As filed with the Securities and Exchange Commission on February 12, 1999.
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PINNACLE GLOBAL GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0583569
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
5599 SAN FELIPE, SUITE 1212
HOUSTON, TEXAS 77056
(Address of Principal Executive Offices)
PINNACLE GLOBAL GROUP, INC.
1998 INCENTIVE PLAN
(Full Title of the Plan)
Name, Address and Telephone Copy of Communications to:
Number of Agent for Service:
ROBERT E. GARRISON II JAMES M. HARBISON, JR.
5599 SAN FELIPE, SUITE 1212 PORTER & HEDGES, L.L.P.
HOUSTON, TEXAS 77056 700 LOUISIANA STREET, SUITE 3500
(713) 629-5771 HOUSTON, TEXAS 77002-2370
(713) 226-0600
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================
PROPOSED MAXIMUM PROPOSED
AMOUNT TO BE OFFERING MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share 1,100,000 $7.00 $7,700,000 $2,272
=================================================================================================================
</TABLE>
(1) Also registered hereunder is an indeterminate number of shares of Common
Stock issuable as a result of the anti-dilution provisions of the Plan and
an automatic quarterly adjustment mechanism provided thereunder.
(2) Pursuant to Rule 457(c), the registration fee is calculated on the basis
of the average of the high and low sale prices for the Common Stock on the
Nasdaq National Market on February 11, 1999, $7.00. Pursuant to Rule
457(h), the registration fee is calculated with respect to the maximum
number of the registrant's securities issuable under the Plan.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Securities and Exchange
Commission ("Commission") by Pinnacle Global Group, Inc. (the "Company" or
"Registrant") under its current name and the predecessor issuer names--"TEI,
Inc." and "Tanknology Environmental, Inc."--are incorporated into this
registration statement ("Registration Statement") by reference:
(1) TEI, Inc.'s annual report on Form 10-K for the year ended December 31,
1997, as filed on March 31, 1998.
(2) TEI, Inc.'s quarterly reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998, as filed on May
14, 1998, August 14, 1998 and November 17, 1998 (as amended by Forms
10-Q/A as filed on November 19, 1998 and November 20, 1998),
respectively.
(3) the Company's current report on Form 8-K as filed on February 1, 1999.
(4) All other reports filed by the Company or TEI, Inc. pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") since December 31, 1997.
(5) The description of the Company's common stock, par value $.01 per
share ("Common Stock"), which is contained in the Company's
Registration Statement on Form S-4 (Registration No. 333-65417).
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the
filing date of this Registration Statement and prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing such
documents. The Company will provide without charge to each participant in the
Company's 1998 Incentive Plan, upon written or oral request of such person, a
copy (without exhibits, unless such exhibits are specifically incorporated by
reference) of any or all of the documents incorporated by reference pursuant to
this Item 3.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Article 1302-7.06 of the Texas Miscellaneous Corporation Laws Act,
the articles of incorporation of a Texas corporation may provide that a director
of that corporation shall not be liable, or shall be liable only to the extent
provided in the articles of incorporation, to the corporation or its
shareholders for monetary damages for acts or omissions in the director's
capacity as a director, except that the articles of incorporation cannot provide
for the elimination or limitation of a director to the extent that the director
is found liable for (i) a breach of the director's duty of loyalty to the
corporation or its shareholders, (ii) acts or omissions not in good faith that
constitute a breach of duty of the director to the corporation or an act or
missions not in good faith that constitute a breach of duty of the director to
the corporation or an act or omission that involves intentional misconduct or a
knowing violation of the law, (iii) any transaction from which the director
received an improper benefit, or (iv) an act or omission for which the liability
of a director is expressly provided by an applicable statute. Article IX of the
Company's Articles of Incorporation, as
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<PAGE>
amended, states that a director of the Company shall not be liable to the
Company or its shareholders for monetary damages except to the extent otherwise
expressly provided by the statutes of the State of Texas.
In addition, Article 2.02-1 of the Texas Business Corporation Act (the
"TBCA") authorizes a Texas corporation to indemnify a person who was, or is
threatened to be made a named defendant or respondent in a proceeding, including
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative because the person is or
was a director. The TBCA provides that unless a court of competent jurisdiction
determines otherwise, indemnification is permitted only if it is determined that
the person (1) conducted himself in good faith; (2) reasonably believed (a) in
the case of conduct in his official capacity as a director of the corporation,
that his conduct was in the corporation's best interests; and (b) in all other
cases, that his conduct was at least not opposed to the corporation's best
interest; and (3) in the case of any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. A person may be indemnified under
Article 2.02-1 of the TBCA against judgments, penalties (including excise and
similar taxes), fines, settlements, and reasonable expenses actually incurred by
the person (including court costs and attorneys' fees), but if the person is
found liable to the corporation or is found liable on the basis that personal
benefit was improperly received by him, the indemnification is limited to
reasonable expenses actually incurred and shall not be made in respect of any
proceeding in which the person has been found liable for willful or intentional
misconduct in the performance of his duty to the corporation. A corporation is
obligated under Article 2.02-1 of the TBCA to indemnify a director or officer
against reasonable expenses incurred by him in connection with a proceeding in
which he is named defendant or respondent because he is or was a director or
officer if he has been wholly successful, on the merits or otherwise, in the
defense of the proceeding. Under Article 2.02-1 of the TBCA a corporation may
(i) indemnify and advance expenses to an officer, employee, agent or other
persons who are or were serving at the request of the corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another entity to the same extent that it may indemnify and
advance expenses to its directors, (ii) indemnify and advance expenses to
directors and such other persons identified in (i) to such further extent,
consistent with law, as may be provided in the corporation's articles of
incorporation, bylaws, action of its board of directors, or contract or as
permitted by common law and (iii) purchase and maintain insurance or another
agreement on behalf of directors and such other persons identified in (i)
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person.
The Bylaws, as amended, of the Company set forth specific provisions for
indemnification of directors, officers, agents and other persons which are
substantially identical to the provisions of Article 2.02-1 of the TBCA
described above.
The Company maintains directors' and officers' insurance and has entered
into agreements to indemnify each of its directors and certain of its executive
officers regarding liabilities that may result from such officer's service as an
officer of director of the Company.
The above discussion of the Company's Articles of Incorporation and
Bylaws, as amended, and Texas statutes is not intended to be exhaustive and is
qualified in its entirety by such Articles, Bylaws and statutes.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
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<PAGE>
ITEM 8. EXHIBITS
EXHIBIT
NO. DESCRIPTION
--------- ------------------
4.1 1998 Incentive Plan effective as of October 1, 1998 (filed
herewith).
5.1 Opinion of Porter & Hedges, L.L.P. with respect to legality of
securities (filed herewith).
23.1 Consent of PricewaterhouseCoopers LLP (filed herewith).
23.2 Consent of Chesier & Fuller, L.L.P. (filed herewith).
23.3 Consent of KPMG LLP. (filed herewith).
23.4 Consent of Grant Thornton LLP. (filed herewith).
23.5 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page of this Registration
Statement).
ITEM 9. UNDERTAKINGS
(a) UNDERTAKING TO UPDATE
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Securities and Exchange Commission by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
(b) UNDERTAKING WITH RESPECT TO DOCUMENTS INCORPORATED BY REFERENCE
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of
the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) UNDERTAKING WITH RESPECT TO INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
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<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Titus H. Harris, Jr. and Robert E. Garrison II,
and each of them, either of whom may act without joinder of the other, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all pre- and post-effective amendments and
supplements to this Registration Statement, and to file the same, or cause to
be filed the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or the substitute or substitutes
of either of them, may lawfully do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 12th day of
February, 1999.
PINNACLE GLOBAL GROUP, INC.
By: /s/ ROBERT E. GARRISON II
Robert E. Garrison II, President and
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on this 12th day of February, 1999.
SIGNATURE TITLE
--------- -----
/s/ ROBERT E. GARRISON II President, Chief Executive Officer
Robert E. Garrison II and Director
/s/ TITUS H. HARRIS, JR. Chairman of the Board and Director
Titus H. Harris, Jr.
/s/ DONALD R. CAMPBELL Vice Chairman and Director
Donald R. Campbell
/s/ STEPHEN M. RECKLING Director
Stephen M. Reckling
/s/ PETER W. BADGER Director
Peter W. Badger
/s/ RICHARD C. WEBB Director
Richard C. Webb
/s/ SEAN DOBSON Director
Sean Dobson
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<PAGE>
SIGNATURE TITLE
--------- -----
/s/ TONY COELHO Director
Tony Coelho
/s/ W. BLAIR WALTRIP Director
W. Blair Waltrip
/s/ JAMES H. GREER Director
James H. Greer
/s/ T.G. BOGLE Director
T.G. Bogle
/s/ T. CRAIG BENSON
T. Craig Benson Director
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<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
--------- ------------------
4.1 1998 Incentive Plan effective as of October 1, 1998 (filed
herewith).
5.1 Opinion of Porter & Hedges, L.L.P. with respect to legality of
securities (filed herewith).
23.1 Consent of PricewaterhouseCoopers LLP (filed herewith).
23.2 Consent of Chesier & Fuller, L.L.P. (filed herewith).
23.3 Consent of KPMG LLP. (filed herewith).
23.4 Consent of Grant Thornton LLP. (filed herewith).
23.5 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page of this Registration
Statement).
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EXHIBIT 4.1
PINNACLE GLOBAL GROUP, INC.
