UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP (Exact Name of
Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
Delaware 91-1313292
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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19245 Tenth Avenue N.E., Poulsbo, Washington 98370
(Address of Principal Executive Offices, including Zip Code)
Pope Resources 2005 Unit Incentive Plan
(Full Title of the Plan)
C T Corp.
520 Pike Street #2610
Seattle, Washington 98101
(Name and Address of Agent for Service)
(206) 622-4511
(Telephone Number, Including Area Code, of Agent for Service)
Copy to:
Greg F. Adams
Marcus J. Williams
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101-1688
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Amount to be Proposed Proposed Amount of
Securities to Registered Maximum Maximum Registration
be Registered(1) (1)(2)(3) Offering Aggregate Fee
Price Per Offering
Unit(3) Price
- --------------------------------------------------------------------------------
Limited Partnership
Units 1,105,815 $34.78 $38,460,245.70 $4,526.77
================================================================================
1
(1) This Registration Statement also relates to such additional and
indeterminable number of Limited Partnership Units as may become issuable as a
result of stock dividends, stock splits, recapitalizations, mergers,
reorganizations, combinations or exchanges or other similar events.
(2) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended (the
"Securities Act"), this Registration Statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the Plan.
(3) Estimated for the purpose of calculating the registration fee pursuant to
Rules 457(c) and (h) under the Securities Act, the price per share was
determined by calculating the average of the high and low prices of the Limited
Partnership Units as reported in the Nasdaq National Market on August 31, 2005.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
*Information required by Part I to be contained in the Section 10(a) prospectus
is omitted from this Registration Statement in accordance with Rule 428 under
the Securities Act and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents heretofore filed with the Securities and Exchange
Commission (the "Commission") by Pope Resources, a Delaware limited partnership
(the "Registrant") are hereby incorporated by reference into this Registration
Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004, filed with the Commission on March 9, 2005;
(b) The Registrant's Quarterly Reports on Form 10-Q for the periods ended
March 31, 2005 and June 30, 2005, filed with the Commission on May 12,
2005 and August 9, 2005, respectively; the Registrant's Current
Reports on Form 8-K filed with the Commission on January 3, 2005,
January 6, 2005, January 31, 2005, March 10, 2005, March 22, 2005,
April 22, 2005, April 27, 2005, July 20, 2005, August 1, 2005 and
August 24, 2005;
(c) The Registrant's description of securities contained in the
registration statement on Form 10, filed under File No. 1-9035 and
declared effective on December 5, 1985, including any amendments or
reports filed for the purpose of updating such description.
2
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), after the date of this Registration Statement and prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining unsold
shall be deemed to be incorporated herein by reference into this Registration
Statement and to be a part hereof from the date of the filing of such documents.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superceded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document that is or is deemed to be incorporated by reference herein modifies or
supersedes such previous statement. Any such statement so modified or superceded
shall not be deemed, except as so modified or superceded, to constitute part of
this Registration Statement.
Item 4. Description of Securities
The securities to be offered pursuant to this Registration Statement include
unit grants ("Unit Grants") providing ownership of limited partnership units
(the "Units") of the Registrant, unit purchase options ("Unit Purchase Options")
to purchase Units and unit appreciation rights ("UAR's") granting the holder a
right to participate on certain terms in the value increases, if any, of our
Units. Unit Grants may be restricted (subject to forfeiture on certain events
and conditions) or unrestricted. There is no established trading market for the
Unit Grants, Unit Purchase Options or UAR's. The Units are listed and traded on
the National Association of Securities Dealers Automated Quotation System -
National Market System ("NASDAQ-NMS") under the symbol POPEZ. The following
table sets forth the 2005 year to date, 2004 and 2003 quarterly ranges of low
and high prices, respectively, for the Units:
2005 2004 2003
---- ---- ----
High Low High Low High Low
---- --- ---- --- ---- ---
First Quarter $56.85 $19.35 $24.00 $15.00 $12.50 $ 7.00
Second Quarter $37.68 $31.85 $20.74 $17.14 $12.40 $ 8.95
Third Quarter $37.00* $33.51* $24.00 $18.02 $14.65 $11.70
Fourth Quarter ---- ---- $25.25 $19.27 $15.99 $12.56
- -------------------------
* Through August 31, 2005
The Units underlying the Unit Grants, Unit Purchase Options and UAR's are
subject to certain rights and limitations described more fully in the Limited
Partnership Agreement dated November 7, 1985, as amended (the "Partnership
Agreement"). The total number of Unit Grants, Unit Purchase Options and UAR's
that may be granted under the Plan is subject to the discretion of the Board of
Directors of Pope MGP, Inc., the Registrant's Managing General Partner. Limited
Partners are entitled to pro rata distributions of profits and losses at the end
of each fiscal year, subject to certain limitations imposed by the Partnership
Agreement and the Internal Revenue Code.
3
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers
The Registrant has authority under applicable provisions of the Delaware Revised
Limited Partnership Act to indemnify its directors and officers to the extent
provided under such Act. The Registrant's Partnership Agreement, dated November
7, 1985 and as currently amended, contains additional indemnification provisions
for the benefit of the managing general partner and the directors and officers
of the managing general partner of the Registrant.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits.
The following Exhibits are filed as a part of this Registration Statement:
Exhibit
Number Description
------ -------------------------------
4.1 Specimen Depositary Receipt of Registrant. (1)
4.2 Limited Partnership Agreement, dated as of November 7, 1985. (1)
4.3 Amendment to Limited Partnership Agreement dated
December 16, 1986. (2)
4.4 Amendment to Limited Partnership Agreement dated March 14, 1997. (3)
5.1 Opinion of Davis Wright Tremaine LLP as to the legality of the
securities being registered hereunder.
23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm
23.2 Consent of Davis Wright Tremaine LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (see signature page).
99.1 Pope Resources 2005 Unit Incentive Plan.
(1) Incorporated by reference from the Registrant's Registration Statement on
Form 10 filed under File No. 1-9035 and declared effective by the Commission on
December 5, 1985.
(2) Incorporated by reference from the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987.
(3) Incorporated by reference from the Registrant's Proxy Statement filed with
the Commission on February 11, 1997.
4
Item 9. Undertakings
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
and of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement; provided,
however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the Registration Statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act that are incorporated by
reference in the Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a post- effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
5
(2) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Poulsbo, State of Washington, on the 6th day of
September 2005.
