2001 Stock Incentive Plan - KB Home
KB HOME
2001 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE. The purpose of the 2001 Stock Incentive Plan (the
"Plan") is to promote the success of KB HOME (the "Company") by providing a
method whereby employees of the Company and its subsidiaries and other eligible
participants may be encouraged to invest in the Common Stock, $1.00 par value,
of the Company ("Common Stock"), increase their proprietary interest in its
business, remain in the employ of the Company or its subsidiaries, and increase
their personal interests in the continued success and progress of the Company.
The Plan provides for the grant of Options that satisfy the requirements for
treatment as Incentive Stock Options ("ISOs") as defined under Section 422 of
the Code or that are not intended to satisfy such requirements ("Non-qualified
Options"), as well as for certain other "Awards," as defined below.
SECTION 2. DEFINITIONS. As used in this Plan, the following terms shall
have the indicated meanings:
(a) Award: An award under this Plan of a Performance Stock Award,
Restricted Stock Award, or Stock Unit Award.
(b) Board: The board of directors of KB HOME.
(c) Code: The Internal Revenue Code of 1986, as amended.
(d) Committee: The Committee specified in Section 3(a) of this Plan.
(e) Company: KB HOME and its Subsidiaries.
(f) Exchange Act: The Securities Exchange Act of 1934, as amended.
(g) Limited Stock Appreciation Right: A right granted pursuant to
Section 6(b) to receive cash in certain circumstances with respect to a related
Option.
(h) Option: An Option is a right granted under Section 6(a) to purchase
a number of shares of Common Stock at such exercise price, at such times, and on
such other terms and conditions as are specified in or determined pursuant to
the document(s) evidencing the Award.
(i) Participant: An individual eligible under Section 5(a) to
participate in this Plan.
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(j) Performance Objectives: With reference to a particular Option or
Award, the objectives established by the Committee under various criteria, the
satisfaction of which may result in the grant, issuance, retention and/or
vesting of an Option, a Performance Stock Award or Stock Unit Award, or which
may accelerate the release of shares of Common Stock from the restrictions of a
Restricted Stock Award. The Performance Objectives may differ from Participant
to Participant and from Award to Award, as determined by the Committee and
specified in the applicable Award. For purposes of an Award that is intended to
qualify as "performance-based compensation" under Code Section 162(m), the term
"Performance Objective" shall mean any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or subsidiary, either
individually, alternatively or in any combination, and measured either annually
or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years' results or to a designated comparison
group, in each case as specified by the Committee in the Award: (i) pre-tax
income, (ii) after-tax income, (iii) cash flow, (iv) return on equity, (v)
return on capital, (vi) earnings per share (including earnings before interest,
taxes, depreciation and amortization), (vii) unit volume, (viii) net sales, (ix)
service quality or (v) total shareholder return, in each case as determined in
accordance with Generally Accepted Accounting Principles, if applicable.
(k) Performance Stock Award: Performance Stock is an award of shares of
Common Stock made under Section 7(a), the grant, issuance, retention and/or
vesting of which is subject to such performance and other conditions as are
expressed in the document(s) evidencing the Award.
(l) Plan: The KB HOME 2001 Stock Incentive Plan, as it may be amended
from time to time.
(m) Restricted Stock Award: Restricted Stock is a right granted under
Section 7(b) to shares of Common Stock issued or issuable under the Plan but
subject during specified periods of time to such conditions on vesting,
restrictions on transferability and/or repurchase rights as are expressed in the
document(s) evidencing the Award.
(n) Stock Unit Award: An award granted under Section 8 of this Plan.
(o) Subsidiary: Any corporation of which the Corporation owns, directly
or indirectly, fifty percent (50%) or more of the voting or capital stock, or
any partnership or other entity of which the Company owns, directly or
indirectly, a fifty percent (50%) or more participating interest or the general
partner of which is a Subsidiary.
(p) Tax Date: The date on which taxes of any kind are required by law to
be withheld with respect to shares of Common Stock subject to an Option or
Award.
