Attached files
Exhibit 10.4
AZURRX BIOPHARMA, INC. 2020 OMNIBUS
EQUITY INCENTIVE PLAN
(AS AMENDED AND RESTATED THROUGH AUGUST 11, 2020)
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AZURRX BIOPHARMA, INC. 2020 OMNIBUS EQUITY
INCENTIVE
PLAN
(AS AMENDED AND RESTATED THROUGH AUGUST 11, 2020)
ARTICLE I
PURPOSE
The
purpose of this AzurRx BioPharma, Inc. 2020 Omnibus Equity
Incentive Plan as amended and restated (the “Plan”) is to benefit
AzurRx BioPharma, Inc., a Delaware corporation (the
“Company”) and its
shareholders, by assisting the Company and its subsidiaries to
attract, retain and provide incentives to key management employees,
officers, directors, and consultants of the Company and its
Affiliates, and to align the interests of such service providers
with those of the Company’s shareholders. Accordingly, the
Plan provides for the granting of Non-qualified Stock Options,
Incentive Stock Options, Restricted Stock Awards, Restricted Stock
Unit Awards, Stock Appreciation Rights, Performance Stock Awards,
Performance Unit Awards, Unrestricted Stock Awards, Dividend
Equivalent Rights, Incentive Bonus Awards, Other Cash-Based Awards
and Other Stock-Based Awards or any combination of the
foregoing.
ARTICLE II
DEFINITIONS
The
following definitions shall be applicable throughout the Plan
unless the context otherwise requires:
2.1 “Affiliate” shall mean any
corporation which, with respect to the Company, is a
“subsidiary corporation” within the meaning of Section
424(f) of the Code or other entity in which the Company has a
controlling interest in such entity or another entity which is part
of a chain of entities in which the Company or each entity has a
controlling interest in another entity in the unbroken chain of
entities ending with the applicable entity.
2.2 “Award” shall mean,
individually or collectively, any Option, Restricted Stock Award,
Restricted Stock Unit Award, Performance Stock Award, Performance
Unit Award, Stock Appreciation Right, Dividend Equivalent Right,
Incentive Bonus Award, Other Cash-Based Award and Other Stock-Based
Award or Unrestricted Stock Award.
2.3 “Award Agreement” shall mean a
written agreement between the Company and the Holder with respect
to an Award, setting forth the terms and conditions of the Award,
as amended.
2.4 “Board” shall mean the
Board of Directors of the Company.
2.5 “Base Value” shall have
the meaning given to such term in Section 14.2.
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2.6 “Cause” shall mean (i) if
the Holder is a party to an employment or service agreement with
the Company or an Affiliate which agreement defines
“Cause” (or a similar term), “Cause” shall have the
same meaning as provided for in such agreement, or (ii) for a
Holder who is not a party to such an agreement, “Cause” shall mean
termination by the Company or an Affiliate of the employment (or
other service relationship) of the Holder by reason of the
Holder’s (A) intentional failure to perform reasonably
assigned duties, (B) dishonesty or willful misconduct in the
performance of the Holder’s duties, (C) involvement in a
transaction which is materially adverse to the Company or an
Affiliate, (D) breach of fiduciary duty involving personal profit,
(E) willful violation of any law, rule, regulation or court order
(other than misdemeanor traffic violations and misdemeanors not
involving misuse or misappropriation of money or property), (F)
commission of an act of fraud or intentional misappropriation or
conversion of any asset or opportunity of the Company or an
Affiliate, (G) conviction of, or the entry of a plea of guilty or
no contest to, a felony or any other crime that causes the Company
or an Affiliates public disgrace or disrepute, or materially and
adversely affects the Company’s or an Affiliates’
operations or financial performance or the relationship the Company
has with its customer, (H) any breach of any obligation or duty to
the Company or any of its Affiliates (whether arising by statute,
common law or agreement) relating to confidentiality,
noncompetition, nonsolicitation or proprietary rights, or (I)
material breach of any provision of the Plan or the Holder’s
Award Agreement or any other written agreement between the Holder
and the Company or an Affiliate, in each case as determined in good
faith by the Board, the determination of which shall be final,
conclusive and binding on all parties.
2.7 “Change of Control” shall mean:
the satisfaction of any one or more of the following conditions
(and the “Change of Control” shall be deemed to have
occurred as of the first day that any one or more of the following
conditions shall have been satisfied):
(a) Any person (as such
term is used in paragraphs 13(d) and 14(d)(2) of the Exchange Act,
hereinafter in this definition, “Person”), other than the
Company or an Affiliate or an employee benefit plan of the Company
or an Affiliate, becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then
outstanding securities;
(b) The closing of a
merger, consolidation or other business combination (a
“Business
Combination”) other than a Business Combination in
which holders of the Shares immediately prior to the Business
Combination have substantially the same proportionate ownership of
the common stock or ordinary shares, as applicable, of the
surviving corporation immediately after the Business Combination as
immediately before;
(c) The closing of an
agreement for the sale or disposition of all or substantially all
(50% or more) of the Company’s assets to any entity that is
not an Affiliate;
(d) The approval by the
holders of Shares of a plan of complete liquidation of the Company,
other than a merger of the Company into any subsidiary or a
liquidation as a result of which persons who were shareholders of
the Company immediately prior to such liquidation have
substantially the same proportionate ownership of shares of common
stock or ordinary shares, as applicable, of the surviving
corporation immediately after such liquidation as immediately
before; or
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(e) Within any
twenty-four (24) month period, the Incumbent Directors shall cease
to constitute at least a majority of the Board or the board of
directors of any successor to the Company; provided, however, that any director
elected to the Board, or nominated for election, by a majority of
the Incumbent Directors then still in office, shall be deemed to be
an Incumbent Director for purposes of this paragraph (e), but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either 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 an individual, entity or
“group” other than the Board (including, but not
limited to, any such assumption that results from paragraphs (a),
(b), (c), or (d) of this definition).
Notwithstanding the
foregoing, no event or condition shall constitute a Change of
Control to the extent that, if it were, a penalty tax would be
imposed under Section 409A of the Code; provided that, in such a
case, the event or condition shall continue to constitute a Change
of Control to the maximum extent possible (e.g., if applicable, in
respect of vesting without an acceleration of distribution) without
causing the imposition of such penalty tax.
2.8 “Code” shall mean the
United States of America Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to any section and
any regulation under such section.
2.9 “Committee” shall mean a
committee comprised of not less than two (2) members of the Board
who are selected by the Board as provided in Section
4.1.
2.10 “Company”
shall have the meaning given to such term in the introductory
paragraph, including any successor thereto.
2.11 “Consultant”
shall mean any non-Employee (individual) advisor to the Company or
an Affiliate who or which has contracted directly with the Company
or an Affiliate to render bona fide consulting or advisory services
thereto.
2.12 “Director”
shall mean a member of the Board or a member of the board of
directors of an Affiliate, in either case, who is not an
Employee.
2.13 “Dividend
Equivalent Right” shall mean an Award
granted under Article XIII of the Plan which entitles the Holder to
receive bookkeeping credits, cash payments and/or Share
distributions equal in amount to the distributions that would have
been made to the Holder had the Holder held a specified number of
Shares during the period the Holder held the Dividend Equivalent
Right.
2.14 “Dividend
Equivalent Right
Award Agreement” shall mean a
written agreement between the Company and a Holder with respect to
a Dividend Equivalent Right Award.
2.15 “Effective
Date” shall mean August 11, 2020.
2.16 “Employee”
shall mean any employee, including any officer, of the Company or
an Affiliate.
2.17 “Exchange
Act” shall mean the Securities Exchange Act of 1934,
as amended.
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2.18 “Fair
Market Value” shall mean, as of any specified date,
the closing sales price of the Shares for such date (or, in the
event that the Shares are not traded on such date, on the
immediately preceding trading date) on the Nasdaq Stock Market or a
domestic or foreign national securities exchange (including
London’s Alternative Investment Market) on which the Shares
may be listed, as reported in The Wall Street Journal or The
Financial Times. If the Shares are not listed on the Nasdaq Stock
Market or on a national securities exchange, but are quoted on the
OTC Bulletin Board or by the National Quotation Bureau, the Fair
Market Value of the Shares shall be the mean of the highest bid and
lowest asked prices per Share for such date. If the Shares are not
quoted or listed as set forth above, Fair Market Value shall be
determined by the Board in good faith by any fair and reasonable
means (which means may be set forth with greater specificity in the
applicable Award Agreement). The Fair Market Value of property
other than Shares shall be determined by the Board in good faith by
any fair and reasonable means consistent with the requirements of
applicable law.
2.19 “Family
Member” of an individual shall mean any child,
stepchild, grandchild, parent, stepparent, 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 of the Holder), a trust
in which such persons have more than fifty percent (50%) of the
beneficial interest, a foundation in which such persons (or the
Holder) control the management of assets, and any other entity in
which such persons (or the Holder) own more than fifty percent
(50%) of the voting interests.
2.20 “Holder”
shall mean an Employee, Director or Consultant who has been granted
an Award or any such individual’s beneficiary, estate or
representative, who has acquired such Award in accordance with the
terms of the Plan, as applicable.
