EXHIBIT 10.4
FORM OF NEWCASTLE INVESTMENT CORP.
NONQUALIFIED STOCK OPTION AND
INCENTIVE AWARD PLAN
ADOPTED [______________, 2002]
TABLE OF CONTENTS
PAGE
SECTION 1 PURPOSE OF PLAN; DEFINITIONS................................................... 1
1.1 PURPOSE................................................................. 1
1.2 DEFINITIONS............................................................. 1
SECTION 2 ADMINISTRATION................................................................. 4
2.1 ADMINISTRATION.......................................................... 4
2.2 DUTIES AND POWERS OF COMMITTEE.......................................... 5
2.3 MAJORITY RULE........................................................... 5
2.4 COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD
FAITH ACTIONS........................................................... 5
SECTION 3 STOCK SUBJECT TO PLAN.......................................................... 6
3.1 NUMBER OF AND SOURCE OF SHARES.......................................... 6
3.2 UNREALIZED AND TANDEM AWARDS............................................ 6
3.3 ADJUSTMENT OF AWARDS.................................................... 7
SECTION 4 ELIGIBILITY.................................................................... 7
SECTION 5 AWARDS......................................................................... 7
5.1 STOCK OPTIONS........................................................... 8
5.2 STOCK APPRECIATION RIGHTS............................................... 8
5.3 RESTRICTED STOCK........................................................ 9
5.4 PERFORMANCE AWARDS...................................................... 9
5.5 MANAGER AWARDS AND TANDEM AWARDS........................................ 10
5.6 INDEPENDENT DIRECTOR STOCK OPTIONS...................................... 11
5.7 OTHER AWARDS............................................................ 13
SECTION 6 AWARD AGREEMENTS............................................................... 13
6.1 TERMS OF AWARD AGREEMENTS............................................... 14
6.2 REPLACEMENT, SUBSTITUTION, AND RELOADING................................ 15
6.3 SURRENDER OF OPTIONS.................................................... 15
SECTION 7 LOANS.......................................................................... 16
SECTION 8 AMENDMENT AND TERMINATION...................................................... 16
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SECTION 9 UNFUNDED STATUS OF PLAN........................................................ 17
SECTION 10 GENERAL PROVISIONS............................................................. 17
10.1 SECURITIES LAWS COMPLIANCE.............................................. 17
10.2 CERTIFICATE LEGENDS..................................................... 17
10.3 TRANSFER RESTRICTIONS................................................... 17
10.4 COMPANY ACTIONS; NO RIGHT TO EMPLOYMENT................................. 18
10.5 PAYMENT OF TAXES........................................................ 18
SECTION 11 EFFECTIVE DATE OF PLAN......................................................... 18
SECTION 12 TERM OF PLAN................................................................... 18
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FORM OF NEWCASTLE INVESTMENT CORP.
NONQUALIFIED STOCK OPTION AND INCENTIVE AWARD PLAN
SECTION 1
PURPOSE OF PLAN; DEFINITIONS
1.1 Purpose. The purpose of the Plan is (a) to reinforce the
long-term commitment to the Company's success of those Independent Directors,
officers, employees, advisors, consultants and other personnel who are or will
be responsible for such success; to facilitate the ownership of the Company's
stock by such individuals, thereby reinforcing the identity of their interests
with those of the Company's stockholders; to assist the Company in attracting
and retaining individuals with experience and ability, (b) to compensate the
Manager for its successful efforts in raising capital for the Company and to
provide performance-based compensation in order to provide incentive to the
Manager to enhance the value of the Company's Stock and (c) to benefit the
Company's stockholders by encouraging high levels of performance by individuals
whose performance is a key element in achieving the Company's continued success.
1.2 Definitions. For purposes of the Plan, the following terms
shall be defined as set forth below:
(a) "Award" or "Awards" means an award described in
Section 5 hereof.
(b) "Award Agreement" means an agreement described in
Section 6 hereof entered into between the Company and a Participant, setting
forth the terms, conditions and any limitations applicable to the Award granted
to the Participant.
(c) "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
(d) "Board" means the Board of Directors of the
Company.