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SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by the Board and/or by a committee of
the Board, as appointed from time to time by the Board (the "Committee"). The
Board shall fill vacancies on, and from time to time may remove or add members
to, the Committee. The Committee shall act pursuant to a majority vote or
unanimous written consent. Notwithstanding the foregoing, with respect to any
Award that is not intended to satisfy the conditions of Rule 16b-3 under the
Exchange Act or Section 162(m)(4)(C) of the Code, the Committee may appoint one
or more separate committees (any such committee, a "Subcommittee") composed of
one or more directors of the Corporation (who may but need not be members of the
Committee) and may delegate to any such Subcommittee(s) the authority to grant
Options, Limited Stock Appreciation Rights and/or Awards under the Plan, to
determine all terms of such Options, Limited Stock Appreciation Rights and/or
Awards, and to administer the Plan or any aspect of it. Any action by any such
Subcommittee shall be deemed for all purposes to have been taken by the
Committee. The Committee may designate the Secretary of the Corporation or other
Company employees to assist the Committee in the administration of the Plan, and
may grant authority to such persons to issue and/or execute agreements or other
documents under this Plan on behalf of the Committee or the Company.
(b) The Committee shall have full power and authority, subject to such
orders or resolutions not inconsistent with the provisions of the Plan as may
from time to time be issued or adopted by the Board, to grant to eligible
persons Options, Limited Stock Appreciation Rights and Awards pursuant to the
provisions of the Plan, to fix the exercise price and other terms of Options, to
fix the terms of any Performance Stock Award and/or Restricted Stock Award in a
manner consistent with the terms of Section 7, to fix the terms of any Stock
Unit Award in a manner consistent with the terms of Section 8, to prescribe,
amend and rescind rules and regulations, if any, relating to the Plan, to
interpret the provisions of the Plan, Options, Limited Stock Appreciation Rights
and Awards issued under the Plan, to amend such Options, Limited Stock
Appreciation Rights and Awards from time to time subject to the provisions of
the Plan, and to supervise the administration of the Plan. All decisions made by
the Committee pursuant to the provisions of the Plan and related orders or
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, stockholders, employees and optionees.
(c) Each person who is or shall have been a member of the Committee or
of the Board shall be indemnified and held harmless by the Company from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by him or her in connection with any claim, action, suit or proceeding to which
he or she may be a party by reason of any action taken or any failure to act
under the Plan. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which
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such persons may be entitled under the Company's Articles of Incorporation or
Bylaws, or as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) The shares to be delivered upon exercise of Options or Limited Stock
Appreciation Rights granted under the Plan or pursuant to Awards, may be made
available from the authorized but unissued shares of the Company or from shares
reacquired by the Company, including shares purchased in the open market or in
private transactions.
(b) Subject to adjustments made pursuant to the provisions of Section
4(d) and this Section 4(b), the aggregate number of shares reserved for issuance
upon the exercise of Options and pursuant to Awards which may be granted under
the Plan shall not exceed 4,200,000 shares of Common Stock. The aggregate number
of shares of Common Stock issued under this Plan shall equal only the number of
shares actually issued upon exercise or settlement of an Option or vesting or
settlement of any Award and not returned to the Company upon cancellation,
expiration or forfeiture of Options and Awards or delivered (either actually or
by attestation) in payment or satisfaction of the exercise price, purchase price
or tax obligation of Options and Awards.
(c) The aggregate number of shares of Common Stock issued and issuable
pursuant to ISOs may not exceed 4,200,000 shares. The maximum number of shares
of Common Stock subject to Options granted during any calendar year to any one
Participant shall not exceed 1,000,000. The maximum number of shares of Common
Stock subject to Awards (other than Stock Units issued or issuable upon exercise
of Options) that may be granted during any calendar year to any one Participant
shall not exceed 500,000 in the aggregate.
(d) In the event that the Committee shall determine that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below fair
market value, or other similar corporate event affects the Common Stock such
that an adjustment is required in order to preserve the benefits or potential
benefits intended to be made available to Participants under this Plan, then the
Committee may, in its sole discretion and in such manner as the Committee may
deem equitable, adjust any or all of (1) the number and kind of shares which
thereafter may be awarded or optioned and sold or made the subject of Limited
Stock Appreciation Rights under the Plan, (2) the number and kind of shares
subject to outstanding Options and Awards, and Limited Stock Appreciation
Rights, and (3) the option price with respect to any of the foregoing and/or, if
deemed
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appropriate, make provision for a cash payment to a Participant, including to
reflect such an event occurring prior to an Option or Award, the grant of which
was intentionally deferred in anticipation of such event; provided, however,
that the number of shares subject to any Option or Award shall always be a whole
number.
