EXHIBIT 10.5
AMENDED AND RESTATED 2002 STOCK INCENTIVE PLAN
OF
LODGIAN, INC.
.
.
.
LODGIAN, INC.
AMENDED AND RESTATED 2002 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
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SECTION 1 Purpose.....................................................1
SECTION 2. Definitions.................................................1
SECTION 3. Administration of the Plan..................................3
SECTION 4. Duration of Plan............................................4
SECTION 5. Shares of Stock Subject to the Plan.........................4
SECTION 6. Eligible Individuals........................................5
SECTION 7. Awards Generally............................................5
SECTION 8. Stock Options...............................................6
SECTION 9. Stock Appreciation Rights...................................7
SECTION 10. Stock Awards................................................7
SECTION 11. Performance Share Awards....................................7
SECTION 12. Other Awards................................................7
SECTION 13. Section 162(m) Awards.......................................7
SECTION 14. Non-Transferability.........................................8
SECTION 15. Recapitalization or Reorganization..........................8
SECTION 16. Change in Control...........................................9
SECTION 17. Amendment of the Plan......................................10
SECTION 18. Miscellaneous..............................................10
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LODGIAN, INC.
AMENDED AND RESTATED 2002 STOCK INCENTIVE PLAN
SECTION 1. Purpose. The purposes of the Lodgian, Inc. 2002
Amended and Restated Stock Incentive Plan (the "Plan") are to attract, retain
and motivate officers and other key employees and consultants of LODGIAN, INC.,
a Delaware corporation (the "Company"), and its Subsidiaries (as hereinafter
defined), to compensate them for their contributions to the growth and profits
of the Company and to encourage ownership by them of stock of the Company.
SECTION 2. Definitions. For purposes of the Plan, the
following terms shall be defined as follows:
"Administrator" means the individual or individuals to whom
the Committee delegates authority under the Plan in accordance with Section
3(d).
"Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
"Award" means an award made pursuant to the terms of the Plan
to an Eligible Individual in the form of Stock Options, Stock Appreciation
Rights, Stock Awards, Performance Share Awards, Section 162(m) Awards or other
awards determined by the Committee.
"Award Agreement" means a written agreement or certificate
granting an Award. An Award Agreement shall be executed by an officer on behalf
of the Company and shall contain such terms and conditions as the Committee
deems appropriate and that are not inconsistent with the terms of the Plan. The
Committee may in its discretion require that an Award Agreement be executed by
the Participant to whom the relevant Award is made.
"Beneficial Owner" has the meaning ascribed to such term in
Rule 13d-3 promulgated under the Exchange Act.
"Board" means the Board of Directors of the Company.
A "Change in Control" of the Company shall be deemed to have
occurred when:
(a) any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any person or entity organized, appointed
or established by the Company or any Subsidiary of the Company for or
pursuant to the terms of any such plan), alone or together with its
Affiliates and Associates (collectively, an "Acquiring Person"), shall
become the Beneficial Owner of 40 percent or more of the then
outstanding shares of Common Stock or the Combined Voting Power of the
Company,
(b) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director who is a representative or
nominee of an Acquiring Person) whose election by the Board or
nomination for election by the Company's shareholders was approved by a
vote of at least a majority of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved (collectively,
the "Continuing Directors"), cease for any reason to constitute a
majority of the Board,
(c) the consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the Surviving Entity (as defined in Section 16 hereof) or
any Parent of such Surviving Entity) at least a majority of the
Combined Voting Power of the Company, such
Surviving Entity or the Parent of such Surviving Entity outstanding
immediately after such merger or consolidation; or
(d) the consummation of a plan of reorganization (other
than a reorganization under the United States Bankruptcy Code) or
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, other than a sale of all or substantially all of the Company's
assets to a transferee, the majority of whose voting securities are
held by the Company;
provided, however, that a Change in Control shall not be deemed to have occurred
in the event of
(i) a sale or conveyance in which the Company
continues as a holding company of an entity or entities that
conduct all or substantially all of the business or businesses
formerly conducted by the Company, or
(ii) any transaction undertaken for the purpose
of incorporating the Company under the laws of another
jurisdiction, if such transaction does not materially affect
the beneficial ownership of the Company's capital stock.
"Code" means the Internal Revenue Code of 1986, as amended,
and the applicable rulings and regulations thereunder.
"Combined Voting Power" means the combined voting power of the
Company's or other relevant entity's then outstanding voting securities.