1998 INCENTIVE PLAN
(AS EFFECTIVE OCTOBER 1, 1998)
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. GENERAL PROVISIONS RELATING TO PLAN
GOVERNANCE, COVERAGE AND BENEFITS..............................1
1.1 Purpose........................................................1
1.2 Definitions....................................................2
(a) Appreciation.............................................2
(b) Authorized Officer.......................................2
(c) Board....................................................2
(d) Cause....................................................2
(e) Change in Control........................................2
(f) Code.....................................................2
(g) Committee................................................2
(h) Common Stock.............................................3
(i) Company..................................................3
(j) Consultant...............................................3
(k) Covered Employee.........................................3
(l) Deferred Stock...........................................3
(m) Disability...............................................3
(n) Employee.................................................4
(o) Employment...............................................4
(p) Exchange Act.............................................4
(q) Fair Market Value........................................4
(r) Grantee..................................................5
(s) Incentive Award..........................................5
(t) Incentive Agreement......................................5
(u) Incentive Stock Option...................................5
(v) Independent SAR..........................................5
(w) Insider..................................................5
(x) Nonstatutory Stock Option................................5
(y) Option Price.............................................6
(z) Other Stock-Based Award..................................6
(aa) Outside Director.........................................6
(bb) Parent...................................................6
(cc) Performance-Based Exception..............................6
(dd) Performance Period.......................................6
(ee) Performance Share or Performance Unit....................6
(ff) Plan.....................................................6
(gg) Publicly Held Corporation................................6
(hh) Restricted Stock.........................................6
(ii) Restricted Stock Award...................................6
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(jj) Restriction Period.......................................6
(kk) Retirement...............................................7
(ll) Share....................................................7
(mm) Share Pool...............................................7
(nn) Spread...................................................7
(oo) Stock Appreciation Right or SAR..........................7
(pp) Stock Option or Option...................................7
(qq) Subsidiary...............................................7
(rr) Supplemental Payment.....................................7
(ss) Tandem SAR...............................................7
1.3 Plan Administration............................................7
(a) Authority of the Committee...............................7
(b) Meetings.................................................8
(c) Decisions Binding........................................8
(d) Modification of Outstanding Incentive Awards.............8
(e) Delegation of Authority..................................8
(f) Expenses of Committee....................................9
(g) Surrender of Previous Incentive Awards...................9
(h) Indemnification..........................................9
1.4 Shares of Common Stock Available for Incentive Awards..........9
1.5 Share Pool Adjustments for Awards and Payouts.................11
1.6 Common Stock Available. .....................................11
1.7 Participation.................................................11
(a) Eligibility.............................................11
(b) Incentive Stock Option Eligibility......................12
1.8 Types of Incentive Awards.....................................12
SECTION 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS...................12
2.1 Grant of Stock Options........................................12
2.2 Stock Option Terms............................................13
(a) Written Agreement.......................................13
(b) Number of Shares........................................13
(c) Exercise Price..........................................13
(d) Term....................................................13
(e) Exercise................................................13
(f) $100,000 Annual Limit on Incentive Stock Options........13
2.3 Stock Option Exercises........................................14
(a) Method of Exercise and Payment..........................14
(b) Restrictions on Share Transferability...................15
(c) Notification of Disqualifying Disposition of Shares from
Incentive Stock Options.................................15
(d) Proceeds of Option Exercise.............................15
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<PAGE>
2.4 Stock Appreciation Rights in Tandem with Nonstatutory Stock
Options.................................................16
(a) Grant...................................................16
(b) General Provisions......................................16
(c) Exercise................................................16
(d) Settlement..............................................16
2.5 Stock Appreciation Rights Independent of Nonstatutory Stock
Options.................................................16
(a) Grant...................................................16
(b) General Provisions......................................16
(c) Exercise................................................17
(d) Settlement..............................................17
2.6 Reload Options................................................17
2.7 Supplemental Payment on Exercise of Nonstatutory Stock Options or
Stock Appreciation Rights.....................................17
SECTION 3. RESTRICTED STOCK..............................................18
3.1 Award of Restricted Stock.....................................18
(a) Grant...................................................18
(b) Immediate Transfer Without Immediate Delivery of
Restricted Stock........................................18
3.2 Restrictions..................................................19
(a) Forfeiture of Restricted Stock..........................19
(b) Issuance of Certificates................................19
(c) Removal of Restrictions.................................19
3.3 Delivery of Shares of Common Stock............................20
3.4 Supplemental Payment on Vesting of Restricted Stock...........20
SECTION 4. PERFORMANCE UNITS AND PERFORMANCE SHARES......................20
4.1 Performance Based Awards......................................20
(a) Grant...................................................20
(b) Performance Criteria....................................20
(c) Modification............................................21
(d) Payment.................................................21
(e) Special Rule for Covered Employees......................21
4.2 Supplemental Payment on Vesting of Performance Units or
Performance Shares............................................21
SECTION 5. OTHER STOCK-BASED AWARDS......................................22
5.1 Grant of Other Stock-Based Awards.............................22
5.2 Other Stock-Based Award Terms.................................22
(a) Written Agreement.......................................22
(b) Purchase Price..........................................22
(c) Performance Criteria and Other Terms....................22
(d) Payment.................................................23
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(e) Dividends...............................................23
SECTION 6. PROVISIONS RELATING TO PLAN PARTICIPATION.....................23
6.1 Plan Conditions...............................................23
(a) Incentive Agreement.....................................23
(b) No Right to Employment..................................24
(c) Securities Requirements.................................24
6.2 Transferability...............................................24
(a) Non-Transferable Awards and Options.....................24
(b) Ability to Exercise Rights..............................25
6.3 Rights as a Stockholder.......................................25
(a) No Stockholder Rights...................................25
(b) Representation of Ownership.............................25
6.4 Listing and Registration of Shares of Common Stock............25
6.5 Change in Stock and Adjustments...............................25
(a) Changes in Law or Circumstances.........................25
(b) Exercise of Corporate Powers............................26
(c) Recapitalization of the Company.........................26
(d) Reorganization of the Company...........................26
(e) Issue of Common Stock by the Company....................27
(f) Acquisition of the Company..............................27
(g) Assumption under the Plan of Outstanding Stock Options..27
(h) Assumption of Incentive Awards by a Successor...........28
6.6 Termination of Employment, Death, Disability and Retirement...29
(a) Termination of Employment...............................29
(b) Termination of Employment for Cause.....................29
(c) Retirement..............................................29
(d) Disability or Death.....................................29
(e) Continuation............................................30
6.7 Change in Control.............................................30
6.8 Exchange of Incentive Awards..................................32
6.9 Financing.....................................................32
SECTION 7. GENERAL.......................................................33
7.1 Effective Date and Grant Period...............................33
7.2 Funding and Liability of Company..............................33
7.3 Withholding Taxes.............................................33
(a) Tax Withholding.........................................33
(b) Share Withholding.......................................34
(c) Incentive Stock Options.................................34
(d) Loans...................................................34
7.4 No Guarantee of Tax Consequences..............................34
7.5 Designation of Beneficiary by Participant.....................34
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7.6 Deferrals.....................................................34
7.7 Amendment and Termination.....................................35
7.8 Requirements of Law...........................................35
7.9 Rule 16b-3 Securities Law Compliance..........................36
7.10 Compliance with Code Section 162(m)...........................36
7.11 Successors....................................................36
7.12 Miscellaneous Provisions......................................36
7.13 Severability..................................................37
7.14 Gender, Tense and Headings....................................37
7.15 Governing Law.................................................37
v
<PAGE>
PINNACLE GLOBAL GROUP, INC.
1998 INCENTIVE PLAN
SECTION 1.
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1 PURPOSE
The purpose of the Plan is to foster and promote the long-term financial
success of Pinnacle Global Group, Inc. (the "Company") and its Subsidiaries and
to increase stockholder value by: (a) encouraging the commitment of selected key
Employees, Consultants and Outside Directors, (b) motivating superior
performance of key Employees, Consultants and Outside Directors by means of
long-term performance related incentives, (c) encouraging and providing key
Employees, Consultants and Outside Directors with a program for obtaining
ownership interests in the Company which link and align their personal interests
to those of the Company's stockholders, (d) attracting and retaining key
Employees, Consultants and Outside Directors by providing competitive incentive
compensation opportunities, and (e) enabling key Employees, Consultants and
Outside Directors to share in the long-term growth and success of the Company.
The Plan provides for payment of various forms of incentive compensation
and it is not intended to be a plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended (ERISA). The Plan shall be interpreted,
construed and administered consistent with its status as a plan that is not
subject to ERISA.
Subject to approval by the Company's stockholders pursuant to SECTION 7.1,
the Plan shall become effective as of October 1, 1998 (the "EFFECTIVE DATE").
The Plan shall commence on the Effective Date, and shall remain in effect,
subject to the right of the Board to amend or terminate the Plan at any time
pursuant to SECTION 7.7, until all Shares subject to the Plan have been
purchased or acquired according to its provisions. However, in no event may an
Incentive Award be granted under the Plan after the expiration of ten (10) years
from the Effective Date. Any Incentive Award granted prior to the Effective Date
shall be subject to the subsequent receipt of stockholder approval of the Plan
pursuant to SECTION 7.1 if applicable.
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1.2 DEFINITIONS
The following terms shall have the meanings set forth below:
(a) APPRECIATION. The difference between the option exercise price
per share of the Nonstatutory Stock Option to which a Tandem SAR relates
and the Fair Market Value of a share of Common Stock on the date of
exercise of the Tandem SAR.
(b) AUTHORIZED OFFICER. The Chairman of the Board or the Chief
Executive Officer of the Company or any other senior officer of the
Company to whom either of them delegate the authority to execute any
Incentive Agreement for and on behalf of the Company. No officer or
director shall be an Authorized Officer with respect to any Incentive
Agreement for himself.
(c) BOARD. The Board of Directors of the Company.
(d) CAUSE. When used in connection with the termination of a
Grantee's Employment, shall mean the termination of the Grantee's
Employment by the Company by reason of (i) the conviction of the Grantee
by a court of competent jurisdiction as to which no further appeal can be
taken of a crime involving moral turpitude or a felony; (ii) the proven
commission by the Grantee of an act of fraud upon the Company; (iii) the
willful and proven misappropriation of any funds or property of the
Company by the Grantee; (iv) the willful, continued and unreasonable
failure by the Grantee to perform the material duties assigned to him; (v)
the knowing engagement by the Grantee in any direct, material conflict of
interest with the Company without compliance with the Company's conflict
of interest policy, if any, then in effect; or (vi) the knowing engagement
by the Grantee, without the written approval of the Board, in any activity
which competes with the business of the Company or which would result in a
material injury to the business, reputation or goodwill of the Company.
(e) CHANGE IN CONTROL. Any of the events described in and subject to
SECTION 6.7.
(f) CODE. The Internal Revenue Code of 1986, as amended, and the
regulations and other authority promulgated thereunder by the appropriate
governmental authority. References herein to any provision of the Code
shall refer to any successor provision thereto.
(g) COMMITTEE. A committee appointed by the Board consisting of not
less than two directors as appointed by the Board to administer the Plan.
During such period that the Company is a Publicly Held Corporation, the
Plan shall be administered by a committee appointed by the Board
consisting of not less than two directors who fulfill the "non-employee
director" requirements of Rule 16b-3 under the Exchange Act and the
"outside director" requirements of Section 162(m) of the Code. In either
case, the Committee may
2
<PAGE>
be the Compensation Committee of the Board, or any subcommittee of the
Compensation Committee, provided that the members of the Committee satisfy
the requirements of the previous provisions of this paragraph. The Board
shall have the power to fill vacancies on the Committee arising by
resignation, death, removal or otherwise. The Board, in its sole
discretion, may bifurcate the powers and duties of the Committee among one
or more separate committees, or retain all powers and duties of the
Committee in a single Committee. The members of the Committee shall serve
at the discretion of the Board.
Notwithstanding the preceding paragraph, the term "Committee" as
used in the Plan with respect to any Incentive Award for an Outside
Director shall refer to the entire Board. In the case of an Incentive
Award for an Outside Director, the Board shall have all the powers and
responsibilities of the Committee hereunder as to such Incentive Award,
and any actions as to such Incentive Award may be acted upon only by the
Board (unless it otherwise designates in its discretion). When the Board
exercises its authority to act in the capacity as the Committee hereunder
with respect to an Incentive Award for an Outside Director, it shall so
designate with respect to any action that it undertakes in its capacity as
the Committee.
(h) COMMON STOCK. The common stock of the Company, $.01 par value
per share, and any class of common stock into which such common shares may
hereafter be converted, reclassified or recapitalized.
(i) COMPANY. Pinnacle Global Group, Inc., a corporation organized
under the laws of the State of Texas, and any successor in interest
thereto.
(j) CONSULTANT. An independent agent, consultant, attorney, an
individual who has agreed to become an Employee, or any other individual
who is not an Outside Director or employee of the Company (or any Parent
or Subsidiary) and who, in the opinion of the Committee, is in a position
to contribute materially to the growth or financial success of the Company
(or any Parent or Subsidiary).
(k) COVERED EMPLOYEE. A named executive officer who is one of the
group of covered employees, as defined in Section 162(m) of the Code and
Treasury Regulation ss. 1.162-27(c) (or its successor), during such period
that the Company is a Publicly Held Corporation.
(l) DEFERRED STOCK. Shares of Common Stock to be issued or
transferred to a Grantee under an Other Stock-Based Award granted pursuant
to SECTION 5 at the end of a specified deferral period, as set forth in
the Incentive Agreement pertaining thereto.
(m) DISABILITY. As determined by the Committee in its discretion
exercised in good faith, a physical or mental condition of the Employee
that would entitle him to payment of disability income payments under the
Company's long term disability insurance policy
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or plan for employees, as then effective, if any; or in the event that the
Grantee is not covered, for whatever reason, under the Company's long-term
disability insurance policy or plan, "Disability" means a permanent and
total disability as defined in Section 22(e)(3) of the Code. A
determination of Disability may be made by a physician selected or
approved by the Committee and, in this respect, the Grantee shall submit
to an examination by such physician upon request.
