Exhibit 10
HEALTHSOUTH CORPORATION
2005 EQUITY INCENTIVE PLAN
1. PURPOSE OF THE PLAN. The purpose of the 2005 Equity Incentive Plan
(the "Plan") of HealthSouth Corporation, a Delaware corporation (the
"Corporation"), is to provide incentive for future endeavor and to advance the
interests of the Corporation and its stockholders by encouraging ownership of
the Common Stock, par value $.01 per share (the "Common Stock"), of the
Corporation by its Directors, executives and other key employees, upon whose
judgment, interest and continuing special efforts the Corporation is largely
dependent for the successful conduct of its operations, and to enable the
Corporation to compete effectively with other enterprises for the services of
such new Directors, executives and employees as may be needed for the continued
improvement of the Corporation's business, through the grant of (a) options to
purchase shares of Common Stock (each, an "Option"), (b) shares of Common Stock
that are subject to restrictions set forth in the Plan or any individual award
agreement ("Restricted Stock" or a "Restricted Stock Award"), (c) Stock
Appreciation Rights (as defined below), (d) the right to receive shares of
Common Stock at the end of a specified deferral period ("Deferred Stock" or a
Deferred Stock Award" and (e) Other Stock-Based Awards (as defined below) (such
Stock Options, Restricted Stock, Stock Appreciation Rights and Other
Stock-Based Awards, collectively, the "Awards"). All Options issued under the
Plan shall constitute non-qualified stock options ("NQSOs").
2. PARTICIPANTS. Awards may be granted under the Plan to Directors of
the Corporation and to such executives and key employees of the Corporation and
its Subsidiaries (as defined below) as shall be determined by the Board of
Directors as set forth in Section 5 of the Plan (each, a "Grantee"); provided,
however, that no Awards may be granted to any person if such grant would cause
the Plan to cease to be an "employee benefit plan" as defined in Rule 405 of
Regulation C promulgated under the Securities Act of 1933. For purposes of the
Plan, a Subsidiary shall mean any corporation in an unbroken chain of
corporations beginning with the Corporation if, at the time of granting of an
Award, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
3. TERM OF THE PLAN. The Plan shall become effective upon approval of
the Board of Directors of the Corporation (the "Effective Date"). The Plan
shall terminate on the earliest of (a) the third anniversary of the Effective
Date or (b) such earlier time as the Board of Directors of the Corporation may
determine. Any Awards outstanding under the Plan at the time of its termination
shall remain in effect in accordance with its terms and conditions and those of
the Plan. No Awards shall be granted under the Plan after the termination date
of the Plan.
4. STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 16, the aggregate
number of shares of Common Stock for which Awards may be granted under the Plan
shall not exceed 22,000,000 shares, and the maximum number of shares of Common
Stock for which any individual may be granted Awards under the Plan during any
calendar year is 1,000,000 shares of Common Stock. If, on or prior to the
termination of the Plan as provided in Section 3, any Option granted under the
Plan shall have expired or terminated for any reason without having been
exercised in full or any shares of Restricted Stock shall have been forfeited,
or any other Awards for which shares of Common Stock are deliverable are so
forfeited, such unpurchased or forfeited shares covered thereby shall again
become available for the grant of Awards under the Plan. In addition, shares
covered by Options surrendered in connection with the exercise of other Options
pursuant to Section 9(e) shall again become available for the grant of Options
or Restricted Stock under the Plan.
(b) The shares to be delivered pursuant to an Award shall be
made available, at the discretion of the Board of Directors, either from
authorized but previously unissued shares as permitted by the Certificate of
Incorporation of the Corporation or from shares re-acquired by the Corporation,
including shares of Common Stock purchased in the open market, and shares held
in the treasury of the Corporation.