"Committee" means the Compensation Committee of the Board, any
successor committee thereto or if no such committee has yet been established,
the Board. The Committee shall consist of at least two people as the Board may
appoint to administer the Plan. Unless the Board is acting as the Committee or
the Board specifically determines otherwise, each member of the Committee shall,
at the time he takes any action with respect to an Option under the Plan, be an
Eligible Director; provided that the mere fact a Committee member shall fail to
qualify as an Eligible Director shall not invalidate any Option granted by the
Committee which Option is otherwise validly made under the Plan.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Eligible Individuals" means the individuals described in
Section 6 who are eligible for Awards under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the applicable rulings and regulations thereunder.
"Eligible Director" means a person who is (i) a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act, or a person
meeting any similar requirement under any successor rule or regulation and (ii)
an "outside director" within the meaning of Section 162(m) of the Code, and the
Treasury Regulations promulgated thereunder.
"Fair Market Value" means, in the event the Common Stock is
traded on a recognized securities exchange or quoted by the National Association
of Securities Dealers Automated Quotations on National Market Issues, an amount
equal to the average of the high and low prices of the Common Stock on such
exchange or such quotation on the date set for valuation or, if no sales of
Common Stock were made on said exchange or so quoted on that date, the average
of the high and low prices of the Common Stock on the next preceding day on
which sales were made on such exchange or quotations; or, if the Common Stock is
not so traded or quoted, that value determined, in its sole discretion, by the
Committee.
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"Incentive Stock Option" means a Stock Option which is an
"incentive stock option" within the meaning of Section 422 of the Code and
designated by the Committee as an Incentive Stock Option in an Award Agreement.
"Nonqualified Stock Option" means a Stock Option which is not
an Incentive Stock Option.
"Parent" means any corporation which is a "parent corporation"
within the meaning of Section 424(e) of the Code with respect to the relevant
entity.
"Participant" means an Eligible Individual to whom an Award
has been granted under the Plan.
"Performance Period" means a fiscal year of the Company or
such other period that may be specified by the Committee in connection with the
grant of a Section 162(m) Award.
"Performance Share Award" means a conditional Award of shares
of Common Stock granted to an Eligible Individual pursuant to Section 11 hereof.
"Person" means any person, entity or "group" within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act.
"Section 162(m) Participant" means, for a given fiscal year of
the Company, any Participant designated by the Committee by not later than 90
days following the start of such year as a Participant (or such other time as
may be required or permitted by Section 162(m) of the Code) whose compensation
for such fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.
"Stock Appreciation Right" means an Award to receive all or
some portion of the appreciation on shares of Common Stock granted to an
Eligible Individual pursuant to Section 9 hereof.
"Stock Award" means an Award of shares of Common Stock granted
to an Eligible Individual pursuant to Section 10 hereof.
"Stock Option" means an Award to purchase shares of Common
Stock granted to an Eligible Individual pursuant to Section 8 hereof.
"Subsidiary" means (i) any corporation which is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code with respect to
the Company or (ii) any other corporation or other entity in which the Company,
directly or indirectly, has an equity or similar interest and which the
Committee designates as a Subsidiary for the purposes of the Plan.
"Substitute Award" means an Award granted upon assumption of,
or in substitution for, outstanding awards previously granted by a company or
other entity in connection with a corporate transaction, such as a merger,
combination, consolidation or acquisition of property or stock.
SECTION 3. Administration of the Plan.
(a) Power and Authority of the Committee. The Plan shall
be administered by the Committee, which shall have full power and authority,
subject to the express provisions hereof, (i) to select Participants from the
Eligible Individuals, (ii) to make Awards in accordance with the Plan, (iii) to
determine the number of Shares subject to each Award or the cash amount payable
in connection with an Award, (iv) to determine the terms and conditions of each
Award, including, without limitation, those related to vesting, forfeiture,
payment and exercisability, and the effect, if any, of a Participant's
termination of employment with the Company or, subject to Section 16 hereof, of
a Change in Control on the outstanding Awards granted to such Participant, and
including the authority to amend the terms and conditions of an Award after the
granting thereof to a Participant in a manner that is not prejudicial to the
rights of such Participant in such Award, (v) to specify and approve the
provisions of the Award Agreements delivered to Participants in connection with
their Awards, (vi) to construe and interpret any
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Award Agreement delivered under the Plan, (vii) to prescribe, amend and rescind
rules and procedures relating to the Plan, (viii) to vary the terms of Awards to
take account of tax, securities law and other regulatory requirements of foreign
jurisdictions, (ix) subject to the provisions of the Plan and subject to such
additional limitations and restrictions as the Committee may impose, to delegate
to one or more officers of the Company some or all of its authority under the
Plan, and (x) to make all other determinations and to formulate such procedures
as may be necessary or advisable for the administration of the Plan.
