EXHIBIT 4.1
WATSCO, INC.
2001 INCENTIVE COMPENSATION PLAN
WATSCO, INC.
2001 INCENTIVE COMPENSATION PLAN
1. Purpose............................................................................................ 1
2. Definitions........................................................................................ 1
3. Administration..................................................................................... 4
(a) Authority of the Committee................................................................ 4
(b) Manner of Exercise of Committee Authority................................................. 5
(c) Limitation of Liability................................................................... 5
4. Stock Subject to Plan.............................................................................. 5
(a) Limitation on Overall Number of Shares Subject to Awards.................................. 5
(b) Application of Limitations................................................................ 6
5. Eligibility; Per-Person Award Limitations.......................................................... 6
6. Specific Terms of Awards........................................................................... 6
(a) General................................................................................... 6
(b) Options................................................................................... 6
(c) Stock Appreciation Rights................................................................. 9
(d) Restricted Stock.......................................................................... 9
(e) Deferred Stock............................................................................ 10
(f) Bonus Stock and Awards in Lieu of Obligations............................................. 11
(g) Dividend Equivalents...................................................................... 11
(h) Other Stock-Based Awards.................................................................. 12
7. Certain Provisions Applicable to Awards............................................................ 12
(a) Stand-Alone, Additional, Tandem, and Substitute Awards.................................... 12
(b) Term of Awards............................................................................ 13
(c) Form and Timing of Payment Under Awards; Deferrals........................................ 13
(d) Exemptions from Section 16(b) Liability................................................... 13
8. Performance and Annual Incentive Awards............................................................ 13
(a) Performance Conditions.................................................................... 13
(b) Performance Awards Granted to Designated Covered Employees................................ 14
(c) Annual Incentive Awards Granted to Designated Covered Employees........................... 15
(d) Written Determinations.................................................................... 16
(e) Status of Section 8(b) and Section 8(c) Awards Under Code Section 162(m).................. 16
9. Change in Control.................................................................................. 17
(a) Effect of................................................................................. 17
(b) Definition of............................................................................. 17
(c) Definition of............................................................................. 18
10. General Provisions................................................................................. 18
(a) Compliance With Legal and Other Requirements.............................................. 18
(b) Limits on Transferability; Beneficiaries.................................................. 19
(c) Adjustments............................................................................... 19
(d) Taxes..................................................................................... 20
(e) Changes to the Plan and Awards............................................................ 20
(f) Limitation on Rights Conferred Under Plan................................................. 20
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(g) Unfunded Status of Awards; Creation of Trusts............................................. 21
(h) Nonexclusivity of the Plan................................................................ 21
(i) Payments in the Event of Forfeitures; Fractional Shares................................... 21
(j) Governing Law............................................................................. 21
(k) Plan Effective Date and Stockholder Approval; Termination of Plan......................... 21
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WATSCO, INC.
2001 INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of this 2001 INCENTIVE COMPENSATION PLAN
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(the "Plan") is to assist Watsco, Inc., a Florida corporation (the "Company")
and its subsidiaries in attracting, motivating, retaining and rewarding
high-quality executives and other employees, officers, directors and independent
contractors by enabling such persons to acquire or increase a proprietary
interest in the Company in order to strengthen the mutuality of interests
between such persons and the Company's stockholders, and providing such persons
with annual and long term performance incentives to expend their maximum efforts
in the creation of shareholder value. The Plan is intended to qualify certain
compensation awarded under the Plan for tax deductibility under Section 162(m)
of the Code (as hereafter defined) to the extent deemed appropriate by the
Committee (or any successor committee) of the Board of Directors of the Company.
2. Definitions. For purposes of the Plan, the following terms
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shall be defined as set forth below, in addition to such terms defined in
Section 1 hereof.
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest, granted to a
Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Cause" shall, with respect to any Participant, have the
equivalent meaning (or the same meaning as "cause" or "for cause") set forth in
any employment agreement between the Participant and the Company or Parent
Corporation or Subsidiary or, in the absence of any such agreement, such term
shall mean (i) the failure by the Participant to perform his or her duties as
assigned by the Company (or Parent Corporation or Subsidiary) in a reasonable
manner, (ii) any violation or breach by the Participant of his or her employment
agreement with
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the Company (or Parent Corporation or Subsidiary), if any, (iii) any violation
or breach by the Participant of his or her non-competition and/or non-disclosure
agreement with the Company (or Parent Corporation or Subsidiary) if any, (iv)
any act by the Participant of dishonesty or bad faith with respect to the
Company (or Parent Corporation or Subsidiary), (v) chronic addiction to alcohol,
drugs or other similar substances affecting the Participant's work performance,
or (vi) the commission by the Participant of any act, misdemeanor, or crime
reflecting unfavorably upon the Participant or the Company. The good faith
determination by the Committee of whether the Participant's employment was
terminated by the Company for "Cause" shall be final and binding for all
purposes hereunder.
