1
EXHIBIT 10.12
WHITEHALL JEWELLERS, INC.
1997 LONG-TERM INCENTIVE PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1997 Long-Term Incentive
Plan (the "Plan") of Whitehall Jewellers, Inc. (the "Company"), and its
subsidiaries from time to time (individually a "Subsidiary" and collectively the
"Subsidiaries"), are (a) to align the interests of the Company's stockholders
and the recipients of awards under this Plan by increasing the proprietary
interest of such recipients in the Company's growth and success, (b) to advance
the interests of the Company by attracting and retaining officers and other key
employees, and well-qualified persons who are not officers or employees of the
Company ("non-employee directors") for service as directors of the Company and
(c) to motivate such employees and non-employee directors to act in the
long-term best interests of the Company's stockholders. For purposes of this
Plan, references to employment by the Company shall also mean employment by a
Subsidiary.
1.2 CERTAIN DEFINITIONS.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2, as in effect on the effective date of this
Plan, under the Exchange Act; provided, however, that no director or officer of
the Company shall be deemed an Affiliate or Associate of any other director or
officer of the Company solely as a result of his or her being a director or
officer of the Company.
"AGREEMENT" shall mean the written agreement evidencing an
award hereunder between the Company and the recipient of such award.
"BENEFICIAL OWNER" (including the terms "BENEFICIALLY OWN" and
"BENEFICIAL OWNERSHIP"), when used with respect to any Person, shall be deemed
to include any securities which:
(a) such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (determined as provided in
Rule 13d-3, as in effect on the effective date of this Plan, under the Exchange
Act);
2
(b) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has:
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction
of any conditions, or both) pursuant to any written or oral agreement,
arrangement or understanding (other than customary agreements with and
among underwriters and selling group members with respect to a bona
fide public offering of securities), upon the exercise of any options,
warrants, rights or conversion or exchange privileges or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or
(ii) the right to vote pursuant to any written or oral agreement,
arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, any
security otherwise subject to this item (ii) if such agreement,
arrangement or understanding to vote (1) arises solely from a revocable
proxy or consent given to such Person or any of such Person's
Affiliates or Associates in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations under the Exchange Act and (2) is not also then
reportable by such Person on Schedule 13D (or any comparable or
successor report then in effect) under the Exchange Act; or
(iii) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group members with
respect to a bona fide public offering of securities); or
(c) are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any written or oral agreement, arrangement or understanding (other than
customary agreements with and among underwriters and selling group members with
respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to
item (ii) of subparagraph (b) of the first paragraph of this definition) or
disposing of any securities of the Company.
-2-
3
Notwithstanding the first paragraph of this definition, no
director or officer of the Company shall be deemed to be the "Beneficial Owner"
of, or to "Beneficially Own," shares of Common Stock or other securities of the
Company beneficially owned by any other director or officer of the Company
solely as a result of his or her being a director or officer of the Company.
"BOARD" shall mean the Board of Directors of the Company.
"BONUS STOCK" shall mean shares of Common Stock which are not
subject to a Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under
this Plan.
"CAUSE" shall mean commission of a felony involving moral
turpitude or any material breach of any statutory or common law duty to the
Company or a Subsidiary involving wilful malfeasance.
"CHANGE IN CONTROL" shall have the meaning set forth in
Section 6.8(b).
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMITTEE" shall mean the Committee designated by the Board,
consisting of two or more members of the Board, each of whom shall be (a) a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act
and (b) an "outside director" within the meaning of Section 162(m) of the Code,
subject to any transition rules applicable to the definition of outside
director.
"COMMON STOCK" shall mean the common stock, $.001 par value,
of the Company.
"COMPANY" has the meaning specified in Section 1.1.
"DIRECTORS OPTIONS" shall have the meaning set forth in
Section 5.1.
"DISABILITY" shall mean the inability for a continuous period
of at least six months of the holder of an award to perform substantially such
holder's duties and responsibilities, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
-3-
4
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"EXEMPT PERSON" shall mean each of Hugh M. Patinkin, John R.
Desjardins, Matthew M. Patinkin and each Affiliate thereof.
"FAIR MARKET VALUE" shall mean the average of the high and low
transaction prices of a share of Common Stock as reported in the National
Association of Securities Dealers Automated Quotation National Market System on
the date as of which such value is being determined, or, if the Common Stock is
listed on a national securities exchange, the average of the high and low
transaction prices of a share of Common Stock on the principal national stock
exchange on which the Common Stock is traded on the date as of which such value
is being determined, or, if there shall be no reported transactions for such
date, on the next preceding date for which transactions were reported; provided,
however, that if Fair Market Value for any date cannot be so determined, Fair
Market Value shall be determined by the Committee by whatever means or method as
the Committee, in the good faith exercise of its discretion, shall at such time
deem appropriate.
"FREE-STANDING SAR" shall mean an SAR which is not issued in
tandem with, or by reference to, an option, which entitles the holder thereof to
receive, upon exercise, shares of Common Stock (which may be Restricted Stock),
cash or a combination thereof with an aggregate value equal to the excess of the
Fair Market Value of one share of Common Stock on the date of exercise over the
base price of such SAR, multiplied by the number of such SARs which are
exercised.
"INCENTIVE STOCK OPTION" shall mean an option to purchase
shares of Common Stock that meets the requirements of Section 422 of the Code,
or any successor provision, which is intended by the Committee to constitute an
Incentive Stock Option.
"INCUMBENT BOARD" shall have the meaning set forth in Section
6.8(b)(ii) hereof.
"MATURE SHARES" shall mean shares of Common Stock for which
the holder thereof has good title, free and clear of all liens and encumbrances
and which such holder either (a) has held for at least six months or (b) has
purchased on the open market.
"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company
who is not an officer or employee of the Company or any Subsidiary (except in
the definition of Committee, in which case
-4-
5
"Non-Employee Director" shall have the meaning set forth in Rule 16b-3 under the
Exchange Act).
