Exhibit 10.17
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
2005 STOCK OPTION AND AWARD PLAN
1. Purpose. International Thoroughbred Breeders, Inc. a Delaware
corporation (the "Company"), hereby adopts the International Thoroughbred
Breeders, Inc. 2005 Stock Option and Award Plan (the "Plan"). The Plan is
intended to recognize the contributions made to the Company by employees
(including employees who are members of the Board of Directors), non- employee
directors of the Company and certain consultants and advisors of the Company or
any Affiliate, to provide such persons with additional incentive to devote
themselves to the future success of the Company or an Affiliate, and to improve
the ability of the Company or an Affiliate to attract, retain, and motivate
persons upon whom the Company's sustained growth and financial success depend,
by providing such persons with an opportunity to acquire or increase their
proprietary interest in the Company through receipt of rights to acquire the
Company's Common Stock, with or without par value (the "Common Stock"), and
through the transfer or issuance of Common Stock.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
"Act" shall mean the Securities Act of 1933.
"Affiliate" shall mean a corporation which is a parent
corporation or a subsidiary corporation with respect to the Company within the
meaning of Section 424(e) or (f) of the Code.
"Award" shall mean a transfer of Common Stock made pursuant to
the terms of the Plan.
"Award Agreement" shall mean the agreement between the Company
and a Grantee with respect to an Award made pursuant to the Plan.
"Board of Directors" or "Board" shall mean the Board of Directors
of the Company.
"Change of Control" shall have the meaning as set forth in
Section 9 of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall have the meaning set forth in Section 3 of the
Plan.
"Common Stock" shall have the meaning set forth in Section 1 of
the Plan.
"Company" shall mean International Thoroughbred Breeders, Inc, a
Delaware corporation.
"Disability" shall have the meaning set forth in Section 22(e)(3)
of the Code.
"Employee" shall mean an employee of the Company or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall have the meaning set forth in
Subsection 8(b) of the Plan.
"Grantee" shall mean a person to whom an Award has been granted
pursuant to the Plan.
"ISO" shall mean an Option granted under the Plan which is
intended to qualify as an "incentive stock option" within the meaning of Section
422(b) of the Code.
"Non-Employee Director" shall mean a member of the Board of
Directors of the Company who is both a "non-employee" of the Company within the
meaning of Rule 16b- 3 and an "outside director" within the meaning of Section
162(m) of the Code.
"Non-qualified Stock Option" shall mean an Option granted under
the Plan which is not intended to qualify, or otherwise does not qualify, as an
"incentive stock option" within the meaning of Section 422(b) of the Code.
"Option" shall mean either an ISO or a Non-qualified Stock Option
granted under the Plan.
"Optionee" shall mean a person to whom an Option has been granted
under the Plan, which Option has not been exercised and has not expired or
terminated.
"Option Document" shall mean the document described in Section 8
of the Plan, as applicable, which sets forth the terms and conditions of each
grant of Options under the Plan.
"Option Price" shall mean the price at which Shares may be
purchased upon exercise of an Option, as calculated pursuant to Subsection 8(b)
of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act.
"Section 16 Person" shall mean any person who is an "officer" or
"director" within the meaning of Rule 16a-1(f) promulgated under the Exchange
Act or any successor rule.
"Shares" shall mean the shares of Common Stock of the Company
which are the subject of Options or granted as Awards under the Plan.
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3. Administration of the Plan. The Board of Directors may administer the
Plan itself or may designate a committee or committees composed of two or more
of members of the Board of Directors. At the discretion of the Board of
Directors, a separate committee may be designated consisting of two or more
Non-Employee Directors to operate and administer the Plan with respect to only
Section 16 Persons or such other persons as deemed appropriate by the Board of
Directors, while appointing another committee or itself to administer the Plan
with respect to all other persons eligible to participate in the Plan. Any such
committee or committees designated by the Board of Directors, and the Board of
Directors itself in its administrative capacity with respect to the Plan, is
referred to as the "Committee."
