Exhibit 2.1
CITI TRENDS
2005 LONG-TERM INCENTIVE PLAN
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TABLE OF CONTENTS
1. Establishment, Purpose and Effective Date.
(a) Establishment
(b) Purpose
(c) Effective Date
2. Definitions.
3. Scope of the Plan.
(a) Number of Shares Available Under the Plan
(b) Reduction in the Available Shares in Connection with Award Grants
(c) Effect of the Expiration, Termination, Cancellation or Settlement
of Awards
4. Administration.
(a) Committee Administration
(b) Board Reservation and Delegation
(c) Committee Authority
(d) Committee Determinations Final
5. Eligibility.
6. Conditions to Grants.
(a) General Conditions.
(b) Grant of Options and Exercise Price
(c) Grant of Incentive Stock Options
(d) Grant of Shares of Restricted Stock
(e) Grant of Performance Units and Performance Shares
(f) Grant of Stock Appreciation Rights
(g) Tandem Awards
7. Non-transferability.
8. Exercise.
(a) Exercise of Options and Stock Appreciation Rights
(b) Exercise of Performance Units
(c) Payment of Performance Shares
(d) Exercise, Cancellation, Expiration or Forfeiture of Tandem Awards
9. Effect of Certain Transactions.
10. Mandatory Withholding Taxes.
11. Termination of Employment.
12. Securities Law Matters.
13. No Funding Required.
14. No Employment Rights.
15. Rights as a Stockholder.
16. Nature of Payments.
17. Non-Uniform Determinations.
18. Adjustments.
19. Amendment of the Plan.
20. Termination of the Plan.
21. No Illegal Transactions.
22. Governing Law.
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23. Severability.
24. Translations.
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Exhibit 2.1
1. Establishment, Purpose and Effective Date.
(a) Establishment. The Company hereby establishes the Citi
Trends 2005 Long-Term Incentive Plan (as set forth herein and from time
to time amended, the "Plan").
(b) Purpose. The primary purpose of the Plan is to provide a
means by which key employees and directors of the Company can acquire
and maintain stock ownership, thereby strengthening their commitment to
the success of the Company and their desire to remain employed by the
Company, focusing their attention on managing the Company as an equity
owner, and aligning their interests with those of the Company's
stockholders. The Plan also is intended to attract and retain key
employees and to provide such employees with additional incentive and
reward opportunities designed to encourage them to enhance the
profitable growth of the Company.
(c) Effective Date. The Plan shall become effective upon its
adoption by the Board and a majority of the stockholders of the Company.
2. Definitions. As used in the Plan, terms defined parenthetically
immediately after their use shall have the respective meanings provided by such
definitions and the terms set forth below shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
(a) "Award" means Options, shares of restricted Stock,
performance units, performance shares, Stock Appreciation Rights
or Director's Shares granted under the Plan.
(b) "Award Agreement" means the written agreement by which an
Award is evidenced.
(c) "Beneficial Owner," "Beneficially Owned" and "Beneficially
Owning" shall have the meanings applicable under Rule 13d-3
promulgated under the 1934 Act.
(d) "Board" means the board of directors of the Company.
(e) "Change in Capitalization" means any increase or reduction in
the number of shares of Stock, or any change in the shares of
Stock or exchange of shares of Stock for a different number or
kind of shares or other securities by reason of a stock dividend,
extraordinary dividend, stock split, reverse stock split, share
combination, reclassification, recapitalization, merger,
consolidation, spin-off, split-up, reorganization, issuance of
warrants or rights, liquidation, exchange of shares, repurchase
of shares, change in corporate structure, or similar event, of or
by the Company.
(f) "Change of Control" means any of the following:
(i) the acquisition by any Person of Beneficial
Ownership of Voting Securities which, when added to the Voting
Securities then Beneficially Owned by such Person, would result
in such Person Beneficially Owning 33% or more of the combined
Voting Power of the Company's then outstanding Voting Securities;
provided, however, that for purposes of this paragraph (i), a
Person shall not be deemed to have made an acquisition of Voting
Securities if such Person: (1) acquires Voting Securities as a
result of a stock split, stock dividend or other corporate
restructuring in which all stockholders of the class of such
Voting Securities are treated on a pro rata basis; (2) acquires
the Voting Securities directly from the Company; (3) becomes the
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Beneficial Owner of 33% or more of the combined Voting Power of
the Company's then outstanding Voting Securities solely as a
result of the acquisition of Voting Securities by the Company or
any Subsidiary which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares
Beneficially Owned by such Person, provided that if (x) a Person
would own at least such percentage as a result of the acquisition
by the Company or any Subsidiary and (y) after such acquisition
by the Company or any Subsidiary, such Person acquires Voting
Securities, then an acquisition of Voting Securities shall have
occurred; (4) is the Company or any corporation or other Person
of which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the Company
(a "Controlled Entity"); or (5) acquires Voting Securities in
connection with a "Non-Control Transaction" (as defined in
paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date, are
members of the Board (the "Incumbent Board") cease for any reason
to constitute at least two-thirds of the Board; provided,
however, that if either the election of any new director or the
nomination for election of any new director by the Company's
stockholders was approved by a vote of at least two-thirds of the
Incumbent Board prior to such election or nomination, such new
director shall be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered
a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under
the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) consummation of:
(A) a merger, consolidation or reorganization
involving the Company (a "Business Combination"), unless
(1) the stockholders of the Company,
immediately before the Business Combination, own,
directly or indirectly immediately following the
Business Combination, at least a majority of the
combined voting power of the outstanding voting
securities of the corporation resulting from the
Business Combination (the "Surviving Corporation")
in substantially the same proportion as their
ownership of the Voting Securities immediately
before the Business Combination, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution
of the agreement providing for the Business
Combination constitute at least a majority of the
members of the Board of Directors of the Surviving
Corporation, and
(3) no Person (other than the Company or
any Controlled Entity, a trustee or other fiduciary
holding securities under one or
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more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the
Company, the Surviving Corporation or any
Controlled Entity, or any Person who, immediately
prior to the Business Combination, had Beneficial
Ownership of 33% or more of the then outstanding
Voting Securities) has Beneficial Ownership of 33%
or more of the combined voting power of the
Surviving Corporation's then outstanding voting
securities (a Business Combination satisfying the
conditions of clauses (1), (2) and (3) of this
subparagraph (A) shall be referred to as a
"Non-Control Transaction");
(B) a complete liquidation or dissolution of the
Company; or
(C) the sale or other disposition of all or
substantially all of the assets of the Company (other than
a transfer to a Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because 33% or more of the then outstanding Voting Securities is
Beneficially Owned by (x) a trustee or other fiduciary holding securities under
one or more employee benefit plans or arrangements (or any trust forming a part
thereof) maintained by the Company or any Controlled Entity or (y) any
corporation which, immediately prior to its acquisition of such interest, is
owned directly or indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company immediately prior to such
acquisition.
