Exhibit 10.4
2000 STOCK INCENTIVE PLAN
OF
STANDARD PACIFIC CORP.
(as amended and restated effective May 15, 2002)
SECTION 1. PURPOSE OF PLAN
The purpose of this 2000 Stock Incentive Plan (this "Plan") of Standard
Pacific Corp., a Delaware corporation (the "Company"), is to enable the Company
and its subsidiaries to attract, retain and motivate its directors, officers and
other employees, and to further align the interests of such persons with those
of the stockholders of the Company by providing for or increasing the
proprietary interest of such persons in the Company.
SECTION 2. ADMINISTRATION OF PLAN
2.1 Composition of Committee. This Plan shall be administered by a
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committee of the Board of Directors consisting of two or more directors, each of
whom is: (i) a "Non-Employee Director" within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as such rule may be amended from time to time, and (ii) an "Outside
Director" as defined in the regulations adopted under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), as such Code provision
is amended from time to time (the "Committee"), as appointed from time to time
by the Board of Directors. The Board of Directors shall fill vacancies on, and
from time to time may remove or add members to, the Committee. The Committee
shall act pursuant to a majority vote or unanimous written consent. The Board of
Directors, in its discretion, may exercise any authority of the Committee under
this Plan in lieu of the Committee's exercise thereof. Notwithstanding the
foregoing, with respect to any Award (as defined in Section 5.1) that is not
intended to satisfy the conditions of Rule 16b-3 under the Exchange Act or
Section 162(m)(4)(C) of the Code, the Committee may appoint one or more separate
committees (any such committee, a "Subcommittee") composed of one or more
directors of the Company (who may but need not be members of the Committee) and
may delegate to any such Subcommittee(s) the authority to grant Awards under the
Plan to Eligible Persons (as defined in Section 4), to determine all terms of
such Awards, and/or to administer the Plan or any aspect of it. Any action by
any such Subcommittee within the scope of such delegation shall be deemed for
all purposes to have been taken by the Committee. The Committee may designate
the Secretary of the Company or other Company employees to assist the Committee
in the administration of the Plan, and may grant authority to such persons to
execute agreements or other documents evidencing Awards made under this Plan or
other documents entered into under this Plan on behalf of the Committee or the
Company.
2.2 Powers of the Committee. Subject to the express provisions of this
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Plan, the Committee shall be authorized and empowered to do all things necessary
or desirable, in its discretion, in connection with the administration of this
Plan, including, without limitation, the following:
(a) to prescribe, amend and rescind rules and regulations relating to
this Plan and to define terms not otherwise defined herein; provided that,
unless the Committee
shall specify otherwise, for purposes of this Plan (i) the term "fair
market value" shall mean, as of any date, the closing price for a Share (as
defined in Section 3.1) reported for that date by the New York Stock
Exchange (or such other stock exchange or quotation system on which Shares
are then listed or quoted) or, if no Shares are traded on the New York
Stock Exchange (or such other stock exchange or quotation system) on the
date in question, then the closing price for the next preceding date for
which Shares are traded on the New York Stock Exchange (or such other stock
exchange or quotation system); and (ii) the term "Company" shall mean the
Company and its subsidiaries and affiliates, unless the context otherwise
requires;
(b) to determine which persons are Eligible Persons, to which of such
Eligible Persons, if any, Awards shall be granted hereunder and the timing
of any such Awards, and to grant Awards;
(c) to determine the number of Shares subject to Awards and the
exercise or purchase price of such Shares;
(d) to establish and verify the extent of satisfaction of any
performance goals applicable to Awards;
(e) to prescribe and amend the terms of the agreements or other
documents evidencing Awards made under this Plan (which need not be
identical);
(f) to determine whether, and the extent to which, adjustments are
required pursuant to Section 10;
(g) to interpret and construe this Plan, any rules and regulations
under this Plan and the terms and conditions of any Award granted
hereunder, and to make exceptions to any such provisions in good faith and
for the benefit of the Company; and
(h) to make all other determinations deemed necessary or advisable for
the administration of this Plan.
2.3 Determinations of the Committee. All decisions, determinations and
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interpretations by the Committee regarding this Plan shall be final and binding
on all Eligible Persons and Participants (as defined in Section 4). The
Committee shall consider such factors as it deems relevant to making such
decisions, determinations and interpretations including, without limitation, the
recommendations or advice of any director, officer or employee of the Company
and such attorneys, consultants and accountants as it may select.
