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WHITEHALL JEWELLERS, INC.
1997 LONG-TERM INCENTIVE PLAN, AS AMENDED
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1997 Long-Term Incentive Plan (the
"Plan") of Whitehall Jewellers, Inc. (the "Company"), and its subsidiaries from
time to time (individually a "Subsidiary" and collectively the "Subsidiaries"),
are (a) to align the interests of the Company's stockholders and the recipients
of awards under this Plan by increasing the proprietary interest of such
recipients in the Company's growth and success, (b) to advance the interests of
the Company by attracting and retaining officers and other key employees, and
well-qualified persons who are not officers or employees of the Company
("non-employee directors") for service as directors of the Company and (c) to
motivate such employees and non-employee directors to act in the long-term best
interests of the Company's stockholders. For purposes of this Plan, references
to employment by the Company shall also mean employment by a Subsidiary.
1.2 CERTAIN DEFINITIONS.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed to
such terms in Rule 12b-2, as in effect on the effective date of this Plan, under
the Exchange Act; provided, however, that no director or officer of the Company
shall be deemed an Affiliate or Associate of any other director or officer of
the Company solely as a result of his or her being a director or officer of the
Company.
"AGREEMENT" shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.
"BENEFICIAL OWNER" (including the terms "BENEFICIALLY OWN" and "BENEFICIAL
OWNERSHIP"), when used with respect to any Person, shall be deemed to include
any securities which:
(a) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly (determined as provided in Rule
13d-3, as in effect on the effective date of this Plan, under the Exchange
Act);
(b) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has:
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction
of any conditions, or both) pursuant to any written or oral agreement,
arrangement or understanding (other than customary agreements with and
among underwriters and selling group members with respect to a bona fide
public offering of securities), upon the exercise of any options,
warrants, rights or conversion or exchange privileges or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or
(ii) the right to vote pursuant to any written or oral agreement,
arrangement or understanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to Beneficially Own, any security
otherwise subject to this item (ii) if such agreement, arrangement or
understanding to vote (1) arises solely from a revocable proxy or
consent given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (2) is not also then reportable
by such Person on Schedule 13D (or any comparable or successor report
then in effect) under the Exchange Act; or
(iii) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary agreements
with and among underwriters and selling group members with respect to a
bona fide public offering of securities); or
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(c) are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or
Associates has any written or oral agreement, arrangement or understanding
(other than customary agreements with and among underwriters and selling
group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to item (ii) of subparagraph (b) of the first
paragraph of this definition) or disposing of any securities of the
Company.
Notwithstanding the first paragraph of this definition, no director or
officer of the Company shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," shares of Common Stock or other securities of the Company
beneficially owned by any other director or officer of the Company solely as a
result of his or her being a director or officer of the Company.
"BOARD" shall mean the Board of Directors of the Company.
"BONUS STOCK" shall mean shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this Plan.
"CAUSE" shall mean commission of a felony involving moral turpitude or any
material breach of any statutory or common law duty to the Company or a
Subsidiary involving willful malfeasance.
"CHANGE IN CONTROL" shall have the meaning set forth in Section 6.8(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Committee designated by the Board, consisting of
two or more members of the Board, each of whom shall be (a) a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act and (b) an
"outside director" within the meaning of Section 162(m) of the Code, subject to
any transition rules applicable to the definition of outside director.
"COMMON STOCK" shall mean the common stock, $.001 par value, of the
Company.
"COMPANY" has the meaning specified in Section 1.1.
"DIRECTORS OPTIONS" shall have the meaning set forth in Section 5.1.
"DISABILITY" shall mean the inability for a continuous period of at least
six months of the holder of an award to perform substantially such holder's
duties and responsibilities, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXEMPT PERSON" shall mean each of Hugh M. Patinkin, John R. Desjardins,
Matthew M. Patinkin and each Affiliate thereof.
"FAIR MARKET VALUE" shall mean the average of the high and low transaction
prices of a share of Common Stock as reported in the National Association of
Securities Dealers Automated Quotation National Market System on the date as of
which such value is being determined, or, if the Common Stock is listed on a
national securities exchange, the average of the high and low transaction prices
of a share of Common Stock on the principal national stock exchange on which the
Common Stock is traded on the date as of which such value is being determined,
or, if there shall be no reported transactions for such date, on the next
preceding date for which transactions were reported; provided, however, that if
Fair Market Value for any date cannot be so determined, Fair Market Value shall
be determined by the Committee by whatever means or method as the Committee, in
the good faith exercise of its discretion, shall at such time deem appropriate.
"FREE-STANDING SAR" shall mean an SAR which is not issued in tandem with,
or by reference to, an option, which entitles the holder thereof to receive,
upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
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Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.
"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.
"INCUMBENT BOARD" shall have the meaning set forth in Section 6.8(b)(ii)
hereof.
"MATURE SHARES" shall mean shares of Common Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (a) has held for at least six months or (b) has purchased on
the open market.
"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is not
an officer or employee of the Company or any Subsidiary (except in the
definition of Committee, in which case "Non-Employee Director" shall have the
meaning set forth in Rule 16b-3 under the Exchange Act).
"NON-STATUTORY STOCK OPTION" shall mean a stock option which is not an
Incentive Stock Option.