2.21 “Incentive
Bonus Award” means an Award granted under Article XVI
of the Plan.
2.22 “Incentive
Stock Option” shall mean an Option which is intended
by the Committee to constitute an “incentive stock
option” and conforms to the applicable provisions of Section
422 of the Code.
2.23 “Incumbent
Director” shall mean, with respect to any period of
time specified under the Plan for purposes of determining whether
or not a Change of Control has occurred, the individuals who were
members of the Board at the beginning of such period.
2.24 “Non-qualified
Stock Option” shall mean an Option which is not an
Incentive Stock Option or which is designated as an Incentive Stock
Option but does not meet the applicable requirements of Section 422
of the Code.
2.25 “Option”
shall mean an Award granted under Article VII of the Plan of an
option to purchase Shares and shall include both Incentive Stock
Options and Non-qualified Stock Options.
2.26 “Option
Agreement” shall mean a
written agreement between the Company and a Holder with respect to
an Option.
2.27 “Other
Cash-Based Award” means a contractual right granted
under Article XV hereof entitling such Holder to receive a cash
payment at such times, and subject to such conditions, as are set
forth in the Plan and the applicable Other Cash-Based Award
Agreement.
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2.28 “Other
Cash-Based Award Agreement” shall mean a
written agreement between the Company and a Holder with respect to
an Other Cash-Based Award.
2.29 “Other
Stock-Based Award” means a contractual right granted
under Article XV representing a notional unit interest equal in
value to a share of Common Stock to be paid and distributed at such
times, and subject to such conditions as are set forth in the Plan
and the applicable Other Stock-Based Award Agreement.
2.30 “Other
Stock-Based Award Agreement” shall mean a
written agreement between the Company and a Holder with respect to
an Other Stock-Based Award.
2.31 “Performance
Stock Award” or “Performance Stock” shall
mean an Award granted under Article XII of the Plan.
2.32 “Performance
Stock Agreement” shall mean a
written agreement between the Company and a Holder with respect to
a Performance Stock Award.
2.33 “Performance
Unit” shall mean a Unit awarded to a Holder pursuant
to a Performance Unit Award.
2.34 “Performance
Unit Award” shall mean an Award granted under Article
XI of the Plan.
2.35 “Performance
Unit Agreement” shall mean a
written agreement between the Company and a Holder with respect to
a Performance Unit Award.
2.36 “Plan”
shall mean this AzurRx BioPharma, Inc. 2020 Omnibus Equity
Incentive Plan initially adopted on July 23, 2020, as amended and
restated through the Effective Date, and as may be further amended
from time to time, together with each of the Award Agreements
utilized hereunder.
2.37 “Reporting
Person” shall mean an officer, director or greater
than ten percent stockholder of the Company within the meaning of
Rule 16a-2 under the Exchange Act, who is required to file reports
pursuant to Rule 16a-3 under the Exchange Act.
2.38 “Restricted
Stock Award” and “Restricted Stock” shall
mean an Award granted under Article VIII of the Plan of Shares, the
transferability of which by the Holder is subject to
Restrictions.
2.39 “Restricted
Stock Agreement” shall mean a
written agreement between the Company and a Holder with respect to
a Restricted Stock Award.
2.40 “Restricted
Stock Unit Award” and “RSUs” shall refer to an
Award granted under Article X of the Plan under which, upon the
satisfaction of predetermined individual service-related vesting
requirements, a cash payment shall be made to the Holder, based on
the number of Units awarded to the Holder.
2.41 “Restricted
Stock Unit Agreement” shall mean a
written agreement between the Company and a Holder with respect to
a Restricted Stock Award.
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2.42 “Restriction
Period” shall mean the period of time for which Shares
subject to a Restricted Stock Award shall be subject to
Restrictions, as set forth in the applicable Restricted Stock
Agreement.
2.43 “Restrictions”
shall mean the forfeiture, transfer and/or other restrictions
applicable to Shares awarded to an Employee, Director or Consultant
under the Plan pursuant to a Restricted Stock Award and set forth
in a Restricted Stock Agreement.
2.44 “Rule
16b-3” shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act, as such
may be amended from time to time, and any successor rule,
regulation or statute fulfilling the same or a substantially
similar function.
2.45 “Shares”
or “Stock” shall mean the
shares of the Company’s common stock, par value $0.0001 per
share.
2.46 “Stock
Appreciation Right” or
“SAR”
shall mean an Award granted under Article XIV of the Plan of a
right, granted alone or in connection with a related Option, to
receive a payment equal to the increase in value of a specified
number of Shares between the date of Award and the date of
exercise.
2.47 “Stock
Appreciation Right
Agreement” shall mean a
written agreement between the Company and a Holder with respect to
a Stock Appreciation Right.
2.48 “Tandem
Stock Appreciation Right” shall mean a Stock
Appreciation Right granted in connection with a related Option, the
exercise of some or all of which results in termination of the
entitlement to purchase some or all of the Shares under the related
Option, all as set forth in Article XIV.
2.49 “Ten
Percent Shareholder” shall mean an Employee who, at
the time an Option is granted to him or her, owns shares possessing
more than ten percent (10%) of the total combined voting power of
all classes of shares of the Company or of any parent corporation
or subsidiary corporation thereof (both as defined in Section 424
of the Code), within the meaning of Section 422(b)(6) of the
Code.
2.50 “Termination
of Service” shall mean a termination of a
Holder’s employment with, or status as a Director or
Consultant of, the Company or an Affiliate, as applicable, for any
reason, including, without limitation, Total and Permanent
Disability or death, except as provided in Section 6.4. In the
event Termination of Service shall constitute a payment event with
respect to any Award subject to Code Section 409A, Termination of
Service shall only be deemed to occur upon a “separation from
service” as such term is defined under Code Section 409A and
applicable authorities.
2.51 “Total
and Permanent Disability” shall mean an individual
being considered “disabled” within the meaning of Code
Section 409A and Treasury Regulation 1.409A-3(i)(4), as well as any
successor regulation or interpretation.
2.52 “Unit”
shall mean a bookkeeping unit, which represents such monetary
amount as shall be designated by the Committee in each Performance
Unit Agreement, or represents one Share for purposes of each
Restricted Stock Unit Award.
2.53 “Unrestricted
Stock Award” shall mean an Award granted under Article
IX of the Plan of Shares which are not subject to
Restrictions.
2.54 “Unrestricted
Stock Agreement” shall mean a
written agreement between the Company and a Holder with respect to
an Unrestricted Stock Award.
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ARTICLE III
EFFECTIVE DATE OF
PLAN
The
Plan shall be effective as of the Effective Date.
ARTICLE IV
ADMINISTRATION
4.1 Composition of Committee. The
Plan shall be administered by the Board until such time that the
Committee is appointed by the Board, and shall at all times
thereafter be administered by the Committee. If necessary, in the
Board’s discretion, to comply with Rule 16b-3 under the
Exchange Act, the Committee shall consist solely of three (3) or
more Directors who are each (i) “non- employee
directors” within the meaning of Rule 16b-3
(“Non-Employee
Directors”) and (ii) “independent” for
purposes of any applicable listing requirements; provided, however, that the Board or the
Committee may delegate to a committee of one or more members of the
Board who are not Non-Employee Directors, the authority to grant
Awards to eligible persons who are not then subject to the
requirements of Section 16 of the Exchange Act. If a member of the
Committee shall be eligible to receive an Award under the Plan,
such Committee member shall have no authority hereunder with
respect to his or her own Award. If and to the extent permitted by
law, the Committee may authorize one or more Reporting Persons (or
other officers) to make Awards to Employees, Directors or
Consultants who are not Reporting Persons (or other officers whom
the Committee has specifically authorized to make Awards). Subject
to law and the restrictions set forth in the Plan, the Committee
may delegate administrative functions to individuals who are
Reporting Persons, officers, or employees of the Company.
4.2 Powers. Subject to the
provisions of the Plan, the Committee shall have the sole
authority, in its discretion, to make all determinations under the
Plan, including but not limited to determining which Employees,
Directors or Consultants shall receive an Award, the time or times
when an Award shall be made (the date of grant of an Award shall be
the date on which the Award is awarded by the Committee), what type
of Award shall be granted, the term of an Award, the date or dates
on which an Award vests (including acceleration of vesting), the
form of any payment to be made pursuant to an Award, the terms and
conditions of an Award (including the forfeiture of the Award
(and/or any financial gain) if the Holder of the Award violates any
applicable restrictive covenant thereof), the Restrictions under a
Restricted Stock Award and the number of Shares which may be issued
under an Award, performance goals applicable to any Award and
certification of the achievement of such goals, and the waiver of
any restrictions or performance goals, subject to compliance with
applicable laws, all as may be applicable. In making such
determinations the Committee may take into account the nature of
the services rendered by the respective Employees, Directors and
Consultants, their present and potential contribution to the
Company’s (or the Affiliate’s) success and such other
factors as the Committee in its discretion may deem
relevant.
