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EXHIBIT 10.1
1999 OMNIBUS STOCK AND INCENTIVE PLAN
FOR
PROBEX CORP.
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TABLE OF CONTENTS
<TABLE>
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1. Purpose..............................................................1
2. Definitions..........................................................1
(a) "Affiliate".................................................1
(b) "Award".....................................................1
(c) "Available Shares"..........................................1
(d) "Board".....................................................1
(e) "Cause".....................................................1
(f) "Change in Control".........................................2
(g) "Change in Control Price"...................................3
(h) "Code"......................................................3
(i) "Committee".................................................3
(j) "Common Stock"..............................................3
(k) "Company"...................................................3
(l) "Consultant"................................................3
(m) "Date of Grant".............................................3
(n) "Director"..................................................3
(o) "Disability"................................................3
(p) "Effective Date"............................................3
(q) "Eligible Person"...........................................4
(r) "Fair Market Value".........................................4
(s) "Holder"....................................................4
(t) "Immediate Family"..........................................4
(u) "Incentive Stock Option"....................................4
(v) "Non-qualified Stock Option"................................4
(w) "Option"....................................................4
(x) "Optionee"..................................................4
(y) "Option Price"..............................................4
(z) "Option Proceeds"...........................................5
(aa) "Outside Director"..........................................5
(bb) "Parent"....................................................5
(cc) "Performance Award".........................................5
(dd) "Performance Period"........................................5
(ee) "Plan"......................................................5
(ff) "Plan Year".................................................5
(gg) "Potential Change In Control"...............................5
(hh) "Reacquired Shares".........................................5
(ii) "Restriction(s)"............................................5
(jj) "Restricted Period".........................................6
(kk) "Restricted Shares".........................................6
(ll) "Restricted Share Award"....................................6
(mm) "Restricted Share Distributions"............................6
(nn) "Share(s)"..................................................6
</TABLE>
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<TABLE>
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(oo) "Spread"....................................................6
(pp) "Subsidiary"................................................6
(qq) "1933 Act"..................................................6
(rr) "1934 Act"..................................................6
3. Award of Available Shares............................................6
4. Conditions for Grant of Awards.......................................7
5. Grant of Options.....................................................8
6. Option Price.........................................................9
7. Exercise of Options..................................................9
8. Exercisability of Options............................................9
9. Termination of Option Period........................................10
10. Incentive Stock Options for 10% Shareholder.........................10
11. Non-qualified Stock Options.........................................10
12. Restricted Share Awards.............................................11
13. Performance Awards..................................................11
14. Acceleration........................................................12
15. Adjustment of Available Shares......................................13
16. Transferability of Awards...........................................14
17. Issuance of Shares..................................................14
18. Administration of the Plan..........................................15
19. Tax Withholding.....................................................16
20. Interpretation......................................................17
21. Amendment and Discontinuation of the Plan...........................17
22. Section 83(b) Election..............................................18
23. Effective Date and Termination Date.................................18
</TABLE>
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1999 OMNIBUS STOCK AND INCENTIVE PLAN
FOR
PROBEX CORP.
1. PURPOSE. The purpose of this Plan is to advance the interests of Probex
Corp. and increase shareholder value by providing additional incentives to
attract, retain and motivate those qualified and competent employees, Directors
and Consultants upon whose efforts and judgment its success is largely
dependent.
2. DEFINITIONS. As used herein, the following terms shall have the meaning
indicated:
(a) "AFFILIATE" means any entity other than the Parent that is
designated by the Board as a participating employer under the Plan, provided
that the Parent directly or indirectly owns at least 20% of the combined voting
power of all classes of stock of such entity or at least 20% of the ownership
interests in such entity.
(b) "AWARD" shall mean either an Option, a Restricted Share Award, or a
Performance Award, except that where it shall be appropriate to identify the
specific type of Award, reference shall be made to the specific type of Award.
(c) "AVAILABLE SHARES" shall mean, at each time of reference, the total
number of Shares described in SECTION 3 with respect to which the Committee may
grant an Award, all of which Available Shares shall be held in the Parent's
treasury or shall be made available from authorized and unissued Shares.
(d) "BOARD" shall mean the Board of Directors of the Parent.
(e) "CAUSE" shall mean either (a) an Optionee's material failure or
refusal to perform his duties if Optionee has failed to cure such failure or
refusal to perform within thirty (30) days after the Company notifies Optionee
in writing of such failure or refusal to perform, or (b) that the Optionee is
involuntarily terminated from employment based upon his commission of any of the
following:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the
Company;
(ii) intentional wrongful damage to property of the Company or
any other willful gross misconduct that causes material economic harm
to the Company or that brings substantial discredit to the Company's
reputation;
(iii) intentional wrongful disclosure of trade secrets or
confidential information of the Company;
(iv) willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease and desist
order, including, but not limited
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to, a final, nonappealable conviction of an Optionee for commission of
a felony involving moral turpitude; or
(v) intentional breach of fiduciary duty owed to the Company
involving personal profit.
For the purpose of this Agreement, no act, or failure to act, on the
part of the Optionee shall be deemed "intentional" unless the Board of Directors
finds, in its sole discretion, that the act or failure to act was done, or
omitted to be done, by the Optionee in other than good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Any determination that an Optionee has been terminated For Cause shall
be made by the Board of Directors in its sole and absolute discretion.
