EXHIBIT 10.2
SPECTRUM PHARMACEUTICALS, INC.
2003 AMENDED AND RESTATED INCENTIVE AWARD PLAN
SPECTRUM PHARMACEUTICALS, INC., a Delaware corporation (the "COMPANY"),
has adopted this 2003 Amended and Restated Incentive Award Plan, (the "PLAN"),
which amends and restates the Spectrum Pharmaceuticals, Inc. 2003 Stock
Incentive Plan for the benefit of its eligible employees, consultants and
directors.
ARTICLE 1
PURPOSE
1.1 General. The purpose of the Plan is to promote the success and
enhance the value of the Company by linking the personal interests of the
members of the Board, employees, consultants, officers, and executives of the
Company and any Subsidiary, to those of Company stockholders and by providing
such individuals with an incentive for outstanding performance to generate
superior returns to Company stockholders. The Plan is further intended to
provide flexibility to the Company in its ability to motivate, attract, and
retain the services of members of the Board, employees, consultants, officers,
and executives of the Company upon whose judgment, interest, and special effort
the successful conduct of the Company's operation is largely dependent.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
2.1 Definitions. The following words and phrases shall have the
following meanings:
(a) "AWARD" means an Option, a Restricted Stock award, a Stock
Appreciation Right award, a Performance Share award, a Dividend Equivalents
award, a Stock Payment award, a Restricted Stock Unit award, or a
Performance-Based Award granted to a Participant pursuant to the Plan.
(b) "AWARD AGREEMENT" means any written or electronic
agreement, contract, or other instrument or document evidencing an Award.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CAUSE" includes one or more of the following: (i) the
commission of an act of fraud, embezzlement or dishonesty by a Participant that
has a material adverse impact on the Company or any successor or parent or
Subsidiary thereof; (ii) a conviction of, or plea of "guilty" or "no contest"
to, a felony by a Participant; (iii) any unauthorized use or disclosure by a
Participant of confidential information or trade secrets of the Company or any
successor or parent or Subsidiary thereof that has a material adverse impact on
any such entity or (iv) any other intentional misconduct by a Participant that
has a material adverse impact on the Company or any successor or parent or
Subsidiary thereof. However, if the term or concept of "Cause" has been defined
in an agreement between a Participant and the Company or any successor or parent
or Subsidiary thereof, then "Cause" shall have the definition set forth in such
agreement. The foregoing definition shall not in any way preclude or restrict
the right of the Company or any successor or parent or Subsidiary thereof to
discharge or dismiss any Participant in the service of such entity for any other
acts or omissions, but such other acts or omissions shall not be deemed, for
purposes of this Plan, to constitute grounds for termination for Cause.
(e) "CHANGE OF CONTROL" means and includes each of the
following:
(i) the acquisition, directly or indirectly, by any
"person" or "group" (as those
terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and
the rules thereunder) of "beneficial ownership" (as determined pursuant to Rule
13d-3 under the Exchange Act) of securities entitled to vote generally in the
election of directors ("voting securities") of the Company that represent 50% or
more of the combined voting power of the Company's then outstanding voting
securities, other than:
(A) an acquisition by a trustee or other
fiduciary holding securities under any employee benefit plan (or related trust)
sponsored or maintained by the Company or any person controlled by the Company
or by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any person controlled by the Company, or
(B) an acquisition of voting securities by
the Company or a corporation owned, directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of the
stock of the Company;
Notwithstanding the foregoing, the following event
shall not constitute an "acquisition" by any person or group for purposes of
this subsection (e): an acquisition of the Company's securities by the Company
that causes the Company's voting securities beneficially owned by a person or
group to represent 50% or more of the combined voting power of the Company's
then outstanding voting securities; provided, however, that if a person or group
shall become the beneficial owner of 50% or more of the combined voting power of
the Company's then outstanding voting securities by reason of share acquisitions
by the Company as described above and shall, after such share acquisitions by
the Company, become the beneficial owner of any additional voting securities of
the Company, then such acquisition shall constitute a Change of Control; or
(ii) during any period of twelve consecutive months,
individuals who, at the beginning of such period, constitute the Board together
with any new director(s) (other than a director designated by a person who shall
have entered into an agreement with the Company to effect a transaction
described in clauses (i) or (iii) of this subsection (e)) whose election by the
Board or nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the consummation by the Company (whether
directly involving the Company or indirectly involving the Company through one
or more intermediaries) of (x) a merger, consolidation, reorganization, or
business combination or (y) a sale or other disposition of all or substantially
all of the Company's assets or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction:
(A) which results in the Company's voting
securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly,
all or substantially all of the Company's assets or otherwise succeeds to the
business of the Company (the Company or such person, the "SUCCESSOR ENTITY"))
directly or indirectly, at least a majority of the combined voting power of the
Successor Entity's outstanding voting securities immediately after the
transaction, and
(B) after which no person or group
beneficially owns voting securities representing 50% or more of the combined
voting power of the Successor Entity; provided, however, that no person or group
shall be treated for purposes of this clause (B) as beneficially owning 50% or
more of
2
combined voting power of the Successor Entity solely as a result of the voting
power held in the Company prior to the consummation of the transaction; or
(iv) the Company's stockholders approve a liquidation
or dissolution of the Company.
