Exhibit 10.3
LITHIA MOTORS,
INC.
AMENDED AND
RESTATED
2003 STOCK INCENTIVE
PLAN
ARTICLE I
PURPOSE OF THE
PLAN
The purposes of this Stock Incentive
Plan (the “Plan”) are to attract, retain and provide
incentive compensation to employees, non-employee directors and
others who contribute to the long-term financial success of LITHIA
MOTORS, INC., an Oregon corporation (the “Company”) and
to more closely align their interests with those of the Company and
its shareholders. This Plan amends and restates in its entirety the
2003 Stock Incentive Plan.
ARTICLE II
DEFINITIONS
As used herein, the following
definitions will apply:
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(a)
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“Acquired
Company” means any corporation or other entity that becomes a
majority owned subsidiary of the Company, after the Effective Date,
by merger, consolidation, acquisition of all or substantially all
of its assets or otherwise.
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(b)
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“Authorized Shares” means the number
of shares of Common Stock authorized for issuance pursuant to
Section 3.1 of this Plan.
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(c)
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“Available Shares” means the number
of shares of Common Stock available under this Plan at any time for
future issuance under Stock Options, Stock-Settled SARs,
Performance Share Awards or Restricted Share Awards, as provided in
Section 3.2 of this Plan.
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(d)
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“Award” means any agreement to issue
a Stock Option, a Stock-Settled SAR, or to make a Performance Share
Award or a Restricted Share Award pursuant to this Plan. An Award
shall, for all purposes, be deemed to have been made on the later
of (i) the date when the Company completes all necessary
corporate action necessary to authorize the Award or such later
date as specified in such corporate action or (ii) when the
maximum number of shares covered by the Award can be determined
(excluding from such determination the effects of any vesting
provisions including Performance Goals and excluding provisions
adjusting the number of shares pursuant to Section 11.1 of
Article XI of this Plan) regardless of the date on which the
written agreement evidencing the Award is prepared or executed by
the Company or the Recipient.
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(e)
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“Board of
Directors” means the Board of Directors of the
Company.
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(f)
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“Committee” means any committee
appointed by the Board of Directors in accordance with Article V of
this Plan, or, the Board of Directors, if no such committee is then
in existence.
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(g)
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“Common
Stock” means the common stock of the Company.
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(h)
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“Company” means Lithia Motors, Inc.
and, unless the context requires otherwise, any successor or
assignee of the Company by merger, consolidation, acquisition of
all or substantially all of the assets of the Company or otherwise.
As used in connection with either the term “Employee”
or “Service,” it includes Subsidiaries of the
Company.
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(i)
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“Corporate Transaction” means
(i) the adoption of a plan of dissolution or liquidation with
respect to the Company, (ii) the consummation of any plan of
exchange, merger or consolidation with one or more corporations in
which the Company is not the surviving entity (other than a merger
of the Company into a wholly-owned subsidiary of the Company or a
reincorporation of the Company in a different jurisdiction), or in
which the security holders of the Company prior to such transaction
do not receive in the transaction securities with voting rights
with respect to the election of directors equal to 50% or more of
the votes of all classes of securities of the surviving corporation
or (iii) the consummation of a sale of all of substantially
all of the assets of the Company following a shareholder vote on
such sale.
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(j)
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“Disabled” means having a mental or
physical impairment that has lasted or is expected to last for a
continuous period of 12 months or more and, in the
Committee’s sole discretion, renders a Recipient unable to
perform the duties that were assigned to the Recipient during the
12 month period prior to such determination. The Committee’s
determination of the existence of an individual’s disability
will be effective when communicated in writing to the Recipient and
will be conclusive on all of the parties.
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(k)
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“Employee” means any person employed
by the Company or a Subsidiary of the Company.
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(l)
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“Exercise
Price” means the price per share at which shares of Common
Stock may be purchased upon exercise of a Stock Option or a
Stock-Settled SAR.
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(m)
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“Fair
Market Value” with respect to shares of Common Stock for any
date means:
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1) If the Common Stock is traded on
a national securities exchange or on either the NASDAQ National
Market or NASDAQ SmallCap Market, the “Fair Market
Value” of a share of Common Stock will be the average between
the lowest and highest reported sales price of the Common Stock for
such date, or if no transactions occurred on such date, on the last
date on which trades occurred;
2) If the Common Stock is not traded
on a national securities exchange or on NASDAQ but bid and asked
prices are regularly quoted on the OTC Bulletin Board Service, by
the National Quotation Bureau or any other comparable service, the
“Fair Market Value” of a share of Common Stock will be
the average between the highest bid and lowest asked prices of the
Common Stock as reported by such service at the close of trading
for such date or, if such date was not a business day, on the
preceding business day; or
3) If there is no public trading of
the Common Stock within the terms of subparagraphs 1 or 2 of this
subsection, the “Fair Market Value” of a share of
Common Stock will be as determined by the Committee in its good
faith discretion.