(e) "Change in Control" of the Company shall be
deemed to have occurred if an event set forth in any one of the following
paragraphs (i)-(iii) shall
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have occurred unless prior to the occurrence of such event, the Board determines
that such event shall not constitute a Change in Control:
(i) any Person is or becomes Beneficial Owner, directly or
indirectly, of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the then
outstanding securities of the Company, excluding (A) any
Person who becomes such a Beneficial Owner in connection with
a transaction described in clause (x) of paragraph (ii) below,
and (B) any Person who becomes such a Beneficial Owner through
the issuance of such securities with respect to purchases made
directly from the Company; or
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or the
issuance of voting securities of the Company in connection
with a merger or consolidation of the Company (or any direct
or indirect subsidiary of the Company) pursuant to applicable
stock exchange requirements, other than (x) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) fifty percent
(50%) or more of the combined voting power of the securities
of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(y) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting power of
the then outstanding securities of the Company; or
(iii) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the assets of the Company.
(f) "Code" means the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute thereto.
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(g) "Commission" means Securities and Exchange
Commission.
(h) "Committee" means any committee the Board may
appoint to administer the Plan. To the extent necessary and desirable, the
Committee shall be composed entirely of individuals who meet the qualifications
referred to in Section 162(m) of the Code and Rule 16b-3 under the Exchange Act.
If at any time or to any extent the Board shall not administer the Plan, then
the functions of the Board specified in the Plan shall be exercised by the
Committee.
(i) "Company" means Newcastle Investment Corp., a
Maryland corporation.
(j) "Effective Date" means the date provided pursuant
to Section 11.
(k) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(l) "Fair Market Value" means, as of any given date,
(i) the closing price of a share of the Company's Stock on the principal
exchange on which shares of the Company's Stock are then trading, if any, on the
trading day previous to such date, or, if stock was not traded on the trading
day previous to such date, then on the next preceding trading day during which a
sale occurred; or (ii) if such Stock is not traded on an exchange but is quoted
on NASDAQ or a successor quotation system, (x) the last sales price (if the
Stock is then listed as a National Market Issue under the NASDAQ National Market
System) or (y) the mean between the closing representative bid and asked prices
(in all other cases) for the Stock on the trading day previous to such date as
reported by NASDAQ or such successor quotation system; or (iii) if such Stock is
not publicly traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the mean between the closing bid and asked prices for the
Stock, on the day previous to such date, as determined in good faith by the
Committee; or (D) if the Stock is not publicly traded, the fair market value
established by the Committee using any reasonable method and acting in good
faith.
(m) "Independent Director" means a director of the
Company who is not an officer or employee of the Company.
(n) "Initial Offering Price" means the initial price
to the public as set forth in the final prospectus included within the
Registration Statement.
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(o) "Manager" means Fortress Investment Group LLC, a
Delaware limited liability company, or any affiliate of Fortress Investment
Group LLC who shall succeed as manager under that certain Management and
Advisory Agreement, dated as of June 10, 1998, by and among the Company,
Fortress Partners, L.P. and Fortress Investment Group LLC.
(p) "Manager Awards" means the Awards granted to the
Manager as described in Section 5.5 hereof.
(q) "Participant" means any Independent Director, the
Manager and any director, officer, employee, consultant or advisor to the
Company or to any parent, affiliate or subsidiary of the Company, selected by
the Committee, pursuant to the Commit tee's authority in Section 2 below, to
receive Awards.
(r) "Plan" means this Newcastle Investment Corp.
Nonqualified Stock Option and Incentive Award Plan.
(s) "Registration Statement" means the registration
statement filed with the Securities and Exchange Commission for the initial
underwritten public offering of the Company's Stock.
(t) "Stock" means the common stock, par value $0.01
per share, of the Company.
(u) "Stock Option" means any option to purchase
shares of Stock granted pursuant to the Plan. The Stock Options granted
hereunder are not intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Code.
SECTION 2
ADMINISTRATION
2.1 Administration. The Plan shall be administered in
accordance with the requirements of Section 162(m) of the Code (but only to the
extent necessary and desirable to maintain qualification of awards under the
Plan under Section 162(m) of the Code) and, to the extent applicable, Rule 16b-3
under the Exchange Act ("Rule 16b-3"), by the Board or, at the Board's sole
discretion, by the Committee, which shall be appointed by the Board, and which
shall serve at the pleasure of the Board.
