Exhibit 10.5
ANTHRACITE CAPITAL, INC.
2006 STOCK AWARD AND INCENTIVE PLAN
1. Purpose.
The purpose of the Anthracite Capital, Inc. 2006 Stock Award and Incentive
Plan (the "Plan") is to promote the interests of the Company and its
Subsidiaries and the stockholders of the Company by providing directors,
officers, employees, consultants and advisors of the Company or its
Subsidiaries, including the Manager, with appropriate incentives and rewards to
encourage them to enter into and continue in the employ or service of the
Company or its Subsidiaries, to acquire a proprietary interest in the long-term
success of the Company and its Subsidiaries and to reward the performance of
individuals in fulfilling their personal responsibilities for long-range
achievements.
2. Administration of the Plan.
The Plan shall be administered by a Committee appointed by the Board. The
Committee shall have the authority, in its sole discretion, subject to and not
inconsistent with the express terms and provisions of the Plan, to administer
the Plan and to exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the administration of
the Plan, including, without limitation, the authority to grant Awards; to
determine the persons to whom and the time or times at which Awards shall be
granted; to determine the type and number of Awards to be granted (including
whether an Option granted is an Incentive Stock Option or a Nonqualified Stock
Option); to determine the number of shares of stock to which an Award may relate
and the terms, conditions, restrictions and performance criteria relating to any
Award; to determine whether, to what extent, and under what circumstances an
Award may be settled, cancelled, forfeited, exchanged, suspended or surrendered;
to make adjustments in the performance goals in recognition of unusual or
nonrecurring events affecting the Company or its Subsidiaries or the financial
statements of the Company or its Subsidiaries (to the extent not inconsistent
with Section 162(m) of the Code, if applicable), or in response to changes in
applicable laws, regulations, or accounting principles; to construe and
interpret the Plan and any Award; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of
Agreements; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.
The Committee may, in its sole discretion, without amendment to the Plan,
(a) accelerate the date on which any Option granted under the Plan becomes
exercisable, waive or amend the operation of Plan provisions respecting exercise
after termination of employment or otherwise adjust any of the terms of such
Option, and (b) accelerate the vesting date, or waive any condition imposed
hereunder, with respect to any share of Restricted Stock or other Award, or
otherwise adjust any of the terms applicable to any such Award.
Subject to Section 162(m) of the Code and except as required by Rule 16b-3
with respect to grants of Awards to individuals who are subject to Section 16 of
the Exchange Act, or as otherwise required for compliance with Rule 16b-3 or
other applicable law, the Committee may
delegate all or any part of its authority under the Plan to an employee,
employees or committee of employees. The Board shall have sole authority, unless
expressly delegated to the Committee, to grant Awards to Nonemployee Directors.
All decisions, determinations and interpretations of the Committee or the
Board shall be final and binding on all persons with any interest in an Award,
including the Manager, the Company and the Participant (or any person claiming
any rights under the Plan from or through any Participant). No member of the
Committee or the Board shall be liable for any action taken or determination
made in good faith with respect to the Plan or any Award.
Subject to Section 162(m) of the Code and Section 16 of the Exchange Act,
to the extent the Committee deems it necessary, appropriate or desirable to
comply with foreign law or practices and to further the purpose of the Plan, the
Committee may, without amending the Plan, establish special rules applicable to
Awards granted to Participants who are foreign nationals, are employed outside
the United States, or both, including rules that differ from those set forth in
the Plan, and grant Awards to such Participants in accordance with those rules.
3. Definitions.
(a) "Agreement" shall mean the written agreement between the Company and a
Participant evidencing an Award.
(b) "Annual Incentive Award" shall mean an Award described in Section 6(e)
hereof that is based upon a period of one year or less.
(c) "Award" shall mean any Option, Restricted Stock award, Stock Payment
award, Stock Appreciation Right, Other Stock-Based Award, Other Cash-Based Award
or Performance Award granted pursuant to the terms of the Plan.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Cause" shall mean (1) the willful and continued failure by the
Participant substantially to perform his or her duties and obligations to the
Company or a Subsidiary, including without limitation, repeated refusal to
follow the reasonable directions of the employer, knowing violation of law in
the course of performance of the duties of Participant's employment with the
Company or a Subsidiary, repeated absences from work without a reasonable
excuse, or intoxication with alcohol or illegal drugs while on the premises of
the Company or a Subsidiary during regular business hours (other than any such
failure resulting from his or her incapacity due to physical or mental illness);
(2) fraud or material dishonesty against the Company or a Subsidiary, or other
willful misconduct by the Participant that is demonstrably injurious to the
Company or a Subsidiary; or (3) a conviction or plea of guilty or nolo contendre
to a felony or a crime involving material dishonesty. For purposes of this
Section 3(d), no act, or failure to act, on a Participant's part shall be
considered "willful" unless done, or omitted to be done, by the Participant in
bad faith and without reasonable belief that his or her action or omission was
in the best interest of the Company and its Subsidiaries. For
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purposes of the Plan, determination of whether a termination of employment or
service was for Cause shall be made by the Committee in its sole discretion.