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(n)
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“Option
Agreement” means the written agreement between the Company
and a Recipient that evidences a Stock Option awarded pursuant to
this Plan. Each Option Agreement shall be subject to the terms and
conditions of this Plan.
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(o)
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“Outstanding Stock Options” means
all Stock Options awarded pursuant to this Plan that, at such time,
have not yet expired and have not either been terminated or
cancelled.
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(p)
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“Performance Goals”
means any of the following performance criteria or combination of
the following performance criteria applied either to the Company as
a whole, as to any Subsidiary or as to any business unit of the
Company or any Subsidiary and measured on an actual or as adjusted
basis applied on a quarterly, annual or cumulative basis or
relative to pre-established targets, previous period results or a
designated comparison group, in each case as specified by the
Committee in the agreement evidencing an Award: (i) net
revenue, (ii) net margin, (iii) operating income,
(iv) operating cash flow, (v) earnings before interest,
taxes, depreciation and amortization, (vi) earnings before
interest and taxes, (vii) net income before income taxes,
(viii) net income, (ix) new product introduction,
(x) product release schedules, (xi) market segment
share,
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(xii) product cost
reduction, (xiii) customer satisfaction, (xiv) quality
criteria, or (xv) other business objectives. The Committee
shall determine whether or the extent to which any Performance Goal
is achieved and may appropriately adjust any evaluation of
performance to exclude, in whole or in part, any extraordinary
non-recurring items, accruals for reorganization or restructuring
events, asset write-downs, judgments, settlement amounts and
expenses associated with litigation, and the effect of changes in
tax law or accounting principles.
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(q)
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“Performance Share Award” means an
Award of shares of Common Stock pursuant to Article IX of this Plan
subject to the terms of a Share Vesting Agreement in which vesting
is based, either in whole or in part, to the achievement of certain
Performance Goals.
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(r)
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“Recipient” means any individual who
is awarded a Stock Option, a Stock-Settled SAR, a Performance Share
Award or a Restricted Share Award pursuant to this Plan.
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(s)
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“Restricted Share Award” means an
Award of shares of Common Stock pursuant to Article X of this Plan,
regardless of whether the Recipient receives the shares covered by
such Award solely for services or for a combination of services and
cash payment to the Company, pursuant to a Share Vesting
Agreement.
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(t)
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“Securities Act” means the
Securities Act of 1933, as amended.
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(u)
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“Service” means the continued
employment of an Employee, service as director of the Company,
service as a director of a Subsidiary of the Company or the regular
provision of services to the Company or a Subsidiary of the Company
under an independent contractor arrangement. If a recipient ceases
to provide Service with the Company or a Subsidiary of the Company
in one capacity but continues to provide Service in another
capacity or contemporaneously begins to provide Service in another
capacity, the recipient shall, for purposes of this Plan, be deemed
to have continued in Service without interruption.
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(v)
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“Share
Vesting Agreement” means the written agreement between the
Company and a Recipient that evidences either a Performance Share
Award or a Restricted Share Award made pursuant to this Plan. Each
Share Vesting Agreement shall be subject to the terms and
conditions of this Plan.
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(w)
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“Stock-Settled SAR” means the right
to acquire shares of Common Stock in an amount equal to the
difference between the Fair Market Value of a share of Common Stock
on the date of exercise and the Exercise Price per share multiplied
by the number of shares covered by the right awarded under Article
VII of this Plan.
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(x)
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“Stock-Settled SAR Agreement” means
the written agreement between the Company and a Recipient that
evidences a Stock-Settled SAR pursuant to this Plan. Each
Stock-Settled SAR Agreement shall be subject to the terms and
conditions of this Plan.
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(y)
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“Subsidiary” of the Company means
any corporation or other entity owned or controlled by the Company
in an unbroken chain of corporations or other entities in which
each of the corporations or other entities other than last
corporation or other entity owns 50 percent or more of the total
combined voting power of all classes of equity ownership interests
in the other corporations or other entities in such
chain.
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(z)
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“Stock
Option” means a Stock Option awarded pursuant to Article VI
of this Plan.
