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EXHIBIT 10j
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ATRION CORPORATION
1997 STOCK INCENTIVE PLAN
ARTICLE 1 - ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment of the Plan. Atrion Corporation, a Delaware corporation (the
"Company"), hereby establishes an incentive compensation plan to be known as the
"Atrion Corporation 1997 Stock Incentive Plan" (the "Plan"), as set forth
herein. The Plan permits the Company to grant Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock and
Performance Shares, as defined herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the interests of
the Company by affording employees of the Company and the Subsidiaries and
directors of the Company an opportunity to acquire a proprietary interest in the
Company, and by providing such persons with long-term financial incentives for
outstanding performance. The Plan is further intended to provide flexibility to
the Company in its ability to motivate, attract, and retain the services of
employees and directors upon whose judgment, interest and special effort the
successful conduct of its operation is largely dependent.
1.3 Duration of the Plan. The Plan shall be effective on March 12, 1997, the
date of its adoption by the Board of Directors (the "Effective Date"), subject
to approval by the Company's stockholders within twelve (12) months thereafter,
such approval to be by stockholder vote sufficient to satisfy the federal tax
requirements then in effect related to stockholder approval of stock option
plans providing for the grant of Incentive Stock Options and any requirement of
The Nasdaq Stock Market, and shall remain in effect, subject to the right of the
Board of Directors to amend or terminate the Plan at any time pursuant to
Article 15 hereof, until all Shares subject to it shall have been purchased or
acquired according to the provisions hereof. However, in no event may an Award
of an ISO, as such terms are defined herein, be granted under the Plan after
March 12, 2007, although an ISO granted prior thereto may extend beyond such
date.
ARTICLE 2 - DEFINITIONS
Whenever used in the Plan, the following capitalized terms shall have the
meanings set forth below:
2.1 "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock or Performance Shares.
2.2 "Award Agreement" means a written agreement between the Company and a
Participant setting forth the terms and provisions applicable to an Award
granted by the Company to such Participant hereunder.
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2.3 "Board" or "Board of Directors" means the Board of Directors of the Company.
2.4 "Change in Control" means the occurrence of any of the following:
(a) when any "person," as such term is used in Section 13(d) or 14(d) of the
Exchange Act (other than the Company or any subsidiary or any employee benefit
plan of the Company or any subsidiary (including its trustee)), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of the Company's
outstanding securities;
(b) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than (i) 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 or
parent entity) seventy-five percent (75%) or more of the combined voting power
of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquired
twenty-five percent (25%) or more of the combined voting power of the Company's
then outstanding securities;
(c) when, during any period of two (2) consecutive years during the existence of
the Plan, the individuals who, at the beginning of such period, constitute the
Board cease, for any reason, to constitute at least a majority thereof, unless
the election or the nomination for election by the Company's stockholders of
each director first elected during such period was approved by a vote of at
least sixty-seven percent (67%) of the directors then still in office who were
directors of the Company at the beginning of any such period or whose election
or nomination for election was previously so approved; or
(d) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the assets of the Company which will result in the Company
having no significant continuing operations.
2.5 "Change in Control Price" means the highest price per share (a) paid for
Shares in any transaction reported on any exchange on which the Common Stock is
listed or on The Nasdaq Stock Market, as the case may be, or (b) paid or offered
in any transaction related to a Change in Control of the Company, in either
event at any time during the preceding sixty (60) day period, as determined by
the Committee.
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2.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and references thereto shall include the applicable Treasury regulations
thereunder.
2.7 "Committee" means the Compensation Committee of the Board.
2.8 "Common Stock" means the ten cent ($0.10) par value common stock of the
Company.
2.9 "Company" means Atrion Corporation, a Delaware corporation, and any
successor as provided in Article 18 hereof.
2.10 "Director" means any individual who is a member of the Board.
2.11 "Disability" with respect to a Participant means physical or mental
inability to perform the normal duties of his employment by the Company or
service as a Director as determined by a physician selected by the Committee
after an examination of such Participant; provided, however, that if such
participant fails or refuses to cooperate in such examination, the determination
of his Disability shall be made by the Committee in its sole discretion.
