EXHIBIT 4.5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
1999 STOCK INCENTIVE PLAN
ARTICLE I. PURPOSE; BACKGROUND
The purpose of this Plan is to give the Company a competitive advantage in
attracting, retaining and motivating officers, employees and/or consultants and
to provide the Company and its Subsidiaries and Affiliates with a stock plan
providing incentives directly linked to the profitability of the Company's
businesses and increases in the Company's shareholder value. Effective March 26,
2002, the ALEC Holdings, Inc. 1999 Stock Incentive Plan (the "ALEC Plan") was
merged into this Plan. Awards granted under the ALEC Plan will be governed by
the provisions of this Merged Plan, which preserves the original terms of the
ALEC Plan. After March 26, 2002, no new Awards may be granted under the ALEC
Plan, and all new Awards will be granted under the Merged Plan.
ARTICLE II. DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
(1) "Affiliate" means a corporation or other entity controlled by,
controlling or under common control with the Company and designated by the
Committee from time to time as such.
(2) "ALEC Plan" has the meaning set forth in Article I.
(3) "Award" means a Stock Appreciation Right, Stock Option, Restricted
Stock, Performance Unit, or other stock-based award.
(4) "Award Agreement" means a written agreement (including an employment
or consulting agreement) setting forth the terms and conditions of an Award.
(5) "Award Cycle" shall mean a period of consecutive fiscal years or
portions thereof designated by the Committee over which Performance Units are to
be earned.
(6) "Board" means the Board of Directors of the Company.
(7) "Business Combination" has the meaning set forth in Article XI(2)(c).
(8) "Cause" means, unless otherwise provided by the Committee, (a) "Cause"
as defined in any Award Agreement to which the Eligible Individual is a party;
or (b) if there is no such Award Agreement or, if it does not define Cause, any
of the following on the part of the Eligible Individual: an intentional failure
to perform assigned duties; willful misconduct in the course of the Eligible
Individual's employment; breach of a fiduciary duty involving personal profit;
or acts or omissions of personal dishonesty, any of which results in material
loss to the Company or any of its Subsidiaries or Affiliates. The Committee
shall, unless otherwise provided in an Award Agreement with the Eligible
Individual, have the sole discretion to determine whether "Cause" exists, and
its determination shall be final.
(9) "Change in Control" has the meaning set forth in Article XI
(10) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
(11) "Commission" means the Securities and Exchange Commission or any
successor agency.
(12) "Committee" means the Committee referred to in Article III.
(13) "Common Stock" means the common stock, par value $.01 per share, of
the Company.
(14) "Company" means Alaska Communications Systems Group, Inc., a Delaware
corporation, f/k/a ALEC Holdings, Inc., a Delaware corporation.
(15) "Covered Employee" means an Eligible Individual designated prior to
or at the time of the grant of Restricted Stock or Performance Units by the
Committee as an individual who is or may be a "covered employee" within the
meaning of Section 162(m)(3) of the Code in the year in which Restricted Stock
or Performance Units are expected to be taxable to such Eligible Individual.
(16) "Disability" means, unless otherwise provided by the Committee, the
permanent and total inability of an Eligible Individual by reason of mental or
physical infirmity, or both, to perform the work customarily assigned to him or
her, if a medical doctor selected or approved by the Board, and knowledgeable in
the field of such infirmity, advises the Committee either that it is not
possible to determine when such Disability will terminate or that it appears
probable that such Disability will be permanent during the remainder of said
Eligible Individual's lifetime.
(17) "Effective Date" has the meaning set forth in Article XVI.
(18) "Eligible Individual" means any officer, employee or consultant of
the Company or any of its Subsidiaries or Affiliates, and prospective employees
and consultants who have accepted offers of employment or consultancy from the
Company or its Subsidiaries or Affiliates, and who are or will be responsible
for or contribute to the management, growth or profitability of the business of
the Company, or its Subsidiaries or Affiliates. Non-Employee Directors who
received an Award under the ALEC Plan are also Eligible Individuals.
(19) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
(20) "Fair Market Value" of the Common Stock means, for Awards issued
under the Pre-Merger Plan and the Merged Plan, the closing bid price of the
Common Stock as reported by the Nasdaq National Market as of any given date or,
if there are no reported sales on such date, on the last day prior to such date
on which there were sales of the Common Stock on the Nasdaq National Market or,
if the Common Stock is not quoted on the Nasdaq National Market, the closing
sale price of the Common Stock on any national securities exchange on which the
Common Stock is listed on such date. If there is no regular public trading
market for such Common Stock, the Fair Market Value of the Common Stock shall be
determined by the Committee in good faith.
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(21) "Fair Market Value" of the Common Stock for Awards issued under the
ALEC Plan means, as of any given date, the mean between the highest and lowest
reported sales prices of the Common Stock on the New York Stock Exchange, or, if
not listed on such exchange, on any other national securities exchange on which
the Common Stock is listed, or, if not so listed, on the Nasdaq National Market.
If such sales prices are not so available, the Fair Market Value of the Common
Stock shall be determined by the Committee in good faith.
(22) "Fox Paine" has the meaning set forth in Article XI(2)(a).
(23) "FPC" has the meaning set forth in the Stockholders' Agreement.
(24) "FPC Affiliate" means an individual or entity directly or indirectly
controlled by, controlling, or under common control with FPC.
(25) "Freestanding Stock Appreciation Right" has the meaning set forth in
Article VII(1).
(26) "Incumbent Board" has the meaning set forth in Article XI(2)(b).
(27) "Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of Section 422 of
the Code.
(28) "Merger Date" means March 26, 2002.
(29) "Merged Plan" means the Plan after the Merger Date.
(30) "Non-Employee Director" means a member of the Board who qualifies as
a Non-Employee Director as defined in Rule 16b-3.
(31) "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(32) "Outstanding Company Common Stock" has the meaning set forth in
Article XI(2)(a).
(33) "Outstanding Company Voting Power" has the meaning set forth in
Article XI(2)(a).