5. ADMINISTRATION OF THE PLAN.
(a) With respect to the participation of executives and key
employees of the Corporation and its Subsidiaries who are not also Directors of
the Corporation, the Plan shall be administered by the Board of Directors,
except to the extent that such authority is delegated by the Board of Directors
to the Compensation Committee of the Board of Directors of the Corporation
(hereinafter called the "Committee"). To the extent so delegated, the acts of a
majority of the Committee, at any meeting thereof at which a quorum is present,
or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee. Except to the extent so
delegated to the Committee, the Board of Directors shall determine the Grantees
who shall be granted Awards and the number of shares of Common Stock to be
subject to each such Award and all other applicable terms of each such Award.
Such applicable terms and conditions shall be evidenced in an award agreement
entered into by and between the Grantee and the Corporation (an "Award
Agreement").
(b) The interpretation and construction of any provision of
the Plan or of any Award granted under it by the Committee shall be final,
conclusive and binding upon all parties, including the Corporation, its
stockholders and Directors, and the executives and employees of the Corporation
and its Subsidiaries. No member of the Board of Directors or the Committee
shall be liable to the Corporation, any stockholder, any Grantee or any
employee of the Corporation or its Subsidiaries for any action or determination
made in good faith with respect to the Plan or any Award granted under it. No
member of the Board of Directors may vote on any Award to be granted to him or
her.
(c) The expenses of administering the Plan shall be borne by
the Corporation.
6. GRANT OF OPTIONS.
(a) Options may be granted under the Plan by the Board of
Directors in accordance with the provisions of Section 5 at any time prior to
the termination of the Plan. In making any determination as to the Grantee to
whom Options shall be granted and as to the number of shares to be covered by
such Options, the Board of Directors shall take into account the duties of the
respective Grantees, their present and potential contribution to the success of
the Corporation, and such other factors as the Board of Directors shall deem
relevant in connection with the accomplishment of the purposes of the Plan.
Notwithstanding the foregoing, it is the intention of the Corporation that all
Options granted hereunder shall be intended to comply with the provisions and
requirement of Section 409A of the Internal Revenue Code of 1986, as amended
(the "Code").
(b) Each Option granted under the Plan shall be granted
pursuant to and subject to the terms and conditions of a stock option agreement
to be entered into between the Corporation and the Grantee at the time of such
grant. Each such stock option agreement shall be in a form from time-to-time
adopted for use under the Plan by the Committee (such form being hereinafter
called a "Stock Option Agreement"). Any such Stock Option Agreement shall
incorporate by reference all of the terms and provisions of the Plan as in
effect at the time of grant and may contain such other terms and provisions as
shall be approved and adopted by the Board of Directors.
7. OPTION PRICE.
(a) The purchase price of the shares of Common Stock covered
by each Option granted under the Plan shall be at least 100% of the fair market
value (but in no event less than the par value) of such shares at the time the
Option is granted, or such higher purchase price as shall be determined by the
Committee.
(b) If the Common Stock is not listed upon a national
securities exchange or exchanges, such fair market value shall be as determined
by the Board of Directors of the Corporation (which determination shall be
conclusive and binding for all purposes) or, if applicable, shall be deemed to
be the last reported sale price for the Common Stock as quoted by brokers and
dealers trading in the Common Stock in the over-the-counter market (or if the
Common Stock shall be quoted by the National Association of Securities Dealers
Automated Quotation system, then such NASDAQ quote) immediately prior to the
commencement of the meeting of the Committee at which the Option is granted. If
the Common Stock is listed upon a national securities exchange or exchanges,
such fair market value shall be deemed to be the last reported sale price at
which the shares of Common Stock were traded on such securities exchange or
exchanges immediately prior to the commencement of the meeting of the Committee
at which the Option is granted, or if no sale of the Common Stock was made on
any national securities exchange on such date, then the closing price per share
of the Common Stock on such securities exchange or exchanges on the next
preceding day on which there was a sale of the Common Stock. Notwithstanding
the foregoing, the determination of fair market value in all cases shall be in
accordance with the requirements set forth under Section 409A of the Code. The
determination of fair market value pursuant to this subsection (b) is referred
to herein as the Fair Market Value.
