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EXHIBIT 99
INCENTIVE STOCK OPTION AGREEMENT
1995 STOCK OPTION PLAN
OF FURR'S/▇▇▇▇▇▇'▇, INCORPORATED
This STOCK OPTION AGREEMENT (the "Agreement") is made between
FURR'S/▇▇▇▇▇▇'▇, INCORPORATED, a Delaware corporation (the "Company"), and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Executive"). The Company considers that its interests
will be served by granting the Executive an option to purchase shares of common
stock of the Company as an inducement for his continued and effective
performance of services for the Company. The Board of Directors of the Company
(the "Board") has adopted, and the stockholders have approved, the 1995 Stock
Option Plan of Furr's/▇▇▇▇▇▇'▇ Incorporated (the "Plan"), a copy of which is
attached hereto and incorporated by reference herein. The Executive has been
designated as a participant in the Plan.
IT IS AGREED:
1. Subject to the terms of the Plan, on March 23, 1998 (the "Date
of Grant"), the Company hereby grants to the Executive an incentive stock
option (the "Option") to purchase 500,000 shares of the common stock of the
Company, $.01 par value per share ("Stock"), at a price of $.75 per share,
subject to adjustment as provided in the Plan ("the "Option Price"). The
Option is exercisable according to the following schedule:
(a) On the day after the first anniversary of the Date of
Grant, the Option may be exercised with respect to up to 1/5 of the
shares subject to the Option;
(b) after each succeeding anniversary of the Date of
Grant, the Option may be exercised with respect to up to an additional
1/5 of the shares subject to the Option, so that after the expiration
of the fifth anniversary of the Date of Grant the Option shall be
exercisable in full; and
(c) to the extent not exercised, installments shall be
cumulative and may be exercised in whole or in part.
Notwithstanding the above, the Option shall become fully exercisable
upon the occurrence of either (i) termination of the Executive's employment by
the Company other than in a termination for cause or (ii) a change of control.
For this purpose, the Executive's employment will be deemed to have been
terminated by the Company for cause if the Company ▇▇▇▇▇▇ its employment
relationship with the Executive because of (i) his failure to perform, or
willful and continual neglect of, his material duties or
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obligations as President and Chief Executive Officer, which continues after
written notice that such actions are occurring has been furnished by the
Company to him and he has been afforded a reasonable opportunity of at least
ten (10) days to cure the same, all as determined by the Board, (ii) his
conviction of any crime or offense involving (a) moral turpitude, either in
connection with the performance of his obligations to the Company or its
affiliates or which shall adversely affect his ability to perform such
obligations or (b) money or other property of the Company or its affiliates; or
(iii) drug addiction. For purposes of this Agreement a "change of control"
shall be deemed to have occurred upon any of the following events: (a) if the
stockholders of the Company approving a sale or disposition of all or
substantially all of the assets of the Company to an entity that is not then an
affiliate (as such term is defined in Rule 405 promulgated under the Securities
Act of 1933, as amended) of the Company; (b) if the Company merges with an
entity that is not an affiliate (as such term is defined in Rule 405
promulgated under the Securities Act of 1933, as amended) of the Company and
persons who were members of the Board of Directors of the Company immediately
prior to the merger do not constitute a majority of the directors of the
surviving entity immediately after the merger; or (c) the election during any
period of twelve (12) months or less of a majority of the members of the Board
of Directors of the Company without the approval of the election or nomination
for election of such new member or members by a majority of the members of the
Board who were members at the beginning of the period, or members of the Board
thereafter recommended to succeed such original members (or recommended to
succeed their successors that were recommended as required hereunder) by a
majority of the members of the Board who were members at the beginning of the
period (or their successors that were recommended as required hereunder).
THE EXECUTIVE IS HEREBY NOTIFIED THAT IF HIS EMPLOYMENT IS TERMINATED
OTHER THAN IN A TERMINATION FOR CAUSE OR THERE IS A CHANGE OF CONTROL, A
PORTION OF THE OPTION MAY BE TAXED AS IF IT WERE A NONQUALIFIED STOCK OPTION
RATHER THAN AN INCENTIVE STOCK OPTION.
To the extent that the aggregate fair market value of Stock with
respect to which incentive stock options are exercisable for the first time by
the Executive during any calendar year (under the Plan or any other plan of the
Company of its affiliates) exceeds $100,000, the options will be treated as
nonqualified stock options. For purposes of this rule, the fair market value
of the Stock is determined at the time the option for the Stock is granted.