(34) "Performance Goals" means the performance goals established by the
Committee in connection with the grant of Restricted Stock or Performance Units.
In the case of Qualified Performance-Based Awards, (a) such goals shall be based
on the attainment of specified levels of one or more of the following measures:
return on equity, return on assets, operating income, earnings per share, net
income and/or achievement of pre-determined, objectively defined strategic
performance goals; and (b) such Performance Goals shall be set by the Committee
within the time period prescribed by Section 162(m) of the Code and related
regulations. Performance Goals may be stated in the alternative or in
combination.
(35) "Performance Units" means an Award granted under Article IX.
(36) "Person" has the meaning set forth in Article XI(2)(a).
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(37) "Plan" means the Alaska Communications Systems Group, Inc. 1999 Stock
Incentive Plan, as set forth herein and as hereinafter amended from time to
time.
(38) "Pre-Merger Plan" means the Alaska Communications Systems Group, Inc.
1999 Stock Incentive Plan prior to the Merger Date.
(39) "Qualified Performance-Based Award" means an Award of Restricted
Stock or Performance Units designated as such by the Committee at the time of
grant, based upon a determination that (a) the recipient is a Covered Employee;
and (b) the Committee wishes such Award to qualify for the Section 162(m)
Exemption.
(40) "Restricted Stock" means an Award granted under Article VIII.
(41) "Restriction Period" has the meaning set forth in Article VIII(3)(b).
(42) "Retirement" means retirement from the employ of the Company or its
Subsidiaries or Affiliates at the normal or early retirement date as set forth
in any tax-qualified retirement/pension plan of the Company.
(43) "Rule 13d-3" means Rule 13d-3, as promulgated by the Commission under
Section 13(d) of the Exchange Act, as amended from time to time.
(44) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
(45) "Section 162(m) Exemption" means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C) of the Code.
(46) "Stock Appreciation Right" means an Award granted under Article VII.
(47) "Stock Option" means an Award granted under Article VI.
(48) "Stockholders' Agreement" means that certain Stockholders' Agreement
dated as of May 14, 1999, among the Company and certain shareholders of the
Company, as amended from time to time.
(49) "Subsidiary" means any corporation, partnership, joint venture or
other entity during any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the Company or any successor to
the Company.
(50) "Tandem Stock Appreciation Right" has the meaning set forth in
Article VII(1).
(51) "Termination of Employment" means the termination of an Eligible
Individual's employment with, or performance of services for, the Company and
any of its Subsidiaries or Affiliates. An Eligible Individual employed by, or
performing services for, a Subsidiary or an Affiliate shall also be deemed to
incur a Termination of Employment if the Subsidiary or Affiliate ceases to be
such a Subsidiary or an Affiliate, as the case may be, and the Eligible
Individual does not immediately thereafter become an employee of, or service
provider for, the Company or another Subsidiary or Affiliate. Temporary absences
from employment because of illness, vacation or leave of absence and transfers
among the Company and its Subsidiaries and
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Affiliates shall not be considered Terminations of Employment. For purposes of
the Plan, an Eligible Individual's employment shall be deemed to have terminated
at the close of business on the day preceding the first date on which he or she
is no longer for any reason whatsoever employed by the Company or any of its
Subsidiaries or Affiliates.
(52) "Transferred Shares" has the meaning set forth in Article IV.
ARTICLE III. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
or such other committee of the Board as the Board may from time to time
designate (the "Committee"), which shall be composed of not less than two
directors, and shall be appointed by and serve at the pleasure of the Board.
The Committee shall have plenary authority to grant Awards pursuant to the
terms of the Plan to Eligible Individuals.
Among other things, the Committee shall have the authority, subject to the
terms of the Plan:
(1) To select the Eligible Individuals to whom Awards may from time to
time be granted;
(2) To determine whether and to what extent Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Units and other stock-based awards or any combination thereof are to
be granted hereunder;
(3) To determine the number of shares of Common Stock to be covered by
each Award granted hereunder;
(4) To determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Article VI(1)), any
vesting condition, restriction or limitation (which may be related to the
performance of the Eligible Individual, the Company or any Subsidiary or
Affiliate) and any vesting acceleration or forfeiture waiver regarding any Award
and the shares of Common Stock relating thereto, based on such factors as the
Committee shall determine;
(5) To modify, amend or adjust the terms and conditions of any Award, at
any time or from time to time, including but not limited to Performance Goals;
provided however, that the Committee may not (a) subject to the last paragraph
of Article IV, reduce the exercise price or cancel and regrant a Stock Option
theretofore granted; or (b) adjust upwards the amount payable with respect to a
Qualified Performance-Based Award or waive or alter the Performance Goals
associated therewith;
(6) To determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred; and
(7) To determine under what circumstances an Award may be settled in cash
or Common Stock under Articles VI(9), VI(10), VII(2), VII(3) and IX(2)(d).
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to
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interpret the terms and provisions of the Plan and any Award issued under the
Plan (and any agreement relating thereto) and to otherwise supervise the
administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the Committee may, except to the extent prohibited by applicable law
or the applicable rules of a stock exchange or automated quotation system,
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it; provided that, no such
delegation may be made that would cause Awards or other transactions under the
Plan to cease to be exempt from Section 16(b) of the Exchange Act or cause an
Award designated as a Qualified Performance-Based Award not to qualify for, or
to cease to qualify for, the Section 162(m) Exemption. Any such allocation or
delegation may be revoked by the Committee at any time.
Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any time thereafter. All decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and all Eligible Individuals.
Any authority granted to the Committee may also be exercised by the full
Board, except to the extent that the grant or exercise of such authority would
cause any Award or transaction to become subject to (or lose an exemption under)
Section 16(b) of the Exchange Act or cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to qualify for, the
Section 162(m) Exemption. To the extent that any permitted action taken by the
Board conflicts with action taken by the Committee, the Board action shall
control.
ARTICLE IV. COMMON STOCK SUBJECT TO PLAN
The maximum number of shares of Common Stock that may be delivered to
Eligible Individuals and their beneficiaries under the Plan shall be 4,910,486.