SECTION 5. ELIGIBILITY AND EXTENT OF PARTICIPATION.
(a) The persons eligible to receive Awards, Options and associated
Limited Stock Appreciation Rights under the Plan shall consist of employees or
prospective employees of the Company and consultants or advisors of the Company
who, in the Committee's judgment, can make substantial contributions to the
Company's long-term profitability and value. For purposes of the administration
of previously granted Options and Awards, the term "Participant" shall also
include a former Participant and any permitted transferee (including any trust,
partnership or estate) of a Participant or former Participant.
(b) Subject to the limitations of the Plan, the Committee shall, after
such consultation with and consideration of the recommendations of management as
the Committee considers desirable, select from eligible persons those
Participants to be granted Options and Awards and determine the time when each
Option and Award shall be granted, the number of shares subject to each Option
and Award and whether Limited Stock Appreciation Rights should be granted in
connection with such Option, the number of shares for each Award and the
restrictions associated with such Award. Subject to the provisions of Section 4,
both Options and Awards may be granted to the same Participant.
SECTION 6. GRANTS OF OPTIONS AND LIMITED STOCK APPRECIATION RIGHTS.
(a) Grant of Options. Options on shares of Common Stock may be granted
to Participants by the Committee from time to time at its sole discretion.
Options intended to qualify as ISOs pursuant to Code Section 422 and
Non-Qualified Options which are not intended to qualify as ISOs may be granted
as the Committee in its sole discretion shall determine. Each Option grant shall
contain such terms and conditions as may be approved by the Committee. Subject
to the terms of the Plan, the Committee may establish provisions regarding (1)
the number of shares of Common Stock which may be issued upon exercise of the
Option, (2) the purchase price of the shares of Common Stock and the means of
payment for the shares of Common Stock, (3) the term of the Option, (4) such
terms and conditions of exercisability as may be determined from time to time by
the Committee, (5) restrictions on the transfer of the Option and forfeiture
provisions, and (6) such further terms and conditions, in each case not
inconsistent with the Plan as may be determined from time to time by the
Committee. The grant of an Option shall not constitute or be evidence of any
agreement or other understanding,
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express or implied, on the part of the Company or any Subsidiary to employ an
individual for any specific period.
(b) Grant of Limited Stock Appreciation Rights in the Event of Change of
Ownership. If deemed by the Committee to be in the best interests of the
Company, any Option granted on or after the effective date of the Plan may
include a Limited Stock Appreciation Right at the time of grant of the Option;
also, the Committee may grant a Limited Stock Appreciation Right with respect to
any unexercised Option at any time after granting such Option prior to the end
of its term, provided such Option was granted after the effective date of the
Plan. Unless otherwise specified, any reference in this Plan to an Option or
Options shall include any associated Limited Stock Appreciation Right. Such
Limited Stock Appreciation Rights shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose, provided that:
(1) A Limited Stock Appreciation Right shall be exercisable only during
the ninety-one (91) day period specified in the last sentence of
Section 9(a), provided, however, that except in connection with a
Change of Ownership, no Limited Stock Appreciation Right granted to
a Participant who is subject to Section 16 of the Exchange Act shall
be exercisable within six (6) months of the date of its grant; and
(2) A Limited Stock Appreciation Right shall, upon its exercise, entitle
the optionee to whom such Limited Stock Appreciation Right was
granted to receive an amount of cash equal to the amount by which
the "Offer Price per Share" (as such term is hereinafter defined)
shall exceed the exercise price of the associated Option, multiplied
by the number of shares of Common Stock with respect to which such
Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any associated
Option shall cease to be exercisable to the extent of the shares of
Common Stock with respect to which such Limited Stock Appreciation
Right was exercised. Upon the exercise or termination of an
associated Option, any related Limited Stock Appreciation Right
shall terminate to the extent of the shares of Common Stock with
respect to which such associated Option was exercised or terminated.
The term "Offer Price per Share" as used in this Section 6(b) shall
mean with respect to a Limited Stock Appreciation Right the higher
of (i) the fair market value per share of Common Stock on the date
of exercise of such Limited Stock Appreciation Right or (ii) the
highest price per share for Common Stock paid or to be paid in the
transaction, if any, giving rise to
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the event specified in clauses (1) or (2) (as the case may be) of
Section 9(a) which triggered the exercisability of such Limited
Stock Appreciation Right. For purposes of clause (ii) above, any
securities or property which are part of the consideration paid or
to be paid in such transactions shall be valued in determining the
Offer Price per Share at the highest of (A) the valuation placed on
such securities or property by the company, person or other entity
engaging in such transaction, or (B) the valuation placed on such
securities or property by the Committee.
