EXHIBIT 10.1.8.3
UNITED AUTO GROUP, INC.
2002 EQUITY COMPENSATION PLAN
1. DEFINITIONS: As used herein, the following definitions shall apply:
(a) "Award" shall mean any stock option, stock appreciation right,
restricted stock, restricted stock unit, performance share award or other
stock-based award granted under the Plan.
(b) "Committee" shall mean a committee consisting of two or more
members of the Board of Directors of the Corporation, each of whom (1) shall be
an "outside director" as defined under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "CODE"), and the Treasury Regulations thereunder,
and (2) shall be a "non-employee director" as defined under Rule 16b-3 of the
Rules and Regulations under the Securities Exchange Act of 1934, as amended, or
any similar or successor provision, as appointed by the Board of Directors of
the Corporation to administer the Plan.
(c) "Corporation" shall mean United Auto Group, Inc., a Delaware
corporation, or any successor thereof.
(d) "Discretion" shall mean in the sole discretion of the Committee,
with no requirement whatsoever that the Committee follow past practices, act in
a manner consistent with past practices, or treat a Participant (as hereinafter
defined) in a manner consistent with the treatment afforded other Participants
with respect to the Plan.
(e) "Incentive Option" shall mean an option to purchase Common Stock of
the Corporation which meets the requirements set forth in the Plan and also
meets the definition of an incentive stock option set forth in Section 422 of
the Code.
(f) "Nonqualified Option" shall mean an option to purchase Common Stock
of the Corporation which meets the requirements set forth in the Plan but does
not meet the definition of an incentive stock option set forth in Section 422 of
the Code.
(g) "Other stock-based award" shall mean any right granted under
Paragraph 20 of the Plan.
(h) "Participant" shall mean any individual designated by the Committee
under Paragraph 6 for participation in the Plan who is (i) a key employee
(including an officer or director who is also a key employee) of the Corporation
or any Subsidiary, (ii) a director who is not an employee of the Corporation or
any Subsidiary (hereinafter sometimes referred to as an "outside director"), and
(iii) a consultant or advisor of the Corporation or any Subsidiary.
(i) "Performance share" shall mean a grant of Common Stock of the
Corporation upon the attainment of one or more performance goals during a
performance period established by the Committee, as provided in Paragraph 19.
(j) "Plan" shall mean this United Auto Group, Inc. 2002 Equity
Compensation Plan.
(k) "Restricted stock" shall mean a grant of Common Stock of the
Corporation which is subject to restrictions against transfer, forfeiture and
such other terms and conditions determined by the Committee, as provided in
Paragraph 18.
(l) "Restricted stock unit" shall mean a grant of a right to obtain the
value of a share of Common Stock of the Corporation which is subject to
restrictions against transfer, forfeiture and such other terms and conditions
determined by the Committee, as provided in Paragraph 18.
(m) "Stock appreciation right" shall mean a right to receive the
appreciation in value, or a portion of the appreciation in value, of a specified
number of shares of the Common Stock of the Corporation, as provided in
Paragraph 12.
(n) "Subsidiary" shall mean any corporation, limited liability company,
partnership or any other entity in which the Corporation owns, directly or
indirectly, stock or other ownership interest therein, possessing more than
twenty-five percent (25%) of the combined voting power of all classes of stock
or other ownership interest.
2. PURPOSE OF PLAN: The purpose of the Plan is to provide key employees
(including officers and directors who are also key employees), outside
directors, consultants and advisors of the Corporation and its Subsidiaries with
incentives to make significant and extraordinary contributions to the long-term
performance and growth of the Corporation and its Subsidiaries, to join the
interests of key employees, outside directors, consultants and advisors with the
interests of the shareholders of the Corporation, and to facilitate attracting
and retaining key employees, outside directors, consultants and advisors with
exceptional abilities.
3. ADMINISTRATION: The Plan shall be administered by the Committee. Subject to
the provisions of the Plan, the Committee shall determine, from those eligible
to be Participants under the Plan, the persons to be granted Awards, the type of
Awards and the amount of stock or rights covered by Awards to be granted to each
such person, and the terms and conditions of any Awards. Subject to the
provisions of the Plan, the Committee is authorized to interpret the Plan, to
promulgate, amend and rescind rules and regulations relating to the Plan and to
make all other determinations necessary or advisable for its administration.