(b) Plan Construction and Interpretation. The Committee
shall have full power and authority, subject to the express provisions hereof,
to construe and interpret the Plan.
(c) Determinations of Committee Final and Binding. All
determinations by the Committee in carrying out and administering the Plan and
in construing and interpreting the Plan shall be final, binding and conclusive
for all purposes and upon all persons interested herein.
(d) Delegation of Authority. The Committee may, but need
not, from time to time delegate some or all of its authority under the Plan to
an Administrator consisting of one or more members of the Committee or of one or
more officers of the Company; provided, however, that the Committee may not
delegate its authority (i) to make Awards to Eligible Individuals (A) who are
Section 162(m) Participants or (B) who are officers of the Company who are
delegated authority by the Committee hereunder, or (ii) under Sections 3(b) and
17 of the Plan. Any delegation hereunder shall be subject to the restrictions
and limits that the Committee specifies at the time of such delegation or
thereafter. Nothing in the Plan shall be construed as obligating the Committee
to delegate authority to an Administrator, and the Committee may at any time
rescind the authority delegated to an Administrator appointed hereunder or
appoint a new Administrator. At all times, the Administrator appointed under
this Section 3(d) shall serve in such capacity at the pleasure of the Committee.
Any action undertaken by the Administrator in accordance with the Committee's
delegation of authority shall have the same force and effect as if undertaken
directly by the Committee, and any reference in the Plan to the Committee shall,
to the extent consistent with the terms and limitations of such delegation, be
deemed to include a reference to the Administrator.
(e) Liability of Committee. No member of the Committee
shall be liable for such person's own willful misconduct. Under no circumstances
shall any member of the Committee be liable for any act or omission of any other
member of the Committee. In the performance of its functions with respect to the
Plan, the Committee shall be entitled to rely upon information and advice
furnished by the Company's officers, the Company's accountants, the Company's
counsel and any other party the Committee deems necessary, and no member of the
Committee shall be liable for any action taken or not taken in reliance upon any
such advice.
SECTION 4. Duration of Plan. The Plan shall remain in effect
until terminated by the Board of Directors and thereafter until all Awards
granted under the Plan are satisfied by the issuance of shares of Common Stock
or the payment of cash or are terminated under the terms of the Plan or under
the Award Agreement entered into in connection with the grant thereof.
Notwithstanding the foregoing, no Awards may be granted under the Plan after the
tenth anniversary of the Effective Date (as defined in Section 18(k)).
SECTION 5. Shares of Stock Subject to the Plan. Subject to
adjustment as provided in Section 15(b) hereof, effective as of April 8, 2004,
the number of shares of Common Stock that may be issued under the Plan pursuant
to Awards shall not exceed, in the aggregate, 1,149,000 shares (the "Section 5
Limit"), of which the number of shares of Common Stock that may be issued under
the Plan pursuant to Incentive Stock Options may not exceed, in the aggregate,
1,100,000 shares (the "Incentive Stock Option Limit"); provided, however, that
immediately upon the completion of a Qualified Public Offering (as defined
below) (i) the Section 5 Limit shall equal the lesser of (A) 3,367,400 shares
(such number would not be adjusted for the Reverse Stock Split (as defined in
the Company's proxy statement for its 2004 Annual Meeting of Stockholders)) or
(B) a number of shares that constitutes 12% of the issued and outstanding Common
Stock of Company immediately following the consummation of the Qualified Public
Offering, calculated on a fully diluted basis and assuming the exercise in full
of the underwriters' over-allotment option in the offering and (ii) the
Incentive Stock Option Limit shall equal the lesser of (A) 3,318,400 shares
(such number would not be adjusted for the Reverse Stock Split (as defined in
the Company's proxy statement for its 2004 Annual Meeting of Stockholders)) or
(B) a number of shares that constitutes 12% of the issued and outstanding Common
Stock of Company immediately following the consummation of the Qualified Public
Offering, calculated on a fully diluted basis and assuming the exercise in full
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of the underwriters' over-allotment option in the offering, reduced by 49,000.
