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EXHIBIT 99.1
SHURGARD STORAGE CENTERS, INC.
2000 LONG-TERM INCENTIVE PLAN
SECTION 1 PURPOSE
The purpose of the Shurgard Storage Centers, Inc. 2000 Long-Term
Incentive Plan (the "Plan") is to enhance the long-term profitability and
shareholder value of Shurgard Storage Centers, Inc., a Washington corporation
(the "Company"), by offering incentives to those employees, officers, directors,
consultants and agents of the Company and its Subsidiaries (as defined in
Section 2.28 below) who are key to the Company's growth and success, and to
encourage them to remain in the service of the Company and its Subsidiaries and
to acquire and maintain stock ownership in the Company.
SECTION 2 DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 AWARD
"Award" means an award or grant made to a Participant pursuant to the
Plan, including, without limitation, awards or grants of Options, Stock
Appreciation Rights, Stock Awards, Performance Awards, Other Stock-Based Awards,
Dividend Equivalent Rights or any combination of the foregoing.
2.2 BOARD
"Board" means the Board of Directors of the Company.
2.3 CAUSE
"Cause" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, whose determination shall be conclusive
and binding.
2.4 CODE
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 COMMON STOCK
"Common Stock" means the Class A Common Stock, par value $.001 per
share, of the Company.
2.6 CORPORATE TRANSACTION
"Corporate Transaction" means any of the following events:
(a) Approval by the holders of the Common Stock of any merger or
consolidation of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Common Stock are
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Common Stock immediately prior to the merger
have substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
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(b) Approval by the holders of the Common Stock of any sale, lease,
exchange or other transfer in one transaction or a series of related
transactions of all or substantially all the Company's assets other than a
transfer of the Company's assets to a majority-owned subsidiary (as the term
"subsidiary" is defined in Section 8.3) of the Company; or
(c) Approval by the holders of the Common Stock of any plan or proposal
for the liquidation or dissolution of the Company.
2.7 DISABILITY
"Disability" means "disability" as that term is defined for purposes of
the Company's Long-Term Disability Plan or other similar successor plan
applicable to salaried employees.
2.8 DIVIDEND EQUIVALENT RIGHT
"Dividend Equivalent Right" means a right, granted to a Participant
under Section 13, to receive cash, shares of Common Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Common Stock.
2.9 EARLY RETIREMENT
"Early Retirement" means retirement as that term is defined by the Plan
Administrator from time to time for purposes of the Plan.
2.10 EFFECTIVE DATE
"Effective Date" has the meaning set forth in Section 20.
2.11 EXCHANGE ACT
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.12 FAIR MARKET VALUE
"Fair Market Value" means the closing price of the Common Stock as
reported in The Wall Street Journal for the New York Stock Exchange--Composite
Transactions (or similar successor consolidated transactions reports) for a
single trading day. If no sales of Common Stock were made on the New York Stock
Exchange on the transaction date, Fair Market Value shall mean the closing price
of a share of Common Stock as reported for the next preceding day on which sales
of Common Stock were made on the New York Stock Exchange.
2.13 GOOD REASON
"Good Reason" means the occurrence of any of the following events or
conditions:
(a) a change in the Holder's status, title, position or responsibilities
(including reporting responsibilities) that, in the Holder's reasonable
judgment, represents a substantial reduction of the status, title, position or
responsibilities as in effect immediately prior thereto; the assignment to the
Holder of any duties or responsibilities that, in the Holder's reasonable
judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Holder from or failure to reappoint or
reelect the Holder to any of such positions, except in connection with the
termination of the Holder's employment for Cause or Disability or as a result of
his or her death, or by the Holder other than for Good Reason;
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(b) a reduction in the Holder's annual base salary, unless such
reduction is part of a reduction in salary applicable to substantially all or
certain classes of Company employees;
(c) the Company's requiring the Holder (without the Holder's consent) to
be based at any place outside a 35-mile radius of his or her place of employment
prior to a Corporate Transaction, except for reasonably required travel on the
Company's business that is not materially greater than such travel requirements
prior to the Corporate Transaction;
(d) the Company's failure to (i) continue in effect any material
compensation or benefit plan (or the substantial equivalent thereof) in which
the Holder was participating at the time of a Corporate Transaction, including,
but not limited to, the Plan, or (ii) provide the Holder with compensation and
benefits at least equal (in terms of benefit levels and/or reward opportunities)
to those provided for under each employee benefit plan, program and practice as
in effect immediately prior to the Corporate Transaction (or as in effect
following the Corporate Transaction, if greater), unless such reduction in
benefits as set forth in clauses (i) and (ii) above is part of a reduction in
benefits applicable to substantially all or certain classes of Company
employees;
(e) any material breach by the Company of any provision of the Plan; or
(f) any purported termination of the Holder's employment or service for
Cause by the Company that does not comply with the terms of the Plan.