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(aa)
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“Tax
Withholding” means all amounts determined by the Company to
be required to satisfy applicable federal, state and local tax
withholding requirements upon the exercise of a Stock Option, the
disqualifying disposition of shares of Common Stock acquired by
exercise of a Stock Option, the vesting of shares under a
Performance Share Award or Restricted Share Award, a Recipient
making an election under Section 83(b) of the Internal Revenue
Code with respect to a Performance Share Award or Restricted Share
Award or as otherwise may be required under applicable tax
laws.
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ARTICLE III
STOCK SUBJECT TO THE
PLAN
3.1 Aggregate Number of
Authorized Shares . Subject to adjustment in accordance with
Section 10.1, the total number of shares of Common Stock
authorized for issuance under all Awards pursuant to this Plan is
established at 2,200,000 shares.
3.2 Number of Available
Shares . At any point
in time, the number of Available Shares shall be the number of
Authorized Shares at such time minus:
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(a)
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the number of
shares of Common Stock issued prior to such time upon the exercise
of Stock Options and Stock-Settled SARs that were awarded pursuant
to this Plan; and
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(b)
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the number of
shares covered by outstanding Stock Options and Stock-Settled SARs
that were awarded pursuant to this Plan to the extent that such
have not been exercised at such time; and
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(c)
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the number of
shares of Common Stock covered by Performance Share Awards and
Restricted Share Awards made pursuant to this Plan prior to such
time except to the extent that unvested shares have been forfeited
and repurchased by the Company pursuant to the terms of a Share
Vesting Agreement.
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As a result of the foregoing, if a
Stock Option or Stock-Settled SAR expires, terminates or is
cancelled for any reason without having been exercised in full, the
shares of Common Stock covered by such Stock Option or
Stock-Settled SAR that were not acquired through the exercise of
such Award will again become Available Shares. Upon the exercise in
full of a Stock-Settled SAR, all shares covered by that Award other
than the shares actually issued upon such exercise, will again
become Available Shares. If shares of Common Stock covered by a
Performance Share Award or Restricted Share Award are repurchased
by the Company pursuant to the terms of a Share Vesting Agreement,
those shares will again become Available Shares. If shares of
Common Stock covered by an Award are surrendered by a Recipient to
satisfy any Tax Withholding obligations, those shares will again
become Available Shares.
3.3 Reservation of Shares
. Available Shares shall
consist of authorized but unissued shares of Common Stock of the
Company. By appropriate resolution of the Board of Directors, the
Company at all times will reserve for issuance shares of Common
Stock equal to the sum of (i) the number of shares covered by
Outstanding Stock Options to the extent that such Stock Options
have not been exercised at such time and (ii) the number of
Available Shares. By action of the Board of Directors, the Company
may repurchase issued and outstanding shares for purposes of
providing Available Shares under this Plan but the Company is not
required to make such repurchases and any such repurchases shall
not effect the calculation of the number of Authorized Shares or
Available Shares.
3.4 Annual Limit on Number of
Shares to Any One Person . No person will be eligible to receive Awards
pursuant to this Plan which, in aggregate, exceed 75,000 shares in
any calendar year except in connection with the hiring or
commencement of services from such person in which case such limit
shall be 100,000 shares during such calendar year. However, the
foregoing limitation shall not apply to Awards of Stock Options in
substitution for outstanding stock options of an Acquired Company
that are cancelled in connection with the acquisition of such
Acquired Company.
ARTICLE IV
COMMENCEMENT AND DURATION OF THE
PLAN
4.1 Effective Date of the
Plan . This Plan will
be effective as of the date on which it was adopted by the Board of
Directors. However, the implementation of this Plan shall be
subject to the provisions of Section 4.2.
4.2 Shareholder Approval of
the Plan . Within
twelve (12) months of the date on which this Plan was adopted
by the Board of Directors, this Plan will be submitted to the
shareholders of the Company for their approval. This Plan will be
deemed approved by the shareholders if approved by a majority of
the votes cast at a duly held
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meeting of the Company’s shareholders at
which a quorum is present in person or by proxy. Awards may be made
pursuant to this Plan prior to such shareholder approval provided
that such Awards are conditioned upon such approval and state by
their terms that they will be null and void if shareholder approval
is not obtained.
4.3 Termination of the
Plan . This Plan will
terminate March 4, 2013. In addition, the Board of Directors
will have the right to suspend or terminate this Plan at any time.