(a) Meetings. The Committee shall hold meetings at such times and
places as it may determine, shall keep minutes of its meetings, and shall adopt,
amend and revoke such rules or procedures as it may deem proper; provided,
however, that it may take action only upon the agreement of a majority of the
whole Committee. Any action which the Committee shall take through a written
instrument signed by a majority of its members shall be as effective as though
it had been taken at a meeting duly called and held.
(b) Indemnification. Service on the Committee shall constitute
service as a member of the Board of Directors of the Company. Each member of the
Committee shall be entitled, without further act on his or her part, to
indemnity from the Company and limitation of liability to the fullest extent
provided by applicable law and by the Company's Certificate of Incorporation
and/or By-laws in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the granting of
Options thereunder in which he or she may be involved by reason of his or her
being or having been a member of the Committee, whether or not he or she
continues to be such member of the Committee at the time of the action, suit or
proceeding.
(c) Interpretation. The Committee shall have the power and
authority to interpret the Plan and to adopt rules and regulations for its
administration that are not inconsistent with the express terms of the Plan. Any
such actions by the Committee shall be final, binding and conclusive on all
parties in interest.
4. Grants and Awards under the Plan. Under the Plan, the Committee may, in
its discretion, grant Options in the form of Non-qualified Stock Options and
ISOs, Awards of Common Stock or a combination thereof.
5. Eligibility. All Employees, members of the Board of Directors and
consultants and advisors to the Company shall be eligible to receive Options and
Awards hereunder. Consultants and advisors shall be eligible only if they render
bona fide services to the Company unrelated to the offer or sale of securities;
provided, however, that the limitation contained in this sentence shall not
apply to the extent that the inapplicability of such limitation will not
disqualify the Common Stock from being eligible for registration on Form S-8 (or
any successor form) under the Act. The Committee, in its sole discretion, shall
determine whether an individual qualifies as an Employee.
6. Shares Subject to Plan. The aggregate maximum number of Shares for which
Awards or Options may be granted pursuant to the Plan is ____________
(___________). The number of
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Shares which may be issued under the Plan shall be further subject to adjustment
in accordance with Section 10. The Shares shall be issued from authorized and
unissued Common Stock or Common Stock held in or hereafter acquired for the
treasury of the Company. If an Option terminates or expires without having been
fully exercised for any reason or if Shares subject to an Award have been
conveyed back to the Company pursuant to the terms of an Award Agreement, the
Shares for which the Option was not exercised or the Shares that were conveyed
back to the Company may again be the subject of one or more Options or Awards
granted pursuant to the Plan.
7. Term of the Plan. This Plan shall become effective upon its adoption by
the Board, and Options and Awards may be issued upon such adoption and from time
to time thereafter; provided, however, that the Plan shall be submitted to the
holders of the Company's Common Stock for their approval by written consent of
holders of at least a majority of the outstanding shares of Common Stock or at
the next annual meeting of shareholders, or prior thereto at a special meeting
of shareholders expressly called for such purpose; and provided further, that
the approval of the Company's Common Stockholders shall be obtained within 12
months of the date of adoption of the Plan. If the Plan is not approved by the
requisite written consent of shareholders or by vote of the shareholders
entitled to vote at a duly called shareholders' meeting at which a quorum
representing a majority of all voting stock is present in person or by proxy,
then this Plan and all Options and Awards then outstanding under it shall
forthwith automatically terminate and be of no force or effect.
8. Option Documents and Terms. Each Option granted under the Plan shall be
a Non-qualified Stock Option unless the Option shall be specifically designated
at the time of grant to be an ISO for Federal income tax purposes. If any Option
designated an ISO is determined for any reason not to qualify as an incentive
stock option within the meaning of Section 422 of the Code, such Option shall be
treated as a Non-qualified Stock Option for all purposes under the provisions of
the Plan. Options granted pursuant to the Plan shall be evidenced by the Option
Documents in such form as the Committee shall from time to time approve, which
Option Documents shall comply with and be subject to the following terms and
conditions and such other terms and conditions as the Committee shall from time
to time require which are not inconsistent with the terms of the Plan.