The Section 5 Limit and the Incentive Stock Option Limit would be increased
pursuant to the foregoing proviso only after the first Qualified Public Offering
of the Company consummated after the Company's 2004 Annual Meeting of
Stockholders. For purposes of calculating the fully diluted shares of Common
Stock outstanding, the number of shares outstanding would include all issued and
outstanding shares of Common Stock, all shares of Common Stock reserved for
issuance in connection with the reserve established to resolve claims remaining
in dispute following the Company's emergence from Chapter 11 bankruptcy, all
shares of Common Stock issuable upon exercise of outstanding warrants and all
shares reserved for issuance under the Plan, including shares issuable upon
exercise of outstanding options previously granted under the Plan and shares
reserved which are not subject to any outstanding award under the Plan. The term
"Qualified Public Offering" means a firm commitment, underwritten public
offering of Common Stock by the Company. For purposes of determining the number
of shares that remain available for issuance under the Plan, the following rules
shall apply:
(a) the number of Shares subject to outstanding Awards
shall be charged against the Section 5 Limit; and
(b) the Section 5 Limit shall be increased by:
(i) the number of shares subject to an Award (or
portion thereof) which lapses, expires or is otherwise terminated
without the issuance of such shares or is settled by, the delivery of
consideration other than shares,
(ii) the number of shares tendered to pay the
exercise price of a Stock Option or other Award, and
(iii) the number of shares withheld from any Award
to satisfy a Participant's tax withholding obligations or, if
applicable, to pay the exercise price of a Stock Option or other Award.
In addition, any shares underlying Substitute Awards shall not be counted
against the Section 5 Limit set forth in the first sentence of this Section 5.
SECTION 6. Eligible Individuals.
(a) Eligibility Criteria. Awards may be granted by the
Committee to individuals ("Eligible Individuals") who are officers or other key
employees or consultants (including non-employee directors) of the Company or a
Subsidiary with the potential to contribute to the future success of the Company
or its Subsidiaries; provided, however, that no Incentive Stock Options shall be
granted to any Eligible Individual who is not an employee of the Company or a
"parent" or "subsidiary" of the Company, as such terms are used in Section
422(a)(s) of the Code. An individual's status as an Administrator or a member of
the Committee will not affect his or her eligibility to participate in the Plan.
(b) Maximum Number of Shares Per Eligible Individual. In
accordance with the requirements under Section 162(m) of the Code, no Eligible
Individual shall receive grants of Awards with respect to an aggregate of more
than 500,000 shares of Common Stock in respect of any fiscal year of the
Company. For purposes of the preceding sentence, any Award that is made as bonus
compensation, or is made in lieu of compensation that otherwise would be payable
to an Eligible Individual, shall be considered made in respect of the fiscal
year to which such bonus or other compensation relates or otherwise was earned.
SECTION 7. Awards Generally. Awards under the Plan may consist
of Stock Options, Stock Appreciation Rights, Stock Awards, Performance Share
Awards, Section 162(m) Awards or other awards determined by the Committee. The
terms and provisions of an Award shall be set forth in a written Award Agreement
approved by the Committee and delivered or made available to the Participant as
soon as practicable following the date of the award. The vesting,
exercisability, payment and other restrictions applicable to an Award (which may
include, without limitation, restrictions on transferability or provision for
mandatory resale to the Company) shall be determined by the Committee and set
forth in the applicable Award Agreement. Notwithstanding
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the foregoing, the Committee may accelerate (i) the vesting or payment of any
Award, (ii) the lapse of restrictions on any Award or (iii) the date on which
any Stock Option or Stock Appreciation Right first becomes exercisable. The date
of a Participant's termination of employment for any reason shall be determined
in the sole discretion of the Committee. The Committee shall also have full
authority to determine and specify in the applicable Award Agreement the effect,
if any, that a Participant's termination of employment for any reason will have
on the vesting, exercisability, payment or lapse of restrictions applicable to
an outstanding Award.
SECTION 8. Stock Options.
(a) Terms of Stock Options Generally. Subject to the
terms of the Plan and the applicable Award Agreement, each Stock Option shall
entitle the Participant to whom such Stock Option was granted to purchase the
number of shares of Common Stock specified in the applicable Award Agreement and
shall be subject to the terms and conditions established by the Committee in
connection with the Award and specified in the applicable Award Agreement. Upon
satisfaction of the conditions to exercisability specified in the applicable
Award Agreement, a Participant shall be entitled to exercise the Stock Option in
whole or in part and to receive, upon satisfaction or payment of the exercise
price or an irrevocable notice of exercise in the manner contemplated by Section
8(d) below, the number of shares of Common Stock in respect of which the Stock
Option shall have been exercised. Stock Options may be either Nonqualified Stock
Options or Incentive Stock Options.