(f) "CHANGE IN CONTROL" shall mean the first to occur of (i) a merger,
consolidation, statutory share exchange or sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company that requires the consent or vote
of the holders of the Parent's Common Stock, other than a consolidation, merger
or share exchange of the Parent in which the holders of the Parent's Common
Stock immediately prior to such transaction have the same proportionate
ownership of common stock of the surviving corporation immediately after such
transaction; (ii) the shareholders of the Parent approve any plan or proposal
for the liquidation or dissolution of the Company; (iii) the cessation of
control (by virtue of their not constituting a majority of Directors) of the
Board of Directors of the Parent by the individuals (the "Continuing Directors")
who (x) on the Effective Date were Directors or (y) become Directors after the
date of this Agreement and whose election or nomination for election by the
Parent's shareholders was approved by a vote of at least two-thirds of the
Directors then in office who were Directors at the Effective Date or whose
election or nomination for election was previously so approved; (iv) the
acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of an aggregate of 21% or more of the voting power of the Parent's
outstanding voting securities by any person or group (as such term is used in
Rule 13d-5 under the Exchange Act) who beneficially owned less than 15% of the
voting power of the Parent's outstanding voting securities on the Effective
Date, or the acquisition of beneficial ownership of an additional 6% of the
voting power of the Parent's outstanding voting securities by any person or
group who beneficially owned at least 15% of the voting power of the Parent's
outstanding voting securities on the Effective Date; provided, however, that
notwithstanding the foregoing, an acquisition shall not be described hereunder
if the acquiror is (x) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company and acting in such capacity, (y) a
wholly-owned subsidiary of the Parent or a corporation owned, directly or
indirectly, by the shareholders of the Parent in the same proportions as their
ownership of voting securities of the Parent or (z) any other person whose
acquisition of shares of voting securities is approved in advance by a majority
of the Continuing Directors; or (v) in a Title 11 bankruptcy proceeding, the
appointment of a trustee or the conversion of a case involving the Company to a
case under Chapter 7.
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(g) "CHANGE IN CONTROL PRICE" shall mean the highest price per share
paid in any transaction reported on the NYSE or such other exchange or market as
is the principal trading market for the Common Stock, or paid or offered in any
bona fide transaction related to a Potential or actual Change in Control at any
time during the 60 day period immediately preceding such occurrence, in each
case as determined by the Committee.
(h) "CODE" shall mean the Internal Revenue Code of 1986, as now or
hereafter amended.
(i) "COMMITTEE" shall mean the a Committee of the Board, not less than
2 in number, appointed by the Board, unless, and to the extent, the Board is
required to, or expressly elects to, act as the Committee.
(j) "COMMON STOCK" shall mean the common stock, no par value, of the
Parent.
(k) "COMPANY" shall mean the Parent, its Subsidiaries and Affiliates,
except when it shall be appropriate to refer only to Probex Corp., then it shall
be referred to as "Parent".
(l) "CONSULTANT" shall mean any person or entity who or which is
engaged by the Company to render services but is not carried on the books of the
Company as an employee, and any director of the Employer whether compensated for
such services or not; provided that, in the event the Company registers any
security under Section 12 of the Securities Exchange Act of 1934, as amended,
the term Consultant shall thereafter not include Directors who are not
compensated for their services and are paid only a director's fee by the
Employer.
(m) "DATE OF GRANT" shall mean the date on which the Committee takes
formal action to grant an Award, provided that it is followed, as soon as
reasonably possible, by written notice to the Eligible Person receiving the
Award.
(n) "DIRECTOR" shall mean a member of the Board.
(o) "DISABILITY" shall mean a Holder's present incapacity resulting
from an injury or illness (either mental or physical) which, in the reasonable
opinion of the Committee based on such medical evidence as it deems necessary,
will result in death or can be expected to continue for a period of at least
twelve (12) months and will prevent the Holder from performing the normal
services required of the Holder by the Company, provided, however, that such
disability did not result, in whole or in part: (i) from chronic alcoholism;
(ii) from addiction to narcotics; (ii) from a felonious undertaking; or (iv)
from an intentional self-inflicted wound.
(p) "EFFECTIVE DATE" shall mean July 22, 1999.
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(q) "ELIGIBLE PERSON" shall mean employees of the Company who have
completed six months (or more) of employment or who are expressly designated as
eligible by the Committee, Consultants, and Directors, in each case limited to
those persons so described who the Committee determines have the capacity to
substantially contribute to the success of the Company.
(r) "FAIR MARKET VALUE" shall mean, as of a particular date, the
closing sale price of Shares, which shall be (i) if the Shares are listed or
admitted for trading on any United States national securities exchange, the last
reported sale price of the Shares on such exchange as reported in any newspaper
of general circulation, or (ii) if the Shares are quoted on NASDAQ, the closing
high bid quotation for such day on such system. If neither clause (i) nor clause
(ii) is applicable, the fair market value shall be determined by the Committee
by any fair and reasonable means.
(s) "HOLDER" shall mean, at each time of reference, each person
(including, but not limited to an Optionee) with respect to whom an Award is in
effect, except that where it should be appropriate to distinguish between a
Holder with respect to an Option and a Holder with respect to a different type
of Award, reference shall be made to Optionee; and provided further that to the
extent provided under, and subject to the conditions of, the Award, it shall
refer to the person who succeeds to the rights of the Holder upon the death of
the Holder.
(t) "IMMEDIATE FAMILY" means any child, stepchild, grandchild, parent
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter- in-law, brother-in-law, or sister-in-law, and shall
include adoptive relationships.