POPE RESOURCES,
A DELAWARE LIMITED PARTNERSHIP
Date: September 6, 2005 By /s/ David L. Nunes
--------------------------------------------
DAVID L. NUNES,
President and Chief Executive Officer
(principal executive officer),
Partnership and Pope MGP, Inc.;
Director, Pope MGP, Inc.
POWER OF ATTORNEY
We, the undersigned officers and directors of the Registrant, Pope Resources, a
Delaware Limited Partnership, and of Pope MGP, Inc., managing general partner of
the Registrant, hereby severally and individually constitute and appoint David
L. Nunes and Thomas M. Ringo, and each of them, as true and lawful attorneys in
fact for the undersigned, in any and all capacities, with full power of
substitution, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to file the same with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys in fact, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys in fact, or any of them, may lawfully do
or cause to be done by virtue of this appointment.
6
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Date: September 6, 2005 By /s/ David L. Nunes
--------------------------------------------
DAVID L. NUNES,
President and Chief Executive Officer
(principal executive officer),
Partnership and Pope MGP, Inc.;
Director, Pope MGP, Inc.
Date: September 6, 2005 By /s/ Thomas M. Ringo
--------------------------------------------
THOMAS M. RINGO
Vice President & CFO
(principal financial and
accounting officer),
Partnership and Pope MGP, Inc.
Date: September 6, 2005 By /s/ J. Thurston Roach
--------------------------------------------
J. Thurston Roach
Director, Pope MGP, Inc.
Date: September 6, 2005 By /s/ Peter T. Pope
--------------------------------------------
PETER T. POPE
Director, Pope MGP, Inc.
Date: September 6, 2005 By /s/ Marco F. Vitulli
--------------------------------------------
MARCO F. VITULLI
Director, Pope MGP, Inc.
Date: September 6, 2005 By /s/ Douglas E. Norberg
--------------------------------------------
DOUGLAS E. NORBERG
Director, Pope MGP, Inc.
7
Pursuant to the requirements of the Securities Act of 1933, the trustees (or
other persons who administer the Pope Resources 2005 Unit Incentive Plan) have
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Poulsbo, State of
Washington, on the 6th day of September, 2005.
POPE RESOURCES 2005 UNIT INCENTIVE
PLAN, BY HUMAN RESOURCES COMMITTEE
OF THE BOARD OF DIRECTORS
Date: September 6, 2005 By /s/ Peter T. Pope
--------------------------------------------
Peter T. Pope, Director,
Pope MGP, Inc.
8
EXHIBIT INDEX
Exhibit
Number Description
------ -------------------------------
4.1 Specimen Depositary Receipt of Registrant. (1)
4.2 Limited Partnership Agreement, dated as of November 7, 1985. (1)
4.3 Amendment to Limited Partnership Agreement dated
December 16, 1986. (2)
4.4 Amendment to Limited Partnership Agreement dated March 14, 1997. (3)
5.1 Opinion of Davis Wright Tremaine LLP as to the legality of the
securities being registered hereunder.
23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm
23.2 Consent of Davis Wright Tremaine LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (see signature page).
99.1 Pope Resources 2005 Unit Incentive Plan.
(1) Incorporated by reference from the Registrant's Registration Statement on
Form 10 filed under File No. 1-9035 and declared effective by the Commission on
December 5, 1985.
(2) Incorporated by reference from the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987.
(3) Incorporated by reference from the Registrant's Proxy Statement filed with
the Commission on February 11, 1997.
9
Exhibit 5.1
September 9, 2005
Pope Resources
19245 Tenth Avenue N.E.
Poulsbo, Washington 98370
Re: Pope Resources 2005 Unit Incentive Plan
Dear Ladies and Gentlemen:
We have acted as counsel to Pope Resources, a Delaware Limited Partnership (the
"Partnership"), in connection with its registration statement on Form S-8 of its
Pope Resources 2005 Unit Incentive Plan (the "Plan") and corresponding limited
partnership units (the "Registration Statement"). Capitalized terms used herein
that are not otherwise defined have the meanings ascribed thereto as set forth
in the Registration Statement and the exhibits thereto.
We have examined such documents, papers, statutes and authorities as we have
deemed necessary to form a basis for the opinions hereinafter expressed. We have
assumed the genuineness of all signatures, the authenticity of documents,
certificates and records submitted to us as originals, the conformity to the
originals of all documents, certificates and records submitted to us as copies,
the legal capacity of all natural persons executing documents, certificates and
records, and the completeness and accuracy as of the date of this opinion letter
of the information contained in such documents, certificates and records.
Based upon the foregoing, we are of the opinion that:
1. The Partnership is duly formed and validly existing under the laws of the
State of Delaware.
2. The Plan, the Units and the options respecting such Units have been duly
authorized and, when issued pursuant to the Plan by the proper officers of
the Partnership's Managing General Partner, will be validly issued, fully
paid and nonassessable.
This opinion is limited to the laws of the States of Delaware and Washington and
the federal laws of the United States of the type typically applicable to
transactions contemplated by the Registration Statement. We express no opinion
with respect to the laws of any other country, state or jurisdiction.
10
This opinion letter is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated. This letter
speaks only as of the date hereof and is limited to present statutes,
regulations and administrative and judicial interpretations. We undertake no
responsibility to update or supplement this letter after the date hereof.
We consent to being named in the Registration Statement as counsel who are
passing upon the validity of the options to be issued pursuant to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in such Registration Statement. Subject to the foregoing, this opinion
letter may be relied upon by you only in connection with the offering and may
not be used or relied upon by you for any other purpose or by any other person
for any purpose whatsoever without, in each instance, our prior written consent.
Very truly yours,
/s/ Davis Wright Tremaine LLP
11
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
--------------------------------------------------------
The Board of Directors and Unitholders
Pope Resources, A Delaware Limited Partnership:
We consent to the use of our report dated February 3, 2005, with respect to the
consolidated balance sheets of Pope Resources, A Delaware Limited Partnerhip,
and subsidiaries as of December 31, 2004 and 2003, and the related consolidated
statements of operations, partners' capital and comprehensive income, and cash
flows and for each of the years in the three-year period ended December 31,
2004, and the related financial statement schedule, incorporated herein by
reference.
