FROZEN FOOD EXPRESS INDUSTRIES,
INC.
2005 STOCK INCENTIVE
PLAN
(As Amended and Restated
Effective May 20, 2009)
Frozen Food
Express Industries, Inc. (the "Corporation") has previously
established the Frozen Food Express Industries, Inc. 2005 Stock
Incentive Plan, effective May 5, 2005 (the
"Plan"). Effective upon approval by the stockholders of
the Corporation, the Plan has been amended and restated
herein. The purpose of the Plan is to:
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Attract and
retain employees of the Corporation and certain consultants and
advisors to provide services to the Corporation;
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Motivate
participating employees and consultants, by means of appropriate
incentives, to achieve long-range goals;
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Provide
incentive compensation opportunities which are competitive with
those of our peer group of corporations; and
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Further
identify Holders’ interests with those of the Corporation's
other stockholders through compensation alternatives based on the
Corporation's common stock;
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and thereby
promote the long-term financial interest of the Corporation and its
Subsidiaries, including the growth in value of the Corporation's
equity and enhancement of long-term stockholder return.
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"Award" means
the grant of any Option, share of Restricted Stock, Stock Unit,
Performance Share or Stock Appreciation Right under the Plan,
whether granted singly, in combination, or in tandem, to a Holder
pursuant to the terms, conditions, and limitations that the
Committee may establish in order to fulfill the objectives of the
Plan.
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"Award
Agreement" means the written agreement between the Corporation and
a Holder evidencing the terms, conditions, and limitations of the
Award granted to that Holder.
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"Board of
Directors" means the board of directors of the
Corporation.
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"Business Day"
means any day other than a Saturday, a Sunday, or a day on which
banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
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"Change in
Control" means the event that is deemed to have occurred
if:
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any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) that does not currently own a five percent (5%) or greater
equity interest in the Corporation or in any Related Corporation
becomes the "beneficial owner" (as determined pursuant to Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation or of any Related Corporation
representing fifteen percent (15%) or more of the combined voting
power of the Corporation's or Related Corporation's, as the case
may be, then outstanding voting securities; or
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a change in the
composition of the Board of Directors occurring within a two (2)
year period, as a result of which members of the Incumbent Board
cease to constitute at least a majority of the Board of Directors;
or
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the Corporation
or any Related Corporation shall merge with or consolidate into any
other corporation, other than a merger or consolidation which would
result in the holders of the Voting Securities of the Corporation
or any Related Corporation, as the case may be, outstanding
immediately prior thereto holding immediately thereafter securities
representing more than sixty percent (60%) of the combined voting
power of the Voting Securities of the Corporation or any Related
Corporation, as the case may be, or such surviving entity (or its
ultimate parent, if applicable) outstanding immediately after such
merger or consolidation; or
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the
stockholders of the Corporation or any Related Corporation approve
a plan of complete liquidation of the Corporation or any Related
Corporation or the consummation of an agreement for the sale or
disposition by the Corporation or any Related Corporation of all or
substantially all of the Corporation's or Related Corporation's
assets and such plan or agreement becomes effective, other than
a liquidation or sale which would result in the Corporation
directly or indirectly owning such interest or assets.
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"Code" means
the Internal Revenue Code of 1986, as amended.
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"Committee"
means the committee appointed pursuant to Section 3 by the Board of
Directors to administer this Plan.
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"Corporation"
means Frozen Food Express Industries, Inc., a Texas
corporation.
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"Date of Grant"
has the meaning given it in Paragraph 4.3.
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"Disability"
has the meaning given it in Paragraph 10.5.
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"Effective
Date" means the first date that the Plan has been approved by both
the Board of Directors and the stockholders of the Corporation, as
provided in Paragraph 11.1.
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"Eligible
Individual" means (a) a Key Employee or (b) any other Person that
the Committee designates as eligible for an Award (other than for
Incentive Options) because the Person performs bona fide consulting
or advisory services for the Corporation or any of its Subsidiaries
(other than services in connection with the offer or sale of
securities in a capital-raising transaction) and the Committee
determines that the Person has a direct and significant effect on
the financial development of the Corporation or any of its
Subsidiaries.
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"Employee"
means any employee of the Corporation or of any of its
Subsidiaries, including officers and directors of the Corporation
who are also employees of the Corporation or of any of its
Subsidiaries.
