WESTERN ALLIANCE BANCORPORATION
2005 STOCK INCENTIVE PLAN
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TABLE OF CONTENTS
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3. ADMINISTRATION OF THE PLAN.......................................6
3.3. Terms of Awards............................................7
3.4. Deferral Arrangement.......................................7
3.5. No Liability...............................................8
3.6. Book Entry.................................................8
4. STOCK SUBJECT TO THE PLAN........................................8
5. EFFECTIVE DATE, DURATION AND AMENDMENTS..........................9
5.1. Effective Date.............................................9
5.3. Amendment and Termination of the Plan......................9
6. AWARD eligibility AND LIMITATIONS................................9
6.1. Service Providers and Other Persons........................9
6.2. Successive Awards..........................................10
6.3. Limitation on Shares of Stock Subject to Awards and Cash
6.4. Substitute or Exchange Awards..............................10
7. AWARD AGREEMENT..................................................11
8. TERMS AND CONDITIONS OF OPTIONS..................................11
8.1. Option Price...............................................11
8.4. Termination of Service.....................................11
8.5. Limitations on Exercise of Option..........................12
8.6. Method of Exercise.........................................12
8.7. Rights of Holders of Options...............................12
8.8. Delivery of Stock Certificates.............................12
8.9. Transferability of Options.................................12
8.10. Family Transfers...........................................13
8.11. Limitations on Incentive Stock Options.....................13
9. TERMS AND CONDITIONS OF Stock Appreciation Rights................13
9.1. Right to Payment...........................................13
9.2. Other Terms................................................14
10. TERMS AND CONDITIONS OF RESTRICTED STOCK and stock units.........14
10.1. Grant of Restricted Stock or Stock Units...................14
10.3. Restricted Stock Certificates..............................14
10.4. Rights of Holders of Restricted Stock......................15
10.5. Rights of Holders of Stock Units...........................15
10.5.1.Voting and Dividend Rights..........................15
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10.6. Termination of Service.....................................15
10.7. Purchase of Restricted Stock...............................15
10.8. Delivery of Stock..........................................16
11. TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS................16
12. FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK.................16
12.1. General Rule...............................................16
12.2. Surrender of Stock.........................................16
12.3. Cashless Exercise..........................................16
12.4. Other Forms of Payment.....................................17
13. TERMS AND CONDITIONS OF Dividend Equivalent RIGHTS...............17
13.1. Dividend Equivalent Rights.................................17
13.2. Termination of Service.....................................17
14. TERMS AND CONDITIONS OF Performance and Annual Incentive Awards..17
14.1. Performance Conditions.....................................17
14.2. Performance or Annual Incentive Awards Granted to
Designated Covered Employees ..............................18
14.2.1.Performance Goals Generally.........................18
14.2.3.Timing For Establishing Performance Goals...........19
14.2.4.Settlement of Performance or Annual Incentive
Awards; Other Terms ................................19
14.3. Written Determinations.....................................19
14.4. Status of Section 14.2 Awards Under Code Section 162(m)....19
15. PARACHUTE LIMITATIONS............................................20
16. REQUIREMENTS OF LAW..............................................20
16.2. Rule 16b-3.................................................21
17. EFFECT OF CHANGES IN CAPITALIZATION..............................21
17.1. Changes in Stock...........................................21
17.2. Reorganization in Which the Company Is the Surviving
Entity Which does not Constitute a Corporate Transaction...22
17.3. Corporate Transaction......................................22
17.5. No Limitations on Company..................................24
18. general provisions...............................................24
18.1. Disclaimer of Rights.......................................24
18.2. Nonexclusivity of the Plan.................................24
18.3. Withholding Taxes..........................................24
18.5. Other Provisions...........................................25
18.6. Number and Gender..........................................25
18.8. Governing Law..............................................25
WESTERN ALLIANCE BANCORPORATION
2005 STOCK INCENTIVE PLAN
Western Alliance Bancorporation, a Nevada corporation (the "Company"),
sets forth herein the terms of its 2005 Stock Incentive Plan (the "Plan"), as
The Plan is intended to enhance the Company's and its Affiliates' (as
defined herein) ability to attract and retain highly qualified officers,
directors, key employees, and other persons, and to motivate such officers,
directors, key employees, and other persons to serve the Company and its
Affiliates and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such persons an opportunity to acquire
or increase a direct proprietary interest in the operations and future success
of the Company. To this end, the Plan provides for the grant of stock options,
stock appreciation rights (on and after the IPO Date), restricted stock, stock
units, unrestricted stock, dividend equivalent rights and cash awards. Any of
these awards may, but need not, be made as performance incentives to reward
attainment of annual or long-term performance goals in accordance with the terms
hereof. Stock options granted under the Plan may be non-qualified stock options
or incentive stock options, as provided herein.
Furthermore, this Plan is an amendment and restatement of the Bankwest of
Nevada 1997 Incentive Stock Option Plan and the Bankwest of Nevada 1997
Nonqualified Stock Option Plan (together, the "1997 Plans"), the Western
Alliance Bancorporation 2000 Stock Appreciation Rights Plan (the "2000 SAR
Plan"), the Western Alliance Bancorporation 2002 Stock Option Plan (the "2002
Plan") and any other prior plan of the Company or a predecessor in effect prior
to the Effective Date of this Plan under which stock options or other equity
awards covering the Company's Stock remain outstanding to a service provider
(the "Prior Plans"). This Plan document therefore is intended to preserve
material rights and features of the Prior Plans, and should any material
provision of this Plan be determined to impair the rights of a Grantee under an
Award granted prior to the Effective Date of this restated Plan, the Award
Agreement covering the Award shall instead be treated as including the material
provision as an explicit term. In this regard, as of the Effective Date and
notwithstanding the absence of an automatic change in control vesting provision
under this restated Plan, any change in control vesting provision of a Prior
Plan hereby is incorporated into the Awards outstanding as of the Effective Date
and made under the applicable Prior Plan.
For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:
2.1 "AFFILIATE" means, with respect to the Company, any company or other
trade or business that directly or indirectly controls, is controlled by or is
under common control with the Company within the meaning of Rule 405 of
Regulation C under the Securities Act, including, without limitation, any
2.2 "ANNUAL INCENTIVE AWARD" means an Award made subject to attainment of
performance goals (as described in SECTION 14) over a performance period of up
to one year (the fiscal year, unless otherwise specified by the Committee).
