FURMANITE CORPORATION 1994 STOCK INCENTIVE PLAN Amendment and Restatement Effective June 14, 2011
Exhibit 10.1
FURMANITE CORPORATION
1994 STOCK INCENTIVE PLAN
Amendment and Restatement
Effective June 14, 2011
Effective June 14, 2011
| TABLE OF CONTENTS | ||||||||
| Page | ||||||||
| ARTICLE I | PLAN |
1 | ||||||
| 1.1 | Purpose |
1 | ||||||
| 1.2 | Term of Plan |
1 | ||||||
| ARTICLE II | DEFINITIONS |
2 | ||||||
| 2.1 | Affiliate |
2 | ||||||
| 2.2 | Award |
2 | ||||||
| 2.3 | Board |
2 | ||||||
| 2.4 | Change of Control |
2 | ||||||
| 2.5 | Code |
3 | ||||||
| 2.6 | Committee |
3 | ||||||
| 2.7 | Company |
3 | ||||||
| 2.8 | Disability |
3 | ||||||
| 2.9 | Distribution Date |
4 | ||||||
| 2.10 | Dividend Equivalent |
4 | ||||||
| 2.11 | Employee Benefits Agreement |
4 | ||||||
| 2.12 | Employee |
4 | ||||||
| 2.13 | Exchange Act |
4 | ||||||
| 2.14 | Fair Market Value |
4 | ||||||
| 2.15 | Holder |
4 | ||||||
| 2.16 | Incentive Option |
4 | ||||||
| 2.17 | KSI Deferred Compensation Plans |
4 | ||||||
| 2.18 | Mature Shares |
5 | ||||||
| 2.19 | Minimum Statutory Tax Withholding Obligation |
5 | ||||||
| 2.20 | Net Shares |
5 | ||||||
| 2.21 | Non-Employee Director |
5 | ||||||
| 2.22 | Nonqualified Option |
5 | ||||||
| 2.23 | Option |
5 | ||||||
| 2.24 | Option Agreement |
5 | ||||||
| 2.25 | Permissible under Section 409A |
5 | ||||||
| 2.26 | Plan |
5 | ||||||
| 2.27 | Restricted Stock |
5 | ||||||
| 2.28 | Restricted Stock Agreement |
5 | ||||||
| 2.29 | Restricted Stock Award |
5 | ||||||
| 2.30 | Retirement |
5 | ||||||
| 2.31 | Restricted Stock Unit |
5 | ||||||
| 2.32 | Restricted Stock Unit Award |
5 | ||||||
| 2.33 | Section 409A |
6 | ||||||
| 2.34 | Stock |
6 | ||||||
| 2.35 | Substantial Risk of Forfeiture |
6 | ||||||
| 2.36 | Ten Percent Stockholder |
6 | ||||||
| ARTICLE III | ELIGIBILITY |
7 | ||||||
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| TABLE OF CONTENTS (continued) |
||||||||
| Page | ||||||||
| ARTICLE IV | GENERAL PROVISIONS RELATING TO AWARDS |
8 | ||||||
| 4.1 | Authority to Grant Awards |
8 | ||||||
| 4.2 | Dedicated Shares; Maximum Awards |
8 | ||||||
| 4.3 | Non-Transferability |
8 | ||||||
| 4.4 | Requirements of Law |
8 | ||||||
| 4.5 | Changes in the Company’s Capital Structure |
9 | ||||||
| 4.6 | Election Under Section 83(b) of the Code |
11 | ||||||
| ARTICLE V | OPTIONS |
12 | ||||||
| 5.1 | Type of Option |
12 | ||||||
| 5.2 | Exercise Price |
12 | ||||||
| 5.3 | Duration of Options |
12 | ||||||
| 5.4 | Amount Exercisable |
14 | ||||||
| 5.5 | Exercise of Options |
14 | ||||||
| 5.6 | Substitution Options |
15 | ||||||
| 5.7 | No Rights as Stockholder |
15 | ||||||
| ARTICLE VI | RESTRICTED STOCK AWARDS |
16 | ||||||
| 6.1 | Restricted Stock Awards |
16 | ||||||
| 6.2 | Holder’s Rights as Stockholder |
16 | ||||||
| ARTICLE VII | RESTRICTED STOCK UNIT AWARDS |
17 | ||||||
| 7.1 | Authority to Grant Restricted Stock Unit Awards |
17 | ||||||
| 7.2 | Restricted Stock Unit Award |
17 | ||||||
| 7.3 | Restricted Stock Unit Award Agreement |
17 | ||||||
| 7.4 | Dividend Equivalents |
17 | ||||||
| 7.5 | Form of Payment Under Restricted Stock Unit Award |
17 | ||||||
| 7.6 | Time of Payment Under Restricted Stock Unit Award |
17 | ||||||
| 7.7 | No Rights as Stockholder |
17 | ||||||
| ARTICLE VIII | ADMINISTRATION |
18 | ||||||
| ARTICLE IX | AMENDMENT OR TERMINATION OF PLAN |
19 | ||||||
| ARTICLE X | MISCELLANEOUS |
20 | ||||||
| 10.1 | No Establishment of a Trust Fund |
20 | ||||||
| 10.2 | No Employment or Affiliation Obligation |
20 | ||||||
| 10.3 | Forfeiture |
20 | ||||||
| 10.4 | Tax Withholding |
20 | ||||||
| 10.5 | Written Agreement |
21 | ||||||
| 10.6 | Indemnification of the Committee |
21 | ||||||
| 10.7 | Gender |
22 | ||||||
| 10.8 | Headings |
22 | ||||||
| 10.9 | Other Compensation Plans |
22 | ||||||
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| TABLE OF CONTENTS (continued) |
||||||||
| Page | ||||||||
| 10.10 | Other Options or Awards |
22 | ||||||
| 10.11 | Option Adjustments Pursuant to the Employee Benefits Agreement |
22 | ||||||
| 10.12 | Governing Law |
22 | ||||||
| 10.13 | Compliance with Section 409A |
22 | ||||||
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ARTICLE I
PLAN
1.1 Purpose. The Plan is intended to advance the best interests of the Company and its
stockholders by providing those persons who have substantial responsibility for the management and
growth of the Company and its Affiliates with additional incentives and an opportunity to obtain or
increase their proprietary interest in the Company, thereby encouraging them to continue in their
employment or affiliation with the Company or any of its Affiliates.