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2.2 Duties and Powers of Committee. The Committee shall have
the power and authority to grant Awards to Participants pursuant to the terms of
the Plan, and, in its discretion, to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall from time to time
deem advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.
In particular, the Committee shall have the authority to
determine, in a manner consistent with the terms of the Plan:
(a) in addition to the Manager and the Independent
Directors, those officers, employees, directors, managers, consultants or
advisors, if any, who shall be Participants;
(b) subject to Section 3, the number of shares of
Stock to be covered by each Stock Option granted hereunder;
(c) the terms and conditions of any Award granted
hereunder, including the waiver or modification of any such terms or conditions,
consistent with the provisions of the Plan (including, but not limited to,
Section 8 of the Plan); and
(d) the terms and conditions which shall govern all
the Award Agreements, including the waiver or modification of any such terms or
conditions.
2.3 Majority Rule. The Committee shall act by a majority of
its members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.
2.4 Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee may receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities that
members of the Committee or Board may incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Board, the Company and
any officers and directors of the Company shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by
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the Committee or Board in good faith shall be final and binding upon all
Participants, the Company and all other interested persons. No member of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan or any Award, and
all members of the Committee and Board shall be fully protected and indemnified
to the fullest extent permitted by law, by the Company, in respect of any such
action, determination or interpretation.
SECTION 3
STOCK SUBJECT TO PLAN
3.1 Number of and Source of Shares. The maximum number of
shares of Stock reserved and available for issuance under the Plan each fiscal
year shall be as follows: for the Company's fiscal year during which the
Effective Date occurs, [5,000,000] (subject to adjustment as provided herein);
for each of the Company's fiscal years thereafter, fifteen percent (15%) of the
number of shares of Stock outstanding as determined as of the first day of the
fiscal year during which an Award may be granted (subject to adjustment as
provided herein). Notwithstanding the foregoing, in no event shall such number
of shares exceed 10,000,000. The Stock which may be issued pursuant to an Award
under the Plan may be treasury Stock, authorized but unissued Stock, or Stock
acquired, subsequently or in anticipation of the transaction, in the open market
to satisfy the requirements of the Plan. Awards may consist of any combination
of such Stock, or, at the election of the Company, cash. The aggregate number of
shares of Stock as to which Awards may be granted to any Participant during any
calendar year may not, subject to adjustment as provided in this Section 3,
exceed 50% of the shares of Stock reserved for the purposes of the Plan. If any
shares of Stock subject to an Award are forfeited, cancelled, exchanged or
surrendered or if an Award otherwise terminates or expires with or without a
distribution of shares to the Participant, the shares of Stock with respect to
such Award shall, to the extent of any such forfeiture, cancellation, exchange,
surrender, termination or expiration, count against the maximum number of shares
for which Awards may be granted to the Participant under the preceding sentence.
3.2 Unrealized and Tandem Awards. Subject to the limitations
set forth in the last sentence of Section 3.1, if any shares of Stock subject to
an Award are forfeited, cancelled, exchanged or surrendered or if an Award
otherwise terminates or expires with or without a distribution of shares to the
Participant, the shares of Stock with respect to such Award shall, to the extent
of any such forfeiture, cancellation, exchange, surrender, termination or
expiration, again be available for grants under the
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Plan. The grant of a Tandem Award (as defined herein) shall not reduce the
number of shares of Stock reserved and available for issuance under the Plan.
3.3 Adjustment of Awards. Upon the occurrence of any event
which affects the shares of Stock in such a way that an adjustment of
outstanding Awards is appropriate in order to prevent the dilution or
enlargement of rights under the Awards (including, without limitation, any
extraordinary dividend or other distribution (whether in cash or in kind),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event), the Committee shall make appropriate
equitable adjustments, which may include, without limitation, adjustments to any
or all of the number and kind of shares of Stock (or other securities) which may
thereafter be issued in connection with such outstanding Awards and adjustments
to any exercise price specified in the outstanding Awards and shall also make
appropriate equitable adjustments to the number and kind of shares of Stock (or
other securities) authorized by or to be granted under the Plan. Such other
substitutions or adjustments shall be made respecting Awards hereunder as may be
determined by the Committee, in its sole discretion. In connection with any
event described in this paragraph, the Committee may provide, in its discretion,
for the cancellation of any outstanding Award and payment in cash or other
property in exchange therefor, equal to the difference, if any, between the fair
market value of the Stock or other property subject to the Award, and the
exercise price, if any.
