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EXHIBIT 10.6
HV MARINE SERVICES, INC.
INCENTIVE COMPENSATION PLAN
SECTION 1. PURPOSE OF THIS PLAN
The purposes of the HV Marine Services, Inc. Incentive Compensation
Plan are to (i) promote the interests of HV Marine Services, Inc., a Delaware
corporation (the "Company") and its shareholders by enabling the Company and
each of its Subsidiaries (as hereinafter defined) to (A) attract, motivate and
retain their respective employees and non-employee Directors (as hereinafter
defined) by offering such employees and non-employee Directors performance-based
stock incentives and other equity interests in the Company and other incentive
awards and (B) compensate Consultants (as hereinafter defined) by offering such
Consultants performance-based stock incentives and other equity interests in the
Company and other incentive awards that recognize the creation of value for the
shareholders of the Company and (ii) promote the Company's long-term growth and
success. To achieve these purposes, eligible Persons may receive Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance Awards, Dividend
Equivalent Rights and any other Awards (as such terms are hereinafter defined),
or any combination thereof.
SECTION 2. DEFINITIONS
As used in this Plan, the following terms shall have the meanings set
forth below unless the context otherwise requires:
2.1 "Award" shall mean the grant of a Stock Option, a Stock
Appreciation Right, Restricted Stock, a Performance Award, a Dividend
Equivalent Right or any other grant of incentive compensation pursuant
to this Plan.
2.2 "Award Period" shall have the meaning set forth in
Subsection 17.2 of this Plan.
2.3 "Book Value" shall mean the excess of the value of the
assets of an entity over the liabilities of such entity (determined in
accordance with United States generally accepted accounting principles,
consistently applied).
2.4 "Board" shall mean the Board of Directors of the Company,
as the same may be constituted from time to time.
2.5 "Cause" shall mean termination of a Participant's
employment with the Company or a Subsidiary upon the occurrence of one
or more of the following events:
(a) The Participant's failure to substantially perform such
Participant's duties with the Company or any Subsidiary as determined
by the Committee or
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the Board following receipt by the Participant of written notice of
such failure and the Participant's failure to remedy such failure
within thirty (30) days after receipt of such notice (other than a
failure resulting from the Participant's incapacity during physical or
mental illness or disability);
(b) The Participant's willful failure or refusal to perform
specific directives of the Board, which directives are consistent with
the scope and nature of the Participant's duties and responsibilities,
and which are not remedied by the Participant within thirty (30) days
after being notified in writing of such Participant's failure by the
Board;
(c) The Participant's conviction of a felony; or
(d) A breach of the Participant's fiduciary duty to the
Company or any Subsidiary or willful violation in the course of
performing the Participant's duties for the Company or any Subsidiary
of any law, rule or regulation (other than traffic violations or other
minor offenses). No act or failure to act on the Participant's part
shall be considered willful unless done or omitted to be done in bad
faith and without reasonable belief that the action or omission was in
the best interest of the Company.
2.6 "Change in Control" shall mean, after the Effective Date,
(i) the occurrence of an event of a nature that would be required to be
reported by the Company in response to Item 1 of a Current Report on
Form 8-K (or any successor to such form) promulgated pursuant to the
Exchange Act; provided, without limitation, such a Change in Control
shall be deemed to have occurred if (a) any Person or Group (other than
(A) the Company, (B) a wholly-owned Subsidiary, (C) any employee
benefit plan (including, without limitation, an employee stock
ownership plan) adopted by the Company or any wholly-owned Subsidiary
or (D) any trustee or other fiduciary holding securities under any
employee benefit plan adopted by the Company or any Subsidiary),
becomes the "beneficial owner" (as defined in Rule 13d-3 (or any
successor to such rule) promulgated under the Exchange Act), directly
or indirectly, of securities of the Company or any Material Subsidiary
representing fifty percent (50%) or more of the combined voting power
of the Company's or such Material Subsidiary's then outstanding
securities or (b) during any period of twenty-four (24) months,
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless
the election by the Board or the nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors
at the beginning of such twenty-four (24) month period or whose
election or nomination for election was previously so approved; (ii) a
Corporate Transaction is consummated, other than a Corporate
Transaction that would result in substantially all of the holders of
voting securities of the Company outstanding immediately prior thereto
owning (directly or indirectly and in substantially the same
proportions relative to each other) not less than fifty percent (50%)
of the combined voting power of the voting securities of the
issuing/surviving/resulting entity outstanding immediately after such
Corporate Transaction
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or (iii) an agreement for the sale or other disposition of all or
substantially all of the Company's assets (evaluated on a consolidated
basis, without regard to whether the sale or disposition is effected
via a sale or disposition of assets of the Company, the sale or
disposition of the securities of one or more Subsidiaries or the sale
or disposition of the assets of one or more Subsidiaries) is
consummated.
2.7 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time (or any successor to such legislation).
2.8 "Committee" shall mean the Compensation Committee of the
Board as such Compensation Committee may be constituted from time to
time; provided, however, membership on the Committee shall be limited
to "Non-Employee Directors" (as that term is defined in Rule 16b-3 (or
any successor to such rule) promulgated under the Exchange Act) who are
also "outside directors," as required pursuant to Section 162(m) of the
Code and such Treasury regulations as may be promulgated thereunder;
and provided further, the Committee will consist of not less than two
(2) such Directors. All members of the Committee will serve at the
pleasure of the Board. Notwithstanding the foregoing, if the
composition of the Committee does not comply with the foregoing
provisions of this Subsection, the entire Board shall constitute the
Committee until such time as a proper Committee is appointed in
accordance with the foregoing provisions of this Subsection.
2.9 "Common Stock" shall mean the Common Stock, par value $.01
per share, of the Company.
2.10 "Company" shall have the meaning set forth in Section 1
of this Plan.
2.11 "Consultant" shall mean any Person who or which is
engaged by the Company or any Subsidiary to render consulting services
including, without limitation, any nonvoting advisory director who may
be appointed by the Board.
2.12 "Corporate Transaction" shall mean any recapitalization
(other than a transaction contemplated by Subsection 13(a)), merger,
consolidation or conversion involving the Company or any exchange of
securities involving the Common Stock (other than a transaction
contemplated by Subsection 13(a)).
2.13 "Designated Beneficiary" shall mean the beneficiary
designated by a Participant, in a manner authorized by the Committee or
the Board, to exercise the rights of such Participant in the event of
such Participant's death. In the absence of an effective designation by
a Participant, the Designated Beneficiary shall be such Participant's
estate.
2.14 "Director" shall mean any member of the Board.
2.15 "Disability" shall mean permanent and total inability to
engage in any substantial gainful activity, even with reasonable
accommodation, by reason of any medically determinable physical or
mental impairment which has lasted or can reasonably
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be expected to last without material interruption for a period of not
less than twelve (12) months, as determined in the sole discretion of
the Committee or the Board.
2.16 "Dividend Equivalent Right" shall mean the right of the
holder thereof to receive payments based on the cash or stock dividends
or other distributions that would have been paid on the number of
Shares specified in an Award granting Dividend Equivalent Rights if the
number of Shares subject to such Award were held by such holder on the
record date for determining shareholders to whom dividends are payable.
2.17 "Effective Date" shall mean November ____, 1997.
2.18 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time (or any successor to such
legislation).