1.2 Term of Plan. No Award shall be granted under the Plan after March 4, 2019. The Plan
shall remain in effect until all Awards under the Plan have been satisfied or expired.
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ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the meaning set out in these
definitions throughout the Plan, unless the context in which any such word or phrase appears
reasonably requires a broader, narrower or different meaning.
2.1 “Affiliate” means any parent corporation and any subsidiary corporation. The term “parent
corporation” means any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if, at the time of the action or transaction, each of the corporations
other than the Company owns stock possessing 50 percent or more of the total combined voting power
of all classes of stock in one of the other corporations in the chain. The term “subsidiary
corporation” means any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the action or transaction, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other corporations in the
chain.
2.2 “Award” means any Incentive Option, Nonqualified Option, Restricted Stock Award or
Restricted Stock Unit Award granted under the Plan.
2.3 “Board” means the board of directors of the Company.
2.4 “Change of Control” means the occurrence of any of the following after March 4, 2009:
(a) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a “Covered Person”) of beneficial ownership
(within the meaning of rule 13d-3 promulgated under the Exchange Act) of 20 percent or more
of either (i) the then outstanding shares of Stock (the “Outstanding Company Common Stock”)
or (ii) the combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this Section 2.4(a), the following
acquisitions shall not constitute a Change in Control of the Company: (i) any acquisition by
the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any entity controlled by the Company or (iii) any
acquisition by any corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of Section 2.4(c);
(b) individuals who, as of March 4, 2009, constitute the Board of Directors (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a director subsequent to March 4,
2009, whose election, or nomination for election, by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual
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whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors; or
(c) the consummation of (i) a reorganization, merger or consolidation or sale of the
Company or (ii) a disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business Combination, (A) all
or substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 80 percent of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may
be, (B) no Covered Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 80 percent or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation, except to the
extent that such ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such Business Combination;
provided, however, that any individual becoming a director subsequent to March 4, 2009 whose
election, or nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the election or removal of
directors.
2.5 “Code” means the Internal Revenue Code of 1986, as amended.
2.6 “Committee” means a committee of at least two persons appointed by the Board.
2.7 “Company” means Furmanite Corporation, a Delaware corporation.
2.8 “Disability” means, as determined by the Committee in its discretion exercised in good
faith, (a) in the case of an Award that is exempt from the application of the requirements of
Section 409A a medically determinable mental or physical impairment which, in the opinion of a
physician selected by the Committee, shall prevent the Holder from engaging in any substantial
gainful activity and which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12 months and which: (i) was not
contracted,
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suffered or incurred while the Holder was engaged in, or did not result from having engaged
in, a felonious criminal enterprise; (ii) did not result from alcoholism or addiction to narcotics;
(iii) did not result from an injury incurred while a member of the Armed Forces of the United
States for which the Holder receives a military pension; and (iv) did not result from an
intentionally self-inflicted injury and (b) in the case of an Award that is not exempt from the
application of the requirements of Section 409A, a physical or mental condition of the Holder where
(i) the Holder is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) the Holder is, by
reason of any medically determinable physical or mental impairment that can be expected to result
in death or can be expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an accident and health
plan covering employees of the Company. A determination of Disability may be made by a physician
selected or approved by the Committee and, in this respect, the Holder shall submit to an
examination by such physician upon request by the Committee.
2.9 “Distribution Date” shall have the meaning specified in the Distribution Agreement by and
between the Company, Kaneb Services LLC and Kaneb Pipeline Partners, L.P.
2.10 “Dividend Equivalent” means a payment equivalent in amount to dividends paid with respect
to the Stock to the Company’s stockholders.
2.11 “Employee Benefits Agreement” means the Employee Benefits Agreement by and between the
Company and Kaneb Services LLC, a Delaware limited liability company.
2.12 “Employee” means a person employed by the Company or any Affiliate as a common law
employee.
2.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.14 “Fair Market Value” of the Stock as of any date means the closing price of the Stock on
such date, or, if the Stock was not traded on such date, on the immediately preceding day that the
Stock was so traded. However, if the Stock is not listed on a securities exchange, the Fair Market
Value will be an amount determined by the Committee in a manner that complies with the requirements
of Section 409A.
2.15 “Holder” means a person who has been granted an Award or any person who is entitled to
receive Stock under an Award.
2.16 “Incentive Option” means an Option granted under the Plan which is designated as an
“Incentive Option” and satisfies the requirements of section 422 of the Code.
2.17 “KSI Deferred Compensation Plans” means the Kaneb Services, Inc. 1996 Supplemental
Deferred Compensation Plan, the Kaneb Services, Inc. Non-Employee Directors Deferred Stock Unit
Plan, the Kaneb Services, Inc. Deferred Stock Unit Plan, and any other nonqualified deferred
compensation plans that the Company may adopt in the future.
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2.18 “Mature Shares” means shares of Stock that the Holder has held for at least six months.
2.19 “Minimum Statutory Tax Withholding Obligation” means, with respect to an Award, the
amount the Company, an Affiliate or other subsidiary is required to withhold for federal, state,
local and foreign taxes based upon the applicable minimum statutory withholding rates required by
the relevant tax authorities.
2.20 “Net Shares” means the shares of Stock to be issued upon exercise of an Option reduced by
the number of unencumbered, transferable Mature Shares that would be required to be tendered to the
Company to satisfy the exercise price of the Option.
2.21 “Non-Employee Director” means any duly elected member of the Board who is not an
Employee.
2.22 “Nonqualified Option” means an Option granted under the Plan other than an Incentive
Option.
2.23 “Option” means either an Incentive Option or a Nonqualified Option granted under the Plan
to purchase shares of Stock.