Notwithstanding the foregoing, a transaction shall not
constitute a "CHANGE OF CONTROL" if: (w) its sole purpose is to change the state
of the Company's incorporation; (x) its sole purpose is to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company's securities immediately before such transaction; (y) it
constitutes the Company's initial public offering of its securities; or (z) it
is a transaction effected primarily for the purpose of financing the Company
with cash (as determined by the Committee in its discretion and without regard
to whether such transaction is effectuated by a merger, equity financing or
otherwise).
The Committee shall have full and final authority, which shall
be exercised in its discretion, to determine conclusively whether a Change of
Control of the Company has occurred pursuant to the above definition, and the
date of the occurrence of such Change of Control and any incidental matters
relating thereto.
(f) "CODE" means the Internal Revenue Code of 1986, as
amended.
(g) "COMMITTEE" means the committee of the Board described in
Article 12.
(h) "COVERED EMPLOYEE" means an Employee who is, or could be,
a "covered employee" within the meaning of Section 162(m) of the Code.
(i) "DISABILITY" means, for purposes of this Plan, that the
Participant qualifies to receive long-term disability payments under the
Company's long-term disability insurance program, as it may be amended from time
to time.
(j) "DIVIDEND EQUIVALENTS" means a right granted to a
Participant pursuant to Article 8 to receive the equivalent value (in cash or
Stock) of dividends paid on Stock.
(k) "EMPLOYEE" means any officer or other employee (as defined
in accordance with Section 3401(c) of the Code) of the Company or any
Subsidiary. A person shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between locations of
the Company or between the Company, any Subsidiary, or any successor. For
purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. Neither service as a director nor payment of a director's fee by the
Company shall be sufficient, by itself, to constitute "employment" by the
Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(m) "FAIR MARKET VALUE" shall mean, as of any date, the value
of Stock determined as follows:
(i) If the Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market
3
trading day prior to the date of determination, as reported in The Wall Street
Journal or such other source as the Committee deems reliable;
(ii) If the Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Stock on the date
prior to the date of determination as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or
(iii) In the absence of an established market for the
Stock, the Fair Market Value thereof shall be determined in good faith by the
Committee.
(n) "GOOD REASON" means a Participant's voluntary resignation
following any one or more of the following that is effected without the
Participant's written consent: (i) a reduction in his or her base salary
following a Change of Control, unless the base salaries of all similarly
situated individuals are similarly reduced or (ii) a relocation of such
Participant's place of employment of more than fifty (50) miles following a
Change of Control.
(o) "INCENTIVE STOCK OPTION" means an Option that is intended
to meet the requirements of Section 422 of the Code or any successor provision
thereto.
(p) "NON-EMPLOYEE DIRECTOR" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the
Exchange Act, or any successor definition adopted by the Board.
(q) "NON-QUALIFIED STOCK OPTION" means an Option that is not
intended to be an Incentive Stock Option.
(r) "OPTION" means a right granted to a Participant pursuant
to Article 5 of the Plan to purchase a specified number of shares of Stock at a
specified price during specified time periods. An Option may be either an
Incentive Stock Option or a Non-Qualified Stock Option.
(s) "PARTICIPANT" means a person who, as a member of the
Board, consultant to the Company or any Subsidiary or Employee, has been granted
an Award pursuant to the Plan.
(t) "PERFORMANCE-BASED AWARD" means an Award granted to
selected Covered Employees pursuant to Articles 6 and 8, but which is subject to
the terms and conditions set forth in Article 9. All Performance-Based Awards
are intended to qualify as Qualified Performance-Based Compensation.
(u) "PERFORMANCE CRITERIA" means the criteria that the
Committee selects for purposes of establishing the Performance Goal or
Performance Goals for a Participant for a Performance Period. The Performance
Criteria that will be used to establish Performance Goals are limited to the
following: net earnings (either before or after interest, taxes, depreciation
and amortization), net losses, sales or revenue, operating earnings, operating
cash flow, return on net assets, return on stockholders' equity, return on
assets, return on capital, stockholder returns, gross or net profit margin,
earnings per share, price per share of Stock, and market share, any of which may
be measured either in absolute terms or as compared to any incremental increase
or as compared to results of a peer group. The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.
4
(v) "PERFORMANCE GOALS" means, for a Performance Period, the
goals established in writing by the Committee for the Performance Period based
upon the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.
(w) "PERFORMANCE PERIOD" means the one or more periods of
time, which may be of varying and overlapping durations, as the Committee may
select, over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant's right to, and the
payment of, a Performance-Based Award.
(x) "PERFORMANCE SHARE" means a right granted to a Participant
pursuant to Article 8, to receive cash, Stock, or other Awards, the payment of
which is contingent upon achieving certain performance goals established by the
Committee.
(y) "PLAN" means this Spectrum Pharmaceuticals, Inc. 2003
Equity Incentive Award Plan, as amended and/or restated from time to time, as
successor to the Spectrum Pharmaceuticals, Inc. 2003 Stock Incentive Plan.
(z) "PUBLIC TRADING DATE" means the first date upon which
Stock is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.
(aa) "QUALIFIED PERFORMANCE-BASED COMPENSATION" means any
compensation that is intended to qualify as "qualified performance-based
compensation" as described in Section 162(m)(4)(C) of the Code.
(bb) "RESTRICTED STOCK" means Stock awarded to a Participant
pursuant to Article 6 that is subject to certain restrictions and to risk of
forfeiture.
(cc) "RESTRICTED STOCK UNIT" means a right to receive a share
of Stock during specified time periods pursuant to Article 8.
(dd) "STOCK" means the common stock of the Company and such
other securities of the Company that may be substituted for Stock pursuant to
Article 11.
