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EXHIBIT 10.1
O'CHARLEY'S 2000 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the O'Charley's 2000 Stock Incentive Plan (the "Plan") is to
enable O'Charley's Inc. (the "Corporation") to attract, retain and reward key
employees of and consultants to the Corporation and its Subsidiaries and
Affiliates, and directors who are not also employees of the Corporation, and to
strengthen the mutuality of interests between such key employees, consultants,
and directors by awarding such key employees, consultants, and directors
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Corporation, as well as performance-based incentives payable
in cash. The creation of the Plan shall not diminish or prejudice other
compensation programs approved from time to time by the Board.
For purposes of the Plan, the following terms shall be defined as set forth
below:
A. "Affiliate" means any entity other than the Corporation and its Subsidiaries
that is designated by the Board as a participating employer under the Plan,
provided that the Corporation 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. "Board" means the Board of Directors of the Corporation.
C. "Cause" has the meaning provided in Section 5(j) of the Plan.
D. "Change in Control" has the meaning provided in Section 10(b) of the Plan.
E. "Change in Control Price" has the meaning provided in Section 10(d) of the
Plan.
F. "Code" means the Internal Revenue Code of 1986, as amended from time to time,
and any successor thereto.
G. "Common Stock" means the Corporation's common stock, no par value per share.
H. "Committee" means the Committee referred to in Section 2 of the Plan.
I. "Corporation" means O'Charley's Inc., a corporation organized under the laws
of the State of Tennessee, or any successor corporation.
J. "Disability" means disability as determined under the Corporation's Group
Long Term Disability Insurance Plan.
K. "Early Retirement" means retirement, for purposes of this Plan with the
express consent of the Corporation at or before the time of such retirement,
from active employment with the Corporation and any Subsidiary or Affiliate
prior to age 65, in accordance with any applicable early retirement policy of
the Corporation then in effect or as may be approved by the Committee.
L. "Effective Date" has the meaning provided in Section 14 of the Plan.
M. "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.
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N. "Fair Market Value" means with respect to the Common Stock, as of any given
date or dates, unless otherwise determined by the Committee in good faith, the
reported closing price of a share of Common Stock on NASDAQ or such other market
or exchange as is the principal trading market for the Common Stock, or, if no
such sale of a share of Common Stock is reported on NASDAQ or other exchange or
principal trading market on such date, the fair market value of a share of
Common Stock as determined by the Committee in good faith.
O. "Incentive Stock Option" means any Stock Option intended to be and designated
as an "Incentive Stock Option" within the meaning of Section 422 of the Code.
P. "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.
Q. "Non-Employee Director" means a member of the Board who is a Non-Employee
Director within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange
Act and an outside director within the meaning of Treasury Regulation Sec.
162-27(e)(3) promulgated under the Code.
R. "Non-Qualified Stock Option" means any Stock Option that is not an Incentive
Stock Option.
S. "NASDAQ" means The Nasdaq Stock Market's National Market.
T. "Normal Retirement" means retirement from active employment with the
Corporation and any Subsidiary or Affiliate on or after age 65.
U. "Other Stock-Based Award" means an award under Section 8 below that is valued
in whole or in part by reference to, or is otherwise based on, the Common Stock.
V. "Outside Director" means a member of the Board who is not an officer or
employee of the Corporation or any Subsidiary or Affiliate of the Corporation.
W. "Outside Director Option" means an award to an Outside Director under Section
9 below.
X. "Plan" means this O'Charley's 2000 Stock Incentive Plan, as amended from time
to time.
Y. "Restricted Stock" means an award of shares of Common Stock that is subject
to restrictions under Section 7 of the Plan.
Z. "Restriction Period" has the meaning provided in Section 7(c)(i) of the Plan.
AA. "Retirement" means Normal or Early Retirement.
BB. "Section 162(m) Maximum" has the meaning provided in Section 3(a) hereof.
CC. "Stock Appreciation Right" means the right pursuant to an award granted
under Section 6 below to surrender to the Corporation all (or a portion) of a
Stock Option in exchange for an amount equal to the difference between (i) the
Fair Market Value, as of the date such Stock Option (or such portion thereof) is
surrendered, of the shares of Common Stock covered by such Stock Option (or such
portion thereof), subject, where applicable, to the pricing provisions in
Section 6(b)(ii), and (ii) the aggregate exercise price of such Stock Option (or
such portion thereof).
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DD. "Stock Option" or "Option" means any option to purchase shares of Common
Stock (including Restricted Stock, if the Committee so determines) granted
pursuant to Section 5 below.