2.24 “Option Agreement” means the written agreement which sets out the terms of an Option.
2.25 “Permissible under Section 409A” means with respect to a particular action (such as, the
grant, payment, vesting, settlement or deferral of an amount or Award under the Plan) that such
action shall not subject the compensation at issue to the additional tax or interest applicable
under Section 409A.
2.26 “Plan” means the Furmanite Corporation 1994 Stock Incentive Plan, as set forth in this
document and as it may be amended from time to time.
2.27 “Restricted Stock” means stock awarded or purchased under the Plan pursuant to a
Restricted Stock Agreement.
2.28 “Restricted Stock Agreement” means the written agreement which sets out the terms of a
Restricted Stock Award.
2.29 “Restricted Stock Award” means an Award of Restricted Stock.
2.30 “Retirement” means the termination of an Employee’s employment relationship with the
Company and all Affiliates after attaining the age of 55.
2.31 “Restricted Stock Unit” means a restricted stock unit credited to a Holder’s ledger
account maintained by the Company pursuant to Article VII.
2.32 “Restricted Stock Unit Award” means an Award granted pursuant to Article VII.
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2.33 “Section 409A” means section 409A of the Code and the regulations and other guidance
promulgated by the United States Department of Treasury or the United States Internal Revenue
Service under section 409A of the Code, or any successor statute.
2.34 “Stock” means the common stock of the Company, no par value, or, in the event that the
outstanding shares of common stock are later changed into or exchanged for a different class of
stock or securities of the Company or another corporation, that other stock or security. Shares of
Stock when issued may be represented by a certificate or by book or electronic entry.
2.35 “Substantial Risk of Forfeiture” shall have the meaning ascribed to that term in Section
409A.
2.36 “Ten Percent Stockholder” means an individual who, at the time the Option is granted,
owns stock possessing more than ten percent of the total combined voting power of all classes of
stock or series of the Company or of any Affiliate. An individual shall be considered as owning
the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole
or half blood), spouse, ancestors and lineal descendants; and stock owned, directly or indirectly,
by or for a corporation, partnership, estate or trust, shall be considered as being owned
proportionately by or for its stockholders, partners or beneficiaries.
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ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to receive Incentive Options shall be those key
Employees of the Company or any of its Affiliates as the Committee shall determine from time to
time. The individuals who shall be eligible to receive Awards other than Incentive Options shall
be those persons, including Employees, consultants, advisors and directors, who have substantial
responsibility for the management and growth of the Company or any of its Affiliates as the
Committee shall determine from time to time. Further, shares of Stock may be issued under the Plan
to participants and former participants in the KSI Deferred Compensation Plans in satisfaction of
the Company’s obligations thereunder.
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ARTICLE IV
GENERAL PROVISIONS RELATING TO AWARDS
4.1 Authority to Grant Awards. The Committee may grant Awards to those key Employees of the
Company or any of its Affiliates and other eligible persons as it shall from time to time
determine, under the terms and conditions of the Plan. Subject only to any applicable limitations
set out in the Plan, the number of shares of Stock to be covered by any Award to be granted to any
person shall be as determined by the Committee.
4.2 Dedicated Shares; Maximum Awards. The aggregate number of shares of Stock with respect to
which Awards may be granted under the Plan to current and former participants in the KSI Deferred
Compensation Plans pursuant to the terms thereof is 6,100,000. Such shares of Stock may be
treasury shares or authorized but unissued shares. The maximum number of shares of Stock with
respect to which Options may be granted under the Plan is 6,100,000 shares. The maximum number of
shares of Stock with respect to which Restricted Stock Awards and Restricted Stock Unit Awards may
be granted under the Plan is 1,250,000 shares. The maximum number of shares with respect to which
Options which may be granted to any person under the Plan during any calendar year is 750,000
shares. If a Holder’s Option is cancelled, the cancelled Option continues to be counted against
the maximum number of shares of Stock for which Options may be granted to the Holder under the
Plan. The number of shares stated in this Section 4.2 shall be subject to adjustment in accordance
with the provisions of Section 4.5. If any outstanding Award expires or terminates for any reason
or any Award is surrendered, the shares of Stock allocable to the unexercised portion of that Award
may again be subject to an Award under the Plan.
4.3 Non-Transferability. Incentive Options shall not be transferable by the Employee other
than by will or under the laws of descent and distribution, and shall be exercisable, during the
Employee’s lifetime, only by him. Except as specified in the applicable Award agreements or in
domestic relations court orders, Awards other than Incentive Options shall not be transferable by
the Holder other than by will or under the laws of descent and distribution, and shall be
exercisable, during the Holder’s lifetime, only by him. In the discretion of the Committee, any
attempt to transfer an Award other than under the terms of the Plan and the applicable Award
agreement may terminate the Award.
4.4 Requirements of Law. The Company shall not be required to sell or issue any shares of
Stock under any Award if issuing the shares of Stock would constitute or result in a violation by
the Holder or the Company of any provision of any law, statute or regulation of any governmental
authority. Specifically, in connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Award, the Company shall not be required to issue
any shares of Stock unless the Committee has received evidence satisfactory to it to the effect
that the Holder will not transfer the shares of Stock except in accordance with applicable law,
including receipt of an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. The determination by the Committee on this matter
shall be final, binding and conclusive. The Company may, but shall in no event be obligated to,
register any shares of Stock covered by the Plan pursuant to applicable securities laws of any
country or any political subdivision. In the event the shares of Stock issuable on exercise of
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an Option or any other Award are not registered, the Company may imprint on the certificate
evidencing the shares of Stock any legend that counsel for the Company considers necessary or
advisable to comply with applicable law; or should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to restrict transfer of
the shares of Stock as counsel for the Company considers necessary or advisable to comply with
applicable law. The Company shall not be obligated to take any other affirmative action in order
to cause the exercise of an Option or vesting under an Award, or the issuance of shares of Stock
pursuant thereto, to comply with any law or regulation of any governmental authority.
