LIZ CLAIBORNE, INC.
2000 STOCK INCENTIVE PLAN
ARTICLE I
General
1.1 Purpose
The Liz Claiborne, Inc. 2000 Stock Incentive Plan (the "Plan") is designed to
provide certain key persons, on whose initiative and efforts the successful
conduct of the business of Liz Claiborne, Inc. (the "Company") depends, and who
are responsible for the management, growth and protection of the business of the
Company, with incentives to: (a)enter into and remain in the service of the
Company, a Company subsidiary or a Company joint venture, (b)acquire a
proprietary interest in the success of the Company, (c)maximize their
performance and (d)enhance the long-term performance of the Company (whether
directly or indirectly through enhancing the long-term performance of a Company
subsidiary or a Company joint venture). The Plan is also designed to provide
certain "performance-based" compensation to these key persons.
1.2 Administration
(a) Administration by Committee; Constitution of Committee. The Plan shall be
administered by the Compensation Committee of the board of directors of the
Company (the "Board") or such other committee or subcommittee as the Board may
designate or as shall be formed by the abstention or recusal of a non-Qualified
Member (as defined below) of such committee (the "Committee"). The members of
the Committee shall be appointed by, and serve at the pleasure of, the Board. At
all times that the Committee acts in connection with the Plan, the Committee
shall consist solely of Qualified Members, the number of whom shall not be less
than two. A "Qualified Member" is both a "non-employee director" within the
meaning of Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange
Act of 1934 (the "1934 Act") and an "outside director" within the meaning of
section 162(m) of the Internal Revenue Code of 1986 (the "Code").
(b) Committee's Authority. The Committee shall have the authority (i)to exercise
all of the powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Grant Certificates executed pursuant to Section 2.1,
(iii)to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules governing its own operations, (iv)to make all determinations
necessary or advisable in administering the Plan, (v)to correct any defect,
supply any omission and reconcile any inconsistency in the Plan, and (vi)to
amend the Plan to reflect changes in applicable law.
(c) Committee Action. Actions of the Committee shall be taken by the vote of a
majority of its members. Any action may be taken by a written instrument signed
by a majority of the Committee members, and action so taken shall be fully as
effective as if it had been taken by a vote at a meeting.
(d) Determinations Final. The determination of the Committee on all matters
relating to the Plan or any Grant Certificate shall be final, binding and
conclusive.
(e) Limit on Committee Members' Liability. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any award thereunder.
1.3 Persons Eligible for Awards
The persons eligible to receive awards under the Plan are those officers,
directors, and executive, managerial, professional or administrative employees
of, and consultants to, the Company, its subsidiaries and its joint ventures
(collectively, "key persons") as the Committee in its sole discretion shall
select. The Committee may from time to time in its sole discretion determine
that any key person shall be ineligible to receive awards under the Plan.
1.4 Types of Awards Under Plan
Awards may be made under the Plan in the form of (a)incentive stock options,
(b) non-qualified stock options, (c)stock appreciation rights, (d)dividend
equivalent rights, (e)restricted stock, (f)unrestricted stock, and
(g)performance shares, all as more fully set forth in Article II. The term
"award" means any of the foregoing. No incentive stock option may be granted to
a person who is not an employee of the Company on the date of grant.
1.5 Shares Available for Awards
(a) Aggregate Number Available; Certificate Legends. The total number of shares
of common stock of the Company ("Common Stock") with respect to which awards may
be granted pursuant to the Plan shall not exceed 5,000,000 shares and no more
than 1,000,000 of those shares may be granted pursuant to restricted stock
awards. Shares issued pursuant to the Plan may be authorized but unissued Common
Stock, authorized and issued Common Stock held in the Company's treasury or
Common Stock acquired by the Company for the purposes of the Plan. The Committee
may direct that any stock certificate evidencing shares issued pursuant to the
Plan shall bear a legend setting forth such restrictions on transferability as
may apply to such shares.
(b) Adjustment Upon Changes in Common Stock. Upon certain changes in Common
Stock, the number of shares of Common Stock available for issuance with respect
to awards that may be granted under the Plan pursuant to Section 1.5(a), shall
be adjusted pursuant to Section 3.7(a).
(c) Certain Shares to Become Available Again. The following shares of Common
Stock shall again become available for awards under the Plan: any shares that
are subject to an award under the Plan and that remain unissued upon the
cancellation or termination of such award for any reason whatsoever; any shares
of restricted stock forfeited pursuant to Section 2.7(e), provided that any
dividends paid on such shares are also forfeited pursuant to such Section
2.7(e); and any shares in respect of which a stock appreciation right or
performance share award is settled for cash.
(d) Individual Limit. Except for the limits set forth in this Section 1.5(d) and
in Section 2.2(h), no provision of this Plan shall be deemed to limit the number
or value of shares with respect to which the Committee may make awards to any
eligible person. Subject to adjustment as provided in Section 3.7(a), the total
number of shares of Common Stock with respect to which awards may be granted to
any one employee of the Company or a subsidiary during any one calendar year
shall not exceed 500,000 shares. Stock options and stock appreciation rights
granted and subsequently canceled or deemed to be canceled in a calendar year
count against this limit even after their cancellation.
1.6 Definitions of Certain Terms
(a) The "Fair Market Value" of a share of Common Stock on any day shall be the
closing price on the New York Stock Exchange as reported for such day in The
Wall Street Journal or, if no such price is reported for such day, the average
of the high bid and low asked price of Common Stock as reported for such day. If
no quotation is made for the applicable day, the Fair Market Value of a share of
Common Stock on such day shall be determined in the manner set forth in the
preceding sentence using quotations for the next preceding day for which there
were quotations, provided that such quotations shall have been made within the
ten (10) business days preceding the applicable day. Notwithstanding the
foregoing, if deemed necessary or appropriate by the Committee, the Fair Market
Value of a share of Common Stock on any day shall be determined by the
Committee. In no event shall the Fair Market Value of any share of Common Stock
be less than its par value.
(b) The term "incentive stock option" means an option that is intended to
qualify for special federal income tax treatment pursuant to sections 421 and
422 of the Code as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in the applicable
Grant Certificate. Any option that is not specifically designated as an
incentive stock option shall under no circumstances be considered an incentive
stock option. Any option that is not an incentive stock option is referred to
herein as a "non-qualified stock option."