(c) The exercise price of any outstanding Options shall not
be reduced during the term of such Options except by reason of an adjustment
pursuant to Section 16 hereof (and any such reduction shall be in accordance
with Section 409A of the Code), nor shall the Committee or the Board of
Directors cancel outstanding Options and reissue new Options at a lower
exercise price in substitution for the canceled Options.
8. TERM OF OPTIONS. The expiration date of an Option granted under the
Plan shall be as determined by the Board of Directors at the time of grant,
provided that each such Option shall expire not more than ten years after the
date such Option was granted.
9. EXERCISE OF OPTIONS
(a) Each Option shall become exercisable in whole or in part
or in installments at such time or times as the Committee may prescribe at the
time the Option is granted and specify in the Stock Option Agreement. No Option
shall be exercisable after the expiration of ten years from the date on which
it was granted and no Option may be exercised, regardless of vesting, unless
and until the Corporation has an effective Registration Statement on Form S-8
(or such other applicable form) on file with the Securities and Exchange
Commission (the "SEC") to register the sale of its common stock for issuance of
shares upon the exercise of the Option.
(b) Notwithstanding any contrary provision contained herein,
unless otherwise expressly provided in the Stock Option Agreement, any Option
granted hereunder shall become immediately vested in full upon the occurrence
of a Change in Control of the Corporation. For purposes of this Plan, "Change
in Control" shall mean
(i) the acquisition (other than from the Corporation) by any
person, entity or "group" (within the meaning of Sections 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, but excluding, for
this purpose, the Corporation or its Subsidiaries, or any employee
benefit plan of the Corporation or its Subsidiaries which acquires
beneficial ownership of voting securities of the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 25% or more of either
the then-outstanding shares of Common Stock or the combined voting
power of the Corporation's then-outstanding voting securities entitled
to vote generally in the election of Directors; or
(ii) individuals who, as of November 17, 2005, constitute the
Board of Directors of the Corporation (as of such date, the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board of Directors; provided, however, that any person becoming a
Director subsequent to such date whose election, or nomination for
election, was approved by a vote of at least a majority of the
Directors then constituting the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of Directors of the Corporation) shall be,
for purposes of this Section 9(b)(ii), considered as though such
person were a member of the Incumbent Board; or
(iii) consummation of a reorganization, merger, consolidation
or share exchange, in each case with respect to which persons who were
the stockholders of the Corporation immediately prior to such
reorganization, merger, consolidation or share exchange do not,
immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged, consolidated or other surviving entity's
then-outstanding voting securities, or a liquidation or dissolution of
the Corporation or the sale of all or substantially all of the assets
of the Corporation.
(c) Subject to Sections 9(a) and 17(a), Options may be
exercised by giving written notice to the Corporation of intention to exercise,
specifying the number of shares to be purchased pursuant to such exercise in
accordance with the procedures set forth in the Stock Option Agreement. All
shares purchased upon exercise of any Option shall be paid for in full at the
time of purchase in accordance with the procedures set forth in the Stock
Option Agreement. Except as provided in Sections 9(d) and 9(e) hereof, such
payment shall be made in cash or through delivery of shares of Common Stock or
a combination of cash and Common Stock as provided in the Stock Option
Agreement. Any shares so delivered shall be valued at their fair market value
determined as of the date of exercise of the Option under the method set forth
in Section 7(b) hereof.
(d) Payment for shares purchased upon exercise of any such
Option may be made by delivery to the Corporation of a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Corporation an amount of sale sufficient to pay the exercise
price. Additionally, the Corporation will accept, in payment for shares
purchased upon exercise of any such Option, proceeds of a margin loan obtained
by the exercising Grantee from a broker, provided that the exercising Grantee
has, at the same time as delivery to the Corporation of a properly executed
exercise notice, delivered to the Corporation irrevocable instructions to the
Corporation to deliver share certificates directly to such broker upon payment
for such shares.