EE. "Subsidiary" means any entity (other than the Corporation) in an unbroken
chain of entities beginning with the Corporation if each of the entities (other
than the last entity in the unbroken chain) owns stock, membership interest or
partnership interest possessing 50% or more of the total combined voting power
of all classes of stock, membership interest or partnership interest in one of
the other entities in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two Non-Employee
Directors, who shall be appointed by the Board and who shall serve at the
pleasure of the Board. The functions of the Committee specified in the Plan may
be exercised by an existing Committee of the Board composed exclusively of
Non-Employee Directors. The initial Committee shall be the Compensation
Committee of the Board. In the event there are not at least two Non-Employee
Directors on the Board, the Plan shall be administered by the Board and all
references herein to the Committee shall refer to the Board.
The Committee shall have authority to grant, pursuant to the terms of the Plan,
to officers, other key employees, Outside Directors, and consultants eligible
under Section 4: (i) Stock Options, (ii) Stock Appreciation Rights, (iii)
Restricted Stock, and/or (iv) Other Stock-Based Awards; provided, however, that
the power to grant and establish the terms and conditions of awards to Outside
Directors other than Outside Director Options shall be reserved to the Board.
With respect to options granted to Outside Directors other than Outside Director
Options, all references to the Committee shall be deemed to be references to the
Board.
In particular, the Committee or the Board, as the case may be, shall have the
authority, consistent with the terms of the Plan:
(a) to select the officers, key employees, Outside Directors, and
consultants to the Corporation and its Subsidiaries and Affiliates to whom
Stock Options, Stock Appreciation Rights, Restricted Stock, and/or Other
Stock-Based Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
and/or Other Stock-Based Awards, or any combination thereof, are to be
granted hereunder to one or more eligible persons;
(c) to determine the number of shares to be covered by each such award
granted hereunder;
(d) 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 share price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions regarding any Stock
Option or other award and/or the shares of Common Stock relating thereto,
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 Section 11 hereof;
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(e) to determine whether and under what circumstances a Stock Option may be
settled in cash or Restricted Stock under Section 5(l) or (m), as
applicable, instead of Common Stock;
(f) to determine whether, to what extent, and under what circumstances
Option grants and/or other 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;
(g) to determine whether, to what extent, and under what circumstances
shares of Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election
of the participant (including providing for and determining the amount (if
any) of any deemed earnings on any deferred amount during any deferral
period);
(h) to determine whether to require payment of tax withholding requirements
in shares of Common Stock subject to the award; and
(i) to impose any holding period required to satisfy Section 16 under the
Exchange Act.
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 Corporation, all decisions of the Committee shall be subject to such
Board or shareholder approval. Subject to the foregoing, 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 Corporation and Plan participants.
SECTION 3. SHARES OF COMMON STOCK SUBJECT TO PLAN.
(a) The aggregate number of shares of Common Stock that may be issued under the
Plan shall be 3,000,000 shares. The shares of Common Stock issuable under the
Plan shall be issued from the Corporation's authorized but unissued shares. No
officer of the Corporation or other person whose compensation may be subject to
the limitations on deductibility under Section 162(m) of the Code shall be
eligible to receive awards pursuant to this Plan relating to in excess of
500,000 shares of Common Stock in any fiscal year (the "Section 162(m)
Maximum").
(b) If any shares of Common Stock that have been optioned cease to be subject to
a Stock Option, or if any shares of Common Stock that are subject to any
Restricted Stock or Other Stock-Based Award granted hereunder are forfeited
prior to the payment of any dividends, if applicable, with respect to such
shares of Common Stock, or any such award otherwise terminates without a payment
being made to the participant in the form of Common Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
(c) In the event of any merger, reorganization, consolidation, recapitalization,
extraordinary cash dividend, stock dividend, stock split or other change in
corporate structure affecting the Common Stock, an appropriate substitution or
adjustment shall be made in
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the maximum number of shares that may be awarded under the Plan, in the number
and option price of shares subject to outstanding Options granted under the
Plan, in the number of shares underlying Outside Director Options to be granted
under Section 9 hereof, the Section 162(m) Maximum and in the number of shares
subject to other outstanding awards granted under the Plan as may be determined
to be appropriate by the Committee, in its sole discretion, provided that the
number of shares subject to any award shall always be a whole number. An
adjusted option price shall also be used to determine the amount payable by the
Corporation upon the exercise of any Stock Appreciation Right associated with
any Stock Option.
SECTION 4. ELIGIBILITY.
Officers, other key employees and Outside Directors of and consultants to the
Corporation and its Subsidiaries and Affiliates who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Corporation and/or its Subsidiaries and Affiliates are eligible to be granted
awards under the Plan.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to, or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive Stock
Options and (ii) Non-Qualified Stock Options. Incentive Stock Options may be
granted only to individuals who are employees of the Corporation or any
Subsidiary of the Corporation.
Subject to the foregoing, the Committee shall have the authority to grant to any
optionee Incentive Stock Options, Non-Qualified Stock Options, or both types of
Stock Options (in each case with or without Stock Appreciation Rights).