2.3 "AWARD" means a grant of an Option, Stock Appreciation Right,
Restricted Stock, Unrestricted Stock, Stock Unit, Dividend Equivalent Right, or
cash award under the Plan.
2.4 "AWARD AGREEMENT" means the written agreement between the Company and
a Grantee that evidences and sets out the terms and conditions of an Award.
2.5 "BENEFIT ARRANGEMENT" shall have the meaning set forth in SECTION 15
2.6 "BOARD" means the Board of Directors of the Company.
2.7 "CAUSE" means, as determined by the Board and unless otherwise
provided in an applicable agreement with the Company or an Affiliate, (i)
performance of any act or failure to perform any act in bad faith and to the
detriment of the Company or an Affiliate; (ii) dishonesty, intentional
misconduct or material breach of any agreement with the Company or an Affiliate;
or (iii) commission of a crime involving dishonesty, breach of trust, or
physical or emotional harm to any person.
2.8 "CODE" means the Internal Revenue Code of 1986, as now in effect or as
2.9 "COMMITTEE" means a committee of, and designated from time to time by
resolution of, the Board, which shall be constituted as provided in SECTION 3.2.
2.10 "COMPANY" means Western Alliance Bancorporation.
2.11 "CORPORATE TRANSACTION" means (i) the dissolution or liquidation of
the Company or a merger, consolidation, or reorganization of the Company with
one or more other entities in which the Company is not the surviving entity,
(ii) a sale of all or substantially all of the assets of the Company to another
person or entity, or (iii) any transaction (including without limitation a
merger or reorganization in which the Company is the surviving entity) which
results in any person or entity (other than persons who are stockholders or
Affiliates immediately prior to the transaction) owning 50% or more of the
combined voting power of all classes of stock of the Company.
2.12 "COVERED EMPLOYEE" means a Grantee who is a Covered Employee within
the meaning of Section 162(m)(3) of the Code.
2.13 "DISABILITY" means the Grantee is unable to perform each of the
essential duties of such Grantee's position by reason of a medically
determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less
than 12 months; provided, however, that, with respect to rules regarding
expiration of an Incentive Stock Option following termination of the Grantee's
Service, Disability shall mean the Grantee is unable to engage in any
substantial gainful activity by reason of a medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
2.14 "DIVIDEND EQUIVALENT RIGHT" means a right, granted to a Grantee under
SECTION 13 hereof, to receive cash, Stock, other Awards or other property equal
in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.
2.15 "EFFECTIVE DATE" means April 7, 2005, the date the Plan is approved
by the Board.
2.16 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.
2.17 "FAIR MARKET VALUE" means the value of a share of Stock, determined
as follows: if on the Grant Date or other determination date the Stock is listed
on an established national or regional stock exchange, is admitted for quotation
on The Nasdaq Stock Market, Inc. or is publicly traded on an established
securities market, the Fair Market Value of a share of Stock shall be the
closing price of the Stock on such exchange or in such market (if there is more
than one such exchange or market the Board shall determine the appropriate
exchange or market) on the Grant Date or such other determination date (or if
there is no such reported closing price, the Fair Market Value shall be the mean
between the highest bid and lowest asked prices or between the high and low sale
prices on such trading day, as determined by the Board) or, if no sale of Stock
is reported for such trading day, on the next preceding day on which any sale
shall have been reported. If the Stock is not listed on such an exchange, quoted
on such system or traded on such a market, Fair Market Value shall be the value
of the Stock as determined by the Board in good faith.
2.18 "FAMILY MEMBER" means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the
Grantee, any person sharing the Grantee's household (other than a tenant or
employee), a trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which any one or more
of these persons (or the Grantee) control the management of assets, and any
other entity in which one or more of these persons (or the Grantee) own more
than fifty percent of the voting interests.
2.19 "GRANT DATE" means, as determined by the Board, the latest to occur
of (i) the date as of which the Board approves an Award, (ii) the date on which
the recipient of an
Award first becomes eligible to receive an Award under SECTION 6 hereof, or
(iii) such other date as may be specified by the Board.
2.20 "GRANTEE" means a person who receives or holds an Award under the
2.21 "INCENTIVE STOCK OPTION" means an "incentive stock option" within the
meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.
2.22 "IPO DATE" means the closing date of the first sale of Stock to the
general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act.
2.23 "NON-QUALIFIED STOCK OPTION" means an Option that is not an Incentive
2.24 "OPTION" means an option to purchase one or more shares of Stock
pursuant to the Plan.
2.25 "OPTION PRICE" means the exercise price for each share of Stock
subject to an Option.
2.26 "OPTION PROCEEDS" means, with respect to an Option, the sum of (i)
the Option Price paid in cash, if any, to purchase shares of Stock under such
Option, plus (ii) the value of all federal, state, and local deductions to which
the Company is entitled with respect to the exercise of such Option determined
using the highest Federal tax rate applicable to corporations and a blended tax
rate for state and local taxes based on the jurisdictions in which the Company
does business and giving effect to the deduction of state and local taxes for
Federal tax purposes.
2.27 "OTHER AGREEMENT" shall have the meaning set forth in SECTION 15
2.28 "OUTSIDE DIRECTOR" means a member of the Board who is not an officer
or employee of the Company.
2.29 "PERFORMANCE AWARD" means an Award made subject to the attainment of
performance goals (as described in SECTION 14) over a performance period of up
to ten (10) years.
2.30 "PLAN" means this Western Alliance Bancorporation 2005 Stock
2.31 "PURCHASE PRICE" means the purchase price for each share of Stock
pursuant to a grant of Restricted Stock or Unrestricted Stock.
2.32 "REPORTING PERSON" means a person who is required to file reports
under Section 16(a) of the Exchange Act.
2.33 "RESTRICTED STOCK" means shares of Stock, awarded to a Grantee
pursuant to SECTION 10 hereof.
2.34 "SAR EXERCISE PRICE" means the per share exercise price of an SAR
granted to a Grantee under SECTION 9 hereof.
2.35 "SECURITIES ACT" means the Securities Act of 1933, as now in effect
or as hereafter amended.