(g) "Change in Control" means a Change in Control as defined with
related terms in Section 9 of the Plan.
(h) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(i) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(j) "Committee" means the Compensation Committee designated by the
Board; provided, however, that the Committee shall consist of at least two
directors, each member of which shall be (i) a "non-employee director" within
the meaning of Rule 16b-3 under the Exchange Act, unless administration of the
Plan by "non-employee directors" is not then required in order for exemptions
under Rule 16b-3 to apply to transactions under the Plan, and (ii) an "outside
director" within the meaning of Section 162(m) of the Code, unless
administration of the Plan by "outside directors" is not then required in order
to qualify for tax deductibility under Section 162(m) of the Code.
(k) "Corporate Transaction" means a Corporate Transaction as defined
in Section 9(b)(i) of the Plan.
(l) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(m) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.
(n) "Director" means a member of the Board.
(o) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(p) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Stock, or other periodic payments.
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(q) "Effective Date" means the effective date of the Plan, which
shall be June 1, 2001.
(r) "Eligible Person" means each Executive Officer of the Company (as
defined under the Exchange Act) and other officers, Directors, and employees of
the Company or of any Subsidiary, and independent contractors with the Company
or any Subsidiary. The foregoing notwithstanding, only employees of the Company
or any Subsidiary shall be Eligible Persons for purposes of receiving any
Incentive Stock Options. An employee on leave of absence may be considered as
still in the employ of the Company or a Subsidiary for purposes of eligibility
for participation in the Plan.
(s) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(t) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(u) "Fair Market Value" means the fair market value of Stock, Awards
or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date shall be the closing sale price per share reported on a
consolidated basis for stock listed on the principal stock exchange or market on
which Stock is traded on the date as of which such value is being determined or,
if there is no sale on that date, then on the last previous day on which a sale
was reported.
(v) "Incentive Stock Option" or "ISO" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.
(w) "Incumbent Board" means the Incumbent Board as defined in Section
9(b)(ii) of the Plan.
(x) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.
(y) "Option" means a right granted to a Participant under Section
6(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(z) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(aa) "Outside Director" means a member of the Board who qualifies as
an "outside director" under Section 162(m) of the Code and as a "Non-Employee
Director" under Rule 16b-3 promulgated under the Exchange Act.
(bb) "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the
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chain (other than the Company) owns stock possessing 50% or more of the combined
voting power of all classes of stock in one of the other corporations in the
chain.
(cc) "Participant" means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(dd) "Performance Award" means a right, granted to an Eligible Person
under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.
(ee) "Person" shall have the meaning ascribed to such term in Section
3(a) (9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and
shall include a "group" as defined in Section 13(d) thereof.
(ff) "Publicly Held Corporation" shall mean a publicly held
corporation as that term is used under Section 162(m)(2) of the Code.
(gg) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(hh) "Rule 16b-3" and "Rule 16a-l(c)(3)" means Rule 16b-3 and Rule
16a-1(c) (3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
(ii) "Stock" means the Company's Common Stock, par value $.50 per
share (the "Common Stock") and/or the Company's Class B Common Stock, par value
$.50 per share (the "Class B Common Stock"), and such other securities as may be
substituted (or resubstituted) for Stock pursuant to Section 10(c) hereof.
