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APPENDIX A ________________, INC.
20_____ STOCK OPTION AND AWARD PLAN
ARTICLE 1. Establishment, Purpose and Duration
1.1 Establishment of the Plan. ________________, INC., a _______________
corporation (hereinafter referred to as "___________"), hereby establishes a stock option and
award plan to be known as the "_____________, INC. 20_____ Stock Option and Award Plan"
(the "Plan"), as set forth in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Performance Shares and Restricted Stock.
The effective date of the Plan is _________, 20____ (the "Effective Date") and the Plan
shall
remain in effect as provided in Section 1.3.
1.2 Purpose of the Plan. The purpose of the Plan is to secure for ________ and its
stockholders the benefits of the incentive inherent in stock ownership in ________ by key
employees, directors and other persons who are largely responsible for its future growth and
continued success. The Plan promotes the success and enhances the value of __________ by
linking the personal interests of Participants to those of _____________ 's stockholders, and by
providing Participants with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to __________ in its ability to motivate,
attract and retain the services of Participants upon whose judgment, interest and special effort the
successful conduct of its operation largely depends.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date and shall
remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at
any time pursuant to Article 13, until the day prior to the tenth (10th) anniversary of the Effective
Date.
ARTICLE 2. Definitions
Whenever used herein, the following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Performance Shares or Restricted Stock.
(b) "Award Agreement" means an agreement entered into by each Participant
and
____________, setting forth the terms and provisions applicable to Awards granted to
Participants
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hereunder.
(c) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to
such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
(d) "Board" or "Board of Directors" means the board of directors of _____________.
(e) "Cause" means: (i) willful misconduct on the part of a Participant that is
materially detrimental to ____________; or (ii) the indictment of a Participant for the
commission of a felony. The existence of "Cause" under either (i) or (ii) shall be determined by
the Committee. Notwithstanding the foregoing, if the Participant has entered into an employment
agreement that is binding as of the date of employment termination, and if such employment
agreement defines "Cause" and/or provides a means of determining whether "Cause" exists, the
definition of "Cause" and the means of determining whether "Cause" exists provided for in the
employment agreement shall apply to the Participant for purposes hereof.
(f) "Change in Control" shall be deemed to have occurred if:
(i) An acquisition by any Person of Beneficial Ownership of the Shares then
outstanding ("__________ Common Stock Outstanding") or the voting securities of
___________ then outstanding entitled to vote generally in the election of directors
("___________ Voting Securities Outstanding"); provided such acquisition of Beneficial
Ownership would result in the Person's beneficially owning (within the meaning of Rule
13d-3 promulgated under the Exchange Act) twenty-five percent (25%) or more of
__________ Common Stock Outstanding or twenty-five percent (25%) or more of the
combined voting power of __________ Voting Securities Outstanding; and provided
further, that immediately prior to such acquisition such Person was not a direct or indirect
Beneficial Owner of twenty-five percent (25%) or more of __________ Common Stock
Outstanding or twenty-five percent (25%) or more of the combined voting power of
__________ Voting Securities Outstanding, as the case may be; or
(ii) The approval of the stockholders of ____________ of a reorganization,
merger, consolidation, complete liquidation or dissolution of __________, the sale or
disposition of all or substantially all of the assets of __________ or similar corporate
transaction (in each case referred to in this Section 2(f) as a "Corporate Transaction") or,
if consummation of such Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental agency, the obtaining of
such consent (either explicitly or implicitly); or
(iii) A change in the composition of the Board such that the individuals
who, as of
the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 2(f), that any individual who becomes a
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member of the Board subsequent to the Effective Date whose election, or nomination for
election by ___________'s stockholders, was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as
though such individual were a member of the Incumbent Board; but, provided, further,
that any such individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act, including any successor to such Rule) or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board shall not be so considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii) of this Section 2(f), the
following shall not constitute a Change in Control for purposes hereof: (1) any acquisition of
shares of common stock of _______________ by, or consummation of a Corporate Transaction
with, any Subsidiary or an employee benefit plan (or related trust) sponsored or maintained by
_______________ or an affiliate; or (2) any acquisition of shares of common stock of
_______________, or consummation of a Corporate Transaction, following which more than
fifty percent (50%) of the shares of common stock then outstanding of the corporation resulting
from such acquisition or Corporate Transaction and more than fifty percent (50%) of the
combined voting power of the voting securities then outstanding of such corporation entitled to
vote generally in the election of directors, is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were Beneficial Owners of
_______________ Common Stock Outstanding and _______________ Voting Securities
Outstanding, respectively, immediately prior to such acquisition or Corporate Transaction in
substantially the same proportions as their ownership, immediately prior to such acquisition or
Corporate Transaction, of _______________ Common Stock Outstanding and
_______________ Voting Securities Outstanding, as the case may be.
(g) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(h) "Committee" means the committee appointed by the Board to administer
the Plan
with respect to grants of Awards, as specified in Article 3.