2. The Option granted to the Executive under this Agreement shall
not be transferable or assignable by Employee other than by will or the laws of
descent and distribution, and shall be exercisable during the Executive's
lifetime only by him.
3. The Option, to the extent such rights shall not previously
have been exercised, shall terminate and become null and void on the earliest
of:
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(a) the last day within the ten year period commencing on
the Date of Grant (the "Expiration Date");
(b) the date that is 30 days after the date of severance
of the Executive's employment with the Company and all subsidiaries of
the Company as defined in the Plan ("Subsidiaries") for any reason
other than death, retirement as defined in the Plan ("Retirement"), or
disability as defined in section 22(e)(3) of the Internal Revenue Code
of 1986, as amended ("Disability");
(c) the date that is 90 days after the date of severance
of the Executive's employment with the Company and all Subsidiaries
because of Retirement;
(d) the date that is 180 days after the date of the
Executive's severance of employment with the Company and all
Subsidiaries because of Disability; or
(e) the date that is 180 days after the date of the
Executive's death; provided that he dies either while employed with
the Company or Subsidiary or within 30 days after his severance of
employment with the Company and all Subsidiaries.
THE EXECUTIVE IS HEREBY NOTIFIED THAT THE OPTION WILL BE TAXED AS IF
IT WERE A NONQUALIFIED STOCK OPTION RATHER THAN AN INCENTIVE STOCK OPTION TO
THE EXTENT THAT IT IS NOT EXERCISED ON OR BEFORE ONE DAY LESS THAN THREE MONTHS
AFTER THE EXECUTIVE'S RETIREMENT.
In the event of the severance of the Executive's employment with the
Company and all Subsidiaries for any reason prior to the Expiration Date, the
Option shall not continue to vest after his severance of employment. Upon the
death of the Executive, his executors, administrators or any person or persons
to whom his Option may be transferred by will or by the laws of descent and
distribution, shall have the right to exercise the Option with respect to the
number of shares that the Executive would have been entitled to exercise if he
were still alive.
4. This Agreement may not be changed or terminated orally but
only by an agreement in writing signed by the party against whom enforcement of
any such change or termination is sought.
5. The Company shall not be deemed by the grant of the Option (as
distinguished from a separate employment agreement, if any) to be required to
employ the Executive for any period.
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6. The Executive shall not have any rights as a stockholder with
respect to any shares covered by the Option until the date of the issuance of
the stock certificate or certificates to him for such shares following his
exercise of the Option pursuant to its terms and conditions and payment for the
shares. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such certificate or certificates are
issued.
7. The Executive consents to the placing on the certificate for
any shares covered by the Option of an appropriate legend restricting resale or
other transfer of such shares except in accordance with the Securities Act of
1933 and all applicable rules thereunder.
8. In the event of any difference of opinion concerning the
meaning or effect of the Plan or this Agreement, such difference shall be
resolved by the committee referred to in the Plan.
9. The validity, construction and performance of this agreement
shall be governed by the laws of the State of Delaware. Any invalidity of any
provision of this Agreement shall not affect the validity of any other
provision.
10. All offers, notices, demands, requests, acceptances or other
communications hereunder shall be in writing and shall be deemed to have been
duly made or given if mailed by registered or certified mail, return receipt
requested. Any such notice mailed to the Company shall be addressed to its
principal office, and any notice mailed to the Executive shall be addressed to
the Executive's residence address as it appears on the books and records of the
Company or to such other address as either party may hereafter designate in
writing to the other.
11. This Agreement shall, except as herein stated to the contrary,
inure to the benefit of and bind the legal representatives, successors and
assigns of the parties hereto.
12. This Option is an incentive stock option which is intended to
be governed by section 422 of the Internal Revenue Code of 1986, as amended.
13. In accepting this Option, the Executive accepts and agrees to
be bound by all the terms and conditions of the Plan which pertain to incentive
stock options granted under the Plan.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered to be effective as of the day and year first above written.
FURR'S/▇▇▇▇▇▇'▇, INCORPORATED
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Chairman of the Compensation Committee
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
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ANNEX B
1995 STOCK OPTION PLAN
OF FURR'S/▇▇▇▇▇▇'▇, INCORPORATED
1. Purpose, Types of Awards, Construction. The purpose of the
1995 Stock Option Plan of Furr's/▇▇▇▇▇▇'▇, Incorporated (the "Plan") is to
afford an incentive to executive officers, other employees and non-employee
directors of Furr's/▇▇▇▇▇▇'▇, Incorporated, a Delaware corporation (the
"Company"), or any Subsidiary (as defined below), to acquire a proprietary
interest in the Company, to continue as employees or non-employee directors (as
the case may be), to increase their efforts on behalf of the Company and to
promote the success of the Company's business. To further such purposes the
Committee as defined below may grant stock options, stock appreciation rights
and restricted stock. The provisions of the Plan are intended to satisfy the
requirements of Section 16(b) of the Securities Exchange Act of 1934, and shall
be interpreted in a manner consistent with the requirements thereof, as now or
hereafter construed, interpreted and applied by regulations, rulings and cases.
