require an employee exercising an NQSO or disposing of
Shares acquired pursuant to the exercise of an Incentive Option in a
disqualifying disposition (within the meaning of Section 421(b) of the Code) or
acquiring Shares pursuant to Performance Share awards to reimburse the Company
for any taxes required by any government to be withheld or otherwise deducted
and paid by the Company in respect of the issuance or disposition of Shares. In
lieu thereof, the Company shall have the right to withhold the amount of such
taxes from any other sums due or to become due from the Company to the employee
upon such terms and conditions as the Board of Directors or the Committee, as
the case may be, shall prescribe. Notwithstanding the foregoing, the Committee
may, by the adoption of rules or otherwise, modify the provisions of this
Article X or impose such other restrictions or limitations as may be necessary
to ensure that the withholding transactions described above will be exempt
transactions under Section 16(b) of the Exchange Act.
-7-
With respect to withholding required hereunder, an optionee or holder of a
Performance Share award may elect, subject to the approval of the Board of
Directors or the Committee, as the case may be, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares having a
fair market value (as determined under the provisions of Article V, Paragraph 2)
on the date the tax is to be determined equal to the minimum statutory total tax
which could be imposed on the transaction. All such elections shall be
irrevocable, made in writing, signed by the optionee or holder, and shall be
subject to any restrictions or limitations that the Board of Directors or the
Committee, as the case may be, in its sole discretion, deems appropriate.
If an optionee makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such optionee pursuant to the exercise of an Incentive Option within
the two-year period commencing on the day after the date of the grant or within
the one-year period commencing on the day after the date of transfer of such
Share or Shares to the optionee pursuant to such exercise, the optionee shall,
within 10 days of such disposition, notify the Company thereof, by delivery of
written notice to the Company at its principal executive office.
XI. DEFERRAL
The Board of Directors or the Committee, as the case may be, may permit an
optionee or holder of Performance Share awards to defer such individual's
receipt of Shares that would otherwise be due to such optionee or holder by
virtue of the exercise of an option or the lapse of restrictions with respect to
Performance Share awards. If any such deferral election is required or
permitted, the Board of Directors or the Committee, as the case may be, shall,
in its sole discretion, establish rules and procedures for such deferrals. The
Committee may provide for such provisions as it deems necessary with respect to
an award, including after it is granted, to prevent the award from being subject
to or violating the requirements of Section 409A of the Code.
XII. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board of Directors or the Committee, as the case may
be, shall determine in its discretion that the listing, registration or
qualification of the Shares covered by the Plan upon any national securities
exchange or under any state or federal law or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the sale or purchase of Shares under the Plan, no Shares shall
be issued unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Board of Directors or the Committee, as
the case may be. Notwithstanding the foregoing, none of the Company, the
Committee or the Board of Directors shall be obligated to list, register,
qualify or otherwise seek an exemption from the foregoing with respect to the
Shares.
XIII. AMENDMENT OF THE PLAN
The Board of Directors or the Committee, as the case may be, may, from
time to time, amend the Plan, provided that no amendment shall be made, without
the approval of the stockholders of the Company, that will (i) increase the
total number of Shares which may be issued under the Plan (other than an
increase resulting from an adjustment provided for in Article II, (ii) modify
the provisions of the Plan relating to eligibility, (iii) materially increase
the benefits accruing to participants under the Plan, or (iv) extend the maximum
period of the Plan. The Board of Directors or the Committee, as the case may be,
shall be authorized to amend the Plan and the awards granted hereunder to permit
the Incentive Options granted hereunder to qualify as incentive stock options
within the meaning of Section 422 of the Code (or such successor provision) and
to comply with Rule 16b-3 of the Exchange Act. The rights and obligations under
any option or award granted before amendment of the Plan or any unexercised
portion of such option shall not be adversely affected by amendment of the Plan
or the option without the consent of the holder of the option or the award.
XIV. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors or the Committee, as the case may be, may at any
time suspend or terminate the Plan. The Plan, unless sooner terminated by action
of the Board of Directors or the Committee, as the case may be, shall terminate
as provided in Article XVII. An option or award may not be granted while the
Plan is suspended or after it is terminated. Rights and obligations under any
option or award granted while the Plan is in effect shall not be altered or
impaired by suspension or termination of the Plan, except upon the consent of
the person to whom the option or award was granted. The power of the Board of
Directors or the Committee, as the case may be, to
-8-
construe and administer any options and awards granted prior to the termination
or suspension of the Plan under Article III nevertheless shall continue after
such termination or during such suspension.
XV. GOVERNING LAW
The Plan, such options and awards as may be granted thereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware.
XVI. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be deemed
to affect the validity of any other provision.
XVII. EFFECTIVE DATE, DURATION OF THE PLAN
The Plan shall become effective on the date it is approved by the
Company's stockholders, and shall remain in effect, subject to the provisions of
Article VII, until terminated by the Board of Directors. In no event may any
options or Performance Shares be granted under the Plan on or after the tenth
anniversary of the date the Plan is approved by the company's stockholders;
provided, however, that the term of previously granted Options and Performance
Shares may extend beyond that date.
-9-