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The Exhibit Index is on Page 3
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Sections 13 and 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) December 13, 1996
Redwood Trust, Inc.
(Exact name of Registrant as specified in its charter)
Maryland 0-026436 68-0329422
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
591 Redwood Highway, Suite 1300, Mill Valley, CA 94941
(Address of principal executive offices)
Registrant's telephone number, including area code (415) 389-7373
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 13, 1996, the Board of Directors of the Company approved
and adopted amendments to the Company's Bylaws and the Amended and Restated 1994
Executive and Non-Employee Director Stock Option Plan.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
3.3.1 Amended and Restated Bylaws, amended December 13, 1996.
10.14.2 Amended and Restated 1994 Executive and Non-Employee Director
Stock Option Plan, amended December 13, 1996.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REDWOOD TRUST, INC.
By /s/ Vickie L. Rath
---------------------------------------
Vickie L. Rath
Vice President, Treasurer and
Controller (Principal Accounting
Officer)
January 7, 1997.
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REDWOOD TRUST, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Location of Document in
Exhibit No. Description Sequential Numbering System
- ----------- ----------- ---------------------------
<S> <C> <C>
3.3.1 Amended and Restated Bylaws, 5
amended December 13, 1996
10.14.2 Amended and Restated 1994 Executive ______
and Non-Employee Director Stock Option
Plan, amended December 13, 1996
</TABLE>
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EXHIBIT 3.3.1
BYLAWS
OF
REDWOOD TRUST, INC.
DECEMBER 13, 1996
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meeting. The Corporation shall hold an annual meeting
of its stockholders to elect directors and transact any other business within
its power, either at 10:00 a.m. on the last day of May in each year if not a
legal holiday, or at such other time on such other day falling on or before the
30th day thereafter as shall be set by the Board of Directors. Except as the
Charter or statute provides otherwise, any business may be considered at an
annual meeting without the purpose of the meeting having been specified in the
notice. Failure to hold an annual meeting does not invalidate the Corporation's
existence or affect any otherwise valid corporate acts. Meetings of stockholders
shall be held at the principal office of the Corporation or at such other place
in the United States as is set forth from time to time by the Board of
Directors.
SECTION 2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called at any time by the President, by the
Chairman of the Board of Directors, by a majority of the Board of Directors, by
a majority of the Independent Directors (as defined in Section 1 of Article II
hereof), or by stockholders entitled to cast at least twenty-five percent (25%)
of the votes which all stockholders are entitled to cast at the particular
meeting, upon written request addressed to the Secretary and then only as may be
required by law.
SECTION 3. Notices. Notice of the annual meeting and of any special
meeting of stockholders shall, at least ten days but not more than ninety days
prior to the date thereof, be given to each stockholder entitled to vote thereat
and each other stockholder entitled to notice of the meeting. Notice is given to
a stockholder when it is personally delivered to it, left at its residence or
usual place of business, or mailed to it at its address as it appears on the
records of the Corporation. Notwithstanding the foregoing provisions, each
person who is entitled to notice waives notice if, before or after the meeting,
such stockholder signs a waiver of notice which is filed with the records of the
stockholders' meeting, or is present at the meeting in person or by proxy. Every
notice of an annual meeting or a special meeting shall state the time and place
of the meeting. If the meeting is a special meeting or notice of the purpose or
purposes is required by statute, the notice shall also briefly state the purpose
or purposes thereof, and no business, other than that specified in such notice
and matters germane thereto, shall be transacted at the meeting without further
notice to stockholders not present in person or by proxy.
SECTION 4. Quorum; Manner of Acting and Adjournment. Unless statute or
the Charter provides otherwise, at a meeting of stockholders the presence in
person or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at the meeting constitutes a quorum, and a
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majority of all the votes cast at a meeting at which a quorum is present is
sufficient to approve any matter which properly comes before the meeting, except
that a plurality of all the votes cast at a meeting at which a quorum is present
is sufficient to elect a director.
Whether or not a quorum is present, a meeting of stockholders convened
on the date for which it was called may be adjourned from time to time without
further notice by a majority vote of the stockholders present in person or by
proxy to a date not more than 120 days after the original record date. Any
business which might have been transacted at the meeting as originally notified
may be deferred and transacted at any such adjourned meeting at which a quorum
shall be present.
SECTION 5. Organization. At every meeting of the stockholders, the
Chairman of the Board, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the Chairman of the Board, one of the
following officers present shall conduct the meeting in the order stated: the
Vice Chairman of the Board, if there be one, the President, the Vice Presidents
in their order of rank and seniority, or a Chairman chosen by the stockholders
entitled to cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast, shall act as Chairman, and the
Secretary or, in his or her absence, an assistant secretary, or in the absence
of both Secretary and assistant secretaries, a person appointed by the Chairman,
shall act as Secretary.
SECTION 6. Voting. Unless the Charter provides for a greater or lesser
number of votes per share or limits or denies voting rights, each outstanding
share of stock, regardless of class, is entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. In all elections for
directors, each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted, but cumulative voting is not permitted.
SECTION 7. Proxies. A stockholder may vote the stock the stockholder
owns of record either in person or by proxy. A stockholder may sign a writing
authorizing another person to act as proxy. Signing may be accomplished by the
stockholder or the stockholder's authorized agent signing the writing or causing
the stockholder's signature to be affixed to the writing by any reasonable
means, including facsimile signature. A stockholder may authorize another person
to act as proxy by transmitting, or authorizing the transmission of, a telegram,
cablegram, datagram, or other means of electronic transmission to the person
authorized to act as proxy or to a proxy solicitation firm, proxy support
service organization, or other person authorized by the person who will act as
proxy to receive the transmission. Unless a proxy provides otherwise, it is not
valid more than 11 months after its date. A proxy is revocable by a stockholder
at any time without condition or qualification unless the proxy states that it
is irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities.
SECTION 8. Voting Lists. At each meeting of stockholders, a full, true
and complete list of all stockholders entitled to vote at such meeting, showing
the number and class of shares held by each and certified by the transfer agent
for such class or by the Secretary, shall be furnished by the Secretary.
SECTION 9. Conduct of Business. Nominations of persons for election to
the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving notice provided for in Article I, Section 10, who
is entitled to vote at the meeting and
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who complied with the notice procedures set forth in Article I, Section 10. The
chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made in
accordance with the procedures set forth in this Section and Article I, Section
10, and, if any proposed nomination or business is not in compliance with this
Section and Article I, Section 10, to declare that such defective nomination or
proposal be disregarded.
SECTION 10. Stockholder Proposals. For any stockholder proposal to be
presented in connection with an annual meeting of stockholders of the
Corporation (other than proposals made under Rule 14a-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholder putting forth such proposal must have given
timely notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors pursuant to Regulation 14A under the Exchange Act (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and of the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made, (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares of stock of the
Corporation which are owned beneficially and of record by such stockholder and
such beneficial owner.
ARTICLE II
DIRECTORS
SECTION 1. Number, Classification, Election and Term. The affairs of
the Corporation shall be under the direction and control of a Board of Directors
which shall be initially composed of three (3) members who shall hold office
until its successors are duly chosen and qualified. The directors shall be
divided into three Classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The term of the
initial Class I directors shall terminate on the date of the annual meeting of
stockholders held in 1995; the term of the initial Class II directors shall
terminate on the date of the annual meeting of stockholders held in 1996; and
the term of the initial Class III directors shall terminate on the date of the
annual meeting of stockholders held in 1997. At each annual meeting of
stockholders beginning in 1995, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. The
number of directors shall be increased or decreased from time to time by vote of
a majority of the entire Board of Directors; provided, however, that the number
of directors may not exceed fifteen (15) nor be less than three (3) except as
permitted by law. If the number of directors is changed,
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any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible. A
director elected by stockholders shall hold office until the annual meeting for
the year in which his or her term expires and until his or her successor shall
be elected and shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
At all times subsequent to the first closing in the Corporation's
initial private placement of its Capital Stock (the "Private Placement"), except
in the case of a vacancy, a majority of the Board of Directors shall be
Independent Directors (as hereinafter defined). For the purposes of these
Bylaws, "Independent Director" shall mean a director of the Corporation who is
not an officer or employee of the Corporation, any subsidiary of the Corporation
or of George E. Bull, III Capital Management, Inc.
Directors need not be stockholders in the Corporation.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the Board of Directors shall consist of
said directors so elected in addition to the number of directors fixed as
provided above in the first paragraph of this Section 1. Notwithstanding the
foregoing, and except as otherwise may be required by law, whenever the holders
of any one or more series of preferred stock of the Corporation shall have the
right, voting separately as a class, to elect one or more directors of the
Corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
SECTION 2. Function of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. All
the powers of the Corporation are vested in and shall be exercised by or under
the authority of the Board of Directors except as otherwise prescribed by
statute, by the Charter or by these Bylaws.