SECTION 4
ELIGIBILITY
The Manager, each employee of the Manager who is performing
services for the Company and each Independent Director, officer and employee of
the Company or any parent, affiliate or subsidiary of the Company shall be
eligible for Awards under the Plan. Additional Participants under the Plan may
be selected from time to time by the Committee, in its sole discretion, and the
Committee shall determine, in its sole discretion, the number of shares covered
by each Award.
SECTION 5
AWARDS
Awards may include, but are not limited to, those described in
this Section 5. The Committee may grant Awards singly, in tandem or in
combination
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with other Awards, as the Committee may in its sole discretion determine.
Subject to the other provisions of this Plan, Awards may also be granted in
combination or in tandem with, in replacement of, or as alternatives to, grants
or rights under this Plan and any other employee (or director) benefit or
compensation plan of the Company.
5.1 Stock Options. A Stock Option is a right to purchase a
specified number of shares of Stock, at a specified price during such specified
time as the Committee shall determine.
(a) A Stock Option may be exercised, in whole or in
part, by giving written notice of exercise to the Company, specifying the number
of shares of Stock to be purchased.
(b) The exercise price of the Stock Option may be
paid in cash or its equivalent, as determined by the Committee. As determined by
the Committee, in its sole discretion, payment in whole or in part may also be
made (i) by means of any cashless exercise procedure approved by the Committee,
or (ii) in the form of unrestricted Stock already owned by the Participant
which, (x) in the case of unrestricted Stock acquired upon exercise of an
option, have been owned by the Participant for more than six months on the date
of surrender, and (y) has a Fair Market Value on the date of surrender equal to
the aggregate option price of the Stock as to which such Stock Option shall be
exercised. No fractional shares of Stock will be issued or accepted.
5.2 Stock Appreciation Rights. A Stock Appreciation Right is a
right to receive, upon surrender of the right, an amount payable in cash and/or
shares of Stock under such terms and conditions as the Committee shall
determine.
(a) A Stock Appreciation Right may be granted in
tandem with part or all of (or in addition to, or completely independent of) a
Stock Option or any other Award under this Plan. A Stock Appreciation Right
issued in tandem with a Stock Option may be granted at the time of grant of the
related Stock Option or at any time thereafter during the term of the Stock
Option.
(b) The amount payable in cash and/or shares of Stock
with respect to each right shall be equal in value to a percentage (including up
to 100%) of the amount by which the Fair Market Value per share of Stock on the
exercise date exceeds the Fair Market Value per share of Stock on the date of
grant of the Stock Appreciation Right. The applicable percentage shall be
established by the Committee. The Award Agreement may state whether the amount
payable is to be paid
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wholly in cash, wholly in shares of Stock, or in any combination of the
foregoing; if the Award Agreement does not so state the manner of payment, the
Committee shall determine such manner of payment at the time of payment. The
amount payable in shares of Stock, if any, is determined with reference to the
Fair Market Value per share of Stock on the date of exercise.
(c) Stock Appreciation Rights issued in tandem with
Stock Options shall be exercisable only to the extent that the Stock Options to
which they relate are exercisable. Upon exercise of the tandem Stock
Appreciation Right, and to the extent of such exercise, the Participant's
underlying Stock Option shall automatically terminate. Similarly, upon the
exercise of the tandem Stock Option, and to the extent of such exercise, the
Participant's related Stock Appreciation Right shall automatically terminate.