4.5 Changes in the Company’s Capital Structure. (a) The existence of outstanding Awards 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 or other changes in the Company’s
capital structure or its business, any merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Stock or its rights, the
dissolution or liquidation of the Company, 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.
(a) If the Company shall effect a subdivision or consolidation of shares or other
capital readjustment, the payment of a stock dividend, or other increase or reduction of the
number of shares of Stock outstanding, without receiving compensation for it in money,
services or property, then (i) the number, class or series and per share price of shares of
Stock subject to outstanding Awards under this Plan shall be appropriately adjusted in such
a manner as to entitle a Holder to receive upon exercise of an Award, for the same aggregate
cash consideration, the equivalent total number and class or series of shares he would have
received had he exercised his Award in full immediately prior to the event requiring the
adjustment, and (ii) the number and class or series of shares of Stock then reserved to be
issued under the Plan shall be adjusted by substituting for the total number and class or
series of shares of Stock then reserved, that number and class or series of shares of Stock
that would have been received by the owner of an equal number of outstanding shares of each
class or series of Stock as the result of the event requiring the adjustment.
(b) If while unexercised Awards remain outstanding under the Plan (i) the Company shall
not be the surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than an entity that was wholly-owned by the
Company immediately prior to such merger, consolidation or other reorganization), (ii) the
Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or entity (other than an entity wholly-owned by the
Company), (iii) the Company is to be dissolved or (iv) the Company is a party to any other
corporate transaction (as defined under section 424(a) of the Code and applicable Department
of Treasury Regulations) that is not described in clauses (i), (ii) or (iii) of this
sentence (each such event is referred to herein as a “Corporate Change”), then, except as
otherwise provided in an Award agreement or as a result of the Board’s effectuation of one
or more of the alternatives described below, there shall be no acceleration of the time at
which any Award then outstanding may be exercised, and no later than ten days after the
approval by the stockholders of the
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Company of such Corporate Change, the Board, acting in its sole and absolute discretion
without the consent or approval of any Holder, shall act to effect one or more of the
following alternatives, which may vary among individual Holders and which may vary among
Awards held by any individual Holder:
(A) accelerate the time at which some or all of the Awards then
outstanding may be exercised so that such Awards may be exercised in full
for a limited period of time on or before a specified date (before or after
such Corporate Change) fixed by the Board, after which specified date all
such Awards that remain unexercised and all rights of Holders thereunder
shall terminate;
(B) require the mandatory surrender to the Company by all or selected
Holders of some or all of the then outstanding Options held by such Holders
(irrespective of whether such Options are then exercisable under the
provisions of this Plan or the Option Agreements evidencing such Options) as
of a date, before or after such Corporate Change, specified by the Board, in
which event the Board shall thereupon cancel such Options and the Company
shall pay to each such Holder an amount of cash per share equal to the
excess, if any, of the per share price offered to stockholders of the
Company in connection with such Corporate Change over the exercise prices
under such Options for such shares;
(C) with respect to all or selected Holders, have some or all of their
then outstanding Awards (whether vested or unvested) assumed or have a new
Award substituted for some or all of their then outstanding Awards (whether
vested or unvested) by an entity which is a party to the transaction
resulting in such Corporate Change and which is then employing him, or a
parent or subsidiary of such entity, provided that (1) such assumption or
substitution is on a basis where the excess of the aggregate fair market
value of the shares subject to the Award immediately after the assumption or
substitution over the aggregate exercise price of such shares is equal to
the excess of the aggregate fair market value of all shares subject to the
Award immediately before such assumption or substitution over the aggregate
exercise price of such shares, and (2) the assumed rights under such
existing Award or the substituted rights under such new Award as the case
may be will have the same terms and conditions as the rights under the
existing Award assumed or substituted for, as the case may be;
(D) provide that the number and class or series of shares of Stock
covered by an Award (whether vested or unvested) theretofore granted shall
be adjusted so that such Award when exercised shall thereafter cover the
number and class or series of shares of stock or other securities or
property (including, without limitation, cash) to which the Holder would
have been entitled pursuant to the terms of the agreement or plan relating
to such Corporate Change if, immediately prior to such
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Corporate Change, the Holder had been the holder of record of the
number of shares of Stock then covered by such Award; or
(E) make such adjustments to Awards then outstanding as the Board deems
appropriate to reflect such Corporate Change (provided, however, that the
Board may determine in its sole and absolute discretion that no such
adjustment is necessary).
In effecting one or more of alternatives (C), (D) or (E) above, and except as otherwise may be
provided in an Award agreement, the Board, in its sole and absolute discretion and without the
consent or approval of any Holder, may accelerate the time at which some or all Awards then
outstanding may be exercised.
(c) In the event of changes in the outstanding Stock by reason of recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes
in capitalization occurring after the date of the grant of any Award and not otherwise
provided for by this Section 4.5, any outstanding Awards and any agreements evidencing such
Awards shall be subject to adjustment by the Board in its sole and absolute discretion as to
the number and price of shares of Stock or other consideration subject to such Awards. In
the event of any such change in the outstanding Stock, the aggregate number of shares
available under this Plan may be appropriately adjusted by the Board, whose determination
shall be conclusive.
(d) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company shall be the
surviving corporation, each Holder shall be entitled to have his Restricted Stock
appropriately adjusted based on the manner the Stock was adjusted under the terms of the
agreement of merger or consolidation.
(e) The issue by the Company of shares of Stock of any class or series, or securities
convertible into shares of Stock of any class or series, for cash or property, or for labor
or services either upon direct sale or upon the exercise of rights or warrants to subscribe
for them, or upon conversion of shares or obligations of the Company convertible into shares
or other securities, shall not affect, and no adjustment by reason of such issuance shall be
made with respect to, the number, class or series, or price of shares of Stock then subject
to outstanding Awards.
4.6 Election Under Section 83(b) of the Code. No Holder shall exercise the election permitted
under section 83(b) of the Code with respect to any Award without the written approval of the Chief
Financial Officer of the Company. Any Holder who makes an election under section 83(b) of the Code
with respect to any Award without the written approval of the Chief Financial Officer of the
Company may, in the discretion of the Committee, forfeit any or all Awards granted to him under the
Plan.
