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EXHIBIT 10.22
LKQ CORPORATION
1998 EQUITY INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. LKQ CORPORATION, a Delaware corporation
(hereinafter referred to as the "Company"), hereby establishes an incentive
compensation plan to be known as the LKQ 1998 Equity Incentive Plan (hereinafter
referred to as the "Plan") as set forth in this document. The Plan became
effective as of February 13, 1998 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof.
1.2 PURPOSE OF THE PLAN. The purpose of this Plan is to benefit the
Company and its subsidiaries and affiliated companies by enabling the Company to
offer to certain present and future executives, key personnel and other persons
affiliated with the Company stock based incentives and other equity interests in
the Company, thereby giving them a stake in the growth and prosperity of the
Company and encouraging the continuance of their relationship with the Company
or subsidiaries or affiliated companies.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date
and shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 15 hereof, until all
Shares subject to it shall have been purchased or acquired according to the Plan
provisions.
ARTICLE 2
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
"AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares or Performance Units.
"AWARD AGREEMENT" means a writing provided by the Company to each
Participant setting forth the terms and provisions applicable to Awards granted
under this Plan. The Participant's acceptance of the terms of the Award
Agreement shall be evidenced by his or her continued employment without written
objection before any exercise or payment of the Award. If the Participant
objects in writing, the grant of the Award shall be revoked.
"BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
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"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
"CAUSE" shall mean, with respect to termination of a Participant's
employment, consulting arrangement or other affiliation, the occurrence of any
one or more of the following, as determined by the Committee, in the exercise of
good faith and reasonable judgment:
(i) In the case where there is no employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award, or where there is such an
agreement but the agreement does not define "cause" (or similar words) or a
"cause" termination would not be permitted under such agreement at that
time because other conditions were not satisfied, the termination of an
employment or consulting arrangement is due to the willful and continued
failure or refusal by the Participant to substantially perform assigned
duties (other than any such failure resulting from the Participant's
Disability), the Participant's dishonesty or theft, the Participant's
violation of any obligations or duties under any employee agreement, or the
Participant's gross negligence or willful misconduct; or
(ii) In the case where there is an employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award that defines "cause" (or
similar words) and a "cause" termination would be permitted under such
agreement at that time, the termination of an employment or consulting
arrangement is or would be deemed to be for "cause" (or similar words) as
defined in such agreement.
No act or failure to act on a Participant's part shall be considered willful
unless done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Company.
"CHANGE OF CONTROL" of the Company shall mean:
(a) the Company is merged or consolidated or reorganized into or
with another corporation or other legal person (an "Acquiror") and as a
result of such merger, consolidation or reorganization less than 50% of the
outstanding voting securities or other capital interests of the surviving,
resulting or acquiring corporation or other legal person are owned in the
aggregate by the stockholders of the Company, directly or indirectly,
immediately prior to such merger, consolidation or reorganization, other
than by the Acquiror or any corporation or other legal person controlling,
controlled by or under common control with the Acquiror;
(b) The Company sells all or substantially all of its business
and/or assets to an Acquiror, of which less than 50% of the outstanding
voting securities or other capital interests are owned in the aggregate by
the stockholders of the Company, directly or indirectly, immediately prior
to such sale, other than by any corporation or other legal person
controlling, controlled by or under common control with the Acquiror;
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(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to
the Exchange Act, disclosing that any person or group (as the terms
"person" and "group" are used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act and the rules and regulations promulgated thereunder) has
become the beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of 50% or more of the issued and outstanding shares of voting
securities of the Company; or
(d) During any period of two consecutive years, individuals who at
the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's stockholders, of
each new director of the Company was approved by a vote of at least
two-thirds of such directors of the Company then still in office who were
directors of the Company at the beginning of any such period.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation thereto.
"COMMITTEE" means the Committee as specified in Article 3 herein appointed
by the Board to administer the Plan with respect to grants of Awards.
"COMMON STOCK" means the common stock of the Company.
"COMPANY" means LKQ Corporation, a Delaware corporation, as well as any
successor to such entity as provided in Article 17 herein.