(i) "Director" means any individual who is a member of the Board of
Directors.
(j) "Disability" shall have the meaning ascribed to such term in the _______________
long-term disability plan covering the Participant, or in the absence of such plan, a meaning
consistent with Section 22(e)(3) of the Code.
(k) "Employee" means any full-time, salaried employee of _______________, or
_______________'s Subsidiaries.
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(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from
time to time, or any successor act thereto.
(m) "Fair Market Value" shall be determined as follows:
(i) If, on the relevant date, the Shares, are traded on a national or regional
securities exchange or on The Nasdaq Stock Market ("Nasdaq") and closing sale prices
for the Shares are customarily quoted, on the basis of the closing sale price on the
principal such securities exchange on which the Shares may then be traded or, if there is
no such sale on the relevant date, then on the immediately preceding day on which a sale
was reported;
(ii) If, on the relevant date, the Shares are not listed on any securities
exchange
or traded on Nasdaq, but nevertheless are publicly traded and reported on Nasdaq without
closing sale prices for the Shares being customarily quoted, on the basis of the mean
between the closing bid and asked quotations in such other over-the-counter market as
reported by Nasdaq; but, if there are no bid and asked quotations in the over-the-counter
market as reported by Nasdaq on that date, then the mean between the closing bid and
asked quotations in the over-the-counter market as reported by Nasdaq on the
immediately preceding day such bid and asked prices were quoted; and
(iii) If, on the relevant date, the Shares are not publicly traded as
described in
(i) or (ii), on the basis of the good faith determination of the Committee.
(n) "Final Award" means the actual award earned during a performance
period by a
Participant, as determined by the Committee at the end of the performance period pursuant to
Article 7.
(o) "Incentive Payment Date" means the seventy-fifth (75th) day following
the last day of the performance period during which the Final Award under Article 7 was earned,
or such
earlier date upon which Final Awards are paid to Participants.
(p) "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted
under Article 6 which is designated as an Incentive Stock Option and is intended to meet the
requirements of Section 422 of the Code.
(q) "Insider" shall mean a Person who is, on the relevant date, a director,
officer or ten
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percent (10%) beneficial owner of any class of _______________'s equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the
Exchange Act.
(r) "Named Executive Officer" means a Participant who, as of the date of
vesting
and/or payout of an Award is one of the group of "covered employees," as defined in the
regulations promulgated under Code Section 162(m), or any successor statute.
(s) "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares
granted under Article 6 which is not intended to meet, or does not meet, the requirements of
Code Section 422.
(t) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
(u) "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option, as determined by the Committee.
(v) "Participant" means an Employee, director or other Person who has been
granted
an Award which is outstanding.
(w) "Performance Share" means an Award granted to an Employee, as described in
Article 7.
(x) "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the
Exchange Act and used in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) thereof.
(y) "Plan Year" shall mean, for purposes of Article 7, _______________'s
fiscal year which coincides with each calendar year during the term hereof.
(z) "Retirement" shall have the meaning ascribed to such term in the
_______________ INC. Retirement Savings and Profit Sharing Plan and Trust.
(aa) "Restricted Stock" means an Award of restricted Shares
granted in accordance with the terms of Article 8 and the other provisions hereof.
(ab) "Shares" means the shares of _______________ common
stock, par value $0.05 per share.
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(ac) "Subsidiary" means any corporation, partnership, joint
venture or other entity in which _______________ has a fifty percent (50%) or greater voting
interest.
ARTICLE 3. Administration
3.1 The Committee. The Plan shall be administered by the Stock Option and Bonus
Committee of the Board, or by any other Committee appointed by the Board consisting of not
less than two (2) Directors who are "non-employee directors" under Rule 16b-3 or any successor
thereto under the Exchange Act. The members of the Committee shall be appointed from time to
time by, and shall serve at the discretion of, the Board of Directors.
The Committee shall be comprised solely of non-employee directors who are eligible to
administer the Plan pursuant to Rule 16b-3(b)(3) or any successor thereto under the Exchange
Act. However, if for any reason any member of the Committee does not qualify to administer
the Plan, as contemplated by Rule 16b-3(b)(3) of the Exchange Act, the Board of Directors may
appoint a new Committee member who complies with Rule 16b-3(b)(3).