(c) Option Price.
(1) The price at which each share of Common Stock may be purchased upon
exercise of a particular Option shall be as specified by the
Committee, in its sole discretion, but in no event shall the
exercise price be less than 100% of the fair market value of a share
of Common Stock at the time such Option is granted, except that (i)
in the event that an optionee is required to make a payment or to
forego the receipt of other compensation pursuant to paragraph
(c)(3) below prior to receiving such Option, the exercise price per
share of Common Stock of such Option shall not be less than 100% of
the fair market value of a share of Common Stock at the time such
Option is granted less the purchase price per share of Common Stock
of such Option, and (ii) the Committee may specifically provide that
the exercise price of an Option may be higher or lower in the case
of an Option granted to employees of a company acquired by the
Company in assumption and substitution of options held by such
employees at the time such company is acquired.
(2) Unless approved by shareholders and subject to adjustment pursuant
to Section 4(d), the exercise price of any Option previously awarded
under the Plan may not be adjusted downward, whether through
amendment, cancellation or replacement grants, or by any other
means.
(3) If the Committee, in its discretion, shall deem it desirable, the
grant of an Option may be made conditional upon the receipt of a
payment therefor by the optionee or upon the optionee agreeing to
forego receipt of an amount of other compensation. Such condition
and the terms and conditions as to its satisfaction may also provide
for the reimbursement to the optionee of any part or all of such
payment under such circumstances as the Committee may specify.
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(d) Exercise.
(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion,
specify, provided, however, that except in connection with a Change
of Ownership, (i) Options granted to Participants who are subject to
Section 16 of the Exchange Act shall not become exercisable within
six (6) months from the date of grant and (ii) in no event may any
Option granted hereunder be exercisable after the expiration of 15
years from the date of such grant. Subject to the foregoing, each
Option grant shall specify the effect thereon of the death,
retirement or other termination of employment of the optionee. In
addition, the Committee may impose such other conditions with
respect to the exercise of Options, including without limitation,
any relating to the application of Federal or state securities laws,
as it may deem necessary or advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until the Participant has made payment in full of the option price
therefor or provision for such payment satisfactory to the
Committee. The exercise price of an Option may be paid in cash or
certified or cashiers' check or by delivery (either actually or by
attestation) of shares of Common Stock that have been acquired or
held by the Participant in such manner as to not result in an
accounting charge. To the extent authorized by the Committee, either
at the time of grant or at the time of exercise of an Option, the
exercise price of an Option also may be paid through one of more of
the following: (i) shares of capital stock of the Corporation, (ii)
other property deemed acceptable by the Committee, (iii) a reduction
in the number of shares or other property otherwise issuable
pursuant to such Option, (iv) a promissory note of or other
commitment to pay by the Participant or of a third party, the terms
and conditions of which shall be determined by the Committee, or
(vi) any combination of the foregoing. No optionee or the legal
representative, legatee or distributee of an optionee shall be
deemed to be a holder of any shares subject to any Option prior to
the issuance of such shares upon exercise of such Option.
(e) Transferability of Options. Unless the documents evidencing the
grant of an Option (or an amendment thereto authorized by the Committee)
expressly states that the Option is transferable as provided hereunder, no
Option granted under the Plan may be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner, other than by will or the
laws of descent and distribution. The Committee may in its sole discretion grant
an Option or amend an outstanding Option to provide that the Option is
transferable or assignable to a member or members
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of the Participant's "immediate family," as such term is defined under Exchange
Act Rule 16a-1(e), or to a trust for the benefit solely of a member or members
of the Participant's immediate family, or to a partnership or other entity whose
only owners are members of the Participant's family, provided that (1) no
consideration is given in connection with the transfer of such Option, and (2)
following any such transfer or assignment the Option will remain subject to
substantially the same terms applicable to the Option while held by the
Participant, as modified as the Committee in its sole discretion shall determine
appropriate, and the transferee shall agree to be bound by such terms.