On the Merger Date, the Company allocated the 2,448,449 shares reserved for
options granted under the ALEC Plan to the Merged Plan, the 540,459 shares
available under the ALEC Plan to the Merged Plan, and the 421,578 shares issued
and outstanding under the ALEC Plan to the Merged Plan (collectively, the
"Transferred Shares"). The maximum number of shares available under the
Pre-Merger Plan was 1,500,000. The maximum number of shares available for
incentive stock options is 1,500,000.
No Eligible Individual may be granted Stock Options and Freestanding Stock
Appreciation Rights covering in excess of 500,000 shares of Common Stock in any
calendar year. No Eligible Individual may be granted more than 500,000 shares of
Restricted Stock or Performance Units covering in excess of 500,000 shares of
Common Stock under this Plan. Shares subject to an Award under the Plan may be
authorized and unissued shares or may be treasury shares.
If any Award granted under the Pre-Merger or the Merged Plan is forfeited
or if any Stock Option (and related Stock Appreciation Right, if any)
terminates, expires or lapses without being exercised, or if any Stock
Appreciation Right is exercised for cash, shares of Common Stock subject to such
Awards shall again be available for distribution in connection with Awards under
the Plan. If any Award granted under the ALEC Plan is forfeited or if any Stock
Option (and related Stock Appreciation Right, if any) terminates, expires or
lapses without being
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exercised, or if any Stock Appreciation Right is exercised for cash, shares of
Common Stock subject to such Awards shall again be available for distribution in
connection with Awards under the Plan.
In the event of any change in corporate capitalization, such as a stock
split or an extraordinary corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other distribution of stock
or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code) or any partial or complete liquidation of the Company, the Committee or
Board may make such substitution or adjustments to reflect such change or
transaction in (a) the aggregate number and kind of shares reserved for issuance
under the Plan; (b) the limitation upon Stock Options and Stock Appreciation
Rights to be granted to any Eligible Individual, to the extent such adjustment
does not cause any Qualified Performance-Based Award to fail to qualify for the
Section 162(m) Exemption; (c) the number, kind and option price of shares or
other property subject to outstanding Stock Options, Stock Appreciation Rights
and Restricted Stock; (d) the number and kind of shares or other property
subject to other outstanding Awards granted under the Plan; and/or (e) such
other equitable manner, in each case, as it may determine to be appropriate in
its sole discretion; provided, however, that the number of shares subject to any
Award shall always be a whole number. Such adjusted option price shall also be
used to determine the amount payable by the Company upon the exercise of any
Tandem Stock Appreciation Right.
ARTICLE V. ELIGIBILITY
Awards may be granted under the Plan to Eligible Individuals. Except for
grants made under the ALEC Plan prior to the Merger Date, no grant shall be made
under this Plan to a director who is not an officer or a salaried employee of
the Company or its Subsidiaries or Affiliates.
ARTICLE VI. STOCK OPTIONS
Stock Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and Nonqualified
Stock Options. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Nonqualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights); provided however, that
grants hereunder are subject to the aggregate limit on grants to Eligible
Individuals set forth in Article IV. Incentive Stock Options may be granted only
to employees of the Company and its subsidiaries (within the meaning of Section
424(f) of the Code). Except as provided in Article IV, any Award granted with
respect to Transferred Shares must be a Nonqualified Stock Option. To the extent
that any Stock Option is not designated as an Incentive Stock Option or even if
so designated does not qualify as an Incentive Stock Option on or subsequent to
its grant date, it shall constitute a Nonqualified Stock Option.
Stock Options shall be evidenced by Award Agreements, the terms and
provisions of which may differ. The Award Agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
Nonqualified Stock Option. The grant of a Stock Option shall occur on the date
the Committee by resolution selects an Eligible Individual to receive a grant of
a Stock Option, determines the number of shares of Common Stock to be subject to
such Stock Option to be granted to such Eligible Individual and specifies the
terms and
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provisions of the Stock Option. The Company shall notify an Eligible Individual
of any grant of a Stock Option, and a written Award Agreement shall be duly
executed and delivered by the Company to the Eligible Individual. Such Award
Agreement shall become effective upon execution by the Company and the Eligible
Individual.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(1) Option Price. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee and set forth in the
Award Agreement, and shall not be less than the Fair Market Value of the Common
Stock subject to the Stock Option on the date of grant unless otherwise
determined by the Committee at the time of grant.
(2) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than 10 years after the
date the Stock Option is granted. If the Committee has not fixed the term of a
Stock Option granted prior to the Merger Date under the ALEC Plan, such term
shall be 10 years.
(3) Exercisability. Except as otherwise provided herein or as determined
by the Committee at the time of grant, each Stock Option shall be exercisable in
four equal annual installments, beginning on the first anniversary of the date
of grant. The Committee may at any time waive such installment exercise
provisions, in whole or in part, based on such factors as the Committee may
determine. In addition, the Committee may at any time accelerate the
exercisability of any Stock Option.
(4) Method of Exercise. Subject to the provisions of this Article VI,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase price
by certified or bank check or such other instrument as the Company may accept.
If approved by the Committee, payment, in full or in part, may also be made in
the form of unrestricted Common Stock (by delivery of such shares or by
attestation) already owned by the optionee of the same class as the Common Stock
subject to the Stock Option (based on the Fair Market Value of the Common Stock
on the date the Stock Option is exercised); provided however, that, in the case
of an Incentive Stock Option, the right to make a payment in the form of already
owned shares of Common Stock of the same class as the Common Stock subject to
the Stock Option may be authorized only at the time the Stock Option is granted;
and provided further, that under the Pre-Merger Plan or the Merged Plan such
already owned shares must have been held by the optionee for at least six months
at the time of exercise or must have been purchased on the open market.
If approved by the Committee, payment in full or in part may also be made
by delivering a properly executed exercise notice to the Company, together with
a copy of irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds necessary to pay the purchase price,
and, if requested, reduced by the amount of any federal, state, local or foreign
withholding taxes. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.