Options granted to officers, key employees, Outside Directors and consultants
under the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant but shall be not less than 100% (or, in the case of any employee who
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or of any of its Subsidiaries, not
less than 110%) of the Fair Market Value of the Common Stock at grant, in
the case of Incentive Stock Options, and not less than 50% of the Fair
Market Value of the Common Stock at grant, in the case of Non-Qualified
Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years (or, in the case of an employee who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the
Corporation or any of its Subsidiaries or parent corporations, more than
five years) after the date the Option is granted.
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(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee at or after grant; provided, however, that except as provided
in Section 5(g) and (h) and Section 10, unless otherwise determined by the
Committee at or after grant, no Stock Option shall be exercisable prior to
the first anniversary date of the granting of the Option. The Committee may
provide that a Stock Option shall vest over a period of future service at a
rate specified at the time of grant, or that the Stock Option is
exercisable only in installments. If the Committee provides, in its sole
discretion, that any Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time at or
after grant, in whole or in part, based on such factors as the Committee
shall determine in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
restrictions apply under Section 5(c), Stock Options may be exercised in
whole or in part at any time during the option period, by giving written
notice of exercise to the Corporation specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the
purchase price, either by check, note, or such other instrument as the
Committee may accept. As determined by the Committee, in its sole
discretion, at or (except in the case of an Incentive Stock Option) after
grant, payment in full or in part may also be made in the form of shares of
Common Stock already owned by the optionee or, in the case of a
Non-Qualified Stock Option, shares of Restricted Stock or shares subject to
such Option or another award hereunder (in each case valued at the Fair
Market Value of the Common Stock on the date the Option is exercised). If
payment of the exercise price is made in part or in full with Common Stock,
the Committee may award to the employee a new Stock Option to replace the
Common Stock that was surrendered. If payment of the option exercise price
of a Non-Qualified Stock Option is made in whole or in part in the form of
Restricted Stock, such Restricted Stock (and any replacement shares
relating thereto) shall remain (or be) restricted in accordance with the
original terms of the Restricted Stock award in question, and any
additional Common Stock received upon the exercise shall be subject to the
same forfeiture restrictions, unless otherwise determined by the Committee,
in its sole discretion, at or after grant. No shares of Common Stock shall
be issued until full payment therefor has been made. An optionee shall
generally have the rights to dividends or other rights of a shareholder
with respect to shares subject to the Option when the optionee has given
written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in Section 13(a).
(e) Transferability of Options. No Non-Qualified Stock Option shall be
transferable by the optionee without the prior written consent of the
Committee other than (i) transfers by the Optionee 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. No Incentive Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and all Incentive Stock Options shall be exercisable, during
the optionee's lifetime, only by the optionee.
(f) Bonus for Taxes. In the case of a Non-Qualified Stock Option or an
optionee who elects to make a disqualifying disposition (as defined in
Section 422(a)(1) of the Code) of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option, the Committee in its discretion may
award at the time of grant or thereafter
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the right to receive upon exercise of such Stock Option a cash bonus
calculated to pay part or all of the federal and state, if any, income tax
incurred by the optionee upon such exercise.
(g) Termination by Death. Subject to Section 5(k), if an optionee's
employment by the Corporation and any Subsidiary or (except in the case of
an Incentive Stock Option) Affiliate terminates by reason of death, any
Stock Option held by such optionee may thereafter be exercised, to the
extent such option was exercisable at the time of death or (except in the
case of an Incentive Stock Option) on such accelerated basis as the
Committee may determine at or after grant (or except in the case of an
Incentive Stock Option, as may be determined in accordance with procedures
established by the Committee) by the legal representative of the estate or
by the legatee of the optionee under the will of the optionee, for a period
of one year (or such other period as the Committee may specify at or after
grant) from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is the shorter.
(h) Termination by Reason of Disability. Subject to Section 5(k), if an
optionee's employment by the Corporation and any Subsidiary or (except in
the case of an Incentive Stock Option) Affiliate terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
termination or (except in the case of an Incentive Stock Option) on such
accelerated basis as the Committee may determine at or after grant (or,
except in the case of an Incentive Stock Option, as may be determined in
accordance with procedures established by the Committee), for a period of
(i) three years (or such other period as the Committee may specify at or
after grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter, in the case of a Non-Qualified Stock Option and (ii) one year from
the date of termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is shorter, in the case of an
Incentive Stock Option; provided however, that, if the optionee dies within
the period specified in (i) above (or other such period as the committee
shall specify at or after grant), any unexercised Non-Qualified Stock
Option held by such optionee shall thereafter be exercisable to the extent
to which it was exercisable at the time of death for a period of twelve
months from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is shorter. In the event of
termination of employment by reason of Disability, if an Incentive Stock
Option is exercised after the expiration of the exercise period applicable
to Incentive Stock Options, but before the expiration of any period that
would apply if such Stock Option were a Non-Qualified Stock Option, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.