4.3 Additional Powers. The
Committee shall have such additional powers as are delegated to it
under the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the
Plan and the respective Award Agreements executed hereunder, to
prescribe such rules and regulations relating to the Plan as it may
deem advisable to carry out the intent of the Plan, to determine
the terms, restrictions and provisions of each Award and to make
all other determinations necessary or advisable for administering
the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in any Award Agreement in
the manner and to the extent the Committee shall deem necessary,
appropriate or expedient to carry it into effect. The
determinations of the Committee on the matters referred to in this
Article IV shall be conclusive and binding on the Company and all
Holders.
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4.4 Committee Action. Subject to
compliance with all applicable laws, action by the Committee shall
require the consent of a majority of the members of the Committee,
expressed either orally at a meeting of the Committee or in writing
in the absence of a meeting. No member of the Committee shall have
any liability for any good faith action, inaction or determination
in connection with the Plan.
ARTICLE V
SHARES SUBJECT TO
PLAN AND LIMITATIONS THEREON
5.1 Authorized Shares and Award
Limits. The Committee may from time to time grant Awards to
one or more Employees, Directors and/or Consultants determined by
it to be eligible for participation in the Plan in accordance with
the provisions of Article VI. Subject to Article XVIII, the number
of Shares that may be issued under all Awards granted under the
Plan shall be 10,000,000 (the “Share Reserve”); provided
that, subject to Article XVIII, the Share Reserve (as adjusted as
set forth herein) shall automatically be increased, but not
decreased, on January 1 of each calendar year (beginning January 1,
2021) so as to be equal to ten percent (10%) of the issued and
outstanding shares of the Company’s common stock on December
31 of the preceding calendar year on an as converted basis (the
“As Converted
Shares”). Notwithstanding the foregoing, the Board may
in its discretion, determine that no increase in the Share Reserve
shall be made for any year or determine that a lesser number of
Shares shall be added to the Share Reserve than would otherwise
have been added pursuant to the preceding sentence. For calculation
purposes, the As Converted Shares shall include all shares of the
Company’s outstanding common stock and all shares of the
Company’s common stock issuable upon the conversion of
outstanding preferred stock, warrants and other convertible
securities, but shall not include any shares of common stock
issuable upon the exercise of options and other convertible
securities issued pursuant to the Plan or the Company’s
Amended and Restated 2014 Omnibus Equity Incentive Plan. Subject to
Article XVIII, the maximum number of Shares available for issuance
in respect of Incentive Stock Options is 15,000,000, but in no
event may Incentive Stock Options be granted in excess of the Share
Reserve as the same may be increased in accordance with the
foregoing provisions of this Section. To the extent that an Award
lapses, expires, is canceled, is terminated unexercised or ceases
to be exercisable for any reason, or the rights of its Holder
terminate, any Shares subject to such Award shall again be
available for the grant of a new Award. Shares that otherwise would
have been issued upon the exercise of an Option or Stock
Appreciation Right or in payment with respect to any other form of
Award, that are surrendered in payment or partial payment of the
exercise price thereof and/or taxes withheld with respect to the
exercise thereof or the making of such payment, will no longer be
counted against the foregoing maximum share limitations and may
again be made subject to Awards under the Plan pursuant to such
limitations.
5.2 Individual Holder
Limitations. Subject to adjustment as provided in
Article XVIII, the number of Shares with respect to which Awards
may be granted during any calendar year to any one Director who is
a non-employee director of the Board shall not exceed
250,000.
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ARTICLE VI
ELIGIBILITY AND
TERMINATION OF SERVICE
6.1 Eligibility. Awards made under the
Plan may be granted solely to individuals who, at the time of
grant, are Employees, Directors or Consultants, or any other person
who is determined by the Committee to be a prospective Employee,
Director or Consultant; provided, that the Award for any grant to a
prospective Employee, Director or Consultant will contain
appropriate forfeiture provisions in the event such individual does
not become employed or engaged by the Company. An Award may be
granted on more than one occasion to the same Employee, Director or
Consultant, and, subject to the limitations set forth in the Plan,
such Award may include, a Non-qualified Stock Option, a Restricted
Stock Award, a Restricted Stock Unit Award, an Unrestricted Stock
Award, a Dividend Equivalent Right Award, a Performance Stock
Award, a Performance Unit Award, a Stock Appreciation Right, a
Tandem Stock Appreciation Right, an Incentive Bonus Award, an Other
Cash-Based Award, an Other Stock-Based Award or any combination
thereof, and solely for Employees, an Incentive Stock Option. The
Committee shall determine the terms and conditions of all Awards in
accordance with its authority under Article IV.
6.2 Termination of Service. Except
to the extent inconsistent with the terms of the applicable Award
Agreement and/or the provisions of Sections 6.3 or 6.4, the
following terms and conditions shall apply with respect to a
Holder’s Termination of Service with the Company or an
Affiliate, as applicable:
(i) The Holder’s
rights, if any, to exercise any then exercisable Options and/or
Stock Appreciation Rights shall terminate:
(A) If such termination
is for a reason other than the Holder’s Total and Permanent
Disability or death, ninety (90) days after the date of such
Termination of Service;
(B) If such termination
is on account of the Holder’s Total and Permanent Disability,
one (1) year after the date of such Termination of Service;
or
(C) If such termination
is on account of the Holder’s death, one (1) year after the
date of the Holder’s death.
Upon
such applicable date the Holder (and such Holder’s estate,
designated beneficiary or other legal representative) shall forfeit
any rights or interests in or with respect to any such Options and
Stock Appreciation Rights. Notwithstanding the forgoing, the
Committee, in its sole discretion, may provide for a different time
period in the Award Agreement, or may extend the time period,
following a Termination of Service, during which the Holder has the
right to exercise any vested Non-qualified Stock Option or Stock
Appreciation Right, which time period may not extend beyond the
expiration date of the Award term.
(ii) In
the event of a Holder’s Termination of Service for any reason
prior to the actual or deemed satisfaction and/or lapse of the
Restrictions, vesting requirements, terms and conditions applicable
to a Restricted Stock Award, Incentive Bonus Award, Other
Cash-Based Award, Other Stock-Based Award and/or Restricted Stock
Unit Award, such Award shall immediately be canceled, and the
Holder (and such Holder’s estate, designated beneficiary or
other legal representative) shall forfeit any rights or interests
in and with respect to any such Award. Notwithstanding the
immediately preceding sentence, the Committee, in its sole
discretion, may determine, prior to or within thirty (30) days
after the date of such Termination of Service that all or a portion
of any such Holder’s Award shall not be so canceled and
forfeited.
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6.3 Special Termination Rule.
Except to the extent inconsistent with the terms of the applicable
Award Agreement, and notwithstanding anything to the contrary
contained in this Article VI, if a Holder’s employment with,
or status as a Director of, the Company or an Affiliate shall
terminate, and if, within ninety (90) days of such termination,
such Holder shall become a Consultant, such Holder’s rights
with respect to any Award or portion thereof granted thereto prior
to the date of such termination may be preserved, if and to the
extent determined by the Committee in its sole discretion, as if
such Holder had been a Consultant for the entire period during
which such Award or portion thereof had been outstanding. Should
the Committee effect such determination with respect to such
Holder, for all purposes of the Plan, such Holder shall not be
treated as if his or her employment or Director status had
terminated until such time as his or her Consultant status shall
terminate, in which case his or her Award, as it may have been
reduced in connection with the Holder’s becoming a
Consultant, shall be treated pursuant to the provisions of Section
6.2, provided, however, that any such Award which is intended to be
an Incentive Stock Option shall, upon the Holder’s no longer
being an Employee, automatically convert to a Non- qualified Stock
Option. Should a Holder’s status as a Consultant terminate,
and if, within ninety (90) days of such termination, such Holder
shall become an Employee or a Director, such Holder’s rights
with respect to any Award or portion thereof granted thereto prior
to the date of such termination may be preserved, if and to the
extent determined by the Committee in its sole discretion, as if
such Holder had been an Employee or a Director, as applicable, for
the entire period during which such Award or portion thereof had
been outstanding, and, should the Committee effect such
determination with respect to such Holder, for all purposes of the
Plan, such Holder shall not be treated as if his or her Consultant
status had terminated until such time as his or her employment with
the Company or an Affiliate, or his or her Director status, as
applicable, shall terminate, in which case his or her Award shall
be treated pursuant to the provisions of Section 6.2.
6.4 Termination for Cause.
Notwithstanding anything in this Article VI or elsewhere in the
Plan to the contrary, and unless a Holder’s Award Agreement
specifically provides otherwise, in the event of a Holder’s
Termination for Cause, all of such Holder’s then outstanding
Awards shall expire immediately and be forfeited in their entirety
upon such termination. A Holder may not vest in any Award nor
exercise any Option after such time he or she is notified of the
Company’s intention to termination his/her employment or
service for Cause.
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ARTICLE VII
OPTIONS
7.1 Option Period. The term of each
Option shall be as specified in the Option Agreement; provided, however, that except as set
forth in Section 7.3, no Option shall be exercisable after the
expiration of ten (10) years from the date of its
grant.
