Exhibit 10.35
NETWORK EVENT THEATER, INC.
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1999 STOCK OPTION PLAN
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ARTICLE I
PURPOSE
The purpose of this Network Event Theater, Inc. 1999 Stock Option Plan
is to enhance the profitability and value of the Company for the benefit of its
stockholders by enabling the Company to offer employees of and Consultants to
the Company and its Affiliates stock-based incentives and other equity interests
in the Company, thereby creating a means to raise the level of stock ownership
by employees and Consultants in order to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals
and the Company's stockholders.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Acquisition Event" has the meaning set forth in Section
4.2(d).
2.2 "Affiliate" means each of the following: (i) any
Subsidiary; (ii) any Parent; (iii) any corporation, trade or business
(including, without limitation, a partnership or limited liability
company) which is directly or indirectly controlled 50% or more
(whether by ownership of stock, assets or an equivalent ownership
interest or voting interest) by the Company or one of its Affiliates;
and (iv) any other entity in which the Company or any of its Affiliates
has a material equity interest and which is designated as an
"Affiliate" by resolution of the Committee.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means, with respect to a Participant's Termination
of Employment or Termination of Consultancy: (i) in the case where
there is no employment agreement,
consulting agreement, change in control agreement or similar agreement
in effect between the Company or an Affiliate and the Participant at
the time of the grant of the Option (or where there is such an
agreement but it does not define "cause" (or words of like import)),
termination due to a Participant's insubordination, dishonesty,
incompetence, moral turpitude, other misconduct of any kind or the
refusal to perform his or her duties or responsibilities for any reason
other than illness or incapacity; or (ii) in the case where there is an
employment agreement, consulting agreement, change in control agreement
or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Option that defines
"cause" (or words of like import), as defined under such agreement;
provided, however, that with regard to any agreement that conditions
"cause" on occurrence of a change in control, such definition of
"cause" shall not apply until a change in control actually takes place
and then only with regard to a termination thereafter.
2.5 "Change in Control" has the meaning set forth in Article
VIII.
2.6 "Code" means the Internal Revenue Code of 1986, as
amended. Any reference to any section of the Code shall also be a
reference to any successor provision.
2.7 "Committee" means: a committee or subcommittee of the
Board appointed from time to time by the Board, which committee or
subcommittee shall consist of two or more non-employee directors, each
of whom is intended to be, to the extent required by Rule 16b-3, a
"non-employee director" as defined in Rule 16b-3 and, to the extent
required by Section 162(m) of the Code and any regulations thereunder,
an "outside director" as defined under Section 162(m) of the Code;
provided, however, that if and to the extent that no Committee exists
which has the authority to administer this Plan, the functions of the
Committee shall be exercised by the Board and all references herein to
the Committee shall be deemed to be references to the Board.
2.8 "Common Stock" means the common stock, $.01 par value per
share, of the Company.
2.9 "Company" means Network Event Theater, Inc., a Delaware
corporation, and its successors by operation of law.
2.10 "Consultant" means any advisor or consultant to the
Company or its Affiliates.
2.11 "Disability" means, with respect to an Eligible Employee
or Consultant, a permanent and total disability as defined in Section
22(e)(3) of the Code. A Disability shall only be deemed to occur at the
time of the determination by the Committee of the Disability.
2.12 "Effective Date" means the effective date of this Plan as
defined in Article XII.
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2.13 "Eligible Employee" means each employee of the Company or
an Affiliate.
2.14 "Exchange Act" means the Securities Exchange Act of 1934,
as amended. Any references to any section of the Exchange Act shall
also be a reference to any successor provision.
2.15 "Fair Market Value" means, unless otherwise required by
any applicable provision of the Code or any regulations issued
thereunder, as of any date, the last sales price for the Common Stock
on the applicable date: (i) as reported on the principal national
securities exchange on which it is then traded or the Nasdaq Stock
Market, Inc. or (ii) if not traded on any such national securities
exchange or the Nasdaq Stock Market, Inc. as quoted on an automated
quotation system sponsored by the National Association of Securities
Dealers, Inc. If the Common Stock is not readily tradable on a national
securities exchange, the Nasdaq Stock Market, Inc. or any automated
quotation system sponsored by the National Association of Securities
Dealers, Inc., its Fair Market Value shall be set in good faith by the
Committee. Notwithstanding anything herein to the contrary, "Fair
Market Value" means the price for Common Stock set by the Committee in
good faith based on reasonable methods set forth under Section 422 of
the Code and the regulations thereunder including, without limitation,
a method utilizing the average of prices of the Common Stock reported
on the principal national securities exchange on which it is then
traded during a reasonable period designated by the Committee. For
purposes of the grant of any Stock Option, the applicable date shall be
the date for which the last sales price is available at the time of
grant.
2.16 "Foreign Jurisdiction" means any jurisdiction outside of
the United States including, without limitation, countries, states,
provinces and localities.
2.17 "Incentive Stock Option" means any Stock Option awarded
to an Eligible Employee under this Plan intended to be and designated
as an "Incentive Stock Option" within the meaning of Section 422 of the
Code.
