2002 Stock Option Plan - Salton Inc.
2002 STOCK OPTION PLAN
TABLE OF CONTENTS
Section 1. Purpose................................................ 1
Section 2. Definition............................................. 1
Section 3. Administration......................................... 3
Section 4. Shares Subject to the Plan............................. 4
Section 5. Eligibility............................................ 5
Section 6. Stock Options.......................................... 5
Section 7. Stock Appreciation Rights.............................. 8
Section 8. Restricted Stock....................................... 10
Section 9. Performance Awards..................................... 10
Section 10. Other Stock Unit Awards................................ 11
Section 11. Termination of Awards.................................. 11
Section 12. Transferability of Awards.............................. 13
Section 13. Change in Control...................................... 13
Section 14. Amendments and Termination............................. 15
Section 15. General Provisions..................................... 15
Section 16. Term of Plan........................................... 17
2002 STOCK OPTION PLAN
THE PLAN. Salton, Inc., a Delaware corporation (the "Company"), hereby
establishes the Salton, Inc. 2002 Stock Option Plan (the "Plan"), effective as
of the Effective Date.
SECTION 1. PURPOSE. The purposes of the Plan are to encourage employees of
the Company and its Affiliates to acquire an ownership interest in the growth
and performance of the Company and to increase their incentive to contribute to
the Company's future success, thus enhancing the value of the Company for the
benefit of stockholders, and enhancing the ability of the Company and its
Affiliates to attract and retain individuals upon whom, in large measure, the
progress, growth and profitability of the Company depends.
SECTION 2. DEFINITIONS. The following terms have the meanings set forth
"Affiliate" means any Person that directly, or through one or more
intermediaries, controls, or is controlled by, or is under common control with,
"Award" means any Option, SAR, Restricted Stock Award, Performance Share,
Performance Unit or Other Stock Unit Award.
"Award Agreement" means the written agreement or instrument by which every
Award is evidenced.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to a specific section of the Code shall also refer to any
successor provision, and any regulations promulgated under such section or
"Committee" means the Stock Option Committee of the Board.
"Company" means Salton, Inc.
"Effective Date" means October 29, 2001, the date this Plan is adopted by
the Board; provided, however, that if the Plan is not approved by a majority of
the stockholders present and voting at an annual meeting of the stockholders of
the Company on or before January 15, 2002, this Plan shall not be effective and
this Plan and any Award theretofore made under this Plan shall be void.
"Employee" means any employee of the Company or of any Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934.
"Fair Market Value" means, with respect to a Share, (i) the closing price
of the Shares on the NYSE or any other national stock exchange on which the
Shares are then traded, or if no such reported sale of Shares shall have
occurred on such date, on the next preceding date on which there was such a
reported sale; or (ii) if the Shares are not listed for trading on a national
securities exchange or authorized for quotation on the NYSE, the average of the
closing bid and
asked prices as reported by the NYSE or, if no such prices shall have been
reported for such date, on the next preceding date for which such prices were so
"Incentive Stock Option" means an Option granted pursuant to Section 6(h)
that is intended to meet the requirements of Section 422 of the Code.
"including" means including without limitation.
"Limited Right" means an SAR which is exercisable only for a limited period
after a Change in Control as provided in Section 7(f).
"Mature Shares" means Shares to which the holder thereof has good title,
free and clear of all liens and encumbrances, and which such holder either (i)
has held for at least six months or (ii) has purchased on the open market.
"Nonstatutory Stock Option" means an Option granted to a Participant
pursuant to Section 6 that is not intended to be an Incentive Stock Option.
"NYSE" means the New York Stock Exchange.
"Option" means any right granted to a Participant under the Plan allowing
such Participant to purchase Shares at such price or prices and during such
period or periods as the Committee shall determine.
"Optionee" means any Participant to whom an Option has been granted under
"Option Price" means the per share purchase price of Shares subject to an
"Other Stock Unit Award" means any right granted to a Participant by the
Committee pursuant to Section 10.
"Participant" means an Employee who is selected by the Committee to receive
an Award under the Plan.
"Performance Award" means any Award of Performance Shares or Performance
Units pursuant to Section 9.
"Performance Period" means that period established by the Committee at the
time any Performance Award is granted or at any time thereafter during which any
performance goals specified by the Committee with respect to such Award are to
"Performance Share" means any grant pursuant to Section 9 of a unit valued
by reference to a designated number of Shares, which value may be paid to the
Participant by delivery of such property as the Committee shall determine,
including cash, Shares, or any combination thereof, upon achievement of such
performance goals during the Performance Period as the Committee shall establish
at the time of such grant or thereafter.