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In addition, if approved by the Committee, payment in full or in part may
also be made by instructing the Committee to withhold a number of such shares
having a Fair Market Value on the date of exercise equal to the aggregate
exercise price of such Stock Option.
No shares of Common Stock shall be issued until full payment therefor has
been made. Except as otherwise provided in the Stockholders' Agreement, the
applicable Award Agreement or Article VI(10), an optionee shall have all of the
rights of a shareholder of the Company holding the Common Stock that is subject
to such Stock Option (including, if applicable, the right to vote the shares and
the right to receive dividends and distributions), when the optionee has given
written notice of exercise, has paid in full for such shares and, if applicable,
has given the representations described in Article XV(2).
(5) Nontransferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (a) by will or by the laws of descent
and distribution; or (b) in the case of a Nonqualified Stock Option, as
otherwise expressly permitted by the Committee including, if so permitted,
pursuant to a transfer to such optionee's immediate family, whether directly or
indirectly or by means of a trust or partnership or otherwise. For purposes of
the Plan, unless otherwise determined by the Committee, "immediate family" shall
mean, except as otherwise defined by the Committee, any child, sibling,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
sister-in-law or brother-in-law, including adoptive relationships, of the
optionee. All Stock Options shall be exercisable, subject to the terms of the
Plan, only by the optionee, the guardian or legal representative of the
optionee, or any person to whom such option is transferred pursuant to this
paragraph, it being understood that the terms "holder" and "optionee" include
such guardian, legal representative and other transferee.
(6) Termination by Death. Unless otherwise determined by the Committee or
as set forth in an Award Agreement, if an optionee incurs a Termination of
Employment by reason of death, any Stock Option held by such optionee may
thereafter be exercised, to the extent then exercisable, or on such accelerated
basis as the Committee may determine, for a period of one year (or such other
period as the Committee may specify in the option agreement) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is shorter.
(7) Termination by Reason of Disability or Retirement. Unless otherwise
determined by the Committee or as set forth in an Award Agreement, if an
optionee incurs a Termination of Employment by reason of Disability or
Retirement, any Stock Option held by such optionee may thereafter be exercised
by the optionee, to the extent it was exercisable at the time of termination, or
on such accelerated basis as the Committee may determine, for a period of one
year (or such other period as the Committee may specify in the option agreement)
from the date of such Termination of Employment or until the expiration of the
stated term of such Stock Option, whichever period is shorter; provided however,
that if the optionee dies within such period, any unexercised Stock Option held
by such optionee shall, notwithstanding the expiration of such period, continue
to be exercisable to the extent to which it was exercisable at the time of death
for a period of 12 months from the date of such death or until the expiration of
the stated term of such Stock Option, whichever period is shorter. If an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Nonqualified Stock Option.
(8) Other Termination. Unless otherwise determined by the Committee or as
set forth in an Award Agreement: (a) if an optionee who receives an Award under
the Pre-Merger
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Plan or the Merged Plan incurs a Termination of Employment for Cause, all Stock
Options held by such optionee shall thereupon terminate; and (b) if an optionee
incurs a Termination of Employment (i) for any reason other than death,
Disability or Retirement under the ALEC Plan, or (ii) for any reason other than
death, Disability, Retirement or for Cause under the Pre-Merger Plan or the
Merged Plan, any Stock Option held by such optionee, to the extent it was then
exercisable at the time of termination, or on such accelerated basis as the
Committee may determine, may be exercised for the lesser of three months from
the date of such Termination of Employment or the balance of such Stock Option's
term; provided however, that if the optionee dies within such three-month
period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three-month period, continue to be
exercisable to the extent to which it was exercisable at the time of death for a
period of 12 months from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is shorter. Notwithstanding
any other provision of this Plan to the contrary, in the event an optionee who
receives an Award under the Pre-Merger Plan or the Merged Plan incurs a
Termination of Employment other than for Cause during the 24-month period
following a Change in Control, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at the
time of termination, including on such accelerated basis as provided in Article
XI, for (c) the longer of (i) one year from such date of termination; or (ii)
such other period as may be provided in the Plan for such Termination of
Employment or as the Committee may provide in the option agreement; or (d) until
expiration of the stated term of such Stock Option, whichever period is shorter.
If an Incentive Stock Option is exercised after the expiration of the
post-termination exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a Nonqualified Stock
Option.
(9) Cashing Out of Stock Option. On receipt of written notice of exercise,
the Committee may elect to cash out all or part of the portion of the shares of
Common Stock for which a Stock Option is being exercised by paying the optionee
an amount, in cash or Common Stock, equal to the excess of the Fair Market Value
of the Common Stock over the option price times the number of shares of Common
Stock for which the Option is being exercised on the effective date of such
cash-out.
(10) Deferral of Option Shares. The Committee may from time to time
establish procedures pursuant to which an optionee under the Pre-Merger Plan or
the Merged Plan may elect to defer, until a time or times later than the
exercise of an Option, receipt of all or a portion of the shares of Common Stock
subject to such Option and/or to receive cash at such later time or times in
lieu of such deferred shares, all on such terms and conditions as the Committee
shall determine. If any such deferrals are permitted, then notwithstanding
Article VI(4) above, an optionee who elects such deferral shall not have any
rights as a shareholder with respect to such deferred shares unless and until
shares are actually delivered to the optionee with respect thereto, except to
the extent otherwise determined by the Committee.
ARTICLE VII. STOCK APPRECIATION RIGHTS
(1) Type of Stock Appreciation Right. Stock Appreciation Rights may be
granted without relationship to a Stock Option (each, a "Freestanding Stock
Appreciation Right") or in conjunction with all or part of any Stock Option
granted under the Plan (each, a "Tandem Stock Appreciation Right").