"DIRECTOR" means any individual who is a member of the Board of Directors
of the Company.
"DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan. If no long term disability
plan is in place with respect to a Participant, then with respect to that
Participant, Disability shall mean: for the first 24 months of disability, that
the Participant is unable to perform his or her job; thereafter, that the
Participant is unable to perform any and every duty of any gainful occupation
for which the Participant is reasonably suited by training, education or
experience.
"EFFECTIVE DATE" shall have the meaning ascribed to such term in Section
1.1 hereof.
"EMPLOYEE" means any employee of the Company or any Subsidiary.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
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"FAIR MARKET VALUE" means (a) if the Common Stock is not listed or traded
on a stock exchange or market, the value of the Common Stock determined in good
faith by the Committee; or (b) if the Common Stock is listed or traded on a
stock exchange or market, (i) for purposes of setting any Option Price, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, or unless the Committee otherwise determines, means as of the
date of the Award, the average of the closing sales prices of the Common Stock
on the applicable stock exchange or market (as reported in THE WALL STREET
JOURNAL, Midwest Edition) on each of the five trading dates immediately
preceding such date; and (ii) for purposes of the valuation of any Shares
delivered in payment of the Option Price upon the exercise of an Option, for
purposes of the valuation of any Shares withheld in payment of the Option Price
or to pay taxes due on an Award, or for purposes of the exercise of any SAR or
conversion of a Performance Unit, means the average of the high and low sales
prices of the Common Stock on the applicable stock exchange or market (as
reported in THE WALL STREET JOURNAL, Midwest Edition) on the date of exercise
(or if the date of exercise is not a trading day, on the trading day next
preceding the date of exercise).
"FREESTANDING SAR" means a stock appreciation right that is granted
independently of any Options, as described in Article 7 herein.
"GOOD REASON" shall mean, with respect to the termination of a
Participant's employment or consulting arrangement,
(i) in the case where there is no employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award, or where there is such an
agreement but the agreement does not define "good reason" (or similar
words) or a "good reason" termination would not be permitted under such
agreement at that time because other conditions were not satisfied, a
voluntary termination of an employment or consulting arrangement due to
"good reason" as the Committee, in its sole discretion, decides to treat as
a "Good Reason" termination; or
(ii) in the case where there is an employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award that defines "good reason"
(or similar words) and a "good reason" termination would be permitted under
such agreement at that time, the termination of an employment or consulting
arrangement is or would be deemed to be for "good reason" (or similar
words) as defined in such agreement.
"INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Section 422 of the
Code.
"INSIDER" shall mean an individual who is, on the relevant date, an
officer, director or more than ten percent (10%) beneficial owner of any class
of the Company's equity securities that is registered pursuant to Section 12 of
the Exchange Act, all as defined under Section 16 of the Exchange Act.
"NAMED EXECUTIVE OFFICER" means a Participant who is one of the group of
covered employees as defined in the regulations promulgated under Section 162(m)
of the Code, or any successor statute.
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"NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase Shares
granted under Article 6 herein and which is not intended to meet the
requirements of Section 422 of the Code.
"OPTION" means an Incentive Stock Option or a Nonqualified Stock Option, as
described in Article 6 herein.
"OPTION PRICE" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
"PARTICIPANT" means a Person who or which has outstanding an Award granted
under the Plan.
"PERFORMANCE-BASED EXCEPTION" means the exception for performance-based
compensation from the tax deductibility limitations of Section 162(m) of the
Code.
"PERFORMANCE PERIOD" means the time period during which performance goals
must be achieved with respect to an Award, as determined by the Committee.
"PERFORMANCE SHARE" means an Award granted to a Participant, as described
in Article 9 herein.
"PERFORMANCE UNIT" means an Award granted to a Participant, as described in
Article 9 herein.
"PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock is limited in some way, and the Shares are subject to
a substantial risk of forfeiture, as provided in Article 8 herein.
"PERSON" shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Section 13(d) and 14(d) thereof, including a group
as defined in Section 13(d) thereof.