7.2 Limitations on Exercise of
Option. An Option shall be exercisable in whole or in such
installments and at such times as specified in the Option
Agreement.
7.3 Special Limitations on Incentive Stock
Options. To the extent that the aggregate Fair Market Value
(determined at the time the respective Incentive Stock Option is
granted) of Shares with respect to which Incentive Stock Options
are exercisable for the first time by an individual during any
calendar year under all plans of the Company and any parent
corporation or subsidiary corporation thereof (both as defined in
Section 424 of the Code) which provide for the grant of Incentive
Stock Options exceeds One Hundred Thousand Dollars ($100,000) (or
such other individual limit as may be in effect under the Code on
the date of grant), the portion of such Incentive Stock Options
that exceeds such threshold shall be treated as Non-qualified Stock
Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other
administrative pronouncements, which of a Holder’s Options,
which were intended by the Committee to be Incentive Stock Options
when granted to the Holder, will not constitute Incentive Stock
Options because of such limitation, and shall notify the Holder of
such determination as soon as practicable after such determination.
No Incentive Stock Option shall be granted to an Employee if, at
the time the Incentive Stock Option is granted, such Employee is a
Ten Percent Shareholder, unless (i) at the time such Incentive
Stock Option is granted the Option price is at least one hundred
ten percent (110%) of the Fair Market Value of the Shares subject
to the Incentive Stock Option, and (ii) such Incentive Stock Option
by its terms is not exercisable after the expiration of five (5)
years from the date of grant. No Incentive Stock Option shall be
granted more than ten (10) years from the earlier of the Effective
Date or date on which the Plan is approved by the Company’s
shareholders. The designation by the Committee of an Option as an
Incentive Stock Option shall not guarantee the Holder that the
Option will satisfy the applicable requirements for
“incentive stock option” status under Section 422 of
the Code. An Incentive Stock Option may only be granted to Employee
who is considered an employee under Treasury Regulation
§1.421-7(h) of the Company.
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7.4 Option Agreement. Each Option shall be
evidenced by an Option Agreement in such form and containing such
provisions not inconsistent with the provisions of the Plan as the
Committee from time to time shall approve, including, but not
limited to, provisions intended to qualify an Option as an
Incentive Stock Option. An Option Agreement may provide for the
payment of the Option price, in whole or in part, by the delivery
of a number of Shares (plus cash if necessary) that have been owned
by the Holder for at least six (6) months and having a Fair Market
Value equal to such Option price, or such other forms or methods as
the Committee may determine from time to time, in each case,
subject to such rules and regulations as may be adopted by the
Committee. Each Option Agreement shall, solely to the extent
inconsistent with the provisions of Sections 6.2, 6.3, and 6.4, as
applicable, specify the effect of Termination of Service on the
exercisability of the Option. The Committee may, in its discretion,
accelerate the vesting of an Option at any time. Moreover, without
limiting the generality of the foregoing, a Non-qualified Stock
Option Agreement may provide for a “cashless exercise”
of the Option, in whole or in part, by (a) establishing procedures
whereby the Holder, by a properly-executed written notice, directs
(i) an immediate market sale or margin loan as to all or a part of
Shares to which he is entitled to receive upon exercise of the
Option, pursuant to an extension of credit by the Company to the
Holder of the Option price, (ii) the delivery of the Shares from
the Company directly to a brokerage firm and (iii) the delivery of
the Option price from sale or margin loan proceeds from the
brokerage firm directly to the Company, or (b) reducing the number
of Shares to be issued upon exercise of the Option by the number of
such Shares having an aggregate Fair Market Value equal to the
Option price (or portion thereof to be so paid) as of the date of
the Option’s exercise. An Option Agreement may also include
provisions relating to: (i) subject to the provisions hereof,
accelerated vesting of Options, including but not limited to, upon
the occurrence of a Change of Control, (ii) tax matters (including
provisions covering any applicable Employee wage withholding
requirements) and (iii) any other matters not inconsistent with the
terms and provisions of the Plan that the Committee shall in its
sole discretion determine. The terms and conditions of the
respective Option Agreements need not be identical.
7.5 Option Price and Payment. The
price at which a Share may be purchased upon the exercise of an
Option shall be determined by the Committee; provided, however, that such
Option’s exercise price (i) shall not be less than the Fair
Market Value of a Share on the date such Option is granted (or 110%
of Fair Market Value for an Incentive Stock Option held by a Ten
Percent Shareholder, as provided in Section 7.3), and (ii) shall be
subject to adjustment as provided in Article XVIII. The Option or
portion thereof may be exercised by delivery of an irrevocable
notice of exercise to the Company. The exercise price for the
Option or portion thereof shall be paid in full in the manner
prescribed by the Committee as set forth in the Plan and the
applicable Option Agreement, which manner, with the consent of the
Committee, may include the withholding of Shares otherwise issuable
in connection with the exercise of the Option. Separate share
certificates shall be issued by the Company for those Shares
acquired pursuant to the exercise of an Incentive Stock Option and
for those Shares acquired pursuant to the exercise of a
Non-qualified Stock Option.
7.6 Shareholder Rights and Privileges. The Holder of an Option
shall be entitled to all the privileges and rights of a shareholder
of the Company solely with respect to such Shares as have been
purchased under the Option and for which share certificates have
been registered in the Holder’s name.
7.7 Options and Rights in Substitution for
Stock or Options Granted by Other Corporations. Options may
be granted under the Plan from time to time in substitution for
stock options held by individuals employed by entities who become
Employees, Directors or Consultants as a result of a merger or
consolidation of the employing entity with the Company or any
Affiliate, or the acquisition by the Company or an Affiliate of the
assets of the employing entity, or the acquisition by the Company
or an Affiliate of stock or shares of the employing entity with the
result that such employing entity becomes an
Affiliate.
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7.8 Disqualifying Dispositions. If
Shares acquired by exercise of an Incentive Stock Option are
disposed of within two (2) years following the date of grant
or one (1) year following the transfer of such shares to the
Holder upon exercise, the Holder shall, promptly following such
disposition, notify the Company in writing of the date and terms of
such disposition and provide such other information regarding the
disposition as the Company may reasonably require.
7.9 Prohibition Against Re-Pricing. Except to the
extent (i) approved in advance by holders of a majority of the
shares of the Company entitled to vote generally in the election of
directors, or (ii) as a result of any Change of Control or any
adjustment as provided in Article XVIII, the Committee shall not
have the power or authority to reduce, whether through amendment or
otherwise, the exercise price under any outstanding Option or Stock
Appreciation Right, or to grant any new Award or make any payment
of cash in substitution for or upon the cancellation of Options
and/or Stock Appreciation Rights previously granted.
ARTICLE VIII
RESTRICTED STOCK
AWARDS
8.1 Award. A Restricted Stock Award
shall constitute an Award of Shares to the Holder as of the date of
the Award which are subject to a “substantial risk of
forfeiture” as defined under Section 83 of the Code during
the specified Restriction Period. At the time a Restricted Stock
Award is made, the Committee shall establish the Restriction Period
applicable to such Award. Each Restricted Stock Award may have a
different Restriction Period, in the discretion of the
Committee.
8.2 Terms and Conditions. At the
time any Award is made under this Article VIII, the Company and the
Holder shall enter into a Restricted Stock Agreement setting forth
each of the matters contemplated thereby and such other matters as
the Committee may determine to be appropriate. Shares awarded
pursuant to a Restricted Stock Award shall be represented by a
share certificate registered in the name of the Holder of such
Restricted Stock Award. If provided for under the Restricted Stock
Agreement, the Holder shall have the right to vote Shares subject
thereto and to enjoy all other shareholder rights, including the
entitlement to receive dividends on the Shares during the
Restriction Period, except that (i) the Holder shall not be
entitled to delivery of the share certificate until the Restriction
Period shall have expired, (ii) the Company shall retain custody of
the share certificate during the Restriction Period (with a share
power endorsed by the Holder in blank), (iii) the Holder may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose
of the Shares during the Restriction Period and (iv) a breach of
the terms and conditions established by the Committee pursuant to
the Restricted Stock Agreement shall cause a forfeiture of the
Restricted Stock Award. At the time of such Award, the Committee
may, in its sole discretion, prescribe additional terms and
conditions or restrictions relating to Restricted Stock Awards,
including, but not limited to, rules pertaining to the effect of
Termination of Service prior to expiration of the Restriction
Period. Such additional terms, conditions or restrictions shall, to
the extent inconsistent with the provisions of Sections 6.2, 6.3
and 6.4, as applicable, be set forth in a Restricted Stock
Agreement made in conjunction with the Award. The Committee may
subject the grant of any Restricted Stock Award to the execution of
a voting agreement with the Company. Such Restricted Stock
Agreement may also include provisions relating to: (i) subject to
the provisions hereof, accelerated vesting of Awards, including but
not limited to accelerated vesting upon the occurrence of a Change
of Control, (ii) tax matters (including provisions covering any
applicable Employee wage withholding requirements) and (iii) any
other matters not inconsistent with the terms and provisions of the
Plan that the Committee shall in its sole discretion determine. The
terms and conditions of the respective Restricted Stock Agreements
need not be identical. All Shares delivered to a Holder as part of
a Restricted Stock Award shall be delivered and reported by the
Company or the Affiliate, as applicable, to the Holder at the time
of vesting. The Committee may, in its discretion, accelerate the
vesting of a Restricted Stock Award.