SECTION 7. PERFORMANCE STOCK AWARDS AND RESTRICTED STOCK AWARDS.
(a) Performance Stock Awards. Subject to the terms of this Plan,
Performance Stock Awards may be granted to Participants by the Committee from
time to time at its sole discretion. Performance Stock Awards shall consist of
an award of shares of Common Stock, the grant, issuance, retention and/or
vesting of which shall be subject to such Performance Objectives, and to such
further terms and conditions as the Committee deems appropriate. Each
Performance Stock Award shall contain provisions regarding (1) the number of
shares of Common Stock subject to such Award or a formula for determining such,
(2) the performance criteria and level of achievement versus these criteria
which shall determine the number of shares of Common Stock granted, issued,
retainable and/or vested, (3) the period as to which performance shall be
measured for determining achievement of such performance criteria (a
"Performance Period"), (4) forfeiture provisions, and (5) such further terms and
conditions, in each case not inconsistent with the Plan as may be determined
from time to time by the Committee. The grant, issuance, retention and/or
vesting of each Performance Stock Award shall be subject to such performance
criteria and level of achievement versus these criteria as the Committee shall
determine, which criteria may be based on financial performance and/or personal
performance evaluations. Notwithstanding anything to the contrary herein, the
performance criteria for any Performance Stock that is intended by the Committee
to satisfy the requirements for "performance-based compensation" under Code
Section 162(m) shall be a measure based on one or more Performance Objectives
selected by the Committee and specified at the time the Performance Stock Award
is granted. Notwithstanding anything in this Plan to the contrary, Performance
Stock Awards may provide that upon satisfaction of Performance Objectives the
shares subject to the Award are subject to such further holding periods and/or
restrictions on transferability as the Committee may provide.
(b) Restricted Stock Awards. Subject to the terms of this Plan,
Restricted Stock Awards may be granted to Participants by the Committee from
time to time at its sole discretion. Restricted Stock consists of shares of
Common Stock which are registered or are issuable by the Company in the name of
a Participant in exchange for such cash or
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other consideration, if any, as determined by the Committee. Restricted Stock
shall be subject during specified periods of time to such conditions to vesting,
to restrictions on their sale or other transfer by the Participant and/or to
repurchase rights as may be determined by the Committee, consistent with the
terms of the Plan. The transfer and sale of shares of Common Stock pursuant to
Restricted Stock Awards shall be subject to the following terms and conditions:
(1) The number of shares of Common Stock to be transferred or sold by
the Company to a Participant pursuant to a Restricted Stock award
shall be determined by the Committee.
(2) Subject to the requirements of applicable law, the Committee shall
determine the price, if any, at which shares of Restricted Stock
shall be sold or awarded to a Participant, which may vary from time
to time and among Participants and which may be below the fair
market value of such Shares at the date of grant or issuance.
(3) All shares of Common Stock transferred or sold as Restricted Stock
hereunder shall be subject to such restrictions or conditions as the
Committee may determine, including, without limitation any or all of
the following: (i) a prohibition against the sale, transfer, pledge
or other encumbrance of the Shares, such prohibition to lapse at
such time or times as the Committee shall determine (whether in
annual or more frequent installments, at the time of the death,
disability or retirement of the holder of such Shares, or
otherwise); (ii) a requirement that the holder of shares of Common
Stock forfeit or resell back to the Company at a price specified by
the Committee (which price may be more than the price, if any, paid
by the Participant for such Shares) all or part of such shares of
Common Stock in the event of termination of employment during any
period in which such shares of Common Stock are subject to
conditions; (iii) such other conditions or restrictions as the
Committee may deem advisable; and (iv) any applicable Performance
Objectives which, if achieved, shall cause acceleration of the
lapsing of restrictions imposed upon all or part of the shares
covered by the Restricted Stock Award.
Notwithstanding anything else in this Plan to the contrary, the restrictions set
forth in Section 7(b)(3) shall not lapse with respect to a Restricted Stock
Award before the second anniversary of the date of grant of such Restricted
Stock Award, provided, however, that the Committee, in its sole discretion, may
designate that such restrictions shall lapse upon the achievement of Performance
Objectives. Subject to the preceding sentence, once established, Performance
Objectives and the terms under which the lapsing of restrictions may be
accelerated may be changed, adjusted or amended by the
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Committee in its sole discretion. Notwithstanding anything in this Plan to the
contrary, Restricted Stock Awards may provide that upon the lapsing of
restrictions set forth above, the shares subject to the Award may be subject to
such further holding periods and/or restrictions on transferability as the
Committee may provide.