(i) Termination by Reason of Retirement. Subject to Section 5(k), if an
optionee's employment by the Corporation and any Subsidiary or (except in
the case of an Incentive Stock Option) Affiliate terminates by reason of
Normal or Early Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable
at the time of such Retirement or (except in the case of an Incentive Stock
Option) on such accelerated basis as the Committee may determine at or
after grant (or, except in the case of an Incentive Stock Option, as may be
determined in accordance with procedures established by the Committee), for
a period of (i) three years (or such other period as the Committee
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may specify at or after grant) from the date of such termination of
employment or the expiration of the stated term of such Stock Option,
whichever period is the shorter, in the case of a Non-Qualified Stock
Option and (ii) three months from the date of such termination of
employment or the expiration of the stated term of such Stock Option,
whichever period is the shorter, in the event of an Incentive Stock Option;
provided however, that, if the optionee dies within the period specified in
(i) above (or other such period as the Committee shall specify at or after
grant), any unexercised Non-Qualified Stock Option held by such optionee
shall thereafter be exercisable to the extent to which it was exercisable
at the time of death for a period of twelve months from the date of such
death or until the expiration of the stated term of such Stock Option,
whichever period is shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise period applicable to Incentive Stock Options,
but before the expiration of the period that would apply if such Stock
Option were a Non-Qualified Stock Option, the option will thereafter be
treated as a Non-Qualified Stock Option.
(j) Other Termination. Subject to Section 5(k), unless otherwise
determined by the Committee (or pursuant to procedures established by the
Committee) at or (except in the case of an Incentive Stock Option) after
grant, if an optionee's employment by the Corporation and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate is
involuntarily terminated for any reason other than death, Disability or
Normal or Early Retirement, the Stock Option shall thereupon terminate,
except that such Stock Option may be exercised, to the extent otherwise
then exercisable, for the lesser of three months or the balance of such
Stock Option's term if the involuntary termination is without Cause. For
purposes of this Plan, "Cause" means (i) a felony conviction of a
participant or the failure of a participant to contest prosecution for a
felony or (ii) a participant's willful misconduct or dishonesty that is
directly and materially harmful to the business or reputation of the
Corporation or any Subsidiary or Affiliate. If an optionee voluntarily
terminates employment with the Corporation and any Subsidiary or (except in
the case of an Incentive Stock Option) Affiliate (except for Disability,
Normal or Early Retirement), the Stock Option shall thereupon terminate;
provided, however, that the Committee at grant or (except in the case of an
Incentive Stock Option) thereafter may extend the exercise period in this
situation for the lesser of three months or the balance of such Stock
Option's term.
(k) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options
shall be interpreted, amended, or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the
optionee(s) affected, to disqualify any Incentive Stock Option under such
Section 422. No Incentive Stock Option shall be granted to any participant
under the Plan if such grant would cause the aggregate Fair Market Value
(as of the date the Incentive Stock Option is granted) of the Common Stock
with respect to which all Incentive Stock Options are exercisable for the
first time by such participant during any calendar year (under all such
plans of the Company and any Subsidiary) to exceed $100,000. To the extent
permitted under Section 422 of the Code or the
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applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:
(i) if (x) a participant's employment is terminated by reason of death,
Disability, or Retirement and (y) the portion of any Incentive Stock
Option that is otherwise exercisable during the post-termination period
specified under Section 5(g), (h) or (i), applied without regard to the
$100,000 limitation contained in Section 422(d) of the Code, is greater
than the portion of such Option that is immediately exercisable as an
"Incentive Stock Option" during such post-termination period under
Section 422, such excess shall be treated as a Non-Qualified Stock
Option; and
(ii) if the exercise of an Incentive Stock Option is accelerated by
reason of a Change in Control, any portion of such Option that is not
exercisable as an Incentive Stock Option by reason of the $100,000
limitation contained in Section 422(d) of the Code shall be treated as a
Non-Qualified Stock Option.
(l) Buyout Provisions. The Committee may at any time offer to buy out an
Option previously granted for a payment in cash, Common Stock, or
Restricted Stock, based on such terms and conditions as the Committee shall
establish and communicate to the optionee at the time that such offer is
made.
(m) Settlement Provisions. If the option agreement so provides at grant or
(except in the case of an Incentive Stock Option) is amended after grant
and prior to exercise to so provide (with the optionee's consent), the
Committee may require that all or part of the shares to be issued with
respect to the spread value of an exercised Option take the form of
Restricted Stock, which shall be valued on the date of exercise on the
basis of the Fair Market Value (as determined by the Committee) of such
Restricted Stock determined without regards to the forfeiture restrictions
involved.
(n) Performance and Other Conditions. 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 in the option agreement, any such conditional
Option shall vest six months prior to its expiration if the conditions to
exercise have not theretofore been satisfied.