2.14 GRANT DATE
"Grant Date" means the date designated in a resolution of the Plan
Administrator as the date an Award is granted. If the Plan Administrator does
not designate a Grant Date in the resolution, the Grant Date shall be the date
the Plan Administrator completes the corporate action relating to the grant of
an Award and all conditions precedent to the grant have been satisfied;
provided, however, that conditions to the exercisability or vesting of Awards
shall not defer the Grant Date.
2.15 HOLDER
"Holder" means the Participant to whom an Award is granted or the
personal representative of a Holder who has died.
2.16 INCENTIVE STOCK OPTION
"Incentive Stock Option" means an option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an "incentive
stock option" as that term is defined in Section 422 of the Code.
2.17 NONQUALIFIED STOCK OPTION
"Nonqualified Stock Option" means an option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
2.18 OPTION
"Option" means the right to purchase Common Stock granted under Section
7.
2.19 OPTION TERM
"Option Term" shall have the meaning set forth in Section 7.3.
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2.20 OTHER STOCK-BASED AWARD
"Other Stock-Based Award" means an Award granted under Section 12.
2.21 PARTICIPANT
"Participant" means (a) an individual who is a Holder of an Award or, as
the context may require, any employee, consultant or agent of the Company or a
Subsidiary who has been designated by the Plan Administrator as eligible to
participate in the Plan, (b) for a Participant who has died, the personal
representative of the Participant's estate, the person or persons to whom the
Participant's rights under the Award have passed by will or by the applicable
laws of descent and distribution, or the beneficiary designated in accordance
with Section 15, or (c) the person or persons to whom an Award has been
transferred in accordance with Section 15.
2.22 PERFORMANCE AWARD
"Performance Award" means an Award granted under Section 11 the payout
of which is subject to achievement through a performance period of performance
goals prescribed by the Plan Administrator.
2.23 PLAN ADMINISTRATOR
"Plan Administrator" means any committee of the Board designated to
administer the Plan or any person or persons to whom the Board has delegated
authority to administer the Plan under Section 3.1.
2.24 RESTRICTED STOCK
"Restricted Stock" means shares of Common Stock granted under Section
10, the rights of ownership of which are subject to restrictions prescribed by
the Plan Administrator.
2.25 RETIREMENT
"Retirement" means retirement as of the individual's normal retirement
date under the Shurgard Employees Retirement Savings Plan or other similar
successor plan applicable to salaried employees.
2.26 STOCK APPRECIATION RIGHT
"Stock Appreciation Right" means an Award granted under Section 9.
2.27 STOCK AWARD
"Stock Award" means an Award granted under Section 10.
2.28 SUBSIDIARY
"Subsidiary," except as expressly provided otherwise in Section 8.3 in
connection with Incentive Stock Options, means any entity that is directly, or
indirectly controlled by the Company or in which the Company has a significant
ownership interest, as determined by the Plan Administrator, and any entity that
may become a direct or indirect parent of the Company.
2.29 SUCCESSOR CORPORATION
"Successor Corporation" shall have the meaning set forth in Section
16.2.
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2.30 TERMINATION DATE
"Termination Date" shall have the meaning set forth in Section 7.6(a).
SECTION 3 ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Compensation Committee of the
Board, except to the extent the Board appoints another committee or committees
(which term includes subcommittees) consisting of one or more members of the
Board to administer the Plan. The Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible
Participants to different committees, subject to such limitations as the Board
deems appropriate. Committee members shall serve for such terms as the Board may
determine, subject to removal by the Board at any time. The Board shall
consider, in selecting the members of any committee responsible for
administering the Plan with respect to any persons subject, or likely to become
subject, to Section 16 of the Exchange Act as officers of the Company, the
requirements of (a) Rule 16b-3 under Section 16(b) of the Exchange Act and (b)
Section 162(m) of the Code, as then in effect. Currently, Rule 16b-3 requires
that Awards granted to directors and officers subject to Section 16 of the
Exchange Act be approved by a committee that consists solely of at least two
"nonemployee" directors of the Company and Section 162(m) requires that Awards
granted to officers subject to Section 162(m) be approved by a committee that
consists solely of at least two "outside" directors of the Company.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4 STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 16.1, a
maximum of 1,400,000 shares of Common Stock shall be available for issuance
under the Plan. Shares issued under the Plan shall be drawn from authorized and
unissued shares.
