Document:

Exhibit 10(a)

 

BRINKER
INTERNATIONAL, INC.

STOCK OPTION AND INCENTIVE PLAN

 

SECTION 1

 

GENERAL

 

1.1   Purpose.   The
Brinker International, Inc. Stock Option and Incentive Plan (the “Plan”)
has been established by Brinker International, Inc. (the “Company”) (i) to
attract and retain persons eligible to participate in the Plan; (ii) motivate
Participants, by means of appropriate incentives, to achieve long-range goals; (iii) provide
incentive compensation opportunities that are competitive with those of other
similar companies; and (iv) further align Participants’ interests with
those of the Company’s other shareholders through compensation that is based on
the Company’s common stock; and thereby promote the long-term financial
interest of the Company and the Related Companies, including the growth in
value of the Company’s equity and enhancement of long-term shareholder return.

 

1.2   Participation.   Subject
to the terms and conditions of the Plan, the Committee shall determine and
designate, from time to time, from among the Eligible Employees, those persons
who will be granted one or more Awards under the Plan, and thereby become “Participants”
in the Plan. In the discretion of the Committee, a Participant may be granted
any Award permitted under the provisions of the Plan, and more than one Award
may be granted to a Participant. Awards may be granted as alternatives to or
replacement of awards outstanding under the Plan, or any other plan or
arrangement of the Company or a Related Company (including a plan or arrangement
of a business or entity, all or a portion of which is acquired by the Company
or a Related Company).

 

1.3   Operation,
Administration and Definitions.   The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 7 of the Plan).

 

SECTION 2

 

OPTIONS
AND SARS

 

2.1   Definitions.

 

(a)             The grant of
an “Option” entitles the Participant to purchase shares of Stock at an Exercise
Price established by the Committee. Options granted under this Section 2
may be either Incentive Stock Options or Non-Qualified Stock Options, as determined
in the discretion of the Committee. An “Incentive Stock Option” is an Option
that is intended to satisfy the requirements applicable to an “incentive stock
option” described in section 422(b) of the Code. A “Non-Qualified
Option” is an Option that is not intended to be an incentive stock option” as
that term is described in section 422(b) of the Code.

 

(b)            A stock
appreciation right (an “SAR”) entitles the Participant to receive, in cash or
Stock (as determined in accordance with subsection 2.5), value equal to
all or a portion of the excess of: (a) the Fair Market Value of a
specified number of shares of Stock at the time of exercise; over (b) an
Exercise Price established by the Committee.

 

2.2   Exercise Price.   The
“Exercise Price” of each Option and SAR granted under this Section 2 shall
be established by the Committee or shall be determined by a method established
by the Committee at the time the Option or SAR is granted, except that the
Exercise Price shall not be less than 100% of the Fair Market Value of a share
of Stock as of the Pricing Date. For purposes of the preceding sentence, the “Pricing
Date” shall be the date on which the Option or SAR is granted.

 

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2.3   Exercise.   An
Option and an SAR shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the Committee.

 

2.4   Payment of
Option Exercise Price.   The payment of the Exercise Price of an
Option granted under this Section 2 shall be subject to the following:

 

(a)             Subject to
the following provisions of this subsection 2.4, the full Exercise Price
for shares of Stock purchased upon the exercise of any Option shall be paid at
the time of such exercise (except that, in the case of an exercise arrangement
approved by the Committee and described in paragraph 2.4(c), payment may be
made as soon as practicable after the exercise).

 

(b)            The Exercise
Price shall be payable in cash or by tendering shares of Stock (by either
actual delivery of shares or by attestation, with such shares valued at Fair
Market Value as of the day of exercise), or in any combination thereof, as
determined by the Committee.

 

(c)             The
Committee may permit a Participant to elect to pay the Exercise Price upon the
exercise of an Option by authorizing a third party to sell shares of Stock (or
a sufficient portion of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the entire
Exercise Price and any tax withholding resulting from such exercise.

 

2.5   Settlement of
Award.   Distribution following exercise of an Option or SAR,
and shares of Stock distributed pursuant to such exercise, shall be subject to
such conditions, restrictions and contingencies as the Committee may establish.
Settlement of SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination thereof, as
determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.

 

SECTION 3

 

OTHER
STOCK AWARDS

 

3.1   Definition.   A
Stock Award is a grant of shares of Stock or of a right to receive shares of
Stock (or their cash equivalent or a combination of both) in the future. The
grant of a right to receive shares of Stock (or their cash equivalent or a
combination of both) in the future may be done in such form as the Committee
determines, including, without limitation, performance shares or restricted
stock units.

 

3.2   Restrictions on
Stock Awards.   Each Stock Award shall be subject to such
conditions, restrictions and contingencies as the Committee shall determine.
These may include continuous service and/or the achievement of performance
measures. The Committee may designate a single goal criterion or multiple goal
criteria for performance measurement purposes, with the measurement based on
absolute Company or business unit performance and/or on performance as compared
with that of other publicly traded companies. If the right to become vested in
a Stock Award granted under this Section 3 is conditioned on the completion
of a specified period of service with the Company and the Related Companies,
without achievement of performance measures or other objectives being required
as a condition of vesting, then the required period of service for vesting
shall be not less than three years (subject to acceleration of vesting, to the
extent permitted by the Committee, in the event of the Participant’s death,
disability, change in control or involuntary termination).