(ee) "STOCK APPRECIATION RIGHT" or "SAR" means a right granted
pursuant to Article 7 to receive a payment equal to the excess of the Fair
Market Value of a specified number of shares of Stock on the date the SAR is
exercised over the Fair Market Value on the date the SAR was granted as set
forth in the applicable Award Agreement.
(ff) "STOCK PAYMENT" means (a) a payment in the form of shares
of Stock, or (b) an option or other right to purchase shares of Stock, as part
of any bonus, deferred compensation or other arrangement, made in lieu of all or
any portion of the compensation, granted pursuant to Article 8.
5
(gg) "SUBSIDIARY" means any corporation or other entity of
which a majority of the outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Company.
ARTICLE 3
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) The initial number of shares of Stock available for
issuance under the Plan shall be 2,000,000. Commencing on July 1, 2004, the
aggregate number of shares of Stock (i) subject to outstanding Awards under the
Plan and under any other bonus or similar plan or agreement of the Company, (ii)
previously issued upon exercise of Awards under the Plan and awards under any
other bonus or similar plan or agreement of the Company and (iii) issuable upon
future grants of Awards under the Plan and awards under any other bonus or
similar plan or agreement of the Company, at any time, shall equal 30 % of the
then outstanding shares of Stock of the Company, as calculated pursuant to
Section 260.140.45 of Title 10 of the California Code of Regulations; provided,
however, that notwithstanding the foregoing, the aggregate number of shares of
Stock that may be issued under the Plan shall not exceed 15,000,000 during the
ten year term of the Plan, as set forth in Section 13.2.
(b) To the extent that an Award terminates, expires, or lapses
for any reason, any shares of Stock subject to the Award shall again be
available for the grant of an Award pursuant to the Plan. Additionally, any
shares of Stock tendered or withheld to satisfy the grant or exercise price or
tax withholding obligation pursuant to any Award shall again be available for
the grant of an Award pursuant to the Plan. To the extent permitted by
applicable law or any exchange rule, shares of Stock issued in assumption of, or
in substitution for, any outstanding awards of any entity acquired in any form
of combination by the Company or any Subsidiary shall not be counted against
shares of Stock available for grant pursuant to this Plan. If shares of Stock
issued pursuant to Awards are repurchased by the Company at no less than their
original purchase price, such shares of Stock shall become available for future
grant under the Plan (unless the Plan has terminated).
(c) Notwithstanding the provisions of this Section 3.1, no
shares of Stock may again be optioned, granted or awarded if such action would
cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option
under Code Section 422.
3.2 Stock Distributed. Any Stock distributed pursuant to an Award
may consist, in whole or in part, of authorized and unissued Stock, treasury
Stock or Stock purchased on the open market.
3.3 Limitation on Number of Shares Subject to Awards.
Notwithstanding any provision in the Plan to the contrary, and subject to
Article 11, on and after the Public Trading Date, the maximum number of shares
of Stock with respect to one or more Awards that may be granted to any one
Participant during a calendar year shall be 500,000.
ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1 Eligibility.
(a) General. Persons eligible to participate in this Plan
include Employees, consultants to the Company or any Subsidiary and all members
of the Board, as determined by the Committee.
6
(b) Foreign Participants. In order to assure the viability of
Awards granted to Participants employed in foreign countries, the Committee may
provide for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations
contained in Sections 3.1 and 3.3 of the Plan.
4.2 Actual Participation. Subject to the provisions of the Plan,
the Committee may, from time to time, select from among all eligible
individuals, those to whom Awards shall be granted and shall determine the
nature and amount of each Award. No individual shall have any right to be
granted an Award pursuant to this Plan.
ARTICLE 5
STOCK OPTIONS
5.1 General. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
subject to an Option shall be determined by the Committee and set forth in the
Award Agreement; provided that the exercise price for any Option shall not be
less than par value of a share of Stock on the date of grant.
(b) Time And Conditions Of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part, provided that the term of any Option granted under the Plan shall not
exceed ten years, and provided further, that in the case of a Non-Qualified
Stock Option, such Option shall be exercisable for one year after the date of
the Participant's death. The Committee shall also determine the performance or
other conditions, if any, that must be satisfied before all or part of an Option
may be exercised.
(c) Payment. The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, promissory note bearing interest at such
rate as is a market rate of interest and which also precludes the imputation of
interest under the Code, shares of Stock held for longer than six months having
a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof, or other property acceptable
to the Committee (including through the delivery of a notice that the
Participant has placed a market sell order with a broker with respect to shares
of Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price, provided that payment of
such proceeds is then made to the Company upon settlement of such sale), and the
methods by which shares of Stock shall be delivered or deemed to be delivered to
Participants. Notwithstanding any other provision of the Plan to the contrary,
no Participant who is a member of the Board or an "executive officer" of the
Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to pay the exercise price of an Option in any method which would
violate Section 13(k).
(d) Evidence Of Grant. All Options shall be evidenced by a
written Award Agreement between the Company and the Participant. The Award
Agreement shall include such additional provisions as may be specified by the
Committee.
5.2 Incentive Stock Options. Incentive Stock Options shall be granted
only to Employees
7
and the terms of any Incentive Stock Options granted pursuant to the Plan must
comply with the following additional provisions of this Section 5.2:
(a) Exercise Price. The exercise price per share of Stock
shall be set by the Committee, provided that the exercise price for any
Incentive Stock Option shall not be less than 100% of the Fair Market Value on
the date of grant.