2.18 "Non-Qualified Stock Option" means any Stock Option
awarded under this Plan that is not an Incentive Stock Option.
2.19 "Parent" means any parent corporation of the Company
within the meaning of Section 424(e) of the Code.
2.20 "Participant" means any Eligible Employee or Consultant
to whom an Option has been granted under this Plan.
2.21 "Plan" means this Network Event Theater, Inc. 1999 Stock
Option Plan, as amended from time to time.
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2.22 "Retirement" means a Termination of Employment or
Termination of Consultancy without Cause by a Participant at or after
age 65 or such earlier date after age 50 as may be approved by the
Committee with regard to such Participant.
2.23 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.
2.24 "Section 162(m) of the Code" means Section 162(m) of the
Code and any Treasury regulations thereunder.
2.25 "Securities Act" means the Securities Act of 1933, as
amended. Any reference to any section of the Securities Act shall also
be a reference to any successor provision.
2.26 "Stock Option" or "Option" means any option to purchase
shares of Common Stock granted to Eligible Employees or Consultants
under Article VI.
2.27 "Subsidiary" means any subsidiary corporation of the
Company within the meaning of Section 424(f) of the Code.
2.28 "Ten Percent Stockholder" means a person owning stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company, its Subsidiaries or its Parent.
2.29 "Termination of Consultancy" means, with respect to a
Consultant, that the Consultant is no longer acting as a consultant to
the Company or an Affiliate. In the event an entity shall cease to be
an Affiliate, there shall be deemed a Termination of Consultancy of any
individual who is not otherwise a Consultant to the Company or another
Affiliate at the time the entity ceases to be an Affiliate. In the
event that a Consultant becomes an Eligible Employee upon the
termination of his consultancy, the Committee, in its sole and absolute
discretion, may determine that no Termination of Consultancy shall be
deemed to occur until such time as such Consultant is no longer a
Consultant or an Eligible Employee.
2.30 "Termination of Employment" means: (i) a termination of
employment (for reasons other than a military or personal leave of
absence granted by the Company) of a Participant from the Company and
its Affiliates; or (ii) when an entity which is employing a Participant
ceases to be an Affiliate, unless the Participant otherwise is, or
thereupon becomes, employed by the Company or another Affiliate. In the
event that an Eligible Employee becomes a Consultant upon the
termination of his employment, the Committee, in its sole and absolute
discretion, may determine that no Termination of Employment shall be
deemed to occur until such time as such Eligible Employee is no longer
an Eligible Employee or a Consultant.
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2.31 "Transfer" means anticipate, alienate, attach, sell,
assign, pledge, encumber, charge, hypothecate or otherwise transfer and
"Transferred" has a correlative meaning.
ARTICLE III
ADMINISTRATION
3.1 The Committee. The Plan shall be administered and
interpreted by the Committee. If for any reason the appointed Committee
does not meet the requirements of Rule 16b-3 or Section 162(m) of the
Code, such noncompliance with the requirements of Rule 16b-3 and
Section 162(m) of the Code shall not affect the validity of Options,
grants, interpretations or other actions of the Committee.
3.2 Grants of Options. The Committee shall have full authority
to grant to Eligible Employees and Consultants, pursuant to the terms
of this Plan, Stock Options. All Stock Options shall be granted by,
confirmed by, and subject to the terms of, a written agreement executed
by the Company and the Participant. In particular, the Committee shall
have the authority:
(a) to select the Eligible Employees and Consultants
to whom Stock Options may from time to time be granted
hereunder;
(b) to determine whether and to what extent Stock
Options are to be granted hereunder to one or more Eligible
Employees or Consultants;
(c) to determine, in accordance with the terms of
this Plan, the number of shares of Common Stock to be covered
by each Stock Option granted hereunder;
(d) to determine the terms and conditions, not
inconsistent with the terms of this Plan, of any Stock Option
granted hereunder (including, but not limited to, the exercise
or purchase price, any restriction or limitation, any vesting
schedule or acceleration thereof and any forfeiture
restrictions or waiver thereof, regarding any Stock Option and
the shares of Common Stock relating thereto, based on such
factors, if any, as the Committee shall determine, in its sole
discretion);
(e) to determine whether and under what circumstances
a Stock Option may be settled in cash and/or Common Stock
under Section 6.3(d);
(f) to determine whether, to what extent and under
what circumstances to provide loans (which shall bear interest
at the rate the Committee shall provide) to Eligible Employees
and Consultants in order to exercise Stock Options under this
Plan;
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(g) to determine whether a Stock Option is an
Incentive Stock Option or Non-Qualified Stock Option or
whether a Stock Option is intended to satisfy Section 162(m)
of the Code;
(h) to determine whether to require an Eligible
Employee or Consultant, as a condition of the granting of any
Stock Option, not to sell or otherwise dispose of shares of
Common Stock acquired pursuant to the exercise of a Stock
Option for a period of time as determined by the Committee, in
its sole discretion, following the date of the acquisition of
such Stock Option;
(i) to modify, extend or renew a Stock Option,
subject to Article IX herein, provided, however, that if a
Stock Option is modified, extended or renewed and thereby
deemed to be the issuance of a new Stock Option under the Code
or the applicable accounting rules, the exercise price of a
Stock Option may continue to be the original exercise price
even if less than the Fair Market Value of the Common Stock at
the time of such modification, extension or renewal; and
(j) to offer to buy out a Stock Option previously
granted, based on such terms and conditions as the Committee
shall establish and communicate to the Participant at the time
such offer is made.