 

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SECTION 4

 

OPERATION
AND ADMINISTRATION

 

4.1   Effective Date.   The
Plan shall be effective as of September 3, 1998 (the “Effective Date”),
shall be unlimited in duration and, in the event of Plan termination, shall
remain in effect as long as any Awards under it are outstanding.

 

4.2   Shares Subject
to Plan.

 

(a)   (i)                      Subject to
the following provisions of this subsection 4.2, the maximum number shares
of Stock that may be delivered to Participants and their beneficiaries under
the Plan shall be equal to the sum of: (1) 17,500,000 shares of Stock and (2) any
shares of Stock that are represented by awards granted under any prior plan of
the Company in which employees are eligible to participate (the “Prior Plans”),
which are forfeited, expire or are canceled without delivery of shares of Stock
or which result in the forfeiture of shares of Stock back to the Company.

 

(ii)             Any shares
of Stock granted under the Plan that are forfeited because of the failure to
meet an Award contingency or condition shall again be available for delivery
pursuant to new Awards granted under the Plan. To the extent any shares of
Stock covered by an Award are not delivered to a Participant or beneficiary
because the Award is forfeited or canceled, or the shares of Stock are not
delivered because the Award is settled in cash, such shares shall not be deemed
to have been delivered for purposes of determining the maximum number of shares
of Stock available for delivery under the Plan.

 

(iii)          Shares of
Stock delivered under the Plan in settlement, assumption or substitution of
outstanding awards (or obligations to grant future awards) under the plans or
arrangements of another entity shall not reduce the maximum number of shares of
Stock available for delivery under the Plan, to the extent that such
settlement, assumption or substitution as a result of the Company or a Related
Company acquiring another entity (or an interest in another entity).

 

(iv)         Notwithstanding
the foregoing, the following shares of Stock shall not be available for
issuance under the Plan:

 

(1)            shares
tendered by Participants as full or partial payment to the Company upon
exercise of Options granted under the Plan;

 

(2)            shares
reserved for issuance for each SAR granted under the Plan, to the extent the
number of reserved shares exceeds the number of shares actually issued upon
exercise of each such SAR; and

 

(3)            shares
withheld by, or otherwise remitted to, the Company to satisfy a Participant’s
tax withholding obligations upon the lapse of restrictions on a Stock Award or
the exercise of any Options or SARs granted under the Plan or upon any other
payment or issuance of shares under the Plan.

 

(b)            Subject to
paragraph 4.2(c), the following additional maximums are imposed under the Plan.

 

(i)                The maximum
number of shares of Stock that may be issued by Options intended to be
Incentive Stock Options shall be 17,500,000 shares.

 

(ii)             The maximum
number of shares of Stock that may be issued in conjunction with Awards granted
pursuant to Section 3 (relating to Stock Awards) shall equal the sum of: (1) 3,000,000
shares, and (2) the 544,076 shares previously issued in conjunction with
Stock Awards during the time period prior to November 13, 2002.

 

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(iii)          The maximum
number of shares that may be covered by Awards granted to any one individual
pursuant to Section 2 (relating to Options and SARs) shall be 500,000
shares during any fiscal year.

 

(iv)         The maximum
payment that can be made for awards granted to any one individual pursuant to Section 3
(relating to Stock Awards) shall be 200,000 shares for any single or combined
performance goals established for any fiscal year.

 

(v)            The maximum
time period for any Option to be exercised shall be 10 years from the date of
grant.

 

(c)             Subject to
the provisions of Section 6 hereof, in the event of a corporate
transaction involving the Company (including, without limitation, any stock
dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination or
exchange of shares), the Committee may adjust Awards to preserve the benefits
or potential benefits of the Awards. Action by the Committee may include
adjustment of: (i) the number and kind of shares which may be delivered
under the Plan; (ii) the number and kind of shares subject to outstanding
Awards; and (iii) the Exercise Price of outstanding Options and SARs as
well as any other adjustments that the Committee determines to be equitable.

 

4.3   Limit on
Distribution.   Distribution of shares of Stock or other amounts
under the Plan shall be subject to the following:

 

(a)             Notwithstanding
any other provision of the Plan, the Company shall have no liability to deliver
any shares of Stock under the Plan or make any other distribution of benefits
under the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.

 

(b)            To the
extent that the Plan provides for issuance of stock certificates to reflect the
issuance of shares of Stock, the issuance may be effected on a non-certificated
basis, to the extent not prohibited by applicable law or the applicable rules of
any stock exchange.

 

4.4   Tax Withholding.   Whenever
the Company proposes or is required to distribute Stock under the Plan, the
Company may require the recipient to remit to the Company an amount sufficient
to satisfy any Federal, state and local tax withholding requirements prior to
the delivery of any certificate for such shares or, in the discretion of the
Committee, the Company may withhold from the shares to be delivered shares
sufficient to satisfy all or a portion of such tax withholding requirements.
Whenever under the Plan payments are to be made in cash, such payments may be
net of an amount sufficient to satisfy any Federal, state and local tax
withholding requirements.

