EXHIBIT 10.2
LIBERTE INVESTORS INC.
2002 LONG TERM INCENTIVE PLAN
The Liberte Investors Inc. 2002 Long Term Incentive Plan (the "Plan")
was adopted by the Board of Directors of Liberte Investors Inc., a Delaware
corporation (the "Company"). This Plan shall become effective upon approval by
the holders of a majority of the votes cast at a meeting of stockholders at
which a quorum is present or by written consent in accordance with applicable
law. Subject to such approval, Stock Options may be granted hereunder on and
after the adoption of this Plan by the Board.
ARTICLE 1
PURPOSE
The purpose of the Plan is to foster and promote the long-term
financial success of the Company and its Subsidiaries and materially increase
the value of the Company and its Subsidiaries by (a) encouraging the long-term
commitment of the Employees, Consultants, and Outside Directors of the Company
and its Subsidiaries, (b) motivating performance of the Employees, Consultants,
and Outside Directors of the Company and its Subsidiaries by means of long-term
performance related incentives, (c) encouraging and providing Employees,
Consultants, and Outside Directors of the Company and its Subsidiaries with an
opportunity to obtain an ownership interest in the Company, (d) attracting and
retaining outstanding Employees, Consultants, and Outside Directors by providing
incentive compensation opportunities, and (e) enabling participation by
Employees, Consultants, and Outside Directors in the long-term growth and
financial success of the Company and its Subsidiaries.
ARTICLE 2
DEFINITIONS
For the purpose of the Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
2.1 "Award" means the grant of any Incentive Stock Option, Nonqualified
Stock Option, Restricted Stock, or SAR, whether granted singly or in combination
or in tandem (each individually referred to herein as an "Incentive").
2.2 "Award Agreement" means a written agreement between a Participant
and the Company which sets out the terms of the grant of an Award.
2.3 "Award Period" means the period set forth in the Award Agreement
with respect to a Stock Option during which the Stock Option may be exercised,
which shall commence on the Date of Grant and expire at the time set forth in
the Award Agreement.
2.4 "Board" means the board of directors of the Company.
2.5 "Change in Control" shall mean any of the following: (i) any
consolidation, merger or share exchange of the Company in which the holders of a
majority of the Company's outstanding voting power prior to such transaction do
not own at least a majority of the outstanding voting power of the Company or
any successor thereto following such transaction; (ii) any sale, lease, exchange
or other transfer (excluding transfer by way of pledge or hypothecation) in one
transaction or a series of related transactions, of all or substantially all of
the assets of the Company; (iii) the stockholders of the Company approve any
plan or proposal for the
liquidation or dissolution of the Company; (iv) the cessation of control (by
virtue of their not constituting a majority of directors) of the Board by the
individuals (the "Continuing Directors") who (x) at the date of this Plan were
directors or (y) become directors after the date of this Plan and whose election
or nomination for election by the Company's stockholders was approved by a vote
of at least two-thirds of the directors then in office who were directors at the
date of this Plan or whose election or nomination for election was previously so
approved; (v) the acquisition of beneficial ownership (within the meaning of
Rule 13d-3 under the 1934 Act) of an aggregate of 50% or more of the voting
power of the Company's outstanding voting securities by any person or group (as
such term is used in Rule 13d-5 under the 1934 Act) who beneficially owned less
than 50% of the voting power of the Company's outstanding voting securities on
the date of this Plan; provided, however, that notwithstanding the foregoing, an
acquisition shall not constitute a Change in Control hereunder if the acquiror
is (x) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company and acting in such capacity, or (y) a Subsidiary of the
Company or a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of voting
securities of the Company; or (vi) in a Title 11 bankruptcy proceeding, the
appointment of a trustee or the conversion of a case involving the Company to a
case under Chapter 7.
2.6 "Code" means the Internal Revenue Code of 1986, as amended.
2.7 "Committee" means the committee appointed or designated by the
Board to administer the Plan in accordance with Article 3 of this Plan.
2.8 "Common Stock" means the common stock, par value $0.01 per share,
which the Company is currently authorized to issue or may in the future be
authorized to issue, or any securities into which or for which the common stock
of the Company may be converted or exchanged, as the case may be, pursuant to
the terms of this Plan.
2.9 "Company" means Liberte Investors Inc., a Delaware corporation, and
any successor entity.
2.10 "Consultant" means any person performing advisory or consulting
services for the Company or a Subsidiary, with or without compensation, to whom
the Company chooses to grant an Award in accordance with the Plan, provided that
bona fide services must be rendered by such person and such services shall not
be rendered in connection with the offer or sale of securities in a capital
raising transaction.
2.11 "Corporation" means any entity that (i) is defined as a
corporation under Code Section 7701 and (ii) is the Company or is in an unbroken
chain of corporations (other than the Company) beginning with the Company, if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing a majority of the total combined voting power of all
classes of stock in one of the other corporations in the chain. For purposes of
clause (ii) hereof, an entity shall be treated as a "corporation" if it
satisfies the definition of a corporation under Section 7701 of the Code.
2.12 "Date of Grant" means the effective date on which an Award is made
to a Participant as set forth in the applicable Award Agreement.
2.13 "Employee" means common law employee (as defined in accordance
with the Regulations and Revenue Rulings then applicable under Section 3401(c)
of the Code) of the Company or any Subsidiary of the Company.
2.14 "Fair Market Value" means, as of a particular date, (a) if the
shares of Common Stock are listed on a national securities exchange, the closing
sales price per share of Common Stock on the consolidated transaction reporting
system for the principal securities exchange for the Common Stock on that date,
or, if
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there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (b) if the shares of Common
Stock are not so listed but are quoted on the Nasdaq National Market System, the
closing sales price per share of Common Stock on the Nasdaq National Market
System on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported, (c)
if the Common Stock is not so listed or quoted, the mean between the closing bid
and asked price on that date, or, if there are no quotations available for such
date, on the last preceding date on which such quotations shall be available, as
reported by Nasdaq, or, if not reported by Nasdaq, by the National Quotation
Bureau, Inc., or (d) if none of the above is applicable, such amount as may be
determined by the Committee (acting on the advice of an Independent Third Party,
should the Committee elect in its sole discretion to utilize an Independent
Third Party for this purpose), in good faith, to be the fair market value per
share of Common Stock.
"Independent Third Party" means an individual or entity independent of
the Company having experience in providing investment banking or similar
appraisal or valuation services and with expertise generally in the valuation of
securities or other property for purposes of this Plan. The Board Committee may
utilize one or more Independent Third Parties.
2.15 "Incentive Stock Option" means an incentive stock option within
the meaning of Section 422 of the Code, granted pursuant to this Plan.
2.16 "Nonpublicly Traded" means not listed on a national securities
exchange registered with the Securities and Exchange Commission or designated
for trading on the Nasdaq National Market.
