Exhibit 99.1
FRP HOLDINGS, INC.
Equity Incentive Plan
---------------------
1. Purpose; Eligibility.
--------------------
1.1 General Purpose.
---------------
The name of this plan is the FRP Holdings, Inc. 2016 Equity Incentive
Plan (the "Plan"). The purposes of the Plan are to (a) enable FRP
Holdings, Inc., a Florida corporation (the "Company"), and any
Affiliate to attract and retain the types of Employees and Directors
who will contribute to the Company's long range success; (b) provide
incentives that align the interests of Employees, Consultants and
Directors with those of the shareholders of the Company; and (c)
promote the success of the Company's business.
1.2 Eligible Award Recipients.
-------------------------
The persons eligible to receive Awards are the Employees and
Directors of the Company and its Affiliates, and such other
individuals designated by the Compensation Committee (the "Committee")
who are reasonably expected to become Employees, Consultants and
Directors after the receipt of Awards.
1.3 Available Awards.
----------------
Awards that may be granted under the Plan include (a) Incentive Stock
Options, (b) Non-qualified Stock Options, (c) Stock Appreciation
Rights, (d) Restricted Stock Awards, and (e) Performance Share Awards.
2. Definitions.
-----------
"Affiliate" means, at the time of determination, any "parent" of
"subsidiary of the Company as such terms are defined in Rule 405 of the
Securities Act. The Board shall have the authority to determine the time
or times at which "parent" or "subsidiary" status is determined within the
foregoing definition.
"Applicable Laws" means the requirements related to or implicated by the
administration of the Plan under applicable state corporate law, United
States federal and state securities laws, the Code, any stock exchange or
quotation system on which the shares of Common Stock are listed or quoted,
and the applicable laws of any foreign country or jurisdiction where Awards
are granted under the Plan.
"Award" means any right granted under the Plan, including an Incentive
Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a
Restricted Stock Award, or a Performance Share Award.
"Award Agreement" means a written agreement, contract, certificate or
other instrument or document evidencing the terms and conditions of an
individual Award granted under the Plan which may, in the discretion of
the Company, be transmitted electronically to any Participant. Each Award
Agreement shall be subject to the terms and conditions of the Plan.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person"
(as that term is used in Section 13(d)(3) of the Exchange Act), such
"person" shall be deemed to have beneficial ownership of all securities
that such "person" has the right to acquire by conversion or exercise of
other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms "Beneficially Owns"
and "Beneficially Owned" have a corresponding meaning.
"The Board" means the Board of Directors of the Company, as constituted at
any time.
"Cause" means:
With respect to any Employee or Consultant:
(a) If the Employee or Consultant is a party to an employment or
service agreement with the Company or its Affiliates and such
agreement provides for a definition of Cause, the definition
contained therein; or
(b) If no such agreement exists, or if such agreement does not define
Cause: (i) the commission of, or plea of guilty or no contest to,
a felony or a crime involving moral turpitude or the commission of
any other act involving willful malfeasance or material fiduciary
breach with respect to the Company or an Affiliate; (ii) conduct
that results in or is reasonably likely to result in harm to the
reputation or business of the Company or any of its Affiliates;
(iii) gross negligence or willful misconduct with respect to the
Company or an Affiliate; or (iv) material violation of state or
federal securities laws.
With respect to any Director, a determination by a majority of the
disinterested Board members that the Director has engaged in any of
the following:
(a) malfeasance in the office;
(b) gross misconduct or neglect;
(c) false or fraudulent misrepresentation inducing the Director's
appointment;
(d) willful conversion of corporate funds; or
(e) repeated failure to participate in Board meetings on a regular
basis despite having received proper notice of the meetings in
advance.
The Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to whether a Participant has
been discharged for Cause.
"Change in Control"
(a) The direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one
or a series of related transactions, of all or substantially all
of the properties or assets of the Company and its subsidiaries,
taken as a whole, to any Person that is not a subsidiary of the
Company;
(b) The Incumbent Directors cease for any reason to constitute at
least a majority of the Board;
(c) The date which is 10 business days prior to the consummation of a
complete liquidation or dissolution of the Company;
(d) The acquisition by any Person of Beneficial Ownership of 50% or
more (on a fully diluted basis) of either (i) the then outstanding
shares of Common Stock of the Company, taking into account as
outstanding for this purpose such Common Stock issuable upon the
exercise of options or warrants, the conversion of convertible
stock or debt, and the exercise of any similar right to acquire
such Common Stock (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this Plan,
the following acquisitions shall not constitute a Change in
Control: (A) any acquisition by the Company or any Affiliate,
(B) any acquisition by any employee benefit plan sponsored or
maintained by the Company or any subsidiary, (C) any acquisition
which complies with clauses, (i), (ii) and (iii) of subsection
(e) of this definition or (D) in respect of an Award held by a
particular Participant, any acquisition by the Participant or any
group of persons including the Participant (or any entity
controlled by the Participant or any group of persons including
the Participant); or
(e) The consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction
involving the Company that requires the approval of the Company's
shareholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (i) more than
50% of the total voting power of (A) the entity resulting from
such Business Combination (the "Surviving Company"), or (B) if
applicable, the ultimate parent entity that directly or indirectly
has beneficial ownership of sufficient voting securities eligible
to elect a majority of the members of the board of directors (or
the analogous governing body) of the Surviving Company (the
"Parent Company"), is represented by the Outstanding Company
Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares
into which the Outstanding Company Voting Securities were
converted pursuant to such Business Combination), and such voting
power among the holders thereof is in substantially the same
proportion as the voting power of the Outstanding Company Voting
Securities among the holders thereof immediately prior to the
Business Combination; (ii) no Person (other than any employee
benefit plan sponsored or maintained by the Surviving Company or
the Parent Company) is or becomes the Beneficial Owner, directly
or indirectly, of 50% or more of the total voting power of the
outstanding voting securities eligible to elect members of the
board of directors of the Parent Company (or the analogous
governing body) (or, if there is no Parent Company, the Surviving
Company); and (iii) at least a majority of the members of the
board of directors (or the analogous governing body) of the
Parent Company (or, if there is no Parent Company, the Surviving
Company) following the consummation of the
Business Combination were Board members at the time of the
Board's approval of the execution of the initial agreement
providing for such Business Combination.
"Code" means the Internal Revenue Code of 1986, as it may be amended from
time to time. Any reference to a section of the Code shall be deemed to
include a reference to any regulations promulgated together.
"Committee" means the Compensation Committee.
"Common Stock" means the common stock $.10 par value per share, of the
Company, or such other securities of the Company as may be designated by
the Committee from time to time in substitution thereof.
"Company" means FRP Holdings, Inc., a Florida corporation, and any
successor thereto.
"Consultant" means any individual who is engaged by the Company or any
Affiliate to render consulting or advisory services.
"Continuous Service" means that the Participant's service with the Company
or an Affiliate, whether as an Employee, Consultant or Director, is not
interrupted or terminated. The Participant's Continuous Service shall not
be deemed to have terminated merely because of a change in the capacity in
which the Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service; provided further that
if any Award is subject to Section 409A of the Code, this sentence shall
only be given effect to the extent Participant has experienced a separation
from services as defined under Section 409A of the Code. For example, a
change in status from an Employee of the Company to a Director of an
Affiliate will not constitute an interruption of Continuous Service. To the
extent permitted by law, the Committee or its delegate, in its sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any approved leave of absence, including sick
leave, military leave or any other personal or family leave of absence.
"Covered Employee" has the same meaning as set forth in Section 162(m)(3)
of the Code, as interpreted by Internal Revenue Service Notice 2007-49.
"Director" means a member of the Board.
"Disability" means the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment; provided, however, for purposes of determining the term of an
Incentive Stock Option pursuant to Section 6.10 hereof, the term Disability
shall have the meaning ascribed to it under Section 22(e)(3) of the Code.
The determination of whether an individual has a Disability shall be
determined under procedures established by the Committee. Except in
situations where the Committee is determining Disability for purposes of
the term of an Incentive Stock Option pursuant to Section 6.10 hereof
within the meaning of Section 22(e)(3) of the Code, the Committee may rely
on any
determination that a Participant is disabled for purposes of benefits under
any long-term disability plan maintained by the Company or any Affiliate in
which a Participant participates.
"Disqualifying Disposition" has the meaning set forth in Section 14.12.
"Effective Date" shall mean the date as of which this Plan is adopted by
the Board.