(e) Subject to approval of the Board of Directors, payment
for shares purchased upon exercise of any Option granted hereunder may be made
by surrender of outstanding Options issued under this Plan or any other stock
option plan of the Corporation having a Spread (as defined below) equal to the
exercise price of the Options sought to be exercised. For purposes of this
Section 9(e), the "Spread" with respect to any unexercised Option shall be
equal to (i) the average price per share of Common Stock on the date of
exercise, as determined in accordance with the method set forth in Section 7(b)
hereof, less (ii) the exercise price of the surrender of the Option. All
Options so surrendered shall again become available for the grant of Options or
Restricted Stock under the Plan. Such surrender shall be evidenced in a form
satisfactory to the Secretary of the Corporation.
10. NONTRANSFERABILITY OF OPTIONS. Options granted under the Plan
shall be assignable or transferable only by will or pursuant to the laws of
descent and distribution and shall be exercisable during the Grantee's lifetime
only by such Grantee.
11. STOCKHOLDER RIGHTS OF OPTIONHOLDER. No holder of any Option shall
have any rights to dividends or other rights of a stockholder with respect to
shares subject to an Option prior to the purchase of such shares upon exercise
of the Option.
12. TERMINATION OF OPTION.
(a) Except as set forth in an individual agreement with any
Grantee, upon termination of employment or service with the Corporation, all
unvested Options held by such Grantee shall immediately terminate and all
vested options shall remain exercisable until the earlier of (i) three months
after the date of termination of employment or service or (ii) the expiration
of the original term of the Option, except as follows.
(i) Death. If a Grantee's employment or service with the
Corporation is terminated by reason of death or if the Grantee dies
during the three-month post-termination exercise period described in
the preceding sentence, then all Options held by the Grantee shall
remain exercisable until the earlier of one year after the date of
death or the expiration of the original term of the Option.
(ii) Cause. If a Grantee's employment or service with the
Corporation is terminated for cause (as determined by the Committee in
its sole discretion), then all Options held by such Grantee, whether
vested or unvested, shall immediately terminate.
(iii) Retirement. If a Grantee retires from employment with
the Company and at the time of such retirement has attained the age of
59 1/2 and completed at least five consecutive years of service with
the Corporation, then all Options held by such Grantee, whether vested
or unvested, shall become immediately vested and exercisable and shall
remain exercisable until the earlier of the third anniversary of such
Grantee's date of termination of employment or the expiration of the
term of the Option.
(b) Notwithstanding the foregoing, the Board of Directors
may, at any time prior to any termination of such employment or service,
determine in its sole discretion that the exercise of any Option after
termination of such employment or other relationship with the Corporation shall
be subject to satisfaction of the conditions precedent that the Grantee refrain
from engaging, directly or indirectly, in any activity which is competitive
with any activity of the Corporation or any subsidiary thereof and from
otherwise acting, either prior to or after termination of such employment or
other relationship, in any manner inimical or in any way contrary to the best
interests of the Corporation and that the Grantee furnish to the Corporation
such information with respect to the satisfaction of the foregoing condition
precedent as the Board of Directors shall reasonably request.
(c) Nothing in the Plan or in the Stock Option Agreement
shall confer upon any Grantee the right to continue in the employ of the
Corporation or any of its Subsidiaries or in any other relationship thereto or
interfere in any way with the right of the Corporation to terminate such
employment or other relationship at any time.
(d) A holder of an Option under the Plan may make written
designation of a beneficiary on forms prescribed by and filed with the
Secretary of the Corporation. Such beneficiary, or if no such designation of
any beneficiary has been made, the legal representative of such Grantee or such
other person entitled thereto as determined by a court of competent
jurisdiction, may exercise, in accordance with and subject to the provisions of
this Section 12, any unterminated and unexpired Option granted to such Grantee
to the same extent that the Grantee himself or herself could have exercised
such Option were he alive or able; provided, however, that no Option granted
under the Plan shall be exercisable for more shares than the Grantee could have
purchased thereunder on the date his or her employment by, or other
relationship with, the Corporation and its Subsidiaries was terminated.