4.2 LIMITATIONS
(a) Subject to adjustment as provided in Section 16.1, not more than an
aggregate of 400,000 shares of Common Stock shall be available for issuance
pursuant to grants of Stock Awards or Other Stock-Based Awards under the Plan.
(b) Subject to adjustment from time to time as provided in Section 16.1,
not more than 500,000 shares of Common Stock may be made subject to Options or
Stock Appreciation Rights under the Plan to any individual Participant in any
one fiscal year of the Company, except that the Plan Administrator may make
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additional one-time grants of up to 750,000 shares to newly hired or newly
promoted individuals, such limitations to be applied in a manner consistent with
the requirements of, and only to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code.
4.3 REUSE OF SHARES
Any shares of Common Stock made subject to an Award that cease to be
subject to that Award (other than by reason of exercise or payment of the Award
to the extent it is exercised for, or settled in, vested and nonforfeitable
shares), including, without limitation, in connection with the expiration,
surrender, cancellation or termination of an Award, shall again be available for
issuance in connection with future grants of Awards under the Plan; provided,
however, that for purposes of this Section 4.3, any such shares shall be counted
in accordance with the requirements of Section 162(m) of the Code. Shares that
are subject to tandem Awards shall be counted only once.
SECTION 5 ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects. Awards may also be made to consultants and agents who
provide services to the Company and its Subsidiaries; provided, however, that
such persons render bona fide services that are not in connection with the offer
and sale of the Company's securities in a capital-raising transaction and that
do not directly or indirectly promote or maintain a market for the Company's
securities.
SECTION 6 AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole discretion,
to determine the type or types of Awards to be made under the Plan. Such Awards
may include, but are not limited to, Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Stock Awards, Performance Awards, Other
Stock-Based Awards and Dividend Equivalent Rights. Awards may be granted singly,
in combination or in tandem so that the settlement or payment of one
automatically reduces or cancels the other. Awards may also be made in
combination or in tandem with, as alternatives to, or as the payment form for,
grants or rights under any other employee or compensation plan of the Company.
6.2 SETTLEMENT OF AWARDS
The Plan Administrator may permit or require the deferral of any Award
payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest, or dividend
equivalents, including converting such credits into deferred stock equivalents.
The Plan Administrator may at any time offer to buy out, for a payment in cash
or Common Stock, an Award previously granted, based on such terms and conditions
as the Plan Administrator shall establish and communicate to the Participant at
the time such offer is made.
6.3 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other entities ("Acquired Entities") (or
the parent of the Acquired Entity) and the new Award is substituted, or the old
award is assumed, by reason of a merger, consolidation, acquisition of property
or of stock, reorganization or liquidation (the "Acquisition Transaction"). In
the event
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that a written agreement pursuant to which the Acquisition Transaction is
completed is approved by the Board and said agreement sets forth the terms and
conditions of the substitution for or assumption of outstanding awards of the
Acquired Entity, said terms and conditions shall be deemed to be the action of
the Plan Administrator without any further action by the Plan Administrator,
except as may be required for compliance with Rule 16b-3 under the Exchange Act,
and the persons holding such Awards shall be deemed to be Participants and
Holders.
SECTION 7 AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date with respect to
Incentive Stock Options and not less than 85% of the Fair Market Value of the
Common Stock on the Grant Date with respect to Nonqualified Stock Options. For
Incentive Stock Options granted to a more than 10% shareholder, the Option
exercise price shall be as specified in Section 8.2.
7.3 TERM OF OPTIONS
The term of each Option (the "Option Term") shall be as established by
the Plan Administrator or, if not so established, shall be 10 years from the
Grant Date. For Incentive Stock Options, the maximum Option Term shall be as
specified in Sections 8.2 and 8.4.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, which provisions may be waived or
modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall vest and become exercisable
according to the following schedule, which may be waived or modified by the Plan
Administrator at any time:
<TABLE>
<CAPTION>
PERIOD OF HOLDER'S
CONTINUOUS EMPLOYMENT OR SERVICE
WITH THE COMPANY OR ITS PERCENT OF TOTAL
SUBSIDIARIES FROM THE OPTION OPTION THAT
GRANT DATE IS EXERCISABLE
-------------------------------- ----------------
<S> <C>
After one year............................................. 33%
After two years............................................ 66%
After three years.......................................... 100%
</TABLE>
To the extent that the right to purchase shares has accrued thereunder,
an Option may be exercised from time to time by written notice to the Company,
in accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised
and accompanied by payment in full as described in Section 7.5. In no case may
an Option be exercised as to less than 100 shares at any one time (or the lesser
number of remaining shares covered by the Option).