(jj) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
(kk) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
3. Administration.
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(a) Authority of the Committee. The Plan shall be administered by the
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Committee; provided, however, that except as otherwise expressly provided in
this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under the
Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules
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and regulations for the administration of the Plan, construe and interpret the
Plan and Award agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee or the Board may deem necessary or advisable for the
administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. The Committee, and not
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the Board, shall exercise sole and exclusive discretion on any matter relating
to a Participant then subject to Section 16 of the Exchange Act with respect to
the Company to the extent necessary in order that transactions by such
Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any action
of the Committee or the Board shall be final, conclusive and binding on all
persons, including the Company, its subsidiaries, Participants, Beneficiaries,
transferees under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and stockholders. The express grant of any specific power
to the Committee or the Board, and the taking of any action by the Committee or
the Board, shall not be construed as limiting any power or authority of the
Committee or the Board. The Committee or the Board may delegate to officers or
managers of the Company or any subsidiary, or committees thereof, the authority,
subject to such terms as the Committee or the Board shall determine, (i) to
perform administrative functions, (ii) with respect to Participants not subject
to Section 16 of the Exchange Act, to perform such other functions as the
Committee or the Board may determine, and (iii) with respect to Participants
subject to Section 16, to perform such other functions of the Committee or the
Board as the Committee or the Board may determine to the extent performance of
such functions will not result in the loss of an exemption under Rule 16b-3
otherwise available for transactions by such persons, in each case to the extent
permitted under applicable law and subject to the requirements set forth in
Section 8(d). The Committee or the Board may appoint agents to assist it in
administering the Plan.
(c) Limitation of Liability. The Committee and the Board, and each
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member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any executive officer, other
officer or employee of the Company or a Subsidiary, the Company's independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and the Board, and any officer or employee of the
Company or a subsidiary acting at the direction or on behalf of the Committee or
the Board, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.
4. Stock Subject to Plan.
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(a) Limitation on Overall Number of Shares Subject to Awards. Subject
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to adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be the sum of (i) 3,000,000, plus (ii) the number of shares with
respect to Awards previously granted under the Plan that terminate without being
exercised, expire, are forfeited or canceled, and the number of shares of Stock
that are surrendered in payment of any Awards or any tax withholding with
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regard thereto. Any shares of Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury shares. Subject
to adjustment as provided in Section 10(c) hereof, in no event shall the
aggregate number of shares of Stock which may be issued pursuant to ISOs exceed
3,000,000 shares.
(b) Application of Limitations. The limitation contained in Section
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4(a) shall apply not only to Awards that are settleable by the delivery of
shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted under
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the Plan only to Eligible Persons. In each fiscal year during any part of which
the Plan is in effect, an Eligible Person may not be granted Awards relating to
more than 1,500,000 shares of Stock, subject to adjustment as provided in
Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h),
8(b) and 8(c). In addition, the maximum amount that may be earned as an Annual
Incentive Award or other cash Award in any fiscal year by any one Participant
shall be $5,000,000, and the maximum amount that may be earned as a Performance
Award or other cash Award in respect of a performance period by any one
Participant shall be $12,500,000.
6. Specific Terms of Awards.
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(a) General. Awards may be granted on the terms and conditions set
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forth in this Section 6 . In addition, the Committee or the Board may impose on
any Award or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee or the Board shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee or the Board shall retain
full power and discretion to accelerate, waive or modify, at any time, any term
or condition of an Award that is not mandatory under the Plan. Except in cases
in which the Committee or the Board is authorized to require other forms of
consideration under the Plan, or to the extent other forms of consideration must
be paid to satisfy the requirements of Delaware law, no consideration other than
services may be required for the grant (but not the exercise) of any Award.
(b) Options. The Committee and the Board each is authorized to grant
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Options to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
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purchasable under an Option shall be determined by the Committee or
the Board, provided that such exercise price shall not, in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of
the Stock on the date of grant of the Option and shall not, in any
event, be less than the par value of a share of Stock on the date of
grant of such Option. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the
Code)
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more than 10% of the combined voting power of all classes of stock of
the Company or any Parent Corporation or Subsidiary and an Incentive
Stock Option is granted to such employee, the option price of such
Incentive Stock Option (to the extent required by the Code at the time
of grant) shall be no less than 110% of the Fair Market Value of the
Stock on the date such Incentive Stock Option is granted.
(ii) Time and Method of Exercise. The Committee or the Board
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shall determine the time or times at which or the circumstances under
which an Option may be exercised in whole or in part (including based
on achievement of performance goals and/or future service
requirements), the time or times at which Options shall cease to be or
become exercisable following termination of employment or upon other
conditions, the methods by which such exercise price may be paid or
deemed to be paid (including in the discretion of the Committee or the
Board a cashless exercise procedure), the form of such payment,
including, without limitation, cash, Stock, other Awards or awards
granted under other plans of the Company or any subsidiary, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis), and the methods by
or forms in which Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall
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comply in all respects with the provisions of Section 422 of the Code.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to ISOs (including any SAR in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify either the
Plan or any ISO under Section 422 of the Code, unless the Participant
has first requested the change that will result in such
disqualification. Thus, if and to the extent required to comply with
Section 422 of the Code, Options granted as Incentive Stock Options
shall be subject to the following special terms and conditions:
(A) the Option shall not be exercisable more than ten years
after the date such Incentive Stock Option is granted; provided,
however, that if a Participant owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or any
Parent Corporation and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to the
extent required by the Code at the time of the grant) for no more than
five years from the date of grant; and
(B) The aggregate Fair Market Value (determined as of the
date the Incentive Stock Option is granted) of the shares of stock with
respect to which Incentive Stock Options granted under the Plan and all
other option plans of the Company or its Parent Corporation during any
calendar year exercisable for the first time by the Participant during
any calendar year shall not (to the extent required by the Code at the
time of the grant) exceed $100,000.