(signed) KPMG LLP
Seattle, Washington
September 9, 2005
12
Exhibit 99.1
POPE RESOURCES
2005 UNIT INCENTIVE PLAN
SECTION 1. Purpose . The purpose of this Pope Resources 2005 Unit Incentive
Plan (this "Plan") is to provide a means for Pope Resources, A Delaware Limited
Partnership (the "Company") and related entities to continue to attract,
motivate and retain key employees, consultants and other independent
contractors, and to provide these individuals with greater incentive for their
service to the Company (and related entities) by linking their interests in the
Company's success with those of the Company and its unit holders. The incentives
will be in the form of options to purchase units of the Company's limited
partnership interests, other awards of the Company's limited partnership
interests, and Unit Appreciation Rights (as defined below).
SECTION 2. Definitions . When used in this Plan the following terms are
defined as set forth below:
"Administrator" has the meaning provided in Section 4.
"Award" means an Option, Unit Grant or Unit Appreciation Right.
"Award Agreement" shall mean a written agreement that details the terms and
conditions of a particular Award.
"Base Value" has the meaning provided in Section 8.1.
"Board" means the Board of Directors of MGP.
"Capitalization Change" has the meaning provided in Section 11.1.
"Cause" has the meaning provided in Section 9.1.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Pope Resources, A Delaware Limited Partnership.
"Effective Date" has the meaning provided in Section 18.
"Eligible Participants" has the meaning provided in Section 5.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the amount to be paid by an Optionee to exercise an
Option.
"Fair Market Value" of a Unit is the fair market value established in good
faith by the Administrator, unless one of the following applies: (a) if the
Units are listed on the NASDAQ Stock Market, then the Fair Market Value is the
average of the last reported sale price for the Units as recorded by the NASDAQ
Stock Market on each of the five trading days ending on and including the day
before the award is priced; (b) if the Units are not listed on the NASDAQ Stock
Market and are listed on the New York Stock Exchange or the American Stock
Exchange, then the Fair Market Value is the average of the closing sales price
for the Units as such price is officially quoted in the composite tape of
transactions on such exchange on each of the five trading days ending on and
including the day before the Award is priced; (c) if the Units are of a class
for which reports are required to be filed pursuant to Section 13 or Section
15(d) of the Exchange Act, but are not listed on a national securities exchange
or on the NASDAQ Stock Market, then the Fair Market Value shall be equal to the
average of the closing price or last reported sale price of the Units on each of
the five trading days ending on and including the day before the Award is
priced, as quoted or disclosed by the market or exchange on which the Unit is
listed. For purposes of this definition a "trading day" on an exchange or market
is a day on which the number of Units traded is equal to or greater than
one-half of the average daily trading volume of the Units measured over the
then-current ninety-day trailing average.
13
"Grant Agreement" means a written agreement that details the terms and
conditions of a particular Unit Grant.
"Grant Date" means the date on which the Administrator completes the
corporate action relating to the grant of an Award and all conditions precedent
to the grant have been satisfied, provided that conditions relating to
exercisability or vesting of an Award shall not defer the Grant Date.
"Grantee" means an individual or entity who has received a Unit Grant
under this Plan.
"Holder" means an individual or entity who has received a Unit
Appreciation Right under this Plan.
"Human Resources Committee" means the Human Resources Committee of the
Board, as constituted from time to time in compliance with the Bylaws of MGP and
the rules of the securities market (if any) upon which the Units are then listed
for trading.
"MGP" means Pope MGP, Inc., a Delaware corporation, the managing general
partner of the Company.
"Option" means an option granted pursuant to this Plan for the purchase of
Units.
"Option Agreement" means a written agreement that details the terms and
conditions of a particular Option.
"Optionee" means an individual or entity who has received an Option under
this Plan.
"Plan" means this Pope Resources 2005 Unit Incentive Plan.
"Prior Plan" shall have the meaning specified in Section 3.1.
"Related Entity" means any entity that, directly or indirectly, is in
control of, or under common control with, the Company.
"Sales Event" has the meaning provided in Section 11.2.1.
"Securities Act" means the Securities Act of 1933, as amended.
"Unit" has the meaning provided in Section 3.
"Unit Appreciation Right" shall mean a right awarded to a Holder to
receive a cash payment equal to the appreciation (if any) in the Fair Market
Value of a Unit from the date of grant until the Unit Appreciation Right is
exercised or cancelled for payment. At the discretion of the Administrator, and
as provided in each individual Award Agreement, payment may be made in one or
more cash installments (each of which may be, but is not required to be,
conditioned upon the continuation of the Holder's employment, the achievement of
other benchmarks, or both), or by delivering an amount of Units that have a Fair
Market Value equal to the cash otherwise payable to the Holder, or a combination
of cash and Units.
"Unit Appreciation Right Agreement" means a written agreement that details
the terms and conditions of a particular Unit Appreciation Right.
"Unit Grant" means a grant pursuant to this Plan of one or more Units,
subject to such terms and conditions as the applicable Grant Agreement may
provide.
"Total Disability" has the meaning provided in Section 9.2.
SECTION 3. Units Subject to This Plan . The securities and rights issuable
under this Plan relate to the Company's limited partnership units, either
available for original issuance or reacquired by the Company (the "Units").
14
3.1 Amount. Subject to adjustment under Section 11.1, the maximum amount of
Units that may be issued for Awards under this Plan is 1,500,000, as such Units
were constituted on the Effective Date. The total shall include any Units, as of
the date of Unit holder approval of this Plan, available for future awards under
the Pope Resources 1997 Unit Option Plan (the "Prior Plan"), as well as any
Units that are represented by awards under the Prior Plan, which are forfeited
or cancelled or expire without the delivery of Units or which result in the
reacquisition of Units by the Company. From the date of unit holder approval of
this Plan, the Prior Plan shall cease to be effective for purposes of granting
any additional Awards; provided, however, that the adoption of this Plan shall
not be construed to amend or affect any securities or rights previously issued
under the Prior Plan. The granting of Unit Appreciation Rights shall not reduce
the number of Units available under this Plan, except to the extent the
Company's obligations under the Unit Appreciation Rights are satisfied by
delivering Units instead of cash.
3.2 Returned Units. If any outstanding Option or Unit Appreciation Right
expires, or is exchanged, canceled or terminated for any reason without having
been exercised or realized in full, or all or part of a Unit Grant is forfeited
because the Grantee terminates employment or other services with the Company
prior to satisfying the applicable vesting schedule, then the unpurchased,
unissued or forfeited Units subject to such Awards will again be available for
issuance under this Plan. If the Company repurchases Units issued pursuant to an
Award, then the repurchased Units will not be available again for issuance under
this Plan, unless the units relate to an Option (or portion of an Option) that
was exercised prior to becoming vested, which Units are then repurchased by the
Company, for the Optionee's Exercise Price, in conjunction with the Optionee
terminating employment or services with the Company prior to satisfaction of the
underlying vesting schedule, in which case the repurchased Units will again be
available for issuance under this Plan.