(c) A grantee shall be deemed to have a "termination of employment" upon (i) the
date the grantee ceases to be employed by, or to provide consulting services
for, the Company, any Company subsidiary or Company joint venture, or any
corporation (or any of its subsidiaries) which assumes the grantee's award in a
transaction to which section 424(a) of the Code applies; (ii) the date the
grantee ceases to be a Board member; or (iii) in the case of a grantee who is,
at the time of reference, both an employee or consultant and a Board member, the
later of the dates determined pursuant to subparagraphs (i) and (ii) above. For
purposes of clause (i) above, a grantee who continues his employment or
consulting relationship with: (A) a Company subsidiary subsequent to its sale by
the Company, or (B) a Company joint venture subsequent to the Company's sale of
its interests in such joint venture, shall have a termination of employment upon
the date of such sale. The Committee may in its discretion determine whether any
leave of absence constitutes a termination of employment for purposes of the
Plan and the impact, if any, of any such leave of absence on awards theretofore
made under the Plan. Such determinations of the Committee shall be final,
binding and conclusive.
(d) The terms "parent corporation" and "subsidiary corporation" shall have the
meanings given them in section 424(e) and (f) of the Code, respectively.
(e) The term "employment" shall be deemed to mean an employee's employment with,
or a consultant's provision of services to, the Company, any Company subsidiary
or any Company joint venture and each Board member's service as a Board member.
(f) The term "cause" in connection with a termination of employment by reason of
a dismissal for cause shall mean:
(i) to the extent that there is an employment, severance or other agreement
governing the relationship between the grantee and the Company, a Company
subsidiary or a Company joint venture, which agreement contains a definition of
"cause," cause shall consist of those acts or omissions that would constitute
"cause" under such agreement; and otherwise,
(ii) the grantee's termination of employment by the Company or an affiliate on
account of any one or more of the following:
(A) any failure by the grantee substantially to perform the grantee's
employment duties;
(B) any excessive unauthorized absenteeism by the grantee;
(C) any refusal by the grantee to obey the lawful orders of the Board or
any other person or committee to whom the grantee reports;
(D) any act or omission by the grantee that is or may be injurious to the
Company, monetarily or otherwise;
(E) any act by the grantee that is inconsistent with the best interests of
the Company;
(F) the grantee's material violation of any of the Company's policies,
including, without limitation, those policies relating to discrimination or
sexual harassment;
(G) the grantee's unauthorized (a) removal from the premises of the Company
or an affiliate of any document (in any medium or form) relating to the
Company or an affiliate or the customers or clients of the Company or an
affiliate or (b) disclosure to any person or entity of any of the
Company's, or its affiliates', confidential or proprietary information;
(H) the grantee's commission of any felony, or any other crime involving
moral turpitude; and
(I) the grantee's commission of any act involving dishonesty or fraud.
Notwithstanding the foregoing, in determining whether a termination of
employment by reason of a dismissal for cause has occurred pursuant to Section
1.6(f)(ii) for the purposes of Section 3.8 (b)(iii), reference shall be made
solely to subsections (C), (F), (G), (H), and (I) of Section 1.6 (f)(ii).
Any rights the Company may have hereunder in respect of the events giving rise
to cause shall be in addition to the rights the Company may have under any other
agreement with a grantee or at law or in equity. Any determination of whether a
grantee's employment is (or is deemed to have been) terminated for cause shall
be made by the Committee in its discretion, which determination shall be final,
binding and conclusive on all parties. If, subsequent to a grantee's voluntary
termination of employment or involuntary termination of employment without
cause, it is discovered that the grantee's employment could have been terminated
for cause, the Committee may deem such grantee's employment to have been
terminated for cause. A grantee's termination of employment for cause shall be
effective as of the date of the occurrence of the event giving rise to cause,
regardless of when the determination of cause is made.
ARTICLE II
Awards Under The Plan
2.1 Agreements Evidencing Awards
Each award granted under the Plan (except an award of unrestricted stock) shall
be evidenced by a written certificate ("Grant Certificate") which shall contain
such provisions as the Committee may in its sole discretion deem necessary or
desirable. By accepting an award pursuant to the Plan, a grantee thereby agrees
that the award shall be subject to all of the terms and provisions of the Plan
and the applicable Grant Certificate.
2.2 Grant of Stock Options, Stock Appreciation Rights and Dividend Equivalent
Rights
(a) Stock Option Grants. The Committee may grant incentive stock options and
non-qualified stock options (collectively, "options") to purchase shares of
Common Stock from the Company, to such key persons, and in such amounts and
subject to such vesting and forfeiture provisions and other terms and
conditions, as the Committee shall determine in its sole discretion, subject to
the provisions of the Plan.
(b) Stock Appreciation Right Grants; Types of Stock Appreciation Rights. The
Committee may grant stock appreciation rights to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms
and conditions, as the Committee shall determine in its sole discretion, subject
to the provisions of the Plan. The terms of a stock appreciation right may
provide that it shall be automatically exercised for a cash payment upon the
happening of a specified event that is outside the control of the grantee, and
that it shall not be otherwise exercisable. Stock appreciation rights may be
granted in connection with all or any part of, or independently of, any option
granted under the Plan. A stock appreciation right granted in connection with a
non-qualified stock option may be granted at or after the time of grant of such
option. A stock appreciation right granted in connection with an incentive stock
option may be granted only at the time of grant of such option.
(c) Nature of Stock Appreciation Rights. The grantee of a stock appreciation
right shall have the right, subject to the terms of the Plan and the applicable
Grant Certificate, to receive from the Company an amount equal to (i) the excess
of the Fair Market Value of a share of Common Stock on the date of exercise of
the stock appreciation right over the Fair Market Value of a share of Common
Stock on the date of grant (or over the option exercise price if the stock
appreciation right is granted in connection with an option), multiplied by
(ii) the number of shares with respect to which the stock appreciation right is
exercised. Payment upon exercise of a stock appreciation right shall be in cash
or in shares of Common Stock (valued at their Fair Market Value on the date of
exercise of the stock appreciation right) or both, all as the Committee shall
determine in its sole discretion. Upon the exercise of a stock appreciation
right granted in connection with an option, the number of shares subject to the
option shall be reduced by the number of shares with respect to which the stock
appreciation right is exercised. Upon the exercise of an option in connection
with which a stock appreciation right has been granted, the number of shares
subject to the stock appreciation right shall be reduced by the number of shares
with respect to which the option is exercised.