(c) Rights with Respect to Shares. Unless the terms of the Award provide
otherwise, unless and until forfeited pursuant to the terms of this Plan or the
Award, a Participant shall have the right to vote and to receive dividends and
other distributions on shares subject to a Performance Stock Award or Restricted
Stock Award, subject, however, to the terms, conditions and restrictions
described in this Plan and the Award.
(d) Escrow. Shares of Common Stock issued pursuant to a Performance
Stock Award or Restricted Stock Award may be held in escrow by the Company until
such time as the Committee shall have determined that the restrictions set forth
in Section 7 have lapsed or until the shares subject to such Performance Stock
Award or Restricted Stock Award are forfeited pursuant to their terms.
(e) Restrictive Legends. Certificates for shares of Common Stock
delivered pursuant to Performance Stock Awards or Restricted Stock Awards may
bear an appropriate legend referring to the terms, conditions and restrictions
described in this Plan and in the applicable Award. Any attempt to dispose of
any such shares of Common Stock in contravention of the terms, conditions and
restrictions described in this Plan or in the applicable Award shall be
ineffective. Any shares of Common Stock of the Company or other property,
including cash, received by a Participant as a dividend or as a result of any
stock split, combination, exchange of shares, reorganization, merger,
consolidation or similar event with respect to shares of Common Stock received
pursuant to a Performance Stock Award or Restrictive Stock Award shall have the
same status and bear the same legend and be held in escrow pursuant to Section
7(d) as the shares received pursuant to the Performance Stock Award or
Restricted Stock Award unless otherwise determined by the Committee at the time
of such event.
(f) Designation of Beneficiaries. A Participant may designate a
beneficiary or beneficiaries to receive such Participant's Common Stock
hereunder in the event of such Participant's death, and may, at any time and
from time to time, change any such beneficiary designation. All beneficiary
designations and changes therein shall be in writing and shall be effective if
and when delivered to the Committee during the lifetime of the Participant.
(g) Discretionary Adjustments. Notwithstanding satisfaction of any
Performance Objectives, the number of shares of Common Stock granted, issued,
retainable and/or vested under a Performance Stock Award on account of either
financial performance or
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personal performance evaluations may be reduced by the Committee on the basis of
such further considerations as the Committee in its sole discretion shall
determine. The Committee may make adjustments or modifications, and its
determination thereof shall be conclusive, in any applicable Performance
Objectives to give effect to the intent of this Plan in connection with any
event affecting the performance criteria established as the Performance
Objectives, including without limitation, any reorganization, recapitalization,
merger, consolidation, offering of additional shares of Common Stock or other
change in the Company's shareholders' equity by means other than earnings, or
any similar event. The grant of an Award shall not constitute or be evidence of
any agreement or other understanding, express or implied, on the part of the
Company or any Subsidiary to employ an individual for any specific period.
SECTION 8. STOCK UNIT AWARDS.
(a) Grant of Stock Unit Awards. The Committee shall have authority to
grant to Participants Stock Unit Awards, the value of which is based, in whole
or in part, on the value of Common Stock. Each "Stock Unit" shall consist of a
bookkeeping entry representing an amount equivalent to the fair market value of
one share of Common Stock. Such Stock Units represent an unfunded and unsecured
obligation of the Company, except as otherwise provided for by the Committee.
Stock Units may be granted as additional compensation or in lieu of any other
compensation, as specified by the Committee, or may be issued upon exercise of
Options, or in lieu of a Performance Stock Award or Restricted Stock Award,
provided that for any Common Stock to be purchased in connection with a Stock
Unit Award other than upon exercise of an Option or in settlement of a
Performance Stock Award or Restricted Stock Award, the purchase price or the
amount of consideration paid or of other compensation foregone shall be equal to
at least 100% of the fair market value of such Common Stock on the date such
Award is granted. Subject to the provisions of the Plan, Stock Unit Awards shall
be subject to such terms, restrictions, conditions, vesting requirements and
payment rules as the Committee may determine in its sole discretion.