SECTION 3. Vacancies. Subject to the rights of the holders of any class
of stock separately entitled to one or more directors, any vacancy occurring on
the Board of Directors for any cause other than by reason of an increase in the
number of directors may, subject to the provisions of Section 5, be filled by a
majority of the remaining members of the Board of Directors, regardless of
whether such majority of the remaining members of the Board of Directors is less
than a quorum; provided, however, that if the Corporation has completed its
Private Placement and, in accordance with Section 1, a majority of the Board of
Directors are required to be Independent Directors, then Independent Directors
shall nominate replacements for vacancies among the Independent Directors, which
replacements must be elected by a majority of the directors, including a
majority of the Independent Directors. Subject to the rights of the holders of
any class of stock separately entitled to elect one or more directors, any
vacancy occurring by reason of an increase in the number of directors may be
filled by action of a majority of the entire Board of Directors including,
following the Private Placement, a majority of the Independent Directors. The
stockholders may fill any vacancy occurring on the Board of Directors for any
reason, subject to the requirement for Independent Directors, if applicable. If
the stockholders of any class or series are entitled separately to elect one or
more directors, a majority of the remaining directors elected by that class or
series or the sole remaining director elected by that class or series may fill
any vacancy among the number of directors elected by that class or series. A
director elected by the Board of Directors to fill a vacancy shall be elected to
hold office until the next annual meeting of stockholders or until his successor
is elected and qualified.
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SECTION 4. Resignations. Any director or member of a committee may
resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time be specified, at the time of
the receipt by the Chairman of the Board, the President or the Secretary.
Acceptance of a resignation shall not be necessary to make it effective.
SECTION 5. Removal. Unless statute or the Charter provide otherwise,
and subject to the rights of the holders of any class separately entitled to
elect one or more directors, at any meeting of stockholders duly called and at
which a quorum is present, the stockholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office with or without cause, and may elect a
successor or successors to fill any resulting vacancies for the unexpired terms
of removed directors; provided, however, that at all times subsequent to the
Corporation's Private Placement, a majority of the Board of Directors shall be
Independent Directors.
SECTION 6. Committees of the Board of Directors. The Board of Directors
may appoint from among its members an Executive Committee, an Audit Committee, a
Compensation Committee and other committees composed of one or more directors
and delegate to these committees any of the powers of the Board of Directors,
except the power to authorize dividends of stock, elect directors, issue stock
other than as provided in the next sentence, recommend to the stockholders any
action which requires stockholder approval, amend these Bylaws, or approve any
merger or share exchange which does not require stockholder approval. At least a
majority of all committees of the Board shall be comprised of Independent
Directors. During the time any shares of stock of the Corporation are quoted on
the Nasdaq National Market or listed on a national securities exchange, the
Board of Directors shall appoint an audit committee comprised of not less than
two members, all of whom are Independent Directors. If the Board of Directors
has given general authorization for the issuance of stock providing for or
establishing a method or procedure for determining the maximum number of shares
to be issued, a committee of the Board, in accordance with that general
authorization or any stock option or other plan or program adopted by the Board
of Directors, may authorize or fix the terms of stock subject to classification
or reclassification and the terms on which any stock may be issued, including
all terms and conditions required or permitted to be established or authorized
by the Board of Directors.
Each committee may fix rules of procedure for its business. One-third
of the members of a committee shall constitute a quorum for the transaction of
business and the act of a majority of those present at a meeting at which a
quorum is present shall be the act of the committee. The members of a committee
present at any meeting, whether or not they constitute a quorum, may appoint a
director to act in the place of an absent member; provided, however, that in the
event of the absence or disqualification of any Independent Director, such
appointee shall be an Independent Director. Any action required or permitted to
be taken at a meeting of a committee may be taken without a meeting, if an
unanimous written consent which sets forth the action is signed by each member
of the committee and filed with the minutes of the committee. The members of a
committee may conduct any meeting thereof by conference telephone in accordance
with the provisions of Section 8 of this Article.
Subject to the provisions hereof, the Board of Directors shall have the
power at any time to change the membership of any committee, to fill all
vacancies, to designate alternative members to replace any absent or
disqualified member, or to dissolve any such committee.
SECTION 7. Meetings of the Board of Directors. Meetings of the Board of
Directors, regular or special, may be held at any place in or out of the State
of Maryland as the Board of Directors may from time to time determine or as
shall be specified in the notice of such meeting.
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Members of the Board of Directors may participate in a meeting by means
of a conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by such means constitutes presence in person at a meeting.
The first meeting of each newly elected Board of Directors shall be
held as soon as practicable after the annual meeting of the stockholders at
which the directors were elected. The meeting may be held at such time and place
as shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors as provided in this Section 7, except that no
notice shall be necessary if such meeting is held immediately after the
adjournment, and at the site, of the annual meeting of stockholders.
Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called at any time
by two (2) or more directors or by a majority of the members of the executive
committee, if one be constituted, in writing with or without a meeting of such
committee, or by the Chairman of the Board of Directors or the President.
Special meetings may be held at such place or places in or out of the
State of Maryland as may be designated from time to time by the Board of
Directors; in the absence of such designation, such meetings shall be held at
such places as may be designated in the notice of meeting.
Notice of the place and time of every special meeting of the Board of
Directors shall be delivered by the Secretary to each director either personally
or by telephone, telegraph, overnight courier or facsimile, or by leaving the
same at his residence or usual place of business at least twenty-four (24) hours
before the time at which such meeting is to be held or, if by first-class mail,
at least 72 hours before the time of such meeting. If mailed, such notice shall
be deemed to be given when deposited in the United States Mail addressed to the
director at his post office address as it appears on the records of the
Corporation, with postage thereon paid. Unless the Bylaws or a resolution of the
Board of Directors provides otherwise, the notice need not state the business to
be transacted at, or the purposes of, any special meeting of the Board of
Directors. No notice of any special meeting of the Board of Directors need be
given to any director who attends except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
special meeting is not lawfully called or convened, or to any director who, in
writing executed and filed with the records of the meeting either before or
after the holding thereof, waives such notice.
Any meeting of the Board of Directors, regular or special, may adjourn
from time to time to reconvene at the same or some other place, and no notice
need be given of any such adjourned meeting other than by announcement.
SECTION 8. Informal Action by Directors. Unless otherwise provided by
law, any action required to be taken at a meeting of the directors or any other
action which may be taken at a meeting of the directors may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors.
SECTION 9. Quorum and Voting. At all meetings of the Board of
Directors, a majority of the entire Board of Directors shall constitute a quorum
for the transaction of business, and the action of a
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majority of the directors present at any meeting at which a quorum is present
shall be the action of the Board of Directors unless the concurrence of a
greater proportion is required for such action by law, the Charter or these
Bylaws. If a quorum shall not be present at any meeting of directors, the
directors present thereat may, by a majority vote, adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 10. Organization. The Chairman of the Board shall preside at
each meeting of the Board of Directors. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President or, in his absence
or inability to act, another director chosen by a majority of the directors
present, shall act as chairman of the meeting and preside thereat. The Secretary
(or, in his absence or inability to act, any person appointed by the chairman of
the meeting) shall act as Secretary of the meeting and keep the minutes thereof.
SECTION 11. Compensation of Directors. Independent Directors shall
receive compensation for their services, and expenses of attendance for
attendance at each regular or special meeting of the Board of Directors, or of
any committee thereof or both, as may be determined from time to time by the
Board of Directors. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 12. Investment Policies and Restrictions. The Board of
Directors, including a majority of the Independent Directors, shall approve the
investment policies of the Corporation. The investment policies and compliance
therewith shall be reviewed by the Independent Directors at least annually to
determine that the policies then being followed by the Corporation are in the
best interest of the stockholders of the Corporation. Each such determination
and the basis therefor shall be set forth in the minutes of the meeting of the
Board of Directors.
It shall be the duty of the Board of Directors to ensure that the
purchase, sale, retention and disposal of the Corporation's assets, and the
investment policies of the Corporation and the limitations thereon or amendment
thereof are at all times in compliance with the restrictions applicable to real
estate investment trusts pursuant to the Internal Revenue Code of 1986, as
amended.
SECTION 13. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent or abstention shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any director who votes in favor of such action.
SECTION 14. Advisory Directors. The Board of Directors may by
resolution appoint advisory directors to the Board, who may also serve as
directors emeriti, and shall have such authority and receive such compensation
and reimbursement as the Board of Directors shall provide. Advisory directors or
directors emeriti shall not have the authority to participate by vote in the
transaction of business.
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ARTICLE III
OFFICERS
SECTION 1. Officers. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, who shall be
elected by the Board of Directors to serve during the pleasure of the Board and
until their respective successors are elected and qualified, except as otherwise
provided in any employment agreement between the Corporation and any officer.
The Chairman of the Board and the President shall always be members of the Board
of Directors. The Board of Directors may also appoint one or more Vice
Presidents. The same person may hold any two or more offices except those of
President and Vice President.