"PERFORMANCE MEASURES" shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (a) as a condition to the
exercisability of all or a portion of an option or SAR or (b) during the
applicable Restriction Period or Performance Period as a condition to the
holder's receipt, in the case of a Restricted Stock Award, of the shares of
Common Stock subject to such award, or, in the case of a Performance Share
Award, of payment with respect to such award. Such criteria and objectives may
include one or more of the following: the attainment by a share of Common Stock
of a specified Fair Market Value for a specified period of time, earnings per
share, return to stockholders (including dividends), return on equity, earnings
of the Company, revenues, market share, cash flows or cost reduction goals, or
any combination of the foregoing. If the Committee desires that compensation
payable pursuant to any award subject to Performance Measures be "qualified
performance-based compensation" within the meaning of section 162(m) of the
Code, the Performance Measures shall be established by the Committee no later
than the end of the first quarter of the Performance Period or Restriction
Period, as applicable (or such other time designated by the Internal Revenue
Service).
"PERFORMANCE PERIOD" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.
"PERFORMANCE SHARE" shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to receive
one share of Common Stock, which may be Restricted Stock, or in lieu thereof,
the Fair Market Value of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.
"PERSON" shall mean any individual, firm, corporation, partnership or other
entity, and shall include any successor (by merger or otherwise) of any of the
forgoing.
"RESTRICTED STOCK" shall mean shares of Common Stock which are subject to a
Restriction Period.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under this
Plan.
"RESTRICTION PERIOD" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.
"SAR" shall mean a stock appreciation right which may be a Free-Standing
SAR or a Tandem SAR.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.
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"TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.
"TAX DATE" shall have the meaning set forth in Section 6.5.
"TEN PERCENT HOLDER" shall have the meaning set forth in Section 2.1(a).
1.3 ADMINISTRATION. This Plan shall be administered by the Committee.
Subject to Section 6.1, any one or a combination of the following awards may be
made under this Plan to eligible persons: (a) options to purchase shares of
Common Stock in the form of Incentive Stock Options or Non-Statutory Stock
Options, (b) in the form of Tandem SARs or Free-Standing SARs, (c) Stock Awards
in the form of Restricted Stock or Bonus Stock and (d) Performance Shares. The
Committee shall, subject to the terms of this Plan, select eligible persons for
participation in this Plan and determine the form, amount and timing of each
award to such persons and, if applicable, the number of shares of Common Stock,
the number of SARs and the number of Performance Shares subject to such an
award, the exercise price or base price associated with the award, the time and
conditions of exercise or settlement of the award and all other terms and
conditions of the award, including, without limitation, the form of the
Agreement evidencing the award. The Committee shall, subject to the terms of
this Plan, interpret this Plan and the application thereof, establish rules and
regulations it deems necessary or desirable for the administration of this Plan
and may impose, incidental to the grant of an award, conditions with respect to
the award, such as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be conclusive and
binding on all parties.
The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other executive officer of the Company as the
Committee deems appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to (a) the grant of an award under
this Plan to any person who is a "covered employee" within the meaning of
Section 162(m) of the Code or who, in the Committee's judgment, is likely to be
a covered employee at any time during the period an award hereunder to such
employee would be outstanding or (b) the selection for participation in this
Plan of an officer or other person subject to Section 16 of the Exchange Act or
decisions concerning the timing, pricing or amount of an award to such an
officer or other person.
No member of the Board of Directors or Committee, and neither the Chief
Executive Officer nor any other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interpretation, construction or determination made in connection with
this Plan in good faith, and the members of the Board of Directors and the
Committee and the President and Chief Executive Officer or other executive
officer shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law, except as otherwise may
be provided in the Company's Certificate of Incorporation and/or By-laws, as the
same may be amended or restated from time to time, and under any directors' and
officers' liability insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (a) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (b) acts approved in
writing by a majority of the members of the Committee without a meeting.
Notwithstanding anything to the contrary herein, any grant of awards to a
Non-Employee Director shall require the approval of the Board.
1.4 ELIGIBILITY. Participants in this Plan shall consist of such directors,
officers or other key employees of the Company and its Subsidiaries as the
Committee, in its sole discretion, may select from time to time. The Committee's
selection of a person to participate in this Plan at any time shall not require
the Committee to
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select such person to participate in this Plan at any other time. Non-Employee
Directors shall also be eligible to participate in this Plan in accordance with
Article V.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Sections 6.7 and
6.8, 2,100,000 shares of Common Stock shall be available under this Plan,
reduced by the sum of the aggregate number of shares of Common Stock (a) that
are issued upon the grant of a Stock Award and (b) which become subject to
outstanding options, including Directors' Options, outstanding Free-Standing
SARs and outstanding Performance Shares. To the extent that shares of Common
Stock subject to an outstanding option (other than in connection with the
exercise of a Tandem SAR), Free-Standing SAR or Performance Share are not issued
or delivered by reason of the expiration, termination, cancellation or
forfeiture of such award or by reason of the delivery or withholding of shares
of Common Stock to pay all or a portion of the exercise price of an award, if
any, or to satisfy all or a portion of the tax withholding obligations relating
to an award, then such shares of Common Stock shall again be available under
this Plan.
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of shares of Common Stock with
respect to which options or SARs, Stock Awards or Performance Share Awards, or a
combination thereof may be granted during any calendar year to any person shall
be 300,000 subject to adjustment as provided in Section 6.7.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 STOCK OPTIONS. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Non-Statutory Stock Option. Each Incentive Stock Option shall
be granted within ten years of the effective date of this Plan. To the extent
that the aggregate Fair Market Value (determined as of the date of grant) of
shares of Common Stock with respect to which options designated as Incentive
Stock Options are exercisable for the first time by a participant during any
calendar year (under this Plan or any other plan of the Company, or any parent
or Subsidiary) exceeds the amount (currently $100,000) established by the Code,
such options shall constitute Non-Statutory Stock Options.
Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. To the extent required, the
number of shares of Common Stock subject to an option shall be determined
by the Committee. The purchase price per share of Common Stock purchasable
upon exercise of the option shall be determined by the Committee; provided,
however, that the purchase price per share of Common Stock purchasable upon
exercise of an Option shall not be less than 100% of the Fair Market Value
of a share of Common Stock on the date of grant of such option; provided
further, that if an Incentive Stock Option shall be granted to any person
who, at the time such option is granted, owns capital stock possessing more
than ten percent of the total combined voting power of all classes of
capital stock of the Company (or of any parent or Subsidiary) (a "Ten
Percent Holder"), the purchase price per share of Common Stock shall be the
price (currently 110% of Fair Market Value) required by the Code in order
to constitute an Incentive Stock Option.
(b) Option Period and Exercisability. The period during which an
option may be exercised shall be determined by the Committee; provided,
however, that no Incentive Stock Option shall be exercised later than ten
years after its date of grant; provided further, that if an Incentive Stock
Option shall be granted to a Ten Percent Holder, such option shall not be
exercised later than five years after its date of grant. The Committee may,
in its discretion, establish Performance Measures which shall be satisfied
or met as a condition to the grant of an option or to the exercisability of
all or a portion of an option. The Committee shall determine whether an
option shall become exercisable in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable option, or
portion thereof, may be exercised
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only with respect to whole shares of Common Stock, except that if the
remaining option then exercisable is for less than a whole share, such
remaining amount may be exercised.
(c) Method of Exercise. An option may be exercised (i) by giving
written notice to the Company specifying the number of whole shares of
Common Stock to be purchased and accompanied by payment therefor in full
(or arrangement made for such payment to the Company's satisfaction) either
(1) in cash, (2) by delivery of Mature Shares having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase
price payable by reason of such exercise, (3) by authorizing the Company to
withhold whole shares of Common Stock which would otherwise be delivered
upon exercise of the option having a Fair Market Value, determined as of
the date of exercise, equal to the aggregate purchase price payable by
reason of such exercise, (4) in cash by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of
exercise or (5) a combination of (1), (2) and (3), in each case to the
extent set forth in the Agreement relating to the option, (ii) if
applicable, by surrendering to the Company any Tandem SARs which are
canceled by reason of the exercise of the option and (iii) by executing
such documents as the Company may reasonably request. The Committee shall
have sole discretion to disapprove of an election pursuant to any of
clauses (2)-(5). Any fraction of a share of Common Stock which would be
required to pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the optionee. No certificate
representing Common Stock shall be delivered until the full purchase price
therefor has been paid.
(d) Additional Options. The Committee shall have the authority to
include in any Agreement relating to an option a provision entitling the
optionee to an additional option in the event such optionee exercises the
option represented by such option agreement, in whole or in part, by
delivering previously owned whole shares of Common Stock in payment of the
purchase price in accordance with this Plan and such Agreement. Any such
additional option shall be for a number of shares of Common Stock equal to
the number of delivered shares, shall have a purchase price determined by
the Committee in accordance with this Plan, shall be exercisable on the
terms and subject to the conditions set forth in the Agreement relating to
such additional option.
2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
SARs to such eligible persons as may be selected by the Committee. The Agreement
relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) Number of SARs and Base Price. The number of SARs subject to an
award shall be determined by the Committee. Any Tandem SAR related to an
Incentive Stock Option shall be granted at the same time that such
Incentive Stock Option is granted. The base price of a Tandem SAR shall be
the purchase price per share of Common Stock of the related option. The
base price of a Free-Standing SAR shall be determined by the Committee;
provided, however, that such base price shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date of grant of such
SAR.
(b) Exercise Period and Exercisability. The Agreement relating to an
award of SARs shall specify whether such award may be settled in shares of
Common Stock (including shares of Restricted Stock) or cash or a
combination thereof. The period for the exercise of an SAR shall be
determined by the Committee; provided, however, that no Tandem SAR shall be
exercised later than the expiration, cancellation, forfeiture or other
termination of the related option. The Committee may, in its discretion,
establish Performance Measures which shall be satisfied or met as a
condition to the exercisability of an SAR. The Committee shall determine
whether an SAR may be exercised in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable SAR, or
portion thereof, may be exercised, in the case of a Tandem SAR, only with
respect to whole shares of Common Stock and, in the case of a Free-Standing
SAR, only with respect to a whole number of SARs. If an SAR is exercised
for shares of Restricted Stock, a certificate or certificates representing
such Restricted Stock shall be issued in accordance with Section 3.2(c) and
the holder of such Restricted Stock shall have such rights of a stockholder
of the Company as determined pursuant to Section 3.2(d). Prior to the
exercise of an SAR
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for shares of Common Stock, including Restricted Stock, the holder of such
SAR shall have no rights as a stockholder of the Company with respect to
the shares of Common Stock subject to such SAR.