2.12 "Earnings per Share" means the consolidated "earnings per share" of the
Common Stock determined in accordance with generally accepted accounting
principles.
2.13 "Effective Date" means the date described in Section 1.3 hereof.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
2.15 "Fair Market Value" as of any date means (i) with respect to an Award of an
ISO and an Award which is intended to qualify under the Performance-Based
Exception, the average of the high and low sales price of a Share on such date
as reported by (1) any national securities exchange on which the Shares are
actively traded or (2) The Nasdaq Stock Market or, if no Shares are traded on
such exchange or system on such date, then on the next preceding date on which
any Shares were traded on such exchange or system; and (ii) with respect to all
other Awards, the closing sales price of a Share on such date as reported by (1)
any national securities exchange on which the Shares are actively traded or (2)
The Nasdaq Stock Market or, if no Shares are traded on such exchange or system
on such date, then on the next preceding date on which any Shares were traded on
such exchange or system.
2.16 "Freestanding SAR" means an SAR granted independently of any Options.
2.17 "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted pursuant to Article 5 hereof which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.
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2.18 "Insider" shall mean an individual who is required to file reports of
beneficial ownership and changes in beneficial ownership with the Securities and
Exchange Commission under Section 16 of the Exchange Act.
2.19 "Key Employee" means an employee of the Company or any Subsidiary who is
designated as a key employee by the Committee.
2.20 "Named Executive Officer" means, for a calendar year, a Participant who is
one of the group of "covered employees" for such calendar year within the
meaning of Section 162(m) of the Code.
2.21 "Non-Employee Director" means a Director who, at the time of determination
of such status, (i) is not an officer or otherwise employed by the Corporation
or a Subsidiary; (ii) does not receive compensation directly or indirectly from
the Corporation or a Subsidiary for services rendered as a consultant or in any
capacity other than as a Director, except for an amount for which disclosure
would not be required pursuant to Item 404(a) of Regulation S-K; (iii) does not
possess an interest in any other transactions for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K; and (iv) is not engaged in a
business relationship for which disclosure would be required pursuant to Item
404(b) of Regulation S-K.
2.22 "Nonqualified Stock Option" or "NQSO" means an option to purchase Shares
granted pursuant to Article 5 or Article 10 hereof which is not intended to meet
the requirements of Section 422 of the Code.
2.23 "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
2.24 "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.
2.25 "Outside Director" means a Director who is not an employee of
the Company or any Subsidiary.
2.26 "Participant" means a Key Employee or an Outside Director who has been
granted an Award which is outstanding hereunder.
2.27 "Performance-Based Exception" means the performance-based exception, set
forth in Section 162(m)(4)(C) of the Code, from the deductibility limitations of
Section 162(m) of the Code.
2.28 "Performance Share" means an Award granted pursuant to Article 8 hereof.
2.29 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and such Shares are subject to
a
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substantial risk of forfeiture, as provided in Article 7 hereof.
2.30 "Prior Plans" means the (i) Atrion Corporation 1990 Stock Option Plan and
(ii) Atrion Corporation 1994 Key Employee Stock Incentive Plan.
2.31 "Restricted Stock" means an Award granted pursuant to Article 7 hereof.
2.32 "Return on Assets" means the consolidated "return on average assets" of the
Company and its subsidiaries determined in accordance with generally accepted
accounting principles.
2.33 "Return on Equity" means the consolidated "return on average common
stockholders' equity" of the Company and its subsidiaries determined in
accordance with generally accepted accounting principles.
2.34 "Revenues" means the consolidated "revenues" of the Company and its
subsidiaries determined in accordance with generally accepted accounting
principles.
2.35 "Shares" means the shares of Common Stock of the Company.
2.36 "Stock Appreciation Right" or "SAR" means an Award granted to a Key
Employee alone or in tandem with a related Option pursuant to Article 6 hereof
which is designated as an SAR and which grants such Key Employee the right to
receive payment of an amount equal to the appreciation in the value of Shares.
2.37 "Subsidiary" means any corporation, partnership, joint venture, affiliate,
or other entity of which a majority of the outstanding voting stock or power is
beneficially owned, directly or indirectly, by the Company.
2.38 "Tandem SAR" means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
a Share under the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall similarly be canceled).