SECTION 2. Subordinate Officers, Committees and Agents. The Board of
Directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the Corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these Bylaws, or as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any officer or committee the power to elect subordinate officers and to
retain or appoint employees or other agents.
SECTION 3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and the Board of Directors at which
he or she is present. Unless otherwise specified by the Board of Directors, the
Chairman of the Board shall also be the Chief Executive Officer of the
Corporation and perform the duties customarily performed by chief executive
officers, and shall perform such other duties as may from time to time be
requested of him or her by the Board of Directors.
SECTION 4. President. Unless otherwise provided by resolution of the
Board of Directors, the President, in the absence of the Chairman of the Board,
shall preside at all meetings of the Board of Directors and of the stockholders
at which he shall be present. The President shall, subject to the control of the
Board of Directors, in general supervise and control all of the business and
affairs of the Corporation. The President may sign, with the Secretary or any
other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors have
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 5. Vice Presidents. In the absence of the President or in event
of his or her death, inability or refusal to act, or at the request of the Chief
Executive Officer or President, the Vice President or Vice Presidents shall
perform the duties and exercise all the powers of the President and be subject
to all the restrictions upon the President. The Vice President or Vice
Presidents shall perform such other duties as from time to time may be assigned
to him or her or them by the President or by the Board of Directors.
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SECTION 6. Secretary. The Secretary shall keep the minutes of the
stockholders' and of the Board of Directors' meetings in one or more books
provided for that purpose, see that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law, be custodian of the
corporate records and of the seal of the Corporation and keep a register of the
post office address of each stockholder which shall be furnished to the
Secretary by such stockholder, have general charge of the stock transfer books
of the Corporation and, in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him or
her by the President, the Chief Executive Officer or the Board of Directors.
SECTION 7. Treasurer. The Treasurer shall have charge and custody of
and be responsible for all funds and securities of the Corporation, receive and
give receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these Bylaws and in general perform all of the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him or her by the President, the Chief Executive Officer, the Chief Financial
Officer or by the Board of Directors.
SECTION 8. Other Officers. The other officers of the Corporation shall
perform such duties as the President may from time to time assign to them.
SECTION 9. Removal. Any officer elected by the Board of Directors may
be removed, either for or without cause, at any time upon the vote of a majority
of the Board of Directors. Any other employee of the Corporation may be removed
or dismissed at any time by the President. The removal of an officer does not
prejudice any of his or her contract rights.
SECTION 10. Resignation. Any officer or agent may resign at any time by
giving written notice to the Board of Directors, or to the President or to the
Secretary of the Corporation. Any such resignation shall take effect at the date
of the receipt of such notice or at any later time specified therein and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 11. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the Board of Directors or by the officer or remaining members of the committee
to which the power to fill such office has been delegated pursuant to Section 2
of this Article, as the case may be, and if the office is one for which these
Bylaws prescribe a term, shall be filled for the unexpired portion of the term.
SECTION 12. Compensation. The salaries or other compensation , if any,
of the officers elected by the Board of Directors shall be fixed from time to
time by the Board of Directors or by such officer as may be designated by
resolution of the Board of Directors. The salaries or other compensation of any
other officers, employees and other agents shall be fixed from time to time by
the officer or committee to which the power to elect such officers or to retain
or appoint such employees or other agents has been delegated pursuant to Section
2 of this Article. No officer shall be prevented from receiving such salary or
other compensation by reason of the fact that he is also a director of the
Corporation.
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ARTICLE IV
STOCK
SECTION 1. Certificates. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the number and
kind and class of shares owned by it in the Corporation. Each certificate shall
be signed by the Chairman of the Board or the President or a Vice President and
countersigned by the Secretary or an assistant secretary or the Treasurer or an
assistant treasurer.
The signatures may be either manual or facsimile signatures. In case
any officer who has signed any certificate ceases to be an officer of the
Corporation before the certificate is issued, the certificate may nevertheless
be issued by the Corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue. Each stock certificate
shall include on its face the name of the Corporation, the name of the
stockholder and the class of stock and number of shares represented by the
certificate. If the Corporation has authority to issue stock of more than one
class, the stock certificate shall contain on its face or back a full statement
or summary of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue and if the Corporation is authorized to issue
any preferred or special class in series, the differences in the relative rights
and preferences between the shares of each series to the extent they have been
set, and the authority of the Board of Directors to set the relative rights and
preferences of subsequent series. In lieu of such full statement or summary,
there may be set forth upon the face or back of the certificate a statement that
the Corporation will furnish to any stockholder upon request and without charge,
a full statement of such information. Such request may be made to the Secretary
or to the Corporation's transfer agent. Every stock certificate representing
shares of stock which are restricted as to transferability by the Corporation
shall contain a full statement of the restriction or state that the Corporation
will furnish information about the restriction to the stockholder on request and
without charge. A stock certificate may not be issued until the stock
represented by it is fully paid, except in the case of stock purchased under a
plan, agreement or transaction as permitted by law and with such statement on
future payments as required by law.
SECTION 2. Lost Certificates. The Board of Directors may order a new
certificate or certificates of stock to be issued in place of any certificates
shown to have been lost or destroyed under such terms and conditions as to it
may seem reasonable. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such stolen, lost or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the Corporation a
bond, with sufficient surety to the Corporation to indemnify it against any loss
or claim which may arise by reason of the issuance of a new certificate.
SECTION 3. Transfer Agents and Registrars. At such time as the
Corporation lists its securities on a national securities exchange or the Nasdaq
National Market, or such earlier time as the Board of Directors may elect, the
Board of Directors shall appoint one or more banks or trust companies in such
city or cities as the Board of Directors may deem advisable, from time to time,
to act as transfer agents and/or registrars of the shares of stock of the
Corporation; and, upon such appointments being made, no certificate representing
shares shall be valid until countersigned by one of such transfer agents and
registered by one of such registrars.
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SECTION 4. Transfer of Stock. No transfers of shares of stock of the
Corporation shall be made if (i) void ab initio pursuant to the Charter, or (ii)
the Board of Directors, pursuant to the Charter, shall have refused to transfer
such shares; provided, however, that nothing contained in these Bylaws shall
impair the settlement of transactions entered into on the facilities of the New
York Stock Exchange or any other national securities exchange or automated
inter-dealer quotation system. Permitted transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only upon the
instruction of the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent or transfer clerk, and upon surrender of the certificate
or certificates, if issued, for such shares properly endorsed or accompanied by
a duly executed stock transfer power and the payment of all taxes thereon. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, as to any transfers not
prohibited by the Charter or by action of the Board of Directors thereunder, it
shall be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
SECTION 5. Fixing of Record Dates. The Board of Directors may fix, in
advance, a date as the record date for the purpose of determining stockholders
entitled to notice of, or to vote at, any meeting of stockholders, or
stockholders entitled to receive payment of any dividend or the allotment of any
rights, or in order to make a determination of stockholders for any other proper
purpose. Such date, in any case, may not be prior to the close of business on
the day the record date is fixed nor, subject to Section 4 of Article I, more
than ninety (90) days, or in case of a meeting of stockholders, less than ten
(10) days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken.
SECTION 6. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments, if any, a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law or the Charter.
SECTION 7. Regulations; Book-Entry System. The Board of Directors may
make such additional rules and regulations, not inconsistent with the Bylaws or
the Charter, as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of stock of the Corporation.
Further, the Corporation may participate in one or more systems under
which certificates for shares of stock are replaced by electronic book-entry
pursuant to such rules, terms and conditions as the Board of Directors may
approve and subject to applicable law, notwithstanding any provisions to the
contrary set forth in this Article.
ARTICLE V
SEAL
The Board of Directors may provide a suitable seal for the Corporation,
which may be either facsimile or any other form of seal and shall remain in the
custody of the Secretary. If the Board of Directors so provides, it shall be
affixed to all certificates of the Corporation's stock and to other
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instruments requiring a seal. If the Corporation is required to place its
corporate seal to a document, it is sufficient to meet the requirement of any
law, rule, or regulation relating to a corporate seal to place the word "(seal)"
adjacent to the signature of the person authorized to sign the document on
behalf of the Corporation.
ARTICLE VI
SIGNATURES
SECTION 1. Checks, Drafts, Etc. All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness, issued in the name
of the Corporation, shall, unless otherwise provided by resolution of the Board
of Directors, be signed by the President, a Vice President or an Assistant Vice
President and countersigned by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary.
SECTION 2. Stock Transfer. All endorsements, assignments, stock powers
or other instruments of transfer of securities standing in the name of the
Corporation shall be executed for and in the name of the Corporation by the
President or Vice President or by such officer as the Board of Directors may
designate.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be the twelve
calendar months period ending December 31 in each year, unless otherwise
provided by the Board of Directors.