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"Exchange Act"
means the Securities Exchange Act of 1934, or any successor law, as
it may be amended from time to time.
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"Exercise
Notice" has the meaning given it in Paragraph 5.5.
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"Exercise
Price" has the meaning given it in Paragraph 5.4.
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"Fair Market
Value" of any Stock means, as of any date, the last sale price for
such Stock as reported by the NASDAQ stock market on the date or,
if Stock is not traded on that date, on the next preceding date on
which Stock was traded.
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"Holder" means
an Eligible Individual to whom an Award has been granted or such
Eligible Individual's Permitted Transferee.
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"Incentive
Option" means an incentive stock option as defined under Section
422 of the Code and regulations thereunder.
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"Incumbent
Board" means the individuals who, as of the Effective Date,
constitute the Board of Directors and any other individual who
becomes a director of the Corporation after that date and whose
election or appointment by the Board of Directors or nomination for
election by the Corporation's stockholders was approved by a vote
of at least a majority of the directors then comprising the
Incumbent Board.
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"Key Employee"
means any Employee whom the Committee identifies as having a direct
and significant effect on the performance of the Corporation or any
of its Subsidiaries.
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"Non-Employee
Director" has the meaning given it in Rule 16b-3.
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"Nonstatutory
Option" means a stock option that does not satisfy the requirements
of Section 422 of the Code or that is designated at the Date of
Grant or in the applicable Award Agreement to be an option other
than an Incentive Option.
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"Non-Surviving
Event" means an event of Restructure as described in either
subparagraph (b) or (c) of Paragraph 1.35.
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"Normal
Retirement" means the separation of the Holder from employment with
the Corporation and its Subsidiaries on account of retirement at
any time on or after the date on which the Holder reaches age
sixty-five (65).
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"Option" means
either an Incentive Option or a Nonstatutory Option, or
both.
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"Outside
Director" has the meaning given it under Section 162(m) of the
Code.
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“Performance Shares” has the meaning
ascribed to it in Section 7.
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"Permitted
Transferee" means an Eligible Individual's spouse, children, or
grandchildren, a trust established by the Eligible Individual for
the benefit of the Eligible Individual and/or his or her spouse,
children, or grandchildren, a family partnership or limited
liability company whose partners or members are the Eligible
Individual, his or her spouse, children, or grandchildren, and/or a
trust that would be a Permitted Transferee, or any other Person,
the transfer to whom has been approved by the Committee in its sole
discretion.
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"Person" means
any person or entity of any nature whatsoever, specifically
including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, or a trust or other
entity. A Person, together with that Person's affiliates
and associates (as those terms are defined in Rule 12b-2 under the
Exchange Act for purposes of this definition only), and any Persons
acting as a partnership, limited partnership, joint venture,
association, syndicate or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a
coordinated or consciously parallel manner (whether or not pursuant
to any express agreement), for the purpose of acquiring, holding,
voting or disposing of securities of the Corporation with that
Person, shall be deemed a single "Person."
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"Plan" means
the Corporation's 2005 Stock Incentive Plan, as it may be amended
from time to time.
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"Related
Corporation" shall mean FFE, Inc., a Delaware corporation and
wholly-owned subsidiary of the Corporation, and FFE Transportation
Services, Inc., a Delaware corporation and wholly-owned subsidiary
of FFE, Inc.
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"Restricted
Period" has the meaning ascribed to it in Section 6.
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"Restricted
Stock" has the meaning ascribed to it in Section 6.
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"Restructure"
means the occurrence of anyone or more of the following:
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The merger or
consolidation of the Corporation with any Person, whether effected
as a single transaction or a series of related transactions, with
the Corporation remaining the continuing or surviving entity of
that merger or consolidation and the Stock remaining outstanding
and not changed into or exchanged for stock or other securities of
any other Person or of the Corporation, cash, or other
property;
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The merger or
consolidation of the Corporation with any Person, whether effected
as a single transaction or a series of related transactions,
with
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the
Corporation not being the continuing or surviving entity of that
merger or consolidation or
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the
Corporation remaining the continuing or surviving entity of that
merger or consolidation but all or a part of the outstanding shares
of Stock of the Corporation being changed into or exchanged for
stock or other securities of any other Person or of the
Corporation, or into cash or other property; or
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The transfer,
directly or indirectly, of all or substantially all of the assets
of the Corporation (whether by sale, merger, consolidation,
liquidation or otherwise) to any Person whether effected as a
single transaction or a series of related transactions.