2.36 "SERVICE" means service as a Service Provider to the Company or an
Affiliate. Unless otherwise stated in the applicable Award Agreement, a
Grantee's change in position or duties shall not result in interrupted or
terminated Service, so long as such Grantee continues to be a Service Provider
to the Company or an Affiliate. Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the Plan shall be
determined by the Board, which determination shall be final, binding and
2.37 "SERVICE PROVIDER" means an employee, officer or director of the
Company or an Affiliate, or a consultant or adviser currently providing services
to the Company or an Affiliate.
2.38 "STOCK" means the common stock, par value $.0001 per share, of the
2.39 "STOCK APPRECIATION RIGHT" or "SAR" means a right granted to a
Grantee under SECTION 9 hereof. SARs may only be awarded under this Plan on and
after the IPO Date, and during a period that the Company remains publicly
traded. Notwithstanding the preceding sentence, SARs awarded under a Prior Plan
on or before October 3, 2004 shall continue in effect under this Plan under the
term then in effect under the Award Agreement for the respective SAR.
2.40 "STOCK UNIT" means a bookkeeping entry representing the equivalent of
shares of Stock awarded to a Grantee pursuant to SECTION 10 hereof.
2.41 "SUBSIDIARY" means any "subsidiary corporation" of the Company within
the meaning of Section 424(f) of the Code.
2.42 "TERMINATION DATE" means the date upon which an Option shall
terminate or expire, as set forth in SECTION 8.3 hereof.
2.43 "TEN PERCENT STOCKHOLDER" means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company, its parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of Section 424(d) of the Code shall be
2.44 "TRANSITION PERIOD" means the reliance period described in Treas.
Reg. Section 1.162-27(f) or a successor provision.
2.45 "UNRESTRICTED STOCK" means an Award pursuant to SECTION 11 hereof.
3. ADMINISTRATION OF THE PLAN
The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company's articles of
incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate for the administration
of the Plan, any Award or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company's articles of incorporation and by-laws
and applicable law. The interpretation and construction by the Board of any
provision of the Plan, any Award or any Award Agreement shall be final, binding
The Board from time to time may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in SECTION 3.1 above and other applicable provisions, as the Board shall
determine, consistent with the articles of incorporation and by-laws of the
Company and applicable law.
(i) On and after the IPO Date, except as provided in subsection (ii)
hereof and except as the Board may otherwise determine, the Committee, if
any, appointed by the Board to administer the Plan shall consist of two or
more Outside Directors of the Company who: (a) following the Transition
Period qualify as "outside directors" within the meaning of Section 162(m)
of the Code, and (b) meet such other requirements as may be established
from time to time by the Securities and Exchange Commission for plans
intended to qualify for exemption under Rule 16b-3 (or its successor)
under the Exchange Act, and (c) comply with the independence requirements,
if any, of the stock exchange on which the Stock is listed.
(ii) The Board may also appoint one or more separate committees of
the Board, each composed of one or more directors of the Company who need
not be Outside Directors, who may administer the Plan with respect to
employees or other Service Providers who are not officers or directors of
the Company, may grant Awards under the Plan to such employees or other
Service Providers, and may determine all terms of such Awards.
In the event that the Plan, any Award or any Award Agreement entered into
hereunder provides for any action to be taken by or determination to be made by
the Board, such action may be taken or such determination may be made by the
Committee if the power and authority to do so has been delegated to the
Committee by the Board
as provided for in this Section. Unless otherwise expressly determined by the
Board, any such action or determination by the Committee shall be final, binding
3.3. TERMS OF AWARDS.
Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority to:
(i) designate Grantees,
(ii) determine the type or types of Awards to be made to a Grantee,
(iii) determine the number of shares of Stock to be subject to an
(iv) establish the terms and conditions of each Award (including,
but not limited to, the exercise price of any Option, the nature and
duration of any restriction or condition (or provision for lapse thereof)
relating to the vesting, exercise, transfer, or forfeiture of an Award or
the shares of Stock subject thereto, and any terms or conditions that may
be necessary to qualify Options as Incentive Stock Options),
(v) prescribe the form of each Award Agreement evidencing an Award,
(vi) amend, modify, or supplement the terms of any outstanding
Award. Such authority specifically includes the authority, in order to
effectuate the purposes of the Plan but without amending the Plan, to
modify Awards to eligible individuals who are foreign nationals or are
individuals who are employed outside the United States to recognize
differences in local law, tax policy, or custom. Notwithstanding the
foregoing, no amendment, modification or supplement of any Award shall,
without the consent of the Grantee, impair the Grantee's rights under such
The Company may retain the right in an Award Agreement to cause a
forfeiture of the gain realized by a Grantee on account of actions taken by the
Grantee in violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof or otherwise in
competition with the Company or any Affiliate thereof, to the extent specified
in such Award Agreement applicable to the Grantee. Furthermore, the Company may
annul an Award if the Grantee is an employee of the Company or an Affiliate
thereof and is terminated for Cause as defined in the applicable Award Agreement
or the Plan, as applicable. The grant of any Award shall be contingent upon the
Grantee executing the appropriate Award Agreement.
3.4. DEFERRAL ARRANGEMENT.
The Board may permit or require the deferral of any award payment into a
deferred compensation arrangement, subject to such rules and procedures as it
may establish in writing that is intended to satisfy Section 409A of the Code,
which may include provisions for the payment or crediting of interest or
dividend equivalents, including converting such
credits into deferred Stock equivalents and restricting deferrals to comply with
hardship distribution rules affecting 401(k) plans.
3.5. NO LIABILITY.
No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award or
3.6. BOOK ENTRY.
Notwithstanding any other provision of this Plan to the contrary, the
Company may elect to satisfy any requirement under this Plan for the delivery of
stock certificates through the use of book-entry.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in SECTION 17 hereof, the number of
shares of Stock available for issuance under the Plan taking into account shares
originally available under the 1997 Plans, the 2000 SAR Plan, the 2002 Plan and
any Prior Plan shall be 3,253,844. Of the shares of Stock so designated for
issuance under the Plan, 2,246,894 shares represent Awards outstanding as of the
Effective Date. Stock issued or to be issued under the Plan shall be authorized
but unissued shares or, to the extent permitted by applicable law, issued shares
that have been reacquired by the Company. If any shares covered by an Award are
not purchased or are forfeited, or if an Award otherwise terminates without
delivery of any Stock subject thereto, then the number of shares of Stock
counted against the aggregate number of shares available under the Plan with
respect to such Award shall, to the extent of any such forfeiture or
termination, again be available for making Awards under the Plan.
