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EXHIBIT 10.1
PETROQUEST ENERGY, INC.
1998 INCENTIVE PLAN
(AS EFFECTIVE AUGUST 21, 1998)
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TABLE OF CONTENTS
PAGE
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SECTION 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS........................1
1.1 Purpose......................................................................................1
1.2 Definitions..................................................................................2
(a) Appreciation........................................................................2
(b) Authorized Officer..................................................................2
(c) Board...............................................................................2
(d) Cause...............................................................................2
(e) Change in Control...................................................................2
(f) Code................................................................................2
(g) Committee...........................................................................2
(h) Common Stock........................................................................3
(i) Company.............................................................................3
(j) Consultant..........................................................................3
(k) Covered Employee....................................................................3
(l) Disability..........................................................................3
(m) Employee............................................................................4
(n) Employment..........................................................................4
(o) Exchange Act........................................................................4
(p) Fair Market Value...................................................................5
(q) Grantee.............................................................................5
(r) Incentive Award.....................................................................5
(s) Incentive Agreement.................................................................5
(t) Incentive Stock Option..............................................................5
(u) Independent SAR.....................................................................5
(v) Insider.............................................................................5
(w) Nonstatutory Stock Option...........................................................6
(x) Option Price........................................................................6
(y) Outside Director....................................................................6
(z) Parent..............................................................................6
(aa) Plan................................................................................6
(bb) Publicly Held Corporation...........................................................6
(cc) Retirement..........................................................................6
(dd) Share...............................................................................6
(ee) Share Pool..........................................................................6
(ff) Spread..............................................................................6
(gg) Stock Appreciation Right or SAR.....................................................6
(hh) Stock Option or Option..............................................................7
(ii) Subsidiary..........................................................................7
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(jj) Tandem SAR..........................................................................7
1.3 Plan Administration..........................................................................7
(a) Authority of the Committee..........................................................7
(b) Meetings............................................................................7
(c) Decisions Binding...................................................................7
(d) Modification of Outstanding Incentive Awards........................................8
(e) Delegation of Authority.............................................................8
(f) Expenses of Committee...............................................................8
(g) Surrender of Previous Incentive Awards..............................................8
(h) Indemnification.....................................................................9
1.4 Shares of Common Stock Available for Incentive Awards........................................9
1.5 Share Pool Adjustments for Awards and Payouts...............................................10
1.6 Common Stock Available. ...................................................................11
1.7 Participation...............................................................................11
(a) Eligibility........................................................................11
(b) Incentive Stock Option Eligibility.................................................11
1.8 Types of Incentive Awards...................................................................12
1.9 Maximum Term................................................................................12
SECTION 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.................................................12
2.1 Grant of Stock Options......................................................................12
2.2 Stock Option Terms..........................................................................12
(a) Written Agreement..................................................................12
(b) Number of Shares...................................................................12
(c) Exercise Price.....................................................................12
(d) Term...............................................................................13
(e) Exercise...........................................................................13
(f) $100,000 Annual Limit on Incentive Stock Options...................................13
2.3 Stock Option Exercises......................................................................14
(a) Method of Exercise and Payment.....................................................14
(b) Restrictions on Share Transferability..............................................15
(c) Notification of Disqualifying Disposition of Shares from Incentive Stock Options...15
(d) Proceeds of Option Exercise........................................................15
2.4 Stock Appreciation Rights in Tandem with Nonstatutory Stock Options.........................15
(a) Grant..............................................................................15
(b) General Provisions.................................................................16
(c) Exercise...........................................................................16
(d) Settlement.........................................................................16
2.5 Stock Appreciation Rights Independent of Nonstatutory Stock Options.........................16
(a) Grant..............................................................................16
(b) General Provisions.................................................................16
(c) Exercise...........................................................................16
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(d) Settlement.........................................................................17
2.6 Reload Options..............................................................................17
SECTION 3. PROVISIONS RELATING TO PLAN PARTICIPATION...................................................17
3.1 Plan Conditions.............................................................................17
(a) Incentive Agreement................................................................17
(b) No Right to Employment.............................................................18
(c) Securities Requirements............................................................18
3.2 Transferability.............................................................................19
(a) Non-Transferable Awards and Options................................................19
(b) Ability to Exercise Rights.........................................................19
3.3 Rights as a Stockholder.....................................................................19
(a) No Stockholder Rights..............................................................19
(b) Representation of Ownership........................................................20
3.4 Listing and Registration of Shares of Common Stock..........................................20
3.5 Change in Stock and Adjustments.............................................................20
(a) Changes in Law or Circumstances....................................................20
(b) Exercise of Corporate Powers.......................................................21
(c) Recapitalization of the Company....................................................21
(d) Reorganization of the Company......................................................21
(e) Issue of Common Stock by the Company...............................................22
(f) Acquisition of the Company.........................................................22
(g) Assumption of Outstanding Incentive Awards under the Plan..........................22
(h) Assumption of Incentive Awards by a Successor......................................23
3.6 Termination of Employment, Death, Disability and Retirement.................................23
(a) Termination of Employment..........................................................23
(b) Termination of Employment for Cause................................................24
(c) Retirement.........................................................................24
(d) Disability or Death................................................................24
(e) Continuation.......................................................................25
3.7 Change in Control...........................................................................25
3.8 Exchange of Incentive Awards................................................................27
3.9 Financing...................................................................................27
SECTION 4. GENERAL.....................................................................................27
4.1 Effective Date and Grant Period.............................................................27
4.2 Funding and Liability of Company............................................................28
4.3 Withholding Taxes...........................................................................28
(a) Tax Withholding....................................................................28
(b) Share Withholding..................................................................28
(c) Incentive Stock Options............................................................28
(d) Loans..............................................................................29
4.4 No Guarantee of Tax Consequences............................................................29
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4.5 Designation of Beneficiary by Participant...................................................29
4.6 Deferrals...................................................................................29
4.7 Amendment and Termination...................................................................29
4.8 Requirements of Law.........................................................................30
4.9 Rule 16b-3 Securities Law Compliance........................................................30
4.10 Compliance with Code Section 162(m).........................................................31
4.11 Successors..................................................................................31
4.12 Miscellaneous Provisions....................................................................31
4.13 Severability................................................................................32
4.14 Gender, Tense and Headings..................................................................32
4.15 Governing Law...............................................................................32
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PETROQUEST ENERGY, INC.
1998 INCENTIVE PLAN
SECTION 1.
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1. Purpose
The purpose of the Plan is to foster and promote the long-term
financial success of PetroQuest Energy, Inc. (the "Company") and its
Subsidiaries and to increase stockholder value by: (a) encouraging the
commitment of selected key Employees, Consultants and Outside Directors, (b)
motivating superior performance of key Employees, Consultants and Outside
Directors by means of long-term performance related incentives, (c) encouraging
and providing key Employees, Consultants and Outside Directors with a program
for obtaining ownership interests in the Company which link and align their
personal interests to those of the Company's stockholders, (d) attracting and
retaining key Employees, Consultants and Outside Directors by providing
competitive incentive compensation opportunities, and (e) enabling key
Employees, Consultants and Outside Directors to share in the long-term growth
and success of the Company.
The Plan provides for payment of various forms of incentive
compensation and it is not intended to be a plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended (ERISA). The Plan shall be
interpreted, construed and administered consistent with its status as a plan
that is not subject to ERISA.
Subject to approval by the Company's stockholders pursuant to Section
4.1, the Plan shall become effective as of August 21, 1998 (the "EFFECTIVE
DATE"). The Plan shall commence on the Effective Date, and shall remain in
effect, subject to the right of the Board to amend or terminate the Plan at any
time pursuant to Section 4.7, until all Shares subject to the Plan have been
purchased or acquired according to its provisions. However, in no event may an
Incentive Award be granted under the Plan after the expiration of ten (10) years
from the Effective Date. Any Incentive Award granted prior to the Effective Date
shall be subject to the subsequent receipt of stockholder approval of the Plan
pursuant to Section 4.1.