13. GRANT OF RESTRICTED STOCK OR DEFERRED STOCK.
(a) The Board of Directors may grant Restricted Stock Awards
and Deferred Stock Awards, subject to such restrictions, terms and conditions,
as the Committee shall determine in its sole discretion and as shall be
evidenced by the applicable award agreement (a "Restricted Stock Agreement" or
"Deferred Stock Agreement"). The vesting of a Restricted Stock Award or a
deferred Stock Award granted under the Plan may be conditioned upon the
completion of a specified period of employment or service with the Corporation
or any of its Subsidiaries, upon the attainment of specified performance goals
as determined by the Committee in its sole discretion, or a combination
thereof, and shall be set forth in the applicable Restricted Stock Agreement or
Deferred Stock Agreement.
(b) The Board of Directors may, upon such terms and
conditions as the Board of Directors determines, provide that a certificate or
certificates representing the shares underlying a Restricted Stock Award shall
be registered in the Grantee's name and bear an appropriate legend specifying
that such shares are not transferable and are subject to the provisions of the
Plan and the restrictions, terms and conditions set forth in the applicable
Restricted Stock Agreement, or that such certificate or certificates shall be
held in escrow by the Corporation on behalf of the Grantee until such shares
become vested or are forfeited. Except as provided in the applicable Restricted
Stock Agreement or Deferred Stock Agreement, no shares of Stock underlying a
Restricted Stock Award or a Deferred Stock Award may be assigned, transferred,
or otherwise encumbered or disposed of by the Grantee until such shares of
Restricted Stock or Deferred Stock become vested.
(c) If and to the extent that the applicable Restricted Stock
Agreement may so provide, a Grantee shall have the right to vote and receive
dividends on Restricted Stock granted under the Plan. Unless otherwise provided
in the applicable Restricted Stock Agreement, any Common Stock received as a
dividend on or in connection with a stock split of the shares of Common Stock
underlying a Restricted Stock Award shall be subject to the same restrictions
as the shares of Common Stock underlying such Restricted Stock Award.
(d) With respect to a Deferred Stock Award, the Board of
Directors shall determine the rights, if any, that a Grantee shall hold with
respect to Deferred Stock. Upon vesting of any Deferred Stock Award, stock
certificates in respect of such shares of Deferred Stock shall be delivered to
the Grantee, or his or her legal representative, in a number equal to the
number of shares of Common Stock covered by the Deferred Stock Award.
(e) Upon termination of employment with or service to the
Corporation or any of its Subsidiaries (including by reason of such subsidiary
ceasing to be a subsidiary of the Corporation), during the applicable
restriction period, Restricted Stock and Deferred Stock shall be forfeited;
provided, that the Board of Directors may provide, by rule or regulation or in
any Restricted Stock Agreement or Deferred Stock Agreement, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Restricted Stock or Deferred Stock will be waived in whole or in part in the
event of terminations resulting from specified causes, and the Board or the
Board of Directors may in other cases waive in whole or in part the forfeiture
of Restricted Stock or Deferred Stock.
(f) Unless otherwise determined by the Board of Directors or
set forth in an applicable Restricted Stock Agreement or Deferred Stock
Agreement, upon a Change in Control of the Corporation, all Restricted Stock
Awards and Deferred Stock Awards shall become immediately vested and all
restrictions with respect thereto shall lapse, other than restrictions on
transfer imposed under the federal securities laws.
14. STOCK APPRECIATION RIGHTS.
(a) A stock appreciation right means the right pursuant to an
Award granted under this Section 14 to receive an amount equal to the excess,
if any, of (i) the aggregate Fair Market Value, as of the date of such Stock
Appreciation Right or portion thereof is surrendered, of the shares of Common
Stock covered by such right or such portion thereof, over (ii) the aggregate
exercise price of such right or portion thereof (a "Stock Appreciation Right").
