UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Toll Brothers, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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23-2416878
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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250 Gibraltar Road, Horsham, Pennsylvania
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19044
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(Address of Principal Executive Offices)
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(Zip Code)
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Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007)
(Full Title of the Plan)
Joel H. Rassman
Executive Vice President and Chief Financial Officer
Toll Brothers, Inc.
250 Gibraltar Road
Horsham, Pennsylvania 19044
(Name and address of agent for service)
(215) 938-8000
(Telephone number, including area code, of agent for service)
Copies to:
Darrick M. Mix, Esquire
WolfBlock LLP
1650 Arch Street, 22nd Floor
Philadelphia, PA 19103-2097
(215) 977-2006
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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EXPLANATORY NOTE
Pursuant to a Registration Statement on Form S-8 filed by Toll Brothers, Inc. (the “Registrant”)
with the Securities and Exchange Commission (the “Commission”) on June 29, 2007, the Registrant
registered 2,000,000 shares of its common stock for issuance under the Toll Brothers, Inc. Stock
Incentive Plan for Non-Employee Directors (2007) (the “Plan”). On December 12, 2007, the Board of
Directors of the Registrant adopted certain amendments to the Plan (collectively, the “Amendments”)
and such Amendments, to the extent required, were approved by the stockholders of the Registrant at
the 2008 Annual Meeting of Stockholders on March 12, 2008. On September 17, 2008, the
Board of Directors of the Registrant amended and restated the Plan (the “Amended and Restated
Plan”) to incorporate the relevant Amendments into the Plan. The purpose of this post-effective
amendment is to amend the previously filed Form S-8 by filing the Amended and Restated Plan. No
additional shares are being registered.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), are incorporated by reference in
this Registration Statement:
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1.
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The Registrant’s Annual Report on Form 10-K for the year ended October 31, 2007;
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2.
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The Registrant’s Quarterly Reports on Form 10-Q for the quarters ended January
31, 2008, April 30, 2008 and July 31, 2008;
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3.
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The Registrant’s Current Reports on Form 8-K filed with the Commission on
December 17, 2007, December 19, 2007, December 28, 2007, February 7, 2008,
March 18, 2008 and June 13, 2008.
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4.
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The description of the Registrant’s Common Stock contained in its Registration
Statement on Form 8-A dated June 19, 1986 (File No. 001-09186), including all
amendments and reports updating the description; and
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5.
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The description of preferred stock purchase rights contained in the
Registrant’s Registration Statement on Form 8-A dated June 19, 2007, including
all amendments and reports updating the description.
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In addition, all documents subsequently filed with the Commission by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, and prior to the filing of a
post-effective amendment that indicates that all securities offered hereby have been sold or that
deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference
in this Registration Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded to the extent that a
statement contained herein or in any other subsequently filed document that also is incorporated by
reference herein modifies or supersedes such earlier statement.
Any statement so modified or superseded shall not be deemed to constitute a part of
hereof except as so modified or superseded.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the “DGCL”) provides that a corporation
may indemnify directors and officers as well as other employees and individuals against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation—a “derivative action”), if they acted
in good faith and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal actions or proceedings, had no
reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the
case of derivative actions, except that indemnification only extends to expenses (including
attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of
such action, and the DGCL requires court approval before there can be any indemnification where the
person seeking indemnification has been found liable to the corporation. The DGCL provides that it
is not exclusive of other indemnification that may be granted by a corporation’s bylaws,
disinterested director vote, stockholder vote, agreement or otherwise.
Under our Certificate of Incorporation and bylaws, the Company is obligated to indemnify and
hold harmless any Director, officer
or employee of the Company to the fullest extent permitted by law as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than such law permitted the
Company to provide prior to such amendment) against expenses (including legal fees), judgments,
losses, liability, fines and amounts paid in settlement, actually and reasonably incurred or
suffered by him or her, in connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”),
brought or threatened to be brought against him by reason of the fact that he or she is or was a
Director, officer or employee of the Company or is or was serving at the request of the Company as
a director, officer, employee or trustee of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit plan (hereinafter
an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as
a director, officer, employee or trustee or in any other capacity while serving as a director,
officer, employee or trustee; provided, however, that except as provided in the Certification of
Incorporation with respect to proceedings to enforce rights to indemnification, the Company is
obligated to indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board
of Directors. In addition to the foregoing, the Company may provide indemnification for any
indemnitee in those instances in which such indemnification, although greater in scope or degree
than that expressly provided by law, is deemed to be in the best interest of the Company by (a) a
majority of disinterested Directors even though less than a quorum (which may consist of only one
Director if there is only one disinterested Director), (b) by a committee of disinterested
Directors designated by a majority of disinterested Directors, even though less than a quorum, or
(c) if there are no disinterested Directors, or if such disinterested Directors so direct, by
independent legal counsel in a written opinion.
In addition, an indemnitee also has the right to be paid by the Company the expenses incurred
(including attorney’s fees) in connection with any proceeding in advance of the final disposition
of the proceeding (hereinafter an “advancement of expenses”); provided, however, that, if required
by law, any advancement of expenses incurred by a indemnitee solely in his capacity as a director,
officer or employee shall only be made upon delivery to the Company of an undertaking (hereinafter
an “undertaking”) by or on behalf of such indemnitee to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no further right to appeal
(hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified by the
Company or authorized by law. No such undertaking is required in connection with the advancement
of expenses incurred by an indemnitee acting in any other capacity in which service is or was
rendered by such indemnitee, including, without limitation, service to an employee benefit plan.
