Document:

LLC MEMBERSHIP INTEREST

EXHIBIT 10.60

 

AMENDMENT

NO. 1. TO

STOCK

PURCHASE AGREEMENT

DATED

FEBRUARY 26, 2002

 

This Amendment No. 1 (“Amendment”) to the Stock

Purchase Agreement dated February 26, 2002 (“Agreement”) is made and entered

into as of the 25th day of March, 2002, by and between Zamba

Corporation, a Delaware corporation (“Zamba”), and Joseph B. Costello (the

“Purchaser”).

 

WHEREAS, the parties intend by this Amendment to

clarify the understanding between them that the shares referred to in the

Agreement are those that are owned by Zamba;

 

NOW, THEREFORE, the parties agree as follows:

 

1.                The

defined term “NextNet Preferred Stock” shall be removed from the Agreement and

replaced in each location where it appears with the defined term “Zamba’s

NextNet Stock.”

2.                Section

1(b)(i) shall be modified by deleting, from the first and second lines, the

phrase “received by the shareholders of NextNet,” and replacing this phrase

with the following: “determined.”

3.                Except

as set forth herein, the terms and conditions of the Agreement shall continue

in full force and effect.

 

IN WITNESS WHEREOF, the Company and the Purchaser have

executed this Agreement as of the date set forth in the first paragraph.

 

	

  ZAMBA CORPORATION

  	

   

  	

  THE PURCHASER:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Michael H.

  Carrel

  	

   

  	

  /s/ Joseph B. Costello

  
	

  Name:

  	

  Michael H. Carrel

  	

   

  	

  Joseph B. Costello

  
	

  Title:

  	

  CFOWord 8.0 Generic Normal Template, rev. 4/1/97, The Legal MacPac

EXHIBIT

10.6

 

 

APEX

MORTGAGE CAPITAL, INC.

 

AMENDED AND RESTATED

1997 STOCK OPTION PLAN

 

(As Amended on December

16, 1998 and December 13, 2001)

 

 

TABLE OF CONTENTS

 

	

  1.

  	

  The Plan

  
	

   

  	

   

  
	

   

  	

  1.1

  	

  Purpose

  
	

   

  	

   

  	

   

  
	

   

  	

  1.2

  	

  Administration

  and Authorization; Power and Procedure

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.2.1

  	

  Committee

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.2.2

  	

  Plan

  Awards; Interpretation; Powers of Committee

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.2.3

  	

  Binding

  Determinations

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.2.4

  	

  Reliance

  on Experts

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.2.5

  	

  Delegation

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.3

  	

  Participation

  
	

   

  	

   

  	

   

  
	

   

  	

  1.4

  	

  Shares

  Available for Awards; Share Limits

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.4.1

  	

  Shares Available

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.4.2

  	

  Share Limits

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.4.3

  	

  Limitation

  on Ownership

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.4.4

  	

  Share

  Reservation; Replenishment and Reissue of Unvested Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.5

  	

  Grant of Awards

  
	

   

  	

   

  	

   

  
	

   

  	

  1.6

  	

  Award Period

  
	

   

  	

   

  	

   

  
	

   

  	

  1.7

  	

  Limitations

  on Exercise and Vesting of Awards

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.7.1

  	

  Provisions

  for Exercise

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.7.2

  	

  Procedure

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.7.3

  	

  Fractional

  Shares/Minimum Issue

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.8

  	

  Acceptance of

  Notes to Finance Exercise

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.8.1

  	

  Principal

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.8.2

  	

  Term

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.8.3

  	

  Recourse; Security;

  Compliance

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.8.4

  	

  Termination of Employment

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.9

  	

  No

  Transferability; Limited Exception to Transfer Restrictions

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.9.1

  	

  Limit On Exercise and

  Transfer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.9.2

  	

  Exceptions

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  1.9.3

  	

  Further

  Exceptions to Limits On Transfer

  
					

 

i

 

	

  2.

  	

  Options

  
	

   

  	

   

  
	

   

  	

  2.1

  	

  Grants

  
	

   

  	

   

  	

   

  
	

   

  	

  2.2

  	

  Option Price

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.2.1

  	

  Pricing Limits

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.2.2

  	

  Payment

  Provisions

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.3

  	

  Limitations

  on Grant and Terms of Incentive Stock Options

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.3.1

  	

  $100,000 Limit

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.3.2

  	

  Option Period

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.3.3

  	

  Other Code Limits

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.4

  	

  Limits

  on 10% Holders

  
	

   

  	

   

  	

   

  
	

   

  	

  2.5

  	

  Option

  Repricing/Cancellation and Regrant/Waiver of Restrictions

  
	

   

  	

   

  	

   

  
	

   

  	

  2.6

  	

  Effects

  of Termination of Employment; Termination of Subsidiary Status; Discretionary

  Provisions

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.6.1

  	

  Options -

  Resignation or Dismissal

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.6.2

  	

  Options - Death or

  Disability

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.6.3

  	

  Options

  - Retirement

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.6.4

  	

  Certain SARs

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.6.5

  	

  Other Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  2.6.6

  	

  Committee

  Discretion

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.7

  	

  Options

  and Rights in Substitution for Stock Options Granted by Other Corporations

  
	

   

  	

   

  	

   

  
	

  3.

  	

  Stock

  Appreciation Rights  (Including

  Limited Stock Appreciation Rights)

  
	

   

  	

   

  
	

   

  	

  3.1

  	

  Grants

  
	

   

  	

   

  	

   

  
	

   

  	

  3.2

  	

  Exercise of

  Stock Appreciation Rights

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  3.2.1

  	

  Exercisability

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  3.2.2

  	

  Effect on Available Shares

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  3.2.3

  	

  Stand-Alone SARs

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  3.2.4

  	

  Proportionate

  Reduction

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.3

  	

  Payment

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  3.3.1

  	

  Amount

  
					

 

ii

 

	

   

  	

   

  	

  3.3.2

  	

  Form of Payment

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.4

  	

  Limited Stock

  Appreciation Rights

  
	

   

  	

   

  	

   

  
	

  4.

  	

  Restricted

  Stock Awards

  
	

   

  	

   

  
	

   

  	

  4.1

  	

  Grants

  
	

   

  	

   

  	

   

  
	

   

  	

  4.2

  	

  Restrictions

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  4.2.1

  	

  Pre-Vesting

  Restraints

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  4.2.2

  	

  Dividend and Voting Rights

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  4.2.3

  	

  Cash Payments

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.3

  	

  Return to the Corporation

  
	

   

  	

   

  	

   

  
	

  5.

  	

  Performance

  Share Awards; Stock Units; Stock Bonuses

  
	

   

  	

   

  
	

   

  	

  5.1

  	

  Grants of

  Performance Share Awards

  
	

   

  	

   

  	

   

  
	

   

  	

  5.2

  	

  Special

  Performance-Based Share Awards

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  5.2.1

  	

  Eligible Class

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  5.2.2

  	

  Maximum Award

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  5.2.3

  	

  Committee Certification

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  5.2.4

  	

  Terms and Conditions of

  Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  5.2.5

  	

  Stock

  Payout Features

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  5.2.6

  	

  Adjustments for

  Material Changes

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.3

  	

  Grants

  of Stock Bonuses

  
	

   

  	

   

  	

   

  
	

   

  	

  5.4

  	

  Deferred Payments; Stock

  Units

  
	

   

  	

   

  	

   

  
	

   

  	

  5.5

  	

  Cash Bonus Awards

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  5.5.1

  	

  Performance

  Goals

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.6

  	

  Alternative

  Payments

  
	

   

  	

   

  	

   

  
	

  6.

  	

  Other Provisions

  
	

   

  	

   

  
	

   

  	

  6.1

  	

  Rights of Eligible

  Persons, Participants and Beneficiaries

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.1.1

  	

  Employment

  Status

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.1.2

  	

  No

  Employment Contract

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.1.3

  	

  Plan Not Funded

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.2

  	

  Adjustments; Acceleration

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.2.1

  	

  Adjustments

  
										

 

iii

 

	

   

  	

   

  	

  6.2.2

  	

  Acceleration

  of Awards Upon Change in Control

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.2.3

  	

  Possible

  Early Termination of Accelerated Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.2.4

  	

  Golden Parachute

  Limitations

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.3

  	

  Effect of

  Termination of Employment

  
	

   

  	

   

  	

   

  
	

   

  	

  6.4

  	

  Compliance

  with Laws

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.4.1

  	

  General

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.4.2

  	

  Restrictions

  on Transfer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.5

  	

  Tax Withholding

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.5.1

  	

  Provision for Tax

  Withholding Offset

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.5.2

  	

  Tax Loans

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.6

  	

  Plan Amendment, Termination

  and Suspension

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.6.1

  	

  Board

  Authorization

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.6.2

  	

  Stockholder

  Approval

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.6.3

  	

  Amendments

  to Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.6.4

  	

  Limitations

  on Amendments to Plan and Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.7

  	

  Privileges of Stock

  Ownership

  
	

   

  	

   

  	

   

  
	

   

  	

  6.8

  	

  Effective Date of the Plan

  
	

   

  	

   

  	

   

  
	

   

  	

  6.9

  	

  Term of the Plan

  
	

   

  	

   

  	

   

  
	

   

  	

  6.10

  	

  Governing

  Law/Construction/Severability

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.10.1

  	

  Choice of Law

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.10.2

  	

  Severability

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  6.10.3

  	

  Plan Construction

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.11

  	

  Captions

  
	

   

  	

   

  	

   

  
	

   

  	

  6.12

  	

  Effect of Change

  of Subsidiary Status

  
	

   

  	

   

  	

   

  
	

   

  	

  6.13

  	

  Non-Exclusivity

  of Plan

  
	

   

  	

   

  	

   

  
	

  7.