SECTION VIII
INDEMNIFICATION
SECTION 1. Procedure. Any indemnification, or payment of expenses in
advance of the final disposition of any proceeding, shall be made promptly, and
in any event within 60 days, upon the written request of the director or officer
entitled to seek indemnification (the "Indemnified Party"). The right to
indemnification and advances hereunder shall be enforceable by the Indemnified
Party in any court of competent jurisdiction, if (i) the Corporation denies such
request, in whole or in part, or (ii) no disposition thereof is made within 60
days. The Indemnified Party's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be reimbursed by the Corporation. It shall
be a defense to any action for advance for expenses that (a) a determination has
been made that the facts then known to those making the determination would
preclude indemnification or (b) the Corporation has not received either (i) an
undertaking as required by law to repay such advances in the event it shall
ultimately be determined that the standard of conduct has not been met or (ii) a
written affirmation by the Indemnified Party of such Indemnified Party's good
faith belief that the standard of conduct necessary for indemnification by the
Corporation has been met.
SECTION 2. Exclusivity, Etc. The indemnification and advance of
expenses provided by the Charter and these Bylaws shall not be deemed exclusive
of any other rights to which a person seeking
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indemnification or advance of expenses may be entitled under any law (common or
statutory), or any agreement, vote of stockholders or disinterested directors or
other provision that is consistent with law, both as to action in his or her
official capacity and as to action in another capacity while holding office or
while employed by or acting as agent for the Corporation, shall continue in
respect of all events occurring while a person was a director or officer after
such person has ceased to be a director or officer, and shall inure to the
benefit of the estate, heirs, executors and administrators of such person. All
rights to indemnification and advance of expenses under the Charter of the
Corporation and hereunder shall be deemed to be a contract between the
Corporation and each director or officer of the Corporation who serves or served
in such capacity at any time while this Bylaw is in effect. Nothing herein shall
prevent the amendment of this Bylaw, provided that no such amendment shall
diminish the rights of any person hereunder with respect to events occurring or
claims made before its adoption or as to claims made after its adoption in
respect of events occurring before its adoption. Any repeal or modification of
this Bylaw shall not in any way diminish any rights to indemnification or
advance of expenses of such director or officer or the obligations of the
Corporation arising hereunder with respect to events occurring, or claims made,
while this Bylaw or any provision hereof is in force. The Corporation shall not
be liable for any payment under this Bylaw in connection with a claim made by a
director or officer to the extent such director or officer has otherwise
actually received payment under insurance policy, agreement, vote or otherwise,
of the amounts otherwise indemnifiable hereunder.
SECTION 3. Severability; Definitions. The invalidity or
unenforceability of any provision of this Article VIII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this
Bylaw" in this Article VIII means this Article VIII in its entirety.
SECTION IX
SUNDRY PROVISIONS
SECTION 1. Books and Records. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors. The
books and records of the Corporation may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection. Minutes shall be recorded in written form but may be maintained in
the form of a reproduction. The original or a certified copy of the Bylaws shall
be kept at the principal office of the Corporation.
SECTION 2. Voting Upon Shares in Other Corporations. Stock of other
corporations or associations, registered in the name of the Corporation, may be
voted by the President, a Vice President, or a proxy appointed by either of
them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to vote
such shares upon the production of a certified copy of such resolution.
SECTION 3. Annual Statement of Affairs. The President or chief
accounting officer shall prepare annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial statement
of operations for the preceding fiscal year. The statement of affairs shall be
submitted at the annual meeting of the stockholders and, within 20 days after
the meeting, placed on file at the Corporation's principal office.
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SECTION 4. Mail. Except as herein expressly provided, any notice or
other document which is required by these Bylaws to be mailed shall be deposited
in the United States mails, postage prepaid.
SECTION 5. Reliance. Each director, officer, employee and agent of the
Corporation shall, in the performance of his or her duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon the opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or expert may
also be a director.
SECTION 6. Certain Rights of Directors, Officers, Employees and Agents.
The directors shall have no responsibility to devote their full time to the
affairs of the Corporation. Any director or officer, employee or agent of the
Corporation, in his or her personal capacity or in a capacity as an affiliate,
employee or agent of any other person, or otherwise, may have business interests
and engage in business activities similar to or in addition to those of or
relating to the Corporation.
SECTION 7. Loss of Deposits. No director shall be liable for any loss
which may occur by reason of the failure of any bank, trust company, savings and
loan association or other institution with whom moneys or stock of the
Corporation have been deposited.
SECTION X
AMENDMENTS
These Bylaws may be amended or replaced, or new Bylaws may be adopted,
either (1) by the vote of the stockholders entitled to cast at least a majority
of the votes which all stockholders are entitled to cast thereon at any duly
organized annual or special meeting of stockholders, or (2), with respect to
those matters which are not by statute reserved exclusively to the stockholders,
by vote of a majority of the Board of Directors, including a majority of the
Independent Directors of the Corporation, in office at any regular or special
meeting of the Board of Directors. It shall not be necessary to set forth such
proposed amendment, repeal or new Bylaws, or a summary thereof, in any notice of
such meeting, whether annual, regular or special.
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REDWOOD TRUST, INC. EXHIBIT 10.14.2
AMENDED AND RESTATED
1994 EXECUTIVE AND NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
(LAST AMENDED DECEMBER 13, 1996)
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the Redwood Trust, Inc. Amended and Restated
1994 Executive and Non-Employee Director Stock Option Plan (the "Plan"). The
Plan was adopted by the Board on June 23, 1994, subject to the approval of the
Company stockholders, which approval was obtained on June 23, 1994. The Board
approved amendments to the Plan on March 8, 1996 which became effective upon
approval by the Company's stockholders on June 14, 1996. The Board approved
additional non-material amendments on December 13, 1996, which became effective
on such date. The purpose of the Plan is to enable the Company and its
Subsidiaries to obtain and retain competent personnel who will contribute to the
Company's success by their ability, ingenuity and industry, to give the
Company's non-employee directors a proprietary interest in the Company and to
provide incentives to the participating directors, officers and other key
employees, and agents and consultants that are linked directly to increases in
stockholder value and will therefore inure to the benefit of all stockholders of
the Company.
For purposes of the Plan, the following terms shall be defined
as set forth below:
(1) "Accrued DERs" means DERs with the accrual rights described in
Section 5(11).
(2) "Administrator" means the Board, or if the Board does not
administer the Plan, the Committee in accordance with Section 2.
(3) "Board" means the Board of Directors of the Company.
(4) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(5) "Committee" means the Compensation Committee of the Board, which
shall be composed entirely of individuals who meet the qualifications to be a
"Non-Employee Director" as defined in Rule 16b-3 ("Rule 16b-3) as promulgated by
the Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934 (the "Act"), and as such Rule may be amended from time to
time, or any successor definition adopted by the Commission, or any other
Committee the Board may subsequently appoint to administer the Plan. If at any
time the Board shall not administer the Plan, then the functions of the Board
specified in the Plan shall be exercised by the Committee.
(6) "Company" means Redwood Trust, Inc., a corporation organized under
the laws of the State of Maryland (or any successor corporation).
<PAGE> 2
(7) "Current-pay DERs" means DERs with the current-pay rights described
in Section 5(11).
(8) "DERs" shall mean Accrued DERs and Current-pay DERs.
(9) "Deferred Stock" means an award granted pursuant to Section 7 of
the right to receive Stock at the end of a specified deferral period.
(10) "Disability" means permanent and total disability as determined
under the Company's disability program or policy.
(11) "Effective Date" shall mean the date provided pursuant to Section
12.
(12) "Eligible Employee" means an employee of the Company or any
Subsidiary eligible to participate in the Plan pursuant to Section 4.
(13) "Eligible Non-Employee Director" means a member of the Board or
the board of directors of any Subsidiary who is not a bona fide employee of the
Company or any Subsidiary and who is eligible to participate in the Plan
pursuant to Section 5A.
(14) "Fair Market Value" means, as of any given date, with respect to
any awards granted hereunder, at the discretion of the Administrator and subject
to such limitations as the Administrator may impose, (A) the closing sale price
of the Stock on the next preceding business day as reported in the Western
Edition of the Wall Street Journal Composite Tape, or (B) the average of the
closing price of the Stock on each day on which the Stock was traded over a
period of up to twenty trading days immediately prior to such date, or (C) if
the Stock is not publicly traded, the fair market value of the Stock as
otherwise determined by the Administrator in the good faith exercise of its
discretion.
(15) "Incentive Stock Option" means any Stock Option intended to be
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(16) "Limited Stock Appreciation Right" means a Stock Appreciation
Right that can be exercised only in the event of a "Change of Control" (as
defined in Section 10 below).
(17) "Non-Employee Director" shall have the meaning set forth in Rule
16b-3.
(18) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option, including any Stock Option that provides (as of the time
such option is granted) that it will not be treated as an Incentive Stock
Option.
(19) "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.
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(20) "Participant" means any Eligible Employee or any consultant or
agent of the Company or any Subsidiary selected by the Committee, pursuant to
the Administrator's authority in Section 2, to receive grants of Stock Options,
DERs, Stock Appreciation Rights, Limited Stock Appreciation Rights, Restricted
Stock awards, Deferred Stock awards, Performance Shares or any combination of
the foregoing, or any Eligible Non-Employee Director eligible to receive grants
of Non-Qualified Stock Options and DERs pursuant to Section 5A below.
