Exhibit 10.2
THIRD AMENDED AND RESTATED
PLAYBOY ENTERPRISES, INC.
1995 STOCK INCENTIVE PLAN
(as amended through May 23, 2007)
Playboy Enterprises, Inc., a corporation organized under the laws of the State
of Delaware (the "Company"), hereby adopts this Second Amended and Restated
Playboy Enterprises, Inc. 1995 Stock Incentive Plan.
The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its key employees
through the ownership of Company stock and/or rights which recognize such
growth, development and financial success.
(2) To enable the Company to obtain and retain the services of key
employees considered essential to the long-range success of the Company by
providing and offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan they shall have
the meaning specified below, unless the context clearly indicates otherwise.
Section 1.1 Board. "Board" shall mean the Board of Directors of the
Company.
Section 1.2 Change of Control. "Change of Control" shall mean the
occurrence of any of the following events: (i) except in a transaction described
in clause (iii) below, Hugh M. Hefner, Christie Hefner, the Hugh M. Hefner 1991
Trust (for so long as Hugh M. Hefner and Christie Hefner are joint trustees or
one of them is sole trustee), and the Hugh M. Hefner Foundation (for so long as
Hugh M. Hefner and Christie Hefner are joint trustees or one of them is sole
trustee) cease collectively to own a majority of the total number of votes that
may be cast for the election of directors of the Company; or (ii) a sale of
Playboy magazine by the Company; or (iii) the liquidation or dissolution of the
Company, or any merger, consolidation or other reorganization involving the
Company unless (x) the merger, consolidation or other reorganization is
initiated by the Company, and (y) is one in which the stockholders of the
Company immediately prior to such reorganization become the majority
stockholders of a successor or ultimate parent corporation of the Company
resulting from such reorganization and (z) in connection with such event,
provision is made for an assumption of outstanding Options and rights or a
substitution thereof of a new Option or right in such successor or ultimate
parent of substantially equivalent value.
Section 1.3 Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.
Section 1.4 Committee. "Committee" shall mean a committee of the
Board of Directors comprised of persons who are both non-employee directors
within the meaning of Rule 16b-3 which has been adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, as
such rule or its equivalent is then in effect ("Rule 16b-3") and "outside
directors" within the meaning of Section 162(m) of the Code.
Section 1.5 Common Stock. "Common Stock" shall mean the Class B
Common Stock, par value $.01 per share, of the Company.
Section 1.6 Company. "Company" shall mean Playboy Enterprises, Inc.,
a Delaware corporation.
Section 1.7 Deferred Stock. "Deferred Stock" shall mean Common Stock
awarded under Article VII of the Plan.
Section 1.8 Director. "Director" shall mean a member of the Board.
Section 1.9 Employee. "Employee" shall mean any officer or other
employee (as defined in accordance with the Regulations and Revenue Rulings then
applicable under Section 3401(c) of the Code) of the Company or any Subsidiary.
Section 1.10 ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
Section 1.11 Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
Section 1.12 Grantee. "Grantee" shall mean an Employee granted a
Performance Award, Stock Payment, Section 162(m) Performance Award,
Section162(m) Stock Payment, or an award of Deferred Stock or Section 162(m)
Deferred Stock, under this Plan.
Section 1.13 Incentive Stock Option. "Incentive Stock Option" shall
mean an Option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.
Section 1.14 Non-Qualified Option. "Non-Qualified Option" shall mean
an Option which is not designated as an Incentive Stock Option by the Committee.
Section 1.15 Officer. "Officer" shall mean an officer of the
Company.
Section 1.16 "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option.
Section 1.17 Optionee. "Optionee" shall mean an Employee to whom an
Option is granted under the Plan.
Section 1.18 Performance Award. "Performance Award" shall mean a
cash bonus, stock bonus or other performance or incentive award that is paid in
cash, Common Stock or a combination of both, awarded under Article VII of this
Plan.
Section 1.18A Performance Criteria. "Performance Criteria" shall
mean objective performance criteria established pursuant to this Plan with
respect to awards of Section 162(m) Restricted Stock, Section 162(m) Performance
Awards, Section 162(m) Stock Payments and Section 162(m) Deferred Stock.
Performance Criteria shall be measured in terms of one or more of the following
objectives, described as such objectives relate to corporation-wide objectives
or objectives that are related to the performance of the individual Employee or
of the Subsidiary, division, department or function with the Company or
Subsidiary in which the participant is employed:
(i) market value;
(ii) book value;
(iii) earnings per share;
(iv) market share;
(v) operating profit;
(vi) net income;
(vii) cash flow;
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(viii) return on capital;
(ix) return on assets;
(x) return on equity;
(xi) margins;
(xii) shareholder return;
(xiii) sales or product volume growth;
(xiv) productivity improvement; or
(xv) costs or expenses.
Each grant of Section 162(m) Restricted Stock, Section 162(m)
Performance Awards, Section 162(m) Stock Payments, and Section 162(m) Deferred
Stock shall specify the Performance Criteria to be achieved, a minimum
acceptable level of achievement below which no payment or award will be made,
and a formula for determining the amount of any payment or award to be made if
performance is at or above the minimum acceptable level but fall short of full
achievement of the specified Performance Criteria.
If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or circumstances
render the Performance Criteria to be unsuitable, the Committee may modify such
Performance Criteria or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable; provided,
however, that no such modification shall be made if the effect would be to cause
the award to fail to qualify for the performance-based compensation exception to
Section 162(m) of the Code. In addition, at the time the award subject to
Performance Criteria is made and performance goals established, the Committee is
authorized to determine the manner in which the Performance Criteria will be
calculated or measured to take into account certain factors over which the
Employees have no or limited control including market related changes in
inventory value, changes in industry margins, changes in accounting principles,
and extraordinary changes to income.