(u) "INCENTIVE STOCK OPTION" shall mean an Option that is an incentive
stock option as defined in Section 422 of the Code.
(v) "NON-QUALIFIED STOCK OPTION" shall mean an Option that is not an
Incentive Stock Option.
(w) "OPTION" (when capitalized) shall mean any Incentive Stock Option
and Non-qualified Stock Option granted under this Plan, except that, where it
shall be appropriate to identify a specific type of Option, reference shall be
made to the specific type of Option; provided, further, without limitation, that
a single Option may include both Incentive Stock Option and Non-qualified Stock
Option provisions.
(x) "OPTIONEE" shall mean a person to whom an Option is granted (often
referred to as a Holder).
(y) "OPTION PRICE" shall mean the price per Share which is required to
be paid by the Optionee in order to exercise his right to acquire the Share
under the terms of the Option.
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(z) "OPTION PROCEEDS" shall mean the cash proceeds received by the
Company from the exercise of Options reduced by any such amounts previously used
to purchase Reacquired Shares.
(aa) "OUTSIDE DIRECTOR" means a member of the Board who is not an
officer or employee of the Company.
(bb) "PARENT" means Probex Corp., a Colorado corporation.
(cc) "PERFORMANCE AWARD" shall mean the award which is granted
contingent upon the attainment of the performance objectives during the
Performance Period, all as described more fully in SECTION 13.
(dd) "PERFORMANCE PERIOD" shall mean the period described in SECTION 13
with respect to which the performance objectives relate.
(ee) "PLAN" shall mean this 1999 Omnibus Stock and Incentive Plan For
Probex Corp.
(ff) "PLAN YEAR" shall mean the Parent's fiscal year.
(gg) "POTENTIAL CHANGE IN CONTROL" shall mean the first to occur of (i)
approval by shareholders of an agreement by the Parent, the consummation of
which would result in a Change in Control; or (ii) the acquisition of beneficial
ownership, directly or indirectly, by any entity, person or group (other than
the Company or any Company employee benefit plan) of securities of the Company
representing 5% or more of the combined voting power of the Parent's outstanding
securities and the adoption by the Committee of a resolution to the effect that
a Potential Change in Control has occurred for purposes of this Plan.
(hh) "REACQUIRED SHARES" shall mean Shares, if any, which are (i)
delivered to the Company in full or partial payment of the Option Price of an
Option, (ii) reacquired by the Company on the open market with the Option
Proceeds, or (iii) designated by the Board as being deemed to have been
reacquired as Reacquired Shares from authorized but unissued or treasury Shares
as of a specific future date and at the deemed reacquisition price on the deemed
reacquisition date; provided, in each case described in (ii) or (iii), that such
reacquisition is specifically approved and directed in writing by the Board, and
that, in the case of (iii) the deemed reacquisition price shall be the Fair
Market Value of the Shares on the deemed reacquisition date; and provided,
finally, that the aggregate of such Reacquired Shares may not exceed
seventy-five percent (75%) of the aggregate Shares (excluding Reacquired Shares)
authorized in SECTION 3, as SECTION 3 is amended at the time of reference.
(ii) "RESTRICTION(S)" shall mean the restrictions applicable to
Available Shares subject to an Award which prohibit the "transfer" of such
Available Shares, and which constitute "a substantial risk of forfeiture" of
such Available Shares, as those terms are defined under Section 83(a)(1) of the
Code.
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(jj) "RESTRICTED PERIOD" shall mean the period during which Restricted
Shares shall be subject to Restrictions.
(kk) "RESTRICTED SHARES" shall mean the Available Shares granted to an
Eligible Person which are subject to Restrictions.
(ll) "RESTRICTED SHARE AWARD" shall mean the award of Restricted
Shares.
(mm) "RESTRICTED SHARE DISTRIBUTIONS" shall mean any amounts, whether
Shares, cash or other property (other than regular cash dividends) paid or
distributed by the Parent with respect to Restricted Shares during a Restricted
Period.
(nn) "SHARE(S)" shall mean a share or shares of Common Stock.
(oo) "SPREAD" shall mean the difference between the Option Price of the
Share(s), and the Fair Market Value of such Share(s), on the date of reference.
(pp) "SUBSIDIARY" shall mean any corporation (other than the Parent) in
any unbroken chain of corporations beginning with the Parent if, at the time of
the granting of the Award, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such unbroken chain.
(qq) "1933 ACT" shall mean the Securities Act of 1933, as amended.
(rr) "1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
3. AWARD OF AVAILABLE SHARES.
(a) As of the Effective Date, 2,750,000 Shares shall automatically, and
without further action, become Available Shares, and as of March 30, 2000, on
additional 3,000,000 Shares shall automatically, and without further action,
become Available Shares. Thereafter, the number of Available Shares shall be
increased automatically by the number of Reacquired Shares. To the extent any
Award shall terminate, expire or be canceled, or the Award shall be paid in
cash, the Available Shares subject to such Award (or with respect to which the
Award is measured), shall remain Available Shares.