(n) EMPLOYEE. Any employee of the Company (or any Parent or
Subsidiary) within the meaning of Section 3401(c) of the Code who, in the
opinion of the Committee, is one of a select group of executive officers,
other officers, or other key personnel of the Company (or any Parent or
Subsidiary), who is in a position to contribute materially to the growth
and development and to the financial success of the Company (or any Parent
or Subsidiary), including, without limitation, officers who are members of
the Board.
(o) EMPLOYMENT. Employment by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Incentive Award
in any transaction described in Section 424(a) of the Code, or by a parent
corporation or a subsidiary corporation of such corporation issuing or
assuming such Incentive Award, as the parent-subsidiary relationship shall
be determined at the time of the corporate action described in Section
424(a) of the Code. In this regard, neither the transfer of a Grantee from
Employment by the Company to Employment by any Parent or Subsidiary, nor
the transfer of a Grantee from Employment by any Parent or Subsidiary to
Employment by the Company, shall be deemed to be a termination of
Employment of the Grantee. Moreover, the Employment of a Grantee shall not
be deemed to have been terminated because of an approved leave of absence
from active Employment on account of temporary illness, authorized
vacation or granted for reasons of professional advancement, education,
health, or government service, or during military leave for any period (if
the Grantee returns to active Employment within 90 days after the
termination of military leave), or during any period required to be
treated as a leave of absence by virtue of any applicable statute, Company
personnel policy or agreement. Whether an authorized leave of absence
shall constitute termination of Employment hereunder shall be determined
by the Committee in its discretion.
Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan is also defined to include (i)
compensatory services performed by a Consultant for the Company (or any
Parent or Subsidiary) and (ii) membership on the Board by an Outside
Director.
(p) EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
(q) FAIR MARKET VALUE. The Fair Market Value of one share of Common
Stock on the date in question is deemed to be (i) the closing sales price
on the immediately preceding business day of a share of Common Stock as
reported on the principal securities exchange on which Shares are then
listed or admitted to trading, or (ii) if not so reported, the
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average of the closing bid and asked prices for a Share on the immediately
preceding business day as quoted on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), or (iii) if not quoted on
NASDAQ, the average of the closing bid and asked prices for a Share as
quoted by the National Quotation Bureau's "Pink Sheets" or the National
Association of Securities Dealers' OTC Bulletin Board System. If there was
no public trade of Common Stock on the date in question, Fair Market Value
shall be determined by reference to the last preceding date on which such
a trade was so reported.
If the Company is not a Publicly Held Corporation at the time a
determination of the Fair Market Value of the Common Stock is required to
be made hereunder, the determination of Fair Market Value for purposes of
the Plan shall be made by the Committee in its discretion exercised in
good faith. In this respect, the Committee may rely on such financial
data, valuations, experts, and other sources, in its discretion, as it
deems advisable under the circumstances.
(r) GRANTEE. Any Employee, Consultant or Outside Director who is
granted an Incentive Award under the Plan.
(s) INCENTIVE AWARD. A grant of an award under the Plan to a
Grantee, including any Nonstatutory Stock Option, Incentive Stock Option,
Reload Option, Stock Appreciation Right, Restricted Stock Award,
Performance Unit, Performance Share, or Other Stock-Based Award, as well
as any Supplemental Payment.
(t) INCENTIVE AGREEMENT. The written agreement entered into between
the Company and the Grantee setting forth the terms and conditions
pursuant to which an Incentive Award is granted under the Plan, as such
agreement is further defined in SECTION 6.1(A).
(u) INCENTIVE STOCK OPTION. A Stock Option granted by the Committee
to an Employee under SECTION 2 which is designated by the Committee as an
Incentive Stock Option and intended to qualify as an Incentive Stock
Option under Section 422 of the Code.
(v) INDEPENDENT SAR. A Stock Appreciation Right described in SECTION
2.5.
(w) INSIDER. An individual who is, on the relevant date, an officer,
director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of
the Exchange Act, all as defined under Section 16 of the Exchange Act.
(x) NONSTATUTORY STOCK OPTION. A Stock Option granted by the
Committee to a Grantee under SECTION 2 that is not designated by the
Committee as an Incentive Stock Option.
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(y) OPTION PRICE. The exercise price at which a Share may be
purchased by the Grantee of a Stock Option.
(z) OTHER STOCK-BASED AWARD. An award granted by the Committee to a
Grantee under SECTION 5.1 that is valued in whole or in part by reference
to, or is otherwise based upon, Common Stock.
(aa) OUTSIDE DIRECTOR. A member of the Board who is not, at the time
of grant of an Incentive Award, an employee of the Company or any Parent
or Subsidiary.
(bb) PARENT. Any corporation (whether now or hereafter existing)
which constitutes a "parent" of the Company, as defined in Section 424(e)
of the Code.
(cc) PERFORMANCE-BASED EXCEPTION. The performance-based exception
from the tax deductibility limitations of Section 162(m) of the Code, as
prescribed in Code ss. 162(m) and Treasury Regulation ss. 1.162-27(e) (or
its successor), which is applicable during such period that the Company is
a Publicly Held Corporation.
(dd) PERFORMANCE PERIOD. A period of time determined by the
Committee over which performance is measured for the purpose of
determining a Grantee's right to and the payment value of any Performance
Unit, Performance Share or Other Stock-Based Award.
(ee) PERFORMANCE SHARE OR PERFORMANCE UNIT. An Incentive Award
representing a contingent right to receive cash or shares of Common Stock
(which may be Restricted Stock) at the end of a Performance Period and
which, in the case of Performance Shares, is denominated in Common Stock,
and, in the case of Performance Units, is denominated in cash values.
(ff) PLAN. The Pinnacle Global Group, Inc. 1998 Incentive Plan as
set forth herein and as it may be amended from time to time.
(gg) PUBLICLY HELD CORPORATION. A corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act.
(hh) RESTRICTED STOCK. Shares of Common Stock issued or transferred
to a Grantee pursuant to SECTION 3.
(ii) RESTRICTED STOCK AWARD. An authorization by the Committee to
issue or transfer Restricted Stock to a Grantee.
(jj) RESTRICTION PERIOD. The period of time determined by the
Committee and set forth in the Incentive Agreement during which the
transfer of Restricted Stock by the Grantee is restricted.
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(kk) RETIREMENT. The voluntary termination of Employment from the
Company or any Parent or Subsidiary constituting retirement for age on any
date after the Employee attains the normal retirement age of 65 years, or
such other age as may be designated by the Committee in the Employee's
Incentive Agreement.
(ll) SHARE. A share of the Common Stock of the Company.
(mm) SHARE POOL. The number of shares authorized for issuance under
SECTION 1.4, as adjusted for awards and payouts under SECTION 1.5 and as
adjusted for changes in corporate capitalization under SECTION 6.5.
(nn) SPREAD. The difference between the exercise price per Share
specified in any Independent SAR grant and the Fair Market Value of a
Share on the date of exercise of the Independent SAR.
(oo) STOCK APPRECIATION RIGHT OR SAR. A Tandem SAR described in
SECTION 2.4 or an Independent SAR described in SECTION 2.5.
(pp) STOCK OPTION OR OPTION. Pursuant to SECTION 2, (i) an Incentive
Stock Option granted to an Employee, or (ii) a Nonstatutory Stock Option
granted to an Employee, Consultant or Outside Director, whereunder such
option the Grantee has the right to purchase Shares of Common Stock. In
accordance with Section 422 of the Code, only an Employee may be granted
an Incentive Stock Option.
(qq) SUBSIDIARY. Any corporation (whether now or hereafter existing)
which constitutes a "subsidiary" of the Company, as defined in Section
424(f) of the Code.
(rr) SUPPLEMENTAL PAYMENT. Any amount, as described in SECTIONS 2.7,
3.4 AND/OR 4.2, that is dedicated to payment of income taxes which are
payable by the Grantee resulting from an Incentive Award.
(ss) TANDEM SAR. A Stock Appreciation Right that is granted in
connection with a related Stock Option pursuant to SECTION 2.4, the
exercise of which shall require forfeiture of the right to purchase a
Share under the related Stock Option (and when a Share is purchased under
the Stock Option, the Tandem SAR shall similarly be canceled).
1.3 PLAN ADMINISTRATION
(a) AUTHORITY OF THE COMMITTEE. Except as may be limited by law and
subject to the provisions herein, the Committee shall have full power to
(i) select Grantees who shall participate in the Plan; (ii) determine the
sizes, duration and types of Incentive Awards; (iii) determine the terms
and conditions of Incentive Awards and Incentive Agreements; (iv)
determine whether any Shares subject to Incentive Awards will be subject
to any restrictions
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on transfer; (v) construe and interpret the Plan and any Incentive
Agreement or other agreement entered into under the Plan; and (vi)
establish, amend, or waive rules for the Plan's administration. Further,
the Committee shall make all other determinations which may be necessary
or advisable for the administration of the Plan.
The Committee may grant an Incentive Award to an individual who it
expects to become an Employee within the next six months, with such
Incentive Award being subject to such individual actually becoming an
Employee within such time period, and subject to such other terms and
conditions as may be established by the Committee in its discretion.
(b) MEETINGS. The Committee shall designate a chairman from among
its members who shall preside at all of its meetings, and shall designate
a secretary, without regard to whether that person is a member of the
Committee, who shall keep the minutes of the proceedings and all records,
documents, and data pertaining to its administration of the Plan. Meetings
shall be held at such times and places as shall be determined by the
Committee and the Committee may hold telephonic meetings. The Committee
may take any action otherwise proper under the Plan by the affirmative
vote, taken with or without a meeting, of a majority of its members. The
Committee may authorize any one or more of their members or any officer of
the Company to execute and deliver documents on behalf of the Committee.
(c) DECISIONS BINDING. All determinations and decisions made by the
Committee shall be made in its discretion pursuant to the provisions of
the Plan, and shall be final, conclusive and binding on all persons
including the Company, its shareholders, Employees, Grantees, and their
estates and beneficiaries. The Committee's decisions and determinations
with respect to any Incentive Award need not be uniform and may be made
selectively among Incentive Awards and Grantees, whether or not such
Incentive Awards are similar or such Grantees are similarly situated.
(d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to the
stockholder approval requirements of SECTION 7.7 if applicable, the
Committee may, in its discretion, provide for the extension of the
exercisability of an Incentive Award, accelerate the vesting or
exercisability of an Incentive Award, eliminate or make less restrictive
any restrictions contained in an Incentive Award, waive any restriction or
other provisions of an Incentive Award, or otherwise amend or modify an
Incentive Award in any manner that is either (i) not adverse to the
Grantee to whom such Incentive Award was granted or (ii) consented to by
such Grantee. With respect to an Incentive Award that is an incentive
stock option (as described in Section 422 of the Code), no adjustment to
such option shall be made to the extent constituting a "modification"
within the meaning of Section 424(h)(3) of the Code unless otherwise
agreed to by the optionee in writing.
(e) DELEGATION OF AUTHORITY. The Committee may delegate to
designated officers or other employees of the Company any of its duties
under this Plan pursuant to such
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conditions or limitations as the Committee may establish from time to
time; provided, however, while the Company is a Publicly Held Corporation,
the Committee may not delegate to any person the authority to (i) grant
Incentive Awards, or (ii) take any action which would contravene the
requirements of Rule 16b-3 under the Exchange Act or the Performance-Based
Exception under Section 162(m) of the Code.
(f) EXPENSES OF COMMITTEE. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel
regularly employed by the Company, and other agents as the Committee may
deem appropriate for the administration of the Plan. The Committee may
rely upon any opinion or computation received from any such counsel or
agent. All expenses incurred by the Committee in interpreting and
administering the Plan, including, without limitation, meeting expenses
and professional fees, shall be paid by the Company.
(g) SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee may, in
its absolute discretion, grant Incentive Awards to Grantees on the
condition that such Grantees surrender to the Committee for cancellation
such other Incentive Awards (including, without limitation, Incentive
Awards with higher exercise prices) as the Committee directs. Incentive
Awards granted on the condition precedent of surrender of outstanding
Incentive Awards shall not count against the limits set forth in SECTION
1.4 until such time as such previous Incentive Awards are surrendered and
cancelled.
