Attached files
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10-Q - PEERLESS SYSTEMS CORP | v205587_10q.htm |
EX-31.2 - PEERLESS SYSTEMS CORP | v205587_ex31-2.htm |
EX-32.2 - PEERLESS SYSTEMS CORP | v205587_ex32-2.htm |
EX-32.1 - PEERLESS SYSTEMS CORP | v205587_ex32-1.htm |
EX-31.1 - PEERLESS SYSTEMS CORP | v205587_ex31-1.htm |
PEERLESS SYSTEMS
CORPORATION
2005 INCENTIVE AWARD
PLAN
amended and restated on
November 1, 2010
Peerless Systems
Corporation, a Delaware corporation (the "Company"), by resolution of its Board
of Directors, hereby adopts the Peerless Systems Corporation 2005 Incentive Award Plan
(the "Plan"). The Plan will become effective upon the approval of the Company's
stockholders (the "Effective Date").
The purpose of the Plan is
to promote the success and enhance the value of the Company by linking the
personal
interests of the members of the Board, Employees, and Consultants to those of
the Company's stockholders and by providing such individuals with an incentive
for outstanding performance to generate superior returns to the Company's
stockholders. The Plan is further intended to
provide flexibility to the Company in its ability to motivate, attract, and
retain the services of members of the Board, Employees, and Consultants upon
whose judgment, interest, and special effort the successful conduct of
the Company's operation is
largely dependent.
ARTICLE I.
DEFINITIONS
Wherever the following terms
are used in the Plan they shall have the meanings specified below, unless the
context clearly indicates otherwise. The singular pronoun shall include the
plural where the
context so indicates.
1.1. "Administrator" shall mean the entity that
conducts the general administration of the Plan as provided herein. With
reference to the administration of the Plan with respect to Awards granted to
Independent Directors, the term
"Administrator" shall refer to the Board. With reference to the administration
of the Plan with respect to any other Award, the term "Administrator" shall
refer to the Committee unless the Board has assumed the authority for
administration of the Plan generally as
provided in Section 11.1. With reference to the duties of the Committee
under the Plan which have been delegated to one or more persons pursuant to
Section 11.5, the term "Administrator" shall refer to such person(s) unless
the Committee or the Board has
revoked such delegation.
1.2. "Award" shall mean an Option, a
Restricted Stock award, a Restricted Stock Unit award, a Performance Award, a
Dividend Equivalents award, a Deferred Stock award, a Stock Payment award or a
Stock
Appreciation Right, which may be awarded or granted under the Plan
(collectively, "Awards").
1.3. "Award
Agreement" shall
mean a written agreement executed by an authorized officer of the Company and
the Holder which shall contain such terms and conditions with respect
to an Award as the Administrator shall determine, consistent with the
Plan.
1.4. "Award
Limit" shall
mean two hundred fifty thousand (250,000) shares of Common Stock, as adjusted
pursuant to Section 12.3; provided, however, that, solely with respect
to Performance Awards granted pursuant to Section 8.2(b), "Award Limit"
shall mean $600,000.
1.5. "Board" shall mean the Board of
Directors of the Company.
1.6. "Change
in Control"
means the occurrence of any of the following
events:
(a) the acquisition,
directly or indirectly, by any "person" or "group" (as those terms are defined
in Sections 3(a)(9), 13(d), and 14(d) of the Exchange Act and the rules
thereunder) of "beneficial ownership" (as determined pursuant to
Rule 13d-3 under the Exchange Act) of securities entitled to vote generally
in the election of directors ("voting securities") of the Company that represent
25% or more of the combined voting power of the Company's then outstanding
voting securities, other
than
(i) an acquisition by a trustee or
other fiduciary holding securities under any employee benefit plan (or related
trust) sponsored or maintained by the Company or any person controlled by the
Company or by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the
Company,
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(ii) an acquisition of voting
securities by the Company or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of the stock of the Company, or
(iii) an acquisition of voting
securities pursuant to a transaction described in subsection (c) below
that would not be a Change in Control under subsection (c);
provided, however, that notwithstanding the
foregoing, an acquisition of the Company's securities by the Company which
causes the Company's voting securities beneficially owned by a person or group
to represent 25% or more of the combined voting power of the Company's then
outstanding voting securities shall not be considered an acquisition by any
person or group for purposes of this subsection (a); provided, however,that if a person or group
shall become the beneficial owner of 25% or more of the combined voting power of the
Company's then outstanding voting securities by reason of share acquisitions by
the Company as described above and shall, after such share acquisitions by the
Company, become the beneficial owner of any additional voting
securities of the Company, then such
acquisition shall constitute a Change in Control;
(b) individuals who, as
of the Effective Date, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board;
(c) the consummation by
the Company (whether directly involving the Company or indirectly involving the
Company through
one or more intermediaries) of (i) a merger, consolidation, reorganization,
or business combination or (ii) a sale or other disposition of all or
substantially all of the Company's assets or (iii) the acquisition of
assets or stock of another entity, in each case, other
than a transaction
(A) which results in the Company's
voting securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the Company
or the person that, as a result of the transaction, controls, directly or
indirectly, the Company or owns, directly or indirectly, all or substantially
all of the Company's assets or otherwise succeeds to the business of the Company
(the Company or such person, the "Successor
Entity")) directly or indirectly, more than 50% of the combined voting power of
the Successor Entity's outstanding voting securities immediately after the
transaction,
(B) after which more than 50% of
the members of the board
of directors of the Successor Entity were members of the Incumbent Board at the
time of the Board's approval of the agreement providing for the transaction or
other action of the Board approving the
transaction, and
(C) after which no person or group beneficially
owns voting securities representing 25% or more of the combined voting power of
the Successor Entity; provided, however, that no person or group shall be
treated for purposes of this subsection (C) as beneficially
owning 25% or more of
combined voting power of the Successor Entity solely as a result of the voting
power held in the Company prior to the consummation of the
transaction; or
(d) stockholder
approval of a liquidation or dissolution of the
Company.
For
purposes of subsection (a) above, the calculation of voting power
shall be made as if the date of the acquisition were a record date for a vote of
the Company's stockholders, and for purposes of subsection (c) above,
the calculation of voting power shall be made
as if the date of the consummation of the transaction were a record date for a
vote of the Company's stockholders.
1.7. "Code" shall mean the Internal
Revenue Code of 1986, as amended.
1.8. "Committee" shall mean the
Compensation
Committee of the Board, or another committee or subcommittee of the Board,
appointed as provided in Section 11.1.
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1.9. "Common
Stock" shall
mean the common stock of the Company, par value $0.001 per
share.
1.10. "Company" shall mean Peerless Systems
Corporation, a Delaware corporation.
1.11. "Consultant" shall mean any consultant
or adviser if: (a) the consultant or adviser renders bona fide services to
the Company; (b) the services rendered by the consultant or adviser are
not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities; and (c) the consultant or adviser is a natural person who has
contracted directly with the Company to
render such services.
1.12. "Deferred
Stock" shall
mean rights to receive Common Stock awarded under Article VIII of the
Plan.
1.13. "Director" shall mean a member of the
Board.
1.14. "Dividend
Equivalent"
shall mean a
right to receive the equivalent value (in cash or Common Stock) of dividends
paid on Common Stock, awarded under Article VIII of the
Plan.
1.15. "DRO" shall mean a domestic
relations order as defined by the Code or Title I of the Employee
Retirement
Income Security Act of 1974, as amended, or the rules
thereunder.
1.16. "Effective
Date" shall mean
the date the Plan is approved by the Company's
stockholders.
1.17. "Employee" shall mean any officer or
other employee (as defined in accordance with
Section 3401(c) of the Code) of the Company, or of any corporation which is
a Subsidiary.
1.18. "Exchange
Act" shall mean
the Securities Exchange Act of 1934, as amended.
1.19. "Fair
Market Value" of
a share of Common Stock as of a given date shall mean:
(a) the closing price of a share of Common Stock on the trading day
previous to such date as reported by the Nasdaq Stock Market or any successor
quotation system, or (b) if the Common Stock is not quoted on Nasdaq Stock
Market or a successor quotation system but
is traded on an exchange, the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then trading, if any (or
as reported on any composite index which includes such principal exchange), on the trading day
previous to such date, or if shares were not traded on the trading day previous
to such date, then on the next preceding date on which a trade occurred, or
(c) if the Common Stock is not quoted on Nasdaq Stock Market or a
successor quotation system and not
publicly traded on an exchange, the Fair Market Value of a share of Common Stock
as established by the Administrator acting in good
faith.
1.20. "Holder" shall mean a person who has
been granted or awarded an Award.
1.21. "Incentive
Stock Option"
shall mean an option which conforms to the applicable provisions of
Section 422 of the Code and which is designated as an Incentive Stock
Option by the Administrator.
1.22. "Independent
Director" shall
mean a member of the Board who is not an
Employee.
1.23. "Non-Qualified
Stock Option"
shall mean an Option which is not designated as an Incentive Stock Option by the
Administrator.
1.24. "Option" shall mean a stock option
granted under Article IV of the Plan. An Option granted under the
Plan shall, as determined by the Administrator, be either a Non-Qualified Stock
Option or an Incentive Stock Option; provided, however, that Options granted to
Independent Directors and Consultants shall be Non-Qualified Stock Options.