(b) Notwithstanding the forgoing, Incentive Stock Options may not be
issued in whole or in part with respect to Reacquired Shares; provided, further,
that where an Award other than an Incentive Stock Option is granted at a time
when Reacquired Shares are available for grant under the Plan (i.e. are not
subject to a previous grant), for purposes of this SECTION 3(b) the Award shall
be deemed granted with respect to Reacquired Shares, and to the extent an Award
granted with respect to Reacquired Shares shall terminate, expire or be
canceled, or the Award shall be paid in cash, the Available Shares subject to
such Award (or with respect to which the Award is measured), shall remain
Available Shares and continue to be considered Reacquired Shares for purposes of
this SECTION 3(b). Further, notwithstanding
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any provision hereof to the contrary, no person whose compensation is subject to
the limitations on deductibility under Section 162(m) of the Code shall be
eligible to receive Awards during any Plan Year with respect to more than
1,100,000 shares. The Administrator shall maintain records sufficient to carry
out the purposes of this SECTION 3(b).
4. CONDITIONS FOR GRANT OF AWARDS.
(a) Without limiting the generality of the provisions hereof which deal
specifically with each form of Award, Awards shall only be granted to such one
or more Eligible Persons as shall be selected by the Committee; provided
further, and without limitation, that nothing herein shall be deemed to prohibit
the Committee from granting an Award contingent on the Eligible Person receiving
the Award surrendering an existing Award.
(b) In granting Awards, the Committee shall take into consideration the
contribution the Eligible Person has made or may be reasonably expected to make
to the success of the Company and such other factors as the Committee shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from officers and other personnel of the Company with
regard to these matters. The Committee may from time to time in granting Awards
under the Plan prescribe such other terms and conditions concerning such Awards
as it deems appropriate, including, without limitation, relating an Award to
achievement of specific goals established by the Committee or to the continued
employment of the Eligible Person for a specified period of time, provided that
such terms and conditions are not inconsistent with the provisions of this Plan.
(c) Incentive Stock Options may be granted only to Employees, and all
other Awards may be granted to either Employees, Consultants or Outside
Directors.
(d) The Plan shall not confer upon any Holder any right with respect to
continuation of employment by, or consulting relationship with, the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment, consulting relationship or Directorship at any time, nor shall
the reference to "Company" confer an employment relationship on a Consultant.
(e) The Awards granted to Eligible Persons shall be in addition to
regular salaries, pension, life insurance or other benefits related to their
service to the Company. Neither the Plan nor any Award granted under the Plan
shall confer upon any person any right to continuance of employment by the
Company; and provided, further, that nothing herein shall be deemed to limit the
ability of the Company to enter into any other compensation arrangements with
any Eligible Person.
(f) The Committee shall determine in each case whether periods of
military or government service shall constitute a continuation of employment for
the purposes of this Plan or any Award.
(g) Notwithstanding any provision hereof to the contrary, each Award
which in whole or in part involves the issuance of Available Shares may provide
for the issuance of
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such Available Shares for consideration consisting of such consideration as the
Committee may determine, including (without limitation) as compensation for past
services rendered.
5. GRANT OF OPTIONS.
(a) The Committee may grant to Optionees from time to time Options
alone, in addition to, or in tandem with, other Awards granted under the Plan
and/or cash Awards made outside of the Plan, to purchase some or all of the
Available Shares. An Option granted hereunder shall be either an Incentive Stock
Option or a Non-qualified Stock Option, shall be evidenced by a written
agreement that shall contain such provisions as shall be selected by the
Committee, which may incorporate the terms of this Plan by reference, and which
clearly shall state whether it is (in whole or in part) an Incentive Stock
Option or a Non-qualified Stock Option.
(b) The aggregate Fair Market Value (determined as of the Date of
Grant) of the Available Shares with respect to which any Incentive Stock Option
is exercisable for the first time by an Optionee during any calendar year under
the Plan and all such plans of the Company (as defined in Section 425 of the
Code) shall not exceed $100,000.
(c) A Non-qualified Stock Option shall not be transferable by the
Holder without the prior written consent of the Committee other than (i)
transfers by the Holder to a member of his or her Immediate Family or a trust
for the benefit of the optionee or a member of his or her Immediate Family, or
(ii) transfers by will or by the laws of descent and distribution. An Incentive
Stock Option shall not be transferable by the Holder otherwise than by will or
by the laws of descent and distribution. All Options shall be exercisable,
during the Holder's lifetime, only by the Holder.
(d) In the case of a Non-qualified Stock Option or a Holder who elects
to make a disqualifying disposition (as defined in Section 422(a)(1) of the
Code) of Shares acquired pursuant to the exercise of an Incentive Stock Option,
the Committee may provide that, at such time as the Company files an income tax
return on which it shows taxable income, or upon the later exercise of the
Non-qualified Stock Option or disqualifying disposition of an Incentive Stock
Option, the Optionee will be paid a cash bonus in an amount equal to some or all
of the federal and state, if any, income tax incurred (or deemed incurred) by
the Holder (i) as a result of such exercise or disqualifying disposition, and
(ii) as a result of the payment of such cash bonus; and provided, further, that
the amount of such cash bonus may be expressed in the case of an Non-Qualified
Stock Option as a percentage of the Spread on the date of exercise, and may be
expressed in the case of a disqualifying disposition as a percentage of the
ordinary income reportable as a result of such disqualifying disposition;
provided, further, that in each case the Committee shall determine the
percentage in its sole discretion and separately with respect to each Optionee
and each Option.
(e) If the Option agreement so provides at Date of Grant or (except in
the case of an Incentive Stock Option) is amended after Date of Grant and prior
to exercise to so provide (with the Holder's consent), the Committee may require
that all or part of the Shares to be issued with respect to the Spread take the
form of Restricted Stock, which shall be
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valued on the date of exercise on the basis of the Fair Market Value of such
Restricted Stock determined without regard to the transferability and forfeiture
restrictions involved.