A Director of the Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for liability (i) for any
breach of the Director’s duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company carries directors’ and officers’ liability insurance that covers certain
liabilities and expenses of its directors and officers.
The Amended and Restated Plan provides that in addition to such other rights of
indemnification as he may have as a member of the Board of Directors or the Committee (as
hereinafter defined), and with respect to administration of the Amended and Restated Plan and the
granting of awards under it, each member of the Board of Directors and of the Committee shall be
entitled without further act on his part to indemnity from the Registrant for all expenses
reasonably incurred by him in connection with or arising out of any action, suit or proceeding with
respect to the administration of the Amended and Restated Plan or the granting of awards under it
in which he may be involved by reason of his being or having been a member of the Board of
Directors or the Committee. “Committee” is defined in the Amended and Restated Plan to mean a
committee, composed of two or more members of the Board of Directors, or the Board of Directors in
its administrative capacity with respect to the Amended and Restated Plan.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following Exhibits are filed as part of this Registration Statement:
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Exhibit No.
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4.1
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Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007), amended and restated as of September 17, 2008.
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5.1
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Opinion and Consent of WolfBlock LLP.
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23.1
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Consent of Ernst & Young LLP.
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23.2
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Consent of WolfBlock LLP (contained in Exhibit 5.1).
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24.1
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Power of Attorney (included on signature page of this Registration Statement).
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Item 9. Undertakings.
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The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the “Securities Act”);
(ii) To reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective
registration statement.
(iii) To include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material change to such information
in the registration statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the information required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant
to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant’s annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
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Paragraphs correspond to Item 512 of Regulation S-K.
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SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Horsham, Commonwealth of Pennsylvania, on October 29,
2008.
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TOLL BROTHERS, INC.
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By:
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/s/ Robert I. Toll
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Robert I. Toll,
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Chairman of the Board of Directors and
Chief Executive Officer
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KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Robert I. Toll, Zvi Barzilay, Joel H. Rassman, Mark K. Kessler, John K. McDonald and
Joseph R. Sicree, and each of them, the undersigned’s true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for the undersigned and in the undersigned’s
name, place and stead, in any and all capacities, to sign any and all amendments to this
registration statement (including, without limitation, post-effective amendments to this
registration statement), and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities indicated on October 29, 2008.
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Signature
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Title
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/s/ Robert I. Toll
Robert I. Toll
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Chairman of the Board, Chief Executive Officer
and Director (Principal Executive Officer)
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/s/ Bruce E. Toll
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Vice Chairman of the Board
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Bruce E. Toll
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/s/ Zvi Barzilay
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President, Chief Operating Officer and Director
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Zvi Barzilay
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/s/ Robert S. Blank
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Director
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Robert S. Blank
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/s/ Edward G. Boehne
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Director
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Edward G. Boehne
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/s/ Richard J. Braemer
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Director
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Richard J. Braemer
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/s/ Roger S. Hillas
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Director
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Roger S. Hillas
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/s/ Carl B. Marbach
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Director
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Carl B. Marbach
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/s/ Stephen A. Novick
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Director
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Stephen A. Novick
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Signature
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Title
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/s/ Joel H. Rassman
Joel H. Rassman
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Executive Vice President, Treasurer, Chief
Financial Officer and Director (Principal
Financial Officer)
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/s/ Paul E. Shapiro
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Director
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Paul E. Shapiro
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/s/ Joseph R. Sicree
Joseph R. Sicree
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Senior Vice President and Chief Accounting
Officer (Principal Accounting Officer)
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EXHIBIT INDEX
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Exhibit No.
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4.1*
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Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007), amended and restated as of September 17, 2008.
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5.1**
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Opinion and Consent of WolfBlock LLP.
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23.1*
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Consent of Ernst & Young LLP.
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23.2**
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Consent of WolfBlock LLP (contained in Exhibit 5.1).
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24.1*
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Power of Attorney (included on signature page of this Registration Statement).
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*
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Filed electronically herewith
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**
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Previously filed as an Exhibit to the Registrant’s Registration Statement on Form S-8, dated as
of June 29, 2007, and incorporated herein by reference.
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Exhibit 4.1
TOLL BROTHERS, INC. AMENDED AND RESTATED
STOCK INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS (2007)
AMENDED AND RESTATED AS OF SEPTEMBER 17, 2008
1.
Purpose.
The Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for
Non-Employee Directors (2007) (the “Plan”) is intended as an additional incentive to non-employee
members of the Board of Directors (“Non-employee Director”) to serve on the Board of Directors (the
“Board of Directors”) of Toll Brothers, Inc., a Delaware corporation (the “Company”), or any
Affiliate (as defined below), and to devote themselves to the Company’s success by providing such
Non-employee Directors with an opportunity to acquire or increase their proprietary interest in the
Company (a) through receipt of rights (the “Options”) to acquire the Company’s Common Stock, par
value $0.01 per share (the “Common Stock”), (b) through incentive stock awards involving the
transfer or issuance of Common Stock, which may be subject to conditions of forfeiture (the
“Awards”), (c) through “Stock Appreciation Rights” or “SARs” that represent the right of the
recipient to receive cash or stock of a value equal to the appreciation of the Company’s Common
Stock from the date of the grant of the SAR to the date the SAR is exercised and (d) through
Restricted Stock Units (“RSUs”) that represent the right of the recipient to receive the economic
equivalent to a grant of an Award, and may provide for cash payment to the recipient of an amount
equal to the value of an Award, or for the transfer to the recipient of a number of shares of
Common Stock either immediately following the date the RSU becomes vested or at such later date as
may be specified at the time the RSU is granted in the grant document. The terms Options, Awards,
SARs, RSUs, and Performance-Based Awards and RSUs are sometimes referred to herein as “Grants.” No
Option granted hereunder to a Non-Employee Director (an “Optionee”) shall be an incentive stock
option (“ISO”) within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as
amended (the “Code”). All Options granted hereunder shall be non-qualified stock options
(“Non-Qualified Stock Options”).
For purposes of the Plan, the term “Affiliate” shall mean a corporation which is a parent
corporation or a subsidiary corporation with respect to the Company within the meaning of Section
424(e) or (f) of the Code.
2.
Administration.
The Plan shall be administered by the Board of Directors, without
participation by any member of the Board of Directors on any matter pertaining to him. However, the
Board of Directors may designate a committee or committees composed of two or more of its members
to operate and administer the Plan in its stead. Any such committee and the Board of Directors in
its administrative capacity with respect to the Plan is referred to herein as the “Committee.”
The Committee shall hold meetings at such times and places as it may determine. Acts approved
at a meeting by a majority of the members of the Committee or acts approved in writing by the
unanimous consent of the members of the Committee shall be the valid acts of the Committee.
The Committee shall, from time to time at its discretion, direct the Company to award Grants
pursuant to the provisions of the Plan. The Committee shall have plenary authority to determine the
recipients to whom and the times at which Grants shall be awarded, the number of Grants to be
awarded and the price and other terms and conditions thereof, subject, however, to the express
provisions of the Plan. In making such determinations, the Committee may take into account the
nature of the recipient’s services and responsibilities, the recipient’s present and potential
contribution to the Company’s success and such other factors as it may deem relevant. The
interpretation and construction by the Committee of any provision of the Plan or of any Grant
awarded under it shall be final, binding and conclusive.
No member of the Board of Directors or the Committee shall be personally liable for any action
or determination made in good faith with respect to the Plan or any Grant awarded under it. No
member of the Committee shall be liable for any act or omission of any other member of the
Committee or for any act or omission on his own part, including but not limited to the exercise of
any power and discretion given to him under the Plan, except those resulting from (i) any breach of
such member’s duty of loyalty to the Company or its stockholders, (ii) acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law, (iii) acts or
omissions that would result in liability under Section 174 of the General Corporation Law of the
State of Delaware, as amended, and (iv) any transaction from which the member derived an improper
personal benefit.
In addition to such other rights of indemnification as he may have as a member of the Board of
Directors or the Committee, and with respect to administration of the Plan and Grants awarded under
it, each member of the Board of Directors and of the Committee shall be entitled without further
act on his part to indemnity from the Company
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for all expenses (including the amount of any judgment and the amount of approved settlements
made with a view to the curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or Grants awarded under it in which he
may be involved by reason of his being or having been a member of the Board of Directors or the
Committee, whether or not he continues to be such member of the Board of Directors or the Committee
at the time of the incurring of such expenses; provided, however, that such indemnity shall not
include any expenses incurred by such member of the Board of Directors or the Committee: (i) in
respect of matters as to which he shall be finally adjudged in such action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of his duties as a
member of the Board of Directors or the Committee; or (ii) in respect of any matter in which any
settlement is effected to an amount in excess of the amount approved by the Company on the advice
of its legal counsel; and provided further, that no right of indemnification under the provisions
set forth herein shall be available to or accessible by any such member of the Board of Directors
or the Committee unless within five days after institution of any such action, suit or proceeding
he shall have offered the Company in writing the opportunity to handle and defend such action, suit
or proceeding at its own expense. The foregoing right of indemnification shall inure to the benefit
of the heirs, executors or administrators of each such member of the Board of Directors or the
Committee and shall be in addition to all other rights to which such member of the Board of
Directors or the Committee would be entitled as a matter of law, contract or otherwise.
3.
Eligibility.
All Non-employee Directors shall be eligible to receive Non-Qualified
Stock Options, Awards, SARs and RSUs hereunder. A Non-employee Director may receive more than one
Grant, but only on the terms and subject to the restrictions of the Plan.
4.