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2. Definitions
The following terms shall have the meanings set forth below:
i. APPRECIATION. The
difference between the option
exercise price per share of the
Nonstatutory Stock Option to which a
Tandem SAR relates and the weighted
average of the Fair Market Value of
a share of Common Stock for the five
trading days immediately preceding
the date of exercise of the Tandem
SAR.
ii. AUTHORIZED OFFICER. The
Chairman of the Board or the Chief
Executive Officer of the Company or
any other senior officer of the
Company to whom either of them
delegate the authority to execute
any Incentive Agreement for and on
behalf of the Company. No officer or
director shall be an Authorized
Officer with respect to any
Incentive Agreement for himself.
iii. BOARD. The Board of
Directors of the Company.
iv. CAUSE. When used in
connection with the termination of a
Grantee's Employment, shall mean the
termination of the Grantee's
Employment by the Company by reason
of (i) the conviction of the Grantee
by a court of competent jurisdiction
as to which no further appeal can be
taken of a crime involving moral
turpitude or a felony; (ii) the
proven commission by the Grantee of
an act of fraud upon the Company;
(iii) the willful and proven
misappropriation of any funds or
property of the Company by the
Grantee; (iv) the willful, continued
and unreasonable failure by the
Grantee to perform the material
duties assigned to him; (v) the
knowing engagement by the Grantee in
any direct, material conflict of
interest with the Company without
compliance with the Company's
conflict of interest policy, if any,
then in effect; or (vi) the knowing
engagement by the Grantee, without
the written approval of the Board,
in any activity which competes with
the business of the Company or which
would result in a material injury to
the business, reputation or goodwill
of the Company.
v. CHANGE IN CONTROL. Any of
the events described in and subject
to Section 3.7.
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vi. CODE. The Internal Revenue
Code of 1986, as amended, and the
regulations and other authority
promulgated thereunder by the
appropriate governmental authority.
References herein to any provision
of the Code shall refer to any
successor provision thereto.
vii. COMMITTEE. A committee
appointed by the Board consisting of
not less than two directors as
appointed by the Board to administer
the Plan. However, if the Company is
a Publicly Held Corporation, the
Plan shall be administered by a
committee appointed by the Board
consisting of not less than two
directors who fulfill the
"non-employee director" requirements
of Rule 16b-3 under the Exchange Act
and the "outside director"
requirements of Section 162(m) of
the Code. In either case, the
Committee may be the Compensation
Committee of the Board, or any
subcommittee of the Compensation
Committee, provided that the members
of the Committee satisfy the
requirements of the previous
provisions of this paragraph. The
Board shall have the power to fill
vacancies on the Committee arising
by resignation, death, removal or
otherwise. The Board, in its sole
discretion, may bifurcate the powers
and duties of the Committee among
one or more separate committees, or
retain all powers and duties of the
Committee in a single Committee. The
members of the Committee shall serve
at the discretion of the Board.
Notwithstanding the preceding paragraph, the term "Committee"
as used in the Plan with respect to any Incentive Award for an Outside
Director shall refer to the Board. In the case of an Incentive Award
for an Outside Director, the Board shall have all the powers and
responsibilities of the Committee hereunder as to such Incentive Award,
and any actions as to such Incentive Award may be acted upon only by
the Board (unless it otherwise designates in its discretion). When the
Board exercises its authority to act in the capacity as the Committee
hereunder with respect to an Incentive Award for an Outside Director,
it shall so designate with respect to any action that it undertakes in
its capacity as the Committee.
viii. COMMON STOCK. The common
stock of the Company, $.001 par
value per share, and any class of
common stock into which such common
shares may hereafter be converted,
reclassified or recapitalized.
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ix. COMPANY. PetroQuest Energy,
Inc., a corporation organized under
the laws of the State of Delaware,
and any successor in interest
thereto.
x. CONSULTANT. An independent
agent, consultant, attorney, an
individual who has agreed to become
an Employee, or any other individual
who is not an Outside Director or
employee of the Company (or any
Parent or Subsidiary) and who
provides ongoing management or
consulting services to the Company
(or any Parent or Subsidiary).
xi. COVERED EMPLOYEE. Only if
the Company is a Publicly Held
Corporation, a named executive
officer who is one of the group of
covered employees as defined in
Section 162(m) of the Code and
Treasury Regulation Section
1.162-27(c) (or its successor).
xii. DISABILITY. As determined
by the Committee in its discretion
exercised in good faith, a physical
or mental condition of the Employee
that would entitle him to payment of
disability income payments under the
Company's long term disability
insurance policy or plan for
employees, as then effective, if
any; or in the event that the
Grantee is not covered, for whatever
reason, under the Company's
long-term disability insurance
policy or plan, "Disability" means a
permanent and total disability as
defined in Section 22(e)(3) of the
Code. A determination of Disability
may be made by a physician selected
or approved by the Committee and, in
this respect, the Grantee shall
submit to an examination by such
physician upon request.
xiii. EMPLOYEE. Any employee of
the Company (or any Parent or
Subsidiary) within the meaning of
Section 3401(c) of the Code who, in
the opinion of the Committee, is one
of a select group of executive
officers, other officers, or other
key personnel of the Company (or any
Parent or Subsidiary), who is in a
position to contribute materially to
the growth and development and to
the financial success of the Company
(or any Parent or Subsidiary),
including, without limitation,
officers who are members of the
Board.
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xiv. EMPLOYMENT. Employment by
the Company (or any Parent or
Subsidiary), or by any corporation
issuing or assuming an Incentive
Award in any transaction described
in Section 424(a) of the Code, or by
a parent corporation or a subsidiary
corporation of such corporation
issuing or assuming such Incentive
Award, as the parent-subsidiary
relationship shall be determined at
the time of the corporate action
described in Section 424(a) of the
Code. In this regard, neither the
transfer of a Grantee from
Employment by the Company to
Employment by any Parent or
Subsidiary, nor the transfer of a
Grantee from Employment by any
Parent or Subsidiary to Employment
by the Company, shall be deemed to
be a termination of Employment of
the Grantee. Moreover, the
Employment of a Grantee shall not be
deemed to have been terminated
because of an approved leave of
absence from active Employment on
account of temporary illness,
authorized vacation or granted for
reasons of professional advancement,
education, health, or government
service, or during military leave
for any period (if the Grantee
returns to active Employment within
90 days after the termination of
military leave), or during any
period required to be treated as a
leave of absence by virtue of any
applicable statute, Company
personnel policy or agreement.
Whether an authorized leave of
absence shall constitute termination
of Employment hereunder shall be
determined by the Committee in its
discretion.
Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan will also include compensatory
services performed by a Consultant for the Company (or any Parent or
Subsidiary) as well as membership on the Board by an Outside Director.
xv. EXCHANGE ACT. The Securities
Exchange Act of 1934, as amended.
xvi. FAIR MARKET VALUE. If the
Company is not a Publicly Held
Corporation at the time a
determination of the Fair Market
Value of the Common Stock is
required to be made hereunder, the
determination of Fair Market Value
for purposes of the Plan shall be
made by the Committee in its
discretion exercised in good faith.
In this respect, the
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Committee may rely on such financial
data, valuations or experts as it
deems advisable under the
circumstances.
If the Company is a Publicly Held Corporation, the Fair Market
Value of one share of Common Stock on the date in question is deemed to
be (i) the closing sales price of a share of Common Stock as reported
on the principal securities exchange on which Shares are then listed or
admitted to trading, or (ii) if not so reported, the average of the
closing bid and asked prices for a Share as quoted on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), or (iii) if not quoted on NASDAQ, the average of the
closing bid and asked prices for a Share as quoted by the National
Quotation Bureau's "Pink Sheets" or the National Association of
Securities Dealers' OTC Bulletin Board System. If there was no public
trade of Common Stock on the date in question, Fair Market Value shall
be determined by reference to the last preceding date on which such a
trade was so reported.
xvii. GRANTEE. Any Employee, Consultant or Outside Director
who is granted an Incentive Award under the Plan.
xviii. INCENTIVE AWARD. A grant of an award under the Plan to
a Grantee, including any Nonstatutory Stock Option, Incentive Stock
Option, Reload Option and Stock Appreciation Right.
xix. INCENTIVE AGREEMENT. The written agreement entered into
between the Company and the Grantee setting forth the terms and
conditions pursuant to which an Incentive Award is granted under the
Plan, as such agreement is further defined in Section 3.1(a).
xx. INCENTIVE STOCK OPTION. A Stock Option granted by the
Committee to an Employee under Section 2 which is designated by the
Committee as an Incentive Stock Option and intended to qualify as an
Incentive Stock Option under Section 422 of the Code.
xxi. INDEPENDENT SAR. A Stock Appreciation Right described
in Section 2.5.
xxii. INSIDER. To the extent that the Company is a Publicly
Held Corporation, an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of
the Company's equity securities that is registered pursuant to Section
12 of the Exchange Act, all as defined under Section 16 of the Exchange
Act.
xxiii. NONSTATUTORY STOCK OPTION. A Stock Option granted by
the Committee to a Grantee under Section 2 which is not designated by
the Committee as an Incentive Stock Option.