SECTION 3. STOCK SUBJECT TO PLAN
3.1 Aggregate Limits. The aggregate number of shares of the Company's
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common stock, $.01 par value per share ("Shares"), issued pursuant to all Awards
granted under this Plan shall not exceed 2,500,000 plus the number of shares
subject to awards that are cancelled, expire or forfeited under the Company's
1991 Employee Stock Incentive Plan and 1997 Stock Incentive Plan after the
expiration date of such plans; provided that no more than 10% of such Shares may
be issued pursuant to all Incentive Stock Awards (as defined in Section 5.1)
granted under this
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Plan. Such limits shall be subject to adjustment as provided in Section 10. The
Shares issued pursuant to this Plan may be Shares that either were reacquired by
the Company, including Shares purchased in the open market, or authorized but
unissued Shares.
3.2 Tax Code Limits. The aggregate number of Shares subject to Options
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granted under this Plan during any calendar year to any one Eligible Person
shall not exceed 300,000. The aggregate number of Shares issued or issuable
under all Awards granted under this Plan, other than Options, during any
calendar year to any one Eligible Person shall not exceed 150,000.
Notwithstanding anything to the contrary in this Plan, the foregoing Share
limitations shall be subject to adjustment under Section 10 only to the extent
that such adjustment will not affect the status of any Award intended to qualify
as "performance based compensation" under Code Section 162(m). The foregoing
limitations shall not apply to the extent that they are no longer required in
order for compensation in connection with grants under this Plan to be treated
as "performance-based compensation" under Code Section 162(m). The aggregate
fair market value (as of the date of grant) of Shares for which one or more
Options granted by the Company to any one Eligible Person under this Plan, or
any other plan of the Company, may for the first time become exercisable as ISOs
during any one calendar year shall not exceed the maximum value permitted under
Code Section 422, and the number of Shares that may be issued pursuant to the
exercise of ISOs granted under this Plan shall not exceed 2,500,000, which
number shall be calculated and adjusted pursuant to Section 3.3 and Section 10
only to the extent that such calculation or adjustment will not affect the
status of any option intended to qualify as an ISO under Code Section 422.
3.3 Issuance of Shares. For purposes of Section 3.1, the aggregate number
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of Shares issued under this Plan at any time shall equal only the number of
Shares actually issued upon exercise or settlement of an Award and shall not
include Shares subject to Awards that have been canceled, expired or forfeited
or Shares subject to Awards that have been delivered to the Company in payment
or satisfaction of the purchase price, exercise price or tax withholding
obligation of an Award.
SECTION 4. PERSONS ELIGIBLE UNDER PLAN
Any person who is an employee or prospective employee of the Company or of
any of its subsidiaries or affiliates and any director of the Company who is not
an employee shall be eligible to be considered for the grant of Awards hereunder
(an "Eligible Person"). A "Participant" is any current or former Eligible Person
to whom an Award has been made and any person (including any estate) to whom an
Award has been assigned or transferred pursuant to Section 9.1.
SECTION 5. PLAN AWARDS
5.1 Award Types. The Committee, on behalf of the Company, is authorized
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under this Plan to enter into certain types of written arrangements with
Eligible Persons and to confer certain benefits on them. The following
arrangements or benefits are authorized under this Plan if their terms and
conditions are not inconsistent with the provisions of this Plan: Options,
Incentive Bonuses and Incentive Stock. Such arrangements and benefits are
sometimes referred
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to herein as "Awards." The authorized types of arrangements and benefits for
which Awards may be granted are defined as follows:
(a) Options: An option is a right granted under Section 6 (an
"Option") to purchase a number of Shares at such exercise price, at such
times, and on such other terms and conditions as are specified in the
agreement or terms and conditions or other document evidencing the Award
(the "Option Document"). Options intended to qualify as Incentive Stock
Options ("ISOs") pursuant to Code Section 422 and Options not intended to
qualify as ISOs ("Nonqualified Options") may be granted under Section 6.
(b) Incentive Bonus: An incentive bonus is a bonus opportunity awarded
under Section 7 (an "Incentive Bonus") pursuant to which a Participant may
become entitled to receive an amount based on satisfaction of such
performance criteria as are specified in the agreement or other document
evidencing the Award (the "Incentive Bonus Document").