(o) Termination of Consultant. The Committee shall have discretion in
determining when a termination under Sections 5(g), (h), (i) or (j) above
shall occur with respect to a consultant's relationship with the
Corporation.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in conjunction
with all or part of any Stock Option granted under the Plan. In the case of a
Non-Qualified Stock Option, such rights may be granted either at or after the
time of the grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the grant of such Stock
Option. A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject to such
provisions as the Committee may specify at grant where a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related Stock Option. A Stock Appreciation Right may be exercised by an
optionee, subject to Section 6(b), in accordance with the procedures established
by the Committee for such
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purpose. Upon such exercise, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock Options relating to
exercised Stock Appreciation Rights shall no longer be exercisable to the extent
that the related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate shall
be exercisable in accordance with the provisions of Section 5 and this
Section 6 of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be
entitled to receive an amount in cash and/or shares of Common Stock equal
in value to the excess of the Fair Market Value of one share of Common
Stock over the option price per share specified in the related Stock Option
multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment. When payment is to be made in
shares, the number of shares to be paid shall be calculated on the basis of
the Fair Market Value of the shares on the date of exercise. When payment
is to be made in cash, such amount shall be calculated on the basis of the
Fair Market Value of the Common Stock on the date of exercise.
(iii) Stock Appreciation Rights shall be transferable only when and to the
extent that the underlying Stock Option would be transferable under Section
5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or
part thereof to which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth
in Section 3 of the Plan on the number of shares of Common Stock to be
issued under the Plan.
(v) The Committee, in its sole discretion, may also provide that, in the
event of a Change in Control and/or a Potential Change in Control, the
amount to be paid upon the exercise of a Stock Appreciation Right shall be
based on the Change in Control Price, subject to such terms and conditions
as the Committee may specify at grant.
(vi) The Committee may condition the exercise of any Stock Appreciation
Right upon the attainment of specified performance goals or other factors
as the Committee may determine, in its sole discretion.
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the eligible persons
to whom, and the time or times at which, grants of Restricted Stock will be
made, the number of shares of Restricted Stock to be awarded to any person, the
price (if any) to be paid by the recipient of Restricted Stock (subject to
Section 7(b)), the time or times within which such awards may be subject to
forfeiture, and the other terms, restrictions and conditions of the awards in
addition to those set forth in Section 7(c). The Committee may condition the
grant of Restricted Stock upon the attainment of specified performance goals or
such
<PAGE> 11
other factors as the Committee may determine, in its sole discretion. The
provisions of Restricted Stock awards need not be the same with respect to each
recipient.
(b) Awards and Certificates. The prospective recipient of a Restricted Stock
award shall not have any rights with respect to such award, unless and until
such recipient has executed an agreement evidencing the award and has delivered
a fully executed copy thereof to the Corporation, and has otherwise complied
with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be established
by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of 60 days
(or such shorter period as the Committee may specify at grant) after the
award date, by executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock award shall be issued a
stock certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such participant (or a
transferee permitted by Section 13(h) hereof), and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such award.
(iv) The Committee shall require that the stock certificates evidencing
such shares be held in custody by the Corporation until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the participant shall have delivered a stock power, endorsed in
blank, relating to the shares of Common Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) In accordance with the provisions of this Plan and the award agreement,
during a period set by the Committee commencing with the date of such award
(the "Restriction Period"), the participant shall not be permitted to sell,
transfer, pledge, assign, or otherwise encumber shares of Restricted Stock
awarded under the Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such restrictions in installments
and may accelerate or waive such restrictions, in whole or in part, based
on service, performance, such other factors or criteria as the Committee
may determine in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i), the
participant shall have, with respect to the shares of Restricted Stock, all
of the rights of a shareholder of the Corporation, including the right to
vote the shares, and the right to receive any cash dividends. The
Committee, in its sole discretion, as determined at the time of award, may
permit or require the payment of cash dividends to be deferred and, if the
Committee so determines, reinvested, subject to Section 13(e), in
additional Restricted Stock to the extent shares are available under
Section 3, or otherwise reinvested. Pursuant to Section 3 above, stock
dividends issued with respect to Restricted Stock shall be treated as
additional shares of Restricted Stock that are subject to the same
restrictions and other terms and conditions that apply to the shares with
respect to which such dividends are issued. If the Committee so
<PAGE> 12
determines, the award agreement may also impose restrictions on the right
to vote and the right to receive dividends.
(iii) Subject to the applicable provisions of the award agreement and this
Section 7, upon termination of a participant's employment with the
Corporation and any Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction will vest, or
be forfeited, in accordance with the terms and conditions established by
the Committee at or after grant.
(iv) If and when the Restriction Period expires without a prior forfeiture
of the Restricted Stock subject to such Restriction Period, certificates
for an appropriate number of unrestricted shares shall be delivered to the
participant (or a transferee permitted by Section 13(h) hereof) promptly.
(d) Minimum Value Provisions. In order to better ensure that award payments
actually reflect the performance of the Corporation and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Common Stock to the recipient of a restricted stock award, subject to
such performance, future service, deferral, and other terms and conditions as
may be specified by the Committee.