2.39 "Total Stockholder Return" means the percentage change in the value of an
initial investment in the Common Stock assuming the reinvestment of all
dividends paid on such shares.
ARTICLE 3 - ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Committee, all of the
members of which shall be Non-Employee Directors. Any action taken with respect
to Named Executive Officers for purposes of meeting the Performance-Based
Exception shall be taken by the Committee only if all of the members of the
Committee are "outside directors" within the meaning of Code Section 162(m),
subject to any applicable transition rules under
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Code Section 162(m). If all of the members of the Committee are not "outside
directors," such action shall be taken by a subcommittee of the Committee of two
(2) or more members, all of whom are "outside directors."
3.2 Authority of the Committee. Except as limited by law, or by the Certificate
of Incorporation or Bylaws of the Company, and subject to the provisions hereof,
the Committee shall have full power to designate the Key Employees who shall
participate in the Plan; determine the sizes and types of Awards (other than
Options granted to Outside Directors pursuant to Article 10 hereof); determine
the terms and provisions of Awards in a manner consistent with the Plan (other
than Options granted to Outside Directors pursuant to Article 10 hereof);
construe and interpret the Plan and any agreement or instrument entered into
under the Plan; establish, amend, or waive rules and regulations for the Plan's
administration; determine whether Awards (other than Options granted to Outside
Directors pursuant to Article 10 hereof) will be granted singularly, in
combination or in tandem; accelerate or defer (with the consent of the Key
Employee) the vesting, exercise or payment of an Award (other than Options
granted to Outside Directors pursuant to Article 10 hereof) or the performance
period of an Award (other than Options granted to Outside Directors pursuant to
Article 10 hereof), but no deferral shall extend beyond the term of the Award;
to accept the surrender of Awards and the substitution of new or revised Awards
in exchange therefor (other than Options granted to Outside Directors pursuant
to Article 10 hereof); and (subject to the provisions of Article 15 hereof),
amend the terms and provisions of any outstanding Award to the extent such terms
and provisions are within the discretion of the Committee as provided in the
Plan; provided, however, that notwithstanding the foregoing, the Committee shall
not have the power or authority to cancel any Options granted under the Plan to
executive officers of the Company (as such term is defined in rules promulgated
under the Exchange Act) and to replace such Options with, or regrant such
Options through, Awards having a lower Option Price. The Committee shall make
all other decisions relating to the operation of the Plan, and all other
determinations which may be necessary or advisable for the administration of the
Plan.
3.3 Decisions Binding. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Directors, employees,
Participants, and their estates and beneficiaries.
3.4 Administration of Article 10. Notwithstanding any other provision of the
Plan, the Board shall administer Article 10 of the Plan, and the Committee shall
exercise no discretion with respect to Article 10. In the Board's administration
of Article 10 and the Options granted to Outside Directors, the Board shall have
all of the authority and discretion otherwise granted to the Committee with
respect to the administration of the Plan.
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ARTICLE 4 - SHARES SUBJECT TO THE PLAN
4.1 Number of Shares Available for Grants. Beginning on the Effective Date,
there is hereby reserved for grants of Awards under the Plan the number of
Shares equal to the sum of:
(a) Three Hundred Thousand (300,000) Shares; and
(b) such number of Shares reserved for issuance under the Prior Plans in excess
of the number of Shares as to which options have been awarded thereunder as of
the Effective Date including any Shares subject to options previously granted
under the Prior Plans which hereafter shall lapse, expire, terminate or be
canceled.
The number of Shares reserved for grants of Awards under this Section 4.1 shall
be subject to adjustment as provided in Section 4.3 hereof. In no event shall a
Participant receive Awards of Options, Freestanding SARs, Restricted Stock or
Performance Shares during any one (1) calendar year covering in the aggregate
more
than Fifty Thousand (50,000) Shares.
4.2 Lapsed Awards. If any Award granted hereunder is canceled, terminates,
expires or lapses for any reason (with the exception of the termination of a
Tandem SAR upon exercise of the related Option, or the termination of a related
Option upon exercise of the corresponding Tandem SAR), any Shares subject to
such Award shall again be available for the grant of an Award under the Plan.