(f) A "Change in Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
(i) any Person is or becomes the "Beneficial Owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person, any
securities acquired directly from the Company) representing 50% or more of the
Company's then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other corporation
immediately following which the individuals who comprise the Board immediately
prior thereto constitute at least a majority of the board of directors of (a)
any parent of the Company or the entity surviving such merger or consolidation
or (b) if there is no such parent, of the Company or such surviving entity; or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
Effective Date, constitute the Board and any new director (other than a director
whose initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's stockholders was approved
or recommended by a vote of at least a two-thirds of the directors then still in
office who either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved or recommended;
or
(iii) there is consummated a merger or consolidation of the Company
with any other corporation other than a merger or consolidation immediately
following which the individuals who comprise the Board immediately prior thereto
constitute at least a majority of the board of directors of (a) any parent of
the Company or the entity surviving such merger or consolidation or (b) if there
is no such parent, of the Company or such surviving entity; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition by
the Company of all or substantially all of the Company's assets immediately
following which the individuals who comprise the Board immediately prior thereto
constitute at least a majority of the board of directors of (a) any parent of
the Company or of the entity to which such assets are sold or disposed or (b) if
there is no such parent, of the Company or such entity.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder. References in the Plan
to specific sections of the Code shall be deemed to include any successor
provisions thereto.
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(h) "Committee" shall mean, at the discretion of the Board, a Committee of
the Board, which shall consist of two or more persons, each of whom, unless
otherwise determined by the Board, is an "outside director" within the meaning
of Section 162(m) of the Code and a "nonemployee director" within the meaning of
Rule 16b-3.
(i) "Common Stock" shall mean the common stock of the Company, par value
$.001 per share.
(j) "Company" shall mean Anthracite Capital, Inc., a Maryland corporation,
or any successor corporation, or their respective parents.
(k) "Covered Employee" shall have the meaning set forth in Section
162(m)(3) of the Code.
(l) "Disability" shall mean permanent disability as determined pursuant to
the long-term disability plan or policy of the Company or its Subsidiaries in
effect at the time of such disability and applicable to a Participant.
(m) "Effective Date" shall mean the date as of which this Plan is adopted
by the Board.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(o) "Fair Market Value" of a share of Common Stock, as of a particular
date, shall mean (1) if the shares of Common Stock are then listed on a national
securities exchange, the closing sales price per share of Common Stock on such
national securities exchange on such date, or (2) if the shares of Common Stock
are then traded in an over-the-counter market, the average of the closing bid
and ask prices for shares of Common Stock in such over-the-counter market on
such date, or (3) if the shares of Common Stock are not then listed on a
national securities exchange or traded in an over-the-counter market, or the
value of such shares is not otherwise determinable, such value as determined by
the Committee in its good faith discretion.
(p) "Incentive Stock Option" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code and that is
designated by the Committee as an Incentive Stock Option.
(q) "Long Term Incentive Award" shall mean an Award described in Section
6(e) hereof that is based upon a period in excess of one year.
(r) "Manager" means BlackRock Financial Management, Inc., a Delaware
corporation, or any successor thereto or assignee of its Investment Advisory
Agreement with the Company.
(s) "Nonemployee Director" shall mean a member of the Board who is not an
employee of the Company or a Subsidiary.
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(t) "Nonqualified Stock Option" shall mean an Option other than an
Incentive Stock Option.
(u) "Other Cash-Based Award" shall mean a right or other interest granted
to a Participant other than Other Stock-Based Award.
(v) "Other Stock-Based Award" shall mean a right or other interest granted
to a Participant, valued in whole or in part by reference to, or otherwise based
on, or related to, Common Stock, including but not limited to (i) unrestricted
Common Stock awarded as a bonus or upon the attainment of performance goals or
otherwise as permitted under the Plan, and (ii) a right granted to a Participant
to acquire Common Stock from the Company containing terms and conditions
prescribed by the Committee.
(w) "Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 6(b) hereof.
(x) "Participant" shall mean an employee, consultant, director or advisor
of the Company or of a Subsidiary, including, without limitation, the Manager,
to whom an Award is granted pursuant to the Plan, and, upon the death of the
employee, consultant, director or advisor such of his or her successors, heirs,
executors and administrators, as the case may be, who have acquired, in
accordance with Section 16 hereof, the right to exercise or receive payment with
respect to such Award.
(y) "Performance Award" shall mean an Award granted to a Participant
pursuant to Section 6(e) hereof.
(z) "Person" shall have the meaning set forth in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (1) the Company or any of its Subsidiaries, (2)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any of its Subsidiaries or affiliates, (3) an underwriter
temporarily holding securities pursuant to an offering of such securities or (4)
a corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company.
(aa) "Restricted Stock" shall mean a share of Common Stock which is granted
pursuant to the terms of Section 6(d) hereof.
(bb) "Retirement" shall mean a Participant's voluntary retirement, with the
consent of the Company, from employment with or service to the Company or a
Subsidiary on or after attainment of the age of 60.
(cc) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act,
as amended from time to time, including any successor to such Rule.
(dd) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
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(ee) "Stock Appreciation Right" shall mean the right, granted to a
Participant under Section 6(c) hereof, to be paid an amount measured by the
appreciation in the Fair Market Value of a share of Common Stock from the date
of grant to the date of exercise of the right, with payment to be made in cash
and/or shares of Common Stock, as specified in the Award or determined by the
Committee.
(ff) "Stock Payment" shall mean a bonus or other payment, payable in shares
of Common Stock granted pursuant to Section 6(d) hereof.
(gg) "Subsidiary" shall mean any company, partnership, limited liability
company, business or entity (other than the Company) of which at least 50% of
the combined voting power of its voting securities is, or the operations and
management are, directly or indirectly controlled by the Company.
