--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
METROCORP BANCSHARES, INC.
1998 STOCK INCENTIVE PLAN
_______________, 1998
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Administration . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3. Eligibility for Participation. . . . . . . . . . . . . . . . . . 2
Section 1.4. Types of Awards Under Plan . . . . . . . . . . . . . . . . . . . 2
Section 1.5. Aggregate Limitation on Awards . . . . . . . . . . . . . . . . . 2
Section 1.6. Effective Date and Term of Plan. . . . . . . . . . . . . . . . . 3
ARTICLE II. STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1. Award of Stock Options . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Stock Option Agreements. . . . . . . . . . . . . . . . . . . . . 3
Section 2.3. Stock Option Price . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.4. Term and Exercise. . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.5. Manner of Payment. . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.6. Restrictions on Certain Shares . . . . . . . . . . . . . . . . . 4
Section 2.7. Death, Retirement and Termination of Employment of Optionee. . . 4
ARTICLE III. INCENTIVE STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1. Award of Incentive Stock Options . . . . . . . . . . . . . . . . 5
Section 3.2. Incentive Stock Option Agreements. . . . . . . . . . . . . . . . 5
Section 3.3. Incentive Stock Option Price . . . . . . . . . . . . . . . . . . 5
Section 3.4. Term and Exercise. . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.5. Maximum Amount of Incentive Stock Option Grant . . . . . . . . . 5
Section 3.6. Death of Optionee. . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.7. Retirement or Disability . . . . . . . . . . . . . . . . . . . . 6
Section 3.8. Termination of Employment for Other Than Cause. . . . . . . . . 6
Section 3.9. Termination for Cause or Other Reasons . . . . . . . . . . . . . 6
Section 3.10. Applicability of Stock Options Sections . . . . . . . . . . . . 6
ARTICLE IV. PERFORMANCE SHARE AWARDS . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.1. Awards Granted by Committee. . . . . . . . . . . . . . . . . . . 6
Section 4.2. Amount of Award. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.3. Communication of Award.. . . . . . . . . . . . . . . . . . . . . 6
Section 4.4. Amount of Award Payable. . . . . . . . . . . . . . . . . . . . . 7
Section 4.5. Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.6. Payments of Awards.. . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.7. Termination of Employment. . . . . . . . . . . . . . . . . . . . 7
Section 4.8. Transfer Restriction . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-i-
Section 5.1. General Restriction. . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.2. Non-Assignability. . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.3. Withholding Taxes. . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.4. Right to Terminate Employment. . . . . . . . . . . . . . . . . . 8
Section 5.5. Non-Uniform Determinations . . . . . . . . . . . . . . . . . . . 8
Section 5.6. Rights as a Stockholder. . . . . . . . . . . . . . . . . . . . . 8
Section 5.7. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.8. Leaves of Absence. . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.9. Newly Eligible Employees . . . . . . . . . . . . . . . . . . . . 9
Section 5.10. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.11. Changes in the Company's Capital Structure. . . . . . . . . . . 9
Section 5.12. Amendment of the Plan . . . . . . . . . . . . . . . . . . . . . 11
Section 5.13. Rights Under the Plan . . . . . . . . . . . . . . . . . . . . . 11
Section 5.14. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.15. Intention to Comply With Applicable Securities Laws. . . . . . . 11
-ii-
METROCORP BANCSHARES, INC.
1998 STOCK INCENTIVE PLAN
ARTICLE I. GENERAL
SECTION 1.1. PURPOSE. The purposes of this Stock Incentive Plan (the
"Plan") are to: (1) associate the interests of the officers and other key
employees of METROCORP BANCSHARES, INC. and its subsidiaries and affiliates
(collectively referred to as the "Company") closely with the stockholders to
generate an increased incentive to contribute to the Company's future success
and prosperity, thus enhancing the value of the Company for the benefit of its
stockholders; (2) provide officers and other key employees with a proprietary
ownership interest in the Company commensurate with Company performance, as
reflected in increased stockholder value; (3) maintain competitive compensation
levels thereby attracting and retaining highly competent and talented officers
and employees; and (4) provide an incentive to the officers and other key
employees for continuous employment with the Company. Certain capitalized terms
are defined in Section 5.7.