 

4.5   Payment Shares.   Subject
to the overall limitation on the number of shares of Stock that may be
delivered under the Plan, the Committee may use available shares of Stock as
the form of payment for compensation, grants or rights earned or due under any
other compensation plans or arrangements of the Company or a Related Company,
including the plans and arrangements of the Company or a Related Company
acquiring another entity (or an interest in another entity).

 

4

 

4.6   Dividends and
Dividend Equivalents.   An Award may provide the Participant
with the right to receive dividends or dividend equivalent payments with
respect to Stock which may be either paid currently or credited to an account
for the Participant, and may be settled in cash or Stock as determined by the
Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.

 

4.7   Payments.   Awards
may be settled through cash payments, the delivery of shares of Stock, the
granting of replacement Awards, or combination thereof as the Committee shall
determine. Any Award settlement, including payment deferrals, may be subject to
such conditions, restrictions and contingencies as the Committee shall
determine. The Committee may permit or require the deferral of any Award
payment, subject to such rules and procedures as it may establish, which
may include provisions for the payment or crediting of interest, or dividend
equivalents, including converting such credits into deferred Stock equivalents.

 

4.8   Transferability.   Except
as otherwise provided by the Committee, Awards under the Plan are not
transferable except as designated by the Participant by will or by the laws of
descent and distribution. However, in no event may Awards be transferred for
monetary value or monetary consideration without the approval of the
shareholders of the Company. Notwithstanding the foregoing, Options may be
assigned or transferred by the Participant (a) to immediate family members
of the Participant, or (b) to a trust in which the Participant or such
family members have more than 50% of the beneficial interests, a foundation in
which the Participant or such family members control the management of the
foundation’s assets, or any other entity in which the Participant or such
family members own more than 50% of the voting interests.

 

4.9   Form and
Time of Elections.   Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Committee shall require.

 

4.10   Agreement With
Company.   At the time of an Award to a Participant under the
Plan, the Committee may require a Participant to enter into an agreement with
the Company (the “Agreement”) in a form specified by the Committee, agreeing to
the terms and conditions of the Plan and to such additional terms and
conditions, not inconsistent with the Plan, as the Committee may, in its sole
discretion, prescribe.

 

4.11   Limitation of
Implied Rights.

 

(a)             Neither a
Participant nor any other person shall, by reason of the Plan, acquire any
right in or title to any assets, funds or property of the Company or any
Related Company whatsoever, including, without limitation, any specific funds,
assets, or other property which the Company or any Related Company, in their
sole discretion, may set aside in anticipation of a liability under the Plan. A
Participant shall have only a contractual right to the stock or amounts, if
any, payable under the Plan, unsecured by any assets of the Company or any
Related Company. Nothing contained in the Plan shall constitute a guarantee
that the assets of such companies shall be sufficient to pay any benefits to
any person.

 

(b)            The Plan
does not constitute a contract of employment, and selection as a Participant
will not give any employee the right to be retained in the employ of the
Company or any Related Company, nor any right or claim to any benefit under the
Plan, unless such right or claim has specifically accrued under the terms of
the Plan. Except as otherwise provided in the Plan, no Award under the Plan
shall confer upon the holder thereof any right as a shareholder of the Company prior
to the date on which the individual fulfills all conditions for receipt of such
rights.

 

5

 

4.12   Evidence.   Evidence
required of anyone under the Plan may be by certificate, affidavit, document or
other information which the person acting on it considers pertinent and
reliable, and signed, made or presented by the proper party or parties.

 

4.13   Action by
Company or Related Company.   Any action required or permitted
to be taken by the Company or any Related Company shall be by resolution of its
board of directors, or by action of one or more members of the board (including
a committee of the board) who are duly authorized to act for the board, or
(except to the extent prohibited by applicable law or applicable rules of
any stock exchange) by a duly authorized officer of the company.

 

4.14   Gender and
Number.   Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and
the plural shall include the singular.

 

SECTION 5

 

COMMITTEE

 

5.1   Administration.   The
authority to control and manage the operation and administration of the Plan
shall be vested in the Compensation Committee (the “Committee”) in accordance
with this Section 5. The Committee shall be selected by the Board and
shall consist of two or more members of the Board.

 

5.2   Powers of
Committee.   The authority to manage and control the operation
and administration of the Plan shall be vested in the Committee, subject to the
following:

 

(a)             Subject to
the provisions of the Plan, the Committee will have the authority and
discretion to select from among the Eligible Employees those persons who shall
receive Awards, to determine the time or times of receipt, to determine the
types of Awards and the number of shares covered by the Awards, to establish
the terms, conditions, performance criteria, restrictions, and other provisions
of such Awards, and (subject to the restrictions imposed by Section 6) to
cancel or suspend Awards. In making such Award determinations, the Committee
may take into account the nature of services rendered by the individual, the
individual’s present and potential contribution to the Company’s success and
such other factors as the Committee deems relevant.

