EXHIBIT 10.5
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AMENDED AND RESTATED
INTERSTATE HOTELS & RESORTS, INC.
INCENTIVE PLAN
ARTICLE I
DEFINITIONS
1.1 "AFFILIATE" means any "subsidiary" or "parent" corporation
(within the meaning of Section 424 of the Code) of the Interstate Hotels &
Resorts, Inc.
1.2 "AGGREGATE LIMIT" means 15% of the aggregate number of shares
of Common Stock issued and outstanding as of the end of the preceding fiscal
year; provided, that for the year in which the Merger is consummated, the
Aggregate Limit shall mean the number of issued and outstanding shares of Common
Stock as of the calendar day after the effective time of the Merger times 15%;
and further provided that, notwithstanding the foregoing and subject to Article
XI, no more than 1,000,000 shares of Common Stock shall be available for Awards
of Options under the Plan which are intended to be qualified as "incentive stock
options" within the meaning of Section 422 of the Code.
1.3 "AGGREGATE NUMBER OF AWARD SHARES" means the total of (i) the
number of shares of Common Stock covered by outstanding Awards under the Plan;
(ii) the number of shares of Common Stock issued pursuant to Awards under the
Plan; and (iii) if the Merger is completed, the number of shares of Common Stock
covered by outstanding unexercised options granted under the Interstate Hotels
Corporation 1999 Equity Incentive Plan.
1.4 "AGREEMENT" means a written agreement (including any amendment
or supplement thereto) between the Company and a Participant specifying the
terms and conditions of a Stock Award, an award of Performance Shares or an
Option or Incentive Award granted to such Participant.
1.5 "AWARD" means any of an Incentive Award, an Option, an award
of Performance Shares, or a Stock Award.
1.6 "BOARD" means the Board of Directors of the Company.
1.7 "CHANGE IN CONTROL," shall, unless in the case of a particular
Award, the applicable Agreement states otherwise or contains a different
definition of "Change in Control," be deemed to occur upon:
(i) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") other than a Permitted Acquiror of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more (on a fully diluted basis) of either (A)
the then outstanding shares of common stock of the Company, taking into
account as outstanding for this purpose such common stock issuable upon
the exercise of options or warrants, the conversion of convertible
stock or debt, and the exercise of any similar right to acquire such
common stock (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this Plan, the following acquisitions shall not constitute
a Change of Control: (I) any acquisition by the Company or any
Affiliate, (II) any acquisition by any employee benefit plan sponsored
or maintained by the Company or any Affiliate, (III) any acquisition
which complies with clauses (A), (B) and (C) of subsection (v) of this
Section 1.7, or (IV) in respect of an award held by a particular
Participant, any acquisition by the Participant or any group of persons
including the Participant (or any entity controlled by the Participant
or any group of persons including the Participant);
(ii) Individuals who, on the date hereof, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board; provided that (A) any person becoming a
director subsequent to the date hereof, whose election or nomination
for election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Corporation in which such person
is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; (B) no individual initially
elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to directors or as a
result of any other actual or
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threatened solicitation of proxies or consents by or on behalf of any
person other than the Board shall be deemed to be an Incumbent
Director; and (C) any individual elected to the Board in connection
with the Merger shall be an Incumbent Director;
(iii) the dissolution or liquidation of the Company;
(iv) the sale of all or substantially all of the business
or assets of the Company; or
(v) the consummation of a merger, consolidation,
statutory share exchange or similar form of corporate transaction
involving the Company that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (A) more than 50% of
the total voting power of (x) the corporation resulting from such
Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly
has beneficial ownership of sufficient voting securities eligible to
elect a majority of the directors of the Surviving Corporation (the
"Parent Corporation"), is represented by the Outstanding Company Voting
Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which the
Outstanding Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders thereof
is in substantially the same proportion as the voting power of the
Company's Voting Securities among the holders thereof immediately prior
to the Business Combination, (B) no Person (other than a Permitted
Acquiror or any employee benefit plan sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 30% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of
the members of the board of directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation) following
the consummation of the Business Combination were Board members at the
time of the Board's approval of the execution of the initial agreement
providing for such Business Combination.
(vi) Notwithstanding any provision of this Section 1.7 to
the contrary, any acquisition of the securities of the Company by any
Person in connection with the Merger shall not be deemed to be a
"Change of Control."
1.8 "CODE" means the Internal Revenue Code of 1986, and any
amendments thereto.