  	

  Definitions

  
	

   

  	

   

  
	

  8.

  	

  Non Employee Director

  Options

  
	

   

  	

   

  
	

   

  	

  8.1

  	

  Participation

  
	

   

  	

   

  	

   

  
	

   

  	

  8.2

  	

  Option Grants

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  8.2.1

  	

  Time

  of Initial Award

  
								

 

iv

 

	

   

  	

   

  	

  8.2.2

  	

  Subsequent Automatic

  Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  8.2.3

  	

  Subsequent

  Discretionary Awards

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  8.3

  	

  Option Price

  
	

   

  	

   

  	

   

  
	

   

  	

  8.4

  	

  Option Period and

  Exercisability

  
	

   

  	

   

  	

   

  
	

   

  	

  8.5

  	

  Termination of Directorship

  
	

   

  	

   

  	

   

  
	

   

  	

  8.6

  	

  Adjustments;

  Accelerations; Terminations

  
	

   

  	

   

  	

   

  
	

   

  	

  8.7

  	

  Acceleration

  Upon a Change in Control Event

  

 

v

 

APEX MORTGAGE CAPITAL, INC.

AMENDED AND RESTATED 1997 STOCK OPTION PLAN

 

1. 

The Plan

 

1.1                               Purpose. 

The purpose of this Plan is to promote the success of the Company and

the interests of its stockholders by attracting, motivating, retaining and

rewarding directors, officers and employees and other Eligible Persons associated

with the management of the Company with awards and incentives for high levels

of performance and improving the financial performance of the Company, by

aligning the interests of the those persons and the Company’s stockholders, and

by attracting, motivating and retaining experienced and knowledgeable

independent directors through the benefits provided under Section 8.  “Corporation” means Apex Mortgage Capital,

Inc. and “Company” means the Corporation and its Subsidiaries,

collectively.  These terms and other

capitalized terms are defined in Section 7.

 

1.2                               Administration and Authorization;

Power and Procedure

 

1.2.1                     Committee.  This Plan will be administered by and all

Awards to Eligible Persons will be authorized by the Committee, other than the

Initial Awards which have been authorized by the Corporation’s stockholder(s)

in connection with approving this Plan. 

Action of the Committee with respect to the administration of this Plan

will be taken pursuant to a majority vote or by written consent of its members.

 

1.2.2                     Plan Awards; Interpretation; Powers

of Committee.  Subject to the express provisions of this

Plan, the Committee will have the authority to:

 

(a)                                  determine

the particular Eligible Persons who will receive Awards;

 

(b)                                 grant

Awards to Eligible Persons, determine the price at which securities will be

offered or awarded and the amount of securities to be offered or awarded to any

of such Eligible Persons, and determine the other specific terms and conditions

of such Awards consistent with the express limits of this Plan, and establish

the installments (if any) in which such Awards will become exercisable or will

vest, or determine that no delayed exercisability or vesting is required, and

establish the events of termination or reversion of such Awards;

 

(c)                                  approve

the forms of Award Agreements (which need not be identical either as to type of

Award or among Participants);

 

(d)                                 construe

and interpret this Plan and any agreements defining the rights and obligations

of the Company and Eligible Persons under this Plan, further define the terms

used in this Plan, and prescribe, amend and rescind rules and regulations

relating to the administration of this Plan;

 

1

 

(e)                                  cancel,

modify, or waive the Corporation’s rights with respect to, or modify,

discontinue, suspend, or terminate any or all outstanding Awards held by

Eligible Persons, subject to any required consent under Section 6.6;

 

(f)                                    accelerate

or extend the exercisability or extend the term of any or all such outstanding

Awards within the maximum 10 year term of Awards under Section 1.6; and

 

(g)                                 make

all other determinations and take such other action as contemplated by this

Plan or as may be necessary or advisable for the administration of this Plan

and the effectuation of its purposes.

 

Notwithstanding the foregoing, the provisions of

Sections 8.2.1 and 8.2.2 relating to Non-Employee Director Awards will be

automatic and, to the maximum extent possible, self-effectuating.

 

1.2.3                     Binding Determinations.  Any action taken by, or inaction of, the Corporation, any

Subsidiary, the Board or the Committee relating or pursuant to this Plan will

be within the absolute discretion of that entity or body and will be conclusive

and binding upon all persons.  No member

of the Board or Committee, or officer of the Corporation or any Subsidiary,

will be liable for any such action or inaction of the entity or body, of

another person or, except in circumstances involving bad faith, of himself or

herself.  Subject only to compliance

with the express provisions hereof, the Board and Committee may act in their

absolute discretion in matters within their authority related to this Plan.

 

1.2.4                     Reliance on Experts.  In making any

determination or in taking or not taking any action under this Plan, the

Committee or the Board, as the case may be, may obtain and may rely upon the

advice of experts, including professional advisors to the Corporation.  No director, officer or agent of the Company

will be liable for any such action or determination taken or made or omitted in

good faith.

 

1.2.5                     Delegation.  The Committee may delegate ministerial, non-discretionary functions to individuals

who are officers or employees of the Company.

 

1.3                               Participation.  Awards may be granted by the Committee only

to those persons that the Committee determines to be Eligible Persons.  An Eligible Person who has been granted an

Award may, if otherwise eligible, be granted additional Awards if the Committee

so determines.

 

1.4                               Shares Available for Awards; Share

Limits.

 

1.4.1                     Shares Available.  Subject to

the provisions of Section 6.2, the capital stock that may be delivered

under this Plan will be shares of the Corporation’s authorized but unissued

Common Stock and any shares of its Common Stock held as treasury shares (the

“Shares”).  The Shares may be delivered

for any lawful consideration.

 

2

 

1.4.2                     Share Limits.  The maximum number of Shares that may be

delivered pursuant to Awards granted to Eligible Persons under this Plan will

not exceed 1,000,000 Shares (the “Share Limit”).  The number of Shares subject to Awards outstanding at any time

will not exceed the number of Shares remaining available for issuance under the

Plan.  The maximum number of Shares

subject to those Options and Stock Appreciation Rights that are granted during

any calendar year to any one individual, subject to Section 1.4.3, will be

limited to 200,000 Shares.  Each of the

foregoing numerical limits is subject to adjustment as contemplated by this

Section 1.4 and Section 6.2.

 

1.4.3                     Limitation on Ownership.

 

(a)                                  No

Awards will be granted under the Plan to any person who, after the grant of

such Award, would be deemed to beneficially own more than 9.8% (in value or in

number of Shares, whichever is more restrictive) of the outstanding Shares of

Common Stock of the Corporation.  For

purposes of this Section 1.4.3, “ownership” is determined in accordance

with the Real Estate Investment Trust provisions of the Code, the constructive

ownership provisions of Section 544 of the Code (as modified by

Section 856(1)(b) of the Code), and Rule 13d-3 promulgated under the

Exchange Act.

 

(b)                                 If,

after an Award is granted, circumstances of ownership (or the Corporation’s

knowledge thereof) change so that the exercise of such Award would cause the

Participant to beneficially own more Shares than are permitted pursuant to

paragraph (a) above, then upon any exercise of such Award that causes such

result, the Corporation shall have the right to deliver to the Participant, in

lieu of Shares, a check or cash in the amount equal to the Fair Market Value of

the Shares otherwise deliverable on the date of exercise (minus any amounts

withheld pursuant to Section 6.5).

 

1.4.4                     Share Reservation; Replenishment

and Reissue of Unvested Awards.  No Award may be granted under this Plan

unless, on the date of grant, the sum of (a) the maximum number of Shares

issuable at any time pursuant to such Award, plus (b) the number of Shares

that have previously been issued pursuant to Awards granted under this Plan,

other than reacquired Shares available for reissue consistent with any

applicable legal limitations, plus (c) the maximum number of Shares that

may be issued at any time after such date of grant pursuant to Awards that are

outstanding on such date, does not exceed the Share Limit.  Shares that are subject to or underlie

Awards that expire or for any reason are canceled or terminated, are forfeited,

fail to vest, or for any other reason are not paid or delivered under this

Plan, as well as reacquired Shares, will again, except to the extent prohibited

by law, be available for subsequent Awards under the Plan.  Except as limited by law, if an Award is or

may be settled only in cash, such Award need not be counted against any of the

limits under this Section 1.4.

 

3

 

1.5                               Grant of Awards.  Subject to the

express provisions of this Plan, the Committee will determine the number of

Shares subject to each Award, the price (if any) to be paid for the Shares or

the Award and, in the case of performance share awards, in addition to matters

addressed in Section 1.2.2, the specific objectives, goals and performance

criteria (such as an increase in sales, market value, earnings or book value

over a base period, the years of service before vesting, the relevant job

classification or level of responsibility or other factors) that further define

the terms of the performance share award. 