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"Rule 16b-3"
means Rule 16b-3 under Section 16(b) of the Exchange Act, or any
successor rule, as it may be amended from time to time.
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"Securities
Act" means the Securities Act of 1933, or any successor law, as it
may be amended from time to time.
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"Stock" means
the Corporation's authorized common stock, par value $1.50 per
share, as described in the Corporation's Articles of Incorporation
as it exists at the Effective Date, or any other securities that
are substituted for the Stock as provided in Section 9.
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"Stock
Appreciation Right" has the meaning ascribed to it in Section
8.
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"Stock Units"
has the meaning ascribed to it in Section 7.
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"Subsidiary"
means, with respect to any Person, any corporation or other entity
of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by
that Person.
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"Total Shares"
has the meaning given it in Paragraph 9.2.
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"Voting
Securities" means any securities that are entitled to vote
generally in the election of directors, in the admission of general
partners, or in the selection of any other similar governing
body.
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SECTION
2.
SHARES OF STOCK SUBJECT TO THE
PLAN
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Maximum Amount
of Shares. Subject to the provisions of Paragraph 2.6
and Section 9 of the Plan, the aggregate number of shares of
Stock that may be issued, transferred or exercised pursuant to
Awards under the Plan shall be 2,700,000
shares. Notwithstanding the foregoing, the maximum
number of shares of Stock that may be issued in the form of
Restricted Stock, Stock Units or Performance Shares under the Plan
shall be no more than 1,000,000 out of such 2,700,000
shares.
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Reduction in
Available Shares. In computing the total number of
shares available at a particular time for Awards under the
Plan, there shall be counted against the limitations stated in
Paragraph 2.1 the number of shares of Stock awarded or subject to
issuance upon exercise or settlement of Awards and the number of
shares of Stock that have been awarded or issued upon exercise or
settlement of Awards (except as otherwise provided in Paragraph
2.3). Notwithstanding the foregoing, upon the grant of
Stock Appreciation Rights that are to be settled in shares of
Stock, the number of Rights awarded (and not the “net”
number of shares of Stock issued upon exercise of the Rights) shall
be considered awarded from the pool of authorized shares of Stock
available under the Plan.
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Restoration of
Unused and Surrendered Shares. If Stock subject to any
Award is not issued or transferred, or ceases to be issuable or
transferable for any reason, including because an Award
is forfeited, terminated, expires unexercised, or is exchanged for
other Awards, the shares of Stock that were subject to that Award
shall no longer be charged against the number of available shares
provided for in Paragraph 2.1 and shall again be available for
issue, transfer, or exercise pursuant to Awards under the Plan to
the extent of such forfeiture, termination, expiration, or other
cessation of its subjection to an Award.
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Description of
Shares. The shares to be delivered under the Plan shall
be made available from (a) authorized but unissued shares of Stock,
(b) Stock held in the treasury of the Corporation, or (c)
previously issued shares of Stock reacquired by the Corporation,
including shares purchased on the open market, in each situation as
the Board of Directors or the Committee may determine from time to
time in its sole discretion.
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Registration
and Listing of Shares. From time to time, the Board of
Directors and appropriate officers of the Corporation shall and are
authorized to take whatever actions are necessary to file required
documents with governmental authorities, stock exchanges, and other
appropriate Persons to make shares of Stock available for issuance
pursuant to Awards.
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Reduction in
Outstanding Shares of Stock. Nothing in this Section 2
shall impair the right of the Corporation to reduce the number of
outstanding shares of Stock pursuant to repurchases, redemptions,
or otherwise; provided, however, that no reduction in the number of
outstanding shares of Stock shall (a) impair the validity of any
outstanding Award, whether or not that Award is fully exercisable
or fully vested or (b) impair the status of any shares of Stock
previously issued pursuant to an Award or thereafter issued
pursuant to a then-outstanding Award as duly authorized,
validly issued, fully paid, and nonassessable shares.
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SECTION
3.
