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EXHIBIT 10.3
ADMINISTAFF, INC.
2001 INCENTIVE PLAN
(ADOPTED EFFECTIVE AS OF MARCH 7, 2001)
1. OBJECTIVES. This Administaff, Inc. 2001 Incentive Plan (this
"Plan") is intended as an incentive to retain and attract persons of training,
experience and ability to serve as employees of Administaff, Inc., a Delaware
corporation (the "Company"), and its Subsidiaries and as nonemployee directors
of the Company, to encourage the sense of proprietorship of such persons and to
stimulate the active interest of such persons in the development and financial
success of the Company and its Subsidiaries.
2. DEFINITIONS. As used herein, the terms set forth below shall have
the following respective meanings:
"ANNUAL DIRECTOR AWARD DATE" means, for each calendar year beginning
on or after January 1, 2002, in which this Plan is in effect, the date on which
the annual meeting of the stockholders of the Company is held in that year.
"AWARD" means an Employee Award or a Director Award.
"AWARD AGREEMENT" means a written agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable to
an Award.
"BOARD" means the Board of Directors of the Company.
"CASH AWARD" means an Award payable in cash.
"CAUSE" means:
(a) the Director whose removal is proposed has been convicted, or when
a Director is granted immunity to testify when another has been convicted,
of a felony by a court of competent jurisdiction and such conviction is no
longer subject to direct appeal;
(b) such Director has been found by the affirmative vote of a majority
of the entire Board at any regular or special meeting of the Board called
for that purpose or by a court of competent jurisdiction to have been
guilty of willful misconduct in the performance of his duties to the
Company in a matter of substantial importance to the Company; or
(c) such Director has been adjudicated by a court of competent
jurisdiction to be mentally incompetent, which mental incompetency directly
affects his ability as a Director of the Company.
"CHANGE IN CONTROL" means:
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(a) the date of the acquisition by any "person" (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding the Company or
any of its Subsidiaries, of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of 30% or more of either the then
outstanding shares of common stock of the Company or the then outstanding
voting securities entitled to vote generally in the election of directors;
or
(b) the date the individuals who constitute the Board as of March 7,
2001 (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the members of the Board, provided that any person becoming a
director subsequent to March 7, 2001, whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (other than
any individual whose nomination for election to Board membership was not
endorsed by the Company's management prior to, or at the time of, such
individual's initial nomination for election) shall be, for purposes of
this Plan, considered as though such person were a member of the Incumbent
Board; or
(c) the date of consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets or the issuance of shares of
stock of the Company in connection with the acquisition of the stock or
assets of another entity, provided, however, that a Change in Control shall
not occur under this clause (c) if consummation of the transaction would
result in at least 65% of the total voting power represented by the voting
securities of the Company (or, if not the Company, the entity that succeeds
to all or substantially all of the Company's business) outstanding
immediately after such transaction being beneficially owned (within the
meaning of Rule 13d-3 promulgated pursuant to the Exchange Act) by at least
65% of the holders of outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each such
continuing holder relative to other such continuing holders not
substantially altered in the transaction; or
(d) the date the Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing
in response to Form 8-K or Schedule 14A (or any successor schedule, form or
report of item therein) that a change in control of the Company has or may
have occurred, or will or may occur in the future, pursuant to any then
existing contract or transaction.
"CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time.
"COMMITTEE" means the Compensation Committee of the Board or any other
committee as may be designated by the Board.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
the Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Section 13.
"COMPANY" means Administaff, Inc., a Delaware corporation.
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"DIRECTOR" means a member of the Board, excluding any individual who
is also an employee of the Company or any Subsidiary.
"DIRECTOR AWARD" means a Director Option.
"DIRECTOR OPTION" means a nonqualified stock option granted to a
Director pursuant to Section 7.
"DISABILITY" means the inability to perform the duties of the
Director's position for a period of six (6) consecutive months or for an
aggregate of six (6) months during any twelve (12) month period after the Grant
Date by reason of any medically determinable physical or mental impairment, as
determined by the Committee in the Committee's sole discretion.
"EMPLOYEE" means an individual employed by the Company or any
Subsidiary. For purposes of this Plan, an Employee also includes any individual
who has been offered employment by the Company or any Subsidiary, provided that
(a) any Award granted to such prospective employee shall be canceled if such
individual fails to commence such employment, (b) no payment of value may be
made in connection with such Award until such individual has commenced such
employment, and (c) such individual may not be granted an ISO prior to the date
the individual actually commences employment.