Each Award will be evidenced by an Award Agreement signed by the

Corporation and, if required by the Committee, by the Participant.

 

1.6                               Award Period.  The Award Period of any Option, SAR, warrant

or similar right shall expire and any other Award shall either vest or be

forfeited not more than 10 years after the date of grant; provided, however,

that any payment of cash or delivery of Shares pursuant to an Award may be

delayed until a future date if specifically authorized by the Committee in

writing.

 

1.7                               Limitations on Exercise and Vesting

of Awards.

 

1.7.1                     Provisions for Exercise.  Unless the Committee otherwise expressly provides, no Award will

be exercisable or will vest until at least six months after the initial Award

Date, and once exercisable an Award will remain exercisable until the expiration

or earlier termination of the Award.

 

1.7.2                     Procedure.  Any exercisable Award will be deemed to be

exercised when the Corporation receives written notice of such exercise from

the Participant, together with any required payment made in accordance with Section 2.2.2

or 8.4, as the case may be, and any other requirements of exercise,

including any document required by Section 6.4, are satisfied.

 

1.7.3                     Fractional Shares/Minimum Issue.  Fractional share interests will be

disregarded, but may be accumulated. The Committee, however, may determine in

the case of Eligible Persons that cash, other securities, or other property

will be paid or transferred in lieu of any fractional share interests.  No fewer than 100 Shares may be

purchased on exercise of any Award at one time unless the number purchased is

the total number at the time available for purchase under the Award.

 

1.8                               Acceptance of Notes to Finance

Exercise.  The Corporation, in its sole discretion, may

accept one or more notes from any Eligible Person in connection with the

exercise or receipt of any outstanding Award; but any such note will be subject

to the following terms and conditions:

 

1.8.1                     Principal.  The principal of the note will not exceed

the amount required to be paid to the Corporation upon the exercise or receipt

of one or more Awards under the Plan and the note will be delivered directly to

the Corporation in consideration of such exercise or receipt.

 

4

 

1.8.2                     Term.  The initial term of the note will be

determined by the Committee; but the term of the note, including extensions,

will not exceed a period of five years.

 

1.8.3                     Recourse; Security; Compliance.  The note will provide for full recourse to

the Participant and will bear interest at a rate determined by the Committee

but not less than the interest rate necessary to avoid the imputation of

interest under the Code.  If required by

the Committee or by applicable law, the note will be secured by a pledge of any

Shares or rights financed thereby in compliance with applicable law.  The terms, repayment provisions, and

collateral release provisions of the note and the pledge securing the note will

conform with applicable rules and regulations of the Federal Reserve Board as

then in effect.

 

1.8.4                     Termination of Employment.  If the employment of the Participant

terminates, the unpaid principal balance of the note will become due and

payable on the 10th business day after the Severance Date; but if a sale of

such Shares would cause the Participant to incur liability under

Section 16(b) of the Exchange Act, the unpaid balance will become due and

payable on the 10th business day after the first day on which a sale of such

Shares could have been made without incurring such liability assuming for these

purposes that there are no other transactions (or deemed transactions) in

securities of this Corporation by the Participant after such termination.

 

1.9                               No Transferability; Limited

Exception to Transfer Restrictions.

 

1.9.1                     Limit On Exercise and Transfer.  Unless otherwise expressly provided in (or

pursuant to) this Section 1.9, by applicable law and by the Award

Agreement, as the same may be amended, (a) all Awards are non-transferable

and will not be subject in any manner to sale, transfer, anticipation,

alienation, assignment, pledge, encumbrance or charge, (b) Awards may be

exercised only by the Participant, and (c) amounts payable or Shares

issuable pursuant to an Award will be delivered only to (or for the account of)

the Participant.

 

1.9.2                     Exceptions.  The Committee may permit Awards to be

exercised by and paid only to certain persons or entities related to the

Participant pursuant to such conditions and procedures as the Committee may

establish.  Any permitted transfer will

be subject to the condition that the Committee receive evidence satisfactory to

it that the transfer is being made to related persons for estate and/or tax

planning purposes and without consideration (other than nominal

consideration).  Incentive Stock Options

and Restricted Stock Awards, however, will be subject to any and all additional

transfer restrictions under the Code.

 

1.9.3                     Further Exceptions to Limits On

Transfer.  The exercise and transfer restrictions in

Section 1.9.1 will not apply to:

 

(a)                                  transfers

to the Corporation,

 

(b)                                 the

designation of a beneficiary to receive benefits if the Participant dies or, if

the Participant has died, transfers to or exercise by the Participant’s 

 

5

 

beneficiary, or, in the absence of a validly

designated beneficiary, transfers by will or the laws of descent and

distribution,

 

(c)                                  transfers

pursuant to a QDRO if approved or ratified by the Committee,

 

(d)                                 if

the Participant has suffered a disability, permitted transfers or exercises on

behalf of the Participant by the Participant’s legal representative, or

 

(e)                                  the

authorization by the Committee of “cashless exercise” procedures with third

parties who provide financing for the purpose of (or who otherwise facilitate)

the exercise of Awards consistent with applicable laws and the express

authorization of the Committee.

 

2.  Options

 

2.1                               Grants.  One or more Options may be granted under

this Section to any Eligible Person. 

Each Option granted will be designated by the Committee in the applicable

Award Agreement as either an Incentive Stock Option, subject to

Section 2.3, or a Non-Qualified Stock Option.

 

2.2                               Option Price.

 

2.2.1                     Pricing Limits.  The purchase

price per Share of the Shares covered by each Option will be not be less than

100% (110% in the case of a Participant described in Section 2.4) of the

Fair Market Value of the Common Stock on the date of grant.

 

2.2.2                     Payment Provisions.  The

purchase price of any Shares purchased on exercise of an Option granted under

this Section will be paid in full at the time of each purchase in one or a

combination of the following methods: 

(a) in cash or by electronic funds transfer; (b) by certified

or cashier’s check payable to the order of the Corporation; (c) if

permitted by the Committee, by a promissory note of the Participant consistent

with the requirements of Sections 1.8 and 6.4; (d) by notice and

third party payment in such manner as may be authorized by the Committee; or

(e) by the delivery of shares of Common Stock of the Corporation already

owned by the Participant, but the Committee may in its absolute discretion

limit the Participant’s ability to exercise an Award by delivering such shares,

and any shares delivered that were initially acquired upon exercise of a stock

option must have been owned by the Participant at least six months as of the

date of delivery.  Shares of Common

Stock used to satisfy the exercise price of an Option will be valued at their

Fair Market Value on the date of exercise. 

Without limiting the generality of the foregoing, the Committee may

provide that the Option can be exercised and payment made by delivering a

properly executed exercise notice together with irrevocable instructions to a

broker to promptly deliver to the Corporation the amount of sale proceeds necessary

to pay the exercise price and, unless otherwise prohibited by the Committee or

applicable law, any applicable tax withholding under Section 6.5.  The Corporation will not be obligated to

deliver certificates for the shares unless and until it receives full payment

of the 

 

6

 

exercise price therefor and any related withholding

obligations have been satisfied.

 

2.3                               Limitations on Grant and Terms of

Incentive Stock Options.

 

2.3.1                     $100,000

Limit.  To the extent that the aggregate “Fair

Market Value” of Shares with respect to which incentive stock options first

become exercisable by a Participant in any calendar year exceeds $100,000,

taking into account both Shares subject to Incentive Stock Options under this

Plan and stock subject to incentive stock options under all other plans of the

Company or any parent corporation, such options will be treated as Nonqualified

Stock Options.  For this purpose, the

“Fair Market Value” of the stock subject to options will be determined as of

the date the options were awarded.  In

reducing the number of options treated as incentive stock options to meet the

$100,000 limit, the most recently granted options will be reduced first.  To the extent a reduction of simultaneously

granted options is necessary to meet the $100,000 limit, the Committee may, in

the manner and to the extent permitted by law, designate which Shares are to be

treated as Shares acquired pursuant to the exercise of an Incentive Stock

Option.

 

2.3.2                     Option Period.  Except as provided in Section 1.6, each

Option and all rights thereunder will expire no later than 10 years after

the Award Date.

 

2.3.3                     Other Code Limits.  Incentive

Stock Options may only be granted to Eligible Employees of the Corporation or a

Subsidiary who satisfy the eligibility requirements of the Code.  There will be imposed in any Award Agreement

relating to Incentive Stock Options such other terms and conditions as from

time to time are required in order that the Option be an “incentive stock

option” as that term is defined in Section 422 of the Code.

 

2.4                               Limits on 10% Holders.  No Incentive Stock Option may be granted to any person who, at

the time the Option is granted, owns (or is deemed to own under

Section 424(d) of the Code) shares of outstanding Common Stock possessing

more than 10% of the total combined voting power of all classes of stock of the

Corporation, unless the exercise price of such Option is at least 110% of the

Fair Market Value of the stock subject to the Option and such Option by its

terms is not exercisable after the expiration of five years from the date such

Option is granted.

 

2.5                               Option Repricing/Cancellation and

Regrant/Waiver of Restrictions.