2. Definitions. As used in this Plan, the following words and
phrases shall have the meanings indicated:
(a) "Agreement" shall mean an agreement entered into
between the Company and a Grantee in connection with an award under
the Plan.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(d) "Committee" shall mean a committee established by the
Board to administer the Plan, the composition of which shall at all
times satisfy the provisions of Rule 16b-3 under the Exchange Act.
(e) "Company Stock" shall mean shares of common stock,
par value $.01 per share, of the Company.
(f) "Company" shall mean Furr's/▇▇▇▇▇▇'▇, Incorporated, a
corporation organized under the laws of the State of Delaware, or any
successor corporation.
(g) "Disability" shall mean a Grantee's inability to
perform his duties with the Company or any Subsidiary for more than
six consecutive months by reason of any medically determinable
physical or mental impairment, as determined by a physician selected
by the Grantee and acceptable to the Company.
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(h) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time, and as now or hereafter
construed, interpreted and applied by regulations, rulings and cases.
(i) "Fair Market Value" per share as of a particular date
shall mean (i) the closing sales price per share of Common Stock on
the national securities exchange on which the Common Stock is
principally traded for the last preceding date on which there was a
sale of such Common Stock on such exchange, or (ii) if the shares of
Common Stock are then traded in an over-the-counter market, the
average of the closing bid and asked prices for the shares of Common
Stock in such over-the-counter market for the last preceding date on
which there was a sale of such Common Stock in such market, or (iii)
if the shares of Common Stock are not then listed on a national
securities exchange or traded in an over-the-counter market, such
value as the Committee, in its sole discretion, shall determine.
(j) "Grantee" shall mean a person who receives a grant of
Options, Stock Appreciation Rights or Restricted Stock under the Plan.
(k) "Incentive Stock Option" shall mean any option
intended to be, and designated as, an incentive stock option within
the meaning of Section 422 of the Code.
(l) "Insider" shall mean a Grantee who is subject to the
reporting requirements of Section 16(a) of the Exchange Act.
(m) "Option" or "Options" shall mean a grant to a Grantee
of an option or options to purchase shares of Common Stock. Options
granted by the Committee to an employee Grantee pursuant to the Plan
shall constitute either Incentive Stock Options or Nonqualified Stock
Options. Options automatically granted pursuant to Section 23 hereof
to a non-employee director shall be Nonqualified Stock Options.
(n) "Option Price" shall mean the exercise price of an
Option per share of Common Stock covered by the Option.
(o) "Option Term" shall mean the period (determined at
the Option's grant) from its date of grant to the last date on which
it can be exercised. The Option Term of any Incentive Stock Option or
any Option granted to a non-employee director pursuant to Section 23
hereof shall not be longer than ten (10) years. The Option Term of
any Option granted to a Ten Percent Stockholder shall not be longer
than five (5) years.
(p) "Plan" means this 1995 Stock Option Plan of
Furr's/▇▇▇▇▇▇'▇, Incorporated, as amended from time to time.
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(q) "Recapitalization" means the proposed conversion of
various classes of stock into one class of common stock, par value
$0.01 per share, of the Company.
(r) "Retirement" shall mean a Grantee's retirement in
accordance with the terms of any tax-qualified retirement plan
maintained by the Company (or any Subsidiary) in which the Grantee
participates.
(s) "Rule 16b-3" shall mean Rule 16b-3, as from time to
time in effect, promulgated by the Securities and Exchange Commission
under Section 16 of the Exchange Act, including any successor to such
Rule.
(t) "Stock Appreciation Right" shall mean the right,
granted to a Grantee under Section 9, to be paid an amount measured by
the appreciation in the Fair Market Value of Common Stock from the
date of grant to the date of exercise of the right, with payment to be
made in cash or Common Stock as specified in the award or determined
by the Committee.
(u) "Subsidiary" shall mean any company (other than the
Company) in an unbroken chain of companies beginning with the Company,
if, at the relevant time, each of the companies other than the last
company in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other companies in such chain.