4. Stock Subject to the Plan.
(a) Shares Available for Awards.
The maximum number of shares of Common Stock reserved for issuance under
the Plan shall be 2,816,927 shares (subject to adjustment as provided herein).
Such shares may be authorized but unissued Common Stock or authorized and issued
Common Stock held in the Company's treasury. The Committee may direct that any
stock certificate evidencing shares issued pursuant to the Plan shall bear a
legend setting forth such restrictions on transferability as may apply to such
shares pursuant to the Plan. The maximum number of shares of Common Stock that
may be issued pursuant to the exercise of Incentive Stock Options may not exceed
1,408,464 shares (subject to adjustment as provided herein).
(b) Individual Limitation.
In no event shall the total number of shares of Common Stock subject to
Awards awarded to any Covered Employee during any tax year of the Company exceed
600,000 (subject to adjustment as provided herein).
(c) Adjustment for Change in Capitalization.
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Common Stock, or other property),
re-capitalization, Common Stock split, reverse Common Stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event, makes an
adjustment appropriate in order to prevent dilution or enlargement of the rights
of Participants under the Plan, then the Committee shall make such equitable
changes or adjustments as it in its good faith discretion deems necessary or
appropriate to any or all of (1) the number and kind of shares of Common Stock
or other securities which may thereafter be issued in connection with Awards,
(2) the number and kind of shares of Common Stock, securities or other property
issued or issuable in respect of outstanding Awards, (3) the exercise price,
grant price or purchase price relating to any Award, and (4) the maximum number
of
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shares subject to Awards which may be awarded to any employee during any tax
year of the Company; provided that, with respect to Incentive Stock Options, any
such adjustment shall be made in accordance with Section 424 of the Code.
(d) Adjustment for Change or Exchange of Shares for Other Consideration.
In the event the outstanding shares of Common Stock shall be changed into
or exchanged for any other class or series of capital stock or cash, securities
or other property pursuant to a re-capitalization, reclassification, merger,
consolidation, combination or similar transaction ("Transaction"), then, unless
otherwise determined by the Committee in its good faith discretion, each Option
shall thereafter become exercisable for the number and/or kind of capital stock,
and/or the amount of cash, securities or other property so distributed, into
which the shares of Common Stock subject to the Option would have been changed
or exchanged had the Option been exercised in full prior to such transaction,
provided that, if the kind or amount of capital stock or cash, securities or
other property received in such transaction is not the same for each outstanding
share, then the kind or amount of capital stock or cash, securities or other
property for which the Option shall thereafter become exercisable shall be the
kind and amount so receivable per share by a plurality of the shares of Common
Stock, and provided further that, if necessary, (1) the provisions of the Option
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of capital stock, cash, securities or other
property thereafter issuable or deliverable upon exercise of the Option, and (2)
each Award that is not an Option and that is not automatically changed in
connection with the Transaction shall represent the number and/or kind of shares
of capital stock, and/or the amount of cash, securities or other property so
distributed, into which the number of shares of Common Stock covered by the
Award would have been changed or exchanged had they been held by a stockholder.
(e) Reuse of Shares.
The following shares of Common Stock shall again become available for
Awards: except as provided below, any shares subject to an Award that remain
unissued upon the cancellation, surrender, exchange, forfeiture or termination
of such Award for any reason whatsoever; and any shares of Restricted Stock
cancelled or forfeited. Notwithstanding the foregoing, upon the exercise of any
Award granted in tandem with any other Awards, such related Awards shall be
cancelled to the extent of the number of shares of Common Stock as to which the
Award is exercised and such number of shares shall no longer be available for
Awards under the Plan.
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5. Eligibility.
Awards may be granted to executive officers and other employees of the
Company or its Subsidiaries, including officers and directors who are employees
of the Company or its Subsidiaries, to Nonemployee Directors and to key
consultants and advisors to the Company or its Subsidiaries, including the
Manager; provided, that no Incentive Stock Options may be granted to any
director who is not also a full-time employee or to directors, officers and
other employees of entities unrelated to the Company. In determining the persons
to whom Awards shall be granted and the number of shares to be covered by each
Award, the Committee shall take into account the duties of the respective
persons, their present and potential contributions to the success of the Company
or its Subsidiaries and such other factors as the Committee shall deem relevant
in connection with accomplishing the purposes of the Plan.
6. Awards Under the Plan.
(a) Agreement.
The Committee may grant Awards in such amounts and with such terms and
conditions as the Committee shall determine in its sole discretion, subject to
the terms and provisions of the Plan. Each Award granted under the Plan (except
an unconditional Stock Payment) shall be evidenced by an Agreement as the
Committee may in its sole discretion deem necessary or desirable and unless the
Committee determines otherwise, such Agreement must be signed, acknowledged and
returned by the Participant to the Company. Unless the Committee determines
otherwise, any failure by the Participant to sign and return the Agreement
within such period of time following the granting of the Award as the Committee
shall prescribe shall cause such Award to the Participant to be null and void.
By accepting an Award or other benefits under the Plan (including participation
in the Plan), each Participant, shall be conclusively deemed to have indicated
acceptance and ratification of, and consent to, all provisions of the Plan and
the Agreement.
(b) Stock Options.