"NON-STATUTORY STOCK OPTION" shall mean a stock option which
is not an Incentive Stock Option.
"PERFORMANCE MEASURES" shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met (a) as a condition
to the exercisability of all or a portion of an option or SAR or (b) during the
applicable Restriction Period or Performance Period as a condition to the
holder's receipt, in the case of a Restricted Stock Award, of the shares of
Common Stock subject to such award, or, in the case of a Performance Share
Award, of payment with respect to such award. Such criteria and objectives may
include one or more of the following: the attainment by a share of Common Stock
of a specified Fair Market Value for a specified period of time, earnings per
share, return to stockholders (including dividends), return on equity, earnings
of the Company, revenues, market share, cash flows or cost reduction goals, or
any combination of the foregoing. If the Committee desires that compensation
payable pursuant to any award subject to Performance Measures be "qualified
performance-based compensation" within the meaning of section 162(m) of the
Code, the Performance Measures shall be established by the Committee no later
than the end of the first quarter of the Performance Period or Restriction
Period, as applicable (or such other time designated by the Internal Revenue
Service).
"PERFORMANCE PERIOD" shall mean any period designated by the
Committee during which the Performance Measures applicable to a Performance
Share Award shall be measured.
"PERFORMANCE SHARE" shall mean a right, contingent upon the
attainment of specified Performance Measures within a specified Performance
Period, to receive one share of Common Stock, which may be Restricted Stock, or
in lieu thereof, the Fair Market Value of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance
Shares under this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set
forth in Section 22(e)(3) of the Code or any successor thereto.
"PERSON" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of any of the forgoing.
-5-
6
"RESTRICTED STOCK" shall mean shares of Common Stock which are
subject to a Restriction Period.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted
Stock under this Plan.
"RESTRICTION PERIOD" shall mean any period designated by the
Committee during which the Common Stock subject to a Restricted Stock Award may
not be sold, transferred, assigned, pledged, hypothecated or otherwise
encumbered or disposed of, except as provided in this Plan or the Agreement
relating to such award.
"SAR" shall mean a stock appreciation right which may be a
Free-Standing SAR or a Tandem SAR.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus
Stock Award.
"TANDEM SAR" shall mean an SAR which is granted in tandem
with, or by reference to, an option (including a Non-Statutory Stock Option
granted prior to the date of grant of the SAR), which entitles the holder
thereof to receive, upon exercise of such SAR and surrender for cancellation of
all or a portion of such option, shares of Common Stock (which may be Restricted
Stock), cash or a combination thereof with an aggregate value equal to the
excess of the Fair Market Value of one share of Common Stock on the date of
exercise over the base price of such SAR, multiplied by the number of shares of
Common Stock subject to such option, or portion thereof, which is surrendered.
"TAX DATE" shall have the meaning set forth in Section 6.5.
"TEN PERCENT HOLDER" shall have the meaning set forth in
Section 2.1(a).
1.3 ADMINISTRATION. This Plan shall be administered by the
Committee. Subject to Section 6.1, any one or a combination of the following
awards may be made under this Plan to eligible persons: (a) options to purchase
shares of Common Stock in the form of Incentive Stock Options or Non-Statutory
Stock Options, (b) in the form of Tandem SARs or Free-Standing SARs, (c) Stock
Awards in the form of Restricted Stock or Bonus Stock and (d) Performance
Shares. The Committee shall, subject to the terms of this Plan, select eligible
persons for participation in this Plan and determine the form, amount and timing
of each award to such persons and, if applicable, the number of shares of Common
Stock, the number of SARs and the number of Performance Shares subject to such
an award, the
-6-
7
exercise price or base price associated with the award, the time and conditions
of exercise or settlement of the award and all other terms and conditions of the
award, including, without limitation, the form of the Agreement evidencing the
award. The Committee shall, subject to the terms of this Plan, interpret this
Plan and the application thereof, establish rules and regulations it deems
necessary or desirable for the administration of this Plan and may impose,
incidental to the grant of an award, conditions with respect to the award, such
as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be conclusive and
binding on all parties.
The Committee may delegate some or all of its power and
authority hereunder to the Chief Executive Officer or other executive officer of
the Company as the Committee deems appropriate; provided, however, that the
Committee may not delegate its power and authority with regard to (a) the grant
of an award under this Plan to any person who is a "covered employee" within the
meaning of Section 162(m) of the Code or who, in the Committee's judgment, is
likely to be a covered employee at any time during the period an award hereunder
to such employee would be outstanding or (b) the selection for participation in
this Plan of an officer or other person subject to Section 16 of the Exchange
Act or decisions concerning the timing, pricing or amount of an award to such an
officer or other person.
No member of the Board of Directors or Committee, and neither
the Chief Executive Officer nor any other executive officer to whom the
Committee delegates any of its power and authority hereunder, shall be liable
for any act, omission, interpretation, construction or determination made in
connection with this Plan in good faith, and the members of the Board of
Directors and the Committee and the President and Chief Executive Officer or
other executive officer shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense (including
attorneys' fees) arising therefrom to the full extent permitted by law, except
as otherwise may be provided in the Company's Certificate of Incorporation
and/or By-laws, as the same may be amended or restated from time to time, and
under any directors' and officers' liability insurance that may be in effect
from time to time.
A majority of the Committee shall constitute a quorum. The
acts of the Committee shall be either (a) acts of a majority of the members of
the Committee present at any meeting at which a quorum is present or (b) acts
approved in writing by a majority of the members of the Committee without a
meeting.
-7-
8
Notwithstanding anything to the contrary herein, any grant of
awards to a Non-Employee Director shall require the approval of the Board.
