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EXHIBIT 10.2
STANCORP FINANCIAL GROUP, INC.
1999 OMNIBUS STOCK INCENTIVE PLAN, AS AMENDED
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to
enable StanCorp Financial Group, Inc. an Oregon corporation (the "Company") to
attract and retain the services of (a) employees, officers and directors of the
Company or of any subsidiary of the Company, (b) selected nonemployee agents,
consultants, advisors, persons involved in the sale or distribution of the
products of the Company or any subsidiary and independent contractors of the
Company or any subsidiary, (c) non-employee directors of the Company, and (d)
non-employees to whom an offer of employment has been extended.
2. Shares Subject to the Plan. The shares to be offered under the Plan
shall consist of Common Stock of the Company. Subject to adjustment as provided
below and in Section 14, the total number of shares of Common Stock that may be
issued under the Plan shall not exceed 5% of the number of shares outstanding
after the closing of the Company's initial public offering (including shares
issued on exercise of the underwriter's overallotment option). The shares issued
under the Plan may be authorized and unissued shares or reacquired shares. If an
option, stock appreciation right or performance unit granted under the Plan
expires, terminates or is cancelled, the unissued shares subject to such option,
stock appreciation right or performance unit shall again be available under the
Plan. If shares sold or awarded as a bonus under the Plan are forfeited to the
Company or repurchased by the Company, the number of shares forfeited or
repurchased shall again be available under the Plan.
3. Effective Date and Duration of Plan.
3.1 Effective Date. The Plan shall become effective when adopted by
the Board of Directors of the Company, but no Incentive Stock Option granted
under the Plan shall become exercisable until the Plan is approved by the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at a shareholders meeting at which a quorum is present. Any
Incentive Stock Options granted under the Plan prior to the receipt of
shareholder approval shall be conditioned on and subject to such approval.
Subject to the foregoing limitations, options, stock appreciation rights and
performance units may be granted and shares may be awarded as bonuses or sold
under the Plan at any time after the effective date and before termination of
the Plan.
3.2 Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors may suspend or terminate the
Plan at any time except with respect to options, performance units and shares
subject to restrictions then outstanding under the Plan. Termination shall not
affect any outstanding options, any right of the Company to repurchase shares or
the forfeitability of shares issued under the Plan.
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4. Administration.
4.1 Board of Directors. The Plan shall be administered by the Board
of Directors of the Company, which shall determine and designate from time to
time the individuals to whom awards shall be made, the amount of the awards and
the other terms and conditions of the awards. Subject to the provisions of the
Plan, the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect, and it shall be the sole and final judge of such
expediency.
Any action taken by, or inaction of, the Company or any of its
subsidiaries or the Board of Directors relating or pursuant to this Plan,
including but not limited to the interpretation and construction of the
provisions of the Plan and related agreements by the Board of Directors, shall
be within the absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. Subject only to the express provisions of the
Plan, the Board of Directors may act in its absolute discretion in matters
within its authority related to the Plan. In making any determination or in
taking or not taking any action under the Plan, the Board of Directors may
obtain and rely upon the advice of experts, including professional advisors to
the Company. No director, officer or agent of the Company will be liable for any
such action or determination taken or made or omitted in good faith.
4.2 Committee. The Board of Directors may delegate to a committee
comprised solely of two or more members of the Board of Directors or specified
officers of the Company, or both (the "Committee") any or all authority for
administration of the Plan. If authority is delegated to a Committee, all
references to the Board of Directors in the Plan shall mean and relate to the
Committee except (i) as otherwise provided by the Board of Directors, (ii) that
only the Board of Directors may amend or terminate the Plan as provided in
Sections 3 and 17, and (iii) that a Committee including officers of the Company
shall not be permitted to grant options to persons who are officers of the
Company who are subject to Section 16(a) of the Securities Exchange Act of 1934,
as amended. If awards are to be made under the Plan to directors or officers who
are subject to Section 16(a) of the Securities Exchange Act of 1934, as amended,
authority for selection of such directors and officers for participation and
decisions concerning the timing, pricing and amount of a grant or award, if not
determined under a formula meeting the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, shall be delegated to a committee
consisting of two or more disinterested directors..