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8.3 Payment for Restricted Stock. The
Committee shall determine the amount and form of any payment from a
Holder for Shares received pursuant to a Restricted Stock Award, if
any, provided that in the absence of such a determination, a Holder
shall not be required to make any payment for Shares received
pursuant to a Restricted Stock Award, except to the extent
otherwise required by law.
8.4 Section 83(b) Election. If a
Holder makes an election pursuant to Section 83(b) of the Code with
respect to a Restricted Stock Award, the Holder shall file, within
30 days following the date of grant, a copy of such election with
the Company (directed to the Secretary thereof) and with the
Internal Revenue Service, in accordance with the regulations under
Section 83 of the Code. The Committee may provide in an Award
Agreement that the Restricted Stock Award is conditioned upon the
Holder’s making or refraining from making an election with
respect to the Award under Section 83(b) of the Code.
ARTICLE IX
UNRESTRICTED STOCK
AWARDS
9.1 Award. Shares may be awarded
(or sold) to Employees, Directors or Consultants under the Plan
which are not subject to Restrictions of any kind, in consideration
for past services rendered thereby to the Company or an Affiliate
or for other valid consideration.
9.2 Terms and Conditions. At the
time any Award is made under this Article IX, the Company and the
Holder shall enter into an Unrestricted Stock Agreement setting
forth each of the matters contemplated hereby and such other
matters as the Committee may determine to be
appropriate.
9.3 Payment for Unrestricted Stock.
The Committee shall determine the amount and form of any payment
from a Holder for Shares received pursuant to an Unrestricted Stock
Award, if any, provided that in the absence of such a
determination, a Holder shall not be required to make any payment
for Shares received pursuant to an Unrestricted Stock Award, except
to the extent otherwise required by law.
ARTICLE X
RESTRICTED STOCK
UNIT AWARDS
10.1 Award.
A Restricted Stock Unit Award shall constitute a promise to grant
Shares (or cash equal to the Fair Market Value of Shares) to the
Holder at the end of a specified Restriction Period. At the time a
Restricted Stock Unit Award is made, the Committee shall establish
the Restriction Period applicable to such Award. Each Restricted
Stock Unit Award may have a different Restriction Period, in the
discretion of the Committee. A Restricted Stock Unit shall not
constitute an equity interest in the Company and shall not entitle
the Holder to voting rights, dividends or any other rights
associated with ownership of Shares prior to the time the Holder
shall receive a distribution of Shares pursuant to Section
10.3.
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10.2 Terms
and Conditions. At the time any Award is made under this
Article X, the Company and the Holder shall enter into a Restricted
Stock Unit Agreement setting forth each of the matters contemplated
thereby and such other matters as the Committee may determine to be
appropriate. The Restricted Stock Unit Agreement shall set forth
the individual service-based vesting requirement which the Holder
would be required to satisfy before the Holder would become
entitled to distribution pursuant to Section 10.3 and the number of
Units awarded to the Holder. Such conditions shall be sufficient to
constitute a “substantial risk of forfeiture” as such
term is defined under Section 409A of the Code. At the time of such
Award, the Committee may, in its sole discretion, prescribe
additional terms and conditions or restrictions relating to
Restricted Stock Unit Awards in the Restricted Stock Unit
Agreement, including, but not limited to, rules pertaining to the
effect of Termination of Service prior to expiration of the
applicable vesting period. The Committee may, in its discretion,
accelerate the vesting of a Restricted Stock Unit at any time. The
terms and conditions of the respective Restricted Stock Unit
Agreements need not be identical.
ARTICLE XI
PERFORMANCE UNIT
AWARDS
11.1 Award.
A Performance Unit Award shall constitute an Award under which,
upon the satisfaction of predetermined individual and/or Company
(and/or Affiliate) performance goals, a cash payment shall be made
to the Holder, based on the number of Units awarded to the Holder.
Performance Unit Award shall not constitute an equity interest in
the Company and shall not entitle the Holder to voting rights,
dividends or any other rights associated with ownership of
Shares.
11.2 Terms
and Conditions. At the time any Award is made under this
Article XI, the Company and the Holder shall enter into a
Performance Unit Agreement setting forth each of the matters
contemplated thereby and such other matters as the Committee may
determine to be appropriate. The Committee shall set forth in the
applicable Performance Unit Agreement the performance goals which
the Holder and/or the Company would be required to satisfy before
the Holder would become entitled to payment pursuant to Section
11.3, the number of Units awarded to the Holder and the dollar
value or formula assigned to each such Unit. Such payment shall be
subject to a “substantial risk of forfeiture” under
Section 409A of the Code. At the time of such Award, the Committee
may, in its sole discretion, prescribe additional terms and
conditions or restrictions relating to Performance Unit Awards,
including, but not limited to, rules pertaining to the effect of
Termination of Service prior to expiration of the applicable
performance period. The terms and conditions of the respective
Performance Unit Agreements need not be identical.
ARTICLE XII
PERFORMANCE STOCK
AWARDS
12.1 Award.
A Performance Stock Award shall constitute a promise to grant
Shares (or cash equal to the Fair Market Value of Shares) to the
Holder subject to achievement of specified performance goal. The
Committee shall establish the performance goals for the Performance
Stock Award, in its sole discretion. A Performance Stock Award
shall not constitute an equity interest in the Company and shall
not entitle the Holder to voting rights, dividends or any other
rights associated with ownership of Shares unless and until the
Holder shall receive a distribution of Shares pursuant to Section
12.3.
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12.2 Terms
and Conditions. At the time any Award is made under this
Article XII, the Company and the Holder shall enter into a
Performance Stock Agreement setting forth each of the matters
contemplated thereby and such other matters as the Committee may
determine to be appropriate. The Committee shall set forth in the
applicable Performance Stock Agreement the performance goals which
the Holder and/or the Company would be required to satisfy before
the Holder would become entitled to the receipt of Shares pursuant
to such Holder’s Performance Stock Award and the number of
Shares subject to such Performance Stock Award. Such distribution
shall be subject to a “substantial risk of forfeiture”
under Section 409A of the Code. If such performance goals are
achieved, the distribution of Shares (or the payment of cash, as
determined in the sole discretion of the Committee), shall be made
no later than by the fifteenth (15th) day of the third (3rd)
calendar month next following the end of the Company’s fiscal
year to which such goals and objectives relate. At the time of such
Award, the Committee may, in its sole discretion, prescribe
additional terms and conditions or restrictions relating to
Performance Stock Awards, including, but not limited to, rules
pertaining to the effect of the Holder’s Termination of
Service prior to the expiration of the applicable performance
period. The terms and conditions of the respective Performance
Stock Agreements need not be identical.
ARTICLE XIII
DIVIDEND EQUIVALENT
RIGHTS
13.1 Award.
A Dividend Equivalent Right shall entitle the Holder to receive
bookkeeping credits, cash payments and/or Share distributions equal
in amount to the distributions that would have been made to the
Holder had the Holder held a specified number of Shares during the
specified period of the Award.
13.2 Terms
and Conditions. At the time any Award is made under this
Article XIII, the Company and the Holder shall enter into a
Dividend Equivalent Rights Award Agreement setting forth each of
the matters contemplated thereby and such other matters as the
Committee may determine to be appropriate. The Committee shall set
forth in the applicable Dividend Equivalent Rights Award Agreement
the terms and conditions, if any, including whether the Holder is
to receive credits currently in cash, is to have such credits
reinvested (at Fair Market Value determined as of the date of
reinvestment) in additional Shares or is to be entitled to choose
among such alternatives. Such receipt shall be subject to a
“substantial risk of forfeiture” under Section 409A of
the Code and, if such Award becomes vested, the distribution of
such cash or Shares shall be made no later than by the fifteenth
(15th) day of the third (3rd) calendar month next following the end
of the Company’s fiscal year in which the Holder’s
interest in the Award vests. Dividend Equivalent Rights Awards may
be settled in cash or in Shares, as set forth in the applicable
Dividend Equivalent Rights Award Agreement. A Dividend Equivalent
Rights Award may, but need not be, awarded in tandem with another
Award (other than an Option or a SAR), whereby, if so awarded, such
Dividend Equivalent Rights Award shall expire, terminate or be
forfeited by the Holder, as applicable, under the same conditions
as under such other Award.
13.3 Interest
Equivalents. The Dividend Equivalent Rights Award Agreement
for a Dividend Equivalent Rights Award may provide for the
crediting of interest on a Dividend Rights Award to be settled in
cash at a future date (but in no event later than by the fifteenth
(15th) day of the third (3rd) calendar month next following the end
of the Company’s fiscal year in which such interest is
credited and vested), at a rate set forth in the applicable
Dividend Equivalent Rights Award Agreement, on the amount of cash
payable thereunder.