3.2 Authority of the Committee. Subject to the provisions hereof, the Committee shall
have full power to select the Employees and other Persons who are responsible for the future
growth and success of _______________, who may include, without limitation, consultants,
independent contractors or other providers of services to _______________, who shall
participate herein (who may change from year to year); determine the size and types of Awards;
determine the terms and conditions of Awards in a manner consistent herewith (including
vesting provisions and the duration of the Awards); construe and interpret the Plan and any
agreement or instrument entered into hereunder; establish, amend or waive rules and regulations
for the Plan's administration; and (subject to the provisions of Article 13) amend the terms and
conditions of any outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided herein, including to establish different terms and
conditions relating to the effect of the termination of employment or other service to
_______________. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration hereof. As permitted by law, the Committee may
delegate its authority hereunder.
3.3 Decisions Binding. All determinations and decisions made by the Committee
pursuant to the provisions hereof and all related orders and resolutions of the Board shall be
final, conclusive and binding on all Persons, including _______________, the stockholders,
Employees, Participants and their estates and beneficiaries.
ARTICLE 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the total
number of Shares available for grant of Awards shall be an aggregate of three million
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(3,000,000). These Shares may, in the discretion of _______________, be either authorized but
unissued Shares or shares held as treasury shares, including Shares purchased by _______________.
The following rules shall apply for purposes of the determination of the number of
Shares
available for grant hereunder;
(a) The grant of an option or Restricted Stock shall reduce the Shares
available
for grant hereunder by the number of shares subject to such Award.
(b) The Committee shall in each case determine the appropriate
number of
Shares to deduct from the authorized pool in connection with the grant of Performance
Shares.
(c) While an Option, Restricted Stock or Performance Share is
outstanding, it
shall be counted against the authorized pool of Shares, regardless of its vested status.
(d) In the event an Award is paid in the form of Shares or derivatives of
Shares, the authorized pool shall be reduced by the number of Shares or Share derivatives
paid to the Participant, as determined by the Committee.
(e) To the extent that an Award is settled in cash rather than in Shares,
the
authorized Share pool shall be credited with the appropriate number of Shares
represented by the cash settlement of the Award, as determined at the sole discretion of
the Committee (subject to the limitation set forth in Section 4.2).
4.2 Lapsed Awards. If any Award is canceled, terminates, expires or lapses for any
reason, any Shares subject to such Award shall again be available for the grant of an Award.
However, in the event that prior to the Award's cancellation, termination, expiration or lapse, the
holder of the Award at any time received one (1) or more "benefits of ownership" pursuant to
such Award (as defined by the Securities and Exchange Commission, pursuant to any rule or
interpretation promulgated under Section 16 of the Exchange Act), the Shares subject to such
Award shall not be made available for regrant hereunder.
4.3 Adjustments in Authorized Shares. In the event of any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of _______________,
any reorganization (whether or not such reorganization comes within the definition of such term
in Code Section 368) or any partial or complete liquidation of _______________, such
adjustment shall be made in the number and class of Shares which may be delivered hereunder,
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and in the number and class of and/or price of Shares subject to outstanding Awards, as may be
determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares subject to any
Award shall always be a whole number and the Committee shall make such adjustments as are
necessary to insure Awards of whole Shares.
ARTICLE 5. Eligibility and Participation
Any key Employee or Director of _______________, or of any Subsidiary, including any
such
Employee who is also a director of _______________, or of any Subsidiary, or any other Person,
including consultants, independent contractors or other service providers, whose judgment,
initiative and efforts contribute or may be expected to contribute materially to the successful
performance of _______________ or any Subsidiary shall be eligible to receive an Award. In
determining the Employees and other Persons to whom an Award shall be granted and the
number of Shares which may be granted pursuant to that Award, the Committee shall take into
account the duties of the respective Person, their present and potential contributions to the
success of _______________ or any Subsidiary, and such other factors as the Committee shall
deem relevant in connection with accomplishing the purpose hereof.
ARTICLE 6. Stock Options
6.1 Grant of Options.
(a) Eligible Persons other than Outside Directors. Subject to the terms and provisions
hereof, Options may be granted to Employees or other Persons at any time and from time to time
as shall be determined by the Committee. The Committee shall have discretion in determining
the number of Shares subject to Options granted to each Participant; provided, however, that in
the case of any ISO, only an Employee may receive such grant and the aggregate Fair Market
Value (determined at the time such Option is granted) of the Shares to which ISOs are
exercisable for the first time by the Optionee during any calendar year (hereunder and under all
other Incentive Stock Option Plans of _______________ and any Subsidiary) shall not exceed
$100,000. The Committee may grant a Participant ISOs, NQSOs or a combination thereof, and
may vary such Awards among Participants.