5. Types of Awards. The Board of Directors may, from time to time, take
the following actions, separately or in combination, under the Plan:
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5.1 Grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as provided in Sections
7.1 and 7.2;
5.2 Grant options other than Incentive Stock Options ("Non-Statutory
Stock Options") as provided in Sections 7.1 and 7.3;
5.3 Award stock bonuses as provided in Section 8;
5.4 Sell shares subject to restrictions as provided in Section 9;
5.5 Grant stock appreciation rights as provided in Section 10;
5.6 Grant cash bonus rights as provided in Section 11;
5.7 Grant performance units as provided in Section 12; and
5.8 Grant foreign qualified awards as provided in Section 13.
6. Eligibility. Awards may be made to regular employees in good standing,
working at least 20 hours per week and do not have a status of "Inactive
Disability", including employees who are officers or directors, and to other
individuals described in Section 1 who the Board of Directors believes have made
or will make an important contribution to the Company or any subsidiary of the
Company; provided, however, that only employees of the Company shall be eligible
to receive Incentive Stock Options under the Plan. The Board of Directors shall
select the individuals to whom awards shall be made and shall specify the action
taken with respect to each individual to whom an award is made. At the
discretion of the Board of Directors, an individual may be given an election to
surrender an award in exchange for the grant of a new award.
7. Option Grants.
7.1 General Rules Relating to Options.
7.1.1 Terms of Grant. The Board of Directors may grant
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options under the Plan. With respect to each option grant, the Board of
Directors shall determine the number of shares subject to the option, the option
price, the period of the option, the time or times at which the option may be
exercised and whether the option is an Incentive Stock Option or a Non-Statutory
Stock Option. At the time of the grant of an option or at any time thereafter,
the Board of Directors may provide that an optionee who exercised an option with
Common Stock of the Company shall automatically receive a new option to purchase
additional shares equal to the number of shares surrendered and may specify the
terms and conditions of such new options.
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7.1.2 Exercise of Options. Except as provided in Section
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7.1.4 or as determined by the Board of Directors, no option granted under the
Plan may be exercised unless at the time of such exercise the optionee is
employed on a regular basis, working at least 20 hours or more per week or in
the service of the Company or any subsidiary of the Company and shall have been
so employed or provided such service continuously since the date such option was
granted. Absence on authorized leave or on account of illness or disability
under rules established by the Board of Directors shall not, however, be deemed
an interruption of employment or service for this purpose. Unless otherwise
determined by the Board of Directors, vesting of options shall continue during
an absence on authorized leave (including an extended illness) or on account of
disability. Except as provided in Sections 7.1.4, 14 and 15, options granted
under the Plan may be exercised from time to time over the period stated in each
option in such amounts and at such times as shall be prescribed by the Board of
Directors; provided, that options shall not be exercised for fractional shares.
Unless otherwise determined by the Board of Directors, if the optionee does not
exercise an option in any one year with respect to the full number of shares to
which the optionee is entitled in that year, the optionee's rights shall be
cumulative and the optionee may purchase those shares in any subsequent year
during the term of the option.
7.1.3 Nontransferability. Each Incentive Stock Option and,
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unless otherwise determined by the Board of Directors, each other option granted
under the Plan by its terms shall be nonassignable and nontransferable by the
optionee, either voluntarily or by operation of law, except by will or by the
laws of descent and distribution of the state or country of the optionee's
domicile at the time of death.
7.1.4 Termination of Employment or Service.
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7.1.4.1 General Rule. Unless otherwise determined by
the Board of Directors, if the employment or service with the Company or a
subsidiary of an optionee terminates for any reason other than Total
Disability, death, Retirement, resignation or termination by the Company
without cause (each as set forth below), any options (or portion thereof)
held by such optionee shall immediately terminate.
7.1.4.2 Termination By Reason of Total Disability.
Unless otherwise determined by the Board of Directors, if an optionee's
employment or service terminates by reason of the optionee's Total
Disability (as defined below), any options held by such optionee shall
become fully exercisable and may be exercised at any time prior to the
expiration date of the option(s) or the expiration of 60 months after the
date of such termination, whichever is the shorter period, provided that
with respect to Incentive Stock Options, the period during which an option
may be exercised after the date of termination shall not exceed that
permitted with respect to Incentive Stock Options under the Code. "Total
Disability" means a physical or mental impairment which
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is expected to result in death or which has lasted or is expected to last
for a continuous period of 12 months or more and which causes the optionee
to be unable, in the opinion of the Company, to perform his or her duties
as an employee, director, officer or consultant of the Company or any
subsidiary and to be engaged in any substantial gainful activity. Total
Disability shall be deemed to have occurred on the first day after the
Company has made a determination of Total Disability.