(v) "Ten Percent Stockholder" shall mean an employee
Grantee who, at the time an Incentive Stock Option is granted to such
Grantee, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the employer
corporation or of its parent or subsidiary corporation.
3. Administration. The Plan shall be administered by the
Committee. The Committee shall have the authority in its discretion, subject
to and not inconsistent with the express provisions of the Plan (including
Section 23 hereof with respect to any Option granted to a non-employee director
of the Company), to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without limitation, the
authority to grant Options, Stock Appreciation Rights and Restricted Stock; to
determine which Options shall constitute Incentive Stock Options and which
Options shall constitute Nonqualified Stock Options; to determine the purchase
price of the shares of Common Stock covered by each Option; to determine the
persons to whom, and the time or times at which awards shall be granted; to
determine the number of shares to be covered by each award; to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Agreements (which need not
be identical) and to cancel or suspend awards, as necessary; and to make all
other determinations deemed necessary or advisable for the administration of
the Plan.
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The Committee may delegate to one or more of its members or to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. All decisions, determination
and interpretations of the Committee shall be final and binding on all Grantees
of any awards under this Plan.
The Board shall fill all vacancies, however caused, in the Committee.
The Board may from time to time appoint additional members to the Committee,
and may at any time remove one or more Committee members and substitute others.
One member of the Committee shall be selected by the Board as chairman. The
Committee shall hold its meetings at such times and places as it shall deem
advisable. All determinations of the Committee shall be made by a majority of
its members either present in person or participating by conference telephone
at a meeting or by written consent. The Committee may appoint a secretary and
make such rules and regulations for the conduct of its business as it shall
deem advisable, and shall keep minutes of its meetings.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any award
granted hereunder.
4. Eligibility. Awards may be granted to executive officers and
other key employees, including officers and directors who are employees (and to
non-employee directors of the Company in accordance with Section 23 hereof),
except as proscribed by the Exchange Act or the Code. In determining the
employees to whom awards shall be granted and the number of shares to be
covered by each award, the Committee shall take into account the duties of the
respective employees, their present and potential contributions to the success
of the Company and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.
5. Stock. The maximum number of shares of Common Stock reserved
for the grant of awards under the Plan shall be 40,540,795, subject to
adjustment as provided in Section 11 hereof. Such shares may, in whole or in
part, be authorized but unissued shares or shares that shall have been or may
be reacquired by the Company.
If any outstanding award under the Plan should, for any reason expire,
be cancelled or be forfeited (other than in connection with the exercise of a
Stock Appreciation Right), without having been exercised in full, the shares of
Common Stock allocable to the unexercised, cancelled or terminated portion of
such award shall (unless the Plan shall have been terminated) become available
for subsequent grants of awards under the Plan; provided, however, that, in the
case of the cancellation or forfeiture of Restricted Stock with respect to
which dividends have been paid or accrued, the number of shares with respect to
such Restricted Stock shall not be available for subsequent grants hereunder
unless, in the case of shares with respect to which dividends were accrued but
unpaid, such dividends are also cancelled or forfeited.
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6. Terms and Conditions of Options. Each Option granted pursuant
to the Plan shall be evidenced by a written agreement between the Company and
the Grantee (the "Option Agreement"), in such form and containing such terms
and conditions as the Committee shall from time to time approve, which Option
Agreement shall comply with and be subject to the following terms and
conditions, unless otherwise specifically provided in such Option Agreement
(and any Option Agreement with respect to an Option granted automatically to a
non-employee director pursuant to Section 23 hereof shall also comply with and
be subject to the terms and conditions of said Section 23):
(a) Number of Shares. Each Option Agreement shall state
the number of shares of Common Stock to which the Option relates.
(b) Type of Option. Each Option Agreement shall
specifically state that the Option constitutes an Incentive Stock
Option or a Nonqualified Stock Option.
(c) Option Price. Each Option Agreement shall state the
Option Price, which, in the case of an Incentive Stock Option, shall
not be less than one hundred percent (100%) of the Fair Market Value
of a share of Common Stock covered by the Option on the date of grant,
and in any case shall not be less than the par value of a share of the
Common Stock covered by the Option. The Option Price shall be subject
to adjustment as provided in Section 11 hereof. The date as of which
the Committee adopts a resolution expressly granting an Option shall
be considered the day on which such Option is granted.
(d) Medium and Time of Payment. The Option Price shall
be paid in full, at the time of exercise, in cash or in shares of
Common Stock having a Fair Market Value equal to such Option Price or
in a combination of cash and Common Stock or in such other manner as
the Committee shall determine including a cashless exercise procedure
through a broker-dealer.