Shares Under the Plan
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The total number of shares of Common Stock available for
issuance under the Plan shall be two million (2,000,000) shares, of which no more than one hundred
thousand (100,000) shares of Common Stock shall be available for granting Awards or RSUs under the
Plan. The foregoing amounts are subject to adjustment as provided in Section 8. If any shares
subject to any Grant are forfeited or such Grant otherwise terminates without the issuance of such
shares, the shares subject to such Grant, to the extent of any such forfeiture or termination,
shall again be available for Grants under the Plan. Shares underlying Grants shall be issued from
authorized and unissued Common Stock or Common Stock held in or hereafter acquired for the treasury
of the Company. If any outstanding Option or SAR granted under the Plan expires, lapses or is
terminated for any reason, or if the shares of Common Stock that has been transferred pursuant to
an Award or RSU under the Plan are forfeited for any reason, the shares allocable to the
unexercised portion of such Option or SAR and the forfeited shares of Common Stock may again be the
subject of a Grant pursuant to the Plan.
5.
Term of Plan.
The Plan was initially adopted by the Board of Directors on December
13, 2006 and was effective upon approval by the Company’s stockholders on March 14, 2007. No Grant
may be awarded under the Plan after December 13, 2016.
6.
Terms and Conditions of Options.
Options granted pursuant to the Plan shall be
evidenced by written documents (the “Option Documents”) in such form as the Committee shall from
time to time approve, which Option Documents shall comply with and be subject to the following
terms and conditions and such other terms and conditions which the Committee shall from time to
time require which are not inconsistent with the terms of the Plan. Each option granted pursuant to
the Plan shall be a Non-Qualified Stock Option.
(a)
Number of Option Shares.
Each Option Document shall state the number of Option
Shares to which it pertains.
(b)
Option Price.
Each Option Document shall state the price at which Option Shares
may be purchased (the “Option Price”), which shall be at least 100% of the fair market value of the
Common Stock on the date the Option is granted as determined by the Committee. If the Common Stock
is traded in a public market, listed on a national securities exchange or included in the NASDAQ
National Market System, then the fair market value per share shall be the last reported sale price
thereof on the relevant date, or, if the Common Stock is not so listed or included, the fair market
value shall be the mean between the last reported “bid” and “asked” prices thereof on the relevant
date, as reported on NASDAQ or, if not so reported, as reported by the National Daily Quotation
Bureau, Inc. or as reported in a customary financial reporting service, as applicable, and as the
Committee determines.
(c)
Medium of Payment
. An Optionee shall pay for Option Shares:
(i) in cash;
2
(ii) by certified check payable to the order of the Company; or
(iii) by such other mode of payment as the Committee may approve, including, but not limited
to, (x) payment through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board, or (y) a deemed payment by means of a net issuance of shares. If a net
issuance of shares is permitted under the terms of an Option Document, the exercise of the Option
shall be treated in the following manner: upon notice of exercise, the Optionee shall be deemed, as
of the date of exercise, to have received all of the shares of Common Stock subject to the Option
(or such portion of such shares as corresponds to the portion of the Option being exercised), and
shall simultaneously be deemed to have delivered back to the Company that number of such shares as
have a fair market value (determined as of the date of exercise) equal to the Option Price required
to be paid on exercise of the Option (or portion being exercised) and any additional amounts
required to be paid by the Optionee in connection with the exercise of the Option. The intent of
this provision is to permit the Optionee to pay the Option Price and other required amounts by
relinquishing back to the Company shares of Common Stock otherwise issuable pursuant to the
exercise of the Option, so that the Optionee will be entitled to receive only a net issuance of
shares of Common Stock having a value equal to the economic benefit of exercising the Option (or
portion of the Option being exercised).
The Committee may provide in an Option Document that payment may be made in whole or in part in
shares of the Common Stock held by the Optionee for more than one year. If payment is made in
whole or in part in shares of the Common Stock, then the Optionee shall deliver to the Company
certificates registered in the name of such Optionee representing shares of Common Stock legally
and beneficially owned by such Optionee, free of all liens, claims and encumbrances of every kind
and having a fair market value on the date of delivery of such notice that is not greater than the
Option Price of the Option Shares with respect to which such Option is to be exercised, accompanied
by stock powers duly endorsed in blank by the record holder of the shares represented by such
certificates. In the event that certificates for shares of the Company’s common stock delivered to
the Company represent a number of shares less than the number of shares required to make payment
for the Option Price of the Option Shares (or relevant portion thereof) with respect to which such
Option is to be exercised by payment in shares of Common Stock, the Optionee shall deliver the
remainder of the Option Price to the Company by some other form of payment permitted herein. In
the event that certificates for shares of the Company’s Common Stock delivered to the Company
represent a number of shares in excess of the number of shares required to make payment for the
Option Price of the Option Shares (or relevant portion thereof) with respect to which such Option
is to be exercised by payment in shares of Common Stock, the stock certificate issued to the
Optionee shall represent the Option Shares in respect of which payment is made, and such excess
number of shares. Notwithstanding the foregoing, the Committee, in its sole discretion, may refuse
to accept shares of Common Stock in payment of the Option Price. In that event, any certificates
representing shares of Common Stock which were delivered to the Company shall be returned to the
Optionee with notice of the refusal of the Committee to accept such shares in payment of the Option
Price. The Committee may impose such limitations and prohibitions on the use of shares of the
Common Stock to exercise an Option as it deems appropriate, subject to the provisions of the Plan.
(d)
Termination of Options.