 

(b)            Subject to
the provisions of the Plan, the Committee will have the authority and
discretion to determine the extent to which Awards under the Plan will be
structured to conform to the requirements applicable to performance-based
compensation as described in Code section 162(m), and to take such action,
establish such procedures, and impose such restrictions at the time such Awards
are granted as the Committee determines to be necessary or appropriate to
conform to such requirements.

 

(c)             Subject to
the provisions of the Plan, the Committee will have the authority and
discretion to establish terms and conditions of awards as the Committee
determines to be necessary or appropriate to conform to applicable requirements
or practices of jurisdictions outside of the United States.

 

(d)            The
Committee will have the authority and discretion to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any agreements made pursuant to
the Plan, and to make all other determinations that may be necessary or
advisable for the administration of the Plan.

 

6

 

(e)             Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding.

 

(f)               Except as
otherwise expressly provided in the Plan, where the Committee is authorized to
make a determination with respect to any Award, such determination shall be
made at the time the Award is made, except that the Committee may reserve the
authority to have such determination made by the Committee in the future (but
only if such reservation is made at the time the Award is granted and is expressly
stated in the Agreement reflecting the Award).

 

(g)            In
controlling and managing the operation and administration of the Plan, the
Committee shall act by a majority of its then members, by meeting or by writing
filed without a meeting. The Committee shall maintain and keep adequate records
concerning the Plan and concerning its proceedings and acts in such form and
detail as the Committee may decide.

 

5.3   Delegation by
Committee.   Except to the extent prohibited by applicable law
or the applicable rules of a stock exchange and subject to the prior
approval of the Board, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.

 

5.4   Information to
be Furnished to Committee.   The Company and Related Companies
shall furnish the Committee with such data and information as may be required
for it to discharge its duties. The records of the Company and Related
Companies as to an employee’s or Participant’s employment, termination of
employment, leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other
persons entitled to benefits under the Plan must furnish the Committee such
evidence, data or information as the Committee considers desirable to carry out
the terms of the Plan.

 

SECTION 6

 

ACCELERATION
OF EXERCISABILITY

AND VESTING UNDER CERTAIN CIRCUMSTANCES

 

Notwithstanding
any provision in this Plan to the contrary, with regard to any Award of Options,
SARs and Stock Awards to any Participant, unless the particular grant agreement
provides otherwise, all Awards will become immediately exercisable and vested
in full upon the occurrence, before the expiration or termination of such
Option, SARs and Stock Awards or forfeiture of such Awards, of any of the
events listed below:

 

(a)             a sale,
transfer or other conveyance of all or substantially all of the assets of the
Company on a consolidated basis; or

 

(b)            the
acquisition of beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) by any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the
Company, directly or indirectly, of securities representing 50% or more of the
total number of votes that may be cast for the election of directors of the
Company; or

 

(c)             the failure
at any annual or special meetings of the Company’s shareholders held during the
three-year period following a “solicitation in opposition” as defined in Rule 14a-6
promulgated under the Exchange Act, of a majority of the persons nominated by
the Company in the proxy material mailed to shareholders by the management of
the Company to win election to seats on the Board (such majority calculated
based upon the total number of persons nominated by the Company failing to win
election to seats on the Board divided by the total number of Board members of
the Board as of the beginning of such three year period), excluding only those
who die, retire voluntarily, are disabled or are otherwise disqualified in the
interim between their nomination and the date of the meeting.

 

7

 

SECTION 7

 

AMENDMENT
AND TERMINATION

 

The
Committee may, at any time, amend or terminate the Plan, provided that, subject
to subsection 4.2 (relating to certain adjustments to shares) and Section 6
hereof (relating to immediate vesting upon certain events), no amendment or
termination may, in the absence of written consent to the change by the affected
Participant (or, if the Participant is not then living, the affected
beneficiary), adversely affect the rights of any Participant or beneficiary
under any Award granted under the Plan prior to the date such amendment is
adopted by the Board. Notwithstanding anything herein to the contrary, no
amendment to the Plan may be adopted without the approval of the Company’s
shareholders that would (a) materially increase the number of shares
available under the Plan (other than an increase solely to reflect a reorganization,
stock split, merger, spin-off or similar transaction), (b) change the
types of Awards available under the Plan, (c) materially expand the class
of persons eligible to receive Awards under or otherwise participate in the
Plan, (d) materially extend the term of the Plan, (e) materially
change the method of determining the strike price of options under the Plan, (f) permit
repricing of an Option or SAR, or (g) permit the grant of an Option or SAR
for, or in connection with, the cancellation or surrender of an Option, SAR or
Stock Award granted under the Plan having a higher option or exercise price.

 

SECTION 8

 

DEFINED
TERMS

 

For
purposes of the Plan, the terms listed below shall be defined as follows:

 

(a)             Award.   The term “Award” shall mean any
award or benefit granted to any Participant under the Plan, including, without
limitation, the grant of Options, SARs, and Stock Awards.

 

(b)            Board.   The term “Board” shall mean the
Board of Directors of the Company.

 

(c)             Code.   The term “Code” means the Internal
Revenue Code of 1986, as amended. A reference to any provision of the Code
shall include reference to any successor provision of the Code.