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xxiv. OPTION PRICE. The exercise price at which a Share may
be purchased by the Grantee of a Stock Option.
xxv. OUTSIDE DIRECTOR. A member of the Board who is not,
at the time of grant of an Incentive Award, an employee of the Company
or any Parent or Subsidiary.
xxvi. PARENT. Any corporation (whether now or hereafter
existing) which constitutes a "parent" of the Company, as defined in
Section 424(e) of the Code.
xxvii. PLAN. The PetroQuest Energy, Inc. 1998 Incentive Plan
as set forth herein and as it may be amended from time to time.
xxviii. PUBLICLY HELD CORPORATION. A corporation issuing any
class of common equity securities required to be registered under
Section 12 of the Exchange Act.
xxix. RETIREMENT. The voluntary termination of Employment
from the Company or any Parent or Subsidiary constituting retirement
for age on any date after the Employee attains the normal retirement
age of 65 years, or such other age as may be designated by the
Committee in the Employee's Incentive Agreement.
xxx. SHARE. A share of the Common Stock of the Company.
xxxi. SHARE POOL. The number of shares authorized for
issuance under Section 1.4, as adjusted for awards and payouts under
Section 1.5 and as adjusted for changes in corporate capitalization
under Section 3.5.
xxxii. SPREAD. The difference between the exercise price per
Share specified in any Independent SAR grant and the weighted average
of the Fair Market Value of a Share for the five trading days
immediately preceding the date of exercise of the Independent SAR.
xxxiii. STOCK APPRECIATION RIGHT OR SAR. A Tandem SAR
described in Section 2.4 or an Independent SAR described in Section
2.5.
xxxiv. STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an
Incentive Stock Option granted to an Employee, or (ii) a Nonstatutory
Stock Option granted to an Employee, Consultant or Outside Director,
whereunder such option the Grantee has the right to purchase Shares of
Common Stock. In accordance with Section 422 of the Code, no Consultant
or Outside Director shall be granted an Incentive Stock Option.
xxxv. SUBSIDIARY. Any corporation (whether now or hereafter
existing) which constitutes a "subsidiary" of the Company, as defined
in Section 424(f) of the Code.
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xxxvi. TANDEM SAR. A Stock Appreciation Right that is granted
in connection with a related Stock Option pursuant to Section 2.4, the
exercise of which shall require forfeiture of the right to purchase a
Share under the related Stock Option (and when a Share is purchased
under the Stock Option, the Tandem SAR shall similarly be canceled).
a. PLAN ADMINISTRATION
i. AUTHORITY OF THE COMMITTEE. Except as may be limited by
law and subject to the provisions herein, the Committee shall have full
power to (i) select Grantees who shall participate in the Plan; (ii)
determine the sizes, duration and types of Incentive Awards; (iii)
determine the terms and conditions of Incentive Awards and Incentive
Agreements; (iv) determine whether any Shares subject to Incentive
Awards will be subject to any restrictions on transfer; (v) construe
and interpret the Plan and any Incentive Agreement or other agreement
entered into under the Plan; and (vi) establish, amend, or waive rules
for the Plan's administration. Further, the Committee shall make all
other determinations which may be necessary or advisable for the
administration of the Plan.
ii. MEETINGS. The Committee shall designate a chairman from
among its members who shall preside at all of its meetings, and shall
designate a secretary, without regard to whether that person is a
member of the Committee, who shall keep the minutes of the proceedings
and all records, documents, and data pertaining to its administration
of the Plan. Meetings shall be held at such times and places as shall
be determined by the Committee and the Committee may hold telephonic
meetings. The Committee may take any action otherwise proper under the
Plan by the affirmative vote, taken with or without a meeting, of a
majority of its members. The Committee may authorize any one or more of
their members or any officer of the Company to execute and deliver
documents on behalf of the Committee.
iii. DECISIONS BINDING. All determinations and decisions
made by the Committee shall be made in its discretion pursuant to the
provisions of the Plan, and shall be final, conclusive and binding on
all persons including the Company, its shareholders, Employees,
Grantees, and their estates and beneficiaries. The Committee's
decisions and determinations with respect to any Incentive Award need
not be uniform and may be made selectively among Incentive Awards and
Grantees, whether or not such Incentive Awards are similar or such
Grantees are similarly situated.
iv. MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject
to the stockholder approval requirements of Section 4.7 if applicable,
the Committee may, in its discretion, provide for the extension of the
exercisability of an Incentive Award, accelerate the vesting or
exercisability of an Incentive Award, eliminate or make less
restrictive any restrictions contained in an Incentive Award, waive any
restriction or other provisions of an Incentive Award, or otherwise
amend or modify an Incentive Award in any manner that is either (i) not
adverse to the Grantee to whom such Incentive Award was granted or (ii)
consented to by
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such Grantee. The Committee may grant an Incentive Award to an
individual who it expects to become an Employee within the next six
months, with such Incentive Award being subject to such individual
actually becoming an Employee within such time period, and subject to
such other terms and conditions as may be established by the Committee
in its discretion.
v. DELEGATION OF AUTHORITY. The Committee may delegate to
the Chief Executive Officer and to other senior officers of the Company
its duties under this Plan pursuant to such conditions or limitations
as the Committee may establish from time to time, except that, if the
Company is a Publicly Held Corporation, the Committee may not delegate
to any person the authority to (i) grant Incentive Awards, or (ii) take
any action which would contravene the requirements of Rule 16b-3 under
the Exchange Act or the Performance-Based Exception under Section
162(m) of the Code.
vi. EXPENSES OF COMMITTEE. The Committee may employ legal
counsel, including, without limitation, independent legal counsel and
counsel regularly employed by the Company, and other agents as the
Committee may deem appropriate for the administration of the Plan. The
Committee may rely upon any opinion or computation received from any
such counsel or agent. All expenses incurred by the Committee in
interpreting and administering the Plan, including, without limitation,
meeting expenses and professional fees, shall be paid by the Company.
vii. SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee
may, in its absolute discretion, grant Incentive Awards to Grantees on
the condition that such Grantees surrender to the Committee for
cancellation such other Incentive Awards (including, without
limitation, Incentive Awards with higher exercise prices) as the
Committee directs. Incentive Awards granted on the condition precedent
of surrender of outstanding Incentive Awards shall not count against
the limits set forth in Section 1.4 until such time as such previous
Incentive Awards are surrendered and canceled. Any decision of the
Committee to grant Incentive Awards on such a condition precedent shall
be deemed an amendment to the Plan and shall be subject to the
requirements of Section 4.7 of the Plan regarding approvals of
Regulatory Authorities (as defined therein).
viii. INDEMNIFICATION. Each person who is or was a member of
the Committee, or of the Board, shall be indemnified by the Company
against and from any damage, loss, liability, cost and expense that may
be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may
be a party or in which he may be involved by reason of any action taken
or failure to act under the Plan, except for any such act or omission
constituting willful misconduct or gross negligence. Such person shall
be indemnified by the Company for all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of
any judgment in any such action, suit, or proceeding against him,
provided he shall give the Company an opportunity, at its own expense,
to handle and defend the same before he undertakes to handle and defend
it on his own behalf. The foregoing right of indemnification
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shall not be exclusive of any other rights of indemnification to which
such persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless.
b. SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS
Subject to adjustment under Section 3.5, there shall be available for
Incentive Awards under this Plan granted wholly or partly in Common Stock
(including rights or Options that may be exercised for or settled in Common
Stock) an aggregate of 1,800,000 Shares of Common Stock, of which an aggregate
of not more than 500,000 Shares shall be available for Incentive Awards granted
to Outside Directors and the remainder shall be available for Incentive Awards
to Employees and Consultants. No more than 1,800,000 Shares of Common Stock
shall be available for Incentive Stock Options. The number of Shares of Common
Stock that are the subject of Incentive Awards under this Plan, that are
forfeited or terminated, expire unexercised, are settled in cash in lieu of
Common Stock or in a manner such that all or some of the Shares covered by an
Incentive Award are not issued to a Grantee or are exchanged for Incentive
Awards that do not involve Common Stock, shall again immediately become
available for Incentive Awards hereunder. The Committee may from time to time
adopt and observe such procedures concerning the counting of Shares against the
Plan maximum as it may deem appropriate. The Board and the appropriate officers
of the Company shall from time to time take whatever actions are necessary to
file any required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that Shares are available for issuance
pursuant to Incentive Awards.