SECTION 1.2. ADMINISTRATION.
(a) The Plan shall be administered by the Compensation Committee of
the Board of Directors of the Company (the "Committee"), as constituted
from time to time, each member of which shall be a Non-Employee Director,
as such term is defined in Rule 16b-3 issued by the Securities and Exchange
Commission.
(b) The Committee shall have the authority, in its sole discretion
and from time to time to:
(i) designate the officers and key employees of the Company
eligible to participate in the Plan;
(ii) grant Awards provided in the Plan in such form and amount as
the Committee shall determine;
(iii) impose such limitations, restrictions and conditions, not
inconsistent with this Plan, upon any such Award as the Committee
shall deem appropriate;
(iv) prescribe the form and terms of instruments evidencing such
Awards; and
(v) interpret the Plan and any agreement, instrument or other
document executed in connection with the Plan; adopt, amend and
rescind rules and regulations relating to the Plan; and make all
other determinations and take all other action necessary or advisable
for the implementation and administration of the Plan.
(c) Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and shall be final,
conclusive and binding upon all persons, including the Company, any
participant, any stockholder of the Company and any employee. A majority
of
-1-
the members of the Committee may determine its actions and fix the time and
place of its meetings. No member of the Committee shall be liable for any
action taken or decision made relating to the Plan or any Award thereunder.
SECTION 1.3. ELIGIBILITY FOR PARTICIPATION. Participants in the Plan
shall be selected by the Committee from the officers, employees and consultants
of the Company or its Subsidiaries who, in the opinion of the Committee, have
the capacity to contribute to the successful performance of the Company or a
Subsidiary. For the purposes of this Plan, the term "Subsidiary" means any
corporation or other entity of which at least 50% of the voting securities are
owned by the Company directly or through one or more other corporations, each of
which is also a Subsidiary. With respect to non-corporate entities, Subsidiary
shall mean an entity managed or controlled by the Company or any Subsidiary and
with respect to which the Company or any Subsidiary is allocated more than half
of the profits and losses thereof.
SECTION 1.4. TYPES OF AWARDS UNDER PLAN. Awards under the Plan may be in
the form of any one or more of the following:
(i) Stock Options, as described in Article II;
(ii) Incentive Stock Options, as described in Article III; and/or
(iii) Performance Shares, as described in Article IV.
Awards under the Plan shall be evidenced by an Award Agreement between the
Company and the recipient of the Award, in form and substance satisfactory to
the Committee, and not inconsistent with this Plan. Award Agreements may
provide such vesting schedules for Stock Options and Incentive Stock Options,
and such other terms, conditions and provisions as are not inconsistent with the
terms of this Plan. Subject to the express provisions of the Plan, and within
the limitations of the Plan, the Committee may modify, extend or renew
outstanding Award Agreements, or accept the surrender of outstanding Awards and
authorize the granting of new Awards in substitution therefor. However, except
as provided in this Plan, no modification of an Award shall impair the rights of
the holder thereof without his or her consent.
SECTION 1.5. AGGREGATE LIMITATION ON AWARDS.
(a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of Common Stock of the Company
("Common Stock"). Subject to adjustment by the operation of Section 5.10
hereof, the maximum number of shares of Common Stock which may be issued
pursuant to Awards issued under the Plan shall be 200,000.
(b) For purposes of calculating the maximum number of shares of
Common Stock which may be issued under the Plan at any time:
(i) all the shares issued (including the shares, if any,
withheld for tax withholding requirements) under the Plan shall be
counted when issued upon exercise of a Stock Option or Incentive Stock
Option; and
-2-
(ii) only the net shares issued as Performance Shares shall be
counted (shares reacquired by the Company because of failure to
achieve a performance target or failure to become fully vested for any
other reason shall again be available for issuance under the Plan).