If the Option Price of any Option granted under the Plan, or if pursuant
to SECTION 18.3 the withholding obligation of any Grantee with respect to an
Option or other Award, is satisfied by tendering shares of Stock to the Company
(by either actual delivery or by attestation) or by withholding shares of Stock,
the number of shares of Stock issued net of the shares of Stock tendered or
withheld shall be deemed delivered for purposes of determining the maximum
number of shares of Stock available for delivery under the Plan.
The Board shall have the right to substitute or assume Awards in
connection with mergers, reorganizations, separations, or other transactions to
which Section 424(a) of the Code applies, provided such substitutions and
assumptions are permitted by Section 424 of the Code and the regulations
promulgated thereunder. The number of shares of Stock reserved pursuant to
Section 4 may be increased by the corresponding number of Awards assumed and, in
the case of a substitution, by the net increase in the number of shares of Stock
subject to Awards before and after the substitution.
The number of shares of Stock reserved under this SECTION 4 shall be
increased by the number of any shares of Stock that are repurchased by the
Company with Option Proceeds (as defined herein) in respect of the exercise of
an Option; provided, however, that the
number of shares of Stock contributed to number of shares of Stock reserved
under this SECTION 4 in respect of the use of Option Proceeds for repurchase
shall not be greater than: (A) the amount of such Option Proceeds, divided by
(B) the Fair Market Value on the date of exercise of the applicable Option.
5. EFFECTIVE DATE, DURATION AND AMENDMENTS
5.1. EFFECTIVE DATE.
The Plan shall be effective as of the Effective Date, subject to approval
of the Plan by the Company's stockholders within one year of the Effective Date.
Upon approval of the Plan by the stockholders of the Company as set forth above,
all Awards made under the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the Plan on the
Effective Date. If the stockholders fail to approve the Plan within one year
after the Effective Date, any Awards made hereunder relating to the period on or
after the Effective Date shall be null and void and of no effect.
The Plan shall terminate automatically ten (10) years after its adoption
by the Board and may be terminated on any earlier date as provided in SECTION
5.3. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any shares of Stock as to which Awards have not been
made. An amendment shall be contingent on approval of the Company's stockholders
to the extent stated by the Board, required by applicable law or required by
applicable stock exchange listing requirements. No Awards shall be made after
termination of the Plan. No amendment, suspension, or termination of the Plan
shall, without the consent of the Grantee, impair rights or obligations under
any Award theretofore awarded under the Plan.
6. AWARD ELIGIBILITY AND LIMITATIONS
6.1. SERVICE PROVIDERS AND OTHER PERSONS.
Subject to this SECTION 6, Awards may be made under the Plan to: (i) any
Service Provider to the Company or of any Affiliate, including any Service
Provider who is an officer or director of the Company, or of any Affiliate, as
the Board shall determine and designate from time to time, (ii) any Outside
Director, and (iii) any other individual whose participation in the Plan is
determined to be in the best interests of the Company by the Board.
6.2. SUCCESSIVE AWARDS.
An eligible person may receive more than one Award, subject to such
restrictions as are provided herein.
6.3. LIMITATION ON SHARES OF STOCK SUBJECT TO AWARDS AND CASH AWARDS.
During any time when the Company has a class of equity securities
registered under Section 12 of the Exchange Act, but only after the Transition
Period has expired:
(i) the maximum number of shares of Stock subject to Options or SARs
that can be awarded under the Plan to any person eligible for an Award
under SECTION 6 hereof is one hundred fifty thousand (150,000) per
(ii) the maximum number of shares of Stock that can be awarded under
the Plan, other than pursuant to an Option or SARs, to any person eligible
for an Award under SECTION 6 hereof is one hundred fifty thousand
(150,000) per calendar year; and
(iii) the maximum amount that may be earned as an Annual Incentive
Award or other cash Award in any calendar year by any one Grantee shall be
$5,000,000 and the maximum amount that may be earned as a Performance
Award or other cash Award in respect of a performance period by any one
Grantee shall be $15,000,000.
The preceding limitations in this SECTION 6.3, subsections (i) and (ii),
are subject to adjustment as provided in SECTION 17 hereof.
6.4. SUBSTITUTE OR EXCHANGE AWARDS.
Awards granted under the Plan may, in the discretion of the Board, be
granted in substitution or exchange for, any other Award or any award granted
under another plan of the Company, any Affiliate, or any business entity to be
acquired by the Company or an Affiliate, or any other right of a Grantee to
receive payment from the Company or any Affiliate. Such substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another award, the Board shall require the surrender of such other
Award in consideration for the grant of the new Award. Notwithstanding anything
in Section 8.1 or 9.1 below to the contrary, any Awards granted under this
Section 6.4 that are in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any Affiliate, or any business
entity to be acquired by the Company or an Affiliate may be granted at an Option
Price or grant price, as the case may be, as the Board of the Committee may
reasonably determine even if such price is less than Fair Market Value of the
7. AWARD AGREEMENT
Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Board shall from time to time determine.
Award Agreements granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Stock Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-qualified Stock Options.
8. TERMS AND CONDITIONS OF OPTIONS
8.1. OPTION PRICE.
The Option Price of each Option shall be fixed by the Board and stated in
the Award Agreement evidencing such Option. The Option Price of each Option
shall be at least the Fair Market Value on the Grant Date of a share of Stock;
provided, however, that in the event that a Grantee is a Ten Percent
Stockholder, the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall be not less than 110 percent of
the Fair Market Value of a share of Stock on the Grant Date. In no case shall
the Option Price of any Option be less than the par value of a share of Stock.
Subject to SECTIONS 8.3 AND 17.3 hereof, each Option granted under the
Plan shall become exercisable at such times and under such conditions as shall
be determined by the Board and stated in the Award Agreement. For purposes of
this SECTION 8.2, fractional numbers of shares of Stock subject to an Option
shall be rounded down to the next nearest whole number. No Option shall be
exercisable in whole or in part prior to the date the Plan is approved by the
Stockholders of the Company as provided in SECTION 5.1 hereof.
Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option (the
"Termination Date"); provided, however, that in the event that the Grantee is a
Ten Percent Stockholder, an Option granted to such Grantee that is intended to
be an Incentive Stock Option shall not be exercisable after the expiration of
five years from its Grant Date.
8.4. TERMINATION OF SERVICE.
Each Award Agreement shall set forth the extent to which the Grantee shall
have the right to exercise the Option following termination of the Grantee's
provisions shall be determined in the sole discretion of the Board, need not be
uniform among all Options issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of Service.
8.5. LIMITATIONS ON EXERCISE OF OPTION.
Notwithstanding any other provision of the Plan to the contrary, in no
event may any Option be exercised, in whole or in part, prior to the date the
Plan is approved by the stockholders of the Company as provided herein or after
the occurrence of an event referred to in SECTION 17 hereof which results in
termination of the Option.
8.6. METHOD OF EXERCISE.
An Option that is exercisable may be exercised by the Grantee's delivery
to the Company of written notice of exercise on any business day, at the
Company's principal office, on the form specified by the Company. Such notice
shall specify the number of whole shares of Stock with respect to which the
Option is being exercised and shall be accompanied by payment in full of the
Option Price of the shares for which the Option is being exercised plus the
amount (if any) of federal and/or other taxes which the Company may, in its
judgment, be required to withhold with respect to an Award. The minimum number
of shares of Stock with respect to which an Option may be exercised, in whole or
in part, at any time shall be the lesser of (i) 100 shares or such lesser number
as is set forth in the applicable Award Agreement and (ii) the maximum number of
shares available for purchase under the Option at the time of exercise.
8.7. RIGHTS OF HOLDERS OF OPTIONS.
Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in SECTION 17 hereof, no adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date of such issuance.
8.8. DELIVERY OF STOCK CERTIFICATES.
Promptly after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the issuance of a
stock certificate or certificates evidencing his or her ownership of the shares
of Stock subject to the Option.
8.9. TRANSFERABILITY OF OPTIONS.
Except as provided in SECTION 8.10, during the lifetime of a Grantee, only
the Grantee (or, in the event of legal incapacity or incompetency, the Grantee's
guardian or legal representative) may exercise an Option. Except as provided in
SECTION 8.10, no Option shall be assignable or transferable by the Grantee to
whom it is granted, other than
by will or the laws of descent and distribution or pursuant to a domestic
relations order as referred to in the Code or Title I of the Employment
Retirement Income Security Act or the rules thereunder.
8.10. FAMILY TRANSFERS.
If authorized in the applicable Award Agreement, a Grantee may transfer,
not for value, all or part of an Option which is not an Incentive Stock Option
to any Family Member. For the purpose of this SECTION 8.10, a "not for value"
transfer is a transfer which is (i) a gift; (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that entity.
Following a transfer under this SECTION 8.10, any such Option shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer. Subsequent transfers of transferred Options are prohibited except
to Family Members of the original Grantee in accordance with this SECTION 8.10
or by will or the laws of descent and distribution. The events of termination of
Service of SECTION 8.4 hereof shall continue to be applied with respect to the
original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified, in SECTION 8.4.
8.11. LIMITATIONS ON INCENTIVE STOCK OPTIONS.
An Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Grantee's employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.
9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
9.1. RIGHT TO PAYMENT.
An SAR shall confer on the Grantee to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market Value of one
share of Stock on the date of exercise over (B) the grant price of the SAR as
determined by the Board. The Award Agreement for an SAR shall specify the grant
price of the SAR, which shall be no less than the Fair Market Value of a share
of Stock on the date of grant. SARs may be granted in conjunction with all or
part of an Option granted under the Plan or at any subsequent time during the
term of such Option, in conjunction with all or part of any other Award or
without regard to any Option or other Award. All SARs granted under the Plan
shall have such terms and conditions as are necessary to avoid the imposition of
the 20% excise tax under Code Section 409A.
9.2. OTHER TERMS.
The Board shall determine at the date of grant or thereafter, the time or
times at which and the circumstances under which a SAR may be exercised in whole
or in part (including based on achievement of performance goals and/or future
service requirements), the time or times at which SARs shall cease to be or
become exercisable following termination of Service or upon other conditions,
the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Grantees, whether or not a SAR shall be in tandem or in combination
with any other Award, and any other terms and conditions of any SAR.
10. TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS
10.1. GRANT OF RESTRICTED STOCK OR STOCK UNITS.
Awards of Restricted Stock or Stock Units may be made for no consideration
(other than par value of the shares which is deemed paid by Services already
At the time a grant of Restricted Stock or Stock Units is made, the Board
may, in its sole discretion, establish a period of time (a "restricted period")
applicable to such Restricted Stock or Stock Units. Each Award of Restricted
Stock or Stock Units may be subject to a different restricted period. The Board
may, in its sole discretion, at the time a grant of Restricted Stock or Stock
Units is made, prescribe restrictions in addition to or other than the
expiration of the restricted period, including the satisfaction of corporate or
individual performance objectives, which may be applicable to all or any portion
of the Restricted Stock or Stock Units in accordance with SECTION 14.1 and 14.2.
Neither Restricted Stock nor Stock Units may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the restricted period or
prior to the satisfaction of any other restrictions prescribed by the Board with
respect to such Restricted Stock or Stock Units.
10.3. RESTRICTED STOCK CERTIFICATES.
The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the Company shall hold such certificates for
the Grantee's benefit until such time as the Restricted Stock is forfeited to
the Company or the restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend (or legends) that complies with the applicable securities laws and
regulations and makes appropriate reference to the restrictions imposed under
the Plan and the Award Agreement.
10.4. RIGHTS OF HOLDERS OF RESTRICTED STOCK.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction shall
be subject to the restrictions applicable to the original Grant.