(b) Transferability of Stock Units. Unless the Stock Unit Award (or an
amendment thereto authorized by the Committee) expressly states otherwise, any
shares of Common Stock which are part of a Stock Unit Award shall not be
assigned, sold transferred, pledged or otherwise encumbered before the date on
which the shares are issued.
(c) Settlement of Stock Units. Unless provided otherwise by the
Committee at the time of grant, settlement of Stock Units shall be made by
issuance of Common Stock and shall occur within 60 days after a Participant's
termination of employment for any reason. The Committee may provide in the terms
of the Stock Unit Award for Stock Units to be settled in cash (at the election
of the Company or the Participant, as
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specified by the Committee) and to be made at such other times as it determines
appropriate or as it permits a Participant to choose. The amount of shares of
Common Stock, or other settlement medium, to be so distributed may be increased
by an interest factor or by dividend equivalents, which may be valued as if
reinvested in Common Stock. Until a Stock Unit is settled, the number of shares
of Common Stock represented by a Stock Unit shall be subject to adjustment
pursuant to Section 4(d).
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SECTION 9. SPECIAL RULES.
(a) Notwithstanding anything to the contrary in this Plan, unless
otherwise specifically determined by the Committee at the time of grant, all
Options theretofore granted and not fully exercisable shall become exercisable
in full and the restrictions on all outstanding Awards shall lapse upon the
occurrence of a Change of Ownership. A "Change of Ownership" shall be deemed to
have occurred if either (1) individuals who, as of the effective date of this
Plan, constitute the Board of Directors of the Company (the "Board of Directors"
generally and as of the date hereof the "Incumbent Board") cease for any reason
to constitute at least a majority of the directors constituting the Board of
Directors, provided that any person becoming a director subsequent to the
effective date of this Plan whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least three-quarters (3/4)
of the then directors who are members of the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is
(i) in connection with the acquisition by a third person, including a "group" as
such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Act"), of beneficial ownership, directly or indirectly, of 20% or
more of the combined voting securities ordinarily having the right to vote for
the election of directors of the Company (unless such acquisition of beneficial
ownership was approved by a majority of the Board of Directors who are members
of the Incumbent Board), or (ii) in connection with an actual or threatened
election contest relating to the election of the directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Act)
shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board, or (2) the Board of Directors (a majority of
which shall consist of directors who are members of the Incumbent Board) has
determined that a Change of Ownership triggering the exercisability of Options
and the lapse of restrictions on Awards as described in this Section 10 shall
have occurred. Options which become fully exercisable by reason of events
specified in clauses (1) or (2) shall remain exercisable for 90 days following
the date on which they become so exercisable, after which they will revert to
being exercisable in accordance with their original terms, provided, however,
that no Option which has previously been exercised or has expired or otherwise
terminated shall become exercisable by virtue of this Section nor shall this
Section permit exercise of any option during the portion, if any, of such 90 day
period which follows the termination or expiration of any such Option.
(b) For purposes of this Plan and any Option or Award hereunder,
termination of employment shall not be deemed to occur upon the transfer of any
optionee from the employ of the Company to the employ of any Subsidiary or
affiliate. For purposes of
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this Plan, "affiliate" means (1) any entity 50% or more of the voting interest
in which is owned, directly or indirectly, by an entity which owns, directly or
indirectly, 50% or more of the voting interest in the Company and (2) any entity
which owns, directly or indirectly, 50% or more of the voting interest in the
Company.
(c) Either at the time an Award is granted or by subsequent action, the
Committee may impose such restrictions, conditions or limitations as it
determines appropriate as to the timing and manner of any resales by a
Participant or other subsequent transfers by a Participant of any shares issued
under an Award, including without limitation (i) restrictions under an insider
trading policy, (ii) restrictions designed to delay and/or coordinate the timing
and manner of sales by Participants, and (iii) restrictions as to the use of a
specified brokerage firm for such resales or other transfers.
(d) The existence of outstanding Awards (including any Options) shall
not affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations,
exchanges, or other changes in the Company's capital structure or its business,
or any merger or consolidation of the Company, or any issuance of shares or
other securities or subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the shares
or the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
Further, except as herein expressly provided, (i) the issuance by the Company of
shares of stock or any class of securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, (ii) the payment of a dividend in property other than Common Stock,
or (iii) the occurrence of any similar transaction, and in any case whether or
not for fair value, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares subject to Options theretofore
granted or the purchase price per share, unless the Committee shall determine in
its sole discretion that an adjustment is necessary to provide equitable
treatment to Participant.