If the Company is a Publicly Held Corporation, then unless and until
the Committee determines that a particular Incentive Award granted to a Covered
Employee is not intended to comply with the Performance-Based Exception, the
following rules shall apply to grants of Incentive Awards to Covered Employees:
i. Subject to adjustment as provided in Section 3.5, the
maximum aggregate number of Shares of Common Stock (including Stock
Options and SARs) that may be granted or that may vest, as applicable,
in any calendar year pursuant to any Incentive Award held by any
individual Covered Employee shall be 500,000 Shares. In addition, the
number of Shares of Common Stock that are subject to Incentive Awards
granted under the Plan to any one Grantee will not exceed 5% of the
Company's issued and outstanding shares of Common Stock.
ii. The maximum aggregate cash payout (in SARs) with
respect to Incentive Awards granted in any calendar year which may be
made to any Covered Employee shall be $5,000,000.
iii. With respect to any Stock Option or Stock Appreciation
Right granted to a Covered Employee that is canceled or repriced, the
number of Shares subject to such Stock
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Option or Stock Appreciation Right shall continue to count against the
maximum number of Shares that may be the subject of Stock Options or
Stock Appreciation Rights granted to such Covered Employee hereunder
and, in this regard, such maximum number shall be determined in
accordance with Section 162(m) of the Code.
iv. The limitations of subsections (a), (b) and (c) above
shall be construed and administered so as to comply with the
Performance-Based Exception.
c. SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS.
The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:
i. Stock Option; and
ii. SAR (except a Tandem SAR).
The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:
(a) A Payout of an SAR or Tandem SAR in the form of cash;
(b) A cancellation, termination, expiration, forfeiture, or
lapse for any reason (with the exception of the termination of a Tandem
SAR upon exercise of the related Stock Option, or the termination of a
related Stock Option upon exercise of the corresponding Tandem SAR) of
any Shares subject to an Incentive Award; and
(c) Payment of an Option Price with previously acquired
Shares or by withholding Shares which otherwise would be acquired on
exercise (i.e., the Share Pool shall be increased by the number of
Shares turned in or withheld as payment of the Option Price).
d. COMMON STOCK AVAILABLE.
The Common Stock available for issuance under the Plan shall be made
available from Shares now or hereafter (i) held in the treasury of the Company
or (ii) authorized but unissued shares. No fractional shares shall be issued
under the Plan; payment for fractional shares shall be made in cash.
e. PARTICIPATION
i. ELIGIBILITY. The Committee shall from time to time
designate those Employees, Consultants and/or Outside Directors, if
any, to be granted Incentive Awards under the Plan, the type of
Incentive Awards granted, the number of Shares, Stock Options, rights
or units, as the case may be, which shall be granted to each such
person, and any other
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terms or conditions relating to the Incentive Awards as it may deem
appropriate to the extent consistent with the provisions of the Plan. A
Grantee who has been granted an Incentive Award may, if otherwise
eligible, be granted additional Incentive Awards at any time.
ii. INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or
Outside Director shall be eligible for the grant of any Incentive Stock
Option. In addition, no Employee shall be eligible for the grant of any
Incentive Stock Option who owns or would own immediately before the
grant of such Incentive Stock Option, directly or indirectly, stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, or any Parent or
Subsidiary. This restriction does not apply if, at the time such
Incentive Stock Option is granted, the Incentive Stock Option exercise
price is at least one hundred and ten percent (110%) of the Fair Market
Value on the date of grant and the Incentive Stock Option by its terms
is not exercisable after the expiration of five (5) years from the date
of grant. For the purpose of the immediately preceding sentence, the
attribution rules of Section 424(d) of the Code shall apply for the
purpose of determining an Employee's percentage ownership in the
Company or any Parent or Subsidiary. This paragraph shall be construed
consistent with the requirements of Section 422 of the Code.
f. TYPES OF INCENTIVE AWARDS
The types of Incentive Awards under the Plan are Stock Options and
Stock Appreciation Rights, or any combination of the foregoing.
g. MAXIMUM TERM
The maximum term for any Incentive Award granted under the Plan is ten
years from the date of grant.
SECTION 2.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
a. GRANT OF STOCK OPTIONS
The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.
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b. STOCK OPTION TERMS
i. WRITTEN AGREEMENT. Each grant of an Stock Option shall
be evidenced by a written Incentive Agreement. Among its other
provisions, each Incentive Agreement shall set forth the extent to
which the Grantee shall have the right to exercise the Stock Option
following termination of the Grantee's Employment. Such provisions
shall be determined in the discretion of the Committee, shall be
included in the Grantee's Incentive Agreement, need not be uniform
among all Stock Options issued pursuant to the Plan.
ii. NUMBER OF SHARES. Each Stock Option shall specify the
number of Shares of Common Stock to which it pertains.
iii. EXERCISE PRICE. The exercise price per Share of Common
Stock under each Stock Option shall be determined by the Committee;
provided, however, that in the case of an Incentive Stock Option, such
exercise price shall not be less than 100% of the Fair Market Value per
Share on the business day immediately preceding the day the Incentive
Stock Option is granted. To the extent that the Company is a Publicly
Held Corporation and the Stock Option is intended to qualify for the
Performance-Based Exception, the exercise price shall not be less than
100% of the Fair Market Value per Share on the date the Stock Option is
granted. Each Stock Option shall specify the method of exercise which
shall be consistent with the requirements of Section 2.3(a).
iv. TERM. In the Incentive Agreement, the Committee shall
fix the term of each Stock Option which shall be not more than ten (10)
years from the date of grant. In the event no term is fixed, such term
shall be ten (10) years from the date of grant.
v. EXERCISE. The Committee shall determine the time or
times at which a Stock Option may be exercised in whole or in part.
Each Stock Option may specify the required period of continuous
Employment and/or the performance objectives to be achieved before the
Stock Option or portion thereof will become exercisable. Each Stock
Option, the exercise of which, or the timing of the exercise of which,
is dependent, in whole or in part, on the achievement of designated
performance objectives, may specify a minimum level of achievement in
respect of the specified performance objectives below which no Stock
Options will be exercisable and a method for determining the number of
Stock Options that will be exercisable if performance is at or above
such minimum but short of full achievement of the performance
objectives. All such terms and conditions shall be set forth in the
Incentive Agreement.
vi. $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS.
Notwithstanding any contrary provision in the Plan, to the extent that
the aggregate Fair Market Value (determined as of the time the
Incentive Stock Option is granted) of the Shares of Common Stock with
respect to which Incentive Stock Options are exercisable for the first
time by any Grantee during any single calendar year (under the Plan and
any other stock option plans of the
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Company and its Subsidiaries or Parent) exceeds the sum of $100,000,
such Incentive Stock Option shall be treated as a Nonstatutory Stock
Option to the extent in excess of the $100,000 limit, and not an
Incentive Stock Option, but all other terms and provisions of such
Stock Option shall remain unchanged. This paragraph shall be applied by
taking Incentive Stock Options into account in the order in which they
are granted and shall be construed in accordance with Section 422(d) of
the Code. In the absence of such regulations or other authority, or if
such regulations or other authority require or permit a designation of
the Options which shall cease to constitute Incentive Stock Options,
then Incentive Stock Options, only to the extent of such excess and in
the order in which they were granted, shall automatically be deemed to
be Nonstatutory Stock Options but all other terms and conditions of
such Incentive Stock Options, and the corresponding Incentive
Agreement, shall remain unchanged.
c. STOCK OPTION EXERCISES
i. METHOD OF EXERCISE AND PAYMENT. Stock Options shall be
exercised by the delivery of a signed written notice of exercise to the
Company as of a date set by the Company in advance of the effective
date of the proposed exercise. The notice shall set forth the number of
Shares with respect to which the Option is to be exercised, accompanied
by full payment for the Shares.