"Employee" means any person, including an Officer or Director, employed by
the Company or an Affiliate; provided, that, for purposes of determining
eligibility to receive Incentive Stock Options, an Employee shall mean an
employee of the Company or a parent or subsidiary corporation within the
meaning of IRC Section 424. Mere service as a Director or payment of a
director's fee by the Company or an Affiliate shall not be sufficient to
constitute "employment" by the Company or an Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, as of any date, the value of the Common Stock
as determined below. If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation, the New
York Stock Exchange or the NASDAQ Stock Market, the Fair Market Value shall
be the closing price of a share of Common Stock (or if no sales were
reported the closing price on the date immediately preceding such date) as
quoted on such exchange or system on the day of determination, as reported
in the Wall Street Journal or such other source as the Committee deems
reliable. In the absence of an established market for the Common Stock, the
Fair Market Value shall be determined in good faith by the Committee by the
reasonable application of a reasonable valuation method and in a manner
that complies with Sections 409A and 422 of the Code; and such
determination shall be conclusive and binding on all persons.
"Free Standing Rights" has the meaning set forth in Section 7.1(a).
"Good Reason" means
(a) If an Employee or Consultant is party to an employment or service
agreement with the Company or its Affiliates and such agreement
provides for a definition of Good Reason, the definition contained
therein; or
(b) If no such agreement exists or if such agreement does not define
Good Reason, the occurrence of one or more of the following
without the Participant's express written consent, which
circumstances are not remedied by the Company within thirty (30)
days of its receipt of a written notice from the Participant
describing the applicable circumstances (which notice must be
provided by the Participant within ninety (90) days of the
Participant's knowledge of the applicable circumstances): (i)
any material, adverse change in the Participant's duties,
responsibilities or authority; (ii) a material reduction in the
Participant's base salary or bonus opportunity; or (iii) a
geographical relocation of the Participant's principal office
location by more than one hundred (100) miles.
"Grant Date" means the date on which the Committee adopts a resolution, or
takes other appropriate action, expressly granting an Award to a
Participant that specifies the key terms and conditions of the Award or,
if a later date is set forth in such resolution, then such date as is set
forth in such resolution.
"Incumbent Directors" means individuals who, on the Effective Date,
constitute the Board, provided that any individual becoming a Director
subsequent to the Effective Date whose election or nomination for election
to the Board was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is named as a
nominee for Director without objection to such nomination) shall be an
Incumbent Director. No individual initially elected or nominated as a
director of the Company as a result of an actual or threatened election
contest with respect to Directors or as a result of any other actual or
threatened solicitation of proxies by or on behalf of any person other than
the Board shall be an Incumbent Director.
"Negative Discretion" means the discretion authorized by the Plan to be
applied by the Committee to eliminate or reduce the size of a Performance
Compensation Award in accordance with Section 7.4(d)(iv) of the Plan;
provided, that, the exercise of such discretion would not cause the
Performance Compensation Award to fail to qualify as "performance-based
compensation" under Section 162(m) of the Code.
"Non-Employee Director" means a Director who is a "non-employee director"
within the meaning of Rule 16b-3.
"Non-qualified Stock Option" means an Option that by its terms does not
qualify or is not intended to qualify as an Incentive Stock Option.
"Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
"Option" means an Incentive Stock Option or a Non-qualified Stock Option
granted pursuant to the Plan.
"Option Exercise Price" means the price at which a share of Common Stock
may be purchased upon the exercise of an Option.
"Optionholder" means a person to whom an Option is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Option.
"Outside Director" means a Director who is an "outside director" within the
meaning of Section 162(m) of the Code and Treasury Regulations Section
1.162-27(e)(3) or any successor to such statute and regulation.
"Participant" means an eligible person to whom an Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Award.
"Performance Compensation Award" means any Award designated by the
Committee as a Performance Compensation Award pursuant to Section 7.4 of
the Plan.
"Performance Criteria" means the criterion or criteria that the Committee
shall select for purposes of establishing the Performance Goal(s) for a
Performance Period with respect to any Performance Compensation Award under
the Plan. The Performance Criteria that will be used to establish the
Performance Goal(s) shall be based on the attainment of specific levels of
performance of the Company (or Affiliate, division, business unit or
operational unit of the Company) and shall be limited to the following:
(a) net earnings or net income (before or after taxes);
(b) basic or diluted earnings per share (before or after taxes);
(c) net revenue or net revenue growth;
(d) gross revenue;
(e) gross profit or gross profit growth;
(f) net operating profit (before or after taxes);
(g) return on assets, capital employed, invested capital, equity, or
sales;
(h) funds from operations or cash flow (including, but not limited to,
operating cash flow, free cash flow, and cash flow return on
capital);
(i) earnings before or after taxes, interest, depreciation and/or
amortization;
(j) gross or operating margins;
(k) improvements in capital structure;
(l) budget and expense management;
(m) productivity ratios;
(n) economic value added or other value added measurements;
(o) share price (including, but not limited to, growth measures and
total shareholder return);
(p) expense targets;
(q) margins;
(r) operating efficiency;
(s) working capital targets;
(t) enterprise value;
(u) safety record; and
(v) completion of acquisitions or business expansion.
Any one or more of the Performance Criteria may be used on an absolute or
relative basis to measure the performance of the Company and/or an
Affiliate as a whole or any division, business unit or operational unit of
the Company and/or an Affiliate or any combination thereof, as the
Committee may deem appropriate, or as compared to the performance of a
group of comparable companies, or published or special index that the
Committee, in its sole discretion, deems appropriate, or the Committee may
select Performance Criterion (o) above as compared to various stock market
indices. The Committee also has the authority to provide for accelerated
vesting of any Award based on the achievement of Performance Goals pursuant
to the Performance Criteria specified in this paragraph. To the extent
required under Section 162(m) of the Code, the Committee shall, within the
first 90 days of a Performance Period (or, if longer or shorter, within the
maximum period allowed under Section 162(m) of the Code), define in an
objective fashion the manner of calculating the Performance Criteria it
selects to use for such Performance Period. In the event that applicable
tax and/or securities laws change to permit the Committee discretion to
alter the governing Performance Criteria without obtaining shareholder
approval of such changes, the Committee shall have sole discretion to make
such changes without obtaining shareholder approval.
"Performance Formula" means, for a Performance Period, the one or more
objective formulas applied against the relevant Performance Goal to
determine, with regard to the Performance Compensation Award of a
particular Participant, whether all, some portion but less than all, or
none of the Performance Compensation Award has been earned for the
Performance Period.
"Performance Goals" means, for a Performance Period, the one or more goals
established by the Committee for the Performance Period based upon the
Performance Criteria. The Committee is authorized at any time during the
first 90 days of a Performance Period (or, if longer or shorter, within
the maximum period allowed under Section 162(m) of the Code), or at any
time thereafter (but only to the extent the exercise of such authority
after such period would not cause the Performance Compensation Awards
granted to any Participant for the Performance Period to fail to qualify
as "performance-based compensation" under Section 162(m) of the Code), in
its sole and absolute discretion, to adjust or modify the calculation of a
Performance Goal for such Performance Period to the extent permitted under
Section 162(m) of the Code in order to prevent the dilution or enlargement
of the rights of Participants based on the following events:
(a) asset write-downs;
(b) litigation or claim judgments or settlements;
(c) the effect of changes in tax laws, accounting principles, or other
laws or regulatory rules affecting reported results;
(d) any reorganization and restructuring programs;
(e) extraordinary nonrecurring items as described in Accounting
Principles Board Opinion No. 30 (or any successor or pronouncement
thereto) and/or in management's discretion and analysis of
financial condition and results of operations appearing in the
Company's annual report to shareholders for the applicable year;
(f) acquisitions or divestitures;
(g) any other specific unusual or nonrecurring events, or objectively
determinable category thereof;
(h) foreign exchange gains and losses; and
(i) a change in the Company's fiscal year.
"Performance Period" means the one or more periods of time not less than
one fiscal quarter in duration, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant's right to and the payment of a
Performance Compensation Award.
"Performance Share Award" means any Award granted pursuant to Section 7.3
hereof.
"Performance Share" means the grant of a right to receive a number of
actual shares of Common Stock or share units based upon the performance of
the Company during a Performance Period, as determined by the Committee.
"Permitted Transferee" (a) a member of the Optionholder's immediate family
(child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships), any person sharing the Optionholder's household
(other than a tenant or employee), a trust in which these persons have
more than 50% of the beneficial interest, a foundation in which these
persons (or the Optionholder) control the management of assets, and any
other entity in which these persons (or the Optionholder) own more than
50% of the voting interests; (b) third parties designated by the
Committee in connection with a program established and approved by the
Committee pursuant to which Participants may receive a cash payment or
other consideration in consideration for the transfer of a Non-qualified
Stock Option; and (c) such other transferees as may be permitted by the
Committee in its sole discretion.