2.17 "Nonqualified Stock Option" means a nonqualified stock option,
granted pursuant to this Plan, to which Section 421 of the Code does not apply.
2.18 "Option Price" means the price that must be paid by a Participant
upon exercise of a Stock Option to purchase a share of Common Stock.
2.19 "Outside Director" means a director of the Company who is not an
Employee.
2.20 "Participant" means an Employee, Consultant, or Outside Director
of the Company or a Subsidiary to whom an Award is granted under this Plan.
2.21 "Plan" means this Liberte Investors Inc. 2002 Long Term Incentive
Plan, as amended from time to time.
2.22 "Reporting Participant" means a Participant who is subject to the
reporting requirements of Section 16 of the 1934 Act.
2.23 "Restricted Stock" means shares of Common Stock issued or
transferred to a Participant pursuant to Section 6.5 of this Plan which are
subject to restrictions or limitations set forth in this Plan and in the related
Award Agreement.
2.24 "Retirement" means any Termination of Service solely due to
retirement upon or after attainment of age sixty-five (65), or permitted early
retirement as determined by the Committee.
2.25 "SAR" or "stock appreciation right" means the right to receive a
payment, in cash and/or Common Stock, equal to the excess of the Fair Market
Value of a specified number of shares of Common Stock on the date the SAR is
exercised over the SAR Price for such shares.
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2.26 "SAR Price" means the exercise price of each share of Common Stock
covered by a SAR, determined on the Date of Grant of the SAR.
2.27 "Stock Option" means a Nonqualified Stock Option or an Incentive
Stock Option.
2.28 "Subsidiary" means (i) any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of
the total combined voting power of all classes of stock in one of the other
corporations in the chain, (ii) any limited partnership, if the Company or any
corporation described in item (i) above owns a majority of the general
partnership interest and a majority of the limited partnership interests
entitled to vote on the removal and replacement of the general partner, and
(iii) any partnership or limited liability company, if the partners or members
thereof are composed only of the Company, any corporation listed in item (i)
above or any limited partnership listed in item (ii) above. "Subsidiaries" means
more than one of any such corporations, limited partnerships, partnerships or
limited liability companies.
2.29 "Termination of Service" occurs when a Participant who is an
Employee or a Consultant of the Company or any Subsidiary shall cease to serve
as an Employee or Consultant of the Company and its Subsidiaries, for any
reason; or, when a Participant who is an Outside Director of the Company or a
Subsidiary shall cease to serve as a director of the Company and its
Subsidiaries for any reason. Except as may be necessary or desirable to comply
with applicable federal or state law, a "Termination of Service" shall not be
deemed to have occurred when a Participant who is an Employee becomes a
Consultant or an Outside Director or vice versa. If, however, a Participant who
is an Employee and who has an Incentive Stock Option ceases to be an Employee
but does not suffer a Termination of Service, and if that Participant does not
exercise the Incentive Stock Option within the time required under Code section
422 upon ceasing to be an Employee, the Incentive Stock Option shall thereafter
become a Nonqualified Stock Option.
2.30 "Total and Permanent Disability" means a Participant is qualified
for long-term disability benefits under the Company's or Subsidiary's disability
plan or insurance policy; or, if no such plan or policy is then in existence or
if the Participant is not eligible to participate in such plan or policy, that
the Participant is incapacitated and absent from his or her duties with the
Company or any Subsidiary on a full time basis for a period of six (6)
continuous months or for at least one hundred eighty (180) days during any
twelve (12) -month period as a result of mental or physical illness or physical
injury, as determined in good faith by the Committee; provided that, with
respect to any Incentive Stock Option, Total and Permanent Disability shall have
the meaning given it under the rules governing Incentive Stock Options under the
Code.
ARTICLE 3
ADMINISTRATION
3.1 GENERAL ADMINISTRATION; ESTABLISHMENT OF COMMITTEE. Subject to the
terms of this Article 3, the Plan shall be administered by the Board or such
committee of the Board as is designated by the Board to administer the Plan (the
"Committee"). The Committee shall consist of not fewer than two persons. Any
member of the Committee may be removed at any time, with or without cause, by
resolution of the Board. Any vacancy occurring in the membership of the
Committee may be filled by appointment by the Board. At any time there is no
Committee to administer the Plan, any references in this Plan to the Committee
shall be deemed to refer to the Board.
Membership on the Committee shall be limited to those members of the
Board who are "outside directors" under Section 162(m) of the Code and
"non-employee directors" as defined in Rule 16b-3
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promulgated under the 1934 Act. The Committee shall select one of its members to
act as its Chairman. A majority of the Committee shall constitute a quorum, and
the act of a majority of the members of the Committee present at a meeting at
which a quorum is present shall be the act of the Committee.
3.2 DESIGNATION OF PARTICIPANTS AND AWARDS.
(a) The Committee or the Board shall determine and designate from time
to time the eligible persons to whom Awards will be granted and shall set forth
in each related Award Agreement, where applicable, the Award Period, the Date of
Grant, and such other terms, provisions, limitations, and performance
requirements, as are approved by the Committee, but not inconsistent with the
Plan. The Committee shall determine whether an Award shall include one type of
Incentive or two or more Incentives granted in combination or two or more
Incentives granted in tandem (that is, a joint grant where exercise of one
Incentive results in cancellation of all or a portion of the other Incentive).
Although the members of the Committee shall be eligible to receive Awards, no
member of the Committee shall participate in any decisions regarding any Award
granted hereunder to such member. All decisions with respect to any Award, and
the terms and conditions thereof, to be granted under the Plan to any member of
the Committee shall be made solely and exclusively by the other members of the
Committee, or if such member is the only member of the Committee, by the Board.
In addition, the Chief Executive Officer of the Company may recommend
to the Board or the Committee (i) that Awards be granted to one or more
Employees, Officers, Consultants, or Outside Directors, (ii) the number of
shares of Common Stock to be subject to such Awards, and (iii) the price to be
paid for such Awards and such other terms that the Chief Executive Officer deems
appropriate with respect to such Awards; in such case, the Chief Executive
Officer's recommendations shall not be binding on the Board and the Board may,
in its sole discretion, accept or deny the Chief Executive Officer's
recommendations.