(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving
written notice to the Company specifying the number of whole SARs which are
being exercised, (ii) by surrendering to the Company any options which are
canceled by reason of the exercise of the Tandem SAR and (iii) by executing
such documents as the Company may reasonably request. A Free-Standing SAR
may be exercised (i) by giving written notice to the Company specifying the
whole number (or if the remaining SAR then exercisable is for less then one
whole share, such remaining amount) of SARs which are being exercised and
(ii) by executing such documents as the Company may reasonably request.
2.3 TERMINATION OF EMPLOYMENT OR SERVICE WITH THE COMPANY.
(a) Disability. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR,
as the case may be, if the employment or service with the Company of the
holder of an option or SAR terminates by reason of Disability, each option
and SAR held by such holder shall be exercisable only to the extent that
such option or SAR, as the case may be, is exercisable on the effective
date of such holder's termination of employment or service and may
thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur
of (i) the date which is three months (or such other period as set forth in
the Agreement relating to such option or SAR) after the effective date of
such holder's termination of employment or service and (ii) the expiration
date of the term of such option or SAR.
(b) Retirement. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR,
as the case may be, if the employment or service with the Company of the
holder of an option or SAR terminates by reason of retirement on or after
age 65 with the consent of the Company, each option and SAR held by such
holder shall be exercisable only to the extent that such option or SAR, as
the case may be, is exercisable on the effective date of such holder's
termination of employment or service and may thereafter be exercised by
such holder (or such holder's legal representative or similar person) until
and including the earliest to occur of (i) the date which is six months (or
such other period as set forth in the Agreement relating to such option or
SAR) after the effective date of such holder's termination of employment or
service and (ii) the expiration date of the term of such option or SAR.
(c) Death. Subject to paragraph (f) below and Section 6.8, and unless
otherwise specified in the Agreement relating to an option or SAR, as the
case may be, if the employment or service with the Company of the holder of
an option or SAR terminates by reason of death, each option and SAR held by
such holder shall be exercisable only to the extent that such option or
SAR, as the case may be, is exercisable on the date of such holder's death,
and may thereafter be exercised by such holder's executor, administrator,
legal representative, beneficiary or similar person, as the case may be,
until and including the earliest to occur of (i) the date which is one year
(or such other period as set forth in the Agreement relating to such option
or SAR) after the date of death and (ii) the expiration date of the term of
such option or SAR.
(d) Other Termination. If the employment or service with the Company
of the holder of an option or SAR is terminated by the Company for Cause,
each option and SAR held by such holder shall terminate automatically on
the effective date of such holder's termination of employment or service.
Subject to paragraph (f) below and Section 6.8, and unless specified in the
Agreement relating to an option or SAR, as the case may be, if the employment or
service with the Company of the holder of an option or SAR terminates for any
reason other than Disability, retirement on or after age 65 with the consent of
the Company, death or Cause, each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR is exercisable on the
effective date of such holder's termination of employment or service and may
thereafter be exercised by such holder (or such holder's legal representative or
similar person) until and including the earliest to occur of (i) the date which
is three months (or such other period as
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set forth in the Agreement relating to such option or SAR) after the effective
date of such holder's termination of employment or service and (ii) the
expiration date of the term of such option or SAR.
(e) Death Following Termination of Employment or Service. Subject to
paragraph (f) below and Section 6.8, and unless otherwise specified in the
Agreement relating to an option or SAR, as the case may be, if the holder
of an option or SAR dies during the three-month period following
termination of employment or service by reason of Disability, or if the
holder of an option or SAR dies during the three-month period following
termination of employment or service by reason of retirement on or after
age 65 with the consent of the Company, or if the holder of an option or
SAR dies during the three-month period following termination of employment
or service for any reason other than Disability or retirement on or after
age 65 with the consent of the Company (or, in each case, such other period
as set forth in the Agreement relating to such option or SAR), each option
and SAR held by such holder shall be fully exercisable and may thereafter
be exercised by the holder's executor, administrator, legal representative,
beneficiary or similar person, as the case may be, until and including the
earliest to occur of (i) the date which is one year (or such other period
as set forth in the Agreement relating to such option or SAR) after the
date of death and (ii) the expiration date of the term of such option or
SAR.
(f) Termination of Employment or Service -- Incentive Stock
Options. Subject to Section 6.8 and unless otherwise specified in the
Agreement relating to the option, if the employment or service with the
Company of a holder of an incentive stock option terminates by reason of
Permanent and Total Disability (as defined in Section 22(e)(3) of the
Code), each incentive stock option held by such optionee shall be
exercisable only to the extent that such option is exercisable on the
effective date of such optionee's termination of employment or service by
reason of Permanent and Total Disability, and may thereafter be exercised
by such optionee (or such optionee's legal representative or similar
person) until and including the earliest to occur of (i) the date which is
three months (or such other period no longer than one year as set forth in
the Agreement relating to such option) after the effective date of such
optionee's termination of employment or service by reason of Permanent and
Total Disability and (ii) the expiration date of the term of such option.
Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates by reason of death, each
Incentive Stock Option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the date of such optionee's death and
may thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such shorter period as set forth
in the Agreement relating to such option)after the date of death and (ii) the
expiration date of the term of such option.
If the employment or service with the Company of the optionee of an
Incentive Stock Option is terminated by the Company for Cause, each Incentive
Stock Option held by such optionee shall terminate automatically on the
effective date of such optionee's termination of employment or service.
Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates for any reason other than
Permanent and Total Disability, death or Cause, each Incentive Stock Option held
by such optionee shall be exercisable only to the extent such option is
exercisable on the effective date of such optionee's termination of employment
or service, and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) the date which is three months after the effective date of such
optionee's termination of employment or service and (ii) the expiration date of
the term of such option.