3.3 Guidelines. Subject to Article IX hereof, the Committee
shall have the authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing this Plan and perform all
acts, including the delegation of its administrative responsibilities,
as it shall, from time to time, deem advisable; to construe and
interpret the terms and provisions of this Plan and any Option issued
under this Plan (and any agreements relating thereto); and to otherwise
supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the
extent it shall deem necessary to effectuate the purpose and intent of
this Plan. The Committee may adopt special guidelines and provisions
for persons who are residing in, or subject to, the taxes of, Foreign
Jurisdictions to comply with applicable tax and securities laws and may
impose any limitations and restrictions that it deems necessary to
comply with the applicable tax and securities laws of such Foreign
Jurisdictions. To the extent applicable, this Plan is intended to
comply with Section 162(m) of the Code and the applicable requirements
of Rule 16b-3 and shall be limited, construed and interpreted in a
manner so as to comply therewith.
3.4 Decisions Final. Any decision, interpretation or other
action made or taken in good faith by or at the direction of the
Company, the Board or the Committee (or any of its members) arising out
of or in connection with this Plan shall be within the absolute
discretion of all and each of them, as the case may be, and shall be
final, binding and conclusive on the Company and all employees and
Participants and their respective heirs, executors, administrators,
successors and assigns.
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3.5 Reliance on Counsel. The Company, the Board or the
Committee may consult with legal counsel, who may be counsel for the
Company or other counsel, with respect to its obligations or duties
hereunder, or with respect to any action or proceeding or any question
of law, and shall not be liable with respect to any action taken or
omitted by it in good faith pursuant to the advice of such counsel.
3.6 Procedures. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the
Committee shall hold meetings, subject to the By-Laws of the Company,
at such times and places as it shall deem advisable. A majority of the
Committee members shall constitute a quorum. All determinations of the
Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by all the Committee
members in accordance with the By-Laws of the Company, shall be fully
as effective as if it had been made by a vote at a meeting duly called
and held. The Committee shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it
shall deem advisable.
3.7 Designation of Consultants/Liability.
(a) The Committee may designate employees of the
Company and professional advisors to assist the Committee in
the administration of this Plan and may grant authority to
officers to execute agreements or other documents on behalf of
the Committee.
(b) The Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the
administration of this Plan and may rely upon any opinion
received from any such counsel or consultant and any
computation received from any such consultant or agent.
Expenses incurred by the Committee in the engagement of any
such counsel, consultant or agent shall be paid by the
Company. The Committee, its members and any employee of the
Company designated pursuant to paragraph (a) above shall not
be liable for any action or determination made in good faith
with respect to this Plan. To the maximum extent permitted by
applicable law, no officer of the Company or member or former
member of the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or
any Option granted under it. To the maximum extent permitted
by applicable law or the Certificate of Incorporation or
By-Laws of the Company and to the extent not covered by
insurance, each officer and member or former member of the
Committee shall be indemnified and held harmless by the
Company against any cost or expense (including reasonable fees
of counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the
approval of the Company), and advanced amounts necessary to
pay the foregoing at the earliest time and to the fullest
extent permitted, arising out of any act or omission to act in
connection with this Plan, except to the extent arising out of
such officer's, member's or former member's own fraud or bad
faith. Such indemnification shall be in addition to any rights
of
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indemnification the officers, directors or members or former
officers, directors or members may have under applicable law
or under the Certificate of Incorporation or By-Laws of the
Company or any Affiliate. Notwithstanding anything else
herein, this indemnification will not apply to the actions or
determinations made by an individual with regard to Options
granted to him or her under this Plan.
ARTICLE IV
SHARE AND OTHER LIMITATIONS
4.1 Shares. The aggregate number of shares of Common Stock
which may be issued or used for reference purposes under this Plan or
with respect to which Stock Options may be granted shall not exceed
475,000 shares of Common Stock (subject to any increase or decrease
pursuant to Section 4.2) which may be either authorized and unissued
Common Stock or Common Stock held in or acquired for the treasury of
the Company or both. If any Stock Option granted under this Plan
expires, terminates or is canceled for any reason without having been
exercised in full or the Company repurchases any Stock Option, the
number of shares of Common Stock underlying such unexercised or
repurchased Stock Option shall again be available for the purposes of
Options under this Plan. In determining the number of shares of Common
Stock available for Non-Qualified Stock Options, if Common Stock has
been delivered or exchanged by a Participant as full or partial payment
to the Company for payment of the exercise price, or for payment of
withholding taxes, or if the number shares of Common Stock otherwise
deliverable has been reduced for payment of the exercise price or for
payment of withholding taxes, the number of shares of Common Stock
exchanged as payment in connection with the exercise or for withholding
or reduced shall again be available for purposes of Non-Qualified Stock
Options under this Plan.