(g) "Committee" means the committee of the Board appointed
pursuant to Article 4.
(h) "Company" means Citi Trends, a Delaware corporation.
(i) "Disability" means a mental or physical condition which, in
the opinion of the Committee, renders a Grantee unable or
incompetent to carry out the job responsibilities which such
Grantee held or the duties to which such Grantee was assigned at
the time the disability was incurred, and which is expected to
be permanent or for an indefinite duration.
(j) "Effective Date" means the date that the Plan is adopted by
the Board.
(k) "Fair Market Value" of any security of the Company or any
other issuer means, as of any applicable date:
(i) if the security is listed for trading on the New
York Stock Exchange, the closing price at the close of the
primary trading session of the security on such date on the New
York Stock Exchange, or if there has been no such closing price
of the security on such date, on the next preceding date on which
there was such a closing price, or
(ii) if the security is not so listed, but is listed on
another national securities exchange, the closing price at the
close of the primary trading session of the security on such date
on such exchange, or if there has been no such closing price of
the security on such date, on the next preceding date on which
there was such a closing price, or
(iii) if the security is not listed for trading on the
New York Stock Exchange or on another national securities
exchange, the last sale price at the end of normal
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market hours of the security on such date as quoted on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or, if no such price shall have been so quoted
for such date, on the next preceding date for which such price
was so quoted, or
(iv) if the security is not listed for trading on a
national securities exchange or is not authorized for quotation
on NASDAQ, the fair market value of the security as determined in
good faith by the Committee, and in the case of Incentive Stock
Options, in accordance with Section 422 of the Internal Revenue
Code.
(l) "Grant Date" means the date of grant of an Award determined
in accordance with Article 6.
(m) "Grantee" means an individual who has been granted an Award.
(n) "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Internal Revenue Code and
designated by the Committee as an Incentive Stock Option.
(o) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and regulations and rulings thereunder.
References to a particular Section of the Internal Revenue Code
shall include references to successor provisions.
(p) "Measuring Period" has the meaning specified in Article
6(e)(ii)(A).
(q) "Minimum Consideration" means the $.01 par value per share of
Stock or such larger amount determined pursuant to resolution of
the Board to be capital within the meaning of Section 154 of the
Delaware General Corporation Law.
(r) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(s) "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option or other type of statutory stock option
under the Internal Revenue Code.
(t) "Option" means an option to purchase Stock granted or issued
under the Plan.
(u) "Exercise Price" means the per share purchase price of (i)
Stock subject to an Option, (ii) Stock subject to a Stock
Appreciation Right, or (iii) restricted Stock subject to an
Option.
(v) "Performance-Based Compensation" means any Option or Award
that is intended to constitute "performance based compensation"
within the meaning of Section 162(m)(4)(C) of the Internal
Revenue Code and the regulations promulgated thereunder.
(w) "Performance Percentage" has the meaning specified in Article
6(e)(ii)(C).
(x) "Person" means a person within the meaning of Sections 13(d)
and 14(d) of the 1934 Act.
(y) "Plan" has the meaning set forth in Article 1(a).
(z) "SEC" means the Securities and Exchange Commission.
(aa) "Section 16 Grantee" means a person subject to potential
liability with respect to equity securities of the Company under
Section 16(b) of the 1934 Act.
(bb) "Stock" means common stock, par value $.01 per share, of the
Company.
(cc) "Stock Appreciation Right" means a right that permits the
individual to receive a payment equal to the excess of the
stock's value at exercise over the Exercise Price.
(dd) "Subsidiary" means (i) except as provided in subsection (ii)
below, any corporation which is a subsidiary corporation within
the meaning of Section 424(f) of the Internal Revenue Code with
respect to the Company, and (ii) in relation to the eligibility
to receive Options or Awards other than Incentive Stock Options,
any entity, whether or not incorporated, in which the Company
directly or indirectly owns either (A) Voting Securities
possessing at least 50% of the Voting Power of
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such entity, or (B) if such entity does not issue Voting
Securities, at least 50% of the ownership interests in such
entity.
(ee) "10% Owner" means a person who owns stock (including stock
treated as owned under Section 424(d) of the Internal Revenue
Code) possessing more than 10% of the Voting Power of the
Company.
(ff) "Termination of Employment" occurs the first day on which an
individual is for any reason no longer employed by, or providing
services to, the Company or any of its Subsidiaries, or with
respect to an individual who is an employee of a Subsidiary, the
first day on which the Company no longer owns Voting Securities
possessing at least 50% of the Voting Power of such Subsidiary.
(gg) "Voting Power" means the combined voting power of the then
outstanding Voting Securities.