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ARTICLE V
OPTIONS
5.1 Type of Option. The Committee shall specify in an Option Agreement whether a given Option
is an Incentive Option or a Nonqualified Option. However, notwithstanding such designation, to the
extent that the aggregate Fair Market Value (determined as of the time an Incentive Option is
granted) of the Stock with respect to which incentive stock options first become exercisable by an
Employee during any calendar year (under the Plan and any other incentive stock option plan(s) of
the Company or any Affiliate) exceeds $100,000, the Incentive Option shall be treated as a
Nonqualified Option. In making this determination, incentive stock options shall be taken into
account in the order in which they were granted.
5.2 Exercise Price. The price at which Stock may be purchased under an Option shall not be
less than 100 percent of the Fair Market Value of the shares of Stock on the date the Option is
granted. In the case of any Ten Percent Stockholder, the price at which shares of Stock may be
purchased under an Incentive Option shall not be less than 110 percent of the Fair Market Value of
the Stock on the date the Incentive Option is granted. An Option granted under the Plan may not be
granted with any Dividend Equivalents rights.
5.3 Duration of Options. An Option shall not be exercisable after the earlier of (i) the term
of the Option specified in the Option Agreement (which shall not exceed five years from the date
the Option is granted in the case of an Incentive Option granted to a Ten Percent Stockholder, or
ten years from the date the Option is granted in the case of any other Option), or (ii) the period
of time specified herein that follows the Holder’s Retirement, Disability, death or other severance
of the employment or affiliation relationship between the Holder and the Company and all
Affiliates. Except as specified in Section 10.11, unless the Holder’s Option Agreement specifies
otherwise, an Option shall not continue to vest after the severance of the employment or
affiliation relationship between the Company and all Affiliates.
(a)
General Term of Option. Unless the Option Agreement specifies a shorter term, an
Option shall expire on the tenth anniversary of the date the Option is granted.
Notwithstanding the foregoing, unless the Option Agreement specifies a shorter term, in the
case of an Incentive Option granted to a Ten Percent Stockholder, the Option shall expire on
the fifth anniversary of the date the Option is granted.
(b) Early Termination of Option Due to Severance of Employment or Affiliation
Relationship (Other Than for Death, Disability or Retirement). Except as may be otherwise
expressly provided in an Option Agreement, (i) an Option that has been granted to a person
other than a Non-Employee Director and that has been in effect for at least two years shall
terminate on the earlier of the date of the expiration of the general term of the Option or
90 days after the date of the termination of the employment relationship between the Holder
and the Company and all Affiliates for any reason other than the death, Disability or
Retirement of the Holder, and (ii) an Option that has been granted to a person other than a
Non-Employee Director and that has been in effect for less than two years shall terminate on
the earlier of the date of the expiration of the general term of the Option or 30 days after
the date of the termination of the employment
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relationship between the Holder and the Company and all Affiliates for any reason other
than the death, Disability or Retirement of the Holder, during which period the Holder shall
be entitled to exercise the Option in respect of the number of shares that the Holder would
have been entitled to purchase had the Holder exercised the Option on the date of such
termination of employment. Whether authorized leave of absence, or absence on military or
government service, shall constitute a termination of the employment relationship between
the Holder and the Company and all Affiliates shall be determined by the Committee at the
time thereof.
Except as may be otherwise expressly provided in an Option Agreement, an Option that
has been granted to a Non-Employee Director shall terminate on the earlier of the date of
the expiration of the general term of the Option or 90 days after the Non-Employee Director
is no longer a director of the Company for any reason other than the death or Disability of
the Holder.
(c) Early Termination of Option Due to Death. Unless the Option Agreement specifies
otherwise, in the event of the severance of the employment or affiliation relationship
between the Holder and the Company and all Affiliates due to death before the date of
expiration of the general term of the Option, the Holder’s Option shall terminate on the
earlier of the date of expiration of the general term of the Option or 180 days after the
Holder’s death.
(d) Early Termination of Option Due to Disability. With respect to an Option granted
to a person other than a Non-Employee Director, unless the Option Agreement specifies
otherwise, in the event of the severance of the employment relationship between the Holder
and the Company and all Affiliates due to Disability before the date of the expiration of
the general term of the Option, the Option shall terminate on the earlier of the expiration
of the general term of the Option or 90 days after the termination of the employment
relationship between the Holder and the Company and all Affiliates terminates due to
Disability.
In the event his affiliation relationship is terminated as a result of Disability, a
Holder who is a Non-Employee Director may exercise an Option for a period of 180 days after
the Non-Employee Director is no longer a director of the Company or until the expiration of
the Option period, if sooner, to the extent of the Stock with respect to which the Option
could have been exercised by the Holder on the date the Non-Employee Director ceases being a
director of the Company.
(e) Early Termination of Option Due to Retirement. Unless the Option Agreement
specifies otherwise, if the Holder is an Employee and the employment relationship between
the Holder and the Company and all Affiliates terminates by reason of Retirement, the
Holder’s Option shall terminate on the earlier of the expiration of the general term of the
Option or one day less than three months after the date of the Holder’s termination of
employment due to Retirement.
After the death of the Holder, the Holder’s executors, administrators or any person or persons
to whom the Holder’s Option may be transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to the termination of the Option to exercise the
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Option, in respect to the number of shares that the Holder would have been entitled to
exercise if the Holder exercised the Option prior to his death.
5.4 Amount Exercisable. Each Option may be exercised at the time, in the manner and subject
to the conditions the Committee specifies in the Option Agreement in its sole discretion. If
specified in the Option Agreement, an Option will be exercisable in full upon the occurrence of a
Change of Control.