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(iv) Repurchase Rights. The Committee and the Board shall have the
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discretion to grant Options which are exercisable for unvested shares
of Common Stock. Should the Optionee cease to be employed with or
perform services to the Company (or a Parent Corporation or Subsidiary)
while holding such unvested shares, the Company shall have the right to
repurchase, at the exercise price paid per share, any or all of those
unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be
established by the Committee or the Board and set forth in the document
evidencing such repurchase right.
(v) Formula Grants to Outside Directors. The Committee and the
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Board each is authorized to grant Options to Participants who are
Outside Directors on the following terms and conditions:
(1) Each Outside Director who, prior to 1998, was not granted
an option under any prior plan to purchase shares of
Common Stock shall receive an Option to purchase shares
of Common Stock upon his or her initial election to the
Board as may be determined by the Compensation Committee
or Nominating Committee. All such Options shall become
fully exercisable at 20% per year commencing on the first
anniversary of the date of grant. Commencing on the sixth
anniversary of the date of his or her initial election to
the Board, and thereafter on each anniversary that such
Outside Director is a member of the Board, each such
Outside Director shall receive an Option to purchase
3,375 shares of Common Stock, which option shall become
fully exercisable on the first anniversary of the date of
grant.
(2) Each Outside Director who, prior to 1998, was granted an
option to purchase under any prior plan shares of Common
Stock shall receive, commencing on the sixth anniversary
of the date of the last grant of an Option to such
Outside Director and thereafter on each anniversary that
such Outside Director is a member of the Board, an Option
to purchase 3,375 shares of Common Stock which Option
shall become fully exercisable on the first anniversary
of the date of grant.
(3) The per share exercise price of all Options granted to
Outside Directors pursuant to paragraphs (1) and (2) of
this Section 6(b)(v) will be equal to the Fair Market
Value of the Common Stock underlying such Option on the
date such Option is granted. The unexercised portion of
any Option granted pursuant to paragraphs (1) or (2) of
this
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Section 6(b)(v) shall become null and void three months
after the date on which such Outside Director ceases to
be a Director for any reason.
(4) The Board may also grant Options to Outside Directors
pursuant to the other provisions of this Section 6(b),
subject to the provisions of the Plan generally
applicable to Options granted pursuant to Section 6(b).
(c) Stock Appreciation Rights. The Committee and the Board each is
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authorized to grant SAR's to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to
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whom it is granted a right to receive, upon exercise thereof, the excess
of (A) the Fair Market Value of one share of stock on the date of exercise
(or, in the case of a "Limited SAR" that may be exercised only in the
event of a Change in Control, the Fair Market Value determined by
reference to the Change in Control Price, as defined under Section 9(c)
hereof), over (B) the grant price of the SAR as determined by the
Committee or the Board. The grant price of an SAR shall not be less than
the Fair Market Value of a share of Stock on the date of grant except as
provided under Section 7(a) hereof.
(ii) Other Terms. The Committee or the Board shall determine at the
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date of grant or thereafter, the time or times at which and the
circumstances under which a SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of employment or upon other conditions,
the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Stock will be delivered
or deemed to be delivered to Participants, whether or not a SAR shall be
in tandem or in combination with any other Award, and any other terms and
conditions of any SAR. Limited SARs that may only be exercised in
connection with a Change in Control or other event as specified by the
Committee or the Board, may be granted on such terms, not inconsistent
with this Section 6(c), as the Committee or the Board may determine. SARs
and Limited SARs may be either freestanding or in tandem with other
Awards.