The maximum number of Options that a Named Executive Officer can be granted
hereunder during any twelve month period is 300,000.
(b) Outside Directors. Subject to the terms and provisions hereof, Options shall be
granted to Outside Directors as follows:
(i) Each Outside Director elected or appointed to the Board for the first time
after February 25, 1997 shall be granted an NQSO to purchase 15,000 Shares on the date
of such election or appointment; and
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(ii) Each Outside Director upon his or her re-election at the first meeting of
the
stockholders to elect Directors following the expiration of the Triennial Period shall be
granted an NQSO to purchase 15,000 Shares.
Each such Option shall have an Option Price equal to one hundred percent (100%) of the Fair
Market Value of a Share on the date of grant, shall have a term often (10) years and shall vest
twenty percent (20%) on the date of grant and (20%) on each anniversary thereof. For purposes
of this Section 6.1(b), the term "Outside Director" shall mean any Director that is not an
employee of the Company or any Subsidiary. Further, the term "Triennial Period" shall mean, in
respect of any Outside Director, the three year period beginning on the date of the last grant of
Options to such Outside Director under Section 6.1(b), and ending three calendar years
thereafter.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement
that shall specify the Option Price, the duration of the Option, the number of Shares to which the
Option pertains and such other provisions as the Committee shall determine. The Award
Agreement shall further specify whether the Award is intended to be an ISO or an NQSO. Any
portion of an Option that is not designated as an ISO or otherwise fails or is not qualified to be
treated as an ISO (even if designated as an ISO) shall be a NQSO.
6.3 Option Price. The Option Price for each grant of an ISO shall be not less than one
hundred percent (100%) of the Fair Market Value of a Share on the date the ISO is granted. In no
event, however, shall any Participant, who at the time he would otherwise be granted an Option
owns (within the meaning of Section 424(d) of the Code) stock of _______________ possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of
_______________be eligible to receive an ISO at an Option Price less than one hundred ten
percent (110%) of the Fair Market Value of a Share on the date the ISO is granted. The price at
which each Share covered by each NQSO shall be purchased by an Optionee shall be established
by the Committee, but in no event shall such price be less than eighty-five percent (85%) of the
Fair Market Value (or such lower percentage of Fair Market Value as may be established by
Internal Revenue Service rules or regulations as the limit for granting discounted stock options
without causing immediate tax consequences to the Participant) of a Share on the date the Option
is granted.
6.4 Duration of Options. Each Option shall expire at such time as the Committee shall
determine at the time of grant; provided, however, that no Option shall be exercisable later than
the tenth (10th) anniversary date of its grant; provided, further, however, that any ISO granted to
any Participant who at such time owns (within the meaning of Section 424(d) of the Code) stock
of _______________ possessing more than ten percent (10%) of the total combined voting
power of all classes of stock in _______________, shall be exercisable not later than the fifth
(5th) anniversary date
of its grant.
6.5 Exercise of Options. Options shall be exercisable at such times and be subject to
such restrictions and conditions the Committee shall in each instance approve, which need not be
the same for each grant or each Participant. Each Option shall be exercisable for such number of
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Shares and at such time or times, including periodic installments, as may be determined by the
Committee at the time of the grant. Except as otherwise provided in the Award Agreement and
Article 12, the right to purchase Shares that are exercisable in periodic installments shall be
cumulative so that when the right to purchase any Shares has accrued, such Shares or any part
thereof may be purchased at any time thereafter until the expiration or termination of the
Option.
6.6 Payment. Options shall be exercised by the delivery of a written notice of
exercise to _______________, setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon
exercise of any Option shall be payable to _______________ in full either: (a) in cash, or (b) if
approved by the Committee, by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price, or (c) by a combination of(a)
and (b). The Committee also may allow cashless exercises as permitted under Federal Reserve
Board's Regulation T, subject to applicable securities law restrictions, or by any other means
which the Committee determines to be consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise and full payment,
_______________ shall deliver to the Participant, in the Participant's name, Share certificates in
an appropriate amount based upon the number of Shares purchased under the Option(s).