(21) "Performance Share" means an award of shares of Stock granted
pursuant to Section 7 that is subject to restrictions based upon the attainment
of specified performance objectives.
(22) "Restricted Stock" means an award granted pursuant to Section 7 of
shares of Stock subject to restrictions that will lapse with the passage of
time.
(23) "Stock" means the common stock, $0.01 par value, of the Company.
(24) "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 to receive an amount equal to the difference between (A)
the Fair Market Value, as of the date such Stock Appreciation Right or portion
thereof is surrendered, of the shares of Stock covered by such right or such
portion thereof, and (B) the aggregate exercise price of such right or such
portion thereof.
(25) "Stock Option" means an option to purchase shares of Stock granted
pursuant to Section 5 or Section 5A.
(26) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation) in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Board or by a Committee appointed
by the Board, which shall serve at the pleasure of the Board; provided, however,
that at all times when the Company is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, the Plan shall be administered
by the Committee appointed by the Board.
The Administrator shall have the power and authority to grant to
Eligible Employees and consultants or agents of the Company or any Subsidiary,
pursuant to the terms of the Plan: (a) Stock Options (with or without DERs), (b)
Stock Appreciation Rights or Limited Stock Appreciation Rights, (c) Restricted
Stock, (d) Deferred Stock, (e) Performance Shares or (f) any combination of the
foregoing.
In particular, the Administrator shall have the authority:
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(a) to select those employees of the Company or any Subsidiary who
shall be Eligible Employees;
(b) to determine whether and to what extent Stock Options (with or
without DERs), Stock Appreciation Rights, Limited Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Performance Shares or a combination of the
foregoing, are to be granted to Eligible Employees or any consultant or agent of
the Company or any Subsidiary hereunder;
(c) to determine the number of shares to be covered by each such award
granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, (x) the restricted period applicable to Restricted or Deferred Stock awards
and the date or dates on which restrictions applicable to such Restricted or
Deferred Stock shall lapse during such period, and (y) the performance goals and
periods applicable to the award of Performance Shares); and
(e) to determine the terms and conditions, not inconsistent with the
terms of the Plan, which shall govern all written instruments evidencing the
Stock Options, DERs, Stock Appreciation Rights, Limited Stock Appreciation
Rights, Restricted Stock, Deferred Stock, Performance Shares or any combination
of the foregoing.
The Administrator shall have the authority, in its discretion, to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable; to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any agreements relating thereto); and to otherwise supervise the administration
of the Plan.
All decisions made by the Administrator pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company, any
Subsidiaries and the Participants.
Notwithstanding anything to the contrary herein, no award hereunder may
be made to any Participant to the extent that, following such award, the shares
subject or potentially subject to such Participant's control (including, but not
limited to, (i) shares of the Company's equity stock owned by the Participant,
(ii) Stock Options, whether or not then exercisable, held by the Participant to
purchase additional such shares, (iii) Restricted Stock, Deferred Stock and
Performance Share awards to the Participant, whether or not then vested, and
(iv) Accrued DERs credited to the Participant) would constitute more than 9.8%
of the outstanding capital stock of the Company.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for issuance
under the Plan shall be 500,000; provided, however, that from and after such
time as the number of outstanding shares of Stock as reflected on the Company's
quarterly or year-end balance sheet exceeds 6,000,000 (including treasury shares
but not including adjustments in the event of changes in the
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corporate structure of the Company as provided below in this Section 3), the
total number of shares of Stock reserved and available for issuance under the
Plan shall automatically be increased so as to equal fifteen (15) percent of the
number of then outstanding shares of Stock, and provided further, that no more
than 500,000 shares of Stock shall be cumulatively available for Incentive Stock
Options. At all times, the number of shares reserved and available for issuance
hereunder as so determined from time to time shall be decreased by virtue of
awards granted and outstanding or exercised hereunder.
To the extent that (i) a Stock Option or DER expires or is otherwise
terminated without being exercised, or (ii) any shares of Stock subject to any
Restricted Stock, Deferred Stock or Performance Share award granted hereunder
are forfeited, such shares shall again be available for issuance in connection
with future awards under the Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock Option and such shares are returned to the Company in
satisfaction of such indebtedness, such shares shall again be available for
issuance in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, or other change in corporate structure
affecting the Stock, a substitution or adjustment may be made in (i) the
aggregate number of shares reserved for issuance under the Plan, and (ii) the
kind, number and option price of shares subject to outstanding Stock Options and
DERs granted under the Plan as may be determined by the Administrator, in its
sole discretion, provided that the number of shares subject to any award shall
always be a whole number. Such other substitutions or adjustments shall be made
as may be determined by the Administrator, in its sole discretion; provided,
however, that with respect to Incentive Stock Options, such adjustment shall be
made in accordance with Section 424 of the Code. An adjusted option price shall
also be used to determine the amount payable by the Company upon the exercise of
any Stock Appreciation Right or Limited Stock Appreciation Right associated with
any Stock Option.
The aggregate number of shares of Stock for which Stock Options or
Stock Appreciation Rights may be granted to any individual during any calendar
year may not, subject to adjustment as provided in this Section 3, exceed 75% of
the shares of Stock reserved for the purposes of the Plan in accordance with the
provisions of this Section 3.
SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company or Subsidiaries who are
responsible for or contribute to the management, growth and/or profitability of
the business of the Company or its Subsidiaries and consultants and agents of
the Company or its Subsidiaries, shall be eligible to be granted Stock Options,
DERs, Stock Appreciation Rights, Limited Stock Appreciation Rights, Restricted
Stock awards, Deferred Stock awards or Performance Shares hereunder. The
Participants under the Plan shall be selected from time to time by the
Administrator, in its sole discretion, from among the Eligible Employees and
consultants and agents recommended by the senior management of the Company, and
the Administrator shall determine, in its sole discretion, the number of shares
covered by each award; provided, however, that Eligible Non-Employee Directors
shall only be eligible to receive Stock Options as provided in Section 5A.
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SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards
granted under the Plan, including DERs as described in Section 5(11). Any Stock
Option granted under the Plan shall be in such form as the Administrator may
from time to time approve, and the provisions of Stock Option awards need not be
the same with respect to each optionee. Recipients of Stock Options shall enter
into a stock option agreement with the Company, in such form as the
Administrator shall determine, which agreement shall set forth, among other
things, the exercise price of the option, the term of the option and provisions
regarding exercisability of the option granted thereunder.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.
The Administrator shall have the authority under this Section 5 to
grant any optionee (except Eligible Non-Employee Directors) Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in each
case with or without DERs, Stock Appreciation Rights or Limited Stock
Appreciation Rights), provided, however, that Incentive Stock Options may not be
granted to any individual who is not an employee of the Company or its
Subsidiaries. To the extent that any Stock Option does not qualify as an
Incentive Stock Option, it shall constitute a separate Non-Qualified Stock
Option. More than one option may be granted to the same optionee and be
outstanding concurrently hereunder.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
(1) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Administrator in its sole discretion
at the time of grant but shall not, in the case of Incentive Stock Options, be
less than 100% of the Fair Market Value of the Stock on such date, and shall
not, in any event, be less than the par value of the Stock. The option price per
share of Stock purchasable under a Non-Qualified Stock Option may be less than
100% of such Fair Market Value. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 425(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is
granted to such employee, the option price of such Incentive Stock Option (to
the extent required by the Code at the time of grant) shall be no less than 110%
of the Fair Market Value of the Stock on the date such Incentive Stock Option is
granted.
(2) Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted; provided, however, that if an
employee owns or is deemed to own (by reason of the attribution rules of Section
425(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Parent Corporation or Subsidiary and an Incentive
Stock Option is granted to such employee, the term of such Incentive Stock
Option (to the extent
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required by the Code at the time of grant) shall be no more than five years from
the date of grant.
(3) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Administrator at or after grant; provided, however, that, except as provided
herein or unless otherwise determined by the Administrator at or after grant,
Stock Options shall become exercisable as to 25% of the shares subject to such
Stock Option on the first anniversary of the date of grant of the Stock Option,
and as to an additional 25% on each of the next three anniversaries of the date
of grant. To the extent not exercised, installments shall accumulate and be
exercisable in whole or in part at any time after becoming exercisable but not
later than the date the Stock Option expires. The Administrator may provide, in
its discretion, that any Stock Option shall be exercisable only in installments,
and the Administrator may waive such installment exercise provisions at any time
in whole or in part based on such factors as the Administrator may determine, in
its sole discretion.