5.3 Restricted Stock. Restricted Stock is Stock that
is issued to a Participant and is subject to such terms, conditions and
restrictions as the Committee deems appropriate, which may include, but are not
limited to, restrictions upon the sale, assignment, transfer or other
disposition of the Restricted Stock and the requirement of forfeiture of the
Restricted Stock upon termination of employment or service under certain
specified conditions. The Committee may provide for the lapse of any such term
or condition or waive any term or condition based on such factors or criteria as
the Committee may determine. Subject to the restrictions stated in this Section
5.3 and in the applicable Award Agreement, the Participant shall have, with
respect to Awards of Restricted Stock, all of the rights of a stockholder of the
Company, including the right to vote the Restricted Stock and the right to
receive any cash or stock dividends on such Stock. The Company may require that
the stock certificates evidencing Restricted Stock granted hereunder be held in
the custody of the Company until the restrictions thereon shall have lapsed, and
that, as a condition of any award of Restricted Stock, the Participant shall
have delivered a stock power, endorsed in blank, relating to the Stock covered
by such award.
5.4 Performance Awards. Performance Awards may be granted
under this Plan from time to time based on such terms and conditions as the
Committee deems appropriate provided that such Awards shall not be inconsistent
with the terms and purposes of this Plan. Performance Awards are Awards which
are contingent upon the performance of all or a portion of the Company and/or
its subsidiaries and/or which are contingent upon the individual performance of
a Participant. Performance Awards may be in the form of performance units,
performance shares and such other forms of Performance Awards as the Committee
shall determine. The Committee shall determine the performance measurements and
criteria for such
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Performance Awards. The Company may require that the stock certificates
evidencing Performance Awards granted hereunder be held in the custody of the
Company until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Performance Awards, the Participant shall have
delivered a stock power, endorsed in blank, relating to the Stock covered by
such award.
5.5 Manager Awards and Tandem Awards.
(a) Grant of Compensatory Stock Options. As
consideration for the Manager's role in raising capital for the Company, the
Manager shall be granted Stock Options to acquire that number of shares of Stock
equal in number to ten percent (10%) of the equity securities issued by the
Company on the Registration Statement.
(b) Terms of Manager Awards. The Stock Options
referred to in clause (a) above shall be 100% vested as of the date of grant and
become exercisable as to 1/30th of the Stock subject to the Stock Options on the
first day of each of the following 30 calendar months following the date of
grant. Such Stock Options shall expire on the tenth anniversary of the date of
grant. Such Stock Options shall have a per share exercise price equal to the
Initial Offering Price, subject to adjustment as set forth in Section 3.3
hereof. The exercise price of such Stock Options may be paid in cash or its
equivalent, as determined by the Committee. As determined by the Committee, in
its sole discretion, payment in whole or in part may also be made (i) by means
of any cashless exercise procedure approved by the Committee, or (ii) in the
form of unrestricted Stock already owned by the Manager which, (x) in the case
of unrestricted Stock acquired upon exercise of an option, have been owned by
the Manager for more than six months on the date of surrender, and (y) has a
Fair Market Value on the date of surrender equal to the aggregate option price
of the Stock as to which such Stock Option shall be exercised. No fractional
shares of Stock will be issued or accepted. The Award Agreement with respect to
such Stock Options shall also set forth such other terms and conditions with
respect to Awards to the Manager as the Committee may determine, including,
without limitation, provisions for replacement, substitution and reloading of
such Stock Options and/or the grant of Restricted Stock, Performance Awards or
other Awards.
(c) The Committee shall (unless the members thereof
determine that such Awards are inappropriate), award Stock Options to such
employees of the Manager as the Manager shall recommend, who act as officers of
or perform other services for the Company, which options may be tandem to the
Stock Options that are the subject of outstanding Manager Awards designated by
the
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Manager--i.e., shares of Stock issuable pursuant to the exercise of the
Stock Options that are subject to certain designated Manager Awards would
alternatively be issuable pursuant to the exercise of Stock Options that are the
subject of the tandem awards granted to persons who perform services for or on
behalf of the Company, provided that such shares of Stock may be issued pursuant
to the exercise of either the designated Manager Awards or the tandem awards but
not both (the "Tandem Awards").