1.25. "Performance
Award" shall
mean a cash bonus, stock bonus or other performance or incentive award that is
paid in cash, Common Stock or a combination of both, awarded under
Article VIII of the Plan.
1.26. "Performance
Criteria"
means the
criteria that the Committee selects for an Award for purposes of establishing
the Performance Goal or Performance Goals for a Performance Period. The
Performance Criteria that will be used to establish Performance Goals are
limited to the following: (a) net earnings
(either before or after (i) interest, (ii) taxes,
(iii) depreciation and (iv) amortization), (b) sales or revenue,
(c) net income (either before or after taxes), (d) operating earnings,
(e) cash flow (including, but not limited to, operating cash flow and free cash
flow), (f) return on assets, (g) return on stockholders' equity,
(h) return on sales, (i) gross or net profit margin, (j) expense,
(k) working capital, (l) earnings per share, (m) price per share
of Common Stock, and (n) market share, any of which may be
measured either in absolute terms or as compared to any incremental increase or
as compared to results of a peer group. The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective
fashion the manner of calculating
the Performance Criteria it selects to use for such Performance Period for such
Award; provided, however, that each Performance
Criteria shall be determined in accordance with generally accepted accounting
principles to the extent
applicable.
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1.27. "Performance
Goals" means,
for a Performance Period, the goals established in writing by the Committee for
the Performance Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals, the
Performance Goals may be expressed in terms of overall Company performance or
the performance of a division, business unit, or an individual. The Committee,
in its discretion, may, within the time prescribed by Section 162(m) of the
Code, adjust or modify the
calculation of Performance Goals for such Performance Period in order to prevent
the dilution or enlargement of the rights of any Holder of a Performance Award
(a) in the event of, or in anticipation of, any unusual or
extraordinary corporate item,
transaction, event, or development, or (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events affecting the Company,
or the financial statements of the Company, or in response to, or in
anticipation of, changes in applicable laws,
regulations, accounting principles, or business
conditions.
1.28. "Performance
Period" means
one or more periods of time, which may be of varying and overlapping durations,
as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Holder's
right to, and the payment of, a Performance Award.
1.29. "Plan" shall mean the Peerless
Systems Corporation 2005 Incentive Award Plan.
1.30. "Prior
Plan" shall mean the Peerless
Systems Corporation 1996 Equity Incentive Plan.
1.31. "Restricted
Stock" shall
mean Common Stock awarded under Article VII of the
Plan.
1.32. "Restricted
Stock Units"
shall mean rights to receive Common Stock awarded under
Article VIII.
1.33. "Rule 16b-3" shall mean Rule 16b-3
promulgated under the Exchange Act, as such Rule may be amended from time to
time.
1.34. "Section 162(m)
Participant"
shall mean any key Employee designated by the Administrator as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.
1.35. "Securities
Act" shall mean
the Securities
Act of 1933, as amended.
1.36. "Stock
Appreciation Right" shall mean a stock
appreciation right granted under Article IX of the
Plan.
1.37. "Stock
Payment" shall
mean: (a) a payment in the form of shares of Common Stock, or
(b) an
option or other right to purchase shares of Common Stock, as part of a deferred
compensation arrangement, made in lieu of all or any portion of the
compensation, including without limitation, salary, bonuses, commissions and
directors' fees, that would otherwise become payable to a
key Employee, Independent Director or Consultant in cash, awarded under
Article VIII of the Plan.
1.38. "Subsidiary" shall mean any corporation
in an unbroken chain of corporations beginning with the Company if each of
the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
1.39. "Substitute
Award" shall mean an Option
granted under this Plan upon the assumption of, or in substitution for,
outstanding equity awards previously granted by a company or other entity in
connection with a corporate transaction, such as a merger, combination,
consolidation or
acquisition of property or stock; provided, however, that in no event shall the
term "Substitute Award" be construed to refer to an award made in connection
with the cancellation and repricing of an Option.
1.40. "Termination
of Consultancy" shall mean the time when the
engagement of a Holder as a Consultant to the Company or a Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, by resignation, discharge, death or retirement, but
excluding terminations where there is a
simultaneous commencement of employment with the Company or any Subsidiary. The
Administrator, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Consultancy, including, but not by way of
limitation, the question of whether a Termination of Consultancy resulted from a
discharge for good cause, and all questions of whether a particular leave of
absence constitutes a Termination of Consultancy. Notwithstanding any
other provision of the Plan, the
Company or any Subsidiary has an absolute and unrestricted right to terminate a
Consultant's service at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in
writing.
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1.41. "Termination
of Directorship"
shall mean the time when a Holder who is an Independent Director ceases to be a
Director for any reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The Board, in its sole and
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship with respect to Independent
Directors.
1.42. "Termination
of Employment"
shall mean the time when the employee-employer relationship
between a Holder and the Company or any Subsidiary is terminated for any reason,
with or without cause, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding: (a) terminations
where there is a simultaneous reemployment or continuing employment of a Holder
by the Company or any Subsidiary, (b) at the discretion of the
Administrator, terminations which result in a temporary severance of the
employee-employer relationship, and
(c) at the discretion of the Administrator, terminations which are followed
by the simultaneous establishment of a consulting relationship by the Company or
a Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the
effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all
questions of whether a particular leave
of absence constitutes a Termination of Employment; provided, however, that, with respect to
Incentive Stock Options, unless otherwise determined by the Administrator in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for
the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and
revenue rulings under said Section.
ARTICLE II.
SHARES SUBJECT TO
PLAN
2.1. Shares
Subject to Plan.
(a) Subject to
Section 12.3 and Section 2.1(b), the maximum aggregate number of shares of
Common Stock which may be issued or transferred pursuant to Awards under the
Plan shall be the sum of: (i) 500,000 shares; and (ii) any shares
of Common Stock which as of the Effective Date are available for issuance under
the Prior Plan and which following
the Effective Date are not issued under the Prior Plan. In order that the
applicable regulations under the Code relating to Incentive Stock Options be
satisfied, the maximum number of shares of Common Stock that may be
delivered upon exercise of Incentive
Stock Options shall be the number specified in Section 2.1(a)(i), and, if
necessary to satisfy such regulations, such maximum limit shall apply to the
number of shares of Common Stock that may be delivered in connection with
each other type of Award under
the Plan (applicable separately to each type of
Award).
(b) To the extent that
an Award terminates, expires, or lapses for any reason, any shares of Common
Stock then subject to such Award shall again be available for the grant of an Award pursuant
to the Plan. Additionally, any shares of Common Stock tendered or withheld to
satisfy the grant or exercise price or tax withholding obligation pursuant to
any Award shall again be available for the grant of an Award pursuant
to the Plan. To the extent
permitted by applicable law or any exchange rule, shares of Common Stock issued
in assumption of, or in substitution for, any outstanding awards of any entity
acquired in any form of combination by the Company or any Subsidiary
shall not be counted against
shares of Common Stock available for grant pursuant to this Plan. If any shares
of Restricted Stock are surrendered by the Holder or repurchased by the Company
pursuant to Section 7.4 or 7.5 hereof, such shares may again be
optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1(a). The payment of
Dividend Equivalents in conjunction with any outstanding Awards shall not be
counted against the shares available for issuance under the Plan.
Notwithstanding the provisions of this
Section 2.1(b), no shares of Common Stock may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the
Code.
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2.2. Stock
Distributed. Any Common Stock
distributed pursuant to an Award may consist, in whole or in part, of authorized
and unissued Common Stock, shares of Common Stock held in treasury or shares of
Common Stock purchased on the open market.
2.3. Limitation
on
Number of Shares Subject to Awards. Notwithstanding any
provision in the Plan to the contrary, and subject to Article 11, the
maximum number of shares of Common Stock with respect to one or more Awards that
may be granted to any one Employee, Independent Director or Consultant
during any calendar year shall not exceed the Award Limit. To the extent
required by Section 162(m) of the Code, shares subject to Awards which are
canceled continue to be counted against the Award
Limit.
ARTICLE III.
GRANTING OF AWARDS
3.1. Award
Agreement. Each
Award shall be evidenced by an Award Agreement. Award Agreements evidencing
Awards intended to qualify as performance-based compensation (as described in
Section 162(m)(4)(C) of the Code) shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code.
Award Agreements evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of
Section 422 of the
Code.
3.2. Provisions
Applicable to Section 162(m) Participants.
(a) The Committee, in
its discretion, may determine whether an Award is to qualify as
performance-based compensation (as described in Section 162(m)(4)(C) of the
Code).
(b) Notwithstanding
anything in the Plan to the contrary, the Committee may grant any Award to a
Section 162(m) Participant, including Restricted Stock the restrictions
with respect to which lapse upon the attainment of performance goals which are
related to one or more of the
Performance Criteria and any performance or incentive award described in
Article VIII that vests or becomes exercisable or payable upon the
attainment of performance goals which are related to one or more of the
Performance Criteria.
