EXHIBIT 10.11
KIRKLAND'S, INC.
2002 EQUITY INCENTIVE PLAN
1. PURPOSE; DEFINITIONS.
The purpose of the Kirkland's, Inc. 2002 Equity Incentive Plan (the
"Plan") are to (a) enable Kirkland's, Inc. (the "Company") and its affiliated
companies to recruit and retain highly qualified employees, directors and
consultants; (b) provide those employees, directors and consultants with an
incentive for productivity; and (c) provide those employees, directors and
consultants with an opportunity to share in the growth and value of the Company.
For purposes of the Plan, the following initially capitalized words and
phrases have the meanings defined below, unless the context clearly requires a
different meaning:
(a) "Award" means a grant of Options, SARs or Restricted Shares pursuant
to the provisions of this Plan.
(b) "Award Agreement" means, with respect to any particular Award, the
written document that sets forth the terms of that particular Award.
(c) "Board" means the Board of Directors of the Company, as constituted
from time to time; provided, however, that if the Board appoints a Committee to
perform some or all of the Board's administrative functions hereunder pursuant
to Section 2, references in this Plan to the "Board" will be deemed to also
refer to that Committee in connection with administrative matters to be
performed by that Committee.
(d) "Cause" exists when a Participant (as determined by the Board, in its
sole discretion):
(i) engages in any type of disloyalty to the Company, including
without limitation, fraud, embezzlement, theft, or dishonesty in the course of
his employment or engagement, or otherwise breaches any fiduciary duty owed to
the Company;
(ii) is convicted of a felony or a misdemeanor involving moral
turpitude;
(iii) enters a plea of guilty or nolo contendere to a felony or a
misdemeanor involving moral turpitude.
(iv) discloses any proprietary information belonging to the Company
without the consent of the Company; or
(v) breaches any agreement with or duty to the Company.
However, notwithstanding the foregoing, if an Participant is bound by the terms
of an employment agreement with the Company or any Subsidiary that includes a
definition of "cause," the determination of whether that Participant has been
terminated for "Cause" will be made in accordance with that employment
agreement.
(e) "Change in Control" means (i) the sale, transfer, assignment or other
disposition (including by merger or consolidation) by shareholders of the
Company, in one transaction or a series of related transactions, of more than
50% of the voting power represented by the then outstanding capital stock of the
Company to one or more persons, (ii) the sale of substantially all the assets of
the Company, or (iii) the liquidation or dissolution of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
(g) "Committee" means a committee appointed by the Board in accordance
with Section 2 of this Plan.
(h) "Director" means a member of the Board.
(i) "Disability" means a condition rendering a Participant Disabled.
(j) "Disabled" means, with respect to any Participant (i) entitled to
benefits under a long-term disability policy or program of the Company, or (ii)
if the Participant is not covered by any such policy or program, when the
Participant is prevented by a physical or mental impairment from engaging in any
substantial, gainful activity for a period of at least six (6) months, as
determined by the Board, in its sole and absolute discretion; provided, however,
notwithstanding the foregoing, if an Participant is bound by the terms of an
employment agreement with the Company or any Subsidiary that includes a
definition of "disabled" or disability," the determination of whether that
Participant is "Disabled" for purposes of this Plan will be made in accordance
with that employment agreement.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Fair Market Value" means, as of any date: (i) the closing price of
the Shares as reported on the principal nationally recognized stock exchange on
which the Shares are traded on such date, or if no Share prices are reported on
such date, the closing price of the Shares on the last preceding date on which
there were reported Share prices; or (ii) if the Shares are not listed or
admitted to unlisted trading privileges on a nationally recognized stock
exchange, the closing price of the Shares as reported by The Nasdaq Stock Market
on such date, or if no Share prices are reported on such date, the closing price
of the Shares on the last preceding date on which there were reported Share
prices; or (iii) if the Shares are not listed or admitted to unlisted trading
privileges on a nationally recognized stock exchange or traded on The Nasdaq
Stock Market, the Fair Market Value will be determined by the Board acting in
its discretion, which determination will be conclusive.