(f) Without limitation, the Committee may condition the exercise of any
Option upon the attainment of specified performance goals or other factors as
the Committee may determine in its sole discretion. Unless specifically provided
to the contrary in the Option agreement, any such performance conditioned Option
shall vest twelve (12) months prior to its expiration if the conditions to
exercise have not theretofore been satisfied.
6. OPTION PRICE.
(a) The Option Price shall be any price determined by the Committee;
provided, however, that in the case of an Incentive Stock Option, the Option
Price shall not be less than one hundred percent (100%) of the Fair Market Value
per Share (as reasonably determined in the sole discretion of the Committee) on
the Date of Grant.
(b) Unless further limited by the Committee in any Option, the Option
Price shall be paid solely in cash, by certified or cashier's check, by wire
transfer, by money order, with Shares (but only to the extent expressly
permitted under the terms of the Option), or by a combination of the above;
provided, however, that the Committee, in its discretion, may accept a personal
check in full or partial payment. Without limitation, in the Committee's sole
discretion (but only to the extent expressly permitted under the terms of the
Option), the Option Price of an Option can be paid in full or in part by the
surrender of Vested Shares subject to the Option or to any other Award
hereunder. If the Option Price is permitted to be, and is, paid in whole or in
part with Shares, the value of the Share(s) surrendered shall be their Fair
Market Value on the date they are delivered to the Company.
7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i) the
Committee has received written notice of such exercise in accordance with the
terms of the Option, and (ii) full payment of the aggregate Option Price of the
Available Shares as to which the Option is exercised has been made. Separate
stock certificates shall be issued by the Parent for any Available Shares
acquired as a result of exercising an Incentive Stock Option and a Non-
qualified Stock Option.
8. EXERCISABILITY OF OPTIONS.
(a) Each Option shall become exercisable in whole or in part and
cumulatively, and shall expire, according to the terms of the Option to the
extent not inconsistent with the express provisions of this Plan; provided,
further and without limitation, that each Option may have a different maximum
period of exercisability prior to its expiration date.
(b) The Committee, in its sole discretion, may accelerate the date on
which all or any portion of an otherwise unexercisable Option may be exercised
or a restriction will lapse.
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9. TERMINATION OF OPTION PERIOD.
(a) As provided in SECTION 5, and without limitation, each Option shall
be evidenced by an agreement that may contain any provisions selected by the
Committee; provided, however, that in each case, unless terminated earlier under
the express terms of the Option, the unexercised portion of an Option shall
automatically and without notice terminate and become null and void on the
earlier of (i) the date that Optionee ceases to be employed by the Company, if
such cessation is for Cause, (ii) the anniversary of the date of the Optionee's
cessation of employment by reason of Optionee's death, (iii) the three month
anniversary of the date of Optionee's cessation of employment by reason of
Optionee's Disability, (iv) the tenth (10th) anniversary of the Date of Grant;
and (v) solely in the case of an Incentive Stock Option, three months after the
date that Optionee ceases to be employed by the Company regardless of the reason
therefor, other than a cessation by reason of death, in which case the date of
termination may be extended under the terms of the Incentive Stock Option
agreement.
(b) Notwithstanding any provision of SECTION 15(a) to the contrary, if
provided in an Option, the Committee may, by giving written notice
("CANCELLATION NOTICE"), cancel, effective upon the date of the consummation of
any of the transactions described in SUBSECTION 15(a), all or any portion of
such Option which remains unexercised on such date. Such Cancellation Notice
shall be given a reasonable period of time (but not less than 15 days) prior to
the proposed date of such cancellation, and may be given either before or after
shareholder approval of such corporate transaction.
10. INCENTIVE STOCK OPTIONS FOR 10% SHAREHOLDER. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly (or indirectly through attribution under
Section 425(d) of the Code) at the Date of Grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (as
defined in Section 425 of the Code) at the Date of Grant, unless the Option
Price of such Incentive Stock Option is at least 110% of the Fair Market Value
on the Date of Grant of the Available Shares subject to such Incentive Stock
Option, and the period during which the Incentive Stock Option may be exercised
does not exceed five (5) years from the Date of Grant.
11. NON-QUALIFIED STOCK OPTIONS. Non-qualified Stock Options may be granted
hereunder and shall contain such terms and provisions as shall be determined by
the Committee, except that each such Non-qualified Stock Option (i) must be
clearly designated as a Non-qualified Stock Option; (ii) may be granted for
Available Shares which become exercisable in excess of the limits contained in
SUBSECTION 5(b); and (iii) shall not be subject to SECTION 10 hereof. If both
Incentive Stock Options and Non-qualified Stock Options are granted to an
Optionee, the right to exercise, to the full extent thereof, Options of either
type shall not be contingent in whole or in part upon the exercise of, or
failure to exercise, Options of the other type.
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12. RESTRICTED SHARE AWARDS.
(a) Each Restricted Share Award shall be evidenced by an agreement that
may contain any provisions selected by the Committee, and not expressly in
conflict with a provision of the Plan. Except as otherwise provided in the
express terms and conditions of each Restricted Share Award, the Eligible Person
receiving the Restricted Share Award shall have all of the rights of a
shareholder with respect to such Restricted Shares including, but not limited
to, voting rights and the right to receive any dividends paid, subject only to
the retention provisions of the Restricted Share Distributions.