Section 1.19 Plan. "Plan" shall mean the Second Amended and Restated
Playboy Enterprises, Inc. 1995 Stock Incentive Plan.
Section 1.20 Restricted Stock. "Restricted Stock" shall mean Common
Stock awarded under Article VII of this Plan.
Section 1.21 Restricted Stockholder. "Restricted Stockholder" shall
mean an Employee granted an award of Restricted Stock under Article VI of this
Plan.
Section 1.22 Secretary. "Secretary" shall mean the Secretary of the
Company.
Section 1.22A Section 162(m) Deferred Stock. "Section 162(m)
Deferred Stock" shall mean Common Stock awarded under Article VII-A of this
Plan.
Section 1.22B Section 162(m) Performance Award. "Section 162(m)
Performance Award" shall mean a cash bonus, stock bonus, or other performance or
incentive award that is paid in cash, Common Stock or a combination of both,
awarded under Article VII-A of this Plan.
Section 1.22C Section 162(m) Restricted Stock. "Section 162(m)
Restricted Stock" shall mean Common Stock awarded under Section VI-A of this
Plan.
Section 1.22D Section 162(m) Restricted Stockholder. "Section 162(m)
Restricted Stockholder" shall mean an Employee granted an award of Section
162(m) Restricted Stock under Article VI-A of this Plan.
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Section 1.22E Section 162(m) Stock Payment. "Section 162(m) Stock
Payment" shall mean (i) a payment in the form of Common Stock, or (ii) an option
or other right to purchase shares of Common Stock, as part of a deferred
compensation arrangement, made in lieu of all or any portion of the
compensation, including without limitation, salary, bonuses and commissions,
that would otherwise become payable to a key Employee in cash, awarded under
Article VII-A of this Plan.
Section 1.23 Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.
Section 1.24 Stock Payment. "Stock Payment" shall mean (i) a payment
in the form of shares of Common Stock, or (ii) an option or other right to
purchase shares of Common Stock, as part of a deferred compensation arrangement,
made in lieu of all or any portion of the compensation, including without
limitation, salary, bonuses and commissions, that would otherwise become payable
to a key Employee in cash, awarded under Article VII-A of this Plan.
Section 1.25 Subsidiary. "Subsidiary" shall mean any corporation in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
Section 1.26 Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between the
Optionee, Grantee, Restricted Stockholder, or Section 162(m) Restricted
Stockholder and the Company or any Subsidiary is terminated, voluntarily or
involuntarily, for any reason, with or without Cause (as defined below),
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement, but excluding any termination where
there is a simultaneous reemployment by the Company or a Subsidiary. The
Committee, subject to the definition of Cause below, shall determine the effect
of all other matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether particular
leaves of absence constitute Terminations of Employment; provided, however,
that, with respect to Incentive Stock Options, a leave of absence shall
constitute a Termination of Employment if, and to the extent that, such leave of
absence interrupts employment for the purposes of Section 422(a)(2) of the Code
and the then applicable regulations and revenue rulings under said Section. For
purposes of the Plan, "Cause" shall mean an Employee's (a) gross negligence in
the performance of the responsibilities of such Employee's office or position;
(b) any act of dishonesty or moral turpitude materially adversely affecting the
Company or the Company's reputation; (c) commission of any other willful or
intentional act that could reasonably be expected to injure materially the
reputation, business or business relationships of the Company or any Subsidiary;
or (d) conviction of a felony or of any crime involving moral turpitude, fraud
or misrepresentation.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 Shares Subject to Plan. (a) The shares of stock subject
to Options, or awards of Restricted Stock, Section 162(m) Restricted Stock,
Performance Awards, Section 162(m) Performance Awards, Deferred Stock, Section
162(m) Deferred Stock, Stock Payments, or Section 162(m) Stock Payments shall be
Common Stock. The aggregate number of shares which may be issued upon exercise
of such Options or rights or upon any such awards under the Plan shall not
exceed 7,703,000 shares of Common Stock.
(b) The maximum number of shares of Common Stock which may be
subject to Options, rights or other awards granted under the Plan to any
Employee in any calendar year shall not exceed 650,000, and the method of
counting such shares shall conform to any requirements applicable to
performance-based compensation under Section 162(m) of the Code. The shares of
Common Stock issuable upon exercise of such Options or rights or upon any such
awards may be either previously authorized but unissued shares or treasury
shares.
(c) With regard to Section 162(m) Performance Awards that are
cash bonuses or other performance or incentive awards expressed as cash awards
(without regard to whether such bonuses or awards are ultimately paid in the
form of cash, stock, or a combination of both as described in Section 7.7A), an
Employee may not be granted during any calendar year such Section 162(m)
Performance Awards in an amount in excess of $1,000,000.
Section 2.2 Unexercised Options and Awards. If any Option, or other
right to acquire shares of Common Stock under any other award under this Plan,
expires or is cancelled without having been fully exercised
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(including Restricted Stock, Section 162(m) Restricted Stock or any other award
that is forfeited before applicable vesting requirements are met or transfer
restrictions have lapsed), the number of shares subject to such Option or other
right but as to which such Option or other right was not exercised (or vested or
delivered without restriction, as the case may be) prior to its expiration or
cancellation may again be optioned, granted or awarded hereunder, subject to the
limitations of Section 2.1.
Section 2.3 Adjustments in Outstanding Options or Rights. Subject to
Section 4.2(c), in the event that the outstanding shares of the Common Stock
subject to Options or other rights are changed into or exchanged for a different
number or kind of shares of the Company or other securities of the Company by
reason of a recapitalization, reclassification, stock split, stock dividend or
combination of shares or similar transaction, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares as to
which all outstanding Options or rights, or portions thereof then unexercised,
shall be exercisable, so that the Optionee's, Grantee's, Restricted
Stockholder's or Section 162(m) Restricted Stockholder's proportionate interest
shall be maintained. Such adjustment shall be made without change in the total
price applicable to the unexercised portion of the Option or right (except for
any change in the aggregate price resulting from rounding-off of share
quantities or prices) and with any necessary corresponding adjustment in price
per share; provided, however, that, in the case of Incentive Stock Options, each
such adjustment shall be made in such manner as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the Committee shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, Section 162(m) Restricted Stockholders, the
Company or any Subsidiary, their representatives and all other interested
persons. Such adjustments will also be made in determining Section 2.1
limitations on maximum number and kind of shares which may be issued on exercise
of Options, Restricted Stock, Section 162(m) Restricted Stock or other awards.