"Performance Unit" means any grant pursuant to Section 9 of a unit valued
by reference to a designated amount of property other than Shares, which value
may be paid to the Participant by delivery of such property as the Committee
shall determine, including cash, Shares, or any
combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish at the time of such grant or
"Permitted Transferee" means, in respect of any Participant, any member of
the Immediate Family of such Participant, any trust of which all of the primary
beneficiaries are such Participant or members of his or her Immediate Family, or
any partnership of which all of the partners are such Participant or members of
his or her Immediate Family. The "Immediate Family" of a Participant means the
Participant's spouse, children, stepchildren, grandchildren, parents,
stepparents, siblings, grandparents, nieces and nephews.
"Person" means any individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, or government or
political subdivision thereof.
"Restricted Stock" means any Share issued with the restriction that the
holder may not sell, transfer, pledge, or assign such Share and with such other
restrictions as the Committee, in its sole discretion, may impose (including any
restriction on the right to vote such Share, and the right to receive any cash
dividends), which restrictions may lapse separately or in combination at such
time or times, in installments or otherwise, as the Committee may specify.
"Restricted Stock Award" means an Award of Restricted Stock pursuant to
"SAR" means any right granted to a Participant pursuant to Section 7 to
receive, upon exercise by the Participant, an amount equal to the number of
Shares with respect to which the right is granted multiplied by the excess of
(i) the Fair Market Value of one Share on the date of exercise or, if the
Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before the date of exercise, over (ii) the grant price of the right as specified
by the Committee.
"Shares" means shares of the common stock of the Company.
SECTION 3. ADMINISTRATION.
(a) General. The Plan is administered by the Committee. A majority of the
members of the Committee may determine its actions and fix the time and place of
its meetings. The Committee may appoint agents (who may be Employees) to assist
in the administration of the Plan, and may authorize such persons to execute
agreements or other documents on its behalf. No member of the Committee shall be
liable for any action or determination made with respect to the Plan or any
(b) Power and Authority of Committee. The Committee shall have full power
and authority, in its sole discretion subject to the provisions of the Plan, to:
(i) determine the Employees to whom Awards may from time to time
(ii) determine the type or types of Award to be granted to each
(iii) determine the number of Shares or other amount to be covered by
each Award, subject to the limitations of Section 4.
(iv) determine the terms and conditions, not inconsistent with the
provisions of the Plan, of any Award;
(v) determine whether, to what extent and under what circumstances
Awards may be settled in cash, Shares or other property or canceled or
(vi) determine whether, to what extent and on what terms and
conditions cash, Shares and other property and other amounts payable with
respect to an Award under this Plan shall be deferred, either automatically
or at the election of the Participant;
(vii) determine the existence or nonexistence of any fact or status
relevant to Awards or the rights of Participants thereunder, including
whether a Termination of Employment occurs by reason of cause, retirement,
death or disability;
(viii) construe and interpret the Plan, any Award Agreement, and any
other instrument or agreement entered into under the Plan;
(ix) adjust performance award criteria or the terms and conditions of
other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or changes in applicable laws,
regulations or accounting principles;
(x) make such other determinations and waive such requirements as may
be required or permitted by Sections 6, 7, 8, 9, 10 and 11 or other
provisions of the Plan;
(xi) administer the Plan and establish such rules and regulations,
approve and prescribe such forms, and appoint such agents as it shall deem
appropriate for the proper administration of the Plan;
(xii) correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry it into effect;
(xiii) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan.
In making such determinations, the Committee may take into consideration
the value of the services rendered by the respective individuals, their present
and potential contributions to the success of the Company and its Affiliates and
such other factors which the Committee may deem relevant in accomplishing the
purposes of the Plan. The Committee's determinations under the Plan need not be
uniform. The Committee may make such determinations selectively among persons
who receive, or are eligible to receive, Awards (whether or not such persons are
similarly situated). Decisions of the Committee shall be final and binding upon
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Aggregate Limit. Subject to adjustment as provided in Section 15(h), a
total of 600,000 Shares are reserved for grant pursuant to Awards under the
Plan. Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued Shares or treasury Shares. Shares shall be charged
against the foregoing limit upon the grant of each Award (other than a
Performance Unit or Other Stock Unit not denominated in Shares), but if such
Shares are thereafter forfeited or such Award otherwise terminates without the
issuance of such Shares or of other consideration in lieu of such Shares, the
Shares so forfeited or related to the terminated portion of such Award shall be
restored to the foregoing limit and shall again be available for Awards under
the Plan. If Shares are applied to pay the Option Price upon exercise of an
Option or to pay federal, state and local taxes upon exercise of an Option or
other receipt of payment under an Award, the Shares so applied shall be added to
the foregoing limit and shall be available for Awards under the Plan.