(b) Notwithstanding Subsection 3.2(a), the Board may, in its discretion
and by a resolution adopted by the Board, authorize one or more officers of the
Company (an "Authorized Officer") to (i) designate one or more Employees as
eligible persons to whom Awards will be granted under the Plan and (ii)
determine the number of shares of Common Stock that will be subject to such
Awards; provided, however, that the resolution of the Board granting such
authority shall (x) specify the total number of shares of Common Stock that may
be made subject to the Awards, (y) set forth the price or prices (or a formula
by which such price or prices may be determined) to be paid for the purchase of
the Common Stock subject to such Awards, and (z) not authorize an officer to
designate himself as a recipient of any Award. The Authorized Officer shall
notify the Committee in writing of the persons designated to receive such
Awards, the type of Award or the type of Incentives subject to the Award, the
Date of Grant, the number of shares of Common Stock that will be subject to such
Awards, and the purchase price to be paid for such shares. If authorized to do
so in the Board's written resolution, the Authorized Officer shall cause the
Company to execute an Award Agreement with the Participant, subject to the
Committee's ratification of such terms of an Award as required by law.
Within an administratively reasonable time after receipt of the
Authorized Officer's written notice of one or more Awards, the Committee shall
authorize or ratify the grant of such Awards and shall prescribe all other terms
of such Awards pursuant to its authority set forth in Subsection 3(a).
3.3 AUTHORITY OF THE COMMITTEE. The Committee, in its discretion, shall
(i) interpret the Plan, (ii) prescribe, amend, and rescind any rules and
regulations necessary or appropriate for the administration of the Plan, (iii)
establish performance goals for an Award and certify the extent of their
achievement, and (iv) make such other determinations or certifications and take
such other action as it deems necessary or advisable in the administration of
the Plan. Any interpretation, determination, or other action made or taken by
the Committee shall be final, binding, and conclusive on all interested parties.
The Committee's discretion set
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forth herein shall not be limited by any provision of the Plan, including any
provision which by its terms is applicable notwithstanding any other provision
of the Plan to the contrary.
The Committee may delegate to officers of the Company, pursuant to a
written delegation, the authority to perform specified functions under the Plan.
Any actions taken by any officers of the Company pursuant to such written
delegation of authority shall be deemed to have been taken by the Committee.
With respect to restrictions in the Plan that are based on the
requirements of Rule 16b-3 promulgated under the 1934 Act, Section 422 of the
Code, Section 162(m) of the Code, the rules of any exchange or inter-dealer
quotation system upon which the Company's securities are listed or quoted, or
any other applicable law, rule or restriction (collectively, "applicable law"),
to the extent that any such restrictions are no longer required by applicable
law, the Committee shall have the sole discretion and authority to grant Awards
that are not subject to such mandated restrictions and/or to waive any such
mandated restrictions with respect to outstanding Awards.
ARTICLE 4
ELIGIBILITY
Any Employee (including an Employee who is also a director or an
officer), Outside Director, or Consultant of the Company whose judgment,
initiative, and efforts contributed or may be expected to contribute to the
successful performance of the Company is eligible to participate in the Plan;
provided that only Employees of a Corporation shall be eligible to receive
Incentive Stock Options. The Committee, upon its own action, may grant, but
shall not be required to grant, an Award to any Employee, Outside Director, or
Consultant of the Company or any Subsidiary. Awards may be granted by the
Committee at any time and from time to time to new Participants, or to then
Participants, or to a greater or lesser number of Participants, and may include
or exclude previous Participants, as the Committee shall determine. Except as
required by this Plan, Awards granted at different times need not contain
similar provisions. The Committee's determinations under the Plan (including
without limitation determinations of which Employees, Outside Directors, or
Consultants, if any, are to receive Awards, the form, amount and timing of such
Awards, the terms and provisions of such Awards and the agreements evidencing
same) need not be uniform and may be made by it selectively among Participants
who receive, or are eligible to receive, Awards under the Plan.
ARTICLE 5
SHARES SUBJECT TO PLAN
5.1 NUMBER AVAILABLE FOR AWARDS. Subject to adjustment as provided in
Articles 11 and 12, the maximum number of shares of Common Stock that may be
delivered pursuant to Awards granted under the Plan is 6,000,000 shares. Shares
to be issued may be made available from authorized but unissued Common Stock,
Common Stock held by the Company in its treasury, or Common Stock purchased by
the Company on the open market or otherwise. During the term of this Plan, the
Company will at all times reserve and keep available the number of shares of
Common Stock that shall be sufficient to satisfy the requirements of this Plan.
5.2 REUSE OF SHARES. Subject to Section 5.2(c), if, and to the extent:
(a) A Stock Option shall expire or terminate for any reason
without having been exercised in full, or in the event that a Stock
Option is exercised or settled in a manner such that some or all of the
shares of Common Stock relating to the Stock Option are not issued to
the Participant (or
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beneficiary) (including as the result of the use of shares for
withholding taxes), the shares of Common Stock subject thereto which
have not become outstanding shall (unless the Plan shall have sooner
terminated) become available for issuance under the Plan; in addition,
with respect to any share-for-share exercise or cashless exercise
pursuant to Section 8.3 or otherwise, only the "net" shares issued
shall be deemed to have become outstanding for purposes of the Plan as
a result thereof.
(b) If shares of Restricted Stock under the Plan are forfeited
for any reason, such shares of Restricted Stock shall (unless the Plan
shall have sooner terminated) become available for issuance under the
Plan; provided, however, that if any dividends paid with respect to
shares of Restricted Stock were paid to the Participant prior to the
forfeiture thereof, such shares shall not be reused for grants or
awards.
(c) In no event shall the number of shares of Common Stock
subject to Incentive Stock Options exceed, in the aggregate, 6,000,000
shares of Common Stock plus shares subject to Incentive Stock Options
which are forfeited or terminated, or expire unexercised.
ARTICLE 6
GRANT OF AWARDS
6.1 IN GENERAL. The Company shall execute an Award Agreement with a
Participant after the Committee approves the issuance of an Award. Any Award
granted pursuant to this Plan must be granted within ten (10) years after the
date of adoption of this Plan. The Plan shall be submitted to the Company's
stockholders for approval; however, the Committee may grant Awards under the
Plan prior to the time of stockholder approval. Any Incentive Stock Option,
other Stock Option which the Committee determines may be subject to Code Section
162(m), or Stock Option which requires approval of this Plan by stockholders
under any applicable stock exchange rules which is granted prior to such
stockholder approval shall be made subject to such stockholder approval. The
grant of an Award to a Participant shall not be deemed either to entitle the
Participant to, or to disqualify the Participant from, receipt of any other
Award under the Plan.
6.2 STOCK OPTIONS. The grant of an Award of Stock Options shall be
authorized by the Committee and shall be evidenced by an Award Agreement setting
forth: (i) the Incentive or Incentives being granted, (ii) the total number of
shares of Common Stock subject to the Incentive(s), (iii) the Option Price, (iv)
the Award Period, (v) the Date of Grant, and (vi) such other terms, provisions,
limitations, and performance objectives, as are approved by the Committee, but
not inconsistent with the Plan.