10.5. RIGHTS OF HOLDERS OF STOCK UNITS.
10.5.1. VOTING AND DIVIDEND RIGHTS.
Holders of Stock Units shall have no right to vote any Stock promised upon
settlement of the Stock Unit or to "vote" the Stock Unit. The Board may provide
in an Award Agreement evidencing a grant of Stock Units that the holder of such
Stock Units shall be entitled to receive, upon the Company's payment of a cash
dividend on its outstanding Stock, a cash payment for each Stock Unit held equal
to the per-share dividend paid on the Stock. Such Award Agreement may also
provide that such cash payment will be deemed reinvested in additional Stock
Units at a price per unit equal to the Fair Market Value of a share of Stock on
the date that such dividend is paid.
10.5.2. CREDITOR'S RIGHTS.
A holder of Stock Units shall have no rights other than those of a general
creditor of the Company. Stock Units represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions of the applicable
10.6. TERMINATION OF SERVICE.
Unless the Board otherwise provides in an Award Agreement or in writing
after the Award Agreement is issued, upon the termination of a Grantee's
Service, any Restricted Stock or Stock Units held by such Grantee that have not
vested, or with respect to which all applicable restrictions and conditions have
not lapsed, shall immediately be deemed forfeited. Upon forfeiture of Restricted
Stock or Stock Units, the Grantee shall have no further rights with respect to
such Award, including but not limited to any right to vote Restricted Stock or
any right to receive dividends with respect to shares of Restricted Stock or
10.7. PURCHASE OF RESTRICTED STOCK.
The Grantee shall be required, to the extent required by applicable law,
to purchase the Restricted Stock from the Company at a Purchase Price equal to
the greater of (i) the aggregate par value of the shares of Stock represented by
such Restricted Stock or (ii) the Purchase Price, if any, specified in the Award
Agreement relating to such Restricted Stock. The Purchase Price shall be payable
in a form described in SECTION 12 or, in the discretion of the Board, in
consideration for past Services rendered to the Company or an Affiliate.
10.8. DELIVERY OF STOCK.
Upon the expiration or termination of any restricted period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock or Stock Units settled in Stock shall
lapse, and, unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee's beneficiary or estate, as the case may be.
11. TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS
The Board may, in its sole discretion, grant (or sell at par value or such
other higher purchase price determined by the Board) an Unrestricted Stock Award
to any Grantee pursuant to which such Grantee may receive shares of Stock free
of any restrictions ("Unrestricted Stock") under the Plan. Unrestricted Stock
Awards may be granted or sold as described in the preceding sentence in respect
of past services and other valid consideration, or in lieu of, or in addition
to, any cash compensation due to such Grantee.
12. FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK
12.1. GENERAL RULE.
Payment of the Option Price for the shares purchased pursuant to the
exercise of an Option or the Purchase Price for Restricted Stock shall be made
in cash or in cash equivalents acceptable to the Company.
12.2. SURRENDER OF STOCK.
To the extent the Award Agreement so provides, payment of the Option Price
for shares purchased pursuant to the exercise of an Option or the Purchase Price
for Restricted Stock may be made all or in part through the tender to the
Company of shares of Stock, which shares, if acquired from the Company and if so
required by the Company, shall have been held for at least six months at the
time of tender and which shall be valued, for purposes of determining the extent
to which the Option Price or Purchase Price has been paid thereby, at their Fair
Market Value on the date of exercise or surrender.
12.3. CASHLESS EXERCISE.
With respect to an Option only (and not with respect to Restricted Stock)
for any period that the Company is publicly traded, to the extent permitted by
law and to the extent the Award Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option may be made all
or in part by delivery (on a form acceptable to the Board) of an irrevocable
direction to a licensed securities broker acceptable to the Company to sell
shares of Stock and to deliver all or part of the sales proceeds to the Company
in payment of the Option Price and any withholding taxes described in SECTION
12.4. OTHER FORMS OF PAYMENT.
To the extent the Award Agreement so provides, payment of the Option Price
for shares purchased pursuant to exercise of an Option or the Purchase Price for
Restricted Stock may be made in any other form that is consistent with
applicable laws, regulations and rules.
13. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS
13.1. DIVIDEND EQUIVALENT RIGHTS.
A Dividend Equivalent Right is an Award entitling the recipient to receive
credits based on cash distributions that would have been paid on the shares of
Stock specified in the Dividend Equivalent Right (or other award to which it
relates) if such shares had been issued to and held by the recipient. A Dividend
Equivalent Right may be granted hereunder to any Grantee as a component of
another Award or as a freestanding award. The terms and conditions of Dividend
Equivalent Rights shall be specified in the grant. Dividend equivalents credited
to the holder of a Dividend Equivalent Right may be paid currently or may be
deemed to be reinvested in additional shares of Stock, which may thereafter
accrue additional equivalents. Any such reinvestment shall be at Fair Market
Value on the date of reinvestment. Dividend Equivalent Rights may be settled in
cash or Stock or a combination thereof, in a single installment or installments,
all determined in the sole discretion of the Board. A Dividend Equivalent Right
granted as a component of another Award may provide that such Dividend
Equivalent Right shall be settled upon exercise, settlement, or payment of, or
lapse of restrictions on, such other award, and that such Dividend Equivalent
Right shall expire or be forfeited or annulled under the same conditions as such
other award. A Dividend Equivalent Right granted as a component of another Award
may also contain terms and conditions different from such other award.
13.2. TERMINATION OF SERVICE.
Except as may otherwise be provided by the Board either in the Award
Agreement or in writing after the Award Agreement is issued, a Grantee's rights
in all Dividend Equivalent Rights or interest equivalents shall automatically
terminate upon the Grantee's termination of Service for any reason.
14. TERMS AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS
14.1. PERFORMANCE CONDITIONS.
The right of a Grantee to exercise or receive a grant or settlement of any
Award, and the timing thereof, may be subject to such performance conditions as
may be specified by the Board. The Board may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to
performance conditions, except as limited under SECTIONS 14.2 hereof in the case
of a Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code Section 162(m), any
power or authority relating to a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m), shall be exercised by the
Committee and not the Board.
14.2. PERFORMANCE OR ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED
If and to the extent that the Committee determines that a Performance or
Annual Incentive Award to be granted to a Grantee who is designated by the
Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance or Annual Incentive Award shall
be contingent upon achievement of pre-established performance goals and other
terms set forth in this SECTION 14.2.