4.2 Changes.
(a) The existence of this Plan and the Options
granted hereunder shall not affect in any way the right or
power of the Board or the stockholders of the Company to make
or authorize any adjustment, recapitalization, reorganization
or other change in the Company's capital structure or its
business, any merger or consolidation of the Company or any
Affiliate, any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or any Affiliate,
any sale or transfer of all or part of the assets or business
of the Company or any Affiliate or any other corporate act or
proceeding.
(b) Subject to the provisions of Section 4.2(d), in
the event of any such change in the capital structure or
business of the Company by reason of any stock split, reverse
stock split, stock dividend, combination or reclassification
of shares,
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recapitalization, or other change in the capital structure of
the Company, merger, consolidation, spin-off, reorganization,
partial or complete liquidation, issuance of rights or
warrants to purchase any Common Stock or securities
convertible into Common Stock, or any other corporate
transaction or event having an effect similar to any of the
foregoing and effected without receipt of consideration by the
Company, then the aggregate number and kind of shares which
thereafter may be issued under this Plan, the number and kind
of shares or other property (including cash) to be issued upon
exercise of an outstanding Stock Option granted under this
Plan and the purchase price thereof shall be appropriately
adjusted consistent with such change in such manner as the
Committee may deem equitable to prevent substantial dilution
or enlargement of the rights granted to, or available for,
Participants under this Plan, and any such adjustment
determined by the Committee in good faith shall be final,
binding and conclusive on the Company and all Participants and
employees and their respective heirs, executors,
administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from
any adjustment in Options pursuant to Section 4.2(a) or (b)
shall be aggregated until, and eliminated at, the time of
exercise by rounding-down for fractions less than one-half and
rounding-up for fractions equal to or greater than one-half.
No cash settlements shall be made with respect to fractional
shares eliminated by rounding. Notice of any adjustment shall
be given by the Committee to each Participant whose Option has
been adjusted and such adjustment (whether or not such notice
is given) shall be effective and binding for all purposes of
this Plan.
(d) In the event of a merger or consolidation in
which the Company is not the surviving entity or in the event
of any transaction that results in the acquisition of
substantially all of the Company's outstanding Common Stock by
a single person or entity or by a group of persons and/or
entities acting in concert, or in the event of the sale or
transfer of all or substantially all of the Company's assets
(all of the foregoing being referred to as "Acquisition
Events"), then the Committee may, in its sole discretion,
terminate all outstanding Stock Options, effective as of the
date of the Acquisition Event, by delivering notice of
termination to each Participant at least 30 days prior to the
date of consummation of the Acquisition Event, in which case
during the period from the date on which such notice of
termination is delivered to the consummation of the
Acquisition Event, each such Participant shall have the right
to exercise in full all of his or her Stock Options that are
then outstanding (without regard to any limitations on
exercisability otherwise contained in the Stock Option
agreements), but any such exercise shall be contingent upon
and subject to the occurrence of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place
within a specified period after giving such notice for any
reason whatsoever, the notice and exercise pursuant thereto
shall be null and void.
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If an Acquisition Event occurs but the Committee does not
terminate the outstanding Stock Options pursuant to this Section
4.2(d), then the provisions of Section 4.2(b) shall apply.
4.3 Minimum Purchase Price. Notwithstanding any provision of
this Plan to the contrary, if authorized but previously unissued shares
of Common Stock are issued under this Plan, such shares shall not be
issued for a consideration which is less than as permitted under
applicable law.
4.4 Assumption of Options. Stock Options that were granted
prior to the Effective Date under the Network Event Theater, Inc. 1996
Stock Option Plan, the Network Event Theater, Inc. 1997 Stock Option
Plan and the sixdegrees, inc. 1997 Incentive Stock Plan that were
outstanding immediately prior to the Effective Date shall be assumed
under the Plan by the Company as of the Effective Date and converted
into Stock Options hereunder based on the Company's Common Stock in a
manner determined by the Committee and in accordance with section
2.1(c) of the Merger Agreement dated December 14, 1999 among the
Company, Sixdegrees Acquisition Corp. and sixdegrees, inc. The terms of
such Stock Options shall be governed by the terms of this Plan as of
the Effective Date. Notwithstanding the foregoing, such Stock Options
shall continue to be governed by the terms of the applicable agreement
in effect prior to the Effective Date, except as adjusted to reflect
the appropriate number of shares of Common Stock and the appropriate
exercise price.