6.3 OPTION PRICE. The Option Price for any share of Common Stock which
may be purchased under a Nonqualified Stock Option for any share of Common Stock
may be less than, equal to, or greater than the Fair Market Value of the share
on the Date of Grant. The Option Price for any share of Common Stock which may
be purchased under an Incentive Stock Option must be at least equal to the Fair
Market Value of the share on the Date of Grant; if an Incentive Stock Option is
granted to an Employee who owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than ten percent (10%) of
the combined voting power of all classes of stock of the Company (or any parent
or Subsidiary), the Option Price shall be at least 110% of the Fair Market Value
of the Common Stock on the Date of Grant.
6.4 MAXIMUM ISO GRANTS. The Committee may not grant Incentive Stock
Options under the Plan to any Employee which would permit the aggregate Fair
Market Value (determined on the Date of Grant) of the Common Stock with respect
to which Incentive Stock Options (under this and any other plan of the Company
and its Subsidiaries) are exercisable for the first time by such Employee during
any calendar year to exceed $100,000. To the extent any Stock Option granted
under this Plan which is designated as an
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Incentive Stock Option exceeds this limit or otherwise fails to qualify as an
Incentive Stock Option, such Stock Option (or any such portion thereof) shall be
a Nonqualified Stock Option. In such case, the Committee shall designate which
stock will be treated as Incentive Stock Option stock by causing the issuance of
a separate stock certificate and identifying such stock as Incentive Stock
Option stock on the Company's stock transfer records.
6.5 RESTRICTED STOCK. If Restricted Stock is granted to or received by
a Participant under an Award (including a Stock Option), the Committee shall set
forth in the related Award Agreement: (i) the number of shares of Common Stock
awarded, (ii) the price, if any, to be paid by the Participant for such
Restricted Stock and the method of payment of the price, (iii) the time or times
within which such Award may be subject to forfeiture, (iv) specified performance
goals of the Company, a Subsidiary, any division thereof or any group of
Employees of the Company, or other criteria, which the Committee determines must
be met in order to remove any restrictions (including vesting) on such Award,
and (v) all other terms, limitations, restrictions, and conditions of the
Restricted Stock, which shall be consistent with this Plan. The provisions of
Restricted Stock need not be the same with respect to each Participant. If the
Committee establishes a purchase price for an Award of Restricted Stock, the
Participant must accept such Award within a period of thirty (30) days (or such
shorter period as the Committee may specify) after the Date of Grant by
executing the applicable Award Agreement and paying such purchase price.
(a) LEGEND ON SHARES. Each Participant who is awarded or
receives Restricted Stock shall be issued a stock certificate or
certificates in respect of such shares of Common Stock. Such
certificate(s) shall be registered in the name of the Participant, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Restricted Stock, substantially as
provided in Section 15.11 of the Plan.
(b) RESTRICTIONS AND CONDITIONS. Shares of Restricted Stock
shall be subject to the following restrictions and conditions:
(i) Subject to the other provisions of this Plan and
the terms of the particular Award Agreements, during such
period as may be determined by the Committee commencing on the
Date of Grant or the date of exercise of an Award (the
"Restriction Period"), the Participant shall not be permitted
to sell, transfer, pledge or assign shares of Restricted
Stock. Except for these limitations, the Committee may in its
sole discretion, remove any or all of the restrictions on such
Restricted Stock whenever it may determine that, by reason of
changes in applicable laws or other changes in circumstances
arising after the date of the Award, such action is
appropriate.
(ii) Except as provided in sub-paragraph (i) above or
in the applicable Award Agreement, the Participant shall have,
with respect to his or her Restricted Stock, all of the rights
of a stockholder of the Company, including the right to vote
the shares, and the right to receive any dividends thereon.
Certificates for shares of Common Stock free of restriction
under this Plan shall be delivered to the Participant promptly
after, and only after, the Restriction Period shall expire
without forfeiture in respect of such shares of Common Stock
or after any other restrictions imposed in such shares of
Common Stock by the applicable Award Agreement or other
agreement have expired. Certificates for the shares of Common
Stock forfeited under the provisions of the Plan and the
applicable Award Agreement shall be promptly returned to the
Company by the forfeiting Participant. Each Award Agreement
for shares of Common Stock subject to restrictions shall
require that: (x) each Participant, by his or her acceptance
of Restricted Stock, shall irrevocably grant to the Company a
power of attorney to transfer any shares so forfeited to the
Company and agrees to execute any
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documents requested by the Company in connection with such
forfeiture and transfer, and (y) such provisions regarding
returns and transfers of stock certificates with respect to
forfeited shares of Common Stock shall be specifically
performable by the Company in a court of equity or law.
(iii) The Restriction Period of Restricted Stock
shall commence on the Date of Grant or the date of exercise of
an Award, as specified in the Award Agreement, and, subject to
Article 12 of the Plan, unless otherwise established by the
Committee in the Award Agreement setting forth the terms of
the Restricted Stock, shall expire upon satisfaction of the
conditions set forth in the Award Agreement; such conditions
may provide for vesting based on (i) length of continuous
service, (ii) achievement of specific business objectives,
(iii) increases in specified indices, (iv) attainment of
specified growth rates, or (v) other comparable measurements
of Company performance, as may be determined by the Committee
in its sole discretion.
(iv) Except as otherwise provided in the particular
Award Agreement, upon Termination of Service for any reason
during the Restriction Period, the nonvested shares of
Restricted Stock shall be forfeited by the Participant. In the
event a Participant has paid any consideration to the Company
for such forfeited Restricted Stock, the Committee shall
specify in the Award Agreement that either (i) the Company
shall be obligated to, or (ii) the Company may, in its sole
discretion, elect to, pay to the Participant, as soon as
practicable after the event causing forfeiture, in cash, an
amount equal to the lesser of the total consideration paid by
the Participant for such forfeited shares or the Fair Market
Value of such forfeited shares as of the date of Termination
of Service, as the Committee, in its sole discretion shall
select. Upon any forfeiture, all rights of a Participant with
respect to the forfeited shares of the Restricted Stock shall
cease and terminate, without any further obligation on the
part of the Company.
6.6 MAXIMUM INDIVIDUAL GRANTS. No Participant may receive during any
fiscal year of the Company Awards covering an aggregate of more than 3,000,000
shares of Common Stock.
6.7 SAR. An SAR shall entitle the Participant at his election to
surrender to the Company the SAR, or portion thereof, as the Participant shall
choose, and to receive from the Company in exchange therefor cash in an amount
equal to the excess (if any) of the Fair Market Value (as of the date of the
exercise of the SAR) per share over the SAR Price per share specified in such
SAR, multiplied by the total number of shares of the SAR being surrendered. In
the discretion of the Committee, the Company may satisfy its obligation upon
exercise of a SAR by the distribution of that number of shares of Common Stock
having an aggregate Fair Market Value (as of the date of the exercise of the
SAR) equal to the amount of cash otherwise payable to the Participant, with a
cash settlement to be made for any fractional share interests, or the Company
may settle such obligation in part with shares of Common Stock and in part with
cash.
