EXHIBIT 4.6
2007 OMNIBUS STOCK AND
INCENTIVE PLAN
For
CAPITAL SENIOR LIVING
CORPORATION
2007
Omnibus Stock And Incentive Plan
For
Capital Senior Living Corporation
1.
Purpose
. The purpose of this
Plan is to advance the interests of Capital Senior Living
Corporation and increase shareholder value by providing
additional incentives to attract, retain and motivate those
qualified and competent Employees, Outside Directors, and
Consultants upon whose efforts and judgment its success is
largely dependent.
2.
Definitions
. As used herein,
the following terms shall have the meaning indicated:
(a) “Affiliate”
means any entity, other
than the Parent or a Subsidiary, that is designated by the Board
as a participating employer under the Plan, provided that the
Parent directly or indirectly owns at least 20% of the combined
voting power of all classes of stock of such entity or at least
20% of the ownership interests in such entity.
(b) “Agreed Price”
shall relate to the
grant of a SAR or Limited SAR under an Award, and shall mean the
value assigned to the Available Shares in the Award which will
form the basis for calculating the Spread on the date of
exercise of the SAR or Limited SAR, which assigned value may be
any value determined by the Committee, including the Fair Market
Value of the Shares on the Date of Grant.
(c) “Award”
shall mean either an Option,
an SAR, a Restricted Share Award, or a Performance Award, except
that where it shall be appropriate to identify the specific type
of Award, reference shall be made to the specific type of Award.
(d) “Available Shares”
shall mean, at each
time of reference, the total number of Shares described in
Section 3
with respect to which the Committee may
grant an Award, all of which Available Shares shall be held in
the Parent’s treasury or shall be made available from
authorized and unissued Shares.
(e) “Board”
shall mean the Board of
Directors of the Parent.
(f) “Cause”
shall mean (i) a final,
nonappealable conviction of a Holder for commission of a felony
involving moral turpitude, (ii) Holder’s willful gross
misconduct that causes material economic harm to the Company or
that brings substantial discredit to the Company’s
reputation, or (iii) Holder’s material failure or
refusal to perform his duties if Holder has failed to cure such
failure or refusal to perform within thirty (30) days after
the Company notifies Holder in writing of such failure or
refusal to perform.
(g) “Change in Control”
shall mean the
first to occur of (i) a merger, consolidation, statutory
share exchange or sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or
substantially all of the assets of the Company that requires the
consent or vote of the holders of the Parent’s Common
Stock, other than a consolidation, merger or share exchange of
the Parent in which the holders of the Parent’s Common
Stock immediately prior to such transaction have the same
proportionate ownership of common stock of the surviving
corporation immediately after such transaction; (ii) the
shareholders of the Parent approve any plan or proposal for the
liquidation or dissolution of the Company; (iii) the
cessation of control (by virtue of their not constituting a
majority of Directors) of the Board of Directors of the Parent
by the individuals (the “Continuing Directors”) who
(x) on the Effective Date were Directors, or
(y) become Directors after the date of this Agreement and
whose election or nomination for election by the Parent’s
shareholders was approved by a vote of at least two-thirds of
the Directors then in office who were Directors at the Effective
Date or whose election or nomination for election was previously
so approved; (iv) the acquisition of beneficial ownership
(within the meaning of
Rule 13d-3
under the Exchange Act) of an aggregate of 20% or more of the
voting power of the Parent’s outstanding voting securities
by any person or group (as such term is used in
Rule 13d-5
under the Exchange Act) who beneficially owned less than 15% of
the voting power of the Parent’s outstanding voting
securities on the Effective Date, or the acquisition of
beneficial ownership of an additional 5% of the voting power of
the Parent’s outstanding voting securities by any person or
group who beneficially owned at least 15% of the voting power of
the Parent’s outstanding voting securities on the Effective
Date; provided, however, that notwithstanding the foregoing, an
acquisition shall not be described hereunder if the acquiror is
(x) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company
and acting in such capacity, (y) a wholly-owned subsidiary
of the Parent or a corporation owned, directly or indirectly, by
the shareholders of the Parent in the same proportions as their
ownership of voting securities of the Parent, or (z) any
other person whose acquisition of shares of voting securities is
approved in advance by a majority of the Continuing Directors;
or (v) in a Title 11 bankruptcy proceeding, the
appointment of a trustee or the conversion of a case involving
the Company to a case under Chapter 7.
(h) “Change in Control Price”
shall mean
the highest price per share paid in any transaction reported on
the NYSE or such other exchange or market as is the principal
trading market for the Common Stock, or paid or offered in any
bona fide transaction related to a Change in Control at any time
during the 60 day period immediately preceding such
occurrence, in each case as determined by the Committee except
that, in the case of Stock Appreciation Rights relating to
Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Holder exercises
such Stock Appreciation Rights or, where applicable, the date on
which a cash out occurs.
(i) “Code”
shall mean the Internal Revenue
Code of 1986, as now or hereafter amended.
(j) “Committee”
shall mean the
Compensation Committee of the Board, exclusive of any member of
the Compensation Committee who is not a Non-Employee Director.
(k) “Common Stock”
shall mean the common
stock, par value $.01 per share, of the Parent.
(l) “Company”
shall mean the Parent, its
Subsidiaries and Affiliates, except when it shall be appropriate
to refer only to Capital Senior Living Corporation, then it
shall be referred to as “Parent”.
(m) “Consultant”
shall mean any person or
entity (including a Director) who or which is engaged by the
Company to render consulting services and is compensated for
such consulting services; provided, further, without limiting
the generality of the forgoing, it shall not mean a Director who
is paid only a Director’s fee by the Company.
(n) “Covered Person(s)”
shall mean, for
each Plan Year, the Chief Executive Officer and the four
(4) highest paid Employees as of the last day of such Plan
Year.
(o) “Date of Grant”
shall mean the date on
which the Committee has taken all of the actions required to
make the Award, in all material respects, final and binding on
the Company; provided, further, it is followed, as soon as
reasonably possible, by written notice to the Eligible Person
who has been granted the Award.
(p) “Director”
shall mean a member of the
Board.
(q) “Disability”
shall mean a
Holder’s present incapacity resulting from an injury or
illness (either mental or physical) which, in the reasonable
opinion of the Committee based on such medical evidence as it
deems necessary, will result in death or can be expected to
continue for a period of at least twelve (12) months and
will prevent the Holder from performing the normal services
required of the Holder by the Company, provided, however, that
such disability did not result, in whole or in part:
(i) from chronic alcoholism; (ii) from addiction to
narcotics; (ii) from a felonious undertaking; or
(iv) from an intentional self-inflicted wound.