 Subject to Section 1.4 and

Section 6.6 and the specific limitations on Awards contained in this Plan,

the Committee from time to time may authorize, generally or in specific cases

only, for the benefit of any Eligible Person any adjustment in the exercise or

purchase price, the vesting schedule, the number of Shares subject to, the

restrictions upon or the term of, an Award granted under this Section by

cancellation of an outstanding Award and a subsequent regranting of an Award,

by amendment, by substitution of an outstanding Award, by waiver or by other

legally valid means.  Such amendment or

other action may result among other changes in an exercise or purchase price

that is higher or lower than 

 

7

 

the exercise or purchase price of the original or

prior Award, provide for a greater or lesser number of Shares subject to the

Award, or provide for a longer or shorter vesting or exercise period.

 

2.6                               Effects of Termination of

Employment; Termination of Subsidiary Status; Discretionary Provisions.

 

2.6.1                     Options - Resignation or Dismissal.  If the Participant’s employment by (or other

service specified in the Award Agreement to) the Company or the Manager, as the

case may be, terminates for any reason (the date of such termination being

referred to as the “Severance Date”) other than Retirement, Total Disability or

death, or “for Cause” (as determined in the discretion of the Committee), the

Participant will have, unless otherwise provided in the Award Agreement and

subject to earlier termination pursuant to or as contemplated by

Section 1.6 or 6.2, 90 days after the Severance Date to exercise

any Option to the extent exercisable on the Severance Date.  In the case of a termination “for Cause”,

the Option will terminate on the Severance Date.  The Option, to the extent not exercisable on the Severance Date,

will terminate in all cases, unless the Award Agreement or the Committee

otherwise provides.

 

2.6.2                     Options - Death or Disability.  If the Participant’s employment by (or

specified service to) the Company or the Manager, as the case may be,

terminates as a result of Total Disability or death, the Participant,

Participant’s Personal Representative or the Participant’s Beneficiary, as the

case may be, will have, unless otherwise provided in the Award Agreement and

subject to earlier termination pursuant to or as contemplated by

Section 1.6 or 6.2, until 12 months after the Severance Date to

exercise any Option to the extent exercisable on the Severance Date.  Any Option to the extent not exercisable on

the Severance Date will terminate.

 

2.6.3                     Options - Retirement.  If the Participant’s employment by (or specified service to) the

Company or the Manager, as the case may be, terminates as a result of

Retirement, the Participant, Participant’s Personal Representative or the Participant’s

Beneficiary, as the case may be, will have, unless otherwise provided in the

Award Agreement and subject to earlier termination pursuant to or as

contemplated by Section 1.6 or 6.2, until 12 months after the

Severance Date to exercise any Nonqualified Stock Option (three months after

the Severance Date if an Incentive Stock Option states it is it be retained) to

the extent exercisable on the Severance Date. 

The Option, to the extent not exercisable on the Severance Date, will

terminate.

 

2.6.4                     Certain SARs.  Any SAR granted concurrently or in tandem

with an Option will have the same post-Severance Date provisions and

exercisability periods as the Option to which it relates, unless the Committee

otherwise provides.

 

2.6.5                     Other Awards.  The Committee will establish in respect of

each other Award granted hereunder the Participant’s rights and benefits (if

any) if the Participant’s 

 

8

 

employment is terminated and in so doing may make

distinctions based upon the cause of termination and the nature of the Award.

 

2.6.6                     Committee Discretion.  Notwithstanding the foregoing provisions of this

Section 2.6, in the event of, or in anticipation of, a termination of

employment with the Company or the Manager, as the case may be, for any reason,

other than a discharge for Cause, the Committee, by express provisions in or by

amendment to the Award Agreement, may increase the portion of the Participant’s

Award available to the Participant, or Participant’s Beneficiary or Personal

Representative, as the case may be, and/or, subject to the provisions of

Section 1.6, extend the exercisability period, upon such terms as the

Committee deems appropriate.

 

2.7                               Options and Rights in Substitution

for Stock Options Granted by Other Corporations.  Options and Stock Appreciation Rights may be

granted to Eligible Persons under this Plan in substitution for employee stock

options granted by other entities to persons who are or who will become

Eligible Persons in respect of the Company, in connection with a distribution,

merger or reorganization by or with the granting entity or an affiliated

entity, or the acquisition by the Company, directly or indirectly, of all or a

substantial part of the stock or assets of the employing entity.

 

3. 

Stock Appreciation Rights 

(Including Limited Stock Appreciation Rights)

 

3.1                               Grants.  The Committee may grant to any Eligible

Person Stock Appreciation Rights either concurrently with the grant of another

Award or in respect of an outstanding Award, in whole or in part, or

independently of any other Award.  Any

Stock Appreciation Right granted in connection with an Incentive Stock Option

will contain such terms as may be required to comply with the provisions of Section 422

of the Code and the regulations promulgated thereunder, unless the holder

otherwise agrees.

 

3.2                               Exercise of Stock Appreciation

Rights.

 

3.2.1                     Exercisability.  Unless the

Award Agreement or the Committee otherwise provides, a Stock Appreciation Right

related to another Award will be exercisable at such time or times, and to the

extent, that the related Award will be exercisable.

 

3.2.2                     Effect on Available Shares.  To the extent that a Stock Appreciation Right is exercised, only

the actual number of delivered Shares will be charged against the maximum

amount of Common Stock that may be delivered pursuant to Awards under this

Plan.  The number of shares subject to

the Stock Appreciation Right and the related Option of the Participant will,

however, be reduced by the number of underlying shares as to which the exercise

related, unless the Award Agreement otherwise expressly provides.

 

3.2.3                     Stand-Alone SARs.  A Stock

Appreciation Right granted independently of any other Award will be exercisable

pursuant to the terms of the Award Agreement 

 

9

 

but in no event earlier than six months after the

Award Date, except in the case of death or Total Disability.

 

3.2.4                     Proportionate Reduction.  If an SAR extends to less than all the Shares covered by the related

Award and if a portion of the related Award is thereafter exercised, the number

of Shares subject to the unexercised SAR shall be reduced only if and to the

extent that the remaining number of Shares covered by the related Award is less

than the remaining number of Shares subject to such SAR.

3.3                               Payment.

 

3.3.1                     Amount.  Unless the Committee otherwise provides,

upon exercise of a Stock Appreciation Right and the attendant surrender of an

exercisable portion of any related Award, the Participant will be entitled to

receive subject to Section 6.5 payment of an amount determined by

multiplying

 

(a)                                  the

difference obtained by subtracting the exercise price per Share under the

related Award (if applicable) or the initial share value specified in the Award

from the Fair Market Value of a share of Common Stock on the date of exercise

of the Stock Appreciation Right, by

 

(b)                                 the

number of Shares with respect to which the Stock Appreciation Right has been

exercised.

 

3.3.2                     Form of Payment.  The Committee,

in its sole discretion, will determine the form in which payment will be made

of the amount determined under Section 3.3.1 above, either solely in cash,

solely in Shares (valued at Fair Market Value on the date of exercise of the

Stock Appreciation Right), or partly in Shares and partly in cash, provided

that the Committee has determined that such exercise and payment are consistent

with applicable law.  If the Committee

permits the Participant to elect to receive cash or Shares (or a combination

thereof) upon exercise, the election will be subject to such conditions as the

Committee may impose.

 

3.4                               Limited Stock Appreciation Rights.  The Committee may grant to any Eligible

Person Stock Appreciation Rights exercisable only upon or in respect of a

change in control or any other specified event (“Limited SARs”) and such

Limited SARs may relate to or operate in tandem or combination with or

substitution for Options, other SARs or other Awards (or any combination

thereof), and may be payable in cash or Shares based on the spread between the

base price of the SAR and a price based upon or equal to the Fair Market Value

of the Shares during a specified period or at a specified time before, after or

including the date of such event.

 

4. 

Restricted Stock Awards

 

4.1                               Grants.  The Committee may grant one or more

Restricted Stock Awards to any Eligible Person.  Each Restricted Stock Award Agreement will specify the number of

Shares to be issued to the Participant, the date of such issuance, the consideration

for such Shares (but not less than the minimum lawful consideration under

applicable state law) payable by 

 

10

 

the Participant, the extent (if any) to which and the

time (if ever) at which the Participant will be entitled to dividends, voting

and other rights in respect of the Shares prior to vesting, and the

restrictions (which may be based on performance criteria, passage of time or

other factors or any combination thereof) imposed on such Shares and the

conditions of release or lapse of such restrictions.  Such restrictions will not lapse earlier than six months after

the Award Date, except to the extent the Committee may otherwise expressly

provide.  Stock certificates evidencing

shares of Restricted Stock pending the lapse of the restrictions (“Restricted

Shares”) will bear a legend making appropriate reference to the restrictions

hereunder and will be held by the Corporation or by a third party designated by

the Committee until the restrictions on such Restricted Shares have lapsed and

the Restricted Shares have vested in accordance with the provisions of the

Award and Section 1.7.  Upon

issuance of the Restricted Stock Award, the Participant may be required to

provide such further assurance and documents as the Committee may require to

enforce the restrictions.

 

4.2                               Restrictions.

 

4.2.1                     Pre-Vesting Restraints. 

Except as provided in Sections 4.1 and 1.9, Restricted

Shares comprising any Restricted Stock Award may not be sold, assigned,

transferred, pledged or otherwise disposed of or encumbered, either voluntarily

or involuntarily, until the restrictions on such Restricted Shares have lapsed

and the Shares have become vested.