"EMPLOYEE AWARD" means any Option, Performance Award, Phantom Stock
Award, Cash Award, Stock Award, Stock Appreciation Right or Other Stock-Based
Award, whether granted singly, in combination or in tandem, to a Participant who
is an Employee pursuant to any applicable terms, conditions and limitations as
the Committee may establish in order to fulfill the objectives of the Plan.
"EXERCISE PRICE" means the price at which the Option Shares may be
purchased under the terms of the Award Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"FAIR MARKET VALUE" of a share of Common Stock means, as of a
particular date, (a) if shares of Common Stock are listed on a national
securities exchange, the closing sales price per share of Common Stock on the
consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date or, if there
shall have been no such sale so reported on that date, on the last preceding
date on which such a sale was so reported or, at the discretion of the
Committee, the price prevailing on the exchange at the time of exercise; (b) if
shares of Common Stock are not so listed but are quoted on the Nasdaq National
Market, the closing sales price per share of Common Stock reported by the Nasdaq
National Market on that date or, if there shall have been no such sale so
reported on that date, on the last preceding date on which such a sale was so
reported or, at the discretion of the Committee, the price prevailing on the
Nasdaq National Market at the time of exercise; (c) if the Common Stock is not
so listed or quoted, the closing price on that date or, if there are no
quotations available for such date, on the last preceding date on which such
quotations shall be available, as reported by the Nasdaq Stock Market or, if not
reported by the Nasdaq Stock Market, by the National Quotation Bureau
Incorporated; or (d) if none of the above is applicable,
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then such amount as may be determined by the Committee or the Board in such a
manner as it deems in good faith to be the fair market value per share of Common
Stock.
"GRANT DATE" means (a) with respect to an Award other than a Director
Award, the date specified by the Committee in the Award Agreement on which such
Award will become effective, and (b) with respect to a Director Award, the
automatic date of grant for such Award as provided in Section 7.
"ISO" means an incentive stock option within the meaning of Code
Section 422.
"OPTION" means a right to purchase a particular number of shares of
Common Stock at a particular Exercise Price, subject to certain terms and
conditions as provided in this Plan and in the Award Agreement. An Option may be
in the form of an ISO or a nonqualified stock option within the meaning of Code
Section 83.
"OPTION SHARES" means the shares of Common Stock covered by a
particular Option.
"OTHER STOCK-BASED AWARD" means any Award that shall consist of a
right that (a) is not an Option, Performance Award, Phantom Stock Award, Stock
Award or SAR, and (b) is denominated or payable in, valued in whole or in part
by reference to, or otherwise based on or related to shares of Common Stock as
is deemed by the Committee to be consistent with the terms of the Plan.
"PARTICIPANT" means an Employee or a Director to whom an Award has
been granted under this Plan.
"PERFORMANCE AWARD" means an Employee Award, such as a Performance
Unit, that is subject to the achievement of one or more Performance Objectives
established by the Committee.
"PERFORMANCE OBJECTIVES" means the objectives, if any, established by
the Committee that are to be achieved with respect to an Award granted under
this Plan, which may be described in terms of Company-wide objectives, in terms
of objectives that are related to performance of a division, Subsidiary,
department, geographic market or function within the Company or a Subsidiary in
which the Participant receiving the Award is employed, or in individual or other
terms, and which shall relate to the period of time determined by the Committee.
The Performance Objectives intended to qualify under Code Section 162(m) shall
be with respect to one or more of the following: (a) net earnings; (b) operating
income; (c) earnings before interest and taxes; (d) earnings before interest,
taxes, depreciation and amortization expenses; (e) earnings before taxes and
unusual or nonrecurring items; (f) total revenue; (g) return on investment; (h)
return on equity; (i) return on total capital; (j) return on assets; (k) total
stockholder return; (l) return on capital employed in the business; (m) stock
price performance; (n) earnings per share growth; (o) cash flows; (p) total
profit; (q) operating expenses; (r) fee revenue; (s) total revenue less bonus
payroll; (t) the number of paid worksite employees; and (u) gross mark-up per
worksite employee.
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The Committee shall determine, in its sole discretion, at the time of
grant of an Award, which Performance Objectives to use with respect to an Award,
the weighting of such objectives if more than one is used and whether such
objective(s) is (are) to be measured against a Company-established budget or
target, an index or a peer group of companies. A Performance Objective need not
be based on an increase or a positive result and may be based, for example, on
maintaining the status quo or limiting economic losses.