(r) “Effective Date”
shall mean May 8,
2007.
(s) “Eligible Person”
shall mean an
Employee, a Consultant, or an Outside Director, who the
Committee determines to have the capacity to substantially
contribute to the success of the Company.
(t) “Employee”
shall mean a person
employed by the Company.
(u) “Fair Market Value”
shall mean, as of
a particular date, the closing sale price of Shares, which shall
be (i) if the Shares are listed or admitted for trading on
any United States national securities exchange, the last
reported sale price of the Shares on such exchange as reported
in any newspaper of general circulation or (ii) if the
Shares are quoted on NASDAQ, or any similar system of automated
dissemination of quotations of securities prices in common use,
the mean between the closing high bid and low asked quotations
for such day on such system. If neither clause (i) nor
clause (ii) is applicable, the fair market value shall be
determined by any fair and reasonable means prescribed by the
Committee.
(v) “Holder”
shall mean, at each time of
reference, each person (including, but not limited to an
Optionee) with respect to whom an Award is in effect, except
that where it should be appropriate to distinguish between a
Holder with respect to an Option and a Holder with respect to a
different type of Award, reference shall be made to Optionee;
and provided further that to the extent provided under, and
subject to the conditions of, the Award, it shall refer to the
person who succeeds to the rights of the Holder upon the death
of the Holder.
(w) “Immediate Family”
means any child,
stepchild, grandchild, parent stepparent, grandparent, spouse,
sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law,
and shall include adoptive relationships.
(x) “Incentive Stock Option”
shall mean an
Option that is an incentive stock option as defined in
Section 422 of the Code.
(y) “Limited SAR”
shall mean a limited
stock appreciation right as defined in
Section 18
hereof.
(z) “Non-Employee Director”
means a member
of the Board who is a Non-Employee Director within the meaning
of
Rule 16b-3(b)(3)
promulgated under the 1934 Act and an outside director
within the meaning of Treasury Regulation Sec.
162-27(e)(3)
promulgated under the Code.
(aa) “Non-qualified Stock Option”
shall
mean an Option that is not an Incentive Stock Option.
(bb) “Option”
(when capitalized) shall
mean any Incentive Stock Option and Non-qualified Stock Option
granted under this Plan, except that, where it shall be
appropriate to identify a specific type of Option, reference
shall be made to the specific type of Option; provided, further,
without limitation, that a single Option may include both
Incentive Stock Option and Non-qualified Stock Option provisions.
(cc) “Optionee”
shall mean a person to
whom an Option is granted (often referred to as a Holder).
(dd) “Option Price”
shall mean the price
per Share which is required to be paid by the Optionee in order
to exercise his right to acquire the Share under the terms of
the Option.
(ee) “Option Proceeds”
shall mean the cash
proceeds received by the Company from the exercise of Options
reduced by any such amounts previously used to purchase
Reacquired Shares.
(ff) “Outside Director”
means a member of
the Board who is not an officer or Employee.
(gg) “Parent”
shall mean Capital Senior
Living Corporation, a Delaware corporation.
(hh) “Performance Award”
shall mean the
award which is granted to a Covered Person, and is contingent
upon the attainment of the Performance Measures specified in
such Award during the Performance Period, all as described more
fully in
Section 13.
(ii) “Performance Measures”
shall mean one
or more (or a combination) of the following: (i) earnings
per share, (ii) return on average common equity,
(iii) pre-tax income, (iv) earnings before deductions
for interest, taxes, depreciation and amortization of non-cash
items, (v) pre-tax operating income, (vi) net
operating income, (vii) net revenue, (viii) net
income, (ix) cash earnings per share, (x) book value
per share, (xi) net asset values, (xii) overall or
specific cost reductions, (xiii) resident satisfaction
and/or
retention, (xiv) completion of sale/leasebacks,
(xv) site acquisitions, and (xvi) facility
acquisitions; and such other criteria which the Committee
reasonably determines is comparable to such listed criteria;
provided, further, without limitation, that a Performance Award
can provide that satisfaction of the selected criteria will be
based on the Company’s performance relative to one or more
peer companies; and provided, finally, without limitation, that
a Performance Measure may not consist of merely remaining in the
employ of the Company for a specified period of time.
(jj) “Performance Period”
shall mean the
period during which attainment of the Performance Measures set
forth in the Performance Award must occur.
(kk) “Plan”
shall mean this 2007 Omnibus
Stock and Incentive Plan For Capital Senior Living Corporation.
(ll) “Plan Year”
shall mean the
Parent’s fiscal year.
(mm) “Potential Change In Control”
shall
mean the first to occur of (i) approval by shareholders of
an agreement by the Parent, the consummation of which would
result in a Change in Control; or (ii) the filing of a
Schedule 13G or 13D under the Exchange Act and, within
15 days after such filing, the adoption by the Committee of
a resolution stating that, in the judgment of the Committee, a
Potential Change in Control has occurred for purposes of this
Plan.
(nn) “Reacquired Shares”
shall mean
Shares, if any, reacquired by the Company on the open market
with the Option Proceeds, provided that the aggregate of such
Reacquired Shares may not exceed fifty percent (50%) of the
aggregate Shares (excluding Reacquired Shares) authorized in
Section 3.
(oo) “Restriction(s)”
shall mean the
restrictions applicable to Available Shares subject to an Award
which prohibit the “transfer” of such Available
Shares, and which constitute “a substantial risk of
forfeiture” of such Available Shares, as those terms are
defined under Section 83(a)(1) of the Code.
(pp) “Restricted Period”
shall mean the
period during which Restricted Shares shall be subject to
Restrictions.
(qq) “Restricted Shares”
shall mean the
Available Shares granted to an Eligible Person which are subject
to Restrictions.
(rr) “Restricted Share Award”
shall mean
the award of Restricted Shares.
(ss) “Restricted Share Distributions”
shall mean any amounts, whether Shares, cash or other
property (other than regular cash dividends) paid or distributed
by the Parent with respect to Restricted Shares during a
Restricted Period.
(tt) “SAR”
shall mean a stock appreciation
right as defined in
Section 18
hereof.
(uu) “Section 162(m) Maximum”
shall
mean 250,000 Shares.