(m) "Incentive Stock Option" means any Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
(n) "Non-Employee Director" will have the meaning set forth in Rule
16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission; provided, however, that the Board may, to the extent necessary to
comply with Section 162(m) of the Code or
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regulations thereunder, require each "Non-Employee Director" to also be an
"outside director," as that term is defined in regulations under Section 162(m)
of the Code.
(o) "Non-Qualified Stock Option" means any Option that is not an Incentive
Stock Option.
(p) "Option" means any option to purchase Shares (including Restricted
Shares, if the Board so determines) granted pursuant to Section 5 hereof.
(q) "Participant" means an employee, consultant or director of the Company
or a Subsidiary to whom an Award is granted.
(r) "Restricted Shares" means Shares that are subject to restrictions
pursuant to Section 8 hereof.
(s) "SAR" means a share appreciation right granted under the Plan and
described in Section 6 hereof.
(t) "Share" means a share of common stock, no par value, of the Company,
subject to substitution or adjustment as provided in Section 3(c) hereof.
(u) "Subsidiary" means, in respect of the Company, a subsidiary company,
whether now or hereafter existing, as defined in Sections 424(f) and (g) of the
Code.
2. ADMINISTRATION.
The Plan will be administered by the Board; provided, however, that the
Board may at any time appoint a Committee to perform some or all of the Board's
administrative functions hereunder; and provided further, that the authority of
any Committee appointed pursuant to this Section 2 will be subject to such terms
and conditions as the Board may prescribe and will be coextensive with, and not
in lieu of, the authority of the Board hereunder.
Any Committee established under this Section 2 will be composed of not
fewer than two members, each of whom will serve for such period of time as the
Board determines; provided, however, that if the Company has a class of
securities required to be registered under Section 12 of the Exchange Act, all
members of any Committee established pursuant to this Section 2 will be
Non-Employee Directors. From time to time the Board may increase the size of the
Committee and appoint additional members thereto, remove members (with or
without cause) and appoint new members in substitution therefore, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.
Members of the Board who are eligible for Awards or have received Awards
may vote on any matters affecting the administration of the Plan or the grant of
Awards, except that no such member will act upon the grant of an Award to
himself or herself, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board or Committee during which
action is taken with respect to the grant of Awards to himself or herself.
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The Board will have full authority to grant Awards under this Plan. In
particular, the Board will have the authority:
(a) to select the persons to whom Awards may from time to time be granted
hereunder (consistent with the eligibility conditions set forth in Section 4);
(b) to determine the type of Award to be granted hereunder;
(c) to determine the number of Shares, if any, to be covered by each such
Award;
(d) to establish the terms of each Award Agreement;
(e) to determine whether and under what circumstances an Option may be
exercised without a payment of cash under Section 5(f); and
(f) to determine whether, to what extent and under what circumstances
Shares and other amounts payable with respect to an Award may be deferred either
automatically or at the election of the Participant.
The Board will have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it, from
time to time, deems advisable; to interpret the terms and provisions of the Plan
and any Award Agreement; to amend the terms of any Award Agreement, provided
that the Participant consents to such amendment or that such amendment does not
have a material adverse effect on the Participant; and to otherwise supervise
the administration of the Plan. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent it deems necessary to carry out the intent of the Plan.
All decisions made by the Board pursuant to the provisions of the Plan
will be final and binding on all persons, including the Company and
Participants. No member of the Board will be liable for any good faith
determination, act or omission in connection with the Plan or any Award.
3. SHARES SUBJECT TO THE PLAN.
(a) Shares Subject to the Plan. The Shares to be subject or related to
awards under the Plan will be authorized and unissued Shares of the Company,
whether or not previously issued and subsequently acquired by the Company. The
maximum number of Shares that may be the subject of awards under the Plan is
_______ and the Company will reserve for the purposes of the Plan such number of
Shares. No Participant will receive Options or SARs with respect to more than
_______ Shares in any calendar year.
(b) Effect of the Expiration or Termination of Awards. If and to the
extent that an Award expires, terminates or is canceled or forfeited for any
reason without having been exercised in full, the Shares associated with the
expired, terminated, canceled or forfeited portion of the Award will again
become available for grant under the Plan. If any Share is received in
satisfaction of the exercise price payable upon exercise of an Option, or if any
Share is withheld
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pursuant to Section 11(d) in settlement of a tax obligation associated with an
Award, that Share will become available for grant under the Plan.