1.9 "COMMITTEE" means the Compensation Committee of the Board or a
subcommittee thereof comprised of at least two (2) directors each of whom is a
non-employee director within the meaning of Securities and Exchange Commission
Rule 16b-3 and an outside director within the meaning of Section 162(m) of the
Code.
1.10 "COMMON STOCK" means the common stock, $0.01 par value, of the
Company.
1.11 "COMPANY" means Interstate Hotels & Resorts, Inc., a Delaware
corporation.
1.12 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended and as in effect on the effective date of this Plan.
1.13 "FAIR MARKET VALUE" means, on any given date, the current fair
market value of the shares of Common Stock as determined below:
If the Common Stock is not listed on an established stock
exchange, the Fair Market Value shall be the average of the
final bid and asked quotations on the over-the-counter market
in which the Common Stock is traded or, if applicable, the
reported "closing" price of a share of Common Stock in the New
York over-the-counter market as reported by the National
Association of Securities Dealers, Inc. If the Common Stock is
listed on one or more established stock exchanges, Fair Market
Value shall be deemed to be the highest closing price of a
share of Common Stock reported on any such exchange. In any
case, if no sale of Common Stock is made on any stock exchange
or over-the-
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counter market on that date, then Fair Market Value shall be
determined as of the next preceding day on which there was a
sale. If the Common Stock is not traded, Fair Market Value
shall be determined by the Board using any reasonable method
in good faith.
1.14 "INCENTIVE AWARD" means an award which, subject to such terms
and conditions as may be prescribed by the Committee, entitles the Participant
to receive a cash payment from the Company or an Affiliate.
1.15 "MERGER" means the merger transaction contemplated by the
Agreement and Plan of Merger, dated as of May 1, 2002, as amended to date,
between the Company and Interstate Hotels Corporation.
1.16 "OPTION" means a stock option that entitles the holder to
purchase from the Company a stated number of shares of Common Stock at the price
set forth in an Agreement.
1.17 "PARTICIPANT" means: (i) an employee of the Company or any
Affiliate (including an employee who is a member of the Board), or any
individual who provides services to the Company or any Affiliate, (ii) who
satisfies the requirements of Article IV and (iii) is selected by the Committee
to receive an Award under the Plan.
1.18 "PERFORMANCE SHARES" means an award, in the amount determined
by the Committee and specified in an Agreement, stated with reference to a
specified number of shares of Common Stock, that entitles the holder to receive
a payment for each specified share equal to the Fair Market Value of Common
Stock on the date of payment.
1.19 "PERMITTED ACQUIROR" means, if the Merger is completed, any
Person who has, as of the day after the Merger is completed, beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of 30% or more (on a
fully diluted basis) of the Outstanding Company Common Stock or the Outstanding
Company Voting Securities; provided, however, that no Person shall be deemed to
be a Permitted Acquiror if such Person beneficially owns (as defined in Rule
13d-3 under the Exchange Act) 50% or more (on a fully diluted basis) of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities.
1.20 "PERMITTED FAMILY MEMBERS" shall have the meaning set forth in
Section 6.5 hereof.
1.21 "PLAN" means the Amended and Restated Interstate Hotels &
Resorts, Inc. Incentive Plan.
1.22 "STOCK AWARD" means Common Stock awarded to a Participant
under Article VIII.
1.23 "TEN PERCENT SHAREHOLDER" means any individual owning more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of an Affiliate. An individual shall be considered to
own any voting stock owned (directly or indirectly) by or for his brothers,
sisters, spouse, ancestors or lineal descendants and shall be considered to own
proportionately any voting stock owned (directly or indirectly) by or for a
corporation, partnership, estate or trust of which such individual is a
shareholder, partner or beneficiary.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company and its Affiliates in (i) attracting
and retaining employees, directors and other service providers with ability and
initiative, (ii) providing incentives to those deemed important to the success
of the Company, (iii) aligning the interests of those individuals with the
interests of the Company and its stockholders through opportunities for
increased stock ownership. The Plan is intended to permit the grant of Options
that qualify as incentive stock options under Section 422 of the Code and
nonqualified stock options, Stock Awards, Performance Shares and Incentive
Awards. No Option that is intended to be an incentive stock option shall be
invalid for failure to qualify as an incentive stock option. The proceeds
received by the Company from the sale of Common Stock pursuant to this Plan
shall be used for general corporate purposes.