(b) Individual Annual Limits. Awards to any one individual in any one
calendar year are subject to the following limits:
(i) Options. The maximum number of Shares with respect to which
Options may be granted during a calendar year to any Participant is
(ii) SARs. The maximum number of SARs that may be granted during a
calendar year to any Participant is 200,000;
(iii) Aggregate Options and SARs. The sum of the number of Shares with
respect to which Options may be granted and the number of SARs that may be
granted in total during a calendar year to any Participant is 200,000;
(iv) Other Share-Denominated Awards. The maximum number of Shares with
respect to which Restricted Stock, Performance Shares, and Other Stock
Units denominated in Shares in total may be granted during a calendar year
to any Participant is 100,000; and
(v) Dollar-Denominated Awards. The maximum dollar amount of
compensation that may be represented by Performance Units and Other Stock
Units not denominated in Shares awarded during calendar year to any
Participant is 150% of the Participant's annual base salary in effect on
the date of the Award multiplied by the number of whole and fractional
years in the Performance Period for Performance Units.
SECTION 5. ELIGIBILITY. The Committee may grant Awards to any Employee
(excluding any member of the Committee). An Employee may be granted more than
one Award, but only on the terms and subject to the restrictions hereinafter set
SECTION 6. STOCK OPTIONS.
(a) Issuance. The Committee may grant Options to Participants either alone
or in addition to other Awards granted under the Plan.
(b) Award Agreements. Each Option shall be evidenced by an Award Agreement
in such form as the Committee may from time to time approve. The Committee may
require that any Participant shall, as consideration for the grant of the
Option, agree in writing to remain in the employ of the Company or of one of
Affiliates, at the pleasure of the Company or of such Affiliate, for at least
one year from the date of the granting of such Option or until earlier
termination of the Participant's employment effected or approved by the Company
or by such Affiliate, in which event if the Participant violates such agreement,
any Options still held by such
person at the time of such violation shall automatically terminate. The
Committee may waive this requirement in the case of any Participant. Any Option
shall also be subject to the following terms and conditions and to such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall deem desirable.
(c) Date of Granting of Options. The date of grant of all Options shall be
the date designated by the Committee as the date of grant, provided that in no
event shall the date of grant be earlier than the date on which the Committee
approves the grant.
(d) Option Price. The Option Price per Share shall be determined by the
Committee in its sole discretion; provided that the Option Price shall not be
less than 100% of the Fair Market Value of a Share on the date of the grant of
(e) Option Period. The term of each Option shall be fixed by the Committee
in its sole discretion and set forth in the Award Agreement, provided that the
Option and any related SAR shall not be exercisable after the expiration of 10
years from the date the Option was granted.
(f) Exercisability. Options shall be exercisable either in full or in
installments at such time or times as determined by the Committee at or
subsequent to grant, and set forth in the Award Agreement; provided that the
Committee may in its sole discretion subsequent to grant waive any restriction
on the exercise of an Option.
(g) Method of Exercise. An Option shall be exercised by the delivery to
the Company (or an agent of the Company) during the period in which such Option
is exercisable of (x) written notice of exercise in a form acceptable to the
Committee for a specific number of Shares subject to the Option and (y) payment
in full of the Option Price of such specific number of Shares. Payment for the
Shares with respect to which an Option is exercised may be made by any one or
more of the following means:
(i) cash, negotiable personal check or electronic funds transfer;
(ii) the Committee in its sole discretion may permit payment through
tender of Mature Shares, valued at their Fair Market Value on the date of
exercise; provided that the Committee may impose whatever restrictions it
deems necessary or desirable with respect to such method of payment;
(iii) the Committee in its sole discretion may permit payment by
submitting acceptable certification to the Committee of the ownership of
Mature Shares, valued at their Fair Market Value on the date of exercise;
in which event the Shares issued to the Optionee for the portion of any
Option so exercised by shall not exceed the number of Shares covered by the
such portion of the Option less the number of Shares for which proof of
ownership is submitted in full or partial payment; or
(iv) the Committee in its sole discretion may permit payment through
the sale of the Shares acquired on exercise of the Option through a
broker-dealer to whom the Optionee has submitted an irrevocable notice of
exercise and irrevocable instructions to deliver promptly to the Company
the amount of sale or loan proceeds sufficient to pay for
such Shares, together with, if requested by the Committee, the amount of
federal, state, local or foreign withholding taxes payable by Optionee by
reason of such exercise.
(h) Incentive Stock Options. At the time of the grant of any Option, the
Committee may designate in the Award Agreement that such Option shall be an
Incentive Stock Option, which shall be subject to the following terms and
(i) Option Term. The term of an Incentive Stock Option shall not
exceed 10 years (five years in the case of a 10% Owner) from the grant
date, and shall be subject to earlier termination as provided in the Plan
or in the applicable Award Agreement.
(ii) Option Price. The Option Price of an Incentive Stock Option shall
(1) not be less than 100% of the Fair Market Value on the grant date of the
Shares subject to the Option, or (2) in the case of a 10% Owner, not be
less than 110% of the Fair Market Value on the Grant Date of the Shares
subject to the Options.