(vv) “Separation”
shall mean the date on
which a Holder ceases to have an employment relationship with
the Company for any reason, including death or Disability; and
provided, further, without limitation, such employment
relationship will cease, (a) in the case of an Outside
Director, upon his or her ceasing to be a Director, and
(b) in the case of a Consultant, upon the termination of
such Consultant’s contract with the Company, or in the
absence of a contract, upon the later of (i) delivery by
the Company to such Consultant of a formal written notice of
cessation of his or her services for the Company, and
(ii) the date of such cessation stated in such notice;
provided, however, that a Separation will not be considered to
have occurred while an Employee is on sick leave, military
leave, or any other leave of absence approved by the Company, if
the period of such leave does not exceed 180 days, or, if
longer, so long as the Employee’s right to reemployment
with the Company is guaranteed either by statute or by contract.
(ww) “Share(s)”
shall mean a share or
shares of Common Stock.
(xx) “Special Expired Option Shares”
shall
mean any Shares (i) which are subject to an Option, as
defined in and issued under the 1997 Omnibus Stock and Incentive
Plan For Capital Senior Living Corporation, which remains
outstanding in whole or in part on the Effective Date, and
(ii) which remain subject to such Option on the date such
Option terminates, expires, is cancelled, or is settled in cash.
(yy) “Spread”
shall mean the difference
between the Option Price, or the Agreed Price, as the case may
be, of the Share(s) and the Fair Market Value of such Share(s),
on the date of reference.
(zz) “Subsidiary”
shall mean a
“subsidiary corporation” with respect to the Parent as
defined in Section 424(f) of the Code.
(aaa) “Vest”, “Vested”
and
similar terms shall mean the number of Award Shares which have
become nonforfeitable, including the number of Restricted Shares
on which the Restrictions have lapsed; provided, further, and
without limitation, that the lapse of Restrictions imposed under
a Performance Award, based on the attainment of the Performance
Measures set forth in such Performance Award, is also a Vesting
event.
(bbb) “1933 Act”
shall mean the
Securities Act of 1933, as amended.
(ccc) “1934 Act”
shall mean the
Securities Exchange Act of 1934, as amended.
3.
Award of Available Shares.
As
of the Effective Date, Two Million Six Hundred Thousand
(2,600,000) Shares shall automatically, and without further
action, become Available Shares. To the extent any Award shall
terminate, expire or be canceled, or the Award shall be paid in
cash, the Available Shares subject to such Award (or with
respect to which the Award is measured), shall remain Available
Shares. Such number shall be increased automatically by the
number of Reacquired Shares and Special Expired Option Shares;
provided, however, that Incentive Stock Options may not be
issued after Two Million Six Hundred Thousand (2,600,000) Shares
have been issued under the Plan. No Covered Person shall be
eligible to receive Awards pursuant to this Plan in any Plan
Year which relate to Shares which exceed the Section 162(m)
Maximum.
4.
Conditions for Grant of Awards
.
(a)
Without limiting the generality of the
provisions hereof which deal specifically with each form of
Award, Awards shall only be granted to such one or more Eligible
Persons as shall be selected by the Committee.
(b)
In granting Awards, the Committee shall take
into consideration the contribution the Eligible Person has made
or may be reasonably expected to make to the success of the
Company and such other factors as the Committee shall determine.
The Committee shall also have the authority to consult with and
receive recommendations from officers and other personnel of the
Company with regard to these matters. The Committee may from
time to time in granting Awards under the Plan prescribe such
other terms and conditions concerning such Awards as it deems
appropriate, including, without limitation, relating an Award to
achievement of specific goals established by the Committee or to
the continued employment of the Eligible Person for a specified
period of time, provided that such terms and conditions are not
inconsistent with the provisions of this Plan.
(c)
Incentive Stock Options may be granted only to
Employees, and all other Awards may be granted to either
Employees, Consultants or Outside Directors.
(d)
The Plan shall not confer upon any Holder any
right with respect to continuation of employment by, or
consulting relationship with, the Company, nor shall it
interfere in any way with his right or the Company’s right
to terminate his employment, consulting relationship or
Directorship at any time, nor shall the reference to
“Company” confer an employment relationship on a
Consultant.
(e)
The Awards granted to Eligible Persons shall be
in addition to regular salaries, pension, life insurance or
other benefits related to their service to the Company. Neither
the Plan nor any Award granted under the Plan shall confer upon
any person any right to continuance of employment by the
Company; and provided, further, that nothing herein shall be
deemed to limit the ability of the Company to enter into any
other compensation arrangements with any Eligible Person.
(f)
The Committee shall determine in each case
whether periods of military or government service shall
constitute a continuation of employment for the purposes of this
Plan or any Award.
(g)
Notwithstanding any provision hereof to the
contrary, each Award which in whole or in part involves the
issuance of Available Shares may provide for the issuance of
such Available Shares for consideration consisting of such
consideration as the Committee may determine, including (without
limitation) as compensation for past services rendered.
5.
Grant of Options
.
(a)
The Committee may grant to Optionees from time
to time Options alone, in addition to, or in tandem with , other
Awards granted under the Plan
and/or
cash
Awards made outside of the Plan, to purchase some or all of the
Available Shares. An Option granted hereunder shall be either an
Incentive Stock Option or a Non-qualified Stock Option, shall be
evidenced by a written agreement that shall contain such
provisions as shall be selected by the Committee, which may
incorporate the terms of this Plan by reference, and which
clearly shall state whether it is (in whole or in part) an
Incentive Stock Option or a Non-qualified Stock Option.
(b)
The aggregate Fair Market Value (determined as
of the Date of Grant) of the Available Shares with respect to
which any Incentive Stock Option is exercisable for the first
time by an Optionee during any calendar year under the Plan and
all such plans of the Company (as defined in Section 425 of
the Code) shall not exceed $100,000.
(c)
A Non-qualified Stock Option shall not be
transferable by the Holder without the prior written consent of
the Committee other than (i) transfers by the Holder to a
member of his or her Immediate Family or a trust for the benefit
of the optionee or a member of his or her Immediate Family, or
(ii) transfers by will or by the laws of descent and
distribution. An Incentive Stock Option shall not be
transferable by the Holder otherwise than by will or by the laws
of descent and distribution. All Options shall be exercisable,
during the Holder’s lifetime, only by the Holder.
(d)
In the case of a Non-qualified Stock Option or a
Holder who elects to make a disqualifying disposition (as
defined in Section 422(a)(1) of the Code) of Shares
acquired pursuant to the exercise of an Incentive Stock Option,
the Committee in its discretion may award at the time of grant
or thereafter the right to receive upon exercise of such Option
a cash bonus calculated to pay part or all of the federal and
state, if any, income tax incurred by the Holder upon such
exercise.