(hh) "Voting Securities" means, with respect to the Company or
any Subsidiary, any securities issued by the Company or such
Subsidiary, respectively, which generally entitle the holder
thereof to vote for the election of directors of the Company.
3. Scope of the Plan.
(a) Number of Shares Available Under the Plan. The maximum
number of shares of Stock that may be made the subject of Awards granted
under the Plan is 1,300,000 (or the number and kind of shares of Stock
or other securities to which such shares of Stock are adjusted upon a
Change in Capitalization pursuant to Article 18); provided, however,
that in the aggregate, not more than 50% of total shares of Stock may be
made the subject of Awards other than Options. The maximum number of
shares of Stock that may be the subject of Options and Awards granted to
any individual pursuant to the Plan in any calendar year period may not
exceed 5% of total number of reserved shares. The maximum dollar amount
of cash or the Fair Market Value of Stock that any individual may
receive in any calendar year in respect of performance units denominated
in dollars may not exceed $2,500,000. The Company shall reserve for the
purpose of the Plan, out of its authorized but unissued shares of Stock
or out of shares held in the Company's treasury, or partly out of each,
such number of shares as shall be determined by the Board. The Board
shall have the authority to cause the Company to purchase from time to
time shares of Stock to be held as treasury shares and used for or in
connection with Awards.
(b) Reduction in the Available Shares in Connection with Award
Grants. Upon the grant of an Award, the number of shares of Stock
available under Article 3(a) for the granting of further Awards shall be
reduced as follows:
(i) Generally. In connection with the granting of each
Award, other than a performance unit denominated in dollars, the
number of shares of Stock available under Article 3(a) for the
granting of further Awards shall be reduced by a number of shares
equal to the number of shares of Stock in respect of which the
Award is granted or denominated; provided, however, that if any
Award is exercised by tendering shares of Stock, either actually
or by attestation, to the Company as full or partial payment of
the exercise price, the maximum number of shares of Stock
available under Article 3(a) shall be increased by the number of
shares of Stock so tendered.
(ii) Performance Units Denominated in Dollars. In
connection with the granting of a performance unit denominated in
dollars, there shall be no reduction in the
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number of shares of Stock available under Article 3(a) for the
granting of further Awards. If a performance unit denominated in
dollars is settled in Stock, the number of shares of Stock
available under Article 3(a) for the granting of further Awards
shall be reduced at the time of settlement by the number of
shares of Stock issued in connection with the settlement of the
performance unit.
(iii) Cash Settlement; Shares Subject to Multiple Awards.
Notwithstanding anything contained herein to the contrary, (A) if
an Award is granted that cannot be settled in shares of Stock,
there shall be no reduction in the number of shares of Stock
available under Article 3(a) for the granting of further Awards,
and (B) where two or more Awards are granted with respect to the
same shares of Stock, such shares shall be taken into account
only once for purposes of this Article 3(b).
(c) Effect of the Expiration, Termination, Cancellation or
Settlement of Awards. If and to the extent an Option or Award expires,
terminates or is canceled, settled in cash (including the settlement of
tax withholding obligations using shares of Stock) or forfeited for any
reason without having been exercised in full (including, without
limitation, a cancellation of an Option pursuant to Article 4(c)(vi)),
the shares of Stock associated with the expired, terminated, canceled,
settled or forfeited portion of the Award (to the extent the number of
shares available for the granting of Awards was reduced pursuant to
Article 3(b)) shall again become available for Awards under the Plan.
4. Administration.
(a) Committee Administration. The Plan shall be administered by
the Committee, which shall consist of not less than two "non-employee
directors" within the meaning of Rule 16b-3, and to the extent necessary
for any Award intended to qualify as Performance-Based Compensation to
so qualify, each member of the Committee shall be an "outside director"
within the meaning of Section 162(m) of the Internal Revenue Code. For
purposes of the preceding sentence, if one or more members of the
Committee is not a "non-employee director" within the meaning of Rule
16b-3 and an "outside director" within the meaning of Section 162(m) of
the Internal Revenue Code but recuses himself or herself or abstains
from voting with respect to a particular action taken by the Committee,
then the Committee, with respect to that action, shall be deemed to
consist only of the members of the Committee who have not recused
themselves or abstained from voting.
(b) Board Reservation and Delegation. Except to the extent
necessary for any Award intended to qualify as Performance-Based
Compensation to so qualify, the Board may, in its discretion, reserve to
itself or exercise any or all of the authority and responsibility of the
Committee hereunder and may also delegate to another committee of the
Board any or all of the authority and responsibility of the Committee
with respect to Awards to Grantees who are not Section 16 Grantees at
the time any such delegated authority or responsibility is exercised.
Such other committee may consist of one or more directors who may, but
need not be, officers or employees of the Company or of any of its
Subsidiaries. To the extent that the Board has reserved to itself, or
exercised the authority and responsibility of the Committee, or
delegated the authority and responsibility of the Committee to such
other committee, all references to the Committee in the Plan shall be to
the Board or to such other committee.
