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Exhibit 99.10
SERVICE EXPERTS, INC.
SERVICE CENTER STOCK OPTION PLAN
MARCH 12, 1998
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SERVICE EXPERTS, INC.
SERVICE CENTER STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
1.1 Affiliate 1
1.2 Agreement 1
1.3 Board 1
1.4 Code 1
1.5 Committee 1
1.6 Company 1
1.7 Date of Exercise 1
1.8 Fair Market Value 1
1.9 Option 2
1.10 Participant 2
1.11 Plan 2
1.12 Stock 2
ARTICLE II. PURPOSE 2
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan 2
3.2 Authority to Grant Options 3
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation 3
4.2 Grant of Options 3
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares 3
5.2 Maximum Number of Shares 3
5.3 Forfeitures 3
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Exercise Price 3
6.2 Right to Exercise 4
6.3 Maximum Exercise Period 4
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6.4 Transferability 4
6.5 Employee Status 4
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise 4
7.2 Payment 4
7.3 Federal Withholding Tax Requirements 4
7.4 Stockholder Rights 4
7.5 Issuance and Delivery of Shares 4
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares 5
8.2 Substitution of Options on Merger or Acquisition 5
8.3 Effect of Certain Transactions 5
8.4 No Preemptive Rights 6
8.5 Fractional Shares 6
ARTICLE IX. COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES
9.1 General 6
9.2 Representations by Participants 6
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment 7
10.2 Unfunded Plan 7
10.3 Rules of Construction 7
10.4 Governing Law 7
10.5 Amendment 7
10.6 Effective Date of Plan 7
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SERVICE EXPERTS, INC.
SERVICE CENTER STOCK OPTION PLAN
PREAMBLE
WHEREAS, Service Experts, Inc. (the "Company") desires to establish a
plan through which the Company may grant options to purchase the common stock of
the Company to employees of the Company, or employees of the Company's
subsidiaries or affiliated business entities, who are not executive officers and
who are not subject to section 16(b) of the Securities Exchange Act of 1934; and
WHEREAS, the Company intends for all options that are granted hereunder
not to qualify as "incentive stock options" within the meaning of section 422 of
the Code;
NOW, THEREFORE, the Company hereby establishes the Service Experts,
Inc. Service Center Stock Option Plan (the "Plan"), effective March 12, 1998:
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company, as well as any other business entity that is owned by such a
parent or subsidiary corporation.
1.2 Agreement. A written agreement (including any amendment or
supplement thereto) between the Company or Affiliate and a Participant
specifying the terms and conditions of an Option granted to such Participant.
1.3 Board. The board of directors of the Company.
1.4 Code. The Internal Revenue Code of 1986, as amended.
1.5 Committee. A committee of the Board that is designated by the Board
to administer the Plan.
1.6 Company. Service Experts, Inc. and its successors.
1.7 Date of Exercise. The date that the Company accepts tender of the
Option exercise price.
1.8 Fair Market Value. On any given date, Fair Market Value shall be
(unless, where appropriate, the Committee determines in good faith the fair
market value of the Stock to be otherwise) the closing price of the Stock on the
New York Stock Exchange (or such other exchange as is then the primary market
for trading the Stock) on the date for which Fair Market
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Value is being determined, or the closing price on the next preceding trading
day on which such prices were published if no Stock was traded on such trading
day.
1.9 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement.
1.10 Participant. An employee of the Company or of an Affiliate who:
either satisfies the requirements of Article and is selected by the Committee to
receive an Option, or receives an Option pursuant to a grant authorized in this
Plan.
1.11 Plan. The Service Experts, Inc. Service Center Stock Option Plan.
1.12 Stock. The common stock of the Company.
ARTICLE II. PURPOSE
The purpose of the Plan is to provide a performance incentive and to
encourage stock ownership by certain employees of the Company and its Affiliates
who are not executive officers and who are not subject to section 16(b) of the
Securities Exchange Act of 1934, and to align the interests of such individuals
with those of the Company, its Affiliates and its stockholders. It is intended
that Participants may acquire or increase their proprietary interests in the
Company and be encouraged to remain in the employ of the Company or of its
Affiliates. The proceeds received by the Company from the sale of Stock pursuant
to this Plan may be used for general corporate purposes.