SECTION 4. Administration.
4.1 Administrator. The Human Resources Committee shall administer this
Plan; provided, however, that if the Human Resources Committee is not in
existence or otherwise cannot administer this Plan, then this Plan may be
administrated by the Board or by a committee or subcommittee of the Board, which
subcommittee shall be comprised solely of independent directors (as determined
by the rules of the securities markets on which the Units are then listed for
trading). The body charged with administering the Plan is referred to as the
"Administrator." Notwithstanding the delegation of administrative authority, the
Board has exclusive authority to (a) amend or terminate this Plan as provided in
Section 16, and (b) remove members from and add members to the Administrator.
Subject to the rules of the securities markets on which the Units are then
listed for trading, the Administrator may further delegate administrative duties
to those officers and managers of the Company as it so determines.
4.2 Procedures. The Administrator may hold meetings at such times and
places as it determines, and from time to time adopt and amend rules and
regulations relating to the administration of this Plan, provided that absent
the adoption of any formal rules, the acts of a majority of the members of the
Administrator at a meeting, or acts approved in writing by all Administrator
members, are valid acts of the Administrator.
4.3 Responsibilities. Except as stated elsewhere in this Plan, the
Administrator has full discretionary authority to determine all matters relating
to Awards, including but not limited to (a) the selection of Eligible
Participants to receive Awards, (b) the number of Units subject to each Award,
(c) the Exercise Price to be paid for any Option, (d) any vesting or forfeiture
schedule, (e) the acceleration of the exercise date, and (f) the extension of
the exercise period. In exercising its authority to set the terms and conditions
of an Award, and subject only to the limits of applicable law and the rules of
the securities markets on which the Units are then listed for trading, the
Administrator shall be under no obligation or duty to treat, or to forbear from
treating, similarly situated Grantees, Holders or Optionees in the same manner,
and any action taken by the Administrator with respect to the grant of an Award
to one individual shall in no way obligate the Administrator to take the same or
similar action with respect to any other individual. Subject to rules of the
securities markets on which the Units are then listed for trading, the
Administrator may exercise its discretion in a manner such that Awards granted
to individuals who are foreign nationals or are employed outside the United
States contain terms and conditions that are different from the provisions
otherwise anticipated in this Plan, but which are consistent with the tax and
other laws of applicable foreign jurisdictions and consistent with the Company's
objectives in establishing this Plan.
15
4.4 Plan Construction and Interpretation. Subject to Section 4.5, the
Administrator may correct any defect, supply any omission, or reconcile any
inconsistency (a) within this Plan, (b) between this Plan and any related
agreement, or (c) between this Plan and any rule or regulation promulgated under
this Plan, in the manner and to the extent the Administrator deems appropriate
to carry out this Plan, subject in each case to rules of the securities markets
on which the Units are then listed for trading. The Administrator's
interpretation or construction of any such Plan provision, related agreement,
rule or regulation shall be final, conclusive and binding on all interested
parties.
4.5 Amendment of Awards; Waiver of Restrictions. The Administrator may
modify or amend outstanding Awards granted under this Plan. The modification or
amendment of an outstanding Award shall not, without the consent of the Grantee,
Holder or Optionee, impair, diminish or terminate any of the rights of the
Grantee, Holder or Optionee or any of the obligations of the Company under the
Award, except as otherwise provided in this Plan, or as required to comply with
applicable law. Notwithstanding any other provision of this Plan, the
Administrator may, in its sole discretion, waive forfeiture restrictions and any
other terms, conditions or limitations on any Option, Unit Grant or Unit
Appreciation Right under such circumstances and subject to such terms and
conditions as the Administrator deems appropriate.
SECTION 5. Awards and Eligible Participants.
5.1 Types. Subject to Section 4, the Administrator may, from time to time,
grant under this Plan (a) Options, (b) Unit Appreciation Rights or (c) Unit
Grants. Options, Unit Appreciation Rights and Unit Grants may be granted singly
or in combination.
5.2 Eligible Participants. The Administrator, as it determines from time to
time, may grant Awards to officers, directors and employees of the Company and
its Related Entities. The Administrator may also grant Awards to consultants,
agents, advisors and independent contractors who provide services to the Company
or its Related Entities, or both, provided that such Award recipients (a) are
natural persons or an alter-ego entity, (b) render bona fide services that are
not in connection with the offer and sale of the Company's securities in a
capital-raising transaction and (c) render bona fide services that do not
directly or indirectly promote or maintain a market for the Company's
securities.
5.3 Terms and Conditions. The terms and conditions of Awards granted under
this Plan need not be identical in any respect, even when grants are made
simultaneously or to persons with the same or similar status.
SECTION 6. Provisions Applicable to Options.
6.1 Option Agreement. Each Option shall be evidenced by an Option Agreement
that incorporates this Plan by reference and describes the terms and conditions
of the Option. In particular, the Option Agreement shall specify the number of
Units that may be purchased, the Option's expiration date, the schedule (if any)
under which the Option may be exercised, the Exercise Price, and any other
terms, conditions, restrictions, representations or warranties required by the
Administrator.
6.2 Exercise Price. The Administrator shall establish the Exercise Price of
Options at the Fair Market Value of the underlying Units, determined as of the
Grant Date.
6.3 Term. The term of each Option shall be ten years from the Grant Date,
unless the Administrator establishes a shorter or longer period of time as
evidenced in the Award Agreement.
6.4 Vesting. To ensure the Company achieves the purposes and receives the
benefits contemplated in this Plan, any Option granted under this Plan shall
vest and be exercisable on the schedule and subject to the terms and conditions
that the Administrator, shall, in its complete discretion, determine. In
addition, the Administrator may, in its complete discretion, provide in an
Option Agreement (or addendum to a previously issued Option Agreement) for the
Optionee's ability to exercise his or her Option prior to vesting, provided that
the Company may require that such units be held in escrow until the Optionee
satisfies the applicable vesting schedule, that such units be subject to a
requirement that they may not be sold, gifted or otherwise transferred prior to
vesting, and that if the Optionee
16
terminates employment or other service relationship with the Company prior to
satisfaction of the applicable vesting schedule, then the Company may (but will
not be obligated to) repurchase the units that relate to the unvested portion of
the Option at the time of termination, with the Company's repurchase price being
the Optionee's original Exercise Price. In connection with an Optionee's
exercise of an Option prior to vesting, the Optionee may file an election under
Code ss. 83(b) to accelerate the tax consequence of the exercise.