(b) Exercise Price. The exercise price per share of
Common Stock purchasable under a Stock Option shall be determined by the
Committee at the time of grant and set forth in the Award Agreement, provided,
that the exercise price per share shall be no less than 100% of the Fair Market
Value per share on the date of grant. Notwithstanding the foregoing, the
exercise price per share of a Stock Option that is a Substitute Award may be
less than the Fair Market Value per share on the date of award, provided that
the excess of:
(i) the aggregate Fair Market Value (as of the date such
Substitute Award is granted) of the shares subject to the Substitute
Award, over
(ii) the aggregate exercise price thereof, does not exceed
the excess of:
(iii) the aggregate fair market value (as of the time
immediately preceding the transaction giving rise to the Substitute
Award, such fair market value to be determined by the Committee) of the
shares of the predecessor entity that were subject to the award assumed
or substituted for by the Company, over
(iv) the aggregate exercise price of such shares.
(c) Option Term. The term of each Stock Option shall be
fixed by the Committee and set forth in the Award Agreement; provided, however,
that a Stock Option shall not be exercisable after the expiration of ten (10)
years after the date the Stock Option is granted.
(d) Method of Exercise. Subject to the provisions of the
applicable Award Agreement, the exercise price of a Stock Option may be paid in
cash or previously owned shares or a combination thereof. In accordance with the
rules and procedures established by the Committee for this purpose and only to
the extent permitted by applicable law, the Stock Option may also be exercised
through a "cashless exercise" procedure approved by the Committee involving a
broker or dealer approved by the Committee, that affords Participants the
opportunity to sell immediately some or all of the shares underlying the
exercised portion of the Stock Option in order to generate sufficient cash to
pay the Stock Option exercise price and/or to satisfy withholding tax
obligations related to the Stock Option. When payment of the exercise price for
a Stock Option consists of shares of the Company's capital stock, such shares
will not be accepted as payment unless the Participant has held such shares for
the requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes.
(e) (i) Incentive Stock Option. Notwithstanding anything
to the contrary in this Plan, if an Incentive Stock Option is granted to a
Participant who owns stock representing more than ten percent of the voting
power of all classes of stock of the Company, the Option Period shall not exceed
five years from the Date of Grant
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of such Option and the Option Price shall be at least 110 percent of the Fair
Market Value (on the Date of Grant) of the Stock subject to the Option.
(ii) $100,000 Per Year Limitation for Incentive Stock Options.
To the extent the aggregate Fair Market Value (determined as of the time of
grant) of Stock for which Incentive Stock Options are exercisable for the first
time by a 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.
SECTION 9. Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to the terms and conditions established by the Committee
in connection with the Award thereof and specified in the applicable Award
Agreement. Upon satisfaction of the conditions to the payment specified in the
applicable Award Agreement, each Stock Appreciation Right shall entitle a
Participant to an amount, if any, equal to the Fair Market Value of a share of
Common Stock on the date of exercise over the Stock Appreciation Right exercise
price specified in the applicable Award Agreement. At the discretion of the
Committee, payments to a Participant upon exercise of a Stock Appreciation Right
may be made in Shares, cash or a combination thereof. A Stock Appreciation Right
may be granted alone or in addition to other Awards, or in tandem with a Stock
Option. If granted in tandem with a Stock Option, a Stock Appreciation Right
shall cover the same number of shares of Common Stock as covered by the Stock
Option (or such lesser number of shares as the Committee may determine) and
shall be exercisable only at such time or times and to the extent the related
Stock Option shall be exercisable, and shall have the same term and exercise
price as the related Stock Option. Upon exercise of a Stock Appreciation Right
granted in tandem with a Stock Option, the related Stock Option shall be
cancelled automatically to the extent of the number of shares covered by such
exercise; conversely, if the related Stock Option is exercised as to some or all
of the shares covered by the tandem grant, the tandem Stock Appreciation Right
shall be cancelled automatically to the extent of the number of shares covered
by the Stock Option exercised.
SECTION 10. Stock Awards. Stock Awards shall consist of one or
more shares of Common Stock granted or offered for sale to an Eligible
Individual, and shall be subject to the terms and conditions established by the
Committee in connection with the Award and specified in the applicable Award
Agreement. The shares of Common Stock subject to a Stock Award may, among other
things, be subject to vesting requirements or restrictions on transferability.
SECTION 11. Performance Share Awards. Performance Share Awards
shall be evidenced by an Award Agreement in such form and containing such terms
and conditions as the Committee deems appropriate and which are not inconsistent
with the terms of the Plan. Each Award Agreement shall set forth the number of
shares of Common Stock to be earned by a Participant upon satisfaction of
certain specified performance criteria and subject to such other terms and
conditions as the Committee deems appropriate. Payment in settlement of a
Performance Share Award shall be made as soon as practicable following the
conclusion of the applicable performance period, or at such other time as the
Committee shall determine, in shares of Common Stock, in an equivalent amount of
cash or in a combination of Common Stock and cash, as the Committee shall
determine.