Interpretation and construction of any provision of the Plan by the Committee
shall, unless otherwise determined by the Board of Directors of the Corporation,
be final and conclusive. A majority of the Committee shall constitute a quorum,
and the acts approved by a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by a majority of the
Committee, shall be the acts of the Committee.
4. INDEMNIFICATION OF COMMITTEE MEMBERS: In addition to such other rights of
indemnification as they may have, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Award
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by the Board of Directors of the
Corporation) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
determined in such action, suit or proceeding that such Committee member has
acted in bad faith; provided, however, that within sixty (60) days after receipt
of notice of institution of any such action, suit or proceeding, a Committee
member shall offer the Corporation in writing the opportunity, at its own cost,
to handle and defend the same.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN: The maximum number of shares of
stock which may be issued pursuant to Awards granted under the Plan or with
respect to which Awards may be granted under the Plan shall not exceed in the
aggregate 2,100,000 shares of Common Stock of the Corporation (subject to
adjustments as provided in this Paragraph 5). Any shares that are delivered by
the Corporation, and any awards or grants that are made by, or become
obligations of, the Corporation through the assumption by the Corporation or a
Subsidiary of, or in substitution for, outstanding awards or grants previously
made by an acquired company, shall not be counted against the number of shares
available under the Plan. Consistent with the purpose of the Plan and with a
view to avoiding over or under counting, the Committee shall, in its Discretion,
determine the number of shares to charge against the shares remaining available
under the Plan as a result of the grant or settlement of Awards made under the
Plan. If any shares covered by an Award or to which an Award relates are
forfeited, or if an Award otherwise terminates without the delivery of shares or
of other consideration, then the shares covered by such Award, or to which such
Award relates, or the number of shares otherwise counted against the aggregate
number of shares available under the Plan with respect to such Award, to the
extent of any such forfeiture or termination, shall again be, or shall become,
available for granting Awards under the Plan.
The maximum number of shares with respect to which Awards may be granted to any
Participant during the term of the Plan shall not exceed 500,000 shares of
Common Stock of the Corporation (subject to adjustments as provided in this
Paragraph 5). All shares with respect to which an Award is granted shall be
counted for purposes of this per-person share limitation, regardless of whether
the Participant did not realize the benefit of the Award as a result of
forfeiture, cancellation, expiration, termination or other event.
The number of shares with respect to each outstanding Award, the option price
with respect to outstanding stock options, the grant value with respect to
outstanding stock appreciation rights, the aggregate number of shares available
at any time under the Plan, and the maximum number of shares with respect to
which Awards may be made to an individual Participant during the term of the
Plan shall be subject to such adjustment as
the Committee, in its Discretion, deems appropriate to reflect such events as
stock dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Corporation; provided, however, that no fractional
shares shall be issued pursuant to the Plan, no Awards may be granted under the
Plan with respect to fractional shares, and any fractional shares resulting from
such adjustments shall be eliminated from any outstanding Award.
6. PARTICIPANTS: The Committee shall determine and designate from time to time,
in its Discretion, those key employees (including officers and directors who are
also key employees), outside directors, consultants or advisors of the
Corporation or any Subsidiary to receive Awards who, in the judgment of the
Committee, are or will become responsible for the direction and financial
success of the Corporation or any Subsidiary.
7. WRITTEN AGREEMENT: Each Award granted under the Plan shall be evidenced by a
written agreement between the Corporation and the Participant which shall
contain such provisions as may be approved by the Committee. Such agreements
shall constitute binding contracts between the Corporation and the Participant,
and every Participant, upon acceptance of such agreement, shall be bound by the
terms and restrictions of the Plan and of such agreement. The terms of each such
agreement shall be in accordance with the Plan, but the agreements may include
such additional provisions and restrictions determined by the Committee,
provided that such additional provisions and restrictions do not violate the
terms of the Plan.