(c) Shares tendered by a participant as payment for shares issued
upon exercise of a Stock Option or Incentive Stock Option shall be
available for issuance under the Plan. Any shares of Common Stock subject
to a Stock Option or Incentive Stock Option which for any reason is
terminated unexercised or expires shall again be available for issuance
under the Plan.
SECTION 1.6. EFFECTIVE DATE AND TERM OF PLAN.
(a) The Plan shall become effective only after (i) it has been
approved by the stockholders of the Company at the 1998 Annual Meeting of
Stockholders and (ii) the Company shall have completed an initial public
offering.
(b) No Awards shall be made under the Plan after the tenth
anniversary of the effective date of this Plan; provided, however, that the
Plan and all Awards made under the Plan prior to such date shall remain in
effect until such Awards have been satisfied or terminated in accordance
with the Plan and the terms of such Awards.
ARTICLE II. STOCK OPTIONS
SECTION 2.1. AWARD OF STOCK OPTIONS. The Committee may from time to time,
and subject to the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, grant to any participant in the Plan one or more
options to purchase for cash or shares the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is granted
shall mean the date selected by the Committee as of which the Committee allots a
specific number of shares to a participant pursuant to the Plan.
SECTION 2.2. STOCK OPTION AGREEMENTS. The grant of a Stock Option shall
be evidenced by a written Award Agreement, executed by the Company and the
holder of a Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Stock Option evidenced thereby, and in such form as
the Committee may from time to time determine.
SECTION 2.3. STOCK OPTION PRICE. The option price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be 100% of the fair
market value of a share of Common Stock on the date the Stock Option is granted.
SECTION 2.4. TERM AND EXERCISE. A Stock Option shall be exercisable at
such time and under such conditions as set forth in the Award Agreement, but in
no event shall a Stock Option be exercisable later than the tenth anniversary of
the date of grant (the "Option Term"). No Stock Option shall be exercisable
after the expiration of its Option Term.
SECTION 2.5. MANNER OF PAYMENT. Each Award Agreement providing for Stock
Options shall set forth the procedure governing the exercise of the Stock Option
granted thereunder, and shall provide that,
-3-
upon such exercise in respect of any shares of Common Stock subject thereto, the
Optionee shall pay to the Company, in full, the option price for such shares.
Such payment may be made by such method or methods and in such form or forms as
the Committee shall determine, including, without limitation, cash, shares of
Common Stock, other Awards or other property, cashless exercise with
simultaneous sale, or any combination thereof, provided that the combined value,
as determined by the Committee, of all cash and cash equivalents and the fair
market value of any such shares of Common Stock, or other property so tendered
to the Company, as of the date of such tender, is at lease equal to the full
amount required to be paid pursuant to the Plan or the applicable Award
Agreement to the Company.
SECTION 2.6. RESTRICTIONS ON CERTAIN SHARES. As soon as practicable after
receipt of payment, the Company shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock; PROVIDED, HOWEVER, that the
Company shall not be required to issue or deliver any certificates for shares of
Common Stock purchased upon the exercise of a Stock Option prior to the
completion of any registration or other qualification of such shares under any
state or federal law or rulings or regulations of any government regulatory
body, which the Committee shall determine to be necessary or advisable. The
Optionee shall become a stockholder of the Company with respect to Common Stock
represented by share certificates so issued and as such shall be fully entitled
to receive dividends, to vote and to exercise all other rights of a stockholder.
SECTION 2.7. DEATH, RETIREMENT AND TERMINATION OF EMPLOYMENT OF OPTIONEE.
Unless otherwise provided in an Award Agreement or otherwise agreed to by the
Committee:
(a) Upon the death of the Optionee, any rights to the extent
exercisable on the date of death may be exercised by the Optionee's estate,
or by a person who acquires the right to exercise such Stock Option by
bequest or inheritance or by reason of the death of the Optionee, provided
that such exercise occurs within both (i) the remaining Option Term of the
Stock Option and (ii) one year after the Optionee's death. The provisions
of this Section shall apply notwithstanding the fact that the Optionee's
employment may have terminated prior to death, but only to the extent of
any rights exercisable on the date of death.