SECTION 12. Other Awards. The Committee shall have the
authority to specify the terms and provisions of other forms of equity-based or
equity-related Awards not described above which the Committee determines to be
consistent with the purpose of the Plan and the interests of the Company, which
Awards may provide for cash payments based in whole or in part on the value or
future value of Common Stock, for the acquisition or future acquisition of
Common Stock, or any combination thereof. Other Awards shall also include cash
payments (including the cash payment of dividend equivalents) under the Plan
which may be based on one or more criteria determined by the Committee which are
unrelated to the value of Common Stock and which may be granted in tandem with,
or independent of, other Awards under the Plan.
SECTION 13. Section 162(m) Awards.
(a) Terms of Section 162(m) Awards Generally. In addition
to any other Awards under the Plan, the Company may make Awards that are
intended to qualify as "qualified performance-based compensation" for purposes
of Section 162(m) of the Code ("Section 162(m) Awards"). Section 162(m) Awards
may consist of Stock Options, Stock Appreciation Rights, Stock Awards,
Performance Share Awards or Other Awards the vesting, exercisability and/or
payment of which is conditioned upon the attainment for the applicable
Performance Period of
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specified performance targets related to designated performance goals for such
period selected by the Committee from among the performance goals specified in
Section 13(b) below. Section 162(m) Awards will be made in accordance with the
procedures specified in applicable treasury regulations for compensation
intended to be "qualified performance-based compensation."
(b) Performance Goals. For purposes of this Section 13,
performance goals shall be limited to one or more of the following: (i) net
revenue, (ii) net earnings, (iii) operating earnings or income, (iv) absolute
and/or relative return on equity or assets, (v) earnings per share, (vi) cash
flow, (vii) pretax profits, (viii) earnings growth, (ix) revenue growth, (x)
book value per share, (xi) stock price and (xii) performance relative to peer
companies, each of which may be established on a corporate-wide basis or
established with respect to one or more operating units, divisions, acquired
businesses, minority investments, partnerships or joint ventures.
(c) Other Performance-Based Compensation. The Committee's
decision to make, or not to make, Section 162(m) Awards within the meaning of
this Section 13 shall not in any way prejudice the qualification of any other
Awards as performance based compensation under Section 162(m). In particular,
Awards of Stock Options may, pursuant to applicable regulations promulgated
under Section 162(m), be qualified as performance-based compensation for Section
162(m) purposes without regard to this Section 13.
SECTION 14. Non-Transferability. No Award granted under the
Plan or any rights or interests therein shall be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of except by will or by the laws of
descent and distribution or pursuant to a "qualified domestic relations order"
("QDRO") as defined in the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations thereunder;
provided, however, that the Committee may, subject to such terms and conditions
as the Committee shall specify, permit the transfer of an Award to a
Participant's family members or to one or more trusts established in whole or in
part for the benefit of one or more of such family members; provided, however,
that the restrictions in this sentence shall not apply to the shares received in
connection with an Award after the date that the restrictions on transferability
of such shares set forth in the applicable Award Agreement have lapsed. During
the lifetime of a Participant, a Stock Option or Stock Appreciation Right shall
be exercisable only by, and payments in settlement of Awards shall be payable
only to, the Participant or, if applicable, the "alternate payee" under a QDRO
or the family member or trust to whom such Stock Option, Stock Appreciation
Right or other Award has been transferred in accordance with the previous
sentence.
SECTION 15. Recapitalization or Reorganization.
(a) Authority of the Company and Shareholders. The
existence of the Plan, the Award Agreements and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
(b) Change in Capitalization. Notwithstanding any
provision of the Plan or any Award Agreement, in the event of any change in the
outstanding Common Stock by reason of a stock dividend, recapitalization,
reorganization, merger, consolidation, stock split, combination or exchange of
shares or any other significant corporate event affecting the Common Stock, the
Committee, in its discretion, may make (i) such proportionate adjustments it
considers appropriate (in the form determined by the Committee in its sole
discretion) to prevent diminution or enlargement of the rights of Participants
under the Plan with respect to the aggregate number of shares of Common Stock
for which Awards in respect thereof may be granted under the Plan, the number of
shares of Common Stock covered by each outstanding Award, and the exercise or
Award prices in respect thereof and/or (ii) such other adjustments as it deems
appropriate. The Committee's determination as to what, if any, adjustments shall
be made shall be final and binding on the Company and all Participants.