2.19 "Fair Market Value" shall mean with respect to the
Shares, as of any date, (i) if the Common Stock is listed or admitted
to trade on a national securities exchange, the closing price of the
Common Stock on the composite tape, as published in The Wall Street
Journal, of the principal national securities exchange on which the
Common Stock is so listed or admitted to trade, on such date or, if
there is no trading in Shares on such date, then the closing price of
the Common Stock as quoted on such composite tape on the next preceding
date on which there was trading in such Shares; (ii) if the Common
Stock is not listed or admitted to trade on a national securities
exchange, then the closing price of the Common Stock as quoted on the
National Market System of the NASD; (iii) if the Common Stock is not
listed or admitted to trade on a national securities exchange or the
National Market System of the NASD, the mean between the bid and asked
price for the Common Stock on such date, as furnished by the NASD
through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information; or (iv) if the Common Stock is not listed
or admitted to trade on a national securities exchange or the National
Market System of the NASD and if bid and asked prices for the Common
Stock are not so furnished by the NASD or a similar organization, the
value established by the Board. Fair market value shall be determined
without regard to any restriction other than a restriction which, by
its terms, will never lapse.
2.20 "Group" shall have the meaning ascribed to such term in
Section 13(d) of the Exchange Act.
2.21 "Incentive Stock Option" shall mean any option to
purchase Shares awarded pursuant to this Plan which qualifies as an
"Incentive Stock Option" pursuant to Section 422 of the Code.
2.22 "Limited Stock Appreciation Rights" shall have the
meaning set forth in Subsection 7.4 of this Plan.
2.23 "Material Subsidiary" shall mean any Subsidiary of which
the Book Value or fair market value (whichever is greater) constitutes
fifty percent (50%) or more of the
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Book Value of the Company. The fair market value of a Subsidiary will
be determined in good faith by the Board.
2.24 "Named Executive Officer" shall have the meaning set
forth in Subsection 17.1 of this Plan.
2.25 "NASD" shall mean the National Association of Securities
Dealers, Inc.
2.26 "Non-Qualified Stock Option" shall mean any option to
purchase Shares awarded pursuant to this Plan that does not qualify as
an Incentive Stock Option (including, without limitation, any option to
purchase Shares originally designated as or intended to qualify as an
Incentive Stock Option but which does not (for whatever reason) qualify
as an Incentive Stock Option).
2.27 "Non-Share Method" shall have the meaning set forth in
Subsection 6.6(c) of this Plan.
2.28 "Non-Tandem Stock Appreciation Right" shall mean any
Stock Appreciation Right granted alone and not in connection with an
Award which is a Stock Option.
2.29 "Optionee" shall mean any Participant who has been
granted and holds a Stock Option awarded pursuant to this Plan.
2.30 "Participant" shall mean any Person who has been granted
and holds an Award granted pursuant to this Plan.
2.31 "Performance Award" shall mean any Award granted pursuant
to this Plan of Shares, rights based upon, payable in or otherwise
related to Shares (including Restricted Stock) or cash, as the
Committee or Board may determine, at the end of a specified performance
period established by the Committee or Board and may include, without
limitation, Performance Shares or Performance Units.
2.32 "Performance Shares" shall have the meaning set forth in
Subsection 9.1 of this Plan.
2.33 "Performance Units" shall have the meaning set forth in
Subsection 9.1 of this Plan.
2.34 "Permitted Modification" shall be deemed to be any
modification of an Award which is made in connection with a Corporate
Transaction and which provides (i) in connection with a Stock Option,
that subsequent to the consummation of the Corporate Transaction (A)
the exercise price of such Stock Option will be proportionately
adjusted to reflect the exchange ratio applicable to the particular
Corporate Transaction and/or (B) the nature and amount of consideration
to be received upon exercise of the Stock Option will be the same (on a
per share basis) as was received by Persons who were
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holders of shares of Common Stock immediately prior to the consummation
of the Corporate Transaction, (ii) in connection with a Stock
Appreciation Right, that subsequent to the consummation of the
Corporate Transaction (A) the base price of such Stock Appreciation
Right will be proportionately adjusted to reflect the exchange ratio
applicable to the particular Corporate Transaction and/or (B) the
benefits to be received by the holder of such Stock Appreciation Right
will be measured based upon the nature and amount of consideration
received (on a per share basis) by Persons who were holders of shares
of Common Stock immediately prior to the consummation of the Corporate
Transaction, and (iii) in connection with a Dividend Equivalent Right,
that subsequent to the consummation of the Corporate Transaction the
benefits to be received by the holder of such Dividend Equivalent Right
will be measured based upon the nature and amount of consideration
received (on a per share basis) by Persons who were holders of shares
of Common Stock immediately prior to the consummation of the Corporate
Transaction.
2.35 "Person" shall mean an individual, partnership, limited
liability company, corporation, joint stock company, trust, estate,
joint venture, association or unincorporated organization or any other
form of business organization.
2.36 "Plan" shall mean this HV Marine Services, Inc. Incentive
Compensation Plan as it may be amended from time to time.
2.37 "Reload Option" shall mean a Stock Option as defined in
Subsection 6.6(b) of this Plan.
2.38 "Reorganization" shall mean any stock split, stock
dividend, reverse stock split, combination of Shares or any other
similar increase or decrease in the number of Shares issued and
outstanding.
2.39 "Restricted Stock" shall mean any Shares granted pursuant
to this Plan that are subject to restrictions or substantial risk of
forfeiture.
2.40 "Retirement" shall mean termination of employment of an
employee of the Company or any Subsidiary, other than discharge for
Cause, after age 65 or on or before age 65 if pursuant to the terms of
any retirement plan maintained by the Company or any Subsidiary in
which such employee participates.
2.41 "Securities Act" shall mean the Securities Act of 1933,
as amended from time to time (or any successor to such legislation).
2.42 "Share Retention Method" shall have the meaning set forth
in Subsection 6.6(c) of this Plan.
2.43 "Shares" shall mean shares of the Common Stock and any
shares of capital stock or other securities hereafter issued or
issuable upon, in respect of or in substitution or exchange for shares
of Common Stock.
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2.44 "Stock Appreciation Right" shall mean the right of the
holder thereof to receive property or Shares with a Fair Market Value
equal to or cash in an amount equal to the excess of the Fair Market
Value of the aggregate number of Shares subject to such Stock
Appreciation Right on the date of exercise over the Fair Market Value
of the aggregate number of Shares subject to such Stock Appreciation
Right on the date of the grant of such Stock Appreciation Right (or
such other value as may be specified in the agreement granting such
Stock Appreciation Right). A Stock Appreciation Right may be a Tandem
Stock Appreciation Right, Non-Tandem Stock Appreciation Right or
Limited Stock Appreciation Right.
2.45 "Stock Option" shall mean any Incentive Stock Option or
Non-Qualified Stock Option.
2.46 "Subsidiary" shall mean a subsidiary corporation of the
Company, as defined in Section 424(f) of the Code.
2.47 "Tandem Stock Appreciation Right" shall mean a Stock
Appreciation Right granted in connection with an Award which is a Stock
Option.
2.48 "Transactional Consideration" shall have the meaning set
forth in Subsection 13(b) of this Plan.
SECTION 3. ADMINISTRATION OF THIS PLAN
3.1 Committee. This Plan shall be administered and interpreted
by the Committee.