1.4 ELIGIBILITY. Participants in this Plan shall consist of
such directors, officers or other key employees of the Company and its
Subsidiaries as the Committee, in its sole discretion, may select from time to
time. The Committee's selection of a person to participate in this Plan at any
time shall not require the Committee to select such person to participate in
this Plan at any other time. Non-Employee Directors shall also be eligible to
participate in this Plan in accordance with Article V.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in
Sections 6.7 and 6.8, 1,000,000 shares of Common Stock shall be available under
this Plan, reduced by the sum of the aggregate number of shares of Common Stock
(a) that are issued upon the grant of a Stock Award and (b) which become subject
to outstanding options, including Directors' Options, outstanding Free-Standing
SARs and outstanding Performance Shares. To the extent that shares of Common
Stock subject to an outstanding option (other than in connection with the
exercise of a Tandem SAR), Free-Standing SAR or Performance Share are not issued
or delivered by reason of the expiration, termination, cancellation or
forfeiture of such award or by reason of the delivery or withholding of shares
of Common Stock to pay all or a portion of the exercise price of an award, if
any, or to satisfy all or a portion of the tax withholding obligations relating
to an award, then such shares of Common Stock shall again be available under
this Plan.
Shares of Common Stock to be delivered under this Plan shall
be made available from authorized and unissued shares of Common Stock, or
authorized and issued shares of Common Stock reacquired and held as treasury
shares or otherwise or a combination thereof.
To the extent required by Section 162(m) of the Code and the
rules and regulations thereunder, the maximum number of shares of Common Stock
with respect to which options or SARs, Stock Awards or Performance Share Awards,
or a combination thereof may be granted during any calendar year to any person
shall be 200,000 subject to adjustment as provided in Section 6.7.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 STOCK OPTIONS. The Committee may, in its discretion, grant
options to purchase shares of Common Stock to
-8-
9
such eligible persons as may be selected by the Committee. Each option, or
portion thereof, that is not an Incentive Stock Option, shall be a Non-Statutory
Stock Option. Each Incentive Stock Option shall be granted within ten years of
the effective date of this Plan. To the extent that the aggregate Fair Market
Value (determined as of the date of grant) of shares of Common Stock with
respect to which options designated as Incentive Stock Options are exercisable
for the first time by a participant during any calendar year (under this Plan or
any other plan of the Company, or any parent or Subsidiary) exceeds the amount
(currently $100,000) established by the Code, such options shall constitute
Non-Statutory Stock Options.
Options shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. To the extent
required, the number of shares of Common Stock subject to an option shall be
determined by the Committee. The purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of Common Stock purchasable
upon exercise of an Option shall not be less than 100% of the Fair Market Value
of a share of Common Stock on the date of grant of such option; provided
further, that if an Incentive Stock Option shall be granted to any person who,
at the time such option is granted, owns capital stock possessing more than ten
percent of the total combined voting power of all classes of capital stock of
the Company (or of any parent or Subsidiary) (a "Ten Percent Holder"), the
purchase price per share of Common Stock shall be the price (currently 110% of
Fair Market Value) required by the Code in order to constitute an Incentive
Stock Option.
(b) Option Period and Exercisability. The period during which
an option may be exercised shall be determined by the Committee; provided,
however, that no Incentive Stock Option shall be exercised later than ten years
after its date of grant; provided further, that if an Incentive Stock Option
shall be granted to a Ten Percent Holder, such option shall not be exercised
later than five years after its date of grant. The Committee may, in its
discretion, establish Performance Measures which shall be satisfied or met as a
condition to the grant of an option or to the exercisability of all or a portion
of an option. The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments and in part or in full
at any time. An exercisable option, or portion thereof, may be exercised only
with respect to whole shares of
-9-
10
Common Stock, except that if the remaining option then exercisable is for less
than a whole share, such remaining amount may be exercised.
(c) Method of Exercise. An option may be exercised (i) by
giving written notice to the Company specifying the number of whole shares of
Common Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either (1) in
cash, (2) by delivery of Mature Shares having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable by reason
of such exercise, (3) by authorizing the Company to withhold whole shares of
Common Stock which would otherwise be delivered upon exercise of the option
having a Fair Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, (4) in cash by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (5) a combination of (1), (2) and (3), in each
case to the extent set forth in the Agreement relating to the option, (ii) if
applicable, by surrendering to the Company any Tandem SARs which are canceled by
reason of the exercise of the option and (iii) by executing such documents as
the Company may reasonably request. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5). Any fraction of a
share of Common Stock which would be required to pay such purchase price shall
be disregarded and the remaining amount due shall be paid in cash by the
optionee. No certificate representing Common Stock shall be delivered until the
full purchase price therefor has been paid.
(d) Additional Options. The Committee shall have the authority
to include in any Agreement relating to an option a provision entitling the
optionee to an additional option in the event such optionee exercises the option
represented by such option agreement, in whole or in part, by delivering
previously owned whole shares of Common Stock in payment of the purchase price
in accordance with this Plan and such Agreement. Any such additional option
shall be for a number of shares of Common Stock equal to the number of delivered
shares, shall have a purchase price determined by the Committee in accordance
with this Plan, shall be exercisable on the terms and subject to the conditions
set forth in the Agreement relating to such additional option.
2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its
discretion, grant SARs to such eligible persons as may be selected by the
Committee. The Agreement relating to an SAR shall specify whether the SAR is a
Tandem SAR or a Free-Standing SAR.
-10-
11
SARs shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable:
(a) Number of SARs and Base Price. The number of SARs subject
to an award shall be determined by the Committee. Any Tandem SAR related to an
Incentive Stock Option shall be granted at the same time that such Incentive
Stock Option is granted. The base price of a Tandem SAR shall be the purchase
price per share of Common Stock of the related option. The base price of a
Free-Standing SAR shall be determined by the Committee; provided, however, that
such base price shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date of grant of such SAR.
(b) Exercise Period and Exercisability. The Agreement relating
to an award of SARs shall specify whether such award may be settled in shares of
Common Stock (including shares of Restricted Stock) or cash or a combination
thereof. The period for the exercise of an SAR shall be determined by the
Committee; provided, however, that no Tandem SAR shall be exercised later than
the expiration, cancellation, forfeiture or other termination of the related
option. The Committee may, in its discretion, establish Performance Measures
which shall be satisfied or met as a condition to the exercisability of an SAR.