ADMINISTRATION OF THE
PLAN
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Committee. The Committee shall
administer the Plan. The Committee shall be constituted
so that, as long as Stock is registered under Section 12 of the
Exchange Act, each member of the Committee shall be both a
Non-Employee Director and an Outside Director and so that the Plan
in all other applicable respects will qualify transactions related
to the Plan for the exemptions from Section 16(b) of the Exchange
Act provided by Rule 16b-3, to the extent exemptions thereunder may
be available, and for the performance-based compensation exception
under Section 162(m) of the Code. If the Committee is
nevertheless not so constituted, then the Plan shall be
administered, and each grant of Awards to Eligible Individuals who
are subject to Section 16(b) of the Exchange Act shall be approved,
by the Board of Directors. No discretion regarding
Awards to Eligible Individuals who are subject to Section 16(b) of
the Exchange Act or Section 162(m) of the Code shall be afforded to
a person who is not both a Non-Employee Director and an Outside
Director. The number of persons that shall constitute
the Committee shall be determined from time to time by a majority
of all the members of the Board of Directors, but shall be no less
than two persons.
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Duration,
Removal, Etc. The members of the Committee shall serve
at the pleasure of the Board of Directors, which shall have the
power, at any time and from time to time, to remove members from or
add members to the Committee. Removal of a member from
the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the
right to resign from membership in the Committee by at least three
days prior written notice to the Board of Directors. The
Board of Directors, and not the remaining members of the Committee,
shall have the power and authority to fill vacancies on the
Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the number of members of the
Committee to be below two or any other number that Rule 16b-3 or
Section 162(m) may require from time to time.
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Meetings and
Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of
the Committee. If the Board of Directors fails to
designate a Committee chairman, the members of the Committee shall
elect one of the Committee members as chairman, who shall act as
chairman until he ceases to be a member of the Committee or until
the Board of Directors elects a new chairman. The
Committee shall hold its meetings at those times and places as the
chairman of the Committee may determine. At all meetings
of the Committee, a quorum for the transaction of business shall be
required, and a quorum shall be deemed present if at least a
majority of the members of the Committee are present. At
any meeting of the Committee, each member shall have one
vote. All decisions and determinations of the Committee
shall be made by the majority vote or majority decision of all of
its members present at a meeting at which a quorum is present;
provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be
as fully effective as if it had been made at a meeting that was
duly called and held. The Committee may make any rules
and regulations for the conduct of its business that are not
inconsistent with the provisions of the Plan, the Certificate of
Incorporation, the By-laws of the Corporation, Rule 16b-3 and the
performance-based compensation exception under Section 162(m) of
the Code, so long as either is applicable, as the Committee may
deem advisable.
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Committee's
Powers. Subject to the express provisions of the Plan,
Rule 16b-3 and the performance-based compensation exception under
Section 162(m) of the Code, the Committee shall have the authority,
in its sole and absolute discretion, (a) to adopt, amend, and
rescind administrative and interpretive rules and regulations
relating to the Plan; (b) to determine the Eligible Individuals to
whom, and the time or times at which, Awards shall be granted; (c)
to determine the number of shares of Stock that shall be the
subject of each Award; (d) to determine the terms and provisions of
each Award Agreement (which need not be identical), including
provisions defining or otherwise relating to (i) the term and the
period or periods and extent of exercisability of the Options, (ii)
the extent to which the transferability of shares of Stock issued
or transferred pursuant to any Award is restricted, (iii) the
effect of termination of employment on the Award, and (iv) the
effect of approved leaves of absence (consistent with any
applicable regulations of the Internal Revenue Service); (e) to
construe the respective Award Agreements and the Plan; (f) to make
determinations of the Fair Market Value of the Stock pursuant to
the Plan; (g) to delegate its duties under the Plan to such agents
as it may appoint from time to time, provided that the Committee
may not delegate its duties with respect to making Awards or take
any action that would disqualify an award for the performance-based
compensation exception under Section 162(m) of the Code; and (h) to
make all other determinations, perform all other acts, and exercise
all other powers and authority necessary or advisable for
administering the Plan, including the delegation of those
ministerial acts and responsibilities as the Committee deems
appropriate. Subject to Rule 16b-3 and the
performance-based compensation exception under Section 162(m)
of the Code, the Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan, in any Award,
or in any Award Agreement in the manner and to the extent it deems
necessary or desirable to carry the Plan into effect, and the
Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters
referred to in this Paragraph 3.4 shall be final and
conclusive. Neither the Board nor the Committee may
accelerate the vesting of an Award of Restricted Stock, Stock Units
or Performance Shares, except in the event of a Holder’s
death, Disability or Normal Retirement. Neither the Board nor the
Committee may, without further approval of the stockholders of the
Corporation, reduce the exercise price of a Stock Option or the
grant value of a Stock Appreciation Right, except in accordance
with the adjustments pursuant to Section 9.