(c) Other Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, stock distribution or dividend, stock split or
combination, or other similar event or transaction affecting the Shares,
substitutions or adjustments may be made by the Board, in its sole and absolute
discretion, to the aggregate number, type and issuer of the securities reserved
for issuance under the Plan, to the limit on the number of shares that may be
subject to Options or SARs granted to a single Participant in any calendar year,
and to the number, type, issuer and price of securities subject to outstanding
Awards.
(d) Change Control. Notwithstanding anything to the contrary set forth in
this Plan, upon or in anticipation of any Change in Control, the Board may, in
its sole and absolute discretion and without the need for the consent of any
Participant, take one or more of the following actions contingent upon the
occurrence of that Change in Control: (i) cause all outstanding Options and SARs
to become fully vested and immediately exercisable; (ii) cause all outstanding
Restricted Shares to become non-forfeitable; (iii) cancel any Option in exchange
for an option to purchase common stock of any successor corporation, which new
option satisfies the requirements of Treas. Reg. ss. 1.425-1(a)(4)(i) (without
regard to whether the original Option was intended to be an Incentive Stock
Option), (iv) cancel any Restricted Shares in exchange for a restricted shares
of the common stock of any successor corporation, (v) redeem any Restricted
Share for cash and/or other substitute consideration with a value equal to the
Fair Market Value of an unrestricted Share on the date of the Change in Control,
and/or (vi) cancel any Option or SAR in exchange for cash and/or other
substitute consideration with a value equal to the (A) the number of Shares
subject to that Option or SAR, multiplied by (B) the difference between the Fair
Market Value per Share on the date of the Change in Control and the exercise
price of that Option or SAR.
4. ELIGIBILITY.
Employees, directors, consultants, and other individuals who provide
services to the Company or its Subsidiaries are eligible to be granted Awards.
Persons who are not employees of the Company or a Subsidiary are eligible to be
granted Awards, but are not eligible to be granted Incentive Stock Options.
5. OPTIONS.
Options may be either: (i) Incentive Stock Options or (ii) Non-Qualified
Stock Options. The Award Agreement evidencing any Option will incorporate the
following terms and conditions and may contain such additional terms and
conditions (not inconsistent with the terms of this Plan) as the Board deems
appropriate, in its sole discretion:
(a) Option Price. The exercise price per Share purchasable under a
Non-Qualified Stock Option will be determined by the Board. The exercise price
per Share purchasable under an Incentive Stock Option will not be less than 100%
of the Fair Market Value of one Share on the date of the grant. However, any
Incentive Stock Option granted to any Participant who, at the time the Option is
granted, owns more than 10% of the voting power of all classes of shares
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of the Company or of a Subsidiary will have an exercise price per Share of not
less than 110% of Fair Market Value of one Share on the date of the grant.
(b) Option Term. The term of each Option will be fixed by the Board, but
no Option will be exercisable more than ten (10) years after the date the Option
is granted. However, any Incentive Stock Option granted to any Participant who,
at the time such Option is granted, owns more than 10% of the voting power of
all classes of shares of the Company or of a Subsidiary may not have a term of
more than five (5) years. No Option may be exercised by any person after
expiration of the term of the Option.
(c) Method of Exercise. Subject to the terms of the applicable Award
Agreement and the termination provisions set forth in Section 7, Options may be
exercised in whole or in part at any time and from time to time during the term
of the Option, by giving written notice of exercise to the Company specifying
the number of Shares to be purchased. Such notice will be accompanied by payment
in full of the purchase price, either by certified or bank check, or such other
means as the Board may accept. As determined by the Board, in its sole
discretion, at or after grant, payment in full or in part of the exercise price
of an Option may be made in the form of previously acquired Shares based on the
Fair Market Value of the Shares on the date the Option is exercised.