8. ALLOTMENT OF SHARES: The Committee shall determine and fix, in its
Discretion, the number of shares with respect to which each Participant may be
granted Awards; provided, however, that no Incentive Option may be granted under
the Plan to any one Participant which would result in the aggregate fair market
value, determined as of the date the option is granted, of underlying stock with
respect to which Incentive Options are exercisable for the first time by such
Participant during any calendar year under any plan maintained by the
Corporation (or any parent or Subsidiary of the Corporation) exceeding $100,000.
9. STOCK OPTIONS: Subject to the terms of the Plan, the Committee, in its
Discretion, may grant to Participants either Incentive Options, Nonqualified
Options or any combination thereof; provided, however, that an Incentive Option
may only be granted to an employee of the Corporation or a Subsidiary, and in
the case of a Subsidiary only if (i) the Subsidiary is treated as a disregarded
entity owned by the Corporation, or (ii) the Subsidiary is a corporation (or is
treated as a disregarded entity owned by a corporation) fifty percent or more of
the combined voting power of all classes of stock of which is owned, directly or
indirectly, by the Corporation. Each option granted under the Plan shall
designate the number of shares covered thereby, if any, with respect to which
the option is an Incentive Option, and the number of shares covered thereby, if
any, with respect to which the option is a Nonqualified Option.
10. STOCK OPTION PRICE: Subject to the rules set forth in this Paragraph 10, at
the time any stock option is granted, the Committee, in its Discretion, shall
establish the price per share for which the shares covered by the option may be
purchased. With respect to
an Incentive Option, such option price shall not be less than 100% of the fair
market value of the stock on the date on which such option is granted; provided,
however, that with respect to an Incentive Option granted to a Participant who
at the time of the grant owns (after applying the attribution rules of Section
424(d) of the Code) more than 10% of the total combined voting stock of the
Corporation or of any parent or Subsidiary, the option price shall not be less
than 110% of the fair market value of the stock on the date such option is
granted. With respect to a Nonqualified Option, the option price shall not be
less than 50% of the fair market value of the stock on the date such option is
granted. Fair market value of a share shall be determined by the Committee and
may be determined by taking the mean between the highest and lowest quoted
selling prices of the Corporation's stock on any exchange or other market on
which the shares of Common Stock of the Corporation shall be traded on such date
or, if there are no sales on such date, on the next following day on which there
are sales. The option price shall be subject to adjustment in accordance with
the provisions of Paragraph 5 of the Plan.
11. PAYMENT OF STOCK OPTION PRICE: At the time of the exercise in whole or in
part of any stock option granted hereunder, payment of the option price in full
in cash or, with the consent of the Committee, in Common Stock of the
Corporation shall be made by the Participant for all shares so purchased. In the
Discretion of, and subject to such conditions as may be established by, the
Committee, payment of the option price may also be made by the Corporation
retaining from the shares to be delivered upon exercise of the stock option that
number of shares having a fair market value on the date of exercise equal to the
option price of the number of shares with respect to which the Participant
exercises the option. In the Discretion of the Committee, a Participant may
exercise an option, if then exercisable, in whole or in part, by delivery to the
Corporation of written notice of the exercise in such form as the Committee may
prescribe, accompanied by irrevocable instructions to a stock broker to promptly
deliver to the Corporation full payment for the shares with respect to which the
option is exercised from the proceeds of the stock broker's sale of or loan
against some or all of the shares (a "Regulation T Stock Option Exercise"). In
the event the Corporation then has in effect a stock repurchase program, in its
Discretion and subject to such terms and conditions as it may impose, the
Committee may permit a Participant to exercise an option and pay the option
price by delivering to the Corporation a written notice of exercise which
includes a request that the Corporation repurchase (and retain the repurchase
price of) that number of the option shares having a fair market value on the
date of exercise equal to the option price of the number of shares with respect
to which the Participant exercises the option. Such payment may also be made in
such other manner as the Committee determines is appropriate, in its Discretion.
No Participant shall have any of the rights of a shareholder of the Corporation
under any stock option until the actual issuance of shares to said Participant,
and prior to such issuance no adjustment shall be made for dividends,
distributions or other rights in respect of such shares, except as provided in
Paragraph 5.