(a) Number of Option Shares. Each Option Document shall state the
number of Shares to which it pertains. An Optionee may receive more than one
Option, which may include Options which are intended to be ISO's and Options
which are not intended to be ISO's, on the terms and subject to the conditions
and restrictions of the Plan.
(b) Option Price. Each Option Document shall state the Option
Price which, for a Non-qualified Stock Option, may be less than, equal to, or
greater than the Fair Market Value of the Shares on the date the Option is
granted and, for an ISO, shall be at least 100% of the Fair Market Value of the
Shares on the date the Option is granted as determined by the Committee in
accordance with this Subsection 8(b); provided, however, that if an ISO is
granted to an Optionee who then owns, directly or by attribution under Section
424(d) of the Code, shares possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or an Affiliate,
then the Option Price shall be at least 110% of the Fair Market Value of the
Shares on the date the Option is granted. If the Common Stock is traded in
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a public market, then the Fair Market Value per share shall be, if the Common
Stock is listed on a national securities exchange or included in the NASDAQ
System, the last reported sale price thereof for the "Valuation Date" (as
hereinafter defined), or, if the Common Stock is not so listed or included, the
mean between the last reported "bid" and "asked" prices thereof on the Valuation
Date, as reported on NASDAQ or, if not so reported, as reported by the National
Daily Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines. If the Common Stock is
not traded in a public market, Fair Market Value shall be determined in good
faith by the Committee. For purposes of the determination of Fair Market Value
under this Section 8(b), the Valuation Date shall be the immediately preceding
business day unless the transaction with respect to which Fair Market Value is
being determined occurs following the closing of the exchange, the NASDAQ
System, NASDAQ or the financial reporting service, as applicable, in which case
the Valuation Date shall be the date on which the transaction occurs.
(c) Exercise. No Option shall be deemed to have been exercised
prior to the receipt by the Company of written notice of such exercise and
(unless arrangements satisfactory to the Company have been made for payment
through a broker in accordance with procedures permitted by Regulation P of the
Federal Reserve Board) of payment in full of the Option Price for the Shares to
be purchased. Each such notice shall specify the number of Shares to be
purchased and shall (unless the Shares are covered by a then current
registration statement or a Notification under Regulation A under the Act),
contain the Optionee's acknowledgment in form and substance satisfactory to the
Company that (a) such Shares are being purchased for investment and not for
distribution or resale (other than a distribution or resale which, in the
opinion of counsel satisfactory to the Company, may be made without violating
the registration provisions of the Act), (b) the Optionee has been advised and
understands that (i) the Shares have not been registered under the Act and are
"restricted securities" within the meaning of Rule 144 under the Act and are
subject to restrictions on transfer and (ii) the Company is under no obligation
to register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (c) such Shares
may not be transferred without compliance with all applicable federal and state
securities laws, and (d) an appropriate legend referring to the foregoing
restrictions on transfer and any other restrictions imposed under the Option
Documents may be endorsed on the certificates. Notwithstanding the foregoing, if
the Company determines that issuance of Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available, (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may defer
exercise of any Option granted hereunder until any of the events described in
this sentence has occurred.