(iii) $100,000 Limit. The aggregate Fair Market Value (determined as
of the time of grant) of the Shares with respect to which Incentive Stock
Options held by any Participant which are exercisable for the first time by
such Participant during any calendar year under the Plan (and under any
other benefit plans of the Company or of any parent or subsidiary
corporation of the Company) shall not exceed $100,000 or, if different, the
maximum limitation in effect at the time of grant under Section 422 of the
Code. To the extent the $100,000 Limit is exceeded, such Option shall be
deemed to be a Nonstatutory Stock Option.
(iv) Grant Date. Each Incentive Stock Option shall be granted within
10 years from the earlier of the date the Plan is adopted or the date the
Plan is approved by the stockholders of the Company.
(v) Disqualifying Disposition. Each Incentive Stock Option shall
require the holder of Shares issued upon exercise of such Incentive Stock
Options to notify the Committee of any disposition of such Shares under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within 10 days of such disposition.
(vi) Nontransferability. Notwithstanding Section 12, a Participant may
not transfer an Incentive Stock Option otherwise than upon death by will or
under the applicable laws of descent and distribution or by designation of
a beneficiary pursuant to Section 12(a); and during the lifetime of the
Participant only the Participant may exercise an Incentive Stock Option.
(vii) Other Requirements. The terms of any Incentive Stock Option
shall comply in all respects with the provisions of Section 422 of the
(viii) Other Terms and Conditions. Except as otherwise provided in
this subsection, all the provisions of the Plan shall apply to Incentive
(i) Form of Settlement. In its sole discretion, the Committee may provide,
at the time of grant, that the Shares to be issued upon an Option's exercise
shall be in the form of
Restricted Stock or other similar securities, or may reserve the right so to
provide after the time of grant.
(j) Discretionary Share Withholding. The Committee in its sole discretion
may provide that when taxes are to be withheld in connection with the exercise
of an Option by delivering Shares in payment of the exercise price, or an
exercise of an SAR for stock, or upon the lapse of restrictions on Restricted
Stock received upon the exercise of an Option (the date on which such exercise
occurs or such restrictions lapse hereinafter referred to as the "Tax Date"),
the Optionee may elect to make payment for the withholding of federal, state and
local taxes, including Social Security and Medicare ("FICA") taxes, up to the
Optionee's marginal tax rate, by one or both of the following methods:
(i) delivering part or all of the payment in previously-owned Mature
Shares (which shall be valued at their Fair Market Value on the Tax Date);
(ii) requesting the Company to withhold from those Shares that would
otherwise be received upon exercise of the Option, upon exercise of an SAR
for stock, or upon the lapse of restrictions on Restricted Stock, a number
of Shares having a Fair Market Value on the Tax Date equal to the amount to
The Committee in its sole discretion may provide that the amount of tax
withholding to be satisfied by withholding Shares from the Option exercise shall
be the minimum amount of taxes, including FICA taxes, required to be withheld
under federal, state and local law, or shall be the entire amount of taxes,
including FICA taxes, required to be paid by Optionee under federal, state and
local law. An election by Optionee under this subsection is irrevocable. Any
fractional share amount and any additional withholding not paid by the
withholding or surrender of Shares must be paid in cash. If no timely election
is made, cash must be delivered to satisfy all tax withholding requirements.
SECTION 7. STOCK APPRECIATION RIGHTS.
(a) Issuance. The Committee may grant SARs to Participants either alone or
in addition to other Awards granted under the Plan. Such SARs may, but need not,
be granted in connection with a specific Option granted under Section 6. Any SAR
related to a Nonstatutory Stock Option may be granted at the same time such
Option is granted or at any time thereafter before exercise or expiration of
such Option. Any SAR related to an Incentive Stock Option must be granted at the
same time such Option is granted. The Committee may impose such conditions or
restrictions on the exercise of any SAR as it shall deem appropriate.
(b) Award Agreements. Any SAR granted to a Participant under the Plan
shall be evidenced by an Award Agreement in such form and the Committee may
approve and shall contain such terms and conditions not inconsistent with other
provisions of the Plan as shall be determined from time to time by the
(c) Grant Price. The grant price of a SAR shall be determined by the
Committee in its sole discretion; provided that the grant price shall not be
less than the lesser of 100% of the Fair Market Value of a Share on the date of
the grant of the SAR, or the Option Price under the Nonstatutory Stock Option to
which the SAR relates.