(e) Term and Exercisability of Options. Each Option
Agreement shall provide the exercise schedule for the Option as
determined by the Committee (or, in the case of an Option granted
pursuant to Section 23 hereof, the exercise schedule provided by such
Section); provided, however, that the Committee shall have the
authority to accelerate the exercisability of any outstanding Option
(other than an Option granted pursuant to Section 23 hereof) at such
time and under such circumstances as it, in its sole discretion, deems
appropriate. Each Option Agreement shall provide an Option Term which
shall be ten (10) years from the date of the grant of the Option,
unless otherwise provided in Section 2 hereof or otherwise determined
by the Committee. The Option Term shall be subject to earlier
expiration as provided in Sections 6(f) and 6(g) hereof. An Option
may be exercised, as to any or all full shares of Common Stock as to
which the Option has become exercisable, by written notice delivered
in person or by mail to the Secretary of the Company, specifying the
number of shares of Common Stock with respect to which the Option is
being exercised.
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(f) Termination of Employee Grantee. Except as provided
in this Section 6(f) and in Section 6(g) hereof, an Option granted to
an employee of the Company or a Subsidiary thereof may be exercised
only if the employee Grantee is then in the employ of the Company or a
Subsidiary thereof (or a corporation issuing or assuming the Option in
a transaction to which Section 424(a) of the Code applies (or a parent
or subsidiary corporation of such corporation)), and the Grantee has
remained continuously so employed since the date of grant of the
Option. In the event that the employment of a employee Grantee shall
terminate (other than by reason of death, Disability or Retirement),
all Options of such Grantee that are exercisable on the date of such
termination shall continue to be exercisable for thirty (30) days
after the date of such termination (or such longer period as the
Committee shall prescribe). Notwithstanding the foregoing provisions
of this Section 6(f), no Option may be exercised later than the
expiration of its Option Term. To the extent that any Option is not
exercisable on the date of such termination of employment, its Option
Term shall expire on such date.
(g) Termination of Employee Grantee by Death, Disability
or Retirement. If an employee Grantee shall die while employed by the
Company or a Subsidiary thereof, or within thirty (30) days after the
date of termination of such Grantee's employment (or within such
longer period as the Committee may have provided for exercise of the
Grantee's Options after termination of the Grantee's employment
pursuant to Section 6(f) hereof), or if the employee Grantee's
employment shall terminate by reason of Disability, all Options
theretofore granted to such Grantee (to the extent such Options are
exercisable on the date the Grantee's employment is terminated by such
death or Disability) may be exercised by the Grantee or by the
Grantee's estate or by a person who acquired the right to exercise
such Options by bequest or inheritance or otherwise by reason of death
or Disability of the Grantee, at any time within one-hundred-eighty
(180) days after the death or Disability of the Grantee. In the event
that an Option granted hereunder shall be exercised by the legal
representatives of a deceased or Disabled Grantee, written notice of
such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal
representatives to exercise such Option. In the event that the
employment of an employee Grantee shall terminate on account of such
Grantee's Retirement, all Options of such Grantee (to the extent such
Options are exercisable on the date of the Grantee's Retirement) may
be exercised at any time within ninety (90) days after the date of
such Retirement. Notwithstanding the foregoing provisions of this
Section 6(g), no Option may be exercised later than the expiration of
its Option Term. To the extent that any Option is not exercisable on
the date of such termination of employment by reason of death,
Disability or Retirement, its Option Term shall expire on such date.
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(h) Other Provisions. The Option Agreements evidencing
awards under the Plan shall contain such other terms and conditions
not inconsistent with the Plan as the Committee may determine.
7. Nonqualified Stock Options. Options granted pursuant to this
Section 7 are intended to constitute Nonqualified Stock Options and shall be
subject only to the general terms and conditions specified in Section 6 hereof
(and, in the case of Options granted to a non-employee director pursuant to
Section 23 hereof, shall also be subject to the terms and conditions specified
in said Section 23).
8. Incentive Stock Options. Options granted pursuant to this
Section 8 are intended to constitute Incentive Stock Options and shall be
subject to the following special terms and conditions, in addition to the
general terms and conditions specified in Section 6 hereof.
(a) Value of Shares. The aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted) of
the shares of Common Stock with respect to which Incentive Stock
Options granted under this Plan (and all other plans of an employee
Grantee's employer corporation and its parent and subsidiary
corporations) become exercisable for the first time by the Grantee
during any calendar year shall not exceed one-hundred-thousand dollars
($100,000).