The Option Price upon exercise of any Stock Option shall be
payable to the Company in full either: (i) in cash or its equivalent,
or (ii) subject to prior approval by the Committee in its discretion,
by tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held for at least six
(6) months prior to their tender to satisfy the Option Price), or (iii)
subject to prior approval by the Committee in its discretion, by
withholding Shares which otherwise would be acquired on exercise having
an aggregate value equal to the total Option Price, with such value per
share being equal to the weighted average of the Fair Market Value of a
share of Common Stock for the five trading days immediately preceding
the exercise of the Option, or (iv) subject to prior approval by the
Committee in its discretion, by a combination of (i), (ii), and (iii)
above. Any payment in Shares of Common Stock shall be effected by the
delivery of such Shares to the Secretary of the Company, duly endorsed
in blank or accompanied by stock powers duly executed in blank,
together with any other documents as the Secretary shall require from
time to time.
The Committee, in its discretion, also may allow (i) "cashless
exercise" as permitted under Federal Reserve Board's Regulation T, 12
CFR Part 220 (or its successor), and subject to applicable securities
law restrictions and tax withholdings, or (ii) by any other means which
the Committee, in its discretion, determines to be consistent with the
Plan's purpose and applicable law.
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As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to or on behalf
of the Grantee, in the name of the Grantee or other appropriate
recipient, Share certificates for the number of Shares purchased under
the Stock Option. Such delivery shall be effected for all purposes when
a stock transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to Grantee or other
appropriate recipient.
During the lifetime of a Grantee, each Option granted to him
shall be exercisable only by the Grantee (or his legal guardian in the
event of his Disability) or by a broker-dealer acting on his behalf
pursuant to a cashless exercise under the foregoing provisions of this
Section 2.3(a). No Option shall be assignable or transferable by
Grantee otherwise than by will or by the laws of descent and
distribution.
ii. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee
may impose such restrictions on any Shares acquired pursuant to the
exercise of a Stock Option as it may deem advisable, including, without
limitation, restrictions under (i) any buy/sell agreement or right of
first refusal, (ii) any applicable federal securities laws, (iii) the
requirements of any stock exchange or market upon which such Shares are
then listed and/or traded, or (iv) any blue sky or state securities law
applicable to such Shares. Any certificate issued to evidence Shares
issued upon the exercise of an Incentive Award may bear such legends
and statements as the Committee shall deem advisable to assure
compliance with federal and state laws and regulations.
Any Grantee or other person exercising an Incentive Award may
be required by the Committee to give a written representation that the
Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution;
provided, however, that the Committee, in its sole discretion, may
release any person receiving an Incentive Award from any such
representations either prior to or subsequent to the exercise of the
Incentive Award.
iii. NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES
FROM INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of
the Plan, a Grantee who disposes of Shares of Common Stock acquired
upon the exercise of an Incentive Stock Option by a sale or exchange
either (i) within two (2) years after the date of the grant of the
Incentive Stock Option under which the Shares were acquired or (ii)
within one (1) year after the transfer of such Shares to him pursuant
to exercise, shall promptly notify the Company of such disposition, the
amount realized and his adjusted basis in such Shares.
iv. PROCEEDS OF OPTION EXERCISE. The proceeds received by
the Company from the sale of Shares pursuant to Stock Options exercised
under the Plan shall be used for general corporate purposes.
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d. STOCK APPRECIATION RIGHTS IN TANDEM WITH NONSTATUTORY STOCK OPTIONS
i. GRANT. The Committee may, at the time of grant of a
Nonstatutory Stock Option, or at any time thereafter during the term of
the Nonstatutory Stock Option, grant Stock Appreciation Rights with
respect to all or any portion of the Shares of Common Stock covered by
such Nonstatutory Stock Option. A Stock Appreciation Right in tandem
with a Nonstatutory Stock Option is referred to herein as a "Tandem
SAR."
ii. GENERAL PROVISIONS. The terms and conditions of each
Tandem SAR shall be evidenced by an Incentive Agreement. The Option
Price per Share of a Tandem SAR shall be fixed in the Incentive
Agreement and shall not be less than one hundred percent (100%) of the
exercise price per share of the Nonstatutory Stock Option to which it
relates.
iii. EXERCISE. A Tandem SAR may be exercised at any time the
Nonstatutory Stock Option to which it relates is then exercisable, but
only to the extent such Nonstatutory Stock Option is exercisable, and
shall otherwise be subject to the conditions applicable to such
Nonstatutory Stock Option. When a Tandem SAR is exercised, the
Nonstatutory Stock Option to which it relates shall terminate to the
extent of the number of Shares with respect to which the Tandem SAR is
exercised. Similarly, when a Nonstatutory Stock Option is exercised,
the Tandem SARs relating to the Shares covered by such Nonstatutory
Stock Option exercise shall terminate. Any Tandem SAR which is
outstanding on the last day of the term of the related Nonstatutory
Stock Option shall be automatically exercised on such date for cash,
without the need for any action by the Grantee, to the extent of any
Appreciation.
iv. SETTLEMENT. Upon exercise of a Tandem SAR, the holder
shall receive, for each Share with respect to which the Tandem SAR is
exercised, an amount equal to the Appreciation. The Appreciation shall
be payable in cash, Common Stock, or a combination of both, as
specified in the Incentive Agreement (or in the discretion of the
Committee if not so specified). The Appreciation shall be paid within
30 calendar days of the exercise of the Tandem SAR. The number of
Shares of Common Stock which shall be issuable upon exercise of a
Tandem SAR shall be determined by dividing (1) by (2), where (1) is the
number of Shares as to which the Tandem SAR is exercised multiplied by
the Appreciation in such shares and (2) is the Fair Market Value of a
Share on the exercise date.
e. STOCK APPRECIATION RIGHTS INDEPENDENT OF NONSTATUTORY STOCK OPTIONS
i. GRANT. The Committee may grant Stock Appreciation
Rights independent of Nonstatutory Stock Options ("Independent SARs").
ii. GENERAL PROVISIONS. The terms and conditions of each
Independent SAR shall be evidenced by an Incentive Agreement. The
exercise price per share of Common Stock shall be not less than one
hundred percent (100%) of the Fair Market Value of a Share
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of Common Stock on the business day immediately preceding the day of
grant of the Independent SAR. The term of an Independent SAR shall be
determined by the Committee.
iii. EXERCISE. Independent SARs shall be exercisable at such
time and subject to such terms and conditions as the Committee shall
specify in the Incentive Agreement for the Independent SAR grant.
iv. SETTLEMENT. Upon exercise of an Independent SAR, the
holder shall receive, for each Share specified in the Independent SAR
grant, an amount equal to the Spread. The Spread shall be payable in
cash, Common Stock, or a combination of both, in the discretion of the
Committee or as specified in the Incentive Agreement. The Spread shall
be paid within 30 calendar days of the exercise of the Independent SAR.
The number of Shares of Common Stock which shall be issuable upon
exercise of an Independent SAR shall be determined by dividing (1) by
(2), where (1) is the number of Shares as to which the Independent SAR
is exercised multiplied by the Spread in such Shares and (2) is the
Fair Market Value of a Share on the exercise date.
f. RELOAD OPTIONS
At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, replacement Stock Options that permit the Grantee to
purchase an additional number of Shares equal to the number of previously owned
Shares surrendered by the Grantee to pay all or a portion of the Option Price
upon exercise of his Stock Options. All such replacement Stock Options shall
have an exercise price of not less than 100% of the Fair Market Value of a Share
on the business day immediately preceding the day of grant of such replacement
Stock Options.
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SECTION 3.