12. STOCK APPRECIATION RIGHTS: Subject to the terms of the Plan, the Committee
may grant stock appreciation rights to Participants either in conjunction with,
or independently of, any stock options granted under the Plan. A stock
appreciation right granted in conjunction with a stock option may be an
alternative right wherein the exercise of the stock option terminates the stock
appreciation right to the extent of the number of
shares purchased upon exercise of the stock option and, correspondingly, the
exercise of the stock appreciation right terminates the stock option to the
extent of the number of shares with respect to which the stock appreciation
right is exercised. Alternatively, a stock appreciation right granted in
conjunction with a stock option may be an additional right wherein both the
stock appreciation right and the stock option may be exercised. A stock
appreciation right may not be granted in conjunction with an Incentive Option
under circumstances in which the exercise of the stock appreciation right
affects the right to exercise the Incentive Option or vice versa, unless the
stock appreciation right, by its terms, meets all of the following requirements:
(a) the stock appreciation right will expire no later
than the Incentive Option;
(b) the stock appreciation right may be for no more than
the difference between the option price of the
Incentive Option and the fair market value of the
shares subject to the Incentive Option at the time
the stock appreciation right is exercised;
(c) the stock appreciation right is transferable only
when the Incentive Option is transferable, and under
the same conditions;
(d) the stock appreciation right may be exercised only
when the Incentive Option is eligible to be
exercised; and
(e) the stock appreciation right may be exercised only
when the fair market value of the shares subject to
the Incentive Option exceeds the option price of the
Incentive Option.
Upon exercise of a stock appreciation right, a Participant shall be entitled to
receive, without payment to the Corporation (except for applicable withholding
taxes), an amount equal to the excess of or, in the Discretion of the Committee,
a portion of the excess of (i) the then aggregate fair market value of the
number of shares with respect to which the Participant exercises the stock
appreciation right, over (ii) the aggregate fair market value of such number of
shares at the time the stock appreciation right was granted. This amount shall
be payable by the Corporation, in the Discretion of the Committee, in cash, in
shares of Common Stock of the Corporation, in other property or any combination
thereof.
13. GRANTING AND EXERCISE OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS:
Subject to the provisions of this Paragraph 13, each stock option and stock
appreciation right granted hereunder shall be exercisable at any such time or
times or in any such installments as may be determined by the Committee at the
time of the grant; provided, however, that the aggregate fair market value
(determined at the time the option is granted) of the stock with respect to
which Incentive Options are exercisable for the first time by a Participant
during any calendar year shall not exceed $100,000. A Participant may exercise a
stock option or stock appreciation right, if then exercisable, in whole or in
part, by delivery to the Corporation of written notice of the exercise, in such
form as the
Committee may prescribe, accompanied, in the case of a stock option, by payment
for the shares with respect to which the stock option is exercised as provided
in Paragraph 11 (unless the Committee, in its Discretion, permits a cashless
form of option exercise permitted by Paragraph 11). Except as provided in
Paragraph 17, stock options and stock appreciation rights may be exercised only
while the Participant is an employee, outside director, consultant or advisor,
as the case may be, of the Corporation or a Subsidiary. Successive stock options
and stock appreciation rights may be granted to the same Participant, whether or
not the stock option(s) and stock appreciation right(s) previously granted to
such Participant remain unexercised. A Participant may exercise a stock option
or stock appreciation right, if then exercisable, notwithstanding that stock
options and stock appreciation rights previously granted to such Participant
remain unexercised.
14. NON-TRANSFERABILITY OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS: No stock
option or stock appreciation right granted under the Plan to a Participant shall
be transferable by such Participant otherwise than by will, or by the laws of
descent and distribution, and stock options and stock appreciation rights shall
be exercisable, during the lifetime of the Participant, only by the Participant.
Notwithstanding the foregoing, in its Discretion and subject to such terms and
conditions as it may prescribe, the Committee may permit a Participant to
transfer a Nonqualified Option or a related or independently granted stock
appreciation right.