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ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
authority to grant Stock Awards, Performance Shares, Incentive Awards and
Options upon such terms (not inconsistent with the provisions of this Plan) as
the Committee may consider appropriate. Such terms may include conditions (in
addition to those contained in this Plan) on the exercisability of all or any
part of an Option or on the transferability or forfeitability of a Stock Award,
Incentive Award or Performance Shares. Notwithstanding any such conditions, the
Committee may, in its discretion, accelerate the time at which any Option may be
exercised, or the time at which a Stock Award may become transferable or
nonforfeitable or the time at which an Incentive Award or Performance Shares may
be settled. In addition, the Committee shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of Agreements; to
adopt, amend, and rescind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of
the Committee. Any decision made, or action taken, by the Committee or in
connection with the administration of this Plan shall be final and conclusive.
Neither the Committee nor any member of the Committee shall be liable for any
act done in good faith with respect to this Plan or any Agreement, Option, Stock
Award, Incentive Award or award of Performance Shares. All expenses of
administering this Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers of the
Company all or part of the Committee's authority and duties with respect to
grants and awards to individuals who are not subject to the reporting and other
provisions of Section 16 of the Exchange Act; provided, however, the Committee
shall not delegate its authority (i) to appoint delegates or its authority to
amend or revoke any delegation, (ii) under Articles XI and XII hereof and (iii)
to accelerate the exercisability of Options, the transferability of Stock Awards
or the time at which Incentive Awards or awards of Performance Shares may be
settled. The Committee may revoke or amend the terms of a delegation at any time
but such action shall not invalidate any prior actions of the Committee's
delegate or delegates that were consistent with the terms of the Plan.
ARTICLE IV
ELIGIBILITY
Any employee of the Company or an Affiliate (including a corporation that
becomes an Affiliate after the adoption of this Plan) or a person whose efforts
contribute to the performance or success of the Company or an Affiliate
(including a corporation that becomes an Affiliate after the adoption of this
Plan) (other than a Board member who is not also an employee of the Company or
an Affiliate) is eligible to participate in this Plan if the Committee, in its
sole discretion, determines that such person has contributed significantly or
can be expected to contribute significantly to the profits or growth of the
Company or an Affiliate. Directors of the Company who are employees of the
Company or an Affiliate may be selected to participate in this Plan.
ARTICLE V
STOCK SUBJECT TO PLAN
5.1 SHARES ISSUED. Upon the award of shares of Common Stock
pursuant to a Stock Award or the settlement of a Performance Share award, the
Company may issue shares of Common Stock from its authorized but unissued Common
Stock. Upon the exercise of an Option, the Company may deliver to the
Participant (or the Participant's broker if the Participant so directs), shares
of Common Stock from its authorized but unissued Common Stock.
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5.2 AGGREGATE LIMIT. In no event and at no time may the Aggregate
Number of Award Shares exceed the Aggregate Limit, except that a reduction in
the number of outstanding shares of Common Stock may cause the Aggregate Limit
to be less than the Aggregate Number of Award Shares. If a reduction in the
number of issued and outstanding shares of Common Stock causes the Aggregate
Limit to be less than the Aggregate Number of Award Shares, (i) no additional
Awards may be granted under the Plan until the Aggregate Number of Award Shares
does not exceed the Aggregate Limit; and (ii) all Awards already granted prior
to the reduction in the Aggregate Limit shall remain in effect in accordance
with their terms. The Aggregate Limit and the Aggregate Number of Award Shares
shall be subject to adjustment as provided in Article XI.
5.3 REALLOCATION OF SHARES. If an Award is terminated (for any
reason other than its exercise), forfeited or expires unexercised, the number of
shares of Common Stock allocated to the Award or portion thereof which was
terminated, forfeited or expired unexercised may be reallocated to other Awards
to be granted under this Plan.
ARTICLE VI
OPTIONS
6.1 AWARD. In accordance with the provisions of Article IV, the
Committee will designate each individual to whom an Option is to be granted and
will specify the number of shares of Common Stock covered by the Option;
provided, however, that no individual may be granted Options in any calendar
year covering more than 1,000,000 shares of Common Stock.
6.2 OPTION PRICE. The price per share for Common Stock purchased
on the exercise of an Option shall be determined by the Committee on the date of
grant; provided, however, that the price per share for Common Stock purchased on
the exercise of any Option shall not be less than the Fair Market Value on the
date of grant or, with respect to Options granted in connection with the initial
employment of an individual, eighty-five (85%) percent of the Fair Market Value
on the date the Option is granted; provided, however, that no more than ten
percent (10%) of the shares of Common Stock issued under the Plan may be granted
at less than one hundred percent (100%) of Fair Market Value. Notwithstanding
the preceding sentence, the price per share for Common Stock purchased on the
exercise of any Option that is an incentive stock option shall not be less than
the Fair Market Value on the date the Option is granted or, in the case of an
incentive stock option granted to an individual who is a Ten Percent Shareholder
on the date such option is granted, shall not be less than one hundred ten
percent (110%) of the Fair Market Value on the date the Option is granted.