"Plan" means this FRP Holdings, Inc. 2016 Equity Incentive Plan, as amended
and/or amended and restated from time to time.
"Related Rights" has the meaning set forth in Section 7.1(a).
"Restricted Award" means any Award granted pursuant to Section 7.2(a).
"Restricted Period" has the meaning set forth in Section 7.2(a).
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Appreciation Right" means the right pursuant to an Award granted
under Section 7.1 to receive, upon exercise, an amount payable in cash or
shares equal to the number of shares subject to the Stock Appreciation
Right that is being exercised multiplied by the excess of (a) the Fair
Market Value of a share of Common Stock on the date the Award is exercised,
over (b) the exercise price specified in the Stock Appreciation Right Award
Agreement.
"Stock for Stock Exchange" has the meaning set forth in Section 6.4.
"Stock Grant Award" means a right granted to a Participant under
Section 7.5.
"Ten Percent Shareholder" means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or
of any of its Affiliates.
3. Administration.
--------------
3.1 Authority of Committee.
----------------------
The Plan shall be administered by the Committee or, in the Board's
sole discretion, by the Board. Subject to the terms of the Plan, the
Committee's charter and Applicable Laws, and in addition to other
express powers and authorization conferred by the Plan, the Committee
shall have the authority:
(a) to construe and interpret the Plan and apply its provisions;
(b) to promulgate, amend, and rescind rules and regulations relating
to the administration of the Plan;
(c) to authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan;
(d) to delegate its authority to one or more Officers of the Company
with respect to Awards that do not involve Covered Employees or
"insiders" within the meaning of Section 16 of the Exchange Act;
(e) to determine when Awards are to be granted under the Plan and the
applicable Grant Date;
(f) from time to time to select, subject to the limitations set forth
in this Plan, those Participants to whom Awards shall be granted;
(g) to determine the number of shares of Common Stock to be made
subject to each Award;
(h) to determine whether each Option is to be an Incentive Stock
Option or a Non-qualified Stock Option;
(i) to prescribe the terms and conditions of each Award, including,
without limitation, the exercise price and medium of payment and
vesting provisions, and to specify the provisions of the Award
Agreement relating to such grant;
(j) to determine the target number of Performance Shares to be
granted pursuant to a Performance Share Award, the performance
measures that will be used to establish the performance goals,
the performance period(s) and the number of Performance Shares
earned by a Participant;
(k) to designate an Award (including a cash bonus) as a Performance
Compensation Award and to select the Performance Criteria that
will be used to establish the Performance Goals;
(l) to amend any outstanding Awards, including for the purpose of
modifying the time or manner of vesting, or the term of any
outstanding Award; provided, however, that if any such amendment
impairs a Participant's rights or increases a Participant's
obligations under his or her Award or creates or increases a
Participant's federal income tax liability with respect to an
Award, such amendment shall also be subject to the Participant's
consent;
(m) to determine the duration and purpose of leaves of absences which
may be granted to a Participant without constituting termination
of their employment for purposes of the Plan, which periods shall
be no shorter than the periods generally applicable to Employees
under the Company's employment policies;
(n) to make decisions with respect to outstanding Awards that may
become necessary upon a change in corporate control or an event
that triggers anti-dilution adjustments;
(o) to interpret, administer, reconcile any inconsistency in, correct
any defect in and/or supply any omission in the Plan and any
instrument or agreement relating to, or Award granted under, the
Plan; and
(p) to exercise discretion to make any and all other determinations
which it determines to be necessary or advisable for the
administration of the Plan.
The Committee also may modify the purchase price or the exercise price
of any outstanding Award, provided that if the modification affects a
repricing, shareholder approval shall be required before the repricing
is effective.
3.2 Decisions Final.
---------------
All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on the Company and the Participants,
unless such decisions are determined by a court having jurisdiction
to be arbitrary and capricious.
3.3 Delegation.
----------
The Committee, or if no Committee has been appointed, the Board, may
delegate administration of the Plan to a committee or committees of
one or more members of the Board, and the term "Committee" shall apply
to any person or persons to whom such authority has been delegated.
The Committee shall have the power to delegate to a subcommittee any
of the administrative powers the Committee is authorized to exercise
(and references in this Plan to the Board or the Committee shall
thereafter be to the committee or subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as
may be adopted from time to time by the Board. The Board may abolish
the Committee at any time and revest in the Board the administration
of the Plan. The members of the Committee shall be appointed by and
serve at the pleasure of the Board. From time to time, the Board may
increase or decrease the size of the Committee, add additional members
to, remove members (with or without cause) from, appoint new members
in substitution therefor, and fill vacancies, however caused, in the
Committee. The Committee shall act pursuant to a vote of the majority
of its members or, in the case of a Committee comprised of only two
members, the unanimous consent of its members, whether present or not,
or by the written consent of the majority of its members and minutes
shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the limitations prescribed by the
Plan and the Board, the Committee may establish and follow such rules
and regulations for the conduct of its business as it may determine to
be advisable.
3.4 Committee Composition.
---------------------
Except as otherwise determined by the Board, the Committee shall
consist solely of two or more Non-Employee Directors who are also
Outside Directors. The Board shall have discretion to determine
whether or not it intends to comply with the exemption requirements
of Rule 16b-3 and/or Section 162(m) of the Code. However, if the
Board intends to satisfy such exemption requirements, with respect to
Awards to any Covered Employee and with respect to any insider subject
to Section 16 of the Exchange Act, the Committee shall be a
compensation committee of the Board that at all times consists solely
of two or more Non-Employee Directors who are also Outside Directors.
Within the scope of such authority, the Board or the Committee may
(a) delegate to a committee of one or more members of the Board who
are not Outside Directors the authority to grant Awards to eligible
persons who are either (i) not then
Covered Employees and are not expected to be Covered Employees at the
time of recognition of income resulting from such Award or (ii) not
persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code or (b) delegate to a committee of one or
more members of the Board who are not Non-Employee Directors the
authority to grant Awards to eligible persons who are not then
subject to Section 16 of the Exchange Act. Nothing herein shall
create an inference that an Award is not validly granted under the
Plan in the event Awards are granted under the Plan by a compensation
committee of the Board that does not at all times consist solely of
two or more Non-Employee Directors who are also Outside Directors.
3.5 Indemnification.
---------------
In addition to such other rights of indemnification as they may have
as Directors or members of the Committee, and to the extent allowed
by Applicable Laws, the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney's fees, actually
incurred in connection with any action, suit or proceeding or in
connection with any appeal therein, to which the Committee may be
party by reason of any action taken or failure to act under or in
connection with the Plan or any Award granted under the Plan, and
against all amounts paid by the Committee in settlement thereof
(provided, however, that the settlement has been approved by the
Company, which approval shall not be unreasonably withheld) or paid
by the Committee in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such
Committee did not act in good faith and in a manner which such person
reasonably believed to be in the best interests of the Company, or in
the case of a criminal proceeding, had no reason to believe that the
conduct complained of was unlawful; provided, however, that within 60
days after institution of any such action, suit or proceeding, such
Committee shall, in writing, offer the Company the opportunity at its
own expense to handle and defend such action, suit or proceeding.
4. Shares Subject to the Plan.
--------------------------
4.1 Subject to adjustment in accordance with Section 11, a total of
600,000 shares of Common Stock shall be available for the grant of
Awards under the Plan. No more than 600,000 shares of Common Stock may
be granted as Incentive Stock Options. During the terms of the Awards,
the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Awards.
4.2 Shares of Common Stock available for distribution under the Plan may
consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any manner.
4.3 Subject to adjustment in accordance with Section 11, no Participant
shall be granted, during any one (1) year period, Options to purchase
Common Stock and Stock Appreciation Rights with respect to more than
100,000 shares of Common Stock in the aggregate or any other Awards
with respect to more than 100,000 shares of Common Stock in the
aggregate. If an Award is to be settled in cash, the number of shares
of Common Stock on which the Award is based shall not count toward the
individual share
limit set forth in this Section 4. Subject to adjustment in
accordance with Section 11, no Non-Employee Director shall be
granted, during any one (1) year period, awards with respect to more
than 25,000 shares of Common Stock in the aggregate.
4.4 Any shares of Common Stock subject to an Award that is canceled,
forfeited or expires prior to exercise or realization, either in full
or in part, shall again become available for issuance under the Plan.