(d) Option Exercise Price. Each Grant Certificate with respect to an option
shall set forth the amount (the "option exercise price") payable by the grantee
to the Company upon exercise of the option evidenced thereby. The option
exercise price per share shall be determined by the Committee in its sole
discretion; provided, however, that the option exercise price of an incentive
stock option shall be at least 100% of the Fair Market Value of a share of
Common Stock on the date the option is granted, and provided further that in no
event shall the option exercise price be less than the par value of a share of
Common Stock.
(e) Exercise Period. Each Grant Certificate with respect to an option or stock
appreciation right shall set forth the periods during which the award evidenced
thereby shall be exercisable, whether in whole or in part. Such periods shall be
determined by the Committee in its sole discretion; provided, however, that no
incentive stock option (or a stock appreciation right granted in connection with
an incentive stock option) shall be exercisable more than 10 years after the
date of grant, and provided further that, except as and to the extent that the
Committee may otherwise provide pursuant to Sections 2.5, 3.7 or 3.8, no option
or stock appreciation right shall be exercisable prior to the first anniversary
of the date of grant. (See the default exercise period provided for under
Sections 2.3(a) and (b).)
(f) Reload Options. The Committee may in its sole discretion include in any
Grant Certificate with respect to an option (the "original option") a provision
that an additional option (the "reload option") shall be granted to any grantee
who, pursuant to Section 2.3 (e) (ii), delivers shares of Common Stock in
partial or full payment of the exercise price of the original option. The reload
option shall be for a number of shares of Common Stock equal to the number thus
delivered, shall have an exercise price equal to the Fair Market Value of a
share of Common Stock on the date of exercise of the original option, and shall
have an expiration date no later than the expiration date of the original
option. In the event that a Grant Certificate provides for the grant of a reload
option, such Agreement shall also provide that the exercise price of the
original option be no less than the Fair Market Value of a share of Common Stock
on its date of grant, and that any shares that are delivered pursuant to
Section 2.3 (e) (ii) in payment of such exercise price shall have been held for
at least six months.
(g) Dividend Equivalent Rights. The Committee may in its sole discretion include
in any Grant Certificate with respect to an option, stock appreciation right or
performance shares, a dividend equivalent right entitling the grantee to receive
amounts equal to the ordinary dividends that would be paid, during the time such
award is outstanding and unexercised, on the shares of Common Stock covered by
such award if such shares were then outstanding. In the event such a provision
is included in a Grant Certificate, the Committee shall determine whether such
payments shall be made in cash or in shares of Common Stock, whether they shall
be conditioned upon the exercise of the award to which they relate, the time or
times at which they shall be made, and such other vesting and forfeiture
provisions and other terms and conditions as the Committee shall deem
appropriate. Notwithstanding the foregoing, no dividend equivalent rights shall
be conditioned on the exercise of any option or stock appreciation right if and
to the extent that such dividend equivalent right would cause the compensation
represented by such option or stock appreciation right not to constitute
performance-based compensation under section 162(m) of the Code.
(h) Incentive Stock Option Limitation: Exercisability. To the extent that the
aggregate Fair Market Value (determined as of the time the option is granted) of
the stock with respect to which incentive stock options are first exercisable by
any employee during any calendar year shall exceed $100,000, or such higher
amount as may be permitted from time to time under section 422 of the Code, such
options shall be treated as non-qualified stock options.
(i) Incentive Stock Option Limitation: 10% Owners. Notwithstanding the
provisions of paragraphs (d) and (e) of this Section 2.2, an incentive stock
option may not be granted under the Plan to an individual who, at the time the
option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of his employer corporation or of its
parent or subsidiary corporations (as such ownership may be determined for
purposes of section 422(b) (6) of the Code) unless (i) at the time such
incentive stock option is granted the option exercise price is at least 110% of
the Fair Market Value of the shares subject thereto and (ii) the incentive stock
option by its terms is not exercisable after the expiration of 5 years from the
date it is granted.
2.3 Exercise of Options and Stock Appreciation Rights
Subject to the other provisions of this Article II, each option or stock
appreciation right granted under the Plan shall be exercisable as follows:
(a) Beginning of Exercise Period. Unless the applicable Grant Certificate
otherwise provides, an option or stock appreciation right shall become
exercisable in three installments of 25%, 25% and 50%, respectively, of the
shares subject to such option or stock appreciation right; the first installment
shall become exercisable on the first anniversary of the date of grant and the
remaining two installments shall become exercisable, respectively, on the second
and third anniversaries of the date of grant.
(b) End of Exercise Period. Unless the applicable Grant Certificate otherwise
provides, once an installment becomes exercisable, it shall remain exercisable
until the earlier of (i) the tenth anniversary of the date of grant of the award
or (ii) the expiration, cancellation or termination of the award.
(c) Timing and Extent of Exercise. Unless the applicable Grant Certificate
otherwise provides, an option or stock appreciation right may be exercised from
time to time as to all or part of the shares as to which such award is then
exercisable. A stock appreciation right granted in connection with an option may
be exercised at any time when, and to the same extent that, the related option
may be exercised.
(d) Notice of Exercise. An option or stock appreciation right shall be exercised
by the filing of a written notice with the Company or the Company's designated
exchange agent (the "exchange agent"), on such form and in such manner as the
Committee shall in its sole discretion prescribe.
(e) Payment of Exercise Price. Any written notice of exercise of an option shall
be accompanied by payment for the shares being purchased. Such payment shall be
made: (i) by certified or official bank check (or the equivalent thereof
acceptable to the Company or its exchange agent) for the full option exercise
price; or (ii) with the consent of the Committee, by delivery of shares of
Common Stock having a Fair Market Value (determined as of the exercise date)
equal to all or part of the option exercise price and a certified or official
bank check (or the equivalent thereof acceptable to the Company or its exchange
agent) for any remaining portion of the full option exercise price; or (iii) at
the discretion of the Committee and to the extent permitted by law, by such
other provision, consistent with the terms of the Plan, as the Committee may
from time to time prescribe (whether directly or indirectly through the exchange
agent).