(d) Medium of Payment. Subject to the terms of the applicable
Option Document, an Optionee shall pay for Shares (i) in cash, (ii) by certified
or cashier's check payable to the order of the Company, or (iii) by such other
mode of payment as the Committee may approve, including payment through a broker
in accordance with procedures permitted by Regulation T of the Federal Reserve
Board. Furthermore, payment may be made in whole or in part in shares of the
Company's Common Stock held by the Optionee. If payment is made in
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whole or in part in shares of the Company's Common Stock, then the Optionee
shall deliver to the Company certificates registered in the name of such
Optionee representing the shares owned by such Optionee, free of all liens,
claims and encumbrances of every kind and having an aggregate Fair Market Value
on the date of delivery that is at least as great as the Option Price of the
Shares (or relevant portion thereof) with respect to which such Option is to be
exercised by the payment in shares of Common Stock, endorsed in blank or
accompanied by stock powers duly endorsed in blank by the Optionee. In the event
that certificates for shares of the Company's Common Stock delivered to the
Company represent a number of shares in excess of the number of shares required
to make payment for the Option Price of the Shares (or relevant portion thereof)
with respect to which such Option is to be exercised by payment in shares of
Common Stock, the stock certificate or certificates issued to the Optionee shall
represent (i) the Shares in respect of which payment is made, and (ii) such
excess number of shares. Notwithstanding the foregoing, the Committee may impose
from time to time such limitations and prohibitions on the use of shares of the
Common Stock to exercise an Option as it deems appropriate.
(e) Duration of Options.
i. Each Option and all rights thereunder shall expire and the
Option shall no longer be exercisable on a date not later than ten (10)
years from the date on which the Option was granted. Options shall
expire and cease to be exercisable on such earlier date as the Committee
may determine at the time of grant, and Options also shall be subject to
termination before their expiration date as provided in the Plan or in
the applicable Option Document.
ii. In the case of an ISO, if the Optionee on the date of grant
owns, directly or by attribution under Section 424(d) of the Code,
shares possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of an Affiliate
then the Option Document applicable thereto shall specify an expiration
date that is (or is not later than) the fifth anniversary of the date of
grant.
iii. The Board of Directors may set an accelerated expiration
date in the event of the liquidation or dissolution of the Company.
(f) Effect of Termination of Employment.
i. In the event of termination of an Optionee or Grantee's
employment or service with the Company and Affiliates or status as a
director by reason of such Optionee or Grantee's death or disability,
any outstanding Option or Award held by such Optionee or Grantee shall,
notwithstanding the extent to which such Option or Award was exercisable
prior to termination of employment, immediately become exercisable as to
the total number of Shares purchasable thereunder. In the event of
termination of an Optionee or Grantee's employment or service with the
Company and Affiliates or status as a director by reason of such
Optionee or Grantee's retirement with the consent of the Board or in
accordance with an applicable tax-qualified retirement plan, any
outstanding
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Option or Award held by such Optionee or Grantee shall be exercisable
only to the extent to which such Option or Award was exercisable
immediately prior to retirement. Any such Option or Award that is
exercisable under this Subsection 8(f)(i) shall remain so exercisable at
any time prior to its expiration date or, if earlier, the first
anniversary of termination of the Optionee or Grantee's employment or
service with the Company and Affiliates or status as a director.
ii. In the event of termination of an Optionee's or Grantee's
employment or service with the Company or status as a director for any
reason other than death, disability, or retirement with the consent of
the Board or in accordance with an applicable tax-qualified retirement
plan, any outstanding Option or Award held by such Optionee or Grantee
shall be exercisable only to the extent such Option or Award was
exercisable immediately before such termination and shall remain so
exercisable for a period ending on the earlier of the expiration date of
the Option or Award and a date ninety (90) days after the termination of
employment or service with the Company or status as director. Whether an
authorized leave of absence or absence in military or government service
shall constitute termination of employment or service with the Company
or status as a director shall be determined by the Board. Transfer of
employment between the Company and an Affiliate or between one Affiliate
and another shall not constitute termination of employment.
iii. Notwithstanding anything to the contrary contained in the
Plan or an Option Document, an ISO shall be treated as a Non-qualified
Stock Option to the extent such ISO is exercised at any time after the
expiration of the time period permitted under the Code for the exercise
of an ISO.
(g) Transfers. No ISO granted under the Plan may be transferred,
except by will or by the laws of descent and distribution except as otherwise
set forth in the Option Document or to the extent that the Committee otherwise
determines. An Optionee may transfer any Non-qualified Stock Option to such
Optionee's family members, entities for the benefit of such family members and
such other persons as the Committee may determine; provided that the Optionee
receives no consideration for the transfer and the transferred Non-qualified
Stock Option shall continue to be subject to the same terms and conditions as
were applicable to the Non-qualified Stock Option immediately before the
transfer. Except as otherwise set forth above, Options are not transferable.