No Option shall be exercisable after the first to occur of
the following:
(i) Expiration of the Option term specified in the Option Document. With respect to any
Option, the Option term shall not exceed ten years from the date of grant;
(ii) Expiration of three months (or such shorter period as the Committee may select) from the
date the Optionee’s service on the Board of Directors of the Company or its Affiliates terminates
for any reason other than: (a) disability (within the meaning of Section 22(e)(3) of the Code) or
death or (b) circumstances described by paragraph (d)(vi), below;
(iii) Expiration of one year from the date the Optionee’s service on the Board of Directors of
the Company or its Affiliates terminates by reason of the Optionee’s disability (within the meaning
of Section 22(e)(3) of the Code) or death;
(iv) The date, if any, set by the Committee as an accelerated expiration date in the event of
a “Change of Control” (as defined in Subsection 6(e) below) provided an Optionee who holds an
Option is given written notice at least 30 days before the date so fixed; or
(v) The date set by the Committee to be an accelerated expiration date after a finding by the
Committee that a change in the financial accounting treatment for Options from that in effect on
the date the Plan was adopted adversely affects or, in the determination of the Committee, may
adversely affect in the foreseeable future, the Company, provided the Committee may take whatever
other action, including acceleration of any exercise provisions, it deems necessary should it make
the determination referred to hereinabove.
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(vi) A finding by the Committee, after full consideration of the facts presented on behalf of
both the Company and the Optionee, that the Optionee has breached his fiduciary duty to the Company
or an Affiliate, or has been engaged in any sort of disloyalty to the Company or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his service on the Board of Directors of the Company or has disclosed
trade secrets of the Company or an Affiliate. In such event, in addition to immediate termination
of the Option, the Optionee, upon a determination by the Committee, shall automatically forfeit all
Option Shares for which the Company has not yet delivered the share certificates upon refund by the
Company of the Option Price.
Notwithstanding the foregoing, the Committee may, at its discretion, provide in an Option
Document, either at the time of grant or at a later date by amendment thereto, (a) for an Option to
be exercisable beyond the date it would otherwise terminate pursuant to the provisions of this
Section 6(d) (provided, however, that no such continued period of exercisability may extend beyond
the expiration date specified in the Option Document); (b) for the continued increase in
exercisability of an Option beyond the termination of the Optionee’s service with the Company or
any of its affiliates; and (c) such terms and conditions as its deems appropriate in order for any
such continued and/or increased exercisability to be effective. If the Committee does not, however,
include in an Option Document any such provisions concerning exercisability of an Option following
the termination of service of an Optionee, the Option shall be exercisable during any period
following the termination of service of an Optionee only to the extent such Option was exercisable
immediately prior to the date such Optionee’s service was terminated.
(e)
Change of Control.
In the event of a Change of Control (as defined below), the
Committee may take whatever action with respect to the Options outstanding that it deems necessary
or desirable, including, without limitation, accelerating the expiration or termination date in the
respective Option Documents to a date no earlier than thirty (30) days after notice of such
acceleration is given to the Optionees. In addition to the foregoing, Options granted pursuant to
the Plan shall become immediately exercisable in full immediately prior to a Change of Control. A
“Change of Control” shall be deemed to have occurred upon the earliest to occur of the following
events: (i) the consummation of a plan or other arrangement pursuant to which the Company will be
dissolved or liquidated, or (ii) the consummation of a sale or other disposition of all or
substantially all of the assets of the Company, or (iii) the consummation of a merger or
consolidation of the Company with or into another corporation, other than, in either case, a merger
or consolidation of the Company in which holders of shares of the Common Stock immediately prior to
the merger or consolidation will hold at least a majority of the ownership of common stock of the
surviving corporation (and, if one class of common stock is not the only class of voting securities
entitled to vote on the election of directors of the surviving corporation, a majority of the
voting power of the surviving corporation’s voting securities) immediately after the merger or
consolidation, which common stock (and, if applicable, voting securities) is to be held in the same
proportion as such holders’ ownership of Common Stock immediately before the merger or
consolidation, or (iv) the date any entity, person or group, (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended), (other than (A)
the Company or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (B) any person who, on the date the Plan is
effective, shall have been the beneficial owner of at least fifteen percent (15%) of the
outstanding Common Stock), shall have become the beneficial owner of, or shall have obtained voting
control over, more than fifty percent (50%) of the outstanding shares of the Common Stock, or (v)
the first day after the date this Plan is effective when directors are elected such that a majority
of the Board of Directors shall have been members of the Board of Directors for less than
twenty-four (24) months, unless the nomination for election of each new director who was not a
director at the beginning of such twenty-four (24) month period was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the beginning of such
period.
(f)
Transfers.
No Option granted under the Plan may be transferred, except by will or
by the laws of descent and distribution. During the lifetime of the person to whom an Option is
granted, such Option may be exercised only by him. Notwithstanding the foregoing a Non-Qualified
Stock Option may be transferred pursuant to the terms of a “qualified domestic relations order,”
within the meaning of Sections 401(a)(13) and 414(p) of the Code or within the meaning of Title I
of the Employee Retirement Income Security Act of 1974, as amended.