5.5 Exercise of Options. Each Option shall be exercised by the delivery of written notice to
the Company setting forth the number of shares of Stock with respect to which the Option is to be
exercised, together with: (a) cash, a certified check, a bank draft or a postal or express money
order payable to the order of the Company for an amount equal to the exercise price under the
Option, (b) Mature Shares with a Fair Market Value on the date of exercise equal to the exercise
price under the option, (c) an election to make a cashless exercise through a registered
broker-dealer or (d) except as specified below, any other form of payment which is acceptable to
the Committee, and specifying the address to which the certificates for the shares of Stock are to
be mailed or the information necessary for the Company to effect an electronic transfer of the
shares of Stock. If Mature Shares are used for payment by the Holder, the aggregate Fair Market
Value of the shares of Stock tendered must be equal to or less than the aggregate exercise price of
the shares of Stock being purchased upon exercise of the Option, and any difference must be paid
pursuant to (a) above. As promptly as practicable after receipt of written notification and
payment, the Company shall deliver the number of shares of Stock with respect to which the Option
has been exercised, issued as designated by the Holder. Delivery of the shares of Stock shall be
deemed effected for all purposes when the transfer agent of the Company shall have deposited the
certificates in the United States mail, to the address specified by the Holder, or when the shares
have been transferred electronically as designated by the Holder. In lieu of tendering the Mature
Shares to the Company for the exercise price pursuant to (b) above, the Company may, in its sole
discretion, accept documentation provided by the Holder that the Holder owns the Mature Shares
necessary for exercise and would be able to deliver them to the Company if requested by the
Company, in which case the Company will deliver only the Net Shares. The Company shall have sole
discretion in determining that the shares are Mature Shares and that they are unencumbered,
transferable, and acceptable by the Company for this purpose.
The delivery of certificates upon the exercise of Options is subject to the condition that the
person exercising the Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition.
Electronic transfer of shares of Stock may be effected by the Company it is sole discretion,
in lieu of issuance of physical share certificate(s).
The Company may permit a Holder to elect to pay the exercise price upon the exercise of an
Option by authorizing a third-party broker to sell all or a portion of the shares of Stock acquired
upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to
pay the exercise price and any applicable tax withholding resulting from such exercise.
An Option may not be exercised for a fraction of a Common Share.
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5.6 Substitution Options. Options may be granted under the Plan from time to time in
substitution for stock options held by employees of other corporations who are about to become
employees of or affiliated with the Company or any Affiliate as the result of a merger or
consolidation of the employing corporation with the Company or any Affiliate, or the acquisition by
the Company or any Affiliate of the assets of the employing corporation, or the acquisition by the
Company or any Affiliate of stock of the employing corporation as the result of which it becomes an
Affiliate of the Company. The terms and conditions of the substitute Options granted may vary from
the terms and conditions set out in the Plan to the extent the Committee, at the time of grant, may
deem appropriate to conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted.
5.7 No Rights as Stockholder. No Holder shall have any rights as a Stockholder with respect
to Stock covered by his Option until the shares of Stock are delivered to him.
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ARTICLE VI
RESTRICTED STOCK AWARDS
6.1 Restricted Stock Awards. The Committee may make Awards of Restricted Stock to eligible
persons selected by it. The amount of, the vesting and the transferability restrictions applicable
to, any Restricted Stock Award shall be determined by the Committee in its sole discretion;
provided, however, that the minimum vesting period for any Awards of Restricted Stock should
normally be ratably over a period of three years and, in no event, less than one year. If the
Committee imposes vesting or transferability restrictions on a Holder’s rights with respect to
shares of Restricted Stock, the Committee may issue such instructions to the Company’s transfer
agent in connection therewith as it deems appropriate. The Committee may also cause the
certificate for shares issued pursuant to a Restricted Stock Award to be imprinted with any legend
which counsel for the Company considers advisable with respect to the restrictions or, should the
shares of Stock be represented by book or electronic entry rather than a certificate, the Company
may take such steps to restrict transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law. Each Restricted Stock Award shall
be evidenced by a Restricted Stock Award Agreement that contains any vesting, transferability
restrictions and other provisions that are not inconsistent with the Plan as the Committee may
specify.
6.2 Holder’s Rights as Stockholder. Subject to the terms and conditions of the Plan, each
Holder of Restricted Stock shall have all the rights of a shareholder with respect to the shares of
Stock included in the Restricted Stock Award during any period in which such shares are subject to
forfeiture and restrictions on transfer, including without limitation, the right to vote such
shares, if unrestricted shares of the same class have the right to vote. Dividends paid with
respect to shares of Restricted Stock in cash or property other than Stock in the Company or rights
to acquire shares of Stock in the Company shall be paid to the Holder currently. Dividends paid in
Stock in the Company or rights to acquire Stock in the Company shall be added to and become a part
of the Restricted Stock.
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ARTICLE VII
RESTRICTED STOCK UNIT AWARDS
7.1 Authority to Grant Restricted Stock Unit Awards. Subject to the terms and provisions of
the Plan, the Committee may make Awards of Restricted Stock Units to eligible persons selected by
it. The amount of and the vesting, transferability and forfeiture restrictions applicable to any
Restricted Stock Unit Award shall be determined by the Committee in its sole discretion; provided,
however, that the minimum vesting period for any Restricted Stock Unit Award should be not less
than one year. The Committee shall maintain a bookkeeping ledger account which reflects the number
of Restricted Stock Units credited under the Plan for the benefit of a Holder.
7.2 Restricted Stock Unit Award. A Restricted Stock Unit Award shall be similar in nature to
a Restricted Stock Award except that no shares of Stock are actually transferred to the Holder
until a later date specified in the applicable Award agreement. Each Restricted Stock Unit shall
have a value equal to the Fair Market Value of a share of Stock.
7.3 Restricted Stock Unit Award Agreement. Each Restricted Stock Unit Award shall be
evidenced by an Award agreement that contains any Substantial Risk of Forfeiture, vesting,
transferability and forfeiture restrictions, form and time of payment provisions and other
provisions not inconsistent with the Plan as the Committee may specify.
7.4 Dividend Equivalents. An Award agreement for a Restricted Stock Unit Award may specify
that the Holder shall be entitled to the payment of Dividend Equivalents under the Award.