The Committee shall determine whether an SAR may be exercised in cumulative or
non-cumulative installments and in part or in full at any time. An exercisable
SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only
with respect to whole shares of Common Stock and, in the case of a Free-Standing
SAR, only with respect to a whole number of SARs. If an SAR is exercised for
shares of Restricted Stock, a certificate or certificates representing such
Restricted Stock shall be issued in accordance with Section 3.2(c) and the
holder of such Restricted Stock shall have such rights of a stockholder of the
Company as determined pursuant to Section 3.2(d). Prior to the exercise of an
SAR for shares of Common Stock, including Restricted Stock, the holder of such
SAR shall have no rights as a stockholder of the Company with respect to the
shares of Common Stock subject to such SAR.
(c) Method of Exercise. A Tandem SAR may be exercised (i) by
giving written notice to the Company specifying the number of whole SARs which
are being exercised, (ii) by surrendering to the Company any options which are
canceled by reason of the exercise of the Tandem SAR and (iii) by executing such
documents as the Company may reasonably request. A Free-Standing SAR may be
exercised (i) by giving written notice to the Company specifying the whole
number (or if the remaining SAR then
-11-
12
exercisable is for less then one whole share, such remaining amount) of SARs
which are being exercised and (ii) by executing such documents as the Company
may reasonably request.
2.3 TERMINATION OF EMPLOYMENT OR SERVICE WITH THE COMPANY.
(a) Disability. Subject to paragraph (f) below and Section
6.8, and unless otherwise specified in the Agreement relating to an option or
SAR, as the case may be, if the employment or service with the Company of the
holder of an option or SAR terminates by reason of Disability, each option and
SAR held by such holder shall be exercisable only to the extent that such option
or SAR, as the case may be, is exercisable on the effective date of such
holder's termination of employment or service and may thereafter be exercised by
such holder (or such holder's legal representative or similar person) until and
including the earliest to occur of (i) the date which is three months (or such
other period as set forth in the Agreement relating to such option or SAR) after
the effective date of such holder's termination of employment or service and
(ii) the expiration date of the term of such option or SAR.
(b) Retirement. Subject to paragraph (f) below and Section
6.8, and unless otherwise specified in the Agreement relating to an option or
SAR, as the case may be, if the employment or service with the Company of the
holder of an option or SAR terminates by reason of retirement on or after age 65
with the consent of the Company, each option and SAR held by such holder shall
be exercisable only to the extent that such option or SAR, as the case may be,
is exercisable on the effective date of such holder's termination of employment
or service and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) the date which is six months (or such other period as set forth in
the Agreement relating to such option or SAR) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(c) Death. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR, as the
case may be, if the employment or service with the Company of the holder of an
option or SAR terminates by reason of death, each option and SAR held by such
holder shall be exercisable only to the extent that such option or SAR, as the
case may be, is exercisable on the date of such holder's death, and may
thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until and
including the
-12-
13
earliest to occur of (i) the date which is one year (or such other period as set
forth in the Agreement relating to such option or SAR) after the date of death
and (ii) the expiration date of the term of such option or SAR.
(d) Other Termination. If the employment or service with the
Company of the holder of an option or SAR is terminated by the Company for
Cause, each option and SAR held by such holder shall terminate automatically on
the effective date of such holder's termination of employment or service.
Subject to paragraph (f) below and Section 6.8, and unless
specified in the Agreement relating to an option or SAR, as the case may be, if
the employment or service with the Company of the holder of an option or SAR
terminates for any reason other than Disability, retirement on or after age 65
with the consent of the Company, death or Cause, each option and SAR held by
such holder shall be exercisable only to the extent that such option or SAR is
exercisable on the effective date of such holder's termination of employment or
service and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months (or such other period as set forth in the
Agreement relating to such option or SAR) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(e) Death Following Termination of Employment or Service.
Subject to paragraph (f) below and Section 6.8, and unless otherwise specified
in the Agreement relating to an option or SAR, as the case may be, if the holder
of an option or SAR dies during the three-month period following termination of
employment or service by reason of Disability, or if the holder of an option or
SAR dies during the three-month period following termination of employment or
service by reason of retirement on or after age 65 with the consent of the
Company, or if the holder of an option or SAR dies during the three-month period
following termination of employment or service for any reason other than
Disability or retirement on or after age 65 with the consent of the Company (or,
in each case, such other period as set forth in the Agreement relating to such
option or SAR), each option and SAR held by such holder shall be fully
exercisable and may thereafter be exercised by the holder's executor,
administrator, legal representative, beneficiary or similar person, as the case
may be, until and including the earliest to occur of (i) the date which is one
year (or such other period as set forth in the Agreement relating to such option
or SAR) after the date of death and (ii) the expiration date of the term of such
option or SAR.
-13-
14
(f) Termination of Employment or Service - Incentive Stock
Options. Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an incentive stock option terminates by reason of Permanent and Total
Disability (as defined in Section 22(e)(3) of the Code), each incentive stock
option held by such optionee shall be exercisable only to the extent that such
option is exercisable on the effective date of such optionee's termination of
employment or service by reason of Permanent and Total Disability, and may
thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months (or such other period no longer than one year
as set forth in the Agreement relating to such option) after the effective date
of such optionee's termination of employment or service by reason of Permanent
and Total Disability and (ii) the expiration date of the term of such option.
Subject to Section 6.8 and unless otherwise specified in the
Agreement relating to the option, if the employment or service with the Company
of a holder of an Incentive Stock Option terminates by reason of death, each
Incentive Stock Option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the date of such optionee's death and
may thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such shorter period as set forth
in the Agreement relating to such option)after the date of death and (ii) the
expiration date of the term of such option.
If the employment or service with the Company of the optionee
of an Incentive Stock Option is terminated by the Company for Cause, each
Incentive Stock Option held by such optionee shall terminate automatically on
the effective date of such optionee's termination of employment or service.