 

(d)            Eligible Employee.   The term “Eligible Employee” shall mean
any employee of the Company or a Related Company.

 

(e)             Fair Market Value.   For purposes of determining the “Fair
Market Value” of a share of Stock, the following rules shall apply:

 

(i)                If the Stock
is at the time listed or admitted to trading on any stock exchange, then the “Fair
Market Value” shall be the mean the closing price of the Stock on the date in
question on the principal exchange on which the Stock is then listed or
admitted to trading.

 

(ii)             If the Stock
is not at the time listed or admitted to trading on a stock exchange, the “Fair
Market Value” shall be the mean between the lowest reported bid price and
highest reported asked price of the Stock on the date in question in the
over-the-counter market, as such prices are reported in a publication of
general circulation selected by the Committee and regularly reporting the
market price of Stock in such market.

 

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(iii)          If the Stock
is not listed or admitted to trading on any stock exchange or traded in the
over-the-counter market, the “Fair Market Value” shall be as determined in good
faith by the Committee.

 

(f)               Exchange Act.   The term “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

(g)            Related Companies.   The term “Related Company” means
any company during any period in which it is a “parent company” (as that term
is defined in Code section 424(e)) with respect to the Company, or a “subsidiary
corporation” (as that term is defined in Code section 424(f)) with respect
to the Company.

 

(h)            Stock.   The term “Stock” shall mean
shares of common stock of the Company.

 

9Exhibit 10(b)

 

BRINKER
INTERNATIONAL, INC.

1999 STOCK OPTION AND INCENTIVE PLAN

FOR NON-EMPLOYEE DIRECTORS AND CONSULTANTS

 

SECTION 1

 

GENERAL

 

1.1   Purpose.   The
Brinker International, Inc. 1999 Stock Option and Incentive Plan For
Non-Employee Directors and Consultants (the “Plan”) has been established by
Brinker International, Inc. (the “Company”) to provide a means through
which the Company may attract able persons to serve on its Board and to act as
consultants or advisors and to provide such individuals with an interest in the
Company’s welfare and to furnish them an incentive to continue their services
for the Company.

 

1.2   Participation.   Subject
to the terms and conditions of the Plan, the directors of the Company who are
not employees of the Company or its subsidiaries, and certain consultants, are
eligible to become “Participants” in the Plan. In the discretion of the Committee,
a Participant may be granted any Award permitted under the provisions of the
Plan, and more than one Award may be granted to a Participant. Awards may be
granted as alternatives to or replacement of awards outstanding under the Plan,
or any other plan or arrangement of the Company or a Related Company (including
a plan or arrangement of a business or entity, all or a portion of which is
acquired by the Company or a Related Company).

 

1.3   Operation,
Administration and Definitions.   The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 7 of the Plan).

 

SECTION 2

 

OPTIONS
AND SARS

 

2.1   Definitions.

 

(a)             The grant of
an “Option” entitles the Participant to purchase shares of Stock at an Exercise
Price established by the Committee. Options granted under this Section 2
will be Non-Qualified Stock Options. A “Non-Qualified Stock Option” is an
Option that is not intended to be an “incentive stock option” as that term is
described in section 422(b) of the Code.

 

(b)            A stock
appreciation right (an “SAR”) entitles the Participant to receive, in cash or
Stock (as determined in accordance with subsection 2.5), value equal to
all or a portion of the excess of: (a) the Fair Market Value of a
specified number of shares of Stock at the time of exercise; over (b) an
Exercise Price established by the Committee.

 

2.2   Exercise Price.   The
“Exercise Price” of each Option and SAR granted under this Section 2 shall
be established by the Committee or shall be determined by a method established
by the Committee at the time the Option or SAR is granted, except that the
Exercise Price shall not be less than 100% of the Fair Market Value of a share
of Stock as of the Pricing Date. For purposes of the preceding sentence, the “Pricing
Date” shall be the date on which the Option or SAR is granted.

 

2.3   Exercise.   An
Option and an SAR shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the Committee.

 

1

 

2.4   Payment of
Option Exercise Price.   The payment of the Exercise Price of an
Option granted under this Section 2 shall be subject to the following:

 

(a)             Subject to
the following provisions of this subsection 2.4, the full Exercise Price
for shares of Stock purchased upon the exercise of any Option shall be paid at
the time of such exercise (except that, in the case of an exercise arrangement
approved by the Committee and described in paragraph 2.4(c), payment may be
made as soon as practicable after the exercise).

 

(b)            The Exercise
Price shall be payable in cash or by tendering shares of Stock (by either
actual delivery of shares or by attestation, with such shares valued at Fair
Market Value as of the day of exercise), or in any combination thereof, as
determined by the Committee.

 

(c)             The Committee
may permit a Participant to elect to pay the Exercise Price upon the exercise
of an Option by authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such exercise.

 

2.5   Settlement of
Award.   Distribution following exercise of an Option or SAR,
and shares of Stock distributed pursuant to such exercise, shall be subject to
such conditions, restrictions and contingencies as the Committee may establish.
Settlement of SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination thereof, as
determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.