The shares of Class B Common Stock reserved under this Plan will be reduced as
Options, Restricted Stock, Section 162(m) Restricted Stock or other awards are
granted or issued so that the aggregate number of any single Class of Stock will
never exceed the total amount of shares authorized under the Plan.
ARTICLE III
GRANTING OF OPTIONS
Section 3.1 Eligibility. Any key Employee of the Company or a
Subsidiary except Hugh M. Hefner shall be eligible to be granted Options.
Section 3.2 Qualification of Incentive Stock Options. No Incentive
Stock Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422 of the Code. Without limitation of
the foregoing, no person shall be granted an Incentive Stock Option under this
Plan if such person, at the time the Incentive Stock Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.
Section 3.3 Granting of Options. (a) The Committee shall from time
to time, in its absolute discretion:
(i) Determine which Employees are "key Employees" and
select from among the key Employees (including those to whom Options
and/or rights have been previously granted under the Plan or any other
stock option or other plan of the Company) such of them as in its opinion
should be granted Options; and
(ii) Determine for each Employee the number of shares to
be subject to such Options; and
(iii) Determine whether such Options are to be Incentive
Stock Options or Non-Qualified Options; and
(iv) Determine the terms and conditions of such Options,
consistent with the Plan.
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(b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary or other authorized officer
to execute and deliver a Stock Option Agreement, and may impose such conditions
on the grant of such Option as it deems appropriate, not inconsistent with this
Plan. Without limiting the generality of the preceding sentence, the Committee
may, in its discretion and on such terms as it deems appropriate, require as a
condition on the grant of an Option to an Employee that the Employee surrender
for cancellation some or all of the unexercised Options, awards of Restricted
Stock, Section 162(m) Restricted Stock, Deferred Stock or Section 162(m)
Deferred Stock, Performance Awards, Section 162(m) Performance Awards, Stock
Payments or Section 162(m) Stock Payments or other rights which have been
previously granted to him. An Option, the grant of which is conditioned upon
such surrender, may have an Option price lower (or higher) than the Option price
of the surrendered Option, may cover the same (or a lesser or greater) number of
shares as the surrendered Option, may contain such other terms as the Committee
deems appropriate and be exercised in accordance with its terms, without regard
to the number of shares, price, Option period or any other term or condition of
such surrendered Option or award.
(c) Stock Option Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code. Any Incentive Stock Option
granted under this Plan may be modified by the Committee to disqualify such
option from treatment as an "incentive stock option" under Section 422 of the
Code.
(d) Options granted hereunder shall be consideration for the
future performance of services by the Optionee to the Company or a Subsidiary,
as applicable.
ARTICLE IV
TERMS OF OPTIONS
Section 4.1 Option Price. (a) The price of the shares subject to
each Non-Qualified Option shall not be less than 100% of the fair market value
of such shares at the end of the business day upon which such Option is granted.
(b) For purposes of the Plan, the fair market value ("Fair
Market Value") of a share of the Company's Common Stock as of a given date shall
be: (i) the closing price of a share of such class of the Company's Common Stock
on the principal exchange on which shares of the Company's Common Stock are then
trading, if any, on such date, or, if shares were not traded on such date, then
on the next subsequent trading day during which a sale occurs; or (ii) if such
Common Stock is not traded on an exchange but is quoted on NASDAQ or a successor
quotation system, (1) the last sales price (if the Company's Common Stock is
then listed as a National Market Issue under the NASD National Market System) or
(2) the mean between the closing representative bid and asked prices (in all
other cases) for the Company's Common Stock on such date as reported by NASDAQ
or such successor quotation system; or (iii) if such Common Stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor quotation
system, the mean between the closing bid and asked prices for the Company's
Common Stock, on such date, as determined in good faith by the Committee; or
(iv) if the Company's Common Stock is not publicly traded, the fair market value
established by the Committee acting in good faith.
(c) The price of the shares subject to Incentive Stock Options
shall not be less than the greater of (i) 100% of the Fair Market Value of a
share of Common Stock on the date the Incentive Stock Option is granted, or (ii)
110% of the fair market value of a share of Common Stock on the date such
Incentive Stock Option is granted in the case of an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary.
Section 4.2 Commencement of Exercisability; Change of Control. (a)
Subject to the provisions of Sections 4.2(b) and 9.3, Options shall become
exercisable at such times and in such installments (which may be cumulative) as
the Committee shall provide in the terms of each individual Option; provided,
however, that by a resolution adopted after an Option is granted the Committee
may, on such terms and conditions as it may determine to be appropriate and
subject to Sections 4.2 and 9.3, accelerate the time at which such Option or any
portion thereof may be exercised; provided further, however, that all
outstanding Options shall become fully vested and exercisable as of immediately
prior to a Change of Control.
(b) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable, except as may be
otherwise provided by the Committee either in the Stock Option
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Agreement or in a resolution adopted following the grant of the Option. Except
as limited by requirements of Section 422 of the Code and regulations and
rulings thereunder applicable to Incentive Stock Options, the Committee may
extend the term of any outstanding Option in connection with any Termination of
Employment of the Optionee, or amend any other term or condition of such Option
relating to such a termination.