(h) INDEMNIFICATION. Each person who is or was a member of the
Committee, or of the Board, shall be indemnified by the Company against
and from any damage, loss, liability, cost and expense that may be imposed
upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act
under the Plan, except for any such act or omission constituting willful
misconduct or gross negligence. Such person shall be indemnified by the
Company for all amounts paid by him in settlement thereof, with the
Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit, or proceeding against him, provided he shall give the
Company 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 not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS
Subject to adjustment under SECTION 6.5, there shall be available for
Incentive Awards under this Plan granted wholly or partly in Common Stock
(including rights or Options that may be exercised for or settled in Common
Stock) an aggregate number of shares of Common Stock equal
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to the greater of (i) 1,100,000 shares and (ii) a number of shares equal to 15%
of the total number of shares of Common Stock from time to time outstanding. Not
more than 1,100,000 Shares of Common Stock shall be available for Incentive
Stock Options. The number of Shares of Common Stock that are the subject of
Incentive Awards under this Plan, that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of Common Stock or in a manner such
that all or some of the Shares covered by an Incentive Award are not issued to a
Grantee or are exchanged for Incentive Awards that do not involve Common Stock,
shall again immediately become available for Incentive Awards hereunder. The
Committee may from time to time adopt and observe such procedures concerning the
counting of Shares against the Plan maximum as it may deem appropriate. The
Board and the appropriate officers of the Company shall from time to time take
whatever actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
Shares are available for issuance pursuant to Incentive Awards.
During such period that the Company is a Publicly Held Corporation, then
unless and until the Committee determines that a particular Incentive Award
granted to a Covered Employee is not intended to comply with the
Performance-Based Exception, the following rules shall apply to grants of
Incentive Awards to Covered Employees:
(a) Subject to adjustment as provided in SECTION 6.5, the maximum
aggregate number of Shares of Common Stock (including Stock Options, SARs,
Restricted Stock, Performance Units and Performance Shares paid out in
Shares, or Other Stock-Based Awards paid out in Shares) that may be
granted or that may vest, as applicable, in any calendar year pursuant to
any Incentive Award held by any individual Covered Employee shall be
1,100,000 Shares.
(b) The maximum aggregate cash payout (including SARs, Performance
Units and Performance Shares paid out in cash, or Other Stock-Based Awards
paid out in cash) with respect to Incentive Awards granted in any calendar
year which may be made to any Covered Employee shall be Twenty Million
dollars ($20,000,000).
(c) With respect to any Stock Option or Stock Appreciation Right
granted to a Covered Employee that is canceled or repriced, the number of
Shares subject to such Stock Option or Stock Appreciation Right shall
continue to count against the maximum number of Shares that may be the
subject of Stock Options or Stock Appreciation Rights granted to such
Covered Employee hereunder and, in this regard, such maximum number shall
be determined in accordance with Section 162(m) of the Code.
(d) The limitations of subsections (a), (b) and (c) above shall be
construed and administered so as to comply with the Performance-Based
Exception.
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1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS.
The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:
(a) Stock Option;
(b) SAR (except a Tandem SAR);
(c) Restricted Stock;
(d) A payout of a Performance Share in Shares;
(e) A payout of a Performance Unit in Shares; and
(f) A payout of an Other Stock-Based Award in Shares.
The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:
(a) A Payout of an SAR, Tandem SAR, Restricted Stock Award, or Other
Stock-Based Award in the form of cash;
(b) A cancellation, termination, expiration, forfeiture, or lapse
for any reason (with the exception of the termination of a Tandem SAR upon
exercise of the related Stock Option, or the termination of a related
Stock Option upon exercise of the corresponding Tandem SAR) of any Shares
subject to an Incentive Award; and
(c) Payment of an Option Price with previously acquired Shares or by
withholding Shares which otherwise would be acquired on exercise (i.e.,
the Share Pool shall be increased by the number of Shares turned in or
withheld as payment of the Option Price).
1.6 COMMON STOCK AVAILABLE.
The Common Stock available for issuance or transfer under the Plan shall
be made available from Shares now or hereafter (a) held in the treasury of the
Company, (b) authorized but unissued shares, or (c) shares to be purchased or
acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.
1.7 PARTICIPATION
(a) ELIGIBILITY. The Committee shall from time to time designate
those Employees, Consultants and/or Outside Directors, if any, to be
granted Incentive Awards
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under the Plan, the type of Incentive Awards granted, the number of
Shares, Stock Options, rights or units, as the case may be, which shall be
granted to each such person, and any other terms or conditions relating to
the Incentive Awards as it may deem appropriate to the extent consistent
with the provisions of the Plan. A Grantee who has been granted an
Incentive Award may, if otherwise eligible, be granted additional
Incentive Awards at any time.
(b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or Outside
Director shall be eligible for the grant of any Incentive Stock Option. In
addition, no Employee shall be eligible for the grant of any Incentive
Stock Option who owns or would own immediately before the grant of such
Incentive Stock Option, directly or indirectly, stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company, or any Parent or Subsidiary. This restriction does
not apply if, at the time such Incentive Stock Option is granted, the
Incentive Stock Option exercise price is at least one hundred and ten
percent (110%) of the Fair Market Value on the date of grant and the
Incentive Stock Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant. For the purpose of
the immediately preceding sentence, the attribution rules of Section
424(d) of the Code shall apply for the purpose of determining an
Employee's percentage ownership in the Company or any Parent or
Subsidiary. This paragraph shall be construed consistent with the
requirements of Section 422 of the Code.
1.8 TYPES OF INCENTIVE AWARDS
The types of Incentive Awards under the Plan are Stock Options, Stock
Appreciation Rights and Supplemental Payments as described in SECTION 2,
Restricted Stock and Supplemental Payments as described in SECTION 3,
Performance Units, Performance Shares and Supplemental Payments as described in
SECTION 4, Other Stock-Based Awards and Supplemental Payments as described in
SECTION 5, or any combination of the foregoing.
SECTION 2.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 GRANT OF STOCK OPTIONS
The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.
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2.2 STOCK OPTION TERMS
(a) WRITTEN AGREEMENT. Each grant of an Stock Option shall be
evidenced by a written Incentive Agreement. Among its other provisions,
each Incentive Agreement shall set forth the extent to which the Grantee
shall have the right to exercise the Stock Option following termination of
the Grantee's Employment. Such provisions shall be determined in the
discretion of the Committee, shall be included in the Grantee's Incentive
Agreement, need not be uniform among all Stock Options issued pursuant to
the Plan.
(b) NUMBER OF SHARES. Each Stock Option shall specify the number of
Shares of Common Stock to which it pertains.
(c) EXERCISE PRICE. The exercise price per Share of Common Stock
under each Stock Option shall be determined by the Committee; provided,
however, that in the case of an Incentive Stock Option, such exercise
price shall not be less than 100% of the Fair Market Value per Share on
the date the Incentive Stock Option is granted. To the extent that the
Company is a Publicly Held Corporation and the Stock Option is intended to
qualify for the Performance-Based Exception, the exercise price shall not
be less than 100% of the Fair Market Value per Share on the date the Stock
Option is granted. Each Stock Option shall specify the method of exercise
which shall be consistent with the requirements of SECTION 2.3(A).
(d) TERM. In the Incentive Agreement, the Committee shall fix the
term of each Stock Option which shall be not more than ten (10) years from
the date of grant. In the event no term is fixed, such term shall be ten
(10) years from the date of grant.
(e) EXERCISE. The Committee shall determine the time or times at
which a Stock Option may be exercised in whole or in part. Each Stock
Option may specify the required period of continuous Employment and/or the
performance objectives to be achieved before the Stock Option or portion
thereof will become exercisable. Each Stock Option, the exercise of which,
or the timing of the exercise of which, is dependent, in whole or in part,
on the achievement of designated performance objectives, may specify a
minimum level of achievement in respect of the specified performance
objectives below which no Stock Options will be exercisable and a method
for determining the number of Stock Options that will be exercisable if
performance is at or above such minimum but short of full achievement of
the performance objectives. All such terms and conditions shall be set
forth in the Incentive Agreement.
(f) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS.
Notwithstanding any contrary provision in the Plan, to the extent that the
aggregate Fair Market Value (determined as of the time the Incentive Stock
Option is granted) of the Shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Grantee
during any single calendar year (under the Plan and any other stock option
plans of the
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Company and its Subsidiaries or Parent) exceeds the sum of $100,000, such
Incentive Stock Option shall be treated as a Nonstatutory Stock Option to
the extent in excess of the $100,000 limit, and not an Incentive Stock
Option, but all other terms and provisions of such Stock Option shall
remain unchanged. This paragraph shall be applied by taking Incentive
Stock Options into account in the order in which they are granted and
shall be construed in accordance with Section 422(d) of the Code. In the
absence of such regulations or other authority, or if such regulations or
other authority require or permit a designation of the Options which shall
cease to constitute Incentive Stock Options, then such Incentive Stock
Options, only to the extent of such excess and in the order in which they
were granted, shall automatically be deemed to be Nonstatutory Stock
Options but all other terms and conditions of such Incentive Stock
Options, and the corresponding Incentive Agreement, shall remain
unchanged.
2.3 STOCK OPTION EXERCISES
(a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be exercised
by the delivery of a signed written notice of exercise to the Company as
of a date set by the Company in advance of the effective date of the
proposed exercise. The notice shall set 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 Stock Option shall be payable
to the Company in full either: (i) in cash or its equivalent, or (ii)
subject to prior approval by the Committee in its discretion, by tendering
previously acquired Shares having an aggregate Fair Market Value at the
time of exercise equal to the total Option Price (provided that the Shares
which are tendered must have been held by the Grantee for at least six (6)
months prior to their tender to satisfy the Option Price), or (iii)
subject to prior approval by the Committee in its discretion, by
withholding Shares which otherwise would be acquired on exercise having an
aggregate Fair Market Value at the time of exercise equal to the total
Option Price, or (iv) subject to prior approval by the Committee in its
discretion, by a combination of (i), (ii), and (iii) above. Any payment in
Shares of Common Stock shall be effected by the delivery of such Shares to
the Secretary of the Company, duly endorsed in blank or accompanied by
stock powers duly executed in blank, together with any other documents as
the Secretary shall require from time to time.
The Committee, in its discretion, also may allow (i) "cashless
exercise" as permitted under Federal Reserve Board's Regulation T, 12 CFR
Part 220 (or its successor), and subject to applicable securities law
restrictions and tax withholdings, or (ii) by any other means which the
Committee, in its discretion, determines to be consistent with the Plan's
purpose and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to or on behalf of
the Grantee, in the name of the
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Grantee or other appropriate recipient, Share certificates for the number
of Shares purchased under the Stock Option. Such delivery shall be
effected for all purposes when a stock transfer agent of the Company shall
have deposited such certificates in the United States mail, addressed to
Grantee or other appropriate recipient.
During the lifetime of a Grantee, each Option granted to him shall
be exercisable only by the Grantee (or his legal guardian in the event of
his Disability) or by a broker-dealer acting on his behalf pursuant to a
cashless exercise under the foregoing provisions of this SECTION 2.3(A).
No Option shall be assignable or transferable by Grantee otherwise than by
will or by the laws of descent and distribution.
(b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of a
Stock Option as it may deem advisable, including, without limitation,
restrictions under (i) any buy/sell agreement or right of first refusal,
(ii) any applicable federal securities laws, (iii) the requirements of any
stock exchange or market upon which such Shares are then listed and/or
traded, or (iv) any blue sky or state securities law applicable to such
Shares. Any certificate issued to evidence Shares issued upon the exercise
of an Incentive Award may bear such legends and statements as the
Committee shall deem advisable to assure compliance with federal and state
laws and regulations.