Termination of the Plan will not terminate or otherwise affect any
outstanding Stock Option, Stock-Settled SAR, Performance Share
Award, Restricted Share Award, Option Agreement, Stock-Settled SAR
Agreement or Share Vesting Agreement.
ARTICLE V
ADMINISTRATION OF THE
PLAN
Subject to the provisions of this
Plan and any additional terms or conditions which, from time to
time, may be imposed by the Board of Directors, the Committee will
administer this Plan and, in its sole discretion, will have the
authority to award Stock Options, Stock-Settled SARs, Performance
Share Awards and Restricted Share Awards in accordance with
Articles VI, VII, IX and X respectively. The Board of Directors
shall retain (but may delegate to the Committee) the right to agree
to award Stock Options, Stock-Settled SARs, Performance Share
Awards or Restricted Share Awards in substitution for outstanding
unexercised stock options or unvested share grants made by the
Acquired Company prior to the date of such acquisition in
accordance with Section 11.2 of Article XI. From time to time,
the Committee may adopt rules and regulations relating to the
administration of this Plan and may seek the advice of legal, tax,
accounting and compensation advisors. Decisions of the Committee
with respect to the administration of this Plan, the interpretation
or construction of this Plan, or the interpretation or construction
of any written agreement evidencing an Award will be final and
conclusive, subject only to review by the full Board of Directors.
The Committee shall not directly reduce or adjust the exercise
price of any outstanding Stock Option, nor indirectly do so by
canceling such outstanding Stock Option and replacing it with a
similar award with a lower exercise price. Notwithstanding the
foregoing, the Committee may exchange Restricted Stock Grants for
outstanding Stock Options at such ratio as the Committee deems
appropriate in the exercise of its fiduciary duties. The Committee
may correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any agreement evidencing an Award
in the manner and to the extent it deems appropriate.
The Board of Directors shall appoint
the members of the Committee, which shall consist of at least two
directors from the Board of Directors. The appointment to the
Committee of one or more directors who are not “outside
directors” as such term is defined in Treasury Regulation
§1.162-27(e)(3), one or more directors who are not
“non-employee directors” as such term is defined in
Rule 16b-3 issued by the Securities and Exchange Commission under
Section 16 of the Securities Exchange Act of 1934, as amended,
(“Rule 16b-3”) or one or more directors that fail to
meet the requirements for service on a compensation committee as
set forth in the listing standards of the exchange or market on
which the Common Stock primarily trades shall not invalidate any of
the actions of the Committee. Any member of the Committee that is
not an outside director, as such term is defined, is referred to in
this paragraph as an “Abstaining Director” with respect
to any action by the Committee, for which Section 162(m) of
the Internal Revenue Code requires the approval of a committee
consisting solely of outside directors. Any member of the Committee
that is not a non-employee director, as such term is defined, is
referred to in this paragraph as an “Abstaining
Director” with respect to any action by the Committee for
which Rule 16b-3 requires the approval of a committee consisting
solely of non-employee directors. Any member of the Committee that
fails to meet the requirements of the listing standards of the
exchange or market on which the Common Stock primarily trades is
referred to in this paragraph as an “Abstaining
Director” with respect to any action by the Committee that
requires the approval of a committee consisting solely of directors
meeting those requirements. An Abstaining Director shall be deemed
to have abstained from such action (notwithstanding any statement
to the contrary which may be contained in minutes of a meeting of
the Committee) and the assent of any such director shall be ignored
for purposes of determining whether or not any such actions were
approved by the Committee. If the Committee proposes to take an
action by unanimous consent in lieu of a meeting, an Abstaining
Director shall be deemed to not be a member of the Committee for
the purpose of such consent with respect to any actions for which
such member is deemed to be an Abstaining Director.
If no Committee is appointed, the
Board of Directors will have all the powers, duties and
responsibilities of the Committee as set forth in this Plan. In
addition, the Board of Directors may abolish a Committee and assume
the duties and responsibilities of the Committee at any time by
resolution duly adopted by the Board of Directors.
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ARTICLE VI
STOCK OPTION TERMS AND
CONDITIONS
Stock Options may be awarded
pursuant to this Plan in accordance with the following terms and
conditions.
6.1 Requirement for a Written
Option Agreement . Each Stock Option will be evidenced by a written
Option Agreement. The Committee, from time to time, will determine
the form of Option Agreement to be used for purposes of evidencing
Stock Options awarded pursuant to this Plan. Except as provided in
Section 11.2 of Article XI, the terms of the Option Agreement
evidencing a Stock Option must be consistent with this Plan,
including but not limited to this Article VI. Any inconsistencies
between any Option Agreement and this Plan will be resolved in
accordance with the terms and conditions specified in this Plan.