(d) Restricted Stock. The Committee and the Board each is authorized to
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grant Restricted Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to
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such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee or the Board may impose, which
restrictions may lapse separately or in combination at such times, under
such circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or otherwise, as
the Committee or the Board may determine at the date of grant or
thereafter. Except to the extent restricted under the terms of the
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Plan and any Award agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted stock and the
right to receive dividends thereon (subject to any mandatory reinvestment
or other requirement imposed by the Committee or the Board). During the
restricted period applicable to the Restricted Stock, subject to Section
10(b) below, the Restricted Stock may not be sold, transferred, pledged,
hypothecated, margined or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee or
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the Board at the time of the Award, upon termination of a Participant's
employment during the applicable restriction period, the Participant's
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided that the Committee or
the Board may provide, by rule or regulation or in any Award agreement, or
may determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock shall be waived in whole or in
part in the event of terminations resulting from specified causes, and the
Committee or the Board may in other cases waive in whole or in part the
forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the
----------------------
Plan may be evidenced in such manner as the Committee or the Board shall
determine. If certificates representing Restricted Stock are registered in
the name of the Participant, the Committee or the Board may require that
such certificates bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock, that the
Company retain physical possession of the certificates, and that the
Participant deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award
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of Restricted Stock, the Committee or the Board may require that any cash
dividends paid on a share of Restricted Stock be automatically reinvested
in additional shares of Restricted Stock or applied to the purchase of
additional Awards under the Plan. Unless otherwise determined by the
Committee or the Board, Stock distributed in connection with a Stock split
or Stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has
been distributed.
(e) Deferred Stock. The Committee and the Board each is authorized to
--------------
grant Deferred Stock to Participants, which are rights to receive Stock, cash,
or a combination thereof at the end of a specified deferral period, subject to
the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of Deferred
----------------------
Stock shall occur upon expiration of the deferral period specified for
such Deferred Stock by the Committee or the Board (or, if permitted by the
Committee or the Board, as elected by the Participant). In addition,
Deferred Stock shall be
10
subject to such restrictions (which may include a risk of forfeiture) as
the Committee or the Board may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified
times (including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or
otherwise, as the Committee or the Board may determine. Deferred Stock may
be satisfied by delivery of Stock, cash equal to the Fair Market Value of
the specified number of shares of Stock covered by the Deferred Stock, or
a combination thereof, as determined by the Committee or the Board at the
date of grant or thereafter. Prior to satisfaction of an Award of Deferred
Stock, an Award of Deferred Stock carries no voting or dividend or other
rights associated with share ownership.
(ii) Forfeiture. Except as otherwise determined by the Committee or
----------
the Board, upon termination of a Participant's employment during the
applicable deferral period thereof to which forfeiture conditions apply
(as provided in the Award agreement evidencing the Deferred Stock), the
Participant's Deferred Stock that is at that time subject to deferral
(other than a deferral at the election of the Participant) shall be
forfeited; provided that the Committee or the Board may provide, by rule
or regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Deferred Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee or the
Board may in other cases waive in whole or in part the forfeiture of
Deferred Stock.
(iii) Dividend Equivalents. Unless otherwise determined by the
--------------------
Committee or the Board at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of Deferred Stock
shall be either (A) paid with respect to such Deferred Stock at the
dividend payment date in cash or in shares of unrestricted Stock having a
Fair Market Value equal to the amount of such dividends, or (B) deferred
with respect to such Deferred Stock and the amount or value thereof
automatically deemed reinvested in additional Deferred Stock, other Awards
or other investment vehicles, as the Committee or the Board shall
determine or permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee and the
---------------------------------------------
Board each is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of Company obligations to pay cash or deliver other property
under the Plan or under other plans or compensatory arrangements, provided that,
in the case of Participants subject to Section 16 of the Exchange Act, the
amount of such grants remains within the discretion of the Committee to the
extent necessary to ensure that acquisitions of Stock or other Awards are exempt
from liability under Section 16(b) of the Exchange Act. Stock or Awards granted
hereunder shall be subject to such other terms as shall be determined by the
Committee or the Board.
(g) Dividend Equivalents. The Committee and the Board each is authorized
--------------------
to grant Dividend Equivalents to a Participant entitling the Participant to
receive cash, Stock, other Awards, or other property equal in value to dividends
paid with respect to a specified number of shares of Stock, or other periodic
payments. Dividend Equivalents may be awarded on a free-
11
standing basis or in connection with another Award. The Committee or the Board
may provide that Dividend Equivalents shall be paid or distributed when accrued
or shall be deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles, and subject to such restrictions on transferability and
risks of forfeiture, as the Committee or the Board may specify.