(d) As a condition to the grant of Tandem Awards, the
Manager shall be required to agree that so long as such Tandem Awards remain
outstanding, it will not exercise any Stock Options under any designated Manager
Award that are related to the options under such outstanding Tandem Awards. If
Stock Options under a Tandem Award are forfeited, expire or are cancelled
without being exercised, the related Stock Options under the designated Manager
Award shall again become exercisable in accordance with its terms. Upon the
exercise of Stock Options under a Tandem Award, the related Stock Options under
the designated Manager Award shall terminate.
(e) The terms and conditions of each such Tandem Awards (e.g.,
the per share exercise price, the schedule of vesting and exercisability, etc.)
shall be determined by the Committee in its sole discretion, provided, that the
term of such award may not be greater than the term of its related Manager
Award.
(f) Other Awards. The Committee may, from time to
time, grant such Awards to the Manager as the Committee deems advisable in order
to provide additional incentive to the Manager to enhance the value of the
Company's Stock.
(g) Change in Control Provisions. Notwithstanding
anything herein or in any Award Agreement to the contrary, all Awards granted to
the Manager pursuant to this Plan shall become immediately and fully exercisable
upon a Change in Control and all Tandem Awards granted pursuant to this Plan
shall become immediately and fully vested and exercisable upon a Change in
Control.
5.6 Independent Director Stock Options.
(a) Initial Grant. Each Independent Director shall be
granted a Stock Option, which shall be fully vested as of the date of the grant,
to purchase 2,000 shares of Stock (each, an "Independent Director Stock Option")
upon the later to occur of (i) the Effective Date of the Plan, or (ii) the date
of the first Board of Director's meeting attended by such Independent Director.
For those Independent
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Directors serving as of the Effective Date of the Plan, the option price per
share of Stock shall be equal to the Initial Offering Price. For any Independent
Director appointed to the Board of Directors after the Effective Date of the
Plan, the price shall be determined in accordance with Section 5.6 (c) (i)
below.
(b) Annual Grant. On the first business day after the
first annual stockholder's meeting of the Company following the Effective Date,
and on the first business day after each such annual meeting of the Company
thereafter during the term of the Plan, each Independent Director shall be
granted an Independent Director Stock Option to purchase 2,000 shares of Stock.
In the event that the number of shares of Stock available for grant under the
Plan is not sufficient to accommodate the Independent Director Stock Options,
then the remaining shares of Stock available for Independent Director Stock
Options shall be granted to Independent Directors on a pro-rata basis. No
further grants shall be made until such time, if any, as additional shares of
Stock become available for grant under the Plan through action of the Board
and/or the stockholders of the Company to increase the number of shares of Stock
that may be issued under the Plan or through cancellation or expiration of
Awards previously granted hereunder.
(c) Terms of Grant. The Independent Director Stock
Options granted under the Plan pursuant to subparagraph 5.6 (b) hereof shall be
subject to the following terms and conditions:
(i) The option price per share of
Stock purchasable under such Independent Director Stock Options shall
be 100% of the Fair Market Value of the Stock on the date of grant.
(ii) The Independent Director Stock
Options shall vest and become exercisable as follows: twenty-five
percent (25%) of the Stock subject to the Stock Options on the date of
grant and twenty-five percent on each anniversary of the date of grant.
(d) Term; Method of Exercise. Each Independent
Director Stock Option shall cease to be exercisable no later than the date that
is ten (10) years following the date of grant. The exercise price of such Stock
Options may be paid in cash or its equivalent, as determined by the Committee.
As determined by the Committee, in its sole discretion, payment in whole or in
part may also be made (i) by means of any cashless exercise procedure approved
by the Committee, or (ii) in the form of unrestricted Stock already owned by the
Independent Director which, (x) in
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the case of unrestricted Stock acquired upon exercise of an option, have been
owned by the Independent Director for more than six months on the date of
surrender, and (y) has a Fair Market Value on the date of surrender equal to the
aggregate option price of the Stock as to which such Stock Option shall be
exercised. No fractional shares of Stock will be issued or accepted.
(e) Award Agreements. Recipients of Independent
Director Stock Options shall enter into an Award Agreement with the Company,
which agreement shall set forth, among other things, the exercise price of the
Independent Director Stock Option, the term of the Independent Director Stock
Option and provisions regarding exercisability of the Independent Director Stock
Option granted thereunder, which provisions shall not be inconsistent with the
terms set forth herein. The Award Agreement with respect to such Stock Options
shall also set forth such other terms and conditions with respect to Awards to
the Independent Director as the Committee may determine.