Except as expressly required by this Article VI, the terms and
conditions of each Stock Option do not need to be
identical.
6.2 Who may be Awarded a Stock
Option . A Stock
Option may be awarded to any Employee, any director of the Company
or of any Subsidiary and any other individual who, in the judgment
of the Committee, has performed or will perform, in whatever
capacity, services important to the management, operation and
development of the business of the Company or an of its
Subsidiaries. The Committee, in its sole discretion, shall
determine when and to whom Stock Options are awarded pursuant to
this Plan. In addition, substitute Stock Options may be awarded
pursuant to Section 11.2 of Article XI to persons who were
employees, directors, or independent contractors or former
employees, directors or independent contractors of an Acquired
Company.
6.3 Number of Shares Covered
by a Stock Option . The Committee, in its sole discretion, shall
determine the number of shares of Common Stock covered by each
Stock Option awarded pursuant to this Plan. The number of shares
covered by each Stock Option shall be specified in the Option
Agreement.
6.4 Vesting Under a Stock
Option . The
Committee, in its sole discretion, shall determine whether a Stock
Option is immediately exercisable as to all of the shares of Common
Stock covered by such option or whether it is exercisable only in
accordance with a time-based vesting schedule, Performance Goals or
a combination of the foregoing, all as determined by the Committee.
Any such vesting terms and conditions shall be specified in the
Option Agreement. Notwithstanding any term to the contrary in any
Option Agreement, a Stock Option that is awarded to a person who,
at the time of the Award, was an executive officer of the Company
will not become exercisable until after six (6) months from
the date of such Award unless the Award was approved either by
(i) a committee of non-employee directors within the
requirements of Rule 16b-3 or (ii) the full Board of
Directors.
6.5 Exercise Price of a Stock
Option . The Exercise
Price for each Stock Option will be at least 100% of the Fair
Market Value of a share of Common Stock as of the date on which the
Stock Option was awarded. However, if it is subsequently determined
that the Exercise Price as stated in the Option Agreement
evidencing a Stock Option is less than 100% of the Fair Market
Value of a share of Common Stock as of the date on which an option
was awarded, such fact will not invalidate the Stock
Option.
6.6 Duration of a Stock
Option—Generally . The Committee, in its sole discretion, will
determine the term of each Stock Option provided that such term
will not exceed 10 years from the date on which such option was
awarded. The term of each Stock Option shall be set forth in the
Option Agreement. The Recipient shall have no further right to
exercise a Stock Option following the expiration of such
term.
6.7 The Effect of Termination
of the Recipient’s Service with the Company on the Term of a
Stock Option . If a
Recipient’s Service with the Company terminates for any
reason other than as a result of the Recipient dying or becoming
Disabled (as provided for in Section 6.9 and
Section 6.10, respectively), all Stock Options that have been
awarded to such Recipient shall terminate to the extent that they
are not exercised within 30 days following the date the Recipient
ceased to be in Service with the Company, unless provided otherwise
in the Option Agreement. The foregoing provision will not extend
the time within which a Stock Option may be exercised beyond the
expiration of the term of such option and no additional vesting
shall occur after the date the Recipient’s Service with the
Company terminated.
6.8 The Effect of a Leave of
Absence on a Stock Option . Unless otherwise provided in the Option
Agreement evidencing a Stock Option, a Recipient’s Service
shall not be deemed to have terminated if the Recipient
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is on sick leave, family leave, military leave
or any other leave of absence that is approved by the Committee.
The Committee, in its sole discretion, may determine whether a
Stock Option shall continue to vest during any sick leave, family
leave, military leave or other approved leave of
absence.
6.9 The Effect of the Death of
a Recipient on the Term of a Stock Option .
If a Recipient’s Service with
the Company terminates as a result of the Recipient’s death,
all Stock Options that have been awarded to such Recipient will
terminate to the extent that they are not previously exercised
within 12 months following the date of the Recipient’s death.
The foregoing provision will not extend the time within which a
Stock Option may be exercised beyond the expiration of the term of
such option and no additional vesting shall occur after the date
the Recipient’s death.