6.7 Termination of Employment Due to Death or Disability. Unless otherwise
provided by the Committee in an Award Agreement, the following rules shall apply in the event
of the Participant's termination of employment due to death or Disability. With respect to a
Participant that is a non-employee director of _______________ or is otherwise not an
Employee, the following references to employment shall be deemed to be references to service
as a director or in such other capacity as is determined by the Committee:
(a) Termination by Death. In the event the Participant dies while
actively
employed, all outstanding Options granted to that Participant shall immediately vest and
shall remain exercisable at any time prior to their expiration date, or for two (2) years after
the date of death, whichever period is shorter, by (i) such Person(s) as shall have been
named as the Participant's beneficiary, (ii) such Person(s) that have acquired the
Participant's rights under such Options by will or by the laws of descent and distribution,
(iii) the Participant's estate or representative of the Participant's estate or (iv) by a
transferee of the Option who has acquired the Option in a transaction that is permitted by
Section 6.9.
(b) Termination by Disability. In the event the employment of a
Participant is
terminated by reasbn of Disability, all outstanding Options granted to that Participant shall
immediately vest as of the date the Committee determines the definition of Disability to
have been satisfied and shall remain exercisable at any time prior to their expiration date,
or for one (1) year after the date that the Committee determines the definition of Disability
to have been satisfied, whichever period is shorter, by the Participant's duly appointed
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guardian or other legal representative.
(c) Employment Termination Followed by Death. In the event that a
Participant's employment terminates by reason of Disability, and within the exercise
period
following such termination the Participant dies, then the remaining exercise period for
outstanding Options shall be one (1) year following death. Such Options shall be
exercisable by the Persons specified in subsection (a) above.
6.8 Termination of Employment for Other Reasons. If the employment of
a Participant shall terminate for any reason other than the reasons set forth in Section 6.7, all
Options held by the Participant which are not vested as of the effective date of employment
termination immediately shall be forfeited to _______________ (and shall once again become
available for grant hereunder). However, the Committee, in its sole discretion, shall have the
right to immediately vest all or any portion of such Options, subject to such terms as the
Committee, in its sole discretion, deems appropriate.
In the event an Employee's employment is terminated by _______________ for Cause, or
an
Employee voluntarily terminates his employment, the rights under any then vested outstanding
Options shall terminate immediately upon such termination of employment. If the Employee's
employment is terminated by _______________ without Cause, any Options vested as of the
date of termination shall remain exercisable at any time prior to their expiration date or for
three (3) months after his date of termination of employment, whichever period is shorter.
6.9 Limited Transferability. A Participant may transfer an Option to members of his
or her Immediate Family, to one or more trusts for the benefit of such Immediate Family
members, or to one or more partnerships where such Immediate Family members are the only
partners, if (i) the Award Agreement evidencing such Option expressly provides that the Option
may be transferred and (ii) the Participant does not receive any consideration in any form
whatsoever for said transfer thereof. Any Option so transferred shall continue to be subject to the
same terms and conditions in the hands of the transferee as were applicable to said Option
immediately prior to the transfer thereof. Any reference in any such Award Agreement to the
employment by or performance of services for _______________ by the Participant shall
continue to refer to the employment of or performance by the transferring Participant. For
purpose hereof. "Immediate Family" shall mean the Participant and the Participant's spouse, and
their respective ancestors and descendants. Any Option that is granted pursuant to any Award
Agreement that did not initially expressly allow the transfer of said Option and that has not been
amended to expressly permit such transfer, shall not be transferable by the Participant
otherwise than by will or by the laws of descent and distribution and such Option thus shall be
exercisable during the Participant's lifetime only by the Participant.
ARTICLE 7. Performance Shares
7.1 Grant of Performance Shares. Subject to the terms hereof, Performance Shares
may be granted to eligible Employees at any time and from time to time for no consideration, as
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shall be determined by the Committee. The Committee shall have complete discretion in
determining the number of Performance Shares granted to each Participant; provided, however,
that unless and until _______________'s stockholders vote to change the maximum number of
Performance Shares that may be earned by any one Named Executive Officer (subject to the
terms of Article 13), none of the Named Executive Officers may earn more than three hundred
thousand (300,000) Performance Shares with respect to any performance period.
7.2 Value of Performance Shares. Each Performance Share shall have a value equal to
the Fair Market Value of a Share on the date the Performance Share is earned. The Committee
shall set performance goals in its discretion which, depending on the extent to which they are
met, will determine the number of Performance Shares that will be earned by the Participants.
The time period during which the performance goals must be met shall be called a
"performance
period." Performance periods shall, in all cases, equal or exceed two (2) years in length. The
performance goals shall be established at the beginning of the performance period (or within
such
time period as is permitted by Code Section 162(m)).