3.2 Awards.
(a) Subject to the provisions of this Plan and directions from
the Board, the Committee is authorized to:
(i) determine the Persons to whom Awards are to be
granted;
(ii) determine the types and combinations of Awards
to be granted; the number of Shares to be covered by an Award;
the exercise price of an Award; the time or times when an
Award shall be granted and may be exercised; the terms,
performance criteria or other conditions, vesting periods or
any restrictions for an Award; any restrictions on Shares
acquired pursuant to the exercise of an Award; and any other
terms and conditions of an Award;
(iii) interpret the provisions of this Plan;
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(iv) prescribe, amend and rescind rules and
regulations relating to this Plan;
(v) determine whether, to what extent and under what
circumstances to provide loans from the Company to
Participants to exercise Awards granted pursuant to this Plan,
and the terms and conditions of such loans;
(vi) rely upon employees of the Company for such
clerical and recordkeeping duties as may be necessary in
connection with the administration of this Plan;
(vii) accelerate or defer (with the consent of the
Participant) the vesting of any rights pursuant to an Award;
and
(viii) make all other determinations and take all
other actions necessary or advisable for the administration of
this Plan.
(b) Without limiting the Board's right to amend this Plan
pursuant to Section 14, the Board may take all actions authorized by
Subsection 3.2(a) of this Plan, including, without limitation, granting
such Awards pursuant to this Plan as the Board may deem necessary or
appropriate.
3.3 Procedures.
(a) Proceedings by the Board with respect to this Plan will be
conducted in accordance with the articles of incorporation and bylaws
of the Company.
(b) A majority of the Committee members shall constitute a
quorum for action by the Committee. All determinations of the Committee
shall be made by not less than a majority of its members.
(c) All questions of interpretation and application of this
Plan or pertaining to any question of fact or Award granted hereunder
will be decided by the Committee or the Board, whose decision will be
final, conclusive and binding upon the Company and each other affected
party.
SECTION 4. SHARES SUBJECT TO PLAN
4.1 Limitations. The maximum number of Shares that may be
issued with respect to Awards granted pursuant to this Plan shall not
exceed 1,127,616 unless increased or decreased by reason of changes in
the capitalization of the Company as hereinafter provided or by
amendment of this Plan. The Shares issued pursuant to this Plan may be
authorized but unissued Shares, or may be issued Shares which have been
reacquired by the Company.
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4.2 Changes. To the extent that any Award granted pursuant to
this Plan shall be forfeited, shall expire or shall be cancelled, in
whole or in part, then the number of Shares covered by the Award so
forfeited, expired or cancelled may again be awarded pursuant to the
provisions of this Plan. In the event that Shares are delivered to the
Company in full or partial payment of the exercise price for the
exercise of a Stock Option, the number of Shares available for future
Awards granted pursuant to this Plan shall be reduced only by the net
number of Shares issued upon the exercise of the Stock Option. Awards
that may be satisfied either by the issuance of Shares or by cash or
other consideration shall, until the form of consideration to be paid
is finally determined, be counted against the maximum number of Shares
that may be issued pursuant to this Plan. If the Award is ultimately
satisfied by the payment of consideration other than Shares, as, for
example, a Stock Option granted in tandem with a Stock Appreciation
Right that is settled by a cash payment, such Shares may again be made
the subject of an Award granted pursuant to this Plan. Awards will not
reduce the number of Shares that may be issued pursuant to this Plan if
the settlement of the Award will not require the issuance of Shares,
as, for example, a Stock Appreciation Right that can be satisfied only
by the payment of cash.
SECTION 5. ELIGIBILITY
Eligibility for participation in this Plan shall be confined
to those individuals who are employed by the Company or a Subsidiary
and such Consultants and non-employee Directors as may be designated by
the Committee or the Board. In making any determination as to Persons
to whom Awards shall be granted, the type of Award and/or the number of
Shares to be covered by the Award, the Committee or the Board shall
consider the position and responsibilities of the Person, the
importance of the Person to the Company, the duties of the Person, the
past, present and potential contributions of the Person to the growth
and success of the Company and such other factors as the Committee or
the Board may deem relevant in connection with accomplishing the
purposes of this Plan.
SECTION 6. STOCK OPTIONS
6.1 Grants. The Committee or the Board may grant Stock Options
alone or in addition to other Awards granted pursuant to this Plan to
any eligible Person. Each Person so selected shall be offered a Stock
Option to purchase the number of Shares determined by the Committee or
the Board. The Committee or the Board shall specify whether such Stock
Option is an Incentive Stock Option or Non-Qualified Stock Option and
any other terms or conditions relating to such Award; provided, however
only employees of the Company or a Subsidiary may be granted Incentive
Stock Options. To the extent that any Stock Option designated as an
Incentive Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions, the failure of the shareholders of
the Company to authorize the issuance of Incentive Stock Options, the
time or manner of its exercise or otherwise), such Stock Option or the
portion thereof which does not qualify shall be deemed to constitute a
Non-Qualified Stock Option. Each Person to be granted
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a Stock Option shall enter into a written agreement with the Company,
in such form as the Committee or the Board may prescribe, setting forth
the terms and conditions (including, without limitation, the exercise
price and vesting schedule) of the Stock Option. At any time and from
time to time, the Optionee and the Committee or the Board may agree to
modify an option agreement in such respects as they may deem
appropriate, including, without limitation, the conversion of an
Incentive Stock Option into a Non-Qualified Stock Option. The Committee
or the Board may require that an Optionee meet certain conditions
before the Stock Option or a portion thereof may vest or be exercised,
as, for example, that the Optionee remain in the employ of the Company
or a Subsidiary for a stated period or periods of time.
6.2 Incentive Stock Options Limitations.
(a) In no event shall any individual be granted Incentive
Stock Options to the extent that the Shares covered by any Incentive
Stock Options (and any incentive stock options granted pursuant to any
other plans of the Company or its Subsidiaries) that may be exercised
for the first time by such individual in any calendar year have an
aggregate Fair Market Value in excess of $100,000. For this purpose,
the Fair Market Value of the Shares shall be determined as of the
date(s) on which the Incentive Stock Options are granted. It is
intended that the limitation on Incentive Stock Options provided in
this Subsection 6.2(a) be the maximum limitation on Stock Options which
may be considered Incentive Stock Options pursuant to the Code.
(b) The option exercise price of an Incentive Stock Option
shall not be less than one hundred percent (100%) of the Fair Market
Value of the Shares subject to such Incentive Stock Option on the date
of the grant of such Incentive Stock Option.
(c) Notwithstanding anything herein to the contrary, in no
event shall any employee owning more than ten percent (10%) of the
total combined voting power of the Company or any Subsidiary be granted
an Incentive Stock Option unless the option exercise price of such
Incentive Stock Option shall be at least one hundred ten percent (110%)
of the Fair Market Value of the Shares subject to such Incentive Stock
Option on the date of the grant of such Incentive Stock Option.
(d) In no event shall any individual be granted an Incentive
Stock Option after the expiration of ten (10) years from the date this
Plan is adopted or is approved by the shareholders of the Company (if
shareholder approval is required by Section 422 of the Code).