(c) To
the extent necessary to comply with the performance-based compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles VII and VIII which may be granted to one or more
Section 162(m) Participants, no
later than ninety (90) days following the commencement
of any fiscal year in question or any other designated fiscal period or period
of service (or such other time as may be required or permitted by
Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants,
(ii) select the Performance Criteria applicable to the fiscal year or other
designated fiscal period or period of service, (iii) establish the various
performance targets, in terms of an
objective formula or standard, and amounts of such Awards, as applicable, which
may be earned for such fiscal year or other designated fiscal period or period
of service, and (iv) specify the relationship between Performance Criteria
and the performance targets
and the amounts of such Awards, as applicable, to be earned by each
Section 162(m) Participant for such fiscal year or other designated fiscal
period or period of service. Following the completion of each fiscal year or
other designated fiscal period or
period of service, the Committee shall certify in writing whether the applicable
performance targets have been achieved for such fiscal year or other designated
fiscal period or period of service. In determining the amount earned by a
Section 162(m)
Participant, the Committee shall have the right to reduce (but not to increase)
the amount payable at a given level of performance to take into account
additional factors that the Committee may deem relevant to the assessment of
individual or corporate performance
for the fiscal year or other designated fiscal period or period of
service.
(d) Furthermore,
notwithstanding any other provision of the Plan, any Award which is granted to a
Section 162(m) Participant and is intended to qualify as
performance-based compensation (as
described in Section 162(m)(4)(C) of the Code) shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including
any amendment to Section 162(m) of the Code) or any regulations or rulings
issued thereunder that are
requirements for qualification as performance-based compensation (as described
in Section 162(m)(4)(C) of the Code), and the Plan shall be deemed amended
to the extent necessary to conform to such
requirements.
3.3. Limitations
Applicable
to Section 16 Persons. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application
of such exemptive rule. To the extent permitted by applicable law, the Plan and
Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such applicable
exemptive rule.
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3.4. Consideration. In consideration of the
granting of an Award under the Plan, the Holder shall agree, in the Award
Agreement, to
remain in the employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company or any Subsidiary for a period of at
least one year (or such shorter period as may be fixed in the Award Agreement or
by action of the Administrator following grant of
the Award) after the Award is granted (or, in the case of an Independent
Director, until the next annual meeting of stockholders of the
Company).
3.5. At-Will
Employment.
Nothing in the Plan or in any Award Agreement hereunder shall confer upon any
Holder any right to continue in the employ of, or as a Consultant for, the
Company or any Subsidiary, or as a Director of the Company, or shall interfere
with or restrict in any way the rights of the Company and any
Subsidiary, which rights are hereby
expressly reserved, to discharge any Holder at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in a written employment agreement between the Holder and the Company
and any
Subsidiary.
ARTICLE IV.
GRANTING OF OPTIONS TO
EMPLOYEES,
CONSULTANTS AND INDEPENDENT
DIRECTORS
4.1. Eligibility. Any Employee or Consultant
selected by the Administrator pursuant to Section 4.4(a)(i) shall be
eligible to be granted an Option. Each Independent Director of the
Company shall be eligible to be granted Options at the times and in the manner
set forth in Section 4.5 and as provided in
Section 4.6.
4.2. Disqualification
for Stock Ownership. No person may be granted an
Incentive Stock
Option under the Plan if such person, at the time the Incentive Stock Option is
granted, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any then existing Subsidiary or parent
corporation (within the meaning of
Section 422 of the Code) unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code.
4.3. Qualification
of Incentive Stock Options. No Incentive Stock Option
shall be granted to any person who is not an
Employee.
4.4. Granting
of Options to Employees and Consultants.
(a) The Administrator
shall from time to time, in its absolute discretion, and, subject to applicable
limitations of the Plan:
(i) Determine
which Employees are key Employees and select from among the key Employees or
Consultants (including Employees or Consultants who have previously received
Awards under the Plan) such of them as in its opinion should be granted
Options;
(ii) Subject
to the Award Limit, determine the number of shares to be subject to such Options
granted to the selected key Employees or Consultants;
(iii) Subject
to Section 4.3, determine whether such Options are to be Incentive Stock
Options or Non-Qualified Stock Options and whether such Options are to qualify
as performance-based compensation (as described in Section 162(m)(4)(C) of
the Code); and
(iv) Determine
the terms and conditions of such Options, consistent with the Plan; provided,
however, that the terms and conditions of Options intended to qualify as
performance-based compensation (as described in Section 162(m)(4)(C) of the
Code) shall include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
(b) Upon the selection
of a key Employee or Consultant to be granted an Option, the Administrator shall
instruct the Secretary of the Company to issue the Option and may impose such
conditions on the grant of the Option as it deems
appropriate.
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(c) Any Incentive Stock Option
granted under the Plan may be modified by the Administrator, with the consent of
the Holder, to disqualify such Option from treatment as an "incentive stock
option" under Section 422 of the Code.
4.5. Granting
of Options to
Independent Directors. The Board shall from time
to time, in its absolute discretion, and subject to applicable limitations of
the Plan:
(a) Select
from among the Independent Directors (including Independent Directors who have
previously received Awards under the Plan) such of them as in its opinion should
be granted Options;
(b) Subject
to the Award Limit, determine the number of shares to be subject to such Options
granted to the selected Independent Directors; and
(c) Subject
to the provisions of Article 5, determine the terms and conditions of such
Options, consistent with the Plan.
4.6. Automatic
Grants to Independent Directors.
(a) During the term of
the Plan, a person who first becomes an Independent Director automatically
shall, upon the
date of his or her initial election or appointment to be an Independent
Director, be granted an Option to purchase 10,000 shares of Common Stock (an
"Initial Option"). In addition, on the date of each annual meetings of the
Company's stockholders, commencing with the annual
meeting held in 2005, each Independent Director who has served in such capacity
for at least six months immediately prior to such date automatically shall be
granted an Option to purchase 2,000 shares of Common
Stock effective as of the date of such annual
meeting of stockholders (an "Annual Option"); provided, he or she continues to
serve as member of the Board as of
such date. For the avoidance of doubt, an Independent Director elected for the
first time to the Board at an annual meeting of stockholders shall
only receive an Initial Option in connection with such election, and shall not
receive an Annual Option on such date as well. Members of the Board who are
employees of the Company who subsequently retire from the Company and
remain on the Board will not
receive an Initial Option grant but to the extent they are otherwise eligible,
will receive, at each annual meeting of stockholders after his or her retirement
from employment with the Company, an Annual Option
grant.
(b) The following provisions
govern the terms of the Initial Options and Annual Options granted pursuant to
paragraph (a) above. Initial Options and Annual Options shall be
Non-Qualified Stock Options with an exercise price per share of Common Stock
equal to 100% of the Fair Market Value
of a share of Common Stock on the date the Option is granted. Each Option
granted pursuant to Section 4.6(a) shall vest and become exercisable for
twenty-five percent (25%) of the shares subject to such Option upon the
Independent Director's completion of
one (1) year of service as a Board member measured from the grant date and
shall become exercisable for the balance of the shares subject to such Option in
a series of thirty-six (36) successive equal monthly installments
upon the Independent Director's
completion of each additional month of service as a Board member over the
thirty-six (36)-month period measured from the first anniversary of the grant
date. The term of each Option granted pursuant to Section 4.6(a) shall be
10 years
from the date the Option is granted. Upon a Director's termination of membership
on the Board for any reason, his or her Option granted under Section 4.6(a)
shall remain exercisable for 12 months following his or her termination of
membership on the Board (or such longer period
as the Board may determine in its discretion on or after the date of grant of
such Option). Unless otherwise determined by the Board on or after the date of
grant of such Option, no portion of an Option granted under
Section 4.6(a) which is unexercisable
at the time of an Independent Director's termination of membership on the Board
shall thereafter become exercisable.
(c) At any time, the
Board may, in its sole and absolute discretion, determine that the Independent
Directors shall
be granted Restricted Stock or Restricted Stock Units in lieu of one or more
future Option grants to be made pursuant to Section 4.6(a). In the event
the Board exercises its discretion under this Section 4.6(c), the number of
shares of Common Stock subject to such
Restricted Stock awards or Restricted Stock Unit awards granted in lieu of an
Initial Option or Annual Option shall be 15,000 shares and
5,000 shares, respectively, or such lesser number of shares as the Board
may determine to be appropriate. Any Restricted Stock
award or Restricted Stock Unit award granted pursuant to this
Section 4.6(c) shall vest with respect to twenty-five percent (25%) of the
shares subject to such award upon the Independent Director's completion of one
(1) year of service as a Board member
measured from the grant date and shall vest with respect to the balance of the
shares subject to such award in a series of thirty-six (36) successive
equal monthly installments upon the Independent Director's completion of each
additional month of service as
a Board member over the thirty-six (36)-month period measured from the first
anniversary of the grant date. Unless otherwise determined by the Board on or
after the date of grant of such Restricted Stock award or Restricted
Stock Unit award, no portion of
an award granted under this Section 4.6(c) which is unvested at the time of
an Independent Director's termination of membership on the Board shall
thereafter become vested.
8
(d) All of the
foregoing grants authorized by this Section 4.6 are
subject to stockholder approval of the Plan.
4.7. Options
in Lieu of Cash Compensation. Options may be granted under
the Plan to Employees and Consultants in lieu of cash bonuses which would
otherwise be payable to such Employees and Consultants, and to
Independent Directors in lieu of directors' fees which would otherwise be
payable to such Independent Directors, pursuant to such policies which may be
adopted by the Administrator from time to time.