Unless and until _______________'s stockholders vote to change the general performance
measures (subject to the terms of Article 13), the attainment of which shall determine the number
of Performance Shares earned hereunder, the Committee will use one or more of the following
performance measures for purposes of grants to Named Executive Officers: total shareholder
return, return on assets, return on equity, earnings per share and ratio of operating overhead to
operating revenue. Each Plan Year, the Committee, in its sole discretion, may select among the
performance measures specified in this Section 7.2 and set the relative weights to be given to
such performance measures. However, in the case of Participants who are not Named Executive
Officers, the Committee may approve performance measures that are not specified in this Section
7.2 without obtaining stockholder approval of such measures.
In the event that applicable tax and/or securities laws (including, but not limited to, Code
Section 162(m) and Section 16 of the Exchange Act) change to permit Committee discretion to
alter the governing performance measures without obtaining stockholder approval of such
changes, the Committee shall have sole discretion to make such changes without obtaining
stockholder approval.
7.3 Earning of Performance Shares. After the applicable performance period has
ended,
the Committee shall certify the extent to which the established performance goals have been
achieved. Subsequently, each holder of Performance Shares shall be entitled to receive payout on
the number of Performance Shares earned by the Participant over the performance period, to be
determined as a function of the extent to which the corresponding performance goals have been
achieved. The Committee may, in its sole discretion, decrease the amount of a Final Award
otherwise payable to a Participant under this Article 7. The Committee shall have no discretion,
however, to increase the amount of a Final Award otherwise payable to a Named Executive
Officer under this Article 7.
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7.4 Form and Timing of Payment of Performance Shares. Payment of earned
Performance Shares shall be made, in a single lump sum, promptly but in no event later than the
Incentive Payment Date. The Committee, in its sole discretion, may pay earned Performance
Shares in the form of cash or in Shares (or in a combination thereof) which have, as of the close
of the applicable performance period, an aggregate Fair Market Value equal to the value of the
earned Performance Shares.
7.5 Termination of Employment Due to Death, Disability or at the Request of
_______________ Without Cause. In the event the employment of a Participant is terminated by
reason of death, Disability or by _______________ without Cause during a performance period,
the Participant shall receive a prorated payout with respect to the Performance Shares. The
prorated payout shall be determined by the Committee, in its sole discretion, and shall be based
upon the length of time that the Participant held the Performance Shares during the performance
period, and shall further be adjusted based on the achievement of the established performance
goals at the time of his termination.
Payment of earned Performance Shares shall be made at the same time payments are made
to Participants who did not terminate employment during the applicable performance period.
7.6 Termination of Employment for Other Reasons. In the event that a Participant's
employment terminates for any reason other than those reasons set forth in Section 7.5, all
Performance Shares shall be forfeited by the Participant to _______________.
7.7 Non-transferability. Unless the Committee provides otherwise in the Award
Agreement, Performance Shares may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws of descent and distribution. Further,
a
Participant's Performance Shares rights hereunder shall be exercisable during the Participant's
lifetime only by the Participant or the Participant's legal representative.
ARTICLE 8. Restricted Stock
8.1 Grants. The Committee may from time to time in its discretion grant
Restricted Stock
to Employees and may determine the number of Shares of Restricted Stock to be granted and the
terms and conditions of, and the amount of payment, if any, to be made by the Employee for,
such Restricted Stock. A grant of Restricted Stock may require the Employee to pay for such
Shares of Restricted Stock, but the Committee may establish a price below Fair Market Value at
which the Employee can purchase the Shares of Restricted Stock. Each grant of Restricted Stock
will be evidenced by an Award Agreement containing terms and conditions not inconsistent
herewith as the Committee shall determine to be appropriate in its sole discretion. Such
Restricted Stock shall be granted subject to the restrictions prescribed pursuant hereto and the
Award Agreement.
8.2 Restricted Period; Lapse of Restrictions. At the time a grant of Restricted
Stock is
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made, the Committee shall establish a period or periods of time (the "Restricted Period")
applicable to such grant which, unless the Committee otherwise provides, shall not be less than
one (1) year. Subject to the other provisions of this Article 8, at the end of the Restricted Period
all restrictions shall lapse and the Restricted Stock shall vest in the Participant. At the time a
grant is made, the Committee may, in its discretion, prescribe conditions for the incremental
lapse of restrictions during the Restricted Period and for the lapse or termination of restrictions
upon the occurrence of other conditions in addition to or other than the expiration of the
Restricted Period with respect to all or any portion of the Restricted Stock. Such conditions may,
but need not, include without limitation, (a) the death, Disability or Retirement of the Employee
to whom Restricted Stock is granted or (b) the occurrence of a Change in Control. The
Committee may also, in its discretion, shorten or terminate the Restricted Period, or waive any
conditions for the lapse or termination of restrictions with respect to all or any portion of the
Restricted Stock at any time after the date the grant is made.