(e) To the extent shareholder approval of this Plan is
required by Section 422 of the Code, no individual shall be granted an
Incentive Stock Option unless this Plan is approved by the shareholders
of the Company within twelve (12) months before or after the date this
Plan is initially adopted. In the event this Plan
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is amended to increase the number of Shares subject to issuance upon
the exercise of Incentive Stock Options or to change the class of
employees eligible to receive Incentive Stock Options, no individual
shall be granted an Incentive Stock Option unless such amendment is
approved by the shareholders of the Company within twelve (12) months
before or after such amendment.
(f) No Incentive Stock Option shall be granted to any employee
owning more than ten percent (10%) of the total combined voting power
of the Company or any Subsidiary unless the term of such Incentive
Stock Option is equal to or less than five (5) years measured from the
date on which such Incentive Stock Option is granted.
6.3 Option Term. The term of a Stock Option shall be for such
period of time from the date of its grant as may be determined by the
Committee or the Board; provided, however, that no Incentive Stock
Option shall be exercisable later than ten (10) years from the date of
its grant.
6.4 Time of Exercise. No Stock Option may be exercised unless
it is exercised prior to the expiration of its stated term and, in
connection with options granted to employees of the Company or its
Subsidiaries, at the time of such exercise, the Optionee is, and has
been continuously since the date of grant of such Stock Option,
employed by the Company or a Subsidiary, except that:
(a) A Stock Option may, to the extent vested as of the date
the Optionee ceases to be an employee of the Company or a Subsidiary,
be exercised during the three month period immediately following the
date the Optionee ceases (for any reason other than death, Disability
or termination for Cause) to be an employee of the Company or a
Subsidiary (or within such other period as may be specified in the
applicable option agreement), provided that, if the Stock Option has
been designated as an Incentive Stock Option and the option agreement
provides for a longer exercise period, the exercise of such Stock
Option after such three-month period shall be treated as the exercise
of a Non-Qualified Stock Option;
(b) If the Optionee dies while in the employ of the Company or
a Subsidiary, or within three months after the Optionee ceases (for a
reason other than termination for Cause) to be such an employee (or
within such other period as may be specified in the applicable option
agreement), a Stock Option may, to the extent vested as of the date of
the Optionee's death, be exercised by the Optionee's Designated
Beneficiary during the one year period immediately following the date
of the Optionee's death (or within such other period as may be
specified in the applicable option agreement);
(c) If the Optionee ceases to be an employee of the Company or
a Subsidiary by reason of the Optionee's Disability, a Stock Option, to
the extent vested as of the date the Optionee ceases to be an employee
of the Company or a
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Subsidiary, may be exercised by the Optionee or the Optionee's legal
guardian during the one year period immediately following such date (or
within such other period as may be specified in the applicable option
agreement); provided that, if the Stock Option has been designated as
an Incentive Stock Option and the option agreement provides for a
longer exercise period, the exercise of such Stock Option after such
one-year period shall be treated as the exercise of a Non-Qualified
Stock Option; and
(d) If the Optionee's employment is terminated for Cause, all
Stock Options held by such Optionee shall simultaneously terminate and
will no longer be exercisable.
Nothing contained in this Subsection 6.4 will be deemed to extend the
term of a Stock Option or to revive any Stock Option which has
previously lapsed or been cancelled, terminated or surrendered. Stock
Options granted under this Plan to Consultants or non-employee
Directors will contain such terms and conditions with respect to the
death or disability of a Consultant or non-employee Director or
termination of a Consultant's or non-employee Director's relationship
with the Company as the Committee or the Board deems necessary or
appropriate. Such terms and conditions will be set forth in the option
agreements evidencing the grant of such Stock Options.
6.5 Vesting of Stock Options.
(a) Each Stock Option granted pursuant to this Plan may only
be exercised to the extent that the Optionee is vested in such Stock
Option. Each Stock Option shall vest separately in accordance with the
option vesting schedule determined by the Committee or the Board, which
will be incorporated in the option agreement entered into between the
Company and such Optionee. The option vesting schedule may be
accelerated if, in the discretion of the Committee or the Board, the
acceleration of the option vesting schedule would be in the best
interests the Company.
(b) In the event of the dissolution or liquidation of the
Company, each Stock Option granted pursuant to this Plan shall
terminate as of a date to be fixed by the Committee or Board; provided,
however, that not less than thirty (30) days' written notice of the
date so fixed shall be given to each Optionee. During such period all
Stock Options which have not previously been terminated, exercised or
surrendered will (subject to the provisions of Subsections 6.3 and 6.4)
fully vest and become exercisable, notwithstanding the vesting schedule
set forth in the option agreement evidencing the grant of such Stock
Option. Upon the date fixed by the Committee or the Board, any
unexercised Stock Options shall terminate and be of no further effect.
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(c) Upon the occurrence of a Change in Control, all Stock
Options and any associated Stock Appreciation Rights shall become fully
vested and immediately exercisable.
6.6 Manner of Exercise of Stock Options.
(a) Except as otherwise provided in this Plan, Stock Options
may be exercised as to Shares only in amounts and at intervals of time
specified in the written option agreement between the Company and the
Optionee. Each exercise of a Stock Option, or any part thereof, shall
be evidenced by a written notice delivered by the Optionee to the
Company. The purchase price of the Shares as to which a Stock Option
shall be exercised shall be paid in full at the time of exercise, and
may be paid to the Company either:
(i) in cash (including check, bank draft or money
order); or
(ii) by other consideration acceptable to the
Committee in its sole discretion.
(b) If an Optionee delivers Shares (including Shares of
Restricted Stock) already owned by the Optionee in full or partial
payment of the exercise price for any Stock Option, or if the Optionee
elects to have the Company retain that number of Shares out of the
Shares being acquired through the exercise of the Stock Option having a
Fair Market Value equal to the exercise price of the Stock Option being
exercised, the Committee or the Board may, in its sole discretion,
authorize the grant of a new Stock Option (a "Reload Option") for that
number of Shares equal to the number of already owned Shares
surrendered (including Shares of Restricted Stock) or newly acquired
Shares being retained by the Company in payment of the option exercise
price of the underlying Stock Option being exercised. The grant of a
Reload Option will become effective upon the exercise of the underlying
Stock Option. The option exercise price of the Reload Option shall be
the Fair Market Value of a Share on the effective date of the grant of
the Reload Option. Each Reload Option shall be exercisable no later
than the time when the underlying stock option being exercised could be
last exercised. The Committee or the Board may also specify additional
terms, conditions and restrictions for the Reload Option and the Shares
to be acquired upon the exercise thereof.
(c) The amount, as determined by the Committee or the Board,
of any federal, state or local tax required to be withheld by the
Company due to the exercise of a Stock Option shall, subject to the
authorization of the Committee or the Board, be satisfied, at the
election of the Optionee, either (a) by payment by the Optionee to the
Company of the amount of such withholding obligation in cash or other
consideration acceptable to the Committee or the Board in its sole
discretion (the "Non-Share Method") or (b) through either the retention
by the Company of a number of Shares out of the Shares being acquired
through the exercise of the
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Stock Option or the delivery of already owned Shares having a Fair
Market Value equal to the amount of the withholding obligation (the
"Share Retention Method"). If an Optionee elects to use the Share
Retention Method in full or partial satisfaction of any tax liability
resulting from the exercise of a Stock Option, the Committee or the
Board may authorize the grant of a Reload Option for that number of
Shares as shall equal the number of Shares used to satisfy the tax
liabilities of the Optionee arising out of the exercise of such Stock
Option. Such Reload Option will be granted at the price and on the
terms set forth in Subsection 6.6 (b). The cash payment or an amount
equal to the Fair Market Value of the Shares so withheld, as the case
may be, shall be remitted by the Company to the appropriate taxing
authorities.