ARTICLE V
ELIGIBILITY
5.1 General Eligibility. All Eligible Employees and
Consultants and prospective employees of and Consultants to the Company
and its Affiliates are eligible to be granted Non-Qualified Stock
Options and awards providing benefits similar to each of the foregoing
designed to meet the requirements of Foreign Jurisdictions under this
Plan. Eligibility for the grant of an Option and actual participation
in this Plan shall be determined by the Committee in its sole
discretion. The vesting and exercise of Options granted to a
prospective employee or Consultant are conditioned upon such individual
actually becoming an Eligible Employee or Consultant.
5.2 Incentive Stock Options. All Eligible Employees of the
Company, its Subsidiaries and its Parent (if any) are eligible to be
granted Incentive Stock Options under this Plan. Eligibility for the
grant of an Option and actual participation in this Plan shall be
determined by the Committee in its sole discretion.
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ARTICLE VI
STOCK OPTIONS
6.1 Stock Options. Each Stock Option granted hereunder shall
be one of two types: (i) an Incentive Stock Option intended to satisfy
the requirements of Section 422 of the Code; or (ii) a Non-Qualified
Stock Option.
6.2 Grants. The Committee shall have the authority to grant to
any Eligible Employee one or more Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options. To the
extent that any Stock Option does not qualify as an Incentive Stock
Option (whether because of its provisions or the time or manner of its
exercise or otherwise), such Stock Option or the portion thereof which
does not qualify, shall constitute a separate Non-Qualified Stock
Option. The Committee shall have the authority to grant any Consultant
one or more Non-Qualified Stock Options. Notwithstanding any other
provision of this Plan to the contrary or any provision in an agreement
evidencing the grant of a Stock Option to the contrary, any Stock
Option granted to an Eligible Employee of an Affiliate (other than an
Affiliate which is a Parent or a Subsidiary) shall be a Non-Qualified
Stock Option.
6.3 Terms of Stock Options. Stock Options granted under this
Plan shall be subject to the following terms and conditions, and shall
be in such form and contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem
desirable:
(a) Exercise Price. The exercise price per share of
Common Stock shall be determined by the Committee, but shall
not be less than 100% of the Fair Market Value of the share of
Common Stock at the time of grant; provided, however, that if
an Incentive Stock Option is granted to a Ten Percent
Stockholder, the exercise price shall be no less than 110% of
the Fair Market Value of the Common Stock.
(b) Stock Option Term. The term of each Stock Option
shall be fixed by the Committee; provided, however, that no
Stock Option shall be exercisable more than 10 years after the
date such Stock Option is granted; and further provided that
the term of an Incentive Stock Option granted to a Ten Percent
Stockholder shall not exceed 5 years.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee at
grant. If the Committee provides, in its discretion, that any
Stock Option is exercisable subject to certain limitations
(including, without limitation, that such Stock Option is
exercisable only in installments or within certain time
periods), the Committee may waive such limitations on the
exercisability at any time at or after
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grant in whole or in part (including, without limitation,
waiver of the installment exercise provisions or acceleration
of the time at which such Stock Option may be exercised),
based on such factors, if any, as the Committee shall
determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever
installment exercise and waiting period provisions apply under
subsection (c) above, Stock Options may be exercised in whole
or in part at any time and from time to time during the Stock
Option term by giving written notice of exercise to the
Committee specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the
purchase price as follows: (i) in cash or by check, bank draft
or money order payable to the order of the Company; (ii) if
the Common Stock is traded on a national securities exchange,
the Nasdaq Stock Market, Inc. or quoted on a national
quotation system sponsored by the National Association of
Securities Dealers, through a "cashless exercise" procedure
whereby the Participant delivers irrevocable instructions to a
broker to deliver promptly to the Company an amount equal to
the purchase price; or (iii) on such other terms and
conditions as may be acceptable to the Committee (including,
without limitation, the relinquishment of Stock Options or by
payment in full or in part in the form of Common Stock owned
by the Participant for a period of at least 6 months (and for
which the Participant has good title free and clear of any
liens and encumbrances) based on the Fair Market Value of the
Common Stock on the payment date as determined by the
Committee). No shares of Common Stock shall be issued until
payment therefor, as provided herein, has been made or
provided for.
(e) Incentive Stock Option Limitations. To the extent
that the aggregate Fair Market Value (determined as of the
time of grant) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by
an Eligible Employee during any calendar year under this Plan
and/or any other stock option plan of the Company, any
Subsidiary or any Parent exceeds $100,000, such Options shall
be treated as Non-Qualified Stock Options. In addition, if an
Eligible Employee does not remain employed by the Company, any
Subsidiary or any Parent at all times from the time an
Incentive Stock Option is granted until 3 months prior to the
date of exercise thereof (or such other period as required by
applicable law), such Stock Option shall be treated as a
Non-Qualified Stock Option. Should any provision of this Plan
not be necessary in order for the Stock Options to qualify as
Incentive Stock Options, or should any additional provisions
be required, the Committee may amend this Plan accordingly,
without the necessity of obtaining the approval of the
stockholders of the Company.