Stock Appreciation Rights may be granted either alone ("Free Standing Stock
Appreciation Rights") or in conjunction with all or part of any Option granted
under the Plan ("Related Stock Appreciations Rights"). Related Stock
Appreciation Rights may be granted either at or after the time of the grant of
such Option. The Board of Directors shall determine the Grantee to whom, and
the time or times at which, grants of Stock Appreciation Rights shall be made;
the number of shares of Common Stock to be awarded, the price per share, and
all other conditions of Stock Appreciation Rights. Notwithstanding the
foregoing, no Related Stock Appreciation Right may be granted for more shares
than are subject to the Option to which it relates and any Stock Appreciation
Right must be granted with an exercise price not less than the Fair Market
Value of Common Stock on the date of grant. The provisions of Stock
Appreciation Rights need not be the same with respect to each Grantee. Stock
Appreciation Rights granted under the Plan shall be subject to the following
terms and conditions set forth in this Section 14 and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan,
as the Board of Directors shall deem desirable, as set forth in the applicable
Award Agreement.
(b) The Grantee of a Stock Appreciation Right shall not have
any rights with respect to such Award, unless and until such recipient has
executed an Award Agreement and delivered a fully executed copy thereof to the
Corporation, within a period of sixty days (or such other period as the Board
of Directors may specify) after the award date. Grantees who are granted Stock
Appreciation Rights shall have no rights as stockholders of the Corporation
with respect to the grant or exercise of such rights.
(c) Free Standing Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Board of Directors at or after grant; provided,
however, that no Free Standing Stock Appreciation Right shall be exercisable
during the first six months of its term, except that this additional limitation
shall not apply in the event of a Participant's death or disability (as defined
in Section 409A(a)(2)(C) of the Code) prior to the expiration of such six-month
period.
(d) Related Stock Appreciation Rights shall be exercisable
only at such time or times and to the extent that the Options to which they
relate shall be exercisable in accordance with the provisions of Section 7
above and this Section 14 of the Plan.
(e) Upon the exercise of a Free Standing Stock Appreciation
Right, the Grantee shall be entitled to receive up to, but not more than, that
number of shares of Common Stock equal in value to the excess of the Fair
Market Value as of the date of exercise over the price per share specified in
the Free Standing Stock Appreciation Right (which price shall be no less than
100% of the Fair Market Value on the date of grant) multiplied by the number of
shares of Common Stock in respect of which the Free Standing Stock Appreciation
Right is being exercised, with the Committee having the right to determine the
form of payment.
(f) A Related Stock Appreciation Right may be exercised by a
Grantee by surrendering the applicable portion of the related Option. Upon such
exercise and surrender, the Grantee shall be entitled to receive up to, but not
more than, that number of shares of Common Stock equal in value to the excess
of the Fair Market Value as of the date of exercise over the Exercise Price
specified in the related Option (which price shall be no less than 100% of the
Fair Market Value on the date of grant) multiplied by the number of shares of
Common Stock in respect of which the Related Stock Appreciation Right is being
exercised, with the Committee having the right to determine the form of
payment. Options which have been so surrendered, in whole or in part, shall no
longer be exercisable to the extent the Related Stock Appreciation Rights have
been so exercised.
(g) Notwithstanding the foregoing, the Board of Directors may
determine to settle the exercise of a Stock Appreciation Right in cash (or in
any combination of shares Common Stock and cash) to the extent that such
settlement does not violate Section 409A of the Code.
(h) Unless otherwise determined by the Board of Directors or
set forth in an applicable Award Agreement, upon a Change in Control of the
Corporation, all Stock Appreciation Rights shall become immediately vested and
exercisable.
(i) Stock Appreciation Rights shall be transferable only when
and to the extent that an Option would be transferable under Section 10 of the
Plan.
(j) Except as otherwise set forth in an Award Agreement with
a Grantee, upon termination of employment or service, any outstanding Stock
Appreciation Rights shall be governed by the same principles relating to
Options as set forth in Section 12 hereof.