Any Grantee or other person exercising an Incentive Award may be
required by the Committee to give a written representation that the
Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution;
provided, however, that the Committee, in its sole discretion, may release
any person receiving an Incentive Award from any such representations
either prior to or subsequent to the exercise of the Incentive Award.
(c) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM
INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of the Plan,
a Grantee who disposes of Shares of Common Stock acquired upon the
exercise of an Incentive Stock Option by a sale or exchange either (i)
within two (2) years after the date of the grant of the Incentive Stock
Option under which the Shares were acquired or (ii) within one (1) year
after the transfer of such Shares to him pursuant to exercise, shall
promptly notify the Company of such disposition, the amount realized and
his adjusted basis in such Shares.
(d) PROCEEDS OF OPTION EXERCISE. The proceeds received by the
Company from the sale of Shares pursuant to Stock Options exercised under
the Plan shall be used for general corporate purposes.
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2.4 STOCK APPRECIATION RIGHTS IN TANDEM WITH NONSTATUTORY STOCK OPTIONS
(a) GRANT. The Committee may, at the time of grant of a Nonstatutory
Stock Option, or at any time thereafter during the term of the
Nonstatutory Stock Option, grant Stock Appreciation Rights with respect to
all or any portion of the Shares of Common Stock covered by such
Nonstatutory Stock Option. A Stock Appreciation Right in tandem with a
Nonstatutory Stock Option is referred to herein as a "TANDEM SAR."
(b) GENERAL PROVISIONS. The terms and conditions of each Tandem SAR
shall be evidenced by an Incentive Agreement. The Option Price per Share
of a Tandem SAR shall be fixed in the Incentive Agreement and shall not be
less than one hundred percent (100%) of the Fair Market Value of a Share
on the grant date of the Nonstatutory Stock Option to which it relates.
(c) EXERCISE. A Tandem SAR may be exercised at any time the
Nonstatutory Stock Option to which it relates is then exercisable, but
only to the extent such Nonstatutory Stock Option is exercisable, and
shall otherwise be subject to the conditions applicable to such
Nonstatutory Stock Option. When a Tandem SAR is exercised, the
Nonstatutory Stock Option to which it relates shall terminate to the
extent of the number of Shares with respect to which the Tandem SAR is
exercised. Similarly, when a Nonstatutory Stock Option is exercised, the
Tandem SARs relating to the Shares covered by such Nonstatutory Stock
Option exercise shall terminate. Any Tandem SAR which is outstanding on
the last day of the term of the related Nonstatutory Stock Option shall be
automatically exercised on such date for cash, without the need for any
action by the Grantee, to the extent of any Appreciation.
(d) SETTLEMENT. Upon exercise of a Tandem SAR, the holder shall
receive, for each Share with respect to which the Tandem SAR is exercised,
an amount equal to the Appreciation. The Appreciation shall be payable in
cash, Common Stock, or a combination of both, as specified in the
Incentive Agreement (or in the discretion of the Committee if not so
specified). The Appreciation shall be paid within 30 calendar days of the
exercise of the Tandem SAR. The number of Shares of Common Stock which
shall be issuable upon exercise of a Tandem SAR shall be determined by
dividing (1) by (2), where (1) is the number of Shares as to which the
Tandem SAR is exercised multiplied by the Appreciation in such shares and
(2) is the Fair Market Value of a Share on the exercise date.
2.5 STOCK APPRECIATION RIGHTS INDEPENDENT OF NONSTATUTORY STOCK OPTIONS
(a) GRANT. The Committee may grant Stock Appreciation Rights
independent of Nonstatutory Stock Options ("INDEPENDENT SARS").
(b) GENERAL PROVISIONS. The terms and conditions of each Independent
SAR shall be evidenced by an Incentive Agreement. The exercise price per
share of Common
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Stock shall be not less than one hundred percent (100%) of the Fair Market
Value of a Share of Common Stock on the date of grant of the Independent
SAR. The term of an Independent SAR shall be determined by the Committee.
(c) EXERCISE. Independent SARs shall be exercisable at such time and
subject to such terms and conditions as the Committee shall specify in the
Incentive Agreement for the Independent SAR grant.
(d) SETTLEMENT. Upon exercise of an Independent SAR, the holder
shall receive, for each Share specified in the Independent SAR grant, an
amount equal to the Spread. The Spread shall be payable in cash, Common
Stock, or a combination of both, in the discretion of the Committee or as
specified in the Incentive Agreement. The Spread shall be paid within 30
calendar days of the exercise of the Independent SAR. The number of Shares
of Common Stock which shall be issuable upon exercise of an Independent
SAR shall be determined by dividing (1) by (2), where (1) is the number of
Shares as to which the Independent SAR is exercised multiplied by the
Spread in such Shares and (2) is the Fair Market Value of a Share on the
exercise date.
2.6 RELOAD OPTIONS
At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, replacement Stock Options under the Plan that permit the
Grantee to purchase an additional number of Shares equal to the number of
previously owned Shares surrendered by the Grantee to pay all or a portion of
the Option Price upon exercise of his Stock Options. The terms and conditions of
such replacement Stock Options shall be set forth in the Incentive Agreement.
2.7 SUPPLEMENTAL PAYMENT ON EXERCISE OF NONSTATUTORY STOCK OPTIONS OR STOCK
APPRECIATION RIGHTS
The Committee, either at the time of grant or as of the time of exercise
of any Nonstatutory Stock Option or Stock Appreciation Right, may provide in the
Incentive Agreement for a Supplemental Payment by the Company to the Grantee
with respect to the exercise of any Nonstatutory Stock Option or Stock
Appreciation Right. The Supplemental Payment shall be in the amount specified by
the Committee, which amount shall not exceed the amount necessary to pay the
federal and state income tax payable with respect to both the exercise of the
Nonstatutory Stock Option and/or Stock Appreciation Right and the receipt of the
Supplemental Payment, assuming the holder is taxed at either the maximum
effective income tax rate applicable thereto or at a lower tax rate as deemed
appropriate by the Committee. The Committee shall have the discretion to grant
Supplemental Payments that are payable solely in cash or Supplemental Payments
that are payable in cash, Common Stock, or a combination of both, as determined
by the Committee at the time of payment.
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SECTION 3.
RESTRICTED STOCK
3.1 AWARD OF RESTRICTED STOCK
(a) GRANT. In consideration of the performance of Employment by any
Grantee who is an Employee, Consultant or Outside Director, Shares of
Restricted Stock may be awarded under the Plan by the Committee with such
restrictions during the Restriction Period as the Committee may designate
in its discretion, any of which restrictions may differ with respect to
each particular Grantee. Restricted Stock shall be awarded for no
additional consideration or such additional consideration as the Committee
may determine, which consideration may be less than, equal to or more than
the Fair Market Value of the shares of Restricted Stock on the grant date.
The terms and conditions of each grant of Restricted Stock shall be
evidenced by an Incentive Agreement.
(b) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED
STOCK. Unless otherwise specified in the Grantee's Incentive Agreement,
each Restricted Stock Award shall constitute an immediate transfer of the
record and beneficial ownership of the Shares of Restricted Stock to the
Grantee in consideration of the performance of services as an Employee,
Consultant or Outside Director, as applicable, entitling such Grantee to
all voting and other ownership rights in such Shares.
As specified in the Incentive Agreement, a Restricted Stock Award
may limit the Grantee's dividend rights during the Restriction Period in
which the shares of Restricted Stock are subject to a "substantial risk of
forfeiture" (within the meaning given to such term under Code Section 83)
and restrictions on transfer. In the Incentive Agreement, the Committee
may apply any restrictions to the dividends that the Committee deems
appropriate. Without limiting the generality of the preceding sentence, if
the grant or vesting of Shares of Restricted Stock granted to a Covered
Employee, if applicable, is designed to comply with the requirements of
the Performance-Based Exception, the Committee may apply any restrictions
it deems appropriate to the payment of dividends declared with respect to
such Shares of Restricted Stock, such that the dividends and/or the Shares
of Restricted Stock maintain eligibility for the Performance-Based
Exception. In the event that any dividend constitutes a derivative
security or an equity security pursuant to the rules under Section 16 of
the Exchange Act, if applicable, such dividend shall be subject to a
vesting period equal to the remaining vesting period of the Shares of
Restricted Stock with respect to which the dividend is paid.
Shares awarded pursuant to a grant of Restricted Stock may be issued
in the name of the Grantee and held, together with a stock power endorsed
in blank, by the Committee or Company (or their delegates) or in trust or
in escrow pursuant to an agreement satisfactory to the Committee, as
determined by the Committee, until such time as the restrictions on
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transfer have expired. All such terms and conditions shall be set forth in
the particular Grantee's Incentive Agreement. The Company or Committee (or
their delegates) shall issue to the Grantee a receipt evidencing the
certificates held by it which are registered in the name of the Grantee.
3.2 RESTRICTIONS
(a) FORFEITURE OF RESTRICTED STOCK. Restricted Stock awarded to a
Grantee may be subject to the following restrictions until the expiration
of the Restriction Period: (i) a restriction that constitutes a
"substantial risk of forfeiture" (as defined in Code Section 83), or a
restriction on transferability; (ii) unless otherwise specified by the
Committee in the Incentive Agreement, the Restricted Stock that is subject
to restrictions which are not satisfied shall be forfeited and all rights
of the Grantee to such Shares shall terminate; and (iii) any other
restrictions that the Committee determines in advance are appropriate,
including, without limitation, rights of repurchase or first refusal in
the Company or provisions subjecting the Restricted Stock to a continuing
substantial risk of forfeiture in the hands of any transferee. Any such
restrictions shall be set forth in the particular Grantee's Incentive
Agreement.
(b) ISSUANCE OF CERTIFICATES. Reasonably promptly after the date of
grant with respect to Shares of Restricted Stock, the Company shall cause
to be issued a stock certificate, registered in the name of the Grantee to
whom such Shares of Restricted Stock were granted, evidencing such Shares;
provided, however, that the Company shall not cause to be issued such a
stock certificate unless it has received a stock power duly endorsed in
blank with respect to such Shares. Each such stock certificate shall bear
the following legend or any other legend approved by the Company:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND
CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE PINNACLE GLOBAL GROUP, INC. 1998 INCENTIVE PLAN AND
AN INCENTIVE AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF
SUCH SHARES AND PINNACLE GLOBAL GROUP, INC. A COPY OF THE PLAN AND
INCENTIVE AGREEMENT ARE ON FILE IN THE CORPORATE OFFICES OF PINNACLE
GLOBAL GROUP, INC.
Such legend shall not be removed from the certificate evidencing such
Shares of Restricted Stock until such Shares vest pursuant to the terms of
the Incentive Agreement.
(c) REMOVAL OF RESTRICTIONS. The Committee, in its discretion, shall
have the authority to remove any or all of the restrictions on the
Restricted Stock if it determines that, by reason of a change in
applicable law or another change in circumstance arising after the grant
date of the Restricted Stock, such action is appropriate.
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3.3 DELIVERY OF SHARES OF COMMON STOCK
Subject to withholding taxes under SECTION 7.3 and to the terms of the
Incentive Agreement, a stock certificate evidencing the Shares of Restricted
Stock with respect to which the restrictions in the Incentive Agreement have
been satisfied shall be delivered to the Grantee or other appropriate recipient
free of restrictions. Such delivery shall be effected for all purposes when the
Company shall have deposited such certificate in the United States mail,
addressed to the Grantee or other appropriate recipient.
3.4 SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK
The Committee, either at the time of grant or vesting of Restricted Stock,
may provide for a Supplemental Payment by the Company to the holder in an amount
specified by the Committee, which amount shall not exceed the amount necessary
to pay the federal and state income tax payable with respect to both the vesting
of the Restricted Stock and receipt of the Supplemental Payment, assuming the
Grantee is taxed at either the maximum effective income tax rate applicable
thereto or at a lower tax rate as deemed appropriate by the Committee. The
Committee shall have the discretion to grant Supplemental Payments that are
payable solely in cash or Supplemental Payments that are payable in cash, Common
Stock, or a combination of both, as determined by the Committee at the time of
payment.