(d) An Optionee shall not have any of the rights of a
shareholder of the Company with respect to the Shares subject to a
Stock Option except to the extent that such Stock Option is exercised
and one or more certificates representing such Shares shall have been
delivered to the Optionee.
SECTION 7. STOCK APPRECIATION RIGHTS
7.1 Grants. The Committee or the Board may grant to any
eligible Consultant, non-employee Director or employee of the Company
or a Subsidiary either Non-Tandem Stock Appreciation Rights or Tandem
Stock Appreciation Rights. Stock Appreciation Rights shall be subject
to such terms and conditions as the Committee or the Board shall
impose. The grant of the Stock Appreciation Right may provide that the
holder will be paid for the value of the Stock Appreciation Right
either in cash or in Shares, or a combination thereof, at the sole
discretion of the Committee or the Board. In the event of the exercise
of a Stock Appreciation Right payable in Shares, the holder of the
Stock Appreciation Right shall receive that number of whole Shares
having an aggregate Fair Market Value on the date of exercise equal to
the value obtained by multiplying (i) either (a) in the case of a
Tandem Stock Appreciation Right, the difference between the Fair Market
Value of a Share on the date of exercise over the per share exercise
price of the related Stock Option, or (b) in the case of a Non-Tandem
Stock Appreciation Right, the difference between the Fair Market Value
of a Share on the date of exercise over the Fair Market Value on the
date of the grant by (ii) the number of Shares as to which the Stock
Appreciation Right is exercised. However, notwithstanding the
foregoing, the Committee or the Board, in its sole discretion, may
place a ceiling on the amount payable upon exercise of a Stock
Appreciation Right, but any such limitation shall be specified at the
time that the Stock Appreciation Right is granted.
7.2 Exercisability. A Tandem Stock Appreciation Right granted
in connection with an Incentive Stock Option (i) may be exercised at,
and only at, the times and to the extent the related Incentive Stock
Option is exercisable, (ii) will expire upon the termination of the
related Incentive Stock Option, (iii) may not exceed 100% of the
difference between the exercise price of the related Incentive Stock
Option and the Fair Market Value of the Shares subject to the related
Incentive Stock Option at the time the
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Tandem Stock Appreciation Right is exercised and (iv) may be exercised
at, and only at, such times as the Fair Market Value of the Shares
subject to the related Incentive Stock Option exceeds the exercise
price of the related Incentive Stock Option. A Tandem Stock
Appreciation Right granted in connection with a Non-Qualified Stock
Option will be exercisable as provided by the Committee or the Board
and will have such other terms and conditions as the Committee or the
Board may determine. A Tandem Stock Appreciation Right may be
transferred at, and only at, the times and to the extent the related
Stock Option is transferable. If a Tandem Stock Appreciation Right is
granted, there shall be surrendered and cancelled from the related
Stock Option at the time of exercise of the Tandem Stock Appreciation
Right, in lieu of exercise pursuant to the related Stock Option, that
number of Shares as shall equal the number of Shares as to which the
Tandem Stock Appreciation Right shall have been exercised.
7.3 Certain Limitations on Non-Tandem Stock Appreciation
Rights. A Non-Tandem Stock Appreciation Right will be exercisable as
provided by the Committee or the Board and will have such other terms
and conditions as the Committee or the Board may determine. A
Non-Tandem Stock Appreciation Right is subject to acceleration of
vesting or immediate termination in certain circumstances in the same
manner as Stock Options pursuant to Subsections 6.4 and 6.5 of this
Plan.
7.4 Limited Stock Appreciation Rights. The Committee and the
Board may grant "Limited Stock Appreciation Rights," either as Tandem
Stock Appreciation Rights or Non-Tandem Stock Appreciation Rights.
Limited Stock Appreciation Rights will become exercisable only upon the
occurrence of a Change in Control or such other event as the Committee
or the Board may designate at the time of grant or thereafter.
SECTION 8. RESTRICTED STOCK
8.1 Grants. The Committee or the Board may grant Awards of
Restricted Stock to any Consultant, non-employee Director or employee
of the Company or a Subsidiary for such minimum consideration, if any,
as may be required by applicable law or such greater consideration as
may be determined by the Committee or the Board, in its sole
discretion. The terms and conditions of the Restricted Stock shall be
specified by the grant agreement. The Committee or the Board, in its
sole discretion, may specify any particular rights which the
Participant to whom a grant of Restricted Stock is made shall have in
the Restricted Stock during the restriction period and the restrictions
applicable to the particular Award, the vesting schedule (which may be
based on service, performance or other factors) and rights to
acceleration of vesting (including, without limitation, whether
non-vested Shares are forfeited or vested upon termination of
employment). Further, the Committee or the Board may grant
performance-based Awards consisting of Restricted Stock by conditioning
the grant, or vesting or such other factors, such as the release,
expiration or lapse of restrictions upon any such Award (including the
acceleration of any such conditions or terms) of such Restricted Stock
upon the attainment of specified performance goals or such other
factors as the Committee or the Board may determine. The Committee or
the Board shall also determine when the restrictions shall lapse or
expire and the conditions, if any, pursuant to which the Restricted
Stock will be forfeited or sold back to the Company. Each
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Award of Restricted Stock may have different restrictions and
conditions. Unless otherwise set forth in the grant agreement,
Restricted Stock may not be sold, pledged, encumbered or otherwise
disposed of by the recipient until the restrictions specified in the
Award expire. Awards of Restricted Stock are subject to acceleration of
vesting, termination of restrictions and termination in the same manner
as Stock Options pursuant to Subsections 6.4 and 6.5 of this Plan.
8.2 Awards and Certificates. Any Restricted Stock issued
hereunder may be evidenced in such manner as the Committee or the
Board, in its sole discretion, shall deem appropriate including,
without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is
issued in respect of Shares of Restricted Stock, such certificate shall
bear an appropriate legend with respect to the restrictions applicable
to such Award. The Company may retain, at its option, the physical
custody of any stock certificate representing any awards of Restricted
Stock during the restriction period or require that the certificates
evidencing Restricted Stock be placed in escrow or trust, along with a
stock power endorsed in blank, until all restrictions are removed or
expire.
SECTION 9. PERFORMANCE AWARDS
9.1 Grants. A Performance Award may consist of either or both,
as the Committee or the Board may determine, of (i) the right to
receive Shares or Restricted Stock, or any combination thereof as the
Committee or the Board may determine ("Performance Shares"), or (ii)
the right to receive a fixed dollar amount payable in Shares,
Restricted Stock, cash or any combination thereof, as the Committee or
the Board may determine ("Performance Units"). The Committee or the
Board may grant Performance Awards to any eligible Consultant,
non-employee Director or employee of the Company or a Subsidiary, for
such minimum consideration, if any, as may be required by applicable
law or such greater consideration as may be determined by the Committee
or the Board, in its sole discretion. The terms and conditions of
Performance Awards shall be specified at the time of the grant and may
include provisions establishing the performance period, the performance
criteria to be achieved during a performance period, the criteria used
to determine vesting (including the acceleration thereof), whether
Performance Awards are forfeited or vest upon termination of employment
during a performance period and the maximum or minimum settlement
values. Each Performance Award shall have its own terms and conditions,
which shall be determined in the sole discretion of the Committee or
the Board. If the Committee or the Board determines, in its sole
discretion, that the established performance measures or objectives are
no longer suitable because of a change in the Company's business,
operations, corporate structure or for other reasons that the Committee
or the Board deems satisfactory, the Committee or the Board may modify
the performance measures or objectives and/or the performance period.