15. TERM OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS: If not sooner
terminated, each stock option and stock appreciation right granted hereunder
shall expire not more than ten (10) years from the date of the granting thereof;
provided, however, that with respect to an Incentive Option granted to a
Participant who, at the time of the grant, owns (after applying the attribution
rules of Section 424(d) of the Code) more than 10% of the total combined voting
stock of all classes of stock of the Corporation or any parent or Subsidiary,
such option shall expire not more than five (5) years after the date of granting
thereof.
16. CONTINUATION OF EMPLOYMENT: The Committee may require, in its Discretion,
that any Participant under the Plan to whom a stock option or a stock
appreciation right shall be granted shall agree in writing as a condition of the
granting of such stock option or stock appreciation right to remain an employee,
consultant, advisor or outside director of the Corporation or a Subsidiary, as
the case may be, for a designated minimum period from the date of the granting
of such stock option or stock appreciation right as shall be fixed by the
Committee, and the Committee may further require, in its Discretion, that any
Participant agree in writing to comply with any confidentiality,
non-solicitation, non-competition and non-disparagement provisions and covenants
that the Committee may require as a condition precedent to the exercise of a
stock option or a stock appreciation right.
17. TERMINATION OF EMPLOYMENT: If the employment of an employee Participant
terminates, if the consultancy or advisorship of a consultant or advisor
Participant terminates, or if an outside director Participant ceases to be a
director (hereinafter collectively referred to as a "termination of
employment"), the Committee may, in its
Discretion, permit the exercise of stock options and stock appreciation rights
granted to such Participant (a) for a period not to exceed three months
following such termination of employment (or one year following termination of
employment on account of the Participant's death or permanent disability) with
respect to Incentive Options or related stock appreciation rights, and (b) for a
period not to extend beyond the expiration date with respect to Nonqualified
Options or related or independently granted stock appreciation rights. In no
event, however, shall a stock option or a stock appreciation right be
exercisable subsequent to its expiration date. A stock option or stock
appreciation right may only be exercised after a Participant's termination of
employment to the extent exercisable on the date of termination of employment;
provided, however, that if the termination of employment is due to the
Participant's death, permanent disability or retirement at a retirement age
permitted under the Corporation's or Subsidiary's retirement plan or policies,
or if the termination of employment results from action by the Corporation or a
Subsidiary without cause or from an agreement between the Corporation or a
Subsidiary and the Participant (hereinafter collectively referred to as a
"qualifying termination of employment"), the Committee, in its Discretion, may
permit all or part of the stock options and stock appreciation rights granted to
such Participant to thereupon become exercisable in full or in part. For
purposes of this Paragraph 17 and any other provision of the Plan where the term
is used, the Committee's definition of "cause" shall be final and conclusive.
18. RESTRICTED STOCK OR RESTRICTED STOCK UNITS: Subject to the terms of the
Plan, the Committee may award Participants shares of restricted stock and/or the
Committee may grant Participants restricted units with respect to a specified
number of shares of stock. All shares of restricted stock and all restricted
stock units granted to Participants under the Plan shall be subject to the
following terms and conditions (and to such other terms and conditions
prescribed by the Committee):
(a) At the time of each award of restricted shares or restricted
stock units, there shall be established for the shares or
units a restricted period, which period may differ among
Participants and may have different expiration dates with
respect to portions of shares or units covered by the same
award.
(b) Shares of restricted stock or restricted stock units awarded
to Participants may not be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered during the
restricted period applicable to such shares or units. Except
for such restrictions on transfer, a Participant may be
provided all of the rights of a shareholder in respect of
restricted shares including, but not limited to, the right to
receive dividends on, and the right to vote, the shares. A
Participant shall have no ownership interest in shares of
stock with respect to which restricted stock units are
granted; provided, however, that the Committee may, in its
Discretion, permit payment to such Participant of dividend
equivalents on such units equal to the amount of dividends, if
any, which are paid on that number of shares with respect to
which the restricted stock units are granted.