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7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash, except that the Plan Administrator may, either at the time
the Option is granted or at any time before it is exercised and subject to such
limitations as the Plan Administrator may determine, authorize payment in any
combination of
(a) cash or check;
(b) tendering (either actually or by attestation) shares of Common Stock
already owned by the Holder for at least six months (or any shorter period
necessary to avoid a charge to the Company's earnings for financial reporting
purposes) having a Fair Market Value on the day prior to the exercise date equal
to the aggregate Option exercise price;
(c) delivery of a full-recourse promissory note authorized pursuant to
Section 14;
(d) delivery of a properly executed exercise notice, together with
irrevocable instructions, to (i) a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may arise
in connection with the exercise and (ii) the Company to deliver the certificates
for such purchased shares directly to such brokerage firm, all in accordance
with the regulations of the Federal Reserve Board; or
(e) such other consideration as the Plan Administrator may permit.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed by,
or to provide services to, the Company or its Subsidiaries, which provisions may
be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option shall be
exercisable according to the following terms and conditions, which may be waived
or modified, by the Plan Administrator at any time:
(a) Any portion of an Option that is not vested and exercisable on the
date of termination of the Participant's employment or service relationship (the
"Termination Date") shall expire on such date.
(b) Any portion of an Option that is vested and exercisable on the
Termination Date shall expire on the earliest to occur of
(i) the last day of the Option Term;
(ii) if the Participant's Termination Date occurs for reasons
other than Cause, Retirement, Early Retirement at the Company's request,
Disability or death, the three-month anniversary of such Termination Date; and
(iii) if the Participant's Termination Date occurs by reason of
Retirement, Early Retirement at the Company' request, Disability or death, the
three-year anniversary of such Termination Date.
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Notwithstanding the foregoing, if the Participant dies after the
Termination Date while the Option is otherwise exercisable, the portion of the
Option that is vested and exercisable on such Termination Date shall expire on
the earlier to occur of (y) the last day of the Option Term and (z) the longer
of the first anniversary of the date of death and the post-termination exercise
period otherwise applicable, unless the Plan Administrator determines otherwise.
Also, notwithstanding the foregoing, in case of termination of the Holder's
employment or services for Cause, the Option shall automatically terminate on
first notification to the Holder of such termination, unless the Plan
Administrator determines otherwise. If a Holder's employment or services with
the Company are suspended pending an investigation of whether the Holder shall
be terminated for Cause, all the Holder's rights under any Option likewise shall
be suspended during the period of investigation.
A transfer of employment or services between or among the Company and
its Subsidiaries shall not be considered a termination of employment or
services. Unless the Plan Administrator determines otherwise, a leave of absence
approved in accordance with Company procedures shall not be considered a
termination of employment or services, except that, with respect to Incentive
Stock Options, such leave of absence shall be subject to any requirements of
Section 422 of the Code.
SECTION 8 INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event
the Participant holds two or more such Options that become exercisable for the
first time in the same calendar year, such limitation shall be applied on the
basis of the order in which such Options are granted.
8.2 MORE THAN 10% SHAREHOLDERS
If a Participant owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option term shall not exceed five
years. The determination of 10% ownership shall be made in accordance with
Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.
8.4 TERM
Subject to Section 8.2, the term of an Incentive Stock Option shall not
exceed 10 years.
8.5 EXERCISABILITY
An Option designated as an Incentive Stock Option shall cease to qualify
for favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than
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three months after the Termination Date for reasons other than Disability or
death, (b) more than one year after the Termination Date by reason of
Disability, or (c) after the Participant has been on leave of absence for more
than 90 days, unless the Participant's reemployment rights are guaranteed by
statute or contract.
SECTION 9 STOCK APPRECIATION RIGHTS
9.1 GRANT OF STOCK APPRECIATION RIGHTS
The Plan Administrator may grant a Stock Appreciation Right separately
or in tandem with a related Option.
9.2 TANDEM STOCK APPRECIATION RIGHTS
A Stock Appreciation Right granted in tandem with a related Option will
give the Holder the right to surrender to the Company all or a portion of the
related Option and to receive an appreciation distribution (in shares of Common
Stock or cash or any combination of shares and cash, as the Plan Administrator
shall determine at any time) in an amount equal to the excess of the Fair Market
Value on the date the Stock Appreciation Right is exercised over the exercise
price per share of the right, which shall be the same as the exercise price of
the related Option. A tandem Stock Appreciation Right will have the same other
terms and provisions as the related Option. Upon and to the extent a tandem
Stock Appreciation Right is exercised, the related Option will terminate.