6.3 MAXIMUM OPTION PERIOD. Unless the relevant Agreement provides
otherwise, the maximum period in which an Option may be exercised shall be ten
years from date on which such Option was granted, except that no Option that is
an incentive stock option shall be exercisable after the expiration of ten years
from the date such Option was granted. In the case of an incentive stock option
that is granted to a Participant who is a Ten Percent Shareholder on the date of
grant, such Option shall not be exercisable after the expiration of five years
from the date of grant. The terms of any Option that is an incentive stock
option may provide that it is exercisable for a period less than such maximum
period.
6.4 NONTRANSFERABILITY. Except as provided in Section 6.5 hereof,
each Option granted under this Plan shall be nontransferable except by will or
by the laws of descent and distribution. During the lifetime of the Participant
to whom the Option is granted, the Option may be exercised only by the
Participant. No right or interest of a Participant in any Option shall be liable
for, or subject to, any lien, obligation, or liability of such Participant.
6.5 TRANSFERABLE OPTIONS. Section 6.4 hereof to the contrary
notwithstanding, if the applicable Agreement so provides, an Option that is not
an incentive stock option may be transferred by a Participant to the
Participant's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners (collectively, "Permitted Family Members"); provided, however,
that the Participant may not receive any consideration for the
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transfer; and further provided, that the Participant gives the Committee advance
written notice describing the terms and conditions of the proposed transfer and
the Committee notifies the Participant in writing that such transfer would
comply with the requirements of this Plan and the applicable Agreement. The
holder of an Option transferred pursuant to this section shall be bound by the
same terms and conditions that governed the Option during the period that it was
held by the Participant.
6.6 EMPLOYEE STATUS. For purposes of determining the applicability
of Section 422 of the Code (relating to incentive stock options), or in the
event that the terms of any Option provide that it may be exercised only during
employment or service or within a specified period of time after termination of
employment or service, the Committee may decide to what extent leaves of absence
for governmental or military service, illness, temporary disability, or other
reasons, shall not be deemed interruptions of continuous employment or service.
6.7 VESTING. Unless the applicable Agreement provides otherwise,
one third of the Options subject to an Award shall vest and become exercisable
on each anniversary of the date of grant such that the Options subject to such
Award will be fully vested on the third anniversary of the date of grant;
provided, however, that notwithstanding any vesting dates set forth in the
applicable Agreement, the Committee may in its sole discretion accelerate the
vesting and exercisability of any Option, which acceleration shall not affect
the terms and conditions of any such Option other than with respect to vesting
and exercisability. To the extent not exercised, installments shall accumulate
and be exercisable, in whole or in part, at any time after becoming exercisable,
but not later than the date the Option expires in accordance with Section 6.3
hereof. An Option granted under this Plan may be exercised with respect to any
number of whole shares less than the full number for which the Option could be
exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the Option.
6.8 ANNUAL LIMITATION FOR INCENTIVE STOCK OPTIONS. To the extent
the aggregate Fair Market Value (determined on the date of grant) of the shares
of Common Stock for which an incentive stock options are exercisable for the
first time by any Participant during any calendar year (under all plans of the
Company) exceeds $100,000, such excess incentive stock options shall be treated
as nonqualified stock options.
6.9 PAYMENT. Unless otherwise provided by the Agreement, payment
of the Option price shall be made in cash or a cash equivalent acceptable to the
Committee. If the applicable Agreement so provides, payment of all or part of
the Option price may be made by surrendering shares of Common Stock to the
Company; provided, however, that such shares are not subject to any pledge or
other security interest and have either been held by the Participant for six
months, previously acquired by the Participant on the open market or meet such
requirements as the Committee may determine necessary in order to avoid an
accounting earnings charge in respect of the Option. If Common stock is used to
pay all or part of the Option price, the sum of the cash and cash equivalent and
the Fair Market Value (determined as of the day preceding the date of exercise)
of the shares surrendered must not be less than the Option price of the shares
for which the Option is being exercised. Unless the Committee decides otherwise,
a Participant may provide instructions to the Company that upon receipt of the
Option price in cash from a broker or dealer acting at the direction of the
Participant in payment for any shares of Common Stock pursuant to the exercise
of an Option, the Company shall issue such shares of Common Stock directly to
the designated broker or dealer.