ARTICLE V.
TERMS OF
OPTIONS
5.1. Option
Price. The price
per share of the shares subject to each Option granted to Employees, Independent
Directors and Consultants shall be set by the Administrator; provided, however,
that:
(a) In the case of Incentive Stock
Options, such price shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date the Option is granted (or the date the Option is modified, extended or
renewed for purposes of Section 424(h) of the Code);
(b) In the case of
Incentive Stock Options
granted to an individual then owning (within the meaning of Section 424(d)
of the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation thereof (within
the meaning of Section 422 of the
Code), such price shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date the Option is granted (or the date the Option
is modified, extended or renewed for purposes of Section 424(h) of
the Code); and
(c) In the case of Non-Qualified
Stock Options, such price shall not be less than 100% of the Fair Market Value
of a share of Common Stock on the date the Option is
granted.
5.2. Option
Term. The term
of an Option granted to an Employee, Independent
Director or Consultant shall be set by the Administrator in its discretion;
provided, however, that, in the case of
Incentive Stock Options, the term shall not be more than ten (10) years
from the date the Incentive Stock Option is granted, or five
(5) years from the date the Incentive Stock Option is granted if the
Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code). Except as limited by requirements of
Section 422 of the Code and regulations and rulings thereunder applicable
to Incentive Stock Options, the Administrator
may extend the term of any outstanding Option in connection with any Termination
of Employment, Termination of Directorship or Termination of Consultancy of the
Holder, or amend any other term or condition of such Option relating to such a Termination of
Employment, Termination of Directorship or Termination of
Consultancy.
5.3. Option
Vesting.
(a) The period during
which the right to exercise, in whole or in part, an Option granted to an
Employee, Independent Director or a Consultant vests in
the Holder shall be set by the Administrator and the Administrator may determine
that an Option may not be exercised in whole or in part for a specified period
after it is granted; provided, however, that, unless the
Administrator
otherwise provides in the terms of the Award Agreement or otherwise, no Option
shall be exercisable by any Holder who is then subject to Section 16 of the
Exchange Act within the period ending six months and one day after the date the
Option is granted. At any time after grant of
an Option, the Administrator may, in its sole and absolute discretion and
subject to whatever terms and conditions it selects, accelerate the period
during which an Option granted to an Employee, Independent Director or
Consultant
vests.
9
(b) No portion of an
Option granted to an Employee, Independent Director or Consultant which is
unexercisable at Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, shall thereafter become exercisable, except as may be
otherwise provided by the Administrator either in the Award Agreement or by
action of the Administrator following the grant of the
Option.
(c) To
the extent that the aggregate fair market value of stock with respect to
which
"incentive stock options" (within the meaning of Section 422 of the Code,
but without regard to Section 422(d) of the Code) are exercisable for the
first time by a Holder during any calendar year under the Plan, and all other
plans of the Company and any
Subsidiary or parent corporation thereof, within the meaning of Section 424
of the Code, exceeds $100,000, the Options shall be treated as Non-Qualified
Stock Options to the extent required by Section 422 of the Code. The rule set
forth in the preceding sentence
shall be applied by taking Options and other "incentive stock options" into
account in the order in which they were granted. For purposes of
this Section 5.3(c),
the fair market value of stock shall be determined as of the time the Option or
other "incentive
stock options" with respect to such stock is granted.
5.4. Substitute
Awards.
Notwithstanding the foregoing provisions of this Article V to the contrary,
in the case of an Option that is a Substitute Award, the price per share of the
shares subject
to such Option may be less than the Fair Market Value per share on the date of
grant, provided, that the excess of:
(a) the aggregate Fair Market Value (as of the date such Substitute Award
is granted) of the shares subject to the Substitute Award, over (b) the
aggregate exercise price thereof does not exceed the excess of: (x) the
aggregate fair market value (as of the time immediately preceding the
transaction giving rise to the Substitute Award, such fair market value to be
determined by the Committee) of the shares of
the predecessor entity that were subject to the grant assumed or substituted for
by the Company, over (y) the aggregate exercise price of such
shares.
ARTICLE VI.
EXERCISE OF
OPTIONS
6.1. Partial
Exercise. An
exercisable Option may be exercised in
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Administrator may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of
shares.
6.2. Manner
of Exercise. All
or a portion of an exercisable Option shall be deemed exercised upon delivery of
all of the following to the Secretary of the Company, or such other person or
entity designated by the Board, or his, her or its office, as applicable:
(a) A written
notice complying with the applicable rules established by the Administrator
stating that the Option, or a portion thereof, is exercised. The notice shall be
signed by the Holder or other person then entitled to exercise the Option or such portion of the
Option;
(b) Such
representations and documents as the Administrator, in its absolute discretion,
deems necessary or advisable to effect compliance with all applicable provisions
of the Securities Act and any other federal or state securities laws or
regulations. The Administrator may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and issuing stop-transfer notices to
agents and registrars;
(c) In the event that the Option
shall be exercised pursuant to Section 12.1 by any person or persons other
than the Holder, appropriate proof of the right of such person or persons to
exercise the
Option; and
10
(d) Full cash payment to the
Secretary of the Company for the shares with respect to which the Option, or
portion thereof, is exercised. However, the Administrator may, in its
discretion, (i) allow payment, in whole or in part, through the delivery of shares of
Common Stock which have been owned by the Holder for at least six months, duly
endorsed for transfer to the Company with a Fair Market Value on the date of
delivery equal to the aggregate exercise price of the Option or exercised portion thereof;
(ii) allow payment, in whole or in part, through the surrender of shares of
Common Stock then issuable upon exercise of the Option having a Fair Market
Value on the date of Option exercise equal to the aggregate exercise
price of the Option or exercised portion
thereof; (iii) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration;
(iv) allow payment, in whole or in part, through the delivery of a
notice that the Holder has placed a market
sell order with a broker with respect to shares of Common Stock then issuable
upon exercise of the Option, and the broker timely pays a sufficient portion of
the net proceeds of the sale to the Company in satisfaction of the Option exercise price; or
(v) allow payment through any combination of the consideration provided in
the foregoing subparagraphs (i), (ii), (iii) and (iv); provided, however, that the payment in the manner
prescribed in the preceding paragraphs shall not be permitted to the extent that
the Administrator determines that payment in such manner shall result in an
extension or maintenance of credit, an arrangement for the extension of credit,
or a renewal or an extension of credit in
the form of a personal loan to or for any Director or
executive officer of the Company that is prohibited by Section 13(k) of the
Exchange Act or other applicable law.
6.3. Conditions
to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares
to listing on all stock exchanges on which such class of stock is then
listed;
(b) The completion of any
registration or other qualification of such shares under any state or federal
law, or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body which the
Administrator shall, in its absolute discretion, deem necessary or
advisable;
(c) The obtaining of any approval
or other clearance from any state or federal governmental agency which the
Administrator shall, in
its absolute discretion, determine to be necessary or
advisable;
(d) The lapse of such reasonable
period of time following the exercise of the Option as the Administrator may
establish from time to time for reasons of administrative convenience; and
(e) The receipt by the Company of
full payment for such shares, including payment of any applicable withholding
tax, which in the discretion of the Administrator may be in the form of
consideration used by the Holder to pay for such shares under
Section 6.2(d).
6.4. Rights
as Stockholders.
Holders shall not be, nor have any of the rights or privileges of, stockholders
of the Company in respect of any shares purchasable upon the exercise of any
part of an Option unless and until certificates representing such
shares have been issued by the Company to such
Holders.
6.5. Ownership
and Transfer Restrictions. The Administrator, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate. Any such restriction shall be set
forth in the respective Award Agreement and may be referred to on the
certificates evidencing such shares. The Holder shall give the Company prompt
notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code)
such Option to such Holder, or
(b) one year after the transfer of such shares to such
Holder.
6.6. Additional
Limitations on Exercise of Options. Holders may be required to
comply with any timing or other restrictions with respect to the settlement or
exercise of an
Option, including a window-period limitation, as may be imposed in the
discretion of the Administrator.
ARTICLE VII.
AWARD OF RESTRICTED
STOCK
7.1. Eligibility. Subject to the Award Limit,
Restricted Stock may be awarded to any Employee who the Administrator
determines is a key Employee, or any Independent Director or any Consultant who
the Administrator determines should receive such an
Award.
11
7.2. Award
of Restricted Stock.
(a) The Administrator
may from time to time, in its absolute
discretion:
(i) Determine which Employees are
key Employees, and select from among the Key Employees, Independent Directors or
Consultants (including Employees, Independent Directors or Consultants who have
previously received Awards under the Plan) such of them as in its
opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price,
if any, and other terms and conditions applicable to such Restricted Stock,
consistent with the Plan.
(b) The
Administrator
shall establish the purchase price, if any, and form of payment for Restricted
Stock; provided, however, that such purchase price
shall be no less than the par value of the Common Stock to be purchased, unless
otherwise permitted by applicable state law. In all cases, legal
consideration shall be required for each issuance of Restricted
Stock.
(c) Upon the selection
of an Employee, Independent Director or Consultant to be awarded Restricted
Stock, the Administrator shall instruct the Secretary of the Company to issue such
Restricted Stock and may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate.
7.3. Rights
as Stockholders.