(i) Grant of Stock Options. The Committee may grant Options under the
Plan to purchase shares of Common Stock in such amounts and subject to such
terms and conditions as the Committee shall from time to time determine in its
sole discretion, subject to the terms and provisions of the Plan. Unless
otherwise determined by the Committee in its sole discretion, the exercise price
of the share purchasable under an Option shall be the Fair Market Value per
share on the grant date of such Option. The date as of which the Committee
adopts a resolution granting an Option shall be considered the day on which such
Option is granted, unless such resolution specifies a different date.
(ii) Each Option shall be clearly identified in the applicable
Agreement as either an Incentive Stock Option or a Nonqualified Stock Option and
shall state the number of shares of Common Stock to which the Option (and/or
each type of Option) relates.
(iii) Special Requirements for Incentive Stock Options.
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(A) To the extent that the aggregate Fair Market Value of shares
of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by a Participant
during any calendar year under the Plan and any other stock
option plan of the Company shall exceed $100,000, such
Options shall be treated as Nonqualified Stock Options. Such
Fair Market Value shall be determined as of the date on
which each such Incentive Stock Option is granted.
(B) No Incentive Stock Option may be granted to an individual
if, at the time of the proposed grant, such individual owns
(or is deemed to own under the Code) stock possessing more
than ten percent of the total combined voting power of all
classes of stock of the Company unless (A) the exercise
price of such Incentive Stock Option is at least 110 percent
of the Fair Market Value of a share of Common Stock at the
time such Incentive Stock Option is granted and (B) such
Incentive Stock Option is not exercisable after the
expiration of five years from the date such Incentive Stock
Option is granted.
(c) Stock Appreciation Rights.
(i) The Committee may grant a related Stock Appreciation Right in
connection with all or any part of an Option granted under the Plan, either at
the time such Option is granted or at any time thereafter prior to the exercise,
termination or cancellation of such Option, and subject to such terms and
conditions as the Committee shall from time to time determine in its sole
discretion, consistent with the terms and provisions of the Plan. The holder of
a related Stock Appreciation Right shall, subject to the terms and conditions of
the Plan and the applicable Agreement, have the right by exercise thereof to
surrender to the Company for cancellation all or a portion of such related Stock
Appreciation Right, but only to the extent that the related Option is then
exercisable, and to be paid therefor an amount equal to the excess (if any) of
(i) the aggregate Fair Market Value of the shares of Common Stock subject to the
related Stock Appreciation Right or portion thereof surrendered (determined as
of the exercise date), over (ii) the aggregate exercise price of the Stock
Appreciation Right or portion thereof surrendered. Upon any exercise of a
related Stock Appreciation Right or any portion thereof, the number of shares of
Common Stock subject to the related Option shall be reduced by the number of
shares of Common Stock in respect of which such Stock Appreciation Right shall
have been exercised.
(ii) The Committee may grant unrelated Stock Appreciation Rights in
such amount and subject to such terms and conditions, as the Committee shall
from time to time determine in its sole discretion, subject to the terms and
provisions of the Plan. The holder of an unrelated Stock Appreciation Right
shall, subject to the terms and conditions of the Plan and the applicable
Agreement, have the right to surrender to the Company for cancellation all or a
portion of such Stock Appreciation Right, but only to the extent that such Stock
Appreciation Right is then exercisable, and to be paid therefor an amount equal
to the excess (if any) of (i) the aggregate Fair Market Value of the shares of
Common Stock subject to the Stock Appreciation
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Right or portion thereof surrendered (determined as of the exercise date), over
(ii) the aggregate exercise price of the Stock Appreciation Right or portion
thereof surrendered.
(iii) The grant or exercisability of any Stock Appreciation Right
shall be subject to such conditions as the Committee, in its sole discretion,
shall determine.
(d) Restricted Stock and Stock Payment.
(i) The Committee may grant Restricted Stock awards, alone or in
tandem with other Awards under the Plan, subject to such restrictions, terms and
conditions, as the Committee shall determine in its sole discretion and as shall
be evidenced by the applicable Agreements. The vesting of a Restricted Stock
award granted under the Plan may be conditioned upon the completion of a
specified period of employment or service with the Company or any Subsidiary,
upon the attainment of specified performance goals, and/or upon such other
criteria as the Committee may determine in its sole discretion.
(ii) Each Agreement with respect to a Restricted Stock award shall set
forth the amount (if any) to be paid by the Participant with respect to such
Award and when and under what circumstances such payment (if any) is required to
be made.
(iii) The Committee may, upon such terms and conditions as the
Committee determines in its sole discretion, provide that a certificate or
certificates representing the shares underlying a Restricted Stock award shall
be registered in the Participant's name and bear an appropriate legend
specifying that such shares are not transferable and are subject to the
provisions of the Plan and the restrictions, terms and conditions set forth in
the applicable Agreement, that such certificate or certificates shall be held in
escrow by the Company on behalf of the Participant until such shares become
vested or are forfeited and/or that, with respect to the shares represented by
such certificate or certificates, the Participant execute and deliver to the
Company stock powers for use by the Company in connection with any forfeiture of
the Restricted Stock award and/or a voting proxy for use by the Company until
such shares become vested or are forfeited. Except as provided in the applicable
Agreement, no shares underlying a Restricted Stock award may be assigned,
transferred, or otherwise encumbered or disposed of by the Participant until
such shares have vested in accordance with the terms of such Award.
(iv) Unless the applicable Agreement provides otherwise, a Participant
shall have the right to vote and receive dividends on the shares underlying a
Restricted Stock award granted under the Plan. Notwithstanding the foregoing,
unless otherwise provided in the applicable Agreement, any cash or stock
received as a dividend or distribution on the shares underlying a Restricted
Stock award (including in connection with a stock split) shall be subject to the
same restrictions as the shares to which they relate underlying such Restricted
Stock award.