(b) The Restrictions on Restricted Shares shall lapse in whole, or in
installments, over whatever Restricted Period shall be selected by the
Committee; provided, however, that a complete lapse of Restrictions always shall
occur on or before the 9th anniversary of the Date of Grant.
(c) The Committee may accelerate the date on which Restrictions lapse
with respect to any Restricted Shares.
(d) During the Restricted Period, the certificates representing the
Restricted Shares, and any Restricted Share Distributions, shall be registered
in the Holder's name and bear a restrictive legend disclosing the Restrictions,
the existence of the Plan, and the existence of the applicable agreement
granting such Restricted Share Award. Such certificates shall be deposited by
the Holder with the Company, together with stock powers or other instruments of
assignment, each endorsed in blank, which will permit the transfer to the
Company of all or any portion of the Restricted Shares, and any assets
constituting Restricted Share Distributions, which shall be forfeited in
accordance with the applicable agreement granting such Restricted Share Award.
Restricted Shares shall constitute issued and outstanding Common Stock for all
corporate purposes and the Holder shall have all rights, powers and privileges
of a Holder of unrestricted Shares except that the Holder will not be entitled
to delivery of the stock certificates until all Restrictions shall have
terminated, and the Company will retain custody of all related Restricted Share
Distributions (which will be subject to the same Restrictions, terms, and
conditions as the related Restricted Shares) until the conclusion of the
Restricted Period with respect to the related Restricted Shares; and provided,
further, that any Restricted Share Distributions shall not bear interest or be
segregated into a separate account but shall remain a general asset of the
Company, subject to the claims of the Company's creditors, until the conclusion
of the applicable Restricted Period; and provided, finally, that any material
breach of any terms of the agreement granting the Restricted Share Award, as
reasonably determined by the Committee will cause a forfeiture of both
Restricted Shares and Restricted Share Distributions.
13. PERFORMANCE AWARDS.
(a) The Committee may grant Performance Awards, which may in the sole
discretion of the Committee represent a Share or be related to the increase in
value of a Share, or be contingent on the Company's achievement of the specified
performance measures during the Performance Period, including, without
limitation, performance shares, convertible
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preferred stock, convertible debentures, exchangeable securities and Restricted
Share Awards or Options valued by reference to earnings per Share or Subsidiary
performance, may be granted either alone, in addition to, or in tandem with,
other Awards and cash awards made outside of the Plan. The Committee shall
establish the performance measures for each Performance Period, and such
performance measures, and the duration of any Performance Period, may differ
with respect to each Eligible Person who receives a Performance Award, or with
respect to separate Performance Awards issued to the same Eligible Person. The
performance measures, the medium of payment, the Performance Period(s) and any
other conditions to the Company's obligation to pay such Performance Award in
full or in part, shall be set forth in the written agreement evidencing each
Performance Award.
(b) Unless otherwise expressly provided in the agreement evidencing the
Performance Award, the Holder of the Performance Award must remain employed by
the Company until the end of the Performance Period in order to be entitled to
any payment under such Performance Award; provided, however, that the Committee
expressly may provide in the agreement granting such Performance Award that such
Holder may become entitled to a specified portion of the amount earned under
such Performance Award based on one or more specified period(s) of time between
the Date of Grant of such Performance Award and such Holder's termination of
employment by the Company prior to the end of the Performance Period.
14. ACCELERATION.
(a) In the event the Holder's termination of employment with the
Company is by reason of the Holder's death, all Awards granted to the Holder
shall become fully exercisable, nonforfeitable, or the Restricted Period shall
terminate as the case may be (hereafter, in this SECTION 14, such Award shall be
"accelerated").
(b) In the event of either a Change in Control, or a Potential Change
in Control, unless otherwise expressly provided by the Committee prior to such
event, (i) all Awards, shall become fully exercisable, nonforfeitable, or the
Restricted Period shall terminate, as the case may be (hereafter, in this
SECTION 14, such Award shall be "accelerated") and (ii) the value of all
outstanding Non-qualified Stock Options, Restricted Stock, and Outside Director
Options shall be cashed out on the basis of the Change in Control Price,
effective as the date of the Change in Control, or on such other date as the
Committee may determine prior to the Change in Control.
(c) Notwithstanding any provisions hereof to the contrary, if an Award
is accelerated under SUBSECTION 14(a) or (b), the portion of the Award which is
accelerated is limited to that portion which can be accelerated without causing
the Holder to have an "excess parachute payment" as determined under Section
280G of the Code, determined by taking into account all of the Holder's
"parachute payments" determined under Section 280G of the Code, all as
reasonably determined by the Committee.
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15. ADJUSTMENT OF AVAILABLE SHARES.
(a) If at any time while the Plan is in effect or Awards with respect
to Available Shares are outstanding, there shall be any increase or decrease in
the number of issued and outstanding Shares through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Available Shares which may be granted under SECTION 3, and in
the Available Shares which are then subject to each Award, so that the
same proportion of the Parent's issued and outstanding Common Stock
shall continue to be subject to grant under SECTION 3, and to such
Award, and
(ii) in addition, and without limitation, in the case of
each Award (including, without limitation, Options) which requires the
payment of consideration by the Holder in order to acquire Shares, an
appropriate adjustment shall be made in the consideration (including,
without limitation the Option Price) required to be paid to acquire the
each Share, so that (i) the aggregate consideration to acquire all of
the Shares subject to the Award remains the same and, (ii) so far as
possible (and without disqualifying an Incentive Stock Option) as
reasonably determined by the Committee in its sole discretion, the
relative cost of acquiring each Share subject to such Award remains the
same.