(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.2(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
Section 4.3 Expiration of Options. (a) Unless an Option expires
earlier or later pursuant to the terms of a Stock Option Agreement, each Option
may be exercised any time until the first of the following events, after which
such Option will become unexercisable:
(i) The expiration of ten (10) years from the date the
Option was granted if the Employee is still employed by the Company or any
Subsidiary; or
(ii) The expiration of three (3) months from the
Employee's Termination of Employment if such Termination of Employment
results from such Employee's retirement or such Employee's being
discharged not for Cause, unless the Employee dies within said three-month
period; or
(iii) The effective date of (i) a Termination of
Employment for Cause, (ii) the Employee's resignation, or (iii) a Change
of Control specified in clause (iii) of the definition of such term; or
(iv) In the case of an Optionee who is disabled (within
the meaning of Section 22(e)(3) of the Code), the expiration of one (1)
year from the date of the Optionee's Termination of Employment; provided,
however, that subsection (iv) shall not apply if the Optionee dies within
said one-year period; or
(v) One (1) year from the date of the Optionee's death.
(b) Subject to the provisions of Section 4.3(a), the Committee
shall provide, in the terms of each individual Option, when such Option expires
and becomes unexercisable; and (without limiting the generality of the
foregoing) the Committee may provide in the terms of individual Options that
said Options expire immediately upon a Termination of Employment for any reason.
(c) The term of any Incentive Stock Option shall not be more
than five (5) years from such date if the Incentive Stock Option is granted to
an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary.
Section 4.4 No Right to Continued Employment. Nothing in this Plan
or in any Stock Option Agreement hereunder shall confer upon any Optionee any
right to continue in the employ of the Company or any Subsidiary or as a
director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any of its Subsidiaries, which are hereby expressly
reserved, to discharge any Optionee at any time for any reason whatsoever, with
or without Cause.
Section 4.5 Reload Options. Options may, in the discretion of the
Committee, be granted under the Plan to permit a participant to reaquire any
shares such participant delivered to the Company as payment of the exercise
price (as described in Section 5.3) in connection with the exercise of an Option
hereunder or to reaquire any shares retained by the Company to satisfy the
participant's withholding obligation in connection with the exercise of an
Option hereunder (a "Reload Option"). The terms of a Reload Option shall be
identical in all material respects to the terms of the Option as to which such
Reload Option was granted, provided however, that the exercise price for each
share granted under the Reload Option shall be the Fair Market Value of a share
at the time such Reload Option is granted.
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ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 Person Eligible to Exercise. (a) Subject to 5.1(b),
during the lifetime of an Optionee, only such Optionee may exercise an Option
(or any portion thereof) granted to such Optionee. After the death of the
Optionee, any exercisable portion of an Option may, within the time frame
allowed, be exercised by his personal representative or by any person empowered
to do so under the deceased Optionee's will or under the then applicable laws of
descent and distribution. To the extent Rule 16b-3 as then in effect permits
transfers of Options, the Committee may approve such transfers in its
discretion.
(b) Should the Optionee be determined under applicable law to
have become a disabled person or the equivalent thereof, the then-vested portion
of the Option may, prior to the time when such Option becomes unexercisable
pursuant to the Plan or the applicable Stock Option Agreement, be exercised by
the Optionee's guardian or by any other person empowered to do so under the then
applicable laws of guardianship. For purposes of this section 5.1(b), "disabled
person" shall mean a person who (i) because of mental deterioration or physical
incapacity is not fully able to manage such person's person or estate or (ii) is
mentally ill and who because of such person's mental illness is not fully able
to manage such person's person or estate.
Section 5.2 Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by terms of the Option, a
partial exercise be with respect to a number of shares.
Section 5.3 Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or the Secretary's office:
(a) A written notice signed by the Optionee (or other person
then entitled to exercise such Option or portion), stating that such Option or
portion thereof is being exercised and such notice complies with all applicable
rules established by the Committee; and
(b) Payment in full for the exercised shares:
(i) In cash or by certified or cashier's check; or
(ii) In shares of the same class of the Company's Common
Stock owned by the Optionee; provided, however, that the Optionee may use
Common Stock in payment of the exercise price only if the shares so used
are considered "mature" for purposes of generally accepted accounting
principles, i.e., (x) they have been held by the Optionee free and clear
for at least six months prior to the use thereof to pay part of an Option
exercise price, (y) they have been purchased by the Optionee in other than
a compensatory transaction, or (z) they meet any other requirements for
"mature" shares as may exist on the date of the use thereof to pay part of
an Option exercise price, as determined by the Committee; further
provided, however, that the Optionee may use Common Stock in payment of
the exercise price by means of attestation to the Company of his ownership
of sufficient shares in a manner reasonably acceptable to the Committee.
Shares actually delivered to the Company (i.e., shares for which the
attestation mechanism is not used) must be duly endorsed for transfer to
the Company. Shares used to pay all or part of the Option exercise price
pursuant to this provision will be credited at their Fair Market Value on
the date of delivery; or
(iii) With the consent of the Committee and at the sole
discretion of the Company, by a full recourse promissory note bearing
interest (at no less than such rate as shall then preclude the imputation
of interest under the Code or successor provision) and payable upon such
terms as may be prescribed by the Committee. The Committee may also
prescribe the form of such note and the security to be given for such
note. No Option may, however, be exercised by delivery of a promissory
note or by a loan from the Company when or where such loan or other
extension of credit is prohibited by law; or
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(iv) With the consent of the Committee and at the sole
discretion of the Company, by a "net exercise" via the forfeiture to the
Company of a portion of the Option pertaining to shares with a value
(based on the Fair Market Value of such underlying Option shares on the
date of forfeiture) equal to the exercise price of the portion of the
Option being exercised plus the applicable tax withholding amount; or
(v) Any combination of the consideration provided in the
foregoing subsections (i), (ii), (iii) and (iv); or
(vi) To the extent permitted by law (including then
existing interpretations of Rule 16b-3) a "cashless exercise procedure"
satisfactory to the Committee which permits the Optionee to deliver an
exercise notice to a broker-dealer, who then sells the Option shares,
delivers the exercise price and withholding taxes to the Company and
delivers the excess funds less commission and withholding taxes to the
Optionee; and
(c) Such representations and documents as the Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(d) Appropriate proof of the right of such person or persons
to exercise the option or portion thereof in the event that the Option or
portion thereof shall be exercised pursuant to Section 5.1 by any person or
persons other than the Optionee; and
(e) Full payment of all amounts which, under federal, state or
local law, it is required to withhold upon exercise of the Option. With the
consent of the Committee, shares of the Company's Common Stock owned by the
Employee duly endorsed for transfer or shares of the Company's Common Stock
issuable to the Employee upon exercise of the Option, valued in accordance with
Section 4.1(b) of the Plan at the date of Option exercise, may be used to make
all or part of such payment.