(d) Exercise and Payment. Upon the exercise of SARs, an Optionee shall be
entitled to receive the value thereof. The Fair Market Value of a Share on the
date of exercise of SARs shall be determined in the same manner as the Fair
Market Value of a Share on the date of grant of an Option is determined. SARs
shall be deemed exercised on the date written notice of exercise in a form
acceptable to the Committee is received by the Secretary of the Company. Unless
the Award Agreement provides otherwise or reserves to the Committee or the
Participant or both the right to defer payment, the Company shall make payment
in respect of any SAR within five days of the date the SAR is exercised. Any
payment by the Company in respect of a SAR may be made in cash, Shares, other
property, or any combination thereof, as the Committee, in its sole discretion,
(e) Grant of Limited Rights.
(i) The Committee in its sole discretion may grant Limited Rights upon
or after the grant of any Option under the Plan. Each Limited Right shall
be identified with a share of Stock subject to an Option of the Optionee.
The number of Limited Rights granted to a Optionee shall equal the number
of Shares subject to the Option with which such Limited Rights are
identified. Upon the exercise, expiration, termination, forfeiture, or
cancellation of an Optionee's Option, the Optionee's associated Limited
Rights shall terminate.
(ii) Limited Rights shall become exercisable upon the occurrence of a
Change of Control. Limited Rights shall be exercised by delivery to the
Company, within 90 days after the date of such Change of Control, of
written notice of intent to exercise specific Limited Rights. The exercise
of Limited Rights shall result in the cancellation of the Option with which
such Limited Rights are identified, to the extent of such exercise.
(iii) The Company shall notify all Optionees of the occurrence of a
Change of Control promptly after its occurrence, but any failure of the
Company so to notify shall not deprive any Optionee of any rights that
accrued as a result of a Change of Control. Any such failure of the Company
shall, if an Optionee does not otherwise know of the Change of Control,
automatically extend the 90-day period specified above until 90 days after
the Company notifies such Optionee or such Optionee otherwise knows of the
Change of Control, whichever first occurs, but in no event beyond the
maximum term of the identified Option specified in the applicable Award
(iv) Within five business days after the exercise of any Limited
Rights, the Company shall pay to the Optionee, in cash (except that the
Committee may cause the Company to pay such amount in Shares if it
determines that a payment in cash would cause transaction to be ineligible
for pooling of interests accounting), an amount equal to the difference
between (A) the Change of Control Value, and (B) the Option Price of the
(v) "Change of Control Value" means the greater of (A) the highest
Fair Market Value of a Share during the 180-day period preceding the date
of the Company's receipt of notice of exercise of Limited Rights, or (B)
the cash amount (or fair cash value, as determined by the Committee in its
sole discretion, of consideration other than cash),
payable in respect of a Share to holders of Shares in connection with the
Change of Control.
(g) Other Limitations. The Committee may at any time impose any other
limitations upon the exercise of SARs which, in the Committee's sole discretion,
are necessary or desirable in order for Participants to qualify for an exemption
from Section 16(b) of the Exchange Act.
SECTION 8. RESTRICTED STOCK.
(a) Issuance. The Committee may issue Restricted Stock Awards to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The granting of Restricted Stock shall take place on the
date the Committee determines to grant the Restricted Stock.
(b) Registration. Any Restricted Stock may be evidenced in such manner as
the Committee in its sole discretion shall deem appropriate, including
book-entry registration or issuance of a stock certificate or certificates. In
the event any stock certificate is issued in respect of shares of Restricted
Stock awarded under the Plan, such certificate shall be registered in the name
of the Participant, shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, and shall be held in
escrow by the Company. The Participant shall execute a stock power or powers
assigning the Shares of Restricted Stock back to the Company, which stock powers
shall be held in escrow by the Company and used only in the event of the
forfeiture of any of the Shares of Restricted Stock.
(c) Forfeiture. Except as otherwise determined by the Committee, no
Restricted Stock shall become free of restrictions prior to the date of the
first anniversary of the grant of the Restricted Stock. Unrestricted Shares,
evidenced in such manner as the Committee shall deem appropriate, shall be
issued to the Optionee promptly upon lapse of the period of forfeiture, as
determined or modified by the Committee.
(d) Share Withholding. The Committee in its sole discretion may provide
that a Participant who recognizes income under the federal income tax by reason
of the lapsing of restrictions on Shares of Restricted Stock may elect Share
withholding pursuant to Section 6(j).
SECTION 9. PERFORMANCE AWARDS.