6.10 SHAREHOLDER RIGHTS. No Participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.11 DISPOSITION OF STOCK. A Participant shall notify the Company
of any sale or other disposition of Common Stock acquired pursuant to an Option
that was an incentive stock option if such sale or disposition occurs: (i)
within two years after the grant of an Option or (ii) within one year after the
issuance of the Common Stock to the Participant. Such notice shall be in writing
and directed to the Secretary of the Company.
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6.12 TERMINATION OF EMPLOYMENT OR SERVICE. Unless the applicable
Agreement provides otherwise, if a Participant's employment or service with
Company and its Affiliates is terminated, each Option shall expire on the
earlier of (x) the last day of the option period and (y) the date that is 90
days after the date of the Participant's termination of employment or service.
ARTICLE VII
STOCK AWARDS
7.1 AWARD. In accordance with the provisions of Article IV, the
Committee will designate each individual to whom a Stock Award is to be made and
will specify the number of shares of Common Stock covered by such Award;
provided, however, that no individual may receive Stock Awards with respect to
more than 250,000 shares of Common Stock in any calendar year and no more than
thirty (30%) percent of the shares of Common Stock available under the Plan may
be issued in the form of Stock Awards.
7.2 VESTING. Unless the applicable Agreement provides otherwise, a
Stock Award shall be subject to forfeiture restrictions; provided, however, that
such forfeiture restrictions shall lapse with respect to one third of the shares
of Common Stock subject to the Stock Award on each anniversary of the date of
grant such that the Stock Award will be fully vested on the third anniversary of
the date of grant; and further provided, however, that notwithstanding the
foregoing, the Committee may, in its sole discretion, accelerate the date or
dates on which the forfeiture restrictions shall lapse, which acceleration shall
not affect the terms and conditions of any such Stock Award other than with
respect to vesting.
7.3 PERFORMANCE OBJECTIVES. In accordance with Section 7.2 hereof,
the Committee may prescribe that Stock Awards will be vested immediately upon
grant or will become vested or transferable or both based on objectives stated
with respect to the Company's, an Affiliate's or an operating unit's return on
equity, earnings per share, total earnings, earnings growth, return on capital,
return on assets, funds from operations or Fair Market Value or such other
criteria as are determined by Committee. If the Committee, on the date of award,
prescribes that a Stock Award shall become nonforfeitable and transferable only
upon the attainment of performance objectives stated with respect to one or more
of the foregoing criteria, the shares subject to such Stock Award shall become
nonforfeitable and transferable only to the extent that the Committee certifies
that such objectives have been achieved.
7.4 EMPLOYEE STATUS. In the event that the terms of any Stock
Award provide that shares may become transferable and nonforfeitable thereunder
only after completion of a specified period of employment or service, the
Committee may decide in each case to what extent leaves of absence for
governmental or military service, illness, temporary disability, or other
reasons shall not be deemed interruptions of continuous employment or service.
7.5 SHAREHOLDER RIGHTS. Prior to their forfeiture (in accordance
with the applicable Agreement and while the shares of Common Stock granted
pursuant to the Stock Award may be forfeited or are nontransferable), a
Participant will have all rights of a shareholder with respect to a Stock Award,
including the right to receive dividends and vote the shares; provided, however,
that during such period (i) a Participant may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of shares of Common Stock granted
pursuant to a Stock Award, (ii) the Company shall retain custody of the
certificates evidencing shares of Common Stock granted pursuant to a Stock
Award, and (iii) the Participant will deliver to the Company a stock power,
endorsed in blank, with respect to each Stock Award. The limitations set forth
in the preceding sentence shall not apply after the shares of Common Stock
granted under the Stock Award are transferable and are no longer forfeitable.
7.6 TERMINATION OF EMPLOYMENT OR SERVICE. Except to the extent
provided in the applicable Agreement, in the event a Participant terminates
employment or service with the Company and its Affiliates during the period a
Stock Award is subject to forfeiture conditions, that portion of the Stock Award
with respect to which the forfeiture conditions have not lapsed shall be
completely forfeited.
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ARTICLE VIII
PERFORMANCE SHARE AWARDS
8.1 AWARD. In accordance with the provisions of Article IV, the
Committee will designate each individual to whom an award of Performance Shares
is to be made and will specify the number of shares of Common Stock covered by
such awards; provided, however, that no Participant may receive an award of
Performance Shares in any calendar year for more than 50,000 shares of Common
Stock.