(b) Expiration Of Option. An Incentive Stock Option may not be
exercised to any extent by anyone after the first to occur of the following
events:
(1) Ten years from the date it is granted, unless an
earlier time is set in the Award Agreement.
(2) One year after the date of the Participant's
termination of employment or service on account of Disability or death, unless
in the case of death a shorter or longer period is designated in the Award
Agreement. Upon the Participant's Disability or death, any Incentive Stock
Options exercisable at the Participant's Disability or death may be exercised by
the Participant's legal representative or representatives, by the person or
persons entitled to do so pursuant to the Participant's last will and testament,
or, if the Participant fails to make testamentary disposition of such Incentive
Stock Option or dies intestate, by the person or persons entitled to receive the
Incentive Stock Option pursuant to the applicable laws of descent and
distribution.
(3) Three months after the date of the Participant's
termination of employment or service for any reason other than Disability or
death, unless the Participant dies during said three month period.
(c) Individual Dollar Limitation. The aggregate Fair Market
Value (determined as of the time the Option is granted) of all shares of Stock
with respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000 or such other
limitation as imposed by Section 422(d) of the Code, or any successor provision.
To the extent that Incentive Stock Options are first exercisable by a
Participant in excess of such limitation, the excess shall be considered
Non-Qualified Stock Options.
(d) Ten Percent Owners. An Incentive Stock Option shall be
granted to any individual who, at the date of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of Stock of
the Company only if such Option is granted at a price that is not less than 110%
of Fair Market Value on the date of grant and the Option is exercisable for no
more than five years from the date of grant.
(e) Transfer Restriction. The Participant shall give the
Company prompt notice of any disposition of shares of Stock acquired by exercise
of an Incentive Stock Option within (1) two years from the date of grant of such
Incentive Stock Option or (2) one year after the transfer of such shares of
Stock to the Participant.
(f) Expiration Of Incentive Stock Options. No Award of an
Incentive Stock Option may be made pursuant to this Plan after the tenth
anniversary of the Effective Date.
(g) Right To Exercise. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant.
8
5.3 Early Exercisability. The Committee may provide in the terms
of a Participant's Award Agreement that the Participant may, at any time before
the Participant's status as an Employee, member of the Board or consultant to
the Company terminates, exercise the Option(s) granted to such Participant in
whole or in part prior to the full vesting of the Option(s); provided, however,
shares of Stock acquired upon exercise of an Option which has not fully vested
may be subject to any forfeiture, transfer or other restrictions as the
Committee may determine in its sole discretion.
ARTICLE 6
RESTRICTED STOCK AWARDS
6.1 Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to any Participant selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.
All Awards of Restricted Stock shall be evidenced by a Restricted Stock Award
Agreement.
6.2 Issuance and Restrictions. Restricted Stock shall be subject
to such restrictions on transferability and other restrictions as the Committee
may impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.
6.3 Forfeiture. Except as otherwise determined by the Committee at
the time of the grant of the Award or thereafter, upon termination of employment
or service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that
the Committee may provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.
6.4 Certificates For Restricted Stock. Restricted Stock granted
pursuant to the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical
possession of the certificate until such time as all applicable restrictions
lapse.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right
may be granted to any Participant selected by the Committee. A Stock
Appreciation Right may be granted (a) in connection and simultaneously with the
grant of an Option, (b) with respect to a previously granted Option, or (c)
independent of an Option. A Stock Appreciation Right shall be subject to such
terms and conditions not inconsistent with the Plan as the Committee shall
impose and shall be evidenced by an Award Agreement.
9
7.2 Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.
(b) A CSAR may be granted to a Participant for no more than
the number of shares subject to the simultaneously or previously granted Option
to which it is coupled.
(c) A CSAR shall entitle the Participant (or other person
entitled to exercise the Option pursuant to the Plan) to surrender to the
Company unexercised a portion of the Option to which the CSAR relates (to the
extent then exercisable pursuant to its terms) and to receive from the Company
in exchange therefor an amount determined by multiplying the difference obtained
by subtracting the Option exercise price from the Fair Market Value of a share
of Stock on the date of exercise of the CSAR by the number of shares of Stock
with respect to which the CSAR shall have been exercised, subject to any
limitations the Committee may impose.
7.3 Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Stock as the Committee may determine.
The exercise price per share of Stock subject to each ISAR shall be set by the
Committee; provided, however, that, the Committee in its sole and absolute
discretion may provide that the ISAR may be exercised subsequent to a
termination of employment or service, as applicable, or following a Change of
Control of the Company, or because of the Participant's retirement, death or
disability, or otherwise.
(b) An ISAR shall entitle the Participant (or other person
entitled to exercise the ISAR pursuant to the Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Stock on the date of exercise of the ISAR by
the number of shares of Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.
7.4 Payment and Limitations on Exercise.
(a) Payment of the amounts determined under Section 7.2(c) and
7.3(b) above shall be in cash, in Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee.
(b) To the extent any payment under Section 7.2(c) or 7.3(b)
is effected in Stock it shall be made subject to satisfaction of all provisions
of Article 5 above pertaining to Options.
10
ARTICLE 8
OTHER TYPES OF AWARDS
8.1 Performance Share Awards. Any Participant selected by the
Committee may be granted one or more Performance Share awards which may be
denominated in a number of shares of Stock or in a dollar value of shares of
Stock and which may be linked to any one or more of the Performance Criteria or
other specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of
award) the contributions, responsibilities and other compensation of the
particular Participant.