Section 5.4 [RESERVED]
Section 5.5 Additional Conditions to Issuance of Stock Certificates.
The shares of Common Stock able and deliverable upon the exercise of an Option
shall be fully paid and non-assessable. In addition to satisfaction of the
conditions specified in Section 5.3, the Company shall not be required to issue
or deliver any certificate or certificates for shares of stock purchased upon
the exercise of any Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The completion of any registration or other qualification
of such shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and
(b) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(c) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may establish from time to time
for reasons of administrative convenience.
Section 5.6 Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders or the Company's stock record books reflect the Optionee
as a stockholder pursuant to any book entry procedure approved by the Secretary.
The Committee, in its absolute discretion, may impose such other
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such other restriction shall be set
forth in
9
the respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares. The Committee may require the Employee to give the
Company prompt notice of any disposition of shares of Common Stock, acquired by
exercise of an Incentive Stock Option, within (i) two years from the date of
granting such Option or (ii) one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
Section 6.1 Award of Restricted Stock. (a) The Committee shall from
time to time, in its absolute discretion:
(i) Select from among the key Employees (including
Employees who have previously received other awards under this Plan or any
other stock option plan of the Company) such of them as in its opinion
should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other
terms and conditions applicable to such Restricted Stock, consistent with
this Plan.
(b) In all cases, legal consideration meeting the requirements
of Delaware law shall be required for each issuance of Restricted Stock.
(c) Upon the selection of a key Employee to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.
Section 6.2 Restricted Stock Agreement. Restricted Stock shall be
issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee and an authorized officer of the Company
and which shall contain such terms and conditions as the Committee shall
determine, consistent with this Plan.
Section 6.3 No Right to Continued Employment. Nothing in this Plan
or in any Restricted Stock Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Restricted
Stockholder at any time for any reason whatsoever, with or without good cause.
Section 6.4 Rights as Stockholders. Upon delivery of any shares of
Restricted Stock that are certificated to the escrow holder pursuant to Section
6.7, and upon issuance thereof, if uncertificated, the Restricted Stockholder
shall have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in the
Restricted Stock Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided, however,
that in the discretion of the Committee, any extraordinary distribution with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 6.5.
Section 6.5 Restrictions. All shares of Restricted Stock issued
under this Plan (including any shares received by holders thereof with respect
to shares of Restricted Stock as a result of stock dividends, stock splits or
any other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company or a Subsidiary, Company performance, individual
performance, or a change of control; provided, however, that by a resolution
adopted after the Restricted Stock is issued, the Committee may, on such terms
and conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Restricted Stock Agreement. Restricted
Stock may not be sold or encumbered until all restrictions are terminated or
expire. Unless provided otherwise by the Committee, if no consideration (other
than services) was paid by the Restricted Stockholder upon issuance, a
Restricted Stockholder's rights in unvested Restricted Stock shall lapse upon
Termination of Employment for any reason at any time or prior to any date the
Committee may establish.
10
Section 6.6 Repurchase of Restricted Stock. If consideration (other
than services) was paid for Restricted Stock, the Committee shall provide in the
terms of each individual Restricted Stock Agreement that the Company shall have
the right to repurchase from the Restricted Stockholder the Restricted Stock
then subject to restrictions under the Restricted Stock Agreement immediately
upon a Termination of Employment at a cash price per share equal to the price
paid by the Restricted Stockholder for such Restricted Stock or such other price
as may be specified in the Restricted Stock Agreement; provided, however, that
provision may be made in the Restricted Stock Agreement in the Committee's
discretion that no such right of repurchase shall exist in the event of a
Termination of Employment without Cause, or following a Change in Control of the
Company or because of the Restricted Stockholder's retirement, death or
disability, or otherwise.
Section 6.7 Escrow. The Secretary of the Company or such other
escrow holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed (or the Secretary shall
establish book entry procedures sufficient to prevent unauthorized transfers of
the Restricted Stock).
Section 6.8 Legend. In order to enforce the restrictions imposed
upon shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all certificated shares of
Restricted Stock that are still subject to restrictions under Restricted Stock
Agreements, or stop transfer instructions with respect to book entry procedures,
which legend, legends or instructions shall make appropriate reference to the
conditions imposed hereby.
ARTICLE VI-A
AWARD OF SECTION 162(m) RESTRICTED STOCK
Section 6.1A Award of Section 162(m) Restricted Stock. (a) The
Committee shall from time to time, in its absolute discretion:
(i) Select from among the key Employees (including
Employees who have previously received other awards under this Plan or any
other stock option plan of the Company) such of them as in its opinion
should be awarded Section 162(m) Restricted Stock; and
(ii) Determine the purchase price, if any, and other
terms and conditions applicable to such Section 162(m) Restricted Stock,
consistent with this Plan.
(b) In all cases, legal consideration meeting the requirements
of Delaware law shall be required for each issuance of Section 162(m) Restricted
Stock.