(f) Delivery of Certificates Upon Exercise. Promptly after receiving payment of
the full option exercise price, or after receiving notice of the exercise of a
stock appreciation right for which payment will be made partly or entirely in
shares, the Company or its exchange agent shall, subject to the provisions of
Section 3.2, deliver to the grantee or to such other person as may then have the
right to exercise the award, a certificate or certificates for the shares of
Common Stock for which the award has been exercised. If the method of payment
employed upon option exercise so requires, and if applicable law permits, an
optionee may direct the Company, or its exchange agent as the case may be, to
deliver the stock certificate(s) to the optionee's stockbroker.
(g) No Stockholder Rights. No grantee of an option or stock appreciation right
(or other person having the right to exercise such award) shall have any of the
rights of a stockholder of the Company with respect to shares subject to such
award until the issuance of a stock certificate to such person for such shares.
Except as otherwise provided in Section 1.5(b), no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or extraordinary, and
whether in cash, securities or other property) for which the record date is
prior to the date such stock certificate is issued.
2.4 Compensation in Lieu of Exercise of an Option
Upon written application of the grantee of an option, the Committee may in its
sole discretion determine to substitute, for the exercise of such option,
compensation to the grantee not in excess of the difference between the option
exercise price and the Fair Market Value of the shares covered by such written
application on the date of such application. Such compensation may be in cash,
in shares of Common Stock, or both, and the payment thereof may be subject to
conditions, all as the Committee shall determine in its sole discretion. In the
event compensation is substituted pursuant to this Section 2.4 for the exercise,
in whole or in part, of an option, the number of shares subject to the option
shall be reduced by the number of shares for which such compensation is
substituted.
2.5 Termination of Employment; Death Subsequent to a Termination of Employment
(a) General Rule. Except to the extent otherwise provided in paragraphs (b),
(c), (d) or (e) of this Section 2.5 or Section 3.8(b)(iii), a grantee who incurs
a termination of employment may exercise any outstanding option or stock
appreciation right on the following terms and conditions: (i) exercise may be
made only to the extent that the grantee was entitled to exercise the award on
the termination of employment date; and (ii) exercise must occur within three
months after termination of employment but in no event after the original
expiration date of the award.
(b) Dismissal for Cause; Resignation. If a grantee incurs a termination of
employment as the result of a dismissal for cause or resignation without the
Company's prior consent, all options and stock appreciation rights not
theretofore exercised shall terminate upon the grantee's termination of
employment.
(c) Retirement. If a grantee incurs a termination of employment as the result of
his retirement, then any outstanding option or stock appreciation right shall be
exercisable on the following terms and conditions: (i) exercise may be made only
to the extent that the grantee was entitled to exercise the award on the
termination of employment date; and (ii) exercise must occur by the earlier of
(A) the third anniversary of such termination of employment, or (B) the original
expiration date of the award. For this purpose "retirement" shall mean a
grantee's termination of employment, under circumstances other than those
described in paragraph (b) above, on or after: (x) his 65th birthday, (y) the
date on which he has attained age 60 and completed at least six years of vesting
service (within the meaning of the Company's 401(k) and profit-sharing plan as
it may be amended from time to time) or (z) if approved by the Committee, on or
after he has completed at least 20 years of vesting service.
(d) Disability. If a grantee incurs a termination of employment by reason of a
disability (as defined below), then any outstanding option or stock appreciation
right shall be exercisable on the following terms and conditions: (i) exercise
may be made only to the extent that the grantee was entitled to exercise the
award on such termination of employment; and (ii) exercise must occur by the
earlier of (A) the first anniversary of the grantee's termination of employment,
or (B) the original expiration date of the award. For this purpose "disability"
shall mean: (x) except in connection with an incentive stock option, any
physical or mental condition that would qualify a grantee for a disability
benefit under the long-term disability plan maintained by the Company or, if
there is no such plan, a physical or mental condition that prevents the grantee
from performing the essential functions of the grantee's position (with or
without reasonable accommodation) for a period of six consecutive months and
(y) in connection with an incentive stock option, a disability described in
section 422(c)(6) of the Code. The existence of a disability shall be determined
by the Committee in its absolute discretion.
(e) Death.
(i) Termination of Employment as a Result of Grantee's Death. If a grantee
incurs a termination of employment as the result of his death, then any
outstanding option or stock appreciation right shall be exercisable on the
following terms and conditions: (A) exercise may be made only to the extent
that the grantee was entitled to exercise the award on such termination of
employment; and (B) exercise must occur by the earlier of (1) the first
anniversary of the grantee's termination of employment, or (2) the original
expiration date of the award.
(ii) Death Subsequent to a Termination of Employment. If a grantee dies
subsequent to incurring a termination of employment but prior to the
expiration of the exercise period with respect to a non-qualified stock
option or a stock appreciation right (as provided by paragraphs (a), (c),
or (d) above), then the award shall remain exercisable until the earlier to
occur of (A) the first anniversary of the grantee's date of death or
(B) the original expiration date of the award.
(iii) Restrictions on Exercise Following Death. Any such exercise of an
award following a grantee's death shall be made only by the grantee's
executor or administrator or other duly appointed representative reasonably
acceptable to the Committee, unless the grantee's will specifically
disposes of such award, in which case such exercise shall be made only by
the recipient of such specific disposition. If a grantee's personal
representative or the recipient of a specific disposition under the
grantee's will shall be entitled to exercise any award pursuant to the
preceding sentence, such representative or recipient shall be bound by all
the terms and conditions of the Plan and the applicable Grant Certificate
which would have applied to the grantee including, without limitation, the
provisions of Sections 3.2 and 3.8 hereof.
(f) Special Rules for Incentive Stock Options. No option that remains
exercisable for more than three months following a grantee's termination of
employment for any reason other than death or disability, or for more than one
year following a grantee's termination of employment as the result of his
becoming disabled, may be treated as an incentive stock option.
(g) Committee Discretion. The Committee, in the applicable Grant Certificate,
may waive or modify the application of the foregoing provisions of this
Section 2.5.
2.6 Transferability of Options and Stock Appreciation Rights
Except as otherwise provided in an applicable Grant Certificate evidencing an
option or stock appreciation right, during the lifetime of a grantee, each
option or stock appreciation right granted to a grantee shall be exercisable
only by the grantee and no option or stock appreciation right shall be
assignable or transferable otherwise than by will or by the laws of descent and
distribution. The Committee may, in any applicable Grant Certificate evidencing
an option (other than an incentive stock option to the extent inconsistent with
the requirements of section 422 of the Code applicable to incentive stock
options), permit a grantee to transfer all or some of the options to (A) the
grantee's spouse, children or grandchildren ("Immediate Family Members"), (B) a
trust or trusts for the exclusive benefit of such Immediate Family Members, or
(C) other parties approved by the Committee in its absolute discretion.