14.2.1. PERFORMANCE GOALS GENERALLY.
The performance goals for such Performance or Annual Incentive Awards
shall consist of one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by the Committee
consistent with this SECTION 14.2. Performance goals shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such Performance or
Annual Incentive Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of
such Performance or Annual Incentive Awards. Performance goals may differ for
Performance or Annual Incentive Awards granted to any one Grantee or to
14.2.2. BUSINESS CRITERIA.
One or more of the following business criteria for the Company, on a
consolidated basis, and/or specified subsidiaries or business units of the
Company (except with respect to the total stockholder return and earnings per
share criteria), shall be used exclusively by the Committee in establishing
performance goals for such Performance or Annual Incentive Awards: (1) total
stockholder return; (2) total stockholder return as compared to total return (on
a comparable basis) of a publicly available index such as, but not limited to,
the Standard & Poor's 500 Stock Index; (3) net income; (4) pretax earnings; (5)
earnings before interest expense, taxes, depreciation and amortization; (6)
pretax operating earnings after interest expense and before bonuses, service
fees, and extraordinary or special items; (7) operating margin; (8) earnings per
share; (9) return on equity; (10) return on capital; (11) return on investment;
(12) operating earnings; (13) working capital; (14) ratio of debt to
stockholders' equity; and (15) revenue. Business criteria may be measured on an
absolute basis or on a relative basis (i.e., performance relative to peer
companies) and on a GAAP or non-GAAP basis.
14.2.3. TIMING FOR ESTABLISHING PERFORMANCE GOALS.
Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Performance or Annual
Incentive Awards, or at such other date as may be required or permitted for
"performance-based compensation" under Code Section 162(m).
14.2.4. SETTLEMENT OF PERFORMANCE OR ANNUAL INCENTIVE AWARDS; OTHER
Settlement of such Performance or Annual Incentive Awards shall be in
cash, Stock, other Awards or other property, in the discretion of the Committee.
The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance or Annual Incentive
Awards. The Committee shall specify the circumstances in which such Performance
or Annual Incentive Awards shall be paid or forfeited in the event of
termination of Service by the Grantee prior to the end of a performance period
or settlement of Performance Awards.
14.3. WRITTEN DETERMINATIONS.
All determinations by the Committee as to the establishment of performance
goals, the amount of any Performance Award pool or potential individual
Performance Awards and as to the achievement of performance goals relating to
Performance Awards, and the amount of any Annual Incentive Award pool or
potential individual Annual Incentive Awards and the amount of final Annual
Incentive Awards, shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m). To the extent required to comply with Code
Section 162(m), the Committee may delegate any responsibility relating to such
Performance Awards or Annual Incentive Awards.
14.4. STATUS OF SECTION 14.2 AWARDS UNDER CODE SECTION 162(M).
It is the intent of the Company that Performance Awards and Annual
Incentive Awards under SECTION 14.2 hereof granted to persons who are designated
by the Committee as likely to be Covered Employees within the meaning of Code
Section 162(m) and regulations thereunder shall, if so designated by the
Committee, constitute "qualified performance-based compensation" within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of SECTION 14.2, including the definitions of Covered Employee and other
terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a given Grantee
will be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person
designated by the Committee, at the time of grant of Performance Awards or an
Annual Incentive Award, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.
15. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by a
Grantee with the Company or any Affiliate, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or classes of
Grantees or beneficiaries of which the Grantee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Grantee (a "Benefit Arrangement"), if the Grantee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option, Restricted
Stock or Stock Unit held by that Grantee and any right to receive any payment or
other benefit under this Plan shall not become exercisable or vested (i) to the
extent that such right to exercise, vesting, payment, or benefit, taking into
account all other rights, payments, or benefits to or for the Grantee under this
Plan, all Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be considered a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code as then in effect
(a "Parachute Payment") and (ii) if, as a result of receiving a Parachute
Payment, the aggregate after-tax amounts received by the Grantee from the
Company under this Plan, all Other Agreements, and all Benefit Arrangements
would be less than the maximum after-tax amount that could be received by the
Grantee without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Grantee under any Other Agreement or any
Benefit Arrangement would cause the Grantee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Grantee as described in clause (ii) of the
preceding sentence, then the Grantee shall have the right, in the Grantee's sole
discretion, to designate those rights, payments, or benefits under this Plan,
any Other Agreements, and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment.
16. REQUIREMENTS OF LAW
The Company shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would constitute a
violation by the Grantee, any other individual exercising an Option, or the
Company of any provision of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any shares subject to an Award
upon any securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of shares hereunder, no shares of Stock may be issued or sold to the
Grantee or any other individual exercising an Option pursuant to such Award
unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company, and any delay caused thereby shall in no way affect the date of
termination of the Award. Specifically, in connection with the Securities Act,
upon the exercise of any Option or the delivery of any shares of Stock
underlying an Award, unless a registration statement under such Act is in effect
with respect to the shares of Stock covered by such Award, the Company shall not
be required to sell or issue such shares unless the Board has received evidence
satisfactory to it that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from registration under the
Securities Act. Any determination in this connection by the Board shall be
final, binding, and conclusive. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act. The Company shall not be obligated to take any affirmative action in order
to cause the exercise of an Option or the issuance of shares of Stock pursuant
to the Plan to comply with any law or regulation of any governmental authority.
As to any jurisdiction that expressly imposes the requirement that an Option
shall not be exercisable until the shares of Stock covered by such Option are
registered or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.
16.2. RULE 16B-3.
During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the Company that
Awards pursuant to the Plan and the exercise of Options granted hereunder will
qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.
17. EFFECT OF CHANGES IN CAPITALIZATION
17.1. CHANGES IN STOCK.
If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or kind
of shares or other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall be
adjusted proportionately and accordingly by the Company. In addition, the number
and kind of shares for which Awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent practicable, be
the same as immediately before such event. Any such adjustment
in outstanding Options or SARs shall not change the aggregate Option Price or
SAR Exercise Price payable with respect to shares that are subject to the
unexercised portion of an outstanding Option or SAR, as applicable, but shall
include a corresponding proportionate adjustment in the Option Price or SAR
Exercise Price per share. The conversion of any convertible securities of the
Company shall not be treated as an increase in shares effected without receipt
of consideration. Furthermore, in the event of any distribution to the Company's
stockholders of securities of any other entity or other assets (including an
extraordinary cash dividend but excluding a non-extraordinary dividend payable
in cash or in stock of the Company) without receipt of consideration by the
Company, the Company may, in such manner as the Company deems appropriate,
adjust (i) the number and kind of shares for which grants of Option and other
Awards may be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards, and/or (iii) the exercise price of outstanding Options and
Stock Appreciation Rights to reflect such distribution.