(b) Ten Percent Stockholder. In the case of an Incentive
Stock Option granted to a Ten Percent Stockholder, (i) the Option
Price shall not be less than one-hundred-ten percent (110%) of the
Fair Market Value of a share of Common Stock on the date of grant of
such Incentive Stock Option, and (ii) the Option Term shall not exceed
five (5) years from the date of grant of such Incentive Stock Option.
9. Stock Appreciation Rights. The Committee shall have authority
to grant a Stock Appreciation Right to the employee Grantee of any Option under
the Plan with respect to all or some of the shares of Common Stock covered by
such related Option. A Stock Appreciation Right shall, except as provided in
this Section 9, be subject to the same terms and conditions as the related
Option. Each Stock Appreciation Right granted pursuant to the Plan shall be
evidenced by a written Agreement between the Company and the Grantee in such
form as the Committee shall time to time approve.
(a) Time of Grant. A Stock Appreciation Right may be
granted either at the time of grant, or at any time thereafter during
the term of the Option; provided, however, that Stock Appreciation
Rights related to Incentive Stock Options may only be granted at the
time of grant of the related Option.
(b) Payment. A Stock Appreciation Right shall entitle
the holder thereof, upon exercise of the Stock Appreciation Right or
any portion thereof, to receive payment of an amount computed pursuant
to Section 9(d).
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(c) Exercise. A Stock Appreciation Right shall be
exercisable at such time or times and only to the extent that the
related Option is exercisable, and will not be transferable except to
the extent the related Option may be transferable. A Stock
Appreciation Right granted in connection with an Incentive Stock
Option shall be exercisable only if the Fair Market Value of a share
of Common Stock on the date of exercise exceeds the purchase price
specified in the related Incentive Stock Option.
(d) Amount Payable. Upon the exercise of a Stock
Appreciation Right, the Optionee shall be entitled to receive an
amount determined by multiplying (i) the excess of the Fair Market
Value of a share of Common Stock on the date of exercise of such Stock
Appreciation Right over the Option Price under the related Option, by
(ii) the number of shares of Common Stock as to which such Stock
Appreciation Right is being exercised. Notwithstanding the foregoing,
the Committee may limit in any manner the amount payable with respect
to any Stock Appreciation Right by including such a limit at the time
it is granted.
(e) Treatment of Related Options and Stock Appreciation
Rights Upon Exercise. Upon the exercise of a Stock Appreciation
Right, the related Option shall be cancelled to the extent of the
number of shares of Common Stock as to which the Stock Appreciation
Right is exercised and upon the exercise of an Option granted in
connection with a Stock Appreciation Right, the Stock Appreciation
Right shall be cancelled to the extent of the number of shares of
Common Stock as to which the Option is exercised or surrendered.
(f) Method of Exercise. Stock Appreciation Rights shall
be exercised by a Grantee only by a written notice delivered in person
or by mail to the Secretary of the Company, specifying the number
shares of Common Stock with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Grantee
shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Option Agreement evidencing any related Option
to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such Agreements to the Grantee.
(g) Form of Payment. Payment of the amount determined
under Section 9(d), may be made solely in whole shares of Common Stock
in a number determined based upon their Fair Market Value on the date
of exercise of the Stock Appreciation Right or, alternatively, at the
sole discretion of the Committee, solely in cash, or in a combination
of cash and shares of Common Stock as the Committee deems advisable.
If the Committee decides to make full payment in shares of Common
Stock, and the amount payable results in a fractional share, payment
for the fractional share will be made in cash. Notwithstanding the
foregoing, to the extent required by Rule 16b-3 no payment in the form
of cash may be made upon the exercise of a Stock Appreciation Right
pursuant to Section 9(d) to an Insider, unless the exercise of such
Stock Appreciation Right is made during the period beginning on the
third business
14
day and ending on the twelfth business day following the date of
release for publication of the Company's quarterly or annual
statements of earnings.
10. Restricted Stock. The Committee may award shares of
Restricted Stock to any eligible employee. Each award of Restricted Stock
under the Plan shall be evidenced by a written Agreement between the Company
and the Grantee, in such form as the Committee shall from time to time approve,
and shall comply with the following terms and conditions (and with such other
terms and conditions not inconsistent with the terms of this Plan as the
Committee, in its discretion, shall establish):
(a) Number of Shares. Each Agreement shall state the
number of shares of Restricted Stock to be subject to an award.