PROVISIONS RELATING TO PLAN PARTICIPATION
a. PLAN CONDITIONS
i. INCENTIVE AGREEMENT. Each Grantee to whom an Incentive
Award is granted shall be required to enter into an Incentive Agreement
with the Company, in such a form as is provided by the Committee. The
Incentive Agreement shall contain specific terms as determined by the
Committee, in its discretion, with respect to the Grantee's particular
Incentive Award. Such terms need not be uniform among all Grantees or
any similarly-situated Grantees. The Incentive Agreement may include,
without limitation, vesting, forfeiture and other provisions particular
to the particular Grantee's Incentive Award, as well as, for example,
provisions to the effect that the Grantee (i) shall not disclose any
confidential information acquired during Employment with the Company,
(ii) shall abide by all the terms and conditions of the Plan and such
other terms and conditions as may be imposed by the Committee, (iii)
shall not interfere with the employment or other service of any
employee, (iv) shall not compete with the Company or become involved in
a conflict of interest with the interests of the Company, (v) shall
forfeit an Incentive Award if terminated for Cause, (vi) shall not be
permitted to make an election under Section 83(b) of the Code when
applicable, and (vii) shall be subject to any other agreement between
the Grantee and the Company regarding Shares that may be acquired under
an Incentive Award including, without limitation, an agreement
restricting the transferability of Shares by Grantee. An Incentive
Agreement shall include such terms and conditions as are determined by
the Committee, in its discretion, to be appropriate with respect to any
individual Grantee. The Incentive Agreement shall be signed by the
Grantee to whom the Incentive Award is made and by an Authorized
Officer.
ii. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any
instrument executed pursuant to the Plan shall create any Employment
rights (including without limitation, rights to continued Employment)
in any Grantee or affect the right of the Company to terminate the
Employment of any Grantee at any time without regard to the existence
of the Plan.
iii. SECURITIES REQUIREMENTS. The Company shall be under no
obligation to effect the registration pursuant to the Securities Act of
1933 of any Shares of Common Stock to be issued hereunder or to effect
similar compliance under any state laws. Notwithstanding anything
herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing Shares pursuant to
the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with
all applicable laws, regulations of governmental authorities, and the
requirements of any securities exchange on which Shares are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing Shares of Common Stock pursuant to the terms
hereof, that the recipient of such Shares make such covenants,
agreements and representations, and that such certificates bear such
legends, as the Committee, in its discretion, deems necessary or
desirable.
If the Shares issuable on exercise of an Incentive Award are
not registered under the Securities Act of 1933, the Company may
imprint on the certificate for such Shares the
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following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of
1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON RECEIPT BY
THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE
OR TRANSFER.
The Shares issuable on exercise of an Incentive Award shall
bear the restrictive legends required by the rules of any stock
exchange outside of the United States on which the Shares are traded
from time to time, including the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON
THE TORONTO STOCK EXCHANGE, HOWEVER, SAID SECURITIES CANNOT BE
TRADED THROUGH THE FACILITIES OF SUCH EXCHANGE SINCE THEY ARE
NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE
REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE.
b. TRANSFERABILITY
i. NON-TRANSFERABLE AWARDS AND OPTIONS. No Incentive Award
and no right under the Plan, contingent or otherwise, will be (i)
assignable, saleable, or otherwise transferable by a Grantee except by
will or by the laws of descent and distribution, or (ii) subject to any
encumbrance, pledge, lien, assignment or charge of any nature.
No transfer by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Committee has been
furnished with a copy of the deceased Grantee's enforceable will or
such other evidence as the Committee deems necessary to establish the
validity of the transfer. Any attempted transfer in violation of this
Section 3.2(a) shall be void and ineffective.
ii. ABILITY TO EXERCISE RIGHTS. Subject to a beneficiary
designation pursuant to Section 4.5, only the Grantee (or his legal
guardian in the event of Grantee's Disability), or in the event of his
death, his estate, may exercise Stock Options, receive cash payments
and deliveries of Shares, and otherwise assume the rights of the
Grantee.
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c. RIGHTS AS A STOCKHOLDER
i. NO STOCKHOLDER RIGHTS. A Grantee of an Incentive Award
(or a permitted transferee of such Grantee) shall have no rights as a
stockholder with respect to any Shares of Common Stock until the
issuance of a stock certificate for such Shares.
ii. REPRESENTATION OF OWNERSHIP. In the case of the
exercise of an Incentive Award by a person or estate acquiring the
right to exercise such Incentive Award by reason of the death or
Disability of a Grantee, the Committee may require reasonable evidence
as to the ownership of such Incentive Award or the authority of such
person and may require such consents and releases of taxing authorities
as the Committee may deem advisable.
d. LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Incentive Award.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Grantee may, by written notice to the Committee, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
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e. CHANGE IN STOCK AND ADJUSTMENTS
i. CHANGES IN LAW OR CIRCUMSTANCES. Subject to Section 3.7
(which only applies in the event of a Change in Control), in the event
of any change in applicable laws or any change in circumstances which
results in or would result in any dilution of the rights granted under
the Plan, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan, then, if the
Committee should determine, in its absolute discretion, that such
change equitably requires an adjustment in the number or kind of shares
of stock or other securities or property theretofore subject, or which
may become subject, to issuance or transfer under the Plan or in the
terms and conditions of outstanding Incentive Awards, such adjustment
shall be made in accordance with such determination. Such adjustments
may include changes with respect to (i) the aggregate number of Shares
that may be issued under the Plan, (ii) the number of Shares subject to
Incentive Awards, and (iii) the price per Share for outstanding
Incentive Awards. Any adjustment under this paragraph of an outstanding
Incentive Stock Option shall be made only to the extent not
constituting a "modification" within the meaning of Section 424(h)(3)
of the Code unless otherwise agreed to by the Grantee in writing. The
Committee shall give notice to each applicable Grantee of such
adjustment which shall be effective and binding.
ii. EXERCISE OF CORPORATE POWERS. The existence of the Plan
or outstanding Incentive Awards hereunder shall not affect in any way
the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalization, reorganization or
other changes in the Company's capital structure or its business or any
merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding
whether of a similar character or otherwise.
iii. RECAPITALIZATION OF THE COMPANY. Subject to Section
3.7, if while there are Incentive Awards outstanding, the Company shall
effect any subdivision or consolidation of Shares of Common Stock or
other capital readjustment, the payment of a stock dividend, stock
split, combination of Shares, recapitalization or other increase or
reduction in the number of Shares outstanding, without receiving
compensation therefor in money, services or property, then the number
of Shares available under the Plan and the number of Incentive Awards
which may thereafter be exercised shall (i) in the event of an increase
in the number of Shares outstanding, be proportionately increased and
the Fair Market Value of the Incentive Awards awarded shall be
proportionately reduced; and (ii) in the event of a reduction in the
number of Shares outstanding, be proportionately reduced, and the Fair
Market Value of the Incentive Awards awarded shall be proportionately
increased. The Committee shall take such action and whatever other
action it deems appropriate, in its discretion, so that the value of
each outstanding Incentive Award to the Grantee shall not be adversely
affected by a corporate event described in this subsection (c).
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iv. REORGANIZATION OF THE COMPANY. Subject to Section .4,
if the Company is reorganized, merged or consolidated, or is a party to
a plan of exchange with another corporation, pursuant to which
reorganization, merger, consolidation or exchange, stockholders of the
Company receive any Shares of Common Stock or other securities or
property, or if the Company should distribute securities of another
corporation to its stockholders, each Grantee shall be entitled to
receive, in lieu of the number of unexercised Incentive Awards
previously awarded, the number of Stock Options or Stock Appreciation
Rights with a corresponding adjustment to the Fair Market Value of said
Incentive Awards, to which he would have been entitled if, immediately
prior to such corporate action, such Grantee had been the holder of
record of a number of Shares equal to the number of the outstanding
Incentive Awards payable in Shares that were previously awarded to him.