(v) The Committee may grant Stock Payment awards, alone or in tandem
with other Awards under the Plan, subject to such terms and conditions as the
Committee shall determine in its sole discretion and as may be evidenced by the
applicable Agreement.
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(e) Other Stock- or Cash-Based Awards
The Committee is authorized to grant Awards to Participants in the
form of Other Stock-Based Awards or Other Cash-Based Awards, as deemed by the
Committee to be consistent with the purposes of the Plan. With respect to Other
Cash-Based Awards intended to qualify as performance based compensation under
Section 162(m) of the Code, (i) the maximum value of the aggregate payment that
any Participant may receive with respect to any such Other Cash-Based Award that
is an Annual Incentive Award is $2,500,000 and, (ii) the maximum value of the
aggregate payment that any Participant may receive with respect to any such
Other Cash-Based Award that is a Long Term Incentive Award is the amount set
forth in clause (i) above multiplied by a fraction, the numerator of which is
the number of months in the performance period and the denominator of which is
twelve. Payments earned hereunder may be decreased or, with respect to any
Participants who is not a Covered Employee, increased in the sole discretion of
the Committee based on such factors as it deems appropriate. No payment shall be
made to a Covered Employee prior to the certification by the Committee that the
performance goals have been attained. The Committee may establish such other
rules applicable to the Other Stock- or Cash-Based Awards to the extent not
inconsistent with Section 162(m) of the Code.
(f) Performance Awards.
(i) The Committee may grant Performance Awards, alone or in tandem
with other Awards under the Plan, in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine, subject to the terms of the Plan.
(ii) In the event that the Committee grants a Performance Award (other
than a Nonqualified Stock Option or Incentive Stock Option) that is intended to
constitute qualified performance-based compensation within the meaning Section
162(m) of the Code, the following rules shall apply (as such rules may be
modified by the Committee to conform with Code Section 162(m) and the Treasury
Regulations thereunder as may be in effect from time to time): (a) payments
under the Performance Award shall be made solely on account of the attainment of
one or more objective performance goals established in writing by the Committee
not later than the date on which 25% of the period of service to which the
Performance Award relates has elapsed; (b) the performance goal(s) to which the
Performance Award relates shall be based on one or more of the following
business criteria applied to the Company, a Subsidiary, a business unit, product
line or any combination thereof, as determined by the Committee in its sole
discretion: (1) return on equity; (2) earnings per share; (3) net income (before
or after taxes); (4) earnings before all or any of interest, taxes, depreciation
and/or amortization ("EBIT", "EBITA" or "EBITDA"); (5) operating income (6) cash
flow; (7) return on assets; (8) market share; (9) cost reduction goals or levels
of expenses, costs or liabilities; (10) earnings from continuing operations; or
(11) any combination of one or more of the foregoing over a specified period;
(c) the performance goal(s) may be expressed in terms of attaining a specified
level of the particular criteria, the attainment of a percentage increase or
decrease in the particular criteria, or may be applied to the performance of the
Company, a Subsidiary, a business unit, product line, or any combination
thereof, relative to a market index, a group of other companies
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(or their subsidiaries, business units or product lines), or a combination
thereof, all as determined by the Committee in its sole discretion; (d) the
performance goal(s) may include a threshold level of performance below which no
payment shall be made, levels of performance, below the target level but above
the threshold level, at which specified percentages of the Performance Award
shall be paid, a target level of performance at which the full Performance Award
shall be paid, levels of performance, above the target level but below the
maximum level, at which specified multiples of the Performance Award shall be
paid, and a maximum level of performance above which no additional payment shall
be made (the performance goal(s) may also specify that payments for levels of
performances between specified levels will be interpolated); and (e) the
Committee shall have the sole discretion to determine whether, or to what
extent, the performance goal(s) are achieved; provided, however, that once
granted, the Committee may not have discretion to increase the amount payable
under such stock award; and provided, further, that the Committee shall have the
authority to make appropriate adjustments in performance goal(s) under an Award
to reflect the impact of extraordinary items not reflected in such goals. For
purposes of the Plan, extraordinary items shall be defined as (1) any profit or
loss attributable to acquisitions or dispositions of stock or assets, (2) any
changes in accounting standards or treatments that may be required or permitted
by the Financial Accounting Standards Board or adopted by the Company or its
Subsidiaries after the goal is established, (3) all items of gain, loss or
expense for the year related to restructuring charges for the Company or its
Subsidiaries, (4) all items of gain, loss or expense for the year determined to
be extraordinary or unusual in nature or infrequent in occurrence or related to
the disposal of a segment of a business, (5) all items of gain, loss or expense
for the year related to discontinued operations that do not qualify as a segment
of a business as defined in APB Opinion No. 30 (or successor literature), and
(6) such other items as may be prescribed by Section 162(m) of the Code and the
Treasury Regulations thereunder as may be in effect from time to time. The
Committee shall, prior to making payment under any award under this Section
6(e), certify in writing that all applicable performance goals have been
attained.
(g) Exercisability of Awards; Cancellation of Awards in Certain Cases.