Notwithstanding the foregoing, the Committee may permit a Non-Qualified Stock Option to be
transferred by the Optionee in a transaction qualifying as a “Family Transfer” (as hereinafter
defined). For these purposes, a Family Transfer is a transfer of a Non-Qualified Stock Option to
any person qualifying as a “family member,” as that term is defined in the General Instructions to
Form S-8 as published by the Securities and Exchange Commission (“Form S-8”); provided, however,
that no transfer shall be treated as a Family Transfer if the transfer would be treated as a
transfer for value for purposes of Form S-8. Form S-8 defines “family member” as including any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person
4
sharing the Non-employee Director’s household (other than a tenant or employee), a trust in
which these persons have more than fifty percent of the beneficial interest, a foundation in which
these persons (or the Non-employee Director) control management of assets, and any other entity in
which these persons (or the Non-employee Director) own more than fifty percent of the voting
interests.
(g)
Other Provisions.
The Option Documents shall contain such other provisions,
including, without limitation, additional restrictions upon the exercise of the Option or
additional limitations upon the term of the Option, as the Committee shall deem advisable.
(h)
Amendment.
Subject to the provisions of the Plan, the Committee shall have the
right to amend Option Documents issued to an Optionee, subject to the Optionee’s consent if such
amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be
required for any amendment made under Subsection 6(e).
(i)
Stock Appreciation Rights.
The Committee may, pursuant to this Section 6, make
grants of SARs to any person who is eligible under the terms of the Plan to receive a
Non-Qualified Stock Option. Each SAR granted under the Plan shall convey to the recipient rights
that are in all respects the economic equivalent of a Non-Qualified Stock Option granted under the
terms of the Plan, and shall include in the grant document all of the material terms and conditions
that would be included in a corresponding Option Document, including the number of shares of Common
Stock deemed to be subject to the SAR, the Option Price (which cannot be less than the fair market
value per share of the underlying shares of Common Stock determined as of the date the SAR is
granted), the time or times at which the SAR may be exercised, and an expiration date. The
economic benefit to the recipient of an SAR shall be equal to the value of the shares of Common
Stock underlying the SAR as of the date the SAR is exercised, reduced by the deemed Option Price of
the SAR applicable to the portion of the SAR being exercised. On exercise, the holder of the SAR
shall be entitled to receive a payment of either cash or a distribution of shares of Common Stock,
having a value equal to the value of the SAR (or portion being exercised) as described in the
preceding sentence. Whether the recipient of an SAR is entitled to cash or to a distribution of
shares of Common Stock upon exercise may be specified in the grant document. For all purposes of
the Plan, SARs shall be treated as though each SAR constituted a grant of a Non-Qualified Stock
Option for a number of Option Shares equal to the number of shares of Common Stock designated as
underlying the SAR. As a consequence, and by way of example, for purposes of the limitation set
forth in Section 6(a), above, on the number of Option Shares that may be subject to options granted
to any one employee during any calendar year, the shares of Common Stock subject to an SAR granted
to an employee during a calendar year shall reduce the number of Option Shares otherwise available
for grant pursuant to Options granted to such employee during the same year.
7.
Exercise.
No Option shall be deemed to have been exercised prior to the receipt by
the Company of written notice of such exercise and of payment in full of the Option Price for the
Option Shares to be purchased. Each such notice shall specify the number of Option Shares to be
purchased and shall (unless the Option Shares are covered by a then current registration statement
or a Notification under Regulation A under the Securities Act of 1933 (the “Act”)), contain the
Optionee’s acknowledgment in form and substance satisfactory to the Company that (a) such Option
Shares are being purchased for investment and not for distribution or resale (other than a
distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made
without violating the registration provisions of the Act), (b) the Optionee has been advised and
understands that (i) the Option Shares may not have been registered under the Act and are
“restricted securities” within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register the Option Shares
under the Act or to take any action which would make available to the Optionee any exemption from
such registration, (c) such Option Shares may not be transferred without compliance with all
applicable federal and state securities laws, and (d) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions imposed under the Option Documents
may be endorsed on the certificates. Notwithstanding the above, should the Company be advised by
counsel that issuance of shares should be delayed pending (A) registration under federal or state
securities laws (B) the receipt of an opinion that an appropriate exemption therefrom is available,
(C) the listing or inclusion of the shares on any securities exchange or in an automated quotation
system or (D) the consent or approval of any governmental regulatory body whose consent or approval
is necessary in connection with the issuance of such Option Shares, the Company may defer exercise
of any Option granted hereunder until event A, B, C, or D has occurred. No Option granted pursuant
to Section 6 may be exercised until one year has elapsed from the Grant Date.
8.
Adjustments on Changes in Common Stock.
The aggregate number of shares of Common
Stock as to which Grants may be awarded hereunder, along with any other limitations on Grants or
other provisions set forth in the Plan as a stated number of shares of Common Stock, the number of
shares covered by each outstanding Option or SAR and the Option Price per share shall be
appropriately adjusted in the event of a stock dividend, stock split or
5
other increase or decrease in the number of issued and outstanding shares of Common Stock
resulting from a subdivision or consolidation of the Common Stock or other capital adjustment (not
including the issuance of Common Stock on the conversion of other securities of the Company which
are convertible into Common Stock) effected without receipt of consideration by the Company. The
Committee shall have authority to determine the adjustments to be made under this Section and any
such determination by the Committee shall be final, binding and conclusive.
9.
Amendment of the Plan.