(h) Other Stock-Based Awards. The Committee and the Board each is
------------------------
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall determine the terms and conditions of such Awards. Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration (including without
limitation loans from the Company or a Parent Corporation or a Subsidiary), paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards or other property, as the Committee or the
Board shall determine. The Committee and the Board shall have the discretion to
grant such other Awards which are exercisable for unvested shares of Common
Stock. Should the Optionee cease to be employed with or perform services to the
Company (or a Parent Corporation or Subsidiary) while holding such unvested
shares, the Company shall have the right to repurchase, at the exercise price
paid per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Committee or the Board and set forth in the document
evidencing such repurchase right. Cash awards, as an element of or supplement to
any other Award under the Plan, may also be granted pursuant to this Section
6(h).
7. Certain Provisions Applicable to Awards.
---------------------------------------
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
------------------------------------------------------
granted under the Plan may, in the discretion of the Committee or the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company or
a subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee or the Board shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any subsidiary, in which the value of Stock subject to the Award is equivalent
in value to the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the
12
value of the cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such
--------------
period as may be determined by the Committee or the Board; provided that in no
event shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under Section 422 of the
Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to
--------------------------------------------------
the terms of the Plan and any applicable Award agreement, payments to be made by
the Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee or the Board
shall determine, including, without limitation, cash, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or the Board or upon occurrence of one or more specified events
(in addition to a Change in Control). Installment or deferred payments may be
required by the Committee or the Board (subject to Section 10(e) of the Plan) or
permitted at the election of the Participant on terms and conditions established
by the Committee or the Board. Payments may include, without limitation,
provisions for the payment or crediting of a reasonable interest rate on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.
(d) Exemptions from Section 16(b) Liability. If and to the extent
---------------------------------------
that the Company is or becomes a Publicly Held Corporation, it is the intent of
the Company that this Plan comply in all respects with applicable provisions of
Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
8. Performance and Annual Incentive Awards.
---------------------------------------
(a) Performance Conditions. The right of a Participant to exercise
----------------------
or receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee or
the Board. The Committee or the Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). If and to the
extent required under Code Section 162(m),
13
any power or authority relating to a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m), shall be exercised by the
Committee and not the Board.
(b) Performance Awards Granted to Designated Covered Employees. If
----------------------------------------------------------
and to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for
---------------------------
such Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this
Section 8(b). Performance goals shall be objective and shall otherwise
meet the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of
performance targeted by the Committee result in the achievement of
performance goals being "substantially uncertain". The Committee may
determine that such Performance Awards shall be granted, exercised
and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition
to grant, exercise and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.
(ii) Business Criteria. One or more of the following business
-----------------
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), shall
be used exclusively by the Committee in establishing performance goals
for such Performance Awards: (1) total stockholder return; (2) such
total stockholder return as compared to total return (on a comparable
basis) of a publicly available index such as, but not limited to, the
Standard & Poor's 500 Stock Index or the S&P Small-Cap 600 Index; (3)
increases in the Fair Market Value of any Stock; (4) net income; (5)
pretax earnings; (6) earnings before interest expense, taxes,
depreciation and amortization; (7) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary
or special items; (8) operating margin; (9) earnings per share; (10)
return on equity; (11) return on capital; (12) return on investment;
(13) operating earnings; (14) working capital or inventory; (15) ratio
of debt to stockholders' equity; and (16) increases in the price of
shares of Stock. One or more of the foregoing business criteria shall
also be exclusively used in establishing performance goals for Annual
Incentive Awards granted to a Covered Employee under Section 8(c)
hereof that are intended to qualify as "performanced-based
compensation" under Code Section 162(m).
(iii) Performance Period; Timing For Establishing Performance
-------------------------------------------------------
Goals. Achievement of performance goals in respect of such Performance
-----
Awards shall be measured over a performance period of up to ten years,
as specified by the
14
Committee. Performance goals shall be established not later than 90
days after the beginning of any performance period applicable to such
Performance Awards, or at such other date as may be required or
permitted for "performance-based compensation" under Code Section
162(m).
(iv) Performance Award Pool. The Committee may establish a
----------------------
Performance Award pool, which shall be an unfunded pool, for purposes
of measuring Company performance in connection with Performance
Awards. The amount of such Performance Award pool shall be based upon
the achievement of a performance goal or goals based on one or more of
the business criteria set forth in Section 8(b)(ii) hereof during the
given performance period, as specified by the Committee in accordance
with Section 8(b)(iii) hereof. The Committee may specify the amount of
the Performance Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical
relationship to such business criteria.