SECTION 8. OTHER STOCK-BASED AWARDS.
(a) Administration. Other Stock-Based Awards, including, without limitation,
performance shares, convertible preferred stock, convertible debentures,
exchangeable securities and Common Stock 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 Stock Options, Stock Appreciation Rights, or
Restricted Stock granted under the Plan and cash awards made outside of the
Plan; provided that no such Other Stock-Based Awards may be granted in tandem
with Incentive Stock Options if that would cause such Stock Options not to
qualify as Incentive Stock Options pursuant to Section 422 of the Code. Subject
to the provisions of the Plan, the Committee shall have authority to determine
the persons to whom and the time or times at which such awards shall be made,
the number of shares of Common Stock to be awarded pursuant to such awards, and
all other conditions of the awards. The Committee may also provide for the grant
of Common Stock upon the completion of a specified performance period. The
provisions of Other Stock-Based Awards need not be the same with respect to each
recipient.
(b) Terms and Conditions. Other Stock-Based Awards made pursuant to this
Section 8 shall be subject to the following terms and conditions:
(i) Shares subject to awards under this Section 8 and the award agreement
referred to in Section 8(b)(v) below, may not be sold, assigned,
transferred, pledged, or otherwise encumbered prior to the date on which
the shares are issued, or, if later, the date on which any applicable
restriction, performance, or deferral period lapses.
(ii) Subject to the provisions of this Plan and the award agreement and
unless otherwise determined by the Committee at grant, the recipient of an
award under this Section 8 shall be entitled to receive, currently or on a
deferred basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the award, as determined at
the time of the award by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall
<PAGE> 13
be deemed to have been reinvested in additional shares of Common Stock or
otherwise reinvested.
(iii) Any award under Section 8 and any shares of Common Stock covered by
any such award shall vest or be forfeited to the extent so provided in the
award agreement, as determined by the Committee in its sole discretion.
(iv) In the event of the participant's Retirement, Disability, or death, or
in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or all of an
award under this Section 8.
(v) Each award under this Section 8 shall be confirmed by, and subject to
the terms of, an agreement or other instrument by the Corporation and the
participant.
(vi) Common Stock (including securities convertible into Common Stock)
issued on a bonus basis under this Section 8 may be issued for no cash
consideration. Common Stock (including securities convertible into Common
Stock) purchased pursuant to a purchase right awarded under this Section 8
shall be priced at least 85% of the Fair Market Value of the Common Stock
on the date of grant.
SECTION 9. AWARDS TO OUTSIDE DIRECTORS.
(a) The provisions of this Section 9 shall apply only to awards to Outside
Directors in accordance with this Section 9. The Committee shall have no
authority to determine the timing of or the terms or conditions of any award
under this Section 9.
(b) On the date of his or her initial election or appointment to the Board, each
Outside Director will receive a Non-Qualified Stock Option to purchase 11,250
shares of Common Stock (an "Initial Grant"). The exercise price per share of
each option granted pursuant to this Section 9(b) shall equal the Fair Market
Value per share of Common Stock on the date of grant. Such option shall vest and
become exercisable in five equal, annual installments beginning on the first
anniversary of the date of grant.
(c) On the date of each Annual Meeting of Shareholders of the Corporation
beginning with the Annual Meeting of Shareholders in 2000, unless this Plan has
been previously terminated, each Outside Director who will continue as a
director following such meeting will receive a Non-Qualified Stock Option to
purchase 3,500 shares of Common Stock; provided, that no Outside Director shall
be entitled to receive options granted pursuant to this Section 9(c) until such
Outside Director has served as a director of the Corporation for a period of at
least eleven months prior to the date of the Annual Meeting of Shareholders at
which options are to be granted. The exercise price per share of each option
granted pursuant to this Section 9(c) shall equal the Fair Market Value per
share of Common Stock on the date of grant. Such option shall vest and become
exercisable, with respect to all shares, six months following the date of grant.
(d) No Outside Director Option shall be exercisable prior to vesting. Each
Outside Director Option shall expire, if unexercised, on the tenth anniversary
of the date of grant. The exercise price may be paid in cash or in shares of
Common Stock, including shares of Common Stock subject to the Outside Director
Option.
(e) Outside Director Options shall not be transferable without the prior written
consent of the Board other than (i) transfers by the optionee to a member of his
or her Immediate
<PAGE> 14
Family or a trust for the benefit of optionee or a member of his or her
Immediate Family, or (ii) transfers by will or by the laws of descent and
distribution.
(f) Grantees of Outside Director Options shall enter into a stock option
agreement with the Corporation setting forth the exercise price and other terms
as provided herein.