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Option. The
Company shall bear all expenses of Plan administration. In addition to all other
authority vested with the Committee under the Plan, the Committee shall have
complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration; and
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(e) Make all determinations it deems advisable for the administration
of this Plan.
3.2 Authority to Grant Options. The Committee shall have authority to
grant Options upon such terms as the Committee deems appropriate and that are
not inconsistent with the provisions of this Plan. Such terms may include
conditions on the exercise of all or any part of an Option.
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. The Committee may from time to time designate
employees to whom Options are to be granted and who are eligible to become
Participants. Such designation shall specify the number of shares of Stock, if
any, subject to each Option. All Options granted under this Plan shall be
evidenced by Agreements which shall be subject to applicable provisions of this
Plan or such other provisions as the Committee may adopt that are not
inconsistent with the Plan.
4.2 Grant of Options. An Option shall be deemed to be granted to a
Participant at the time that the Committee designates in a writing that is
adopted by the Committee as the grant of an Option, and that makes reference to
the name of the Participant and the number of shares of Stock that may be
purchased under the Option and the exercise price therefor. Accordingly, an
Option may be deemed to be granted prior to the time that an Agreement is
executed by the Participant and the Company.
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option, the Company shall
deliver to the Participant authorized but unissued Stock, treasury shares or
Stock that has been acquired on the open market under a Stock repurchase program
of the Company.
5.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to the exercise of Options under the Plan is
214,697 shares, subject to increases and adjustments as provided in Article
VIII.
5.3 Forfeitures. If any Option granted hereunder expires or terminates
for any reason during the calendar year in which it was granted, the unpurchased
shares subject thereto shall again be available for issuance pursuant to an
Option award during that year.
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Exercise Price. The exercise price of an Option shall be the price
determined by the Committee at the time the Option is granted. If the exercise
price of an Option is changed after the date it is granted, such change shall be
deemed to be a termination of the existing Option and the issuance of a new
Option.
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6.2 Right to Exercise. An Option shall be exercisable on the date
established by the Committee or provided for in an Agreement.
6.3 Maximum Exercise Period. The maximum period in which an Option may
be exercised shall be determined by the Committee on the date of grant. All
Options shall terminate on the date the Participant's employment with the
Company terminates, except as otherwise provided in the Agreement.
6.4 Transferability. Any Option granted under this Plan shall be
transferable by will or by the laws of descent and distribution only, except as
otherwise expressly provided for in an Agreement. No right or interest of a
Participant in any Option shall be liable for, or subject to, any lien,
obligation or liability of such Participant.
6.5 Employee Status. The Committee shall determine the extent to which
a leave of absence for military or government service, illness, temporary
disability, or other reasons shall be treated as a termination or interruption
of employment for purposes of determining questions of forfeiture and exercise
of an Option after termination of employment.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Option granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles VI and
IX, an Option may be exercised in whole or in part at such times and in
compliance with such requirements as the Committee shall determine.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or, to the extent approved by the Committee,
Stock that was acquired prior to the exercise of the Option, other consideration
acceptable to the Committee, or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of an Option by
a Participant who is an employee of the Company or an Affiliate, the Participant
shall, upon notification of the amount due and prior to or concurrently with the
delivery of the certificates representing the shares, pay to the Company amounts
necessary to satisfy applicable federal, state and local withholding tax
requirements or shall otherwise make arrangements satisfactory to the Company
for such requirements.
7.4 Stockholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his Option prior to the Date of
Exercise of such Option.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Option hereunder and
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executes any applicable stockholder agreement or agreement described in Section
9.2 that the Company requires at the time of exercise.