Following any such transfer, any transferred options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
the transfer.
2.7 Grant of Restricted Stock
(a) Restricted Stock Grants. The Committee may grant restricted shares of Common
Stock to such key persons, in such amounts, and subject to such vesting and
forfeiture provisions and other terms and conditions as the Committee shall
determine in its sole discretion, subject to the provisions of the Plan.
Restricted stock awards may be made independently of or in connection with any
other award under the Plan. A grantee of a restricted stock award shall have no
rights with respect to such award unless such grantee accepts the award within
such period as the Committee shall specify by accepting delivery of a restricted
stock agreement in such form as the Committee shall determine and, in the event
the restricted shares are newly issued by the Company, makes payment to the
Company or its exchange agent by certified or official bank check (or the
equivalent thereof acceptable to the Company) in an amount at least equal to the
par value of the shares covered by the award.
(b) Issuance of Stock Certificate(s). Promptly after a grantee accepts a
restricted stock award, the Company or its exchange agent shall issue to the
grantee a stock certificate or stock certificates for the shares of Common Stock
covered by the award or shall establish an account evidencing ownership of the
stock in uncertificated form. Upon the issuance of such stock certificate(s), or
establishment of such account, the grantee shall have the rights of a
stockholder with respect to the restricted stock, subject to: (i) the
nontransferability restrictions and forfeiture provision described in paragraphs
(d) and (e) of this Section 2.7; (ii) in the Committee's discretion, to a
requirement that any dividends paid on such shares shall be held in escrow until
all restrictions on such shares have lapsed; and (iii) any other restrictions
and conditions contained in the applicable restricted stock agreement.
(c) Custody of Stock Certificate(s). Unless the Committee shall otherwise
determine, any stock certificates issued evidencing shares of restricted stock
shall remain in the possession of the Company until such shares are free of any
restrictions specified in the applicable restricted stock agreement. The
Committee may direct that such stock certificate(s) bear a legend setting forth
the applicable restrictions on transferability.
(d) Nontransferability. Shares of restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as otherwise
specifically provided in this Plan or the applicable restricted stock agreement.
The Committee at the time of grant shall specify the date or dates (which may
depend upon or be related to the attainment of performance goals and other
conditions) on which the nontransferability of the restricted stock shall lapse.
(e) Consequence of Termination of Employment. A grantee's termination of
employment for any reason (including death) shall cause the immediate forfeiture
of all shares of restricted stock that have not yet vested as of the date of
such termination of employment. All dividends paid on such shares also shall be
forfeited, whether by termination of any escrow arrangement under which such
dividends are held, by the grantee's repayment of dividends he received
directly, or otherwise.
2.8 Grant of Unrestricted Stock
The Committee may grant (or sell at a purchase price at least equal to par
value) shares of Common Stock free of restrictions under the Plan, to such key
persons and in such amounts and subject to such forfeiture provisions as the
Committee shall determine in its sole discretion. Shares may be thus granted or
sold in respect of past services or other valid consideration.
2.9 Grant of Performance Shares
(a) Performance Share Grants. The Committee may grant performance share awards
to such key persons, and in such amounts and subject to such vesting and
forfeiture provisions and other terms and conditions, as the Committee shall in
its sole discretion determine, subject to the provisions of the Plan. Such an
award shall entitle the grantee to acquire shares of Common Stock, or to be paid
the value thereof in cash, as the Committee shall determine, if specified
performance goals are met. Performance shares may be awarded independently of,
or in connection with, any other award under the Plan. A grantee shall have no
rights with respect to a performance share award unless such grantee accepts the
award by accepting delivery of a Grant Certificate at such time and in such form
as the Committee shall determine.
(b) Stockholder Rights. The grantee of a performance share award will have the
rights of a stockholder only as to shares for which a stock certificate has been
issued pursuant to the award and not with respect to any other shares subject to
the award.
(c) Consequence of Termination of Employment. Except as may otherwise be
provided by the Committee at any time prior to a grantee's termination of
employment, the rights of a grantee of a performance share award shall
automatically terminate upon the grantee's termination of employment by the
Company and its subsidiaries for any reason (including death).
(d) Exercise Procedures; Automatic Exercise. At the discretion of the Committee,
the applicable Grant Certificate may set out the procedures to be followed in
exercising a performance share award or it may provide that such exercise shall
be made automatically after satisfaction of the applicable performance goals.
(e) Tandem Grants; Effect on Exercise. Except as otherwise specified by the
Committee, (i) a performance share award granted in tandem with an option may be
exercised only while the option is exercisable, (ii) the exercise of a
performance share award granted in tandem with any other award shall reduce the
number of shares subject to such other award in the manner specified in the
applicable Grant Certificate, and (iii) the exercise of any award granted in
tandem with a performance share award shall reduce the number of shares subject
to the latter in the manner specified in the applicable Grant Certificate.
(f) Nontransferability. Performance shares may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as otherwise
specifically provided in this Plan or the applicable Grant Certificate. The
Committee at the time of grant shall specify the date or dates (which may depend
upon or be related to the attainment of performance goals and other conditions)
on which the nontransferability of the performance shares shall lapse.
ARTICLE III
Miscellaneous
3.1 Amendment of the Plan; Modification of Awards
(a) Amendment of the Plan. The Board may from time to time suspend, discontinue,
revise or amend the Plan in any respect whatsoever, except that no such
amendment shall materially impair any rights or materially increase any
obligations under any award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee's death, the person having the right to
exercise the award). For purposes of this Section 3.1, any action of the Board
or the Committee that in any way alters or affects the tax treatment of any
award shall not be considered to materially impair any rights of any grantee.
(b) Stockholder Approval Requirement. Stockholder approval shall be required
with respect to any amendment to the Plan which (i) increases the aggregate
number of shares which may be issued pursuant to incentive stock options or
changes the class of employees eligible to receive such options; or (ii)
materially increases the benefits under the Plan to persons whose transactions
in Common Stock are subject to section 16(b) of the 1934 Act or increases the
benefits under the Plan to someone who is, or who is anticipated to be a "162(m)
covered employee" (as defined in Section 3.9(a)(i)), materially increases the
number of shares which may be issued to such persons, or materially modifies the
eligibility requirements affecting such persons.