8.2 EARNING THE AWARD. The Committee, on the date of the grant of
an award, may prescribe that the Performance Shares, or portion thereof, will be
earned, and the Participant will be entitled to receive payment pursuant to the
award of Performance Shares only upon the satisfaction of certain requirements
or the attainment of certain objectives. By way of example and not of
limitation, the restrictions may provide that Performance Shares will be
forfeited without payment if the Participant separates from the service of the
Company and its Affiliates before the expiration of a stated term or unless the
Company, an Affiliate or an operating unit achieves objectives stated with
reference to the Company's, an Affiliate's or an operating unit's return on
equity, earnings per share, total earnings, earnings growth, return on capital,
return on assets, funds from operations or Fair Market Value or such other
criteria as are determined by Committee. If the Committee, on the date of award,
prescribes that no payments will be made with respect to Performance Shares
unless performance objectives stated with respect to the foregoing criteria are
attained, no such payment will be made unless, and then only to the extent that,
the Committee certifies that such objectives have been achieved.
8.3 PAYMENT. In the discretion of the Committee, the amount
payable when an award of Performance Shares is earned may be settled in cash, by
the issuance of Common Stock or a combination of cash and Common Stock. A
fractional share shall not be deliverable when an award of Performance Shares is
earned, but a cash payment will be made in lieu thereof.
8.4 SHAREHOLDER RIGHTS. No Participant shall, as a result of
receiving an award of Performance Shares, have any rights as a shareholder until
and to the extent that the award of Performance Shares is earned and settled by
the issuance of Common Stock. After an award of Performance Shares is earned, if
settled completely or partially in Common Stock, a Participant will have all the
rights of a shareholder with respect to such Common Stock.
8.5 NONTRANSFERABILITY. Except as provided in Section 8.6 hereof,
Performance Shares granted under this Plan shall be nontransferable except by
will or by the laws of descent and distribution. No right or interest of a
Participant in any Performance Shares shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
8.6 TRANSFERABLE PERFORMANCE SHARES. Section 8.5 hereof to the
contrary notwithstanding, the Committee may grant Performance Shares which are
transferable to Permitted Family Members to the extent that, and on such terms
and conditions as may be permitted by, Securities Exchange Commission Rule 16b-3
as in effect from time to time; provided, however, that the participant gives
the Committee advance written notice describing the terms and conditions of the
proposed transfer and the Committee notifies the Participant in writing that
such transfer would comply with the requirements of this Plan and the applicable
Agreement. The holder of Performance Shares transferred pursuant to this section
shall be bound by the same terms and conditions that governed the Performance
Shares during the period that they were held by the Participant.
8.7 EMPLOYEE STATUS. In the event that the terms of any
Performance Share award provide that no payment will be made unless the
Participant completes a stated period of employment or service, the Committee
may decide to what extent leaves of absence for government or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment or service.
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ARTICLE IX
INCENTIVE AWARDS
9.1 AWARD. In accordance with the provisions of Article IV, the
Committee shall designate Participants to whom Incentive Awards are made. All
Incentive Awards shall be finally determined exclusively by the Committee under
the procedures established by the Committee; provided, however, that no
Participant may receive an Incentive Award payment in any calendar year that
exceeds the lesser of (i) one hundred (100%) percent of the Participant's base
salary (prior to any salary reduction or deferral elections) as of the date of
grant of the Incentive Award or (ii) $250,000.
9.2 TERMS AND CONDITIONS. The Committee, at the time an Incentive
Award is made, shall specify the terms and conditions which govern the award.
Such terms and conditions shall prescribe that the Incentive Award shall be
earned only to the extent that the Company, an Affiliate or an operating unit,
during a performance period of at least one year, achieves objectives stated
with respect to the Company's, an Affiliate's or an operating unit's return on
equity, earnings per share, total earnings, earnings growth, return on capital,
return on assets, funds from operations or Fair Market Value or such other
criteria as are determined by Committee. Such terms and conditions also may
include other limitations on the payment of Incentive Awards including, by way
of example and not of limitation, requirements that the Participant complete a
specified period of employment with the Company or an Affiliate or that the
Company, an Affiliate, or the Participant attain stated objectives or goals (in
addition to those prescribed in accordance with the preceding sentence) as a
prerequisite to payment under an Incentive Award. The Committee, at the time an
Incentive Award is made, shall also specify when amounts shall be payable under
the Incentive Award and whether amounts shall be payable in the event of the
Participant's death, disability, or retirement. No payment shall be made under
an Incentive Award except to the extent that the Committee certifies that the
objectives governing such award have been achieved.