(i) Except as hereinafter provided, each Agreement with respect to an
Option or Stock Appreciation Right shall set forth the period during which and
the conditions subject to which the Option or Stock Appreciation Right evidenced
thereby shall be exercisable, and each Agreement with respect to a Restricted
Stock award or Performance Award shall set forth the period after which and the
conditions subject to which the shares underlying such Award shall vest or be
deliverable, all such periods and conditions to be determined by the Committee
in its sole discretion. Unless the applicable Agreement otherwise specifies, and
subject to Sections 6(b)(iii)(B) and 7 hereof, each Option or Stock Appreciation
Right granted under the Plan shall remain exercisable until the day prior to the
tenth anniversary of the date of grant and shall terminate and cease to be
exercisable on the tenth anniversary of the date of grant.
(ii) Except as provided in Section 7(d) hereof, no Option or Stock
Appreciation Right may be exercised and no shares of Common Stock underlying any
other Award under the Plan may vest or become deliverable more than ten (10)
years after the date of grant.
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(iii) Except as provided in Sections 7(a), 7(b) and 7(d) hereof, no
Option or Stock Appreciation Right may be exercised and no shares of Common
Stock underlying any other Award under the Plan may vest or become deliverable
unless the Participant is at such time in the employ (for Participants who are
employees) or service (for Participants who are Nonemployee Directors or
consultants) of the Company or a Subsidiary (or a company, or a parent or
subsidiary company of such company, issuing or assuming the relevant right or
award in a Transaction) and has remained continuously so employed or in service
since the relevant date of grant of the Award.
(iv) An Option or Stock Appreciation Right shall be exercisable by the
filing of a written notice of exercise or a notice of exercise in such other
manner with the Company, on such form and in such manner as the Committee shall
in its sole discretion prescribe, and by payment in accordance with Section 6(g)
hereof.
(v) Unless the applicable Agreement provides otherwise or the
Committee in its sole discretion otherwise determines, the "Option exercise
date" and the "Stock Appreciation Right exercise date" shall be the date that
the written notice of exercise, together with payment, are received by the
Company.
(h) Payment of Award Price.
(i) Unless the applicable Agreement provides otherwise or the
Committee in its sole discretion otherwise determines, any written notice of
exercise of an Option or Stock Appreciation Right must be accompanied by payment
of the full Option or Stock Appreciation Right exercise price.
(ii) Payment of the Option exercise price and of any other payment
required by the Agreement to be made pursuant to any other Award shall be made
in any combination of the following: (a) by certified or official bank check
payable to the Company (or the equivalent thereof acceptable to the Committee);
(b) with the consent of the Committee in its sole discretion, by personal check
(subject to collection) which may in the Committee's discretion be deemed
conditional; and/or (c) unless otherwise provided in the applicable Agreement,
by delivery of previously-acquired shares of Common Stock owned by the
Participant for at least six (6) months (or such longer or shorter period as the
Committee may determine) having a Fair Market Value (determined as of the Option
exercise date, in the case of Options, or other relevant payment date as
determined by the Committee, in the case of other Awards) equal to the portion
of the exercise price being paid thereby. Payment in accordance with clause (a)
of this Section 6(g)(ii) may be deemed to be satisfied, if and to the extent
that the applicable Agreement so provides or the Committee permits, by delivery
to the Company of an assignment of a sufficient amount of the proceeds from the
sale of Common Stock to be acquired pursuant to the Award to pay for all of the
Common Stock to be acquired pursuant to the Award and an authorization to the
broker or selling agent to pay that amount to the Company and to effect such
sale at the time of exercise or other delivery of shares of Common Stock.
7. Termination of Employment.
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(a) Unless the applicable Agreement provides otherwise or the Committee in
its sole discretion determines otherwise, upon termination of the Participant's
employment or service with the Company and its Subsidiaries (including a failure
to have remained continuously so employed or in service) for any reason other
than as described in subsection (b) or (c) of this Section 7, (1) the portions
of outstanding Options and Stock Appreciation Rights granted to such Participant
that are exercisable as of the date of such termination of employment or service
shall remain exercisable for a period of thirty (30) days from and including the
date of termination of employment or service (and shall terminate thereafter),
and (2) any payment or notice provided for under the terms of any other
outstanding Award as respects the portion thereof vested as of the date of
termination of employment or service may be given for a period of thirty (30)
days from and including the date of termination of employment or service (and
shall terminate thereafter). Unless the applicable Agreement provides otherwise
or the Committee in its sole discretion determines otherwise, all portions of
outstanding Options or Stock Appreciation Rights granted to such Participant
which are not exercisable as of the date of such termination of employment or
service, and any other outstanding Award which is not vested as of the date of
such termination of employment or service, shall terminate upon the date of such
termination of employment or service.
(b) Unless the applicable Agreement provides otherwise or the Committee in
its sole discretion determines otherwise, if a Participant shall die while
employed by or providing service to the Company or its Subsidiaries, or within
thirty (30) days after the date of termination of such Participant's employment
or service (or within such different period as the Committee may have provided
pursuant to subsection (a) of this Section 7), or if the Participant's
employment or service terminates by reason of Disability or Retirement, (1) the
portions of outstanding Options and Stock Appreciation Rights granted to such
Participant that are exercisable as of the date of such termination of
employment or service shall remain exercisable for a period of one year from and
including the date of termination of employment or service (and shall terminate
thereafter), and (2) any payment or notice provided for under the terms of any
other outstanding Award as respects the portion thereof vested as of the date of
termination of employment or service may be given for a period of one year from
and including the date of termination of employment or service (and shall
terminate thereafter). Unless the applicable Agreement provides otherwise or the
Committee in its sole discretion determines otherwise, all portions of
outstanding Options or Stock Appreciation Rights granted to such Participant
which are not exercisable as of the date of such termination of employment or
service, and any other outstanding Award which is not vested as of the date of
such termination of employment or service, shall terminate upon the date of such
termination of employment or service.