(e)
The Committee may at any time offer to buy out
for a payment in cash either (i) Restricted Stock, or
(ii) an Option previously granted, provided that an offer
to buy out an Option will not be made unless the Fair Market
Value, on the date of such offer, of the Shares subject to such
Option exceed the Option Price of such Option.
(f)
If the Option agreement so provides at Date of
Grant or (except in the case of an Incentive Stock Option) is
amended after Date of Grant and prior to exercise to so provide
(with the Holder’s consent), the Committee may require that
all or part of the Shares to be issued with respect to the
Spread take the form of Restricted Stock, which shall be valued
on the date of exercise on the basis of the Fair Market Value of
such Restricted Stock determined without regard to the
transferability and forfeiture Restrictions involved.
(g)
Without limitation, the Committee may condition
the exercise of any Option upon the attainment of specified
performance goals or other factors as the Committee may
determine, in its sole discretion. Unless specifically provided
in the Option agreement, any such conditional Option shall vest
twelve (12) months prior to its expiration if the
conditions to exercise have not theretofore been satisfied.
6.
Option Price
.
(a)
The Option Price shall be any price determined
by the Committee; provided, however, that the Option Price may
not be less than the par value of the Common Stock, and in the
case of an Incentive Stock Option, shall not be less than one
hundred percent (100%) of the Fair Market Value per Share on the
Date of Grant.
(b)
Unless further limited by the Committee in any
Option, the Option Price shall be paid solely in cash, by
certified or cashier’s check, by wire transfer, by money
order, with Common Stock (but with Common Stock only if
expressly permitted by the terms of the Option), or by a
combination of the above; provided, however, that the Committee
may accept a personal check in full or partial payment. If the
Option Price is permitted to be, and is, paid in whole or in
part with Common Stock, the value of the Common Stock
surrendered shall its Fair Market Value on the date surrendered.
7.
Exercise of Options
.
An Option
shall be deemed exercised when (i) the Committee has
received written notice of such exercise in accordance with the
terms of the Option, and (ii) full payment of the aggregate
Option Price of the Available Shares as to which the Option is
exercised has been made. Separate stock certificates shall be
issued by the Parent for any Available Shares acquired as a
result of exercising an Incentive Stock Option and a
Non-qualified Stock Option.
8.
Exercisability of Options.
(a)
Each Option shall become exercisable in whole or
in part and cumulatively, and shall expire, according to the
terms of the Option to the extent not inconsistent with the
express provisions of this Plan; and provided further, without
limitation, that in the case of the grant of an Option to an
officer (as that term is used in
Rule 16a-1
promulgated under the 1934 Act) or any similar rule which
may subsequently be in effect, the Committee may provide that no
Available Shares acquired on the exercise of such Option shall
be transferable during such 6 month period following the
Date of Grant.
(b)
The Committee, in its sole discretion, may
accelerate the date on which all or any portion of an otherwise
unexercisable Option may be exercised or a Restriction will
lapse.
9.
Termination of Option Period.
(a)
As provided in Section 5, and without
limitation, each Option shall be evidenced by an agreement that
may contain any provisions selected by the Committee; provided,
however, that in each case, unless the terms of the Option
expressly provide for a different date of termination, the
unexercised portion of an Option shall automatically and without
notice terminate and become null and void on the earlier of
(i) the date that Optionee ceases to be an Employee, if
such cessation is for Cause, (ii) the 90th day
following Optionee’s Separation for any reason other than
death, Disability or for Cause; (iii) the first anniversary
of a Separation by reason of death or Disability; or
(iv) the tenth (10th) anniversary of the Date of Grant.
(b)
Notwithstanding any provision of the Plan to the
contrary, in the event of the proposed dissolution or
liquidation of the Parent, or in the event of a proposed sale of
all or substantially all of the assets of the Company, or the
proposed merger of the Parent with or into another corporation,
unless otherwise expressly provided (by express reference to
this
Section 9(b)
) in the terms of an Option, the
Committee may, following delivery of a written notice
(“Cancellation Notice”)
to any Holder of an
Option, cancel the unexercised Vested portion (including the
portion which becomes Vested by reason of acceleration), if any,
of such Option, effective on the date specified in the
Cancellation Notice
(“Cancellation Date”)
.
Notwithstanding the forgoing, the Cancellation Date may not be
earlier than the last to occur of (i) the 30th day
following delivery of the Cancellation Notice, and (ii) the
60th day prior to the transaction which has caused the
delivery of the Cancellation Notice. Without limitation, in the
event the transaction giving rise to the Cancellation Notice
does not occur, if so provided in the Cancellation Notice, each
Holder who shall have elected to make his or her exercise
conditional on the occurrence of the transaction shall be
refunded any amounts paid to exercise such Holder’s Option,
such Option will be reissued, and the purported exercise of such
Option shall be null and void ab intitio.
10.
Incentive Stock Options for 10%
Shareholder
.
Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock
Option shall not be granted to any person owning directly (or
indirectly through attribution under Section 425(d) of the
Code) at the Date of Grant, stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company (as defined in Section 425 of the Code) at the Date
of Grant, unless the Option Price of such Incentive Stock Option
is at least 110% of the Fair Market Value on the Date of Grant
of the Available Shares subject to such Incentive Stock Option,
and the period during which the Incentive Stock Option may be
exercised does not exceed five (5) years from the Date of
Grant.
11.
Non-qualified Stock
Options
. Non-qualified Stock Options may be
granted hereunder and shall contain such terms and provisions as
shall be determined by the Committee, except that each such
Non-qualified Stock Option (i) must be clearly designated
as a Non- qualified Stock Option; (ii) may be granted for
Available Shares which become exercisable in excess of the
limits contained in
Subsection 5(b)
; and
(iii) shall not be subject to
Section 10
hereof. If both Incentive Stock Options and Non-qualified
Stock Options are granted to an Optionee, the right to exercise,
to the full extent thereof, Options of either type shall not be
contingent in whole or in part upon the exercise of, or failure
to exercise, Options of the other type.
12.
Restricted Share Awards
.