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(2) Terms of Freestanding Stock Appreciation Rights. Freestanding Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined by the Committee, including the following:
(a) a Freestanding Stock Appreciation Right shall be exercisable as
determined by the Committee, but in no event after 10 years from the date of
grant;
(b) the base price of a Freestanding Stock Appreciation Right shall
be the Fair Market Value of a share of Common Stock on the date of grant. A
Freestanding Stock Appreciation Right shall entitle the holder, upon exercise of
such right, to an amount in cash, shares of Common Stock or both (as determined
by the Committee), with a value equal to the product of (i) the excess of the
Fair Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Right over the base price of the Stock Appreciation Right;
and (ii) the number of shares of Common Stock as to which such Stock
Appreciation Right shall have been exercised with the Committee having the right
to determine the form of payment;
(c) a Freestanding Stock Appreciation Right shall be exercised by
giving written notice of exercise to the Company or its designated agent
specifying the number of shares of Common Stock as to which such Stock
Appreciation Right is being exercised; and
(d) a Freestanding Stock Appreciation Right shall not be
transferable other than by will or laws of descent and distribution.
(3) Terms of Tandem Stock Appreciation Rights. Tandem Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined by
the Committee. Such terms and conditions shall include the following:
(a) in the case of a Nonqualified Stock Option, Tandem Stock
Appreciation Rights may be granted either at or after the time of grant of such
Stock Option. In the case of an Incentive Stock Option, Tandem Stock
Appreciation Rights may be granted only at the time of grant of such Stock
Option;
(b) Tandem Stock Appreciation Rights granted under the ALEC Plan
shall be set forth in the Award Agreement for the related Stock Option or an
amendment thereto;
(c) a Tandem Stock Appreciation Right shall terminate and no longer
be exercisable upon the termination or exercise of the related Stock Option.
Tandem Stock Appreciation Rights shall be exercisable only at such time or times
and to the extent that the Stock Options to which they relate are exercisable in
accordance with the provisions of Article VI and this Article VII;
(d) upon the exercise of a Tandem Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash, shares of Common Stock
or both, in value equal to the excess of the Fair Market Value of one share of
Common Stock over the option price per share specified in the related Stock
Option multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment;
(e) a Tandem Stock Appreciation Right may be exercised by an
optionee in accordance with this Article VII(3) by surrendering the applicable
portion of the related Stock Option in accordance with procedures established by
the Committee, and upon such exercise and
11
surrender, the optionee shall be entitled to receive an amount determined in the
manner prescribed in this Article VII(3). Stock Options which have been so
surrendered shall no longer be exercisable to the extent the related Tandem
Stock Appreciation Rights have been exercised;
(f) upon the exercise of a Tandem Stock Appreciation Right, the
Stock Option or part thereof to which such Tandem Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the limitation
set forth in Article IV on the number of shares of Common Stock to be issued
under the Plan, but only to the extent that the number of shares covered by the
Tandem Stock Appreciation Right at the time of exercise is based on the value of
the Tandem Stock Appreciation Right at such time; and
(g) Tandem Stock Appreciation Rights shall be transferable only to
permitted transferees of the underlying Stock Option in accordance with Article
VI(5).
ARTICLE VIII. RESTRICTED STOCK
(1) Administration. Shares of Restricted Stock may be awarded either alone
or in addition to other Awards granted under the Plan. The Committee shall
determine the Eligible Individuals to whom and the time or times at which grants
of Restricted Stock will be awarded, the number of shares to be awarded to any
Eligible Individual, the conditions for vesting, the time or times within which
such Awards may be subject to forfeiture and any other terms and conditions of
the Awards in addition to those contained in Article VIII(3). Awards of
Restricted Stock under the ALEC Plan shall indicate whether the Company and its
Affiliates have the right to purchase shares of the Restricted Stock.
(2) Awards and Certificates. Shares of Restricted Stock shall be evidenced
in such manner as the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. Any certificate
issued in respect of shares of Restricted Stock shall be registered in the name
of such Eligible Individual and shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such Award, substantially
in the following form:
The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of the Alaska Communications Systems Group,
Inc. 1999 Stock Incentive Plan and an Award Agreement. Copies of
such Plan and Award Agreement are on file at the offices of Alaska
Communications Systems Group, Inc., 600 Telephone Avenue, Anchorage,
Alaska 99503.
The Committee may require that the certificates evidencing such shares be
held in custody by the Company until the restrictions thereon shall have lapsed
and that, as a condition of any Award of Restricted Stock, the Eligible
Individual shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.
(3) Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:
(a) the Committee may, prior to or at the time of grant, designate
an Award of Restricted Stock as a Qualified Performance-Based Award, in which
event it shall condition the grant or vesting, as applicable, of such Restricted
Stock upon the attainment of Performance Goals. If the Committee does not
designate an Award of Restricted Stock as a Qualified
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Performance-Based Award, it may also condition the grant or vesting thereof upon
the attainment of Performance Goals. Regardless of whether an Award of
Restricted Stock is a Qualified Performance-Based Award, the Committee may also
condition the grant or vesting thereof upon the continued service of the
Eligible Individual. The conditions for grant or vesting and the other
provisions of Restricted Stock Awards (including without limitation any
applicable Performance Goals) need not be the same with respect to each
recipient. The Committee may at any time, in its sole discretion, accelerate or
waive, in whole or in part, any of the foregoing restrictions; provided however,
that (except as otherwise provided in Article VIII(3)(d) or XI(1)(b)) in the
case of Restricted Stock that is a Qualified Performance-Based Award, the
applicable Performance Goals have been satisfied;
(b) subject to the provisions of the Plan and the Award Agreement
referred to in Article VIII(3)(f), during the period, if any, set by the
Committee, commencing with the date of such Award for which such Eligible
Individual's continued service is required (the "Restriction Period"), and until
the later of (i) the expiration of the Restriction Period; and (ii) the date the