9.3 NONTRANSFERABILITY. Except as provided in Section 9.4 hereof,
Incentive Awards granted under this Plan shall be nontransferable except by will
or by the laws of descent and distribution. No right or interest of a
Participant in an Incentive Award shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
9.4 TRANSFERABLE INCENTIVE AWARDS. Section 9.3 hereof to the
contrary notwithstanding, the Committee may grant Incentive Awards which are
transferable to Permitted Family Members to the extent that, and on such terms
and conditions as may be permitted by, Securities Exchange Commission Rule 16b-3
as in effect from time to time; provided, however, that the participant gives
the Committee advance written notice describing the terms and conditions of the
proposed transfer and the Committee notifies the Participant in writing that
such transfer would comply with the requirements of this Plan and the applicable
Agreement. The holder of an Incentive Award transferred pursuant to this section
shall be bound by the same terms and conditions that governed the Incentive
Award during the period that it was held by the Participant.
9.5 EMPLOYEE STATUS. If the terms of an Incentive Award provide
that a payment will be made thereunder only if the Participant completes a
stated period of employment or service, the Committee may decide to what extent
leaves of absence for governmental or military service, illness, temporary
disability or other reasons shall not be deemed interruptions of continuous
employment or service.
9.6 SHAREHOLDER RIGHTS. No Participant shall, as a result of
receiving an Incentive Award, have any rights as a shareholder of the Company or
any Affiliate on account of such award.
ARTICLE X
ACCELERATION UPON CHANGE IN CONTROL
In the event of a Change in Control, all outstanding Awards shall become fully
vested and/or exercisable, as applicable, and, upon at least 10 days prior
written notice by the Committee before the date of the consummation of such
Change in Control, the Committee may, in its sole discretion, elect to either
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force the exercise of any outstanding Awards within such 10 day period, or
cancel any outstanding Awards and pay to the holders thereof, in cash or stock
or any combination thereof, the value of such Awards based upon the price per
share of Common Stock received or to be received by other shareholders of the
Company in the event of a Change in Control.
ARTICLE XI
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options, Stock Awards and Performance
Shares may be granted under this Plan, the option price of any outstanding
Option, and the terms and conditions of all outstanding Awards shall be adjusted
as the Committee shall determine to be equitably required in the event that
there is an increase or reduction in the number of shares of Common Stock, or
any change (including, but not limited to, a change in value) in the shares of
Common Stock or exchange of shares of Common Stock for a different number or
kind of shares or other securities of the Company by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split up, subdivision or consolidation of shares, extraordinary
dividend, change in corporate structure or otherwise. Any determination made
under this Article XI by the Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the maximum
number of shares as to which Options, Stock Awards and Performance Shares may be
granted, the per individual limitations on the number of shares for which
Options, Stock Awards and Performance Shares may be granted or the terms of
outstanding Stock Awards, Options, Incentive Awards or Performance Shares.
The Committee may make Stock Awards and may grant Options, Incentive Awards and
Performance Shares in substitution for performance shares, phantom shares, stock
awards, stock options, stock appreciation rights, or similar awards held by an
individual who becomes an employee of the Company or an Affiliate in connection
with a transaction described in the first paragraph of this Article XI.
Notwithstanding any provision of the Plan (other than the limitation of Section
5.2 hereof), the terms of such substituted Stock Awards, Options, Incentive
Awards or Performance Share grants shall be as the Committee, in its discretion,
determines is appropriate. Notwithstanding the foregoing, the numerical
limitations on the various types of Awards set forth in Sections 1.2, 6.1, 7.1
and 8.1 shall not be adjusted in respect of a reverse stock split approved by
stockholders at the Company's 2002 annual meeting of stockholders.
ARTICLE XII
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES; GOVERNING LAW
No Option shall be exercisable, no Common Stock shall be issued, no certificates
for shares of Common Stock shall be delivered, and no payment shall be made
under this Plan except in compliance with all applicable federal and state laws
and regulations (including, without limitation, withholding tax requirements),
any listing agreement to which the Company is a party, and the rules of all
domestic stock exchanges on which the Company's shares may be listed The Company
shall be under no obligation to register for sale under the Securities Act of
1933, as amended, any of the shares of Common Stock to be offered or sold under
this Plan. The Company shall have the right to rely on an opinion of its counsel
as to such compliance. Any share certificate issued to evidence Common Stock
when a Stock Award is granted or for which an Option is exercised or a
Performance Share settled may bear such legends and statements as the Committee
may deem advisable to assure compliance with federal and state laws and
regulations. No Option shall be exercisable, no Stock Award shall be granted, no
Common Stock shall be issued, no
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certificate for shares shall be delivered, and no payment shall be made under
this Plan until the Company has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over
such matters. Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Delaware without giving effect to conflicts of law
principles.