If the holder of an Incentive Stock Option dies during the three-month
period following termination of employment or service by reason of Permanent and
Total Disability (or such shorter period as set forth in the Agreement relating
to such option), or if the holder of an Incentive Stock Option dies during the
three-month period following termination of employment or service for any reason
other than Permanent and Total Disability, death or Cause, each Incentive Stock
Option held by such optionee shall be exercisable only to the extent such option
is exercisable on the date of the optionee's death and may thereafter be
exercised by the
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<PAGE> 9
optionee's executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is one
year (or such shorter period as set forth in the Agreement relating to such
option) after the date of death and (ii) the expiration date of the term of such
option.
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards
to such eligible persons as may be selected by the Committee. Subject to
adjustment as provided in Sections 6.7 and 6.8 of this Plan, the aggregate
number of shares of Common Stock available under this Plan pursuant to all Stock
Awards shall not exceed 150,000 of the aggregate number of shares of Common
Stock available under this Plan. The Agreement relating to a Stock Award shall
specify whether the Stock Award is a Restricted Stock Award or Bonus Stock
Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Shares and Other Terms. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a
Restricted Stock Award shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Restricted
Stock Award shall provide, in the manner determined by the Committee, in
its discretion, and subject to the provisions of this Plan, for the vesting
of the shares of Common Stock subject to such award (i) if specified
Performance Measures are satisfied or met during the specified Restriction
Period or (ii) if the holder of such award remains continuously in the
employment or service of the Company during the specified Restricted Period
and for the forfeiture of the shares of Common Stock subject to such award
(x) if specified Performance Measures are not satisfied or met during the
specified Restriction Period or (y) if the holder of such award does not
remain continuously in the employment or service of the Company during the
specified Restriction Period.
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.
(c) Share Certificates. During the Restriction Period, a certificate
or certificates representing a Restricted Stock Award shall be registered
in the holder's name and may bear a legend, in addition to any legend which
may be required pursuant to Section 6.6, indicating that the ownership of
the shares of Common Stock represented by such certificate is subject to
the restrictions, terms and conditions of this Plan and the Agreement
relating to the Restricted Stock Award. All such certificates shall be
deposited with the Company, together with stock powers or other instruments
of assignment (including a power of attorney), each endorsed in blank with
a guarantee of signature if deemed necessary or appropriate, which would
permit transfer to the Company of all or a portion of the shares of Common
Stock subject to the Restricted Stock Award in the event such award is
forfeited in whole or in part. Upon termination of any applicable
Restriction Period (and the satisfaction or attainment of applicable
Performance Measures), or upon the grant of a Bonus Stock Award, in each
case subject to the Company's right to require payment of any taxes in
accordance with Section 6.5, a certificate or certificates evidencing
ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise
set forth in the Agreement relating to a Restricted Stock Award, and
subject to the terms and conditions of a Restricted Stock Award, the holder
of such award shall have all rights as a stockholder of the Company,
including, but not limited to, voting rights, the right to receive
dividends and the right to participate in any capital adjustment applicable
to all holders of Common Stock; provided, however, that a distribution with
respect to shares of Common Stock, other than a distribution in cash, shall
be deposited with the Company and shall be subject to the same restrictions
as the shares of Common Stock with respect to which such distribution was
made.
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<PAGE> 10
(e) Awards to Certain Executive Officers. Notwithstanding any other
provision of this Article III, and only to the extent necessary to ensure
the deductibility of the award to the Company, the Fair Market Value of the
number of shares of Common Stock subject to a Stock Award granted to a
"covered employee" within the meaning of Section 162(m) of the Code shall
not exceed $2,000,000 (i) at the time of grant in the case of a Stock Award
granted upon the attainment of Performance Measures or (ii) in the case of
a Restricted Stock Award with Performance measures which shall be satisfied
or met as a condition to the holder's receipt of the shares of Common Stock
subject to such award, on the earlier of (x) the date on which the
Performance Measures are satisfied or met and (y) the date the holder makes
an election under Section 83(b) of the Code.
3.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and unless
otherwise set forth in the Agreement relating to a Restricted Stock Award, if
the employment or service with the Company of the holder of such award
terminates, the portion of such award which is subject to a Restriction Period
shall terminate as of the effective date of such holder's termination of
employment or service shall be forfeited and such portion shall be canceled by
the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
(a) Number of Performance Shares and Performance Measures. The number
of Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in
its discretion, and subject to the provisions of this Plan, for the vesting
of such award, if specified Performance Measures are satisfied or met
during the specified Performance Period, and for the forfeiture of such
award, if specified Performance Measures are not satisfied or met during
the specified Performance Period.
(c) Settlement of Vested Performance Share Awards. The Agreement
relating to a Performance Share Award (i) shall specify whether such award
may be settled in shares of Common Stock (including shares of Restricted
Stock) or cash or a combination thereof and (ii) may specify whether the
holder thereof shall be entitled to receive, on a current or deferred
basis, dividend equivalents, and, if determined by the Committee, interest
on any deferred dividend equivalents, with respect to the number of shares
of Common Stock subject to such award. If a Performance Share Award is
settled in shares of Restricted Stock, a certificate or certificates
representing such Restricted Stock shall be issued in accordance with
Section 3.2(c) and the holder of such Restricted Stock shall have such
rights of a stockholder of the Company as determined pursuant to Section
3.2(d). Prior to the settlement of a Performance Share Award in shares of
Common Stock, including Restricted Stock, the holder of such award shall
have no rights as a stockholder of the Company with respect to the shares
of Common Stock subject to such award.