No Shares will be issued upon exercise of an Option until full payment
therefore has been made. A Participant will not have the right to distributions
or dividends or any other rights of a shareholder with respect to Shares subject
to the Option until the Participant has given written notice of exercise, has
paid in full for such Shares, and, if requested, has given the representation
described in Section 11(a) hereof.
(d) Incentive Stock Option Limitations. In the case of an Incentive Stock
Option, the aggregate Fair Market Value (determined as of the time of grant) of
the Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other plan of the Company or any Subsidiary will not exceed $100,000. For
purposes of applying the foregoing limitation, Incentive Stock Options will be
taken into account in the chronological order in which they were granted. Any
Option not meeting such limitation will be treated for all purposes as a
Non-Qualified Stock Option.
(e) Termination of Employment. Unless otherwise specified in the
applicable Award Agreement, Options will be subject to the terms of Section 7
with respect to exercise following termination of employment.
(f) Transferability of Options. Except as may otherwise be specifically
determined by the Board with respect to a particular Option, no Option will be
transferable by the Participant other than by will or by the laws of descent and
distribution, and all Options will be exercisable, during the Participant's
lifetime, only by the Participant or, in the event of his Disability, by his
personal representative.
6. STOCK APPRECIATION RIGHTS.
(a) Grant. The grant of an SAR provides the holder the right to receive
the appreciation in value of Shares between the date of grant and the date of
exercise. SARs may be
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granted alone ("Stand-Alone SARs") or in conjunction with all or part of any
Option ("Tandem SARs"). In the case of a Non-Qualified Stock Option, a Tandem
SAR may be granted either at or after the time of the grant of such Option. In
the case of an Incentive Stock Option, a Tandem SAR may be granted only at the
time of the grant of such Option.
(b) Exercise.
(i) Tandem SARs. A Tandem SAR or applicable portion thereof will
terminate and no longer be exercisable upon the termination or exercise of the
related Option or portion thereof, except that, unless otherwise determined by
the Board, in its sole discretion at the time of grant, a Tandem SAR granted
with respect to less than the full number of Shares covered by a related Option
will be reduced only after such related Option is exercised or otherwise
terminated with respect to the number of Shares not covered by the Tandem SAR.
A Tandem SAR may be exercised by a Participant by surrendering the
applicable portion of the related Option, only at such time or times and to the
extent that the Option to which such Tandem SAR relates will be exercisable in
accordance with the provisions of Section 5 and this Section 6. Options which
have been so surrendered, in whole or in part, will no longer be exercisable to
the extent the related Tandem SARs have been exercised.
Upon the exercise of a Tandem SAR, a Participant will be entitled to
receive, upon surrender to the Company of all (or a portion) of an Option in
exchange for cash and/or Shares, an amount equal to the excess of (A) the Fair
Market Value, as of the date such Option (or such portion thereof) is
surrendered, of the Shares covered by such Option (or such portion thereof) over
(B) the aggregate exercise price of such Option (or such portion thereof).
Upon the exercise of a Tandem SAR, the Option or part thereof to
which such Tandem SAR is related, will be deemed to have been exercised for the
purpose of the limitation set forth in Section 3 of the Plan on the number of
Shares to be issued under the Plan, but only to the extent of the number of
Shares issued under the Tandem SAR at the time of exercise based on the value of
the Tandem SAR at such time.
A Tandem SAR may be exercised only if and when the Fair Market Value
of the Shares subject to the Option exceeds the exercise price of such Option.
(ii) Stand-Alone SARs. A Stand-Alone SAR may be exercised by a
Participant giving notice of intent to exercise to the Company, provided that
all or a portion of such Stand-Alone SAR will have become vested and exercisable
as of the date of exercise.
Upon the exercise of a Stand-Alone SAR, a Participant will be
entitled to receive, in either cash and/or Shares, an amount equal to the
excess, if any, of (A) the Fair Market Value, as of the date such SAR (or
portion of such SAR) is exercised, of the Shares covered by such SAR (or portion
of such SAR) over (B) the Fair Market Value of the Shares covered by such SAR
(or a portion of such SAR) as of the date such SAR (or a portion of such SAR)
was granted.