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SECTION
4.
ELIGIBILITY AND TERMS OF
AWARDS
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Eligible
Individuals. Awards may be granted pursuant to the Plan
only to persons who are Eligible Individuals at the time of the
grant thereof.
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Grant of
Awards. Subject to the express provisions of the Plan,
the Committee shall determine which Eligible Individuals shall be
granted Awards from time to time. In making grants, the
Committee shall take into consideration the contribution the
potential Holder has made or may make to the success of the
Corporation or its Subsidiaries and such other considerations as it
may from time to time specify. The Committee shall also
determine the number of shares subject to each of the Awards and
shall authorize and cause the Corporation to grant Awards in
accordance with those determinations; provided, however, that no
Eligible Individual shall be granted Options or Stock Appreciation
Rights in any single fiscal year of the Corporation, the total
number of shares subject to which exceed 100,000 shares.
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Date of
Grant. The date on which the Committee completes all
action resolving to offer an Award to an individual, including the
specification of the number of shares of Stock to be subject to the
Award, shall be the date on which the Award covered by an Award
Agreement is granted (the "Date of Grant"), even though certain
terms of the Award Agreement may not be determined at that time and
even though the Award Agreement may not be executed until a later
time. In no event shall a Holder gain any rights in
addition to those specified by the Committee in its grant,
regardless of the time that may pass between the grant of the Award
and the actual execution of the Award Agreement by the Corporation
and the Holder.
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Vesting of
Awards. Restricted Stock, Restricted Stock Units and
Performance Shares shall be subject to the following minimum
vesting requirements. If the vesting of such Awards is
not based on the achievement of one or more performance conditions,
such Awards will vest over a minimum period of three years after
the date of grant. If the vesting of Awards is based on
the achievement of one or more performance conditions, such Awards
will vest over a minimum period of one year after the date of
grant. Vesting over a three-year period
will include periodic graded vesting over such period.
With respect to Awards that otherwise would be subject to the
minimum vesting requirements, and notwithstanding those
requirements, up to five percent (5%) of such Awards may be granted
as non-performance-based Awards with vesting terms not conforming
to the three-year minimum vesting
requirement. Notwithstanding the foregoing, these
minimum vesting requirements may be accelerated or waived in the
event of an Eligible Individual’s death, Disability or Normal
Retirement, or in the event of a Change in Control of the
Company.
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Award
Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the
Corporation and the Eligible Individual to whom the Award is
granted incorporating those terms that the Committee shall deem
necessary or desirable. More than one Award may be
granted under the Plan to the same Eligible Individual and be
outstanding concurrently. In the event an Eligible
Individual is granted both one or more Incentive Options and one or
more Nonstatutory Options, those grants shall be evidenced by
separate Award Agreements, one for each of the Incentive Option
grants and one for each of the Nonstatutory Option
grants.
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Limitation for
Incentive Options. Notwithstanding any provision
contained herein to the contrary, (a) a person shall not be
eligible to receive an Incentive Option unless he is an Employee of
the Corporation or a corporate Subsidiary (but not a partnership
Subsidiary), and (b) a person shall not be eligible to receive an
Incentive Option if, immediately before the time the Option is
granted, that person owns (within the meaning of Sections 422 and
425 of the Code) stock possessing more than ten percent of the
total combined voting power or value of all classes of stock of the
Corporation or a Subsidiary. Nevertheless, subparagraph
4.6(b) shall not apply if, at the time the Incentive Option is
granted, the Exercise Price of the Incentive Option is at least one
hundred and ten percent (110%) of Fair Market Value and the
Incentive Option is not, by its terms, exercisable after the
expiration of five years from the Date of Grant.