(a)
Each Restricted Share Award shall be evidenced
by an agreement that may contain any provisions selected by the
Committee, including, without limitation, a provision allowing
the Holder, prior to the date on which the Restrictions lapse
with respect to the Restricted Shares of reference, or within a
period of 10 days after such lapse where such lapse is
accelerated, to elect to receive cash in an amount equal to the
Fair Market Value of some or all of the Restricted Shares on the
date the Restrictions with respect to such Restricted Shares
lapse, in lieu of retaining the corresponding formerly
Restricted Shares; and provided, further, that in the event such
a provision is included in the Restricted Share Award of an
officer (as defined in
Section 18(k)
), the election
to receive cash in lieu of Restricted Shares shall be subject to
the same limitations on exercise as are set forth in
Section 18(k)
. As a condition to the grant of a
Restricted Share Award, if required by applicable law, the
Committee shall require the Eligible Person receiving the
Restricted Share Award to pay to the Company an amount equal to
the par value of the Restricted Shares granted under such
Restricted Share Award, and such Restricted Share Award shall
automatically terminate if such payment is not received within
30 days following the Date of Grant. Except as otherwise
provided in the express terms and conditions of each Restricted
Share Award, the Eligible Person receiving the Restricted Share
Award shall have all of the rights of a shareholder with respect
to such Restricted Shares including, but not limited
to, voting rights and the right to receive any dividends paid,
subject only to the retention provisions applicable to the
Restricted Share Distributions.
(b)
The Restrictions on Restricted Shares shall
lapse in whole, or in installments, over whatever Restricted
Period shall be selected by the Committee; provided, however,
that a complete lapse of Restrictions always shall occur on or
before the 9th anniversary of the Date of Grant.
(c)
The Committee may accelerate the date on which
Restrictions lapse with respect to any Restricted Shares.
(d)
During the Restricted Period, the certificates
representing the Restricted Shares, and any Restricted Share
Distributions, shall be registered in the Holder’s name and
bear a restrictive legend disclosing the Restrictions, the
existence of the Plan, and the existence of the applicable
agreement granting such Restricted Share Award. Such
certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment,
each endorsed in blank, which will permit the transfer to the
Company of all or any portion of the Restricted Shares, and any
assets constituting Restricted Share Distributions, which shall
be forfeited in accordance with the applicable agreement
granting such Restricted Share Award. Restricted Shares shall
constitute issued and outstanding Common Stock for all corporate
purposes and the Holder shall have all rights, powers and
privileges of a Holder of unrestricted Shares except that the
Holder will not be entitled to delivery of the stock
certificates until all Restrictions shall have terminated, and
the Company will retain custody of all related Restricted Share
Distributions (which will be subject to the same Restrictions,
terms, and conditions as the related Restricted Shares) until
the conclusion of the Restricted Period with respect to the
related Restricted Shares; and provided, further, that any
Restricted Share Distributions shall not bear interest or be
segregated into a separate account but shall remain a general
asset of the Company, subject to the claims of the
Company’s creditors, until the conclusion of the applicable
Restricted Period; and provided, finally, that any material
breach of any terms of the Restricted Share Award, as reasonably
determined by the Committee, will cause a forfeiture of both
Restricted Shares and Restricted Share Distributions.
13.
Performance Awards
.
(a)
Performance Awards during a Plan Year may be
granted to one or more Covered Persons, and shall in all events
be specifically designated as Performance Awards. Nothing herein
shall be construed as limiting the Committee’s authority to
grant other types of Awards to Eligible Persons, including
Covered Persons, conditioned on the satisfaction of such
criteria, including those comprising one or more of the
Performance Measures, as the Committee, in its sole discretion,
may select.
(b)
Without limitation, the Committee’s grant
of Performance Awards may, in its sole discretion, be made in
Shares (including, without limitation, Restricted Shares whose
Restrictions will lapse on the basis of the satisfaction of the
selected Performance Measure(s)), or in cash, or in a
combination of Shares and cash, but the cash portion of such
Performance Award granted to a Covered Person may not exceed
$2,000,000 in a Plan Year.
(c)
The Committee shall select the Performance
Measures which will be required to be satisfied during the
Performance Period in order to earn amounts specified in the
Performance Award. Such Performance Measures, and the duration
of any Performance Period, may differ with respect to each
Covered Person, or with respect to separate Performance Awards
issued to the same Covered Person. The selected Performance
Measures, the Performance Period(s), and any other conditions to
the Company’s obligation to pay a Performance Award shall
be set forth in each Performance Award on or before the first to
occur of (i) the 90th day of the selected Performance
Period, (ii) the first date on which more than 25% of the
Performance Period has elapsed, and (iii) the first date,
if any, on which satisfaction of the Performance Measure(s) is
no longer substantially uncertain.
(d)
Unless otherwise expressly provided in the
Performance Award, the Covered Person must remain employed by
the Company until the end of the Performance Period in order to
be entitled to any payment under such Performance Award;
provided, however, that the Committee expressly may provide in
the Performance Award that such Holder may become entitled to a
specified portion of the amount earned under such Performance
Award based on one or more specified period(s) of time between
the Date of Grant of such Performance Award and such Covered
Person’s Separation, prior to the end of the Performance
Period.
(e)
Performance Awards may be payable in a single
payment or in installments, but may not be paid in whole or in
part prior to the date on which the Performance Measures are
attained; except that, if expressly provided under the
Performance Award, such payment may be accelerated upon the
death or Disability of the Covered Person, or as a result of a
Change in Control, it being understood that if such acceleration
events occur prior to the attainment of the Performance
Measures, the Performance Award will not be exempt from
Section 162(m) of the Code.
14.
Acceleration on Change in
Control
.
In the event of either a Change in
Control, or a Potential Change in Control followed, within
360 days, by a Change in Control, unless otherwise
expressly provided by the Committee prior to such event,
(i) all Awards, other than Performance Awards, shall become
fully exercisable, nonforfeitable, or the Restricted Period
shall terminate, as the case may be (hereafter, in this
Section 14
, such Award shall be
“accelerated”), and (ii) the Committee shall have
the right to cash out some or all outstanding Non-qualified
Stock Options, Stock Appreciation Rights, and Restricted Stock,
on the basis of the Change in Control Price, effective as of the
date of the Change in Control, or on such other date as the
Committee may determine prior to the Change in Control.
15.
Adjustment of Available Shares
.