8.2 Dividend Equivalents.
(a) Any Participant selected by the Committee may be granted
Dividend Equivalents based on the dividends declared on the shares of Stock that
are subject to any Award, to be credited as of dividend payment dates, during
the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee.
(b) Dividend Equivalents granted with respect to Options or
SARs that are intended to be Qualified Performance-Based Compensation shall be
payable, with respect to pre-exercise periods, regardless of whether such Option
or SAR is subsequently exercised.
8.3 Stock Payments. Any Participant selected by the Committee may
receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares shall be determined by the Committee and may be
based upon the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.
8.4 Restricted Stock Units. Any Participant selected by the
Committee may be granted an award of Restricted Stock Units in the manner
determined from time to time by the Committee. The number of Restricted Stock
Units shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by
the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. Stock underlying a Restricted Stock Unit
will not be issued until the Restricted Stock Unit has vested, pursuant to a
vesting schedule or performance criteria set by the Committee. Unless otherwise
provided by the Committee, a Participant awarded Restricted Stock Units shall
have no rights as a Company stockholder with respect to such Restricted Stock
Units until such time as the Restricted Stock Units have vested and the Stock
underlying the Restricted Stock Units has been issued.
8.5 Term. The term of any Award of Performance Shares, Dividend
Equivalents, Stock Payments or Restricted Stock Units shall be set by the
Committee in its discretion.
8.6 Exercise or Purchase Price. The Committee may establish the
exercise or purchase price of any Award of Performance Shares, Restricted Stock
Units or Stock Payments; provided, however, that such price shall not be less
than the par value of a share of Stock, unless otherwise permitted by applicable
state law.
8.7 Exercise Upon Termination of Employment or Service. An Award
of Performance
11
Shares, Dividend Equivalents, Restricted Stock Units and Stock Payments shall
only be exercisable or payable while the Participant is an Employee, consultant
to the Company or a member of the Board, as applicable; provided, however, that
the Committee in its sole and absolute discretion may provide that an Award of
Performance Shares, Dividend Equivalents, Stock Payments or Restricted Stock
Units may be exercised or paid subsequent to a termination of employment or
service, as applicable, upon or following a Change of Control of the Company, or
because of the Participant's retirement, death or disability, or otherwise;
provided, however, that any such provision with respect to Performance Shares
shall be subject to the requirements of Section 162(m) of the Code that apply to
Qualified Performance-Based Compensation.
8.8 Form of Payment. Payments with respect to any Awards granted
under this Article 8 shall be made in cash, in Stock or a combination of both,
as determined by the Committee.
8.9 Award Agreement. All Awards under this Article 8 shall be
subject to such additional terms and conditions as determined by the Committee
and shall be evidenced by a written Award Agreement.
ARTICLE 9
PERFORMANCE-BASED AWARDS
9.1 Purpose. The purpose of this Article 9 is to provide the
Committee the ability to qualify Awards other than Options and SARs and that are
granted pursuant to Articles 6 and 8 as Qualified Performance-Based
Compensation. If the Committee, in its discretion, decides to grant a
Performance-Based Award to a Covered Employee, the provisions of this Article 9
shall control over any contrary provision contained in Articles 6 or 8;
provided, however, that the Committee may in its discretion grant Awards to
Covered Employees that are based on Performance Criteria or Performance Goals
but that do not satisfy the requirements of this Article 9.
9.2 Applicability. This Article 9 shall apply only to those
Covered Employees selected by the Committee to receive Performance-Based Awards.
The designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.
9.3 Procedures With Respect to Performance-Based Awards. To the
extent necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6 and 8 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Covered
Employees, (ii) select the Performance Criteria applicable to the Performance
Period, (iii) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (iv) specify
the relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall
12
have the right to reduce or eliminate (but not to increase) the amount payable
at a given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the Performance Period.
9.4 Payment of Performance-Based Awards. Unless otherwise provided
in the applicable Award Agreement, a Participant must be employed by the Company
or a Subsidiary on the day a Performance-Based Award for such Performance Period
is paid to the Participant. Furthermore, a Participant shall be eligible to
receive payment pursuant to a Performance-Based Award for a Performance Period
only if the Performance Goals for such period are achieved. In determining the
amount earned under a Performance-Based Award, the Committee may reduce or
eliminate the amount of the Performance-Based Award earned for the Performance
Period, if in its sole and absolute discretion, such reduction or elimination is
appropriate.
9.5 Additional Limitations. Notwithstanding any other provision of
the Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.
ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS
10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the
Plan may, in the discretion of the Committee, be granted either alone, in
addition to, or in tandem with, any other Award granted pursuant to the Plan.
Awards granted in addition to or in tandem with other Awards may be granted
either at the same time as or at a different time from the grant of such other
Awards.
10.2 Award Agreement. Awards under the Plan shall be evidenced by
Award Agreements that set forth the terms, conditions and limitations for each
Award which may include the term of an Award, the provisions applicable in the
event the Participant's employment or service terminates, and the Company's
authority to unilaterally or bilaterally amend, modify, suspend, cancel or
rescind an Award.
10.3 Limits on Transfer. No right or interest of a Participant in
any Award may be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assigned, transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant's family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members of
the Participant's family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer may be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes (or to a "blind trust" in connection with the Participant's
termination of employment or service with the Company or a Subsidiary to assume
a position with a governmental, charitable, educational or similar non-profit
institution) and on a basis consistent with the Company's lawful issue of
securities.