(c) Incentive Stock: Incentive stock is an award or issuance of Shares
made under Section 8 ("Incentive Stock"), the grant, issuance, retention,
vesting and/or transferability of which is subject during specified periods
of time to such conditions (including continued employment or performance
conditions) and terms as are expressed in the agreement or other document
evidencing the Award (the "Incentive Stock Document").
5.2 Grants of Awards. An Award may consist of one such arrangement or
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benefit or two or more of them in tandem or in the alternative.
SECTION 6. OPTIONS
The Committee may grant an Option or provide for the grant of an Option,
either from time to time in the discretion of the Committee or automatically
upon the occurrence of specified events, including, without limitation, the
achievement of performance goals, the satisfaction of an event or condition
within the control of the recipient of the Award or within the control of
others.
6.1 Option Document. Each Option Document shall contain provisions
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regarding (a) the number of Shares that may be issued upon exercise of the
Option, (b) the purchase price of the Shares and the means of payment for the
Shares, (c) the term of the Option, (d) such terms and conditions of
exercisability as may be determined from time to time by the Committee, (e)
restrictions on the transfer of the Option and forfeiture provisions and (f)
such further terms and conditions, in each case not inconsistent with this Plan
as may be determined from time to time by the Committee. Option Documents
evidencing ISOs shall contain such terms and conditions as may be necessary to
qualify, to the extent determined desirable by the Committee, with the
applicable provisions of Section 422 of the Code.
6.2 Option Price. The purchase price per share of the Shares subject to
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each Option granted under this Plan shall equal or exceed 100% of the fair
market value of such Shares on the date the Option is granted, except that (a)
the exercise price of an Option may be higher or lower in the case of Options
granted to an employee of a company acquired by the Company in
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assumption and substitution of options held by such employee at the time such
company is acquired ("Substitution Options"), (b) if an Eligible Person is
required to pay or forego the receipt of any cash amount in consideration of
receipt of an Option, the exercise price plus such cash amount shall equal or
exceed 100% of the fair market value of such Stock on the date the Option is
granted, and (c) in the case of ISO grants, the purchase price per share of the
Shares subject to each Option granted under this Plan shall equal or exceed 110%
of the fair market value of such Shares on the date the Option is granted, for
Options granted to an individual who, at the time the Option is granted to such
individual under this Plan, owns more than 10% of the combined voting power of
all classes of stock of the Company.
6.3 Option Term. The term of each Option granted under this Plan, including
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any ISOs, shall be 10 years from the date of its grant, unless the Committee
provides for a shorter period.
6.4 Option Vesting. Options granted under this Plan shall be exercisable at
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such time and in such installments during the period prior to the expiration of
the Option's term as determined by the Committee, except that no Option other
than non-employee director options and Substitution Options shall first become
exercisable within one (1) year from its date of grant, other than upon death or
disability of the Eligible Person or upon a Change of Control (as defined in
Section 11.2). The Committee shall have the right to make the timing of the
ability to exercise any Option granted under this Plan subject to such
performance requirements as deemed appropriate by the Committee. Subject to the
limitation set forth in the first sentence of this Section 6.4, at any time
after the grant of an Option the Committee may reduce or eliminate any
restrictions surrounding any Participant's right to exercise all or part of the
Option.
6.5 Termination of Employment or Service. Subject to Section 11, upon a
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termination of a Participant's employment prior to (i) the full vesting of an
Option, the unvested portion of the Option shall be forfeited, unless the
Committee in its discretion determines otherwise and (ii) any unexercised
Options shall be subject to such procedures as the Committee may establish.
6.6 Payment of Exercise Price. The exercise price of an Option shall be
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paid in the form of one of more of the following, as the Committee shall
specify, either through the terms of the Option Document or at the time of
exercise of an Option: (a) cash or certified or cashiers' check, (b) shares of
capital stock of the Company that have been held by the Participant for such
period of time as the Committee may specify, (c) other property deemed
acceptable by the Committee, (d) a reduction in the number of Shares or other
property otherwise issuable pursuant to such Option or (e) any combination of
(a) through (d).
6.7 No Option Repricing. Without the approval of stockholders, the Company
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shall not reprice any Options. For purposes of this Plan, the term "reprice"
shall mean lowering the exercise price of previously awarded Options within the
meaning of Item 402(i) under Securities and Exchange Commission Regulation S-K
(including canceling previously awarded Options and regranting them with a lower
exercise price).