(c) Terms and Conditions. The Award Agreement evidencing any SAR will
incorporate the following terms and conditions and will contain such additional
terms and
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conditions, not inconsistent with the terms of the Plan, as the Board deems
appropriate in its sole and absolute discretion:
(i) Term of SAR. Unless otherwise specified in the Award Agreement,
the term of a Tandem SAR will be identical to the term of the associated Option,
and the term of a Stand-Alone SAR will be ten (10) years.
(ii) Exercisability. SARs will vest and become exercisable at such
time or times and subject to such terms and conditions as will be determined by
the Board at the time of grant; provided that, unless otherwise specified in the
Award Agreement, a Tandem SAR will vest and become exercisable in the same
manner and at the same time as the associated Option.
(iii) Termination of Employment. Unless otherwise specified in the
Award Agreement, SARs will be subject to the terms of Section 7 with respect to
exercise upon termination of employment.
7. TERMINATION OF SERVICE.
Unless otherwise specified with respect to a particular Award, Options or
SARs granted hereunder will remain exercisable after termination of employment
only to the extent specified in this Section 7.
(a) Termination by Reason of Death. If a Participant's service with the
Company or any Subsidiary terminates by reason of death, any Option or SAR held
by such Participant may thereafter be exercised, to the extent then exercisable
or on such accelerated basis as the Board may determine, at or after grant, by
the legal representative of the estate or by the legatee of the Participant
under the will of the Participant, for a period expiring (i) at such time as may
be specified by the Board at or after the time of grant, or (ii) if not
specified by the Board, then one (1) year from the date of death, or (iii) if
sooner than the applicable period specified under (i) or (ii) above, then upon
the expiration of the stated term of such Option or SAR.
(b) Termination by Reason of Disability. If a Participant's service with
the Company or any Subsidiary terminates by reason of Disability, any Option or
SAR held by such Participant may thereafter be exercised by the Participant or
his personal representative, to the extent it was exercisable at the time of
termination, or on such accelerated basis as the Board may determine at or after
grant, for a period expiring (i) at such time as may be specified by the Board
at or after the time of grant, or (ii) if not specified by the Board, then one
(1) year from the date of termination of service, or (iii) if sooner than the
applicable period specified under (i) or (ii) above, then upon the expiration of
the stated term of such Option or SAR.
(c) Cause. If a Participant's service is terminated for Cause: (i) any
Option or SAR not already exercised will be immediately and automatically
forfeited as of the date of such termination, and (ii) any Shares for which the
Company has not yet delivered share certificates will be immediately and
automatically forfeited and the Company will refund to the Participant the
Option exercise price paid for such Shares, if any.
(d) Other Termination. If a Participant's service with the Company or any
Subsidiary terminates for any reason other than death, Disability, or Cause, any
Option or SAR held by such
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Participant may thereafter be exercised by the Participant, to the extent it was
exercisable at the time of such termination or on such accelerated basis as the
Board may determine at or after the time of grant, for a period expiring at such
time as may be specified by the Board at or after the time of grant, but in no
event later than the expiration of the stated term of such Option or SAR;
provided, however, that if the Board does not specifically provide for any
post-termination exercise period, then any Option or SAR held by such terminated
Participant will expire immediately upon the date of such termination.
8. RESTRICTED SHARES.
(a) Issuance. Restricted Shares may be issued either alone or in
conjunction with other Awards. The Board will determine the time or times within
which Restricted Shares may be subject to forfeiture, and all other conditions
of such Awards.
(b) Awards and Certificates. The Award Agreement evidencing the grant of
any Restricted Shares will contain such terms and conditions, not inconsistent
with the terms of the Plan, as the Board deems appropriate in its sole and
absolute discretion. The prospective recipient of an Award of Restricted Shares
will not have any rights with respect to such Award, unless and until such
recipient has executed an Award Agreement and has delivered a fully executed
copy thereof to the Company, and has otherwise complied with the applicable
terms and conditions of such Award. The purchase price for Restricted Shares
may, but need not, be zero.