(b) The Committee may change the terms of Options outstanding under
this Plan, with respect to the Option Price or the number of Available Shares
subject to the Options, or both, when, in the Committee's judgment, such
adjustments become appropriate by reason of a corporate transaction (as defined
in Treasury Regulation ss. 1.425-1(a)(1)(ii)); provided, however, that if by
reason of such corporate transaction an Incentive Stock Option is assumed or a
new option is substituted therefore, the Committee may only change the terms of
such Incentive Stock Option such that (i) the excess of the aggregate Fair
Market Value of the Shares subject to option immediately after the substitution
or assumption, over the aggregate option price of such Shares, is not more than
the excess of the aggregate Fair Market Value of all Available Shares subject to
the Option immediately before such substitution or assumption over the aggregate
Option Price of such Available Shares, and (ii) the new option, or the
assumption of the old Incentive Stock Option does not give the Optionee
additional benefits which he did not have under the old Incentive Stock Option.
(c) Except as otherwise expressly provided herein, the issuance by the
Parent of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
to an unrelated party or for Fair Market Value, or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Parent convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to
Available Shares subject to Awards granted under the Plan.
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(d) Without limiting the generality of the foregoing, the existence of
outstanding Awards with respect to Available Shares granted under the Plan shall
not affect in any manner the right or power of the Parent to make, authorize or
consummate (1) any or all adjustments, recapitalizations, reorganizations or
other changes in the Parent's capital structure or its business; (2) any merger
or consolidation of the Parent; (3) any issue by the Parent of debt securities,
or preferred or preference stock which would rank above the Available Shares
subject to outstanding Awards; (4) the dissolution or liquidation of the Parent;
(5) any sale, transfer or assignment of all or any part of the assets or
business of the Company; or (6) any other corporate act or proceeding, whether
of a similar character or otherwise.
16. TRANSFERABILITY OF AWARDS. Each Award shall provide that such Award
shall not be transferable by the Holder otherwise than by will or the laws of
descent and distribution, or, if so provided in the Award and approved in
writing by the Committee (in its sole discretion), (a) that such Award is
transferable, in whole or in part, without payment of consideration, to members
of the Holder's Immediate Family, to trusts for such Immediate Family members,
or to partnerships whose only partners are such Immediate Family members, or (b)
to a person or other entity for which the Holder is entitled to a deduction for
a "charitable contribution" under Section 170(a)(i) of the Code (provided, in
each such case that no further transfer by any such permitted transferee(s)
shall be permitted).
17. ISSUANCE OF SHARES. No Holder or other person shall be, or have any of
the rights or privileges of, the owner of Shares subject to an Award unless and
until certificates representing such Common Stock shall have been issued and
delivered to such Holder or other person. As a condition of any issuance of
Common Stock, the Committee may obtain such agreements or undertakings, if any,
as the Committee may deem necessary or advisable to assure compliance with any
such law or regulation including, but not limited to, the following:
(i) a representation, warranty or agreement by the Holder
to the Parent, at the time any Shares are transferred, that he is
acquiring the Shares to be issued to him for investment and not with a
view to, or for sale in connection with, the distribution of any such
Shares; and
(ii) a representation, warranty or agreement to be bound by
any legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law deemed
by the Committee to be applicable to the issuance of the Shares and are
endorsed upon the Share certificates.
Share certificates issued to the Holder receiving such Shares who are
parties to any shareholders agreement or any similar agreement shall bear the
legends contained in such agreements. Notwithstanding any provision hereof to
the contrary, no Shares shall be required to be issued with respect to an Award
unless counsel for the Parent shall be reasonably satisfied that such issuance
will be in compliance with applicable Federal or state securities laws.
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18. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee and, except for the
powers reserved to the Board in SECTION 21 hereof, the Committee shall have all
of the administrative powers under Plan. If a Committee is not appointed by the
Board at the time of reference, the Plan shall be administered by the Board and
all references herein to the Committee shall refer to the Board. Notwithstanding
the forgoing, no member of the Committee may be present at discussions
concerning, or vote on, matters which materially affect his Award.
Notwithstanding any provision of the Plan to the contrary, the Board, exclusive
of the non- employee Directors, shall act exclusively as the Committee with
respect to all matters relating to the granting of, and administration of the
Plan with respect to, Awards to non-employee Directors.
(b) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan and, without limitation, may delegate
all of what, in its sole discretion, it determines to be ministerial duties to
an officer of the Parent. The determinations under, and the interpretations of,
any provision of the Plan or an Award by the Committee shall, in all cases, be
in its sole discretion, and shall be final and conclusive.
(c) Any and all determinations and interpretations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting duly called, with at least 3 days prior notice and a general explanation
of the subject matter given to each member, or (ii) without a meeting, by the
written approval of all members of the Committee.
(d) No member of the Committee shall be liable for any action taken or
omitted to be taken by him or by any other member of the Committee with respect
to the Plan, and to the extent of liabilities not otherwise insured under a
policy purchased by the Company, the Company does hereby indemnify and agree to
defend and save harmless any member of the Committee with respect to any
liabilities asserted or incurred in connection with the exercise and performance
of their powers and duties hereunder, unless such liabilities are judicially
determined to have arisen out of such member's gross negligence, fraud or bad
faith. Such indemnification shall include attorney's fees and all other costs
and expenses reasonably incurred in defense of any action arising from such act
of commission or omission. Nothing herein shall be deemed to limit the Company's
ability to insure itself with respect to its obligations hereunder.