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(c) Committee Authority. The Committee shall have full and final
authority, in its discretion, but subject to the express provisions of
the Plan, as follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and
(B) whether or not specific Awards shall be identified with other
specific Awards, and if so, whether they shall be exercisable
cumulatively with, or alternatively to, such other specific
Awards,
(iii) to interpret the Plan and to make all
determinations necessary or advisable for the administration of
the Plan,
(iv) to prescribe, amend, and rescind rules and
regulations relating to the Plan, including, without limitation,
rules with respect to the exercisability and nonforfeitability of
Awards upon the Termination of Employment of a Grantee,
(v) to determine the terms and provisions of the Award
Agreements, which need not be identical and, with the consent of
the Grantee, to modify any such Award Agreement at any time,
(vi) to cancel, with the consent of the Grantee,
outstanding Awards,
(vii) except with respect to Awards made to nonemployee
directors, to accelerate the exercisability of, and to accelerate
or waive any or all of the restrictions and conditions applicable
to, any Award,
(viii) to authorize any action of or make any
determination by the Company as the Committee shall deem
necessary or advisable for carrying out the purposes of the Plan,
and
(ix) to impose such additional conditions,
restrictions, and limitations upon the grant, exercise or
retention of Awards as the Committee may, before or concurrently
with the grant thereof, deem appropriate, including, without
limitation, requiring simultaneous exercise of related identified
Awards, and limiting the percentage of Awards which may from time
to time be exercised by a Grantee.
Notwithstanding anything herein to the contrary, the exercise price of
outstanding Options may not be decreased (except pursuant to Article 18 of the
Plan) and Options may not be cancelled or forfeited and re-granted to effect the
same result. Notwithstanding anything herein to the contrary, with respect to
Grantees working outside the United States, the Committee may determine the
terms and provisions of the Award Agreements and make such adjustments or
modifications to Awards as are necessary and advisable to fulfill the purposes
of the Plan.
(d) Committee Determinations Final. The determination of the
Committee on all matters relating to the Plan or any Award Agreement
shall be conclusive and final. No member of the Committee shall be
liable for any action or determination made in good faith with respect
to the Plan or any Award.
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5. Eligibility.
Awards may be granted to any employee of the Company, and to any
nonemployee director of the Company. In selecting the individuals to whom Awards
may be granted, as well as in determining the number of shares of Stock subject
to, and the other terms and conditions applicable to, each Award, the Committee
shall take into consideration such factors as it deems relevant in promoting the
purposes of the Plan.
6. Conditions to Grants.
(a) General Conditions.
(i) The Grant Date of an Award shall be the date on
which the Committee grants the Award or such later date as
specified in advance by the Committee.
(ii) The term of each Award (subject to Article 6(c)
with respect to Incentive Stock Options) shall be a period of not
more than ten years from the Grant Date and shall be subject to
earlier termination as provided herein or in the applicable Award
Agreement; provided, however, that the Committee may provide that
an Option (other than an Incentive Stock Option) may, upon the
death of the Grantee, be exercised for up to one year following
the date of the Grantee's death even if such period extends
beyond ten years from the date the Option is granted.
(iii) A Grantee may, if otherwise eligible, be granted
additional Awards in any combination.
(iv) The Committee may grant Awards with terms and
conditions which differ among the Grantees thereof. To the extent
not set forth in the Plan, the terms and conditions of each Award
shall be set forth in an Award Agreement.
(b) Grant of Options and Exercise Price. The Committee may, in
its discretion, shall grant Options as follows:
(i) Employee Options. Options to acquire unrestricted
Stock or restricted Stock may be granted to any employee eligible
under Article 5 to receive Awards. No later than the Grant Date
of any Option, the Committee shall determine the Exercise Price.
(ii) Nonemployee Director Options.
(A) Discretionary Grants. Nonqualified Stock
Options to acquire unrestricted or restricted stock may be
granted to nonemployee directors of the Company from time
to time.
(B) Terms Applicable to all Nonemployee Director
Options. Each Nonqualified Stock Option granted to a
nonemployee director will be granted with an Exercise
Price of not less than 100% of the Fair Market Value of
the Stock on the Grant Date, will become exercisable with
respect to one-third of the underlying shares on each of
the first, second and third anniversaries of the
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Grant Date, and will have a term of not more than ten
years. If a nonemployee director ceases to serve as a
director of the Company for any reason, any Nonqualified
Stock Option granted to such nonemployee director shall be
exercisable during its remaining term, to the extent that
such Nonqualified Stock Option was exercisable on the date
such nonemployee director ceased to be a director.
(c) Grant of Incentive Stock Options. At the time of the grant
of any Option to an employee of the Company, the Committee may designate
that such Option shall be an Incentive Stock Option. Any Option
designated as an Incentive Stock Option:
(i) shall have an Exercise Price of (A) not less than
100% of the Fair Market Value of the Stock on the Grant Date or
(B) in the case of a 10% Owner, not less than 110% of the Fair
Market Value of the Stock on the Grant Date;
(ii) shall have a term of not more than ten years (five
years, in the case of a 10% Owner) from the Grant Date, and shall
be subject to earlier termination as provided herein or in the
applicable Award Agreement;
(iii) shall, if, with respect to any grant, the
aggregate Fair Market Value of Stock (determined on the Grant
Date) of all Incentive Stock Options granted under the Plan and
"incentive stock options" (within the meaning of Section 422 of
the Internal Revenue Code) granted under any other stock option
plan of the Grantee's employer or any parent or subsidiary
thereof (in either case determined without regard to this Article
6(c)) are exercisable for the first time during any calendar year
exceeds $100,000, be treated as Nonqualified Stock Options. For
purposes of the foregoing sentence, Incentive Stock Options shall
be treated as Nonqualified Stock Options according to the order
in which they were granted such that the most recently granted
Incentive Stock Options are first treated as Nonqualified Stock
Options;
(iv) shall be granted within ten years from the earlier
of the date the Plan is adopted by the Board or the date the Plan
is approved by the stockholders of the Company; and
(v) shall require the Grantee to notify the Committee
of any disposition of any Stock issued pursuant to the exercise
of the Incentive Stock Option under the circumstances described
in Section 421(b) of the Internal Revenue Code (relating to
certain disqualifying dispositions), within ten days of such
disposition.
(d) Grant of Shares of Restricted Stock.
(i) The Committee may, in its discretion, grant shares
of restricted Stock to any individual eligible under Article 5 to
receive Awards.