15. OTHER STOCK-BASED AWARDS.
(a) The Board of Directors is authorized to grant Awards to
Grantee in the form of Other Stock-Based Awards, as deemed by the Committee to
be consistent with the purposes of the Plan and as evidenced by an Award
Agreement. Other Stock-Based Awards shall include a right or other interest
granted to a Grantee under the Plan that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related
to, shares of Common Stock, including but not limited to restricted stock
units, dividend equivalents or performance units, each of which may be subject
to the attainment of performance goals or a period of continued employment or
other terms or conditions as determined by the Board of Directors. The Board of
Directors shall determine the terms and conditions of such Other Stock-Based
Awards, consistent with the terms of the Plan, at the date of grant or
thereafter, including any performance goals and performance periods. Common
Stock or other securities or property delivered pursuant to an Award in the
nature of a purchase right granted under this Section 15 shall be purchased for
such consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, shares of Common Stock, other Awards, notes or
other property, as the Board of Directors shall determine, subject to any
required corporate action.
(b) To the extent that the Plan is subject to Section 162(m)
of the Code, no payment shall be made to a "covered employee" (within the
meaning of Section 162(m) of the Code) prior to the certification by the
Committee that all requisite performance goals have been attained. The
Committee may establish such other rules applicable to the Other Stock-Based
Awards, provided, however, that in the event that the Plan is subject to
Section 162(m) of the Code, such rules shall be in compliance with Section
162(m) of the Code.
(c) Unless otherwise determined by the Board of Directors,
any Other Stock-Based Award shall become immediately vested upon a Change in
Control.
16. ADJUSTMENT OF AND CHANGES IN CAPITALIZATION.
(a) In the event that the outstanding shares of Common Stock
shall be changed in number or class by reason of split-ups, combinations,
mergers, consolidations or recapitalizations, or by reason of stock dividends,
the number or class of shares which thereafter may be issued pursuant to Awards
granted under the Plan, both in the aggregate and as to any individual, and the
number and class of shares then subject to Awards theretofore granted and the
price per share payable upon exercise of such Option shall be adjusted so as to
reflect such change, all as determined by the Board of Directors. In the event
there shall be any other change in the number or kind of the outstanding shares
of Common Stock, or of any stock or other securities or property into which
such Common Stock shall have been changed, or for which it shall have been
exchanged, then if the Board of Directors shall, in its sole discretion,
determine that such change equitably requires an adjustment in any outstanding
Award theretofore granted or which may be granted under the Plan, such
adjustment shall be made in accordance with such determination.
(b) Notice of any adjustment shall be given by the
Corporation to each Grantee with an Award which shall have been so adjusted and
such adjustment (whether or not such notice is given) shall be effective and
binding for all purposes of the Plan.
(c) Fractional shares resulting from any adjustment in
Options or Restricted Stock pursuant to this Section 16 may be settled in cash
or otherwise as the Board of Directors may determine.
17. SECURITIES ACTS REQUIREMENTS.
(a) THE CORPORATION HAS NOT FILED FINANCIAL STATEMENTS FOR
ANY PERIODS ENDED AFTER DECEMBER 31, 2003. THE CORPORATION DOES NOT EXPECT TO
BECOME CURRENT WITH RESPECT TO ALL OF ITS PREVIOUSLY UNFILED FINANCIAL
STATEMENTS UNTIL AT LEAST THE FIRST QUARTER OF 2006. BECAUSE THE ISSUANCE OF
SHARES OF COMMON STOCK MUST BE REGISTERED UNDER THE SECURITIES ACT OF 1933,
UNLESS AN EXEMPTION IS AVAILABLE, NO OPTION UNDER THE PLAN MAY BE EXERCISED
UNTIL THE CORPORATION COMPLIES WITH ITS REPORTING OBLIGATIONS UNDER THE FEDERAL
SECURITIES LAWS, AND NO SHARES OF COMMON STOCK MAY BE OTHERWISE ISSUABLE
PURSUANT TO OTHER STOCK-BASED AWARDS.