9.3 STAND-ALONE STOCK APPRECIATION RIGHTS
A Stock Appreciation Right granted separately and not in tandem with an
Option will give the Holder the right to receive an appreciation distribution in
an amount equal to the excess of the Fair Market Value for the date the Stock
Appreciation Right is exercised over the exercise price per share of the right.
A stand-alone Stock Appreciation Right will have such terms as the Plan
Administrator may determine, except that the exercise price per share of the
right must be at least equal to 85% of the Fair Market Value on the Grant Date
and the term of the right, if not otherwise established by the Plan
Administrator, shall be 10 years from the Grant Date.
9.4 EXERCISE OF STOCK APPRECIATION RIGHTS
Unless otherwise provided by the Plan Administrator in the instrument
that evidences the Stock Appreciation Right, the provisions of Section 7.6
relating to the termination of a Holder's employment or services shall apply
equally, to the extent applicable, to the Holder of a Stock Appreciation Right.
SECTION 10 STOCK AWARDS
10.1 GRANT OF STOCK AWARDS
The Plan Administrator is authorized to make Awards of Common Stock to
Participants on such terms and conditions and subject to such restrictions, if
any (which may be based on continuous service with the Company or performance
goals related to profits, profit growth, profit-related return ratios, cash
flow, total return to shareholders, funds from operations, customer service,
employee satisfaction or performance against budget, whether applicable to the
Company or any relevant Subsidiary or business unit, comparisons with competitor
companies or groups and with stock market indices, or any combination thereof,
as the Plan Administrator shall determine), which terms, conditions and
restrictions shall be set forth in the instrument evidencing the Award. The
terms, conditions and restrictions that the Plan Administrator shall have the
power to determine shall include, without limitation, the manner in which shares
subject to Stock Awards are held during the periods they are subject to
restrictions and the circumstances under which forfeiture of Restricted Stock
shall occur by reason of termination of the Holder's services.
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10.2 ISSUANCE OF SHARES
Upon the satisfaction of any terms, conditions and restrictions
prescribed in respect to a Stock Award, or upon the Holder's release from any
terms, conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall deliver, as soon as practicable, to the Holder
or, in the case of the Holder's death, to the personal representative of the
Holder's estate or as the appropriate court directs, a stock certificate for the
appropriate number of shares of Common Stock.
10.3 WAIVER OF RESTRICTIONS
Notwithstanding any other provisions of the Plan, the Plan Administrator
may, in its sole discretion, waive the forfeiture period and any other terms,
conditions or restrictions on any Restricted Stock under such circumstances and
subject to such terms and conditions as the Plan Administrator shall deem
appropriate; provided, however, that the Plan Administrator may not adjust
performance goals for any Stock Award intended to be exempt under Section 162(m)
of the Code for the year in which the Stock Award is settled in such a manner as
would increase the amount of compensation otherwise payable to a Participant.
SECTION 11 PERFORMANCE AWARDS
11.1 PLAN ADMINISTRATOR AUTHORITY
Performance Awards may be denominated in cash, shares of Common Stock or
any combination thereof. The Plan Administrator is authorized to grant
Performance Awards and shall determine the nature, length and starting date of
the performance period for each Performance Award and the performance objectives
to be used in valuing Performance Awards and determining the extent to which
such Performance Awards have been earned. Performance objectives and other terms
may vary from Participant to Participant and between groups of Participants.
Performance objectives shall be profits, profit growth, profit-related return
ratios, cash flow, total return to shareholders, funds from operations, customer
service, employee satisfaction or performance against budget, whether applicable
to the Company or any relevant Subsidiary or business unit, comparisons with
competitor companies or groups and with stock market indices, or any combination
thereof, as the Plan Administrator may deem appropriate. Performance periods may
overlap and Participants may participate simultaneously with respect to
Performance Awards that are subject to different performance periods and
different performance factors and criteria. The Plan Administrator shall
determine for each Performance Award the range of dollar values or number of
shares of Common Stock (which may, but need not, be shares of Restricted Stock
pursuant to Section 10), or any combination thereof, to be received by the
Participant at the end of the performance period if and to the extent that the
relevant measures of performance for such Performance Awards are met. The earned
portion of a Performance Award may be paid currently or on a deferred basis with
such interest or earnings equivalent as may be determined by the Plan
Administrator. Payment shall be made in the form of cash, whole shares of Common
Stock (which may, but need not, be shares of Restricted Stock pursuant to
Section 10), Options, or any combination thereof, either in a single payment or
in annual installments, all as the Plan Administrator shall determine.