(c) If there is a termination of employment of a Participant, all
shares or units
theretofore awarded to the Participant which are still subject
to the restrictions imposed by Paragraph 18(b) shall upon such
termination of employment be forfeited and transferred back to
the Corporation, without payment of any consideration by the
Corporation; provided, however, that in the event of a
qualifying termination of employment, the Committee may, in
its Discretion, release some or all of the shares or units
from the restrictions.
(d) Shares of restricted stock granted under the Plan may be
evidenced in such manner as the Committee may deem
appropriate, including, without limitation, book-entry
registration or issuance of stock certificates. If stock
certificates are issued in respect of shares of restricted
stock, such certificates shall be registered in the name of
the Participant, deposited with the Corporation or its
designee, together with a stock power endorsed in blank, and,
in the Discretion of the Committee, a legend shall be placed
upon such certificates reflecting that the shares represented
thereby are subject to restrictions against transfer and
forfeiture.
(e) At the expiration of the restricted period applicable to
restricted shares, the Corporation shall deliver to the
Participant or the legal representative of the Participant's
estate stock certificates for such shares. If stock
certificates were previously issued for the shares and a
legend has been placed on such certificates, the Corporation
shall cause such certificates to be reissued without the
legend.
(f) At the expiration of the restricted period applicable to
restricted stock units, the Corporation shall pay to the
Participant an amount equal to the then fair market value of
that number of shares to which such restricted stock units
relate. In the Discretion of the Committee, such amount may be
paid in cash, stock, other property or any combination
thereof. Moreover, in the Discretion of the Committee, such
amount may be paid in a lump sum or in installments, currently
upon expiration of the restricted period or on a deferred
basis, with provision for the payment or crediting of a
dividend equivalent or reasonable rate of interest on
installment or deferred payments in the Discretion of the
Committee.
In the case of events such as stock dividends, stock splits, recapitalizations,
mergers, consolidations or reorganizations of or by the Corporation, any stock,
securities or other property which a Participant receives or is entitled to
receive by reason of his ownership of restricted shares shall, unless otherwise
determined by the Committee, be subject to the same restrictions applicable to
the restricted shares.
19. PERFORMANCE SHARES: The Committee may grant to a Participant the right to
obtain performance shares subject to the following terms and conditions:
(a) The Participant's right to obtain performance shares shall be
subject to attainment of one or more performance goals over a
performance period
prescribed by the Committee.
(b) The performance goal applicable to an award to a Participant
of the right to obtain performance shares shall be based upon
free cash flow, cash flow return on investment, stock price,
market share, sales, revenues, earnings per share, return on
equity, total stockholder return, costs, net income, working
capital turnover, inventory or receivable turnover and/or
margins of the Corporation, a Subsidiary, or a division or
unit thereof. The specific targets and other details of the
performance goal shall be established by the Committee in its
Discretion. A performance goal must, however, be objective so
that a third party with knowledge of the relevant facts could
determine whether the goal has been attained.
(c) The performance goal applicable to an award to a Participant
of the right to obtain performance shares shall be established
by the Committee in writing at any time during the period
beginning on the date of the award and ending on the earlier
of (i) ninety (90) days after commencement of the performance
period applicable to the award, or (ii) expiration of the
first 25% of the performance period; provided, however, that
there must be substantial uncertainty whether a performance
goal will be attained at the time it is established by the
Committee.
(d) The performance goal established by the Committee must
prescribe an objective formula or standard, that could be
applied by a third party having knowledge of the relevant
performance results, to compute the number of performance
shares issuable to the Participant if the goal is attained.
(e) Unless otherwise determined by the Committee in the case of a
Participant who dies or becomes permanently disabled,
performance shares shall be issued to a Participant only after
(i) expiration of the performance period and attainment of the
performance goal applicable to the award, and (ii) issuance of
a written certification by the Committee (including approved
minutes of the meeting of the Committee at which the
certification is made) that the performance goal and any other
material terms of the award have been attained or satisfied.
(f) No Participant shall have any of the rights of a shareholder
of the Corporation in respect of the shares covered by a
performance share award until the actual issuance of the
shares to said Participant and, prior to such issuance, no
adjustments shall be made for dividends, distributions or
other rights in respect of such shares, except as provided in
Paragraph 5.