Subject to Section 7.4, upon delivery of the shares of Restricted Stock to
the escrow
holder pursuant to Section 7.6, the Holder shall have, unless otherwise
provided by the Administrator, all the rights of a stockholder with respect to
said shares, subject to the restrictions in his or her Award Agreement,
including the right to receive all dividends and other
distributions paid or made with respect to the shares; provided, however, that,
in the discretion of the Administrator, any extraordinary distributions with
respect to the Common Stock shall be subject to the restrictions set
forth in
Section 7.4.
7.4.
Restriction. All shares of Restricted
Stock issued under the Plan (including any shares received by Holders thereof
with respect to shares of Restricted Stock as a result of stock dividends, stock
splits or any other form of recapitalization) shall, in
the terms of each individual Award Agreement, be subject to such restrictions as
the Administrator shall provide, which restrictions may include, without
limitation, restrictions concerning voting rights and transferability and
restrictions based on duration
of employment, directorship or consultancy with the Company, Company performance
and individual performance; provided, however, that, unless the
Administrator otherwise provides in the terms of the Award Agreement or
otherwise, no
share of Restricted Stock granted to a person subject to Section 16 of the
Exchange Act shall be sold, assigned or otherwise transferred until at least six
months and one day have elapsed from the date on which the Restricted Stock was
issued, and provided, further, that, except with respect
to shares of Restricted Stock granted to Section 162(m) Participants, by action
taken after the Restricted Stock is issued, the Administrator may, on such terms
and conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Award Agreement. Restricted Stock may
not be sold or encumbered until all restrictions are terminated or expire. If no
consideration was paid by the Holder upon issuance, a Holder's
rights
in unvested
Restricted Stock shall lapse, and such Restricted Stock shall be surrendered to
the Company without consideration, upon Termination of Employment, Termination
of Directorship, or Termination of Consultancy, as applicable; and, provided, however, that the Administrator in
its sole and absolute discretion may provide that such rights shall not lapse in
the event of a Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, following a "change of
ownership or control" (within the
meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or any successor
regulation thereto) of the Company or because of the Holder's death or
disability; and, provided, further, except with respect to
shares of Restricted Stock granted to Section 162(m)
Participants, the Administrator in its sole and absolute discretion may provide
that no such lapse or surrender shall occur in the event of a Termination of
Employment, Termination of Directorship, or Termination of
Consultancy,
as applicable,
without cause or following any Change in Control or because of the Holder's
retirement, or otherwise.
7.5. Repurchase
of Restricted Stock. The Administrator shall
provide in the terms of each individual Award Agreement that the
Company shall
have the right to repurchase from the Holder the Restricted Stock then subject
to restrictions under the Award Agreement immediately upon a Termination of
Employment, Termination of Directorship, or Termination of Consultancy, as
applicable, at a cash price per share equal to
the price paid by the Holder for such Restricted Stock; provided,
however, that
the Administrator in its sole and absolute discretion may provide that no such
right of repurchase shall exist in the event of a Termination of
Employment,
Termination of Directorship or Termination of Consultancy, as applicable,
following a "change of ownership or control" (within the meaning of Treasury
Regulation Section 1.162-27(e)(2)(v) or any successor regulation thereto)
of the Company or because of the Holder's death or
disability; and, provided,
further, that,
except with respect to shares of Restricted Stock granted to
Section 162(m)
12
Participants, the
Administrator in its sole and absolute discretion may provide that no such right
of repurchase
shall exist in the event of a Termination of Employment, Termination of
Directorship, or Termination of Consultancy, as applicable, without cause or
following any Change in Control or because of the Holder's retirement, or
otherwise.
7.6. Escrow. The Secretary of the Company
or such other escrow holder as the Administrator may appoint shall retain
physical custody of each certificate representing Restricted Stock until all of
the restrictions imposed under the Award Agreement with respect to the
shares evidenced by such
certificate expire or shall have been removed.
7.7. Legend. In order to enforce the
restrictions imposed upon shares of Restricted Stock hereunder, the
Administrator shall cause a legend or legends to be placed on
certificates
representing all shares of Restricted Stock that are still subject to
restrictions under Award Agreements, which legend or legends shall make
appropriate reference to the conditions imposed
thereby.
7.8. Section 83(b)
Election. If a
Holder makes an election under
Section 83(b) of the Code, or any successor section thereto, to be taxed
with respect to the Restricted Stock as of the date of transfer of the
Restricted Stock rather than as of the date or dates upon which the Holder would
otherwise be taxable under Section 83(a)
of the Code, the Holder shall deliver a copy of such election to the Company
immediately after filing such election with the Internal Revenue
Service.
ARTICLE VIII.
PERFORMANCE AWARDS, DIVIDEND
EQUIVALENTS, DEFERRED STOCK,
STOCK PAYMENTS, RESTRICTED STOCK
UNITS
8.1. Eligibility. Subject to the Award Limit,
one or more Performance Awards, Dividend Equivalent awards, Deferred Stock
awards, Stock Payment awards, and/or Restricted Stock Unit awards may be granted
to any Employee whom the Administrator
determines is a key Employee, or any Independent Director or any Consultant whom
the Administrator determines should receive such an
Award.
8.2. Performance
Awards.
(a) Any key Employee,
Independent Director or Consultant selected by the Administrator
may be granted one or more Performance Awards. The value of such Performance
Awards may be linked to any one or more of the Performance Criteria or other
specific performance criteria determined appropriate by the
Administrator, in each case on a
specified date or dates or over any period or periods determined by the
Administrator. In making such determinations, the Administrator shall consider
(among such other factors as it deems relevant in light of the specific type of
award) the contributions,
responsibilities and other compensation of the particular key Employee,
Independent Director or Consultant.
(b) Without limiting
Section 8.2(a), the Administrator may grant Performance Awards to any
Section 162(m) Participant in the form of a cash bonus
payable upon the attainment of objective performance goals which are established
by the Administrator and relate to one or more of the Performance Criteria, in
each case on a specified date or dates or over any period or periods
determined by the
Administrator. Any such bonuses paid to Section 162(m) Participants shall
be based upon objectively determinable bonus formulas established in accordance
with the provisions of Section 3.2. The maximum aggregate amount of all
Performance Awards granted to a
Section 162(m) Participant under this Section 8.2(b) during any
calendar year shall not exceed the Award Limit. Unless otherwise specified by
the Administrator at the time of grant, the Performance Criteria with respect to
a Performance Award payable to a
Section 162(m) Participant shall be determined on the basis of generally
accepted accounting principles.
8.3. Dividend
Equivalents.
(a) Any key Employee,
Independent Director or Consultant selected by the Administrator may
be granted
Dividend Equivalents based on the dividends declared on Common Stock, to be
credited as of dividend payment dates, during the period between the date a
Stock Appreciation Right, Deferred Stock, Performance Award or Restricted Stock
Unit award is granted and the date such
Stock Appreciation Right, Deferred Stock, Performance Award or Restricted Stock
Unit award vests, is exercised, is distributed or expires, as determined by the
Administrator. Such Dividend Equivalents shall be converted to cash
or additional shares of Common
Stock by such formula and at such time and subject to such limitations as may be
determined by the Administrator.
13
(b) Any Holder of an
Option who is an Employee, Independent Director or Consultant selected by the
Administrator
may be granted Dividend Equivalents based on the dividends declared on Common
Stock, to be credited as of dividend payment dates, during the period between
the date an Option is granted and the date such Option vests, is exercised, or
expires, as determined by the Administrator.
Such Dividend Equivalents shall be converted to cash or additional shares of
Common Stock by such formula and at such time and subject to such limitations as
may be determined by the Administrator.
(c) Dividend
Equivalents
granted with respect to Options intended to be qualified performance-based
compensation for purposes of Section 162(m) of the Code shall be payable,
with respect to pre-exercise periods, regardless of whether such Option is
subsequently exercised.
8.4. Stock
Payments. Any
key Employee, Independent Director or Consultant selected by the Administrator
may receive Stock Payments in the manner determined from time to time by the
Administrator. The number of shares shall be determined by the
Administrator
and may be based upon the Performance Criteria or other specific performance
criteria determined appropriate by the Administrator, determined on the date
such Stock Payment is made or on any date thereafter.
8.5. Deferred
Stock. Any key
Employee, Independent Director or
Consultant selected by the Administrator may be granted an award of Deferred
Stock in the manner determined from time to time by the Administrator. The
number of shares of Deferred Stock shall be determined by the Administrator
and may be linked to the
Performance Criteria or other specific performance criteria determined to be
appropriate by the Administrator, in each case on a specified date or dates or
over any period or periods determined by the Administrator. Common Stock
underlying a Deferred Stock award
will not be issued until the Deferred Stock award has vested, pursuant to a
vesting schedule or performance criteria set by the Administrator. Unless
otherwise provided by the Administrator, a Holder of Deferred Stock shall
have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the Award has
vested and the Common Stock underlying the Award has been
issued.