"PERFORMANCE UNIT" means a unit equivalent to $100 or such other value
as determined by the Committee.
"PHANTOM STOCK AWARD" means the right to receive the value of a
specified number of shares of Common Stock.
"PLAN" means the Administaff, Inc. 2001 Incentive Plan, as amended
from time to time.
"RESTRICTED STOCK" means shares of Common Stock that are restricted or
subject to forfeiture provisions.
"STOCK APPRECIATION RIGHTS" or "SARS" means the right to receive an
amount in cash or Common Stock equal to the appreciation in value of a specified
number of shares of Common Stock over a particular period of time.
"STOCK AWARD" means an Employee Award denominated in or payable in
shares of Common Stock, which may be Restricted Stock.
"SUBSIDIARY" means (a) with respect to any Awards other than ISOs, (i)
in the case of a corporation, any corporation of which the Company directly or
indirectly owns shares representing 50% or more of the combined voting power of
the shares of all classes or series of capital stock of such corporation that
have the right to vote generally on matters submitted to a vote of the
stockholders of such corporation, and (ii) in the case of a partnership or other
business entity not organized as a corporation, any such business entity of
which the Company directly or indirectly owns 50% or more of the voting, capital
or profits interests (whether in the form of partnership interests, membership
interests or otherwise), and (b) with respect to Awards of ISOs, any subsidiary
within the meaning of Code Section 424(f).
3. PLAN ADMINISTRATION AND DESIGNATION OF PARTICIPANTS. All Employees of
the Company and its Subsidiaries and all Directors of the Company are eligible
for Awards under this Plan. The Committee shall select the Participants from
time to time by the grant of Employee Awards under this Plan and, subject to the
terms and conditions of this Plan, shall determine all terms and conditions of
the Employee Awards. The Committee shall have no discretion with respect to the
grant of Director Awards.
This Plan shall be administered by the Committee, which shall have
full and exclusive power to interpret this Plan and to adopt such rules,
regulations and guidelines for carrying out this Plan as it may deem necessary
or appropriate.
The Committee may, in its discretion, provide for the extension of the
exercisability of an Employee Award, accelerate the vesting or exercisability of
an Employee
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Award, eliminate or make less restrictive any restrictions contained in an
Employee Award, waive any restriction or other provision of this Plan or an
Employee Award or otherwise amend or modify an Employee Award in any manner that
is either (a) not adverse to the Participant to whom such Employee Award was
granted, or (b) consented to by such Participant. Notwithstanding anything
herein to the contrary, no Option or SAR shall be granted in exchange for
another Option or SAR if the Exercise Price of the previously granted Option or
SAR is greater than the Exercise Price of the replacement Option or SAR.
No member of the Committee shall be liable for anything done or
omitted to be done by him or her, by any member of the Committee or by any
officer of the Company in connection with the performance of any duties under
this Plan, except for his or her own willful misconduct or as expressly provided
by statute.
4. AWARD AGREEMENT. Each Award granted hereunder shall be described in an
Award Agreement, which shall be subject to the terms and conditions of this Plan
and shall be signed by the Participant and by the appropriate officer for and on
behalf of the Company.
5. SHARES OF COMMON STOCK RESERVED FOR THIS PLAN. Subject to adjustment
as provided in Section 13 hereof, a total of 1,500,000 shares of Common Stock
shall be reserved for issuance upon the exercise or payment of Awards granted
pursuant to this Plan. Such shares may be shares of original issuance or
treasury shares or a combination of the foregoing. The Committee and the
appropriate officers of the Company shall from time to time take whatever
actions are necessary to execute, acknowledge, file and deliver any documents
required to be filed with or delivered to any governmental authority or any
stock exchange or transaction reporting system on which shares of Common Stock
are listed or quoted in order to make shares of Common Stock available for
issuance pursuant to this Plan. Awards that are forfeited or terminated or
expire unexercised in such a manner that all or some of the shares of Common
Stock subject thereto are not issued to a Participant shall immediately become
available for the granting of Awards under this Plan.
6. EMPLOYEE AWARDS.
(a) OPTIONS. An Employee Award may be in the form of an Option. The
Exercise Price of an Option granted under this Plan shall not be less than
100% of the Fair Market value of the Common Stock at the time of grant.