13
10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant
may, in the manner determined by the Committee, designate a beneficiary to
exercise the rights of the Participant and to receive any distribution with
respect to any Award upon the Participant's death. A beneficiary, legal
guardian, legal representative, or other person claiming any rights pursuant to
the Plan is subject to all terms and conditions of the Plan and any Award
Agreement applicable to the Participant, except to the extent the Plan and Award
Agreement otherwise provide, and to any additional restrictions deemed necessary
or appropriate by the Committee. If the Participant is married and resides in a
community property state, a designation of a person other than the Participant's
spouse as his beneficiary with respect to more than 50% of the Participant's
interest in the Award shall not be effective without the prior written consent
of the Participant's spouse. If no beneficiary has been designated or survives
the Participant, payment shall be made to the person entitled thereto pursuant
to the Participant's will or the laws of descent and distribution. Subject to
the foregoing, a beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is filed with the
Committee.
10.5 Stock Certificates. Notwithstanding anything herein to the
contrary, the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Board has determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed or traded. All Stock
certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to
comply with federal, state, or foreign jurisdiction, securities or other laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock. In addition to the terms and conditions provided
herein, the Board may require that a Participant make such reasonable covenants,
agreements, and representations as the Board, in its discretion, deems advisable
in order to comply with any such laws, regulations, or requirements. The
Committee shall have the right to require any Participant to comply with any
timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion
of the Committee.
ARTICLE 11
CHANGES IN CAPITAL STRUCTURE
11.1 Adjustments.
(a) In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (i) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and
conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and (iii) the
grant or exercise price per share for any outstanding Awards under the Plan.
(b) In the event of any transaction or event described in
Section 11.1(a), the Committee, in its sole discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event and either
automatically or upon the Participant's request, is hereby authorized to take
any one or more of the following actions whenever the Committee determines that
such action is appropriate in order to prevent
14
dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan or with respect to any Award granted
or issued under the Plan or to facilitate such transaction or event:
(1) To provide for either the purchase of any such
Award for an amount of cash equal to the amount that could have been obtained
upon the exercise of such Award or realization of the Participant's rights had
such Award been currently exercisable or payable or fully vested or the
replacement of such Award with other rights or property selected by the
Committee in its sole discretion;
(2) To provide that such Award shall be exercisable
as to all shares covered thereby, notwithstanding anything to the contrary in
the Plan or the provisions of such Award;
(3) To provide that such Award be assumed by the
successor or survivor corporation or entity, or a parent or subsidiary thereof,
or shall be substituted for by similar options, rights or awards covering the
stock of the successor or survivor corporation or entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices;
(4) To make adjustments in the number and type of
shares of Stock (or other securities or property) subject to outstanding Awards,
and/or in the terms and conditions of (including the grant or exercise price),
and the criteria included in, outstanding Awards or Awards which may be granted
in the future; and
(5) To provide that immediately upon the consummation
of such event, such Award shall not be exercisable and shall terminate;
provided, that for a specified period of time prior to such event, such Award
shall be exercisable as to all shares of Stock covered thereby, and the
restrictions imposed under an Award Agreement upon some or all shares of Stock
may be terminated and, in the case of Restricted Stock, some or all shares of
such Restricted Stock may cease to be subject to repurchase or forfeiture,
notwithstanding anything to the contrary in the Plan or the provisions of such
Award Agreement.
(c) With respect to Awards intended as Qualified
Performance-Based Compensation, no adjustment or action described in this
Section 11.1 or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause such Award to fail to so
qualify under Section 162(m)(4)(C), or any successor provisions thereto. No
adjustment or action described in this Section 11.1 or in any other provision of
the Plan shall be authorized to the extent that such adjustment or action would
cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such
adjustment or action shall be authorized to the extent such adjustment or action
would result in short-swing profits liability under Section 16 or violate the
exemptive conditions of Rule 16b-3 unless the Committee determines that the
Award is not to comply with such exemptive conditions. The number of shares of
Stock subject to any Award shall always be rounded to the next whole number.
11.2 No Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee
under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Stock subject to an Award or the grant or exercise price of any Award.
15
ARTICLE 12
ADMINISTRATION
12.1 Committee. Unless and until the Board delegates administration
to a Committee as set forth below, the Plan shall be administered by the Board.
The Board may delegate administration of the Plan to a Committee or Committees
of one or more members of the Board, and the term "Committee" shall apply to any
person or persons to whom such authority has been delegated. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Notwithstanding the foregoing,
however, from and after the Public Trading Date, a Committee of the Board shall
administer the Plan and the Committee shall consist solely of two or more
members of the Board each of whom is both an "outside director," within the
meaning of Section 162(m) of the Code, and a Non-Employee Director. Within the
scope of such authority, the Board or the Committee may (i) delegate to a
committee of one or more members of the Board who are not "outside directors,"
within the meaning of Section 162(m) of the Code the authority to grant awards
under the Plan to eligible persons who are either (1) not then "covered
employees," within the meaning of Section 162(m) of the Code and are not
expected to be "covered employees" at the time of recognition of income
resulting from such award or (2) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code and/or (ii) delegate to a
committee of one or more members of the Board who are not Non-Employee
Directors, the authority to grant awards under the Plan to eligible persons who
are not then subject to Section 16 of the Exchange Act. The Board may abolish
the Committee at any time and/or revest in the Board the administration of the
Plan. Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may only be filled by the Board.