(4) Method of Exercise. Subject to Section 5(3), Stock Options may be
exercised in whole or in part at any time during the option period, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price in cash or its
equivalent as determined by the Administrator. As determined by the
Administrator, in its sole discretion, payment in whole or in part may also be
made in the form of unrestricted Stock already owned by the optionee, or, in the
case of the exercise of a Non-Qualified Stock Option, Restricted Stock or
Performance Shares subject to an award hereunder (based, in each case, on the
Fair Market Value of the Stock on the date the option is exercised); provided,
however, that in the case of an Incentive Stock Option, the right to make
payment in the form of already owned shares may be authorized only at the time
of grant. Any payment in the form of stock already owned by the optionee may be
effected by use of an attestation form approved by the Administrator. If payment
of the option exercise price of a Non-Qualified Stock Option is made in whole or
in part in the form of Restricted Stock or Performance Shares, the shares
received upon the exercise of such Stock Option (to the extent of the number of
shares of Restricted Stock or Performance Shares surrendered upon exercise of
such Stock Option) shall be restricted in accordance with the original terms of
the Restricted Stock or Performance Share award in question, except that the
Administrator may direct that such restrictions shall apply only to that number
of shares equal to the number of shares surrendered upon the exercise of such
option. An optionee shall generally have the rights to dividends and other
rights of a stockholder with respect to shares subject to the option only after
the optionee has given written notice of exercise, has paid in full for such
shares, and, if requested, has given the representation described in paragraph
(1) of Section 11.
The Administrator may require the voluntary surrender of all or a
portion of any Stock Option granted under the Plan as a condition precedent to a
grant of a new Stock Option. Subject to the provisions of the Plan, such new
Stock Option shall be exercisable at the price, during such period and on such
other terms and conditions as are specified by the Administrator at the time the
new Stock Option is granted; provided, however, that should the Administrator so
require, the number of shares subject to such new Stock Option shall not be
greater than the number of shares subject to the surrendered Stock Option. Upon
their surrender, Stock Options
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shall be canceled and the shares previously subject to such canceled Stock
Options shall again be available for grants of Stock Options and other awards
hereunder.
(5) Loans. The Company may make loans available to Stock Option holders
in connection with the exercise of outstanding options granted under the Plan,
as the Administrator, in its discretion, may determine. Such loans shall (i) be
evidenced by promissory notes entered into by the Stock Option holders in favor
of the Company, (ii) be subject to the terms and conditions set forth in this
Section 5(5) and such other terms and conditions, not inconsistent with the
Plan, as the Administrator shall determine, and (iii) bear interest, if any, at
such rate as the Administrator shall determine. In no event may the principal
amount of any such loan exceed the sum of (x) the exercise price less the par
value of the shares of Stock covered by the option, or portion thereof,
exercised by the holder, and (y) any federal, state, and local income tax
attributable to such exercise. The initial term of the loan, the schedule of
payments of principal and interest under the loan, the extent to which the loan
is to be with or without recourse against the holder with respect to principal
or interest and the conditions upon which the loan will become payable in the
event of the holder's termination of employment shall be determined by the
Administrator; provided, however, that the term of the loan, including
extensions, shall not exceed seven years. Unless the Administrator determines
otherwise, when a loan is made, shares of Stock having a Fair Market Value at
least equal to the principal amount of the loan shall be pledged by the holder
to the Company as security for payment of the unpaid balance of the loan, and
such pledge shall be evidenced by a pledge agreement, the terms of which shall
be determined by the Administrator, in its discretion; provided, however, that
each loan shall comply with all applicable laws, regulations and rules of the
Board of Governors of the Federal Reserve System and any other governmental
agency having jurisdiction.
(6) Limits on Transferability of Options.
(a) Subject to Section 5(6)(b), no Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution or pursuant to a "qualified domestic relations order," as such
term is defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee or in accordance with the terms of a
qualified domestic relations order.
(b) The Administrator may, in its discretion, authorize all or
a portion of the options to be granted to an optionee to be on terms which
permit transfer by such optionee to (i) the spouse, qualified domestic partner,
children or grandchildren of the optionee and any other persons related to the
optionee as may be approved by the Administrator ("Immediate Family Members"),
(ii) a trust or trusts for the exclusive benefit of such Immediate Family
Members, (iii) a partnership or partnerships in which such Immediate Family
Members are the only partners, or (iv) any other persons or entities as may be
approved by the Administrator, provided that (x) there may be no consideration
for any transfer unless approved by the Administrator, (y) the stock option
agreement pursuant to which such options are granted must be approved by the
Administrator, and must expressly provide for transferability in a manner
consistent with this Section 5(6)(b), and (z) subsequent transfers of
transferred options shall be prohibited except those in accordance with Section
5(6)(a) or expressly approved by the
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Administrator. Following transfer, any such options shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that, except for purposes of Sections 5(7), (8) and (9) and
11(3) hereof, the terms "optionee," Stock Option holder" and "Participant" shall
be deemed to refer to the transferee. The events of termination of employment
under Sections 5(7), (8) and (9) hereof shall continue to be applied with
respect to the original optionee, following which the options shall be
exercisable by the transferee only to the extent, and for the periods specified
under such sections unless the option agreement governing such options otherwise
provides. Notwithstanding the transfer, the original optionee will continue to
be subject to the provisions of Section 11(3) regarding payment of taxes,
including the provisions entitling the Company to deduct such taxes from amounts
otherwise due to such optionee. Any transfer of a Stock Option that was
originally granted with DERs related thereto shall automatically include the
transfer of such DERs, any attempt to transfer such Stock Option separately from
such DERs shall be void, and such DERs shall continue in effect according to
their terms. "Qualified domestic partner" for the purpose of this Section
5(6)(b) shall mean a domestic partner living in the same household as the
optionee and registered with, certified by or otherwise acknowledged by the
county or other applicable governmental body as a domestic partner or otherwise
establishing such status in any manner satisfactory to the Administrator. Stock
options granted prior to December 1, 1996 may be amended to provide for their
transferability, subject to the foregoing conditions.
(7) Termination by Death. If an optionee's employment with the Company
or any Subsidiary terminates by reason of death, the Stock Option may thereafter
be immediately exercised, to the extent then exercisable (or on such accelerated
basis as the Administrator shall determine at or after grant), by the legal
representative of the estate or by the legatee of the optionee under the will of
the optionee, for a period of twelve months (or such shorter period as the
Administrator shall specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
(8) Termination by Reason of Disability. If an optionee's employment
with the Company or any Subsidiary terminates by reason of Disability, any Stock
Option held by such optionee may thereafter be exercised, to the extent it was
exercisable at the time of such termination (or on such accelerated basis as the
Administrator shall determine at the time of grant), for a period of twelve
months (or such shorter period as the Administrator shall specify at grant) from
the date of such termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is shorter; provided, however, that,
if the optionee dies within such twelve-month period (or such shorter period as
the Administrator shall specify at grant) and prior to the expiration of the
stated term of such Stock Option, any unexercised Stock Option held by such
optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination for a period of twelve months (or such
shorter period as the Administrator shall specify at grant) from the time of
death or until the expiration of the stated term of such Stock Option, whichever
period is shorter. In the event of a termination of employment by reason of
Disability, if an Incentive Stock Option is exercised after the expiration of
the applicable exercise periods under Section 422 of the Code, such Stock Option
shall thereafter be treated as a Non-Qualified Stock Option.
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<PAGE> 10
(9) Other Termination. Except as otherwise determined by the
Administrator, if an optionee's employment with the Company or any Subsidiary
terminates for any reason other than death or Disability, the Stock Option may
be exercised for a period of three months from the date of such termination, or
until the expiration of the stated term of such Stock Option, whichever period
is shorter.
(10) Annual Limit on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of shares of Stock with respect to which Incentive Stock
Options granted to an Optionee under this Plan and all other option plans of the
Company, its Parent Corporation or any Subsidiary become exercisable for the
first time by the Optionee during any calendar year exceeds $100,000, such Stock
Options shall be treated as Non-Qualified Stock Options.
(11) DERs. The Administrator shall have the discretion to grant DERs in
conjunction with grants of Stock Options pursuant to this Section 5. DERs may be
granted in either of two forms, "Current-pay DERs" and "Accrued DERs" and the
Administrator may condition the payment or accrual of amounts in respect thereof
subject to satisfaction of such performance objectives as the Administrator may
specify at the time of grant. Assuming satisfaction of any applicable
conditions, Current-pay DERs shall be paid concurrently with any dividends or
distributions paid on the Stock during the time the related Stock Options are
outstanding in an amount equal to the cash dividend (or Stock or other property
hereby distributed) per share being paid on the Stock times the number of shares
subject to the related Stock Options. Current-pay DERs are payable in cash,
Stock or such other property as may be distributed to shareholders. Accrued DERs
may be accrued in respect of cash dividends only or cash dividends and the value
of any Stock or other property distributed to shareholders, as the Administrator
shall determine at the time of grant. Assuming satisfaction of any applicable
conditions, Accrued DERs shall be accrued with respect to the related Stock
Options outstanding as of the date dividends are declared on the Company's Stock
in accordance with the following formula:
(A x B) / C
under which "A" equals the number of shares subject to such Stock Options, "B"
equals the cash dividend per share or the value per share of the Stock or other
property being distributed, as the case may be, and "C" equals the Fair Market
Value per share of Stock on the dividend payment date. The Accrued DERs shall
represent shares of Stock which shall be issuable to the holder of the related
Stock Option proportionately as the holder exercises the Stock Option to which
the Accrued DERs relate, rounded down to the nearest whole number of shares.