Options granted to an Employee of the Company may, in the discretion of the
Committee, provide for an automatic "reload" grant upon the exercise of the
Option, with such terms and conditions on any such reload grant as the
Committee may choose, provided, however, that the Exercise Price for such
reload option shall not be less than 100% of the Fair Market Value of the
Common Stock at the time of grant of such reload option and the term for
such reload option shall not exceed the remaining term for the original
Option.
(i) INCENTIVE STOCK OPTIONS. Options granted to Employees
hereunder may be ISOs. An ISO shall consist of a right to purchase a
specified number of shares of Common Stock at a price specified by the
Committee in the Award Agreement or otherwise, which shall not be less
than the Fair Market Value of the Common Stock on the Grant Date. Any
ISO granted shall expire not later than ten (10) years after the Grant
Date, with the expiration date to be specified by the Committee in the
Award Agreement. Any ISO granted must, in addition to being
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subject to applicable terms, conditions and limitations established by
the Committee, comply with Code Section 422. All other terms,
conditions and limitations applicable to ISOs shall be determined by
the Committee.
(ii) NONQUALIFIED STOCK OPTIONS. Options granted to Employees may
be nonqualified stock options within the meaning of Code Section 83. A
nonqualified stock option shall consist of a right to purchase a
specified number of shares of Common Stock at a price specified by the
Committee in the Award Agreement or otherwise, which shall not be less
than the Fair Market Value of the Common Stock on the Grant Date. The
expiration date of the nonqualified stock option shall be specified by
the Committee in the Award Agreement. All other terms, conditions and
limitations applicable to nonqualified stock options shall be
determined by the Committee.
(b) PERFORMANCE AWARD. An Employee Award may be in the form of a
Performance Award, such as a Performance Unit. A Performance Award shall be
subject to the achievement of one or more Performance Objectives. All other
terms, conditions and limitations applicable to Performance Awards shall be
determined by the Committee.
(c) STOCK AWARD (INCLUDING RESTRICTED STOCK). An Employee Award may
consist of Common Stock or may be denominated in units of Common Stock. All
terms, conditions and limitations applicable to any Stock Award pursuant to
this Plan shall be determined by the Committee.
(d) PHANTOM STOCK AWARD. An Employee Award may be in the form of
Phantom Stock or other bookkeeping account tied to the value of shares of
Common Stock. All terms, conditions and limitations applicable to any
Phantom Stock Award shall be determined by the Committee.
(e) STOCK APPRECIATION RIGHT. An Employee Award may be in the form of
SARs. All terms, conditions and limitations applicable to any Employee
Awards of SARs shall be determined by the Committee.
(f) CASH AWARD. An Employee Award may be in the form of a Cash Award.
All terms, conditions and limitations applicable to any Cash Award shall be
determined by the Committee.
(g) OTHER STOCK-BASED AWARDS. An Employee Award may be in the form of
any Other Stock-Based Award. All terms, conditions and limitations
applicable to any Other Stock-Based Award shall be determined by the
Committee.
(h) The following limitations shall apply to any Award made hereunder:
(i) Notwithstanding anything herein to the contrary, no
Participant may be granted, during any one calendar year period,
Options or SARs (that are not subject to the achievement of any
Performance Objectives) with respect to more than 100,000 shares of
Common Stock.
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(ii) Notwithstanding anything herein to the contrary, no
Participant may be granted, during any one calendar year period,
Performance Awards having a total value in excess of $1,000,000 or
Cash Awards (that are not subject to the achievement of any
Performance Objectives) having a total value in excess of $1,000,000.
(iii) Notwithstanding anything herein to the contrary, no
Participant may be granted, during any one calendar year period, Stock
Awards or Phantom Stock Awards (that are not subject to the
achievement of any Performance Objectives) or Other Stock-Based Awards
with respect to more than 100,000 shares of Common Stock.
7. DIRECTORS AWARDS. Directors of the Company shall be granted Director
Awards in accordance with this Section 7 and subject to applicable terms and
limitations set forth in this Plan and the applicable Award Agreements.
Notwithstanding anything herein to the contrary, if the number of shares of
Common Stock available for Awards under this Plan is insufficient to make all
automatic grants of Director Awards provided for in this Section 7 on the
applicable Grant Date, then all Directors who are entitled to a Director Award
on such date shall share ratably in the number of shares then available for
Awards under this Plan, all Directors shall have no right to receive a Director
Award with respect to the deficiencies in the number of available shares, and
all future Director Awards under this Section 7 shall terminate.