(h) Limitation on ISO Grants. To the extent that the aggregate
fair market value of the shares of Common Stock (determined at the time the ISO
is granted) with respect to which ISO's under all incentive stock option plans
of the Company or its Affiliates are exercisable for the first time by the
Optionee during any calendar year exceeds $ 100,000, such ISO's shall, to the
extent of such excess, be treated as Non-qualified Stock Options.
(i) Other Provisions. Subject to the provisions of the Plan, the
Option Documents shall contain such other provisions including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option
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granted pursuant to the Plan, additional restrictions upon the exercise of the
Option or additional limitations upon the term of the Option, as the Committee
shall deem advisable.
(j) Amendment. Subject to the provisions of the Plan, the
Committee shall have the right to amend any Option Document or Award Agreement
issued to an Optionee or Award holder, subject to the Optionee's or Award
holder's consent if such amendment is not favorable to the Optionee or Award
holder, or if such amendment has the effect of changing an ISO to a
Non-Qualified Stock Option, except that the consent of the Optionee or Award
holder shall not be required for any amendment made pursuant to Subsection
8(e)(iii) or Section 9 of the Plan, as applicable.
9. Change of Control.
(a) Definition. A "Change of Control" shall be deemed to have
occurred upon the earliest to occur of the following events:
i. any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act other than the Company, any subsidiary of the
Company, any "person" (as hereinabove defined) acting on behalf of the
Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any "person" (as hereinabove defined) who, on the date the
Plan is effective, shall have been the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of or have voting control over shares
of capital stock of the Company possessing more than twenty-five percent
(25%) of the combined voting power of the Company's then outstanding
securities is or becomes the "beneficial owner" (as hereinabove
defined), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities;
ii. during any period of not more than two consecutive years
(not including any period prior to the date the Plan is effective),
individuals who at the beginning of such period constitute the Board of
Directors, and any new director (other than a director designated by a
"person" (as hereinabove defined) who has entered into an agreement with
the Company to effect a transaction described in clause (i), (iii) or
(iv) of this Section 9) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
iii. the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or other legal
entity, other than (1) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior
thereto continuing to
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represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than fifty percent (50%)
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) other than a "person" who, on the date
the Plan is effective, shall have been the "beneficial owner" (as
hereinabove defined) of or have voting control over shares of capital
stock of the Company possessing more than twenty five percent (25%) of
the combined voting power of the Company's then outstanding securities
acquires more than fifty percent (50%) of the combined voting power of
the Company's then outstanding securities;
iv. the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets (or
any transaction having a similar effect); or
v. a "change of control" (as may hereinafter be defined by the
Board of Directors for the express purposes of this Plan) has occurred.
(a) Effect of Change of Control. In the event of a Change of
Control, the Committee may take whatever action, if any, it deems necessary or
desirable in its sole discretion with respect to the outstanding Options and
Awards. Such action may include, without limiting the generality of the
foregoing, (i) providing for the automatic acceleration of vesting and
exercisability of the Options and/or the lapse of restrictions on Awards; (ii)
after giving Optionees an opportunity to exercise their Options, terminating any
or all unexercised Options at such time or times as the Committee may determine;
(iii) requiring that Optionees and Grantees surrender their Options and Awards
in exchange for a payment by the Company equal to the amount by which the Fair
Market Value at that time of the Shares subject to the Options (to the extent
the Options are then vested) or Awards exceeds the Option Price for the Shares
and the purchase price, if any, for the Shares granted pursuant to an Award;
and/or (iv) any combination of the foregoing actions and/or such alternative or
additional actions as the Committee may specify. Any such action shall take
place as of the date of the Change of Control or such other date as the
Committee may specify.