 

SECTION 3

 

OTHER
STOCK AWARDS

 

3.1   Definition.   A
Stock Award is a grant of shares of Stock or of a right to receive shares of
Stock (or their cash equivalent or a combination of both) in the future. The
grant of a right to receive shares of Stock (or their cash equivalent or a
combination of both) in the future may be done in such form as the Committee
determines, including, without limitation, performance shares or restricted
stock units.

 

3.2   Restrictions on
Stock Awards.   Each Stock Award shall be subject to such
conditions, restrictions and contingencies as the Committee shall determine. If
the right to become vested in a Stock Award granted under this Section 3
is conditioned on the completion of a specified period of service with the
Company and the Related Companies, then the required period of service for
vesting shall be not less than one year (subject to acceleration of vesting, to
the extent permitted by the Committee, in the event of the Participant’s death,
disability, change in control or involuntary termination).

 

SECTION 4

 

OPERATION
AND ADMINISTRATION

 

4.1   Effective Date.   The
Plan shall be effective as of September 2, 1999 (the “Effective Date”).
The Plan shall be unlimited in duration and, in the event of Plan termination,
shall remain in effect as long as any Awards under it are outstanding.

 

2

 

4.2   Shares Subject
to Plan.

 

(a)   (i)                     Subject to
the following provisions of this subsection 4.2, the maximum number shares
of Stock that may be delivered to Participants and their beneficiaries under
the Plan shall be 800,000.

 

(ii)             Any shares
of Stock granted under the Plan that are forfeited because of the failure to
meet an Award contingency or condition shall again be available for delivery
pursuant to new Awards granted under the Plan. To the extent any shares of
Stock covered by an Award are not delivered to a Participant or beneficiary
because the Award is forfeited or canceled, or the shares of Stock are not
delivered because the Award is settled in cash, such shares shall not be deemed
to have been delivered for purposes of determining the maximum number of shares
of Stock available for delivery under the Plan.

 

(iii)          Shares of
Stock delivered under the Plan in settlement, assumption or substitution of
outstanding awards (or obligations to grant future awards) under the plans or
arrangements of another entity shall not reduce the maximum number of shares of
Stock available for delivery under the Plan, to the extent that such settlement,
assumption or substitution as a result of the Company or a Related Company
acquiring another entity (or an interest in another entity).

 

(iv)         Notwithstanding
the foregoing, the following shares of Stock shall not be available for
issuance under the Plan:

 

(I)                      shares
tendered by Participants as full or partial payment to the Company upon
exercise of Options granted under the Plan;

 

(II)                  shares
reserved for issuance for each SAR granted under the Plan, to the extent the
number of reserved shares exceeds the number of shares actually issued upon
exercise of each such SAR; and

 

(III)                 shares
withheld by, or otherwise remitted to, the Company to satisfy a Participant’s
tax withholding obligations upon the lapse of restrictions on a Stock Award or
the exercise of any Options or SARs granted under the Plan or upon any other
payment or issuance of shares under the Plan.

 

(b)            Subject to
Paragraph 4.2(c), the maximum time period for any Option to be exercised shall
be 10 years from the date of grant.

 

(c)             Subject to
the provisions of Section 6 hereof, in the event of a corporate
transaction involving the Company (including, without limitation, any stock
dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination or
exchange of shares), the Committee may adjust Awards to preserve the benefits
or potential benefits of the Awards. Action by the Committee may include
adjustment of: (i) the number and kind of shares which may be delivered
under the Plan; (ii) the number and kind of shares subject to outstanding
Awards; and (iii) the Exercise Price of outstanding Options and SARs as
well as any other adjustments that the Committee determines to be equitable.

 

4.3   Limit on
Distribution.   Distribution of shares of Stock or other amounts
under the Plan shall be subject to the following:

 

(a)             Notwithstanding
any other provision of the Plan, the Company shall have no liability to deliver
any shares of Stock under the Plan or make any other distribution of benefits
under the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.

 

3

 

(b)            To the
extent that the Plan provides for issuance of stock certificates to reflect the
issuance of shares of Stock, the issuance may be effected on a noncertificated
basis, to the extent not prohibited by applicable law or the applicable rules of
any stock exchange.

 

4.4   Tax Withholding.   Whenever
the Company proposes or is required to distribute Stock under the Plan, the
Company may require the recipient to remit to the Company an amount sufficient
to satisfy any Federal, state and local tax withholding requirements prior to
the delivery of any certificate for such shares or, in the discretion of the
Committee, the Company may withhold from the shares to be delivered shares
sufficient to satisfy all or a portion of such tax withholding requirements.
Whenever under the Plan payments are to be made in cash, such payments may be
net of an amount sufficient to satisfy any Federal, state and local tax
withholding requirements.

 

4.5   Payment Shares.   Subject
to the overall limitation on the number of shares of Stock that may be
delivered under the Plan, the Committee may use available shares of Stock as
the form of payment for compensation, grants or rights earned or due under any
other compensation plans or arrangements of the Company or a Related Company,
including the plans and arrangements of the Company or a Related Company
acquiring another entity (or an interest in another entity).