11.2 ADJUSTMENT OF AWARDS
The Plan Administrator may adjust the performance goals and measurements
applicable to Performance Awards to take into account changes in law and
accounting and tax rules and to make such adjustments as the Plan Administrator
deems necessary or appropriate to reflect the inclusion or exclusion of the
impact of extraordinary or unusual items, events or circumstances; provided,
however, that the Plan Administrator may not adjust performance goals for any
Performance Award intended to be exempt under Section 162(m) of the Code for the
year in which the Performance Award is settled in such a manner as would
increase the amount of compensation otherwise payable to a Participant. The Plan
Administrator also may adjust the performance goals and measurements applicable
to Performance Awards and thereby reduce the
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amount to be received by any Participant pursuant to such Awards if and to the
extent the Plan Administrator deems it appropriate.
11.3 PAYOUT UPON TERMINATION
The Plan Administrator shall establish and set forth in each instrument
that evidences a Performance Award whether the Award will be payable, and the
terms and conditions of such payment, if a Holder ceases to be employed by, or
to provide services to, the Company or its Subsidiaries, which provisions may be
waived or modified by the Plan Administrator at any time. If not so established
in the instrument evidencing the Performance Award, the Award will be payable
according to the following terms and conditions, which may be waived or modified
by the Plan Administrator at any time. If during a performance period a
Participant's employment or services with the Company terminate by reason of the
Participant's Retirement, Early Retirement at the Company's request, Disability
or death, such Participant shall be entitled to a payment with respect to each
outstanding Performance Award at the end of the applicable performance period
(a) based, to the extent relevant under the terms of the Award, on the
Participant's performance for the portion of such performance period ending on
the date of termination and (b) prorated for the portion of the performance
period during which the Participant was employed by the Company, all as
determined by the Plan Administrator. The Plan Administrator may provide for an
earlier payment in settlement of such Performance Award discounted at a
reasonable interest rate and otherwise in such amount and under such terms and
conditions as the Plan Administrator deems appropriate. Except as otherwise
provided in Section 16 or in the instrument evidencing the Performance Award, if
during a performance period a Participant's employment or services with the
Company terminate other than by reason of the Participant's Retirement, Early
Retirement at the Company's request, Disability or death, then such Participant
shall not be entitled to any payment with respect to the Performance Awards
relating to such performance period, unless the Plan Administrator shall
otherwise determine. The provisions of Section 7.6 regarding leaves of absence
and termination for Cause shall apply to Performance Awards.
SECTION 12 OTHER STOCK-BASED AWARDS
The Plan Administrator may grant other Awards under the Plan pursuant to
which shares of Common Stock (which may, but need not, be shares of Restricted
Stock pursuant to Section 10) are, or may in the future be, acquired, or Awards
denominated in stock units, including ones valued using measures other than
market value. Such Other Stock-Based Awards may be granted alone, or in addition
to, or in tandem with, any Award of any type granted under the Plan and must be
consistent with the Plan's purpose.
SECTION 13 DIVIDEND EQUIVALENT RIGHTS
The Plan Administrator is authorized to make Awards of Dividend
Equivalent Rights. The Plan Administrator shall establish such rules and
procedures governing the crediting of Dividend Equivalent Rights, including the
timing, form of payment and payment contingencies of such Dividend Equivalent
Rights, as it deems are appropriate or necessary.
SECTION 14 LOANS, LOAN GUARANTEES AND INSTALLMENT PAYMENTS
To assist a Holder (including a Holder who is an officer or director of
the Company) in acquiring shares of Common Stock pursuant to an Award granted
under the Plan, the Plan Administrator may authorize, either at the Grant Date
or at any time before the acquisition of Common Stock pursuant to the Award, (a)
the extension of a full-recourse loan to the Holder by the Company, (b) the
payment by the Holder of the purchase price, if any, of the Common Stock in
installments, or (c) the guarantee by the Company of a full-recourse loan
obtained by the grantee from a third party. Subject to the foregoing, the Plan
Administrator, in its sole discretion, shall specify the terms of any loans,
installment payments or guarantees, including the interest rate and terms of
repayment. The maximum credit available is the purchase price, if any, of the
Common Stock
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acquired, plus the maximum federal and state income and employment tax liability
that may be incurred in connection with the acquisition.
SECTION 15 ASSIGNABILITY
No Option, Stock Appreciation Right, Restricted Stock Award, Performance
Award, Other Stock-Based Award or Dividend Equivalent Right granted under the
Plan may be assigned, pledged or transferred by the Holder other than by will or
by the laws of descent and distribution, and during the Holder's lifetime, such
Awards may be exercised only by the Holder. Notwithstanding the foregoing, and
to the extent permitted by Section 422 of the Code, the Plan Administrator, in
its sole discretion, may permit such assignment, transfer and exercisability and
may permit a Holder of such Awards to designate a beneficiary who may exercise
the Award or receive compensation under the Award after the Holder's death;
provided, however, that any Award so assigned or transferred shall be subject to
all the same terms and conditions contained in the instrument evidencing the
Award.