(ii) Before the grant of any shares of restricted
Stock, the Committee shall determine, in its discretion:
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(A) whether the certificates for such shares shall
be delivered to the Grantee or held (together with a stock
power executed in blank by the Grantee) in escrow by the
Secretary of the Company until such shares become
nonforfeitable or are forfeited;
(B) the per share purchase price of such shares,
which may be zero; provided, however, that the per share
purchase price of all such shares (other than treasury
shares) shall not be less than the Minimum Consideration
for each such share;
(C) the restrictions applicable to such grant and
the time or times upon which any applicable restrictions
on the restricted Stock shall lapse; provided, however,
that except in the case of shares of restricted Stock
issued to nonemployee directors or the case of restricted
stock issued in full or partial settlement of another
Award or other earned compensation, or in the event of the
Grantee's Termination of Employment, as determined by the
Committee and set forth in an Award Agreement, such
restrictions shall not lapse prior to the first
anniversary of the Grant Date of the restricted Stock; and
(D) whether the payment to the Grantee of
dividends, or a specified portion thereof, declared or
paid on such shares by the Company shall be deferred until
the lapsing of the restrictions imposed upon such shares
and shall be held by the Company for the account of the
Grantee, whether such dividends shall be reinvested in
additional shares of restricted Stock (to the extent
shares are available under Article 3) subject to the same
restrictions and other terms as apply to the shares with
respect to which such dividends are issued or otherwise
reinvested in Stock or held in escrow, whether interest
will be credited to the account of the Grantee with
respect to any dividends which are not reinvested in
restricted or unrestricted Stock, and whether any Stock
dividends issued with respect to the restricted Stock to
be granted shall be treated as additional shares of
restricted Stock.
(iii) Payment of the purchase price (if greater than
zero) for shares of restricted Stock shall be made in full by the
Grantee before the delivery of such shares and, in any event, no
later than ten days after the Grant Date for such shares. Such
payment may be made, as determined by the Committee in its
discretion, in any one or any combination of the following:
(A) cash; or
(B) with the prior approval of the Committee,
shares of restricted or unrestricted Stock owned by the
Grantee prior to such grant and valued at its Fair Market
Value on the business day immediately preceding the date
of payment;
provided, however, that, in the case of payment in shares of
restricted or unrestricted Stock, if the purchase price for
restricted Stock ("New Restricted Stock") is paid with shares of
restricted Stock ("Old Restricted Stock"), the restrictions
applicable to
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the New Restricted Stock shall be the same as if the Grantee had
paid for the New Restricted Stock in cash unless, in the judgment
of the Committee, the Old Restricted Stock was subject to a
greater risk of forfeiture, in which case a number of shares of
New Restricted Stock equal to the number of shares of Old
Restricted Stock tendered in payment for New Restricted Stock
shall be subject to the same restrictions as the Old Restricted
Stock, determined immediately before such payment.
(iv) The Committee may, but need not, provide that all
or any portion of a Grantee's Award of restricted Stock shall be
forfeited:
(A) except as otherwise specified in the Award
Agreement, upon the Grantee's Termination of Employment
within a specified time period after the Grant Date; or
(B) if the Company or the Grantee does not achieve
specified performance goals within a specified time period
after the Grant Date and before the Grantee's Termination
of Employment; or
(C) upon failure to satisfy such other
restrictions as the Committee may specify in the Award
Agreement.
(v) If a share of restricted Stock is forfeited, then:
(A) the Grantee shall be deemed to have resold
such share of restricted Stock to the Company at the
lesser of (1) the purchase price paid by the Grantee (such
purchase price shall be deemed to be zero dollars ($0) if
no purchase price was paid) or (2) the Fair Market Value
of a share of Stock on the date of such forfeiture;
(B) the Company shall pay to the Grantee the
amount determined under clause (A) of this sentence, if
not zero, as soon as is administratively practicable, but
in any case within 90 days after forfeiture; and
(C) such share of restricted Stock shall cease to
be outstanding, and shall no longer confer on the Grantee
thereof any rights as a stockholder of the Company, from
and after the date of the Company's tender of the payment
specified in clause (B) of this sentence, whether or not
such tender is accepted by the Grantee, or the date the
restricted Stock is forfeited if no purchase price was
paid for the restricted Stock.
(vi) Any share of restricted Stock shall bear an
appropriate legend specifying that such share is non-transferable
and subject to the restrictions set forth in the Plan and the
Award Agreement. If any shares of restricted Stock become
nonforfeitable, the Company shall cause certificates for such
shares to be issued or reissued without such legend and delivered
to the Grantee or, at the request of the Grantee, shall cause
such shares to be credited to a brokerage account specified by
the Grantee.
(e) Grant of Performance Units and Performance Shares.
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(i) The Committee may, in its discretion, grant
performance units or performance shares to any employee of the
Company eligible under Article 5 to receive Awards.
(ii) Before the grant of any performance unit or
performance share, the Committee shall:
(A) designate a period, of not less than one year
nor more than five years, for the measurement of the
extent to which performance goals are attained (the
"Measuring Period");
(B) determine performance goals applicable to such
grant; provided, however, that the performance goals with
respect to a Measuring Period shall be established in
writing by the Committee by the earlier of (x) the date on
which a quarter of the Measuring Period has elapsed or (y)
the date which is ninety (90) days after the commencement
of the Measuring Period, and in any event while the
performance relating to the performance goals remain
substantially uncertain; and
(C) assign a "Performance Percentage" to each
level of attainment of performance goals during the
Measuring Period, with the percentage applicable to
minimum attainment being zero percent (0%) and the
percentage applicable to optimum attainment to be
determined by the Committee from time to time.