6.8 TANDEM AWARDS. The Committee may grant two or more Incentives in
one Award in the form of a "tandem Award," so that the right of the Participant
to exercise one Incentive shall be canceled if, and to the extent, the other
Incentive is exercised. For example, if a Stock Option and an SAR are issued in
a tandem Award, and the Participant exercises the SAR with respect to 100 shares
of Common Stock, the right of the Participant to exercise the related Stock
Option shall be canceled to the extent of 100 shares of Common Stock.
6.9 SAR PRICE. The SAR Price for any share of Common Stock subject to a
SAR may be less than, equal to, or greater than the Fair Market Value of the
share on the Date of Grant.
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ARTICLE 7
AWARD PERIOD; VESTING
7.1 AWARD PERIOD.
(a) Subject to the other provisions of this Plan, the
Committee shall specify in the Award Agreement the Award Period for a
Stock Option. No Stock Option granted under the Plan may be exercised
at any time after the end of its Award Period. The Award Period for any
Stock Option shall be no more than ten (10) years from the Date of
Grant of the Stock Option. However, if an Employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code)
more than ten percent (10%) of the combined voting power of all classes
of stock of the Company (or any parent or Subsidiary) and an Incentive
Stock Option is granted to such Employee, the Award Period of such
Incentive Stock Option (to the extent required by the Code at the time
of grant) shall be no more than five (5) years from the Date of Grant.
(b) In the event of a Termination of Service of a Participant,
the Award Period for a Stock Option shall be reduced or terminated in
accordance with the Award Agreement.
7.2 VESTING. The Committee, in its sole discretion, may determine that
an Incentive will be immediately vested in whole or in part, or that all or any
portion may not be vested until a date, or dates, subsequent to its Date of
Grant, or until the occurrence of one or more specified events, subject in any
case to the terms of the Plan. If the Committee imposes conditions upon vesting,
then, subsequent to the Date of Grant, the Committee may, in its sole
discretion, accelerate the date on which all or any portion of the Incentive may
be vested.
ARTICLE 8
EXERCISE OF INCENTIVE
8.1 IN GENERAL. The Committee, in its sole discretion, may determine
that a Stock Option will be immediately exercisable, in whole or in part, or
that all or any portion may not be exercised until a date, or dates, subsequent
to its Date of Grant, or until the occurrence of one or more specified events,
subject in any case to the terms of the Plan. If a Stock Option is exercisable
prior to the time it is vested, the Common Stock obtained on the exercise of the
Stock Option shall be Restricted Stock which is subject to the applicable
provisions of the Plan and the Award Agreement. If the Committee imposes
conditions upon exercise, then subsequent to the Date of Grant, the Committee
may, in its sole discretion, accelerate the date on which all or any portion of
the Stock Option may be exercised. No Stock Option may be exercised for a
fractional share of Common Stock. The granting of a Stock Option shall impose no
obligation upon the Participant to exercise that Stock Option.
8.2 SECURITIES LAW AND EXCHANGE RESTRICTIONS. In no event may an
Incentive be exercised or shares of Common Stock be issued pursuant to an Award
if a necessary listing or quotation of the shares of Common Stock on a stock
exchange or inter-dealer quotation system or any registration under state or
federal securities laws required under the circumstances has not been
accomplished.
8.3 EXERCISE OF STOCK OPTION.
(a) NOTICE AND PAYMENT. Subject to such administrative
regulations as the Committee may from time to time adopt, a Stock
Option may be exercised by the delivery of written notice to the
Committee setting forth the number of shares of Common Stock with
respect to which the Stock
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Option is to be exercised and the date of exercise thereof (the
"Exercise Date") which shall be at least three (3) days after giving
such notice unless an earlier time shall have been mutually agreed
upon. On the Exercise Date, the Participant shall deliver to the
Company consideration with a value equal to the total Option Price of
the shares to be purchased, payable as provided in the Award Agreement,
which may provide for payment in any one or more of the following ways:
(a) cash or check, bank draft, or money order payable to the order of
the Company, (b) Common Stock (including Restricted Stock) owned by the
Participant on the Exercise Date, valued at its Fair Market Value on
the Exercise Date, and which the Participant has not acquired from the
Company within six (6) months prior to the Exercise Date, (c) if the
Common Stock is no longer Nonpublicly Traded, by delivery (including by
FAX) to the Company or its designated agent of an executed irrevocable
option exercise form together with irrevocable instructions from the
Participant to a broker or dealer, reasonably acceptable to the
Company, to sell certain of the shares of Common Stock purchased upon
exercise of the Stock Option or to pledge such shares as collateral for
a loan and promptly deliver to the Company the amount of sale or loan
proceeds necessary to pay such purchase price, and/or (d) in any other
form of valid consideration that is acceptable to the Committee in its
sole discretion. In the event that shares of Restricted Stock are
tendered as consideration for the exercise of a Stock Option, a number
of shares of Common Stock issued upon the exercise of the Stock Option
with an Option Price equal to the value of Restricted Stock used as
consideration therefor shall be subject to the same restrictions and
provisions as the Restricted Stock so tendered.
(b) ISSUANCE OF CERTIFICATE. Except as otherwise provided in
Section 6.5 hereof (with respect to shares of Restricted Stock) or in
the applicable Award Agreement, upon payment of all amounts due from
the Participant, the Company shall cause certificates for the Common
Stock then being purchased to be delivered as directed by the
Participant (or the person exercising the Participant's Stock Option in
the event of his death) at its principal business office promptly after
the Exercise Date; provided that if the Participant has exercised an
Incentive Stock Option, the Company may at its option retain physical
possession of the certificate evidencing the shares acquired upon
exercise until the expiration of the holding periods described in
Section 422(a)(1) of the Code. The obligation of the Company to deliver
shares of Common Stock shall, however, be subject to the condition
that, if at any time the Committee shall determine in its discretion
that the listing, registration, or qualification of the Stock Option or
the Common Stock upon any securities exchange or inter-dealer quotation
system or under any state or federal law, or the consent or approval of
any governmental regulatory body, is necessary as a condition of, or in
connection with, the Stock Option or the issuance or purchase of shares
of Common Stock thereunder, the Stock Option may not be exercised in
whole or in part unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any
conditions not reasonably acceptable to the Committee.
(c) FAILURE TO PAY. Except as may be otherwise provided in an
Award Agreement, if the Participant fails to pay for any of the Common
Stock specified in such notice or fails to accept delivery thereof,
that portion of the Participant's Stock Option and right to purchase
such Common Stock may be forfeited by the Company.