"RESTRICTED STOCK" means an Award granted to a Participant pursuant to
Article 8 herein.
"RETIREMENT" means the Participant's termination of employment with the
Company or its Subsidiaries under circumstances which the Committee determines,
in its sole discretion, that qualify as a Retirement termination from the
Company.
"SHARES" means shares of Common Stock of the Company.
"STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the terms of
Article 7 herein.
"SUBSIDIARY" means any corporation, partnership, joint venture, affiliate,
or other entity in which the Company is the direct or indirect beneficial owner
of not less than 20% of all issued and outstanding equity interests.
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"TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
forfeited).
ARTICLE 3
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Committee
appointed by the Board. If and to the extent that no Committee exists that has
the authority to administer the Plan, the functions of the Committee shall be
exercised by the Board.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Persons who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan, establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 15 herein)
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law,
the Committee may delegate the authority granted to it herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.
ARTICLE 4
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 SHARES AVAILABLE FOR AWARDS. The aggregate number of Shares which
may be issued for or used for reference purposes under this Plan or with respect
to which Awards may be granted shall not exceed 5,000,000 Shares (subject to
adjustment as provided in Section 4.3), which may be either authorized and
unissued Shares or Shares held in or acquired for the treasury of the Company.
Upon (a) a payout of a Freestanding SAR, Tandem SAR, or Restricted Stock award
in the form of cash; (b) a cancellation, termination, expiration, forfeiture, or
lapse for any reason (with the exception of the termination of a Tandem SAR upon
exercise of the related Options, or the termination of a related Option upon
exercise of the corresponding Tandem SAR) of any Award; or (c) payment of an
Option Price and/or payment of any taxes arising upon exercise of an Option or
payout of any Award with previously acquired Shares or by withholding Shares
which otherwise would be acquired on exercise or issued upon such payout, then
the number of Shares underlying any such Award which were not issued as a result
of any of the foregoing actions shall again be available for the purposes of
Awards under the Plan.
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4.2 INDIVIDUAL PARTICIPANT LIMITATIONS. Unless and until the Committee
determines that an Award to a Named Executive Officer shall not be designed to
comply with the Performance-Based Exception, the following rules shall apply to
grants of such Awards under the Plan:
(a) Subject to adjustment as provided in Section 4.3 herein, the
maximum aggregate number of Shares (including Options, SARs, Restricted
Stock, Performance Units and Performance Shares to be paid out in Shares)
that may be granted in any one fiscal year to a Participant shall be
300,000.
(b) The maximum aggregate cash payout (including Performance Units
and Performance Shares paid out in cash) with respect to Awards granted in
any one fiscal year which may be made to any Participant shall be
$1,000,000.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares available for Awards,
the number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan and the number of Shares set forth in Sections 4.1 and
4.2, as may be determined to be appropriate and equitable by the Committee, in
its sole discretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to any Award shall always be a whole
number.
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include
all officers and other employees of the Company and its Subsidiaries, and other
Persons affiliated with the Company and its Subsidiaries, as determined by the
Committee, including Employees who are members of the Board and Employees who
reside in countries other than the United States of America.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Persons, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.
ARTICLE 6
STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to one or more Participants in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee. The Committee may grant Nonqualified Stock Options or Incentive Stock
Options. The Committee shall have complete discretion in determining the number
of Options granted to each Participant (subject to Article 4 herein).
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6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement with respect to the Option also
shall specify whether the Option is intended to be an ISO within the meaning of
Section 422 of the Code, or an NQSO whose grant is intended not to fall under
the provisions of Section 422 of the Code.
6.3 OPTION PRICE. The Committee shall designate the Option Price for
each grant of an Option under this Plan which Option Price shall be at least
equal to one hundred percent (100%) of the Fair Market Value of a Share on the
date the Option is granted, and which Option Price may not be subsequently
changed by the Committee except pursuant to Section 4.3 hereof or to the extent
provided in the Award Agreement.