7.1.4.3 Termination by Reason of Death. Unless
otherwise determined by the Board of Directors, if an optionee dies while
employed by or providing service to the Company or a subsidiary, any
options held by such optionee shall become fully exercisable and may be
exercised at any time prior to the expiration date of the option(s) or the
expiration of 60 months after the date of death, whichever is the shorter
period, provided that with respect to Incentive Stock Options, the period
during which an option may be exercised after the date of death shall not
exceed that permitted with respect to Incentive Stock Options under the
Code. Options held by the deceased optionee may be exercised only by the
person or persons to whom such optionee's rights under the option(s) shall
pass by the optionee's will or by the laws of descent and distribution of
the state or country of the optionee's domicile at the time of death.
7.1.4.4 Termination by Reason of Resignation. If an
optionee resigns from employment or providing services to the Company or a
subsidiary, such optionee may exercise his or her option(s) at any time
prior to the expiration date of the option(s) or the expiration of 90 days
after the date of termination, whichever is the shorter period, but only if
and to the extent the optionee was entitled to exercise the option(s) at
the date of termination; provided, however, the Board of Directors may in
its sole discretion at the time of grant, at the time of termination or at
any other time shorten, extend or otherwise modify or terminate such
exercise period.
7.1.4.5 Termination by the Company Without Cause. If
the Company or a subsidiary terminates the employment of or the provision
of services by an optionee without cause, such optionee may exercise his or
her option(s) at any time prior to the expiration date of the option(s) or
the expiration 90 days after the date of termination, whichever is the
shorter period; provided, however, that the Board of Directors may in its
sole discretion at the time of grant, the time of termination or any other
time shorten, extend or otherwise modify or terminate such exercise period.
The Board of Directors shall determine in its sole and absolute discretion
whether an optionee has been terminated without cause.
7.1.4.6 Termination by Reason of Retirement. Unless
otherwise determined by the Board of Directors and except as provided in
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Section 7.2.6, if an optionee terminates employment by or service with the
Company by reason of "Retirement", such optionee may exercise his or her
option(s) at any time prior to the expiration date of the option(s) or the
expiration of 60 months after the date of termination, whichever is the
shorter period, provided that with respect to Incentive Stock Options, the
period during which an option may be exercised after the date of retirement
shall not exceed that permitted with respect to Incentive Stock Options
under the Code. Any options held by such optionee shall continue to vest
according to the terms of their grant, except as provided in Section 7.2.6.
"Retirement" means voluntary retirement with the consent of the Company
under any of the Company's retirement plans.
7.1.4.7 Amendment of Exercise Period Applicable to
Termination. The Board of Directors, at the time of grant or at any time
thereafter, may extend the above-described exercise periods any length of
time not longer than the original expiration date of the option, and may
increase the portion of an option that is exercisable, subject to such
terms and conditions as the Board of Directors may determine.
7.1.4.8 Failure to Exercise Option. To the extent
that the option of any deceased optionee or of any optionee whose
employment or service terminates is not exercised within the applicable
period, all further rights to purchase shares pursuant to such option shall
cease and terminate.
7.1.5 Purchase of Shares. Unless the Board of Directors
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determines otherwise, shares may be acquired pursuant to an option granted under
the Plan only upon receipt by the Company of notice in writing from the optionee
of the optionee's intention to exercise, specifying the number of shares as to
which the optionee desires to exercise the option and the date on which the
optionee desires to complete the transaction, and if required in order to comply
with the Securities Act of 1933, as amended, containing a representation that it
is the optionee's present intention to acquire the shares for investment and not
with a view to distribution. In addition, unless the Board of Directors
determines otherwise, any shares acquired by the optionee shall be subject to
any stock transfer restrictions in any agreement then in effect among the
holders of the Company's Common Stock, and the exercise of an option shall not
be effective until the optionee has signed and delivered a signature page to
such stock transfer restriction agreement.