If the employment or service with the Company of a holder of
an Incentive Stock Option terminates for any reason other than Permanent and
Total Disability, death or Cause, each Incentive Stock Option held by such
optionee shall be exercisable only to the extent such option is exercisable on
the effective date of such optionee's termination of employment or service, and
may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months after the effective date of such optionee's
termination of employment or service and (ii) the expiration date of the term of
such option.
-14-
15
If the holder of an Incentive Stock Option dies during the
three-month period following termination of employment or service by reason of
Permanent and Total Disability (or such shorter period as set forth in the
Agreement relating to such option), or if the holder of an Incentive Stock
Option dies during the three-month period following termination of employment or
service for any reason other than Permanent and Total Disability, death or
Cause, each Incentive Stock Option held by such optionee shall be exercisable
only to the extent such option is exercisable on the date of the optionee's
death and may thereafter be exercised by the optionee's executor, administrator,
legal representative, beneficiary or similar person until and including the
earliest to occur of (i) the date which is one year (or such shorter period as
set forth in the Agreement relating to such option) after the date of death and
(ii) the expiration date of the term of such option.
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant
Stock Awards to such eligible persons as may be selected by the Committee.
Subject to adjustment as provided in Sections 6.7 and 6.8 of this Plan, the
aggregate number of shares of Common Stock available under this Plan pursuant to
all Stock Awards shall not exceed 100,000 of the aggregate number of shares of
Common Stock available under this Plan. The Agreement relating to a Stock Award
shall specify whether the Stock Award is a Restricted Stock Award or Bonus Stock
Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable.
(a) Number of Shares and Other Terms. The number of shares of
Common Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a Restricted
Stock Award shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a
Restricted Stock Award shall provide, in the manner determined by the Committee,
in its discretion, and subject to the provisions of this Plan, for the vesting
of the shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii) if
the holder of such award remains continuously in the employment or service of
the Company during the specified
-15-
16
Restricted Period and for the forfeiture of the shares of Common Stock subject
to such award (x) if specified Performance Measures are not satisfied or met
during the specified Restriction Period or (y) if the holder of such award does
not remain continuously in the employment or service of the Company during the
specified Restriction Period.
Bonus Stock Awards shall not be subject to any Performance
Measures or Restriction Periods.
(c) Share Certificates. During the Restriction Period, a
certificate or certificates representing a Restricted Stock Award shall be
registered in the holder's name and may bear a legend, in addition to any legend
which may be required pursuant to Section 6.6, indicating that the ownership of
the shares of Common Stock represented by such certificate is subject to the
restrictions, terms and conditions of this Plan and the Agreement relating to
the Restricted Stock Award. All such certificates shall be deposited with the
Company, together with stock powers or other instruments of assignment
(including a power of attorney), each endorsed in blank with a guarantee of
signature if deemed necessary or appropriate, which would permit transfer to the
Company of all or a portion of the shares of Common Stock subject to the
Restricted Stock Award in the event such award is forfeited in whole or in part.
Upon termination of any applicable Restriction Period (and the satisfaction or
attainment of applicable Performance Measures), or upon the grant of a Bonus
Stock Award, in each case subject to the Company's right to require payment of
any taxes in accordance with Section 6.5, a certificate or certificates
evidencing ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards. Unless
otherwise set forth in the Agreement relating to a Restricted Stock Award, and
subject to the terms and conditions of a Restricted Stock Award, the holder of
such award shall have all rights as a stockholder of the Company, including, but
not limited to, voting rights, the right to receive dividends and the right to
participate in any capital adjustment applicable to all holders of Common Stock;
provided, however, that a distribution with respect to shares of Common Stock,
other than a distribution in cash, shall be deposited with the Company and shall
be subject to the same restrictions as the shares of Common Stock with respect
to which such distribution was made.
(e) Awards to Certain Executive Officers. Notwithstanding any
other provision of this Article III, and only to the extent necessary to ensure
the deductibility of the award to the Company, the Fair Market Value of the
number of shares of
-16-
17
Common Stock subject to a Stock Award granted to a "covered employee" within the
meaning of Section 162(m) of the Code shall not exceed $2,000,000 (i) at the
time of grant in the case of a Stock Award granted upon the attainment of
Performance Measures or (ii) in the case of a Restricted Stock Award with
Performance measures which shall be satisfied or met as a condition to the
holder's receipt of the shares of Common Stock subject to such award, on the
earlier of (x) the date on which the Performance Measures are satisfied or met
and (y) the date the holder makes an election under Section 83(b) of the Code.
3.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section
6.8 and unless otherwise set forth in the Agreement relating to a Restricted
Stock Award, if the employment or service with the Company of the holder of such
award terminates, the portion of such award which is subject to a Restriction
Period shall terminate as of the effective date of such holder's termination of
employment or service shall be forfeited and such portion shall be canceled by
the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its
discretion, grant Performance Share Awards to such eligible persons as may be
selected by the Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share
Awards shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the terms of this
Plan, as the Committee shall deem advisable.
(a) Number of Performance Shares and Performance Measures. The
number of Performance Shares subject to any award and the Performance Measures
and Performance Period applicable to such award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The Agreement relating to a
Performance Share Award shall provide, in the manner determined by the
Committee, in its discretion, and subject to the provisions of this Plan, for
the vesting of such award, if specified Performance Measures are satisfied or
met during the specified Performance Period, and for the forfeiture of such
award, if specified Performance Measures are not satisfied or met during the
specified Performance Period.