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4.7 No Right
to Award. The adoption of the Plan shall not be deemed
to give any person a right to be granted an Award.
SECTION
5.
TERMS AND CONDITIONS OF
OPTIONS
All Options
granted under the Plan shall comply with, and the related Award
Agreements shall be deemed to include and be subject to, the terms
and conditions set forth in this Section 5 (to the extent each term
and condition applies to the form of Option) and also to the terms
and conditions set forth in Sections 9 and 10; provided, however,
that the Committee may authorize an Award Agreement that expressly
contains terms and provisions that differ from the terms and
provisions set forth in Paragraphs 9.2 and 9.3 and any of the terms
and provisions of Section 10 (other than Paragraph 10.10)
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Number of
Shares. Each Award Agreement shall state the total
number of shares of Stock to which it relates.
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Vesting. Each Award Agreement shall
state the time or periods in which or the conditions upon
satisfaction of which, the right to exercise the Option or a
portion thereof shall vest and the number of shares of Stock for
which the right to exercise the Option shall vest at each such
time, period, or fulfillment of condition.
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Expiration of
Options. Nonstatutory Options and Incentive Options may
be exercised during the term determined by the Committee and set
forth in the Award Agreement; provided that no Option shall be
exercised after the expiration of a period of ten years commencing
on the Date of Grant of such Option.
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Exercise
Price. Each Award Agreement shall state the exercise
price per share of Stock (the "Exercise Price"). The
Exercise Price per share of Stock subject to an Option shall not be
less than the greater of (a) the par value per share of the Stock
or (b) 100% of the Fair Market Value per share of the Stock on the
Date of Grant of the Option.
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Method of
Exercise. The Option shall be exercisable only by
written notice of exercise (the "Exercise Notice") delivered to the
Corporation during the term of the Option, which notice shall (a)
state the number of shares of Stock with respect to which the
Option is being exercised, (b) be signed by the Holder of the
Option or, if the Holder is dead or Disabled, by the person
authorized to exercise the Option pursuant to Paragraphs 10.3, 10.5
or 10.7, (c) be accompanied by the Exercise Price for all shares of
Stock for which the Option is exercised, and (d) include such other
information, instruments, and documents as may be required to
satisfy any other condition to exercise contained in the Award
Agreement. The Option shall not be deemed to have been
exercised unless all of the requirements of the preceding
provisions of this Paragraph 5.5 have been satisfied.
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Incentive
Option Exercises. During the Holder's lifetime, only the Holder may
exercise an Incentive Option.
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Medium and Time
of Payment. The Exercise Price of an Option shall be
payable in full upon the exercise of the Option (a) in cash or by
an equivalent means acceptable to the Committee, (b) on the
Committee's prior consent (expressed in the original Award
Agreement in the case of any Incentive Option), by surrendering or
attesting to ownership of shares of Stock owned by the Holder
(including shares received upon exercise of the Option or
restricted shares already held by the Holder) and having a Fair
Market Value equal to the aggregate Exercise Price payable in
connection with such exercise, or (c) by any combination of clauses
(a) and (b). If the Committee elects to accept shares of
Stock in payment of all or any portion of the Exercise Price, then
(for purposes of payment of the Exercise Price) those shares of
Stock shall be deemed to have a cash value equal to their aggregate
Fair Market Value determined as of the date of the delivery of the
Exercise Notice. If the Committee elects to accept
shares of restricted Stock in payment of all or any portion of the
Exercise Price, then an equal number of shares issued pursuant to
the exercise shall be restricted on the same terms and for the
restriction period remaining on the shares used for
payment.
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Payment with
Sale Proceeds. In addition, at the request of the Holder
and to the extent permitted by applicable law, the Committee may
(but shall not be required to) approve arrangements with a
brokerage firm under which that brokerage firm, on behalf of the
Holder, shall pay to the Corporation the Exercise Price of the
Option being exercised, and the Corporation shall promptly deliver
the exercised shares to the brokerage firm. To
accomplish this transaction, the Holder must deliver to the
Corporation an Exercise Notice containing irrevocable instructions
from the Holder to the Corporation to deliver the stock
certificates directly to the broker. Upon receiving a
copy of the Exercise Notice acknowledged by the Corporation, the
broker shall sell that number of shares of Stock an amount
sufficient to pay the Exercise Price and any withholding
obligations due. The broker shall then deliver to the
Corporation that portion of the sale necessary to cover the
Exercise Price and any withholding obligations due. The
Committee shall not approve any transaction of this nature if the
Committee believes that the transaction would give rise to the
Holder's liability for short-swing profits under Section 16(b) of
the Exchange Act.