7.1.6 Payment of Exercise Price. Unless the Board of
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Directors determines otherwise, on or before the date specified for completion
of the purchase of shares pursuant to an option, the optionee must have paid the
Company the full purchase price of such shares in cash or, with the consent of
the Board of Directors, in whole or in part, in Common Stock of the Company
valued at fair market value, restricted stock, performance units or other
contingent awards denominated in either stock or cash, promissory notes and
other forms of consideration. The fair market
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value of Common Stock provided in payment of the purchase price shall be
determined by the Board of Directors. If the Common Stock of the Company is not
publicly traded on the date the option is exercised, the Board of Directors may
consider any valuation methods it deems appropriate and may, but is not required
to, obtain one or more independent appraisals of the Company. If the Common
Stock of the Company is publicly traded on the date the option is exercised, the
fair market value of Common Stock provided in payment of the purchase price
shall be the closing price of a share of Common Stock shown in the New York
Stock Exchange Composite Transactions Listing as published in The Wall Street
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Journal on the trading day preceding the date the option is exercised, or such
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other reported value of the Common Stock as shall be specified by the Board of
Directors.
With the consent of the Board of Directors, an optionee may request the
Company to apply automatically the shares to be received upon the exercise of a
portion of an option (even though stock certificates have not yet been issued)
to satisfy the purchase price for additional portions of the option.
In addition to the payment methods described above, the Board of Directors
may provide that an option may be exercised and payment made by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale proceeds necessary
to pay the exercise price and, unless otherwise prohibited by the Board of
Directors or applicable law, any applicable tax withholding under Section 7.1.7.
The Company will not be obligated to deliver certificates for the shares or make
book entries denoting ownership of the shares unless and until it receives full
payment of the exercise price therefor and any related withholding obligations
have been satisfied.
7.1.7 Payment of Applicable Withholding. Each optionee who
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has exercised an option shall immediately upon notification of the amount due,
if any, pay to the Company in cash amounts necessary to satisfy any applicable
federal, state and local tax withholding requirements. If additional withholding
is or becomes required beyond any amount deposited before delivery of the
certificates, the optionee shall pay such amount to the Company on demand. If
the optionee fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the optionee, including
salary, subject to applicable law. With the consent of the Board of Directors an
optionee may satisfy this obligation, in whole or in part, by having the Company
withhold from the shares to be issued upon the exercise that number of shares
that would satisfy the withholding amount due or by delivering to the Company
Common Stock to satisfy the withholding amount.
7.1.8 Effect of Exercise. Upon the exercise of an option, the
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number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued upon exercise of the option.
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7.2 Incentive Stock Options. Incentive Stock Options shall be subject
to the following additional terms and conditions:
7.2.1 Limitation on Amount of Grants. No employee may be
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granted Incentive Stock Options under the Plan if the aggregate fair market
value, on the date of grant, of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by that employee during any
calendar year under the Plan and under any other incentive stock option plan
(within the meaning of Section 422 of the Code) of the Company or any parent or
subsidiary of the Company exceeds $100,000.
7.2.2 Limitations on Grants to 10% Shareholders. An
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Incentive Stock Option may be granted under the Plan to an employee possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company only if the option price
is at least 110% of the fair market value of the Common Stock subject to the
option on the date it is granted, as described in Section 7.2.4, and the option
by its terms is not exercisable after the expiration of five years from the date
it is granted.
7.2.3 Duration of Options. Subject to Sections 7.1.2, 7.1.4
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and 7.2.2, Incentive Stock Options granted under the Plan shall continue in
effect for the period fixed by the Board of Directors, except that no Incentive
Stock Option shall be exercisable after the expiration of 10 years from the date
it is granted.
7.2.4 Option Price. The option price per share shall be
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determined by the Board of Directors at the time of grant. Except as provided in
Section 7.2.2, the option price shall not be less than 100% of the fair market
value of the Common Stock at the date the option is granted. The fair market
value shall be determined by the Board of Directors. If the Common Stock of the
Company is not publicly traded on the date the option is granted, the Board of
Directors may consider any valuation methods it deems appropriate and may, but
is not required to, obtain one or more independent appraisals of the Company. If
the Common Stock of the Company is publicly traded on the date the option is
granted, the fair market value shall be deemed to be the closing price of a
share of Common Stock as shown on the New York Stock Exchange Composite
Transactions Listing, as published in The Wall Street Journal on the day
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preceding the date the option is granted, or if there has been no sale on that
date, on the last preceding date on which a sale occurred, or such other value
of the Common Stock as shall be specified by the Board of Directors.