8.3 Rights of Holder; Limitations Thereon. Upon a grant of Restricted Stock, a stock
certificate (or certificates) representing the number of Shares of Restricted Stock granted to the
Employee shall be registered in the Employee's name and shall be held in custody by
_______________ or a bank selected by _______________ for the Employee's account.
Following such registration, the Employee shall have the rights and privileges of a stockholder as
to such Restricted Stock, including the right to receive dividends and to vote such Restricted
Stock, except that, the right to receive cash dividends shall be the right to receive such dividends
either in cash currently or by payment in Restricted Stock, as the Committee shall determine, and
except further that, the following restrictions shall apply:
(a) The Employee shall not be entitled to delivery of a certificate until
the
expiration or termination of the Restricted Period for the Shares represented by such
certificate and the satisfaction of any and all other conditions prescribed by the
Committee;
(b) None of the Shares of Restricted Stock may be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of during the Restricted Period and until
the satisfaction of any and all other conditions prescribed by the Committee; and
(c) All of the Shares of Restricted Stock that have not vested shall be
forfeited
and all right of the Employee to such Restricted Stock shall terminate without further
obligation on the part of _______________ unless the Employee has remained a full-time
employee of _______________ or any of its Subsidiaries until the expiration or termination of
the Restricted Period and the satisfaction of any and all other conditions prescribed by the
Committee applicable to such Restricted Stock. Upon the forfeiture of any Shares of
Restricted Stock, such forfeited Shares shall be transferred to _______________ without
further action by the Employee, and shall, in accordance with Section 4.2, again be available
for grant hereunder.
With respect to any Shares received as a result of adjustments under Section 4.3 and any
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Shares received with respect to cash dividends declared on Restricted Stock, the Participant shall
have the same rights and privileges, and be subject to the same restrictions, as are set forth in this
Article 8.
8.4 Delivery of Unrestricted Shares. Upon the expiration or termination of the
Restricted Period for any Shares of Restricted Stock and the satisfaction of any and all other
conditions prescribed by the Committee, the restrictions applicable to such Restricted Stock
shall lapse and a stock certificate for the number of Shares of Restricted Stock with respect to
which the restrictions have lapsed shall be delivered, free of all such restrictions except any that
may be imposed by law, to the holder of the Restricted Stock. _______________ shall not be
required to deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value
(determined as of the date the restrictions lapse) of such fractional share to the holder thereof.
Prior to or concurrently with the delivery of a certificate for Restricted Stock, the holder shall be
required to pay an amount necessary to satisfy any applicable federal, state and local tax
requirements as set out in Article 14.
8.5 Non-assignability of Restricted Stock. Unless the Committee provides
otherwise in the Award Agreement, no grant of, nor any right or interest of a Participant in or
to any Restricted Stock, or in any instrument evidencing any grant hereunder, maybe assigned,
encumbered or transferred except, in the event of the death of a Participant, by will or the laws of
descent and distribution.
ARTICLE 9. Beneficiary Designation
Each Participant hereunder may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit hereunder is to be paid in
case of his or her death before he or she receives any or all of such benefit. Each such
designation
shall revoke all prior designations by the same Participant, shall be in a form prescribed by
____________ and shall be effective only when filed by the Participant, in writing, with
_______________ during the Participant's lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate.
The spouse of a married Participant domiciled in a community property jurisdiction shall
join in any designation of beneficiary or beneficiaries other than the spouse.
ARTICLE 10. Deferrals
The Committee may permit a Participant to defer to another plan or program such
Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due
to such Participant by virtue of the exercise of an Option, the satisfaction of any requirements or
goals with respect to Performance Shares or the vesting of Restricted Stock. If any such deferral
election is required or permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
ARTICLE 11. Rights of Employees
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11 .1 Employment. Nothing herein shall interfere with or limit in any way the right of
_______________ or a Subsidiary to terminate any Participant's employment or engagement by
_______________ at any time, nor confer upon any Participant any right to continue in the
employ or service of _______________ or a Subsidiary. For purpose hereof, transfer of
employment of a Participant between _______________ and any one of its Subsidiaries (or
between Subsidiaries) shall not be deemed a termination of employment.
11.2 Participation. No Employee shall have the right to be selected to receive an
Award, or, having been so selected, to be selected to receive a future Award.
ARTICLE 12. Change in Control
Upon the occurrence of a Change in Control, except as provided in the Award Agreement
or unless otherwise specifically prohibited by the terms of Article 17.