(g) In its Discretion and subject to such terms and conditions as
it may impose, the Committee may permit a Participant to elect
to defer receipt of performance shares to a time later than
the time the shares otherwise would be issued to the
Participant. In such event, the Committee may, in its
Discretion, provide for the payment by the Corporation of a
dividend
equivalent or interest at a rate determined by the Committee.
(h) In the Discretion of the Committee, in lieu of settling a
performance share award by issuance of shares of Common Stock
of the Corporation to a Participant, all or a portion of the
award may be settled by payment of cash or other property to
the Participant in an amount or having a value equal to the
then value of the otherwise issuable shares; provided,
however, that the amount of cash and the value of any other
property paid to any Participant during any calendar year in
settlement of a performance share award shall not exceed $5.0
Million.
(i) Unless otherwise determined by the Committee, performance
shares or rights therein awarded to a Participant may not be
sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered by the Participant at any time before
actual issuance of the shares to the Participant.
(j) In its Discretion, the Committee may subject a performance
share award to a Participant to any other terms or conditions
not inconsistent with the foregoing, including, without
limitation, a requirement that the Participant remain an
employee of the Corporation or a Subsidiary (including at or
above a specified salary grade), or that the Participant
remain a consultant, advisor or outside director of the
Corporation or a Subsidiary, for the entire performance period
applicable to the award.
Performance share awards under the Plan are intended to constitute qualified
performance-based compensation for purposes of Section 162(m)(4)(C) of the Code
and the Treasury Regulations thereunder, and the provisions of this Paragraph 19
(and the other provisions of the Plan relating to performance share awards)
shall be interpreted and administered to effectuate that intent. Moreover, the
Committee may revise or modify the terms of an outstanding performance share
award to the extent the Committee determines, in its Discretion, that such
revision or modification is necessary for such award to constitute qualified
performance-based compensation.
20. OTHER STOCK-BASED AWARDS: The Committee may grant to Participants such other
awards that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, shares of Common Stock of the
Corporation as are deemed by the Committee, in its Discretion, to be consistent
with the purposes of the Plan; provided, however, that such grants must comply
with applicable law.
21. INVESTMENT PURPOSE: If the Committee, in its Discretion, determines that as
a matter of law such procedure is or may be desirable, it may require a
Participant, upon any acquisition of stock hereunder and as a condition to the
Corporation's obligation to deliver certificates representing such shares, to
execute and deliver to the Corporation a written statement in form satisfactory
to the Committee, representing and warranting that the Participant's acquisition
of shares of stock shall be for such person's own account, for investment and
not with a view to the resale or distribution thereof and that any
subsequent offer for sale or sale of any such shares shall be made either
pursuant to (a) a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), which Registration
Statement has become effective and is current with respect to the shares being
offered and sold, or (b) a specific exemption from the registration requirements
of the Securities Act, but in claiming such exemption the Participant shall,
prior to any offer for sale or sale of such shares, obtain a favorable written
opinion from counsel for or approved by the Corporation as to the availability
of such exemption. The Corporation may endorse an appropriate legend referring
to the foregoing restriction upon the certificate or certificates representing
any shares issued or transferred to the Participant under the Plan.
22 RIGHTS TO CONTINUED EMPLOYMENT: Nothing contained in the Plan or in any Award
granted pursuant to the Plan, nor any action taken by the Committee hereunder,
shall confer upon any Participant any right with respect to continuation of
employment or service as an employee, consultant, advisor or outside director of
the Corporation or a Subsidiary nor interfere in any way with the right of the
Corporation or a Subsidiary to terminate such person's employment or service at
any time with or without cause.
23. WITHHOLDING PAYMENTS: If, upon the grant, exercise, release of restrictions
or settlement of or in respect of an Award, or upon any other event or
transaction under or relating to the Plan, there shall be payable by the
Corporation or a Subsidiary any amount for income or employment tax withholding,
in the Committee's Discretion, either the Corporation shall appropriately reduce
the amount of stock, cash or other property to be paid to the Participant or the
Participant shall pay such amount to the Corporation or Subsidiary to enable it
to pay or to reimburse it for paying such income or employment tax withholding.