7.2.5 Limitation on Time of Grant. No Incentive Stock Option
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shall be granted on or after the tenth anniversary of the effective date of the
Plan.
7.2.6 Exercise Period Upon Termination By Reason of
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Retirement.
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Notwithstanding the provisions of Section 7.1.4.5, unless otherwise determined
by
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the Board of Directors, if an optionee holding an Incentive Stock Option
terminates employment by or service with the Company by reason of Retirement,
such optionee may exercise his or her Incentive Stock Option(s) at any time
prior to the expiration date of the option(s) or the expiration of 90 days after
the date of termination, whichever is the shorter period.
7.2.7 Conversion of Incentive Stock Options. The Board of
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Directors may at any time without the consent of the optionee convert an
Incentive Stock Option to a Non-Statutory Stock Option.
7.3 Non-Statutory Stock Options. Non-Statutory Stock Options shall be
subject to the following terms and conditions in addition to those set forth in
Section 7.1 above:
7.3.1 Option Price. The option price for Non-Statutory Stock
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Options shall be determined by the Board of Directors at the time of grant and
may be any amount determined by the Board of Directors.
7.3.2 Duration of Options. Non-Statutory Stock Options
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granted under the Plan shall continue in effect for the period fixed by the
Board of Directors.
8. Stock Bonuses. The Board of Directors may award shares under the Plan
as stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions, and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with such other restrictions as may be
determined by the Board of Directors. If shares are subject to forfeiture, all
dividends or other distributions paid by the Company with respect to the shares
shall be retained by the Company until the shares are no longer subject to
forfeiture, at which time all accumulated amounts shall be paid to the
recipient. The Board of Directors may require the recipient to sign an agreement
as a condition of the award, but may not require the recipient to pay any
monetary consideration other than amounts necessary to satisfy tax withholding
requirements. The agreement may contain any terms, conditions, restrictions,
representations and warranties required by the Board of Directors. The
certificates representing the shares awarded shall bear any legends required by
the Board of Directors. The Company may require any recipient of a stock bonus
to pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
recipient fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the recipient, including salary or
fees for services, subject to applicable law. With the consent of the Board of
Directors, a recipient may deliver Common Stock to the Company to satisfy this
withholding obligation. Upon the issuance of a stock bonus, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued.
9. Restricted Stock. The Board of Directors may issue shares under the
Plan for such consideration (including promissory notes and services) as
determined by the Board
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of Directors. Shares issued under the Plan shall be subject to the terms,
conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability, repurchase by
the Company and forfeiture of the shares issued, together with such other
restrictions as may be determined by the Board of Directors. If shares are
subject to forfeiture or repurchase by the Company, all dividends or other
distributions paid by the Company with respect to the shares shall be retained
by the Company until the shares are no longer subject to forfeiture or
repurchase, at which time all accumulated amounts shall be paid to the
recipient. All Common Stock issued pursuant to this Section 9 shall be subject
to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the shares prior to the delivery of certificates
representing such shares to the recipient. The purchase agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Board of Directors. The certificates, if any, representing the shares shall
bear any legends required by the Board of Directors. The Company may require any
purchaser of restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the purchaser fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the purchaser,
including salary, subject to applicable law. With the consent of the Board of
Directors, a purchaser may deliver Common Stock to the Company to satisfy this
withholding obligation. Upon the issuance of restricted stock, the number of
shares reserved for issuance under the Plan shall be reduced by the number of
shares issued.
10. Stock Appreciation Rights.
10.1 Grant. Stock appreciation rights may be granted under the Plan by
the Board of Directors, subject to such rules, terms, and conditions as the
Board of Directors prescribes.
10.2 Exercise.
10.2.1 Each stock appreciation right shall entitle the holder,
upon exercise, to receive from the Company in exchange therefor an amount
equal in value to the excess of the fair market value on the date of
exercise of one share of Common Stock of the Company over its fair market
value on the date of grant (or, in the case of a stock appreciation right
granted in connection with an option, the excess of the fair market value
of one share of Common Stock of the Company over the option price per share
under the option to which the stock appreciation right relates), multiplied
by the number of shares covered by the stock appreciation right or the
option, or portion thereof, that is surrendered. No stock appreciation
right shall be exercisable at a time that the amount determined under this
subsection is negative. Payment by the Company upon exercise of a stock
appreciation right may be made in Common Stock valued at fair market value,
in cash, or partly in Common Stock and partly in cash, all as determined by
the Board of Directors.