A share certificate will be issued in connection with each Award of
Restricted Shares. Such certificate will be registered in the name of the
Participant receiving the Award and will bear the following legend and/or any
other legend required by this Plan, the Award Agreement, the Company's
shareholders' agreement, if any, and any applicable law:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED
HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE KIRKLAND'S,
INC. 2002 INCENTIVE PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE
REGISTERED OWNER AND KIRKLAND'S, INC. COPIES OF THAT PLAN AND
AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF KIRKLAND'S, INC.
AND WILL BE MADE AVAILABLE TO THE HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE UPON REQUEST TO THE SECRETARY OF THE COMPANY.
Share certificates evidencing Restricted Shares be held in custody by the
Company or in escrow by an escrow agent until the restrictions thereon have
lapsed. As a condition of any Restricted Share award, the Participant may be
required to deliver to the Company a share power, endorsed in blank, relating to
the Shares covered by such Award.
(c) Restrictions and Conditions. The Restricted Shares awarded pursuant to
this Section 8 will be subject to the following restrictions and conditions:
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(i) During a period commencing with the date of an Award of
Restricted Shares and ending at such time or times as specified by the Board
(the "Restriction Period"), the Participant will not be permitted to sell,
transfer, pledge, assign or otherwise encumber Restricted Shares awarded under
the Plan. The Board may condition the lapse of restrictions on Restricted Shares
upon the continued employment or service of the recipient, the attainment of
specified individual or corporate performance goals, or such other factors as
the Board may determine, in its sole and absolute discretion.
(ii) Except as provided in this Paragraph (ii) or Section 8(c)(i),
once the Participant has been issued a certificate or certificates for
Restricted Shares, the Participant will have, with respect to the Restricted
Shares, all of the rights of a shareholder of the Company, including the right
to vote the Shares, and the right to receive any cash distributions or
dividends. The Board, in its sole discretion, as determined at the time of
award, may permit or require the payment of cash distributions or dividends to
be deferred and, if the Board so determines, reinvested in additional Restricted
Shares to the extent Shares are available under Section 3 of the Plan. Any
distributions or dividends paid in the form of securities with respect to
Restricted Shares will be subject to the same terms and conditions as the
Restricted Shares with respect to which they were paid, including, without
limitation, the same Restriction Period.
(iii) Subject to the applicable provisions of the Award Agreement,
if a Participant's service with the Company terminates prior to the expiration
of the Restriction Period, all of that Participant's Restricted Shares which
then remain subject to forfeiture will then be forfeited automatically.
(iv) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Shares subject to such Restriction Period (or if
and when the restrictions applicable to Restricted Shares lapse pursuant to
Sections 3(d)), the certificates for such Shares will be replaced with new
certificates, without the portion restrictive legends described in Section 8(b)
applicable to such lapsed restrictions, and such new certificates will be
promptly delivered to the Participant, the Participant's representative (if the
Participant has suffered a Disability), or the Participant's estate or heir (if
the Participant has died).
9. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan at any time, but,
except as otherwise provided in Section 3(d) of the Plan, no amendment,
alteration or discontinuation will be made that would impair the rights of a
Participant with respect to an Award that is outstanding under the Plan without
the Participant's consent, or that, without the approval of such amendment
within one year (365 days) of its adoption by the Board, by a majority of the
votes cast at a duly held shareholder meeting at which a quorum representing a
majority of the Company's outstanding voting shares is present (either in person
or by proxy), would: (i) increase the total number of Shares reserved for the
purposes of the Plan (except as otherwise provided in Section 3(c)), or (ii)
change the persons or class of persons eligible to receive Awards.
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10. UNFUNDED STATUS OF PLAN.
The Plan is intended to be "unfunded." With respect to any payments not
yet made to a Participant by the Company, nothing contained herein will give any
such Participant any rights that are greater than those of a general creditor of
the Company. In its sole discretion, the Board may authorize the creation of
grantor trusts or other arrangements to meet the obligations created under the
Plan to deliver Shares or payments in lieu of Shares or with respect to Awards.