12.2 Action by the Committee. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present, and acts approved in writing by a majority
of the Committee in lieu of a meeting, shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in good faith, rely or
act upon any report or other information furnished to that member by any officer
or other employee of the Company or any Subsidiary, the Company's independent
certified public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
12.3 Authority of Committee. Subject to any specific designation in
the Plan, the Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to
each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
pursuant to the Plan, including, but not limited to, the exercise price, grant
price, or purchase price, any reload provision, any restrictions or limitations
on the Award, any schedule for lapse of forfeiture restrictions or restrictions
on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based
in each case on such considerations as the Committee in its sole discretion
determines; provided, however, that the Committee shall not have the
16
authority to accelerate the vesting or waive the forfeiture of any
Performance-Based Awards;
(e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(g) Decide all other matters that must be determined in
connection with an Award;
(h) Establish, adopt, or revise any rules and regulations as
it may deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant
to, the Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be
required pursuant to the Plan or as the Committee deems necessary or advisable
to administer the Plan.
12.4 Decisions Binding. The Committee's interpretation of the Plan,
any Awards granted pursuant to the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.
ARTICLE 13
EFFECTIVE AND EXPIRATION DATE
13.1 Effective Date. The Plan will be effective as of the date of
the Board's initial adoption of the Plan (the "EFFECTIVE DATE"). The Plan will
be submitted for the approval of the Company's stockholders within twelve months
after the Effective Date. Awards may be granted or awarded prior to such
stockholder approval, provided that such Awards shall not be exercisable, shall
not vest and the restrictions thereon shall not lapse prior to the time when the
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Awards
previously granted or awarded under the Plan shall thereupon be canceled and
become null and void.
13.2 Expiration Date. The Plan will expire on, and no Award may be
granted pursuant to the Plan after, the earlier of the tenth anniversary of (i)
the Effective Date or (ii) the date this Plan is approved by the Company's
stockholders. Any Awards that are outstanding on the tenth anniversary of the
Effective Date shall remain in force according to the terms of the Plan and the
applicable Award Agreement. Each Award Agreement shall provide that it will
expire on the tenth anniversary of the date of grant of the Award to which it
relates.
ARTICLE 14
AMENDMENT, MODIFICATION, AND TERMINATION
14.1 Amendment, Modification, and Termination. With the approval of
the Board, at any time and from time to time, the Committee may terminate, amend
or modify the Plan; provided, however, that to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required.
17
14.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted pursuant to the Plan without the prior written consent of the
Participant.
ARTICLE 15
GENERAL PROVISIONS
15.1 No Rights to Awards. No Participant, employee, or other person
shall have any claim to be granted any Award pursuant to the Plan, and neither
the Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.
15.2 No Stockholders Rights. No Award gives the Participant any of
the rights of a stockholder of the Company unless and until shares of Stock are
in fact issued to such person in connection with such Award.
15.3 Withholding. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, local and
foreign taxes (including the Participant's FICA obligation) required by law to
be withheld with respect to any taxable event concerning a Participant arising
as a result of this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have
the Company withhold shares of Stock otherwise issuable under an Award (or allow
the return of shares of Stock) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the
number of shares of Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the
Participant of such Award within six months after such shares of Stock were
acquired by the Participant from the Company) in order to satisfy the
Participant's federal, state, local and foreign income and payroll tax
liabilities with respect to the issuance, vesting, exercise or payment of the
Award shall be limited to the number of shares which have a Fair Market Value on
the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal, state,
local and foreign income tax and payroll tax purposes that are applicable to
such supplemental taxable income.
15.4 No Right to Employment or Services. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant's employment or services
at any time, nor confer upon any Participant any right to continue in the employ
or service of the Company or any Subsidiary.
15.5 Unfunded Status of Awards. The Plan is intended to be an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
15.6 Indemnification. To the extent allowable pursuant to
applicable law, each member of the Committee or of the Board shall be
indemnified and held harmless by the Company from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action or failure to act pursuant to the Plan and against and from any
and all amounts paid by him or her in satisfaction of judgment in such action,
suit, or proceeding against him or her, provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which
18
such persons may be entitled pursuant to the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.
15.7 Relationship to Other Benefits. No payment pursuant to the
Plan shall be taken into account in determining any benefits pursuant to any
pension, retirement, savings, profit sharing, group insurance, welfare or other
benefit plan of the Company or any Subsidiary except to the extent otherwise
expressly provided in writing in such other plan or an agreement thereunder.
15.8 Expenses. The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries.
15.9 Titles and Headings. The titles and headings of the Sections
in the Plan are for convenience of reference only and, in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
15.10 Fractional Shares. No fractional shares of Stock shall be
issued and the Committee shall determine, in its discretion, whether cash shall
be given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up or down as appropriate.
15.11 Limitations Applicable to Section 16 Persons. Notwithstanding
any other provision of the Plan, the Plan, and any Award granted or awarded to
any Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
15.12 Government And Other Regulations. The obligation of the
Company to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register pursuant to the Securities Act of 1933, as amended, any of the shares
of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may
in certain circumstances be exempt from registration pursuant to the Securities
Act of 1933, as amended, the Company may restrict the transfer of such shares in
such manner as it deems advisable to ensure the availability of any such
exemption.
15.13 Governing Law. The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Delaware.
15.14 Compliance with California Securities Laws. To the extent
required to comply with Section 25102(o) of the California Corporations Code and
the regulations issued thereunder, if applicable, the provisions of Appendix I
shall apply to the Plan and any of the provisions contained in this Plan that
are inconsistent with such requirements and Appendix I, such provisions shall be
deemed null and void. The invalidity of any provision of this Plan shall not
affect the validity or enforceability of any other provision of this Plan, which
shall remain in full force and effect.