SECTION 16 ADJUSTMENTS
16.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend or other change in the Company's corporate or capital structure results
in (a) the outstanding shares, or any securities exchanged therefor or received
in their place, being exchanged for a different number or kind of securities of
the Company or any other corporation or (b) new, different or additional
securities of the Company or any other corporation being received by the holders
of shares of Common Stock of the Company, then the Plan Administrator, in its
sole discretion, shall make such equitable adjustments as it shall deem
appropriate in the circumstances in (i) the maximum number of and kind of
securities subject to the Plan as set forth in Section 4.1, (ii) the maximum
number and kind of securities that may be made subject to Stock Awards and
Awards to any individual Participant as set forth in Section 4.2, and (iii) the
number and kind of securities that are subject to any outstanding Award and the
per share price of such securities, without any change in the aggregate price to
be paid therefor. The determination by the Plan Administrator as to the terms of
any of the foregoing adjustments shall be conclusive and binding.
16.2 CORPORATE TRANSACTION
Except as otherwise provided in the instrument that evidences the Award,
in the event of any Corporate Transaction, each Option, Stock Appreciation Right
or Stock Award that is at the time outstanding shall automatically accelerate so
that each such Award shall, immediately prior to the specified effective date of
the Corporate Transaction, become 100% vested, except that such acceleration
will not occur if, in the opinion of the Company's accountants, it would render
unavailable "pooling of interest" accounting for a Corporate Transaction that
would otherwise qualify for such accounting treatment. Such Award shall not so
accelerate, however, if and to the extent, (a) such Award is, in connection with
the Corporate Transaction, either to be assumed by the surviving corporation,
the successor corporation or the parent thereof, as applicable (the "Successor
Corporation"), or to be replaced with a comparable award for the purchase of
shares of the capital stock of the Successor Corporation, (b) such Award is to
be replaced with a cash incentive program of the Successor Corporation that
preserves the spread existing at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same vesting schedule
applicable to such Award, or (c) the acceleration of such Award is subject to
other limitations imposed by the instrument evidencing the Award. The
determination of Award comparability under clause (a) above shall be made by the
Plan Administrator, and its determination shall be conclusive and binding. All
such Awards shall terminate and cease to remain outstanding immediately
following the consummation of the Corporate Transaction, except to the extent
assumed by the Successor Corporation. Any such Awards that are assumed or
replaced in the Corporate Transaction pursuant to
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clause (a) or (b) above and that do not otherwise accelerate at that time shall
be accelerated in the event the Holder's employment or services should
subsequently terminate within two years following such Corporate Transaction,
unless such employment or services are terminated by the Successor Corporation
for Cause or by the Holder voluntarily without Good Reason. Notwithstanding the
foregoing, no Incentive Stock Option shall become exercisable pursuant to this
Section 16.2 without the Holder's consent, if the result would be to cause such
Option not to be treated as an Incentive Stock Option (whether by reason of the
annual limitation described in Section 8.1 or otherwise).
16.3 FURTHER ADJUSTMENT OF AWARDS
Without limiting the preceding Section 16.2, and subject to the
limitations set forth in Section 11, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further actions as it determines to be
necessary or advisable, and fair and equitable to Participants, with respect to
Awards. Such authorized actions may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, payment or settlement or lifting restrictions,
differing methods for calculating payments or settlements, alternate forms and
amounts of payments and settlements and other modifications, and the Plan
Administrator may take such actions with respect to all Participants, to certain
categories of Participants or only to individual Participants. The Plan
Administrator may take such actions before or after granting Awards to which the
actions relate and before or after any public announcement with respect to such
sale, merger, consolidation, reorganization, liquidation or change in control
that is the reason for such actions.
16.4 LIMITATIONS
The grant of Awards will in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
16.5 FRACTIONAL SHARES
In the event of any adjustment in the number of shares covered by any
Award, each such Award shall cover only the number of full shares resulting from
such adjustment.