Notwithstanding anything to the contrary contained herein: shares
subject to an Award under the Plan shall not again be made available
for issuance or delivery under the Plan if such shares are (a) shares
tendered in payment of an Option, (b) shares delivered or withheld by
the Company to satisfy any tax withholding obligation, or (c) shares
covered by a stock-settled Stock Appreciation Right or other Awards
that were not issued upon the settlement of the Award.
5. Eligibility.
-----------
5.1 Eligibility for Specific Awards.
-------------------------------
Incentive Stock Options may be granted to Employees only. Awards other
than Incentive Stock Options may be granted to Employees, Consultants
and Directors and those individuals whom the Committee determines are
reasonably expected to become Employees, Consultants and Directors
following the Grant Date.
5.2 Ten Percent Shareholders.
------------------------
A Ten Percent Shareholder shall not be granted an Incentive Stock
Option unless the Option Exercise Price is at least 110% of the Fair
Market Value of the Common Stock at the Grant Date and the Option is
not exercisable after the expiration of five years from the Grant
`Date.
6. Option Provisions.
-----------------
Each Option granted under the Plan shall be evidenced by an Award
Agreement. Each Option so granted shall be subject to the conditions set
forth in this Section 6, and to such other conditions not inconsistent
with the Plan as may be reflected in the applicable Award Agreement. All
Options shall be separately designated Incentive Stock Options or
Non-qualified Stock Options at the time of grant, and, if certificates
are issued, a separate certificate or certificates will be issued for
shares of Common Stock purchased on exercise of each type of Option.
Notwithstanding the foregoing, the Company shall have no liability to any
Participant or any other person if an Option designated as an Incentive
Stock Option fails to qualify as such at any time or if an Option is
determined to constitute "nonqualified deferred compensation" within the
meaning of Section 409A of the Code and the terms of such Option do not
satisfy the requirements of Section 409A of the Code. The provisions of
separate Options need not be identical, but each Option shall include
(through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:
6.1 Term.
----
Subject to the provisions of Section 5.2 regarding Ten Percent
Shareholders, no Incentive Stock Option shall be exercisable after
the expiration of 10 years from the Grant Date. The term of a
Non-qualified Stock Option granted under the Plan shall be determined
by the Committee; provided, however, no Non-qualified Stock Option
shall be exercisable after the expiration of 10 years from the Grant
Date.
6.2 Incentive Stock Option $100,000 Limitation.
------------------------------------------
To the extent that the aggregate Fair Market Value (determined at the
time of grant) of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of Company and
any Affiliates) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof that exceed such limit (according to the
order in which they were granted) shall be treated as Nonstatutory
Stock Options, notwithstanding any contrary provision of the
applicable Award Agreement.
6.3 Exercise Price of an Incentive Stock Option.
-------------------------------------------
Subject to the provisions of Section 5.2 regarding Ten Percent
Shareholders, the Option Exercise Price of each Incentive Stock
Option shall be not less than 100% of the Fair Market Value of the
Common Stock subject to the Option on the Grant Date. Notwithstanding
the foregoing, an Incentive Stock Option may be granted with an
Option Exercise Price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions
of Section 424(a) of the Code.
6.4 Exercise Price of a Non-qualified Stock Option.
----------------------------------------------
The Option Exercise Price of each Non-qualified Stock Option shall be
not less than 100% of the Fair Market Value of the Common Stock
subject to the Option on the Grant Date. Notwithstanding the
foregoing, a Non-qualified Stock Option may be granted with an Option
Exercise Price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 409A
of the Code.
6.5 Consideration.
-------------
The Option Exercise Price of Common Stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes
and regulations, either (a) in cash or by certified or bank check at
the time the Option is exercised or (b) in the discretion of the
Committee, upon such terms as the Committee shall approve, the Option
Exercise Price may be paid: (i) by delivery to the Company of other
Common Stock, duly endorsed for transfer to the Company, with a Fair
Market Value on the date of delivery equal to the Option Exercise
Price (or portion thereof) due for the number of shares being
acquired, or by means of attestation whereby the Participant
identifies for delivery specific shares of Common Stock that have an
aggregate Fair Market Value on the date of attestation equal to the
Option Exercise Price (or portion thereof) and receives a number of
shares of Common Stock equal to the difference between the number of
shares thereby purchased and the number of identified attestation
shares of Common Stock (a "Stock for Stock Exchange"); (ii) a
"cashless" exercise program established with a broker; (iii) by
reduction in the number of shares of Common Stock otherwise
deliverable upon exercise of such Option with a Fair Market Value
equal to the aggregate Option Exercise Price at the time of exercise;
(iv) any combination of the foregoing methods; or (v) in any other
form of legal consideration that may be acceptable to the Committee.
Unless otherwise specifically provided in the Option, the exercise
price of Common Stock acquired pursuant to an Option that is paid by
delivery (or attestation) to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only
by shares of the Common Stock of the Company that have been held
for more than six months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting
purposes). Notwithstanding the foregoing, during any period for which
the Common Stock is publicly traded (i.e., the Common Stock is
listed on any established stock exchange or a national market system)
an exercise by a Director or Officer that involves or may involve a
direct or indirect extension of credit or arrangement of an extension
of credit by the Company, directly or indirectly, in violation of
Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited
with respect to any Award under this Plan.
6.6 Transferability of an Incentive Stock Option.
--------------------------------------------
An Incentive Stock Option shall not be transferable except by will or
by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
6.7 Transferability of a Non-qualified Stock Option.
-----------------------------------------------
A Non-qualified Stock Option may, in the sole discretion of the
Committee, be transferable to a Permitted Transferee, upon written
approval by the Committee to the extent provided in the Award
Agreement. If the Non-qualified Stock Option does not provide for
transferability, then the Non-qualified Stock Option shall not be
transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.
6.8 Vesting of Options.
------------------
Each Option may, but need not, vest and therefore become exercisable
in periodic installments that may, but need not, be equal. The Option
may be subject to such other terms and conditions on the time or
times when it may be exercised (which may be based on performance or
other criteria) as the Committee may deem appropriate. The vesting
provisions of individual Options may vary. No Option may be exercised
for a fraction of a share of Common Stock. The Committee may, but
shall not be required to, provide for an acceleration of vesting and
exercisability in the terms of any Award Agreement upon the
occurrence of a specified event.
6.9 Termination of Continuous Service.
---------------------------------
Unless otherwise provided in an Award Agreement or in an employment
agreement the terms of which have been approved by the Committee, in
the event an Optionholder's Continuous Service terminates (other than
upon the Optionholder's death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was
entitled to exercise such Option as of the date of termination) but
only within such period of time ending on the earlier of (a) the date
three months following the termination of the Optionholder's
Continuous Service or (b) the expiration of the term of the Option as
set forth in the Award Agreement; provided that, if the termination
of Continuous Service is by the Company for Cause, all outstanding
Options (whether or not vested) shall immediately terminate and cease
to be
exercisable. If, after termination, the Optionholder does not exercise
his or her Option within the time specified in the Award Agreement,
the Option shall terminate.
6.10 Extension of Termination Date.
-----------------------------
An Optionholder's Award Agreement may also provide that if the
exercise of the Option following the termination of the
Optionholder's Continuous Service for any reason would be prohibited
at any time because the issuance of shares of Common Stock would
violate the registration requirements under the Securities Act or any
other state or federal securities law or the rules of any securities
exchange or interdealer quotation system, then the Option shall
terminate on the earlier of (a) the expiration of the term of the
Option in accordance with Section 6.1, or (b) the expiration of a
period after termination of the Participant's Continuous Service that
is three months after the end of the period during which the exercise
of the Option would be in violation of such registration or other
securities law requirements.
6.11 Disability of Optionholder.
--------------------------
Unless otherwise provided in an Award Agreement, in the event that an
Optionholder's Continuous Service terminates as a result of the
Optionholder's Disability, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise
such Option as of the date of termination), but only within such
period of time ending on the earlier of (a) the date 12 months
following such termination or (b) the expiration of the term of the
Option as set forth in the Award Agreement. If, after termination,
the Optionholder does not exercise his or her Option within the time
specified herein or in the Award Agreement, the Option shall terminate.
7. Provisions of Awards Other Than Options.
---------------------------------------
7.1 Stock Appreciation Rights.
-------------------------
(a) General
Each Stock Appreciation Right granted under the Plan shall be
evidenced by an Award Agreement. Each Stock Appreciation Right so
granted shall be subject to the conditions set forth in this Section
7.1, and to such other conditions not inconsistent with the Plan as
may be reflected in the applicable Award Agreement. Stock Appreciation
Rights may be granted alone ("Free Standing Rights") or in tandem with
an Option granted under the Plan ("Related Rights").