(b) Limitations. Notwithstanding the foregoing, no acceleration
of vesting or exercisability, cancellation, lapse of restrictions, termination
or payment shall occur with respect to any Option or Award if the Board of
Directors (as constituted prior to the Change in Control date) reasonably
determines in good faith, prior to the Change in Control, that all outstanding
Options and/or Awards shall be assumed and honored, or new rights substituted
therefor, by the party acquiring control of the Company; provided, however, that
any such
honored, assumed and/or substituted Options and/or Awards must provide the
Optionee and/or Grantee with rights and benefits (including, but not limited to,
substantially equivalent economic value, exercise and vesting provisions, and
similar or better methods of exercise and payment) substantially equivalent to
or better than the rights and benefits under the Optionee's and/or
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Grantee's outstanding Options and/or Awards prior to the transaction
constituting the Change of Control.
10. Adjustments on Changes in Capitalization.
(a) If a dividend shall be declared upon the Common Stock payable
in shares of Common Stock or if a stock split is declared with respect to the
Common Stock, the number of shares of Common Stock then subject to any Option
outstanding under the Plan and the number of Shares reserved for the grant of
Options and Awards pursuant to the Plan but not yet subject to an Option or
Award shall be adjusted by adding to each such Share the number of shares which
would be distributable in respect thereof if such Shares had been outstanding on
the date fixed for determining the shareholders of the Company entitled to
receive such stock dividend or stock split. In the event that the outstanding
shares of Common Stock shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split,
combination of shares, merger, consolidation or otherwise, there shall be
substituted for each share of Common Stock subject to any such Option and for
each share of Common Stock reserved for the grant of Options and Awards pursuant
to the Plan but not yet subject to an Option or Award, the number and kind of
shares of stock or other securities into which each outstanding share of Common
Stock shall have been so changed or for which each such share shall have been
exchanged. In the event there shall be any change, other than as specified above
in this Section 10, in the number or kind of outstanding shares of Common Stock
or of any stock or other securities into which such Common Stock shall have been
changed or for which it shall have been exchanged, then if the Committee shall
in its sole discretion determine that such change equitably requires an
adjustment in the number or kind of Shares theretofore reserved for the grant of
Options pursuant to the Plan but not yet subject to an Option or Award and of
the Shares then subject to Options, such adjustment shall be made by the
Committee and shall be effective and binding for all purposes of the Plan and of
each Option and Award outstanding thereunder. In the case of any such
substitution or adjustment as provided for in this Section 10, the Option Price
for each share of Common Stock or other security which shall have been
substituted for each share of Common Stock covered by an outstanding Option
shall be adjusted appropriately to reflect such substitution or adjustment.
(b) Any adjustment under this Section 10 in the number of Shares
subject to Options shall apply proportionately to only the unexercised portion
of any Option granted hereunder. If fractions of a Share would result from any
such adjustment, the adjustment shall be revised to the next lower whole number
of Shares.
(c) The Committee shall have authority to determine the
adjustments to be made under this Section, and any such determination by the
Committee shall be final, binding and conclusive.
11. Terms and Conditions of Awards. Awards granted pursuant to the Plan
shall be evidenced by written Award Agreements in such form as the Committee
shall from time to time approve, which Award Agreements shall comply with and be
subject to the following terms and conditions and such other terms and
conditions which the Committee may from time to time require which are not
inconsistent with the terms of the Plan.
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(a) Number of Shares. Each Award Agreement shall state the number
of shares of Common Stock to which it pertains.
(b) Grant. Stock certificates evidencing Shares granted pursuant
to an Award shall be issued in the sole name of the Grantee. Notwithstanding the
foregoing, as a precondition to a grant, the Company may require an
acknowledgment by the Grantee as required with respect to Options under Section
8.