(a) Issuance. The Committee may issue Performance Awards to Participants,
for no cash consideration or for such minimum consideration as may be required
by applicable law, either alone or in addition to other Awards granted under the
Plan. Except as provided in Section 13, Performance Awards will be paid only
after the end of the relevant Performance Period. Performance Awards may be paid
in cash, Shares, other property or any combination thereof, in the sole
discretion of the Committee at the time of payment. Performance Awards may be
paid in a lump sum or in installments following the close of the Performance
Period or, in accordance with procedures established by the Committee, on a
(b) Performance Measures. Unless and until the Committee proposes for
stockholder vote and stockholders approve a change in the general performance
measures set forth in this Section, the attainment of which shall determine the
degree of payout and/or vesting with respect
to Awards, the performance measure(s) to be used for purposes of such Awards
shall be chosen from among the following:
(i) Earnings either in the aggregate or on a per-share basis, before
or after taxes, before or after depreciation and amortization, and before
or after interest expense;
(ii) Net income (before or after taxes);
(iii) Operating income;
(iv) Cash flow;
(v) Return measures (including return on assets, equity, or sales);
(vi) Share price (including growth measures and total stockholder
return or attainment by the Shares of a specified value for a specified
period of time);
(vii) Reductions in expense levels in each case where applicable
determined either in a Company-wide basis or in respect of any one or more
(viii) Net economic value; or
(ix) Economic value added.
The degree of attainment of the preestablished performance goals required
for an Award and the amounts of Awards may not be adjusted after the Award is
granted, except that the Committee may retain the discretion to decrease the
amount of an Award.
SECTION 10. OTHER STOCK UNIT AWARDS.
(a) Stock and Administration. The Committee may grant other Awards of
Shares and other Awards that are valued in whole or in part by reference to, or
are otherwise based on, Shares or other property ("Other Stock Unit Awards")
hereunder to Participants, either alone or in addition to other Awards granted
under the Plan. Other Stock Unit Awards may be paid in Shares, cash or any other
form of property as the Committee shall determine. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to determine the
Employees to whom and the time or times at which such Awards shall be made, the
number of Shares to be granted pursuant to such Awards, and all other conditions
of the Awards, which may include attainment of goals based upon the performance
measures set forth in Section 9(b). The provisions of Other Stock Unit Awards
need not be the same with respect to each recipient.
(b) Terms and Conditions. Subject to the provisions of this Plan and any
applicable Award Agreement, Shares subject to Awards made under this Section 10
may not be sold, assigned, transferred, pledged or otherwise encumbered prior to
the date on which the Shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses. Shares granted
under this Section 10 may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
SECTION 11. TERMINATION OF EMPLOYMENT. Except as otherwise provided in this
Section, all Awards not vested shall terminate upon a Participant's Termination
of Employment. For purposes of this Section, a Participant's Termination of
Employment occurs on the last day on which the Participant performs services as
an Employee; or if earlier on the date on which an Affiliate which employs the
Participant ceases to be an Affiliate (unless the Participant continues to be
employed by the Company or an Affiliate which continues to be an Affiliate).
(a) Options and SARs.
(i) Except as otherwise provided in this Section, upon a Participant's
Termination of Employment, all Options and SARs not vested and exercisable
immediately before such Termination of Employment shall terminate and no
Option or SAR may be exercised after such Termination of Employment.
(ii) If Termination of Employment occurs for a reason other than
retirement, death, disability or cause, Options and SARs which were vested
and exercisable immediately before such Termination of Employment shall
remain exercisable for a period of 90 days following such Termination of
Employment (but not for more than 10 years from the grant date of the
Option) and shall then terminate.
(iii) If Termination of Employment occurs by reason of retirement,
death or disability, Options and SARs which were vested and exercisable
immediately before such Termination of Employment shall remain exercisable
for a period of one year following such Termination of Employment (but not
for more than 10 years from the grant date of the Option) and shall then
(b) Restricted Stock. Except as otherwise provided in this Section, upon a
Participant's Termination of Employment, all Shares of Restricted Stock still
subject to restrictions shall be forfeited by the Participant (and the
Participant shall sign any document and take any other action required to assign
such Shares back to the Company) and reacquired by the Company.
(c) Performance Awards:
(i) If Termination of Employment occurs during a Performance Period
for a reason other than retirement, disability or death, all Performance
Awards shall be forfeited upon such Termination of Employment.
(ii) If Termination of Employment occurs during a Performance Period
by reason of retirement, disability or death, the Participant shall be
entitled to payment at or after conclusion of the Performance Period in
accordance with the terms of the Award of that portion of the Performance
Award equal to the amount that would be payable if the Participant
continued in employment for the remainder of the Performance Period
multiplied by a fraction, the numerator of which is the number of days in
the Performance Period preceding such Termination of Employment and the
denominator of which is the total number of days in the Performance Period.
(d) Waiver by Committee. Notwithstanding the foregoing provisions of this
Section, the Committee may in its sole discretion as to all or part of any Award
as to any Participant, at
the time the Award is granted or thereafter, determine that Awards shall become
exercisable or vested upon a Termination of Employment, determine that Awards
shall continue to become exercisable or vested in full or in installments after
Termination of Employment, extend the period for exercise of Options or SARs
following Termination of Employment (but not beyond 10 years from the date of
grant of the Option or SAR), or provide that any Performance Award shall in
whole or in part not be forfeited upon such Termination of Employment.
SECTION 12. TRANSFERABILITY OF AWARDS.