6.4 DURATION OF OPTIONS. Each Option granted to an Employee shall expire
at such time as the Committee shall determine at the time of grant; provided,
however, that unless otherwise designated by the Committee at the time of grant,
no Option shall be exercisable later than the tenth (10th) anniversary date of
its grant.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares. The Option Price upon exercise of
any Option shall be payable to the Company in full either:
(a) in cash or its equivalent,
(b) by tendering previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the total Option Price,
or
(c) by a combination of (a) and (b).
The Committee also may allow cashless exercises as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. As soon as practicable after receipt of a
written notification of exercise and full payment, the Company shall deliver to
the Participant, in the Participant's name, Share certificates in an appropriate
amount based upon the number of Shares purchased under the Option(s).
In connection with the exercise of Options granted under the Plan, the
Company may make loans to the Participants as the Committee, in its discretion,
may determine. Such loans shall be subject to the following terms and conditions
and such other terms and conditions as the Committee shall determine not
inconsistent with the Plan. Such loans shall bear interest at such rates as the
Committee shall determine from time to time, which rates may be below then
current market rates or may be made without interest. In no event may any such
loan exceed the Fair Market Value, at the date of exercise, of the shares
covered by the Option, or portion thereof,
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exercised by the Optionee. No loan shall have an initial term exceeding two
years, but any such loan may be renewable at the discretion of the Committee.
When a loan shall have been made, Shares having a fair market value at least
equal to 150 percent of the principal amount of the loan shall be pledged by the
Participant to the Company as security for payment of the unpaid balance of the
loan.
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8 TERMINATION OF RELATIONSHIP. Each Option Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant's employment or other
relationship with the Company and/or its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be uniform among
all Options issued pursuant to the Plan, and may reflect distinctions based on
the reasons for termination, including, but not limited to, termination of
employment for Cause or Good Reason, or reasons relating to the breach or
threatened breach of restrictive covenants. Subject to Article 14, in the event
that a Participant's Option Award Agreement does not set forth such termination
provisions, the following termination provisions shall apply:
(a) In the event a Participant's employment, consulting
arrangement or other affiliation with the Company and/or its Subsidiaries
is terminated for any reason other than death, Disability or Retirement,
all Options held by the Participant shall expire and all rights to purchase
Shares thereunder shall termination immediately; provided, however, that
notwithstanding the foregoing, all Options to which the Participant has a
vested right immediately prior to such termination shall be exercisable for
the lesser of (i) 30 days following the date of termination or (ii) the
expiration date of the Option, unless the termination was for Cause.
(b) In the event a Participant's employment, consulting
arrangement or other affiliation with the Company and/or its Subsidiaries
is terminated due to death or Disability, all Options shall immediately
become fully vested on the date of termination.
(c) Subject to Article 14, in the event of termination of a
Participant's employment, consulting arrangement or other affiliation due
to death or Disability, all Options in which the Participant has a vested
right upon termination shall be exercisable until the expiration date of
the Option.
(d) Subject to Article 14, in the event of termination of a
Participant's employment, consulting arrangement or other affiliation due
to Retirement, all Options in which the Participant has a vested right upon
termination shall be exercisable for the lesser of (i) three years
following the date of termination or (ii) the expiration date of the
Option.
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6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant.
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such Participant.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SARs. The Committee shall have
complete discretion in determining the number of SARs granted to each
Participant (subject to Article 4 herein) and, consistent with the provisions of
the Plan, in determining the terms and conditions pertaining to such SARs. The
Committee shall designate, at the time of grant, the grant price of Freestanding
SARs which grant price shall at least equal the Fair Market Value of a Share on
the date of grant of the SAR. The grant price of Tandem SARs shall equal the
Option Price of the related Option. Grant prices of SARs shall not subsequently
be changed by the Committee except pursuant to Section 4.3 hereof.