(b) Upon termination of the Optionee's employment by reason of
retirement or permanent disability (as each is determined by the
Committee), the Optionee may exercise any Stock Options, provided such
option exercise occurs within both (i) the remaining Option Term of the
Stock Option and (ii) six months (in the case of permanent disability) or
three months (in the case of retirement) after the termination of the
Optionee's employment.
(c) Upon termination of the Optionee's employment by reason other
than death, disability or cause (as each is determined by the Committee),
the Optionee may exercise any Stock Options, provided such option exercise
occurs within both (i) the remaining Option Term of the Stock Option and
(ii) 30 days of the date of termination.
(d) Upon termination of the Optionee's employment for cause (as
determined by the Committee), or for any reason other than as provided in
Subsection (a), (b) and (c) of this Section 2.7, all Stock Options shall
terminate immediately upon the termination of the Optionee's employment.
-4-
ARTICLE III. INCENTIVE STOCK OPTIONS
SECTION 3.1. AWARD OF INCENTIVE STOCK OPTIONS. The Committee may, from
time to time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any participant in the Plan
who is an employee of the Company one or more "incentive stock options"
(intended to qualify as such under the provisions of Section 422 of the Internal
Revenue Code of 1986, as amended ("Incentive Stock Options")) to purchase for
cash or shares the number of shares of Common Stock allotted by the Committee.
Each provision of the Plan and each Incentive Stock Option granted thereunder
shall be construed so that each such option shall qualify as an Incentive Stock
Option, and any provision thereof that cannot be so construed shall be
disregarded, unless the participant agrees otherwise. The date an Incentive
Stock Option is granted shall mean the date selected by the Committee as of
which the Committee allots a specific number of shares to a participant pursuant
to the Plan.
SECTION 3.2. INCENTIVE STOCK OPTION AGREEMENTS. The grant of an Incentive
Stock Option shall be evidenced by a written Award Agreement, executed by the
Company and the holder of an Incentive Stock Option (the "Optionee"), stating
the number of shares of Common Stock subject to the Incentive Stock Option
evidenced thereby, and in such form as the Committee may from time to time
determine.
SECTION 3.3. INCENTIVE STOCK OPTION PRICE. The option price per share of
Common Stock deliverable upon the exercise of an Incentive Stock Option shall be
100% of the fair market value of a share of Common Stock on the date the
Incentive Stock Option is granted. Notwithstanding the foregoing, Incentive
Stock Options shall not be granted to any owner of 10% or more of the total
voting power of the Company unless the option price is at least 110% of the fair
market value of a share of Common Stock on the date the Incentive Stock Option
is granted.
SECTION 3.4. TERM AND EXERCISE. Each Incentive Stock Option shall be
exercisable at such time and under such conditions as set forth in the Award
Agreement, but in no event shall an Incentive Stock Option be exercisable later
than the tenth anniversary of the date of grant (the "Option Term").
Notwithstanding the foregoing, if the Optionee is the owner of 10% or more of
the total voting power of the Company, such Incentive Stock Option shall not be
exercisable after the expiration of five years from the date of award. No
Incentive Stock Option shall be exercisable after the expiration of its Option
Term.
SECTION 3.5. MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT. The
aggregate fair market value (determined on the date the Incentive Stock Option
is granted) of Common Stock with respect to which Incentive Stock Options first
become exercisable by an Optionee during any calendar year (under all plans of
the Optionee's employer corporations and their parent and subsidiary
corporations) shall not exceed $100,000. If the immediate exercisability of
Incentive Stock Options awarded pursuant to this Article III would cause this
$100,000 limitation to be exceeded for an Optionee, such excess Incentive Stock
Options held by such Optionee shall be treated as non-qualified Stock Options to
the extent necessary to comply with the $100,000 limitation by taking all such
Options into account in the order in which they were granted.