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10.2.2 A stock appreciation right shall be exercisable only at
the time or times established by the Board of Directors. If a stock
appreciation right is granted in connection with an option, the following
rules shall apply: (1) the stock appreciation right shall be exercisable
only to the extent and on the same conditions that the related option could
be exercised; (2) upon exercise of the stock appreciation right, the option
or portion thereof to which the stock appreciation right relates
terminates; and (3) upon exercise of the option, the related stock
appreciation right or portion thereof terminates.
10.2.3 The Board of Directors may withdraw any stock
appreciation right granted under the Plan at any time and may impose any
conditions upon the exercise of a stock appreciation right or adopt rules
and regulations from time to time affecting the rights of holders of stock
appreciation rights. Such rules and regulations may govern the right to
exercise stock appreciation rights granted prior to adoption or amendment
of such rules and regulations as well as stock appreciation rights granted
thereafter.
10.2.4 For purposes of this Section 10, the fair market value
of the Common Stock shall be determined as of the date the stock
appreciation right is exercised, under the methods set forth in Section
7.2.4.
10.2.5 No fractional shares shall be issued upon exercise of a
stock appreciation right. In lieu thereof, cash may be paid in an amount
equal to the value of the fraction or, if the Board of Directors shall
determine, the number of shares may be rounded downward to the next whole
share.
10.2.6 Each stock appreciation right granted in connection
with an Incentive Stock Option, and unless otherwise determined by the
Board of Directors, each other stock appreciation right granted under the
Plan by its terms shall be nonassignable and nontransferable by the holder,
either voluntarily or by operation of law, except by will or by the laws of
descent and distribution of the state or country of the holder's domicile
at the time of death, and each stock appreciation right by its terms shall
be exercisable during the holder's lifetime only by the holder.
10.2.7 Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay to the Company in
cash amounts necessary to satisfy any applicable federal, state and local
tax withholding requirements. If the participant fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable
by the Company to the participant including salary, subject to applicable
law. With the consent of the Board of Directors a participant may satisfy
this obligation, in whole or in part, by having the Company withhold from
any shares to be issued upon the exercise that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the
Company to satisfy the withholding amount.
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10.2.8 Upon the exercise of a stock appreciation right for
shares, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued. Cash payments of stock appreciation
rights shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.
11. Cash Bonus Rights.
11.1 Grant. The Board of Directors may grant cash bonus rights under
the Plan in connection with (i) options granted or previously granted, (ii)
stock appreciation rights granted or previously granted, (iii) stock bonuses
awarded or previously awarded and (iv) shares sold or previously sold under the
Plan. Cash bonus rights will be subject to rules, terms and conditions as the
Board of Directors may prescribe. Unless otherwise determined by the Board of
Directors, each cash bonus right granted under the Plan by its terms shall be
nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the holder's domicile at the time of death. The payment
of a cash bonus shall not reduce the number of shares of Common Stock reserved
for issuance under the Plan.
11.2 Cash Bonus Rights in Connection With Options. A cash bonus right
granted in connection with an option will entitle an optionee to a cash bonus
when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part. If an optionee purchases shares upon exercise of an option and does not
exercise a related stock appreciation right, the amount of the bonus shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right shall be determined from time to time by the Board
of Directors but shall in no event exceed 75%.
11.3 Cash Bonus Rights in Connection With Stock Bonus. A cash bonus
right granted in connection with a stock bonus will entitle the recipient to a
cash bonus payable when the stock bonus is awarded or restrictions, if any, to
which the stock is subject lapse. If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the stock bonus shall terminate and
may not be exercised. The amount and timing of payment of a cash bonus shall be
determined by the Board of Directors.