(c) Modification of Awards. The Committee may cancel any award under the Plan.
The Committee also may amend any outstanding Grant Certificate, including,
without limitation, by amendment which would: (i) accelerate the time or times
at which the award becomes unrestricted or may be exercised, provided that,
except as and to the extent that the Committee may otherwise provide pursuant to
Section 2.5, 3.7 or 3.8, no option or stock appreciation right shall be
exercisable prior to the first anniversary of its date of grant; (ii) waive or
amend any goals, restrictions or conditions set forth in the Agreement; or
(iii) waive or amend the operation of Section 2.5 with respect to the
termination of the award upon termination of employment. However, any such
cancellation or amendment (other than an amendment pursuant to Sections 3.7 or
3.8(b)) that materially impairs the rights or materially increases the
obligations of a grantee under an outstanding award shall be made only with the
consent of the grantee (or, upon the grantee's death, the person having the
right to exercise the award).
3.2 Consent Requirement
(a) No Plan Action without Required Consent. If the Committee shall at any time
determine that any Consent (as hereinafter defined) is necessary or desirable as
a condition of, or in connection with, the granting of any award under the Plan,
the issuance or purchase of shares or other rights thereunder, or the taking of
any other action thereunder (each such action being hereinafter referred to as a
"Plan Action"), then such Plan Action shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the full
satisfaction of the Committee.
(b) Consent Defined. The term "Consent" as used herein with respect to any Plan
Action means (i) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies.
3.3 Nonassignability
Except as provided in Sections 2.5(e), 2.6, 2.7(d) and 2.9(f): (a) no award or
right granted to any person under the Plan or under any Grant Certificate shall
be assignable or transferable other than by will or by the laws of descent and
distribution; and (b) all rights granted under the Plan or any Grant Certificate
shall be exercisable during the life of the grantee only by the grantee or the
grantee's legal representative.
3.4 Requirement of Notification of Election Under Section 83(b) of the Code
If any grantee shall, in connection with the acquisition of shares of Common
Stock under the Plan, make the election permitted under section 83(b) of the
Code (i.e., an election to include in gross income in the year of transfer the
amounts specified in section 83(b) ), such grantee shall notify the Company of
such election within 10 days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Code section 83(b).
3.5 Requirement of Notification Upon Disqualifying Disposition Under
Section 421(b) of the Code
Each Grant Certificate with respect to an incentive stock option shall require
the grantee to notify the Company of any disposition of shares of Common Stock
issued pursuant to the exercise of such option under the circumstances described
in section 421(b) of the Code (relating to certain disqualifying dispositions),
within 10 days of such disposition.
3.6 Withholding Taxes
(a) With Respect to Cash Payments. Whenever cash is to be paid pursuant to an
award under the Plan, the Company shall be entitled to deduct therefrom an
amount sufficient in its opinion to satisfy all federal, state and other
governmental tax withholding requirements related to such payment.
(b) With Respect to Delivery of Common Stock. Whenever shares of Common Stock
are to be delivered pursuant to an award under the Plan, the Company shall be
entitled to require as a condition of delivery that the grantee remit to the
Company an amount sufficient in the opinion of the Company to satisfy all
federal, state and other governmental tax withholding requirements related
thereto. With the approval of the Committee, which the Committee shall have sole
discretion whether or not to give, the grantee may satisfy the foregoing
condition by electing to have the Company withhold from delivery shares having a
value equal to the amount of tax to be withheld. Such shares shall be valued at
their Fair Market Value as of the date on which the amount of tax to be withheld
is determined. Fractional share amounts shall be settled in cash. Such a
withholding election may be made with respect to all or any portion of the
shares to be delivered pursuant to an award.
3.7 Adjustment Upon Changes in Common Stock
(a) Shares Available for Grants. In the event of any change in the number of
shares of Common Stock outstanding by reason of any stock dividend or split,
reverse stock split, recapitalization, merger, consolidation, combination or
exchange of shares or similar corporate change, the maximum number of shares of
Common Stock with respect to which the Committee may grant awards under
Article II hereof, as described in Section 1.5(a), and the individual annual
limit described in Section 1.5(d), shall be appropriately adjusted by the
Committee. In the event of any change in the number of shares of Common Stock
outstanding by reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of shares of Common
Stock with respect to which awards: (i) may be granted under Article II hereof
and (ii) granted to any one employee of the Company or a subsidiary during any
one calendar year, in each case as the Committee may deem appropriate, unless
such adjustment would cause any award that would otherwise qualify as
performance based compensation with respect to a "162(m) covered employee" (as
defined in Section 3.9(a)(i)), to cease to so qualify.
(b) Outstanding Restricted Stock and Performance Shares. Unless the Committee in
its absolute discretion otherwise determines, any securities or other property
(including dividends paid in cash) received by a grantee with respect to a share
of restricted stock, the issue date with respect to which occurs prior to such
event, but which has not vested as of the date of such event, as a result of any
dividend, stock split, reverse stock split, recapitalization, merger,
consolidation, combination, exchange of shares or otherwise will not vest until
such share of restricted stock vests, and shall be promptly deposited with the
Company or other custodian designated pursuant to Section 2.7(c) hereof.
The Committee may, in its absolute discretion, adjust any grant of shares of
restricted stock, the issue date with respect to which has not occurred as of
the date of the occurrence of any of the following events, or any grant of
performance shares, to reflect any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
similar corporate change as the Committee may deem appropriate to prevent the
enlargement or dilution of rights of grantees.
(c) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent
Rights--Increase or Decrease in Issued Shares Without Consideration. Subject to
any required action by the stockholders of the Company, in the event of any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or consolidation of shares of Common Stock or the payment of
a stock dividend (but only on the shares of Common Stock), or any other increase
or decrease in the number of such shares effected without receipt of
consideration by the Company, the Committee shall proportionally adjust the
number of shares of Common Stock subject to each outstanding option and stock
appreciation right, and the exercise price-per-share of Common Stock of each
such option and stock appreciation right and the number of any related dividend
equivalent rights.
(d) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent
Rights--Certain Mergers. Subject to any required action by the stockholders of
the Company, in the event that the Company shall be the surviving corporation in
any merger or consolidation (except a merger or consolidation as a result of
which the holders of shares of Common Stock receive securities of another
corporation), each option, stock appreciation right and dividend equivalent
right outstanding on the date of such merger or consolidation shall pertain to
and apply to the securities which a holder of the number of shares of Common
Stock subject to such option, stock appreciation right or dividend equivalent
right would have received in such merger or consolidation.