(g) Upon termination of an Outside Director's service as a director of the
Corporation, (i) all Outside Director Options theretofore exercisable and held
by such Outside Director will remain vested and exercisable through the
expiration date and (ii) all remaining Outside Director Options held by such
Outside Director will become exercisable and vested and remain so through the
expiration date to the extent of any shares that would have become exercisable
and vested within a period of less than twelve months following the date of
termination of service. Any unvested Outside Director Options held by the
Outside Director on the date of termination of service will be forfeited to the
extent of any shares that would not have become vested and exercisable until at
least twelve months from the date of termination of service. The Board may, in
its sole discretion, elect to accelerate the vesting of any Outside Director
Options in connection with the termination of service of any individual Outside
Director.
(h) Outside Director Options shall be subject to Section 10. The number of
shares and the exercise price per share of each Outside Director Option
theretofore awarded shall be adjusted automatically in the same manner as the
number of shares and the exercise price for Stock Options under Section 3(c)
hereof at any time that Stock Options are adjusted as provided in Section 3(c).
The number of shares underlying Outside Director Options to be awarded in the
future shall be adjusted automatically in the same manner as the number of
shares underlying outstanding Stock Options are adjusted under Section 3(c)
hereof at any time that Stock Options are adjusted under Section 3(c) hereof.
(i) The Board, in its sole discretion, may determine to reduce the size of any
Outside Director Option prior to grant or to postpone the vesting and
exercisability of any Outside Director Option prior to grant.
SECTION 10. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 10(b); or
(2) a "Potential Change in Control" as defined in Section 10(c), but only
if and to the extent so determined by the Committee or the Board at or
after grant (subject to any right of approval expressly reserved by the
Committee or the Board at the time of such determination),
(i) Subject to the limitations set forth below in this Section 10(a),
the following acceleration provisions shall apply:
(a) Any Stock Appreciation Rights, any Stock Option or Outside
Director Option awarded under the Plan not previously exercisable
and vested shall become fully exercisable and vested.
(b) The restrictions applicable to any Restricted Stock and Other
Stock-Based Awards, in each case to the extent not already vested
under the Plan, shall lapse and such shares and awards shall be
deemed fully vested.
<PAGE> 15
(ii) Subject to the limitations set forth below in this Section 10(a),
the value of all outstanding Stock Options, Stock Appreciation Rights,
Restricted Stock, Outside Director Options and Other Stock-Based Awards,
in each case to the extent vested, shall, unless otherwise determined
Board or by the Committee in its sole discretion prior to any Change in
Control, be cashed out on the basis of the "Change in Control Price" as
defined in Section 10(d) as of the date such Change in Control or such
Potential Change in Control is determined to have occurred or such other
date as the Board or Committee may determine prior to the Change in
Control provided, however, that this Section 10(a)(ii) shall have no
effect if it would preclude the pooling method of accounting for the
specific transaction that resulted in a Change in Control (if the
pooling method of accounting is proposed for such a transaction).
(iii) The Board or the Committee may impose additional conditions on the
acceleration or valuation of any award in the award agreement.
(b) Definition of Change in Control. For purposes of Section 10(a), a "Change
in Control" means the happening of any of the following:
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Exchange Act, other than the Corporation or a wholly-owned
subsidiary thereof or any employee benefit plan of the Corporation or any
of its Subsidiaries, becomes the beneficial owner of the Corporation's
securities having 35% or more of the combined voting power of the then
outstanding securities of the Corporation that may be cast for the election
of directors of the Corporation (other than as a result of an issuance of
securities initiated by the Corporation in the ordinary course of
business); or
(ii) as the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sales of assets or contested
election, or any combination of the foregoing transactions, less than a
majority of the combined voting power of the then outstanding securities of
the Corporation or any successor corporation or entity entitled to vote
generally in the election of the directors of the Corporation or such other
corporation or entity after such transaction are held in the aggregate by
the holders of the Corporation's securities entitled to vote generally in
the election of directors of the Corporation immediately prior to such
transaction; or
(iii) during any period of two consecutive years, individuals who at the
beginning of any such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Corporation's shareholders, of each director
of the Corporation first elected during such period was approved by a vote
of at least two-thirds of the directors of the Corporation then still in
office who were directors of the Corporation at the beginning of any such
period.
(c) Definition of Potential Change in Control. For purposes of Section 10(a), a
"Potential Change in Control" means the happening of any one of the following:
(i) The approval by shareholders of an agreement by the Corporation, the
consummation of which would result in a Change in Control of the
Corporation as defined in Section 10(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly, by
any entity, person or group (other than the Corporation or a Subsidiary or
any Corporation
<PAGE> 16
employee benefit plan (including any trustee of such plan acting as such
trustee)) of securities of the Corporation representing 5% or more of the
combined voting power of the Corporation's outstanding securities and the
adoption by the Committee of a resolution to the effect that a Potential
Change in Control of the Corporation has occurred for purposes of this
Plan.