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SECTION 7. INCENTIVE BONUSES
Each Incentive Bonus Award will confer upon the Participant the opportunity
to earn a future payment tied to the level of achievement with respect to one or
more performance criteria established for a specified performance period.
7.1 Incentive Bonus Document. Each Incentive Bonus Document shall contain
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provisions regarding (a) the target and maximum amount payable to the
Participant as an Incentive Bonus, (b) the performance criteria and level of
achievement versus the criteria that shall determine the amount of such payment,
(c) the term of the performance period as to which performance shall be measured
for determining the amount of any payment, (d) the timing of any payment earned
by virtue of performance, (e) restrictions on the alienation or transfer of the
Incentive Bonus prior to actual payment, (f) forfeiture provisions and (g) such
further terms and conditions, in each case not inconsistent with this Plan as
may be determined from time to time by the Committee. The maximum amount payable
as an Incentive Bonus may be a multiple of the target amount payable, but the
maximum amount payable pursuant to that portion of an Incentive Bonus Award
granted under this Plan for any fiscal year to any Participant that is intended
to satisfy the requirements for "performance based compensation" under Code
Section 162(m) shall not exceed $5,000,000.
7.2 Performance Criteria. The Committee shall establish the performance
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criteria and level of achievement versus these criteria that shall determine the
target and maximum amount payable under an Incentive Bonus Award, which criteria
may be based on financial performance and/or personal performance evaluations.
The Committee may specify the percentage of the target Incentive Bonus that is
intended to satisfy the requirements for "performance-based compensation" under
Code Section 162(m). Notwithstanding anything to the contrary herein, the
performance criteria for any portion of an Incentive Bonus that is intended by
the Committee to satisfy the requirements for "performance-based compensation"
under Code Section 162(m) shall be a measure based on one or more Qualifying
Performance Criteria (as defined in Section 9.2) selected by the Committee and
specified at the time the Incentive Bonus Award is granted. The Committee shall
certify the extent to which any Qualifying Performance Criteria has been
satisfied, and the amount payable as a result thereof, prior to payment of any
Incentive Bonus that is intended to satisfy the requirements for
"performance-based compensation" under Code Section 162(m).
7.3 Timing and Form of Payment. The Committee shall determine the timing of
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payment of any Incentive Bonus. The Committee may provide for or, subject to
such terms and conditions as the Committee may specify, may permit a Participant
to elect for the payment of any Incentive Bonus to be deferred to a specified
date or event.
7.4 Discretionary Adjustments. Notwithstanding satisfaction of any
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performance goals, the amount paid under an Incentive Bonus Award on account of
either financial performance or personal performance evaluations may be reduced
by the Committee on the basis of such further considerations as the Committee
shall determine.
7.5 Termination of Employment. Subject to Section 11, upon a termination of
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employment by a Participant prior to the vesting of or the lapsing of
restrictions on Incentive
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Bonuses, the Incentive Bonus Awards granted to such Participant shall be
forfeited, unless the Committee in its discretion determines otherwise.
SECTION 8. INCENTIVE STOCK
Incentive Stock is an award or issuance of Shares the grant, issuance,
retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including continued employment and/or
performance conditions) and terms as the Committee deems appropriate.
8.1 Incentive Stock Document. Each Incentive Stock Document shall contain
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provisions regarding (a) the number of Shares subject to such Award or a formula
for determining such, (b) the performance criteria, if any, and level of
achievement versus these criteria that shall determine the number of Shares
granted, issued, retainable and/or vested, (c) the period, if any, as to which
performance shall be measured for determining achievement of performance or, if
not subject to performance criteria, the period of continued employment upon
which vesting of the Shares is subject, which period in any case (except in the
event of death or disability of the Participant or upon a Change of Control)
shall be not less than one year, (d) forfeiture, (e) transferability and (f)
such further terms and conditions not inconsistent with this Plan as may be
determined from time to time by the Committee.
8.2 Sale Price. Subject to the requirements of applicable law, the
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Committee shall determine the price, if any, at which Shares of Incentive Stock
shall be sold or awarded to an Eligible Person, which may vary from time to time
and among Eligible Persons and which may be below the fair market value of such
Shares at the date of grant or issuance.
8.3 Performance Criteria. The grant, issuance, retention and/or vesting of
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each Share of Incentive Stock may but need not be subject to such performance
criteria and level of achievement versus these criteria as the Committee shall
determine, which criteria may be based on financial performance and/or personal
performance evaluations. Notwithstanding anything to the contrary herein, the
performance criteria for any Incentive Stock that is intended to satisfy the
requirements for "performance-based compensation" under Code Section 162(m)
shall be a measure based on one or more Qualifying Performance Criteria selected
by the Committee and specified at the time the Incentive Stock Award is granted.