(c) Upon the selection of a key Employee to be awarded Section
162(m) Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Section 162(m) Restricted Stock and may impose such
conditions on the issuance of such Section 162(m) Restricted Stock as it deems
appropriate.
Section 6.2A Section 162(m) Restricted Agreement. Section 162(m)
Restricted Stock shall be issued only pursuant to a written Section 162(m)
Restricted Stock Agreement, which shall be executed by the selected key Employee
and an authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
Section 6.3A No Right to Continued Employment. Nothing in this Plan
or in any Section 162(m) Restricted Stock Agreement hereunder shall confer on
any Section 162(m) Restricted Stockholder any right to continue in the employ of
the Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Section 162(m) Restricted Stockholder at any time for any
reason whatsoever, with or without good cause.
Section 6.4A Rights as Stockholders. Upon delivery of any shares of
Section 162(m) Restricted Stock that are certificated to the escrow holder
pursuant to Section 6.7A, and upon issuance thereof, if uncertificated, the
Section 162(m) Restricted Stockholder shall have, unless otherwise provided by
the Committee, all the rights of a stockholder with
11
respect to said shares, subject to the restrictions in the Section 162(m)
Restricted Stock Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided, however,
that in the discretion of the Committee, any extraordinary distribution with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 6.5A.
Section 6.5A Restrictions. All shares of Section 162(m) Restricted
Stock issued under this Plan (including any shares received by holders thereof
with respect to shares of Section 162(m) Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization) shall, in the
terms of each individual Section 162(m) Restricted Stock Agreement, be subject
to such restrictions as the Committee shall provide, which restrictions may
include, without limitation, restrictions concerning voting rights and
transferability. The Section 162(m) Restricted Stock Agreement shall provide
that a Section 162(m) Restricted Stockholder's rights in Section 162(m)
Restricted Stock shall not vest unless one or more specified Performance
Criteria established by the Committee shall have been achieved. Section 162(m)
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. Unless provided otherwise by the Committee, if no
consideration (other than services) was paid by the Section 162(m) Restricted
Stockholder upon issuance, a Section 162(m) Restricted Stockholder's rights in
unvested Section 162(m) Restricted Stock shall lapse upon Termination of
Employment for any reason at any time or prior to any date the Committee may
establish.
Section 6.6A Repurchase of Section 162(m) Restricted Stock. If
consideration (other than services) was paid for Section 162(m) Restricted
Stock, the Committee shall provide in the terms of each individual Section
162(m) Restricted Stock Agreement that the Company shall have the right to
repurchase from the Section 162(m) Restricted Stockholder the Section 162(m)
Restricted Stock then subject to restrictions under the Section 162(m)
Restricted Stock Agreement immediately upon a Termination of Employment at a
cash price per share equal to the price paid by the Section 162(m) Restricted
Stockholder for such Section 162(m) Restricted Stock or such other price as may
be specified in the Section 162(m) Restricted Stock Agreement; provided,
however, that provision may be made in the Section 162(m) Restricted Stock
Agreement in the Committee's discretion that no such right of repurchase shall
exist in the event of a Termination of Employment without Cause, or following a
Change in Control of the Company or because of the Section 162(m) Restricted
Stockholder's retirement, death or disability, or otherwise.
Section 6.7A Escrow. The Secretary of the Company or such other
escrow holder as the Committee may appoint shall retain physical custody of each
certificate representing Section 162(m) Restricted Stock until all of the
restrictions imposed under the Section 162(m) Restricted Stock Agreement with
respect to the shares evidenced by such certificate expire or shall have been
removed (or the Secretary shall establish book entry procedures sufficient to
prevent unauthorized transfers of the Section 162(m) Restricted Stock).
Section 6.8A Legend. In order to enforce the restrictions imposed
upon shares of Section 162(m) Restricted Stock hereunder, the Committee shall
cause a legend or legends to be placed on certificates representing all
certificated shares of Section 162(m) Restricted Stock that are still subject to
restrictions under Section 162(m) Restricted Stock Agreements, or stop transfer
instructions with respect to book entry procedures, which legend, legends or
instructions shall make appropriate reference to the conditions imposed hereby.
ARTICLE VII
PERFORMANCE AWARDS, DEFERRED STOCK, STOCK PAYMENTS
Section 7.1 Performance Award. Any key Employee selected by the
Committee may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria determined to be appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular key
Employee.
Section 7.2 Stock Payments. Any key Employee selected by the
Committee may receive Stock Payments in the manner determined from time to time
by the Committee. In particular, any person designated by the Committee as a
participant in the Company's Key Executive Incentive Bonus Plan (the "Bonus
Plan") or under the Company Service Award Program (the "Service Award Program")
in accordance with the terms thereof, and whose bonus or service award
thereunder is comprised wholly or partially in shares of Common Stock, shall be
deemed to have been
12
selected to participate in this Plan, and shall receive such Common Stock
denominated bonus as a Stock Payment in accordance with and under the provisions
of this Section 7.2. The number of shares shall be determined by the Committee
and may be based upon the Fair Market Value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.
Section 7.3 Deferred Stock. Any key Employee selected by the
Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria, in each case on a specified date or dates or over
any period or periods determined by the Committee. Common Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a Grantee of Deferred
Stock shall have no rights as a Company stockholder with respect to such
Deferred Stock until such time as the award has vested and the Common Stock
underlying the award has been issued.
Section 7.4 Performance Award Agreement, Deferred Stock Agreement,
Stock Payment Agreement. Each Performance Award, Deferred Stock Award and/or
Stock Payment shall be evidenced by a written agreement, which shall be executed
by the Grantee and an authorized Officer of the Company and which shall contain
such terms and conditions as the Committee shall determine, consistent with this
Plan.
Section 7.5 Term. The term of a Performance Award Agreement,
Deferred Stock Award and/or Stock Payment shall be set by the Committee in its
discretion.