 

4.2.2                     Dividend and Voting Rights.  Unless otherwise provided in the applicable

Award Agreement, a Participant receiving a Restricted Stock Award will be

entitled to cash dividend and voting rights for all Shares issued even though

they are not vested, but such rights will terminate immediately as to any

Restricted Shares which cease to be eligible for vesting.

 

4.2.3                     Cash Payments.  If the Participant has been paid or received

cash (including any dividends) in connection with the Restricted Stock Award,

the Award Agreement will specify the extent (if any) to which the cash must be

returned (with or without an earnings factor) as to any Restricted Shares that

cease to be eligible for vesting.

 

4.3                               Return to the Corporation. 

Unless the Committee otherwise expressly provides, Restricted

Shares that remain subject to restrictions as of a Severance Date with respect

to the Participant or are subject to other conditions to vesting that have not

been satisfied by the time specified in the applicable Award Agreement will not

vest and will be returned to the Corporation in such manner and on such terms

as set forth in the Award Agreement or as the Committee otherwise expressly

provides.

 

5. 

Performance Share Awards;

Stock Units; Stock Bonuses

 

5.1                               Grants of Performance Share Awards.  The Committee may grant Performance Share

Awards to Eligible Employees based upon such factors as the Committee deems

relevant in light of the specific type and terms of the award.  An Award Agreement will specify 

 

11

 

the maximum number of Shares (if any) subject to the

Performance Share Award, the consideration (but not less than the minimum

lawful consideration) to be paid for any such Shares as may be issuable to the

Participant, the duration of the Award and the conditions upon which delivery

of any Shares or cash to the Participant will be based.  The amount of cash or Shares or other

property that may be deliverable pursuant to such Award will be based upon the

degree of attainment over a specified period of not more than 10 years (a

“performance cycle”) as may be established by the Committee of such measure(s)

of the performance of the Company (or any part thereof) or the Participant as

may be established by the Committee. 

The Committee may provide for full or partial credit, prior to completion

of such performance cycle or the attainment of the performance achievement

specified in the Award, in the event of the Participant’s death, Retirement, or

Total Disability, a Change in Control Event or in such other circumstances as

the Committee (consistent with Section 6.10.3(b), if applicable) may

determine.

 

5.2                               Special Performance-Based Share

Awards.

 Options or SARs granted with an

exercise price not less than Fair Market Value at the applicable date of grant

for Section 162(m) purposes to Eligible Employees which otherwise satisfy

the conditions to deductibility under Section 162(m) of the Code are

deemed “Qualifying Awards”.  Without

limiting the generality of the foregoing, and in addition to Qualifying Awards

granted under other provisions of this Plan, other performance-based awards

within the meaning of Section 162(m) of the Code (“Performance-Based

Awards”), whether in the form of restricted stock, performance stock, phantom

stock or other rights, the vesting of which depends on the performance of the

Company on a consolidated, segment, subsidiary, or division basis, with

reference to revenue growth, net earnings (before or after taxes or before or

after taxes, interest, depreciation, and/or amortization), cash flow, return on

equity, return on assets or return on net investment, or cost containment or

reduction, or any combination thereof (the “business criteria”) relative to

preestablished performance goals, may be granted under this Plan.  To the extent so applicable, these terms are

used as applied under generally accepted accounting principles and in the

Company’s financial reporting.  The

applicable business criterion or criteria and the specific performance goals

must be approved by the Committee in advance of any applicable deadlines under

the Code and while the performance relating to such goals remains substantially

uncertain.  The applicable performance

measurement period may be not less than one (except as provided in

Section 1.6) nor more than 10 years.  

Other types of performance and non-performance awards may also be

granted under the other provisions of this Plan.  The following provisions relate to all Performance-Based Awards

(other than Qualifying Awards) granted under this Plan:

 

5.2.1                     Eligible Class.  The eligible class of persons for Awards

under this Section is executive officers of the Corporation.

 

5.2.2                     Maximum Award.  Subject to Section 1.4.2, in no event

will grants in any calendar year to any one individual under this

Section 5.2 relate to more than 250,000 shares or, (if payable solely in

cash) a cash amount of more than $1,000,000.

 

12

 

5.2.3                     Committee Certification.  To the extent required by

Section 162(m), before any Performance-Based Award under this

Section 5.2 is paid, the Committee must certify that the material terms of

the Performance-Based Award were satisfied.

 

5.2.4                     Terms and Conditions of Awards.  The Committee will have discretion to

determine the restrictions or other limitations of the individual Awards under

this Section 5.2 (including the authority to reduce Awards, payouts or

vesting or to pay no Awards, in its sole discretion, if the Committee preserves

such authority at the time of grant by language to this effect in its

authorizing resolutions or otherwise).

 

5.2.5                     Stock Payout Features.  In lieu of cash payment of an Award, the Committee may require or

allow all or a portion of the Award to be paid in the form of Shares,

Restricted Shares, an Option, or another Award.

 

5.2.6                     Adjustments for Material Changes.  Performance goals or other features of an

Award under this Section 5.2 may provide that they (a) shall be

adjusted to reflect a change in corporate capitalization, a corporate

transaction (such as a reorganization, combination, separation, or merger) or a

complete or partial corporate liquidation, or (b) shall be calculated

either without regard for or to reflect any change in accounting policies or

practices affecting the Company and/or the business criteria or performance

goals or targets, or (c) shall be adjusted for any other circumstance or

event, or (d) any combination of (a) through (c), but only to the

extent in each case that such adjustment or determination in respect of

Performance-Based Awards would be consistent with the requirements of

Section 162(m) to qualify as performance-based compensation.

 

5.3                               Grants of Stock Bonuses.  The Committee may grant a Stock Bonus to any Eligible Person to

reward exceptional or special services, contributions or achievements in the

manner and on such terms and conditions (including any restrictions on such

Shares) as determined from time to time by the Committee.  The number of Shares so awarded will be

determined by the Committee.  The Award

may be granted independently or in lieu of a cash bonus.

 

5.4                               Deferred Payments; Stock Units.  The Committee may authorize for the benefit

of any Eligible Person the deferral of any payment of cash or Shares that may

otherwise become due or of cash otherwise payable under this Plan or otherwise,

in the form of stock units payable in cash or Shares or by other means, and may

provide for accretion thereof based upon such deferment, at the election or at

the request of the Participant, subject to any other applicable terms of this

Plan.  Such deferral will be subject to

such further conditions, restrictions or requirements as the Committee may

impose, subject to any then vested rights of Participants.

 

13

 

5.5                               Cash Bonus Awards.

 

5.5.1                     Performance Goals.  The Committee may establish a program of annual incentive awards

that are payable in cash to Eligible Persons based upon the extent to which

performance goals are met during the performance period.  The performance goals may depend upon the

performance of the Company on a consolidated, subsidiary division basis with

reference to revenues, net earnings (before or after interest, taxes,

depreciation, or amortization), cash flow, return on equity or on assets or net

investment, cost containment or reduction, or achievement of strategic goals

(or any combination of such factors). 

In addition, the award may depend upon the Eligible Employee’s

individual performance.

 

5.6                               Alternative Payments.  In lieu of cash payment of an Award, the Committee may require or

allow all or a portion of the Award to be paid or credited in the form of

Shares, Restricted Shares, an Option or other Award.

 

6.  Other Provisions

 

6.1                               Rights

of Eligible Persons, Participants and

Beneficiaries.

 

6.1.1                     Employment Status. 

Status as an Eligible Person will not be construed as a

commitment that any Award will be made under this Plan to an Eligible Person or

to Eligible Persons generally.

 

6.1.2                     No Employment Contract.  Nothing contained in this Plan (or in any other documents related

to this Plan or to any Award) will confer upon any Eligible Person or other

Participant any right to continue in the employ or other service of the Company

or the Manager, as the case may be, or constitute any management or other

contract or agreement of employment or other service, nor will interfere in any

way with the right of the Company or the Manager, as the case may be, to

otherwise change a person’s compensation or other benefits or to terminate the

employment or service of such person, with or without cause.  This Plan or any related document will not,

however, adversely affect any independent contractual right of such person

without the Participant’s consent.

 

6.1.3                     Plan Not Funded.  Awards payable

under this Plan will be payable in Shares or from the general assets of the

Corporation, and (except as provided in Section 1.4.3) no special or

separate reserve, fund or deposit will be made to assure payment of such

Awards.  No Participant, Beneficiary or

other person will have any right, title or interest in any fund or in any

specific asset (including Shares) of the Company by reason of any Award

hereunder.  Neither the provisions of

this Plan (or of any related documents), nor the creation or adoption of this

Plan, nor any action taken pursuant to the provisions of this Plan will create,

or be construed to create, a trust of any kind or a fiduciary relationship

between the Company and any Participant, Beneficiary or other person.  To the extent that a Participant,

Beneficiary or other person acquires a right to receive 

 

 

14

 

payment pursuant to any Award hereunder, such right

will be no greater than the right of any unsecured general creditor of the

Company.