To the extent necessary to qualify as performance-based compensation under Code
Section 162(m), the Committee shall certify the extent to which any Qualifying
Performance Criteria has been satisfied, and the amount payable as a result
thereof, prior to issuance or vesting, as applicable, of any Incentive Stock
that is intended to satisfy the requirements for performance-based compensation.
8.4 Discretionary Adjustments. Notwithstanding satisfaction of any
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performance goals, the number of Shares granted, issued, retainable and/or
vested under an Incentive Stock Award on account of either financial performance
or personal performance evaluations may be reduced by the Committee on the basis
of such further considerations as the Committee shall determine.
8.5 Termination of Employment. Subject to Section 11, upon a termination of
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employment by a Participant prior to the vesting of or the lapsing of
restrictions on Incentive
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Stock, the unvested Incentive Stock Awards granted to such Participant shall be
forfeited, unless the Committee in its discretion determines otherwise.
SECTION 9. OTHER PROVISIONS APPLICABLE TO AWARDS
9.1 Transferability. Unless the agreement or other document evidencing an
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Award (or an amendment thereto authorized by the Committee) expressly states
that the Award is transferable as provided hereunder, no Award granted under
this Plan, nor any interest in such Award, may be sold, assigned, conveyed,
gifted, pledged, hypothecated or otherwise transferred in any manner, other than
by will or the laws of descent and distribution. The Committee may grant an
Award or amend an outstanding Award to provide that the Award is transferable or
assignable to a member or members of the Participant's "immediate family," as
such term is defined in Rule 16a-1(e) under the Exchange Act, or to a trust for
the benefit solely of a member or members of the Participant's immediate family,
or to a partnership or other entity whose only owners are members of the
Participant's immediate family, provided that following any such transfer or
assignment the Award will remain subject to substantially the same terms
applicable to the Award while held by the Participant, as modified as the
Committee shall determine appropriate, and the transferee shall execute an
agreement agreeing to be bound by such terms.
9.2 Qualifying Performance Criteria. For purposes of this Plan, the term
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"Qualifying Performance Criteria" shall mean any one or more of the following
performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or subsidiary,
either individually, alternatively or in any combination, and measured over a
specified time period, on an absolute basis or relative to a pre-established
target, to previous years' results or to a designated comparison group, in each
case as specified by the Committee in the Award: (a) cash flow, (b) earnings per
share, (c) earnings before any one or more of interest, taxes and amortization,
(d) return on equity, (e) total stockholder return, (f) return on capital, (g)
return on assets or net assets, (h) revenue, (i) income or net income, (j)
operating income or net operating income, (k) operating profit or net operating
profit, (l) operating margin or profit margin, (m) return on operating revenue,
(n) market share, (o) overhead or other expense reduction, or (p) any other
similar performance criteria. Prior to the grant of an Award, the Committee
shall determine whether or not it shall appropriately adjust any evaluation of
performance under the applicable Qualifying Performance Criteria with respect to
an Award to exclude any of the following events that occurs during a performance
period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs and (v) any extraordinary
non-recurring items as described in Accounting Principles Board Opinion No. 30
and/or in management's discussion and analysis of financial condition and
results of operations appearing in the Company's annual report to stockholders
for the applicable year.
9.3 Dividends. Unless otherwise provided by the Committee, no adjustment
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shall be made in Shares issuable under Awards on account of cash dividends that
may be paid or other rights that may be issued to the holders of Shares prior to
their issuance under any Award. The Committee shall specify whether dividends or
dividend equivalent amounts shall be paid to any Participant with respect to the
Shares subject to any Award that on the record date for such dividends have not
vested or been issued or that are subject to any restrictions or conditions.
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9.4 Documents Evidencing Awards. The Committee shall, subject to applicable
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law, determine the date an Award is deemed to be granted, which for purposes of
this Plan shall not be affected by the fact that an Award is contingent on
subsequent stockholder approval of this Plan. The Committee or, except to the
extent prohibited under applicable law, its delegate(s) may establish the terms
of agreements or other documents evidencing Awards under this Plan and may, but
need not, require as a condition to any such agreement's or document's
effectiveness that such agreement or document be executed by the Participant and
that such Participant agree to such further terms and conditions as specified in
such agreement or document. The grant of an Award under this Plan shall not
confer any rights upon the Participant holding such Award other than such terms,
and subject to such conditions, as are specified in this Plan as being
applicable to such type of Award (or to all Awards) or as are expressly set
forth in the agreement or other document evidencing such Award.