(b) Grant Requirements
Any Related Right that relates to a Non-qualified Stock Option may be
granted at the same time the Option is granted or at any time
thereafter but before the exercise or expiration of the Option. Any
Related Right that relates to an Incentive Stock Option must be
granted at the same time the Incentive Stock Option is granted.
(c) Terms of Stock Appreciation Rights
The term of a Stock Appreciation Right granted under the Plan shall be
determined by the Committee; provided, however, no Stock Appreciation
Right shall be exercisable later than the tenth anniversary of the
Grant Date.
(d) Vesting of Stock Appreciation Rights
Each Stock Appreciation Right may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not, be
equal. The Stock Appreciation Right may be subject to such other terms
and conditions on the time or times when it may be exercised as the
Committee may deem appropriate. The vesting provisions of individual
Stock Appreciation Rights may vary. No Stock Appreciation Right may
be exercised for a fraction of a share of Common Stock. The Committee
may, but shall not be required to, provide for an acceleration of
vesting and exercisability in the terms of any Stock Appreciation
Right upon the occurrence of a specified event.
(e) Exercise and Payment
Upon exercise of a Stock Appreciation Right, the holder shall be
entitled to receive from the Company an amount equal to the number of
shares of Common Stock subject to the Stock Appreciation Right that is
being exercised multiplied by the excess of (i) the Fair Market Value
of a share of Common Stock on the date the Award is exercised, over
(ii) the exercise price specified in the Stock Appreciation Right or
related Option. Payment with respect to the exercise of a Stock
Appreciation Right shall be made on the date of exercise. Payment
shall be made in the form of shares of Common Stock (with or without
restrictions as to substantial risk of forfeiture and transferability,
as determined by the Committee in its sole discretion), cash or a
combination thereof, as determined by the Committee.
(f) Exercise Price
The exercise price of a Free Standing Stock Appreciation Right shall
be determined by the Committee, but shall not be less than 100% of
the Fair Market Value of one share of Common Stock on the Grant Date
of such Stock Appreciation Right. A Related Right granted
simultaneously with or subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto shall have the
same exercise price as the related Option, shall be transferable only
upon the same terms and conditions as the related Option, and shall
be exercisable only to the same extent as the related Option;
provided, however, that a Stock Appreciation Right, by its terms,
shall be exercisable only when the Fair Market Value per share of
Common Stock subject to the Stock Appreciation Right and related
Option exceeds the exercise price per share thereof and no Stock
Appreciation Rights may be granted in tandem with an Option unless
the Committee determines that the requirements of Section 7.1(b) are
satisfied.
(g) Reduction in the Underlying Option Shares
Upon any exercise of a Related Right, the number of shares of Common
Stock for which any related Option shall be exercisable shall be
reduced by the number of shares for which the Stock Appreciation Right
has been exercised. The number of shares of Common Stock for which a
Related Right shall be exercisable shall be reduced upon any exercise
of any related Option by the number of shares of Common Stock for
which such Option has been exercised.
7.2 Restricted Awards.
-----------------
(a) General
A Restricted Award is an Award of actual shares of Common Stock
("Restricted Stock") or hypothetical Common Stock units ("Restricted
Stock Units") having a value equal to the Fair Market Value of an
identical number of shares of Common Stock, which may, but need not,
provide that such Restricted Award may not be sold, assigned,
transferred or otherwise disposed of, pledged or hypothecated as
collateral for a loan or as security for the performance of any
obligation or for any other purpose for such period (the "Restricted
Period") as the Committee shall determine. Each Restricted Award
granted under the Plan shall be evidenced by an Award Agreement. Each
Restricted Award so granted shall be subject to the conditions set
forth in this Section 7.2, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable
Award Agreement.
(b) Restricted Stock and Restricted Stock Units
(i) Each Participant granted Restricted Stock shall execute and
deliver to the Company an Award Agreement with respect to the
Restricted Stock setting forth the restrictions and other
terms and conditions applicable to such Restricted Stock. If
the Committee determines that the Restricted Stock shall be
held by the Company or in escrow rather than delivered to the
Participant pending the release of the applicable
restrictions, the Committee may require the Participant to
additionally execute and deliver to the Company (A) an escrow
agreement satisfactory to the Committee, if applicable and
(B) the appropriate blank stock power with respect to the
Restricted Stock covered by such agreement. If a Participant
fails to execute an agreement evidencing an Award of
Restricted Stock and, if applicable, an escrow agreement and
stock power, the Award shall be null and void. Subject to
the restrictions set forth in the Award, the Participant
generally shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right
to vote such Restricted Stock and the right to receive
dividends; provided that, any cash dividends and stock
dividends with respect to the Restricted Stock shall be
withheld by the Company for the Participant's account, and
interest may be credited on the amount of the cash dividends
withheld at a rate and subject to such terms as determined
by the Committee. The cash dividends or stock dividends so
withheld by the Committee and attributable to any particular
share of Restricted Stock (and earnings thereon, if
applicable) shall be distributed to the Participant in cash
or, at the discretion of the Committee, in shares of Common
Stock having a Fair Market Value equal to the amount of such
dividends, if applicable, upon the release of restrictions on
such share and, if such share is forfeited, the Participant
shall have no right to such dividends.
(ii) The terms and conditions of a grant of Restricted Stock Units
shall be reflected in an Award Agreement. No shares of Common
Stock shall be issued at the time a Restricted Stock Unit is
granted, and the Company will not be required to set aside a
fund for the payment of any such Award. A Participant shall
have no voting rights with respect to any Restricted Stock
Units granted hereunder. At the discretion of the Committee,
each Restricted Stock Unit (representing one share of Common
Stock) may be credited with cash and stock dividends paid by
the Company in respect of one share of Common Stock
("Dividend Equivalents"). Dividend Equivalents shall be
withheld by the Company for the Participant's account, and
interest may be credited on the amount of cash Dividend
Equivalents withheld at a rate and subject to such terms as
determined by the Committee. Dividend Equivalents credited to
a Participant's account and attributable to any particular
Restricted Stock Unit (and earnings thereon, if applicable)
shall be distributed in cash or, at the discretion of the
Committee, in shares of Common Stock having a Fair Market
Value equal to the amount of such Dividend Equivalents and
earnings, if applicable, to the Participant upon settlement
of such Restricted Stock Unit and, if such Restricted Stock
Unit is forfeited, the Participant shall have no right to
such Dividend Equivalents.
(c) Restrictions
(i) Restricted Stock awarded to a Participant shall be subject to
the following restrictions until the expiration of the
Restricted Period, and to such other terms and conditions as
may be set forth in the applicable Award Agreement: (A) if an
escrow arrangement is used, the Participant shall not be
entitled to delivery of the stock certificate; (B) the shares
shall be subject to the restrictions on transferability set
forth in the Award Agreement; (C) the shares shall be subject
to forfeiture to the extent provided in the applicable
Award Agreement; and (D) to the extent such shares are
forfeited, the stock certificates shall be returned to the
Company, and all rights of the Participant to such shares and
as a shareholder with respect to such shares shall terminate
without further obligation on the part of the Company.
(ii) Restricted Stock Units awarded to any Participant shall be
subject to (A) forfeiture until the expiration of the
Restricted Period, and satisfaction of any applicable
Performance Goals during such period, to the extent provided
in the applicable Award Agreement, and to the extent such
Restricted Stock Units are forfeited, all rights of the
Participant to such Restricted Stock Units shall terminate
without further obligation on the part of the Company and (B)
such other terms and conditions as may be set forth in the
applicable Award Agreement.
(iii) The Committee shall have the authority to remove any or all of
the restrictions on the Restricted Stock and Restricted Stock
Units whenever it may determine that, by reason of changes in
Applicable Laws or other changes in circumstances arising
after the date the Restricted Stock or Restricted Stock Units
are granted, such action is appropriate.
(d) Restricted Period
With respect to Restricted Awards, the Restricted Period shall
commence on the Grant Date and end at the time or times set forth on
a schedule established by the Committee in the applicable Award
Agreement.
No Restricted Award may be granted or settled for a fraction of a
share of Common Stock. The Committee may, but shall not be required
to, provide for an acceleration of vesting in the terms of any Award
Agreement upon the occurrence of a specified event.