SECTION 4.
PERFORMANCE UNITS AND PERFORMANCE SHARES
4.1 PERFORMANCE BASED AWARDS
(a) GRANT. The Committee is authorized to grant Performance Units
and Performance Shares to selected Grantees who are Employees or
Consultants. Each grant of Performance Units and/or Performance Shares
shall be evidenced by an Incentive Agreement in such amounts and upon such
terms as shall be determined by the Committee. The Committee may make
grants of Performance Units or Performance Shares in such a manner that
more than one Performance Period is in progress concurrently. For each
Performance Period, the Committee shall establish the number of
Performance Units or Performance Shares and their contingent values which
may vary depending on the degree to which performance criteria established
by the Committee are met.
(b) PERFORMANCE CRITERIA. At the beginning of each Performance
Period, the Committee shall (i) establish for such Performance Period
specific financial or non-financial performance objectives that the
Committee believes are relevant to the Company's business objectives; (ii)
determine the value of a Performance Unit or the number of Shares under a
Performance Share grant relative to performance objectives; and (iii)
notify each Grantee in writing of the established performance objectives
and, if applicable, the minimum, target,
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and maximum value of Performance Units or Performance Shares for such
Performance Period.
(c) MODIFICATION. If the Committee determines, in its discretion
exercised in good faith, that the established performance measures or
objectives are no longer suitable to the Company's objectives because of a
change in the Company's business, operations, corporate structure, capital
structure, or other conditions the Committee deems to be appropriate, the
Committee may modify the performance measures and objectives to the extent
it considers to be necessary. The Committee shall determine whether any
such modification would cause the Performance Unit or Performance Share to
fail to qualify for the Performance-Based Exception, if applicable.
(d) PAYMENT. The basis for payment of Performance Units or
Performance Shares for a given Performance Period shall be the achievement
of those performance objectives determined by the Committee at the
beginning of the Performance Period as specified in the Grantee's
Incentive Agreement. If minimum performance is not achieved for a
Performance Period, no payment shall be made and all contingent rights
shall cease. If minimum performance is achieved or exceeded, the value of
a Performance Unit or Performance Share may be based on the degree to
which actual performance exceeded the preestablished minimum performance
standards. The amount of payment shall be determined by multiplying the
number of Performance Units or Performance Shares granted at the beginning
of the Performance Period times the final Performance Unit or Performance
Share value. Payments shall be made, in the discretion of the Committee as
specified in the Incentive Agreement, solely in cash or Common Stock, or a
combination of cash and Common Stock, following the close of the
applicable Performance Period.
(e) SPECIAL RULE FOR COVERED EMPLOYEES. The Committee may establish
performance goals applicable to Performance Units or Performance Shares
awarded to Covered Employees in such a manner as shall permit payments
with respect thereto to qualify for the Performance-Based Exception, if
applicable. If a Performance Unit or Performance Share granted to a
Covered Employee is intended to comply with the Performance-Based
Exception, the Committee in establishing performance goals shall be guided
by Treasury Regulation ss. 1.162-27(e)(2) (or its successor).
4.2 SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS OR PERFORMANCE SHARES
The Committee, either at the time of grant or at the time of vesting of
Performance Units or Performance Shares, may provide for a Supplemental Payment
by the Company to the Grantee in an amount specified by the Committee, which
amount shall not exceed the amount necessary to pay the federal and state income
tax payable with respect to both the vesting of such Performance Units or
Performance Shares and receipt of the Supplemental Payment, assuming the Grantee
is taxed at either the maximum effective income tax rate applicable thereto or
at a lower tax rate as seemed appropriate by the Committee. The Committee shall
have the discretion to grant Supplemental
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Payments that are payable in cash, Common Stock, or a combination of both, as
determined by the Committee at the time of payment.
SECTION 5.
OTHER STOCK-BASED AWARDS
5.1 GRANT OF OTHER STOCK-BASED AWARDS
Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation, Deferred
Stock, purchase rights, Shares of Common Stock awarded which are not subject to
any restrictions or conditions, convertible or exchangeable debentures, other
rights convertible into Shares, Incentive Awards valued by reference to the
value of securities of or the performance of a specified Subsidiary, division or
department, and settlement in cancellation of rights of any person with a vested
interest in any other plan, fund, program or arrangement that is or was
sponsored, maintained or participated in by the Company or any Parent or
Subsidiary. As is the case with other Incentive Awards, Other Stock-Based Awards
may be awarded either alone or in addition to or in tandem with any other
Incentive Awards.
5.2 OTHER STOCK-BASED AWARD TERMS
(a) WRITTEN AGREEMENT. The terms and conditions of each grant of an
Other Stock-Based Award shall be evidenced by an Incentive Agreement.
(b) PURCHASE PRICE. Except to the extent that an Other Stock-Based
Award is granted in substitution for an outstanding Incentive Award or is
delivered upon exercise of a Stock Option, the amount of consideration
required to be received by the Company shall be either (i) no
consideration other than services actually rendered (in the case of
authorized and unissued shares) or to be rendered, or (ii) in the case of
an Other Stock-Based Award in the nature of a purchase right,
consideration (other than services rendered or to be rendered) at least
equal to 50% of the Fair Market Value of the Shares covered by such grant
on the date of grant (or such percentage higher than 50% that is required
by any applicable tax or securities law).
(c) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion, the
Committee may specify such criteria, periods or goals for vesting in Other
Stock-Based Awards and payment thereof to the Grantee as it shall
determine; and the extent to which such criteria, periods or goals have
been met shall be determined by the Committee. All terms and conditions of
Other Stock-Based Awards shall be determined by the Committee and set
forth
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in the Incentive Agreement. The Committee may also provide for a
Supplemental Payment similar to such payment as described in SECTION 4.2.
(d) PAYMENT. Other Stock-Based Awards may be paid in Shares of
Common Stock or other consideration related to such Shares, in a single
payment or in installments on such dates as determined by the Committee,
all as specified in the Incentive Agreement.
(e) DIVIDENDS. The Grantee of an Other Stock-Based Award shall be
entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to the number of Shares covered by the
Other Stock-Based Award, as determined by the Committee and set forth in
the Incentive Agreement. The Committee may also provide in the Incentive
Agreement that such amounts (if any) shall be deemed to have been
reinvested in additional Shares of Common Stock.
SECTION 6.
PROVISIONS RELATING TO PLAN PARTICIPATION
6.1 PLAN CONDITIONS
(a) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive Award is
granted shall be required to enter into an Incentive Agreement with the
Company, in such a form as is provided by the Committee. The Incentive
Agreement shall contain specific terms as determined by the Committee, in
its discretion, with respect to the Grantee's particular Incentive Award.
Such terms need not be uniform among all Grantees or any
similarly-situated Grantees. The Incentive Agreement may include, without
limitation, vesting, forfeiture and other provisions particular to the
particular Grantee's Incentive Award, as well as, for example, provisions
to the effect that the Grantee (i) shall not disclose any confidential
information acquired during Employment with the Company, (ii) shall abide
by all the terms and conditions of the Plan and such other terms and
conditions as may be imposed by the Committee, (iii) shall not interfere
with the employment or other service of any employee, (iv) shall not
compete with the Company or become involved in a conflict of interest with
the interests of the Company, (v) shall forfeit an Incentive Award if
terminated for Cause, (vi) shall not be permitted to make an election
under Section 83(b) of the Code when applicable, and (vii) shall be
subject to any other agreement between the Grantee and the Company
regarding Shares that may be acquired under an Incentive Award including,
without limitation, an agreement restricting the transferability of Shares
by Grantee. An Incentive Agreement shall include such terms and conditions
as are determined by the Committee, in its discretion, to be appropriate
with respect to any individual Grantee. The Incentive Agreement shall be
signed by the Grantee to whom the Incentive Award is made and by an
Authorized Officer.
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(b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any instrument
executed pursuant to the Plan shall create any Employment rights
(including without limitation, rights to continued Employment) in any
Grantee or affect the right of the Company to terminate the Employment of
any Grantee at any time without regard to the existence of the Plan.
(c) SECURITIES REQUIREMENTS. The Company shall be under no
obligation to effect the registration pursuant to the Securities Act of
1933 of any Shares of Common Stock to be issued hereunder or to effect
similar compliance under any state laws. Notwithstanding anything herein
to the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates evidencing Shares pursuant to the Plan
unless and until the Company is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authorities, and the requirements of any
securities exchange on which Shares are traded. The Committee may require,
as a condition of the issuance and delivery of certificates evidencing
Shares of Common Stock pursuant to the terms hereof, that the recipient of
such Shares make such covenants, agreements and representations, and that
such certificates bear such legends, as the Committee, in its discretion,
deems necessary or desirable.
If the Shares issuable on exercise of an Incentive Award are not
registered under the Securities Act of 1933, the Company may imprint on
the certificate for such Shares the following legend or any other legend
which counsel for the Company considers necessary or advisable to comply
with the Securities Act of 1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON
SUCH REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION
OF COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED
FOR SUCH SALE OR TRANSFER.
6.2 TRANSFERABILITY
(a) NON-TRANSFERABLE AWARDS AND OPTIONS. No Incentive Award and no
right under the Plan, contingent or otherwise, will be (i) assignable,
saleable, or otherwise transferable by a Grantee except by will or by the
laws of descent and distribution, or (ii) subject to any encumbrance,
pledge, lien, assignment or charge of any nature.
No transfer by will or by the laws of descent and distribution shall
be effective to bind the Company unless the Committee has been furnished
with a copy of the deceased Grantee's enforceable will or such other
evidence as the Committee deems necessary to
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establish the validity of the transfer. Any attempted transfer in
violation of this SECTION 6.2(A) shall be void and ineffective.
(b) ABILITY TO EXERCISE RIGHTS. Subject to a beneficiary designation
pursuant to SECTION 7.5, only the Grantee (or his legal guardian in the
event of Grantee's Disability), or in the event of his death, his estate,
may exercise Stock Options, receive cash payments and deliveries of
Shares, and otherwise assume the rights of the Grantee.
6.3 RIGHTS AS A STOCKHOLDER
(a) NO STOCKHOLDER RIGHTS. Except as otherwise provided in SECTION
3.1(B) for grants of Restricted Stock, a Grantee of an Incentive Award (or
a permitted transferee of such Grantee) shall have no rights as a
stockholder with respect to any Shares of Common Stock until the issuance
of a stock certificate for such Shares.
(b) REPRESENTATION OF OWNERSHIP. In the case of the exercise of an
Incentive Award by a person or estate acquiring the right to exercise such
Incentive Award by reason of the death or Disability of a Grantee, the
Committee may require reasonable evidence as to the ownership of such
Incentive Award or the authority of such person and may require such
consents and releases of taxing authorities as the Committee may deem
advisable.
6.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Incentive Award.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Grantee may, by written notice to the Committee, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
6.5 CHANGE IN STOCK AND ADJUSTMENTS
(a) CHANGES IN LAW OR CIRCUMSTANCES. Subject to SECTION 6.7 (which
only applies in the event of a Change in Control), in the event of any
change in applicable laws or any change in circumstances which results in
or would result in any dilution of the rights granted under the Plan, or
which otherwise warrants equitable adjustment because it interferes with
the intended operation of the Plan, then, if the Committee should
determine,
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in its absolute discretion, that such change equitably requires an
adjustment in the number or kind of shares of stock or other securities or
property theretofore subject, or which may become subject, to issuance or
transfer under the Plan or in the terms and conditions of outstanding
Incentive Awards, such adjustment shall be made in accordance with such
determination. Such adjustments may include changes with respect to (i)
the aggregate number of Shares that may be issued under the Plan, (ii) the
number of Shares subject to Incentive Awards, and (iii) the price per
Share for outstanding Incentive Awards. Any adjustment under this
paragraph of an outstanding Incentive Stock Option shall be made only to
the extent not constituting a "modification" within the meaning of Section
424(h)(3) of the Code unless otherwise agreed to by the Grantee in
writing. The Committee shall give notice to each applicable Grantee of
such adjustment which shall be effective and binding.