(a) INITIAL DIRECTOR AWARD. Each Director who is elected or appointed
to the Board for the first time after March 7, 2001, shall be automatically
granted, on the date of his or her election or appointment to the Board, a
Director Option to purchase 7,500 shares of Common Stock (the "Initial
Director Award"), which shall become vested and exercisable as to one-third
(1/3) of the Option Shares on each anniversary of the Grant Date unless
such Director requests in writing not to receive such Initial Director
Award. Notwithstanding the foregoing, if the Director terminates his
service as a member of the Board, his or her unvested Option Shares, if
any, shall terminate immediately on such termination date, unless such
termination of service is due to death or Disability, in which event the
unvested Option Shares shall become immediately 100% vested and exercisable
on such termination date.
(b) ANNUAL DIRECTOR AWARD. On the Annual Director Award Date, each
Director who is in office immediately after the annual meeting on such date
and who was not elected or appointed to the Board for the first time on
such date shall be automatically granted a Director Option to purchase 5000
shares of Common Stock (the "Annual Director Award"), which shall be 100%
vested and exercisable on the Grant Date unless such Director requests in
writing not to receive such Annual Director Award.
(c) TERMINATION OF DIRECTOR AWARDS. The Initial Director Award and the
Annual Director Award granted to each Director shall terminate and be of no
force and effect with respect to any shares of Common Stock not previously
purchased by the Director upon the first to occur of:
(i) the tenth (10th) anniversary of the Grant Date for such
Award or
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(ii) with respect to
(1) the portion of the Initial Director Award and
Annual Director Award exercisable upon termination of
service, the expiration of (A) three (3) months following
the Director's termination of service for Cause or (B) three
(3) years following the Director's termination of service
for any other reason; and/or
(2) the portion of the Initial Director Award not
exercisable upon termination of service, the date of the
Director's termination of service.
Notwithstanding anything herein to the contrary, the normal
expiration date for Director Awards shall not be extended.
(d) EXERCISE PRICE. The exercise price of the Common Stock under the
Initial Director Award and the Annual Director Award granted to each
Director shall be the Fair Market Value of the shares of Common Stock
subject to such Director Award on the Grant Date for such Director Award.
(e) AWARD AGREEMENT. Each Initial Director Award and Annual Director
Award granted to a Director shall be evidenced by an Award Agreement
between the Company and such Director that sets forth the terms, conditions
and limitations described above and any additional terms, conditions and
limitations applicable to the Initial Director Award or the Annual Director
Award. Such Award Agreements shall be consistent with the terms and
conditions of this Plan.
8. PAYMENT OF AWARDS.
(a) GENERAL. Payment of Awards may be made in the form of cash or
Common Stock or combinations thereof and may include such restrictions as
the Committee shall determine, including, in the case of Common Stock,
restrictions on transfer and forfeiture provisions.
(b) DEFERRAL. The Committee may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types of
Awards in accordance with procedures established by the Committee or (ii)
provide for the deferral of an Award in an Award Agreement or otherwise.
Any such deferral may be in the form of installment payments or a future
lump-sum payment. Any deferred payment, whether elected by the Participant
or specified by the Award Agreement or the Committee, may be forfeited if
and to the extent that the Award Agreement so provides.
(c) DIVIDENDS AND INTEREST. Dividends or dividend equivalent rights
may be extended to and made part of any Award denominated in Common Stock
or units of Common Stock, subject to such terms, conditions and
restrictions as the Committee may establish. The Committee may also
establish rules and procedures for the crediting of interest on deferred
cash payments and dividend equivalents for deferred payment denominated in
Common Stock or units of Common Stock.
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(d) SUBSTITUTION OF AWARDS. At the discretion of the Committee, a
Participant who has been granted an Employee Award may be offered an
election to substitute an Employee Award for another Employee Award or
Employee Awards of the same or different type, subject to the overall
limits expressed in this Plan.
(e) NO FRACTIONAL SHARES. The Committee shall not be required to issue
any fractional shares of Common Stock under this Plan. The Committee, in
its sole discretion, may provide for the elimination of fractions for the
settlement of fractions in cash.