 

4.6   Dividends and
Dividend Equivalents.   An Award may provide the Participant
with the right to receive dividends or dividend equivalent payments with
respect to Stock which may be either paid currently or credited to an account
for the Participant, and may be settled in cash or Stock as determined by the
Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.

 

4.7   Payments.   Awards may be settled through cash payments, the
delivery of shares of Stock, the granting of replacement Awards, or combination
thereof as the Committee shall determine. Any Award settlement, including
payment deferrals, may be subject to such conditions, restrictions and
contingencies as the Committee shall determine. The Committee may permit or
require the deferral of any Award payment, subject to such rules and
procedures as it may establish, which may include provisions for the payment or
crediting of interest, or dividend equivalents, including converting such
credits into deferred Stock equivalents.

 

4.8   Transferability.   Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution. However, in no event may
Awards be transferred for monetary value or monetary consideration without the
approval of the shareholders of the Company.

 

4.9   Form and
Time of Elections.   Unless
otherwise specified herein, each election required or permitted to be made by
any Participant or other person entitled to benefits under the Plan, and any
permitted modification, or revocation thereof, shall be in writing filed with
the Committee at such times, in such form, and subject to such restrictions and
limitations, not inconsistent with the terms of the Plan, as the Committee
shall require.

 

4.10   Agreement With
Company.   At the time of an Award to a Participant under the
Plan, the Committee may require a Participant to enter into an agreement with
the Company (the “Agreement”) in a form specified by the Committee, agreeing to
the terms and conditions of the Plan and to such additional terms and
conditions, not inconsistent with the Plan, as the Committee may, in its sole
discretion, prescribe.

 

4

 

4.11   Limitation of
Implied Rights.

 

(a)             Neither a
Participant nor any other person shall, by reason of the Plan, acquire any
right in or title to any assets, funds or property of the Company or any
Related Company whatsoever, including, without limitation, any specific funds,
assets, or other property which the Company or any Related Company, in their
sole discretion, may set aside in anticipation of a liability under the Plan. A
Participant shall have only a contractual right to the stock or amounts, if
any, payable under the Plan, unsecured by any assets of the Company or any
Related Company. Nothing contained in the Plan shall constitute a guarantee
that the assets of such companies shall be sufficient to pay any benefits to
any person.

 

(b)            The Plan
does not give any Participant any right or claim to any benefit under the Plan,
unless such right or claim has specifically accrued under the terms of the
Plan. Except as otherwise provided in the Plan, no Award under the Plan shall
confer upon the holder thereof any right as a shareholder of the Company prior
to the date on which the individual fulfills all conditions for receipt of such
rights.

 

4.12   Evidence.   Evidence
required of anyone under the Plan may be by certificate, affidavit, document or
other information which the person acting on it considers pertinent and
reliable, and signed, made or presented by the proper party or parties.

 

4.13   Action by
Company or Related Company.   Any action required or permitted
to be taken by the Company or any Related Company shall be by resolution of its
board of directors, or by action of one or more members of the board (including
a committee of the board) who are duly authorized to act for the board, or
(except to the extent prohibited by applicable law or applicable rules of
any stock exchange) by a duly authorized officer of the company.

 

4.14   Gender and
Number.   Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and
the plural shall include the singular.

 

SECTION 5

 

COMMITTEE

 

5.1   Administration.   The
authority to control and manage the operation and administration of the Plan
shall be vested in the Governance and Nominating Committee (the “Committee”) in
accordance with this Section 5. The Committee shall be selected by the
Board and shall consist of two or more members of the Board.

 

5.2   Powers of
Committee.   The authority to manage and control the operation
and administration of the Plan shall be vested in the Committee, subject to the
following:

 

(a)             Subject to
the provisions of the Plan, the Committee will have the authority and discretion
to select those persons who shall receive Awards. to determine the time or
times of receipt, to determine the types of Awards and the number of shares
covered by the Awards, to establish the terms, conditions, performance
criteria, restrictions, and other provisions of such Awards, and (subject to
the restrictions imposed by Section 6) to cancel or suspend Awards. In
making such Award determinations, the Committee may take into account the
nature of services rendered by the individual, the individual’s present and
potential contribution to the Company’s success and such other factors as the
Committee deems relevant.

 

(b)            Subject to
the provisions of the Plan, the Committee will have the authority and
discretion to establish terms and conditions of awards as the Committee
determines to be necessary or appropriate to conform to applicable requirements
or practices of jurisdictions outside of the United States.

 

5

 

(c)             The
Committee will have the authority and discretion to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any agreements made pursuant to
the Plan, and to make all other determinations that may be necessary or
advisable for the administration of the Plan.

 

(d)            Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding.

 

(e)             Except as
otherwise expressly provided in the Plan, where the Committee is authorized to
make a determination with respect to any Award, such determination shall be
made at the time the Award is made, except that the Committee may reserve the
authority to have such determination made by the Committee in the future (but
only if such reservation is made at the time the Award is granted and is
expressly stated in the Agreement reflecting the Award).