7.5 Form of Payment Under Restricted Stock Unit Award. Payment under a Restricted Stock Unit
Award shall be made in shares of Stock.
7.6 Time of Payment Under Restricted Stock Unit Award. A Holder’s payment under a Restricted
Stock Unit Award shall be made at such time as is specified in the applicable Award agreement. The
Award agreement shall specify that the payment will be made (a) by a date that is no later than the
date that is two and one-half (2 1/2) months after the end of the calendar year in which the
Restricted Stock Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (b)
at a time that is Permissible under Section 409A.
7.7 No Rights as Stockholder. A recipient of a Restricted Stock Unit Award shall have no
rights of a stockholder with respect to the Holder’s Restricted Stock Units until the shares of
Stock are delivered to him. A Holder shall have no voting rights with respect to any Restricted
Stock Unit Awards.
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ARTICLE VIII
ADMINISTRATION
The Plan shall be administered by the Committee. All questions of interpretation and
application of the Plan and Awards shall be subject to the determination of the Committee. A
majority of the members of the Committee shall constitute a quorum. All determinations of the
Committee shall be made by a majority of its members. Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it had been made by a
majority vote at a meeting properly called and held. The Plan shall be administered in such a
manner as to permit the Options which are designated to be Incentive Options to qualify as
Incentive Options. In carrying out its authority under the Plan, the Committee shall have full and
final authority and discretion, including but not limited to the following rights, powers and
authorities, to:
(a) determine the persons to whom and the time or times at which Awards will be made;
(b) determine the number of shares and the exercise price of Stock covered in each
Award, subject to the terms of the Plan;
(c) determine the terms, provisions and conditions of each Award, which need not be
identical;
(d) accelerate the time at which any outstanding Option may be exercised, or Restricted
Stock Award or Restricted Stock Unit Award will vest; provided, however, that the Committee
determines that such acceleration of vesting is in the best interests of the Company and its
shareholders and, in the case of a Restricted Stock Unit Award, is Permissible under Section
409A;
(e) define the effect, if any, on an Award of the death, disability, retirement or
termination of employment or affiliation relationship between the Holder and the Company and
Affiliates;
(f) prescribe, amend and rescind rules and regulations relating to administration of
the Plan; and
(g) make all other determinations and take all other actions deemed necessary,
appropriate or advisable for the proper administration of the Plan.
The actions of the Committee in exercising all of the rights, powers, and authorities set out
in this Article and all other Articles of the Plan, when performed in good faith and in its sole
judgment, shall be final, conclusive and binding on all parties.
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ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
The Board may amend, terminate or suspend the Plan at any time, in its sole and absolute
discretion; provided, however, that to the extent required to maintain the status of any Option
under the Code, no amendment that would change the aggregate number of shares of Stock which may be
issued under Options, or change the class of Employees eligible to receive Options shall be made
without the approval of the Company’s stockholders. Subject to the preceding sentence, the Board
shall have the power to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of counsel for the
Company may be necessary or appropriate from time to time to enable any Incentive Option granted
under the Plan to continue to qualify as an incentive stock option or such other stock option as
may be defined under the Code so as to receive preferential federal income tax treatment.
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ARTICLE X
MISCELLANEOUS
10.1 No Establishment of a Trust Fund. No property shall be set aside nor shall a trust fund
of any kind be established to secure the rights of any Holder under the Plan. All Holders shall at
all times rely solely upon the general credit of the Company for the payment of any benefit which
becomes payable under the Plan.
10.2 No Employment or Affiliation Obligation. The granting of any Option or Award shall not
constitute an employment contract, express or implied, nor impose upon the Company or any Affiliate
any obligation to employ or continue to employ, or utilize the services of, any Holder. The right
of the Company or any Affiliate to terminate the employment of any person shall not be diminished
or affected by reason of the fact that an Option or Award has been granted to him.
10.3 Forfeiture. Notwithstanding any other provisions of the Plan, if the Committee finds by
a majority vote after full consideration of the facts that the Holder, before or after termination
of his employment or affiliation relationship with the Company or an Affiliate for any reason
committed or engaged in willful misconduct, gross negligence, a breach of fiduciary duty, fraud,
embezzlement, theft, a felony, a crime involving moral turpitude or proven dishonesty in the course
of his employment by the Company or an Affiliate, which conduct damaged the Company or Affiliate,
the Holder shall forfeit all outstanding Options and all outstanding Awards, and all exercised
Options if the Company has not yet delivered Stock to the Holder with respect thereto.
The decision of the Committee as to the cause of the Holder’s discharge, the damage done to
the Company or an Affiliate shall be final. No decision of the Committee, however, shall affect
the finality of the discharge of the Holder by the Company or an Affiliate in any manner.