8.4 SARS. Subject to the conditions of this Section 8.4 and such
administrative regulations as the Committee may from time to time adopt, a SAR
may be exercised by the delivery (including by FAX) of written notice to the
Committee setting forth the number of shares of Common Stock with respect to
which the SAR is to be exercised and the date of exercise thereof (the "Exercise
Date") which shall be at least three (3) days after giving such notice unless an
earlier time shall have been mutually agreed upon. On the Exercise Date, the
Participant shall receive from the Company in exchange therefor cash in an
amount equal to the excess (if any) of the Fair Market Value (as of the date of
the exercise of the SAR) per share of Common Stock over the SAR Price per share
specified in such SAR, multiplied by the total number of shares of Common
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Stock of the SAR being surrendered. In the discretion of the Committee, the
Company may satisfy its obligation upon exercise of a SAR by the distribution of
that number of shares of Common Stock having an aggregate Fair Market Value (as
of the date of the exercise of the SAR) equal to the amount of cash otherwise
payable to the Participant, with a cash settlement to be made for any fractional
share interests, or the Company may settle such obligation in part with shares
of Common Stock and in part with cash.
8.5 DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION. If shares of
Common Stock acquired upon exercise of an Incentive Stock Option are disposed of
by a Participant prior to the expiration of either two (2) years from the Date
of Grant of such Stock Option or one (1) year from the transfer of shares of
Common Stock to the Participant pursuant to the exercise of such Stock Option,
or in any other disqualifying disposition within the meaning of Section 422 of
the Code, such Participant shall notify the Company in writing of the date and
terms of such disposition. A disqualifying disposition by a Participant shall
not affect the status of any other Stock Option granted under the Plan as an
Incentive Stock Option within the meaning of Section 422 of the Code.
ARTICLE 9
AMENDMENT OR DISCONTINUANCE
Subject to the limitations set forth in this Article 9, the Board may
at any time and from time to time, without the consent of the Participants,
alter, amend, revise, suspend, or discontinue the Plan in whole or in part;
provided, however, that no amendment which requires stockholder approval in
order for the Plan and Incentives awarded under the Plan to continue to comply
with Sections 162(m), 421, and 422 of the Code, including any successors to such
Sections, shall be effective unless such amendment shall be approved by the
requisite vote of the stockholders of the Company entitled to vote thereon.
Except as otherwise provided in any existing Award Agreement, any such amendment
shall, to the extent deemed necessary or advisable by the Committee, be
applicable to any outstanding Incentives theretofore granted under the Plan.
Except as otherwise provided in any Award Agreement, in the event of any such
amendment to the Plan, the holder of any Incentive outstanding under the Plan
shall, upon request of the Committee and as a condition to the exercisability
thereof, execute a conforming amendment in the form prescribed by the Committee
to any Award Agreement relating thereto. Notwithstanding anything contained in
this Plan to the contrary, unless required by law, no action contemplated or
permitted by this Article 9 shall adversely affect any rights of Participants or
obligations of the Company to Participants with respect to any Incentive
theretofore granted under the Plan without the consent of the affected
Participant.
ARTICLE 10
TERM
The Plan shall be effective from the date that this Plan is approved by
the Board. Unless sooner terminated by action of the Board, the Plan will
terminate on the date that is ten years after the date this Plan is adopted by
the Board, but Incentives granted before that date will continue to be effective
in accordance with their terms and conditions.
ARTICLE 11
CAPITAL ADJUSTMENTS
In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Common Stock, other securities,
or other property), recapitalization, stock split, reverse stock
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split, rights offering, reorganization, merger, consolidation, split-up,
spin-off, split-off, combination, subdivision, repurchase, or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the Common Stock such that an adjustment
is determined by the Committee to be appropriate to prevent the dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of the (i) the number of shares and type of Common
Stock (or the securities or property) which thereafter may be made the subject
of Awards, (ii) the number of shares and type of Common Stock (or other
securities or property) subject to outstanding Awards, (iii) the number of
shares and type of Common Stock (or other securities or property) specified as
the annual per-participant limitation under Section 6.6 of the Plan, (iv) the
Option Price of each outstanding Award, (v) the amount, if any, the Company pays
for forfeited shares of Common Stock in accordance with Section 6.5, and (vi)
the number of or SAR Price of shares of Common Stock then subject to outstanding
SARs previously granted and unexercised under the Plan to the end that the same
proportion of the Company's issued and outstanding shares of Common Stock in
each instance shall remain subject to exercise at the same aggregate SAR Price;
provided however, that the number of shares of Common Stock (or other securities
or property) subject to any Award shall always be a whole number. In lieu of the
foregoing, if deemed appropriate, the Committee may make provision for a cash
payment to the holder of an outstanding Award, except as may otherwise be
provided in an applicable Award Agreement. Notwithstanding the foregoing, no
such adjustment or cash payment shall be made or authorized to the extent that
such adjustment or cash payment would cause the Plan or any Stock Option to
violate Code Section 422. Such adjustments shall be made in accordance with the
rules of any securities exchange, stock market, or stock quotation system to
which the Company is subject. No adjustment or cash payment will be required
under this Article 11 for the issuance of Common Stock for such consideration,
not less than the par value of the Common Stock, as may be determined from time
to time by the Board to be fair consideration.
Upon the occurrence of any such adjustment or cash payment, the Company
shall provide notice to each affected Participant of its computation of such
adjustment or cash payment which shall be conclusive and shall be binding upon
each such Participant.
ARTICLE 12
RECAPITALIZATION, MERGER AND CONSOLIDATION
12.1 NO EFFECT ON COMPANY'S AUTHORITY. The existence of this Plan and
Incentives granted 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,
recapitalizations, reorganizations, or other changes in the Company's capital
structure and its business, or any merger or consolidation of the Company, or
any issuance of bonds, debentures, preferred or preference stocks ranking prior
to or otherwise affecting the Common Stock or the rights thereof (or any rights,
options, or warrants to purchase same), 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.
12.2 CONVERSION OF INCENTIVES WHERE COMPANY SURVIVES. Subject to any
required action by the stockholders, if the Company shall be the surviving or
resulting corporation in any merger, consolidation or share exchange, any
Incentive granted hereunder shall pertain to and apply to the securities or
rights (including cash, property, or assets) to which a holder of the number of
shares of Common Stock subject to the Incentive would have been entitled.
12.3 EXCHANGE OR CANCELLATION OF INCENTIVES WHERE COMPANY DOES NOT
SURVIVE. In the event of any merger, consolidation or share exchange which is a
Change of Control in which the Company does not
13
survive, there may be substituted for each share of Common Stock subject to the
unexercised portions of outstanding Stock Options or SARs, that number of shares
of each class of stock or other securities or that amount of cash, property, or
assets of the surviving, resulting or consolidated company which were
distributed or distributable to the stockholders of the Company in respect to
each share of Common Stock held by them, such outstanding Stock Options or SARs
to be thereafter exercisable for such stock, securities, cash, or property in
accordance with their terms.