applicable Performance Goals (if any) are satisfied, the Eligible Individual
shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
shares of Restricted Stock;
(c) except as provided in this paragraph (c) and Articles VIII(3)(a)
and VIII(3)(b) and in the Award Agreement and except as otherwise determined by
the Committee, the Eligible Individual shall have, with respect to the shares of
Restricted Stock, all of the rights of a shareholder of the Company holding the
class or series of Common Stock that is the subject of the Restricted Stock,
including, if applicable, the right to vote the shares and the right to receive
any cash dividends or distributions. If so determined by the Committee in the
applicable Award Agreement and subject to Articles IV and VIII(3)(h) of the
Plan, (i) cash dividends or distributions of property other than Common Stock
with respect to the class or series of Common Stock that is the subject of the
Restricted Stock Award shall be automatically deferred and reinvested in
additional Restricted Stock, held subject to the vesting of the underlying
Restricted Stock, or held subject to meeting Performance Goals or other
conditions applicable only to dividends or distributions; and (ii) for Awards of
Restricted Stock granted under the Pre-Merger Plan or the Merged Plan, dividends
payable in Common Stock shall be paid in the form of Restricted Stock of the
same class as the Common Stock with which such dividend was paid, held subject
to the vesting of the underlying Restricted Stock, or held subject to meeting
Performance Goals applicable only to dividends;
(d) except to the extent otherwise provided in the applicable Award
Agreement or Articles VIII(3)(a), VIII(3)(b), VIII(3)(e) or XI(1)(b), upon an
Eligible Individual's Termination of Employment for any reason during the
Restriction Period or before the applicable Performance Goals are satisfied, all
shares still subject to restriction shall be forfeited by the Eligible
Individual; provided however, that the Committee shall have the discretion to
waive, in whole or in part, any or all remaining restrictions (other than, in
the case of Restricted Stock which is a Qualified Performance-Based Award,
satisfaction of the applicable Performance Goals unless the Eligible
Individual's employment is terminated by reason of death or Disability) with
respect to any or all of such Eligible Individual's shares of Restricted Stock;
(e) if and when any applicable Performance Goals are satisfied and
the Restriction Period expires without a prior forfeiture of the Restricted
Stock, unlegended certificates for such shares shall be delivered to the
Eligible Individual upon surrender of the legended certificates;
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(f) each Award shall be confirmed by, and be subject to, the terms
of an Award Agreement;
(g) each Award granted under the ALEC Plan shall be subject to the
terms of the Stockholders' Agreement; and
(h) reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible with respect to Awards
granted under the Pre-Merger Plan and the Merged Plan if sufficient shares of
Common Stock are available under Article IV for such reinvestment (taking into
account then outstanding Awards).
ARTICLE IX. PERFORMANCE UNITS
(1) Administration. Performance Units may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall determine
the Eligible Individuals to whom and the time or times at which Performance
Units shall be awarded, the number of Performance Units to be awarded to any
Eligible Individual, the duration of the Award Cycle and any other terms and
conditions of the Award, in addition to those contained in Article IX(2).
(2) Terms and Conditions. Performance Units shall be subject to the
following terms and conditions:
(a) the Committee may, prior to or at the time of the grant,
designate Performance Units as Qualified Performance-Based Awards, in which
event it shall condition the settlement thereof upon the attainment of
Performance Goals, except as otherwise provided in Articles IX(2)(b) or
XI(1)(c). If the Committee does not designate Performance Units as Qualified
Performance-Based Awards, it may also condition the settlement thereof upon the
attainment of Performance Goals. Regardless of whether Performance Units are
Qualified Performance-Based Awards, the Committee may also condition the
settlement thereof upon the continued service of the Eligible Individual. The
provisions of such Awards (including without limitation any applicable
Performance Goals) need not be the same with respect to each recipient. Subject
to the provisions of the Plan and the Award Agreement referred to in Article
IX(2)(e), Performance Units may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Award Cycle;
(b) except to the extent otherwise provided in the applicable Award
Agreement or Articles IX(2)(c) or XI(1)(c), upon an Eligible Individual's
Termination of Employment for any reason during the Award Cycle or before any
applicable Performance Goals are satisfied, all rights to receive cash or stock
in settlement of the Performance Units shall be forfeited by the Eligible
Individual; provided however, that the Committee shall have the discretion to
waive, in whole or in part, any or all remaining payment limitations (other
than, in the case of Performance Units that are Qualified Performance-Based
Awards, satisfaction of the applicable Performance Goals unless the Eligible
Individual's employment is terminated by reason of death or Disability) with
respect to any or all of such Eligible Individual's Performance Units;
(c) an Eligible Individual may elect to further defer receipt of
cash or shares in settlement of Performance Units for a specified period or
until a specified event, subject in each case to the Committee's approval and to
such terms as are determined by the Committee. Subject to any exceptions adopted
by the Committee, such election must generally be made prior to commencement of
the Award Cycle for the Performance Units in question;
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(d) at the expiration of the Award Cycle, the Committee shall
evaluate and certify the Company's performance in light of any Performance Goals
for such Award, and shall determine the number of Performance Units granted to
the Eligible Individual which have been earned, and the Committee shall then
cause to be delivered (i) a number of shares of Common Stock equal to the number
of Performance Units determined by the Committee to have been earned; or (ii)
cash equal to the Fair Market Value of such number of shares of Common Stock to
the Eligible Individual, as the Committee shall elect (subject to any deferral
pursuant to Article IX(2)(c)); and
(e) each Award shall be confirmed by, and be subject to, the terms
of an Award Agreement.
ARTICLE X. OTHER STOCK-BASED AWARDS
Other Awards of Common Stock and other Awards that are valued in whole or
in part by reference to, or are otherwise based upon, Common Stock, including
(without limitation) dividend equivalents and convertible debentures, may be
granted either alone or in conjunction with other Awards granted under the Plan.
In the event that an Award is granted under this Article X to an Eligible
Individual who is an officer, the Award shall be granted in lieu of additional
cash compensation to the officer for services.