(c) Unless the applicable Agreement provides otherwise or the Committee in
its sole discretion determines otherwise, if the Participant's employment or
service is terminated by the Company or its Subsidiaries for Cause, all
outstanding Options, Restricted Stock awards and Stock Appreciation Rights
granted to such Participant, whether or not they are exercisable as of the date
of such termination of employment or service, and any other outstanding Award,
whether or not it is vested as of the date of such termination of employment or
service, shall in each case terminate upon the date of such termination of
employment or service.
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(d) Notwithstanding the foregoing, the Committee in its sole discretion may
provide for a longer or shorter period for exercise of an Option or Stock
Appreciation Right or may permit a Participant to continue vesting under an
Option, Stock Appreciation Right or Restricted Stock award or to make any
payment, give any notice or to satisfy other condition under any other Award.
The Committee may in its sole discretion determine (i) for purposes of the Plan,
whether any termination of employment or service constitutes a Retirement or is
due to Disability or is for Cause, (ii) whether any leave of absence (including
any short-term or long-term disability or medical leave) or inactive status
constitutes a termination of employment or service, or a failure to have
remained continuously employed or in service, for purposes of the Plan
(regardless of whether such leave or status would constitute such a termination
or failure for purposes of employment law), (iii) the applicable date of any
such termination of employment or service or failure to have remained
continuously employed or in service, and (iv) the impact, if any, of any of the
foregoing on Awards under the Plan.
8. Effect of Change in Control.
Unless the applicable Agreement provides otherwise, upon a Change in
Control:
(A) any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested;
and
(B) the restrictions, deferral limitations, payment conditions, and
forfeiture conditions applicable to any other Award granted under
the Plan shall lapse and such Awards shall be deemed fully
vested, and any performance goals imposed with respect to Awards
shall be deemed to be fully achieved.
9. Miscellaneous.
(a) Agreements evidencing Awards under the Plan shall contain such other
terms and conditions, not inconsistent with the Plan, as the Committee may
determine in its sole discretion, including penalties for the commission of
competitive acts. Notwithstanding any other provision hereof or of an Agreement,
the Committee shall have the right at any time to deny or delay a Participant's
exercise of Options or Stock Appreciation Rights, or suspend vesting of other
Awards, if such Participant is reasonably believed by the Committee (i) to be
engaged in material conduct adversely affecting the Company or its Subsidiaries
or (ii) to be contemplating such conduct, unless and until the Committee shall
have received reasonable assurance that the Participant is not engaged in, and
is not contemplating, such material conduct adverse to the interests of the
Company or its Subsidiaries.
(b) Participants are and at all times shall remain subject to the trading
window policies adopted by the Company from time to time throughout the period
of time during which they may exercise Options, Stock Appreciation Rights or
sell shares of Common Stock acquired pursuant to the Plan.
10. No Special Employment or Service Rights; No Right to Award.
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(a) Nothing contained in the Plan or any Agreement shall confer upon any
Participant any right with respect to the continuation of employment or service
by the Company or any of its Subsidiaries or interfere with or limit in any way
the right of the Company or any of its Subsidiaries, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or service or to increase or decrease the compensation of the
Participant.
(b) No person shall have any claim or right to receive an Award hereunder.
The Committee's granting of an Award to a Participant at any time shall neither
require the Committee to grant any other Award to such Participant or other
person at any time or preclude the Committee from making subsequent grants to
such Participant or any other person.
11. Securities Matters.
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of
Common Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
shares of Common Stock pursuant to the Plan unless and until the Company is
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Common Stock are
traded. The Committee may require, as a condition of the issuance and delivery
of certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such agreements and representations, and
that such certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
(b) The transfer of any shares of Common Stock hereunder shall be effective
only at such time as counsel to the Company shall have determined that the
issuance and delivery of such shares is in compliance with all applicable laws,
regulations of governmental authority and the requirements of any securities
exchange on which shares of Common Stock are traded. The Committee may, in its
sole discretion, defer the effectiveness of any transfer of shares of Common
Stock hereunder in order to allow the issuance of such shares to be made
pursuant to registration or an exemption from registration or other methods for
compliance available under federal or state securities laws. The Committee shall
inform the Participant in writing of its decision to defer the effectiveness of
a transfer. During the period of such deferral in connection with the exercise
of an Award, the Participant may, by written notice, withdraw such exercise and
obtain the refund of any amount paid with respect thereto.
12. Withholding Taxes.
(a) Whenever cash is to be paid pursuant to an Award, the Company shall
have the right to deduct therefrom an amount sufficient to satisfy any federal,
state, local or other withholding tax requirements related thereto.
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(b) Whenever shares of Common Stock are to be delivered pursuant to an
Award, the Company shall have the right to require the Participant to remit to
the Company in cash an amount sufficient to satisfy any federal, state, local or
other withholding tax requirements related thereto. With the approval of the
Committee, a Participant may satisfy the foregoing requirement by electing to
have the Company withhold from delivery shares of Common Stock having a value
equal to the minimum amount of tax required to be withheld. Such shares shall be
valued at their Fair Market Value on the date of which the amount of tax to be
withheld is determined. Fractional share amounts shall be settled in cash. Such
a withholding election may be made with respect to all or any portion of the
shares to be delivered pursuant to an Award.