(a) Any and all Options granted hereunder shall become fully vested
and
immediately exercisable;
(b) The target payout opportunity attainable under all outstanding
Performance
Shares shall be deem to have been fully earned for the entire performance period(s) as of
the effective date of the Change in Control, and all earned Performance Shares shall be
paid out in accordance with Section 7.4 to Participants within thirty (30) days following
the effective date of the Change in Control;
(c) All restrictions on a grant of Restricted Stock shall lapse and such
Restricted Stock shall be delivered to the Participant in accordance with Section 8.4; and
(d) Subject to Article 13, the Committee shall have the authority to
make any
modifications to the Awards as determined by the Committee to be appropriate before the
effective date of the Change in Control.
ARTICLE 13. Amendment, Modification and Termination
13.1 Amendment Modification and Termination. The Board may, at any time and from
time to time, alter, amend, suspend or terminate the Plan in whole or in part.
13.2 Awards Previously Granted. No termination, amendment or modification hereof
shall adversely affect in any material way any Award previously granted hereunder, without the
written consent of the Participant holding such Award. The Committee, with the written consent
of the Participant holding such Award, shall have the authority to cancel Awards outstanding
and grant replacement Awards therefor.
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13.3 Compliance With Code Section 162(m). At all times when the Committee
determines that compliance with Code Section 162(m) is desired, all Awards shall comply with
the requirements of Code Section 162(m). In addition, in the event that changes are made
to Code Section 162(m) to permit greater flexibility with respect to any Award or Awards, the
Committee may, subject to this Article 13, make any adjustments it deems appropriate.
ARTICLE 14. Withholding
14.1 Tax Withholding. _______________ shall have the power and the right to deduct
or withhold, or require a Participant to remit to _______________, an amount sufficient to
satisfy federal, state and local taxes (including the Participant's FICA obligation) required by law
to be withheld with respect to any taxable event arising in connection with an Award.
14.2 Share Withholding. With respect to withholding required upon the exercise of
Options, or upon any other taxable event as a result of Awards granted hereunder which are to be
paid in the form of Shares, a Participant may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having _______________ withhold
Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum
statutory total tax which could be imposed on the transaction. All elections shall be irrevocable,
made in writing, signed by the Participant, and elections by Insiders shall additionally comply
with all legal requirements applicable to Shares transactions by such Participants.
ARTICLE 15. Indemnification
Each person who is or shall have been a member of the Committee, or the Board, shall be
indemnified and held harmless by _______________ against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may be party or in which
he or she may be involved by reason of any action taken or failure to act hereunder and against
and from any and all amounts paid by him or her in settlement thereof, with _______________'s
approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding
against him, provided he shall give _______________ an opportunity, at its own expense, to
handle and defend the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall be in addition to any other rights of indemnification to
which such persons may be entitled under _______________'s Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that _______________ may have to
indemnify them or hold them harmless.
ARTICLE 16. Successors
All obligations of _______________ hereunder, with respect to Awards, shall be binding
on any successor to _______________, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of _______________.
ARTICLE 17. Legal Construction
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17.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall include the singular
and the singular shall include the plural.
17.2 Severability. In the event any provision hereof shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts hereof, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not been included.
17.3 Requirements of Law. The granting of Awards and the issuance of Shares under
the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
17.4 Regulatory Approvals and Listing. _______________ shall not be required to
issue any certificate or certificates for Shares hereunder prior to (i) obtaining any approval from
any governmental agency which _______________ shall, in its discretion, determine to be
necessary or advisable, (ii) the admission of such Shares to listing on any national securities
exchange or Nasdaq on which _______________'s Shares may be listed and (iii) the completion
of any registration or other qualification of such Shares under any state or federal law or ruling
or regulations of any governmental body which _______________ shall, in its sole discretion,
determine to be necessary or advisable.
Notwithstanding any other provision set forth herein, if required by the then-current
Section 16 of the Exchange Act, any "derivative security": or "equity security" offered pursuant
hereto to any Insider may not be sold or transferred for at least six (6) months after the date of
grant of such Award. The terms "equity security" and "derivative security" shall have the
meanings ascribed to them in the then-current Rule 16(a) under the Exchange Act.
17.5 Securities Law Compliance. With respect to Insiders, transactions hereunder are
intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provisions hereof or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable
by the Committee.
17.6 Governing Law. To the extent not preempted by federal law, the Plan, and all
agreements hereunder, shall be construed in accordance with and governed by the laws of the
State of _______________.
_______________, Inc.