6.5 Exercise. The Recipient may exercise Options by delivering written
notice to the Administrator of the number of Units sought to be exercised,
together with payment of the Exercise Price, and any applicable taxes. The
Administrator may specify the form of such notice and the manner of its
delivery. Subject to any vesting schedule in the Option Agreement and to any
additional holding period required by law, the Optionee may exercise each Option
in whole or in part, except that only whole Units will be issued pursuant to the
exercise of any Option. -
6.6 Payment of Exercise Price. An Optionee must pay the Exercise Price in
full at the time of exercise. Payment of the Exercise Price shall be in cash, by
bank certified or cashier's check or by personal check (unless at the time of
exercise the Administrator in a particular case determines not to accept a
personal check). The Administrator may determine in its complete discretion at
any time before exercise of Options, that alternative forms of payment will be
permitted, including but not limited to installment payments on such terms as
the Administrator may determine or various cashless exercise arrangements.
Unless otherwise provided by the Administrator, an Option may not be exercised
by tender to the Company, or attestation to the ownership, of the Unit unless
the Units either have been owned by the Optionee for more than six months (and
were not used for another Option exercise by attestation during that period) or
were not acquired, directly or indirectly, from the Company.
SECTION 7. Unit Grants.
7.1 Grants of Units. Each Unit Grant shall be evidenced by a Grant
Agreement that incorporates this Plan by reference. The Administrator is
authorized to make Unit Grants (or Awards denominated in Units) in such number
of Units and on such terms and conditions and subject to such restrictions, if
any, as the Administrator determines in its sole discretion, as set forth in the
corresponding Grant Agreement. The terms, conditions and restrictions that the
Administrator has the power to determine includes, without limitation, the
manner in which units subject to Unit Grants are held during the periods they
are subject to restrictions and the circumstances under which forfeiture of the
underlying Units shall occur by reason of termination of the Grantee's
employment or other service relationship.
7.2 Issuance of Units. Upon the satisfaction of any terms, conditions and
restrictions prescribed in connection with a Unit Grant, or upon the Grantee's
release from any terms, conditions and restrictions, as determined by the
Administrator, the Company shall release, as soon as practicable, to the
Grantee, or in the case of the Grantee's death, to the personal representative
of the Grantee's estate or other individual or entity as an appropriate court
directs, the appropriate number of Units. At the time the Award is made, the
Administrator will determine whether the certificates for unvested Units will be
held in escrow, pending vesting, or delivered to the Grantee for holding, but
containing a legend that outlines the potential risk of forfeiture, as
contemplated by Section 12.4.
7.3 Vesting. To ensure the Company achieves the purposes and receives the
benefits contemplated in this Plan, any Unit Grant made under this Plan shall
vest on the schedule and subject to the terms and conditions that the
Administrator, shall, in its complete discretion, determine. The Company may
impose restrictions on unvested Units, such as a requirement that the unvested
Units be held in escrow until the Grantee satisfies the applicable vesting
schedule, that the Units be subject to a requirement that they may not be sold,
gifted or otherwise transferred prior to vesting, and that if the Grantee
terminates employment or other service relationship with the Company prior to
satisfaction of the applicable vesting schedule, then the unvested Units
automatically revert back to the Company. In connection with a Grantee's receipt
of a Unit Grant, the Grantee may file an election under Code ss. 83(b) to
accelerate the tax consequence of the exercise prior to its vesting.
17
SECTION 8. Unit Appreciation Rights.
8.1 Unit Appreciation Rights. In addition to other Awards available under
this Plan, the Administrator may grant Unit Appreciation Rights. Any grant of
Unit Appreciation Rights may, but need not be, associated with Units subject to
a specific Option. If a grant of Unit Appreciation Rights is associated with
Units subject to a specific Option, then, unless otherwise provided in the
applicable Award Agreement, the Unit Appreciation Rights shall terminate upon
(a) the expiration, termination, forfeiture or cancellation of the Option or (b)
the exercise of such Option. Similarly, if a grant of Unit Appreciation Rights
is associated with Units subject to a specific Option, then, unless otherwise
provided in the applicable Award Agreement, the Option associated with the Unit
Appreciation Rights shall terminate upon the exercise of the Unit Appreciation
Rights. Each grant of Unit Appreciation Rights shall be evidenced by a Unit
Appreciation Right Agreement that specifies the term, which in no event may
exceed ten years from the Grant Date. In addition, each Unit Appreciation Right
Agreement representing a grant of Unit Appreciation Rights shall designate the
applicable Fair Market Value of a Unit as of the Grant Date (sometimes referred
to as the "Base Value"). The possession of a Unit Appreciation Right shall not,
in and of itself, convey to the Holder any of the rights or attributes of a Unit
holder, but only the right (subject to certain conditions) to receive payment in
connection with appreciation (if any) of the Units.
8.2 Eligibility. Unit Appreciation Rights under this Section 8 may be
granted to any eligible Participant, as determined by the Administrator in its
complete discretion.
8.3 Vesting. To ensure the Company achieves the purposes and receives the
benefits contemplated in this Plan, any Unit Appreciation Right granted under
this Plan shall vest on the schedule and subject to the terms and conditions
that the Administrator, shall, in its complete discretion, determine.
8.4 Exercise of Unit Appreciation Rights. Upon the exercise of an Unit
Appreciation Right, the Holder shall be entitled to receive a cash payment for
each Unit covered by the portion of the Unit Appreciation Right being exercised,
which payment is equal to the excess of (a) the Fair Market Value of a Unit on
the exercise date over (b) the Base Value, as designated in the corresponding
Unit Appreciation Right Agreement. All payments in connection with the exercise
of Unit Appreciation Rights shall be made as soon as practicable, but in no
event later than seven (7) business days after the effective date of the
exercise of the Unit Appreciation Right, unless provided otherwise in the
applicable Award Agreement. Each Unit Appreciation Right may be exercised on
such date or dates, and during such period and with respect to a number of
Units, as determined by the Administrator and as set forth in the corresponding
Unit Appreciation Right Agreement. The exercise of a Unit Appreciation Right
shall also be subject to such terms and conditions as specified in the
corresponding Unit Appreciation Right Agreement, which conditions may include
minimum exercise amounts and the ability to elect a partial exercise. Unless
provided otherwise in the Unit Appreciation Right Agreement, each Unit
Appreciation Right shall be exercised by delivering notice to the Company's
principal office, to the attention of its Secretary, no less than five (5)
business days in advance of the effective date of the proposed exercise. The
notice shall be accompanied by the applicable Unit Appreciation Right Agreement
and specify the number of Units with respect to which the Unit Appreciation
Right is being exercised and the effective date of the proposed exercise.