(f) Change in Control Provisions. Notwithstanding
anything herein or in any Award Agreement to the contrary, all Awards granted to
Independent Directors pursuant to this Plan shall become immediately and fully
vested and exercisable upon a Change in Control.
5.7 Other Awards. The Committee may from time to time grant
Stock, other Stock-based and non-Stock-based Awards under the Plan, including
without limitation those Awards pursuant to which shares of Stock are or may in
the future be acquired, Awards denominated in Stock, securities convertible into
Stock, phantom securities, dividend equivalents and cash. The Committee shall
determine the terms and conditions of such other Stock, Stock-based and
non-Stock-based Awards provided that such Awards shall not be inconsistent with
the terms and purposes of this Plan.
SECTION 6
AWARD AGREEMENTS
Each Award under this Plan shall be evidenced by an Award
Agreement setting forth the number of shares of Stock or other securities, and
such other terms and conditions applicable to the Award (and not inconsistent
with this Plan) as are determined by the Committee.
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6.1 Terms of Award Agreements. Award Agreements shall include
the following terms:
(a) Term. The term of each Award (as determined by
the Committee); provided that, no Award shall be exercisable more than ten years
after the date such Award is granted.
(b) Exercise Price. The exercise price per share of
Stock purchasable under an Award (as determined by the Committee in its sole
discretion at the time of grant); provided that, the exercise price shall not be
less than the par value of the Stock provided, further, that Awards intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code, shall not be less than 100% of the Fair Market Value of the Stock
on such date.
(c) Exercisability. Provisions regarding the
exercisability of Awards (which shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee at
or after grant).
(d) Method of Exercise. Provisions describing the
method of exercising Awards.
(e) Termination of Employment or Service: Provisions
describing the treatment of an Award in the event of the retirement, disability,
death or other termination of a Participant's employment or service with the
Company, including but not limited to, terms relating to the vesting, time for
exercise, forfeiture and cancellation of an Award in such circumstances.
(f) Rights as Stockholder: A provision that a
Participant shall have no rights as a stockholder with respect to any securities
covered by an Award until the date the Participant becomes the holder of record.
Except as provided in Section 3.3 hereof, no adjustment shall be made for
dividends or other rights, unless the Award Agreement specifically requires such
adjustment, in which case, grants of dividend equivalents or similar rights
shall not be considered to be a grant of any other stockholder right.
(g) Nontransferability. A provision that except under
the laws of descent and distribution, the Participant shall not be permitted to
sell, transfer, pledge or assign any Award, and all Awards shall be exercisable,
during the Participant's lifetime, only by the Participant; provided, however,
that the Participant shall
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be permitted to transfer one or more Stock Options to a trust controlled by the
Participant during the Participant's lifetime for estate planning purposes.
(h) Other Terms. Such other terms as are necessary
and appropriate to effectuate an Award to the Participant, including but not
limited to, (1) vesting provisions, (2) deferral elections, (3) any requirements
for continued employment or service with the Company, (4) any other restrictions
or conditions (including performance requirements) on the Award and the method
by which restrictions or conditions lapse, (5) effect on the Award of a Change
in Control, (6) the right of the Company and such other persons as the Committee
shall designate ("Designees") to repurchase from a Participant, and such
Participant's permitted transferees, all shares of Stock issued or issuable to
such Participant in connection with an Award in the event of such Participant's
termination of employment or service, (7) rights of first refusal granted to the
Company and Designees, if any, (8) holdback and other registration right
restrictions in the event of a public registration
of any equity securities of the Company and (9) any other terms and conditions
which the Committee shall deem necessary and desirable.
6.2 Replacement, Substitution, and Reloading. Award Agreements
may also include provisions permitting the replacement or substitution of
outstanding Awards or securities held by the Participant in order to exercise or
realize rights under other Awards, or in exchange for the grant of new Awards
under similar or different terms, and for the grant of reload Stock Options upon
exercise of outstanding Stock Options.