(f) Form, Modification, Extension and Renewal of
Stock Options. Subject to the terms and conditions and within
the limitations of this Plan, Stock Options shall be evidenced
by such form of agreement or grant as is approved by the
Committee, and the Committee may (i) modify, extend or renew
outstanding Stock
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Options granted under this Plan (provided that the rights of a
Participant are not reduced without his consent), and (ii)
accept the surrender of outstanding Stock Options (up to the
extent not theretofore exercised) and authorize the granting
of new Stock Options in substitution therefor (to the extent
not theretofore exercised).
(g) Deferred Delivery of Common Shares. The Committee
may in its discretion permit Participants to defer delivery of
Common Stock acquired pursuant to a Participant's exercise of
an Option in accordance with the terms and conditions
established by the Committee.
(h) Other Terms and Conditions. Stock Options may
contain such other provisions, which shall not be inconsistent
with any of the terms of this Plan, as the Committee shall
deem appropriate including, without limitation, permitting
"reloads" such that the same number of Stock Options are
granted as the number of Stock Options exercised, shares used
to pay for the exercise price of Stock Options or shares used
to pay withholding taxes ("Reloads"). With respect to Reloads,
the exercise price of the new Stock Option shall be the Fair
Market Value on the date of the "reload" and the term of the
Stock Option shall be the same as the remaining term of the
Stock Options that are exercised, if applicable, or such other
exercise price and term as determined by the Committee.
ARTICLE VII
NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY
7.1 Non-Transferability. No Stock Option shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution.
All Stock Options shall be exercisable, during the Participant's lifetime, only
by the Participant. No Stock Option shall, except as otherwise specifically
provided by law or herein, be Transferable in any manner, and any attempt to
Transfer any such Stock Option shall be void, and no such Stock Option shall in
any manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such Stock Option,
nor shall it be subject to attachment or legal process for or against such
person. Notwithstanding the foregoing, the Committee may determine at the time
of grant or thereafter that a Non-Qualified Stock Option that is otherwise not
transferable pursuant to this Section 7.1 is transferable to a "family member"
in whole or in part and in such circumstances, and under such conditions, as
specified by the Committee. A Non- Qualified Stock Option that is transferred to
a family member pursuant to the preceding sentence may not be subsequently
transferred otherwise than by will or by the laws of descent and distribution.
For purposes hereof, a "family member" shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the employee's household (other than a tenant
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or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the employee)
control the management of assets, and any other entity in which these persons
(or the employee) own more than 50% of the voting interests.
7.2 Termination of Employment or Termination of Consultancy.
The following rules apply with regard to the Termination of Employment
or Termination of Consultancy of a Participant, unless otherwise
determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter::
(i) Termination by Reason of Death,
Disability or Retirement. If a Participant's Termination of
Employment or Termination of Consultancy is by reason of
death, Disability or Retirement, all Stock Options held by
such Participant may be exercised, to the extent exercisable
at the Participant's Termination of Employment or Termination
of Consultancy, by the Participant (or, in the case of death,
by the legal representative of the Participant's estate) at
any time within a period of one year from the date of such
Termination of Employment or Termination of Consultancy, but
in no event beyond the expiration of the stated terms of such
Stock Options; provided, however, that, in the case of
Retirement, if the Participant dies within such exercise
period, all unexercised Stock Options held by such Participant
shall thereafter be exercisable, to the extent to which they
were exercisable at the time of death, for a period of one
year from the date of such death, but in no event beyond the
expiration of the stated term of such Stock Options.
(ii) Involuntary Termination Without Cause.
If a Participant's Termination of Employment or Termination of
Consultancy is by involuntary termination without Cause, all
Stock Options held by such Participant may be exercised, to
the extent exercisable at Termination of Employment or
Termination of Consultancy, by the Participant at any time
within a period of 90 days from the date of such Termination
of Employment or Termination of Consultancy, but in no event
beyond the expiration of the stated term of such Stock
Options.
(iii) Voluntary Termination. If a
Participant's Termination of Employment or Termination of
Consultancy is voluntary, all Stock Options held by such
Participant may be exercised, to the extent exercisable at
Termination of Employment or Termination of Consultancy, by
the Participant at any time within a period of 90 days from
the date of such Termination of Employment or Termination of
Consultancy, but in no event beyond the expiration of the
stated terms of such Stock Options.
(iv) Termination for Cause. If a
Participant's Termination of Employment or Termination of
Consultancy (A) is for Cause or (B) is a voluntary termination
(as provided in subsection (iii) above) at any time after an
event which would be grounds for a Termination of Employment
or Termination of Consultancy
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for Cause, all Stock Options held by such Participant shall
thereupon terminate and expire as of the date of such
Termination of Employment or Termination of Consultancy.
ARTICLE VIII
CHANGE IN CONTROL PROVISIONS
8.1 Benefits. In the event of a Change in Control of the
Company, except as otherwise provided by the Committee upon the grant
of a Stock Option the Participant shall be entitled to the following
benefits:
(a) Except to the extent provided in the applicable
Stock Option agreement, the Participant's employment agreement
with the Company or an Affiliate, as approved by the
Committee, or other written agreement approved by the
Committee (as such agreement may be amended from time to
time), Options granted and not previously exercisable shall
not become exercisable upon a Change in Control.