Notwithstanding the foregoing, however, all Stock Options or SARs may
be canceled by the Company, in its sole discretion, as of the effective date of
any merger, consolidation or share exchange which is a Change of Control in
which the Company does not survive, by either:
(a) giving notice to each holder thereof or his personal
representative of its intention to cancel such Stock Options or SARs
and permitting the purchase during the thirty (30) day period next
preceding such effective date of any or all of the shares subject to
such outstanding Stock Options or SARs, including, in the Board's
discretion, some or all of the shares as to which such Stock Options or
SARs would not otherwise be vested and exercisable; or
(b) paying the holder thereof an amount equal to a reasonable
estimate of the difference between the net amount per share payable in
such transaction or as a result of such transaction, and the exercise
price per share of such Stock Option (hereinafter the "Spread"),
multiplied by the number of shares subject to the Stock Option. In
cases where the shares constitute, or would after exercise, constitute
Restricted Stock, the Company, in its discretion, may include some or
all of those shares in the calculation of the amount payable hereunder.
In estimating the Spread, appropriate adjustments to give effect to the
existence of the Stock Options shall be made, such as deeming the Stock
Options to have been exercised, with the Company receiving the exercise
price payable thereunder, and treating the shares receivable upon
exercise of the Options as being outstanding in determining the net
amount per share. In cases where the proposed transaction consists of
the acquisition of assets of the Company, the net amount per share
shall be calculated on the basis of the net amount receivable with
respect to shares of Common Stock upon a distribution and liquidation
by the Company after giving effect to expenses and charges, including
but not limited to taxes, payable by the Company before such
liquidation could be completed.
(c) A Stock Option or SAR that by its terms would be vested
and exercisable upon a Change in Control will be considered vested and
exercisable for purposes of Section 12.3(a) hereof.
ARTICLE 13
LIQUIDATION OR DISSOLUTION
Subject to Section 12.3 hereof, in case the Company shall, at any time
while any Incentive under this Plan shall be in force and remain unexpired, (i)
sell all or substantially all of its property, or (ii) dissolve, liquidate, or
wind up its affairs, then each Participant shall be entitled to receive, in lieu
of each share of Common Stock of the Company which such Participant would have
been entitled to receive under the Incentive, the same kind and amount of any
securities or assets as may be issuable, distributable, or payable upon any such
sale, dissolution, liquidation, or winding up with respect to each share of
Common Stock of the Company. If the Company shall, at any time prior to the
expiration of any Incentive, make any partial distribution of its assets, in the
nature of a partial liquidation, whether payable in cash or in kind (but
excluding the distribution of a cash dividend payable out of earned surplus and
designated as such) then in such event the purchase price, if any, Option Prices
or SAR Prices then in effect with respect to each Stock Option or SAR shall be
reduced, on the payment date of such distribution, in proportion to the
percentage reduction in the
14
tangible book value of the shares of the Company's Common Stock (determined in
accordance with generally accepted accounting principles) resulting by reason of
such distribution.
ARTICLE 14
INCENTIVES IN SUBSTITUTION FOR
INCENTIVES GRANTED BY OTHER ENTITIES
Incentives may be granted under the Plan from time to time in
substitution for similar instruments held by employees or directors of a
corporation, partnership, or limited liability company who become or are about
to become Employees or Outside Directors of the Company or any Subsidiary as a
result of a merger or consolidation of the employing corporation with the
Company, the acquisition by the Company of equity of the employing entity, or
any other similar transaction pursuant to which the Company becomes the
successor employer. The terms and conditions of the substitute Incentives so
granted may vary from the terms and conditions set forth in this Plan to such
extent as the Committee at the time of grant may deem appropriate to conform, in
whole or in part, to the provisions of the Incentives in substitution for which
they are granted.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 INVESTMENT INTENT. The Company may require that there be presented
to and filed with it by any Participant under the Plan, such evidence as it may
deem necessary to establish that the Incentives granted or the shares of Common
Stock to be purchased or transferred are being acquired for investment and not
with a view to their distribution.
15.2 NONPUBLICLY TRADED COMMON STOCK. In the event a Participant
receives, as Restricted Stock or pursuant to the exercise of a Stock Option,
shares of Common Stock that are Nonpublicly Traded (as defined herein), the
Committee may impose restrictions and conditions on the transfer or other
disposition of those shares. The restrictions and conditions may be reflected in
the Award Agreement or in a separate stockholders' agreement.
15.3 NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor any
Incentive granted under the Plan shall confer upon any Participant any right
with respect to continuance of employment by the Company or any Subsidiary.
15.4 INDEMNIFICATION OF BOARD AND COMMITTEE. No member of the Board or
the Committee, nor any officer or Employee of the Company acting on behalf of
the Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board and the Committee, each officer of the
Company, and each Employee of the Company acting on behalf of the Board or the
Committee shall, to the extent permitted by law, be fully indemnified and
protected by the Company in respect of any such action, determination, or
interpretation.
15.5 EFFECT OF THE PLAN. Neither the adoption of this Plan nor any
action of the Board or the Committee shall be deemed to give any person any
right to be granted an Award or any other rights except as may be evidenced by
an Award Agreement, or any amendment thereto, duly authorized by the Committee
and executed on behalf of the Company, and then only to the extent and upon the
terms and conditions expressly set forth therein.
15
15.6 COMPLIANCE WITH OTHER LAWS AND REGULATIONS. Notwithstanding
anything contained herein to the contrary, the Company shall not be required to
sell or issue shares of Common Stock under any Incentive if the issuance thereof
would constitute a violation by the Participant or the Company of any provisions
of any law or regulation of any governmental authority or any national
securities exchange or inter-dealer quotation system or other forum in which
shares of Common Stock are quoted or traded; and, as a condition of any sale or
issuance of shares of Common Stock under an Incentive, the Committee may require
such agreements or undertakings, if any, as the Committee may deem necessary or
advisable to assure compliance with any such law or regulation. The Plan, the
grant and exercise of Incentives hereunder, and the obligation of the Company to
sell and deliver shares of Common Stock, shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required.
15.7 LOCK-UP AGREEMENT. The Company may require that an Award Agreement
include a provision requiring a Participant to agree that in connection with an
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, no shares of Common
Stock received by the Participant under such Award Agreement may be sold,
offered for sale or otherwise disposed of without the prior written consent of
the Company or such underwriter, as the case may be, for at least one hundred
eighty (180) days after the effectiveness of the registration statement filed in
connection with such offering, or such longer period of time as the Board may
determine, if all of the Company's directors and officers agree to be similarly
bound. The obligations contained in an Award Agreement, if applicable, shall
remain effective for all underwritten public offerings with respect to which the
Company has filed a registration statement on or before the date five (5) years
after the closing of the Company's initial public offering, provided, however,
that this Section 15.7 shall cease to apply to any such shares of Common Stock
sold to the public pursuant to an effective registration statement or an
exemption from the registration requirements of the Securities Act in a
transaction that complied with the terms of the applicable Award Agreement.