8.6. Restricted
Stock Units. Any
key Employee, Independent Director or Consultant selected by the
Administrator may be granted an award of Restricted Stock Units in the manner
determined from time to time by the Administrator. The Administrator is
authorized to make awards of Restricted Stock Units in such amounts and subject
to such terms and conditions as
determined by the Administrator. The Administrator shall specify the date or
dates on which the Restricted Stock Units shall become fully vested and
nonforfeitable, and may specify such conditions to vesting as it deems
appropriate, and may specify that such
Restricted Stock Units become fully vested and nonforfeitable pursuant to the
satisfaction of one or more Performance Goals or other specific performance
goals as the Administrator determines to be appropriate at the time of
the grant of the Restricted
Stock Units or thereafter, in each case on a specified date or dates or over any
period or periods determined by the Administrator. The Administrator shall
specify the distribution dates applicable to each award of Restricted
Stock Units which shall be no
earlier than the vesting dates or events of the award and may be determined at
the election of the Employee, Independent Director or Consultant. On the
distribution dates, the Company shall issue to the Holder one unrestricted,
fully transferable share of
Common Stock for each Restricted Stock Unit distributed. The Administrator shall
specify the purchase price, if any, to be paid by the Employee, Independent
Director or Consultant to the Company for such shares of Common Stock to
be distributed pursuant to the
Restricted Stock Unit award.
8.7. Term. The term of a Performance
Award, Dividend Equivalent award, Deferred Stock award, Stock Payment award
and/or Restricted Stock Unit award shall be set by the Administrator in its
discretion.
8.8. Exercise
or Purchase Price. The Administrator may
establish the exercise or purchase price of a Performance Award, shares of
Deferred Stock, shares distributed as a Stock Payment award or shares
distributed pursuant to a
Restricted Stock
Unit award; provided,
however, that
such price shall not be less than the par value of a share of Common Stock,
unless otherwise permitted by applicable state
law.
14
8.9. Exercise
upon Termination of Employment, Termination of Consultancy or Termination
of Directorship.
A Performance Award, Dividend Equivalent award, Deferred Stock award, Stock
Payment award and/or Restricted Stock Unit award is exercisable or distributable
only while the Holder is an Employee, Consultant or Independent Director,
as applicable;
provided,
however, that
the Administrator in its sole and absolute discretion may provide that the
Performance Award, Dividend Equivalent award, Deferred Stock award, Stock
Payment award and/or Restricted Stock Unit award may be exercised or
distributed
subsequent to a Termination of Employment, Termination of Directorship or
Termination of Consultancy following a "change of control or ownership" (within
the meaning of Section 1.162-27(e)(2)(v) or any successor regulation
thereto) of the Company; and, provided,
further, that,
except with respect to Performance Awards granted to Section 162(m)
Participants, the Administrator in its sole and absolute discretion may provide
that Performance Awards may be exercised or paid following a Termination
of Employment,
Termination of Directorship or Termination of Consultancy without cause, or
following a Change in Control, or because of the Holder's retirement, death or
disability, or otherwise.
8.10. Form
of Payment.
Payment of the amount determined under Section 8.2 or 8.3
above shall be in cash, in Common Stock or a combination of both, as determined
by the Administrator. To the extent any payment under this Article VIII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of
Section 6.3.
ARTICLE IX.
STOCK APPRECIATION
RIGHTS
9.1. Grant
of Stock Appreciation Rights. A Stock Appreciation Right
may be granted to any key Employee, Independent Director or Consultant selected
by the Administrator. A Stock Appreciation Right may be granted:
(a) in connection and simultaneously with the grant of an Option,
(b) with respect to a previously granted Option, or (c) independent of
an Option. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the
Administrator shall impose and shall be evidenced by an Award
Agreement.
9.2. Coupled
Stock Appreciation Rights.
(a) A Coupled Stock
Appreciation Right ("CSAR") shall be related to a
particular Option and shall be exercisable only when and to
the extent the related Option is exercisable.
(b) A CSAR may be
granted to the Holder for no more than the number of shares subject to the
simultaneously or previously granted Option to which it is
coupled.
(c) A CSAR shall entitle the Holder
(or other person entitled to exercise the Option pursuant to the Plan) to
surrender to the Company unexercised a portion of the Option to which the CSAR
relates (to the extent then exercisable pursuant to its terms) and to
receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares
of Common Stock with respect
to which the CSAR shall have been exercised, subject to any limitations the
Administrator may impose.
9.3. Independent
Stock Appreciation Rights.
(a) An
Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any
Option and shall have a term set by the Administrator. An ISAR shall be
exercisable in such installments as the Administrator may determine. An ISAR
shall cover such number of shares of Common Stock as the Administrator may
determine; provided,
however, that
unless the Administrator otherwise provides in the terms of the ISAR or
otherwise, no ISAR granted to a person subject to Section 16 of the
Exchange Act shall be exercisable until at least six months have elapsed
following the date on which the Option was
granted. The exercise price per share of
Common Stock subject to each ISAR shall be set by the Administrator;
provided, that such
exercise price per share shall not be less than 100% of the Fair Market Value of
a share of Common Stock on the date the ISAR
is granted. An ISAR is exercisable only while the Holder is an Employee,
Independent Director or Consultant; provided, that the
Administrator may determine that the ISAR may be exercised subsequent to
Termination of Employment, Termination of Directorship
or Termination of Consultancy without cause, or following a Change in Control of
the Company, or because of the Holder's retirement, death or disability, or
otherwise.
(b) An ISAR shall
entitle the Holder (or other person entitled to exercise the ISAR pursuant to the
Plan) to exercise all or a specified portion of the ISAR (to the extent then
exercisable pursuant to its terms) and to receive from the Company an amount
determined by multiplying (i) the difference obtained by subtracting
the exercise price per share of
the ISAR from the Fair Market Value of a share of Common Stock on the date of
exercise of the ISAR by (ii) the number of shares of Common Stock with
respect to which the ISAR shall have been exercised, subject to any
limitations the Administrator may
impose.
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9.4. Payment
and Limitations on Exercise.
(a) Payment of the
amounts determined under Section 9.2(c) and 9.3(b) above shall be in shares
of Common Stock (based on its Fair Market Value as of the date the Stock
Appreciation
Right is exercised). The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock issuable upon the exercise of
any Stock Appreciation Right prior to fulfillment of the conditions set forth in
Section 6.3
above.
(b) Holders of Stock
Appreciation Rights may be required to comply with any timing or other
restrictions with respect to the settlement or exercise of a Stock Appreciation
Right, including a window-period limitation, as may be imposed in the discretion of the
Administrator.
ARTICLE X.
COMPLIANCE WITH
SECTION 409A OF THE CODE
10.1. Awards
subject to Code Section 409A. Any Award that constitutes,
or provides for, a deferral of compensation subject to Section 409A of the
Code (a "Section 409A
Award") shall
satisfy the requirements of Section 409A of the Code and this
Article X, to the extent applicable. The Award Agreement with respect to a
Section 409A Award shall incorporate the terms and conditions required by
Section 409A of the Code and this
Article X.
10.2. Distributions
under a Section 409A Award.
(a) Subject to
subsection (b), any shares of Common Stock or other property or amounts to
be paid or distributed upon the grant, issuance, vesting, exercise or payment of
a Section 409A Award shall
be distributed in accordance with the requirements of Section 409A(a)(2) of
the Code, and shall not be distributed earlier than:
(i) the Holder's separation from
service, as determined by the Secretary of the Treasury,
(ii) the date the Holder becomes
disabled,
(iii) the Holder's
death,
(iv) a specified time (or pursuant
to a fixed schedule) specified under the Award Agreement at the date of the
deferral compensation,
(v) to the extent provided by the Secretary of the
Treasury, a change in the ownership or effective control of the Company or a
Subsidiary, or in the ownership of a substantial portion of the assets of the
Company or a Subsidiary, or
(vi) the occurrence of
an unforeseeable emergency
with respect to the Holder.
(b) In the case of a
Holder who is a specified employee, the requirement of paragraph (a)(i)
shall be met only if the distributions with respect to the Section 409A
Award may not be made before the date which is six months
after the Holder's separation from service (or, if earlier, the date of the
Holder's death). For purposes of this subsection (b), a Holder shall be a
specified employee if such Holder is a key employee (as defined in
Section 416(i) of the Code without regard
to paragraph (5) thereof) of a corporation any stock of which is
publicly traded on an established securities market or otherwise, as determined
under Section 409A(a)(2)(B)(i) of the Code and the Treasury Regulations
thereunder.
(c) The requirement of
paragraph (a)(vi) shall be met only if, as determined under Treasury
Regulations under Section 409A(a)(2)(B)(ii) of the Code, the amounts
distributed with respect to the unforeseeable emergency do not exceed the
amounts necessary to satisfy such
unforeseeable emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into account the
extent to which such unforeseeable emergency is or may be relieved through
reimbursement or compensation by insurance
or otherwise or by liquidation of the Holder's assets (to the extent the
liquidation of such assets would not itself cause severe financial
hardship).
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(d) For purposes of
this Section, the terms specified therein shall have the respective meanings
ascribed thereto under Section 409A of the Code and the Treasury
Regulations thereunder.
10.3. Prohibition
on Acceleration of Benefits. The time or schedule of any
distribution or payment of any shares of Common Stock or other property or amounts
under a Section 409A Award shall not be accelerated, except as otherwise
permitted under Section 409A(a)(3) of the Code and the Treasury Regulations
thereunder.
10.4. Elections
under Section 409A Awards.