(a)
If at any time while the Plan is in effect or
Awards with respect to Available Shares are outstanding, there
shall be any increase or decrease in the number of issued and
outstanding Shares through the declaration of a stock dividend
or through any recapitalization resulting in a stock
split-up,
combination or exchange of Shares, then and in such event:
(i)
appropriate adjustment shall be made in the
maximum number of Available Shares which may be granted under
Section 3
, and in the Available Shares which are
then subject to each Award, so that the same proportion of the
Parent’s issued and outstanding Common Stock shall continue
to be subject to grant under
Section 3
, and to such
Award, and
(ii)
in addition, and without limitation, in the
case of each Award (including, without limitation, Options)
which requires the payment of consideration by the Holder in
order to acquire Shares, an appropriate adjustment shall be made
in the consideration (including, without limitation the Option
Price) required to be paid to acquire the each Share, so that
(i) the aggregate consideration to acquire all of the
Shares subject to the Award remains the same and, (ii) so
far as possible (and without disqualifying an Incentive Stock
Option) as reasonably determined by the Committee in its sole
discretion, the relative cost of acquiring each Share subject to
such Award remains the same.
(b)
The Committee will change the terms of Options
outstanding under this Plan, with respect to the Option Price or
the number of Available Shares subject to the Options, or both,
when, in the Committee’s judgment, such adjustments become
appropriate by reason of a corporate transaction (as defined in
Treasury Regulation
§ 1.425-1(a)(1)(ii));
provided, however, that if by reason of such corporate
transaction an Incentive Stock Option is assumed or a new option
is substituted therefore, the Committee may only change the
terms of such Incentive Stock Option such that (i) the
excess of the aggregate Fair Market Value of the Shares subject
to option immediately after the substitution or assumption, over
the aggregate option price of such Shares, is not more than the
excess of the aggregate Fair Market Value of all Available
Shares subject to the Option immediately before such
substitution or assumption over the aggregate Option Price of
such Available Shares, and (ii) the new option, or the
assumption of the old Incentive Stock Option does not give the
Optionee additional benefits which he did not have under the old
Incentive Stock Option.
(c)
Except as otherwise expressly provided herein,
the issuance by the Parent of shares of its capital stock of any
class, or securities convertible into shares of capital stock of
any class, either in connection with direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Parent convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to
Available Shares subject to Awards granted under the Plan.
(d)
Without limiting the generality of the
foregoing, the existence of outstanding Awards with respect to
Available Shares granted under the Plan shall not affect in any
manner the right or power of the Parent to make, authorize or
consummate (1) any or all adjustments, recapitalizations,
reorganizations or other changes in the Parent’s capital
structure or its business; (2) any merger or consolidation
of the Parent; (3) any issue by the Parent of
debt securities, or preferred or preference stock which would
rank above the Available Shares subject to outstanding Awards;
(4) the dissolution or liquidation of the Parent;
(5) any sale, transfer or assignment of all or any part of
the assets or business of the Company; or (6) any other
corporate act or proceeding, whether of a similar character or
otherwise.
16.
Transferability of
Awards
.
Each Award shall provide that such
Award shall not be transferable by the Holder otherwise than by
will or the laws of descent and distribution, or, if so provided
in the Award, (a) that such Award is transferable, in whole
or in part, without payment of consideration, to members of the
Holder’s Immediate Family, to trusts for such Immediate
Family members, or to partnerships whose only partners are such
Immediate Family members, or (b) except as prohibited by
Rule 16b-3,
to a person or other entity for which the Holder is entitled to
a deduction for a “charitable contribution” under
Section 170(a)(i) of the Code (provided, in each such case
that no further transfer by any such permitted transferee(s)
shall be permitted); provided, further, that in each case the
exercise of the Award will remain the power and responsibility
of the Holder and that so long as the Holder lives, only such
Holder (even if pursuant to the legal direction of the person to
whom a charitable contribution has been made) or his guardian or
legal representative shall have the rights set forth in such
Award.
17.
Issuance of Shares
.
No Holder
or other person shall be, or have any of the rights or
privileges of, the owner of Shares subject to an Award unless
and until certificates representing such Common Stock shall have
been issued and delivered to such Holder or other person. As a
condition of any issuance of Common Stock, the Committee may
obtain such agreements or undertakings, if any, as the Committee
may deem necessary or advisable to assure compliance with any
such law or regulation including, but not limited to, the
following:
(i)
a representation, warranty or agreement by the
Holder to the Parent, at the time any Shares are transferred,
that he is acquiring the Shares to be issued to him for
investment and not with a view to, or for sale in connection
with, the distribution of any such Shares; and
(ii)
a representation, warranty or agreement to be
bound by any legends that are, in the opinion of the Committee,
necessary or appropriate to comply with the provisions of any
securities law deemed by the Committee to be applicable to the
issuance of the Shares and are endorsed upon the Share
certificates.
Share certificates issued to the Holder receiving such Shares
who are parties to any shareholders agreement or any similar
agreement shall bear the legends contained in such agreements.
Notwithstanding any provision hereof to the contrary, no Shares
shall be required to be issued with respect to an Award unless
counsel for the Parent shall be reasonably satisfied that such
issuance will be in compliance with applicable Federal or state
securities laws.
18.
Stock Appreciation Rights and Limited Stock
Appreciation Rights
.
(a)
The Committee shall have authority to grant a
SAR, or to grant a Limited SAR with respect to all or some of
the Available Shares covered by any Option
(“Related
Option”)
, or with respect to, or as some or all of, a
Performance Award
(“Related Performance
Award”)
. A SAR or Limited SAR granted with respect to
an Incentive Stock Option must be granted on the Date of Grant
of such related Option. A SAR or Limited SAR granted with
respect to a Related Non-qualified Stock Option or a Performance
Award, may be granted on or after the Date of Grant of such
Related Option or Related Performance Award.
(b)
For the purposes of this
Section 18
,
the following definitions shall apply:
(i)
The term
“Offer”
shall mean any
tender offer or exchange offer for thirty percent (30%) or more
of the outstanding Common Stock of the Parent, other than one
made by the
Parent
; provided that the corporation, person
or other entity making the Offer acquires Common Stock pursuant
to such Offer.
(ii)
The term
“Offer Price Per Share”
shall mean the highest price per Share paid in any Offer
which is in effect at any time during the period beginning on
the sixtieth (60th) day prior to the date on which a Limited SAR
is exercised and ending on the date on which the Limited SAR is
exercised. Any securities or properties which are a part or all
of the consideration paid or to be paid for Common Stock in the
Offer shall be valued in determining the Offer Price Per Share
at the higher of (1) the valuation placed on such
securities or properties by the person making such Offer, or
(2) the valuation placed on such securities or properties
by the Committee.
(iii)
The term
“Limited SAR”
shall
mean a right granted under this Plan with respect to a Related
Option or Related Performance Award, that shall entitle the
Holder to an amount in cash equal to the Offer Spread in the
event an Offer is made.