10.4 Tax Withholding. The Company or any Affiliate or subsidiary shall be entitled to deduct
from other compensation payable to each Holder any sums required by federal, state, local or
foreign tax law to be withheld with respect to the grant, vesting or exercise of an Award or lapse
of restrictions on an Award or payment under an Award. In the alternative, the Company may require
the Holder (or other person validly exercising or holding the Award) to pay such sums for taxes
directly to the Company or any Affiliate or subsidiary in cash or by check within ten days after
the date of grant, vesting, exercise or lapse of restrictions or payment. In the discretion of the
Company, and with the consent of the Holder, the Company may reduce the number of shares of Stock
issued to the Holder upon his exercise of an Option to satisfy the tax withholding obligations of
the Company or an Affiliate; provided that the Fair Market Value of the shares held back shall not
exceed the Company’s or the Affiliate’s minimum statutory withholding tax obligations. The Company
may, in its discretion, permit a Holder to satisfy any Minimum Statutory Tax Withholding Obligation
arising upon the vesting of or payment under an Award by delivering to the Holder a reduced number
of shares of Stock in the manner specified herein. If permitted by the Company and acceptable to
the Holder, at the time of vesting of shares or payment under the Award, the Company shall (a)
calculate the amount of the Company’s or an Affiliate’s or a subsidiary’s Minimum Statutory Tax
Withholding Obligation on the assumption that all such shares of Stock vested or to be paid under
the Award are made available for delivery, (b) reduce
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the number of such shares of Stock made available for delivery so that the Fair Market Value
of the shares of Stock withheld on the vesting or payment date approximates the Company’s or an
Affiliate’s or a subsidiary’s Minimum Statutory Tax Withholding Obligation and (c) in lieu of the
withheld shares of Stock, remit cash to the United States Treasury or other applicable governmental
authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax Withholding
Obligation. The Company shall withhold only whole shares of Stock to satisfy its Minimum Statutory
Tax Withholding Obligation. Where the Fair Market Value of the withheld shares of Stock does not
equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold
shares of Stock with a Fair Market Value less than the amount of the Minimum Statutory Tax
Withholding Obligation and the Holder must satisfy the remaining minimum withholding obligation in
some other manner permitted under this Section 10.4. The withheld shares of Stock not made
available for delivery by the Company shall be retained as treasury shares or will be cancelled and
the Holder’s right, title and interest in such shares of Stock shall terminate. The Company shall
have no obligation upon payment, vesting or exercise of any Award or lapse of restrictions on an
Award until the Company or an Affiliate or subsidiary has received payment sufficient to cover all
tax withholding amounts due with respect to that payment, vesting, exercise or lapse of
restrictions. Neither the Company nor any Affiliate or subsidiary shall be obligated to advise a
Holder of the existence of the tax or the amount which it will be required to withhold.
10.5 Written Agreement. Each Award shall be embodied in a written agreement which shall be
subject to the terms and conditions of the Plan and shall be signed by the Holder and by a member
of the Committee on behalf of the Committee and the Company or an executive officer of the Company,
other than the Holder, on behalf of the Company. The agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not inconsistent with the terms
of the Plan.
10.6 Indemnification of the Committee. The Company shall indemnify each present and future
member of the Committee against, and each member of the Committee shall be entitled without further
act on his part to indemnity from the Company for, all expenses (including attorney’s fees, the
amount of judgments and the amount of approved settlements made with a view to the curtailment of
costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may be involved by
reason of his being or having been a member of the Committee, whether or not he continues to be a
member of the Committee at the time of incurring the expenses, including, without limitation,
matters as to which he shall be finally adjudged in any action, suit or proceeding to have been
found to have been negligent in the performance of his duty as a member of the Committee. However,
this indemnity shall not include any expenses incurred by any member of the Committee in respect of
matters as to which he shall be finally adjudged in any action, suit or proceeding to have been
guilty of gross negligence or willful misconduct in the performance of his duty as a member of the
Committee. In addition, no right of indemnification under the Plan shall be available to or
enforceable by any member of the Committee unless, within 60 days after institution of any action,
suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and
defend same at its own expense. This right of indemnification shall inure to the benefit of the
heirs, executors or administrators of each member of the Committee and shall be in addition to all
other rights to which a member of the Committee may be entitled as a matter of law, contract or
otherwise.
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10.7 Gender. If the context requires, words of one gender when used in the Plan shall include
the other and words used in the singular or plural shall include the other.
10.8 Headings. Headings of Articles and Sections are included for convenience of reference
only and do not constitute part of the Plan and shall not be used in construing the terms of the
Plan.
10.9 Other Compensation Plans. The adoption of the Plan shall not affect any other stock
option, incentive or other compensation or benefit plans in effect for the Company or any
Affiliate, nor shall the Plan preclude the Company from establishing any other forms of incentive
compensation arrangements for Employees.
10.10 Other Options or Awards. The grant of an Award shall not confer upon the Holder the
right to receive any future or other Awards under the Plan, whether or not Awards may be granted to
similarly situated Holders, or the right to receive future Awards upon the same terms or conditions
as previously granted.
10.11 Option Adjustments Pursuant to the Employee Benefits Agreement. Notwithstanding any
other provision of the Plan or an Option Agreement, the exercise price applicable to each
outstanding Option, to the extent that the Option has not expired or been exercised as of the
Distribution Date, shall be reduced in accordance with the formula specified in paragraph (b) of
Section 3.1 of the Employee Benefits Agreement. Notwithstanding any other provisions of the Plan
or Option Agreement, the term of each outstanding Option, to the extent that the Option has not
expired or been exercised as of the Distribution Date, shall be adjusted in the manner specified in
paragraph (e) of Section 3.1 of the Employee Benefits Agreement.
10.12 Governing Law. The provisions of the Plan shall be construed, administered and governed
under the laws of the State of Texas.
10.13 Compliance With Section 409A. Awards shall be designed, granted and administered in
such a manner that they are either exempt from the application of, or comply with, the requirements
of Section 409A. The Plan and each Award Agreement under the Plan that is intended to comply the
requirements of Section 409A shall be construed and interpreted in accordance with such intent. If
the Committee determines that an Award, Award agreement, payment, distribution, deferral election,
transaction, or any other action or arrangement contemplated by the provisions of the Plan would,
if undertaken or implemented, cause a Holder to become subject to additional taxes under Section
409A, then unless the Committee specifically provides otherwise, such Award, Award agreement,
payment, distribution, deferral election, transaction or other action or arrangement shall not be
given effect to the extent it causes such result and the related provisions of the Plan and/or
Award agreement will be deemed modified, or, if necessary, suspended in order to comply with the
requirements of Section 409A to the extent determined appropriate by the Committee, in each case
without the consent of or notice to the Holder. The exercisability of an Option shall not be
extended to the extent that such extension would subject the Holder to additional taxes under
Section 409A. Notwithstanding any other provision of the Plan, if Holder is a “specified employee”
(within the meaning of Section 409A), and the Company determines that a payment or vesting under an
Award is not Permissible under Section 409A, then no payment shall be made or vesting shall occur
under the Award due to a
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“separation from service” (within the meaning of Section 409A of the Code) for any reason
before the date that is six (6) months after the date on which the Holder incurs such separation
from service.
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