(e) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent
Rights--Certain Other Transactions. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation involving the Company in which
the Company is not the surviving corporation or (iv) 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 power to:
(A) cancel, effective immediately prior to the occurrence of such event, each
option and stock appreciation right (including each dividend equivalent right
related thereto) outstanding immediately prior to such event (whether or not
then exercisable), and, in full consideration of such cancellation, pay to the
grantee to whom such option or stock appreciation right was granted an amount in
cash, for each share of Common Stock subject to such option or stock
appreciation right, respectively, equal to the excess of (x) 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 (y) the exercise price of such option or stock appreciation
right; or
(B) provide for the exchange of each option and stock appreciation right
(including any related dividend equivalent right) outstanding immediately prior
to such event (whether or not then exercisable) for an option on or stock
appreciation right and dividend equivalent right with respect to, as
appropriate, some or all of the property which a holder of the number of shares
of Common Stock subject to such option or stock appreciation right would have
received and, incident thereto, make an equitable adjustment as determined by
the Committee in its absolute discretion in the exercise price of the option or
stock appreciation right, or the number of shares or amount of property subject
to the option, stock appreciation right or dividend equivalent right or, if
appropriate, provide for a cash payment to the grantee to whom such option or
stock appreciation right was granted in partial consideration for the exchange
of the option or stock appreciation right.
(f) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent
Rights--Other Changes. In the event of any change in the capitalization of the
Company or a corporate change other than those specifically referred to in
Sections 3.7(c), (d) or (e) hereof, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject to
options, stock appreciation rights and dividend equivalent rights outstanding on
the date on which such change occurs and in the per-share exercise price of each
such option and stock appreciation right as the Committee may consider
appropriate to prevent dilution or enlargement of rights. In addition, if and to
the extent the Committee determines it is appropriate, the Committee may elect
to cancel each option and stock appreciation right (including each dividend
equivalent right related thereto) outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of such
cancellation, pay to the grantee to whom such option or stock appreciation right
was granted an amount in cash, for each share of Common Stock subject to such
option or stock appreciation right, respectively, equal to the excess of (i) the
Fair Market Value of Common Stock on the date of such cancellation over (ii) the
exercise price of such option or stock appreciation right.
(g) No Other Rights. Except as expressly provided in the Plan, no grantee shall
have any rights by reason of any subdivision or consolidation of shares of stock
of any class, the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution, liquidation, merger
or consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to an award or the exercise price of
any option or stock appreciation right.
3.8 Change in Control
(a) Change in Control Defined. For purposes of this Section 3.8, a "Change in
Control" shall be deemed to have occurred upon the happening of any of the
following events: (i) any "person," including a "group," as such terms are
defined in sections 13(d) and 14(d) of the 1934 Act and the rules promulgated
thereunder, becomes the beneficial owner, directly or indirectly, whether by
purchase or acquisition or agreement to act in concert or otherwise, of 20% or
more of the outstanding shares of Common Stock of the Company; (ii) a cash
tender or exchange offer for 50% or more of the outstanding shares of Common
Stock of the Company is commenced; (iii) the shareholders of the Company approve
an agreement to merge, consolidate, liquidate, or sell all or substantially all
of the assets of the Company; or (iv) two or more directors are elected to the
Board without having previously been nominated and approved by the members of
the Board incumbent on the day immediately preceding such election.
(b) Effect of a Change in Control. Upon the occurrence of a Change in Control:
(i) notwithstanding any other provision of this Plan, any award then
outstanding shall become fully vested and any award in the form of an
option or stock appreciation right shall be immediately exercisable;
(ii) to the extent permitted by law, the Committee may, in its sole
discretion, amend any Grant Certificate in such manner as it deems
appropriate;
(iii) a grantee who incurs a termination of employment for any reason,
other than a dismissal for cause, concurrent with or within one year
following the Change in Control may exercise any outstanding option or
stock appreciation right, but only to the extent that the grantee was
entitled to exercise the award on his termination of employment date, until
the earlier of (A) the original expiration date of the award and (B) the
later of (x) the date provided for under the terms of Section 2.5 without
reference to this Section 3.8(b)(iii) and (y) the first anniversary of the
grantee's termination of employment.
(c) Miscellaneous. Whenever deemed appropriate by the Committee, any action
referred to in paragraph (b) (ii) of this Section 3.8 may be made conditional
upon the consummation of the applicable Change in Control transaction.
3.9 Limitations Imposed by Section 162(m)
(a) Qualified Performance-Based Compensation. To the extent the Committee
determines it is desirable to grant an award to an individual it anticipates
might be a "162(m) covered employee" (as defined below), with respect to which
award the compensation realized by the grantee will or may not otherwise be
deductible by operation of section 162(m) of the Code, the Committee may, as
part of its effort to have such an award treated as "qualified performance-based
compensation" within the meaning of Code section 162(m), make the vesting of the
award subject to the attainment of one or more preestablished objective
performance goals.
(i) An individual is a "162(m) covered employee" if, as of the last day of
the Company's taxable year for which the compensation related to an award
would otherwise be deductible (without regard to section 162(m)), he or she
is (A) the chief executive officer of the Company (or is acting in such
capacity) or (B) one of the four highest compensated officers of the
Company other than the chief executive officer. Whether an individual is
described in either clause (A) or (B) above shall be determined in
accordance with applicable regulations under section 162(m) of the Code.
(ii) If the Committee has determined to grant an award to an individual it
anticipates might be a 162(m) covered employee pursuant to this
Section 3.9(a), then prior to the earlier to occur of (A) the first day
after 25% of each period of service to which the performance goal relates
has elapsed and (B) the ninety first (91st) day of such period and, in
either case, while the performance outcome remains substantially uncertain,
the Committee shall set one or more objective performance goals for each
such 162(m) covered person for such period. Such goals shall be expressed
in terms of (A) one or more corporate or divisional earnings-based measures
(which may be based on net income, operating income, cash flow, residual
income or any combination thereof) and/or (B) one or more corporate or
divisional sales-based measures. Each such goal may be expressed on an
absolute and/or relative basis, may employ comparisons with past
performance of the Company (including one or more divisions) and/or the
current or past performance of other companies, and in the case of
earnings-based measures, may employ comparisons to capital, stockholders'
equity and shares outstanding. The terms of the award shall state an
objective formula or standard for computing the amount of compensation
payable, and shall preclude discretion to increase the amount of
compensation payable, if the goal is attained.