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number and kind of shares of
stock with respect to which Options hereunder may be granted and which are the
subject of outstanding Options shall be adjusted by way of increase or decrease
as the Committee determines (in its sole discretion) to be appropriate, in the
event that:
(a) the Company or an Affiliate effects one or more stock
dividends, stock splits, reverse stock splits, subdivisions,
consolidations or other similar events;
(b) the Company or an Affiliate engages in a transaction to which
section 424 of the Code applies; or
(c) there occurs any other event which in the judgment of the
Committee necessitates such action.
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Options specified in
Section 5.2 that are proportionate to the modifications of the Stock that are on
account of such corporate changes.
8.2 Substitution of Options on Merger or Acquisition. The Committee may
grant Options in substitution for stock awards, stock options, stock
appreciation rights or similar awards held by an individual who becomes an
employee of the Company or an Affiliate in connection with a transaction to
which section 424(a) of the Code applies. The terms of such substituted Options
shall be determined by the Committee in its sole discretion, subject only to the
limitations of Article V.
8.3 Effect of Certain Transactions. Upon a merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation of
the Company, as a result of which the stockholders of the Company receive cash,
stock or other property in exchange for their shares of Stock (but not a public
offering of Stock by the Company), and the Company is not the surviving entity,
any Option granted hereunder shall terminate, provided that the Participant
shall have the right immediately prior to any such merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
exercise his Options in whole or in part whether or not the vesting requirements
set forth in any Agreement have been satisfied, unless the Committee elects to
convert all Options hereunder into options to purchase stock of an acquiring
corporation; provided, however, that, notwithstanding the foregoing, a portion
of the acceleration of exercisability of Options shall not occur with respect to
any holder to the extent that such portion of acceleration would cause the
grantee or holder of such Option to be liable for the payment of taxes pursuant
to section 4999 of the Code. If the Committee so elects to convert the Options,
the amount and price of such converted options shall be determined by
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adjusting the amount and price of the Options granted hereunder in the same
proportion as used for determining the number of shares of stock of the
acquiring corporation the holders of the Stock receive in such merger,
consolidation, acquisition of property or stock, separation or reorganization,
and the vesting schedule set forth in the Agreement may continue to apply to the
converted options if so determined by the Committee.
8.4 No Preemptive Rights. The issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
for cash or property, or for labor or services rendered, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, outstanding Options.
8.5 Fractional Shares. Only whole shares of Stock may be acquired
through the exercise of an Option. Any amounts tendered in the exercise of an
Option remaining after the maximum number of whole shares have been purchased
will be returned to the Participant.
ARTICLE IX. COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES
9.1 General. No Option shall be exercisable, no Stock shall be issued,
no certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Stock for which an Option is exercised may bear such legends and statements as
the Committee upon advice of counsel may deem advisable to assure compliance
with federal or state laws and regulations. No Option shall be exercisable, no
Stock shall be issued, no certificate for shares shall be delivered and no
payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from any regulatory
bodies having jurisdiction over such matters.
9.2 Representations by Participants. As a condition to the exercise of
an Option, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares.
At the option of the Company, a stop transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel was provided (concurred in by counsel
for the Company) and stating that such transfer is not in violation of any
applicable law or regulation may be stamped on the stock certificate in order to
assure exemption from registration. The Committee may also require such other
action or agreement by the Participants as may from time to time be necessary to
comply with
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federal or state securities laws. This provision shall not obligate the Company
or any Affiliate to undertake registration of Options or stock hereunder.
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
10.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall
be unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
10.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
10.4 Governing Law. The laws of the State of Tennessee shall apply to
all matters arising under this Plan, to the extent that federal law does not
apply.
10.5 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Option is not valid with respect to
such Option without the Participant's consent.
10.6 Effective Date of Plan. This Plan shall be effective on March 12,
1998, the date of its adoption by the Board, and Options may be granted
hereunder at any time on or after such date.
IN WITNESS WHEREOF, the undersigned officer has executed this Plan on
this the 12th day of March, 1998.
SERVICE EXPERTS, INC.
By: /s/ Alan R. Sielbeck
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Its: President
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