(b) The Committee, in its sole discretion, may
provide for the purchase of any Stock Option by the Company or
an Affiliate for an amount of cash equal to the excess of the
Change in Control Price (as defined below) of the shares of
Common Stock covered by such Stock Options, over the aggregate
exercise price of such Stock Options. For purposes of this
Section 8.1, Change in Control Price shall mean the higher of
(i) the highest price per share of Common Stock paid in any
transaction related to a Change in Control of the Company, or
(ii) the highest Fair Market Value per share of Common Stock
at any time during the sixty (60) day period preceding a
Change in Control.
(c) Notwithstanding anything to the contrary herein,
unless the Committee provides otherwise at the time a Stock
Option is granted hereunder or thereafter, no acceleration of
exercisability shall occur with respect to such Stock Options
if the Committee reasonably determines in good faith, prior to
the occurrence of the Change in Control, that the Stock
Options shall be honored or assumed, or new rights substituted
therefor (each such honored, assumed or substituted stock
option hereinafter called an "Alternative Option"), by a
Participant's employer (or the parent or a subsidiary of such
employer) immediately following the Change in Control,
provided that any such Alternative Option must meet the
following criteria:
(i) the Alternative Option must be based on
stock which is traded on an established securities
market, or which will be so traded within 30 days of
the Change in Control;
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(ii) the Alternative Option must provide
such Participant with rights and entitlements
substantially equivalent to or better than the
rights, terms and conditions applicable under such
Stock Option, including, but not limited to, an
identical or better exercise schedule; and
(iii) the Alternative Option must have
economic value substantially equivalent to the value
of such Stock Option (determined at the time of the
Change in Control).
For purposes of Incentive Stock Options, any assumed
or substituted Stock Option shall comply with the requirements
of Treasury Regulation ss. 1.425-1 (and any amendments
thereto).
(d) Notwithstanding anything else herein, the
Committee may, in its sole discretion, provide for accelerated
vesting of an Option.
8.2 Change in Control. A "Change in Control" shall be deemed
to have occurred:
(a) at the time any "person" as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any company
owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their
ownership of Common Stock of the Company), is or becomes the
owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of two (2) consecutive years,
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 who has entered into an
agreement with the Company to effect a transaction described
in paragraph (a), (c), or (d) of this section) or a director
whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such term
is used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the
Board of Directors of the Company 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 two-year period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least a majority of the Board of
Directors;
(c) a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which
would result in the voting securities of
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the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more
than 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided,
however, that a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in
which no person (other than those covered by the exceptions in
(a) above) acquires more than 30% of the combined voting power
of the Company's then outstanding securities shall not
constitute a Change in Control of the Company; or
(d) at the time 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 other than the sale
or disposition of all or substantially all of the assets of
the Company to a person or persons who beneficially own,
directly or indirectly, at least 50% or more of the combined
voting power of the outstanding voting securities of the
Company at the time of the sale.
ARTICLE IX
TERMINATION OR AMENDMENT OF PLAN
Notwithstanding any other provision of this Plan, the Board or
the Committee may at any time, and from time to time, amend, in whole
or in part, any or all of the provisions of this Plan (including any
amendment deemed necessary to ensure that the Company may comply with
any regulatory requirement referred to in Article XI), or suspend or
terminate it entirely, retroactively or otherwise; provided, however,
that, unless otherwise required by law or specifically provided herein,
the rights of a Participant with respect to Options granted prior to
such amendment, suspension or termination, may not be impaired without
the consent of such Participant and, provided further, without the
approval of the stockholders of the Company in accordance with the laws
of the State of Delaware, solely to the extent required by the
applicable provisions of Rule 16b-3 or Section 162(m) of the Code, or,
solely to the extent applicable to Incentive Stock Options, Section 422
of the Code, no amendment may be made which would (i) increase the
aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) change the classification of Participants eligible to
receive Stock Options under this Plan; (iii) decrease the minimum
option price of any Stock Option; or (iv) extend the maximum option
period under Section 6.3. In no event may this Plan be amended without
the approval of the stockholders of the Company in accordance with the
applicable laws of the State of Delaware to increase the aggregate
number of shares of Common Stock that may be issued under this Plan,
decrease the minimum exercise price of any Stock Option, or to make any
other amendment that would require stockholder approval under the rules
of any exchange
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or system on which the Company's securities are listed or traded at the
request of the Company.
The Committee may amend the terms of any Option theretofore
granted, prospectively or retroactively, but, subject to Article IV
above or as otherwise specifically provided herein, no such amendment
or other action by the Committee shall impair the rights of any holder
without the holder's consent.
ARTICLE X
UNFUNDED PLAN
10.1 Unfunded Status of Plan. This Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation.
With respect to any payments as to which a Participant has a fixed and
vested interest but which are not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the
Company.