(iii) Except as otherwise provided herein, the measures used in performance
goals set under the Plan shall be determined in accordance with generally
accepted accounting principles ("GAAP") and in a manner consistent with the
methods used in the Company's regular reports on Forms 10-K and 10-Q,
without regard to any of the following unless otherwise determined by the
Committee consistent with the requirements of section 162(m)(4)(C) and the
regulations thereunder: (A) all items of gain, loss or expense for the
period that are related to special, unusual or nonrecurring items, events
or circumstances affecting the Company or the financial statements of the
Company; (B) all items of gain, loss or expense for the period that are
related to (x) the disposal of a business or discontinued operations or
(y) the operations of any business acquired by the Company during the
period; and (C) all items of gain, loss or expense for the period that are
related to changes in accounting principles or to changes in applicable law
or regulations.
(b) Nonqualified Deferred Compensation. Notwithstanding any other provision
hereunder, prior to a Change in Control, if and to the extent that the Committee
determines the Company's federal tax deduction in respect of an award may be
limited as a result of section 162(m) of the Code, the Committee may take the
following actions:
(i) With respect to options, stock appreciation rights or dividend
equivalent rights, the Committee may delay the exercise or payment, as the
case may be, in respect of such options, stock appreciation rights or
dividend equivalent rights until a date that is within 30 days after the
earlier to occur of (A) the date that compensation paid to the grantee no
longer is subject to the deduction limitation under section 162(m) of the
Code and (B) the occurrence of a Change in Control. In the event that a
grantee exercises an option, stock appreciation right or would receive a
payment in respect of a dividend equivalent right at a time when the
grantee is a 162(m) covered employee, and the Committee determines to delay
the exercise or payment, as the case may be, in respect of any such award,
the Committee shall credit cash or, in the case of an amount payable in
Common Stock, the Fair Market Value of the Common Stock, payable to the
grantee to a book account. The grantee shall have no rights in respect of
such book account and the amount credited thereto shall not be transferable
by the grantee other than by will or laws of descent and distribution. The
Committee may credit additional amounts to such book account as it may
determine in its sole discretion. Any book account created hereunder shall
represent only an unfunded, unsecured promise by the Company to pay the
amount credited thereto to the grantee in the future.
(ii) With respect to restricted stock, unrestricted stock or performance
shares, the Committee may require the grantee to surrender to the Committee
any certificates with respect to restricted stock and unrestricted stock
and agreements with respect to performance shares, in order to cancel the
awards of such restricted stock, unrestricted stock and performance shares
(and any related dividend equivalent rights). In exchange for such
cancellation, the Committee shall credit to a book account a cash amount
equal to the Fair Market Value of the shares of Common Stock subject to
such awards. The amount credited to the book account shall be paid to the
grantee within 30 days after the earlier to occur of (A) the date that
compensation paid to the grantee no longer is subject to the deduction
limitation under section 162(m) of the Code and (B) the occurrence of a
Change in Control. The grantee shall have no rights in respect of such book
account and the amount credited thereto shall not be transferable by the
grantee other than by will or laws of descent and distribution. The
Committee may credit additional amounts to such book account as it may
determine in its sole discretion. Any book account created hereunder shall
represent only an unfunded, unsecured promise by the Company to pay the
amount credited thereto to the grantee in the future.
3.10 Right of Discharge Reserved
Nothing in the Plan or in any Grant Certificate shall confer upon any grantee
the right to continue his employment or affect any right which the Company may
have to terminate such employment.
3.11 Nature of Payments
(a) Consideration for Services Performed. Any and all grants of awards and
issuances of shares of Common Stock under the Plan shall be in consideration of
services performed for the Company by the grantee.
(b) Not Taken into Account for Benefits. All such grants and issuances shall
constitute a special incentive payment to the grantee and shall not be taken
into account in computing the amount of salary or compensation of the grantee
for the purpose of determining any benefits under any pension, retirement,
profit-sharing, bonus, life insurance or other benefit plan of the Company or
under any agreement between the Company and the grantee, unless such plan or
agreement specifically otherwise provides.
3.12 Non-Uniform Determinations
The Committee's determinations under the Plan need not be uniform and may be
made by it selectively among persons who receive, or who are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee shall
be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Grant Certificates,
as to (a) the persons to receive awards under the Plan, (b) the terms and
provisions of awards under the Plan, and (c) the treatment of leaves of absence
pursuant to Section 1.6(c).
3.13 Other Payments or Awards
Nothing contained in the Plan shall be deemed in any way to limit or restrict
the Company from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.
3.14 Headings
Any section, subsection, paragraph or other subdivision headings contained
herein are for the purpose of convenience only and are not intended to expand,
limit or otherwise define the contents of such subdivisions.
3.15 Effective Date and Term of Plan
(a) Adoption; Stockholder Approval. The Plan was adopted by the Board on
March 9, 2000, subject to approval by the Company's stockholders. All awards
under the Plan prior to such stockholder approval are subject in their entirety
to such approval. If such approval is not obtained prior to the first
anniversary of the date of adoption of the Plan, the Plan and all awards
thereunder shall terminate on that date.
(b) Termination of Plan. Unless sooner terminated by the Board or pursuant to
Paragraph (a) above, the provisions of the Plan respecting the grant of
incentive stock options shall terminate on the tenth anniversary of the adoption
of the Plan by the Board, and no incentive stock option awards shall thereafter
be made under the Plan. All such awards made under the Plan prior to its
termination shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the Plan and the
applicable Grant Certificates.
3.16 Restriction on Issuance of Stock Pursuant to Awards
The Company shall not permit any shares of Common Stock to be issued pursuant to
Awards granted under the Plan unless such shares of Common Stock are fully paid
and non-assessable, within the meaning of Section 152 of the Delaware General
Corporation Law, except as otherwise permitted by Section 153(c) of the Delaware
General Corporation Law.
3.17 Governing Law
Except to the extent preempted by any applicable federal law, the Plan will be
construed and administered in accordance with the laws of the State of Delaware,
without giving effect to principles of conflict of laws.