SECTION 9. Termination of Relationship with Company . Except as provided
otherwise in the applicable Award Agreement, or as otherwise agreed by the
Partnership and the Holder, all Awards that are unvested or still subject to
forfeiture restrictions automatically expire upon termination of an Optionee's,
Holder's or Grantee's employment or other service relationship with the Company
(or a Company's affiliated entity by which the Holder has been employed) for any
reason other than the transfer of such Holder's employment, without a break in
employment other than for vacation or a bona fide leave of absence approved by
the Administrator, to another entity affiliated with the Company. And except as
provided otherwise in the applicable Award Agreement, the effect of a
termination of employment or other service relationship upon vested and
non-forfeitable Awards is as follows:
9.1 Termination For Cause.
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9.1.1 Effect Upon Options and Unit Appreciation Rights. If the Company
terminates an Optionee's or Holder's employment or other service relationship
for Cause, then, as of the Company's first discovery of any of the grounds for
termination for Cause, any Option or Unit Appreciation Right held by that
Optionee or Holder shall automatically terminate. If an Optionee or Holder is
suspended pending an investigation of whether or not the Optionee or Holder will
be terminated for Cause, then all of the Optionee's or Holder's rights under any
Option or Unit Appreciation Right will also be suspended during the period of
investigation.
9.1.2 Definition of Cause. Termination for "Cause" means the Optionee's,
Holder's or Grantee's (a) willful refusal to perform his obligations to the
Company, (b) willful misconduct constituting either dishonesty toward the
Company or a deliberate attempt to do injury to the interests of the Company,
(c) commission of a serious criminal act whether denominated a felony,
misdemeanor or otherwise, or (d) engaging in activities directly in competition
or antithetical to the best interests of the Company. To the extent an Optionee,
Holder or Grantee is a party to an employment agreement or offer letter of
employment with the Company that defines "cause" or a similar term, then the
meaning set forth in that agreement shall also be considered "Cause" for
purposes of this Plan.
9.2 Termination Because of Total Disability. If an Optionee's or Holder's
employment or other service relationship with the Company terminates because of
a "Total Disability," as defined below, then the Optionee's or Holder's vested
Options or Unit Appreciation Rights (determined as of the termination) shall not
terminate until the sooner of (a) the end of the 12-month period following such
termination or (b) the normal expiration date of the Option or Unit Appreciation
Right. Unless provided otherwise in the applicable Award Agreement, for purposes
of this Plan Total Disability means a mental or physical impairment that (i)
causes an individual to be unable to engage in any substantial gainful activity,
after reasonable accommodation, and (ii) is expected to result in death or has
lasted or is expected to last for a continuous period of 12 months or more. The
status of Total Disability will be determined by the Administrator and, if
requested by the affected Optionee or Holder, two independent physicians, and
shall be deemed to exist on the first day after the Administrator (and the two
independent physicians, if applicable) reach the conclusion. The application of
this Section 9.2 will not accelerate the vesting of Options or Unit Appreciation
Rights. Once a determination of Total Disability has been made, any unvested
options will cancel.
9.3 Termination Because of, or Shortly Before, Death. If an Optionee or
Holder dies (a) while still engaged in a service relationship with the Company
or (b) within the 60-day period (or 12-month period in the case of Total
Disability) following cessation of such relationship, then any vested Options or
Unit Appreciation Rights may be exercised at any time prior to the end of the
12-month period following the death or the regular expiration date applicable to
the Option or Unit Appreciation Right, whichever is earlier. Unless otherwise
provided in the Award Agreement, the application of this Section 9.3 will not
accelerate the vesting of Options or Unit Appreciation Rights. The vested
portion of the Option or Unit Appreciation Right (determined as of the
Optionee's or Holder's date of death) may be exercised by the personal
representative or the person to whom the Optionee's or Holder's rights pass by
will or by the laws of descent and distribution.
9.4 Other Terminations. If an Optionee's or Holder's relationship with the
Company terminates for a reason other than Cause, death, or Total Disability,
the Optionee or Holder may exercise vested Options or Unit Appreciation Rights
until the earlier of (a) the end of the 90-day period following termination of
an Optionee's or Holder's employment or other service relationship with the
Company, or (b) the expiration date stated in the Award Agreement, after which
all unexercised Options or Unit Appreciation Rights will expire. However, the
Administrator may extend the exercise period, in its sole discretion. Unless
provided otherwise in an individual Award Agreement, an Optionee's or Holder's
change in status from being an employee to a non-employee worker (such as a
consultant) will not constitute a termination of the Optionee's or Holder's
employment with the Company. If an Optionee or Holder dies during the 90-day
post-employment period (or within the 12-month period, in the event of Total
Disability), the exercise period will extend for a 12-month period following
death, unless sooner terminated, as provided in Section 9.3.
9.5 Military Leave, Sick Leave and Bona Fide Leave of Absence. To the
extent determined by the Administrator, an Optionee's, Grantee's or Holder's
employment or other working relationship with the Company may be deemed to
continue while the Optionee, Grantee or Holder is on military leave, sick leave
or other bona fide leave of absence, except that the vesting provisions under
the Option, Unit Grant or Unit Appreciation Right may be suspended during the
period of leave, unless the individual's reemployment rights are guaranteed by
statute or by contract.
19
9.6 Effect of Termination Upon Unit Grants. Unless provided otherwise in
the applicable Award Agreement, if a Grantee's employment or other service
relationship with the Company terminates for any reason, including Cause, death,
Total Disability or otherwise, then all units still subject to a vesting
schedule and corresponding risk of forfeiture (pursuant to the applicable Grant
Agreement) at the time of termination shall be deemed forfeited and revert back
to the Company, without payment or other consideration to the Grantee. In the
event a Grantee is suspended pending an investigation of whether or not the
Grantee will be terminated for Cause, then all of the Grantee's rights under any
unvested units will also be suspended during the period of investigation.