(iv)
The term
“Offer Spread”
shall
mean, with respect to each Limited SAR, an amount equal to the
product of (1) the excess of (A) the Offer Price Per
Share immediately preceding the date of exercise over
(B) (x) if the Limited SAR is granted in tandem with
an Option, then the Option Price per Share of the Related
Option, or (y) if the Limited SAR is issued with respect to
a Performance Award, the Agreed Price under the Related
Performance Award, multiplied by (2) the number of
Available Shares with respect to which such Limited SAR is being
exercised; provided, however that with respect to any Limited
SAR granted in tandem with an Incentive Stock Option, in no
event shall the Offer Spread exceed the amount permitted to be
treated as the Offer Spread under applicable Treasury
Regulations or other legal authority without disqualifying the
Option as an Incentive Stock Option.
(v)
The term
“SAR”
shall mean a
right granted under this Plan, including, without limitation, a
right granted in tandem with an Award, that shall entitle the
Holder thereof to an amount in cash equal to the Spread.
(vi)
The term
“SAR Spread”
shall
mean with respect to each SAR an amount equal to the product of
(1) the excess of (A) the Fair Market Value per Share
on the date of exercise over (B) (x) if the SAR is
granted in tandem with an Option, then the Option Price per
Share of the Related Option, (y) if the SAR is granted in
tandem with a Performance Award, the Agreed Price under the
Related Performance Award, or (z) if the SAR is granted by
itself with respect to a designated number of Available Shares,
then whichever of the Fair Market Value of the Available Shares
on the Date of Grant, or the Agreed Price, shall be designated
in the SAR agreement, in each case multiplied by (2) the
number of Available Shares with respect to which such SAR is
being exercised; provided, however, that with respect to any SAR
granted in tandem with an Incentive Stock Option, in no event
shall the SAR Spread exceed the amount permitted to be treated
as the SAR Spread under applicable Treasury Regulations or other
legal authority without disqualifying the Option as an Incentive
Stock Option.
(c)
To exercise the SAR or Limited SAR, the Holder
shall:
(i)
Give written notice thereof to the Company,
specifying the SAR or Limited SAR being exercised and the number
or Available Shares with respect to which such SAR or Limited
SAR is being exercised, and
(ii)
If requested by the Company, deliver within a
reasonable time the agreement evidencing the SAR or Limited SAR
being exercised, and the Related Option agreement, or Related
Performance Award agreement, to the Secretary of the Company who
shall endorse or cause to be endorsed thereon a notation of such
exercise and return all agreements to the Holder.
(d)
As soon as practicable after the exercise of a
SAR or Limited SAR, the Company shall pay to the Holder
(i) cash, (ii) at the request of the Holder and the
approval of the Committee, or in accordance with the terms of
the Award, Shares, or (iii) a combination of cash and
Shares, having a Fair Market Value equal to either the SAR
Spread, or to the Offer Spread, as the case may be; provided,
however, that the Company may, in its sole discretion, withhold
from such payment any amount necessary to satisfy the
Company’s obligation for federal and state withholding
taxes with respect to such exercise.
(e)
A SAR or Limited SAR may be exercised only if
and to the extent that it is permitted under the terms of the
Award which, in the case of a Related Option, shall be only when
such Related Option is eligible to be exercised; provided,
however, a Limited SAR may be exercised only during the period
beginning on the first day following the date of expiration of
the Offer and ending on the thirtieth (30th) day following such
date.
(f)
Upon the exercise or termination of a Related
Option, or the payment or termination of a Related Performance
Award, the SAR or Limited SAR with respect to such Related
Option or Related Performance Award likewise shall terminate.
(g)
A SAR or Limited SAR shall be transferable only
to the extent, if any, that the Related Award is transferable,
and under the same conditions.
(h)
A SAR or Limited SAR granted with respect to an
Incentive Stock Option may be exercised only when the Fair
Market Value of the Available Shares exceeds the Option Price.
(i)
Each SAR or Limited SAR shall be on such terms
and conditions not inconsistent with this Plan as the Committee
may determine and shall be evidenced by a written agreement.
(j)
The Holder shall have no rights as a stockholder
with respect to the related Available Shares as a result of the
grant of a SAR or Limited SAR.
(k)
With respect to a Holder who, on the date of a
proposed exercise of a SAR or Limited SAR, is an officer (as
that term is used in
Rule 16a-1
promulgated under the 1934 Act or any similar rule which
may subsequently be in effect), and who would receive cash in
whole or in part upon the proposed exercise of his SAR, or
Limited SAR such proposed exercise may only occur as permitted
by
Rule 16b-3,
including without limitation paragraph (e)(3)(iii) (or any
similar rule which may subsequently be in effect promulgated
pursuant to Section 16(b) of the 1934 Act) which, at
the date of adopting this Plan, among other things, permits
exercise during a period beginning on the third (3rd) business
day following the Parent’s public release of quarterly or
annual summary statements of sales and earnings and ending on
the twelfth (12th) business day following such public release.
19.
Administration of the Plan
.
(a)
The Plan shall be administered by the Committee
and, except for the powers reserved to the Board in
Section 22
hereof, the Committee shall have all of
the administrative powers under Plan.
(b)
The Committee, from time to time, may adopt
rules and regulations for carrying out the purposes of the Plan
and, without limitation, may delegate all of what, in its sole
discretion, it determines to be ministerial duties to an officer
of the Parent. The determinations under, and the interpretations
of, any provision of the Plan or an Award by the Committee
shall, in all cases, be in its sole discretion, and shall be
final and conclusive.
(c)
Any and all determinations and interpretations
of the Committee shall be made either (i) by a majority
vote of the members of the Committee at a meeting duly called,
with at least 3 days prior notice and a general explanation
of the subject matter given to each member, or (ii) without
a meeting, by the written approval of all members of the
Committee.
(d)
No member of the Committee shall be liable for
any action taken or omitted to be taken by him or by any other
member of the Committee with respect to the Plan, and to the
extent of liabilities not otherwise insured under a policy
purchased by the Company, the Company does hereby indemnify and
agree to defend and save harmless any member of the Committee
with respect to any liabilities asserted or incurred in
connection with the exercise and performance of their powers and
duties hereunder, unless such liabilities are judicially
determined to have arisen out of such member’s gross
negligence, fraud or bad faith. Such indemnification shall
include attorney’s fees and all other costs and expenses
reasonably incurred in defense of any action arising from such
act of commission or omission. Nothing herein shall be deemed to
limit the Company’s ability to insure itself with respect
to its obligations hereunder.