8
SECTION 16. Change in Control. (a) The following provisions of
this Section 16(a) shall apply to Awards granted prior to April 8, 2004, and
shall not apply to any Awards granted after such date unless the holder of such
an Award has agreed that the Award shall be governed by the provisions of
Section 16(b): In the event of a Change in Control, (i) all Stock Options or
Stock Appreciation Rights then outstanding shall become fully exercisable as of
the date of the Change in Control, whether or not then exercisable, (ii) all
restrictions and conditions of all Stock Awards then outstanding shall lapse as
of the date of the Change in Control, (iii) all Performance Share Awards shall
be deemed to have been fully earned as of the date of the Change in Control, and
(iv) in the case of a Change in Control involving a merger of, or consolidation
involving, the Company in which the Company is (A) not the surviving corporation
(the "Surviving Entity") or (B) becomes a wholly owned subsidiary of the
Surviving Entity or any Parent thereof, each outstanding Stock Option granted
under the Plan and not exercised (a "Predecessor Option") will be converted into
an option (a "Substitute Option") to acquire common stock of the Surviving
Entity or its Parent, which Substitute Option will have substantially the same
terms and conditions as the Predecessor Option, with appropriate adjustments as
to the number and kind of shares and exercise prices.
(c) The following provisions of this Section 16(b) shall
apply to Awards granted on or after April 8, 2004, and shall not apply to any
Awards granted prior to such date unless the holder of such Award granted prior
to such date has agreed that the Award will be governed by this Section 16(b):
Except as otherwise provided in an Award Agreement, in the event of a Change in
Control, (i) all Stock Options or Stock Appreciation Rights then outstanding
shall become fully exercisable as of the date of the Change in Control, whether
or not then exercisable, (ii) all restrictions and conditions of all Stock
Awards then outstanding shall lapse as of the date of the Change in Control, and
(iii) all Performance Share Awards shall be deemed to have been fully earned as
of the date of the Change in Control. Except as otherwise provided in an Award
Agreement with respect to an Award, in the case of a Change of Control involving
a merger of, or consolidation involving, the Company in which the Company is (A)
not the Surviving Entity or (B) becomes a wholly owned subsidiary of the
Surviving Entity or any Parent thereof, each outstanding Award granted under the
Plan and not exercised (a "Predecessor Award") may, if the definitive agreement
governing the terms of the Change of Control transaction so provides, be
converted into, or otherwise assumed or substituted for, an Award (a "Substitute
Award") issued by the Surviving Entity or its Parent, which Substitute Award
will have substantially the same terms and conditions as the Predecessor Award,
with appropriate adjustments as to the number and kind of shares and exercise
prices and to reflect the accelerated vesting. Except as otherwise provided in
an Award Agreement with respect to an Award, in the case of a Change of Control
involving a merger of, or consolidation involving, the Company in which the
Company is (A) not the Surviving Entity or (B) becomes a wholly owned subsidiary
of the Surviving Entity or any Parent thereof and in which a Predecessor Award
is not converted into a Substitute Award or otherwise assumed or substituted by
the Surviving Entity or any Parent of the Surviving Entity in the Change of
Control transaction pursuant to the definitive agreement governing the Change of
Control transaction (a "Non-Assumed Award"), the Committee, in its sole and
absolute discretion, may, with respect to any or all of such Non-Assumed Awards,
take any or all of the following actions to be effective as of the date of the
Change of Control (or as of any other date fixed by the Committee occurring
within the thirty (30) day period immediately preceding the date of the Change
of Control, but only if such action remains contingent upon the effectuation of
the Change of Control) (such date is referred to as the "Action Effective
Date"), unilaterally cancel such Non-Assumed Award in exchange for:
(i) whole and/or fractional shares of Common
Stock (or for whole shares of Common Stock
and cash in lieu of any fractional share) or
whole and/or fractional shares of capital
stock of a successor (or for whole shares of
capital stock of a successor and cash in
lieu of any fractional share) that, in the
aggregate, are equal in value to the excess
of the Fair Market Value of the shares of
Common Stock then subject to such
Non-Assumed Award determined as of the
Action Effective Date (taking into account
the accelerated vesting), less the value of
any consideration payable on exercise of
such Non-Assumed Award; or
(ii) cash or other property equal in value to the
excess of the Fair Market Value of the
shares of Common Stock then subject to such
Non-Assumed Award determined as of the
Action Effective Date (taking into account
the accelerated vesting), less the value of
any consideration payable on exercise of
such Non-Assumed Awards.