The Board of Directors may amend the Plan from time to time
in such manner as it may deem advisable. Nevertheless, the Board of Directors may not, without
obtaining approval by vote of a majority of the outstanding voting stock of the Company, within
twelve months before or after such action, extend the expiration date of the Plan or increase the
maximum number of shares as to which Options or SARs may be granted.
10.
Continued Service.
Any Grant pursuant to the Plan shall not be construed to imply
or to constitute evidence of any agreements express or implied, on the part of the Company or any
Affiliate to retain the recipient as a member of the Board of Directors.
11.
Withholding of Taxes.
Whenever the Company proposes or is required to issue or
transfer shares or pay cash pursuant to the terms of a Grant, the Company shall have the right to
(i) require the recipient or transferor to remit to the Company an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the delivery or transfer of cash
or any certificate or certificates for such shares or (ii) take whatever action it deems necessary
to protect its interests. The Company’s obligation to make any delivery or transfer of cash or
shares shall be conditioned on the recipient’s compliance, to the Company’s satisfaction, with any
withholding requirement. The Committee may establish requirements and procedures with respect to
the Company’s withholding of cash or shares to satisfy any federal, state and/or local withholding
tax requirements which arise in connection with the transfer of shares or cash under a Grant, as
the Committee deems appropriate.
12.
Terms and Conditions of Awards.
Awards granted pursuant to the Plan shall be
evidenced by written Award agreements (the “Award Agreements”) in such form as the Committee shall
from time to time approve, which Award Agreements shall comply with and be subject to the
provisions contained in the Plan and subject to such conditions and restrictions (including
conditions which may result in a forfeiture) as the Committee may, from time to time, require;
provided such conditions and restrictions are not inconsistent with the terms of the Plan. The
Award may provide for the lapse of restrictions on transfer and forfeiture conditions in
installments. The Committee may, in its sole discretion, shorten or waive any condition or
restriction with respect to all or any portion of any Award. Notwithstanding the foregoing, all
restrictions and conditions shall lapse or terminate with respect to shares of Common Stock subject
to an Award upon the death or disability (within the meaning of Section 22(e)(3) of the Code) of
the recipient of the Award (the “Awardee”).
(a)
Number of Shares.
Each Award Agreement shall state the number of shares of Common
Stock to which it pertains.
(b)
Purchase Price.
Each Award Agreement shall specify the purchase price, if any,
which applies to the Award. If the Committee specifies a purchase price, the Awardee shall be
required to make payment on or before the date specified in the Award Agreement. An Awardee shall
pay for such shares of Common Stock (i) in cash, (ii) by certified check payable to the order of
the Company, or (iii) by such other mode of payment as the Committee may approve.
(c)
Transfer of Shares.
In the case of an Award which provides for a transfer of
shares of Common Stock without any payment by the Awardee, the transfer shall take place on the
date specified in the Award Agreement. In the case of an Award which provides for a payment, the
transfer shall take place on the date the initial payment is delivered to the Company, unless the
Committee or the Award Agreement otherwise specifies. Stock certificates evidencing shares of
Common Stock transferred pursuant to an Award shall be issued in the sole name of the Awardee.
Notwithstanding the foregoing, as a precondition to a transfer, the Company may require an
acknowledgment by the Awardee as required with respect to Options under Section 7 and may further
require that the Awardee satisfy any of the Company’s withholding obligations attributable to any
federal, state or local law as a result of such transfer.
(d)
Forfeiture Conditions.
The Committee may specify in an Award Agreement any
conditions under which the Awardee shall be required to convey to the Company the shares of Common
Stock covered by the Award. Upon the occurrence of any such specified condition, the Awardee shall
forthwith surrender and deliver to the Company the certificates evidencing such shares as well as
completely executed instruments of conveyance. The Committee, in its
6
discretion, may provide that certificates for shares of Common Stock transferred pursuant to
an Award be held in escrow by the Company’s Treasurer or an appropriate officer of the Company,
together with an undated stock power executed by the Awardee, until such time as each and every
condition that may result in a forfeiture has lapsed, and that the Awardee be required, as a
condition of the transfer, to deliver to such escrow agent stock powers covering the transferred
shares of Common Stock duly endorsed by the Awardee. Stock certificates evidencing shares of Common
Stock subject to forfeiture shall bear a legend to the effect that the Common Stock evidenced
thereby is subject to repurchase or conveyance to the Company in accordance with an Award made
under the Plan and that the shares of Common Stock may not be sold or otherwise transferred.
(e)
Lapse of Conditions.
Upon termination or lapse of each and every forfeiture
condition, the Company shall cause certificates without the legend referring to the Company’s
repurchase right (but with any other legends that may be appropriate, including legends indicating
the restrictions that have been established by the terms of the Award) evidencing the shares of
Common Stock covered by the Award to be issued to the Awardee upon the Awardee’s surrender of the
legended certificates held by him to the Company.
(f)
Rights as Stockholder.
Upon payment of the purchase price, if any, for shares of
Common Stock covered by an Award and compliance with the acknowledgment requirement of Subsection
12(c), the Awardee shall have all of the rights of a stockholder with respect to the shares of
Common Stock covered thereby, including the right to vote such shares and receive all dividends and
other distributions paid or made with respect thereto, except to the extent otherwise provided by
the Committee or in the Award Agreement.