The Committee may, in its Discretion, permit Participants to satisfy such
withholding obligations, in whole or in part, by electing to have the amount of
Common Stock delivered or deliverable by the Corporation in respect of an Award
appropriately reduced, or by electing to tender Common Stock back to the
Corporation subsequent to receipt of such stock in respect of an Award. The
Corporation or any of its Subsidiaries shall also have the right to withhold the
amount of such taxes from any other sums or property due or to become due from
the Corporation or any of its Subsidiaries to the Participant upon such terms
and conditions as the Committee shall prescribe. The Corporation may also defer
issuance of stock under the Plan until payment by the Participant to the
Corporation or any of its Subsidiaries of the amount of any such tax. In the
case of a Regulation T Stock Option Exercise, the Committee may in its
Discretion permit the Participant to irrevocably instruct a stock broker to
promptly deliver to the Corporation an amount (in addition to the option
exercise price) equal to any withholding tax owing in respect of such option
exercise from the proceeds of the stock broker's sale of or loan against some or
all of the shares. In the event the Corporation then has in effect a stock
repurchase program, in its Discretion and subject to such terms and conditions
as it may impose, the Committee may permit Participants to satisfy their
withholding tax obligations by requesting that the Corporation repurchase (and
retain the repurchase price of) that number of shares issuable or issued under
the Plan having a then fair market value equal to the amount of withholding tax
due. The Committee may make such other arrangements with respect to income or
employment tax withholding as it shall determine.
24. CHANGE IN CONTROL: Notwithstanding any other provision of the Plan or any
provision of a grant or award agreement, in the event the Committee determines
that there has been or will be a change in control of the Corporation or of any
Subsidiary, the Committee may, without the consent of the holder, provide for
any treatment of outstanding Awards which it determines, in its Discretion, to
be appropriate. Such treatment may include, without limitation, acceleration of
vesting of stock options and stock appreciation rights, release of restrictions
applicable to restricted stock or restricted stock units, or deeming performance
share awards to have been earned. In determining whether there has been or will
be a change in control of the Corporation or of any Subsidiary, the Committee
may utilize a definition it deems appropriate of a change in control contained
in any existing agreement between the Corporation or a Subsidiary and one of its
senior executives.
25. EFFECTIVENESS OF PLAN: The Plan shall be effective on the date the Board of
Directors of the Corporation adopts the Plan, provided that the shareholders of
the Corporation approve the Plan within twelve (12) months of that date. Awards
may be granted prior to shareholder approval of the Plan, but each such Award
shall be subject to shareholder approval of the Plan. Without limitation, no
stock option or stock appreciation right may be exercised and no performance
shares may be issued prior to shareholder approval, and any restricted stock or
restricted stock units awarded are subject to forfeiture if such shareholder
approval is not obtained.
26. TERMINATION, DURATION AND AMENDMENTS OF PLAN: The Plan may be abandoned or
terminated at any time by the Board of Directors of the Corporation. Unless
sooner terminated by the Board of Directors, the Plan shall terminate on the
date ten (10) years after its adoption by the Board of Directors, and no Awards
may be granted thereafter. The termination of the Plan shall not affect the
validity of any Award outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or governmental
regulations, or for any other lawful purpose, the Board of Directors of the
Corporation shall have the right, without approval of the shareholders of the
Corporation, to amend or revise the terms of the Plan at any time; provided,
however, that no such amendment or revision shall (i) with respect to the Plan,
increase the maximum number of shares in the aggregate which are subject to the
Plan or with respect to which Awards may be made to individual Participants
(subject, however, to the provisions of Paragraph 5), materially change the
class of persons eligible to be Participants under the Plan or establish
additional and different business criteria on which performance share goals are
based without approval or ratification of the shareholders of the Corporation;
or (ii) with respect to an Award previously granted under the Plan, except as
otherwise specifically provided in the Plan, alter or impair any such Award
without the consent of the holder thereof.
As adopted by the Board of Directors on December 11, 2002.