(c) Settlement of Vested Performance Share Awards. The
Agreement relating to a Performance Share Award (i) shall
-17-
18
specify whether such award may be settled in shares of Common Stock (including
shares of Restricted Stock) or cash or a combination thereof and (ii) may
specify whether the holder thereof shall be entitled to receive, on a current or
deferred basis, dividend equivalents, and, if determined by the Committee,
interest on any deferred dividend equivalents, with respect to the number of
shares of Common Stock subject to such award. If a Performance Share Award is
settled in shares of Restricted Stock, a certificate or certificates
representing such Restricted Stock shall be issued in accordance with Section
3.2(c) and the holder of such Restricted Stock shall have such rights of a
stockholder of the Company as determined pursuant to Section 3.2(d). Prior to
the settlement of a Performance Share Award in shares of Common Stock, including
Restricted Stock, the holder of such award shall have no rights as a stockholder
of the Company with respect to the shares of Common Stock subject to such award.
4.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section
6.8 and unless otherwise set forth in the Agreement relating to a Performance
Share Award, if the employment or service with the Company of the holder of such
award terminates, the portion of such award which is subject to a Performance
Period on the effective date of such holder's termination of employment or
service shall be forfeited and such portion shall be canceled by the Company.
V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
5.1 ELIGIBILITY. Each Non-Employee Director shall be granted
options to purchase shares of Common Stock in accordance with this Article V
(collectively "Directors Options"). All options granted under this Article V
shall constitute Non-Statutory Stock Options.
5.2 GRANTS OF STOCK OPTIONS. Each Non-Employee Director may be
granted Non-Statutory Stock Options in the discretion of the Committee (subject
to approval by the Board).
5.3 TERMINATION OF DIRECTORSHIP.
(a) Disability. Subject to Section 6.8, if the holder of an
option granted pursuant to this Article V ceases to be a director of the Company
by reason of Disability, each such option held by such holder shall be
exercisable only to the extent that such option is exercisable on the effective
date of such holder's ceasing to be a director and may thereafter be exercised
by such holder (or such holder's guardian, legal representative or similar
person) until the earliest to occur of the (i) date which
-18-
19
is three months after the effective date of such holder's ceasing to be a
director and (ii) the expiration date of the term of such option.
(b) Retirement. Subject to Section 6.8, if the holder of an
option granted pursuant to this Article V ceases to be a director of the Company
on or after age 65, each such option held by such holder shall be exercisable
only to the extent that such option is exercisable on the effective date of such
holder's ceasing to be a director and may thereafter be exercised by such holder
(or such holder's legal representative or similar person) until the earliest to
occur of the (i) date which is three months after the effective date of such
holder's ceasing to be a director and (ii) the expiration date of the term of
such option.
(c) Death. Subject to Section 6.8, if the holder of an option
granted pursuant to this Article V ceases to be a director of the Company by
reason of death, each such option held by such holder shall be fully exercisable
and may thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until the
earliest to occur of the (i) date which is one year after the date of death and
(ii) the expiration date of the term of such option.
(d) Other Termination. Subject to Section 6.8, if the holder
of an option granted pursuant to this Article V ceases to be a director of the
Company for any reason other than Disability, retirement on or after age 65 or
death, each such option held by such holder shall be exercisable only to the
extent such option is exercisable on the effective date of such holder's ceasing
to be a director and may thereafter be exercised by such holder (or such
holder's legal representative or similar person) until the earliest to occur of
the (i) date which is three months after the effective date of such holder's
ceasing to be a director and (ii) the expiration date of the term of such
option.
(e) Death Following Termination of Directorship. Subject to
Section 6.8, if the holder of an option granted pursuant to this Article V dies
during the three-month period following such holder's ceasing to be a director
of the Company by reason of Disability, or if such a holder dies during the
three-month period following such holder's ceasing to be a director of the
Company on or after age 65, or if such a holder dies during the three-month
period following such holder's ceasing to be a director for any reason other
than by reason of Disability or retirement on or after age 65, each such option
held by such holder shall be exercisable only to the extent that such option is
exercisable on the date of the holder's death and
-19-
20
may thereafter be exercised by the holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until the
earliest to occur of the (i) date one year after the date of death and (ii) the
expiration date of the term of such option.
5.4 DIRECTORS OPTIONS. Each Directors Option shall be subject
to the following terms and conditions and shall contain such additional terms
and conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable:
(a) Option Period and Exercisability. If at any time prior to
the time that a Directors Option becomes exercisable, a Non-Employee Director
shall no longer be a member of the Board, such Directors Option shall become
void and of no further force or effect.
(b) Purchase Price. The purchase price for the shares of
Common Stock subject to any Directors Option shall be equal to 100% of the Fair
Market Value of a share of Common Stock on the date of grant of such Directors
Option. Such Directors Options shall be exercisable in accordance with Section
2.1(c).
(c) Restrictions on Transfer. Directors Options shall be
subject to the transfer restrictions and other provisions of Section 6.4.
(d) Expiration. Each Directors Option which has become
exercisable pursuant to Section 5.4(a), to the extent not theretofore exercised,
shall expire on the first to occur of (i) the date which is three months after
the first date on which the Non-Employee Director shall no longer be a member of
the Board or the Board of Directors of a Subsidiary and (ii) the tenth
anniversary of the date of grant of such option; provided, however, that if the
Non-Employee Director shall die within such three-month period following the
date on which he shall have ceased to serve as such a director, such option may
be exercised at any time within the one-year period following the date of death
to the extent not theretofore exercised (but in no event later than the tenth
anniversary of the date of grant).
VI. GENERAL
6.1 EFFECTIVE DATE AND TERM OF PLAN; SUBMISSION TO
STOCKHOLDERS. This Plan became effective immediately upon its approval by the
Board. This Plan shall terminate ten years after its effective date unless
terminated earlier by the Board. Termination of this Plan shall not affect the
terms or conditions of any award granted prior to termination. Awards hereunder
may
-20-
21
be made at any time prior to the termination of this Plan, provided that no
award may be made later than ten years after the effective date of this Plan.
This Plan, as amended to increase the available shares from
400,000 to 1,000,000, shall be submitted to the stockholders of the Company for
approval. Unless the Plan is approved, as so amended, by the affirmative vote of
a majority of the voting power of the shares of capital stock of the Company
represented at a meeting in which the Plan is considered for approval, no
further awards may be made under the Plan to any director or officer of the
Company; provided that awards may be made to a person not previously employed by
the Company as an inducement essential to such person's entering into an
employment contract with the Company.