SECTION 3.6. DEATH OF OPTIONEE.
(a) Upon the death of the Optionee, any Incentive Stock Option
exercisable on the date of death may be exercised by the Optionee's estate
or by a person who acquires the right to exercise such Incentive Stock
Option by bequest or inheritance or by reason of the death of the Optionee,
provided that such exercise occurs within both the remaining Option Term of
the Incentive Stock Option and one year after the Optionee's death.
-5-
(b) The provisions of this Section shall apply notwithstanding the
fact that the Optionee's employment may have terminated prior to death, but
only to the extent of any Incentive Stock Options exercisable on the date
of death.
SECTION 3.7. RETIREMENT OR DISABILITY. Unless otherwise provided in an
Award Agreement or otherwise agreed to by the Committee, upon the termination of
the Optionee's employment by reason of permanent disability or retirement (as
each is determined by the Committee), the Optionee may exercise any Incentive
Stock Options, provided such option exercise occurs within both (i) the
remaining Option Term of the Incentive Stock Option and (ii) one year (in the
case of permanent disability, as defined in the Internal Revenue Code of 1986)
or three months (in the case of retirement) after the date of termination.
Notwithstanding the terms of an Award Agreement, the tax treatment available
pursuant to Section 422 of the Internal Revenue Code of 1986 upon the exercise
of an Incentive Stock Option shall not be available to an Optionee who exercises
any Incentive Stock Options more than (i) one year after the date of termination
of employment due to permanent disability or (ii) three months after the date of
termination of employment due to retirement.
SECTION 3.8. TERMINATION OF EMPLOYMENT FOR OTHER THAN CAUSE. Upon
termination of the Optionee's employment by reason other than as provided in
Sections 3.6 or 3.7, or by reason other than cause (as determined by the
Committee), the Optionee may exercise any Incentive Stock Options, provided such
option exercise occurs within both (i) the remaining Option Term of the
Incentive Stock Option and (ii) 30 days of the date of termination.
SECTION 3.9. TERMINATION FOR CAUSE OR OTHER REASONS. Upon termination of
the Optionee's employment for cause (as determined by the Committee), or for any
other reason other than as provided in Sections 3.6, 3.7 and 3.8, or except as
otherwise determined by the Committee in an Award Agreement, all Incentive Stock
Options shall terminate immediately upon the termination of the Optionee's
employment.
SECTION 3.10. APPLICABILITY OF STOCK OPTIONS SECTIONS. Sections 2.5,
Manner of Payment; and 2.6, Restrictions on Certain Shares, applicable to Stock
Options, shall apply equally to Incentive Stock Options. Said Sections are
incorporated by reference in this Article III as though fully set forth herein.
ARTICLE IV. PERFORMANCE SHARE AWARDS
SECTION 4.1. AWARDS GRANTED BY COMMITTEE. Coincident with or following
designation for participation in the Plan, a participant may be granted
Performance Shares. Certificates representing Performance Shares shall be
issued to the participant effective as of the date of the Award. Holders of
Performance Shares shall have all of the voting, dividend and other rights of
stockholders of the Company, subject to the terms of any Award Agreement.
SECTION 4.2. AMOUNT OF AWARD. The Committee shall establish a maximum
amount of a participant's Award, which amount shall be denominated in shares of
Common Stock.
SECTION 4.3. COMMUNICATION OF AWARD. Written notice of the maximum amount
of a participant's Award and the Performance Cycle determined by the Committee,
if any, shall be given to a participant as soon as practicable after approval of
the Award by the Committee. The grant of Performance Shares
-6-
shall be evidenced by a written Award Agreement, executed by the Company and the
recipient of Performance Shares, in such form as the Committee may from time to
time determine, providing for the terms of such grant.