(g)
Lapse of Restrictions.
Upon the expiration or termination of the restrictions
applicable under the terms of an Award, and the satisfaction of any other conditions set forth in
an Award Agreement by the Committee as permitted under the Plan, the restrictions applicable to the
shares of Common Stock granted pursuant to an Award shall lapse and a stock certificate for the
number of shares of Common Stock with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, except any that may be imposed by law or pursuant to any
shareholders agreement then in effect, to the Awardee or the beneficiary or estate of the Awardee,
as the case may be. The Company shall not, however, be required to deliver any fractional share of
Common Stock but will pay, in lieu thereof, the fair market value (determined as of the date the
restrictions lapse) of such fractional share to the Awardee or the Awardee’s beneficiary or estate,
as the case may be.
(h)
Section
83(b)
Elections.
An Awardee who files an election with the Internal
Revenue Service to include the fair market value of any shares of Common Stock granted pursuant to
an Award in gross income while they are still subject to restrictions shall promptly furnish the
Company with a copy of such election together with the amount of any federal, state, local or other
taxes required to be withheld to enable the Company to claim an income tax deduction with respect
to such election.
(i)
Forfeiture for Breach of Duty to Company.
Upon a finding by the Committee, after
full consideration of the facts presented on behalf of both the Company and the Awardee, that the
Awardee has breached his or her fiduciary duty to the Company or an Affiliate, or has been engaged
in disloyalty to the Company or an Affiliate, including, without limitation, fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course of his or her service on the Board
of Directors of the Company, or has disclosed trade secrets or confidential information of the
Company or an Affiliate, Awardee shall automatically forfeit all shares of Common Stock granted
pursuant to an Award for which (i) the Company has not yet delivered the share certificates to the
Awardee or (ii) any restrictions applicable to such shares have not lapsed. Notwithstanding
anything herein to the contrary, the Company may withhold delivery of certificates for shares of
Common Stock granted pursuant to an Award pending the resolution of any inquiry that could lead to
a finding resulting in a forfeiture.
(j)
Amendment.
Subject to the provisions of the Plan, the Committee shall have the
right to amend Awards issued to an Awardee, subject to the Awardee’s consent if such amendment is
not favorable to the Awardee, except that the consent of the Awardee shall not be required for any
amendment made pursuant to Section 9 of the Plan.
(k)
Change of Control.
In the event of a Change of Control (as defined in Section 6(e)
above), the Committee may take whatever action with respect to Awards that have been granted under
the Plan that it deems necessary or desirable. In addition to the foregoing, the restrictions
applicable to shares of Common Stock issued pursuant to Awards under the Plan shall lapse
immediately prior to a Change of Control.
(l)
Restricted Stock Units
. In addition to grants of Awards under this Section 12,
the Committee may grant RSUs to any person eligible to receive an Award under this Section 12. To
the extent an applicable grant document provides that settlement of the recipient’s rights under an
RSU is to be by means of a payment of cash or delivery of
7
shares of the Common Stock at a time later than the date the recipient vests in such RSU, the
time and manner of payment or delivery shall be specified in the grant document either as a date
certain, or by reference to the recipient’s separation from service or a change in the ownership or
effective control of the Company (as these terms are used for purposes of Code Section 409A) and
shall include, to the extent required under Code Section 409A(a)(2)(B)(i), a delay in payment or
delivery of six months where payment or delivery is by reason of the recipient’s separation from
service.
13.
Interpretation.
The Plan is intended to enable transactions under the Plan with
respect to directors and officers (within the meaning of Section 16(a) under the Securities
Exchange Act of 1934, as amended) to satisfy the conditions of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended; any provision of the Plan which would cause a conflict
with such conditions shall be deemed null and void to the extent permitted by applicable law and in
the discretion of the Board of Directors.
14.
Special Provisions Related to Code Section 409A.
Notwithstanding anything herein
to the contrary, no Grants shall be made that will be treated as creating a “nonqualified deferred
compensation plan” as that term is defined for purposes of Section 409A of the Code unless such
Grant complies with all applicable rules under Section 409A of the Code, or to the extent the
Committee determines that such Grant will not cause the recipient to be subject to taxation by
reason of the inclusion of the value of such Grant in the recipient’s gross income pursuant to Code
Section 409A(a)(1). While it is not anticipated that any Grants made under the terms of the Plan
as set forth herein would create “nonqualified deferred compensation,” this Section 14 is intended
to prohibit modifications to outstanding Options or SARs that would cause the modified Option or
SAR to be deemed to be a new Option or SAR with an Option Price below the fair market value of the
Option Shares determined as of the date of such modification, unless arrangements are made so that
the deemed date of “payment” for purposes of Code Section 409A can only be on a permitted
distribution date pursuant to Code Section 409A. For purposes of applying this Section 14, the
Committee shall look to applicable guidance regarding the provisions of Code Section 409A as
released from time to time by the Internal Revenue Service or the Department of the Treasury,
including, but not limited to, IRS Notices Treasury Regulations, and such other temporary or final
regulations or guidance as may be issued regarding Code Section 409A from time to time.
15.
Effective Date.
The Plan was effective upon approval by the Company’s
stockholders on March 14, 2007.
8