7.2 EXERCISE OF TANDEM SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of this Plan to the contrary,
with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem
SAR will expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be
exercised only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARs. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
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7.5 TERM OF SARs. The term of an SAR granted under the plan shall be
determined by the Committee, in its sole discretion; provided, however, that
unless otherwise designated by the Committee, such term shall not exceed ten
(10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The excess of the Fair Market Value of a Share on the date of
exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7 TERMINATION OF RELATIONSHIP. Each SAR Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
SAR following termination of the Participant's employment or other relationship
with the Company and/or its Subsidiaries. Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all SARs issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination, including, but not limited to, termination of employment for Cause
or Good Reason, or reasons relating to the breach or threatened breach of
restrictive covenants. Subject to Article 14, in the event that a Participant's
SAR Award Agreement does not set forth such termination provisions, the
following termination provisions shall apply:
(a) In the event a Participant's employment, consulting
arrangement or other affiliation with the Company and/or its Subsidiaries
is terminated for any reason other than death, Disability or Retirement,
all SARs held by the Participant shall expire and all rights thereunder
shall terminate immediately; provided, however, that notwithstanding the
foregoing, all SARs to which the Participant has a vested right immediately
prior to such termination shall be exercisable for the lesser of (i) 30
days following the date of termination or (ii) the expiration date of the
SAR, unless the termination was for Cause.
(b) In the event a Participant's employment, consulting
arrangement or other affiliation with the Company and/or its Subsidiaries
is terminated due to death or Disability, all SARs shall immediately become
fully vested on the date of termination.
(c) Subject to Article 14, in the event of termination of a
Participant's employment, consulting arrangement or other affiliation due
to death or Disability, all SARs in which the Participant has a vested
right upon termination shall be exercisable until the expiration date of
the SAR.
(d) Subject to Article 14, in the event of termination of a
Participant's employment, consulting arrangement or other affiliation due
to Retirement, all SARs in which the Participant has a vested right upon
termination shall be exercisable for the lesser of (i) three years
following the date of termination or (ii) the expiration date of the SAR.
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7.8 NONTRANSFERABILITY OF SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
ARTICLE 8
RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of Restriction,
the number of Shares of Restricted Stock granted, and such other provisions as
the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, voluntarily or involuntarily, until the
end of the applicable Period of Restriction established by the Committee and
specified in the Restricted Stock Award Agreement, or upon earlier satisfaction
of any other conditions, as specified by the Committee in its sole discretion
and set forth in the Restricted Stock Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. Subject to Article 10 herein, the Committee may
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, Subsidiary-wide, divisional, and/or
individual), time-based restrictions on vesting which may or may not be
following the attainment of the performance goals, and/or restrictions under
applicable federal or state securities laws. The Company shall retain the
certificates representing Shares of Restricted Stock in the Company's possession
until such time as all conditions and/or restrictions applicable to such Shares
have been satisfied. Except as otherwise provided in this Article 8, Shares of
Restricted Stock covered by each Restricted Stock grant made under the Plan
shall become freely transferable by the Participant after the last day of the
applicable Period of Restriction.
8.5 VOTING RIGHTS. Unless otherwise designated by the Committee at the
time of grant, Participants to whom Shares of Restricted Stock have been granted
hereunder may exercise full voting rights with respect to those Shares during
the Period of Restriction.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by
the Committee at the time of grant, Participants holding Shares of Restricted
Stock granted hereunder shall be credited with regular cash dividends paid with
respect to the underlying Shares while they are so held during the Period of
Restriction. The Committee may apply any restrictions to the dividends that the
Committee deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Shares of Restricted Stock granted to a
Named Executive Officer
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is designed to comply with the requirements of the Performance-Based Exception,
the Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to such Shares of Restricted Stock, such that
the dividends and/or the Shares of Restricted Stock maintain eligibility for the
Performance-Based Exception. In the event that any dividend constitutes a
derivative security or an equity security pursuant to the rules under Section 16
of the Exchange Act, such dividend shall be subject to a vesting period equal to
the remaining vesting period of the Shares of Restricted Stock with respect to
which the dividend is paid.