(a) Any
deferral
election provided under or with respect to an Award to any Employee, Independent
Director or Consultant, or to the Holder of a Section 409A Award, shall
satisfy the requirements of Section 409A(a)(4)(B) of the Code, to the
extent applicable, and, except as otherwise permitted under
paragraph (i) or (ii), any such deferral election with respect to
compensation for services performed during a taxable year shall be made not
later than the close of the preceding taxable year, or at such other time as
provided in Treasury
Regulations.
(i) In the case of the first year
in which an Employee, Independent Director or Consultant, or the Holder, becomes
eligible to participate in the Plan, any such deferral election may be made with
respect to services to be
performed subsequent to the election within thirty (30) days after the date
the Employee, Independent Director or Consultant, or the Holder, becomes
eligible to participate in the Plan, as provided under
Section 409A(a)(4)(B)(ii) of the Code.
(ii) In the case of any
performance-based compensation based on services performed by an Employee,
Independent Director or Consultant, or the Holder, over a period of at least
twelve (12) months, any such deferral election may be made no later than
six months before the end of the period, as
provided under Section 409A(a)(4)(B)(iii) of the Code.
(b) In the event that a
Section 409A Award permits, under a subsequent election by the Holder of
such Section 409A Award, a delay in a distribution or payment of any shares of Common
Stock or other property or amounts under such Section 409A Award, or a
change in the form of distribution or payment, such subsequent election shall
satisfy the requirements of Section 409A(a)(4)(C) of the Code,
and:
(i) such subsequent election may not take
effect until at least twelve (12) months after the date on which the
election is made,
(ii) in the case such subsequent
election relates to a distribution or payment not described in
Section 10.2(a)(ii), (iii) or (vi), the first payment with
respect to such election may be deferred for a period of not less than five
years from the date such distribution or payment otherwise would have been
made, and
(iii) in the case such subsequent
election relates to a
distribution or payment described in Section 10.2(a)(iv), such election may
not be made less than twelve (12) months prior to the date of the first
scheduled distribution or payment under
Section 10.2(a)(iv).
10.5. Compliance
in Form and Operation. A Section 409A Award,
and any election under or with respect to such Section 409A Award, shall
comply in form and operation with the requirements of Section 409A of the
Code and the Treasury Regulations thereunder.
ARTICLE XI.
ADMINISTRATION
11.1. Compensation
Committee. The
Compensation Committee (or another committee or a subcommittee of the Board
assuming the functions of the Committee under the Plan) shall consist solely of
two or more Independent Directors appointed by and holding office at
the pleasure of
the Board, each of whom is intended to qualify as both a "non-employee director"
as defined by Rule 16b-3 and an "outside director" for purposes of
Section 162(m) of the Code. Appointment of Committee members shall be
effective upon acceptance of appointment. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee may be filled by the
Board.
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11.2. Duties
and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of the
Plan in accordance with its provisions. The Committee shall have the power to
interpret the Plan and the Award Agreements, and to adopt such rules for the
administration, interpretation and application of the Plan as are
consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such grant
or award under the Plan need not
be the same with respect to each Holder. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code. In its absolute discretion, the Board
may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan
except with respect to matters which under Rule 16b-3 or
Section 162(m) of the Code, or any regulations or rules issued thereunder,
are required to be determined in the sole
discretion of the Committee. Notwithstanding the foregoing, the full Board,
acting by a majority of its members in office, shall conduct the general
administration of the Plan with respect to Awards granted to Independent
Directors.
11.3. Majority
Rule; Unanimous Written Consent. The Committee shall act by
a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.
11.4. Compensation;
Professional Assistance; Good Faith Actions. Members of the Committee
shall receive such compensation, if any, for their services as members as may be
determined by the Board. All expenses and liabilities which members of the
Committee incur
in connection with the administration of the Plan shall be borne by the Company.
The Committee may, with the approval of the Board, employ attorneys,
consultants, accountants, appraisers, brokers or other persons. The Committee,
the Company and the Company's officers and
Directors shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee or the Board in good faith shall be final and
binding upon all Holders, the Company
and all other interested persons. No members of the Committee or Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or Awards, and all members of the Committee and the Board shall
be fully protected by the Company in respect of any such action, determination
or interpretation.
11.5. Delegation
of Authority to Grant Awards. The Committee may, but need
not, delegate from time to time some or all of its authority to grant Awards
under the Plan to a committee consisting of one or more members of the Committee
or of one or more officers of the Company; provided, however, that the Committee may not
delegate its authority to grant Awards to individuals: (a) who are subject on the date
of the grant to the reporting rules under Section 16(a) of the Exchange
Act, (b) who are Section 162(m) Participants, or (c) who are
officers of the Company who are delegated authority by the Committee hereunder.
Any delegation hereunder shall be subject
to the restrictions and limits that the Committee specifies at the time of such
delegation of authority and may be rescinded at any time by the Committee. At
all times, any committee appointed under this Section 11.5 shall
serve in such capacity at the
pleasure of the Committee.
ARTICLE XII.
MISCELLANEOUS
PROVISIONS
12.1. Transferability
of Awards.
(a) Except as otherwise
provided in Section 12.1(b):
(i) No Award under the Plan may be
sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution or, subject to the consent of the Administrator, pursuant to a DRO,
unless and until such Award has been exercised, or the shares underlying such
Award have been issued, and all restrictions applicable to
such shares have lapsed;
(ii) No Option, Restricted Stock
award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent award, Stock Payment award or Restricted Stock Unit
award or interest or right
therein shall be liable for the debts, contracts or engagements of the Holder or
his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to the extent that
such disposition is permitted by the preceding
sentence; and
18
(iii) During the lifetime of the
Holder, only the Holder may exercise an Option or other Award (or any portion
thereof) granted to him under the Plan, unless it has been disposed of
pursuant to a DRO; after the death of the Holder, any exercisable portion of an
Option or other Award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Award Agreement, be
exercised by his personal representative or
by any person empowered to do so under the deceased Holder's will or under the
then applicable laws of descent and distribution.
(b) Notwithstanding
Section 12.1(a), the Administrator, in its sole discretion, may determine to permit a Holder
to transfer a Non-Qualified Stock Option to any one or more Permitted
Transferees (as defined below), subject to the following terms and conditions:
(i) a Non-Qualified Stock Option transferred to a Permitted Transferee
shall not be assignable or
transferable by the Permitted Transferee other than by will or the laws of
descent and distribution; (ii) any Non-Qualified Stock Option which is
transferred to a Permitted Transferee shall continue to be subject to all the
terms and conditions of the
Non-Qualified Stock Option as applicable to the original Holder (other than the
ability to further transfer the Non-Qualified Stock Option); and (iii) the
Holder and the Permitted Transferee shall execute any and all documents
requested by the Administrator,
including, without limitation documents to (A) confirm the status of the
transferee as a Permitted Transferee, (B) satisfy any requirements for an
exemption for the transfer under applicable federal and state securities laws
and (C) evidence the transfer. For
purposes of this Section 12.1(b), "Permitted
Transferee"
shall mean, with respect to a Holder, any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the Holder's household (other than a tenant or
employee), a trust in which these persons (or the Holder) control the management
of assets, and any other entity in
which these persons (or the Holder) own more than fifty percent of the voting
interests, or any other transferee specifically approved by the Administrator
after taking into account any state or federal tax or securities
laws applicable to transferable
Non-Qualified Stock Options.
12.2. Amendment,
Suspension or Termination of the Plan. Except as otherwise
provided in this Section 12.2, the Plan may be wholly or partially amended
or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator. However, without approval of the Company's
stockholders given within twelve (12) months before or after the action by
the Administrator, no action of the Administrator may, except as provided in
Section 12.3,
(i) increase the limits imposed in Section 2.1 on the maximum number
of shares which may be issued under the Plan, (ii) expand the classes of
persons to whom Awards may be granted under the Plan, or (iii) decrease the
exercise price of any outstanding Option or Stock
Appreciation Right granted under the Plan. No amendment, suspension or
termination of the Plan shall, without the consent of the Holder, alter or
impair any rights or obligations under any Award theretofore granted or awarded,
unless the Award itself otherwise
expressly so provides. No Awards may be granted or awarded during any period of
suspension or after termination of the Plan, and in no event may any Award be
granted under the Plan after the first to occur of the following events:
(a) The expiration of ten
(10) years from the date the Plan is adopted by the
Board; or
(b) The expiration of ten
(10) years from the date the Plan is approved by the Company's stockholders
under Section 12.4.
12.3. Changes
in
Common Stock or Assets of the Company, Acquisition or Liquidation of the Company
and Other
Corporate Events.
(a) Subject to
Section 12.3(e), in the event that the Administrator determines that any
dividend or other distribution (whether in the form of cash, Common Stock, other
securities or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate
transaction or event, in the Administrator's sole discretion, affects the Common
Stock such that an adjustment is determined by the Administrator to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be
made available under the Plan or with respect to an Award, then the
Administrator shall, in such manner as it may deem equitable, adjust any or all
of:
19
(i) The number and kind of shares
of Common Stock (or other securities or property) with respect to which
Awards may be granted or awarded (including, but not limited to, adjustments of
the limitations in Section 2.1 on the maximum number and kind of shares
which may be issued under the Plan, and the maximum number and kind of shares which may be granted or
issued as Restricted Stock awards, Restricted Stock Unit awards, Performance
Awards, Dividend Equivalent awards, Deferred Stock awards or Stock Payment
awards, and adjustments of the Award Limit);
(ii) The number and kind of shares of Common
Stock (or other securities or property) subject to outstanding
Awards;
(iii) The number and kind of
shares of Common Stock (or other securities or property) for which automatic
grants are subsequently to be made to new and continuing Independent
Directors pursuant to Section 4.6(a); and
(iv) The grant or exercise price
with respect to any Award.