(e)
In particular, and without limitation, the
Committee shall have the authority, consistent with the terms of
the Plan:
(i)
to select the officers, key Employees, Outside
Directors, and Consultants to whom Awards may from time to time
be granted hereunder;
(ii)
to determine whether and to what extent Awards
are to be granted hereunder to one or more Eligible Persons;
(iii)
to determine the number of Shares to be
covered by each such Award granted hereunder;
(iv)
to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted
hereunder (including, but not limited to, the Agreed Price and
any Restriction or limitation, or any Vesting acceleration or
waiver of forfeiture Restrictions, based in each case on such
factors as the Committee shall determine, in its sole
discretion); and to amend or waive any such terms and conditions
to the extent permitted by the Plan; provided, however, and
notwithstanding any provision hereof to the contrary, the
Committee (i) will not (w) amend an Option to reduce
its Option Price, or (except for Vesting acceleration)
materially improve its terms and conditions in favor of the
Holder; nor (x) amend a SAR or a Limited SAR in a manner
which causes or increases its SAR Spread or Offer Spread,
respectively, or (except for Vesting acceleration) materially
improves its terms and conditions in favor of the Holder; and
(ii) will not grant an Award whose exercise is conditioned
directly or indirectly on the surrender, or failure to exercise,
either (y) an Option whose Option Price is greater than the
Fair Market Value of a Share on the date of grant of such Award,
or (z) a SAR which does not have a SAR Spread, or a Limited
SAR which does not have an Offer Spread, on the date of grant of
such Award.
(v)
to determine whether and under what
circumstances an Option may be settled in cash, or Restricted
Shares, instead of Shares;
(vi)
to determine whether, to what extent, and under
what circumstances Awards under the Plan are to be made, and
operate, on a tandem basis
vis-a-vis
other Awards under the Plan
and/or
cash
awards made outside of the Plan;
(vii)
to determine whether and to what extent, and
under what circumstances Shares and other amounts payable with
respect to an Award shall be deferred either automatically or at
the election of the Holder (including providing for and
determining the amount (if any) of any deemed earnings on any
deferred amount during any deferral period); provided, further,
that any such determinations or elections must comply with all
applicable laws, including, without limitation,
Section 409A of the Code; and
(viii)
to determine whether and to what extent a
Holder will be allowed to pay the Option Price of an Option, or
to satisfy tax withholding requirements, in Shares.
(f)
The Committee shall have the authority to adopt,
alter, and repeal such rules, guidelines, and practices
governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any agreements relating
thereto); and to otherwise supervise the administration of the
Plan; provided, however, that to the extent that this Plan
otherwise requires the approval of the Board or the shareholders
of the Parent, all decisions of the Committee shall be subject
to such Board or shareholder approval. Subject to the foregoing,
and without limitation, all decisions made by the Committee
pursuant to the provisions of the Plan shall be made in the
Committee’s sole discretion and shall be final and binding
on all persons, including the Company and Holders.
20.
Tax Withholding
. On or
immediately prior to the date on which a payment is made to a
Holder hereunder or, if earlier, the date on which an amount is
required to be included in the income of the Holder as a result
of an Award, the Holder shall be required to pay to the Company,
in cash, or in Shares (but in Shares only if expressly provided
in the Award, or otherwise authorized by the Committee), the
amount which the Company reasonably determines to be necessary
in order for the Company to comply with applicable federal or
state tax withholding requirements, and the collection of
employment taxes, if applicable.
21.
Interpretation
.
(a)
If any provision of the Plan is held invalid for
any reason, such holding shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and
enforced as if such provision had never been included in the
Plan.
(b)
This Plan
shall be governed by the laws of the State of Texas.
(c)
Headings contained in this Agreement are for
convenience only and shall in no manner be construed as part of
this Plan.
(d)
Any reference to the masculine, feminine, or
neuter gender shall be a reference to such other gender as is
appropriate.
(e)
The Plan is intended to constitute an
“unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a
Holder, nothing contained herein shall give any such Holder any
rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock
or payments in lieu of or with respect to Awards hereunder;
provided, however, that, unless the Committee otherwise
determines with the consent of the affected Holder, the
existence of such trusts or other arrangements is consistent
with the “unfunded” status of the Plan.
(f)
Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation
arrangements, subject to shareholder approval if such approval
is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
22.
Amendment and Discontinuation of the
Plan
. The Board, or the Committee (subject to
the prior written authorization of the Board), may from time to
time amend the Plan or any Award; provided, however, that
(except to the extent provided in
Section 9(b) and 15
hereof) no such amendment may, without approval by the
shareholders of the Parent, (a) increase the number of
Available Shares or change the class of Eligible Persons,
(b) permit the granting of Awards which expire beyond the
maximum
10-year
period described in
Subsection 9(a)(iv)
,
(c) extend the termination date of the Plan as set forth in
Section 24
, (d) increase the
Section 162(m) Maximum; or (e) make any change for
which applicable law or regulatory authority (including the
regulatory authority of the NYSE or any other market or exchange
on which the Common Stock is traded) would require shareholder
approval or for which shareholder approval would be required to
secure all deductibility of compensation received under the Plan
under Section 162(m) of the Code; and provided, further,
that no amendment or suspension of the Plan or any Award issued
hereunder shall, except as specifically permitted in this Plan
or under the terms of such Award, substantially impair any Award
previously granted to any Holder without the consent of such
Holder.
23.
Section 83(b)
Election
. If as a result of receiving an
Award, a Holder receives Restricted Shares subject to a
“substantial risk of forfeiture”, then such Holder may
elect under Section 83(b) of the Code to include in his
gross income, for his taxable year in which the Restricted
Shares are transferred to him, the excess of the Fair Market
Value (determined without regard to any Restriction other than
one which by its terms will never lapse), of such Restricted
Shares at the Date of Grant, over the amount paid for the
Restricted Shares. If the Holder makes the Section 83(b)
election described above, the Holder shall (i) make such
election in a manner that is satisfactory to the Committee,
(ii) provide the Committee with a copy of such election,
(iii) agree to promptly notify the Company if any Internal
Revenue Service or state tax agent, on audit or otherwise,
questions the validity or correctness of such election or of the
amount of income reportable on account of such election, and
(iv) agree to such federal and state income withholding as
the Committee may reasonably require in its sole and absolute
discretion.
24.
Effective Date and Termination
Date
. The Plan shall be effective as of its
Effective Date, and shall terminate on the tenth anniversary of
such Effective Date.
CAPITAL SENIOR LIVING CORPORATION