DERs shall expire upon the expiration of the Stock Options to which they relate.
The Administrator shall specify at the time of grant whether dividends shall be
payable or credited on Accrued DERs. Notwithstanding anything to the contrary
herein, Accrued DERs granted with respect to Stock Options shall be accrued only
to the extent of the number of shares of stock then reserved and available for
issuance under the Plan in excess of the number of shares subject to issuance
pursuant to outstanding Stock Option, Accrued DER, Stock Appreciation Right,
Limited Stock Appreciation Right, Deferred Stock or Performance Share awards.
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SECTION 5A. STOCK OPTIONS FOR ELIGIBLE NON-EMPLOYEE DIRECTORS.
This Section 5A shall apply only to automatic grants of Stock Options
to Eligible Non-Employee Directors.
(1) Each Eligible Non-Employee Director shall automatically be granted,
upon becoming a director of the Company or any Subsidiary, a Non-Qualified Stock
Option to purchase 5,000 shares of Stock. In addition, on the day after the
annual meeting of stockholders of the Company to be held in the calendar year
1995, and on the day after each annual stockholders' meeting of the Company
thereafter during the term of the Plan, each Eligible Non-Employee Director of
the Company shall be granted a Non-Qualified Stock Option to purchase 2,500
shares of Stock, together with Accrued DERs with respect to such Non-Qualified
Stock Option. The option price per share of Stock purchasable under such Stock
Option shall be 100% of the Fair Market Value on the date of grant. Such Stock
Option shall become exercisable as to 25% of the shares subject to such Stock
Option on the first anniversary of the date of grant of the Stock Option, and as
to an additional 25% of the shares subject to such Stock Option on each of the
next three anniversaries of the date of grant. To the extent not exercised,
installments shall accumulate and be exercisable in whole or in part at any time
after becoming exercisable but not later than the date the Stock Option expires.
Exercise shall be by payment in full of the purchase price in cash and no stock
option shall be exercisable more than ten years after the date of grant. The
aggregate number of shares of Stock that may be granted to Eligible Non-Employee
Directors pursuant to the Plan may not exceed 180,000 shares.
(2) Eligible Non-Employee Directors who receive grants of Stock Options
shall enter into a stock option agreement with the Company, which agreement
shall set forth, among other things, the exercise price of the option, the term
of the option and provisions regarding exercisability of the option granted
thereunder. The Stock Options granted under this section shall be Non-Qualified
Stock Options.
(3) Non-Qualified Stock Options granted to Eligible Non-Employee
Directors hereunder shall be transferable only to the extent provided in
Sections 5(6)(a) and (b).
(4) Accrued DERs shall be credited with respect to such Non-Qualified
Stock Options in accordance with the provisions of Section 5(11) above.
(5) The Board may not amend, alter or discontinue the provisions of
this Section 5A more than once every six months other than to comport with
changes in the Code, ERISA or the rules thereunder.
SECTION 6. STOCK APPRECIATION RIGHTS AND LIMITED STOCK
APPRECIATION RIGHTS.
(1) Grant and Exercise. Stock Appreciation Rights and Limited Stock
Appreciation Rights may be granted either alone ("Free Standing Rights") or in
conjunction with all or part of any Stock Option granted under the Plan
("Related Rights"). In the case of a Non-Qualified Stock Option, Related Rights
may be granted either at or after the time of the grant of such
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Stock Option. In the case of an Incentive Stock Option, Related Rights may be
granted only at the time of the grant of the Incentive Stock Option.
A Related Right or applicable portion thereof granted in conjunction
with a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Administrator at the time of grant, a Related Right
granted with respect to less than the full number of shares covered by a related
Stock Option shall only be reduced if and to the extent that the number of
shares covered by the exercise or termination of the related Stock Option
exceeds the number of shares not covered by the Stock Appreciation Right.
A Related Right may be exercised by an optionee, in accordance with
paragraph (2) of this Section 6, by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in paragraph
(2) of this Section 6. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the Related Rights have
been so exercised.
(2) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Administrator, including the
following:
(a) Stock Appreciation Rights that are Related Rights
("Related Stock Appreciation Rights") shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 and this Section 6;
provided, however, that no Related Stock Appreciation Right shall be exercisable
during the first six months of its term, except that this additional limitation
shall not apply in the event of death or Disability of the optionee prior to the
expiration of such six-month period.
(b) Upon the exercise of a Related Stock Appreciation Right,
an optionee shall be entitled to receive up to, but not more than, an amount in
cash or that number of shares of Stock (or in some combination of cash and
shares of Stock) equal in value to the excess of the Fair Market Value of one
share of Stock as of the date of exercise over the option price per share
specified in the related Stock Option multiplied by the number of shares of
Stock in respect of which the Related Stock Appreciation Right is being
exercised, with the Administrator having the right to determine the form of
payment.
(c) Related Stock Appreciation Rights shall be transferable or
exercisable only when and to the extent that the underlying Stock Option would
be transferable or exercisable under paragraph (6) of Section 5.
(d) Upon the exercise of a Related Stock Appreciation Right,
the Stock Option or part thereof to which such Related Stock Appreciation Right
is related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 on the number of shares of Stock to be issued
under the Plan.
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(e) A Related Stock Appreciation Right granted in connection
with an Incentive Stock Option may be exercised only if and when the Fair Market
Value of the Stock subject to the Incentive Stock Option exceeds the exercise
price of such Stock Option.
(f) Stock Appreciation Rights that are Free Standing Rights
("Free Standing Stock Appreciation Rights") shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Administrator at or after grant; provided, however, that no Free Standing Stock
Appreciation Right shall be exercisable during the first six months of its term,
except that this limitation shall not apply in the event of death or Disability
of the recipient of the Free Standing Stock Appreciation Right prior to the
expiration of such six-month period.
(g) The term of each Free Standing Stock Appreciation Right
shall be fixed by the Administrator, but no Free Standing Stock Appreciation
Right shall be exercisable more than ten years after the date such right is
granted.
(h) Upon the exercise of a Free Standing Stock Appreciation
Right, a recipient shall be entitled to receive up to, but not more than, an
amount in cash or that number of shares of Stock (or any combination of cash or
shares of Stock) equal in value to the excess of the Fair Market Value of one
share of Stock as of the date of exercise over the price per share specified in
the Free Standing Stock Appreciation Right (which price shall be no less than
100% of the Fair Market Value of the Stock on the date of grant) multiplied by
the number of shares of Stock with respect to which the right is being
exercised, with the Administrator having the right to determine the form of
payment.
(i) Free Standing Stock Appreciation Rights shall be
transferable or exercisable subject to the provisions governing the
transferability and exercisability of Stock Options set forth in paragraphs (3)
and (6) of Section 5.
(j) In the event of the termination of an employee who has
been granted one or more Free Standing Stock Appreciation Rights, such rights
shall be exercisable to the same extent that a Stock Option would have been
exercisable in the event of the termination of the optionee.
(k) Limited Stock Appreciation Rights may only be exercised
within the 30-day period following a "Change of Control" (as defined in Section
10 below), and, with respect to Limited Stock Appreciation Rights that are
Related Rights ("Related Limited Stock Appreciation Rights"), only to the extent
that the Stock Options to which they relate shall be exercisable in accordance
with the provisions of Section 5 and this Section 6; provided, however, that no
Related Limited Stock Appreciation Right shall be exercisable during the first
six months of its term, except that this additional limitation shall not apply
in the event of death or Disability of the optionee prior to the expiration of
such six-month period.
(l) Upon the exercise of a Limited Stock Appreciation Right,
the recipient shall be entitled to receive an amount in cash equal in value to
the excess of the "Change of Control Price" (as defined in Section 10) of one
share of Stock as of the date of exercise over (A) the
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option price per share specified in the related Stock Option, or (B) in the case
of a Limited Stock Appreciation Right which is a Free Standing Stock
Appreciation Right, the price per share specified in the Free Standing Stock
Appreciation Right, such excess to be multiplied by the number of shares in
respect of which the Limited Stock Appreciation Right shall have been exercised.
(m) For the purpose of the limitation set forth in Section 3
on the number of shares to be issued under the Plan, the grant or exercise of
Free Standing Stock Appreciation Rights shall be deemed to constitute the grant
or exercise, respectively, of Stock Options with respect to the number of shares
of Stock with respect to which such Free Standing Stock Appreciation Rights were
so granted or exercised.
SECTION 7. RESTRICTED STOCK, DEFERRED STOCK AND
PERFORMANCE SHARES.