9.5 Tandem Stock or Cash Rights. Either at the time an Award is granted or
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by subsequent action, the Committee may, but need not, provide that an Award
shall contain as a term thereof, a right, either in tandem with the other rights
under the Award or as an alternative thereto, of the Participant to receive,
without payment to the Company, a number of Shares, cash or a combination
thereof, the amount of which is determined by reference to the value of the
Award.
9.6 Financing. The Committee may in its discretion provide financing to a
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Participant in a principal amount sufficient to pay the purchase price of any
Award and/or to pay the amount of taxes required by law to be withheld with
respect to any Award. Any such loan shall be subject to all applicable legal
requirements and restrictions pertinent thereto, including without limitation,
Regulation U promulgated by the Federal Reserve Board. Neither the prior
financing of another Participant, nor the grant of an Award to a Participant,
shall obligate the Company or the Committee to provide any financing whatsoever
in connection with such grant.
SECTION 10. CHANGES IN CAPITAL STRUCTURE
10.1 Corporate Actions Unimpaired. The existence of outstanding Awards
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shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the Company's capital structure
or its business, or any merger or consolidation of the Company, or any issuance
of common stock or other securities or subscription rights thereto, or any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the common stock or the rights thereof, 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. Further, except as herein expressly provided,
(i) the issuance by the Company of shares of stock of any class (including any
class of securities convertible into shares of stock of any class) for cash,
property, labor or services, upon direct sale, 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, (ii) the payment
of a dividend in property other than common stock, or (iii) the occurrence of
any similar transaction, and in any case whether or not for fair value, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number of shares of common stock subject to Awards theretofore
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granted or the purchase price per Share, unless the Committee shall determine in
its discretion that an adjustment is necessary.
10.2 Adjustments Upon Certain Events. If the outstanding shares of common
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stock or other securities of the Company, or both, for which the Award is then
exercisable or as to which the Award is to be settled shall at any time be
changed or exchanged by declaration of a stock dividend, stock split,
combination of shares, recapitalization, or reorganization, the Committee may,
and if such event occurs after a Change of Control, the Committee shall,
appropriately and equitably adjust the number and kind of shares of common stock
or other securities which are subject to the Plan (including limitations
pursuant to the terms of the Plan) or subject to any Awards theretofore granted,
and the exercise or settlement prices of such Awards, provided, however, that
such adjustment shall be made only to the extent that such will not affect the
status of any Award intended to qualify as an ISO or as "performance based
compensation" under Section 162(m) of the Code. If the Company recapitalizes or
otherwise changes its capital structure, or merges, consolidates, sells all of
its assets or dissolves (each of the foregoing a "Fundamental Change"), then
thereafter upon any exercise of an Option theretofore granted, the Participant
shall be entitled to purchase under such Option, in lieu of the number of shares
of common stock as to which such Option shall then be exercisable, the number
and class of shares of stock and securities to which the Participant would have
been entitled pursuant to the terms of the Fundamental Change if, immediately
prior to such Fundamental Change, the Participant had been the holder of record
of the number of Shares as to which such Option is then exercisable. No
fractional interests shall be issued under this Plan resulting from any
adjustments.
SECTION 11. CHANGE OF CONTROL
11.1 Definitions. Unless the Committee provides otherwise,
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For purposes of the Plan and Awards granted under the Plan, the term
"Change of Control" shall mean:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) or group of persons acting in concert (other than the
Company or any subsidiary thereof or any employee benefit plan of the
Company or any subsidiary thereof, or any underwriter in connection with a
firm commitment public offering of the Company's capital stock) becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 of the Exchange
Act except that a person shall also be deemed the beneficial owner of all
securities which such person may have a right to acquire, whether or not
such right is presently exercisable), directly or indirectly, of securities
of the Company representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities ordinarily having
the right to vote in the election of directors ("voting stock");
(ii) during any period subsequent to the effective date of this Plan,
a majority of the members of the Board shall not for any reason be the
individuals who at the beginning of such period constitute the Board or
those persons who are nominated as new
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directors by a majority of the current directors or their successors who
have been so nominated;
(iii) there shall be consummated any merger, consolidation (including
a series of mergers or consolidations), or any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company (meaning assets
representing fifty percent (50%) or more of the net tangible assets of the
Company or generating fifty percent (50%) or more of the Company's
operating cash flow, in each case measured over the Company's last four
full fiscal quarters), or any other similar business combination or
transaction, but excluding any business combination or transaction which
would result in the voting stock of the Company immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting stock of the surviving entity) more than seventy
percent (70%) of the combined voting power of the voting stock of the
Company (or such surviving entity) outstanding immediately after giving
effect to such business combination or transaction;
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Company;
(v) the occurrence of any other event that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A of the
Exchange Act as in effect on the date hereof; or
(vi) any other event specified by the Committee, regardless of whether
at the time an Award is granted or thereafter.