Section 7.6 Exercise Upon Termination of Employment. A Performance
Award, Deferred Stock Award and/or Stock Payment is exercisable or payable only
while the Grantee is an Employee; provided that the Committee may determine that
the Performance Award, Deferred Stock Award and/or Stock Payment may be
exercised or paid subsequent to Termination of Employment without cause, or
following a Change in Control of the Company, or because of the Grantee's death
or disability.
Section 7.7 Payment. Payment of the amount determined under Section
7.1 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Sections 5.3 and 5.5.
Section 7.8 No Right to Continued Employment. Nothing in this Plan
or in any agreement hereunder shall confer on any Grantee any right to continue
in the employ of the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without good cause.
ARTICLE VII-A
SECTION 162(m) PERFORMANCE AWARDS, SECTION 162(m) DEFERRED STOCK, SECTION 162(m)
STOCK PAYMENTS
Section 7.1A Section 162(m) Performance Awards. Any key Employee
selected by the Committee may be granted one or more Section 162(m) Performance
Awards. The right to a Section 162(m) Performance Award shall not vest unless
one or more specified Performance Criteria established by the Committee shall
have been achieved.
Section 7.2A Section 162(m) Stock Payments. Any key Employee
selected by the Committee may be granted one or more Section 162(m) Stock
Payments. The right to a Section 162(m) Stock Payment shall not vest unless one
or more specified Performance Criteria established by the Committee shall have
been achieved.
Section 7.3A Section 162(m) Deferred Stock. Any key Employee
selected by the Committee may be granted an award of Section 162(m) Deferred
Stock. An award of Section 162(m) Deferred Stock shall not vest unless one or
more specified Performance Criteria established by the Committee shall have been
achieved. Common Stock underlying a Section 162(m) Deferred Stock award will not
be issued until the Section 162(m) Deferred Stock award has vested. Unless
otherwise provided by the Committee, a Grantee of Section 162(m) Deferred Stock
shall have no rights as a
13
Company stockholder with respect to such Section 162(m) Deferred Stock until
such time as the award has vested and the Common Stock underlying the award has
been issued.
Section 7.4A Section 162(m) Performance Award Agreement, Section
162(m) Deferred Stock Agreement, Section 162(m) Stock Payment Agreement. Each
Section 162(m) Performance Award, Section 162(m) Deferred Stock Award and/or
Section 162(m) Stock Payment shall be evidenced by a written agreement, which
shall be executed by the Grantee and an authorized Officer of the Company and
which shall contain such terms and conditions as the Committee shall determine,
consistent with this Plan.
Section 7.5A Term. The term of a Section 162(m) Performance Award
Agreement, Section 162(m) Deferred Stock Award and/or Section 162(m) Stock
Payment shall be set by the Committee in its discretion.
Section 7.6A Exercise Upon Termination of Employment. A Section
162(m) Performance Award, Section 162(m) Deferred Stock Award and/or Section
162(m) Stock Payment is exercisable or payable only while the Grantee is an
Employee; provided that the Committee may determine that the Section 162(m)
Performance Award, Section 162(m) Deferred Stock Award and/or Section 162(m)
Stock Payment may be exercised or paid following a Change in Control of the
Company, or because of the Grantee's death or disability.
Section 7.7A Payment. Payment of the amount determined under Section
7.1A above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII-A
is effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Sections 5.3 and 5.5.
Section 7.8A No Right to Continued Employment. Nothing in this Plan
or in any agreement hereunder shall confer on any Grantee any right to continue
in the employ of the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without good cause.
ARTICLE VIII
ADMINISTRATION
Section 8.1 Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of the Plan in accordance
with its provisions. The Committee shall have the power to interpret the Plan
and the agreements pursuant to which Options, awards of Restricted Stock,
Deferred Stock, Section 162(m) Restricted Stock or Section 162(m) Deferred
Stock, Performance Awards, Stock Payments, Section 162(m) Performance Awards, or
Section 162(m) Stock Payments are granted and awarded and to adopt such rules
for the administration, interpretation and application of the Plan as are
consistent herewith and to interpret, amend or revoke any such rules. Options,
awards of Section 162(m) Restricted Stock, Section 162(m) Deferred Stock,
Section 162(m) Performance Awards and Section 162(m) Stock Payments are intended
to qualify as performance-based compensation under Section 162(m) of the Code,
and the Committee shall grant or award such Options, rights or other awards in a
manner consistent with the rules governing performance-based compensation under
Section 162(m) of the Code. Any such interpretations and rules in regard to
Incentive Stock Options shall be consistent with the basic purpose of the Plan
to grant "incentive stock options" within the meaning of Section 422 of the
Code. In its absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under this Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.
Section 8.2 Majority Rule. The Committee shall act by a majority of
its members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.
Section 8.3 Compensation; Professional Assistance; Good Faith
Action. Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and its Officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be
14
final and binding upon all Optionees, Grantees, Restricted Stockholders, Section
162(m) Restricted Stockholders, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action,
determination, or interpretation made in good faith with respect to the Plan or
the Options or other awards, and all members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation.
ARTICLE IX
OTHER PROVISIONS
Section 9.1 Options and Other Rights Are Not Transferable. No
Options, Performance Awards, Stock Payments, Section 162(m) Performance Awards,
Section 162(m) Stock Payments, Restricted Stock, Section 162(m) Restricted
Stock, Deferred Stock Awards or Section 162(m) Deferred Stock Awards or interest
under this Plan or part thereof shall be liable for the debts, contracts or
engagements of any Optionee, Grantee, Restricted Stockholder or their respective
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this
Section 9.1 shall prevent transfers by will, by the applicable laws of descent
and distribution or by the approval of the Committee as described in Section
5.1(a) of the Plan.