(e) In particular, and without limitation, the Committee shall have the
authority, consistent with the terms of the Plan:
(i) to select the officers, key employees of and consultants
to the Company to whom Awards may from time to time be granted
hereunder;
(ii) to determine whether and to what extent Awards are to be
granted hereunder to one or more eligible persons;
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(iii) to determine the number of Shares to be covered by each
such Award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder (including,
but not limited to, the Agreed Value and any restriction or limitation,
or any vesting acceleration or waiver of forfeiture restrictions, based
in each case on such factors as the Committee shall determine, in its
sole discretion); and to amend or waive any such terms and conditions
to the extent permitted by the Plan;
(v) to determine whether and under what circumstances an
Option may be settled in cash or Restricted Shares instead of Shares;
(vi) to determine whether, to what extent, and under what
circumstances Awards under the Plan are to be made, and operate, on a
tandem basis vis-a-vis other Awards under the Plan and/or cash awards
made outside of the Plan;
(vii) to determine whether and to what extent, and under what
circumstances Shares and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the Holder
(including providing for and determining the amount (if any) of any
deemed earnings on any deferred amount during any deferral period); and
(viii) to determine whether to require payment of tax
withholding requirements in Shares and to impose any holding period
required to satisfy Section 16 under the Exchange Act.
(f) The Committee shall have the authority to adopt, alter, and repeal
such rules, guidelines, and practices governing the Plan as it shall, from time
to time, deem advisable; to interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan; provided, however, that to
the extent that this Plan otherwise requires the approval of the Board or the
shareholders of the Parent, all decisions of the Committee shall be subject to
such Board or shareholder approval. Subject to the foregoing, and without
limitation, all decisions made by the Committee pursuant to the provisions of
the Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Holders.
19. TAX WITHHOLDING. On or immediately prior to the date on which a payment
is made to a Holder hereunder or, if earlier, the date on which an amount is
required to be included in the income of the Holder as a result of an Award, the
Holder shall be required to pay to the Company, in cash or in Shares (including,
but not limited to, the reservation to the Company of the requisite number of
Available Shares otherwise payable to such Holder with respect to such Award)
the amount which the Company reasonably determines to be necessary in order for
the Company to comply with applicable federal or state tax withholding
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requirements, and the collection of employment taxes, if applicable; provided,
further, that the Committee may require that such payment be made in cash.
20. INTERPRETATION.
(a) If any provision of the Plan is held invalid for any reason, such
holding shall not affect the remaining provisions hereof, but instead the Plan
shall be construed and enforced as if such provision had never been included in
the Plan.
(b) THIS PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
(c) Headings contained in this Agreement are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall be
a reference to such other gender as is appropriate.
(e) The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
Holder, nothing contained herein shall give any such Holder any rights that are
greater than those of a general creditor of the Company. In its sole discretion,
the Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Common Stock or payments in
lieu of or with respect to Awards hereunder; provided, however, that, unless the
Committee otherwise determines with the consent of the affected Holder, the
existence of such trusts or other arrangements is consistent with the "unfunded"
status of the Plan.
(f) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
21. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board, or the Committee
(subject to the prior written authorization of the Board), may from time to time
amend the Plan or any Award; provided, however, that [except to the extent
provided in SECTION 9(b) AND 15 hereof] if there are Incentive Stock Options
outstanding on the date of amendment, no such amendment may, without approval by
the shareholders of the Parent, (a) increase the number of Available Shares with
respect to which Incentive Stock Options may be granted, or change the class of
Eligible Persons to which Incentive Stock Options may be granted, (b) permit the
granting of Incentive Stock Options which expire beyond the maximum 10-year
period described in SUBSECTION 9(a)(iv) or beyond the period described in
SUBSECTION 9(a)(v), or (c) extend the termination date of the Plan as set forth
in SECTION 23 with respect the granting of Incentive Stock Options; and
provided, further, that no amendment or suspension of the Plan or any Award
issued hereunder shall, except as specifically permitted in this Plan or under
the terms of such Award, substantially impair any Award previously granted to
any Holder without the consent of such Holder.
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22. SECTION 83(b) ELECTION. If as a result of receiving an Award, a
Holder receives Restricted Shares subject to a "substantial risk of forfeiture",
then such Holder may elect under Section 83(b) of the Code to include in his
gross income, for his taxable year in which the Restricted Shares are
transferred to him, the excess of the Fair Market Value (determined without
regard to any Restriction other than one which by its terms will never lapse),
of such Restricted Shares at the Date of Grant, over the amount paid for the
Restricted Shares. If the Holder makes the Section 83(b) election described
above, the Holder shall (i) make such election in a manner that is satisfactory
to the Committee, (ii) provide the Committee with a copy of such election, (iii)
agree to promptly notify the Company if any Internal Revenue Service or state
tax agent, on audit or otherwise, questions the validity or correctness of such
election or of the amount of income reportable on account of such election, and
(iv) agree to such federal and state income withholding as the Committee may
reasonably require in its sole and absolute discretion.
23. EFFECTIVE DATE AND TERMINATION DATE. The Plan shall be effective
as of its Effective Date, and shall terminate on the tenth anniversary of such
Effective Date.
PROBEX CORP.
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