ARTICLE XIII
GENERAL PROVISIONS
13.1 EFFECT ON EMPLOYMENT AND SERVICE. Neither the adoption of this
Plan, its operation, nor any documents describing or referring to this Plan (or
any part thereof) shall confer upon any individual any right to continue in the
employ or service of the Company or an Affiliate or in any way affect any right
and power of the Company or an Affiliate to terminate the employment or service
of any individual at any time with or without assigning a reason therefor.
13.2 UNFUNDED PLAN. The Plan, insofar as it provides for grants,
shall be unfunded, and the Company shall not be required to segregate any assets
that may at any time be represented by grants under this Plan. Any liability of
the Company to any person with respect to any grant under this Plan shall be
based solely upon any contractual obligations that may be created pursuant to
this Plan. No such obligation of the Company shall be deemed to be secured by
any pledge of, or other encumbrance on, any property of the Company.
13.3 RULES OF CONSTRUCTION. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
13.4 TAX WITHHOLDING.
(i) A Participant may be required to pay to the Company
or any Affiliate and the Company or any Affiliate shall have the right
and is hereby authorized to withhold from any shares of Common Stock or
other property deliverable under any Option or other Award or from any
compensation or other amounts owing to a Participant the amount (in
cash, Common Stock or other property) of any required tax withholding
and payroll taxes in respect of an Option or other Award, its exercise,
or any payment or transfer under an Option or other Award or under the
Plan and to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for the payment of such
taxes.
(ii) Without limiting the generality of clause (i) above,
if so provided in an Agreement, a Participant may satisfy, in whole or
in part, the foregoing withholding liability (but no more than the
minimum required withholding liability) by delivery of shares of Common
Stock owned by the Participant (which are not subject to any pledge or
other security interest and which have been owned by the Participant
for at least 6 months or purchased on the open market) with a Fair
Market Value equal to such withholding liability or by having the
Company withhold from the number of shares of Common Stock otherwise
issuable pursuant to the exercise of the Option or other Award a number
of shares with a Fair Market Value equal to such withholding liability.
13.5 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the Company
or any Affiliate except as otherwise specifically provided in such other plan.
13.6 RELIANCE ON REPORTS. Each member of the Committee and each
member of the Board shall be fully justified in relying, acting or failing to
act, and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of the
Company and Affiliates and upon any other information furnished in connection
with the Plan by any person or persons other than himself.
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13.7 SEVERABILITY. If any provision of the Plan or any Agreement is
or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any person or Option or other Award, or would disqualify
the Plan or any Option or other Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Option or the other Award, such provision shall be stricken as to such
jurisdiction, person or Option or other Award and the remainder of the Plan and
any such Option or other Award shall remain in full force and effect.
ARTICLE XIV
AMENDMENT OR TERMINATION
The Board may amend or terminate this Plan from time to time; provided, however,
that no amendment may become effective until shareholder approval is obtained if
the amendment (i) increases the aggregate number of shares of Common Stock that
may be issued under the Plan, (ii) changes the class of individuals eligible to
become Participants, (iii) increases the benefits that may be provided under the
Plan, or (iv) reduces the exercise price of any Option. Without prior
shareholder approval, the Committee may not cancel any outstanding Option and
replace it with a new Option (with a lower exercise price) in a manner which
would either (i) be reportable on the Company's proxy statement as Options which
have been "repriced" (as such term is used in Item 402 of Regulation S-K
promulgated under the Exchange Act), or (ii) result in any Option being
accounted for under the "variable" method for financial statement reporting
purposes. No amendment shall, without a Participant's consent, adversely affect
any rights of such Participant under any Award outstanding at the time such
amendment is made. Subject to the foregoing, the Committee may, to the extent
consistent with the terms of any Award, waive any conditions or rights under,
amend any terms of, or alter, suspend, discontinue, cancel or terminate, any
Award thereafter granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of any Participant in respect of any
Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant.
ARTICLE XV
DURATION OF PLAN
No Award may be granted under this Plan more than ten years after the earlier of
the date this Plan was adopted by the Board or the date this Plan was originally
approved by stockholders, as reflected in Article XVI. Awards granted before the
effective date shall remain valid in accordance with their terms.
ARTICLE XVI
EFFECTIVE DATE OF PLAN
The Plan was originally adopted by the Board on June 14, 2002, and approved by
shareholders on July 30, 2002.
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