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ARTICLE XIV
STOCK APPRECIATION
RIGHTS
14.1 Award.
A Stock Appreciation Right shall constitute a right, granted alone
or in connection with a related Option, to receive a payment equal
to the increase in value of a specified number of Shares between
the date of Award and the date of exercise.
14.2 Terms
and Conditions. At the time any Award is made under this
Article XIV, the Company and the Holder shall enter into a Stock
Appreciation Right Agreement setting forth each of the matters
contemplated thereby and such other matters as the Committee may
determine to be appropriate. The Committee shall set forth in the
applicable Stock Appreciation Right Agreement the terms and
conditions of the Stock Appreciation Right, including (i) the base
value (the “Base
Value”) for the Stock Appreciation Right, which shall
be not less than the Fair Market Value of an Share on the date of
grant of the Stock Appreciation Right, (ii) the number of Shares
subject to the Stock Appreciation Right, (iii) the period during
which the Stock Appreciation Right may be exercised; provided, however, that no Stock
Appreciation Right shall be exercisable after the expiration of ten
(10) years from the date of its grant, and (iv) any other special
rules and/or requirements which the Committee imposes upon the
Stock Appreciation Right. Upon the exercise of some or all of the
portion of a Stock Appreciation Right, the Holder shall receive a
payment from the Company, in cash or in the form of Shares having
an equivalent Fair Market Value or in a combination of both, as
determined in the sole discretion of the Committee, equal to the
product of:
(a) The excess of (i)
the Fair Market Value of an Share on the date of exercise, over
(ii) the Base Value, multiplied by,
(b) The number of
Shares with respect to which the Stock Appreciation Right is
exercised.
14.3 Tandem
Stock Appreciation Rights. If the Committee grants a
Stock Appreciation Right which is intended to be a Tandem Stock
Appreciation Right, the Tandem Stock Appreciation Right shall be
granted at the same time as the related Option, and the following
special rules shall apply:
(a) The Base Value
shall be equal to or greater than the per Share exercise price
under the related Option;
(b) The Tandem Stock
Appreciation Right may be exercised for all or part of the Shares
which are subject to the related Option, but solely upon the
surrender by the Holder of the Holder’s right to exercise the
equivalent portion of the related Option (and when a Share is
purchased under the related Option, an equivalent portion of the
related Tandem Stock Appreciation Right shall be
canceled);
(c) The Tandem Stock
Appreciation Right shall expire no later than the date of the
expiration of the related Option;
(d) The value of the
payment with respect to the Tandem Stock Appreciation Right may be
no more than one hundred percent (100%) of the difference between
the per Share exercise price under the related Option and the Fair
Market Value of the Shares subject to the related Option at the
time the Tandem Stock Appreciation Right is exercised, multiplied
by the number of the Shares with respect to which the Tandem Stock
Appreciation Right is exercised; and
(e) The Tandem Stock
Appreciation Right may be exercised solely when the Fair Market
Value of the Shares subject to the related Option exceeds the per
Share exercise price under the related Option.
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ARTICLE XV
OTHER CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS
Section 15.1
Other Cash-Based and
Stock-Based Awards. The Committee may grant other types of
equity-based or equity-related Awards not otherwise described by
the terms of this Plan (including the grant or offer for sale of
unrestricted Shares) in such amounts and subject to such terms and
conditions, as the Committee shall determine. Such Awards may
involve the transfer of Shares to a Holder, or payment in cash or
otherwise of amounts based on the value of Shares. In addition, the
Committee, at any time and from time to time, may grant Cash-Based
Awards to a Holder in such amounts and upon such terms as the
Committee shall determine, in its sole discretion.
Section 15.2
Value of Cash-Based Awards
and Other Stock-Based Awards. Each Other Stock-Based Award
shall be expressed in terms of Shares or units based on Shares, as
determined by the Committee, in its sole discretion. Each Other
Cash-Based Award shall specify a payment amount or payment range as
determined by the Committee, in its sole discretion. If the
Committee exercises its discretion to establish performance goals,
the value of Other Cash-Based Awards that shall be paid to the
Holder will depend on the extent to which such performance goals
are met.
Section 15.3
Payment of Cash-Based
Awards and Other Stock-Based Awards. Payment, if any, with
respect to Other Cash-Based Awards and Other Stock-Based Award
shall be made in accordance with the terms of the Award, in cash or
Shares as the Committee determines.
ARTICLE
XVI
INCENTIVE BONUS AWARDS
Section 16.1
Incentive Bonus
Awards. The Committee, at its discretion, may grant
Incentive Bonus Awards to such Employees, Directors or Consultants
as it may designate from time to time. The terms of a
Holder’s Incentive Bonus Award shall be set forth in the
Holder’s Award Agreement. Each Award Agreement shall specify
such general terms and conditions as the Committee shall
determine.
Section 16.2
Incentive Bonus Award
Performance Criteria. The determination of Incentive Bonus
Awards for a given year or years may be based upon the attainment
of specified levels of Company performance as measured by
pre-established, objective performance criteria determined at the
discretion of the Committee. The Committee shall (i) select those
Employees, Directors or Consultants who shall be eligible to
receive an Incentive Bonus Award, (ii) determine the performance
period, (iii) determine target levels of performance, and (iv)
determine the level of Incentive Bonus Award to be paid to each
selected Employee, Director or Consultant upon the achievement of
each performance level. The Committee generally shall make the
foregoing determinations prior to the commencement of services to
which an Incentive Bonus Award relates, to the extent applicable,
and while the outcome of the performance goals and targets is
uncertain.
Section 16.3
Payment of
Incentive Bonus
Awards.
(a)
Incentive Bonus Awards shall be paid in cash or Shares, as set
forth in a Holder’s Award Agreement. Payments shall be made
following a determination by the Committee that the performance
targets were attained and shall be made within two and one-half
months after the later of the end of the fiscal or calendar year in
which the Incentive Award is no longer subject to a substantial
risk of forfeiture.
(b) The
amount of an Incentive Bonus Award to be paid upon the attainment
of each targeted level of performance shall equal a percentage of a
Holder’s base salary for the fiscal year, a fixed dollar
amount, or such other formula, as determined by the
Committee.
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ARTICLE XVII
CHANGE OF CONTROL
Section 17.1
Effect of Change of
Control.
(a) The
Committee may, at the time of the grant of an Award and as set
forth in an Award Agreement, provide for the effect of a
“Change of Control” on an Award. Such provisions may
include any one or more of the following: (i) the acceleration
or extension of time periods for purposes of exercising, vesting
in, or realizing gain from any Award, (ii) the elimination or
modification of performance or other conditions related to the
payment or other rights under an Award, (iii) provision for
the cash settlement of an Award for an equivalent cash value, as
determined by the Committee, or (iv) such other modification
or adjustment to an Award as the Committee deems appropriate to
maintain and protect the rights and interests of Holders upon or
following a Change of Control. To the extent necessary for
compliance with Section 409A of the Code, an Award Agreement
shall provide that an Award subject to the requirements of
Section 409A that would otherwise become payable upon a Change
of Control shall only become payable to the extent that the
requirements for a “change in control” for purposes of
Section 409A have been satisfied.
(b) Notwithstanding
anything to the contrary set forth in the Plan, unless otherwise
provided by an Award Agreement, upon or in anticipation of any
Change of Control, the Committee may, in its sole and absolute
discretion and without the need for the consent of any Holder, take
one or more of the following actions contingent upon the occurrence
of that Change of Control: (i) cause any or all outstanding
Stock Options and Stock Appreciation Rights held by Holders
affected by the Change of Control to become vested and immediately
exercisable, in whole or in part; (ii) cause any or all
outstanding Restricted Stock Awards, Restricted Stock Unit Awards,
Performance Stock Awards, Performance Units Awards, Unrestricted
Stock Awards, Incentive Bonus Award and any other Award held by
Holders affected by the Change of Control to become
non-forfeitable, in whole or in part; (iii) cancel any Stock
Option or Stock Appreciation Right in exchange for a substitute
option in a manner consistent with the requirements of Treasury
Regulation. §1.424-1(a) or §1.409A-1(b)(5)(v)(D), as
applicable (notwithstanding the fact that the original Stock Option
may never have been intended to satisfy the requirements for
treatment as an Incentive Stock Option); (iv) cancel any
Restricted Stock Award, Restricted Stock Units Awards, Performance
Stock Award or Performance Unit Award held by a Holder in exchange
for restricted stock or performance shares of or stock or
performance units in respect of the capital stock of any successor
corporation; (v) redeem any Restricted Stock Award held by a
Holder affected by the Change of Control for cash and/or other
substitute consideration with a value equal to the Fair Market
Value of an unrestricted Share on the date of the Change of
Control; (vi) terminate any Award in exchange for an amount of
cash and/or property equal to the amount, if any, that would have
been attained upon the exercise of such Award or realization of the
Holder’s rights as of the date of the occurrence of the
Change of Control (the “Change of Control
Consideration”); provided, however that if the Change of
Control Consideration with respect to any Option or Stock
Appreciation Right does not exceed the exercise price of such
Option or Stock Appreciation Right, the Committee may cancel the
Option or Stock Appreciation Right without payment of any
consideration therefor. Any such Change of Control Consideration
may be subject to any escrow, indemnification and similar
obligations, contingencies and encumbrances applicable in
connection with the Change of Control to holders of Shares. Without
limitation of the foregoing, if as of the date of the occurrence of
the Change of Control the Committee determines that no amount would
have been attained upon the realization of the Holder’s
rights, then such Award may be terminated by the Company without
payment. The Committee may cause the Change of Control
Consideration to be subject to vesting conditions (whether or not
the same as the vesting conditions applicable to the Award prior to
the Change of Control) and/or make such other modifications,
adjustments or amendments to outstanding Awards or this Plan as the
Committee deems necessary or appropriate.