6.3 Surrender of Options. The Committee may require the
voluntary surrender of all or a portion of any Stock Option or other Award
granted under the Plan as a condition precedent to a grant of a new Stock Option
or Award. Subject to the provisions of the Plan, such new Stock Option or Award
shall be exercisable at the price, during such period and on such other terms
and conditions as are specified by the Committee at the time the new Stock
Option or Award is granted; provided that, should the Committee so require, the
number of shares subject to such new Stock Option or Award shall not be greater
than the number of shares subject to the surrendered Stock Option or Award.
SECTION 7
LOANS
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The Company or any parent or subsidiary of the Company may
make loans available to Stock Option holders in connection with the exercise of
outstanding Stock Options granted under the Plan, as the Committee, in its
discretion, may determine. Such loans shall (i) be evidenced by promissory notes
entered into by the Stock Option holders in favor of the Company or any parent
or subsidiary of the Company, (ii) be subject to the terms and conditions set
forth in this Section 7 and such other terms and conditions, not inconsistent
with the Plan, as the Committee shall determine, (iii) bear interest, if any, at
such rate as the Committee shall determine, and (iv) be subject to Board
approval (or to approval by the Committee to the extent the Board may delegate
such authority). In no event may the principal amount of any such loan exceed
the sum of (x) the exercise price less the par value of the shares of Stock
covered by the Stock Option, or portion thereof, exercised by the holder, and
(y) any federal, state, and local income tax attributable to such exercise. The
initial term of the loan, the schedule of payments of principal and interest
under the loan, the extent to which the loan is to be with or without recourse
against the holder with respect to principal or interest and the conditions upon
which the loan will become payable in the event of the holder's termination of
employment shall be determined by the Committee. Unless the Committee determines
otherwise, when a loan is made, shares of Stock having a Fair Market Value at
least equal to the principal amount of the loan shall be pledged by the holder
to the Company as security for payment of the unpaid balance of the loan, and
such pledge shall be evidenced by a pledge agreement, the terms of which shall
be determined by the Committee, in its discretion; provided that, each loan
shall comply with all applicable laws, regulations and rules of the Board of
Governors of the Federal Reserve System and any other governmental agency having
jurisdiction.
SECTION 8
AMENDMENT AND TERMINATION
The Board may at any time and from time-to-time alter, amend,
suspend, or terminate the Plan in whole or in part; provided that, no amendment
which requires stockholder approval in order for the Plan to comply with a rule
or regulation deemed applicable by the Committee, shall be effective unless the
same shall be approved by the requisite vote of the stockholders of the Company
entitled to vote thereon. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any Participant, without such
Participant's consent, under any Award or Loan theretofore granted under the
Plan.
SECTION 9
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UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
SECTION 10
GENERAL PROVISIONS
10.1 Securities Laws Compliance. Shares of Stock shall not be
issued pursuant to the exercise of any Award granted hereunder unless the
exercise of such Award and the issuance and delivery of such shares of Stock
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act and
the requirements of any stock exchange upon which the Stock may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
10.2 Certificate Legends. The Committee may require each
person purchasing shares pursuant to a Stock Option to represent to and agree
with the Company in writing that such person is acquiring the Stock subject
thereto without a view to distribution thereof. The certificates for such Stock
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
10.3 Transfer Restrictions. All certificates for shares of
Stock delivered under the Plan shall be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Commission, any stock exchange upon
which the Stock is then listed, and any applicable federal or state securities
law, and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
10.4 Company Actions; No Right to Employment. Nothing
contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is
necessary and desirable; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan shall
not confer upon any employee,
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consultant or advisor of the Company any right to continued employment with the
Company, as the case may be, nor shall it interfere in any way with the right of
the Company to terminate the employment or service of any of its employees,
consultants or advisors at any time.
10.5 Payment of Taxes. Each Participant shall, no later than
the date as of which the value of an Award first becomes includible in the gross
income of the Participant for federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld with
respect to the Award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant.
SECTION 11
EFFECTIVE DATE OF PLAN
The Plan became effective (the "Effective Date") on
[_________, 2002], the date the Board formally approved the Plan.
SECTION 12
TERM OF PLAN
No Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date, but Awards theretofore granted may
extend beyond that date.
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