(c) Conditions. The Committee may specify in an Award Agreement
any conditions under which the Grantee of that Award shall be required to convey
to the Company the Shares covered by the Award. Upon the occurrence of any such
specified condition, the Grantee shall forthwith surrender and deliver to the
Company the certificates evidencing such Shares as well as completely executed
instruments of conveyance. The Committee, in its discretion, may provide that
certificates for Shares transferred pursuant to an Award be held in escrow by
the Company or an officer of the Company until such time as each and every
condition has lapsed and that the Grantee be required, as a condition of the
Award, to deliver to such escrow agent or Company officer stock powers covering
the Award Shares duly endorsed by the Grantee. Unless otherwise provided in the
Award Agreement, distributions made on Shares held in escrow will be deposited
in escrow, to be distributed to the party becoming entitled to the Shares on
which the distribution was made. Stock certificates evidencing Shares subject to
conditions shall bear a legend to the effect that the Common Stock evidenced
thereby is subject to repurchase or conveyance to the Company in accordance with
an Award made under the Plan and that the Shares may not be sold or otherwise
transferred.
(d) Lapse of Conditions. Upon termination, or lapse of each and
every forfeiture condition, if any, the Company shall cause certificates without
the legend referring to the Company's repurchase right (but with any other
legends that may be appropriate) evidencing the Shares covered by the Award to
be issued to the Grantee upon the Grantee's surrender of the legended
certificates held by him or her to the Company.
(e) Rights as Stockholder. Upon payment of the purchase price, if
any, for Shares covered by an Award and compliance with the acknowledgment
requirement of Subsection 11(b), the Grantee shall have all of the rights of a
stockholder with respect to the Shares covered thereby, including the right to
vote the Shares and receive all dividends and other distributions paid or made
with respect thereto, except to the extent otherwise provided by the Committee
or in the Award Agreement.
12. Amendment of the Plan. The Board of Directors of the Company may amend
the Plan from time to time in such manner as it may deem advisable.
Nevertheless, the Board of Directors of the Company may not change the class of
individuals eligible to receive an ISO or increase the maximum number of Shares
as to which Options may be granted without obtaining approval, within twelve
months before or after such action, by the stockholders in the manner required
by applicable state law. Notwithstanding anything herein to the contrary, the
Committee may, at its sole discretion, amend the Plan and any outstanding Option
or Award to (i) eliminate any provision it determines is no longer required to
comply with Rule 16b-3 as a result of revisions to Rule 16b-3 which are
generally effective after the date the Plan is effective
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or (ii) provide the holder of the Option or Award an exemption from potential
liability under Section 16(b) of the Exchange Act and the rules and regulations
thereunder.
13. No Commitment to Retain. The grant of an Option or Award pursuant to
the Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company or any Affiliate to
retain the Optionee or Grantee as an employee, consultant or advisor of the
Company or any Affiliate, as a member of the Board of Directors or in any other
capacity.
14. Withholding of Taxes. In connection with any event relating to an
Option or Award, the Company shall have the right to (a) require the recipient
to remit or otherwise make available to the Company an amount sufficient to
satisfy any federal, state and/or local withholding tax requirements prior to
the delivery or transfer of any certificate or certificates for such Shares or
(b) take whatever other action it deems necessary to protect its interests with
respect to tax liabilities. The Company's obligations under the Plan shall be
conditioned on the Optionee's or Grantee's compliance, to the Company's
satisfaction, with any withholding requirement.
15. Parachute Payments. Notwithstanding anything herein to the contrary, if
the right to receive or benefit from any grant of an Option or an Award, either
alone or together with payments that an Optionee or Grantee has the right to
receive from the Company, would constitute a "parachute payment" under Section
280G of the Code, all such payments may be reduced, in the discretion of the
Committee, to the largest amount that will avoid an excise tax to the Optionee
or Grantee under Section 280G of the Code.
16. Interpretation. The Plan is intended to enable transactions under the
Plan with respect to directors to satisfy the conditions of Rule 16b-3; to the
extent that any provision of the Plan would cause a conflict with such
conditions or would cause the administration of the Plan as provided in Section
3 to fail to satisfy the conditions of Rule 16b-3, such provision shall be
deemed null and void to the extent permitted by applicable law.
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