4.3 Adjustments in Authorized Shares. Subject to Article 14 hereof, in the event
of any change in corporate capitalization, such as a stock dividend or stock
split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Company, such adjustment shall be made in the number
and class of Shares reserved under the Plan, in the number, class and price of
Shares subject to outstanding Awards granted under the Plan, and in the
numerical limit set forth in the last sentence of Section 4.1 hereof, as may be
determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; provided, however,
that the number of Shares subject to any Award shall always be a whole number.
In the case of Options granted to Outside Directors pursuant to Article 10
hereof, the foregoing adjustments shall be made by the Board, and any such
adjustments also shall apply to the future grants provided by Article 10 hereof.
ARTICLE 5 - STOCK OPTIONS
5.1 Grant of Options. Subject to the terms and conditions of this Article, and
to such other terms and conditions as the Committee may determine, Options may
be granted to Key Employees in such
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number and at such times as shall be determined by the Committee.
5.2 Award Agreement. Each Option granted shall be evidenced by an Award
Agreement that shall specify the Option Price, the term of the Option, the
number of Shares subject to such Option and such other provisions as the
Committee shall determine which are not inconsistent with the provisions of the
Plan. The Award Agreement also shall specify whether the Option is intended to
be an ISO or an NQSO.
5.3 Option Price. The Option Price of an ISO shall not be less than the Fair
Market Value of a Share on the date the Option is granted and the Option Price
of an NQSO shall be as determined by the Committee in its sole discretion.
5.4 Term of Options. Each Option shall expire at such time as the Committee
shall determine at the time of grant; provided, however, that no Option shall be
exercisable later than the tenth (10th) anniversary date of its grant.
5.5 Exercise of Options. The Shares subject to an Option may be purchased in
such installments and on such exercise dates as shall be set forth in the Award
Agreement. Any Shares not purchased on the applicable exercise date may be
purchased thereafter at any time prior to the final expiration of the Option. In
no event shall any Option be exercised, in whole or in part, after its
expiration date.
5.6 Payment. Options shall be exercised by the delivery of a written notice of
exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company:
(a) in cash or its equivalent, or (b) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the
aggregate Option Price, or (c) by a combination of (a) and (b). The Committee
also may allow cashless exercise or payment by any other means which the
Committee determines to be consistent with the Plan's purpose and applicable
law. As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option.
5.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on the transfer of Shares acquired pursuant to the exercise of an
Option granted under this Article as it may deem advisable including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which the Common Stock is then
listed or traded and under any state securities laws applicable to such Shares.
5.8 Termination of Employment. Each Award Agreement with respect
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to Options granted hereunder shall set forth the extent to which the Participant
shall have the right to exercise the Options following termination of the
Participant's employment with the Company or its Subsidiaries, as the case may
be. Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Award Agreement, need not be uniform among all Options
issued pursuant to this Article, may reflect distinctions based on the reasons
for termination of employment and may include provisions relating to a
Participant's competition with the Company after termination of employment. In
that regard, if an Award Agreement permits exercise of an Option following the
death of the Participant, the Award Agreement shall provide that such Option
shall be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will or, if the Participant shall
fail to make a testamentary disposition of the Option or shall have died
intestate, by the Participant's executor or other legal representative.
5.9 TRANSFERABILITY OF OPTIONS.
(a) Incentive Stock Options. No ISO granted under this Article may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, all ISOs
granted to a Participant shall be exercisable during his or her lifetime only by
such Participant.
(b) Nonqualified Stock Options. Any NQSO granted under this Article 5 may be
transferable or nontransferable in the discretion of the Committee and under
such terms and conditions as may be set forth in the Award Agreement with
respect to such NQSO.
5.10 No Rights. A Participant granted an Option under the Plan shall have no
rights as a stockholder of the Company with respect to the Shares subject to
such Option except to the extent that Shares are issued to the Participant upon
the exercise of such Option.
5.11 Certain Additional Provisions for Incentive Stock Options.
(a) Exercisability. The aggregate Fair Market Value (determined on the date
the Award is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by any Key Employee during any
calendar year (under all plans of the Company and its Subsidiaries) shall not
exceed One Hundred Thousand Dollars ($100,000).