Awards of Performance Shares and/or Performance Units are subject to
acceleration of vesting, termination of restrictions and termination in
the same manner as Stock Options pursuant to Subsections 6.4 and 6.5 of
this Plan.
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9.2 Terms and Conditions. Performance Awards may be valued by
reference to the Fair Market Value of a Share or according to any other
formula or method deemed appropriate by the Committee or the Board, in
its sole discretion, including, but not limited to, achievement of
specific financial, production, sales, cost or earnings performance
objectives that the Committee or the Board believes to be relevant or
the Company's performance or the performance of the Common Stock
measured against the performance of the market, the Company's industry
segment or its direct competitors. Performance Awards may also be
conditioned upon the applicable Participant remaining in the employ of
the Company or one of its Subsidiaries for a specified period.
Performance Awards may be paid in cash, Shares (including Restricted
Stock) or other consideration, or any combination thereof. Performance
Awards may be payable in a single payment or in installments and may be
payable at a specified date or dates or upon attaining the performance
objective or objectives, all at the sole discretion of the Committee or
the Board. The extent to which any applicable performance objective has
been achieved shall be conclusively determined by the Committee or the
Board in its sole discretion.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
The Committee or the Board may grant a Dividend Equivalent
Right to any eligible Consultant, non-employee Director or employee of
the Company or a Subsidiary, either as a component of another Award or
as a separate Award, and, in general, each such Participant awarded a
Dividend Equivalent Right that is outstanding on a dividend record date
for the Common Stock shall be credited with an amount equal to the cash
or stock dividends or other distributions that would have been received
had the Shares subject to the Award been issued and outstanding on the
dividend record date. The terms and conditions of the Dividend
Equivalent Right shall be specified in a dividend equivalent right
agreement which evidences such Award. Dividend Equivalent Rights may be
settled in cash or Shares, or a combination thereof, in a single
payment or in installments. A Dividend Equivalent Right granted as a
component of another Award may provide that such Dividend Equivalent
Right shall be settled upon exercise, settlement or payment for or
lapse of restrictions on such other Award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled pursuant to
the same conditions as such other Award. A Dividend Equivalent Right
granted as a component of another Award may also contain terms and
conditions different from such other Award.
SECTION 11. OTHER AWARDS
The Committee or the Board may grant to any eligible
Consultant, non-employee Director or employee of the Company or a
Subsidiary other forms of Awards based upon, payable in or otherwise
related to, in whole or in part, Shares, if the Committee or the Board,
in its sole discretion, determines that such other form of Award is
consistent with the purposes of this Plan. The terms and conditions of
such other form of Award shall be specified in a written agreement
which sets forth the terms and conditions of such Award, including, but
not limited to, the price, if any, and the vesting schedule, if any, of
such Award. Such Awards may be granted for such minimum consideration,
if any, as may be required by applicable law or for such other greater
consideration as may be determined by the Committee or the Board, in
its sole discretion.
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SECTION 12. COMPLIANCE WITH SECURITIES AND OTHER LAWS
As a condition to the issuance or transfer of any Award or any
security issuable in connection with such Award, the Company may
require an opinion of counsel, satisfactory to the Company, to the
effect that (i) such issuance and/or transfer will not be in violation
of the Securities Act or any other applicable securities laws and (ii)
such issuance and/or transfer will not be in violation of the rules and
regulations of any securities exchange or automated quotation system on
which the Common Stock is listed or admitted to trading. Further, the
Company may refrain from issuing, delivering or transferring any Award
or any security issuable in connection with such Award until the
Committee or the Board has determined that such issuance, delivery or
transfer will not violate such securities laws or rules and regulations
and that the recipient has tendered to the Company any federal, state
or local tax owed as a result of such issuance, delivery or transfer,
when the Company has a legal liability to satisfy such tax. The Company
shall not be liable for damages due to delay in the issuance, delivery
or transfer of any Award or any security issuable in connection with
such Award or any agreement, instrument or certificate evidencing such
Award or security for any reason whatsoever, including, but not limited
to, a delay caused by the listing requirements of any securities
exchange or automated quotation system or any registration requirements
under the Securities Act, the Exchange Act, or under any other state or
federal law, rule or regulation. The Company is under no obligation to
take any action or incur any expense to register or qualify the
issuance, delivery or transfer of any Award or any security issuable in
connection with such Award under applicable securities laws or to
perfect any exemption from such registration or qualification or to
list any security on any securities exchange or automated quotation
system. Furthermore, the Company will have no liability to any person
for refusing to issue, deliver or transfer any Award or any security
issuable in connection with such Award if such refusal is based upon
the foregoing provisions of this Section 12. As a condition to any
issuance, delivery or transfer of any Award or any security issuable in
connection with such Award, the Company may place legends on any
agreement, instrument or certificate evidencing such Award or security,
issue stop transfer orders with respect thereto and require such
agreements or undertakings as the Company may deem necessary or
advisable to assure compliance with applicable laws or regulations,
including, if the Company or its counsel deems it appropriate,
representations from the recipient of such Award or security to the
effect that such recipient is acquiring such Award or security solely
for investment and not with a view to distribution and that no
distribution of the Award or the security will be made unless
registered pursuant to applicable federal and state securities laws, or
in the opinion of counsel to the Company, such registration is
unnecessary.
SECTION 13. ADJUSTMENTS UPON THE OCCURRENCE OF A REORGANIZATION OR
CORPORATE TRANSACTION
(a) In the event of a Reorganization, the number of Shares
subject to this Plan and to each outstanding Award, and the exercise
price of each Award which is based upon Shares, shall (to the extent
deemed appropriate by the Committee or the Board) be proportionately
adjusted (as determined by the Committee or the Board in its sole
discretion) to account for any increase or decrease in the number
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of issued and outstanding Shares of the Company resulting from such
Reorganization.
(b) If a Corporate Transaction is consummated and immediately
following the consummation of such Corporate Transaction the Persons
who were holders of shares of Common Stock immediately prior to the
consummation of such Corporate Transaction do not receive any
securities or other property (hereinafter collectively referred to as
"Transactional Consideration") as a result of such Corporate
Transaction and substantially all of such Persons continue to hold the
shares of Common Stock held by them immediately prior to the
consummation of such Corporate Transaction (in substantially the same
proportions relative to each other), the Awards will remain outstanding
and will (subject to the provisions of Subsections 6.1, 6.5(c), 7.1,
7.3, 8.1 and 9.1) continue in full force and effect in accordance with
its terms (without any modification) following the consummation of the
Corporate Transaction.