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(c) The
Committee may require a Holder to (i) represent and warrant as to
the unencumbered title to the Holder’s Awards, (ii) bear such
Holder’s pro rata share of any post-closing indemnity
obligations, and be subject to the same or similar post-closing
purchase price adjustments, escrow terms, offset rights, holdback
terms and similar conditions as the other holders of Shares, and
(iii) execute and deliver such documents and instruments as the
Committee may reasonably require for the Holder to be bound by such
obligations. The Committee will endeavor to take action under this
Section 17 in a manner that does not cause a violation of Section
409A of the Code with respect to an Award.
ARTICLE XVIII
RECAPITALIZATION OR
REORGANIZATION
18.1 Adjustments
to Shares. The shares with respect to which Awards may be
granted under the Plan are Shares as presently constituted;
provided,
however, that if,
and whenever, prior to the expiration or distribution to the Holder
of Shares underlying an Award theretofore granted, the Company
shall effect a subdivision or consolidation of the Shares or the
payment of an Share dividend on Shares without receipt of
consideration by the Company, the number of Shares with respect to
which such Award may thereafter be exercised or satisfied, as
applicable, (i) in the event of an increase in the number of
outstanding Shares, shall be proportionately increased, and the
purchase price per Share shall be proportionately reduced, and (ii)
in the event of a reduction in the number of outstanding Shares,
shall be proportionately reduced, and the purchase price per Share
shall be proportionately increased. Notwithstanding the foregoing
or any other provision of this Article XVIII, any adjustment made
with respect to an Award (x) which is an Incentive Stock Option,
shall comply with the requirements of Section 424(a) of the Code,
and in no event shall any adjustment be made which would render any
Incentive Stock Option granted under the Plan to be other than an
“incentive stock option” for purposes of Section 422 of
the Code, and (y) which is a Non-qualified Stock Option, shall
comply with the requirements of Section 409A of the Code, and in no
event shall any adjustment be made which would render any
Non-qualified Stock Option granted under the Plan to become subject
to Section 409A of the Code.
18.2 Recapitalization.
If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise or satisfaction, as
applicable, of a previously granted Award, the Holder shall be
entitled to receive (or entitled to purchase, if applicable) under
such Award, in lieu of the number of Shares then covered by such
Award, the number and class of shares and securities to which the
Holder would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization,
the Holder had been the holder of record of the number of Shares
then covered by such Award.
18.3 Other
Events. In the event of changes to the outstanding Shares by
reason of an extraordinary cash dividend, reorganization, merger,
consolidation, combination, split-up, spin-off, exchange or other
relevant change in capitalization occurring after the date of the
grant of any Award and not otherwise provided for under this
Article XVIII, any outstanding Awards and any Award Agreements
evidencing such Awards shall be adjusted by the Board in its
discretion in such manner as the Board shall deem equitable or
appropriate taking into consideration the applicable accounting and
tax consequences, as to the number and price of Shares or other
consideration subject to such Awards. In the event of any
adjustment pursuant to Sections 18.1, 18.2 or this Section 18.3,
the aggregate number of Shares available under the Plan pursuant to
Section 5.1 may be appropriately adjusted by the Board, the
determination of which shall be conclusive. In addition, the
Committee may make provision for a cash payment to a Holder or a
person who has an outstanding Award. The number of Shares subject
to any Award shall be rounded to the nearest whole
number.
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18.4 Powers
Not Affected. The existence of the Plan and the Awards
granted hereunder shall not affect in any way the right or power of
the Board or of the shareholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other
change of the Company’s capital structure or business, any
merger or consolidation of the Company, any issue of debt or equity
securities ahead of or affecting Shares or the rights thereof, the
dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or
business or any other corporate act or proceeding.
18.5 No
Adjustment for
Certain Awards. Except as hereinabove expressly provided,
the issuance by the Company of shares of any class or securities
convertible into shares of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants
to subscribe therefor or upon conversion of shares or obligations
of the Company convertible into such shares or other securities,
and in any case whether or not for fair value, shall not affect
previously granted Awards, and no adjustment by reason thereof
shall be made with respect to the number of Shares subject to
Awards theretofore granted or the purchase price per Share, if
applicable.
ARTICLE XIX
AMENDMENT AND
TERMINATION OF PLAN
The
Plan shall continue in effect, unless sooner terminated pursuant to
this Article XIX, until the tenth (10th) anniversary of the date on
which it is adopted by the Board (except as to Awards outstanding
on that date) (the “Expiration Date”). The Board in its
discretion may terminate the Plan at any time with respect to any
shares for which Awards have not theretofore been granted;
provided,
however, that the
Plan’s termination shall not materially and adversely impair
the rights of a Holder with respect to any Award theretofore
granted without the consent of the Holder. The Board shall have the
right to alter or amend the Plan or any part hereof from time to
time; provided that (a) to the extent necessary and desirable to
comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required, and (b)
stockholder approval is required for any amendment to the Plan that
(i) increases the aggregate number of Shares available for issuance
under the Plan (other than any automatic increases to the Share
Reserve in accordance with Section 5.1), or (ii) changes the
persons or class of persons eligible to receive Awards. Subject to
the terms of the Plan, the Committee shall have the authority to
amend the terms of an Award in any manner that is not inconsistent
with the Plan (including to extend the post-termination
exercisability period of Options and Stock Appreciation Rights),
provided that no such action (except an action relating to a Change
of Control) shall materially and adversely impair the rights of a
Holder with respect to an outstanding Award without the
Holder’s consent. For purposes of the foregoing, any action
of the Board or the Committee that alters or affects the tax
treatment of any Award shall not be considered to materially and
adversely impair any rights of any Holder.
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ARTICLE XX
MISCELLANEOUS
20.1 No
Right to
Award. Neither the adoption of the Plan by the Company nor
any action of the Board or the Committee shall be deemed to give an
Employee, Director or Consultant any right to an Award except as
may be evidenced by an Award Agreement duly executed on behalf of
the Company, and then solely to the extent and on the terms and
conditions expressly set forth therein.
20.2 Substitute
Awards in Corporate Transactions. Nothing contained in the
Plan shall be construed to limit the right of the Committee to
grant Awards under the Plan in connection with the acquisition,
whether by purchase, merger, consolidation or other corporate
transaction, of the business or assets of any corporation or other
entity. Without limiting the foregoing, the Committee may grant
Awards under the Plan to an employee or director of another
corporation who becomes an Employee, Director or Consultant by
reason of any such corporate transaction in substitution for Awards
previously granted by such corporation or entity to such person.
The terms and conditions of the substitute Awards may vary from the
terms and conditions that would otherwise be required by the Plan
solely to the extent the Committee deems necessary for such
purpose. Any Shares subject to these substitute Awards shall not be
counted against any of the maximum share limitations set forth in
the Plan.
20.3 Stock
Certificates; Book Entry Form. Notwithstanding any provision
of the Plan to the contrary, unless otherwise determined by the
Committee or required by any applicable law, rule or regulation,
any obligation set forth in the Plan pertaining to the delivery or
issuance of stock certificates evidencing Shares may be satisfied
by having issuance and/or ownership of such shares recorded on the
books and records of the Company (or, as applicable, its transfer
agent or stock plan administrator).
20.4 No
Guarantee of Tax Consequences. Neither the Company, the
Board, the Committee nor any other person make any commitment or
guarantee that any federal, state, local or foreign tax treatment
will apply or be available to any Holder or any other person
hereunder.
20.5 No
Rights
Conferred. Nothing contained in the Plan shall (i) confer
upon any Employee any right with respect to continuation of
employment with the Company or any Affiliate, (ii) interfere in any
way with any right of the Company or any Affiliate to terminate the
employment of an Employee at any time, (iii) confer upon any
Director any right with respect to continuation of such
Director’s membership on the Board, (iv) interfere in any way
with any right of the Company or an Affiliate to terminate a
Director’s membership on the Board at any time, (v) confer
upon any Consultant any right with respect to continuation of his
or her consulting engagement with the Company or any Affiliate, or
(vi) interfere in any way with any right of the Company or an
Affiliate to terminate a Consultant’s consulting engagement
with the Company or an Affiliate at any time.