SECTION 4.4. AMOUNT OF AWARD PAYABLE. Performance Shares may be granted
based upon past performance or future performance. In addition to any other
restrictions the Committee may place on Performance Shares, the Committee may,
in its discretion, provide that Performance Shares shall vest upon the
satisfaction of performance targets to be achieved during an applicable
"Performance Cycle." Failure to satisfy the performance targets may result, in
the Committee's discretion as set forth in an Award Agreement, in the forfeiture
of the Performance Shares by the participant and the return of such shares to
the Company, or have any other consequence as determined by the Committee.
Performance targets established by the Committee may relate to corporate, group,
unit or individual performance and may be established in terms of cash flow or
cash flow per share, net asset value or net asset value per share, earnings, or
such other measures or standards determined by the Committee. Multiple
performance targets may be used and the components of multiple performance
targets may be given the same or different weighting in determining the amount
of an Award earned, and may relate to absolute performance or relative
performance measured against other groups, units, individuals or entities. The
Committee may also establish that a portion of a full or maximum amount of a
participant's Award will be paid (subject to Section 4.6) for performance which
exceeds the minimum performance target but falls below the maximum performance
target applicable to such Award. Certificates representing Performance Shares
shall bear a legend restricting their transfer and requiring the forfeiture of
the shares to the Company if any performance targets or other conditions to
vesting are not met. The Committee may also require a participant to deliver
certificates representing unvested Performance Shares to the Company in escrow
until the Performance Shares vest.
SECTION 4.5. ADJUSTMENTS. At any time prior to vesting of a Performance
Share, the Committee may adjust previously established performance targets or
other terms and conditions to reflect events such as changes in laws,
regulations, or accounting practice, or mergers, acquisitions, divestitures or
any other event determined by the Committee.
SECTION 4.6. PAYMENTS OF AWARDS. Following the conclusion of each
Performance Cycle, the Committee shall determine the extent to which performance
targets have been attained, and the satisfaction of any other terms and
conditions with respect to vesting an Award relating to such Performance Cycle.
To the extent the Committee determines Performance Shares have vested, the
Company shall issue to the participant certificates representing vested shares
free of any legend regarding performance targets or forfeiture in exchange for
such participant's legended certificates.
SECTION 4.7. TERMINATION OF EMPLOYMENT. Unless the Award Agreement
provides for vesting upon death, disability, retirement or termination of
employment, upon any such termination of employment of a participant prior to
vesting of Performance Shares, all outstanding and unvested Awards of
Performance Shares to such participant shall be cancelled, shall not vest and
shall be returned to the Company.
SECTION 4.8. TRANSFER RESTRICTION. Any Award Agreement providing for the
issuance of Performance Shares to any person who, at the time of grant, is
subject to the restrictions of Section 16(b) of the Exchange Act, shall provide
that such Common Stock cannot be resold for a period of six months following the
grant of such Performance Shares.
-7-
ARTICLE V. MISCELLANEOUS
SECTION 5.1. GENERAL RESTRICTION. Each Award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or Federal law, or (ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the grantee of an Award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the granting of such Award or the issue or purchase
of shares of Common Stock thereunder, such Award may not be consummated in whole
or in part unless such listing, registration, qualification, consent, approval
or agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee. The provisions of this Plan are intended, and
shall be interpreted, to permit Awards made pursuant hereto to comply with the
exemptions afforded by Rule 16b-3 under the 1934 Act.
SECTION 5.2. NON-ASSIGNABILITY. No Award under the Plan shall be
assignable or transferable by the recipient thereof, except by will or by the
laws of descent and distribution. During the life of the recipient, such Award
shall be exercisable only by such person or by such person's guardian or legal
representative.
SECTION 5.3. WITHHOLDING TAXES. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the Company an amount
sufficient to satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. Alternatively, at the Company's discretion, the Company may issue,
transfer or vest only such number of shares of the Company net of the number of
shares sufficient to satisfy the withholding tax requirements. For withholding
tax purposes, the shares of Common Stock shall be valued on the date the
withholding obligation is incurred.
SECTION 5.4. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any participant
the right to continue in the employment of the Company or affect any right which
the Company may have to terminate the employment of such participant.