9. OPTION EXERCISE. The price at which shares of Common Stock may be
purchased under an Option shall be paid in full at the time of exercise (a) in
cash or by check payable and acceptable to the Company, or (b) by tendering to
the Company shares of Common Stock owned by the Participant for at least six
months, if acquired pursuant to a Company stock option, such shares having an
aggregate Fair Market Value as of the date of exercise and tender that is not
greater than the Exercise Price for the shares with respect to which the Option
is being exercised, and by paying any remaining amount of the Exercise Price as
provided in (a) above (provided that the Committee may, upon confirming that the
Participant owns the number of shares being tendered, authorize the issuance of
a new certificate for the number of shares being acquired pursuant to the
exercise of the Option less the number of shares being tendered upon the
exercise and return to the Participant (or not require surrender of) the
certificate for the shares being tendered upon the exercise), or (c) by the
Participant delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company to pay the
Exercise Price and any required tax withholding amounts, provided that in the
event the Participant chooses to pay the Exercise Price and withholding taxes as
provided in (c) above, the Participant and the broker shall comply with such
procedures and enter into such agreements as the Committee may prescribe as a
condition of such payment procedure, or (d) by a combination of such payment
methods.
10. TERMINATION OF EMPLOYMENT OR SERVICE. Upon the termination of
employment or service by a Participant, any unexercised, deferred or unpaid
Awards shall be treated as provided in the specific Award Agreement evidencing
the Award or, in the case of Director Awards, as provided in this Plan. Unless
otherwise specifically provided in the Award Agreement, each Award granted
pursuant to this Plan that is an Option shall immediately terminate to the
extent the Option is not vested (or does not become vested as a result of such
termination of employment or service) on the date the Participant terminates
employment or service with the Company or its Subsidiaries.
11. ACCELERATION UPON A CHANGE IN CONTROL. Notwithstanding anything
herein to the contrary, all conditions and/or restrictions relating to the
continued employment or service of a Participant and/or the achievement of
Performance Objectives with respect to the vesting and exercisability or full
entitlement to any Award shall immediately lapse upon a Change in Control.
12. ASSIGNABILITY. Unless otherwise permitted by the Committee, no
Award granted under this Plan shall be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated by a Participant other than by (a) will or
the laws of descent and distribution, or (b)
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a qualified domestic relations order. During the lifetime of a Participant, any
Award shall be exercisable only by him, or in the case of a Participant who is
mentally incapacitated, the Award shall be exercisable by his guardian or legal
representative. The Committee may prescribe and include in applicable Award
Agreements other restrictions on transfer. Any attempted assignment or transfer
in violation of this Section 12 shall be null and void. Upon the Participant's
death, the personal representative or other person entitled to succeed to the
rights of the Participant (the "Successor Participant") may exercise such
rights. A Successor Participant must furnish proof satisfactory to the Company
of his or her right to exercise the Award under the Participant's will or under
the applicable laws of descent and distribution.
Subject to approval by the Committee in its sole discretion, other
than with respect to ISOs, all or a portion of the Awards granted to a
Participant under this Plan may be transferable by the Participant, to the
extent and only to the extent specified in such approval, to (a) the spouse,
children or grandchildren (including adopted children and stepchildren and
grandchildren) of the Participant ("Immediate Family Members"), (b) a trust or
trusts for the exclusive benefit of such Immediate Family Members and, if
applicable, the Participant, or (c) a partnership or partnerships in which such
Immediate Family Members and, if applicable, the Participant are the only
partners, provided that the Award Agreement pursuant to which such Awards are
granted (or an amendment thereto) must expressly provide for transferability in
a manner consistent with this Section. Subsequent transfers of transferred
Awards shall be prohibited except by will or the laws of descent and
distribution, unless such transfers are made to the original Participant or a
person to whom the original Participant could have made a transfer in the manner
described herein. No transfer shall be effective unless and until written notice
of such transfer is provided to the Committee, in the form and manner prescribed
by the Committee. Following transfer, any such Awards shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, and except as otherwise provided herein, the term "Participant" shall
be deemed to refer to the transferee. No transferred Options shall be
exercisable unless arrangements satisfactory to the Company have been made to
satisfy any tax withholding obligations the Company may have with respect to the
Options. The consequences of termination of employment or service shall continue
to be applied with respect to the original Participant, following which the
Awards shall be exercisable by the transferee only to the extent and for the
periods specified in this Plan and the Award Agreement.