(b) Restrictions. Shares of Restricted Stock may not be
sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and distribution,
for such period as the Committee shall determine from the date on
which the award is granted (the "Restricted Period"). The Committee
may also impose such other restrictions and conditions on the shares
as it deems appropriate including the satisfaction of performance
criteria. Certificates for shares of stock issued pursuant to
Restricted Stock awards shall bear an appropriate legend referring to
such restrictions, and any attempt to dispose of any such shares of
stock in contravention of such restrictions shall be null and void and
without effect. During the Restricted Period, such certificates shall
be held in escrow by an escrow agent appointed by the Committee. In
determining the Restricted Period of an award, the Committee may
provide that the foregoing restrictions shall lapse with respect to
specified percentages of the awarded shares on successive
anniversaries of the date of such award.
(c) Forfeiture. Subject to such exceptions as may be
determined by the Committee, if the Grantee's continuous employment
with the Company or any Subsidiary shall terminate for any reason
prior to the expiration of the Restricted Period of an award, any
shares remaining subject to restrictions (after taking into account
the provisions of Section 10(e) hereof) shall thereupon be forfeited
by the Grantee and transferred to, and reacquired by, the Company or a
Subsidiary at no cost to the Company or Subsidiary.
(d) Ownership. During the Restricted Period the Grantee
shall possess all incidents of ownership of such shares, subject to
Section 10(b) hereof, including the right to receive dividends with
respect to such shares and to vote such shares.
(e) Accelerated Lapse of Restrictions. The Committee
shall have the authority (and the Agreement may, but need not, so
provide) to cancel all or any portion of any outstanding restrictions
prior to the expiration of the Restricted Period with respect to any
or all of the shares of Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
15
11. Effect of Certain Changes. In the event of an extraordinary
dividend, stock dividend, recapitalization, merger, consolidation, stock split,
warrant or rights issuance, or combination or exchange of such shares, or other
similar transactions, the number of shares of Common Stock available for
awards, the number of such shares covered by outstanding awards, and the price
per share of Options or the applicable market value of Stock Appreciation
Rights shall be equitably adjusted by the Committee to reflect such event and
preserve the value of such awards (and such equitable adjustments shall include
both outstanding and future Options granted to non-employee directors pursuant
to Section 23 hereof); provided, however, that any fractional shares resulting
from such adjustments shall be eliminated.
12. Surrender and Exchange of Awards. The Committee may permit
the voluntary surrender of all or a portion of any Option granted under the
Plan to an employee or any option granted under any other plan, program or
arrangement of the Company or any Subsidiary ("Surrendered Option"), to be
conditioned upon the granting to the employee Grantee of a new Option for the
same number of shares of Common Stock as the Surrendered Option, or may require
such voluntary surrender as a condition precedent to a grant of a new Option to
such Grantee. Subject to the provisions of the Plan, such new Option may be an
Incentive Stock Option or a Nonqualified Stock Option and 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 Option is granted. The
Committee may also grant Restricted Stock in exchange for Surrendered Options
to any holder of such Surrendered Options.
13. Period During Which Awards May Be Granted. Awards may be
granted pursuant to the Plan from time to time within a period of ten (10)
years from the date the Plan is adopted by the Board, or the date the Plan is
approved by the shareholders of the Company, whichever is earlier.
14. Nontransferability of Awards. Awards may be granted under the
Plan, shall not be transferable otherwise than by will or by the laws of
descent and distribution, and awards may be exercised or otherwise realized,
during the lifetime of the Grantee, only by the Grantee or by his guardian or
legal representative.
15. Approval of Shareholders and Consummation of Recapitalization.
The Plan shall take effect as of the date determined by the Board in its
adoption of the Plan but the Plan (and any grants of awards made prior to (i)
the shareholder approval described in this sentence and (ii) the consummation
of the Recapitalization) shall be subject to (i) the approval of the holder(s)
of a majority of the issued and outstanding shares of voting securities of the
company entitled to vote, which approval must occur within twelve months of the
date the Plan is adopted by the Board, and (ii) the consummation of the
Recapitalization.
16. Agreement by Employee Grantee Regarding Withholding Taxes. If
the Committee shall so require, as a condition of exercise of an Option or
Stock Appreciation Right or the expiration of the Restricted Period (each a
"Tax Event"), each
16
employee Grantee shall agree that, no later than the date of the Tax Event, the
Grantee will 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 upon the Tax Event. Alternatively, the
Committee may provide that an employee Grantee may elect, to the extent
permitted or required by law, to have the Company deduct federal, state and
local taxes of any kind required by law to be withheld upon the Tax Event from
any payment of any kind due to the Grantee. The withholding obligation may be
satisfied by the withholding or delivery of Common Stock.