(a) No Award shall be transferable by the Participant otherwise than upon
death by will or under the applicable laws of descent and distribution; except
that a Participant may, by written instrument in a manner specified by the
Committee in the Award Agreement or thereafter, designate in writing a
beneficiary to exercise an Option or otherwise receive payment under any Award
after the death of the Participant. The Committee in its sole discretion may
authorize the transfer of a Nonstatutory Stock Option for no consideration to a
(b) Following the transfer of an Option to a Permitted Transferee, the
Permitted Transferee shall have all of the rights and obligations of the
Participant to whom the Option was granted and such Participant shall not retain
any rights with respect to the transferred Option, except that (i) the payment
of any tax attributable to the exercise of the Option shall remain the
obligation of the Participant, and (ii) the period during which the Option shall
become exercisable or remain exercisable under Section 11 shall depend on the
employment status of the original Optionee.
(c) If for any reason an Option or SAR is exercised by a person other than
the original Participant, or payment or distribution under any other Award is to
be made to a person other than the original Participant, the person exercising
or receiving payment or distribution under such Award shall, as a condition to
such exercise or receipt, supply the Committee with such evidence as the
Committee may reasonably require to establish the identity of such person and
such person's right to exercise or receive payment or distribution under such
(d) No Award shall be assigned, negotiated or pledged in any way (whether
by operation of law or otherwise) except as permitted by Section 12(a), and no
Award shall be subject to execution, attachment or similar process.
SECTION 13. CHANGE IN CONTROL.
(a) In order to maintain the Participants' rights in the event of any
Change in Control of the Company, as hereinafter defined, the Committee, as
constituted before such Change in Control, may, in its sole discretion, as to
any Award, either at the time an Award is made or any time thereafter, take any
one or more of the following actions: (i) provide for the acceleration of any
time periods relating to the exercise or realization of any such Award so that
such Award may be exercised or realized in full on or before a date fixed by the
Committee; (ii) provide for the purchase of any such Award with or without the
Participant's consent for an amount of cash equal to the amount that could have
been attained upon the exercise of such Award or realization of the
Participant's rights had such Award been currently exercisable or payable or
exercisable or payable during a stipulated period prior to the Change of
Control; (iii) make such adjustment to
any such Award then outstanding as the Committee deems appropriate to reflect
such Change in Control; or (iv) cause any such Award then outstanding to be
assumed, or new rights substituted therefor, by the acquiring or surviving
corporation after such Change in Control. The Committee may, in its discretion,
include such further provisions and limitations respecting a Change in Control
in any Award Agreement as it may deem equitable and in the best interests of the
(b) A "Change in Control" shall be deemed to have occurred if:
(i) for any reason at any time less than 75% of the members of the
Board shall be individuals who fall into any of the following categories:
(A) individuals who were members of the Board on the Effective Date; or (B)
individuals whose election, or nomination for election by the Company's
stockholders (other than an election or nomination of an individual (an
"Excluded Individual") whose initial assumption of office ins in connection
with an actual or threatened "election contest" relating to the election of
the directors of the Company (as such term is used in Rule 14a-11 under the
Exchange Act), a "tender officer" (as such term is used in Section 14(d) of
the Exchange Act) or a proposed transaction described in (iii) below) was
approved by a vote of at least 75% of the members of the Board then still
in office who were members of the Board on the Effective Date; or (C)
individuals (other than Excluded Individuals) whose election, or nomination
for election, by the Company's stockholders, was approved by a vote of at
least 75% of the members of the Board then still in office who were elected
in the manner described in (A) or (B) above; or
(ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act) or "group" (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the Exchange Act) shall have become after the
Effective Date, according to a public announcement or filing, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or
more (calculated in accordance with Rule 13d-3) of the combined voting
power of the Company's then outstanding voting securities; or
(iii) the stockholders of the Company shall have approved a merger,
consolidation or dissolution of the Company, or a sale, lease, exchange or
disposition of all or substantially all of the Company's assets, if persons
who were the beneficial owners of the combined voting power of the
Company's voting securities immediately before any such merger,
consolidation, dissolution, sale, lease, exchange or disposition do not
immediately thereafter beneficially own, directly or indirectly, in
substantially the same proportions, more than 60% of the combined voting
power of the corporation resulting from any such transaction.