(b) EXERCISE OF CORPORATE POWERS. The existence of the Plan or
outstanding Incentive Awards hereunder shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalization, reorganization or other changes in
the Company's capital structure or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stocks ahead of or affecting the Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding whether of a similar character or
otherwise.
(c) RECAPITALIZATION OF THE COMPANY. Subject to SECTION 6.7, if
while there are Incentive Awards outstanding, the Company shall effect any
subdivision or consolidation of Shares of Common Stock or other capital
readjustment, the payment of a stock dividend, stock split, combination of
Shares, recapitalization or other increase or reduction in the number of
Shares outstanding, without receiving compensation therefor in money,
services or property, then the number of Shares available under the Plan
and the number of Incentive Awards which may thereafter be exercised shall
(i) in the event of an increase in the number of Shares outstanding, be
proportionately increased and the Fair Market Value of the Incentive
Awards awarded shall be proportionately reduced; and (ii) in the event of
a reduction in the number of Shares outstanding, be proportionately
reduced, and the Fair Market Value of the Incentive Awards awarded shall
be proportionately increased. The Committee shall take such action and
whatever other action it deems appropriate, in its discretion, so that the
value of each outstanding Incentive Award to the Grantee shall not be
adversely affected by a corporate event described in this subsection (c).
(d) REORGANIZATION OF THE COMPANY. Subject to SECTION 6.7, if the
Company is reorganized, merged or consolidated, or is a party to a plan of
exchange with another corporation, pursuant to which reorganization,
merger, consolidation or exchange, stockholders of the Company receive any
Shares of Common Stock or other securities or property, or if the Company
should distribute securities of another corporation to its stockholders,
each Grantee shall be entitled to receive, in lieu of the number of
unexercised
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Incentive Awards previously awarded, the number of Stock Options, Stock
Appreciation Rights, Performance Shares or Units, Restricted Stock shares,
or Other Stock-Based Awards, with a corresponding adjustment to the Fair
Market Value of said Incentive Awards, to which he would have been
entitled if, immediately prior to such corporate action, such Grantee had
been the holder of record of a number of Shares equal to the number of the
outstanding Incentive Awards payable in Shares that were previously
awarded to him. For this purpose, Shares of Restricted Stock shall be
treated the same as unrestricted outstanding Shares of Common Stock. In
this regard, the Committee shall take whatever other action it deems
appropriate to preserve the rights of Grantees holding outstanding
Incentive Awards.
(e) ISSUE OF COMMON STOCK BY THE COMPANY. Except as hereinabove
expressly provided in this SECTION 6.5 and subject to SECTION 6.7, the
issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or
for labor or services, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon any conversion of shares
or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of, or Fair Market Value of, any
Incentive Awards then outstanding under previously granted Incentive
Awards; provided, however, in such event, outstanding Shares of Restricted
Stock shall be treated the same as outstanding unrestricted Shares of
Common Stock.
(f) ACQUISITION OF THE COMPANY. Subject to SECTION 6.7, in the case
of any sale of assets, merger, consolidation or combination of the Company
with or into another corporation other than a transaction in which the
Company is the continuing or surviving corporation and which does not
result in the outstanding Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof
(an "Acquisition"), in the absolute discretion of the Committee, any
Grantee who holds an outstanding Incentive Award shall have the right
(subject to any limitation applicable to the particular Incentive Award
under the Plan) to receive upon exercise thereof the Acquisition
Consideration (as defined below) receivable upon the Acquisition by a
holder of the number of Shares which would have been obtained upon
exercise of the Incentive Award immediately prior to the Acquisition. The
term "Acquisition Consideration" shall mean the kind and amount of shares
of the surviving or new corporation, cash, securities, evidence of
indebtedness, other property or any combination thereof receivable in
respect of one Share upon consummation of an Acquisition. The Committee,
in its discretion, shall have the authority to take whatever action it
deems appropriate to effectuate the provisions of this subsection (f).
(g) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS.
Notwithstanding any other provision of the Plan, the Committee, in its
absolute discretion, may authorize the assumption and continuation under
the Plan of outstanding and unexercised stock options or other types of
stock-based incentive awards that were granted under a stock option plan
(or other type of stock incentive plan or agreement) that is or was
maintained by
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a corporation or other entity that was merged into, consolidated with, or
whose stock or assets were acquired by, the Company as the surviving
corporation. Any such action shall be upon such terms and conditions as
the Committee, in its discretion, may deem appropriate, including
provisions to preserve the holder's rights under the previously granted
and unexercised stock option or other stock-based incentive award, such
as, for example, retaining an existing exercise price under an outstanding
stock option. Any such assumption and continuation of any such previously
granted and unexercised incentive award shall be treated as an outstanding
Incentive Award under the Plan and shall thus count against the number of
Shares reserved for issuance pursuant to SECTION 1.4. With respect to an
incentive stock option (as described in Section 422 of the Code) subject
to this subsection (g), no adjustment to such option shall be made to the
extent constituting a "modification" within the meaning of Section
424(h)(3) of the Code unless otherwise agreed to by the optionee in
writing.
(h) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Notwithstanding
any other provision hereof, in the event of a dissolution or liquidation
of the Company, a sale of all or substantially all of the Company's
assets, a merger or consolidation involving the Company in which the
Company is not the surviving corporation, or a merger or consolidation
involving the Company in which the Company is the surviving corporation
but the holders of Shares of Common Stock receive securities of another
corporation and/or other property, including cash, the Committee shall, in
its absolute discretion, have the right and power to:
(i) cancel, effective immediately prior to the occurrence of
such corporate event, each outstanding Incentive Award (whether or
not then exercisable), and, in full consideration of such
cancellation, pay to the Grantee to whom such Incentive Award was
granted an amount in cash equal to the excess of (A) the value, as
determined by the Committee, in its absolute discretion, of the
property (including cash) received by the holder of a Share of
Common Stock as a result of such event over (B) the exercise price
of such Incentive Award, if any; or
(ii) provide for the exchange of each Incentive Award
outstanding immediately prior to such corporate event (whether or
not then exercisable) for an incentive award on some or all of the
property for which such Incentive Award is exchanged and, incident
thereto, make an equitable adjustment as determined by the
Committee, in its absolute discretion, in the exercise price of the
incentive award, if any, or the number of shares or amount of
property (including cash) subject to the Incentive Award or, if
appropriate, provide for a cash payment to the Grantee to whom such
Incentive Award was granted in consideration for the exchange of the
Incentive Award.
The Committee, in its discretion, shall have the authority to take
whatever action it deems appropriate to effectuate the provisions of this
subsection (h).
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6.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
(a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly provided
in the Grantee's Incentive Agreement, if the Grantee's Employment is
terminated for any reason other than due to his death, Disability,
Retirement or for Cause, any non-vested portion of any Stock Option or
other applicable Incentive Award at the time of such termination shall
automatically expire and terminate and no further vesting shall occur
after the termination date. In such event, except as otherwise expressly
provided in his Incentive Agreement, the Grantee shall be entitled to
exercise his rights only with respect to the portion of the Incentive
Award that was vested as of the termination date for a period that shall
end on the earlier of (i) the expiration date set forth in the Incentive
Agreement with respect to the vested portion of such Incentive Award or
(ii) the date that occurs ninety (90) calendar days after his termination
date.
(b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, in the event of the
termination of a Grantee's Employment for Cause, all vested and non-vested
Stock Options and other Incentive Awards granted to such Grantee shall
immediately expire, and shall not be exercisable to any extent, as of
12:01 a.m. (CST) on the date of such termination of Employment.
(c) RETIREMENT. Unless otherwise expressly provided in the Grantee's
Incentive Agreement, upon the Retirement of any Employee who is a Grantee:
(i) any non-vested portion of any outstanding Option or other
Incentive Award shall immediately terminate and no further vesting
shall occur; and
(ii) any vested Option or other Incentive Award shall expire
on the earlier of (A) the expiration date set forth in the Incentive
Agreement for such Incentive Award; or (B) the expiration of (1) six
months after the date of Retirement in the case of any Incentive
Award other than an Incentive Stock Option, or (2) three months
after the date of Retirement in the case of an Incentive Stock
Option.
(d) DISABILITY OR DEATH. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon termination of Employment as a result
of the Grantee's Disability or death:
(i) any nonvested portion of any outstanding Option or other
applicable Incentive Award shall immediately terminate upon
termination of Employment and no further vesting shall occur; and
(ii) any vested Incentive Award shall expire on the earlier of
either (A) the expiration date set forth in the Incentive Agreement
or (B) the one year anniversary date of the Grantee's termination of
Employment date.
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In the case of any vested Incentive Stock Option held by an Employee
following termination of Employment, notwithstanding the definition of
"Disability" in SECTION 1.2, whether the Employee has incurred a
"Disability" for purposes of determining the length of the Option exercise
period following termination of Employment under this paragraph (d) shall
be determined by reference to Section 22(e)(3) of the Code to the extent
required by Section 422(c)(6) of the Code. The Committee shall determine
whether a Disability for purposes of this subsection (d) has occurred.
(e) CONTINUATION. Subject to the conditions and limitations of the
Plan and applicable law and regulation in the event that a Grantee ceases
to be an Employee, Outside Director or Consultant, as applicable, for
whatever reason, the Committee and Grantee may mutually agree with respect
to any outstanding Option or other Incentive Award then held by the
Grantee (i) for an acceleration or other adjustment in any vesting
schedule applicable to the Incentive Award, (ii) for a continuation of the
exercise period following termination for a longer period than is
otherwise provided under such Incentive Award, or (iii) to any other
change in the terms and conditions of the Incentive Award. In the event of
any such change to an outstanding Inventive Award, a written amendment to
the Grantee's Incentive Agreement shall be required.
6.7 CHANGE IN CONTROL
Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below), the following actions shall automatically
occur as of the day immediately preceding the Change in Control date unless
expressly provided otherwise in the Grantee's Incentive Agreement:
(a) all of the Stock Options and Stock Appreciation Rights then
outstanding shall become 100% vested and immediately and fully
exercisable;
(b) all of the restrictions and conditions of any Restricted Stock
and any Other Stock-Based Awards then outstanding shall be deemed
satisfied, and the Restriction Period with respect thereto shall be deemed
to have expired; and
(c) all of the Performance Shares, Performance Units and any Other
Stock-Based Awards shall become fully vested, deemed earned in full, and
promptly paid within thirty (30) days to the affected Grantees without
regard to payment schedules and notwithstanding that the applicable
performance cycle, retention cycle or other restrictions and conditions
have not been completed or satisfied.
Notwithstanding any other provision of this Plan, unless otherwise
expressly provided in the Grantee's Incentive Agreement, the provisions of this
SECTION 6.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the
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prior written consent of the Grantee with respect to his outstanding Incentive
Awards subject, however, to the last paragraph of this SECTION 6.7.