17. Amendment and Termination of the Plan. The Board at any time
and from time to time may suspend, terminate, modify or amend the Plan;
provided, however, that an amendment which requires stockholder approval in
order for the Plan to continue to comply with Rule 16b-3 or any other law,
regulation or stock exchange requirement shall not be effective unless approved
by the requisite vote of stockholders. Except as provided in Section 11
hereof, no suspension, termination, modification or amendment of the Plan may
adversely affect any award previously granted, unless the written consent of
the Grantee is obtained.
18. Rights as a Shareholder. Except as provided in Section 10(d)
hereof, a Grantee of an award (or any individual acquiring rights under such
award from the Grantee) shall have no rights as a shareholder with respect to
any shares covered by the award until the date of the issuance of a stock
certificate for such shares to the Grantee (or such individual). No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distribution of other rights for which the
record date is prior to the date such stock certificate is issued, except as
provided in Section 11 hereof.
19. No Rights to Employment. Nothing in the Plan or in any award
granted or Agreement entered into pursuant hereto shall confer upon any Grantee
the right to continue in the employ of, or a consultant relationship with, the
Company or any Subsidiary or to be entitled to any remuneration or benefits not
set forth in the Plan or such Agreement or to interfere with or limit in any
way the right of the Company or any such Subsidiary to terminate such Grantee's
employment. Awards granted under the Plan shall not be affected by any change
in duties or position of a Grantee as long as such Grantee continues to be
employed by, or in a consultant relationship with, the Company or any
Subsidiary.
20. Beneficiary. A Grantee may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the Committee
and may, from time to time, amend or revoke such designation. If no designated
beneficiary survives the Grantee, the executor or administrator of the
Grantee's estate shall be deemed to be the Grantee's beneficiary.
21. Governing Law. The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Delaware.
17
22. Effective Date and Duration of the Plan. This Plan shall be
effective as of the date determined by the Company, subject to the approval of
the Plan by the stockholders of the Company and the consummation of the
Recapitalization, and shall terminate on the tenth anniversary of such date,
unless earlier terminated pursuant to Section 17 hereof.
23. Grants to Non-employee Directors.
(a) Within ninety business days following the Annual Meeting of
stockholders of the Company held in 1995, the Committee may, in its sole
discretion, grant to each member of the Board who is not then an employee of
the Company or any Subsidiary thereof an Option to purchase not more than one
hundred thousand (100,000) shares of Common Stock. Thereafter, on the first
business day following each annual meeting of stockholders of the Company, the
Committee may, in its sole discretion, grant to each member of the Board who is
not then an employee of the Company or any Subsidiary thereof an Option to
purchase not more than one hundred thousand (100,000) shares of Common Stock.
In the event that such date shall in any year fall on a day on which the Common
Stock is not publicly traded, Options shall instead be granted pursuant to this
Section 23 on the next following trading day.
(b) Such an Option shall be granted at an Option Price equal to
the Fair Market Value of a share of Common Stock on the date of grant. Such
Option shall become exercisable as to one-third (1/3) of the shares subject to
the Option on each of the first, second and third anniversary dates of the date
of grant. The Option Term for such Option shall be ten years following the
date of grant. Such Option shall be a Nonqualified Stock Option.
(c) If, during the Option Term of an unexercised and unexpired
Option issued pursuant to this Section 23, the non-employee director Grantee
shall cease to be a voting member of the Board for any reason (other than the
non- employee director's death or Disability), such portion or all of the
Option which is exercisable on the date such voting status terminates may be
exercised until the end of the three-month period following the date such
voting status terminates (but in no event later than the expiration of the
Option Term). If such an Option (or any portion thereof) is not exercisable on
the date such voting status terminates, the Option Term of such Option (or such
unexercisable portion thereof) shall expire on such date. If such voting
status terminates by reason of the non-employee director Grantee's death or
Disability, all Options theretofore granted to such Grantee (to the extent
exercisable on the date such voting status terminates) may be exercised by the
Grantee or by the Grantee's estate or by a person who acquired the right to
exercise such Options by bequest or inheritance or otherwise by reason of death
or Disability of the Grantee, at any time within one-hundred-eighty (180) days
after the death or Disability of the Grantee (but in no event may such an
Option be exercised after the expiration of its Option Term). In the event
that an Option granted hereunder shall be exercised by the legal
representatives of a deceased or Disabled Grantee, written notice of such
exercise shall
18
be accompanied by a certified copy of letters testamentary or equivalent proof
of the right of such legal representatives to exercise such Option.
(d) Notwithstanding any other provisions of this Plan to the
contrary, this Section 23 shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