 

6.2                               Adjustments; Acceleration.

 

6.2.1                     Adjustments.  The following provisions will apply in the

case of (i) any extraordinary dividend or other extraordinary distribution

occurs in respect of the Common Stock (whether in the form of cash, Common

Stock, other securities, or other property), (ii) any reclassification,

recapitalization, stock split (including a stock split in the form of a stock

dividend), or reverse stock split, (iii) any reorganization, merger,

combination, consolidation, split-up, spin-off, combination, material

repurchase or exchange of Common Stock or other securities of the Corporation,

(iv) any similar, unusual or extraordinary corporate transaction (or event

in respect of the Common Stock) or (v) a sale of substantially all the

assets of the Corporation as an entirety. 

In such event, the Committee will, in such manner and to such extent (if

any) as it deems appropriate and equitable:

 

(a)                                  (i)                                     proportionately

adjust any or all of (1) the number and type of Shares (or other

securities) that thereafter may be made the subject of Awards (including the

specific maximum and numbers of shares set forth elsewhere in this Plan),

(2) the number, amount and type of Shares (or other securities or

property) subject to any or all outstanding Awards, (3) the grant,

purchase, or exercise price of any or all outstanding Awards, (4) the

securities, cash or other property deliverable upon exercise of any outstanding

Awards, or (5) the performance standards appropriate to any outstanding

Awards, or

 

(ii)                                  in

the case of an extraordinary dividend or other distribution, recapitalization,

reclassification, merger, reorganization, consolidation, combination, sale of

assets, split up, exchange, or spin off, make provision for a cash payment or

for the substitution or exchange of any or all outstanding Awards or the cash,

securities or property deliverable to the holder of any or all outstanding

Awards based upon the distribution or consideration payable to holders of the

Common Stock of the Corporation upon or in respect of such event.

 

(b)                                 In

each case, with respect to Awards of Incentive Stock Options, no such adjustment

will be made that would cause the Plan to violate Section 424(a) of the

Code or any successor provisions without the written consent of holders

materially adversely affected thereby.

 

(c)                                  In

any of such events, the Committee may take such action sufficiently prior to

such event if necessary to permit the Participant to realize the 

 

15

 

benefits intended to be conveyed with respect to the

underlying shares in the same manner as is available to stockholders generally.

 

6.2.2                     Acceleration of Awards Upon Change

in Control.  Unless prior to a Change in Control Event

the Committee determines that, upon its occurrence, benefits under any or all

Awards will not accelerate or determines that only certain or limited benefits

under any or all Awards will be accelerated and the extent to which they will

be accelerated, and/or establishes a different time in respect of such Event

for such acceleration, then upon the occurrence of a Change in Control Event

 

(a)                                  each

Option and Stock Appreciation Right will become immediately exercisable,

 

(b)                                 Restricted

Stock will immediately vest free of restrictions, and

 

(c)                                  each

Performance Share Award will become payable to the Participant.

 

However, in the case of a transaction intended to be

accounted for as a pooling of interests transaction, the Committee shall have

no discretion with respect to the foregoing acceleration of Awards.  The Committee may override the limitations

on acceleration in this Section 6.2.2 by express provision in the Award

Agreement and may accord any Eligible Person a right to refuse any

acceleration, whether pursuant to the Award Agreement or otherwise, in such

circumstances as the Committee may approve.

 

Any acceleration of Awards will comply with applicable

legal requirements and, if the circumstances require, may be deemed by the

Committee to occur an instant before the event.

 

6.2.3                     Possible Early Termination of

Accelerated Awards.  If any Option or other right to acquire

Shares under this Plan (other than under Section 8) has been fully

accelerated as required or permitted by Section 6.2.2 but is not exercised

at or prior to (a) a dissolution of the Corporation, or (b) an event

described in Section 6.2.1 that the Corporation does not survive, or

(c) the consummation of an event described in Section 6.1 involving a

Change of Control approved by the Board, the Option or right will terminate,

subject to any provision that has been expressly made by the Committee through

a plan of reorganization approved by the Board or otherwise for the survival,

substitution, assumption, exchange or other settlement of the Option or right.

 

6.2.4                     Golden Parachute Limitations.  Unless otherwise specified in an Award

Agreement or expressly approved by the Committee, no Award will be accelerated

under this Plan to an extent or in a manner that would not be fully deductible

by the Company for federal income tax purposes because of Section 280G of

the Code, nor will any payment hereunder be accelerated if any portion of such

accelerated payment would not be deductible by the Company because of

Section 280G of the Code.  If a

holder would be entitled to benefits or payments hereunder and under any other

plan or program that would constitute 

 

16

 

“parachute payments” as defined in Section 280G

of the Code, then the holder may by written notice to the Company designate the

order in which such parachute payments will be reduced or modified so that the

Company is not denied federal income tax deductions for any “parachute

payments” because of Section 280G of the Code.

 

6.3                               Effect of Termination of Employment.  The Committee will establish in respect of

each Award granted to an Eligible Person the effect of a termination of

employment or service on the rights and benefits thereunder and in so doing may

make distinctions based upon the cause of termination.

 

6.4                               Compliance with Laws.

 

6.4.1                     General.  This Plan, the granting, vesting and exercise

of Awards under this Plan and the offer, issuance and delivery of Shares and/or

the payment of money under this Plan or under Awards granted hereunder are

subject to compliance with all applicable federal and state laws, rules and

regulations (including but not limited to state and federal securities law,

federal margin requirements) and to such approvals by any listing, regulatory

or governmental authority as may, in the opinion of counsel for the

Corporation, be necessary or advisable in connection therewith.  Any securities delivered under this Plan

will be subject to such restrictions, and to any restrictions the Committee may

require to preserve a pooling of interests under generally accepted accounting

principles, and the person acquiring such securities will, if requested by the

Corporation, provide such assurances and representations to the Corporation as

the Corporation may deem necessary or desirable, to assure compliance with all

applicable legal requirements.

 

6.4.2                     Restrictions on Transfer.  If the offer or sale of any Shares under the Plan is not

registered under the Securities Act, but an exemption is available which

requires an investment representation or other representation, each Participant

will be required to represent that the Shares are being acquired for

investment, and not with a view to the sale or distribution thereof, and to

make such other representations as are deemed necessary or appropriate in the

opinion of the Committee and the Corporation’s counsel.  Any determination by the Corporation and its

counsel in connection with any other the matters set forth in this

Section 6.4 will be conclusive and binding on all persons.  Stock certificates evidencing Shares

acquired under the Plan pursuant to an unregistered transaction will bear the

following restrictive legend and such other restrictive legends as are required

or deemed advisable under the provisions of any applicable law:

 

“THE SALE OF THE SECURITIES REPRESENTED HEREBY HAVE

NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE

“ACT”).  ANY TRANSFER OF SUCH SECURITIES

WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS

TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER 

 

17

 

SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER

TO COMPLY WITH THE ACT.”

 

If, in the opinion of the Corporation and its counsel,

any legend placed on a stock certificate representing Shares sold under the

Plan is no longer required, the holder of such certificate may exchange such

certificate for a certificate representing the same number of Shares without

such legend.

 

6.5                               Tax Withholding.

 

6.5.1                     Provision for Tax Withholding Offset.  Upon any exercise, vesting, or payment of

any Award or upon the disposition of Shares acquired pursuant to the exercise

of an Incentive Stock Option prior to satisfaction of the holding period

requirements of Section 422 of the Code, the Company shall have the right

at its option to (a) require the Participant (or Personal Representative

or Beneficiary, as the case may be) to pay or provide for payment of the amount

of any taxes which the Company may be required to withhold with respect to such

Award event or payment or (b) deduct from any amount payable in cash the

amount of any taxes which the Company may be required to withhold with respect

to such cash payment.  In any case where

a tax is required to be withheld in connection with the delivery of Shares

under this Plan, the Committee may in its sole discretion (subject to Section 6.4)

grant (either at the time of the Award or thereafter) to the Participant the

right to elect, pursuant to such rules and subject to such conditions as the

Committee may establish, to have the Corporation reduce the number of Shares to

be delivered by (or otherwise reacquire) the appropriate number of Shares

valued at their then Fair Market Value, to satisfy such withholding obligation.

 

6.5.2                     Tax Loans.  If so provided in the Award Agreement, the

Company may, to the extent permitted by law, authorize a loan to an Eligible

Person in the amount of any taxes that the Company may be required to withhold

with respect to Shares received (or disposed of, as the case may be) pursuant

to a transaction described in Section 6.5.1.  Such a loan will be for a term, at a rate of interest and

pursuant to such other terms and conditions as the Company, under applicable

law may establish and such loan need not comply with the provisions of

Section 1.8.

 

6.6                               Plan

Amendment, Termination and Suspension.

 

6.6.1                     Board Authorization.  The Board may, at any time, terminate or, from time to time,

amend, modify or suspend this Plan, in whole or in part.  No Awards may be granted during any

suspension of this Plan or after termination of this Plan, but the Committee

will retain jurisdiction as to Awards then outstanding in accordance with the

terms of this Plan.

 

6.6.2                     Stockholder Approval.  To the extent then required under Sections 422 and 424

of the Code or any other applicable law, or deemed necessary or advisable by

the Board, any amendment to this Plan shall be subject to stockholder approval.

 

18

 

6.6.3                     Amendments to Awards.  Without limiting any other express authority of the Committee

under but subject to the express limits of this Plan, the Committee by agreement

or resolution may waive conditions of or limitations on Awards to Participants

that the Committee in the prior exercise of its discretion has imposed, without

the consent of a Participant, and may make other changes to the terms and

conditions of Awards that do not affect in any manner materially adverse to the

Participant, the Participant’s rights and benefits under an Award.