17.2. REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY WHICH
DOES NOT CONSTITUTE A CORPORATE TRANSACTION.
Subject to SECTION 17.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities which does not constitute a Corporate Transaction, any
Option or SAR theretofore granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share so
that the aggregate Option Price or SAR Exercise Price thereafter shall be the
same as the aggregate Option Price or SAR Exercise Price of the shares remaining
subject to the Option or SAR immediately prior to such reorganization, merger,
or consolidation. Subject to any contrary language in an Award Agreement
evidencing an Award, any restrictions applicable to such Award shall apply as
well to any replacement shares received by the Grantee as a result of the
reorganization, merger or consolidation. In the event of a transaction described
in this Section 17.2, Stock Units shall be adjusted so as to apply to the
securities that a holder of the number of shares of Stock subject to the Stock
Units would have been entitled to receive immediately following such
17.3. CORPORATE TRANSACTION.
Subject to the exceptions set forth in the last sentence of this SECTION
17.3 and the last sentence of SECTION 17.4:
(i) upon the occurrence of a Corporate Transaction, all outstanding
shares of Restricted Stock shall be deemed to have vested, and all Stock
Units shall be deemed to have vested and the shares of Stock subject
thereto shall be delivered, immediately prior to the occurrence of such
Corporate Transaction, and
(ii) either of the following two actions shall be taken:
(A) fifteen days prior to the scheduled consummation of a
Corporate Transaction, all Options and SARs outstanding hereunder shall
become immediately exercisable and shall remain exercisable for a period
of fifteen days, or
(B) the Board may elect, in its sole discretion, to cancel any
outstanding Awards of Options, Restricted Stock, Stock Units, and/or SARs
and pay or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as determined by
the Board acting in good faith), in the case of Restricted Stock or Stock
Units, equal to the formula or fixed price per share paid to holders of
shares of Stock and, in the case of Options or SARs, equal to the product
of the number of shares of Stock subject to the Option or SAR (the "Award
Shares") multiplied by the amount, if any, by which (I) the formula or
fixed price per share paid to holders of shares of Stock pursuant to such
transaction exceeds (II) the Option Price or SAR Exercise Price applicable
to such Award Shares.
With respect to the Company's establishment of an exercise window, (i) any
exercise of an Option or SAR during such fifteen-day period shall be conditioned
upon the consummation of the event and shall be effective only immediately
before the consummation of the event, and (ii) upon consummation of any
Corporate Transaction the Plan, and all outstanding but unexercised Options and
SARs shall terminate. The Board shall send written notice of an event that will
result in such a termination to all individuals who hold Options and SARs not
later than the time at which the Company gives notice thereof to its
stockholders. This SECTION 17.3 shall not apply to any Corporate Transaction to
the extent that provision is made in writing in connection with such Corporate
Transaction for the assumption or continuation of the Options, SARs, Stock Units
and Restricted Stock theretofore granted, or for the substitution for such
Options, SARs, Stock Units and Restricted Stock for new common stock options and
stock appreciation rights and new common stock stock units and restricted stock
relating to the stock of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number of shares (disregarding any
consideration that is not common stock) and option and stock appreciation right
exercise prices, in which event the Plan, Options, SARs, Stock Units and
Restricted Stock theretofore granted shall continue in the manner and under the
terms so provided.
Adjustments under this SECTION 17 related to shares of Stock or securities
of the Company shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share. The Board shall determine the effect of a Corporate
Transaction upon Awards other than Options, SARs, Stock Units and Restricted
Stock, and such effect shall be set forth in the appropriate Award Agreement.
The Board may provide in the Award Agreements at the time of grant, or any time
thereafter with the consent of the Grantee, for different provisions to apply to
an Award in place of those described in SECTIONS 17.1, 17.2 and 17.3.
17.5. NO LIMITATIONS ON COMPANY.
The making of Awards pursuant to the Plan shall not affect or limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.
18. GENERAL PROVISIONS
18.1. DISCLAIMER OF RIGHTS.
No provision in the Plan or in any Award or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way with any
contractual or other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. In addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award Agreement, no Award
granted under the Plan shall be affected by any change of duties or position of
the Grantee, so long as such Grantee continues to be a Service Provider. The
obligation of the Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan shall
in no way be interpreted to require the Company to transfer any amounts to a
third party trustee or otherwise hold any amounts in trust or escrow for payment
to any Grantee or beneficiary under the terms of the Plan.
18.2. NONEXCLUSIVITY OF THE PLAN.
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.
18.3. WITHHOLDING TAXES.
The Company or an Affiliate, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any federal, state,
or local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option or pursuant to an
Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to
the Company or the Affiliate, as the case may be, any amount that the Company or
the Affiliate may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the Company or the
Affiliate, which may be withheld by the Company or the Affiliate, as the case
may be, in its sole discretion, the
Grantee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company or the Affiliate to withhold shares of Stock otherwise
issuable to the Grantee or (ii) by delivering to the Company or the Affiliate
shares of Stock already owned by the Grantee. The shares of Stock so delivered
or withheld shall have an aggregate Fair Market Value equal to such withholding
obligations. The Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the Affiliate as of
the date that the amount of tax to be withheld is to be determined. A Grantee
who has made an election pursuant to this SECTION 18.3 may satisfy his or her
withholding obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.
18.5. OTHER PROVISIONS.
Each Award granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.
18.6. NUMBER AND GENDER.
With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.
If any provision of the Plan or any Award Agreement shall be determined to
be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
18.8. GOVERNING LAW.
The validity and construction of this Plan and the instruments evidencing
the Award hereunder shall be governed by the laws of the State of Nevada, other
than any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other jurisdiction.
* * *
To record adoption of the Plan by the Board as of April 7, 2005, and
approval of the Plan by the stockholders on April 27, 2005, the Company has
caused its authorized officer to execute the Plan.
WESTERN ALLIANCE BANCORPORATION
By: /s/ Linda Mahan
Name: Linda Mahan