In this regard, the Committee shall take whatever other action it deems
appropriate to preserve the rights of Grantees holding outstanding
Incentive Awards.
v. ISSUE OF COMMON STOCK BY THE COMPANY. Except as
hereinabove expressly provided in this Section 3.5 and subject to
Section 3.7, the issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, for cash
or property, or for labor or services, either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon any
conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of, or Fair
Market Value of, any Incentive Awards then outstanding under previously
granted Incentive Awards.
vi. ACQUISITION OF THE COMPANY. Subject to Section 3.7, in
the case of any sale of assets, merger, consolidation or combination of
the Company with or into another corporation other than a transaction
in which the Company is the continuing or surviving corporation and
which does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property, or any
combination thereof (an "Acquisition"), in the absolute discretion of
the Committee, any Grantee who holds an outstanding Incentive Award
shall have the right (subject to any limitation applicable to the
Incentive Award) thereafter and during the term of the Incentive Award,
to receive upon exercise thereof the Acquisition Consideration (as
defined below) receivable upon the Acquisition by a holder of the
number of Shares which would have been obtained upon exercise of the
Incentive Award immediately prior to the Acquisition. The term
"Acquisition Consideration" shall mean the kind and amount of shares of
the surviving or new corporation, cash, securities, evidence of
indebtedness, other property or any combination thereof receivable in
respect of one Share upon consummation of an Acquisition. The
Committee, in its discretion, shall have the authority to take whatever
action it deems appropriate to effectuate the provisions of this
subsection (f).
vii. ASSUMPTION OF OUTSTANDING INCENTIVE AWARDS UNDER THE
PLAN. Notwithstanding any other provision of the Plan, the Committee,
in its absolute discretion, may
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authorize the assumption and continuation under the Plan of outstanding
and unexercised stock options or other types of stock-based incentive
awards that were granted under a stock option plan (or other type of
stock incentive plan or agreement) that is or was maintained by a
corporation or other entity that was merged into, consolidated with, or
whose stock or assets were acquired by, the Company as the surviving
corporation. Any such action shall be upon such terms and conditions as
the Committee, in its discretion, may deem appropriate, including
provisions to preserve the holder's rights under the previously granted
and unexercised stock option or other stock-based incentive award, such
as, for example, retaining an existing exercise price under an
outstanding stock option. Any such assumption and continuation of any
such previously granted and unexercised incentive award shall be
treated as an outstanding Incentive Award under the Plan and shall thus
count against the number of Shares reserved for issuance pursuant to
Section 1.4. With respect to an incentive stock option (as described in
Section 422 of the Code) subject to this subsection (g), no adjustment
to such option shall be made to the extent constituting a
"modification" within the meaning of Section 424(h)(3) of the Code
unless otherwise agreed to by the optionee in writing.
viii. ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. In the
event of a dissolution or liquidation of the Company, a sale of all or
substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving
corporation, or a merger or consolidation involving the Company in
which the Company is the surviving corporation but the holders of
Shares of Common Stock receive securities of another corporation and/or
other property, including cash, the Committee shall, in its absolute
discretion, have the right and power to:
(i) cancel, effective immediately prior to the
occurrence of such corporate event, each outstanding Incentive
Award (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Grantee to whom
such Incentive Award was granted an amount in cash equal to
the excess of (A) the value, as determined by the Committee,
in its absolute discretion, of the property (including cash)
received by the holder of a Share of Common Stock as a result
of such event over (B) the exercise price of such Incentive
Award, if any; or
(ii) provide for the exchange of each Incentive
Award outstanding immediately prior to such corporate event
(whether or not then exercisable) for an incentive award on
some or all of the property for which such Incentive Award is
exchanged and, incident thereto, make an equitable adjustment
as determined by the Committee, in its absolute discretion, in
the exercise price of the incentive award, if any, or the
number of shares or amount of property (including cash)
subject to the incentive award or, if appropriate, provide for
a cash payment to the Grantee to whom such Incentive Award was
granted in consideration for the exchange of the Incentive
Award.
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The Committee, in its discretion, shall have the authority to take
whatever action it deems appropriate to effectuate the provisions of
this subsection (h).
f. TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
i. TERMINATION OF EMPLOYMENT. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, if the Grantee's
Employment is terminated for any reason other than due to his death,
Disability, Retirement or for Cause, any non-vested portion of any
Stock Option or other applicable Incentive Award at the time of such
termination shall automatically expire and terminate and no further
vesting shall occur. In such event, except as otherwise expressly
provided in his Incentive Agreement, the Grantee shall be entitled to
exercise his rights only with respect to the portion of the Incentive
Award that was vested as of the termination date for a period that
shall end on the earlier of (i) the expiration date set forth in the
Incentive Agreement with respect to the vested portion of such
Incentive Award or (ii) the date that occurs ninety (90) calendar days
after his termination date.
ii. TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise
expressly provided in the Grantee's Incentive Agreement, in the event
of the termination of a Grantee's Employment for Cause, all vested and
non-vested Stock Options and other Incentive Awards granted to such
Grantee shall immediately expire, and shall not be exercisable, as of
the commencement of business on the date of such termination.
iii. RETIREMENT. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon the Retirement of any Employee who
is a Grantee:
(1) any non-vested portion of any outstanding
Option or other Incentive Award shall immediately terminate
and no further vesting shall occur; and
(2) any vested Option or other Incentive Award
shall expire on the earlier of (A) the expiration date set
forth in the Incentive Agreement for such Incentive Award; or
(B) the expiration of (1) one year after the date of
Retirement in the case of any Incentive Award other than an
Incentive Stock Option, or (2) three months after the date of
Retirement in the case of an Incentive Stock Option.
iv. DISABILITY OR DEATH. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, upon termination of
Employment as a result of the Grantee's Disability or death:
(1) any nonvested portion of any outstanding Option
or other applicable Incentive Award shall immediately
terminate upon termination of Employment, as applicable, and
no further vesting shall occur; and
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(2) any vested Incentive Award shall expire upon
the earlier of either (A) the expiration date set forth in the
Incentive Agreement or (B) the first anniversary of the
Grantee's termination of Employment, as applicable, as a
result of his Disability or death.
In the case of any vested Incentive Stock Option held by an
Employee following termination of Employment, notwithstanding the
definition of "Disability" in Section 1.2, whether the Employee has
incurred a "Disability" for purposes of determining the length of the
Option exercise period following termination of Employment under this
paragraph (d) shall be determined by reference to Section 22(e)(3) of
the Code to the extent required by Section 422(c)(6) of the Code. The
Committee shall determine whether a Disability for purposes of this
subsection (d) has occurred.
v. CONTINUATION. Subject to the conditions and limitations
of the Plan and applicable law and regulation in the event that a
Grantee ceases to be an Employee, Outside Director or Consultant, as
applicable, for whatever reason, the Committee and Grantee may mutually
agree with respect to any outstanding Option or other Incentive Award
then held by the Grantee (i) for an acceleration or other adjustment in
any vesting schedule applicable to the Incentive Award, (ii) for a
continuation of the exercise period following termination for a longer
period than is otherwise provided under such Incentive Award, or (iii)
to any other change in the terms and conditions of the Incentive Award.
In the event of any such change to an outstanding Inventive Award, a
written amendment to the Grantee's Incentive Agreement shall be
required.
g. CHANGE IN CONTROL
Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below), all of the Stock Options and Stock
Appreciation Rights then outstanding shall become 100% vested and immediately
and fully exercisable as of the day immediately preceding the Change in Control
date unless expressly provided otherwise in the Grantee's Incentive Agreement.
Notwithstanding any other provision of this Plan, unless expressly
provided otherwise in the Grantee's Incentive Agreement, the provisions of this
Section 3.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Incentive Awards subject,
however, to the last paragraph of this Section 3.7.
For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company
shall mean:
(a) The acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
(a "PERSON") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30%) or more of
the total voting power of all the Company's then outstanding securities
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entitled to vote generally in the election of directors to the Board;
provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i)
any acquisition by the Company or its Parent or Subsidiaries, (ii) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or its Parent or Subsidiaries, or (iii)
any acquisition consummated with the prior approval of the Board.
(b) During the period of two consecutive calendar years,
individuals who at the beginning of such period constitute the Board,
and any new director(s) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least two-thirds of the directors then still in office, who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(c) The Company becomes a party to a merger, plan of
reorganization, consolidation or share exchange in which either (i) the
Company will not be the surviving corporation or (ii) the Company will
be the surviving corporation and any outstanding shares of the
Company's common stock will be converted into shares of any other
company (other than a reincorporation or the establishment of a holding
company involving no change of ownership of the Company) or other
securities, cash or other property (excluding payments made solely for
fractional shares); or
(d) The shareholders of the Company approve a merger, plan
of reorganization, consolidation or share exchange with any other
corporation, and immediately following such merger, plan of
reorganization, consolidation or share exchange the holders of the
voting securities of the Company outstanding immediately prior thereto
hold securities representing fifty percent (50%) or less of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger, plan of
reorganization, consolidation or share exchange; provided, however,
that notwithstanding the foregoing, no Change in Control shall be
deemed to have occurred if one-half (1/2) or more of the members of the
Board of the Company or such surviving entity immediately after such
merger, plan of reorganization, consolidation or share exchange is
comprised of persons who served as directors of the Company immediately
prior to such merger, plan of reorganization, consolidation or share
exchange or who are otherwise designees of the Company; or
(e) Upon approval by the Company's stockholders of a
complete liquidation and dissolution of the Company or the sale or
other disposition of all or substantially all of the assets of the
Company other than to a Parent or Subsidiary; or
(f) Any other event that a majority of the Board, in its
sole discretion, shall determine constitutes a Change in Control.