ARTICLE XI. CHANGE IN CONTROL PROVISIONS
(1) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, except as otherwise provided in the applicable Award Agreement or
the Stockholders' Agreement, in the event of a Change in Control:
(a) any Stock Options and Stock Appreciation Rights outstanding as
of the date such Change in Control is determined to have occurred, and which are
not then exercisable and vested, shall become fully exercisable and vested to
the full extent of the original grant;
(b) the restrictions and deferral limitations applicable to any
Restricted Stock (and any applicable dividends or distributions in respect of
Restricted Stock) shall lapse, and such Restricted Stock (and any applicable
dividends or distributions in respect of Restricted Stock) shall become free of
all restrictions and become fully vested and transferable to the full extent of
the original grant;
(c) all Performance Units shall be considered to be earned and
payable in full, and any deferral or other restriction shall lapse and such
Performance Units shall be settled in cash as promptly as is practicable;
provided that, if such cash settlement would make a Change in Control
transaction ineligible for pooling-of-interests accounting under APB No. 16
(that but for the nature of such payment would otherwise be eligible for such
accounting treatment), the Committee shall have the ability to substitute Common
Stock with a Fair Market Value (as of the effective date of the Change in
Control) equal to the cash that would otherwise be payable hereunder for such
cash settlement or, if necessary to preserve such accounting treatment,
otherwise modify or eliminate such right; and
(d) the Committee may also make additional adjustments and/or
settlements (including without limitation cash settlements) of outstanding
Awards granted under the Pre-Merger Plan and the Merged Plan as it deems
appropriate and consistent with the Plan's
15
purposes and shall, with respect to any right granted under this Plan that would
make a Change in Control transaction ineligible for pooling-of-interests
accounting under APB No. 16 (that but for the nature of such grant would
otherwise be eligible for such accounting treatment), equitably adjust such
Award or, if necessary to preserve such accounting treatment, otherwise modify
or eliminate such right (as determined by the Committee in its sole discretion).
(2) Definition of Change in Control for the Pre-Merger Plan and the Merged
Plan. For purposes of the Pre-Merger Plan and the Merged Plan, a "Change in
Control" shall mean the happening of any of the following events:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of both (i) 30% or more of either (A) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock"); or (B)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Power"); and (ii) more than both the Outstanding
Company Common Stock and the Outstanding Company Voting Power owned or
controlled directly or indirectly by Fox Paine Capital, LLC and/or its
controlled affiliates (collectively, "Fox Paine"); provided however, that for
purposes of this subsection (a), the following acquisitions shall not constitute
a Change in Control: (aa) any acquisition directly from the Company; (bb) any
acquisition by the Company; (cc) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or (dd) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i), (ii) and (iii) of subsection
(c) of this Section XI(2); or
(b) individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any reason not to
constitute at least a majority of the Board; provided however, that any
individual becoming a director subsequent to the effective date of the Plan
whose election, or nomination for election by the Company's shareholders, was
approved by Fox Paine at a time when such entity controlled at least a majority
of the Outstanding Company Voting Power or by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination: (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Power immediately prior to
such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries); (ii) in the event that Fox Paine does not own or control at least
50% of the Outstanding Company Voting Power upon the consummation of the
Business Combination, no
16
Person (excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 30% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation (and such amount exceeds the amount owned or
controlled by Fox Paine) except to the extent that such person had such
ownership of the Outstanding Company Common Stock or Outstanding Company Voting
Power immediately prior to the Business Combination; and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company
(3) Definition of Change in Control for Awards issued under the ALEC Plan.
For purposes of Awards issued under the ALEC Plan, a "Change in Control" shall
mean the happening of any of the following events:
(a) the acquisition by any person or group (as that term is defined
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other
than FPC (as defined in the Stockholders' Agreement) or any FPC Affiliate of
beneficial ownership of a majority of the outstanding voting stock of the
Company;
(b) any sale, lease, exchange or other transfer in one transaction
or a series of selected transactions, other than an entity that is majority
controlled by FPC or any FPC Affiliate, of all substantially all of the assets
of the Company and its operating subsidiaries; or
(c) any plan for the liquidation or dissolution of the Company.
ARTICLE XII. TERM, AMENDMENT AND TERMINATION
The Plan will terminate on the tenth anniversary of the Effective Date of
the Plan as set forth in Article XVI. Awards issued under the ALEC Plan, the
Pre-Merger or the Merged Plan outstanding under the Plan as of such date shall
not be affected or impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee under an Award theretofore granted without the optionee's or
recipient's consent. Awards issued under the Pre-Merger Plan or the Merged Plan
may be amended to comply with applicable law, stock exchange rules or accounting
rules without the holder's consent. No such amendment shall be made without the
approval of the Company's shareholders to the extent such approval is required
by applicable law or stock exchange rules; provided however, that shareholder
approval shall be required for any amendment which (1) increases the maximum
number of shares for which Stock Options may be granted under the Plan (subject,
however, to the provisions of Article IV hereof); (2) reduces the exercise price
at which Awards may be granted (subject, however, to the provisions of Article
IV hereof); (3) extends the period during which Stock Options may be granted or
exercised beyond the times originally prescribed; (4) changes the persons
eligible to participate in the Plan; or (5) materially increases the benefits
accruing to Eligible Individuals under the Plan.
17
Subject to the repricing restrictions in Article III(5)(a), the Committee
may amend the terms of any Award theretofore granted, prospectively or
retroactively, but no such amendment shall be permitted that would cause an
Award that is, or is intended to be, a Qualified Performance-Based Award to fail
or cease to qualify for the Section 162(m) Exemption, nor shall any such
amendment impair the rights of any holder without the holder's consent. Awards
issued under the Pre-Merger Plan or the Merged Plan may be amended to cause the
Plan or Award to comply with applicable law, stock exchange or automated
quotation system rules or accounting rules without the holder's consent.
Subject to the above provisions, the Board shall have the authority to
amend the Plan to take into account changes in law and in tax and accounting
rules as well as other developments, and to grant Awards which qualify for
beneficial treatment under such rules without shareholder approval.
ARTICLE XIII. CASH PAYMENTS
The Committee may grant to an Eligible Individual the right to receive a
cash payment in an amount specified by the Committee, to be paid at such time or
times (if ever) as an Award granted under the ALEC Plan results in compensation
income to the Eligible Individual, for the purpose of assisting the Eligible
Individual to pay the resulting taxes, all as determined by the Committee, and
on such other terms and conditions as the Committee shall determine.