11.4 Cash Bonus Rights in Connection With Stock Purchases. A cash
bonus right granted in connection with the purchase of stock pursuant to Section
9 will entitle the recipient to a cash bonus when the shares are purchased or
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased pursuant to Section 9 shall
terminate and may not be exercised in the event the
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shares are repurchased by the Company or forfeited by the holder pursuant to
applicable restrictions. The amount of any cash bonus to be awarded and timing
of payment of a cash bonus shall be determined by the Board of Directors.
11.5 Taxes. The Company shall withhold from any cash bonus paid
pursuant to Section 11 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
12. Performance Units. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
shareholders' equity, return on invested capital, and such other goals as may be
established by the Board of Directors. In the event that the minimum performance
goal established by the Board of Directors is not achieved at the conclusion of
a period, no payment shall be made to the participants. In the event the maximum
corporate goal is achieved, 100% of the monetary value of the performance units
shall be paid to or vested in the participants. Partial achievement of the
maximum goal may result in a payment or vesting corresponding to the degree of
achievement as determined by the Board of Directors. Payment of an award earned
may be in cash or in Common Stock or in a combination of both, and may be made
when earned, or vested and deferred, as the Board of Directors determines.
Deferred awards shall earn interest on the terms and at a rate determined by the
Board of Directors. Unless otherwise determined by the Board of Directors, each
performance unit granted under the Plan by its terms shall be nonassignable and
nontransferable by the holder, either voluntarily or by operation of law, except
by will or by the laws of descent and distribution of the state or country of
the holder's domicile at the time of death. Each participant who has been
awarded a performance unit shall, upon notification of the amount due, pay to
the Company in cash amounts necessary to satisfy any applicable federal, state
and local tax withholding requirements. If the participant fails to pay the
amount demanded, the Company may withhold that amount from other amounts payable
by the Company to the participant, including salary or fees for services,
subject to applicable law. With the consent of the Board of Directors a
participant may satisfy this obligation, in whole or in part, by having the
Company withhold from any shares to be issued that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the Company
to satisfy the withholding amount. The payment of a performance unit in cash
shall not reduce the number of shares of Common Stock reserved for issuance
under the Plan. The number of shares reserved for issuance under the Plan shall
be reduced by the number of shares issued upon payment of an award.
13. Foreign Qualified Grants. Awards under the Plan may be granted to such
officers and employees of the Company and its subsidiaries and such other
persons described in Section 1 residing in foreign jurisdictions as the Board of
Directors may determine from time to time. The Board of Directors may adopt such
supplements to the Plan as may be necessary to comply with the applicable laws
of such foreign jurisdictions and to afford participants favorable treatment
under such laws; provided, however, that no
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award shall be granted under any such supplement with terms which are more
beneficial to the participants than the terms permitted by the Plan.
14. Stock Splits; Combinations; Dividends. If the outstanding Common Stock
of the Company is hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of any stock split, combination of shares, reorganization,
recapitalization, reclassification, or dividend payable in shares, appropriate
adjustment shall be made by the Board of Directors in the number and kind of
shares available for awards under the Plan. In addition, the Board of Directors
shall make appropriate adjustment in the number and kind of shares as to which
outstanding options and stock appreciation rights, or portions thereof then
unexercised, shall be exercisable, so that the optionee's proportionate interest
before and after the occurrence of the event is maintained. Notwithstanding the
foregoing, the Board of Directors shall have no obligation to effect any
adjustment that would or might result in the issuance of fractional shares, and
any fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Board of Directors. Any such
adjustments made by the Board of Directors shall be conclusive.
15. Acceleration of Awards upon Change in Control.
15.1 Unless prior to a Change in Control Event (as defined in Section
15.2), the Board of Directors determines that, upon its occurrence benefits
under awards made pursuant to this Plan will not accelerate or determines that
only certain or limited benefits under awards made pursuant to this Plan will be
accelerated and the extent to which they will be accelerated, or establishes a
different time in respect of such event for such acceleration, then upon the
occurrence of a Change in Control Event:
15.1.1 Each option and stock appreciation right will become
immediately exercisable;
15.1.2 Restricted stock will immediately vest free of restrictions;
15.1.3 Each performance share award will become payable to the
participant;
provided, however, that in no event will any award be accelerated as to any
Section 16 Person to a date less than six months after the award date of such
award. A "Section 16 Person" means a person subject to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Board of Directors may override the limitations on acceleration in
this Section 15 by express provision in the award agreement of any participant
and may accord any participant a right to refuse any acceleration, whether
pursuant to an award agreement or otherwise, in such circumstances as the Board
of Directors may approve. Any acceleration of awards will comply with all
applicable legal requirements.