6.10 The Effect of the
Disability of a Recipient on the Term of a Stock Option
. If a Recipient’s
Service with the Company terminates as a result of the Recipient
becoming Disabled, all Stock Options that have been awarded to such
Recipient shall terminate to the extent that they are not exercised
within 12 months following the date of the Recipient becoming
Disabled. The foregoing provision will not extend the time within
which a Stock Option may be exercised beyond the expiration of the
term of such option and no additional vesting shall occur after the
date the Recipient became Disabled.
6.11 Options Intended Not to
Qualify as Incentive Stock Options . Stock Options issued pursuant to this Plan are
not intended to qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986,
as amended.
ARTICLE VII
STOCK-SETTLED SARS TERMS AND
CONDITIONS
Stock-Settled SARS may be awarded
pursuant to this Plan in accordance with the following terms and
conditions.
7.1 Requirement for a Written
Stock-Settled SAR Agreement . Each Stock-Settled SAR will be evidenced by a
written Stock-Settled SAR Agreement. The Committee, from time to
time, will determine the form of Stock-Settled SAR Agreement to be
used for purposes of evidencing Stock-Settled SARs awarded pursuant
to this Plan. Except as provided in Section 11.2 of Article
XI, the terms of the Stock-Settled SAR Agreement must be consistent
with this Plan, including but not limited to this Article VII.
Any inconsistencies between any Stock-Settled SAR Agreement and
this Plan will be resolved in accordance with the terms and
conditions specified in this Plan. Except as expressly required by
this Article VII, the terms and conditions of each Stock-Settled
SAR do not need to be identical.
7.2 Who may be Awarded a
Stock-Settled SAR . A
Stock-Settled SAR may be awarded to any Employee, any director of
the Company or of a Subsidiary and any other individual who, in the
judgment of the Committee, has performed or will perform, in
whatever capacity, services important to the management, operation
and development of the business of the Company or any of
Subsidiaries. The Committee, in its sole discretion, shall
determine when and to whom Stock-Settled SARs are awarded pursuant
to this Plan. In addition, substitute Stock-Settled SARs may be
awarded pursuant to Section 11.2 of Article XI to persons who
were employees, directors, or independent contractors or former
employees, directors or independent contractors of an Acquired
Company.
7.3 Number of Shares Covered
by a Stock-Settled SAR . The Committee, in its sole discretion, shall
determine the number of shares of Common Stock covered by each
Stock-Settled SAR awarded pursuant to this Plan. The number of
shares covered by each Stock-Settled SAR shall be specified in the
Stock-Settled SAR Agreement.
7.4 Vesting Under a
Stock-Settled SAR . The Committee, in its sole discretion, shall
determine whether a Stock-Settled SAR is immediately exercisable as
to all of the shares of Common Stock covered by the Stock-Settled
SAR or whether it is exercisable only in accordance with a
time-based vesting schedule, Performance Goals or a combination of
the foregoing, all as determined by the Committee. Any such vesting
terms and conditions shall be specified in the Stock-Settled SAR
Agreement. Notwithstanding any term to the contrary in any
Stock-Settled SAR Agreement, a Stock-Settled SAR that is awarded to
a person who, at the time of the Award, was an executive officer of
the Company will not become exercisable until after six
(6) months from the date of such Award
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unless the Award was approved either by
(i) a committee of non-employee directors within the
requirements of Rule 16b-3 or (ii) the full Board of
Directors.
7.5 Exercise Price of a
Stock-Settled SAR . The Exercise Price for each Stock-Settled SAR
will be at least 100% of the Fair Market Value of a share of Common
Stock as of the date on which the Stock-Settled SAR was awarded.
However, if it is subsequently determined that the Exercise Price
as stated in the Stock-Settled SAR Agreement evidencing a
Stock-Settled SAR is less than 100% of the Fair Market Value of a
share of Common Stock as of the date on which an option was
awarded, such fact will not invalidate the Stock-Settled
SAR.
7.6 Effect of Exercise of a
Stock-Settled SAR . Exercise of a Stock-Settled SAR results in the
Recipient receiving net shares of Common Stock with an aggregate
Fair Market Value as of the date of such exercise equal to
(i) the difference between the Fair Market Value of a share of
Common Stock as of the exercise date minus the Exercise Price of
the SAR, multiplied by (ii) the number of shares covered by
the Stock-Settled SAR as to which it is being exercised, rounded
down to the nearest whole number. A Stock-Settled SAR may be
exercised as to all of the shares covered by it or may be exercised
only in part.
7.7 Duration of a
Stock-Settled SAR—Generally . The Committee, in its sole discretion, will
determine the term of each Stock-Settled SAR prov