(b) In addition to the requirements set forth in Section
17(a), (i) no Option granted pursuant to the Plan shall be exercisable in whole
or in part, and the Corporation shall not be obligated to sell any shares of
Common Stock subject to any such Option, if such exercise and sale or issuance
would, in the opinion of counsel for the Corporation, violate the Securities
Act of 1933 or other Federal or state statutes having similar requirements, as
they may be in effect at that time; and (ii) each Option shall be subject to
the further requirement that, at any time that the Board of Directors or the
Committee, as the case may be, shall determine, in their respective discretion,
that the listing, registration or qualification of the shares of Common Stock
subject to such Option under any securities exchange requirements or under any
applicable law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the
granting of such Option or the issuance of shares thereunder, such Option may
not be exercised or issued, as the case may be, in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors or the Committee, as the case may be.
(c) As a condition to the issuance of any Restricted Stock,
Stock Appreciation Right that may be settled in shares of Common Stock or Other
Stock-Based Award under the Plan, the Board of Directors or the Committee, as
the case may be, may require the Grantee to furnish a written representation
that he or she is acquiring such Restricted Stock or Common Stock for
investment and not with a view to distribution of the shares of Restricted
Stock or Common Stock to the public and a written agreement restricting the
transferability of the shares of Restricted Stock or Common Stock, and may
affix a restrictive legend or legends on the face of the certificate
representing such shares of Restricted Stock or Common Stock. Such
representation, agreement and/or legend shall be required only in cases where
in the opinion of the Board of Directors or the Committee, as the case may be,
and counsel for the Corporation, it is necessary to enable the Corporation to
comply with the provisions of the Securities Act of 1933 or other Federal or
state statutes having similar requirements, and any stockholder who gives such
representation and agreement shall be released from it and the legend removed
at such time as the shares of Restricted Stock or Common Stock to which they
applied are registered or qualified pursuant to the Securities Act of 1933 or
other Federal or state statutes having similar requirements, or at such other
time as, in the opinion of the Board of Directors or the Committee, as the case
may be, and counsel for the Corporation, the representation and agreement and
legend cease to be necessary to enable the Corporation to comply with the
provisions of the Securities Act of 1933 or other Federal or state statutes
having similar requirements.
18. AMENDMENT OF THE PLAN. The Board of Directors may at any time and
from time to time alter, amend, suspend, or terminate the Plan in whole or in
part. Notwithstanding the foregoing, no amendment to or termination of the Plan
shall affect adversely any of the rights of any Grantee, without such Grantee's
consent, under any Option or Restricted Stock theretofore granted under the
Plan. All changes described in this paragraph are at the sole discretion of the
Board of Directors and/or the Committee, may be made at any time, and may have
a retroactive effective date.
19. CHANGES IN LAW. Subject to the provisions of Section 18, the Board
of Directors shall have the power to amend the Plan and any outstanding Awards
granted thereunder in such respects as the Board of Directors shall, in its
sole discretion, deem advisable in order to incorporate in the Plan or any such
Awards any new provision or change designed to comply with or take advantage of
requirements or provisions of the Code or any other statute, or Rules or
Regulations of the Internal Revenue Service or any other Federal or state
governmental agency enacted or promulgated after the adoption of the Plan.
20. LEGAL MATTERS.
(a) Every right of action by or on behalf of the Corporation
or by any stockholder against any past, present or future member of the Board
of Directors, officer or employee of the Corporation arising out of or in
connection with this Plan shall, irrespective of the place where such action
may be brought and irrespective of the place of residence of any such Grantee,
cease and be barred by the expiration of three years from whichever is the
later of (a) the date of the act or omission in respect of which such right of
action arises, or (b) the first date upon which there has been made generally
available to stockholders an annual report of the Corporation and a proxy
statement for the Annual Meeting of Stockholders following the issuance of such
annual report, which annual report and proxy statement alone or together set
forth, for the related period, the aggregate number of shares for which Awards
were granted; and any and all right of action by any employee or executive of
the Corporation (past, present or future) against the Corporation arising out
of or in connection with this Plan shall, irrespective of the place where such
action may be brought, cease and be barred by the expiration of three years
from the date of the act or omission in respect of which such right of action
arises.
(b) This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the law of Delaware, applied without
giving effect to any conflicts-of-law principles, and construed accordingly.