9.7 Employment with Related Entities. For purposes of this Plan, being
engaged in employment or other service relationship with a Related Entity
constitutes employment or other service relationship with the Company, and the
provisions of this Section 9 shall apply by using the terms "Company" and
"Related Entity" interchangeably. A transfer between the Company and one or more
Related Entities will not constitute a termination of employment or other
service relationship with the Company.
SECTION 10. Awards Not Transferable . Awards are personal to the Optionee,
Holder or Grantee during their lifetime and may not be transferred, assigned,
pledged, attached or otherwise disposed of in any manner, except by will or the
laws of descent and distribution, and provided further that to the extent
authorized by the Administrator, on a case by case basis, an Optionee, Holder or
Grantee may transfer Awards into a revocable trust created by the Optionee,
Holder or Grantee for the benefit of the Optionee's, Holder's or Grantee's
descendants, to an immediate family member, or to a partnership in which only
immediate family members or such trusts are partners. Any attempt to transfer,
assign, pledge, attach or otherwise dispose of any Award contrary to this
Section 10 will be null and void.
SECTION 11. Changes in Company's Capital Structure .
11.1 Adjustments Upon Changes in Capitalization. In the event of any
merger, consolidation, reorganization, Unit split, Unit dividend or other event
causing a capital adjustment affecting the number of outstanding Units
("Capitalization Change"), the Administrator will make corresponding adjustments
to preserve the relative value of Awards. To that end the Administrator will
make adjustments, as necessary, in: (a) The aggregate number or kind of Units
for which Options or Unit Appreciation Rights may be granted under this Plan;
(b) the number or kind of units covered by any outstanding Options or Unit
Appreciation Rights under this Plan; and (c) other terms of this Plan or
outstanding Options or Unit Appreciation Rights that merit a change in
conjunction with the Capitalization Change. Any fractional units resulting from
an adjustment will be disregarded. In the event the Company issues additional
Units for consideration (including non-cash consideration), neither the total
amount of units subject to this Plan, nor the amount of units subject to any
outstanding Award, will be adjusted. The Administrator's determination as to
what adjustments should be made and the extent of the adjustments will be final,
binding and conclusive.
11.2 Effect of Sale, Merger or Exchange.
11.2.1 Termination of Options and Unit Appreciation Rights. Subject to
Section 11.2.2, upon the occurrence of a "Sales Event" (as defined below) any
unexercised Options or Unit Appreciation Rights will expire and cease to be
effective, provided that Optionees or Holders will have advance notice and an
opportunity prior to the Sales Event to exercise any vested Options or Unit
Appreciation Rights. Any units acquired through the exercise of an unvested
Option or Unit Appreciation Right, which units remain subject to an underlying
vesting schedule, will be subject to repurchase at the original Exercise Price
paid for those Units. In the alternative, at the complete discretion of the
Administrator, the Company may (a) determine to cash out some or all of the
unexercised, vested Options or Unit Appreciation Rights by paying each affected
Optionee or Holder an amount equal to the Fair Market Value of a Unit (as
determined for purposes of the Sales Event), multiplied by the number of Units
available under the vested portion of the Optionee's Option or Holder's Unit
Appreciation Right, reduced by the aggregate Exercise Price or Base Value
associated with that portion of the Option or Unit Appreciation Right, or (b)
continue some or all of the Options or Unit Appreciation Rights, subject to the
same terms and conditions (including the vesting schedule, if any) that applied
prior to the Sales Event, modified as deemed appropriate by the Administrator in
conjunction with the Sales Event. For purposes of this Plan a "Sales Event" will
include (i) a complete liquidation of the Company, (ii) a sale of substantially
all of the Company's assets, (iii) a sale of the Company's limited partnership
units after which voting control of the Company is held by persons who were not
unit holders of the Company prior to the sale or (iv) a merger, consolidation,
reorganization or other similar event that shifts voting control of the Company
(or any successor entity) to persons who were not unit holders of the Company
prior to the transaction. Unless provided otherwise in the applicable Award
Agreements, or pursuant to an action of the Board, the vesting schedules
applicable to outstanding Options, Unit Grants or Unit Appreciation Rights will
not accelerate in connection with a Sales Event.
20
11.2.2 Conversion of Units for Stock Exchange. If pursuant to a Sales Event
the Unit holders of the Company receive securities of another entity ("Exchange
Securities") in exchange for their Units, then the Company and the entity
issuing the Exchange Securities may (at their discretion) provide that any
unexercised Options or Unit Appreciation Rights or unvested Unit Grants (or any
combination) under this Plan will be converted into unit appreciation rights,
options to purchase or grants to receive of Exchange Securities. The number of
shares and exercise price of unit appreciation rights, options or grants for
Exchange Securities will be determined by adjusting the number of units and
Exercise Price of the unexercised Options, Unit Appreciation Rights and Unit
Grants (as applicable) in the same proportion as used for determining the number
of shares of Exchange Securities that the holders of Units receive in the
transaction. Other than the potential changes to the Exercise Price, Base Value
and number of Units of the outstanding Unit Appreciation Rights or Options, all
of the terms and conditions relating to the converted Options or Unit
Appreciation Rights under this Plan shall apply to options for the Exchange
Securities, unless otherwise determined by the Administrator.
11.3 No Restriction on Ability to Accomplish Corporate Changes. This Plan
and Awards granted hereunder will not in any way limit the right or power of the
Company, or its Unit holders, to make or authorize any or all adjustments in
connection with recapitalizations, reorganizations or other changes in the
Company's structure or its business, or any merger or consolidation of the
Company, or any issuance of Units or of options, warrants or rights to purchase
units or bonds, debentures, preferred or prior preference units whose rights are
superior to or affect the Units or rights of holders thereof or which are
convertible into or exchangeable for Units, the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any corporate act or proceeding, whether of a similar character or
otherwise.
SECTION 12. Securities Regulation, Tax Law and Other Required Approvals .
The Company shall not issue Units subject to an Option, Unit Appreciation Right
or Unit Grant unless the exercise, issuance and delivery of such units comply
with all relevant provisions of law, including any applicable state securities
laws, the Securities Act, the Exchange Act, any relevant securities rules and
regulations, and the requirements of any stock exchange or interdealer quotation
system in which the Units may then be listed. The issuance of Units shall be
further subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for the
issuance and sale of any Units under this Plan.