(iii) The performance goals applicable to performance
units or performance shares shall, in the discretion of the
Committee, be based on stock price, earnings per share, operating
income, return on equity or assets, cash flow, EBITDA, revenues,
overall revenue or sales growth, expense reduction or management,
market position, total shareholder return, return on investment,
earnings before interest and taxes (EBIT), net income, return on
net assets, economic value added, shareholder value added, cash
flow return on investment, net operating profit, net operating
profit after tax, return on capital, and return on invested
capital, or any combination of the foregoing. Such performance
goals may be absolute or relative (to prior performance or to the
performance of one or more other entities or external indices)
and may be expressed in terms of a progression within a specified
range. At the time of the granting of performance units or
performance shares, or at any time thereafter, in either case to
the extent permitted under Section 162(m) of the Internal Revenue
Code and the regulations thereunder without adversely affecting
the treatment of the performance unit or performance share as
Performance-Based Compensation, the Committee may provide for the
manner in which performance will be measured against the
performance goals (or may adjust the performance goals) to
reflect the impact of specified corporate transactions, special
charges, foreign currency effects, accounting or tax law changes
and other extraordinary or nonrecurring events.
(iv) Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any performance unit
or performance share that is intended to constitute
Performance-Based Compensation made to a Grantee who is subject
to
15
Section 162(m) of the Internal Revenue Code, the Committee shall
certify in writing that the applicable performance goals have
been satisfied.
(v) Unless otherwise expressly stated in the relevant
Award Agreement, each performance unit and performance share
granted under the Plan is intended to be Performance-Based
Compensation and the Committee shall interpret and administer the
applicable provisions of the Plan in a manner consistent
therewith. Any provisions inconsistent with such treatment shall
be inoperative and shall not adversely affect the treatment of
performance units or performance shares granted hereunder as
Performance-Based Compensation. The Committee shall not be
entitled to exercise any discretion otherwise authorized
hereunder with respect to such performance unit or performance
share if the ability to exercise such discretion or the exercise
of such discretion itself would cause the compensation
attributable to such performance unit or performance share to
fail to qualify as Performance-Based Compensation.
(f) Grant of Stock Appreciation Rights. The Committee may, in
its discretion, grant Stock Appreciation Rights to any employee who is
eligible under Article 5 to receive Awards as follows:
(i) Employee Stock Appreciation Rights. Stock
Appreciation Rights may be granted to any employee eligible under
Article 5 to receive Awards. No later than the Grant Date of any
Stock Appreciation Right, the Committee shall determine the
Exercise Price.
(ii) Nonemployee Director Stock Appreciation Rights.
(A) Discretionary Grants. Stock Appreciation
Rights may be granted to nonemployee directors of the
Company from time to time.
(B) Terms Applicable to all Nonemployee Director
Stock Appreciation Rights. Each Stock Appreciation Right
granted to a nonemployee director will be granted with an
Exercise Price not less than 100% of the Fair Market Value
of the Stock on the Grant Date, will become exercisable
with respect to one-third of the underlying shares on each
of the first, second and third anniversaries of the Grant
Date, and will have a term of not more than ten years. If
a nonemployee director ceases to serve as a director of
the Company for any reason, any Stock Appreciation Rights
granted to such nonemployee director shall be exercisable
during its remaining term, to the extent that such Stock
Appreciation Right was exercisable on the date such
nonemployee director ceased to be a director.
(g) Tandem Awards. The Committee may grant and identify any
Award with any other Award granted under the Plan ("Tandem Award"), on
terms and conditions determined by the Committee.
7. Non-transferability.
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Unless set forth in the applicable Award Agreement with respect to
Awards other than Incentive Stock Options, no Award (other than an Award of
restricted Stock) granted hereunder shall by its terms be assignable or
transferable except by will or the laws of descent and distribution or, in the
case of an Option other than an Incentive Stock Option, pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated under the
Exchange Act). An Option may be exercised during the lifetime of a Grantee only
by the Grantee or his or her guardian or legal representatives or, except as
would cause an Incentive Stock Option to lose its status as such, by a
bankruptcy trustee. Notwithstanding the foregoing, the Committee may set forth
in the Award Agreement evidencing an Award (other than an Incentive Stock
Option) at the time of grant or thereafter, that the Award may be transferred to
members of the Grantee's immediate family, to trusts solely for the benefit of
such immediate family members and to partnerships in which such family members
and/or trusts are the only partners, and for purposes of this Plan, a transferee
of an Award shall be deemed to be the Grantee. For this purpose, immediate
family means the Grantee's spouse, parents, children, stepchildren and
grandchildren and the spouses of such parents, children, stepchildren and
grandchildren. The terms of an Award shall be final, binding and conclusive upon
the beneficiaries, executors, administrators, heirs and successors of the
Grantee. Each share of restricted Stock shall be non-transferable until such
share becomes nonforfeitable.
8. Exercise.
(a) Exercise of Options and Stock Appreciation Rights. Subject
to such terms and conditions as the Committee may impose, each Option or
Stock Appreciation Right shall be exercisable in one or more
installments commencing not earlier than the first anniversary of the
Grant Date of such Option or Stock Appreciation Right; provided,
however, that all Options or Stock Appreciation Rights held by each
Grantee shall become fully (100%) vested and exercisable upon the
occurrence of a Change of Control regardless of whether the acceleration
of the exercisability of such Options or Stock Appreciation Rights would
cause such Options to lose their eligibility for treatment as Incentive
Stock Options. Each Option or Stock Appreciation Right shall be
exercised by delivery to the Company of written notice of intent to
purchase a specific number of shares of Stock subject to the Option. The
Exercise Price of any shares of Stock as to which an Option or Stock
Appreciation Right shall be exercised shall be paid in full at the time
of the exercise. Payment may be made, as determined by the Committee in
its discretion with respect to Options or Stock Appreciation Rights
granted to eligible employees and in all cases with respect to Options
or Stock Appreciation Rights granted to nonemployee directors, in any
one or any combination of the following:
(i) cash,
(ii) shares of unrestricted Stock held by the Grantee
for at least six months (or such lesser period as may be
permitted by the Committee) prior to the exercise of the Option
or Stock Appreciation Right, and valued at its Fair Market Value
on the last business day immediately preceding the date of
exercise, or
(iii) through simultaneous sale through a broker of
shares of unrestricted Stock acquired on exercise, as permitted
under Regulation T of the Federal Reserve Board.