ARTICLE XI
GENERAL PROVISIONS
11.1 Legend. The Committee may require each person receiving
shares pursuant to a Stock Option under this Plan to represent to and
agree with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof. In addition to any
legend required by this Plan, the certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on Transfer.
All certificates for shares of Common Stock delivered under
this Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then
listed or any national securities association system upon whose system
the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
11.2 Other Plans. Nothing contained in this Plan shall prevent
the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases.
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11.3 No Right to Employment/Consultancy. Neither this Plan nor
the grant of any Option hereunder shall give any Participant or other
employee or Consultant any right with respect to continuance of
employment or Consultancy by the Company or any Affiliate, nor shall
there be a limitation in any way on the right of the Company or any
Affiliate by which an employee is employed or a Consultant is retained
to terminate his employment or Consultancy at any time.
11.4 Withholding of Taxes. The Company shall have the right to
deduct from any payment to be made to a Participant, or to otherwise
require, prior to the issuance or delivery of any shares of Common
Stock or the payment of any cash hereunder, payment by the Participant
of, any Federal, state or local taxes required by law to be withheld.
Upon making an election under Code Section 83(b), a Participant shall
pay all required withholding to the Company.
Any such withholding obligation with regard to any Participant
may be satisfied, subject to the consent of the Committee, by reducing
the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a
share of Common Stock required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the
Participant.
11.5 Listing and Other Conditions.
(a) As long as the Common Stock is listed on a
national securities exchange or system sponsored by a national
securities association, the issue of any shares of Common
Stock pursuant to an Option shall be conditioned upon such
shares being listed on such exchange or system. The Company
shall have no obligation to issue such shares unless and until
such shares are so listed, and the right to exercise any Stock
Option with respect to such shares shall be suspended until
such listing has been effected.
(b) If at any time counsel to the Company shall be of
the opinion that any sale or delivery of shares of Common
Stock pursuant to an Option is or may in the circumstances be
unlawful or result in the imposition of excise taxes on the
Company under the statutes, rules or regulations of any
applicable jurisdiction, the Company shall have no obligation
to make such sale or delivery, or to make any application or
to effect or to maintain any qualification or registration
under the Securities Act or otherwise with respect to shares
of Common Stock or Stock Options, and the right to exercise
any Stock Option shall be suspended until, in the opinion of
said counsel, such sale or delivery shall be lawful or will
not result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension
under this Section 11.5, any Stock Option affected by such
suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such
suspension and
19
as to shares which would otherwise have become available
during the period of such suspension, but no such suspension
shall extend the term of any Stock Option.
11.6 Governing Law. This Plan shall be governed and construed
in accordance with the laws of the State of Delaware (regardless of the
law that might otherwise govern under applicable Delaware principles of
conflict of laws).
11.7 Construction. Wherever any words are used in this Plan in
the masculine gender they shall be construed as though they were also
used in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form they shall be
construed as though they were also used in the plural form in all cases
where they would so apply.
11.8 Other Benefits. No grant of an Option under this Plan
shall be deemed compensation for purposes of computing benefits under
any retirement plan of the Company or its subsidiaries nor affect any
benefits under any other benefit plan now or subsequently in effect
under which the availability or amount of benefits is related to the
level of compensation.
11.9 Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock
pursuant to any Options hereunder.
11.10 No Right to Same Benefits. The provisions of Options
need not be the same with respect to each Participant, and such Options
to individual Participants need not be the same in subsequent years.
11.11 Death/Disability. The Committee may in its discretion
require the transferee of a Participant to supply it with written
notice of the Participant's death or Disability and to supply it with a
copy of the will (in the case of the Participant's death) or such other
evidence as the Committee deems necessary to establish the validity of
the transfer of an Option. The Committee may also require that the
agreement of the transferee to be bound by all of the terms and
conditions of this Plan.
11.12 Section 16(b) of the Exchange Act. All elections and
transactions under this Plan by persons subject to Section 16 of the
Exchange Act involving shares of Common Stock are intended to comply
with any applicable exemptive condition under Rule 16b-3. The Committee
may establish and adopt written administrative guidelines, designed to
facilitate compliance with Section 16(b) of the Exchange Act, as it may
deem necessary or proper for the administration and operation of this
Plan and the transaction of business thereunder.
11.13 Severability of Provisions. If any provision of this
Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions
20
hereof, and this Plan shall be construed and enforced as if such
provisions had not been included.
11.14 Headings and Captions. The headings and captions herein
are provided for reference and convenience only, shall not be
considered part of this Plan, and shall not be employed in the
construction of this Plan.
ARTICLE XII
EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board, subject to
the approval of this Plan by the stockholders of the Company in accordance with
the requirements of the laws of the State of Delaware or such later date as
provided in the adopting resolution.
ARTICLE XIII
TERM OF PLAN
No Option shall be granted pursuant to this Plan on or after the tenth
anniversary of the earlier of the date this Plan is adopted or the date of
stockholder approval, but Options granted prior to such tenth anniversary may
extend beyond that date.
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