4.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and unless
otherwise set forth in the Agreement relating to a Performance Share Award, if
the employment or service with the Company of the holder of such award
terminates, the portion of such award which is subject to a Performance Period
on the effective date of such holder's termination of employment or service
shall be forfeited and such portion shall be canceled by the Company.
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<PAGE> 11
V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
5.1 ELIGIBILITY. Each Non-Employee Director shall be granted options to
purchase shares of Common Stock in accordance with this Article V (collectively
"Directors Options"). All options granted under this Article V shall constitute
Non-Statutory Stock Options.
5.2 GRANTS OF STOCK OPTIONS. Each Non-Employee Director may be granted
Non-Statutory Stock Options in the discretion of the Committee (subject to
approval by the Board).
5.3 TERMINATION OF DIRECTORSHIP.
(a) Disability. Subject to Section 6.8, if the holder of an option
granted pursuant to this Article V ceases to be a director of the Company
by reason of Disability, each such option held by such holder shall be
exercisable only to the extent that such option is exercisable on the
effective date of such holder's ceasing to be a director and may thereafter
be exercised by such holder (or such holder's guardian, legal
representative or similar person) until the earliest to occur of the (i)
date which is three months after the effective date of such holder's
ceasing to be a director and (ii) the expiration date of the term of such
option.
(b) Retirement. Subject to Section 6.8, if the holder of an option
granted pursuant to this Article V ceases to be a director of the Company
on or after age 65, each such option held by such holder shall be
exercisable only to the extent that such option is exercisable on the
effective date of such holder's ceasing to be a director and may thereafter
be exercised by such holder (or such holder's legal representative or
similar person) until the earliest to occur of the (i) date which is three
months after the effective date of such holder's ceasing to be a director
and (ii) the expiration date of the term of such option.
(c) Death. Subject to Section 6.8, if the holder of an option granted
pursuant to this Article V ceases to be a director of the Company by reason
of death, each such option held by such holder shall be fully exercisable
and may thereafter be exercised by such holder's executor, administrator,
legal representative, beneficiary or similar person, as the case may be,
until the earliest to occur of the (i) date which is one year after the
date of death and (ii) the expiration date of the term of such option.
(d) Other Termination. Subject to Section 6.8, if the holder of an
option granted pursuant to this Article V ceases to be a director of the
Company for any reason other than Disability, retirement on or after age 65
or death, each such option held by such holder shall be exercisable only to
the extent such option is exercisable on the effective date of such
holder's ceasing to be a director and may thereafter be exercised by such
holder (or such holder's legal representative or similar person) until the
earliest to occur of the (i) date which is three months after the effective
date of such holder's ceasing to be a director and (ii) the expiration date
of the term of such option.
(e) Death Following Termination of Directorship. Subject to Section
6.8, if the holder of an option granted pursuant to this Article V dies
during the three-month period following such holder's ceasing to be a
director of the Company by reason of Disability, or if such a holder dies
during the three-month period following such holder's ceasing to be a
director of the Company on or after age 65, or if such a holder dies during
the three-month period following such holder's ceasing to be a director for
any reason other than by reason of Disability or retirement on or after age
65, each such option held by such holder shall be exercisable only to the
extent that such option is exercisable on the date of the holder's death
and may thereafter be exercised by the holder's executor, administrator,
legal representative, beneficiary or similar person, as the case may be,
until the earliest to occur of the (i) date one year after the date of
death and (ii) the expiration date of the term of such option.
5.4 DIRECTORS OPTIONS. Each Directors Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:
(a) Option Period and Exercisability. If at any time prior to the time
that a Directors Option becomes exercisable, a Non-Employee Director shall
no longer be a member of the Board, such Directors Option shall become void
and of no further force or effect.
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<PAGE> 12
(b) Purchase Price. The purchase price for the shares of Common Stock
subject to any Directors Option shall be equal to 100% of the Fair Market
Value of a share of Common Stock on the date of grant of such Directors
Option. Such Directors Options shall be exercisable in accordance with
Section 2.1(c).
(c) Restrictions on Transfer. Directors Options shall be subject to
the transfer restrictions and other provisions of Section 6.4.
(d) Expiration. Each Directors Option which has become exercisable
pursuant to Section 5.4(a), to the extent not theretofore exercised, shall
expire on the first to occur of (i) the date which is three months after
the first date on which the Non-Employee Director shall no longer be a
member of the Board or the Board of Directors of a Subsidiary and (ii) the
tenth anniversary of the date of grant of such option; provided, however,
that if the Non-Employee Director shall die within such three-month period
following the date on which he shall have ceased to serve as such a
director, such option may be exercised at any time within the one-year
period following the date of death to the extent not theretofore exercised
(but in no event later than the tenth anniversary of the date of grant).
VI. GENERAL
6.1 EFFECTIVE DATE AND TERM OF PLAN; SUBMISSION TO STOCKHOLDERS. This Plan
became effective immediately upon its approval by the Board. This Plan shall
terminate ten years after its effective date unless terminated earlier by the
Board. Termination of this Plan shall not affect the terms or conditions of any
award granted prior to termination. Awards hereunder may be made at any time
prior to the termination of this Plan, provided that no award may be made later
than ten years after the effective date of this Plan.