17
Shares of unrestricted Stock acquired by a Grantee on exercise of an
Option shall be delivered to the Grantee or, at the request of the Grantee,
shall be credited directly to a brokerage account specified by the Grantee.
(b) Exercise of Performance Units.
(i) Subject to such terms and conditions as the
Committee may impose, and unless otherwise provided in the
applicable Award Agreement, if, with respect to any performance
unit, the Committee has determined that the minimum performance
goals have been achieved during the applicable Measuring Period,
then such performance unit shall be deemed exercised on the date
on which it first becomes exercisable.
(ii) The benefit for each performance unit exercised
shall be an amount equal to the product of
(A) the Unit Value (as defined below), multiplied
by
(B) the Performance Percentage attained during the
Measuring Period for such performance unit.
(iii) The Unit Value shall be, as specified by the
Committee,
(A) a dollar amount,
(B) an amount equal to the Fair Market Value of a
share of Stock on the Grant Date,
(C) an amount equal to the Fair Market Value of a
share of Stock on the exercise date of the performance
unit, plus, if so provided in the Award Agreement, an
amount ("Dividend Equivalent Amount") equal to the Fair
Market Value of the number of shares of Stock that would
have been purchased if each dividend paid on a share of
Stock on or after the Grant Date and on or before the
exercise date were invested in shares of Stock at a
purchase price equal to its Fair Market Value on the
respective dividend payment date, or
(D) an amount equal to the Fair Market Value of a
share of Stock on the exercise date of the performance
unit (plus, if so specified in the Award Agreement, a
Dividend Equivalent Amount), reduced by the Fair Market
Value of a share of Stock on the Grant Date of the
performance unit.
(iv) The benefit upon the exercise of a performance unit
shall be payable as soon as is administratively practicable (but
in any event within 90 days) after the later of (A) the date the
Grantee is deemed to exercise such performance unit, or (B) the
date (or dates in the event of installment payments) as provided
in the applicable Award Agreement. Such benefit shall be payable
in cash or restricted Stock, except that the Committee, with
respect to any particular exercise, may, in its discretion, pay
benefits wholly or partly in Stock delivered to the Grantee or
credited to a brokerage
18
account specified by the Grantee. The number of shares of Stock
payable in lieu of cash shall be determined by valuing the Stock
at its Fair Market Value on the business day next preceding the
date such benefit is to be paid.
(c) Payment of Performance Shares. Subject to such terms and
conditions as the Committee may impose, and unless otherwise provided in
the applicable Award Agreement, if the Committee has determined in
accordance with Article 6(e)(iv) that the minimum performance goals with
respect to an Award of performance shares have been achieved during the
applicable Measuring Period, then the Company shall pay to the Grantee
of such Award (or, at the request of the Grantee, deliver to a brokerage
account specified by the Grantee) shares of restricted Stock or Stock
equal in number to the product of the number of performance shares
specified in the applicable Award Agreement multiplied by the
Performance Percentage achieved during such Measuring Period, except to
the extent that the Committee in its discretion determines that cash be
paid in lieu of some or all of such shares of Stock. The amount of cash
payable in lieu of a share of Stock shall be determined by valuing such
share at its Fair Market Value on the business day next preceding the
date such cash is to be paid. Payments pursuant to this Article 8(d)
shall be made as soon as administratively practicable (but in any event
within 90 days) after the end of the applicable Measuring Period. Any
performance shares with respect to which the performance goals have not
been achieved by the end of the applicable Measuring Period shall
expire.
(d) Exercise, Cancellation, Expiration or Forfeiture of Tandem
Awards. Upon the exercise, cancellation, expiration, forfeiture or
payment in respect of any Award which is identified with any Tandem
Award pursuant to Article 6(g), the Tandem Award shall automatically
terminate to the extent of the number of shares in respect of which the
Award is so exercised, cancelled, expired, forfeited or paid, unless
otherwise provided by the Committee at the time of grant of the Tandem
Award or thereafter.
9. Effect of Certain Transactions.
With respect to any Award which relates to Stock, in the event of (i)
the liquidation or dissolution of the Company or (ii) a merger or consolidation
of the Company (a "Transaction"), the Plan and the Awards issued hereunder shall
continue in effect in accordance with their respective terms, except that
following a Transaction either (i) each outstanding Award shall be treated as
provided for in the agreement entered into in connection with the Transaction
(the "Transaction Agreement") or (ii) if not so provided in the Transaction
Agreement, each Grantee shall be entitled to receive in respect of each share of
Stock subject to any outstanding Awards, upon the vesting, payment or exercise
of the Award (as the case may be), the same number and kind of stock,
securities, cash, property, or other consideration that each holder of a share
of Stock was entitled to receive in the Transaction in respect of a share of
Stock.