(c) If a Corporate Transaction is consummated and immediately
following the consummation of such Corporate Transaction the Persons
who were holders of shares of Common Stock immediately prior to the
consummation of such Corporate Transaction do receive Transactional
Consideration as a result of such Corporate Transaction or
substantially all of such Persons do not continue to hold the shares of
Common Stock held by them immediately prior to the consummation of such
Corporate Transaction (in substantially the same proportions relative
to each other), the terms and conditions of the Awards will be modified
as follows:
(i) If the documentation pursuant to which a
Corporate Transaction will be consummated provides for the
assumption (by the entity issuing Transactional Consideration
to the Persons who were the holders of shares of Common Stock
immediately prior to the consummation of such Corporate
Transaction) of the Awards granted pursuant to this Plan
without any modification or amendment (other than Permitted
Modifications and the modifications contemplated by
Subsections 6.1, 6.5(c), 7.1, 7.3, 8.1 and 9.1 of this Plan),
such Awards will remain outstanding and will continue in full
force and effect in accordance with its terms following the
consummation of such Corporate Transaction (subject to such
Permitted Modifications and the provisions of Subsections 6.1,
6.5(c), 7.1, 7.3, 8.1 and 9.1.
(ii) If the documentation pursuant to which a
Corporate Transaction will be consummated does not provide for
the assumption by the entity issuing Transactional
Consideration to the Persons who were the holders of shares of
Common Stock immediately prior to the consummation of such
Corporate Transaction of the Awards granted pursuant to this
Plan without any modification or amendment (other than
Permitted Modifications), all vesting restrictions
(performance based or otherwise) applicable to Awards which
will not be so assumed will accelerate and the holders of such
Awards may (subject to the expiration of the term of such
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Awards) exercise/receive the benefits of such Awards without
regard to such vesting restrictions during the ten (10) day
period immediately preceding the consummation of such
Corporate Transaction. For purposes of the immediately
preceding sentence, all performance based goals will be deemed
to have been satisfied in full. The Company will provide each
Participant holding Awards which will not be so assumed with
reasonable notice of the termination of such vesting
restrictions and the impending termination of such Awards.
Upon the consummation of such a Corporate Transaction, all
unexercised Awards which are not to be so assumed will
automatically terminate and cease to be outstanding.
Nothing contained in this Section 13 will be deemed to extend the term
of an Award or to revive any Award which has previously lapsed or been
cancelled, terminated or surrendered.
SECTION 14. AMENDMENT OR TERMINATION OF THIS PLAN
14.1 Amendment of This Plan. Notwithstanding anything
contained in this Plan to the contrary, all provisions of this Plan
(including, without limitation, the maximum number of Shares that may
be issued with respect to Awards to be granted pursuant to this Plan)
may at any time or from time to time be modified or amended by the
Board; provided, however, that no Award at any time outstanding
pursuant to this Plan may be modified, impaired or cancelled adversely
to the holder of the Award without the consent of such holder.
14.2 Termination of This Plan. The Board may suspend or
terminate this Plan at any time, and such suspension or termination may
be retroactive or prospective. Termination of this Plan shall not
impair or affect any Award previously granted hereunder and the rights
of the holder of the Award shall remain in effect until the Award has
been exercised in its entirety or has expired or otherwise has been
terminated by the terms of such Award.
SECTION 15. AMENDMENTS AND ADJUSTMENTS TO AWARDS
The Committee or the Board may amend, modify or terminate any
outstanding Award with the Participant's consent at any time prior to
payment or exercise in any manner not inconsistent with the terms of
this Plan, including, without limitation, (i) to change the date or
dates as of which and/or the terms and conditions pursuant to which (A)
a Stock Option becomes exercisable or (B) a Performance Award is deemed
earned, (ii) to amend the terms of any outstanding Award to provide an
exercise price per share which is higher or lower than the then current
exercise price per share of such outstanding Award or (iii) to cancel
an Award and grant a new Award in substitution therefor under such
different terms and conditions as the Committee or the Board determines
in its sole discretion to be appropriate including, but not limited to,
having an exercise price per share which may be higher or lower than
the exercise price per share of the cancelled Award. The Committee or
the Board may also make adjustments in the terms and conditions of,
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and the criteria included in agreements evidencing Awards in
recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 13 hereof) affecting the
Company, or the financial statements of the Company or any Affiliate,
or of changes in applicable laws, regulations or accounting principles,
whenever the Committee or the Board determines that such adjustments
are appropriate to prevent reduction or enlargement of the benefits or
potential benefits intended to be made available pursuant to this Plan.
Any provision of this Plan or any agreement regarding an Award to the
contrary notwithstanding, the Committee or the Board may cause any
Award granted to be cancelled in consideration of a cash payment or
alternative Award made to the holder of such cancelled Award equal in
value to the Fair Market Value of such cancelled Award. The
determinations of value pursuant to this Section 15 shall be made by
the Committee or the Board in its sole discretion.
SECTION 16. GENERAL PROVISIONS
16.1 No Limit on Other Compensation Arrangements. Nothing
contained in this Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, and such
arrangements may be either generally applicable or applicable only in
specific cases.
16.2 No Right to Employment or Continuation of Relationship.
Nothing in this Plan or in any Award, nor the grant of any Award, shall
confer upon or be construed as giving any Participant any right to
remain in the employ of the Company or a Subsidiary or to continue as a
Consultant or non-employee Director. Further, the Company or a
Subsidiary may at any time dismiss a Participant from employment or
terminate the relationship of any Consultant or non-employee Director
with the Company or any Subsidiary, free from any liability or any
claim pursuant to this Plan, unless otherwise expressly provided in
this Plan or in any agreement evidencing an Award made under this Plan.
No Consultant, non-employee Director or employee of the Company or any
Subsidiary shall have any claim to be granted any Award, and there is
no obligation for uniformity of treatment of any Consultant,
non-employee Director or employee of the Company or any Subsidiary or
of any Participants.
16.3 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND EFFECT OF
THIS PLAN AND ANY RULES AND REGULATIONS RELATING TO THIS PLAN SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
16.4 Severability. If any provision of this Plan or any Award
is or becomes or is deemed to be invalid, illegal or unenforceable in
any jurisdiction or as to any individual or Award, or would disqualify
this Plan or any Award under any law deemed applicable by the Committee
or the Board, such provision shall be construed or deemed amended to
conform to applicable law, or if it cannot be construed or deemed
amended without, in the sole determination of the Committee or the
Board, materially altering the intent of this Plan
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or the Award, such provision shall be stricken as to such jurisdiction,
individual or Award and the remainder of this Plan and any such Award
shall remain in full force and effect.
16.5 No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to this Plan or any Award, and the
Committee or the Board shall determine, in its sole discretion, whether
cash, other securities or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or
any rights thereto shall be cancelled, terminated or otherwise
eliminated.
16.6 Headings. Headings are given to the Sections and
Subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of this Plan or any
provision thereof.
16.7 Effective Date. The provisions of this Plan that relate
to the grant of Incentive Stock Options shall be effective as of the
date of the approval of this Plan by the shareholders of the Company.
All other provisions of this Plan shall be effective as of the
Effective Date.
16.8 Transferability of Awards. Awards shall not be
transferable otherwise than by will or the laws of descent and
distribution without the written consent of the Committee or the Board
(which may be granted or withheld at the sole discretion of the
Committee or the Board). Awards may be exercised, during the lifetime
of the holder, only by the holder (or the holder's legal guardian in
the event of the holder's Disability or incompetence). Any attempted
assignment, transfer, pledge, hypothecation or other disposition of an
Award contrary to the provisions hereof, or the levy of any execution,
attachment or similar process upon an Award shall be null and void and
without effect.