12.1 Effect of Lack of Authority. The Company will use its best efforts to
obtain from the appropriate regulatory agencies any requisite authorization in
order to issue the number of Units as needed to satisfy the requirements of this
Plan. The Company's inability to obtain the authority that Company's counsel
deems to be necessary for the lawful issuance of any units under this Plan, or
the unavailability of an exemption from registration for the issuance and sale
of any units under this Plan, shall relieve the Company of any liability with
respect to the non-issuance of such units.
12.2 Section 16(b) Compliance; Bifurcation of Plan. As long as the Company
has registered any of its equity securities pursuant to Section 12(b) or 12(g)
of the Exchange Act, this Plan and the Awards granted under this Plan shall
comply in all respects with Rule 16b-3 under the Exchange Act (or any successor
rule relating to the exemption from Section 16(b) of the Exchange Act of
disgorgement liability for arrangements respecting the Units approved by the
Board or a committee thereof). If any Plan provision is later found not to be in
compliance with Rule 16b-3, the provision shall be deemed null and void, or if
possible construed in favor of its meeting the requirements of Rule 16b-3.
Notwithstanding anything in this Plan to the contrary, the Administrator, in its
absolute discretion, may bifurcate this Plan so as to restrict, limit or
condition the use of any provision of this Plan to Optionees, Holders and
Grantees who are officers and directors subject to Section 16(b) of the Exchange
Act without so restricting, limiting or conditioning other Optionees. This
provision shall not obligate the Company to undertake registration of any of the
Awards.
12.3 Representations and Warranties. As a condition to granting any Award,
the Company may require the recipient to make any representation or warranty to
the Company as may be required, in the judgment of the Company, including
executing and delivering to the Company an agreement as may from time to time be
necessary to comply with federal and state securities laws. At the election of
the Company, a stop-transfer order against any
21
Units may be placed on the official unit books and records of the Company, and a
legend may be stamped on Unit certificates indicating that the Unit may not be
pledged, sold or otherwise transferred unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation.
12.4 Legends on Option Agreements, Unit Appreciation Rights and Unit
Certificates. Unless an appropriate registration statement is filed pursuant to
the Securities Act, with respect to the Units issued under this Plan, each
certificate representing such Unit shall be endorsed with the following legend
or its equivalent:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act") and may
not be sold, assigned, offered or otherwise transferred unless (a) there is
an effective registration statement under the Act, or (b) the Company
receives an opinion of legal counsel for the holder of these securities
(concurred in by legal counsel for the Company) stating that the transaction
is exempt from registration or the Company otherwise satisfies itself that
the transaction is exempt from registration.
In addition to this legend, each Award Agreement and each certificate
representing Units acquired through an Award shall be endorsed with all legends,
if any, which are required by applicable state securities laws and the
Administrator, including without limitation to reflect the existence of vesting
of ownership and contractual restrictions on transfer.
12.5 New Tax Regulations. The Company acknowledges that as of the time of
adopting this Plan, Section 409A of the Code is effective, but in a state of
transition, with the IRS working on regulations. The Company intends for this
Plan and the Awards issued thereunder to comply with Section 409A of the Code,
and this Plan and all Award Agreements will be interpreted to that end.
SECTION 13. Withholding Tax Requirement . The Company will have the right
to retain and withhold from any payment of cash, or Units, the amount of taxes
required by any government to be withheld. The Company may require an individual
receiving cash or Units under this Plan to advance or reimburse the Company for
any such taxes required to be withheld and may withhold any distribution in
whole or in part until the Company is so reimbursed. In lieu of withholding or
reimbursement, the Company has the right to withhold from any other cash amounts
due or to become due from the Company to the individual in an amount equal to
the taxes, or to retain and withhold a number of units having a market value not
less than the amount of the taxes required to be withheld as reimbursement for
any taxes and cancel (in whole or in part) any units so withheld.
SECTION 14. Status of Unit Holder . No Optionee or Holder, nor any party to
which an Optionee's or Holder's rights and privileges may pass, will have any of
the rights or privileges of a unit holder of the Company with respect to the
Units related to an Option or Unit Appreciation Right unless, until and to the
extent the Option or Unit Appreciation Right has been properly exercised for
units.
SECTION 15. Rights and Relationships .
15.1 This Plan. This Plan is purely voluntary on the part of the Company.
The adoption or continuance of this Plan will not be deemed to constitute a
commitment to Eligible Participants by the Company to continue this Plan.
15.2 No Employment Contract. Nothing in this Plan, nor in any Award granted
pursuant to this Plan, shall give any Optionee, Holder or Grantee any right to
continued employment with the Company or a Related Entity, or to interfere in
any way with the right of the Company (or Related Entity) to terminate the
Optionee, Holder's or Grantee's employment or service relationship with the
Company at any time.
15.3 Other Agreements. To the extent required by the Administrator, each
person who receives units as a result of any Award shall agree to enter into and
be bound by any unit holders' agreement, or the agreement then in effect, if
any, between the Company and its unit holders relating to the repurchase by the
unit holders and/or the Company of outstanding Units. In addition, as required
by the Administrator, units available through Awards may be subject to
restrictions on the transfer of the units or commitments regarding the Company's
repurchase of the Optionee's, Holder's or Grantee's units, which restrictions or
commitments may be a condition of the delivery of certificates representing the
units to the Optionee, Holder or Grantee.
22
SECTION 16. Amendment and Termination .
16.1 Board Action. The Board may at any time suspend, amend or terminate
this Plan, provided that the approval of the Company's unit holders is necessary
within 12 months before or after the adoption by the Board of any amendment
which will (a) increase the number of units reserved for the issuance of Awards
under this Plan; or (b) permit the granting of Awards to a class of persons
other than those presently permitted to receive Awards under this Plan.
16.2 Effect. No Award may be granted after the termination or during any
suspension of this Plan. In addition, no amendment, suspension or termination of
this Plan shall adversely affect Awards granted on or prior to the date thereof,
without the consent of the Optionee, Holder or Grantee, unless expressly
provided for in this Plan or a particular Award Agreement.
SECTION 17. Applicable Law . This Plan shall be governed and construed in
accordance with the laws of the State of --------------- Washington.
SECTION 18. Effectiveness of This Plan . This Plan shall become effective
upon adoption by the Board, so long as it is approved by the Company's unit
holders any time within 12 months before or after the adoption of this Plan.
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