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20.6 Other
Laws; No Fractional Shares; Withholding. The Company shall
not be obligated by virtue of any provision of the Plan to
recognize the exercise of any Award or to otherwise sell or issue
Shares in violation of any laws, rules or regulations, and any
postponement of the exercise or settlement of any Award under this
provision shall not extend the term of such Award. Neither the
Company nor its directors or officers shall have any obligation or
liability to a Holder with respect to any Award (or Shares issuable
thereunder) (i) that shall lapse because of such postponement, or
(ii) for any failure to comply with the requirements of any
applicable law, rules or regulations, including but not limited to
any failure to comply with the requirements of Section 409A of this
Code. No fractional Shares shall be delivered, nor shall any cash
in lieu of fractional Shares be paid. The Company shall have the
right to deduct in cash (whether under this Plan or otherwise) in
connection with all Awards any taxes required by law to be withheld
and to require any payments required to enable it to satisfy its
withholding obligations. In the case of any Award satisfied in the
form of Shares, no Shares shall be issued unless and until
arrangements satisfactory to the Company shall have been made to
satisfy any tax withholding obligations applicable with respect to
such Award. Subject to such terms and conditions as the Committee
may impose, the Company shall have the right to retain, or the
Committee may, subject to such terms and conditions as it may
establish from time to time, permit Holders to elect to tender,
Shares (including Shares issuable in respect of an Award) to
satisfy, in whole or in part, the amount required to be
withheld.
20.7 Forfeiture
Events/Representations. The Committee may specify in an
Award Agreement at the time of the Award that the Holder’s
rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon
the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award.
Such events shall include, but shall not be limited to, termination
of service for Cause, violation of material Company policies,
breach of noncompetition, confidentiality or other restrictive
covenants that may apply to the Holder, or other conduct by the
Holder that is detrimental to the business or reputation of the
Company. The Committee may also specify in an Award Agreement that
the Holder’s rights, payments and benefits with respect to an
Award shall be conditioned upon the Holder making a representation
regarding compliance with noncompetition, confidentiality or other
restrictive covenants that may apply to the Holder and providing
that the Holder’s rights, payments and benefits with respect
to an Award shall be subject to reduction, cancellation, forfeiture
or recoupment on account of a breach of such representation.
Notwithstanding the foregoing, the confidentiality restrictions set
forth in an Award Agreement shall not, and shall not be interpreted
to, impair a Holder from exercising any legally protected
whistleblower rights (including under Rule 21 of the Exchange
Act). In addition and without limitation of the foregoing,
any amounts paid hereunder shall be subject to recoupment in
accordance with The Dodd–Frank Wall Street Reform and
Consumer Protection Act and any implementing regulations
thereunder, any “clawback” policy adopted by the
Company or as is otherwise required by applicable law or stock
exchange listing condition.
20.8 No
Restriction on Corporate Action. Nothing contained in the
Plan shall be construed to prevent the Company or any Affiliate
from taking any corporate action which is deemed by the Company or
such Affiliate to be appropriate or in its best interest, whether
or not such action would have an adverse effect on the Plan or any
Award made under the Plan. No Employee, Director, Consultant,
beneficiary or other person shall have any claim against the
Company or any Affiliate as a result of any such
action.
20.9 Restrictions
on Transfer. No Award under the Plan or any Award Agreement
and no rights or interests herein or therein, shall or may be
assigned, transferred, sold, exchanged, encumbered, pledged or
otherwise hypothecated or disposed of by a Holder except (i) by
will or by the laws of descent and distribution, or (ii) where
permitted under applicable tax rules, by gift to any Family Member
of the Holder, subject to compliance with applicable laws. An Award
may be exercisable during the lifetime of the Holder only by such
Holder or by the Holder’s guardian or legal representative
unless it has been transferred by gift to a Family Member of the
Holder, in which case it shall be exercisable solely by such
transferee. Notwithstanding any such transfer, the Holder shall
continue to be subject to the withholding requirements provided for
under Section 20.3 hereof.
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20.10 Beneficiary
Designations. Each Holder may, from time to time, name a
beneficiary or beneficiaries (who may be contingent or successive
beneficiaries) for purposes of receiving any amount which is
payable in connection with an Award under the Plan upon or
subsequent to the Holder’s death. Each such beneficiary
designation shall serve to revoke all prior beneficiary
designations, be in a form prescribed by the Company and be
effective solely when filed by the Holder in writing with the
Company during the Holder’s lifetime. In the absence of any
such written beneficiary designation, for purposes of the Plan, a
Holder’s beneficiary shall be the Holder’s
estate.
20.11 Rule
16b-3. It is intended that the Plan and any Award made to a
person subject to Section 16 of the Exchange Act shall meet all of
the requirements of Rule 16b-3. If any provision of the Plan or of
any such Award would disqualify the Plan or such Award under, or
would otherwise not comply with the requirements of, Rule 16b-3,
such provision or Award shall be construed or deemed to have been
amended as necessary to conform to the requirements of Rule
16b-3.
20.12 Section
409A. Notwithstanding any other provision of the Plan, the
Committee shall have no authority to issue an Award under the Plan
with terms and/or conditions which would cause such Award to
constitute non-qualified “deferred compensation” under
Section 409A of the Code unless such Award shall be structured to
be exempt from or comply with all requirements of Code Section
409A. The Plan and all Award Agreements are intended to comply with
the requirements of Section 409A of the Code (or to be exempt
therefrom) and shall be so interpreted and construed and no amount
shall be paid or distributed from the Plan unless and until such
payment complies with all requirements of Code Section 409A. It is
the intent of the Company that the provisions of this Agreement and
all other plans and programs sponsored by the Company be
interpreted to comply in all respects with Code Section 409A,
however, the Company shall have no liability to the Holder, or any
successor or beneficiary thereof, in the event taxes, penalties or
excise taxes may ultimately be determined to be applicable to any
payment or benefit received by the Holder or any successor or
beneficiary thereof.
20.13 Indemnification.
Each person who is or shall have been a member of the Committee or
of the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred thereby in connection with or
resulting from any claim, action, suit, or proceeding to which such
person may be made a party or may be involved by reason of any
action taken or failure to act under the Plan and against and from
any and all amounts paid thereby in settlement thereof, with the
Company’s approval, or paid thereby in satisfaction of any
judgment in any such action, suit, or proceeding against such
person; provided,
however, that such
person shall give the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive and shall be independent of
any other rights of indemnification to which such persons may be
entitled under the Company’s Articles of Incorporation or
By-laws, by contract, as a matter of law, or
otherwise.
20.14 Other
Benefit Plans. No Award, payment or amount received
hereunder shall be taken into account in computing an
Employee’s salary or compensation for the purposes of
determining any benefits under any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate,
unless such other plan specifically provides for the inclusion of
such Award, payment or amount received. Nothing in the Plan shall
be construed to limit the right of the Company to establish other
plans or to pay compensation to its employees, in cash or property,
in a manner which is not expressly authorized under the
Plan.
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20.15 Limits
of Liability. Any liability of the Company with respect to
an Award shall be based solely upon the contractual obligations
created under the Plan and the Award Agreement. None of the
Company, any member of the Board nor any member of the Committee
shall have any liability to any party for any action taken or not
taken, in good faith, in connection with or under the
Plan.
20.16 Foreign
Jurisdictions. The Committee may adopt, amend and terminate
such arrangements and grant such Awards, not inconsistent with the
intent of the Plan, as it may deem necessary or desirable to comply
with any tax, securities, regulatory or other laws of other
jurisdictions with respect to Awards that may be subject to such
laws. The terms and conditions of such Awards may vary from the
terms and conditions that would otherwise be required by the Plan
solely to the extent the Committee deems necessary for such
purpose. Moreover, the Board may approve such supplements to or
amendments, restatements or alternative versions of the Plan, not
inconsistent with the intent of the Plan, as it may consider
necessary or appropriate for such purposes, without thereby
affecting the terms of the Plan as in effect for any other
purpose.
20.17 Governing
Law. Except as
otherwise provided herein, the Plan shall be construed in
accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law.
20.18 Severability
of Provisions. If any provision of the Plan is held invalid or
unenforceable, such invalidity or unenforceability shall not affect
any other provision of the Plan, and the Plan shall be construed
and enforced as if such invalid or unenforceable provision had not
been included in the Plan.
20.19 No
Funding. The Plan shall be unfunded. The Company shall not
be required to establish any special or separate fund or to make
any other segregation of funds or assets to ensure the payment of
any Award. Prior to receipt of Shares or a cash distribution
pursuant to the terms of an Award, such Award shall represent an
unfunded unsecured contractual obligation of the Company and the
Holder shall have no greater claim to the Shares underlying such
Award or any other assets of the Company or Affiliate than any
other unsecured general creditor.
20.20 Award
Agreements. The Committee may provide for the use of
electronic, internet or other non-paper Award Agreements, and the
use of electronic, internet or other non-paper means for the
acceptance thereof and actions thereunder by a Holder. Each Award
Agreement shall be subject to the terms and conditions of the Plan
and need not be identical.
20.21 Headings.
Headings used throughout the Plan are for convenience only and
shall not be given legal significance.
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