SECTION 10. DELIVERY OF SHARES. No shares of Common Stock shall be
delivered pursuant to an Award or any exercise of an Option until the
requirements of such laws and regulations as may be deemed by the Committee to
be applicable thereto are satisfied.
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SECTION 11. FINANCING AND WITHHOLDING.
(a) Withholding of Taxes. As a condition to the making of an Award, to
the lapse of the restrictions pertaining to an Award, to the transfer of shares
issued under an Award or to the delivery of shares in connection with the
exercise of an Option, the Company may require the Participant to pay to the
Company, or make arrangements satisfactory to the Committee regarding payment
of, any taxes of any kind required by law to be withheld with respect to such
shares of Common Stock.
(b) Financing. If requested by a Participant who exercises an Option or
who has received shares of Common Stock pursuant to an Award, the Committee may
in its discretion provide financing to the Participant in a principal amount
sufficient for the purchase of shares of Common Stock pursuant to such Option
exercise or under such Award, and/or to pay the amount of taxes required by law
to be withheld with respect to such Option exercise or such receipt of shares of
Common Stock. Any such loan shall be subject to all legal requirements, and
restrictions pertinent thereto, including if applicable, Regulation G
promulgated by the Federal Reserve Board. The grant of an Option or Award shall
in no way obligate the Company or the Committee to provide any financing
whatsoever upon the lapse of restrictions on shares or the exercise of such
Option.
(c) Withholding of Shares.
(1) If requested by a Participant who acquires shares of Common Stock
upon the exercise of an Option or who has received Common Stock
pursuant to an Award with respect to which the restrictions shall
have lapsed, the Committee may in its discretion permit the
Participant to satisfy any tax withholding obligations, in whole or
in part, by having the Company withhold a portion of such shares
with a value equal to the amount of taxes required by law to be
withheld.
(2) Requests by a Participant to have shares of Common Stock withheld
shall be (i) made prior to the Tax Date and (ii) irrevocable.
SECTION 12. AMENDMENTS, SUSPENSION OR DISCONTINUANCE. The Board of
Directors may amend, suspend or discontinue the Plan or any Option or Award
granted under the Plan. Notwithstanding the foregoing, except as permitted by
Section 4(c), the Board may not, without prior approval of the shareholders of
the Company, make any amendment which operates (a) to reduce the exercise price
of outstanding Options or amend the provisions of Section 6(c)(2) relating to
repricing Options, (b) to materially increase the total number of shares of
Common Stock which may be delivered in respect of Awards or on exercise of
Options granted under the Plan, (c) to
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extend the maximum option period or the period which Options or Awards may be
granted under the Plan or (d) to reduce the minimum permissible Option exercise
price.
SECTION 13. TERM OF PLAN. The Plan shall become effective on the date it
is approved and adopted by the Board, subject to its subsequent approval by
shareholders of the Company. No Option or Award shall be granted under the Plan
after the date that is ten (10) years after the date on which the Plan is
approved by the Company's shareholders or after such earlier date as the
Committee may decide, in its sole discretion.
SECTION 14. OPTION GRANTS BY SUBSIDIARIES. In the case of a grant of an
option to any Participant by a Subsidiary, such grant may, if the Committee so
directs, be implemented by the Corporation issuing any subject shares to the
Subsidiary, for such lawful consideration as the Committee may determine, upon
the condition or understanding that the Subsidiary will transfer the shares to
the optionholder in accordance with the terms of the option specified by the
Committee pursuant to the provisions of the Plan. Notwithstanding any other
provision hereof, such option may be issued by and in the name of the Subsidiary
and shall be deemed granted on such date as the Committee shall determine.
SECTION 15. LIABILITY OF COMPANY. The Company and any Affiliate which is
in existence or hereafter comes into existence shall not be liable to a
Participant, an Eligible Person or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of shares as to
which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not realized, by
any Participant, Eligible Person or other person due to the receipt, exercise or
settlement of any option or other Award granted hereunder.
SECTION 16. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board nor the submission of the Plan to the shareholders of the
Company for approval shall be construed as creating any limitations on the power
of the Board or the Committee to adopt such other incentive arrangements as it
or they may deem desirable, including without limitation, the granting of
restricted stock or stock options otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
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