SECTION 5.5. NON-UNIFORM DETERMINATIONS. The Committee's determinations
under the Plan (including without limitation, determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
SECTION 5.6. RIGHTS AS A STOCKHOLDER. The recipient of any Award under
the Plan shall have no rights as a stockholder with respect thereto unless and
until certificates for shares of Common Stock are issued to him.
SECTION 5.7. DEFINITIONS. In this Plan, the following definitions shall
apply:
(a) "Award" shall mean a grant of Stock Options, Incentive Stock
Options or Performance Shares under the Plan.
(b) "Fair market value" as of any date and in respect of any share of
Common Stock shall mean the closing price on such date on the NASDAQ
National Market System or such other
-8-
exchange or market trading system upon which the Common Stock shall then be
trading; PROVIDED, HOWEVER, that if shares of Common Stock shall not have
been traded on any public securities market for more than 10 days
immediately preceding such date or if deemed appropriate by the Committee
for any other reason, the fair market value of shares of Common Stock shall
be as determined by the Committee in such other manner as it may deem
appropriate. In no event shall the fair market value of any share of
Common Stock be less than its par value.
(c) "Option" means a Stock Option or Incentive Stock Option.
(d) "Option price" means the purchase price per share of Common Stock
deliverable upon the exercise of a Stock Option or Incentive Stock Option.
(e) "Performance Cycle" means the period of time, if any, as
specified by the Committee over which Performance Shares are to be vested.
SECTION 5.8. LEAVES OF ABSENCE. The Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by the recipient of any Award.
Without limiting the generality of the foregoing, the Committee shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute a termination of employment within the meaning of the Plan and (ii)
the impact, if any, of any such leave of absence on Awards under the Plan
theretofore made to any recipient who takes such leave of absence.
SECTION 5.9. NEWLY ELIGIBLE EMPLOYEES. The Committee shall be entitled to
make such rules, regulations, determinations and Awards as it deems appropriate
in respect of any employee who becomes eligible to participate in the Plan or
any portion thereof after the commencement of an Award or incentive period.
SECTION 5.10. ADJUSTMENTS. In the event of any change in the outstanding
Common Stock by reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like,
the Committee may appropriately adjust the number of shares of Common Stock
which may be issued under the Plan, the number of shares of Common Stock subject
to Options or Performance Shares theretofore granted under the Plan, and any and
all other matters deemed appropriate by the Committee.
SECTION 5.11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
(a) The existence of outstanding Options or Performance Shares shall
not affect in any way the right or power of the Company or its stockholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.
(b) If, while there are outstanding Options, the Company shall effect
a subdivision or consolidation of shares or other increase or reduction in
the number of shares of the Common Stock outstanding without receiving
compensation therefor in money, services or property, then, subject
-9-
to the provisions, if any, in the Award Agreement (a) in the event of an
increase in the number of such shares outstanding, the number of shares of
Common Stock then subject to Options hereunder shall be proportionately
increased; and (b) in the event of a decrease in the number of such shares
outstanding the number of shares then available for Option hereunder shall
be proportionately decreased.
(c) After a merger of one or more corporations into the Company, or
after a consolidation of the Company and one or more corporations in which
the Company shall be the surviving corporation, (i) each holder of an
outstanding Option shall, at no additional cost, be entitled upon exercise
of such Option to receive (subject to any required action by stockholders)
in lieu of the number of shares as to which such Option shall then be so
exercisable, the number and class of shares of stock, other securities or
consideration to which such holder would have been entitled to receive
pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of the Company equal to the number
of shares as to which such Option had been exercisable and (ii) unless
otherwise provided by the Committee, the number of shares of Common Stock,
other securities or consideration to be received with respect to unvested
Performance Shares shall continue to be subject to the Award Agreement,
including any vesting provisions thereof.