(b) Termination of Employment. No Incentive Stock Option may be exercised
more than three (3) months after termination of employment for any reason other
than Disability or death, unless (i) the Participant dies during such three
(3)-month period, and (ii) the Award Agreement or the Committee permits later
exercise.
(c) Company and Subsidiaries Only. Incentive Stock Options may be granted
only to persons who are employees of the Company or
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a Subsidiary on the date the Award is granted.
(d) Expiration. No Incentive Stock Option may be exercised after the
expiration of ten (10) years from the date the Award is granted; provided,
however, that if the Option is granted to a Key Employee who, together with
persons whose stock ownership is attributed to the Key Employee pursuant to
section 424(d) of the Code, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of the stock of the Company or
any of its Subsidiaries, the Option may not be exercised after the expiration of
five (5) years from the Grant Date.
5.12 Substitute Options. Notwithstanding any other provision of this Plan, in
the event that the Company or a Subsidiary consummates a transaction described
in section 424(a) of the Code (e.g., the acquisition of property or stock from
an unrelated corporation), persons who become employees of the Company or any
Subsidiary on account of such transaction may be granted Options in substitution
for options granted by their former employer. If such substitute Options are
granted, the Committee, in its sole discretion and consistent with section
424(a) of the Code, shall determine the exercise price of such substitute
Options.
ARTICLE 6 - STOCK APPRECIATION RIGHTS
6.1 Grant of SARs. Subject to the terms and conditions of this Article, and to
such other terms and conditions as the Committee may determine, SARs may be
granted to Key Employees at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of such forms of SARs. The Committee shall have
complete discretion in determining the number of Shares covered by SARs granted
hereunder (subject to Article 4 hereof) and in determining the terms and
provisions pertaining to such SARs. The number of Shares covered by a
Freestanding SAR shall be counted against the number of Shares available for
grants of Awards under Section 4.1 hereof, but the number of Shares covered by a
Tandem SAR shall not be so counted. The grant price of a Freestanding SAR shall
equal the Fair Market Value of a Share on the date of grant of the SAR. The
grant price of a Tandem SAR shall equal the Option Price of the related Option.
6.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to exercise
the equivalent portion of the related Option. A Tandem SAR may be exercised only
with respect to the Shares for which its related Option is then exercisable. In
no event shall the exercise period for a Tandem SAR exceed the exercise period
for the related Option. Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection with an ISO: (i)
the Tandem SAR will expire no later than the expiration of the underlying ISO;
(ii) the value of the payout with respect to the Tandem SAR shall not exceed the
difference between the Option Price of the underlying ISO and
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the Fair Market Value of the Shares subject to the underlying ISO at the time
the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when
the Fair Market Value of the Shares subject to the ISO exceeds the Option Price
of the ISO.
6.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and provisions the Committee, in its sole discretion, imposes
upon them.
6.4 Award Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
6.5 Term of SARs. The term of an SAR granted under the Plan shall be determined
by the Committee, in its sole discretion; provided, however, that such term
shall not exceed 10 years.
6.6 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company equal to the product of (i) the
difference between the Fair Market Value of a Share on the date of exercise over
the grant price and (ii) the number of Shares with respect to which the SAR is
exercised. At the discretion of the Committee, the payment upon exercise may be
in cash, in Shares of equivalent value, or in some combination thereof;
provided, however, that from and after the date of a Change in Control, the
exercise of an SAR may be settled only in cash.
6.7 Termination of Employment. Each Award Agreement with respect to SARs granted
hereunder shall set forth the extent to which the Key Employee shall have the
right to exercise the SAR following termination of the Key Employee's employment
with the Company or its Subsidiaries, as the case may be. Such provisions shall
be determined in the sole discretion of the Committee, shall be included in the
Award Agreement, need not be uniform among all SARs issued pursuant to the Plan,
may reflect distinctions based on the reasons for termination of employment and
may include provisions relating to a Key Employee's competition with the Company
after termination of employment. In that regard, if an Award Agreement permits
exercise of an SAR following the death of the Participant, the Award Agreement
shall provide that such SAR shall be exercisable to the extent provided therein
by any person that may be empowered to do so under the Key Employee's will, or
if the Key Employee shall fail to make a testamentary disposition of the SAR or
shall have died intestate, by the Key Employee's executor or other legal
representative.