(v) Settlement of Performance Awards; Other Terms. Settlement
---------------------------------------------
of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee may,
in its discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance Awards. The Committee shall
specify the circumstances in which such Performance Awards shall be
paid or forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or settlement of
Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees.
---------------------------------------------------------------
The Committee may, within its discretion, grant one or more Annual Incentive
Awards to any Eligible Person, subject to the terms and conditions set forth in
this Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish
---------------------------
an Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. In the case of Annual Incentive Awards intended to
qualify as "performance-based compensation" for purposes of Code
Section 162(m), the amount of such Annual Incentive Award pool shall
be based upon the achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section 8(b)(ii)
hereof during the given performance period, as specified by the
Committee in accordance with Section 8(b)(iii) hereof. The Committee
may specify the amount of the Annual Incentive Award pool as a
percentage of any such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not bear
a strictly mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end
---------------------------------
of the 90th day of each fiscal year, or at such other date as may be
required or permitted in the case of Awards intended to be
"performance-based compensation" under
15
Code Section 162(m), the Committee shall determine the Eligible
Persons who will potentially receive Annual Incentive Awards, and the
amounts potentially payable thereunder, for that fiscal year, either
out of an Annual Incentive Award pool established by such date under
Section 8(c)(i) hereof or as individual Annual Incentive Awards. In
the case of individual Annual Incentive Awards intended to qualify
under Code Section 162(m), the amount potentially payable shall be
based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in Section 8(b)(ii) hereof
in the given performance year, as specified by the Committee; in other
cases, such amount shall be based on such criteria as shall be
established by the Committee. In all cases, the maximum Annual
Incentive Award of any Participant shall be subject to the limitation
set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each
---------------------------------
fiscal year, the Committee shall determine the amount, if any, of (A)
the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Participant in the Annual
Incentive Award pool, or (B) the amount of potential Annual Incentive
Award otherwise payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any Participant as an
Annual Incentive Award shall be reduced from the amount of his or her
potential Annual Incentive Award, including a determination to make no
Award whatsoever. The Committee shall specify the circumstances in
which an Annual Incentive Award shall be paid or forfeited in the
event of termination of employment by the Participant prior to the end
of a fiscal year or settlement of such Annual Incentive Award.
(d) Written Determinations. All determinations by the committee as to
----------------------
the establishment of performance goals, the amount of any Performance Award pool
or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(c), shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards if and to the
extent required to comply with Code Section 162(m).
(e) Status of Section 8(b) and Section 8(c) Awards Under Code Section
-----------------------------------------------------------------
162(m). It is the intent of the Company that Performance Awards and Annual
- ------
Incentive Awards under Section 8(b) and 8(c) hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder shall, if so designated by the
Committee, constitute "qualified performance-based compensation" within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of Sections 8(b), (c), (d) and (e), including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a
given Participant will be a Covered Employee with respect to a fiscal year that
has not yet been completed, the term Covered
16
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
9 Change in Control.
-----------------
(a) Effect of "Change in Control." If and to the extent provided in
----------------------------
the Award, in the event of a "Change in Control," as defined in Section 9(b):
(i) The Committee may, within its discretion, accelerate the
vesting and exercisability of any Award carrying a right to exercise
that was not previously vested and exercisable as of the time of the
Change in Control, subject to applicable restrictions set forth in
Section 10(a) hereof;
(ii) The Committee may, within its discretion, accelerate the
exercisability of any limited SARs (and other SARs if so provided by
their terms) and provide for the settlement of such SARs for amounts,
in cash, determined by reference to the Change in Control Price;
(iii) The Committee may, within its discretion, lapse the
restrictions, deferral of settlement, and forfeiture conditions
applicable to any other Award granted under the Plan and such Awards
may be deemed fully vested as of the time of the Change in Control,
except to the extent of any waiver by the Participant and subject to
applicable restrictions set forth in Section 10(a) hereof; and
(iv) With respect to any such outstanding Award subject to
achievement of performance goals and conditions under the Plan, the
Committee may, within its discretion, deem such performance goals and
other conditions as having been met as of the date of the Change in
Control.