(d) If the Company is about to be merged into or consolidated with
another corporation or other entity under circumstances where the Company
is not the surviving corporation, or if the Company is about to sell or
otherwise dispose of substantially all of its assets to another corporation
or other entity while unvested Performance Shares or unexercised Options
remain outstanding, then the Committee may direct that any of the following
shall occur:
(i) If the successor entity is willing to assume the obligation
to deliver shares of stock or other securities after the effective
date of the merger, consolidation or sale of assets, as the case may
be, each holder of an outstanding Option shall be entitled to
receive, upon the exercise of such Option and payment of the option
price, in lieu of shares of Common Stock, such shares of stock or
other securities as the holder of such Option would have been entitled
to receive had such Option been exercised immediately prior to the
consummation of such merger, consolidation or sale, and the terms of
such Option shall apply as nearly as practicable to the shares of
stock or other securities purchasable upon exercise of the Option
following such merger, consolidation or sale of assets;
(ii) The Committee may waive any limitations set forth in or
imposed pursuant to this Plan or any Award Agreement with respect
to such Option or Performance Share such that (A) such Option shall
become exercisable prior to the record or effective date of such
merger, consolidation or sale of assets or (B) the vesting of such
Performance Share shall occur upon such merger, consolidation or
sale of assets; and/or
(iii) The Committee may cancel all outstanding Options as of the
effective date of any such merger, consolidation or sale of assets
provided that prior notice of such cancellation shall be given to each
holder of an Option at least 30 days prior to the effective date of
such merger, consolidation or sale of assets, and each holder of an
Option shall have the right to exercise such Option in full during a
period of not less than 30 days prior to the effective date of such
merger, consolidation or sale of assets.
-10-
(e) Except as herein provided, the issuance by the Company of Common
Stock or any other shares of capital stock or securities convertible into
shares of capital stock, for cash, property, labor done or other
consideration, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to outstanding Options.
SECTION 5.12. AMENDMENT OF THE PLAN.
(a) The Board may, without further action by the stockholders and
without receiving further consideration from the participants, amend this
Plan or condition or modify Awards under this Plan in response to changes
in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock
exchange rules or requirements.
(b) The Board may at any time and from time to time terminate or
modify or amend the Plan in any respect, except that without stockholder
approval the Board may not (i) increase the maximum number of shares of
Common Stock which may be issued under the Plan (other than increases
pursuant to Section 5.10), or (ii) extend the term of the Plan.
Notwithstanding the above, no amendment to the Plan or any Award shall be
made without shareholder approval if such approval is necessary to comply
with any applicable tax or regulatory requirement, including any
requirements for exemptive relief under Section 16(b) of the 1934 Act, or
any successor provision. The termination or any modification or amendment
of the Plan, except as provided in subsection (a), shall not, without the
consent of a participant, affect a participant's rights under an Award
previously granted to such participant.
SECTION 5.13. RIGHTS UNDER THE PLAN. No officer or employee of the
Company shall have a right to be selected to participate in the Plan nor, having
been so selected, to be selected again to participate in the Plan. No officer,
employee or other person shall have any claim or right to be granted an Award
under the Plan or under any other incentive or similar plan of the Company.
Neither the Plan nor any action taken thereunder shall be construed as giving
and employee of the Company any right to be retained in the employ of the
Company.
SECTION 5.14. APPLICABLE LAW. To the extent that the Plan is not governed
or regulated by applicable federal law, the Plan shall be governed and regulated
under and in accordance with the laws of the State of Texas.
SECTION 5.15. INTENTION TO COMPLY WITH APPLICABLE SECURITIES LAWS.
(a) With respect to persons subject to Section 16 of the Exchange
Act, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
(b) All transactions pursuant to terms of the Plan, including, with
limitation, Awards and vesting of shares of Common Stock, shall only be
effective at such time as counsel to the Company shall have determined that
such transaction will not violate federal or state securities or other
laws. The Committee may, in its sole discretion, defer the effectiveness
of such transaction to pursue whatever actions may be required to ensure
compliance with such federal or state securities or other laws.
-11-