6.8 Nontransferability of SARs. Except as otherwise provided in an Award
Agreement, no SAR may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in an Award Agreement, all
SARs granted to a Key Employee under the Plan shall be exercisable during his or
her lifetime only by such Key Employee.
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6.9 No rights. A Key Employee granted an SAR shall have no rights as a
stockholder of the Company with respect to the Shares covered by such SAR except
to the extent that Shares are issued to the Key Employee upon exercise of the
SAR.
ARTICLE 7 - RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and conditions of this
Article, and to such other terms and conditions as the Committee may determine,
the Committee, at any time and from time to time, may grant Shares of Restricted
Stock to Key Employees in such numbers as the Committee shall determine.
7.2 Award Agreement. Each Restricted Stock grant shall be evidenced by an Award
Agreement that shall specify the Period or Periods of Restriction, the number of
Shares of Restricted Stock granted, and such other provisions as the Committee
shall determine.
7.3 Transferability. Except as provided in this Article, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the Award Agreement,
or upon earlier satisfaction of any other conditions, as specified by the
Committee in its sole discretion and set forth in the Award Agreement. All
rights with respect to Restricted Stock granted to a Key Employee under the Plan
shall be available during his or her lifetime only to such Key Employee.
7.4 Other Restrictions. The Committee may impose such other conditions or
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, a requirement that Key
Employees pay a certain purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, or individual), time-based restrictions on vesting
following the attainment of the performance goals and restrictions under
applicable federal or state securities laws. The Company shall retain the
certificates representing Shares of Restricted Stock in the Company's possession
until such time as all conditions and restrictions applicable to such Shares
have been satisfied. Except as otherwise provided in this Article or in the
applicable Award Agreement, or as otherwise required by law, Shares of
Restricted Stock shall become freely transferable by the Key Employee after the
last day of the Period of Restriction.
7.5 Voting Rights. During the Period of Restriction, Key Employees owning Shares
of Restricted Stock granted hereunder may exercise full voting rights with
respect to such Shares.
7.6 Dividends and other Distributions. During the Period of Restriction, Key
Employees owning Shares of Restricted Stock granted hereunder may be credited
with regular cash dividends paid
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with respect to the underlying Shares while they are so owned. The Committee may
apply any restrictions to the dividends that the Committee deems appropriate. In
the event that any dividend constitutes a "derivative security" or an "equity
security" pursuant to Section 16 under the Exchange Act, such dividend shall be
subject to a vesting period equal to the remaining vesting period of the Shares
of Restricted Stock with respect to which the dividend is paid.
7.7 Termination of Employment. Each Award Agreement with respect to Restricted
Stock granted hereunder shall set forth the extent to which the Key Employee
shall have the right to receive unvested Restricted Shares following termination
of the Key Employee's employment with the Company or its Subsidiaries, as the
case may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement, need not be uniform among
all Shares of Restricted Stock issued pursuant to the Plan, may reflect
distinctions based on the reasons for termination of employment and may include
provisions relating to a Key Employee's competition with the Company after
termination of employment. In amplification but not limitation of the foregoing,
in the case of an Award of Restricted Stock to a Named Executive Officer which
is intended to qualify for the Performance-Based Exception, the Award Agreement
may provide that such Restricted Stock may become payable in the event of a
termination of employment by reason of death, Disability or Change in Control,
such payment not to occur before attainment of the related performance goal.
ARTICLE 8 - PERFORMANCE SHARES
8.1 Grant of Performance Shares. Subject to the terms and conditions of this
Article and to such other terms and conditions as the Committee may determine,
Performance Shares may be granted to Key Employees in such amounts, upon such
terms and at such times as shall be determined by the Committee. The number and
vesting of Performance Shares granted shall be conditioned upon the degree of
attainment of specified performance goals or other conditions over a specified
period (the "Performance Period") as determined by the Committee, subject to
Section 3.1 hereof. The terms and provisions of an Award of Performance Shares
shall be evidenced by an appropriate Award Agreement.