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Payment of
Taxes. The Committee may, in its discretion, require a
Holder to pay to the Corporation (or the Corporation's Subsidiary
if the Holder is an employee of a Subsidiary of the Corporation),
at the time of the exercise of an Option, the amount that the
Committee deems necessary to satisfy the Corporation's or its
Subsidiary's current or future obligation to withhold federal,
state or local income or other taxes that the Holder incurs by
exercising an Option. Upon the exercise of an Option
requiring tax withholding, a Holder may (a) direct the Corporation
to withhold from the shares of Stock to be issued to the Holder the
number of shares necessary to satisfy the Corporation's minimum
statutory obligation to withhold taxes, that determination to be
based on the shares' Fair Market Value as of the date on which tax
withholding is to be made; (b) deliver to the Corporation
sufficient shares of Stock (based upon the Fair Market Value at
date of withholding) to satisfy the Corporation's tax withholding
obligations, based on the shares' Fair Market Value as of the date
of exercise; or (c) deliver sufficient cash to the Corporation
to satisfy its tax withholding obligations. Holders who elect to
use such a stock withholding feature must make the election at the
time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion,
deny any Holder's request to satisfy withholding obligations
through Stock instead of cash. In the event the
Committee subsequently determines that the aggregate Fair Market
Value (as determined above) of any shares of Stock withheld as
payment of any tax withholding obligation is insufficient to
discharge that tax withholding obligation, then the Holder shall
pay to the Corporation, immediately upon the Committee's request,
the amount of that deficiency. Upon the disposition
(within the meaning of Code Section 424(c)) of shares of Stock
acquired pursuant to the exercise of an Incentive Option prior to
the expiration of the holding period requirements of Code Section
422(a)(1), the Holder shall be required to give notice to the
Corporation of such disposition and the Corporation shall have the
right to require the Holder to pay to the Corporation the amount of
any taxes that are required by law to be withheld with respect to
such disposition.
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Limitation on
Aggregate Value of Shares That May Become First Exercisable During
Any Calendar Year Under an Incentive Option. Except as
is otherwise provided in Paragraph 9.2, with respect to any
Incentive Option granted under this Plan, the aggregate Fair Market
Value of shares of Stock subject to an Incentive Option and the
aggregate Fair Market Value of shares of Stock or stock of any
Subsidiary (or a predecessor of the Corporation or a
Subsidiary) subject to any other incentive stock option (within the
meaning of Section 422 of the Code) of the Corporation or its
Subsidiaries (or a predecessor corporation of any such
corporation) that first become purchasable by a Holder in any
calendar year may not (with respect to that Holder) exceed
$100,000, or such other amount as may be prescribed under Section
422 of the Code or applicable regulations or rulings from time to
time. As used in the previous sentence, Fair Market
Value shall be determined as of the date the Incentive Option is
granted. For purposes of this Paragraph 5.10, "predecessor
corporation" means (a) a corporation that was a party to
a transaction described in Section 425(a) of the Code (or which
would be so described if a substitution or assumption under that
Section had been effected) with the Corporation, (b) a corporation
which, at the time the new incentive stock option (within the
meaning of Section 422 of the Code) is granted, is
a Subsidiary of the Corporation or a predecessor corporation
of any such corporations, or (c) a predecessor corporation of any
such corporations. Failure to comply with this provision
shall not impair the enforceability or exercisability of any
Option, but shall cause the excess amount of shares to be
reclassified in accordance with the Code.
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No Fractional
Shares. The Corporation shall not in any case be
required to sell, issue, or deliver a fractional share with respect
to any Option. In lieu of the issuance of any fractional
share of Stock, the Corporation shall pay to the Holder an amount
in cash equal to the same fraction (as the fractional Stock) of the
Fair Market Value of a share of Stock determined as of the date of
the applicable Exercise Notice.
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