9
If a Change of Control occurs, then, except to the extent otherwise
provided in the Award Agreement pertaining to a particular Award or as otherwise
provided in this Plan, each Award shall be governed by applicable law and the
documents effectuating the Change of Control.
SECTION 17. Amendment of the Plan. The Board or Committee may
at any time and from time to time terminate, modify, suspend or amend the Plan
in whole or in part; provided, however, that no such termination, modification,
suspension or amendment shall be effective without shareholder approval if such
approval is required to comply with any applicable law or stock exchange rule;
and provided, however, that the Board or Committee may not, without shareholder
approval, increase the maximum number of shares issuable under the Plan. No
termination, modification, suspension or amendment of the Plan shall, without
the consent of a Participant to whom any Awards shall previously have been
granted, adversely affect his or her rights under such Awards. Notwithstanding
any provision herein to the contrary, the Board or Committee shall have broad
authority to amend the Plan or any Stock Option to take into account changes in
applicable tax laws, securities laws, accounting rules and other applicable
state and federal laws.
SECTION 18. Miscellaneous.
(a) Tax Withholding. No later than the date as of which
an amount first becomes includable in the gross income of the Participant for
applicable income tax purposes with respect to any award under the Plan, the
Participant shall pay to the Company or make arrangements satisfactory to the
Committee 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 Committee, in accordance with rules and procedures established
by the Committee, the minimum required withholding obligations may be settled
with Common Stock, including Common Stock that is part of the award that gives
rise to the withholding requirement. The obligation of the Company under the
Plan shall be conditioned upon such payment or arrangements and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant.
(b) No Right to Grants or Employment. No Eligible
Individual or Participant shall have any claim or right to receive grants of
Awards under the Plan. Nothing in the Plan or in any Award or Award Agreement
shall confer upon any employee of the Company or any Subsidiary any right to
continued employment with the Company or any Subsidiary, as the case may be, or
interfere in any way with the right of the Company or a Subsidiary to terminate
the employment of any of its employees at any time, with or without cause.
(c) Unfunded Plan. The Plan is intended to constitute an
unfunded plan for incentive compensation. With respect to any payments not yet
made to a Participant by the Company, nothing contained herein shall give any
such Participant any rights that are greater than those of a general creditor of
the Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or payments in lieu thereof with respect to awards
hereunder.
(d) Other Employee Benefit Plans. Payments received by a
Participant under any Award made pursuant to the provisions of the Plan shall
not be included in, nor have any effect on, the determination of benefits under
any other employee benefit plan or similar arrangement provided by the Company.
(e) Securities Law Restrictions. The Committee may
require each Eligible Individual purchasing or acquiring shares of Common Stock
pursuant to a Stock Option or other Award under the Plan to represent to and
agree with the Company in writing that such Eligible Individual is acquiring the
shares for investment and not with a view to the distribution thereof. All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, the American Stock Exchange or any other
exchange upon which the Common Stock is then listed, and any applicable federal
or state securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
No shares of Common Stock shall be issued hereunder unless the Company shall
have determined that such issuance is in compliance with, or pursuant to an
exemption from, all applicable federal and state securities laws.
10
(f) Compliance With Applicable Law.
(i) The Plan is intended to comply with applicable law,
including, without limitation, Rule 16b-3 under the Exchange Act or its
successors under the Exchange Act, and the Committee shall interpret
and administer the provisions of the Plan or any Award Agreement in a
manner consistent therewith. To the extent any provision of the Plan or
Award Agreement or any action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee. Moreover, in the event the Plan or
an Award Agreement does not include a provision required by applicable
law, including, without limitation, Rule 16b-3 to be stated therein,
such provision (other than one relating to eligibility requirements, or
the price and amount of Awards) shall be deemed automatically to be
incorporated by reference into the Plan or such Award Agreement.
(ii) Notwithstanding anything contained in the Plan or any
Award Agreement to the contrary, if the consummation of any transaction
under the Plan would result in the possible imposition of liability on
a Participant pursuant to Section 16(b) of the Exchange Act, the
Committee shall have the right, in its sole discretion, but shall not
be obligated, to defer such transaction to the extent necessary to
avoid such liability.
(g) Award Agreement. In the event of any conflict or
inconsistency between the Plan and any Award Agreement, the Plan shall govern,
and the Award Agreement shall be interpreted to minimize or eliminate any such
conflict or inconsistency.
(h) Expenses. The costs and expenses of administering the
Plan shall be borne by the Company.
(i) Applicable Law. Except as to matters of federal law,
the Plan and all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
conflicts of law principles.
(j) Reserved.
(k) Effective Date. The Plan shall be effective as of
November 25, 2002 (the "Effective Date").
11