11.2 Effect of Change of Control. The Committee may provide, either at the
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time an Award is granted or thereafter, that a Change of Control shall have such
effect as specified by the Committee, or no effect, as the Committee in its
discretion may provide. Without limiting the foregoing, the Committee may but
need not provide, either at the time an Award is granted or thereafter, that if
a Change of Control occurs, then effective as of a date selected by the
Committee, the Committee (which for purposes of the Changes in Control described
in (i), (ii) and (iii) above shall be the Committee as constituted prior to the
occurrence of such Change of Control) acting in its discretion without the
consent or approval of any Participant, may effect one or more of the following
alternatives or combination of alternatives with respect to all outstanding
Awards (which alternatives may be conditional on the occurrence of such of the
Changes in Control specified above and which may vary among individual
Participants):
(i) in the case of a Change of Control specified in clause (iii) of
Section 11.1, accelerate the time at which Options then outstanding may
vest or be exercised in full for a limited period of time on or before a
specified date (which will permit the Participant to participate with the
common stock received upon exercise of such Option in the event of a Change
of Control specified in clause (iii) of Section 11.1) fixed by the
Committee, after which specified date all unexercised Options and all
rights of Participants thereunder shall terminate,
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(ii) accelerate the time at which Options then outstanding may be
exercised so that such Options may be exercised in full for their then
remaining term,
(iii) accelerate the vesting of Incentive Stock Awards, or
(iv) require the mandatory surrender to the Company of outstanding
Options or unvested Incentive Stock held by such Participant (irrespective
of whether such Options are then exercisable under the provisions of the
Plan) as of a date, before or not later than 60 days after such Change of
Control, specified by the Committee, and in such event the Committee shall
thereupon cancel such Options and unvested Incentive Stock and the Company
shall pay to each Participant an amount of cash equal to the excess of the
fair market value of the aggregate shares subject to such Option over the
aggregate Option exercise price of such shares or the fair market value of
the aggregate unvested shares of Incentive Stock, as applicable;
provided, however, the Committee shall not select an alternative (unless
consented to by the Participant) that would result in the Participant's owing
any money by virtue of operation of Section 16(b) of the Exchange Act. If all
such alternatives have such a result, the Committee shall take such action,
which is hereby authorized, to put such Participant in as close to the same
position as such Participant would have been in had the selected alternative
been made but without resulting in any payment by such Participant pursuant to
Section 16(b) of the Exchange Act. Notwithstanding the foregoing, with the
consent of the Participant, the Committee may in lieu of the foregoing make such
provision with respect of any Change of Control as it deems appropriate.
SECTION 12. TAXES
12.1 Withholding Requirements. The Committee may make such provisions or
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impose such conditions as it may deem appropriate for the withholding or payment
by a Participant of any taxes that the Committee determines are required in
connection with any Award granted under this Plan, and a Participant's rights in
any Award are subject to satisfaction of such conditions.
12.2 Payment of Withholding Taxes. Notwithstanding the terms of Section
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12.1, the Committee may provide in the agreement or other document evidencing an
Award or otherwise that all or any portion of the taxes required to be withheld
by the Company or, if permitted by the Committee, desired to be paid by the
Participant, in connection with the exercise of a Nonqualified Option or the
exercise, vesting, settlement or transfer of any other Award shall be paid or,
at the election of the Participant, may be paid by the Company by withholding
shares of the Company's common stock otherwise issuable or subject to such
Award, or by the Participant delivering previously owned shares of the Company's
common stock, in each case having a fair market value equal to the amount
required or elected to be withheld or paid. Any such election is subject to such
conditions or procedures as may be established by the Committee and may be
subject to disapproval by the Committee.