 

6.6.4                     Limitations on Amendments to Plan

and Awards.  No amendment, suspension or termination of

this Plan or change of or affecting any outstanding Award will, without written

consent of the Participant, affect in any manner materially adverse to the

Participant any rights or benefits of the Participant or obligations of the

Corporation under any Award granted under this Plan prior to the effective date

of such change.  Changes contemplated by

Section 6.2 will not be deemed to constitute changes or amendments for

purposes of this Section 6.6.

 

6.7                               Privileges of Stock Ownership.  Except as otherwise expressly authorized by

the Committee or this Plan, a Participant will not be entitled to any privilege

of stock ownership as to any Shares not actually delivered to and held of

record by the Participant.  No

adjustment will be made for dividends or other rights as a stockholder for which

a record date is prior to such date of delivery.

 

6.8                               Effective Date of the Plan.  This Plan is effective as of December 3, 1997 (the

“Effective Date”).  The Plan was

approved by the Corporation’s stockholder(s) on October 17, 1997.

 

6.9                               Term of the Plan.  No Award may be

granted under this Plan more than ten years after the Effective Date (the

“termination date”).  Unless otherwise

expressly provided in this Plan or in an applicable Award Agreement, any Award

granted prior to the termination date may extend beyond such date, and all

authority of the Committee with respect to Awards hereunder, including the

authority to amend an Award, will continue during any suspension of this Plan

and in respect of Awards outstanding on the termination date.

 

6.10                        Governing

Law/Construction/Severability.

 

6.10.1              Choice of Law.  This Plan, the Awards, all documents

evidencing Awards and all other related documents will be governed by, and

construed in accordance with the laws of the State of California.

 

6.10.2              Severability.  If a court of competent jurisdiction holds

any provision invalid and unenforceable, the remaining provisions of this Plan

will continue in effect.

 

6.10.3              Plan Construction.

 

(a)                                  Rule 16b-3.  It is the intent of the Corporation that the

Awards hereunder satisfy and be interpreted in a manner that, in the case of

Participants who are or may be subject to Section 16 of the Exchange Act,

satisfies the applicable requirements of Rule 16b–3 so that such

persons (unless they 

 

19

 

otherwise agree) will be entitled to the benefits of

Rule 16b–3 or other exemptive rules under Section 16 of the

Exchange Act in respect of those transactions and will not be subjected to

avoidable liability thereunder.  If any

provision of this Plan or of any Award would otherwise frustrate or conflict

with the intent expressed above, that provision to the extent reasonable will

be interpreted as to avoid such conflict. 

If the conflict remains irreconcilable, the Committee may disregard the

provision if it concludes that to do so furthers the interest of the

Corporation, is fair to the affected Participant and is consistent with the

purposes of this Plan as to such persons in the circumstances.

 

(b)                                 Section 162(m).  It is the further intent of the Company

that, to the extent the Corporation or Awards under this Plan may be or become

subject to Section 162(m), Options or SARs with an exercise or base price

not less than Fair Market Value on the date of grant and performance awards

under Section 5.2 of this Plan that are granted to or held by a person

subject to Section 162(m) of the Code will qualify as performance-based

compensation under Section 162(m) of the Code, and this Plan will be

interpreted consistent with such intent.

 

6.11                        Captions.  Captions and headings are given to the

sections and subsections of this Plan solely as a convenience to facilitate

reference.  Such headings will not be

deemed in any way material or relevant to the construction or interpretation of

this Plan or any provision thereof.

 

6.12                        Effect of Change of Subsidiary

Status.  For purposes of this Plan and any Award

hereunder, if an entity ceases to be a Subsidiary a termination of employment

and service will be deemed to have occurred with respect to each Eligible

Person in respect of such Subsidiary who does not continue as an Eligible

Person in respect of another entity within the Company.

 

6.13                        Non-Exclusivity of Plan.  Nothing in this Plan will limit or be deemed to limit the

authority of the Board or the Committee to grant awards or authorize any other

compensation, with or without reference to the Common Stock, under any other

plan or authority.

 

7. 

Definitions

 

“Award”

means an award of any Option, Stock Appreciation Right, Restricted Stock,

Stock Bonus, performance share award, stock unit, dividend equivalent or

deferred payment right or other right or security that would constitute a

“derivative security” under Rule 16a–1(c) of the Exchange Act, or

any combination thereof, whether alternative or cumulative, authorized by and

granted under this Plan.

 

“Award

Agreement” means any writing setting forth the terms of an

Award that has been authorized by the Committee.

 

20

 

“Award

Date” means the date upon which the Committee took the action

granting an Award or such later date as the Committee designates as the Award

Date at the time of the Award or, in the case of Awards under Section 8,

the applicable dates set forth therein.

 

“Award

Period” means the period beginning on an Award Date and

ending on the expiration date of such Award.

 

“Beneficiary”

means the person, persons, trust or trusts designated by a Participant or, in

the absence of a designation, entitled by will or the laws of descent and

distribution, to receive the benefits specified in the Award Agreement and

under this Plan if the Participant dies, and means the Participant’s executor

or administrator if no other Beneficiary is designated and able to act under

the circumstances.

 

“Board”

means the Board of Directors of the Corporation.

 

“Change

in Control Event” means any of the following:

 

(a)                                  Approval

by the stockholders of the Corporation of the dissolution or liquidation of the

Corporation;

 

(b)                                 Approval

by the stockholders of the Corporation of an agreement to merge or consolidate,

or otherwise reorganize, with or into one or more entities that are not

Subsidiaries or other affiliates, as a result of which less than 50% of the

outstanding voting securities of the surviving or resulting entity immediately

after the reorganization are, or will be, owned, directly or indirectly, by

stockholders of the Corporation immediately before such reorganization

(assuming for purposes of such determination that there is no change in the

record ownership of the Corporation’s securities from the record date for such

approval until such reorganization and that such record owners hold no

securities of the other parties to such reorganization), but including in such

determination any securities of the other parties to such reorganization held

by affiliates of the Corporation);

 

(c)                                  Approval

by the stockholders of the Corporation of the sale of substantially all of the

Corporation’s business and/or assets as an entity to a person or entity that is

not a Subsidiary or other affiliate; or

 

(d)                                 Any

“person”

(as such term is used in Sections 13(d) and 14(d) of the Exchange Act

but excluding any person described in and satisfying the conditions of

Rule 13d–1(b)(1) thereunder) becomes the beneficial owner (as

defined in Rule 13d–3 under the Exchange Act), directly or

indirectly, of securities of the Corporation representing more than 50% of the

combined voting power of the Corporation’s then outstanding securities entitled

to then vote generally in the election of directors of the Corporation; or

 

(e)                                  During

any period not longer than two consecutive years, individuals who at the

beginning of such period constituted the Board cease to constitute at least a

majority thereof, unless the election, or the nomination for election by the

Corporation’s stockholders, of each new Board member was approved by a vote 

 

21

 

of at least three-fourths of the Board members then

still in office who were Board members at the beginning of such period

(including for these purposes, new members whose election or nomination was so

approved).

 

“Code”

means the Internal Revenue Code of 1986, as amended from time to time.

 

“Commission”

means the Securities and Exchange Commission.

 

“Committee”

means one or more committees appointed by the Board to administer this Plan,

each of which will be comprised of two or more directors meeting such criteria

as the Board may establish from time to time in order to satisfy any applicable

legal or regulatory requirements.

 

“Common

Stock” means the Common Stock of the Corporation and such

other securities or property as may become the subject of Awards, or become

subject to Awards, pursuant to an adjustment made under Section 6.2 of

this Plan.

 

“Company”

means, collectively, the Corporation and its Subsidiaries.

 

“Corporation”

means Apex Mortgage Capital, Inc., a Maryland corporation, and its successors.

 

“Eligible

Employee” means an officer (whether or not a director) or

employee of the Company.

 

“Eligible

Person” means an Eligible Employee, or any Other Eligible

Person, as determined by the Committee.

 

“Exchange

Act” means the Securities Exchange Act of 1934, as amended

from time to time.

 

“Fair

Market Value” on any date means (a) if the stock is

listed or admitted to trade on a national securities exchange, the closing

price of the stock on the Composite Tape, as published in the Western Edition

of The Wall Street Journal, of the principal national securities exchange on

which the stock is so listed or admitted to trade, on such date, or, if there

is no trading of the stock on such date, then the closing price of the stock as

quoted on such Composite Tape on the next preceding date on which there was

trading in such shares; (b) if the stock is not listed or admitted to

trade on a national securities exchange, the last price for the stock on such

date, as furnished by the National Association of Securities Dealers, Inc. (“NASD”)

through the NASDAQ National Market Reporting System or a similar organization

if the NASD is no longer reporting such information; (c) if the stock is

not listed or admitted to trade on a national securities exchange and is not

reported on the National Market Reporting System, the mean between the bid and

asked price for the stock on such date, as furnished by the NASD or a similar

organization; or (d) if the stock is not listed or admitted to trade on a

national securities exchange, is not reported on the National Market Reporting

System and if bid and asked prices for the stock are not furnished by the NASD

or a similar organization, the value as established by the Committee at such

time for purposes of this Plan.