8.7 TERMINATION OF RELATIONSHIP. Each Restricted Stock Award Agreement
shall set forth the extent to which the Participant shall have the right to
receive unvested Shares of Restricted Stock following termination of the
Participant's employment or other relationship with the Company and/or its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Shares of Restricted Stock issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination, including, but not limited to, termination of employment for Cause
or Good Reason, or reasons relating to the breach or threatened breach of
restrictive covenants; provided, however, that, except in the cases of
terminations connected with a Change of Control and terminations by reason of
death or Disability, the vesting of Shares of Restricted Stock which qualify for
the Performance-Based Exception and which are held by Named Executive Officers
shall not occur prior to the time they otherwise would have, but for the
employment termination. Subject to Article 14, in the event that a Participant's
Restricted Stock Award Agreement does not set forth such termination provisions,
the following termination provisions shall apply:
(a) In the event a Participant's employment, consulting
arrangement or other affiliation with the Company and/or its Subsidiaries
is terminated for any reason other than death or Disability, all Shares of
Restricted Stock which are unvested at the date of termination shall be
forfeited to the Company.
(b) Unless the Award qualifies for the Performance-Based
Exception, in the event a Participant's employment, consulting arrangement
or other affiliation with the Company and/or its Subsidiaries is terminated
due to death or Disability, all Shares of Restricted Stock of such
participant shall immediately become fully vested on the date of
termination and the restrictions shall lapse.
ARTICLE 9
PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
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9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participant. For purposes of this Article 9, the time period during which the
performance goals must be met shall be referred to as a "Performance Period."
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the number and
value of Performance Units/Shares earned by the Participant over the Performance
Period, to be determined as a function to the extent to which the corresponding
performance goals have been achieved, as established by the Committee.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. (a) Except
as provided below, payment of earned Performance Units/Shares shall be made in a
single lump sum as soon as reasonably practicable following the close of the
applicable Performance Period. Subject to the terms of this Plan, the Committee,
in its sole discretion, may pay earned Performance Units/Shares in the form of
cash or in Shares which have an aggregate Fair Market Value equal to the value
of the earned Performance Units/Shares at the close of the applicable
Performance Period (or in a combination thereof). Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee.
(b) At the time of grant or shortly thereafter, the Committee, at
its discretion and in accordance with the terms designated by the Committee, may
provide for a voluntary and/or mandatory deferral of all or any part of an
otherwise earned Performance Unit/Share Award.
(c) At the discretion of the Committee, Participants may be
entitled to receive any dividends declared with respect to Shares which have
been earned but not yet distributed to Participants in connection with grants of
Performance Units and/or Performance Shares (such dividends shall be subject to
the same accrual, forfeiture, and payout restrictions as apply to dividends
earned with respect to Shares of Restricted Stock, as set forth in Section 8.6
herein). In addition, Participants may, at the discretion of the Committee, be
entitled to exercise their voting rights with respect to such Shares.
9.5 TERMINATION OF RELATIONSHIP. Subject to Article 14, in the event a
Participant's employment or other relationship with the Company and/or its
Subsidiaries is terminated during a Performance Period for any reason other than
death, Disability or Retirement, all Performance Units/Shares shall be forfeited
by the Participant to the Company. Subject to Article 14, in the event a
Participant's employment, consulting arrangement or other affiliation with the
Company and/or its Subsidiaries is terminated during a Performance Period due to
death, Disability or Retirement, the Participant shall receive a prorated payout
of the Performance Units/Shares, unless the Committee determines otherwise. The
prorated payout shall be determined by the Committee, shall be based upon the
length of time that the Participant held the Performance Units/Shares during the
Performance Period, and shall further be adjusted based on the achievement of
the pre-established performance goals. Subject to Article 14, unless the
Committee determines otherwise in the event of a termination due to death,
Disability or Retirement payment of earned Performance
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Units/Shares shall be made at the same time as payments are made to Participants
who did not terminate employment during the applicable Performance Period.
9.6 NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by a Participant or the
Participant's legal representative.