(d) Change in Control Price. For purposes of this Section 10, "Change in
Control Price" means the highest price per share paid in any transaction
reported on NASDAQ 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 of the Corporation at any
time during the 60 day period immediately preceding the occurrence of the Change
in Control (or, where applicable, the occurrence of the Potential Change in
Control event), in each case as determined by the Committee except that, in the
case of Incentive Stock Options and Stock Appreciation Rights relating to
Incentive Stock Options, such price shall be based only on transactions reported
for the date on which the optionee exercises such Stock Appreciation Rights or,
where applicable, the date on which a cash out occurs under Section 10(a)(ii).
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may at any time amend, alter or discontinue the Plan; provided,
however, that, without the approval of the Corporation's shareholders, no
amendment or alteration may be made that would (a) except as a result of the
provisions of Section 3(c) of the Plan, increase the maximum number of shares
that may be issued under the Plan or increase the Section 162(m) Maximum, (b)
change the provisions governing Incentive Stock Options except as required or
permitted under the provisions governing incentive stock options under the Code,
(c) amend Section 9 hereof so as to increase the size of any award (other than
as contemplated by Section 3(c) and Section 9(i) hereof) or otherwise materially
increase the benefits to Outside Directors under Section 9 hereof, or (d) make
any change for which applicable law or regulatory authority (including the
regulatory authority of NASDAQ or any other market or exchange on which the
Common Stock is traded) would require shareholder approval or for which
shareholder approval would be required to secure full deductibility of
compensation received under the Plan under Section 162(m) of the Code. No
amendment, alteration, or discontinuation shall be made that would impair the
rights of an optionee or participant under a Stock Option, Stock Appreciation
Right, Restricted Stock, Other Stock-Based Award or Outside Director Option
theretofore granted, without the participant's consent. The Committee may amend
the terms of any Stock Option or other award theretofore granted, prospectively
or retroactively, but, subject to Section 3 above, no such amendment shall
impair the rights of any holder without the holder's consent.
SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant or
optionee by the Corporation, nothing contained herein shall give any such
participant or optionee any rights that are greater than those of a general
creditor of the Corporation. 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
<PAGE> 17
otherwise determines with the consent of the affected participant, the existence
of such trusts or other arrangements is consistent with the "unfunded" status of
the Plan.
SECTION 13. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a Stock
Option or other award under the Plan to represent to and agree with the
Corporation in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend that the Committee deems appropriate to reflect any
restrictions on transfer. All certificates for shares of Common Stock or other
securities delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(b) 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.
(c) The adoption of the Plan shall not confer upon any employee of the
Corporation or any Subsidiary or Affiliate any right to continued employment
with the Corporation or a Subsidiary or Affiliate, as the case may be, nor shall
it interfere in any way with the right of the Corporation or a Subsidiary or
Affiliate to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includible in the
gross income of the participant for Federal income tax purposes with respect to
any award under the Plan, the participant shall pay to the Corporation, or make
arrangements satisfactory to the Committee regarding the payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such amount. The Committee may require withholding obligations to be
settled with Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the Corporation
under the Plan shall be conditional on such payment or arrangements and the
Corporation and its Subsidiaries or Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents in
additional Restricted Stock (or other types of Plan awards) at the time of any
dividend payment shall only be permissible if sufficient shares of Common Stock
are available under Section 3 for such reinvestment (taking into account then
outstanding Stock Options and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder shall be governed
by and construed in accordance with the laws of the State of Tennessee.
(g) The members of the Committee and the Board shall not be liable to any
employee or other person with respect to any determination made hereunder in a
manner that is not inconsistent with their legal obligations as members of the
Board. In addition to such other rights of indemnification as they may have as
directors or as members of the Committee,
<PAGE> 18
the members of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Corporation) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within 60 days after institution of any such action,
suit or proceeding, the Committee member shall in writing offer the Corporation
the opportunity, at its own expense, to handle and defend the same.
(h) In addition to any other restrictions on transfer that may be applicable
under the terms of this Plan or the applicable award agreement, no Stock Option,
Stock Appreciation Right, Restricted Stock award, or Other Stock-Based Award or
other right issued under this Plan is transferable by the participant without
the prior written consent of the Committee, or, in the case of an Outside
Director, the Board, other than (i) transfers by an optionee 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. The designation of a beneficiary will not constitute a
transfer.
(i) The Committee may, at or after grant, condition the receipt of any payment
in respect of any award or the transfer of any shares subject to an award on the
satisfaction of a six-month holding period, if such holding period is required
for compliance with Section 16 under the Exchange Act.
SECTION 14. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of May 4, 2000 (the "Effective Date"), provided
that it has been approved by the Board of the Corporation and by a majority of
the votes cast by the holders of the Corporation's Common Stock.
SECTION 15. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Restricted Stock Award, Other
Stock-Based Award or Outside Director Option award shall be granted pursuant to
the Plan on or after the tenth anniversary of the Effective Date of the Plan,
but awards granted prior to such tenth anniversary may be extended beyond that
date.