10. Mandatory Withholding Taxes.
The Company shall have the right to deduct from any distribution of cash
to any Grantee an amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld (the "Withholding Taxes")
with respect to any Award. If a Grantee is to experience a taxable event in
connection with (i) the receipt of an Award, (ii) the receipt of shares pursuant
to an Option exercise, (iii) the vesting or payment of another type of Award or
(iv) any other event in connection with the Plan (a "Taxable Event"), the
Grantee shall pay the Withholding
19
Taxes to the Company prior to the issuance, or release from escrow, of such
Award or shares or vesting or payment of such Award or occurrence of such event,
as applicable. Payment of the applicable Withholding Taxes may be made, as
determined by the Committee in its discretion, in any one or any combination of
(i) cash, (ii) shares of restricted or unrestricted Stock owned by the Grantee
prior to the Taxable Event and valued at its Fair Market Value on the business
day immediately preceding the date of exercise, or (iii) by making a Tax
Election (as described below). For purposes of this Article 11, the Committee
may provide in the Award Agreement at the time of grant, or at any time
thereafter, that the Grantee, in satisfaction of the obligation to pay
Withholding Taxes to the Company, may elect to have withheld a portion of the
shares then issuable to him or her having an aggregate Fair Market Value equal
to the Withholding Taxes.
11. Termination of Employment.
The Award Agreement pertaining to each Award shall set forth the terms
and conditions applicable to such Award upon a Termination of Employment of the
Grantee by the Company, a Subsidiary or an operating division or unit, which,
except for Awards granted to nonemployee directors, shall be as the Committee
may, in its discretion, determine at the time the Award is granted or
thereafter.
12. Securities Law Matters.
(a) If the Committee deems it necessary to comply with the
Securities Act of 1933, the Committee may require a written investment
intent representation by the Grantee and may require that a restrictive
legend be affixed to certificates for shares of Stock.
(b) If, based upon the opinion of counsel for the Company, the
Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of (i) federal or state securities law, (ii) the listing
requirements of any national securities exchange on which are listed any
of the Company's equity securities or (iii) any other law or regulation,
then the Committee may postpone any such exercise, nonforfeitability or
delivery, as the case may be, but the Company shall use its best
efforts, if applicable, to cause such exercise, nonforfeitability or
delivery to comply with all such provisions at the earliest practicable
date.
(c) Notwithstanding any provision of the Plan or any Award
Agreement to the contrary, no shares of Stock shall be issued to any
Grantee in respect of any Award prior to the time a registration
statement under the Securities Act of 1933 is effective with respect to
such shares.
13. No Funding Required.
Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise segregate
assets to be used for payment of, benefits under the Plan.
14. No Employment Rights.
20
Neither the establishment of the Plan, nor the granting of any Award
shall be construed to (a) give any Grantee the right to remain employed by the
Company or to any benefits not specifically provided by the Plan or (b) in any
manner modify the right of the Company or any of its Subsidiaries to modify,
amend, or terminate any of its employee benefit plans.
15. Rights as a Stockholder.
A Grantee shall not, by reason of any Award (other than restricted
Stock), have any right as a stockholder of the Company with respect to the
shares of Stock which may be deliverable upon exercise or payment of such Award
until such shares have been delivered to him. Shares of restricted Stock held by
a Grantee or held in escrow by the Secretary of the Company shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan.
16. Nature of Payments.
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and shall
not be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
Subsidiaries or (b) any agreement between the Company, on the one hand, and the
Grantee, on the other hand, except as such plan or agreement shall otherwise
expressly provide.
17. Non-Uniform Determinations.
Neither the Committee's nor the Board's determinations under the Plan
need be uniform and may be made by the Committee or the Board selectively among
persons who receive, or are eligible to receive, Awards (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, and (c) the treatment of Terminations of Employment.
18. Adjustments.
In the event of Change in Capitalization, the Committee shall, in its
sole discretion, make equitable adjustment of
(a) the aggregate number and class of shares of Stock or other
stock or securities available under Article 3,
(b) the number and class of shares of Stock or other stock or
securities covered by an Award and to be covered by Options or
Stock Appreciation Rights,
(c) the Exercise Price applicable to outstanding Options,
(d) the terms of performance unit and performance share grants
(to the extent permitted under Section 162(m)) of the Internal
Revenue Code and the regulations thereunder without adversely
affecting the treatment of the performance unit or performance
share as Performance-Based Compensation,
(e) the Fair Market Value of Stock to be used to determine the
amount of the benefit payable upon exercise of performance units
and performance shares,
21
(f) the maximum number and class of shares of Stock or other
securities with respect to which Awards may be granted to any
individual in any calendar year period.
19. Amendment of the Plan.
The Board may from time to time in its discretion amend or modify the
Plan without the approval of the stockholders of the Company, except as such
stockholder approval may be required (a) to retain Incentive Stock Option
treatment under Section 422 of the Internal Revenue Code, (b) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act or (c) under the listing requirements of any
securities exchange on which any of the Company's equity securities are listed.
20. Termination of the Plan.
The Plan shall terminate on the tenth (10th) anniversary of the
Effective Date or at such earlier time as the Board may determine. Any
termination, whether in whole or in part, shall not affect any Award then
outstanding under the Plan.
21. No Illegal Transactions.
The Plan and all Awards granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable thereto;
and notwithstanding any provision of the Plan or any Award, Grantees shall not
be entitled to exercise Awards or receive the benefits thereof and the Company
shall not be obligated to deliver any Stock or pay any benefits to a Grantee if
such exercise, delivery, receipt or payment of benefits would constitute a
violation by the Grantee or the Company of any provision of any such law or
regulation or applicable court order.
22. Governing Law.
Except where preempted by federal law, the law of the State of Georgia
shall be controlling in all matters relating to the Plan, without giving effect
to the conflicts of law principles thereof.
23. Severability.
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of the Plan not declared to be unlawful or
invalid. Any Article or part of an Article so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Article or part of an Article to the fullest extent possible while
remaining lawful and valid.
24. Translations.
Any inconsistency between the terms of the Plan or any Award Agreement
and the corresponding translation thereof into a language other than English
shall be resolved by reference, solely, to the English language document.
22