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SECTION 13. AMENDMENTS OR TERMINATION
(a) The Board may amend, alter or discontinue this Plan or any agreement or
other document evidencing an Award made under this Plan but, except as provided
pursuant to the anti-dilution adjustment provisions of Section 10.2, no such
amendment shall, without the approval of the stockholders of the Company:
(i) increase the maximum number of shares of common stock of the
Company for which Awards may be granted under this Plan;
(ii) increase the Awards that may be granted under this Plan during
any calendar year to any one Eligible Person;
(iii) reduce the price at which Options may be granted below the price
provided for in Section 6.2;
(iv) reduce the exercise price of outstanding Options;
(v) extend the term of this Plan;
(vi) change the class of persons eligible to be Participants; or
(vii) increase the number of shares that are eligible for non-Option
Awards.
(b) The Board or Committee may amend, alter or discontinue this Plan or any
agreement or other document evidencing an Award made under this Plan but, except
as provided pursuant to the anti-dilution adjustment provisions of Section 10.2,
no such amendment shall impair the rights of any Participant under an Award,
without the consent of the Participant, provided however, that no such consent
shall be required if the Board or the Committee determines in its discretion and
prior to the date of any Change of Control that such amendment or alteration is
not reasonably likely to diminish the benefits thereunder or that any diminution
has been adequately compensated for.
SECTION 14. COMPLIANCE WITH OTHER LAWS AND REGULATIONS
This Plan, the grant and exercise of Awards thereunder, and the obligation
of the Company to sell, issue or deliver Shares under any Awards, shall be
subject to all applicable federal, state and foreign laws, rules and regulations
and to such approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to register in a Participant's name
or deliver any Shares prior to the completion of any registration or
qualification of such Shares under any federal, state or foreign law or any
ruling or regulation of any government body which the Committee shall determine
to be necessary or advisable. This Plan is intended to constitute an unfunded
arrangement for a select group of management or other key employees and
directors.
No Option shall be exercisable unless a registration statement with respect
to the Option is effective or the Company has determined that such registration
is unnecessary. Unless the Awards and Shares covered by this Plan have been
registered under the Securities Act of 1933,
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as amended, or the Company has determined that such registration is unnecessary,
each person receiving an Award and/or Shares pursuant to any Award may be
required by the Company to give a representation in writing that such person is
acquiring such Shares for his or her own account for investment and not with a
view to, or for sale in connection with, the distribution of any part thereof.
SECTION 15. NO RIGHT TO COMPANY EMPLOYMENT
Nothing in this Plan or as a result of any Award granted pursuant to this
Plan shall confer on any individual any right to continue in the employ of the
Company or its affiliates or interfere in any way with the right of the Company
or its affiliates to terminate an individual's employment at any time. The
agreements or other documents evidencing Awards may contain such provisions as
the Committee may approve with reference to the effect of approved leaves of
absence.
SECTION 16. LIABILITY OF COMPANY
The Company and any affiliate of the Company which is in existence or
hereafter comes into existence shall not be liable to a Participant, an Eligible
Person or other persons as to:
(a) the non-issuance or sale of Shares as to which the Company has
been unable to obtain from any government or regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder; and
(b) any tax consequence expected, but not realized, by any
Participant, Eligible Person or other person due to the receipt, exercise
or settlement of any Option or other Award granted hereunder.
SECTION 17. EFFECTIVENESS AND EXPIRATION OF PLAN
This Plan shall be effective on the date the Company's stockholders adopt
this Plan; provided that if such approval by the stockholders of the Company is
not forthcoming, all Awards previously granted under this Plan shall be void. No
Awards shall be granted pursuant to this Plan more than 10 years after the
effective date of this Plan.
SECTION 18. NON-EXCLUSIVITY OF PLAN
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or the Committee to adopt
such other incentive arrangements as either may deem desirable, including
without limitation, the granting of restricted stock or stock options otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
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SECTION 19. GOVERNING LAW
This Plan and any agreements or other documents hereunder shall be
interpreted and construed in accordance with the laws of the State of Delaware
and applicable federal law. The Committee may provide that any dispute as to any
Award shall be presented and determined in such forum as the Committee may
specify, including through binding arbitration. Any reference in this Plan or in
the agreement or other document evidencing any Award to a provision of law or to
a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.
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