ARTICLE XIV. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
ARTICLE XV. GENERAL PROVISIONS
(1) Stockholders' Agreement. Notwithstanding anything in this Plan to the
contrary, with respect to Awards granted under the ALEC Plan, unless the
Committee determines otherwise, it was a condition to receiving any Award and is
a condition to transferring any Stock Option in accordance with Article VI(5),
or any other transfer permitted under the terms of an Award Agreement or
otherwise, that an Eligible Individual (or transferee in the case of such
transfer) shall become a party to the Stockholders' Agreement and such Eligible
Individual shall become a "Management Investor" thereunder (or such transferee
shall become a "Permitted Transferee" of a "Management Investor" thereunder).
(2) Representations. The Committee may require each person purchasing or
receiving shares pursuant to an Award to represent to and agree with the Company
in writing that such person is acquiring the shares without a view to the
distribution thereof and may require any Eligible Individual who has received an
Award under the ALEC Plan to make any other representations and warranties that
the Committee deems appropriate. The certificates for such shares may include
any legend which the Committee deems necessary or appropriate to reflect any
restrictions on transfer.
18
(3) Conditions (Pre-Merger Plan and Merged Plan). Notwithstanding any
other provision of the Plan or agreements made pursuant thereto, the Company
shall not be required to issue or deliver any certificate or certificates for
shares of Common Stock under the Pre-Merger Plan or the Merged Plan prior to
fulfillment of all of the following conditions:
(a) quotation or approval for quotation upon notice of issuance of
such shares on the Nasdaq National Market, or listing on such other securities
exchange as may at the time be the principal market for the Common Stock;
(b) any registration or other qualification of such shares of the
Company under any state or federal law or regulation, or the maintaining in
effect of any such registration or other qualification which the Committee
shall, in its absolute discretion upon the advice of counsel, deem necessary or
advisable; and
(c) obtaining any other consent, approval, or permit from any state
or federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary or
advisable.
(4) Conditions (ALEC Plan). If any law or any regulation of any commission
or agency having jurisdiction shall require the Company or an Eligible
Individual seeking to exercise an Award under the ALEC Plan to take any action
with respect to the Common Stock to be issued upon the exercise of an Award then
the date upon which the Company shall issue or cause to be issued the
certificate or certificates for the Common Stock shall be postponed until full
compliance has been made with all such requirements of law or regulation;
provided that, the Company shall use its reasonable efforts to take all
necessary action to comply with such requirements of law or regulation.
Moreover, in the event that the Company shall determine that, in compliance with
any applicable statutes or regulations, it is necessary to register any of the
Common Stock with respect to which an exercise of an Award has been made, or to
qualify any such Common Stock for exemption from the requirements of any
applicable statute or regulation, no Award may be exercised and no Common Stock
shall be issued to the exercising Eligible Individual until the required action
has been completed; provided that, the Company shall use its reasonable efforts
to take all necessary action to comply with such requirements of law or
regulation. Notwithstanding anything to the contrary contained herein, neither
the Board nor the members of the Committee owes a fiduciary duty to any Eligible
Individual in his or her capacity as such.
(5) Additional Compensation. Nothing contained in the Plan shall prevent
the Company or any Subsidiary or Affiliate from adopting other or additional
compensation arrangements for its employees.
(6) No Right of Employment. The Plan shall not constitute a contract of
employment, and adoption of the Plan or grant of any Award shall not confer upon
any employee any right to continued employment, nor shall it interfere in any
way with the right of the Company or any Subsidiary or Affiliate to terminate
the employment of any employee at any time.
(7) Withholding. No later than the date as of which an amount first
becomes includible in the gross income of the Eligible Individual for federal
income tax purposes with respect to any Award under the Plan, the Eligible
Individual shall pay to the Company, or make arrangements satisfactory to the
Company regarding the payment of, any federal, state, local or foreign taxes of
any kind required by law to be withheld with respect to such amount. Unless
otherwise determined by the Company, withholding obligations may be settled with
Common
19
Stock, including Common Stock that is part of the Award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Eligible Individual. The Committee may
establish such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Common Stock.
(8) Beneficiaries. The Committee shall establish such procedures as it
deems appropriate for an Eligible Individual to designate a beneficiary to whom
any amounts payable in the event of the Eligible Individual's death are to be
paid or by whom any rights of the Eligible Individual, after the Eligible
Individual's death, may be exercised.
(9) Subsidiaries. In the case of a grant of an Award to any employee of a
Subsidiary of the Company under the Pre-Merger Plan or the Merged Plan, the
Company may, if the Committee so directs, issue or transfer the shares of Common
Stock, if any, covered by the Award to the Subsidiary, for such lawful
consideration as the Committee may specify, upon the condition or understanding
that the Subsidiary will transfer the shares of Common Stock to the employee in
accordance with the terms of the Award specified by the Committee pursuant to
the provisions of the Plan. All shares of Common Stock underlying Awards that
are forfeited or canceled shall revert to the Company.
(10) Governing Law. All Awards made under the Pre-Merger Plan or the
Merged Plan and actions taken thereunder shall be governed by and construed in
accordance with the laws of the state of Delaware, without reference to
principles of conflict of laws. All Awards made under the ALEC Plan and actions
taken thereunder shall be governed by and construed in accordance with the laws
of the state of New York, without reference to principles of conflict of laws.
(11) Non-Transferability. Except as otherwise provided in Articles VI(5)
or VII(3)(g) or by the Committee, Awards under the Plan are not transferable
except by will or by the laws of descent and distribution.
(12) Non-US Employees or Expatriates. In the event an Award is granted to
an Eligible Individual who is employed or providing services outside the United
States and who is not compensated from a payroll maintained in the United
States, the Committee may, in its sole discretion, modify the provisions of the
Plan as they pertain to such individual to comply with applicable foreign law.
ARTICLE XVI. EFFECTIVE DATE OF PLAN
The effective date of the Plan is the date the Pre-Merger Plan was adopted
by the Board, subject to the approval of the Company's shareholders.
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