13. ADJUSTMENTS.
(a) The existence of outstanding Awards shall not affect in any manner
the right or power of the Company or its stockholders to make or authorize
(i) any or all adjustments, recapitalization, reorganizations or other
changes in the ownership of the Company or its business, (ii) any merger or
consolidation of the Company, (iii) any issue of bonds, debentures or other
obligations, (iv) the dissolution or liquidation of the Company, (v) any
sale or transfer of all or any part of its assets or business, or (vi) any
other Company act or proceeding of any kind, whether or not of a character
similar to that of the acts or proceedings enumerated above.
(b) In the event of any Common Stock distribution or split,
recapitalization, extraordinary distribution, merger, consolidation,
combination or exchange of shares of Common Stock or similar change or upon
the occurrence of any other event that the
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Committee, in its sole discretion, deems appropriate, (i) the number of
shares of Common Stock reserved under this Plan and covered by outstanding
Awards, (ii) the Exercise Price in respect of such Awards, and (iii) the
kind of shares covered thereby (including shares of another issuer) shall
be adjusted as appropriate.
(c) In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Committee
shall be authorized (i) to issue or assume Awards by means of substitution
of new Awards, as appropriate, for previously issued Awards or to assume
previously issued Awards as part of such adjustment, or (ii) to cancel
Awards that are Options or SARs and give the Participants who are the
holders of such Awards notice and opportunity to exercise for thirty (30)
days prior to such cancellation.
(d) The Committee, in its sole discretion and without the consent of
the Participant, may amend (i) any stock-based Award to reflect a change in
accounting rules required by the Financial Accounting Standards Board, and
(ii) any Award that is not intended to meet the requirements of Code
Section 162(m), to reflect a significant event that the Committee, in its
sole discretion, believes to be appropriate to reflect the original intent
in the grant of the Award.
14. TAX WITHHOLDING. The Company shall have the right to deduct applicable
taxes from any Award payment and withhold, at the time of delivery or vesting of
cash or shares of Common Stock under this Plan, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes. The
Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.
15. AMENDMENTS OR TERMINATION. The Company may amend, alter or discontinue
this Plan, except that (a) no amendment or alteration that would impair the
rights of any Participant under any Award that he has been granted shall be made
without his consent, and (b) no amendment or alteration shall be effective prior
to approval by the Company's stockholders to the extent such approval is
determined by the Board to be required by applicable laws, regulations or
exchange requirements.
16. RESTRICTIONS. No shares of Common Stock or other form of payment shall
be issued with respect to any Award unless the Company shall be satisfied, based
on the advice of its counsel, that such issuance will be in compliance with
applicable federal and state securities laws. The Award Agreement may include
provisions for the repurchase by the Company of Common Stock acquired pursuant
to an Award and repurchase of the Participant's Option rights.
17. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash,
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Common Stock or rights thereto, nor shall this Plan be construed as providing
for such segregation, nor shall the Company, the Board or the Committee be
deemed to be a trustee of any cash, Common Stock or rights thereto to be granted
under this Plan. Any liability or obligation of the Company to any Participant
with respect to a grant of cash, Common Stock or rights thereto under this Plan
shall be based solely upon any contractual obligations that may be created by
this Plan and any Award Agreement, and no such liability or obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. None of the Company, the Board or the Committee shall
be required to give any security or bond for the performance of any obligation
that may be created by this Plan.
18. INDEMNIFICATION. The Company shall indemnify and hold harmless any
member of the Board or the Compensation Committee and other individuals,
including Employees and Directors, performing services on behalf of the
Committee, against any liability, cost or expense arising as a result of any
claim asserted by any person or entity under the laws of any state or of the
United States with respect to any action or failure to act of such individuals
taken in connection with this Plan, except claims or liabilities arising on
account of the willful misconduct or bad faith of such Board member,
Compensation Committee member or individual.
19. MISCELLANEOUS. The granting of any Award shall not impose upon the
Company any obligation to maintain any Participant as an Employee or a Director
and shall not diminish the power of the Company to terminate any Participant's
employment or service at any time.
20. GOVERNING LAW. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Texas.
21. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of March 7,
2001, subject to approval of this Plan by the stockholders of the Company within
one year of the date this Plan is adopted by the Board. If the stockholders of
the Company should fail to so approve this Plan within one year of the adoption
date, this Plan shall terminate and cease to be of any further force or effect
and all grants of Awards hereunder shall be null and void.
Attested to by the Secretary of Administaff,
Inc., as adopted by the Board of Directors
effective as of March 7, 2001.
/s/ John H. Spurgin
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