(c) Notwithstanding any other provision of the Plan to the contrary, (i)
in the event that the consummation of a Change in Control is contingent on using
pooling of interests accounting methodology; the Committee may take any action
necessary to preserve the use of pooling of interests accounting, and (ii) if
the Committee determines, in its discretion exercised prior to a sale or merger
of the Company (whether or not in connection with a Change in Control) that in
the Committee's judgment is reasonably likely to occur, that the exercise of
Awards would preclude the use of pooling-of-interests accounting ("pooling")
consummation of such sale or merger and that such preclusion of pooling would
have a material adverse effect on such sale or merger, the Committee may (A)
unilaterally cancel such Awards prior to the sale or merger in consideration for
reasonably equivalent value, (B) cause the Company to pay the benefit
attributable to such Awards in the form of Shares if the Committee determines
that such payment would not cause the transaction to become ineligible for
pooling, (C) defer the payment, distribution or exercise date of any Award, or
(D) substitute another form of Award of reasonably equivalent value; in each
case to the extent that the Committee determines that such cancellation,
payment, deferral or substitution would not cause the transaction to become
ineligible for pooling; and only in each case to the minimum extent reasonably
necessary to cause the transaction to become eligible for pooling.
SECTION 14. AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of a Participant under an Award theretofore
granted without the Participant's consent except as required to comply with
securities, tax or other laws.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall adversely affect the
rights of any Participant without the Participant's consent, except as provided
in subsection 9(b) or subsection 12(c) or except as required to comply with
securities, tax or other laws. The Committee may also substitute new Awards for
Awards previously granted to Participants, including previously-granted Options
having higher Option prices.
SECTION 15. GENERAL PROVISIONS.
(a) The term of each Award shall be for such period of months or years
from the date of its grant as may be determined by the Committee; provided that
in no event shall the term of any Option or any SAR exceed a period of 10 years
from the date of its grant.
(b) No Employee or Participant shall have any claim to be granted any
Award under the Plan and there is no obligation for uniformity of treatment of
Employees or Participants under the Plan.
(c) The prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless the Committee shall have
executed an Award Agreement evidencing the Award and delivered a fully executed
copy thereof to the Participant.
(d) Nothing contained in the Plan or in any Award Agreement shall confer
upon any Participant any right with respect to continuance of employment by the
Company or its Affiliates, nor interfere in any way with the right of the
Company or its Affiliates to terminate the Participant's employment or change
the Participant's compensation at any time.
(e) All certificates for Shares delivered under the Plan pursuant to any
Award 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 Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(f) Receipt of an Option or other Award shall not entitle any Participant
(or Permitted Transferee) to any rights as a shareholder of the Company unless
and until such Option has been exercised or such other Award shall have been
paid and the Shares purchased or paid thereunder shall have been issued;
provided, however, that:
(i) Subject to the provisions of this Plan and any Award Agreement,
the recipient of an Award (including any deferred Award) may, if so
determined by the Committee, be entitled to receive, currently or on a
deferred basis, dividends with respect to the number of Shares covered by
the Award or interest on the amount of an Award not denominated in Shares
as determined by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested; and
(ii) The recipient of a Restricted Stock Award shall be entitled to
all rights of a shareholder of the Company upon issuance of such Restricted
Stock pursuant to Section 8(b) except to the extent otherwise provided in
the restrictions or other provisions of the Award Agreement pursuant to
which such Restricted Stock Award is made.
(g) Except as otherwise required in any applicable Award Agreement or by
the terms of the Plan, recipients of Awards under the Plan shall not be required
to make any payment or provide consideration other than the rendering of
(h) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, spin-off or other change in
corporate structure affecting the Shares, such adjustment shall be made in the
aggregate number and class of Shares which may be delivered under the Plan, in
the number, class and option price of Shares subject to outstanding Options
granted under the Plan, and in the value of, or number or class of Shares
subject to, Awards granted under the Plan as may be determined to be appropriate
by the Committee, in its sole discretion, provided that the number of Shares
subject to any Award shall always be a whole number. The grant of Awards shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge or to consolidate or to dissolve, liquidate, or sell or
transfer all or any part of its business or assets.
(i) The Company is authorized to withhold from any Award granted or
payment due under the Plan or any other amount owing from the Company to the
Participant (whether or not for payment of compensation) the amount of
withholding taxes due with respect to an Award or payment hereunder and to take
such other action as may be necessary in the opinion of the Company to satisfy
all obligations for the payment of such taxes. The Company shall also be
authorized to accept the delivery of shares by a Participant in payment for the
withholding of federal, state and local taxes up to the Participant's marginal
(j) The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Delaware.
(k) If any provision of this Plan is or becomes or is deemed invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to
conform to applicable laws or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan, it shall be stricken and the remainder of the Plan shall remain in
full force and effect.
(l) All obligations of the Company under the Plan shall be binding on any
successor to the Company.
(m) The adoption of this Plan shall not amend or terminate the Company's
previously adopted stock option plans (the "Prior Plans") or any outstanding
option or other award thereunder; and the aggregate number of Shares available
under Section 4 shall not be increased or reduced by Shares available under the
Prior Plans as of the Effective Date.
SECTION 16. TERM OF PLAN. No Award shall be granted pursuant to the Plan
after 10 years from the Effective Date, but any Award theretofore granted may
extend beyond that date.