Section 9.2 Amendment, Suspension or Termination of the Plan;
Modification of Options. The Board may at any time terminate the Plan. With the
express written consent of an individual participant, the Board or the Committee
may cancel or reduce or otherwise alter outstanding Options or other awards. The
Board or the Committee may, at any time, or from time to time, amend or suspend
and, if suspended, reinstate, the Plan in whole or in part; provided that any
such amendment shall be contingent on obtaining the approval of the shareholders
of the Company if the Committee determines that such approval is necessary to
comply with any requirement of law or any rule of any stock exchange on which
the Company's equity securities are traded, or in order for Options or other
awards to qualify for an exception from Section 162(m) of the Code (to the
extent they would so qualify but for the absence of shareholder approval).
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of an Option, Restricted Stock, Section 162(m) Restricted
Stock or award, alter or impair any rights or obligations under any such Option,
Restricted Stock, Section 162(m) Restricted Stock or award. No Option,
Restricted Stock, Section 162(m) Restricted Stock or award may be granted during
any period of suspension nor after termination of the Plan, and in no event may
any Option be granted under this Plan after the expiration of ten years from May
23, 2007, the date the Plan, as amended, is approved by the Company's
stockholders under Section 9.3. An Option, Restricted Stock, Section 162(m)
Restricted Stock or award shall be subject in all events to the condition that,
if at any time the Board shall determine, in its discretion, that the listing,
registration or qualification of any of the Company's securities upon any
securities exchange or under any law, regulation or other requirement of any
governmental authority is necessary or desirable, or that any consent or
approval from any governmental authority is necessary or desirable, then the
Board may modify the terms of any Option, Restricted Stock, Section 162(m)
Restricted Stock or other award granted under the Plan, without the consent of
the Optionee, Grantee, Restricted Stockholder or Section 162(m) Restricted
Stockholder in any manner which the Board deems necessary or desirable in order
to improve the Company's ability to obtain such listing, registration,
qualification, consent or approval.
Section 9.3 Approval of Plan by Stockholders. The Plan shall become
effective as of the date of Board approval (the "Effective Date"), subject to
the approval of the Company's stockholders within 12 months after the Effective
Date; provided, however, that notwithstanding anything herein or in any award
agreement to the contrary, all Section 162(m) Performance Awards, Section 162(m)
Stock Payments, Section 162(m) Restricted Stock, and Section 162(m) Deferred
Stock awarded prior to such stockholder approval shall be void if such approval
has not been obtained at the end of said 12-month period.
Section 9.4 Effect of Plan Upon Other Option and Compensation Plans.
The adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company or any Subsidiary (a) to establish
any other forms of incentives or compensation for employees of the Company or
any Subsidiary or (b) to grant or assume options otherwise than under this Plan
in connection with any proper corporate purpose, including, but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
15
Section 9.5 No Obligation to Register. The Company shall not be
deemed, by reason of the granting of any Option or any other award hereunder, to
have any obligation to register the shares of Common Stock subject to such
Option or award under the Securities Act or to maintain in effect any
registration of such shares which may be made at any time under the Securities
Act.
Section 9.6 Tax Withholding. The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Optionee, Grantee, Restricted Stockholder or Section 162(m) Restricted
Stockholder of any sums required by federal, state or local tax law to be
withheld with respect to the issuance, vesting or exercise of any Option,
Restricted Stock, Deferred Stock, Performance Award, Stock Payment, Section
162(m) Restricted Stock, Section 162(m) Deferred Stock, Section 162(m)
Performance Award, or Section 162(m) Stock Payment.
Section 9.7 Loans. The Committee may permit, in its discretion, and
subject to the Company's approval, the extension by the Company of one or more
loans to key Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Payment, Section 162(m) Performance Award, or Section
162(m) Stock Payment granted under this Plan, or the issuance of Restricted
Stock, Deferred Stock, Section 162(m) Restricted Stock, or Section 162(m)
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee, subject to the Company's approval.
Section 9.8 Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, any Option, Performance Award, Stock Payment, Section 162(m) Performance
Award, or Section 162(m) Stock Payment granted, or Restricted Stock, Deferred
Stock, Section 162(m) Restricted Stock, or Section 162(m) Deferred Stock
awarded, to a key Employee who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application of
such exemptive rule, and this Plan shall be deemed amended to the extent
necessary to conform to such limitations. Furthermore, notwithstanding any other
provision of this Plan, any Option, right or award intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.
Section 9.9 Compliance with Laws. This Plan, the granting and
vesting of Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Payments, Section 162(m) Restricted Stock awards, Section 162(m)
Deferred Stock awards, Section 162(m) Performance Awards, or Section 162(m)
Stock Payments under this Plan and the issuance and delivery of shares of Common
Stock and the payment of money under this Plan or under Options, Performance
Awards, Stock Payments, Section 162(m) Performance Awards, or Section 162(m)
Stock Payments granted or Restricted Stock, Deferred Stock, Section 162(m)
Restricted Stock, or Section 162(m) Deferred Stock awarded hereunder are subject
to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities laws and federal
requirements) and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. Any securities delivered under this Plan
shall be subject to such restrictions, and the person acquiring such securities
shall, if requested by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. To the extent permitted by
applicable law, the Plan, Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Payments, Section 162(m) Restricted Stock
awards, Section 162(m) Deferred Stock awards, Section 162(m) Performance Awards,
or Section 162(m) Stock Payments granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
Section 9.10 Noncompetition Provisions. The Committee, as a
condition of issuing any award under the Plan, may include in any agreement
evidencing such award such noncompetition and/or nonsolicitation provisions as
it may deem appropriate, in its sole discretion, and any award containing such
provisions shall not be effective until and unless the grantee thereof
acknowledges by written consent his or her obligation to be bound thereby.
Section 9.11 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.
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Section 9.12 Governing Law. The laws of the State of Delaware shall
govern the interpretation, validity, administration, enforcement and performance
of the terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.
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