(b) Subject to
Sections 12.3(c) and 12.3(e), in the event of any transaction or event
described in Section 12.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations or accounting
principles, the Administrator, in its sole
and absolute discretion, and on such terms and conditions as it deems
appropriate, either by the terms of the Award or by action taken prior to the
occurrence of such transaction or event and either automatically or upon the
Holder's request, is hereby
authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or
with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or
principles:
(i) To provide for either the
purchase of any such Award for an amount of cash equal to the amount
that could have been attained upon the exercise of such Award or realization of
the Holder's rights had such Award been currently exercisable
or payable or fully vested or the replacement of such Award with other
rights or property
selected by the Administrator in its sole discretion;
(ii) To provide that the Award
cannot vest, be exercised or become payable after such
event;
(iii) To provide that such Award
shall be exercisable as to all shares covered thereby, notwithstanding
anything to the contrary in Section 5.3 or the provisions of such
Award;
(iv) To provide that such Award be
assumed by the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options, rights or
awards covering the stock of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices;
(v) To make adjustments
in the number and type of
shares of Common Stock (or other securities or property) subject to outstanding
Awards, and/or in the terms and conditions of (including the grant, exercise or
purchase price), and the criteria included in, outstanding options,
rights and awards and options, rights and
awards which may be granted in the future; and
(vi) To provide that, for a
specified period of time prior to such event, the restrictions imposed under an
Award Agreement upon some or all shares of Restricted Stock, Restricted Stock Units or
Deferred Stock may be terminated, and, in the case of Restricted Stock, some or
all shares of such Restricted Stock may cease to be subject to repurchase under
Section 7.5 or forfeiture under Section 7.4 after such
event.
20
(c) Notwithstanding any
other provision of the Plan, in the event of a Change in Control, each
outstanding Award shall be assumed or an equivalent Award substituted by the
successor corporation or a parent or subsidiary of the successor
corporation. In
the event that the successor corporation refuses to assume or substitute for the
Award, the Committee may cause any or all of such Awards to become fully
exercisable immediately prior to the consummation of such transaction and all
forfeiture restrictions on any or all of such
Awards to lapse. If an Award is exercisable in lieu of assumption or
substitution in the event of a Change in Control, the Administrator shall notify
the Participant that the Award shall be fully exercisable for a period of
fifteen (15) days from the
date of such notice, and the Award shall terminate upon the expiration of such
period. For the purposes of this Section 12.3(c), an Award shall be
considered assumed if, following the Change in Control, the Award confers the
right to purchase or receive, for each
share of Common Stock subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) received in the Change in Control by holders of Common Stock for
each share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares); provided, however, that if such consideration
received in the
Change in Control was not solely common stock of the successor corporation or
its parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Award, for each share of Common Stock subject
to an Award, to be solely common stock of the successor corporation or its
parent equal in fair market value to the per share consideration received by
holders of Common Stock in the Change in Control.
(d) Subject to
Sections 12.3(e), 3.2 and
3.3, the Administrator may, in its discretion, include such further provisions
and limitations in any Award, agreement or certificate, as it may deem equitable
and in the best interests of the Company.
(e) With respect to Awards which are
granted to Section 162(m) Participants and are intended to qualify as
performance-based compensation under Section 162(m)(4)(C), no adjustment or
action described in this Section 12.3 or in any other provision of the Plan
shall be authorized to the extent
that such adjustment or action would cause such Award to fail to so qualify
under Section 162(m)(4)(C), or any successor provisions thereto. No
adjustment or action described in this Section 12.3 or in any other
provision of the Plan shall be authorized to
the extent that such adjustment or action would cause the Plan to violate
Section 422(b)(1) of the Code. Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result in
short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3
unless the Administrator determines that the Award is not to comply
with such
exemptive conditions. The number of shares of Common Stock subject to any Award
shall always be rounded to the next
whole number.
(f) The existence of
the Plan, the Award Agreement and the Awards granted hereunder shall not affect
or restrict in any way the right or power of the Company or the stockholders of
the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of stock or of
options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks
whose rights are superior to or affect the Common Stock or the rights thereof or
which are convertible into or exchangeable for Common Stock, or the dissolution
or liquidation of the company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(g) No action shall be
taken under this Section 12.3 which shall cause an Award to fail to comply
with Section 409A of the Code or the Treasury Regulations
thereunder, to the extent applicable to such Award.
12.4. Approval
of Plan by Stockholders. The Plan will be submitted
for the approval of the Company's stockholders within twelve (12) months
after the date of the Board's initial adoption of the Plan.
No Awards may be granted or awarded prior to such stockholder approval. In
addition, if the Board determines that Awards other than Options or Stock
Appreciation Rights which may be granted to Section 162(m) Participants
should continue to be eligible to
qualify as performance-based compensation under Section 162(m)(4)(C) of the
Code, the Performance Criteria must be disclosed to and approved by the
Company's stockholders no later than the first stockholder meeting that
occurs in the fifth year following
the year in which the Company's stockholders previously approved the Plan, as
amended and restated to include the Performance
Criteria.
21
12.5. Tax
Withholding. The
Company or any Subsidiary shall have the authority and the right to deduct or withhold,
or require a Holder to remit to the Company, an amount sufficient to satisfy
federal, state, local and foreign taxes (including the Holder's FICA obligation)
required by law to be withheld with respect to any taxable event concerning a Holder arising as a
result of this Plan. The Administrator may in its discretion and in satisfaction
of the foregoing requirement allow a Holder to elect to have the Company
withhold shares of Common Stock otherwise issuable under an Award (or
allow the return of shares of
Common Stock) having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the number of shares
of Common Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any
Award (or which may be repurchased from the Holder of such Award within six
months (or such other period as may be determined by the Administrator) after
such shares of Common Stock were acquired by the Holder from the
Company) in order to satisfy the
Holder's federal, state, local and foreign income and payroll tax liabilities
with respect to the issuance, vesting, exercise or payment of the Award shall be
limited to the number of shares which have a Fair Market Value on the
date of withholding or
repurchase equal to the aggregate amount of such liabilities based on the
minimum statutory withholding rates for federal, state, local and foreign income
tax and payroll tax purposes that are applicable to such supplemental taxable
income.
12.6. Prohibition
on Repricing.
Subject to Section 12.3, the Administrator shall not, without the approval
of the stockholders of the Company authorize the amendment of any outstanding
Award to reduce its price per share. Furthermore, no Award shall be canceled and
replaced with the grant of an Award having a lesser price per share without the
further approval of stockholders of the Company.
12.7. Forfeiture
Provisions.
Pursuant to its general authority to determine the terms and
conditions
applicable to Awards under the Plan, the Administrator shall have the right to
provide, in the terms of Awards made under the Plan, or to require a Holder to
agree by separate written instrument, that: (a)(i) any proceeds, gains or other
economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the
receipt or resale of any Common Stock underlying the Award, must be paid to the
Company, and (ii) the Award shall terminate and any unexercised
portion of the Award (whether or
not vested) shall be forfeited, if (b)(i) a Termination of Employment,
Termination of Directorship or Termination of Consultancy occurs prior to a
specified date, or within a specified time period following receipt or exercise
of the Award, or (ii) the
Holder at any time, or during a specified time period, engages in any activity
in competition with the Company, or which is inimical, contrary or harmful to
the interests of the Company, as further defined by the Administrator or
(iii) the Holder incurs a
Termination of Employment, Termination of Directorship or Termination of
Consultancy for "cause" (as such term is defined in the sole and absolute
discretion of the Committee, or as set forth in a written agreement relating to
such Award between the Company
and the Holder).
12.8. Effect
of Plan upon Options and Compensation Plans. The adoption of the Plan
shall not affect any other compensation or incentive plans in effect for the
Company or any Subsidiary. Nothing in the Plan shall be construed to limit
the right of the Company: (a) to establish any other forms of incentives or
compensation for Employees, Directors or Consultants of the Company or any
Subsidiary, or (b) to grant or assume options or other rights or awards
otherwise than under the Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any
corporation, partnership, limited liability company, firm or
association.
12.9. Compliance
with Laws. The
Plan, the granting and vesting of Awards under the Plan and the issuance and
delivery of shares of Common Stock and the payment of money under the
Plan or under Awards granted or awarded hereunder are subject to compliance with
all applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under the Plan shall be subject to such
restrictions, and the person
acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal requirements.
To the extent permitted by
applicable law, the Plan and Awards granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and
regulations.
12.10. Titles. Titles are provided herein
for convenience only and are not to serve as a basis
for interpretation or construction of the Plan.
12.11. Governing
Law. The Plan
and any agreements hereunder shall be administered, interpreted and enforced
under the internal laws of the State of Delaware without regard to conflicts of laws
thereof.
* * * * *
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