 

“Incentive

Stock Option” means an Option that is designated and intended

as an incentive stock option within the meaning of Section 422 of the

Code, the award of that contains such provisions (including but not limited to

the receipt of stockholder approval of this Plan, if the award is made 

 

22

 

prior to such approval) and is made under such circumstances and to

such persons as may be necessary to comply with that section.

 

“Initial

Awards” means the Options granted immediately prior to the

effectiveness of the registration statement relating to the Corporation’s

initial public offering, which Options are granted to officers and employees of

the Corporation and the Manager and which are exercisable for an aggregate of

300,000 shares of Common Stock.

 

“Manager”

means TCW Investment Management Company.

 

“Nonqualified

Stock Option” means an Option that is designated as a

Nonqualified Stock Option and will include any Option intended as an Incentive

Stock Option that fails to meet the applicable legal requirements thereof.  Any Option granted hereunder that is not

designated as an incentive stock option will be deemed to be designated a

nonqualified stock option under this Plan and not an incentive stock option

under the Code.

 

“Non-Employee

Director” means a member of the Board of Directors of the

Corporation who is not an officer or employee of the Company.  For purposes of this Plan, the Chairman of

the Board will be deemed an officer of the Company.

 

“Option”

means an option to purchase Common Stock granted under this

Plan.  The Committee will designate any

Option granted to an Eligible Person as a Nonqualified Stock Option or an

Incentive Stock Option.

 

“Other

Eligible Person” means any Non-Employee Director, any

director, officer or employee of the Manager, or any other natural person

consultant or advisor to the Company (or any natural person employee of any

consultant or advisor to the Company), in each case, who renders or has

rendered bona  fide services to the Company (other than services

in connection with the offering or sale of securities of the Company in a

capital raising transaction or services that directly or indirectly promote or

maintain a market for the Company’s securities).

 

“Participant”

means an Eligible Person who has been granted an Award under this Plan and a

Non-Employee Director who has been received an Award under Section  8 of

this Plan.

 

“Performance

Share Award” means an Award of a right to receive Shares

under Section 5.1, or to receive Shares or other compensation (including

cash) under Section 5.2, the issuance or payment of that is contingent

upon, among other conditions, the attainment of performance objectives

specified by the Committee.

 

“Personal

Representative” means the person or persons who, upon the

disability or incompetence of a Participant, has acquired on behalf of the

Participant, by legal proceeding or otherwise, the power to exercise the rights

or receive benefits under this Plan by virtue of having become the legal

representative of the Participant.

 

“Plan”

means this Apex Mortgage Capital, Inc. 1997 Stock Option Plan, as amended from

time to time.

 

“QDRO”

means a qualified domestic relations order.

 

23

 

“Restricted

Shares” or “Restricted Stock” means Shares awarded to

a Participant under this Plan, subject to payment of such consideration, if

any, and such conditions on vesting (which may include, among others, the

passage of time, specified performance objectives or other factors) and such

transfer and other restrictions as are established in or pursuant to this Plan

and the related Award Agreement, for so long as such Shares remain unvested

under the terms of the applicable Award Agreement.

 

“Retirement”

means retirement with the consent of the Company or the Manager, as the case

may be, or, from active service as an employee or officer of the Company or the

Manager, as the case may be, on or after attaining age 55 with ten or more

years of service or age 65, or, in the case of a Non-Employee Director,

retirement or failure to stand for reelection, with the consent of the Board of

Directors, on or after age 55 with ten or more years of service, or in any case

after age 65.

 

“Rule

16b-3” means Rule 16b–3 as promulgated by the

Commission pursuant to the Exchange Act, as amended from time to time.

 

“Securities

Act” means the Securities Act of 1933, as amended from time

to time.

 

“Stock

Appreciation Right” or “SAR” means a right authorized under this

Plan to receive a number of Shares or an amount of cash, or a combination of

Shares and cash, the aggregate amount or value of which is determined by

reference to a change in the Fair Market Value of the Common Stock.

 

“Stock

Bonus” means an Award of Shares granted under this Plan for

no consideration other than past services and without restriction other than

such transfer or other restrictions as the Committee may deem advisable to

assure compliance with law.

 

“Stock

Unit” means a bookkeeping entry which serves a unit of

measurement relative to a Share for purposes of determining the payment of a

deferred benefit or right under the Plan.

 

“Subsidiary”

means any corporation or other entity a majority of whose outstanding voting

stock or voting power is beneficially owned directly or indirectly by the

Corporation.

 

“Total

Disability” means a disability where Participant is unable to

effectively engage in the material activities required for Participant’s

position with the Company or the Manager, as the case may be, by reason of any

medically determinable physical or mental impairment that can be expected to

result in death or that has lasted or can be expected to last for a period of

90 consecutive days or for shorter periods aggregating 180 days in any

consecutive 12–month period.

 

8.  Non

Employee Director Options

 

8.1                               Participation.  Awards under this Section 8 will be made only to

Non-Employee Directors and will be evidenced by Award Agreements in the form

adopted by the Committee.

 

24

 

8.2                               Option Grants.

 

8.2.1                     Time of Initial Award.  After approval of this Plan by the stockholder(s) of the

Corporation, and upon the closing of the Corporation’s initial public offering,

each person who is then a Non-Employee Director will automatically be granted

(without any action by the Board or Committee) a Non-qualified Stock Option

(the Award Date of which will be the date of the closing of such initial public

offering) to purchase 25,000 shares of Common Stock at the price that the

Corporations Common Stock is offered in such initial public offering.

 

8.2.2                     Subsequent Automatic Awards.  If any person who is not then an officer or

employee of the Company becomes a director of the Corporation, such person will

automatically be granted (without any action by the Board or Committee) a

Non-qualified Stock Option (the Award Date of which will be the date such

person takes office) to purchase 25,000 Shares.

 

8.2.3                     Subsequent Discretionary Awards. The Committee

shall have the authority to grant additional Options to Non-Employee Directors

from time to time; provided, however that no more than 50,000 shares, subject

to adjustment as contemplated by Section 6.2, in the aggregate, shall be

subject to Options made to any one Non-Employee Director under this Section 8.2

and provided further that any such discretionary Option shall be subject to

contemporaneous approval or ratification by a majority of the members of the

Board of Directors and a majority of the Directors who are not recipients of

such grants.

 

8.3                               Option Price. 

The purchase price per share of the Common Stock covered by each

Option granted pursuant to Section 8.2.2 or Section 8.2.3 will be 100% of the

Fair Market Value of the Common Stock on the Award Date.  The exercise price of any Option granted

under this Section will be paid in full at the time of each purchase in cash or

by check or in Shares valued at the Fair Market Value on the date of exercise

of the Option, or partly in such shares and partly in cash, but any such shares

used in payment must be owned by the Participant at least six months prior to

the date of exercise.  Any notice and

third party cashless exercise payment procedures authorized by the Committee

with respect to Options under Section 2 may be utilized with respect to Options

granted under Section 8.2 unless the Committee or applicable law otherwise

provide.

 

8.4                               Option Period and Exercisability.  Each Option granted under this Section 8 and

all rights or obligations thereunder will expire on the day before the 10th

anniversary of the Award Date and will be subject to earlier termination as

provided below. Each Option granted under Section 8.2 shall become exercisable

no earlier than six months after the Award Date.  Unless the Board or Committee otherwise provides in the

applicable Award Agreement, an Option will vest as follows:  one-third on each of the first, second and

third anniversaries of the date of grant.

 

8.5                               Termination of Directorship.  If a Non-Employee Director’s services as a

member of the Board of Directors terminate by reason of death, Total Disability

or Retirement, an Option granted pursuant to this Section 8 held by such

Participant will immediately 

 

25

 

become and will remain exercisable for nine months

after the date of such termination or until the expiration of the stated term

of such Option, whichever first occurs. 

If a Non-Employee Director’s services as a member of the Board of

Directors terminate for any other reason, any portion of an Option granted

pursuant to this Section that is not then exercisable will terminate and any

portion of such Option that is then exercisable may be exercised for six months

after the date of such termination or until the expiration of the stated term

whichever first occurs.

 

8.6                               Adjustments; Accelerations;

Terminations.

 Options granted under this

Section 8 will be subject to adjustments, accelerations and terminations

as provided in Section 6.2, but only to the extent that in the case of a

Change in Control Event such effect and any Board or Committee action in

respect thereof is effected pursuant to the terms of a reorganization agreement

approved by stockholders of the Corporation or is otherwise consistent with the

effect on Options held by persons other than executive officers or directors of

the Corporation (or, if there are none, consistent in respect of the underlying

shares with the effect on stockholders generally).

 

8.7                               Acceleration Upon a Change in

Control Event.  Upon the occurrence of a Change in Control

Event and acceleration under Section 6.2.2, each Option granted under

Section 8.2 hereof will become immediately exercisable in full.  To the extent that any Option granted under

this Section 8 is not exercised prior to (a) a dissolution of the

Corporation or (b) a merger or other corporate event that the Corporation

does not survive, and no provision is (or consistent with the provisions of

this Plan can be) made for the assumption, conversion, substitution or exchange

of the Option, the Option will terminate upon the occurrence of such event.

 

26

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