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Notwithstanding the occurrence of any of the foregoing events of this
Section 3.7 which would otherwise result in a Change in Control, the Board may
determine in its discretion, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change in Control
shall not be considered a Change in Control. Such determination shall be
effective only if it is made by the Board prior to the occurrence of an event
that otherwise would be or probably would lead to a Change in Control; or after
such event if made by the Board a majority of which is composed of directors who
were members of the Board immediately prior to the event that otherwise would be
or probably would lead to a Change in Control.
h. EXCHANGE OF INCENTIVE AWARDS
The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.
i. FINANCING
The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Incentive Award upon such terms as are approved by
the Committee in its discretion.
SECTION 4.
GENERAL
a. EFFECTIVE DATE AND GRANT PERIOD
This Plan is adopted by the Board effective as of February 11, 1998
(the "EFFECTIVE DATE"), and was approved by the stockholders of the Company on
August 21, 1998. Incentive Awards may be granted under the Plan at any time
prior to receipt of such stockholder approval; provided, however, if the
requisite stockholder approval is not obtained then any Incentive Awards granted
hereunder shall automatically become null and void and of no force or effect.
Unless sooner terminated by the Board, no Incentive Award shall be granted under
the Plan after ten (10) years from the Effective Date.
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b. FUNDING AND LIABILITY OF COMPANY
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the 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, Common Stock or rights thereto. The Plan
shall not 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. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive 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. Neither the Company,
the Board nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
c. WITHHOLDING TAXES
i. TAX WITHHOLDING. The Company shall have the power and
the right to deduct or withhold, or require a Grantee to remit to the
Company, an amount sufficient to satisfy federal, state, and local
taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of the
Plan or an Incentive Award hereunder.
ii. SHARE WITHHOLDING. With respect to tax withholding
required upon the exercise of Stock Options or SARs or upon any other
taxable event arising as a result of any Incentive Awards, Grantees may
elect, subject to the approval of the Committee in its discretion, to
satisfy the withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax
is to be determined equal to the minimum statutory total tax which
could be imposed on the transaction. All such elections shall be made
in writing, signed by the Grantee, and shall be subject to any
restrictions or limitations that the Committee, in its discretion,
deems appropriate.
iii. INCENTIVE STOCK OPTIONS. With respect to Shares
received by a Grantee pursuant to the exercise of an Incentive Stock
Option, if such Grantee disposes of any such Shares within (i) two
years from the date of grant of such Option or (ii) one year after the
transfer of such shares to the Grantee, the Company shall have the
right to withhold from any salary, wages or other compensation payable
by the Company to the Grantee an amount
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sufficient to satisfy federal, state and local tax withholding
requirements attributable to such disqualifying disposition.
iv. LOANS. The Committee may provide for loans, on either a
short term or demand basis, from the Company to a Grantee who is an
Employee or Consultant to permit the payment of taxes required by law.
d. NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
e. DESIGNATION OF BENEFICIARY BY PARTICIPANT
Each Grantee may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each such designation shall revoke all prior
designations by the same Grantee, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Grantee in writing with
the Committee during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.
f. DEFERRALS
The Committee may permit a Grantee to defer such Grantee's receipt of
the payment of cash or the delivery of Shares that would, otherwise be due to
such Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with respect
to Performance Units, Performance Shares or Other Stock-Based Awards. If any
such deferral election is permitted, the Committee shall, in its discretion,
establish rules and procedures for such payment deferrals to the extent
consistent with the Code.
g. AMENDMENT AND TERMINATION
The Board shall have complete power and authority to terminate or amend
the Plan at any time; provided, however, that the Board shall not, without the
approval of the stockholders of the Company within the time period required by
applicable law, (a) except as provided in Section 3.5, increase the maximum
number of Shares which may be issued under the Plan pursuant to Section 1.4, (b)
amend the requirements as to the class of Employees eligible to purchase Common
Stock under the Plan, (c) to the extent applicable, increase the maximum limits
on Incentive Awards to Covered Employees as set for compliance with the
Performance-Based Exception, (d) extend the term of the Plan, or (e) to the
extent applicable, decrease the authority granted to the Committee under the
Plan in contravention of Rule 16b-3 under the Exchange Act.
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No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.
This Plan and any amendments hereto are subject to all necessary
approvals of the applicable "Regulatory Authorities" and stockholders.
"Regulatory Authorities" means all stock exchanges and other organized trading
facilities on which the Shares are listed and all securities commissions or
similar securities regulatory bodies having jurisdiction over the Company. To
the extent that the Committee determines that (a) the listing or qualification
requirements of any Regulatory Authority, or (b) the Code (or regulations
promulgated thereunder), require stockholder approval in order to maintain
compliance with such listing or qualification requirements or to maintain any
favorable tax advantages or qualifications, then the Plan shall not be amended
in such respect without approval of such Regulatory Authority and/or the
Company's stockholders.
h. REQUIREMENTS OF LAW
The granting of Incentive Awards and the issuance of Shares under the
Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required. Certificates evidencing shares of Common Stock delivered under
this Plan (to the extent that such shares are so evidenced) may be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules and regulations of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or to which it is admitted for quotation, and
any applicable federal or state securities law, if applicable. The Committee may
cause a legend or legends to be placed upon such certificates (if any) to make
appropriate reference to such restrictions.
i. RULE 16b-3 SECURITIES LAW COMPLIANCE
With respect to Insiders to the extent applicable, transactions under
the Plan are intended to comply with all applicable conditions of Rule 16b-3
under the Exchange Act. Any ambiguities or inconsistencies in the construction
of an Incentive Award or the Plan shall be interpreted to give effect to such
intention. However, to the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee in its discretion.
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j. COMPLIANCE WITH CODE SECTION 162(m)
If the Company is a Publicly Held Corporation, then unless otherwise
determined by the Committee with respect to any particular Incentive Award, it
is intended that the Plan comply fully with and meet all the requirements of
Section 162(m) of the Code so that any applicable types of Incentive Awards that
are granted to Covered Employees shall qualify for the Performance-Based
Exception. If any provision of the Plan or an Incentive Agreement would
disqualify the Plan or would not otherwise permit the Plan or Incentive Award to
comply with the Performance-Based Exception as so intended, such provision shall
be construed or deemed amended to conform to the requirements of the
Performance-Based Exception to the extent permitted by applicable law and deemed
advisable by the Committee; provided that no such construction or amendment
shall have an adverse effect on the prior grant of an Incentive Award or the
economic value to a Grantee of any outstanding Incentive Award.
k. SUCCESSORS
All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
l. MISCELLANEOUS PROVISIONS
i. No Employee, Consultant, Outside Director, or other
person shall have any claim or right to be granted an Incentive Award
under the Plan. Neither the Plan, nor any action taken hereunder, shall
be construed as giving any Employee, Consultant, or Outside Director
any right to be retained in the Employment or other service of the
Company or any Parent or Subsidiary.
ii. No Shares of Common Stock shall be issued hereunder
unless counsel for the Company is then reasonably satisfied that such
issuance will be in compliance with federal and state securities laws,
if applicable.
iii. The expenses of the Plan shall be borne by the Company.
iv. By accepting any Incentive Award, each Grantee and each
person claiming by or through him shall be deemed to have indicated his
acceptance of the Plan.
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m. SEVERABILITY
In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.
n. GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the interpretation or
construction of the Plan.
o. GOVERNING LAW
The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Delaware without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.
IN WITNESS WHEREOF, PetroQuest Energy, Inc. has caused this Plan to be
duly executed in its name and on its behalf by its duly authorized officer.
ATTEST: PETROQUEST ENERGY, INC.
By:/s/ Robert R. Brooksher By: /s/ Charles T. Goodson
--------------------------------- ---------------------------------------
Name: Robert R. Brooksher Name: Charles T. Goodson
------------------------------- -------------------------------------
Title: Chief Financial Officer Title: President & Chief Executive Officer
------------------------------ ------------------------------------
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