(e) Delivery of Restricted Stock and Settlement of Restricted Stock
Units
Upon the expiration of the Restricted Period with respect to any
shares of Restricted Stock, the restrictions set forth in Section
7.2(c) and the applicable Award Agreement shall be of no further
force or effect with respect to such shares, except as set forth in
the applicable Award Agreement. If an escrow arrangement is used,
upon such expiration, the Company shall deliver to the Participant,
or his or her beneficiary, without charge, the stock certificate
evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired
(to the nearest full share) and any cash dividends or stock dividends
credited to the Participant's account with respect to such Restricted
Stock and the interest thereon, if any. Upon the expiration of the
Restricted Period with respect to any outstanding
Restricted Stock Units, the Company shall deliver to the Participant,
or his or her beneficiary, without charge, one share of Common Stock
for each such outstanding Restricted Stock Unit ("Vested Unit") and
cash equal to any Dividend Equivalents credited with respect to each
such Vested Unit in accordance with Section 7.2(b)(ii) hereof and the
interest thereon or, at the discretion of the Committee, in shares of
Common Stock having a Fair Market Value equal to such Dividend
Equivalents and the interest thereon, if any; provided, however,
that, if explicitly provided in the applicable Award Agreement, the
Committee may, in its sole discretion, elect to pay cash or part cash
and part Common Stock in lieu of delivering only shares of Common
Stock for Vested Units. If a cash payment is made in lieu of
delivering shares of Common Stock, the amount of such payment shall
be equal to the Fair Market Value of the Common Stock as of the date
on which the Restricted Period lapsed with respect to each Vested
Unit.
(f) Stock Restrictions
Each certificate representing Restricted Stock awarded under the Plan
shall bear a legend in such form as the Company deems appropriate.
7.3 Performance Share Awards.
------------------------
(a) Grant of Performance Share Awards
Each Performance Share Award granted under the Plan shall be
evidenced by an Award Agreement. Each Performance Share Award so
granted shall be subject to the conditions set forth in this Section
7.3, and to such other conditions not inconsistent with the Plan as
may be reflected in the applicable Award Agreement. The Committee
shall have the discretion to determine: (i) the number of shares of
Common Stock or stock-denominated units subject to a Performance
Share Award granted to any Participant; (ii) the performance period
applicable to any Award; (iii) the conditions that must be satisfied
for a Participant to earn an Award; and (iv) the other terms,
conditions and restrictions of the Award.
(b) Earning Performance Share Awards
The number of Performance Shares earned by a Participant will depend
on the extent to which the performance goals established by the
Committee are attained within the applicable Performance Period, as
determined by the Committee. No payout shall be made with respect to
any Performance Share Award except upon written certification by the
Committee that the minimum threshold performance goal(s) have been
achieved. Performance Share Awards granted for a Performance Period
shall be issued to Participants as soon as administratively
practicable following completion of the certifications required by
this Section 7.3 but in no event later than 2 1/2 months following
the end of the fiscal year during which the Performance Period is
completed.
7.4 Performance Compensation Awards.
-------------------------------
(a) General
The Committee shall have the authority, at the time of grant of any
Award described in this Plan (other than Options and Stock
Appreciation Rights granted with an exercise price equal to or
greater than the Fair Market Value per share of Common Stock on the
Grant Date), to designate such Award as a Performance Compensation
Award in order to qualify such Award as "performance-based
compensation" under Section 162(m) of the Code. In addition, the
Committee shall have the authority to make an Award of a cash bonus
to any Participant and designate such Award as a Performance
Compensation Award in order to qualify such Award as
"performance-based compensation" under Section 162(m) of the Code.
(b) Eligibility
The Committee will, in its sole discretion, designate within the
first 90 days of a Performance Period (or, if longer or shorter,
within the maximum period allowed under Section 162(m) of the Code)
which Participants will be eligible to receive Performance
Compensation Awards in respect of such Performance Period. However,
designation of a Participant eligible to receive an Award hereunder
for a Performance Period shall not in any manner entitle the
Participant to receive payment in respect of any Performance
Compensation Award for such Performance Period. The determination as
to whether or not such Participant becomes entitled to payment in
respect of any Performance Compensation Award shall be decided solely
in accordance with the provisions of this Section 7.4. Moreover,
designation of a Participant eligible to receive an Award hereunder
for a particular Performance Period shall not require designation of
such Participant eligible to receive an Award hereunder in any
subsequent Performance Period and designation of one person as a
Participant eligible to receive an Award hereunder shall not require
designation of any other person as a Participant eligible to receive
an Award hereunder in such period or in any other period.
(c) Discretion of Committee with Respect to Performance Compensation
Awards
With regard to a particular Performance Period, the Committee shall
have full discretion to select the length of such Performance Period
(provided any such Performance Period shall be not less than one
fiscal quarter in duration), the type(s) of Performance Compensation
Awards to be issued, the Performance Criteria that will be used to
establish the Performance Goal(s), the kind(s) and/or level(s) of the
Performance Goal(s) that is (are) to apply to the Company and the
Performance Formula. Within the first 90 days of a Performance Period
(or, if longer or shorter, within the maximum period allowed under
Section 162(m) of the Code), the Committee shall, with regard to the
Performance Compensation Awards to be issued for such Performance
Period, exercise its discretion with respect to each of the matters
enumerated in the immediately preceding sentence of this Section
7.4(c) and record the same in writing.
(d) Payment of Performance Compensation Awards
(i) Condition to Receipt of Payment
Unless otherwise provided in the applicable Award Agreement,
a Participant must be employed by the Company on the last day
of a Performance Period to be eligible for payment in respect
of a Performance Compensation Award for such Performance
Period.
(ii) Limitation
A Participant shall be eligible to receive payment in respect
of a Performance Compensation Award only to the extent that:
(A) the Performance Goals for such period are achieved; and
(B) the Performance Formula as applied against such
Performance Goals determines that all or some portion of such
Participant's Performance Compensation Award has been earned
for the Performance Period.
(iii) Certification
Following the completion of a Performance Period, the
Committee shall review and certify in writing whether, and to
what extent, the Performance Goals for the Performance Period
have been achieved and, if so, calculate and certify in
writing the amount of the Performance Compensation Awards
earned for the period based upon the Performance Formula. The
Committee shall then determine the actual size of each
Participant's Performance Compensation Award for the
Performance Period and, in so doing, may apply Negative
Discretion in accordance with Section 7.4(d)(iv) hereof, if
and when it deems appropriate.
(iv) Use of Discretion
In determining the actual size of an individual Performance
Compensation Award for a Performance Period, the Committee may
reduce or eliminate the amount of the Performance Compensation
Award earned under the Performance Formula in the Performance
Period through the use of Negative Discretion if, in its sole
judgment, such reduction or elimination is appropriate. The
Committee shall not have the discretion to (A) grant or
provide payment in respect of Performance Compensation Awards
for a Performance Period if the Performance Goals for such
Performance Period have not been attained or (B) increase a
Performance Compensation Award above the maximum amount
payable under Section 7.4(d)(vi) of the Plan.
(v) Timing of Award Payments
Performance Compensation Awards granted for a Performance
Period shall be paid to Participants as soon as
administratively practicable following completion of the
certifications required by this Section 7.4 but in no event
later than 2 1/2 months following the end of the fiscal year
during which the Performance Period is completed.
(vi) Maximum Awards Payable
Notwithstanding any provision contained in this Plan to the
contrary, the maximum Performance Compensation Award payable
to any one Participant under the Plan for a Performance
Period (excluding any Options and Stock Appreciation Rights)
is 100,000 shares of Common Stock or, in the event such
Performance Compensation Award is paid in cash, the
equivalent cash value thereof on the first or last day of the
Performance Period to which such Award relates, as determined
by the Committee. The maximum amount that can be paid in any
calendar year to any Participant pursuant to a cash bonus
Award described in the last sentence of Section 7.4(a) shall
be $5,000,000. Furthermore, any Performance Compensation
Award that has been deferred shall not (between the date as
of which the Award is deferred and the payment date) increase
(A) with respect to a Performance Compensation Award that is
payable in cash, by a measuring factor for each fiscal year
greater than a reasonable rate of interest set by the
Committee or (B) with respect to a Performance Compensation
Award that is payable in shares of Common Stock, by an amount
greater than the appreciation of a share of Common Stock from
the date such Award is deferred to the payment date.