16.9 Rights of Participants. Except as hereinbefore expressly
provided in this Plan, any Person to whom an Award is granted shall
have no rights by reason of any subdivision or consolidation of stock
of any class or the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, reorganization, merger or
consolidation or spinoff of assets or stock of another corporation, and
any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number
or exercise price of Shares subject to an Award.
16.10 No Limitation Upon the Rights of the Company. The grant
of an Award pursuant to this Plan shall not affect in any way the right
or power of the Company to make adjustments, reclassifications, or
changes of its capital or business structure; to merge, convert or
consolidate; to dissolve or liquidate; or sell or transfer all or any
part of its business or assets.
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16.11 Date of Grant of an Award. Except as noted in this
Section 16.11, the granting of an Award shall take place only upon the
execution and delivery by the Company and the Participant of a written
agreement and neither any other action taken by the Committee or the
Board nor anything contained in this Plan or in any resolution adopted
or to be adopted by the Committee, the Board or the shareholders of the
Company shall constitute the granting of an Award pursuant to this
Plan. Solely, for purposes of determining the Fair Market Value of the
Shares subject to an Award, such Award will be deemed to have been
granted as of the date specified by the Committee or the Board
notwithstanding any delay which may elapse in executing and delivering
the applicable agreement.
SECTION 17. NAMED EXECUTIVE OFFICERS
17.1 Applicability of Section 17. The provisions of this
Section 17 shall apply only to those executive officers (i) whose
compensation is required to be reported in the Company's proxy
statement pursuant to Item 402(a)(3)(i) and (ii) (or any successor
thereto) of Regulation S-K (or any successor thereto) under the general
rules and regulations under the Exchange Act and (ii) whose total
compensation, including estimated Awards, is determined by the
Committee or the Board to possibly be subject to the limitations on
deductions imposed by Section 162(m) of the Code ("Named Executive
Officers"). In the event of any inconsistencies between this Section 17
and the other Plan provisions as they pertain to Named Executive
Officers, the provisions of this Section 17 shall control.
17.2 Establishment of Performance Goals. Awards for Named
Executive Officers, other than Stock Options and Stock Appreciation
Rights, shall be based on the attainment of certain performance goals.
No later than the earlier of (i) ninety (90) days after the
commencement of the applicable fiscal year of the Company or one of its
Subsidiaries or such other award period as may be established by the
Committee or the Board ("Award Period") and (ii) the completion of
twenty-five percent (25%) of such Award Period, the Committee or the
Board shall establish, in writing, the performance goals applicable to
each such Award for Named Executive Officers. At the time the
performance goals are established, their outcome must be substantially
uncertain. In addition, the performance goal must state, in terms of an
objective formula or standard, the method for computing the amount of
compensation payable to the Named Executive Officer if the goal is
obtained. Such formula or standard shall be sufficiently objective so
that a third party with knowledge of the relevant performance results
could calculate the amount to be paid to the subject Named Executive
Officer. The material terms of the performance goals for Named
Executive Officers and the compensation payable thereunder shall be
submitted to the shareholders of the Company for their review and
approval if and to the extent required for such compensation to be
deductible pursuant to Section 162(m) (or any successor thereto) of the
Code, and the Treasury Regulations thereunder. Shareholder approval, if
necessary, shall be obtained for such performance goals prior to any
Award being paid to such Named Executive Officer. If shareholder
approval is required and not received with respect to such performance
goals, no amount shall be paid to such Named Executive Officer for such
applicable Award Period pursuant to this Plan.
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17.3 Components of Awards. Each Award granted to a Named
Executive Officer, other than Stock Options and Stock Appreciation
Rights, shall be based on performance goals which are sufficiently
objective so that a third party having knowledge of the relevant facts
could determine whether the goal was met. Except as provided in
Subsection 17.8 herein, performance measures which may serve as
determinants of Named Executive Officers' Awards shall be limited to
the following measures: earnings per share; return on assets; return on
equity; return on capital; net profit after taxes; net profit before
taxes; operating profits; stock price; and sales or expenses. Within
ninety (90) days following the end of each Award Period, the Committee
or the Board shall certify in writing that the performance goals, and
any other material terms were satisfied. Thereafter, Awards shall be
made for each Named Executive Officer as determined by the Committee or
the Board. The Awards may not vary from the pre-established amount
based on the level of achievement.
17.4 No Mid-Year Change in Awards. Except as provided in
Subsections 17.8 and 17.9 herein, each Named Executive Officer's Awards
shall be based exclusively on the performance measures established by
the Committee or the Board pursuant to Subsections 17.2 and 17.3.
17.5 No Partial Award Period Participation. A Named Executive
Officer who becomes eligible to participate in this Plan after
performance goals have been established in an Award Period pursuant to
Subsections 17.2 and 17.3 may not participate in this Plan prior to the
next succeeding Award Period, except with respect to Awards which are
Stock Options or Stock Appreciation Rights.
17.6 Performance Goals. Except as provided in Subsection 17.8
herein, performance goals shall not be changed following their
establishment, and Named Executive Officers shall not receive any
payout, except with respect to Awards which are Stock Options or Stock
Appreciation Rights, when the minimum performance goals are not met or
exceeded.
17.7 Individual Performance and Discretionary Adjustments.
Except as provided in Subsection 17.8 herein, subjective evaluations of
individual performance of Named Executive Officers shall not be
reflected in their Awards, other than Awards which are Stock Options or
Stock Appreciation Rights. The payment of such Awards shall be entirely
dependent upon the attainment of the preestablished performance goals.
17.8 Amendments. No amendment of this Plan with respect to any
Named Executive Officer may be made which would (i) increase the
maximum amount that can be paid to any one Participant pursuant to this
Plan, (ii) change the specified performance goal for payment of Awards,
or (iii) modify the requirements as to eligibility for participation in
this Plan, unless the Company's shareholders have first approved such
amendment in a manner which would permit the deduction under Section
162(m) (or any successor thereto) of the Code of such payment in the
fiscal year it is paid. The Committee or the Board shall amend this
Section 17 and such other provisions as it deems appropriate, to cause
amounts payable to Named Executive Officers to satisfy the requirements
of
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Section 162(m) (or any successor thereto) and the Treasury regulations
promulgated thereunder.
17.9 Stock Options and Stock Appreciation Rights.
Notwithstanding any provision of this Plan (including the provisions of
this Section 17) to the contrary, the amount of compensation which a
Named Executive Officer may receive with respect to Stock Options and
Stock Appreciation Rights which are granted hereunder is based solely
on an increase in the value of the applicable Shares after the date of
grant of such Award. Thus, no Stock Option may be granted hereunder to
a Named Executive Officer with an exercise price less than the Fair
Market Value of Shares on the date of grant. Furthermore, the maximum
number of Shares (or cash equivalent value) with respect to which Stock
Options or Stock Appreciation Rights may be granted hereunder to any
Named Executive Officer during any calendar year may not exceed 411,000
Shares, subject to adjustment as provided in Section 13 hereunder.
17.10 Maximum Amount of Compensation. The maximum amount of
compensation payable as an Award (other than an Award which is a Stock
Option or Stock Appreciation Right) to any Named Executive Officer
during any calendar year may not exceed $1,000,000.
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