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15.2 "Change in Control Event" shall have occurred if:
15.2.1 Any "Person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company ), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities;
15.2.2 The shareholders of the Company approve a merger or
other consolidation of the Company with any other company, other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) 51% or more of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (b) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires more than 30% of the
combined voting power of the Company's then outstanding securities;
15.2.3 The shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or substantially all of
its assets;
15.2.4 A tender or exchange offer is made for Common Stock (or
securities convertible into Common Stock) of the Company and such offer
results in a portion of those securities being purchased and the offeror
after the consummation of the offer is the beneficial owner (as determined
pursuant to Section 13(d) of the Exchange Act), directly or indirectly, of
securities representing at least 30% of the voting power of outstanding
securities of the Company;
15.2.5 During any period of twelve months or less, individuals
who at the beginning of such period constituted a majority of the Board
cease for any reason to constitute a majority of the Board unless the
nomination or election of such new directors was approved by a vote of at
least two-thirds of the directors then still in office who were directors
at the beginning of such period;
15.2.6 Any other event or combination of events which the
Board,acting in its sole discretion, determines to be a "Change of Control"
for purposes of this Agreement;
15.3 If any option or other right to acquire Common Stock under this
Plan has been fully accelerated as permitted by Section 15.1 but is not
exercised prior to (a) a
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dissolution of the Company, (b) an event described in Section 15.2 that the
Company does not survive or (c) the consummation of an event described in
Section 15.2 that results in a change in control approved by the Board of
Directors, such option or right will terminate, subject to any provision that
has been expressly made for the assumption, conversion, substitution, survival,
exchange or other settlement of such option or right.
16. Corporate Mergers, Acquisitions, etc. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses and issue restricted stock under the Plan having terms, conditions
and provisions that vary from those specified in this Plan provided that any
such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, stock bonuses, cash
bonuses, restricted stock and performance units granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a transaction (other than a Change of
Control Event as defined in Section 15.2) involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
17. Amendment of Plan. The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason; provided, however, that except as provided in Sections 7.1.4,
7.2.6, 10, 14 and 15, no change in an award already granted shall be made
without the written consent of the holder of such award.
18. Approvals. The obligations of the Company under the Plan are subject
to the approval of state and federal authorities or agencies with jurisdiction
in the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to issue
or deliver Common Stock under the Plan if such issuance or delivery would
violate applicable state or federal securities laws. Any securities delivered
under this Plan will be subject to such restrictions, and to any restrictions
the Board of Directors may require to preserve a pooling of interests under
generally accepted accounting principles, and the person acquiring such
securities will, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements.
19. Employment and Service Rights. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere in any
way with the right of the Company or any subsidiary by whom such employee is
employed to terminate such employee's employment at any time, for any reason,
with or without cause, or to decrease such employee's compensation or benefits,
or (ii) confer upon any person engaged by the Company any right to be retained
or employed by the Company or to the continuation,
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extension, renewal, or modification of any compensation, contract, or
arrangement with or by the Company.
20. Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock until the
date of issue of such shares. Except as otherwise expressly provided in the
Plan, no adjustment shall be made for dividends or other rights for which the
record date occurs prior to the date such stock certificate is issued.
21. Plan Not Funded. Awards payable under this Plan will be payable in
shares or from the general assets of the Company, and no special or separate
reserve, fund or deposit will be made to assure payment of such awards. No
participant, beneficiary or other person will have any right, title or interest
in any fund or in any specific asset (including shares of Common Stock, except
as expressly otherwise provided) of the Company by reason of any award
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan will create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any participant,
beneficiary or other person. To the extent that a participant, beneficiary or
other person acquires a right to receive payment pursuant to any award
hereunder, such right will be no greater than the right of any unsecured general
creditor of the Company.
22. Notices. Any notices required or permitted to be given to holders of
awards pursuant to the Plan shall be in writing, addressed to the most recent
address on the Company's records, and shall be deemed to be effectively given
when (a) mailed by registered or certified mail with postage and fees prepaid,
(b) sent by overnight delivery service, (c) personally delivered, or (d) sent by
facsimile with confirmed transmission.
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