ARTICLE 10
PERFORMANCE MEASURES
(a) Unless and until the Committee proposes for stockholder vote and
stockholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Named Executive Officers which are
designed to qualify for the Performance-Based Exception, the performance goals
to be used for purposes of such grants shall be established by the Committee in
writing and stated in terms of the attainment of specified levels of, or
percentage changes in, any one or more of the following measurements: revenue,
primary or fully-diluted earnings per Share, pretax income, cash flow from
operations, total cash flow, return on equity, return on capital, return on
assets, net operating profits after taxes, economic value added, total
stockholder return or return on sales, or any individual performance objective
which is measured solely in terms of quantitative targets related to the Company
or the Company's business, or any combination thereof. In addition, such
performance goals may be based in whole or in part upon the performance of the
Company, a Subsidiary, division and/or other operational unit, under one or more
of such measures.
(b) The degree of payout and/or vesting of such Awards designed to
qualify for the Performance-Based Exception shall be determined based upon the
written certification of the Committee as to the extent to which the performance
goals and any other material terms and conditions precedent to such payment
and/or vesting have been satisfied. The Committee shall have the discretion to
adjust the determinations of the degree of attainment of the pre-established
performance goals; provided, however, that the performance goals applicable to
Awards which are designed to qualify for the Performance-Based Exception, and
which are held by Named Executive Officers, may not be adjusted so as to
increase the payment under the Award (the Committee shall retain the discretion
to adjust such performance goals upward, or to otherwise reduce the amount of
the payment and/or vesting of the Award relative to the pre-established
performance goals).
(c) In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Section
162(m) of the Code and, thus, which use performance measures other than those
specified above.
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ARTICLE 11
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Secretary of the Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
ARTICLE 12
DEFERRALS
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant upon the exercise of any Option or by virtue of the lapse or
waiver of restrictions with respect to Restricted Stock, or the satisfaction of
any requirements or goals with respect to Performance Units/Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 13
RIGHTS OF EMPLOYEES, CONSULTANTS AND OTHERS
13.1 EMPLOYMENT, CONSULTING OR OTHER ARRANGEMENTS. Nothing in the Plan
shall interfere with or limit in any way the right of the Company to terminate
any Participant's employment, consulting arrangement or other affiliation at any
time, nor confer upon any Participant any right to continue in the employ of or
consulting arrangement or other affiliation with the Company or any Subsidiary.
For purposes of this Plan, temporary absence from employment because of illness,
vacation, approved leaves of absence, and transfers of employment among the
Company and its Subsidiaries, shall not be considered to terminate employment or
to interrupt continuous employment. Temporary cessation of the provision of
consulting or other services because of illness, vacation or any other reason
approved in advance by the Company shall not be considered a termination of the
consulting or other arrangement or an interruption of the continuity thereof.
Conversion of a Participant's employment relationship to a consulting or other
arrangement shall not result in termination of previously granted Awards.
13.2 PARTICIPATION. No Employee, consultant or other affiliated Person
shall have the right to be selected to receive an Award under this Plan, or,
having been so selected, to be selected to receive a future Award.
ARTICLE 14
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, unless otherwise specifically
prohibited under applicable laws, or by the rules and regulations of any
governing governmental agencies or national securities exchanges:
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(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) Any Period of Restriction and other restrictions imposed on
Restricted Shares shall lapse; and
(c) Unless otherwise specified in a Participant's Award Agreement
at time of grant, the maximum payout opportunities attainable under all
outstanding Awards of Performance Units and Performance Shares shall be
deemed to have been fully earned for the entire Performance Period(s) as of
the effective date of the Change of Control. The vesting of all such Awards
shall be accelerated as of the effective date of the Change of Control, and
in full settlement of such Awards, there shall be paid out in cash to
Participants within thirty (30) days following the effective date of the
Change of Control the maximum of payout opportunities associated with such
outstanding Awards.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board may at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part, subject to any requirement of stockholder approval imposed by
applicable law, rule or regulation.
15.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.
ARTICLE 16
WITHHOLDING
16.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which would be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
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ARTICLE 17
SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect merger,
consolidation, purchase of all or substantially all of the business and/or
assets of the Company or otherwise.
ARTICLE 18
LEGAL CONSTRUCTION
18.1 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural.
18.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if as if the illegal or invalid provision had not been included.
18.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
18.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
18.5 GOVERNING LAW. To the extent not pre-empted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
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