Exhibit 10.4
NEWCASTLE INVESTMENT CORP.
NONQUALIFIED STOCK OPTION AND
INCENTIVE AWARD PLAN
ADOPTED ON JUNE 6, 2002
AMENDED AND RESTATED EFFECTIVE AS OF JUNE 23, 2003
TABLE OF CONTENTS
PAGE
SECTION 1 PURPOSE OF PLAN; DEFINITIONS....................................................1
1.1 PURPOSE..................................................................1
1.2 DEFINITIONS..............................................................1
SECTION 2 ADMINISTRATION..................................................................5
2.1 ADMINISTRATION...........................................................5
2.2 DUTIES AND POWERS OF COMMITTEE...........................................6
2.3 MAJORITY RULE............................................................6
2.4 COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD
FAITH ACTIONS............................................................6
SECTION 3 STOCK SUBJECT TO PLAN...........................................................6
3.1 NUMBER OF AND SOURCE OF SHARES...........................................6
3.2 UNREALIZED AND TANDEM AWARDS.............................................7
3.3 ADJUSTMENT OF AWARDS.....................................................7
SECTION 4 ELIGIBILITY.....................................................................8
SECTION 5 AWARDS..........................................................................8
5.1 STOCK OPTIONS............................................................8
5.2 STOCK APPRECIATION RIGHTS................................................9
5.3 RESTRICTED STOCK.........................................................9
5.4 PERFORMANCE AWARDS......................................................10
5.5 MANAGER AWARDS AND TANDEM AWARDS........................................10
5.6 AUTOMATIC NON-OFFICER DIRECTOR AWARDS...................................12
5.7 OTHER AWARDS............................................................14
SECTION 6 AWARD AGREEMENTS...............................................................14
6.1 TERMS OF AWARD AGREEMENTS...............................................14
6.2 REPLACEMENT, SUBSTITUTION, AND RELOADING................................15
6.3 SURRENDER OF OPTIONS....................................................16
SECTION 7 LOANS..........................................................................16
SECTION 8 AMENDMENT AND TERMINATION......................................................17
i
SECTION 9 UNFUNDED STATUS OF PLAN........................................................17
SECTION 10 GENERAL PROVISIONS.............................................................17
10.1 SECURITIES LAWS COMPLIANCE..............................................17
10.2 CERTIFICATE LEGENDS.....................................................18
10.3 TRANSFER RESTRICTIONS...................................................18
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...................................................................19
ii
iii
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 Non-Officer Directors, officers,
directors, 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:
(1) "Award" or "Awards" means an award described in Section 5 hereof.
(2) "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.
(3) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(4) "Board" means the Board of Directors of the Company.
(5) "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
have occurred unless prior to the occurrence of such event, the Board determines
that such event shall not constitute a Change in Control:
1
(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.
(6) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto.
(7) "Commission" means Securities and Exchange Commission.
2
(8) "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.
(9) "Company" means Newcastle Investment Corp., a Maryland corporation.
(10) "Effective Date" means the date provided pursuant to Section 11.
(11) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(12) "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.]
(13) "Initial Offering Price" means the initial price to the public as
set forth in the final prospectus included within the Registration Statement.
(14) "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 6, 2002, by and among the Company, Fortress Partners, L.P. and
Fortress Investment Group LLC as amended from time to time.
3
(15) "Manager Awards" means the Awards granted to the Manager as
described in Section 5.5 hereof.
(16) "Non-Officer Director" means a director of the Company who is not
an officer or employee of the Company.
(17) "Non-Officer Director Stock Option" shall have the meaning set
forth in Section 5.6.
(18) "Non-Officer Director Stock" shall have the meaning set forth in
Section 5.6.
(19) "NYSE" means the New York Stock Exchange.
(20) "Participant" means any Non-Officer 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 Committee's authority in Section 2 below, to receive Awards.
(21) "Plan" means this Newcastle Investment Corp. Nonqualified Stock
Option and Incentive Award Plan.
(22) "Registration Statement" means the registration statement filed
with the Securities and Exchange Commission for the initial underwritten public
offering of the Company's Stock.
(23) "Restricted Stock" means Stock as described in Section 5.3 hereof.
(24) "Stock" means the common stock, par value $0.01 per share, of the
Company.
(25) "Stock Appreciation Right" shall have the meaning set forth in
Section 5.2 hereof.
(26) "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
4
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.
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:
(1) in addition to the Manager and the Non-Officer Directors, those
officers, employees, directors, managers, consultants or advisors, if any, who
shall be Participants;
(2) subject to Section 3, the number of shares of Stock to be covered
by each Stock Option granted hereunder;
(3) 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
(4) the terms and conditions which shall govern all the Award
Agreements, including the waiver or modification of any such terms or
conditions.
5
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 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
6
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 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.
7
SECTION 4
ELIGIBILITY
The Manager, each employee of the Manager who is performing services for
the Company and each Non-Officer Director, officer, director, employee,
consultant or advisor 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
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.
8
(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 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.
9
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
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.
10
(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 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
11
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 Automatic Non-Officer Director Awards.
(a) Initial Grant of Non-Officer Director Stock Option. Each
Non-Officer 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, a
"Non-Officer 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 Non-Officer Director. For those Non-Officer 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 Non-Officer Director
appointed to the Board of Directors after the Effective Date of the Plan, the
option price per share of Stock shall be 100% of the Fair Market Value of the
Stock on the date of grant.
(b) Annual Grant of Stock. On the first business day after the first
annual stockholders' meeting of the Company following June 23, 2003, and on the
first business day after each such annual meeting of the Company thereafter
during the term of the Plan, each Non-Officer Director shall be granted that
number of shares of Stock, the Fair Market Value of which shall equal $15,000 on
the date of
12
grant and which shall be fully vested as of such date (the "Non-Officer Director
Stock").
13
(c) Stock Availability. In the event that the number of shares of Stock
available for grant under the Plan is not sufficient to accommodate the awards
of Non-Officer Director Stock Options and Non-Officer Director Stock, then the
remaining shares of Stock available for such automatic awards shall be granted
to each Non-Officer Director who is to receive such an award 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 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.
(d) Term; Method of Exercise of Non-Officer Director Stock Option. Each
Non-Officer 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 Non-Officer Director which, (x) in the case of unrestricted
Stock acquired upon exercise of an option, have been owned by the Non-Officer
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. Each recipient of a Non-Officer Director Stock
Option and Non-Officer Director Stock shall enter into an Award Agreement with
the Company, which agreement shall set forth, among other things, the exercise
price, the term and provisions regarding exercisability of the Non-Officer
Director Stock Option, or, as applicable, the number of shares of Non-Officer
Director Stock awarded hereunder, which provisions shall not be inconsistent
with the terms of this Section 5.6 and Section 6.1. The Award Agreement with
respect to such Non-Officer Director Stock Option and Non-Officer Director Stock
shall also set forth such other terms and conditions with respect to Awards to
the Non-Officer Director as the Committee may determine.
14
5.7 Other Awards. The Committee may from time to time grant to its
Non-Officer Directors 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.
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.
15
(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 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
16
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.
17
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
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 of the U.S. Securities and Exchange Commission and any other
governmental agency having jurisdiction.
18
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
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.
19
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, 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 June 6, 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
20
anniversary of the Effective Date, but Awards theretofore granted may extend
beyond that date.
21