6.2 AMENDMENTS. The Board may amend this Plan as it shall deem
advisable, subject to any requirement of stockholder approval required by
applicable law, rule or regulation including Section 162(m) of the Code;
provided, however, that no amendment shall be made without stockholder approval
if such amendment would (a) reduce the minimum purchase price in the case of an
option or the base price in the case of an SAR, (b) effect any change
inconsistent with Section 422 of the Code, (c) extend the term of this Plan or
(d) eliminate or have the effect of eliminating the provision set forth in
Section 6.12. No amendment may impair the rights of a holder of an outstanding
award without the consent of such holder.
6.3 AGREEMENT. Each award under this Plan shall be evidenced
by an Agreement setting forth the terms and conditions applicable to such award.
No award shall be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.
6.4 NON-TRANSFERABILITY OF STOCK OPTIONS, SARS AND PERFORMANCE
SHARES. No option, SAR or Performance Share shall be transferable other than (i)
by will, the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company or (ii) as otherwise set forth in
the Agreement relating to such award. Each option, SAR or Performance Share may
be exercised or settled during the participant's lifetime only by the holder or
the holder's legal representative or similar person. Except as permitted by the
second preceding sentence, no option, SAR or Performance Share may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar
-21-
22
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any option, SAR or Performance Share, such
award and all rights thereunder shall immediately become null and void.
6.5 TAX WITHHOLDING. The Company shall have the right to
require, prior to the issuance or delivery of any shares of Common Stock or the
payment of any cash pursuant to an award made hereunder, payment by the holder
of such award of any Federal, state, local or other taxes which may be required
to be withheld or paid in connection with such award. An Agreement may provide
that (i) the Company shall withhold whole shares of Common Stock which would
otherwise be delivered to a holder, having an aggregate Fair Market Value
determined as of the date the obligation to withhold or pay taxes arises in
connection with an award (the "Tax Date"), or withhold an amount of cash which
would otherwise be payable to a holder, in the amount necessary to satisfy any
such obligation or (ii) the holder may satisfy any such obligation by any of the
following means: (1) a cash payment to the Company, (2) delivery to the Company
of Mature Shares having an aggregate Fair Market Value, determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation, (3)
authorizing the Company to withhold whole shares of Common Stock which would
otherwise be delivered having an aggregate Fair Market Value, determined as of
the Tax Date, or withhold an amount of cash which would otherwise be payable to
a holder, equal to the amount necessary to satisfy any such obligation, (4) in
the case of the exercise of an option, a cash payment by a broker-dealer
acceptable to the Company to whom the optionee has submitted an irrevocable
notice of exercise or (5) any combination of (1), (2) and (3), in each case to
the extent set forth in the Agreement relating to the award; provided, however,
that the Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (2)-(5). An Agreement may provide for shares of
Common Stock to be delivered or withheld having an aggregate Fair Market Value
in excess of the minimum amount required to be withheld. Any fraction of a share
of Common Stock which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the holder.
6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of Common Stock subject to
such award upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery of
shares thereunder, such shares shall not be delivered unless such listing,
registration,
-22-
23
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company. The Company may
require that certificates evidencing shares of Common Stock delivered pursuant
to any award made hereunder bear a legend indicating that the sale, transfer or
other disposition thereof by the holder is prohibited except in compliance with
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
6.7 ADJUSTMENT. Except as provided in Section 6.8, in the
event of any stock split, stock dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation, spin-off or
other similar change in capitalization or event, or any distribution to holders
of Common Stock other than a regular cash dividend, the number and class of
securities available under this Plan, the number and class of securities subject
to each outstanding option and the purchase price per security, the number of
securities subject to each option to be granted to Non-Employee Directors
pursuant to Article V, the terms of each outstanding SAR, the number and class
of securities subject to each outstanding Stock Award, and the terms of each
outstanding Performance Share shall be appropriately adjusted by the Committee,
such adjustments to be made in the case of outstanding options and SARs without
an increase in the aggregate purchase price or base price. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (a) available
under this Plan, such fractional security shall be disregarded, or (b) subject
to an award under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award, in
whole or in part, occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (1) the Fair Market Value on the
vesting, exercise or settlement date over (2) the exercise or base price, if
any, of such award.
6.8 CHANGE IN CONTROL.
(a) (i) Notwithstanding any provision in this Plan or any
Agreement, in the event of a Change in Control pursuant to Section
(b)(iii) or (iv) below, (1) all outstanding options and SARS shall
immediately become exercisable in full, (2) the Restriction Period
applicable to any outstanding Restricted Stock Award shall lapse, (3)
the Performance Period applicable to any outstanding Performance Share
shall lapse and (4) the Performance Measures applicable to any
outstanding Restricted Stock Award (if any) and to any outstanding
Performance Share shall be
-23-
24
deemed to be satisfied at the maximum level. If, in connection with
such Change in Control, holders of Common Stock receive solely shares
of common stock that are registered under Section 12 of the Exchange
Act, there shall be substituted for each share of Common Stock
available under this Plan, whether or not then subject to an
outstanding award, the number and class of shares into which each
outstanding share of Common Stock shall be converted pursuant to such
Change in Control. If, in connection with such Change in Control,
holders of Common Stock receive solely cash and shares of common stock
that are registered under Section 12 of the Exchange Act, each
outstanding award shall be surrendered to and canceled by the Company,
and the holder shall receive, within ten days of the occurrence of such
Change in Control, a proportionate amount of cash in the manner
provided in Section (a)(ii) below, and there shall be substituted for
the award surrendered a similar award reflecting a proportionate number
of the class of shares into which each outstanding share of Common
Stock shall be converted to such Change in Control. In the event of any
such substitution, the proportion of cash and common stock, the
purchase price per share in the case of an option and the base price in
the case of an SAR, and any other terms of outstanding awards shall be
appropriately adjusted by the Committee, such adjustments to be made in
the case of outstanding options and SARs without an increase in the
aggregate purchase price or base price; provided, that the proportion
of cash and common stock substituted for outstanding awards shall
reflect the approximate proportion of cash and common stock received by
holders of Common Stock in such Change in Control. If, in connection
with a Change in Control, holders of Common Stock receive any portion
of the consideration in a form other than cash or shares of common
stock that are registered under Section 12 of the Exchange Act, each
share of Common Stock available under this Plan, whether or not then
subject to an outstanding award, shall be substituted or surrendered
for such proportion of common stock, cash or other consideration as
shall be determined by the Committee pursuant to Section 6.7.