This Plan, as amended to increase the available shares from 1,500,000 to
2,100,000, shall be submitted to the stockholders of the Company for approval.
Unless the Plan is approved, as so amended, by the affirmative vote of a
majority of the voting power of the shares of capital stock of the Company
represented at a meeting in which the Plan is considered for approval, no
further awards may be made under the Plan to any director or officer of the
Company; provided that awards may be made to a person not previously employed by
the Company as an inducement essential to such person's entering into an
employment contract with the Company.
6.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation including Section 162(m) of the Code; provided, however, that
no amendment shall be made without stockholder approval if such amendment would
(a) reduce the minimum purchase price in the case of an option or the base price
in the case of an SAR, (b) effect any change inconsistent with Section 422 of
the Code, (c) extend the term of this Plan or (d) eliminate or have the effect
of eliminating the provision set forth in Section 6.12. No amendment may impair
the rights of a holder of an outstanding award without the consent of such
holder.
6.3 AGREEMENT. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.
6.4 NON-TRANSFERABILITY OF STOCK OPTIONS, SARS AND PERFORMANCE SHARES. No
option, SAR or Performance Share shall be transferable other than (i) by will,
the laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company or (ii) as otherwise set forth in the
Agreement relating to such award. Each option, SAR or Performance Share may be
exercised or settled during the participant's lifetime only by the holder or the
holder's legal representative or similar person. Except as permitted by the
second preceding sentence, no option, SAR or Performance Share may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any option, SAR or
Performance Share, such award and all rights thereunder shall immediately become
null and void.
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6.5 TAX WITHHOLDING. The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award of
any Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the "Tax Date"), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(1) a cash payment to the Company, (2) delivery to the Company of Mature Shares
having an aggregate Fair Market Value, determined as of the Tax Date, equal to
the amount necessary to satisfy any such obligation, (3) authorizing the Company
to withhold whole shares of Common Stock which would otherwise be delivered
having an aggregate Fair Market Value, determined as of the Tax Date, or
withhold an amount of cash which would otherwise be payable to a holder, equal
to the amount necessary to satisfy any such obligation, (4) in the case of the
exercise of an option, a cash payment by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of exercise or
(5) any combination of (1), (2) and (3), in each case to the extent set forth in
the Agreement relating to the award; provided, however, that the Committee shall
have sole discretion to disapprove of an election pursuant to any of clauses
(2)-(5). An Agreement may provide for shares of Common Stock to be delivered or
withheld having an aggregate Fair Market Value in excess of the minimum amount
required to be withheld. Any fraction of a share of Common Stock which would be
required to satisfy such an obligation shall be disregarded and the remaining
amount due shall be paid in cash by the holder.
6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
6.7 ADJUSTMENT. Except as provided in Section 6.8, in the event of any
stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to holders of
Common Stock other than a regular cash dividend, the number and class of
securities available under this Plan, the number and class of securities subject
to each outstanding option and the purchase price per security, the number of
securities subject to each option to be granted to Non-Employee Directors
pursuant to Article V, the terms of each outstanding SAR, the number and class
of securities subject to each outstanding Stock Award, and the terms of each
outstanding Performance Share shall be appropriately adjusted by the Committee,
such adjustments to be made in the case of outstanding options and SARs without
an increase in the aggregate purchase price or base price. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (a) available
under this Plan, such fractional security shall be disregarded, or (b) subject
to an award under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award, in
whole or in part, occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (1) the Fair Market Value on the
vesting, exercise or settlement date over (2) the exercise or base price, if
any, of such award.
6.8 CHANGE IN CONTROL.
(a)(i) Notwithstanding any provision in this Plan or any Agreement, in
the event of a Change in Control pursuant to Section (b)(iii) or (iv)
below, (1) all outstanding options and SARS shall immediately become
exercisable in full, (2) the Restriction Period applicable to any
outstanding
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Restricted Stock Award shall lapse, (3) the Performance Period applicable
to any outstanding Performance Share shall lapse and (4) the Performance
Measures applicable to any outstanding Restricted Stock Award (if any) and
to any outstanding Performance Share shall be deemed to be satisfied at the
maximum level. If, in connection with such Change in Control, holders of
Common Stock receive solely shares of common stock that are registered
under Section 12 of the Exchange Act, there shall be substituted for each
share of Common Stock available under this Plan, whether or not then
subject to an outstanding award, the number and class of shares into which
each outstanding share of Common Stock shall be converted pursuant to such
Change in Control. If, in connection with such Change in Control, holders
of Common Stock receive solely cash and shares of common stock that are
registered under Section 12 of the Exchange Act, each outstanding award
shall be surrendered to and canceled by the Company, and the holder shall
receive, within ten days of the occurrence of such Change in Control, a
proportionate amount of cash in the manner provided in Section (a)(ii)
below, and there shall be substituted for the award surrendered a similar
award reflecting a proportionate number of the class of shares into which
each outstanding share of Common Stock shall be converted to such Change in
Control. In the event of any such substitution, the proportion of cash and
common stock, the purchase price per share in the case of an option and the
base price in the case of an SAR, and any other terms of outstanding awards
shall be appropriately adjusted by the Committee, such adjustments to be
made in the case of outstanding options and SARs without an increase in the
aggregate purchase price or base price; provided, that the proportion of
cash and common stock substituted for outstanding awards shall reflect the
approximate proportion of cash and common stock received by holders of
Common Stock in such Change in Control. If, in connection with a Change in
Control, holders of Common Stock receive any portion of the consideration
in a form other than cash or shares of common stock that are registered
under Section 12 of the Exchange Act, each share of Common Stock available
under this Plan, whether or not then subject to an outstanding award, shall
be substituted or surrendered for such proportion of common stock, cash or
other consideration as shall be determined by the Committee pursuant to
Section 6.7.