11. GENERAL PROVISIONS.
(a) The Board may require any Participant to represent to and agree with
the Company in writing that the Participant is acquiring securities of the
Company for investment purposes and without a view to distribution thereof and
as to such other matters as the Board believes are appropriate. The certificate
evidencing any Award and any securities issued pursuant thereto may include any
legend which the Board deems appropriate to reflect any restrictions on transfer
and compliance with securities laws. All certificates for Shares or other
securities delivered under the Plan will be subject to such share-transfer
orders and other restrictions as the Board may deem advisable under the rules,
regulations, and other requirements of the Securities Act of 1933, as amended,
the Exchange Act, any stock exchange upon which the Shares are then listed, and
any other applicable Federal or state securities laws, and the Board may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in the Plan will prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of the Plan will not confer upon any person the right to
continued employment or engagement by the Company or such Subsidiary, nor will
it interfere in any way with the right of the Company or such Subsidiary to
terminate the employment or engagement of any of its service providers at any
time.
(d) No later than the date as of which an amount first becomes includable
in the gross income of the Participant for Federal income tax purposes with
respect to any Award, the Participant will pay to the Company, or make
arrangements satisfactory to the Board regarding the payment, of any Federal,
state or local taxes of any kind required by law to be withheld with respect to
such amount. Unless otherwise determined by the Board, the minimum required
withholding obligations may be settled with Shares, including Shares that are
part of the Award that gives rise to the withholding requirement. The
obligations of the Company under this Plan are conditioned on such payment or
arrangements and the Company will, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to the
Participant.
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12. EFFECTIVE DATE OF PLAN.
This Plan will become effective on the date that it is adopted by the
Board; provided, however, that all Options intended to be Incentive Stock
Options will automatically be converted into Non-Qualified Stock Options if the
Plan is not approved by the Company's stockholders within one year (365 days) of
its adoption by the Board, by a majority of the votes cast at a duly held
shareholder meeting at which a quorum representing a majority of the Company's
outstanding voting shares is present, either in person or by proxy.
13. TERM OF PLAN.
This Plan will continue in effect until terminated in accordance with
Section 9; provided, however, that no Incentive Stock Option will be granted
hereunder on or after the tenth (10th) anniversary of the date of shareholder
approval of the Plan; but provided further, that Incentive Stock Options granted
prior to such tenth (10th) anniversary may extend beyond that date.
14. INVALID PROVISIONS.
In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability will not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions will
be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
15. GOVERNING LAW.
This Plan and all Awards made and actions taken thereunder will be
governed by and construed in accordance with the laws and judicial decisions of
the State of Tennessee, without regard to the application of the principles of
conflicts of laws.
16. BOARD ACTION.
Notwithstanding anything to the contrary set forth in this Plan, any and
all actions of the Board taken under or in connection with this Plan and any
agreements, instruments, documents, certificates or other writings entered into,
executed, granted, issued and/or delivered pursuant to the terms hereof, will be
subject to and limited by any and all votes, consents, approvals, waivers or
other actions of all or certain stockholders of the Company or other persons
required by:
(i) the Company's Articles of Incorporation (as the same may be
amended and/or restated from time to time);
(ii) the Company's Bylaws (as the same may be amended and/or
restated from time to time); and
(iii) any other agreement, instrument, document or writing now or
hereafter existing, between or among the Company and its stockholders or other
persons (as the same may be amended from time to time).
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17. NOTICES. Any notice to be given to the Company pursuant to the provisions of
the Plan will be addressed to the Company in care of its Secretary (or such
other person as the Company may designate from time to time) at its principal
executive office, and any notice to be given to a Participant will be delivered
personally or addressed to him or her at the address given beneath his or her
signature on his or her Award Agreement, or at such other address as such
Participant may hereafter designate in writing to the Company. Any such notice
will be deemed duly given on the date and at the time delivered via personal,
courier or recognized overnight delivery service or, if sent via telecopier, on
the date and at the time telecopied with confirmation of delivery or, if mailed,
on the date five (5) days after the date of the mailing (which will be by
regular, registered or certified mail). Delivery of a notice by telecopy (with
confirmation) will be permitted and will be considered delivery of a notice
notwithstanding that it is not an original that is received.
ADOPTION AND APPROVAL OF PLAN
DATE PLAN ADOPTED BY BOARD: _____________
DATE PLAN APPROVED BY STOCKHOLDERS: _____________
EFFECTIVE DATE OF PLAN: _____________
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