13. Notification of Election Under Section 83(b) of the Code.
If any Participant shall, in connection with the acquisition of shares of
Common Stock under the Plan, make the election permitted under Section 83(b) of
the Code, such Participant shall notify the Company of such election within 10
days of filing notice of the election with the Internal Revenue Service.
14. Notification Upon Disqualifying Disposition Under Section 421(b) of the
Code.
Each Agreement with respect to an Incentive Stock Option shall require the
Participant to notify the Company of any disposition of shares of Common Stock
issued pursuant to the exercise of such Option under the circumstances described
in Section 421(b) of the Code (relating to certain disqualifying dispositions),
within 10 days of such disposition.
15. Amendment or Termination of the Plan.
The Board or the Committee may, at any time, suspend or terminate the Plan
or revise or amend it in any respect whatsoever; provided, however, that the
requisite stockholder approval shall be required if and to the extent the Board
or Committee determines that such approval is appropriate or necessary for
purposes of satisfying Sections 162(m) or 422 of the Code or Rule 16b-3 or other
applicable law. Awards may be granted under the Plan prior to the receipt of
such stockholder approval of the Plan but each such grant shall be subject in
its entirety to such approval and no Award may be exercised, vested or otherwise
satisfied prior to the receipt of such approval. Subject to the foregoing, no
amendment or termination of the Plan may, without the consent of a Participant,
adversely affect the Participant's rights under any outstanding Award.
16. Transfers Upon Death; Nonassignability.
(a) A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, upon the death of a Participant outstanding Awards
granted to such Participant may only be exercised by or paid to the executor or
administrator of the Participant's estate or by a person who shall have acquired
the right to such exercise by will or by the laws of descent and distribution.
No transfer of an Award by designating a beneficiary or by will or the laws of
descent and distribution shall be
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effective to bind the Company unless the Committee shall have been furnished
with written notice thereof and with a copy of the designation, will and/or such
evidence as the Committee may deem necessary to establish the validity of the
transfer and an agreement by the transferee to comply with all the terms and
conditions of the Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Award.
(b) During a Participant's lifetime, the Committee may, in its sole
discretion, pursuant to the provisions set forth in this clause (b), permit the
transfer, assignment or other encumbrance of an outstanding Option, unless such
Option is an Incentive Stock Option and the Committee and the Participant
intends that it shall retain such status. Subject to the approval of the
Committee and to any conditions that the Committee may prescribe, a Participant
may, upon providing written notice to the General Counsel of the Company, elect
to transfer any or all Options granted to such Participant pursuant to the Plan
to members of his or her immediate family, including, but not limited to,
children, grandchildren and spouse or to trusts for the benefit of such
immediate family members or to partnerships in which such family members are the
only partners; provided, however, that no such transfer by any Participant may
be made in exchange for consideration. Any such transferee must agree, in
writing, to be bound by all provisions of the Plan.
17. Effective Date and Term of Plan.
The Plan shall become effective on the Effective Date, but the Plan (and
any grants of Awards made prior to stockholder approval of the Plan) shall be
subject to the requisite approval of the stockholders of the Company. In the
absence of such approval, such Awards shall be null and void. Unless earlier
terminated by the Board, the right to grant Awards under the Plan shall
terminate on the tenth anniversary of the Effective Date. Awards outstanding at
Plan termination shall remain in effect according to their terms and the
provisions of the Plan.
18. Applicable Law.
Except to the extent preempted by any applicable federal law, the Plan
shall be construed and administered in accordance with the laws of the State of
Maryland, without reference to its principles of conflicts of law.
19. Participant Rights.
(a) No Participant shall have any claim to be granted any award under the
Plan, and there is no obligation for uniformity of treatment for Participants.
Except as provided specifically herein, a Participant or a transferee of an
Award shall have no rights as a stockholder with respect to any shares covered
by any Award until the date of the issuance of a Common Stock certificate to him
or her for such shares.
(b) Determinations by the Committee under the Plan relating to the form,
amount and terms and conditions of grants and Awards need not be uniform, and
may be made selectively
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among persons who receive or are eligible to receive grants and awards under the
Plan, whether or not such persons are similarly situated.
20. Unfunded Status of Awards.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Agreement
shall give any such Participant any rights that are greater than those of a
general creditor of the Company.
21. No Fractional Shares.
No fractional shares of Common Stock shall be issued or delivered pursuant
to the Plan. The Committee shall determine in its sole discretion whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
22. Interpretation.
The Plan is designed and intended, to the extent applicable, to comply with
Section 162(m) of the Code, and to provide for grants and other transactions
which are exempt under Rule 16b-3, and all provisions hereof shall be construed
in a manner to so comply. Awards under the Plan are intended to comply with Code
Section 409A and all Awards shall be interpreted in accordance with Code Section
409A and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the effective date of the Plan.
Notwithstanding any provision of the Plan or any Agreement to the contrary, in
the event that the Committee determines that any Award may or does not comply
with Code Section 409A, the Company may adopt such amendments to the Plan and
the affected Award (without Participant consent) or adopt other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, that the Committee determines are necessary
or appropriate to (i) exempt the Plan and any Award from the application of Code
Section 409A and/or preserve the intended tax treatment of the benefits provided
with respect to Award, or (ii) comply with the requirements of Code Section
409A.
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