15.8 TAX REQUIREMENTS. The Company shall have the right to deduct from
all amounts hereunder paid in cash or other form, any Federal, state, or local
taxes required by law to be withheld with respect to such payments. The
Participant receiving shares of Common Stock issued under the Plan shall be
required to pay the Company the amount of any taxes which the Company is
required to withhold with respect to such shares of Common Stock.
Notwithstanding the foregoing, in the event of an assignment of a Nonqualified
Stock Option or SAR pursuant to Section 15.9, the Participant who assigns the
Nonqualified Stock Option or SAR shall remain subject to withholding taxes upon
exercise of the Nonqualified Stock Option or SAR by the transferee to the extent
required by the Code or the rules and regulations promulgated thereunder. Such
payments shall be required to be made prior to the delivery of any certificate
representing such shares of Common Stock. Such payment may be made (i) by the
delivery of cash to the Company in an amount that equals or exceeds (to avoid
the issuance of fractional shares under (iii) below) the required tax
withholding obligation of the Company; (ii) if the Company, in its sole
discretion, so consents in writing, the actual delivery by the exercising
Participant to the Company of shares of Common Stock that the Participant has
not acquired from the Company within six months prior to the date of exercise,
which shares so delivered have an aggregate Fair Market Value that equals or
exceeds (to avoid the issuance of fractional shares under (iii) below) the
required tax withholding payment; (iii) if the Company, in its sole discretion,
so consents in writing, the Company's withholding of a number of shares to be
delivered upon the exercise of the Stock Option, which shares so withheld have
an aggregate fair market value that equals (but does not exceed) the required
tax withholding payment; or (iv) any combination of (i), (ii), or (iii).
15.9 ASSIGNABILITY. Incentive Stock Options may not be transferred,
assigned, pledged, hypothecated or otherwise conveyed or encumbered other than
by will or the laws of descent and distribution and may be exercised during the
lifetime of the Participant only by the Participant or the Participant's legally
16
authorized representative, and each Award Agreement in respect of an Incentive
Stock Option shall so provide. The designation by a Participant of a beneficiary
will not constitute a transfer of the Stock Option. The Committee may waive or
modify any limitation contained in the preceding sentences of this Section 15.9
that is not required for compliance with Section 422 of the Code.
Except as otherwise provided herein, Nonqualified Stock Options and
SARs may not be transferred, assigned, pledged, hypothecated or otherwise
conveyed or encumbered other than by will or the laws of descent and
distribution. The Committee may, in its discretion, authorize all or a portion
of a Nonqualified Stock Option or an SAR granted to a Participant to be on terms
which permit transfer by such Participant to (i) the spouse (or former spouse),
children or grandchildren of the Participant ("Immediate Family Members"), (ii)
a trust or trusts for the exclusive benefit of such Immediate Family Members,
(iii) a partnership in which the only partners are (1) such Immediate Family
Members and/or (2) entities which are controlled by Immediate Family Members,
(iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of
the Code or any successor provision, or (v) a split interest trust or pooled
income fund described in Section 2522(c)(2) of the Code or any successor
provision, provided that (x) there shall be no consideration for any such
transfer, (y) the Award Agreement pursuant to which such Nonqualified Stock
Option or SAR is granted must be approved by the Committee and must expressly
provide for transferability in a manner consistent with this Section, and (z)
subsequent transfers of transferred Nonqualified Stock Options or SARs shall be
prohibited except those by will or the laws of descent and distribution.
Following any transfer, any such Nonqualified Stock Option or SAR shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of Articles 8, 9, 11,
13 and 15 hereof the term "Participant" shall be deemed to include the
transferee. The events of Termination of Service shall continue to be applied
with respect to the original Participant, following which the Nonqualified Stock
Options and SARs shall be exercisable by the transferee only to the extent and
for the periods specified in the Award Agreement. The Committee and the Company
shall have no obligation to inform any transferee of a Nonqualified Stock Option
or an SAR of any expiration, termination, lapse or acceleration of such Stock
Option or SAR. The Company shall have no obligation to register with any federal
or state securities commission or agency any Common Stock issuable or issued
under a Nonqualified Stock Option or SAR that has been transferred by a
Participant under this Section 15.9.
15.10 USE OF PROCEEDS. Proceeds from the sale of shares of Common Stock
pursuant to Incentives granted under this Plan shall constitute general funds of
the Company.
15.11 LEGEND. Each certificate representing shares of Restricted Stock
issued to a Participant shall bear the following legend, or a similar legend
deemed by the Company to constitute an appropriate notice of the provisions
hereof (any such certificate not having such legend shall be surrendered upon
demand by the Company and so endorsed):
On the face of the certificate:
"Transfer of this stock is restricted in accordance
with conditions printed on the reverse of this
certificate."
On the reverse:
"The shares of stock evidenced by this certificate
are subject to and transferable only in accordance
with that certain Liberte Investors Inc. Long Term
Incentive Plan (the "Plan"), a copy of which is on
file at the principal office of the Company in
Dallas, Texas. No
17
transfer or pledge of the shares evidenced hereby may
be made except in accordance with and subject to the
provisions of said Plan. By acceptance of this
certificate, any holder, transferee or pledgee hereof
agrees to be bound by all of the provisions of said
Plan."
The following legend shall be inserted on a certificate evidencing
Common Stock issued under the Plan if the shares were not issued in a
transaction registered under the applicable federal and state securities laws:
"Shares of stock represented by this certificate have
been acquired by the holder for investment and not
for resale, transfer or distribution, have been
issued pursuant to exemptions from the registration
requirements of applicable state and federal
securities laws, and may not be offered for sale,
sold or transferred other than pursuant to effective
registration under such laws, or in transactions
otherwise in compliance with such laws, and upon
evidence satisfactory to the Company of compliance
with such laws, as to which the Company may rely upon
an opinion of counsel satisfactory to the Company."
A copy of this Plan shall be kept on file in the principal office of
the Company in Dallas, Texas.
* * * * *
18
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed as of July 1, 2002 by its Chief Executive Officer and
Secretary pursuant to prior action taken by the Board.
LIBERTE INVESTORS INC.
By: /s/ Gerald J. Ford
------------------------------
Name: Gerald J. Ford
Title: Chief Executive Officer
Attest:
/s/ Ellen Billings, Secretary
- -------------------------------------------
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