(ii) Notwithstanding any provision in this Plan or any Agreement,
in the event of a Change in Control pursuant to Section (b)(i) or (ii)
below, or in the event of a Change in Control pursuant to Section
(b)(iii) or (iv) below in connection with which the holders of Common
Stock receive cash, each outstanding award shall be surrendered to the
Company by the holder thereof, and each such award shall immediately be
canceled by the Company, and the holder shall receive, within ten days
of the occurrence of a Change in
-24-
25
Control pursuant to Section (b)(i) or (ii) below or within ten days of
the approval of the stockholders of the Company contemplated by Section
(b)(iii) or (iv) below, a cash payment from the Company in an amount
equal to (1) in the case of an option, the number of shares of Common
Stock then subject to such option, multiplied by the excess, if any, of
the greater of (A) the highest per share price offered to stockholders
of the Company in any transaction whereby the Change in Control takes
place or (B) the Fair Market Value of a share of Common Stock on the
date of occurrence of the Change in Control, over the purchase price
per share of Common Stock subject to the option; (2) in the case of a
Free-Standing SAR, the number of shares of Common Stock then subject to
such SAR, multiplied by the excess, if any, of the greater of (A) the
highest per share price offered to stockholders of the Company in any
transaction whereby the Change in Control takes place or (B) the Fair
Market Value of a share of Common Stock on the date of occurrence of
the Change in Control, over the base price of the SAR; and (3) in the
case of a Restricted Stock Award or Performance Share Award, the number
of shares of Common Stock or the number of Performance Shares, as the
case may be, then subject to such award, multiplied by the greater of
(A) the highest per share price offered to stockholders of the Company
in any transaction whereby the Change in Control takes place or (B) the
Fair Market Value of a share of Common Stock on the date of occurrence
of the Change in Control. In the event of a Change in Control, each
Tandem SAR shall be surrendered by the holder thereof and shall be
canceled simultaneously with the cancellation of the related option.
Except as may be provided in an agreement relating to an award, the
Company may, but is not required to, cooperate with any person who is
subject to Section 16 of the Exchange Act to assure that any cash
payment in accordance with the foregoing to such person is made in
compliance with Section 16 and the rules and regulations thereunder.
(b) "Change in Control" shall mean:
(i) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of Beneficial Ownership of
25% or more of either (1) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (2) the
combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the
following: (A) any acquisition
-25-
26
directly from the Company (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired
directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company,
(D) any acquisition by an Exempt Person or (E) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this Section 6.8(b); provided
further, that for purposes of clause (2), if any Person (other than an
Exempt Person, the Company or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company) shall become the Beneficial Owner of 50% or
more of the Outstanding Company Common Stock or 50% or more of the
Outstanding Company Voting Securities by reason of an acquisition by
the Company, and such Person shall, after such acquisition by the
Company, become the Beneficial Owner of any additional shares of the
Outstanding Company Common Stock or any additional Outstanding Company
Voting Securities and such Beneficial Ownership is publicly announced,
such additional Beneficial Ownership shall constitute a Change in
Control;
(ii) individuals who, as of the effective date hereof, constitute
the Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the
effective date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a majority
of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any
individual who was initially elected as a director of the Company as a
result of an actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall not
be deemed a member of the Incumbent Board;
(iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a "Corporate
Transaction"); excluding, however, a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals or entities who
are the
-26-
27
Beneficial Owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior
to such Corporate Transaction will Beneficially Own, directly or
indirectly, more than 50% of, respectively, the outstanding shares of
common stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative to each
other as their Beneficial Ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (2) no
Person (other than an Exempt Person; the Company; any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; the corporation resulting from
such Corporate Transaction; and any Person which Beneficially Owned,
immediately prior to such Corporate Transaction, directly or
indirectly, 50% or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) will
Beneficially Own, directly or indirectly, 50% or more of, respectively,
the outstanding shares of common stock of the corporation resulting
from such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally
in the election of directors and (3) individuals who were members of
the Incumbent Board will constitute at least a majority of the members
of the board of directors of the corporation resulting from such
Corporate Transaction; or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
Notwithstanding anything to the contrary herein, no Change of
Control shall be deemed to have taken place as a result of the issuance of
shares of Common Stock by the Company or the sale of shares of Common Stock by
its stockholders in connection with the Company's initial public offering.
6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT/SERVICE. No person
shall have any right to participate in this Plan. Neither this Plan nor any
award made hereunder shall confer upon any person any right to continued
employment or service by the Company, any Subsidiary or any affiliate of the
Company or affect in any manner the right of the Company, any Subsidiary or any
-27-
28
affiliate of the Company to terminate the employment or service of any person at
any time without liability hereunder.
6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as
a stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless and
until such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
6.11 GOVERNING LAW. This Plan, each award hereunder and the
related Agreement, and all determinations made and actions taken pursuant
thereto, to the extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the State of Delaware and
construed in accordance therewith without giving effect to principles of
conflicts of laws.
6.12 REPRICING AWARDS. The exercise price or base price, as
the case may be, of any award granted hereunder shall not be changed after the
date of grant of such award without the affirmative vote of a majority of the
voting power of the shares of capital stock of the Company represented at a
meeting in which the change to such exercise price or base price is considered
for approval.
-28-