7.5 Stock Grants.
------------
Subject to the terms and provisions of the Plan, the Committee, at
any time and from time to time, may grant Stock Awards to one or more
Participants upon such terms and conditions, and in such amounts, as
shall be determined by the Committee. A Stock Grant Award grants the
Participant the right to receive (or purchase at such price as
determined by the Committee) a designated number of shares of Common
Stock free of any vesting restrictions. The purchase price, if any,
for a Stock Grant Award shall be payable in cash or other form of
consideration acceptable to the Committee. A Stock Grant Award may be
granted or sold as described in the preceding sentence in respect of
past services or other valid consideration, or in lieu of any cash
compensation due to such Participant.
8. Securities Law Compliance.
-------------------------
Each Award Agreement shall provide that no shares of Common Stock shall be
purchased or sold thereunder unless and until (a) any then applicable
requirements of state or federal laws and regulatory agencies have been
fully complied with to the satisfaction of the Company and its counsel and
(b) if required to do so by the Company, the Participant has executed and
delivered to the Company a letter of investment intent in such form and
containing such provisions as the Committee may require. The Company shall
use reasonable efforts to seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be
required to grant Awards and to issue and sell shares of Common Stock upon
exercise of the Awards; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any
Award or any Common Stock issued or issuable pursuant to any such Award.
If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for
failure to issue and sell Common Stock upon exercise of such Awards unless
and until such authority is obtained.
9. Use of Proceeds from Stock.
--------------------------
Proceeds from the sale of Common Stock pursuant to Awards, or upon
exercise thereof, shall constitute general funds of the Company.
10. Miscellaneous.
-------------
10.1 Change in Control Acceleration.
------------------------------
An Award may be subject to acceleration of vesting and exercisability
upon or after a Change in Control as may be provided in the Award
Agreement for such Award or as may be provided in any other written
agreement between the Company or any Affiliate and the Participant,
but in the absence of such provision, no such acceleration shall
occur.
10.2 Shareholder Rights.
------------------
Except as provided in the Plan or an Award Agreement, no Participant
shall be deemed to be the holder of, or to have any of the rights of
a holder with respect to, any shares of Common Stock subject to such
Award unless and until such Participant has satisfied all requirements
for exercise of the Award pursuant to its terms and no adjustment
shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions of other rights
for which the record date is prior to the date such Common Stock
certificate is issued, except as provided in Section 11 hereof.
10.3 No Employment or Other Service Rights.
-------------------------------------
Nothing in the Plan or any instrument executed or Award granted
pursuant thereto shall confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in
effect at the time the Award was granted or shall affect the right
of the Company or an Affiliate to terminate (a) the employment of an
Employee with or without notice and with or without Cause or (b) the
service of a Director pursuant to the By-laws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the
state in which the Company or the Affiliate is incorporated, as the
case may be.
10.4 Transfer; Approved Leave of Absence.
-----------------------------------
For purposes of the Plan, no termination of employment by an Employee
shall be deemed to result from either (a) a transfer to the
employment of the Company from an Affiliate or from the Company to an
Affiliate, or from one Affiliate to another, or (b) an approved leave
of absence for military service or sickness, or for any other purpose
approved by the Company, if the Employee's right to reemployment is
guaranteed either by a statute or by contract or under the policy
pursuant to which the leave of absence was granted or if the
Committee otherwise so provides in writing, in either case, except to
the extent inconsistent with Section 409A of the Code if the
applicable Award is subject thereto.
10.5 Withholding Obligations.
-----------------------
To the extent provided by the terms of an Award Agreement and subject
to the discretion of the Committee, the Participant may satisfy any
federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under an Award by any of the
following means (in addition to the Company's right to withhold from
any compensation paid to the Participant by the Company) or by a
combination of such means: (a) tendering a cash payment; (b)
authorizing the Company to withhold shares of Common Stock from the
shares of Common Stock otherwise issuable to the Participant as a
result of the exercise or acquisition of Common Stock under the Award,
provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by
law; or (c) delivering to the Company previously owned and
unencumbered shares of Common Stock of the Company.
10.6 No Obligation to Notify or Minimize Taxes.
-----------------------------------------
The Company shall have no duty or obligation to any Participant to
advise such Participant as to the time or manner of exercising any
Award. Furthermore, the Company shall have no duty or obligation to
warn or otherwise advise such Participant of a pending termination or
expiration of an Award or a possible period in which the Award may
not be exercised. The Company has no duty or obligation to minimize
the tax consequences of an Award to any person.
11. Adjustments Upon Changes in Stock.
---------------------------------
In the event of changes in the outstanding Common Stock or in the capital
structure of the Company by reason of any stock or extraordinary cash
dividend, stock split, reverse stock split, an extraordinary corporate
transaction such as any recapitalization, reorganization, merger,
consolidation, combination, exchange, or other relevant change in
capitalization occurring after the Grant Date of any Award, Awards granted
under the Plan and any Award Agreements, the exercise price of Options and
Stock Appreciation Rights, the maximum number of shares of Common Stock
subject to all Awards stated in Section 4 and the maximum number of shares
of Common Stock with respect to which any one person may be granted Awards
during any period stated in Section 4 and Section 7.4(d)(vi) will be
equitably adjusted or substituted, as to the number, price or kind of a
share of Common Stock or other consideration subject to such Awards to the
extent necessary to preserve the economic intent of such Award. In the
case of adjustments made pursuant to this Section 11, unless the Committee
specifically determines that such adjustment is in the best interests of
the Company or its Affiliates, the Committee shall, in the case of
Incentive Stock
Options, ensure that any adjustments under this Section 11 will not
constitute a modification, extension or renewal of the Incentive Stock
Options within the meaning of Section 424(h)(3) of the Code and in the
case of Non-qualified Stock Options, ensure that any adjustments under
this Section 11 will not constitute a modification of such Non-qualified
Stock Options within the meaning of Section 409A of the Code. Any
adjustments made under this Section 11 shall be made in a manner which
does not adversely affect the exemption provided pursuant to Rule 16b-3
under the Exchange Act. Further, with respect to Awards intended to
qualify as "performance-based compensation" under Section 162(m) of the
Code, any adjustments or substitutions will not cause the Company to be
denied a tax deduction on account of Section 162(m) of the Code. The
Company shall give each Participant notice of an adjustment hereunder
and, upon notice, such adjustment shall be conclusive and binding for all
purposes.
12. Effect of Change in Control.
---------------------------
12.1 Unless otherwise provided in an Award Agreement, notwithstanding any
provision of the Plan to the contrary:
(a) In the event of a Change in Control, all Options and Stock
Appreciation Rights shall become immediately exercisable with
respect to 100% of the shares subject to such Options or Stock
Appreciation Rights, and/or the Restricted Period shall expire
immediately with respect to 100% of the shares of Restricted
Stock or Restricted Stock Units.
(b) With respect to Performance Compensation Awards, in the event
of a Change in Control, all Performance Goals or other vesting
criteria will be deemed achieved at 100% of target levels and
all other terms and conditions will be deemed met.
To the extent practicable, any actions taken by the Committee under
the immediately preceding clauses (a) and (b) shall occur in a
manner and at a time which allows affected Participants the ability
to participate in the Change in Control with respect to the shares
of Common Stock subject to their Awards.
12.2 In addition, in the event of a Change in Control, the Committee may
in its discretion and upon at least 10 days' advance notice to the
affected persons, cancel any outstanding Awards and pay to the
holders thereof, in cash or stock, or any combination thereof, the
value of such Awards based upon the price per share of Common Stock
received or to be received by other shareholders of the Company in
the event. In the case of any Option or Stock Appreciation Right
with an exercise price (or SAR Exercise Price in the case of a Stock
Appreciation Right) that equals or exceeds the price paid for a
share of Common Stock in connection with the Change in Control, the
Committee may cancel the Option or Stock Appreciation Right without
the payment of consideration therefor.
12.3 The obligations of the Company under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to all or
substantially all of the assets and business of the Company and its
Affiliates, taken as a whole.
13. Amendment of the Plan and Awards.
--------------------------------
13.1 Amendment of Plan.
-----------------
The Board at any time, and from time to time, may amend or terminate
the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock and Section 13.3, no
amendment shall be effective unless approved by the shareholders of
the Company to the extent shareholder approval is necessary to
satisfy any Applicable Laws. At the time of such amendment, the
Board shall determine, upon advice from counsel, whether such
amendment will be contingent on shareholder approval.
13.2 Shareholder Approval.
--------------------
The Board may, in its sole discretion, submit any other amendment to
the Plan for shareholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding
the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive
officers.
13.3 Contemplated Amendments.
-----------------------
It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide
eligible Employees, Consultants and Directors with the maximum
benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Incentive
Stock Options or to the nonqualified deferred compensation
provisions of Section 409A of the Code and/or to bring the Plan
and/or Awards granted under it into compliance therewith.