(ii) Notwithstanding any provision in this Plan or any Agreement,
in the event of a Change in Control pursuant to Section (b)(i) or (ii)
below, or in the event of a Change in Control pursuant to Section
(b)(iii) or (iv) below in connection with which the holders of Common
Stock receive cash, each outstanding award shall be surrendered to the
Company by the holder thereof, and each such award shall immediately be
canceled by the Company, and the holder shall receive, within ten days
of the occurrence of a Change in Control pursuant to Section (b)(i) or
(ii) below or within ten days of the approval of the stockholders of the
Company contemplated by Section (b)(iii) or (iv) below, a cash payment
from the Company in an amount equal to (1) in the case of an option, the
number of shares of Common Stock then subject to such option, multiplied
by the excess, if any, of the greater of (A) the highest per share price
offered to stockholders of the Company in any transaction whereby the
Change in Control takes place or (B) the Fair Market Value of a share of
Common Stock on the date of occurrence of the Change in Control, over
the purchase price per share of Common Stock subject to the option; (2)
in the case of a Free-Standing SAR, the number of shares of Common Stock
then subject to such SAR, multiplied by the excess, if any, of the
greater of (A) the highest per share price offered to stockholders of
the Company in any transaction whereby the Change in Control takes place
or (B) the Fair Market Value of a share of Common Stock on the date of
occurrence of the Change in Control, over the base price of the SAR; and
(3) in the case of a Restricted Stock Award or Performance Share Award,
the number of shares of Common Stock or the number of Performance
Shares, as the case may be, then subject to such award, multiplied by
the greater of (A) the highest per share price offered to stockholders
of the Company in any transaction whereby the Change in Control takes
place or (B) the Fair Market Value of a share of Common Stock on the
date of occurrence of the Change in Control. In the event of a Change in
Control, each Tandem SAR shall be surrendered by the holder thereof and
shall be canceled simultaneously with the cancellation of the related
option. Except as may be provided in an agreement relating to an award,
the Company may, but is not required to, cooperate with any person who
is subject to Section 16 of the Exchange Act to assure that any cash
payment in accordance
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with the foregoing to such person is made in compliance with Section 16
and the rules and regulations thereunder.
(b) "Change in Control" shall mean:
(i) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act, of Beneficial Ownership of 25% or more
of either (1) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (2) the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (A) any acquisition
directly from the Company (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired
directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company,
(D) any acquisition by an Exempt Person or (E) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this Section 6.8(b); provided
further, that for purposes of clause (2), if any Person (other than an
Exempt Person, the Company or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company) shall become the Beneficial Owner of 50% or
more of the Outstanding Company Common Stock or 50% or more of the
Outstanding Company Voting Securities by reason of an acquisition by the
Company, and such Person shall, after such acquisition by the Company,
become the Beneficial Owner of any additional shares of the Outstanding
Company Common Stock or any additional Outstanding Company Voting
Securities and such Beneficial Ownership is publicly announced, such
additional Beneficial Ownership shall constitute a Change in Control;
(ii) individuals who, as of the effective date hereof, constitute
the Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the
effective date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a majority
of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any individual
who was initially elected as a director of the Company as a result of an
actual or threatened solicitation by a Person or a group for the purpose
of opposing a solicitation by any other Person or group with respect to
the election or removal of directors shall not be deemed a member of the
Incumbent Board;
(iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a "Corporate
Transaction"); excluding, however, a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals or entities who
are the Beneficial Owners, respectively, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities immediately
prior to such Corporate Transaction will Beneficially Own, directly or
indirectly, more than 50% of, respectively, the outstanding shares of
common stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative to each other
as their Beneficial Ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (2) no Person (other than
an Exempt Person; the Company; any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such Corporate
Transaction; and any Person which Beneficially Owned, immediately prior
to such Corporate Transaction, directly or indirectly, 50% or more of
the Outstanding Company Common Stock or the Outstanding Company
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Voting Securities, as the case may be) will Beneficially Own, directly
or indirectly, 50% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the outstanding securities
of such corporation entitled to vote generally in the election of
directors and (3) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction;
or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
Notwithstanding anything to the contrary herein, no Change of Control shall
be deemed to have taken place as a result of the issuance of shares of Common
Stock by the Company or the sale of shares of Common Stock by its stockholders
in connection with the Company's initial public offering.
6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT/SERVICE. No person shall have
any right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment or
service by the Company, any Subsidiary or any affiliate of the Company or affect
in any manner the right of the Company, any Subsidiary or any affiliate of the
Company to terminate the employment or service of any person at any time without
liability hereunder.
6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a stockholder
of the Company with respect to any shares of Common Stock or other equity
security of the Company which is subject to an award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
6.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
6.12 REPRICING AWARDS. The exercise price or base price, as the case may
be, of any award granted hereunder shall not be changed after the date of grant
of such award without the affirmative vote of a majority of the voting power of
the shares of capital stock of the Company represented at a meeting in which the
change to such exercise price or base price is considered for approval.
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