 

(f)               In
controlling and managing the operation and administration of the Plan, the
Committee shall act by a majority of its then members, by meeting or by writing
filed without a meeting. The Committee shall maintain and keep adequate records
concerning the Plan and concerning its proceedings and acts in such form and
detail as the Committee may decide.

 

5.3   Delegation by
Committee.   Except to the extent prohibited by applicable law
or the applicable rules of a stock exchange and subject to the prior
approval of the Board, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.

 

5.4   Information to
be Furnished to Committee.   The Company and Related Companies
shall furnish the Committee with such data and information as may be required
for it to discharge its duties. Participants and other persons entitled to
benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee considers desirable to carry out the terms of the
Plan.

 

SECTION 6

 

ACCELERATION
OF EXERCISABILITY

AND VESTING UNDER CERTAIN CIRCUMSTANCES

 

Notwithstanding
any provision in this Plan to the contrary, with regard to any Award of
Options, SARs and Stock Awards to any Participant, unless the particular grant
agreement provides otherwise, all Awards will become immediately exercisable
and vested in full upon the occurrence, before the expiration or termination of
such Option, SARs and Stock Awards or forfeiture of such Awards, of any of the
events listed below:

 

(a)             a sale,
transfer or other conveyance of all or substantially all of the assets of the
Company on a consolidated basis; or

 

(b)            the
acquisition of beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) by any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the
Company, directly or indirectly, of securities representing 50% or more of the
total number of votes that may be cast for the election of directors of the
Company; or

 

(c)             the failure
at any annual or special meetings of the Company’s shareholders held during the
three-year period following a “solicitation in opposition” as defined in Rule 14a-6
promulgated under the Exchange Act, of a majority of the persons nominated by
the Company in the proxy material mailed to shareholders by the management of
the Company

 

6

 

to
win election to seats on the Board (such majority calculated based upon the
total number of persons nominated by the Company failing to win election to
seats on the Board divided by the total number of Board members of the Board as
of the beginning of such three year period), excluding only those who die,
retire voluntarily, are disabled or are otherwise disqualified in the interim
between their nomination and the date of the meeting.

 

SECTION 7

 

AMENDMENT
AND TERMINATION

 

The
Committee may, at any time, amend or terminate the Plan, provided that, subject
to subsection 4.2 (relating to certain adjustments to shares) and Section 6
hereof (relating to immediate vesting upon certain events), no amendment or
termination may, in the absence of written consent to the change by the
affected Participant (or, if the Participant is not then living, the affected
beneficiary), adversely affect the rights of any Participant or beneficiary
under any Award granted under the Plan prior to the date such amendment is
adopted by the Board. Notwithstanding anything herein to the contrary, no
amendment to the Plan may be adopted without the approval of the Company’s
shareholders that would (a) materially increase the number of shares
available under the Plan (other than an increase solely to reflect a
reorganization, stock split, merger, spin-off or similar transaction), (b) change
the types of Awards available under the Plan, (c) materially expand the
class of persons eligible to receive Awards under or otherwise participate in
the Plan, (d) materially extend the term of the Plan, (e) materially
change the method of determining the strike price of options under the Plan, (f) permit
repricing of an Option or SAR, or (g) permit the grant of an Option or SAR
for, or in connection with, the cancellation or surrender of an Option, SAR or
Stock Award granted under the Plan having a higher option or exercise price.

 

SECTION 8

 

DEFINED
TERMS

 

For
purposes of the Plan, the terms listed below shall be defined as follows:

 

(a)             Award.   The term “Award” shall mean any
award or benefit granted to any Participant under the Plan, including, without
limitation, the grant of Options, SARs, and Stock Awards.

 

(b)            Board.   The term “Board” shall mean the
Board of Directors of the Company.

 

(c)             Code.   The term “Code” means the
Internal Revenue Code of 1986, as amended. A reference to any provision of the
Code shall include reference to any successor provision of the Code.

 

(d)            Fair Market Value.   For purposes of determining the “Fair
Market Value” of a share of Stock, the following rules shall apply:

 

(i)                If the Stock
is at the time listed or admitted to trading on any stock exchange, then the “Fair
Market Value” shall be the mean between the closing price of the Stock on the
date in question on the principal exchange on which the Stock is then listed or
admitted to trading.

 

(ii)             If the Stock
is not at the time listed or admitted to trading on a stock exchange, the “Fair
Market Value” shall be the mean between the lowest reported bid price and
highest reported asked price of the Stock on the date in question in the
over-the-counter market, as such prices are reported in a publication of
general circulation selected by the Committee and regularly reporting the
market price of Stock in such market.

 

7

 

(iii)          If the Stock
is not listed or admitted to trading on any stock exchange or traded in the
over-the-counter market, the “Fair Market Value” shall be as determined in good
faith by the Committee.

 

(f)               Exchange Act.   The term “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

(g)            Related Companies.   The term “Related Company” means
any company during any period in which it is a “parent company” (as that term
is defined in Code section 424(e)) with respect to the Company, or a “subsidiary
corporation” (as that term is defined in Code section 424(f)) with respect
to the Company.

 

(h)            Stock.   The term “Stock” shall mean
shares of common stock of the Company.

 

8

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