8.2 Value of Performance Shares. The value of a Performance Share at any time
shall be the Fair Market Value of a Share at such time.
8.3 Form and Timing of Payment of Performance Shares. The Committee shall
establish the amount of payment to be made under an Award of Performance Shares
if the performance goals or other conditions are met. Such Award shall be
expressed in terms of Shares. After the completion of a Performance Period, the
performance of the Company, subsidiary, division or individual, as the case may
be, shall be measured against the performance goals or other conditions, and the
Committee shall determine whether all,
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none or a portion of an Award shall be paid. The Committee shall pay any earned
Performance Shares as soon as practicable after they are earned in the form of
cash, Shares or a combination thereof (as determined by the Committee) having an
aggregate Fair Market Value equal to the value of the earned Performance Shares
as of the date they are earned. Any Shares used to pay earned Performance Shares
may be issued subject to any restrictions deemed appropriate by the Committee.
In addition, the Committee, in its discretion, may cancel any earned Performance
Shares and grant Stock Options to the Key Employee which the Committee
determines to be of equivalent value based on a conversion formula stated in the
applicable Award Agreement. The Committee, in its discretion, may also grant
dividend equivalent rights with respect to earned but unpaid Performance Shares
as evidenced by the applicable Award Agreement. Performance Shares shall have no
voting rights.
8.4 Termination of Employment. Each Award Agreement with respect to Performance
Shares granted hereunder shall set forth the extent to which the Key Employee
shall have the right to receive unearned Performance Shares following
termination of the Key Employee's employment with the Company and its
Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreements,
need not be uniform among all Performance Shares awarded pursuant to the Plan,
may reflect distinctions based on the reasons for termination of employment and
may include provisions relating to a Key Employee's competition with the Company
after termination of employment.
8.5 Nontransferability. Except as otherwise provided in an Award Agreement with
respect to Performance Shares granted hereunder, Performance Shares may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, except
as otherwise provided in an Award Agreement, a Key Employee's rights under the
Plan shall be exercisable during the Key Employee's lifetime only by the Key
Employee.
ARTICLE 9 - PERFORMANCE MEASURES
The performance measure or measures to be used for purposes of Awards, other
than Options, to Named Executive Officers which are designed to qualify for the
Performance-Based Exception shall be selected from among the following
alternatives:
(a) Earnings per Share;
(b) Return on Assets;
(c) Return on Equity;
(d) Revenues; or
(e) Total Stockholder Return
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In the event that applicable tax or securities laws change in order to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval.
ARTICLE 10 - OUTSIDE DIRECTOR OPTIONS.
The provisions of this Article 10 shall apply only to grants of Options
to Outside Directors as provided below. Except as set forth in this Article 10,
the other provisions of the Plan shall apply to grants of Options to Outside
Directors to the extent not inconsistent with this Article 10. For purposes of
interpreting the applicable provisions of the Plan, an Outside Director's
service as a member of the Board shall be deemed to be employment with the
Company.
10.1 General. Outside Directors shall be granted Nonqualified Stock Options in
accordance with this Article 10. The Option Price per share of Shares
purchasable under Options granted to Outside Directors shall be the Fair Market
Value of a Share on the date of grant. Options granted pursuant to this Article
10 shall be subject to the terms of this Article 10 and shall not be subject to
discretionary acceleration of exercisability.
10.2 Annual Grants. On July 10 of each year while this Plan is in effect,
commencing with July 10, 1997, each Outside Director will be granted
automatically, without action by the Committee, an Option to purchase Two
Thousand (2,000) Shares. The Option Price shall equal the Fair Market Value of
the Common Stock as of the date of grant.
10.3 Vesting. Each Option granted under this Article 10 shall be fully
exercisable on the date of grant. Sections 5.4 and 5.8 hereof shall not apply to
Options granted to Outside Directors.
10.4 Duration. Each Option granted to an Outside Director shall expire on the
first to occur of (i) the tenth anniversary of the date of grant of the Option,
(ii) six (6) months after the date the Outside Director ceases to be a Director
other than as a result of the death of the Outside Director; or (iii) one (1)
year after the Outside Director ceases to be a Director by reason of the death
of the Outside Director, in which event the Option may be exercised during such
period by the executor or administrator of the Outside Director's estate, by the
person or persons to whom the Outside Director's rights under the Option shall
pass by the Outside Director's will or the laws of descent and distribution or
by the Outside Director's designated beneficiary. The Committee may not provide
for an extended exercise period beyond the periods set forth in this Article 10.