13.4 No Impairment of Rights.
-----------------------
Rights under any Award granted before amendment of the Plan shall
not be impaired by any amendment of the Plan unless (a) the Company
requests the consent of the Participant and (b) the Participant
consents in writing.
13.5 Amendment of Awards.
-------------------
The Committee at any time, and from time to time, may amend the
terms of any one or more Awards; provided, however, that the
Committee may not affect any amendment which would otherwise
constitute an impairment of the rights under any Award unless (a)
the Company requests the consent of the Participant and (b) the
Participant consents in writing.
14. General Provisions.
------------------
14.1 Forfeiture Events.
-----------------
The Committee may specify in an Award Agreement that the
Participant's rights, payments and benefits with respect to an
Award shall be subject
to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain events, in addition to applicable vesting
conditions of an Award. Such events may include, without limitation,
breach of non-competition, non-solicitation, confidentiality, or
other restrictive covenants that are contained in the Award
Agreement or otherwise applicable to the Participant, a termination
of the Participant's Continuous Service for Cause, or other conduct
by the Participant that is detrimental to the business or reputation
of the Company and/or its Affiliates.
14.2 Clawback.
--------
Notwithstanding any other provisions in this Plan, any Award which
is subject to recovery under any law, government regulation or stock
exchange listing requirement, will be subject to such deductions and
clawback as may be required to be made pursuant to such law,
government regulation or stock exchange listing requirement (or any
policy adopted by the Company pursuant to any such law, government
regulation or stock exchange listing requirement).
14.3 Other Compensation Arrangements.
-------------------------------
Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to
shareholder approval if such approval is required.
14.4 Sub-plans.
---------
The Committee may from time to time establish sub-plans under the
Plan for purposes of satisfying blue sky, securities, tax or other
laws of various jurisdictions in which the Company intends to grant
Awards. Any sub-plans shall contain such limitations and other terms
and conditions as the Committee determines are necessary or
desirable. All sub-plans shall be deemed a part of the Plan, but
each sub-plan shall apply only to the Participants in the
jurisdiction for which the sub-plan was designed.
14.5 Unfunded Plan.
-------------
The Plan shall be unfunded. Neither the Company, the Board nor the
Committee shall be required to establish any special or separate
fund or to segregate any assets to assure the performance of its
obligations under the Plan.
14.6 Recapitalizations.
-----------------
Each Award Agreement shall contain provisions required to reflect the
provisions of Section 11.
14.7 Delivery.
--------
Upon exercise of a right granted under this Plan, the Company shall
issue Common Stock or pay any amounts due within a reasonable period
of time thereafter. Subject to any statutory or regulatory
obligations the Company may otherwise have, for purposes of this
Plan, 30 days shall be considered a reasonable period of time.
14.8 No Fractional Shares.
--------------------
No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan. The Committee shall determine whether cash,
additional Awards or other securities or property shall be issued or
paid in lieu of fractional shares of Common Stock or whether any
fractional shares should be rounded, forfeited or otherwise
eliminated.
14.9 Other Provisions.
----------------
The Award Agreements authorized under the Plan may contain such
other provisions not inconsistent with this Plan, including, without
limitation, restrictions upon the exercise of the Awards, as the
Committee may deem advisable.
14.10 Section 409A.
------------
The Plan is intended to comply with Section 409A of the Code to the
extent subject thereto, and, accordingly, to the maximum extent
permitted, the Plan shall be interpreted and administered to be in
compliance therewith. Any payments described in the Plan that are
due within the "short-term deferral period" as defined in Section
409A of the Code shall not be treated as deferred compensation
unless Applicable Laws require otherwise. Notwithstanding anything
to the contrary in the Plan, to the extent required to avoid
accelerated taxation and tax penalties under Section 409A of the
Code, amounts that would otherwise be payable and benefits that
would otherwise be provided pursuant to the Plan during the six (6)
month period immediately following the Participant's termination of
Continuous Service shall instead be paid on the first payroll date
after the six-month anniversary of the Participant's separation from
service (as defined in Section 409A of the Code) or the
Participant's death, if earlier. Notwithstanding the foregoing,
neither the Company nor the Committee shall have any obligation to
take any action to prevent the assessment of any excise tax or
penalty on any Participant under Section 409A of the Code and
neither the Company nor the Committee will have any liability to any
Participant for such tax or penalty.
14.11 Disqualifying Dispositions.
--------------------------
Any Participant who shall make a "disposition" (as defined in
Section 424 of the Code) of all or any portion of shares of Common
Stock acquired upon exercise of an Incentive Stock Option within two
years from the Grant Date of such Incentive Stock Option or within
one year after the issuance of the shares of Common Stock acquired
upon exercise of such Incentive Stock Option (a "Disqualifying
Disposition") shall be required to immediately advise the Company in
writing as to the occurrence of the sale and the price realized upon
the sale of such shares of Common Stock.
14.12 Section 16.
----------
It is the intent of the Company that the Plan satisfy, and be
interpreted in a manner that satisfies, the applicable requirements
of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so
that Participants will be entitled to the benefit of Rule 16b-3, or
any other rule promulgated under Section 16 of the Exchange Act, and
will not be subject to short-swing liability under Section 16 of the
Exchange Act. Accordingly, if the operation of any provision of the
Plan would conflict with the intent expressed in this Section 14.13,
such provision to the extent possible shall be interpreted and/or
deemed amended so as to avoid such conflict.
14.13 Section 162(m).
--------------
To the extent the Committee issues any Award that is intended to be
exempt from the deduction limitation of Section 162(m) of the Code,
the Committee may, without shareholder or grantee approval, amend
the Plan or the relevant Award Agreement retroactively or
prospectively to the extent it determines
necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company's
federal income tax deduction for compensation paid pursuant to any
such Award.
14.14 Beneficiary Designation.
-----------------------
Each Participant under the Plan may from time to time name any
beneficiary or beneficiaries by whom any right under the Plan is to
be exercised in case of such Participant's death. Each designation
will revoke all prior designations by the same Participant, shall be
in a form reasonably prescribed by the Committee and shall be
effective only when filed by the Participant in writing with the
Company during the Participant's lifetime.
14.15 Expenses.
--------
The costs of administering the Plan shall be paid by the Company.
14.16 Severability.
------------
If any of the provisions of the Plan or any Award Agreement is held
to be invalid, illegal or unenforceable, whether in whole or in
part, such provision shall be deemed modified to the extent, but
only to the extent, of such invalidity, illegality or
unenforceability and the remaining provisions shall not be affected
thereby.
14.17 Plan Headings.
-------------
The headings in the Plan are for purposes of convenience only and
are not intended to define or limit the construction of the
provisions hereof.
14.18 Non-Uniform Treatment.
---------------------
The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who are eligible to
receive, or actually receive, Awards. Without limiting the
generality of the foregoing, the Committee shall be entitled to make
non-uniform and selective determinations, amendments and adjustments,
and to enter into non-uniform and selective Award Agreements.
15. Effective Date of Plan.
----------------------
The Plan shall become effective as of the Effective Date, but no Award
shall be exercised (or, in the case of a stock Award, shall be granted)
unless and until the Plan has been approved by the shareholders of the
Company, which approval shall be within twelve (12) months before or
after the date the Plan is adopted by the Board.
16. Termination or Suspension of the Plan.
-------------------------------------
The Plan shall terminate automatically on the tenth (10th) anniversary of
the Effective Date. No Award shall be granted pursuant to the Plan after
such date, but Awards theretofore granted may extend beyond that date.
The Board may suspend or terminate the Plan at any earlier date pursuant
to Section 13.1 hereof. No Awards may be granted under the Plan while the
Plan is suspended or after it is terminated. Unless the Company determines
to submit Section 7.4 of the Plan and the definition of "Performance Goal"
and "Performance Criteria" to the Company's shareholders at the first
shareholder meeting that occurs in the fifth year following the year in
which the Plan was last approved by shareholders (or any earlier meeting
designated by the Board), in accordance with the requirements of Section
162(m) of the Code, and such shareholder approval is obtained, then no
further Performance Compensation Awards shall be made to Covered Employees
under Section 7.4 after the date of such annual meeting, but the Plan may
continue in effect for Awards to Participants not in accordance with
Section 162(m) of the Code.
17. Choice of Law.
-------------
The law of the State of Florida shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to
such state's conflict of law rules.
As adopted by the Board of Directors of FRP Holdings, Inc. on
December 7, 2016.