SECTION 17 WITHHOLDING OF TAXES
The Company may require the Holder to pay to the Company the amount of
any withholding taxes that the Company is required to withhold with respect to
the grant, vesting, exercise, payment or settlement of any Award. In such
instances, the Plan Administrator may, in its discretion and subject to the Plan
and applicable law, permit the Holder to satisfy withholding obligations, in
whole or in part, (a) by paying cash, (b) by electing to have the Company
withhold shares of Common Stock (up to the minimum required federal tax
withholding rate), or (c) by transferring shares of Common Stock to the Company
(already owned by the Holder for the period necessary to avoid a charge to the
Company's earnings for financial accounting purposes), in such amounts as are
equivalent to the Fair Market Value of the withholding obligation. The Company
shall have the right to withhold from any Award or any shares of Common Stock
issuable pursuant to an Award or from any cash amounts otherwise due, or to
become due, from the Company to the Participant an amount equal to such taxes.
The Company may also deduct from any Award any other amounts due from the
Participant to the Company or a Subsidiary.
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SECTION 18 AMENDMENT AND TERMINATION OF PLAN
18.1 AMENDMENT OF PLAN
The Plan may be amended only by the Board in such respects as it shall
deem advisable; provided, however, that, to the extent required for compliance
with Section 422 of the Code or any applicable law or regulation, shareholder
approval will be required for any amendment that will (a) increase the total
number of shares that may be issued under the Plan or that may be issued as
Stock Awards, (b) materially modify the class of persons eligible to receive
Awards, or (c) otherwise require shareholder approval under any applicable law
or regulation. Any amendment made to the Plan that would constitute a
"modification" to Incentive Stock Options outstanding on the date of such
amendment shall not, without the consent of the Participant, be applicable to
such outstanding Incentive Stock Options but shall have prospective effect only.
18.2 TERMINATION OF PLAN
The Board may suspend or terminate the Plan at any time. Unless the Plan
shall theretofore have been terminated by the Board, the Plan shall have no
fixed termination date; provided, however, that no Incentive Stock Option may be
granted more than 10 years after the later of (a) the Plan's adoption by the
Board and (b) the adoption by the Board of any amendment to the Plan that
constitutes the adoption of a new plan for purposes of Section 422 of the Code.
18.3 CONSENT OF HOLDER
The amendment or termination of the Plan or the amendment of an
outstanding Award shall not, without the Holder's consent, impair or diminish
any rights or obligations under any Award theretofore granted to the Holder
under the Plan. Any change or adjustment to an outstanding Incentive Stock
Option shall not, without the consent of the Holder, be made in a manner so as
to constitute a "modification" that would cause such Incentive Stock Option to
fail to continue to qualify as an Incentive Stock Option. Notwithstanding the
foregoing, any adjustments made pursuant to Section 16 shall not be subject to
these restrictions.
SECTION 19 GENERAL
19.1 EVIDENCE OF AWARDS
Awards granted under the Plan shall be evidenced by a written instrument
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.
19.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS
Neither the Plan nor participation in the Plan as a Participant nor any
action of the Plan Administrator taken under the Plan shall be construed as
giving any Participant or employee of the Company any right to be retained in
the employ of the Company or limit the Company's right to terminate the
employment or services of the Participant.
19.3 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register
for offering or resale under the Securities Act of 1933, as amended, or register
or qualify under state securities laws, any shares of Common Stock, security or
interest in a security paid or issued under, or created by, the Plan. The
Company may issue certificates for shares with such legends and subject to such
restrictions on transfer and stop-transfer instructions
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as counsel for the Company deems necessary or desirable for compliance by the
Company with federal and state securities laws.
To the extent that the Plan or any instrument evidencing an Award
provides for issuance of stock certificates to reflect the issuance of shares of
Common Stock, the issuance may be effected on a noncertificated basis, to the
extent not prohibited by applicable law or the applicable rules of any stock
exchange.
19.4 NO RIGHTS AS A SHAREHOLDER
No Option, Stock Appreciation Right, Stock Award denominated in units,
Performance Award or Other Stock-Based Award shall entitle the Holder to any
dividend (except to the extent provided in an Award of Dividend Equivalent
Rights), voting or other right of a shareholder unless and until the date of
issuance under the Plan of the shares that are the subject of such Awards, free
of all applicable restrictions.
19.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Board, in its
sole discretion, may bifurcate the Plan so as to restrict, limit or condition
the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
19.6 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
19.7 PARTICIPANTS IN FOREIGN COUNTRIES
The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Subsidiaries may operate to assure the viability of the benefits from Awards
granted to Participants employed in such countries and to meet the objectives of
the Plan.
19.8 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
19.9 CHOICE OF LAW
The Plan and all determinations made and actions taken pursuant hereto,
to the extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Washington without giving effect to
principles of conflicts of laws.
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SECTION 20 EFFECTIVE DATE
The Plan's Effective Date is the date on which it is approved by the
Company's shareholders.
Adopted by the Board on March 6, 2000 and approved by the Company's
shareholders on May 9, 2000.
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