For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company shall
be deemed to occur if:
(a) There is an acquisition by a "person" as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (a "PERSON") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of thirty percent (30%) or more of the total voting power of all the
Company's then outstanding securities entitled to vote generally in the
election of directors to the Board; provided, however, that for purposes
of this subsection (a), the following acquisitions shall not constitute a
Change in Control: (i) any acquisition by the Company or its Parent or
Subsidiaries, (ii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or its Parent or
Subsidiaries, or (iii) any acquisition consummated with the prior approval
of the Board; or
(b) During a period of two consecutive calendar years, individuals
who at the beginning of such period constitute the Board, and any new
director(s) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of
the directors then still in office, who either were directors at the
beginning of the two-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the Board; or
(c) The Company becomes a party to a merger, plan of reorganization,
consolidation or share exchange in which either (i) the Company will not
be the surviving corporation or (ii) the Company will be the surviving
corporation and any outstanding shares of the Company's common stock will
be converted into shares of any other company (other than a
reincorporation or the establishment of a holding company involving no
change of ownership of the Company) or other securities, cash or other
property (excluding payments made solely for fractional shares); or
(d) The shareholders of the Company approve a merger, plan of
reorganization, consolidation or share exchange with any other
corporation, and immediately following such merger, plan of
reorganization, consolidation or share exchange the holders of the voting
securities of the Company outstanding immediately prior thereto hold
securities representing fifty percent (50%) or less of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger, plan of reorganization,
consolidation or share exchange; PROVIDED, HOWEVER, that notwithstanding
the foregoing, no Change in Control shall be deemed to have occurred if
one-half (1/2) or more of the members of the Board of the Company or such
surviving entity immediately after such merger, plan of reorganization,
consolidation or share exchange is comprised of persons who served as
directors of the Company immediately prior to such merger, plan of
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reorganization, consolidation or share exchange or who are otherwise
designees of the Company; or
(e) Upon approval by the Company's stockholders of a complete
liquidation and dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company other
than to a Parent or Subsidiary; or
(f) Any other event that a majority of the Board, in its sole
discretion, shall determine constitutes a Change in Control hereunder.
Notwithstanding the occurrence of any of the foregoing events of this
SECTION 6.7 which would otherwise result in a Change in Control, the Board may
determine in its discretion, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change in Control
shall not be deemed a Change in Control hereunder. Such determination shall be
effective only if it is made by the Board prior to the occurrence of an event
that otherwise would be a Change in Control, or after such event if made by the
Board a majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be or probably would lead to
a Change in Control.
6.8 EXCHANGE OF INCENTIVE AWARDS
The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.
6.9 FINANCING
The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Incentive Award upon such terms as are approved by
the Committee in its discretion.
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SECTION 7.
GENERAL
7.1 EFFECTIVE DATE AND GRANT PERIOD
This Plan is adopted by the Board effective as of October 1, 1998 (the
"EFFECTIVE DATE") subject to the approval of the stockholders of the Company by
September 30, 1999. Incentive Awards may be granted under the Plan at any time
prior to receipt of such stockholder approval; provided, however, if the
requisite stockholder approval is not obtained then any Incentive Awards granted
hereunder shall automatically become null and void and of no force or effect.
Unless sooner terminated by the Board, no Incentive Award shall be granted under
the Plan after ten (10) years from the Effective Date.
7.2 FUNDING AND LIABILITY OF COMPANY
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company,
the Board nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
7.3 WITHHOLDING TAXES
(a) TAX WITHHOLDING. The Company shall have the power and the right
to deduct or withhold, or require a Grantee to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Plan or an Incentive Award
hereunder.
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(b) SHARE WITHHOLDING. With respect to tax withholding required upon
the exercise of Stock Options or SARs, upon the lapse of restrictions on
Restricted Stock, or upon any other taxable event arising as a result of
any Incentive Awards, Grantees may elect, subject to the approval of the
Committee in its discretion, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares having a Fair
Market Value on the date the tax is to be determined equal to the minimum
statutory total tax which could be imposed on the transaction. All such
elections shall be made in writing, signed by the Grantee, and shall be
subject to any restrictions or limitations that the Committee, in its
discretion, deems appropriate.
(c) INCENTIVE STOCK OPTIONS. With respect to Shares received by a
Grantee pursuant to the exercise of an Incentive Stock Option, if such
Grantee disposes of any such Shares within (i) two years from the date of
grant of such Option or (ii) one year after the transfer of such shares to
the Grantee, the Company shall have the right to withhold from any salary,
wages or other compensation payable by the Company to the Grantee an
amount sufficient to satisfy federal, state and local tax withholding
requirements attributable to such disqualifying disposition.
(d) LOANS. The Committee may provide for loans, on either a short
term or demand basis, from the Company to a Grantee who is an Employee or
Consultant to permit the payment of taxes required by law.
7.4 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
7.5 DESIGNATION OF BENEFICIARY BY PARTICIPANT
Each Grantee may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Grantee, shall be in a form prescribed by the Committee, and will be effective
only when filed by the Grantee in writing with the Committee during the
Grantee's lifetime. In the absence of any such designation, benefits remaining
unpaid at the Grantee's death shall be paid to the Grantee's estate.
7.6 DEFERRALS
The Committee may permit a Grantee to defer such Grantee's receipt of the
payment of cash or the delivery of Shares that would, otherwise be due to such
Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or
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goals with respect to Performance Units, Performance Shares or Other Stock-Based
Awards. If any such deferral election is permitted, the Committee shall, in its
discretion, establish rules and procedures for such payment deferrals to the
extent consistent with the Code.
7.7 AMENDMENT AND TERMINATION
The Board shall have complete power and authority to terminate or amend
the Plan at any time; provided, however, if the Company is a Publicly Held
Corporation, the Board shall not, without the approval of the stockholders of
the Company within the time period required by applicable law, (a) except as
provided in SECTION 6.5, increase the maximum number of Shares which may be
issued under the Plan pursuant to SECTION 1.4, (b) amend the requirements as to
the class of Employees eligible to purchase Common Stock under the Plan, (c) to
the extent applicable, increase the maximum limits on Incentive Awards to
Covered Employees as set for compliance with the Performance-Based Exception,
(d) extend the term of the Plan, or (e) to the extent applicable, decrease the
authority granted to the Committee under the Plan in contravention of Rule 16b-3
under the Exchange Act.
No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.
In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications, then
the Plan shall not be amended in such respect without approval of the Company's
stockholders.
7.8 REQUIREMENTS OF LAW
The granting of Incentive 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. Certificates evidencing shares of Common Stock delivered under this
Plan (to the extent that such shares are so evidenced) may be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules and regulations of the Securities and Exchange Commission, any
securities exchange or transaction reporting system upon which the Common Stock
is then listed or to which it is admitted for quotation, and any applicable
federal or state securities law, if applicable. The Committee may cause a legend
or legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
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7.9 RULE 16B-3 SECURITIES LAW COMPLIANCE
With respect to Insiders to the extent applicable, transactions under the
Plan are intended to comply with all applicable conditions of Rule 16b-3 under
the Exchange Act. Any ambiguities or inconsistencies in the construction of an
Incentive Award or the Plan shall be interpreted to give effect to such
intention. However, to the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee in its discretion.
7.10 COMPLIANCE WITH CODE SECTION 162(M)
While the Company is a Publicly Held Corporation, unless otherwise
determined by the Committee with respect to any particular Incentive Award, it
is intended that the Plan shall comply fully with the applicable requirements so
that any Incentive Awards subject to Section 162(m) that are granted to Covered
Employees shall qualify for the Performance-Based Exception. If any provision of
the Plan or an Incentive Agreement would disqualify the Plan or would not
otherwise permit the Plan or Incentive Award to comply with the
Performance-Based Exception as so intended, such provision shall be construed or
deemed to be amended to conform to the requirements of the Performance-Based
Exception to the extent permitted by applicable law and deemed advisable by the
Committee; provided, however, no such construction or amendment shall have an
adverse effect on the prior grant of an Incentive Award or the economic value to
a Grantee of any outstanding Incentive Award.
7.11 SUCCESSORS
All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
7.12 MISCELLANEOUS PROVISIONS
(a) No Employee, Consultant, Outside Director, or other person shall
have any claim or right to be granted an Incentive Award under the Plan.
Neither the Plan, nor any action taken hereunder, shall be construed as
giving any Employee, Consultant, or Outside Director any right to be
retained in the Employment or other service of the Company or any Parent
or Subsidiary.
(b) No Shares of Common Stock shall be issued hereunder unless
counsel for the Company is then reasonably satisfied that such issuance
will be in compliance with federal and state securities laws, if
applicable.
(c) The expenses of the Plan shall be borne by the Company.
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(d) By accepting any Incentive Award, each Grantee and each person
claiming by or through him shall be deemed to have indicated his
acceptance of the Plan.
7.13 SEVERABILITY
In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.
7.14 GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the interpretation or
construction of the Plan.
7.15 GOVERNING LAW
The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Texas without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.
IN WITNESS WHEREOF, Pinnacle Global Group, Inc. has caused this Plan to be
duly executed in its name and on its behalf by its duly authorized officer.
PINNACLE GLOBAL GROUP, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
37
EXHIBIT 5.1
February 12, 1999
Pinnacle Global Group, Inc.
5599 San Felipe, Suite 1212
Houston, Texas 77056
Re: PINNACLE GLOBAL GROUP, INC. REGISTRATION STATEMENT ON FORM S-8; AND
1998 INCENTIVE PLAN EFFECTIVE AS OF OCTOBER 1, 1998
Gentlemen:
We have acted as counsel to Pinnacle Global Group, Inc., a Texas
corporation (the "Company"), in connection with the preparation for filing with
the Securities and Exchange Commission of a Registration Statement on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended. The
Registration Statement relates to an aggregate of 1,100,0000 shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), issuable pursuant to the Company's 1998 Incentive Plan effective as of
October 1, 1998 (the "Plan").
We have examined the Plan and such corporate records, documents,
instruments and certificates of the Company, and have reviewed such questions of
law as we have deemed necessary, relevant or appropriate to enable us to render
the opinion expressed herein. In such examination, we have assumed without
independent investigation the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons, and the conformity of any documents submitted to us as copies to their
respective originals. As to certain questions of fact material to this opinion,
we have relied without independent investigation upon statements or certificates
of public officials and officers of the Company.
Based upon such examination and review, we are of the opinion that the
Shares have been duly and validly authorized and will, upon issuance and
delivery as contemplated by the Plan, be validly issued, fully paid and
nonassessable outstanding shares of Common Stock.
This Firm consents to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Porter & Hedges, L.L.P.
PORTER & HEDGES, L.L.P.
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Pinnacle Global Group, Inc. on Form S-8 of our report dated October 1, 1998
on our audit of the balance sheet of Pinnacle Global Group, Inc. as of October
1, 1998, our report dated February 17, 1998 on our audit of the financial
statements of TEI, Inc., and our report dated February 16, 1998 on our audit of
the financial statements of Spires Financial L.P.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
February 11, 1999
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement of
Pinnacle Global Group, Inc. on Form S-8 of our report dated February 3, 1998
(including Note 13 for which the date is March 18, 1998 and Notes 7 and 14 for
which the date is October 6, 1998), on our audits of the financial statements of
Harris Webb & Garrison, Inc.
/s/ Chesier & Fuller, L.L.P.
CHESIER & FULLER, L.L.P.
Dallas, Texas
February 12, 1999
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to incorporation by reference in the registration statement on
Form S-8 of Pinnacle Global Group, Inc. of our report dated March 13, 1998,
relating to the balance sheet of Pinnacle Management & Trust Company as of
December 31, 1997 and the related statement of operations, shareholders' equity
and cash flows for the year then ended, which report appears in Form S-4 (No.
333-65417) of Pinnacle Global Group, Inc.
/s/ KPMG LLP
KPMG LLP
Houston, Texas
February 12, 1999
EXHIBIT 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 7, 1997, accompanying the
financial statements of Pinnacle Management & Trust Company contained in the
Registration Statement and Prospectus of Pinnacle Global Group, Inc. on Form S-4
(File No. 333-65417), which is incorporated by reference in this Registration
Statement on Form S-8 relating to the Pinnacle Global Group, Inc. 1998 Incentive
Plan. We consent to the incorporation by reference in this Registration
Statement of the aforementioned report.
/s/Grant Thornton LLP
GRANT THORNTON LLP
Houston, Texas
February 12, 1999