(1) General. Restricted Stock, Deferred Stock or Performance Share
awards may be issued either alone or in addition to other awards granted under
the Plan. The Administrator shall determine the Eligible Employees to whom, and
the time or times at which, grants of Restricted Stock, Deferred Stock or
Performance Share awards shall be made; the number of shares to be awarded; the
price, if any, to be paid by the recipient of Restricted Stock, Deferred Stock
or Performance Share awards; the Restricted Period (as defined in Section 7(3))
applicable to Restricted Stock or Deferred Stock awards; the performance
objectives applicable to Performance Share or Deferred Stock awards; the date or
dates on which restrictions applicable to such Restricted Stock or Deferred
Stock awards shall lapse during such Restricted Period; and all other conditions
of the Restricted Stock, Deferred Stock and Performance Share awards. The
Administrator may also condition the grant of Restricted Stock, Deferred Stock
awards or Performance Shares upon the exercise of Stock Options, or upon such
other criteria as the Administrator may determine, in its sole discretion. The
provisions of Restricted Stock, Deferred Stock or Performance Share awards need
not be the same with respect to each recipient.
(2) Awards and Certificates. The prospective recipient of a Restricted
Stock, Deferred Stock or Performance Share award shall not have any rights with
respect to such award, unless and until such recipient has executed an agreement
evidencing the award (a "Restricted Stock Award Agreement," "Deferred Stock
Award Agreement," or "Performance Share Award Agreement," as appropriate) and
delivered a fully executed copy thereof to the Company, within a period of sixty
days (or such other period as the Administrator may specify) after the award
date. Except as otherwise provided below in this Section 7(2), (i) each
Participant who is awarded Restricted Stock or Performance Shares shall be
issued a stock certificate in respect of such shares of Restricted Stock or
Performance Shares; and (ii) such certificate shall be registered in the name of
the Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of the
Redwood Trust, Inc. Amended and Restated 1994 Executive and Non-Employee
Director Stock Option Plan and a Restricted Stock
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Award Agreement or Performance Share Award Agreement entered into between the
registered owner and Redwood Trust, Inc. Copies of such Plan and Agreement are
on file in the offices of Redwood Trust, Inc."
The Company shall require that the stock certificates evidencing such
shares be held in the custody of the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock award or
Performance Share award, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such award.
(3) Restrictions and Conditions. The Restricted Stock, Deferred Stock
and Performance Share awards granted pursuant to this Section 7 shall be subject
to the following restrictions and conditions:
(a) Subject to the provisions of the Plan and the Restricted
Stock, Deferred Stock or Performance Share award agreement, during such period
as may be set by the Administrator commencing on the grant date (the "Restricted
Period"), the Participant shall not be permitted to sell, transfer, pledge or
assign shares of Restricted Stock, Performance Shares or Deferred Stock awarded
under the Plan; provided, however, that the Administrator may, in its sole
discretion, provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions in whole or in part based on such factors
and such circumstances as the Administrator may determine, in its sole
discretion, including, but not limited to, the attainment of certain performance
related goals, the Participant's termination, death or Disability or the
occurrence of a "Change of Control" as defined in Section 10.
(b) Except as provided in paragraph (3)(a) of this Section 7,
the Participant shall have, with respect to the shares of Restricted Stock or
Performance Shares, all of the rights of a stockholder of the Company, including
the right to vote the shares, and the right to receive any dividends thereon
during the Restricted Period. With respect to Deferred Stock awards, the
Participant shall generally not have the rights of a shareholder of the Company,
including the right to vote the shares during the Restricted Period; provided,
however, that dividends declared during the Restricted Period with respect to
the number of shares covered by a Deferred Stock award shall be paid to the
Participant. Certificates for shares of unrestricted Stock shall be delivered to
the Participant promptly after, and only after, the Restricted Period shall
expire without forfeiture in respect of such shares covered by the award of
Restricted Stock, Performance Shares or Deferred Stock, except as the
Administrator, in its sole discretion, shall otherwise determine.
(c) Subject to the provisions of the Restricted Stock,
Deferred Stock or Performance Share award agreement and this Section 7, upon
termination of employment for any reason during the Restricted Period, all
shares subject to any restriction as of the date of such termination shall be
forfeited by the Participant, and the Participant shall only receive the amount,
if any, paid by the Participant for such Restricted Stock or Performance Shares,
plus simple interest on such amount at the rate of 8% per year.
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SECTION 8. AMENDMENT AND TERMINATION.
Subject to the provisions of Section 5A(5), the Board may amend, alter
or discontinue the Plan, but no amendment, alteration, or discontinuation shall
be made that would impair the rights of a Participant under any award
theretofore granted without such Participant's consent, or that without the
approval of the stockholders (as described below) would:
(1) except as provided in Section 3, increase the total number of
shares of Stock reserved for the purpose of the Plan;
(2) change the employees or class of employees eligible to participate
in the Plan; or
(3) extend the maximum option period under paragraph (2) of Section 5
of the Plan.
Notwithstanding the foregoing, stockholder approval under this Section
8 shall only be required at such time and under such circumstances as
stockholder approval would be required under Rule 16b-3 of the Act with respect
to any material amendment to any employee benefit plan of the Company.
The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 3, no such amendment
shall impair the rights of any holder without his or her consent.
SECTION 9. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant or
optionee by the Company, nothing contained herein shall give any such
Participant or optionee any rights that are greater than those of a general
creditor of the Company.
SECTION 10. CHANGE OF CONTROL.
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control" as defined in paragraph (2) of this Section 10:
(1) In the event of a "Change of Control," unless otherwise determined
by the Administrator or the Board in writing at or after grant (including under
any individual agreement), but prior to the occurrence of such Change of
Control:
(a) any Stock Appreciation Rights outstanding for at least six
months and any Stock Options, including Stock Options granted under Section 5A,
awarded under the Plan not previously exercisable and vested shall become fully
exercisable and vested;
(b) the restrictions applicable to any Restricted Stock,
Deferred Stock or Performance Share awards under the Plan shall lapse, and such
shares and awards shall be deemed fully vested;
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(c) any indebtedness incurred pursuant to Section 5(5) shall
be forgiven and the collateral pledged in connection with any such loan shall be
released; and
(d) the value of all outstanding Stock Options (except Stock
Options granted under Section 5A), DERs (except DERs granted in conjunction with
Stock Options granted under Section 5A), Stock Appreciation Rights, Limited
Stock Appreciation Rights, and Restricted Stock, Deferred Stock and Performance
Share awards shall, to the extent determined by the Administrator at or after
grant, be cashed out by a payment in cash or other property, as the
Administrator may determine, on the basis of the "Change of Control Price" (as
defined in paragraph (3) of this Section 10) as of the date the Change of
Control occurs or such other date as the Administrator may determine prior to
the Change of Control.
(2) For purposes of paragraph (1) of this Section 10, a "Change of
Control" shall be deemed to have occurred if:
(a) any "person," as such term is used in Sections 13(d) and
14(d) of the Act (other than the Company; any trustee or other fiduciary holding
securities under an employee benefit plan of the Company; or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Stock of the Company) is or becomes after
the Effective Date the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired directly
from the Company or its affiliates) representing 25% or more of the combined
voting power of the Company's then outstanding securities; or
(b) during any period of two consecutive years (not including
any period prior to the Effective Date), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (c) or (d) of this Section 10(2))
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof; or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
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(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(3) For purposes of this Section 10, "Change of Control Price" means
the higher of (i) the highest price per share paid or offered in any transaction
related to a Change of Control of the Company or (ii) the highest price per
share paid in any transaction reported on the exchange or national market system
on which the Stock is listed, at any time during the preceding sixty day period
as determined by the Administrator, except that, in the case of Incentive Stock
Options and Stock Appreciation Rights or Limited Stock Appreciation Rights
relating to Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Administrator decides to cash
out such options.
SECTION 11. GENERAL PROVISIONS.
(1) The Administrator may require each person purchasing shares
pursuant to a Stock Option to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to distribution thereof.
The certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
(2) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan shall
not confer upon any employee of the Company or any Subsidiary any right to
continued employment with the Company or a Subsidiary, as the case may be, nor
shall it interfere in any way with the right of the Company or a Subsidiary to
terminate the employment of any of its employees at any time.
(3) Each Participant shall, no later than the date as of which the
value of an award first becomes includable in the gross income of the
Participant for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
(and, where applicable, its Subsidiaries) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Participant.
(4) No member of the Board or the Administrator, nor any officer or
employee of the Company acting on behalf of the Board or the Administrator,
shall be personally liable for any
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action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board or the Administrator and each
and any officer or employee of the Company acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
SECTION 12. EFFECTIVE DATE OF PLAN.
The Plan became effective (the "Effective Date") on June 23, 1994, the
date the Company's stockholders formally approved the Plan.
SECTION 13. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Limited Stock Appreciation
Right, Restricted Stock, Deferred Stock or Performance Share award shall be
granted pursuant to the Plan on or after the tenth anniversary of the Effective
Date, but awards theretofore granted may extend beyond that date.
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