(b) Definition of "Change in Control." A "Change in Control" shall be
--------------------------------
deemed to have occurred upon:
(i) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of the Company immediately
prior to such reorganization, merger or consolidation or other
transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the
Company or the sale of all or substantially all of the assets of the
Company (unless such reorganization, merger, consolidation or other
corporate transaction, liquidation, dissolution or
17
sale (any such event being referred to as a "Corporate Transaction")
is subsequently abandoned);
(ii) Individuals who, as of the date on which the Award is
granted, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date on which the
Award was granted whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company) shall be,
for purposes of this Agreement, considered as though such person were
a member of the Incumbent Board; or
(iii) the acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act, of more than 50% of either
the then outstanding shares of the Company's Stock or the combined
voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors (hereinafter
referred to as the ownership of a "Controlling Interest") excluding,
for this purpose, any acquisitions by (1) the Company or its
Subsidiaries, (2) any person, entity or "group" that as of the date on
which the Award is granted owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act)
of a Controlling Interest (3) any employee benefit plan of the Company
or its Subsidiaries or (4) directly or indirectly by or for the
benefit of Albert H. Nahmad and/or the members of his family.
(c) Definition of "Change in Control Price." The "Change in
--------------------------------------
Control Price" means an amount in cash equal to the higher of (i) the amount of
cash and Fair Market Value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b) (i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may,
--------------------------------------------
to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider
18
appropriate in connection with the issuance or delivery of Stock or payment of
other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations. The foregoing notwithstanding, in
connection with a Change in Control, the Company shall take or cause to be taken
no action, and shall undertake or permit to arise no legal or contractual
obligation, that results or would result in any postponement of the issuance or
delivery of Stock or payment of benefits under any Award or the imposition of
any other conditions on such issuance, delivery or payment, to the extent that
such postponement or other condition would represent a greater burden on a
Participant than existed on the 90th day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries. No Award or other right
----------------------------------------
or interest of a Participant under the Plan, including any Award or right which
constitutes a derivative security as generally defined in Rule 16a-1(c) under
the Exchange Act, shall be pledged, hypothecated or otherwise encumbered or
subject to any lien, obligation or liability of such Participant to any party
(other than the Company or a Subsidiary), or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative, except
that Awards and other rights (other than ISOs and SARs in tandem therewith) may
be transferred to one or more Beneficiaries or other transferees during the
lifetime of the Participant, and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the extent such
transfers and exercises are permitted by the Committee or the Board pursuant to
the express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee or the Board, and to any additional terms and
conditions deemed necessary or appropriate by the Committee or the Board.
(c) Adjustments. In the event that any dividend or other distribution
-----------
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that a
substitution or adjustment is determined by the Committee or the Board to be
appropriate, then the Committee or the Board shall, in such manner as it may
deem equitable, substitute or adjust any or all of (i) the number and kind of
shares of Stock which may be delivered in connection with Awards granted
thereafter, (ii) the number and kind of shares of Stock by which annual
per-person Award limitations are measured under Section 5 hereof, (iii) the
number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if and only to the extent such authority is not required to be
exercised by the Committee to comply with Code Section 162(m)) is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including,
19
without limitation, events described in the preceding sentence, as well as
acquisitions and dispositions of businesses and assets) affecting the Company,
any Subsidiary or any business unit, or the financial statements of the Company
or any Subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
Subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 8(c) hereof
to Participants designated by the Committee as Covered Employees and intended to
qualify as "performance-based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Subsidiary is authorized to withhold
-----
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter,
------------------------------
suspend, discontinue or terminate the Plan, or the Committee's authority to
grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee or the Board may waive
any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor
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any action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or in
the employ of the Company or a Subsidiary; (ii) interfering in any way with the
right of the Company or a Subsidiary to terminate
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any Eligible Person's or Participant's employment at any time, (iii) giving an
Eligible Person or Participant any claim to be granted any Award under the Plan
or to be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a stockholder of the Company
unless and until the Participant is duly issued or transferred shares of Stock
in accordance with the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is
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intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company' s obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
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the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
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otherwise determined by the Committee or the Board, in the event of a forfeiture
of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the Plan,
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any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Florida without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of
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Plan. The Plan shall become effective on the Effective Date, subject to
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subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable NASDAQ
requirements, and other laws, regulations, and obligations of the Company
applicable to the Plan. Awards may be granted subject to stockholder approval,
but may not be exercised or otherwise settled in the event stockholder approval
is not obtained. The Plan shall terminate at such time as
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no shares of Common Stock remain available for issuance under the Plan and the
Company has no further rights or obligations with respect to outstanding Awards
under the Plan.
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