ARTICLE 11 - BENEFICIARY DESIGNATION
Each Participant may, from time to time, designate any beneficiary
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or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
ARTICLE 12 - DEFERRALS
The Committee may permit a Key Employee to defer such Key Employee's receipt of
the payment of cash or the delivery of Shares that would otherwise be due to
such Key Employee by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock, or the satisfaction of
any requirements or goals with respect to Performance Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 13 - RIGHTS OF PARTICIPANTS
13.1 Employment. Nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate any Participant's employment or service at
any time and for any reason, nor confer upon any Participant any right to
continue in the employ or service of the Company or its Subsidiaries. For
purposes of this Plan, a transfer of a Key Employee's employment between the
Company and a Subsidiary, or between Subsidiaries, shall not be deemed to be a
termination of employment.
13.2 Participation. No Key Employee shall have the right to be selected to
receive any Award under this Plan, or, having been so selected, to be selected
to receive any future Award.
ARTICLE 14 - CHANGE IN CONTROL OF THE COMPANY
Except as may be set forth in an Award Agreement, in the event of a Change in
Control, the following provisions shall apply: (i) Options granted under Article
5 hereof and SARs shall become immediately and fully exercisable; (ii)
Restricted Shares granted under the Plan shall be immediately and fully vested
and all restrictions shall lapse; and (iii) the target payout opportunities
attainable under all outstanding Awards of Restricted Stock and Performance
Shares shall be deemed to have been fully earned for the entire Performance
Period(s) as of the effective date of the Change in Control. To the extent set
forth in any Award Agreement (other than with respect to Options granted to
Outside Directors pursuant to Article 10 hereof) a Key Employee will be
permitted to surrender for cancellation within sixty (60) days after such Change
in Control any outstanding Options, SARs, Restricted Stock or Performance Shares
and the Key Employee will be entitled to receive
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a payment (i) with respect to each Option in an amount equal to the excess, if
any, of the Change in Control Price over the Option Price; (ii) with respect to
each SAR in an amount equal to the excess, if any, of the Change in Control
Price over the grant price of the SAR; (iii) with respect to each share of
Restricted Stock the Change in Control Price; and (iv) with respect to each
Performance Share, the Change in Control Price.
ARTICLE 15 - AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time, and from time to time, alter, amend, discontinue,
suspend or terminate the Plan in whole or in part; provided, however, that no
termination, amendment, or modification of the Plan shall adversely affect in
any material way any Award previously granted under the Plan, without the
written consent of the Participant holding such Award.
ARTICLE 16 - WITHHOLDING
16.1 Tax Withholding. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of this Plan.
16.2 Share Withholding. With respect to withholding required upon the exercise
of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon
any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date as of which the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and subject to any restrictions or limitations that
the Committee, in its sole discretion, deems appropriate.
ARTICLE 17 - INDEMNIFICATION
Each person who is or shall have been a member of the Committee shall be
indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding
to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan and against and from
any and all amounts paid by him or her in settlement thereof, with the Company's
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to defend the same before he or
she undertakes to defend it on his or her own behalf.
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The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 18 - SUCCESSORS
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
or assets of the Company.
ARTICLE 19 - MISCELLANEOUS
19.1 Gender and Number. Whenever the context so requires, the singular shall
include the plural and the plural shall include the singular and the gender of
any pronoun shall include the other genders.
19.2 Severability. The invalidity of this Plan with respect to one or more
persons shall not affect the rights and obligations of any other person
hereunder in any manner whatsoever. The invalidity of one or more provisions of
this Plan shall not affect the validity of any other provision of this Plan in
any manner whatsoever.
19.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
19.4 Securities Laws Compliance. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3
promulgated under the Exchange Act. To the extent any provision of the Plan or
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.
19.5 Governing Law. This Plan shall be construed according to the laws of the
State of Delaware.