15.15 Appendices. The Committee may approve such supplements to, or
amendments, or appendices to, the Plan as it may consider necessary or
appropriate for purposes of compliance with applicable laws or otherwise and
such supplements, amendments or appendices shall be considered a part of the
Plan; provided, however, that no such supplements, amendments or appendices
shall increase the share limitations contained in Sections 3.1 and 3.3 of the
Plan.
19
APPENDIX I
TO
SPECTRUM PHARMACEUTICALS, INC.
2003 AMENDED AND RESTATED INCENTIVE AWARD PLAN
CALIFORNIA STATE SECURITIES LAW COMPLIANCE
Notwithstanding anything to the contrary contained in the Plan, the
provisions set forth in this Appendix shall apply to all Awards granted under
the Spectrum Pharmaceuticals, Inc. 2003 Amended and Restated Incentive Award
Plan (the "PLAN") to residents of California (i) at any time when the Stock is
not a "covered security" as defined in Section 18(b)(1) of the Securities Act of
1933, as amended (the "Securities Act"), and (ii) for which the exemption under
Section 25102(f) of the California Corporations Code is not otherwise available.
This Appendix shall be of no force or effect at any time when the Company's
common stock is a "covered security" as defined in Section 18(b)(1) of the
Securities Act. Definitions as set out in Section 2 of the Plan are applicable
to this Appendix.
The purpose of this Appendix is to set forth those provisions of the
Plan necessary to comply with Section 25102(o) of the California Corporations
Code and the regulations issued thereunder. If any of the provisions contained
in this Appendix are inconsistent with such requirements, such provisions shall
be deemed null and void. The invalidity of any provision of this Appendix shall
not affect the validity or enforceability of any other provision of this
Appendix, which shall remain in full force and effect.
1.1 Term of Awards. The term of each Award shall be no more than
ten years from the date of grant thereof.
2.1 Award Exercise or Purchase Price. Except as provided in
Article 11, the per share exercise or purchase price for the Stock to be issued
upon exercise of an Award shall be such price as is determined by the
Administrator, but shall be subject to the following:
In the case of an Award:
(a) granted to a Participant who, at the time of grant of such
Award, owns stock representing more than 10% of the voting power of all classes
of stock of the Company or any parent (as defined in Section 175 of the
California Corporations Code) or Subsidiary, the per share exercise or purchase
price shall be no less than 110% of the Fair Market Value per share on the date
of the grant (100% in the case of an Award other than an Option); and
(b) granted to any other Participant, the per share exercise
or purchase price shall be no less than 85% of the Fair Market Value per share
on the date of grant.
Notwithstanding the foregoing, Awards may be granted with a per share
exercise or purchase price other than as required above pursuant to a merger or
other corporate transaction.
3.1 Exercisability. Except with regard to Awards granted to officers,
directors, managers or consultants, in no event shall an Award granted hereunder
become vested and exercisable at a rate of less than 20% per year over five
years from the date the Award is granted, subject to reasonable conditions, such
as continuing to be a service provider.
20
4.1 Exercisability Following Termination of Relationship as a
Service Provider.
(a) Termination Other Than Death or Disability. If a
Participant's employment or service terminates for any reason other than by
reason of the Participant's disability or death, such Participant may exercise
his or her Award within such period of time as is specified in the Award
Agreement to the extent that the Award is vested on the date of termination;
provided, however, that such period of time shall not be less than thirty days
(but in no event later than the expiration of the term of the Award as set forth
in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option shall remain exercisable for three months following the
Participant's termination.
(b) Disability of Participant. If a Participant's employment
or service terminates as a result of the Participant's disability, the
Participant may exercise his or her Award within such period of time as is
specified in the Award Agreement to the extent the Award is vested on the date
of termination; provided, however, that such period of time shall not be less
than six months (but in no event later than the expiration of the term of such
Award as set forth in the Award Agreement). In the absence of a specified time
in the Award Agreement, the Award shall remain exercisable for twelve months
following the Holder's termination.
(c) Death. If a Participant's employment or service terminates
as a result of the Participant's death, the Award may be exercised within such
period of time as is specified in the Award Agreement; provided, however, that
such period of time shall not be less than six months (but in no event later
than the expiration of the term of such Award as set forth in the Notice of
Grant), by the Participant's estate or by a person who acquires the right to
exercise the Award by bequest or inheritance, but only to the extent that the
Award is vested on the date of death. In the absence of a specified time in the
Award Agreement, the Award shall remain exercisable for twelve months following
the Participant's termination.
5.1 Repurchase Provisions. In the event the Committee provides
that the Company may repurchase Stock acquired upon exercise of an Award upon
the occurrence of certain specified events, including, without limitation,
termination of a Participant's employment or service, divorce, bankruptcy or
insolvency, then any such repurchase right shall be set forth in the applicable
Award Agreement or in another agreement referred to in such agreement and, to
the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of
the California Code of Regulations, any such repurchase right set forth in an
Award granted to a person who is not an officer, director, manager or consultant
shall be upon the following terms: (i) if the repurchase option gives the
Company the right to repurchase the shares upon the Participant's termination of
employment or service at not less than the Fair Market Value of the shares to be
purchased on the date of termination of employment or service, then the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares within ninety days of termination of employment or
service (or in the case of shares issued upon exercise of Awards after such date
of termination, within ninety days after the date of the exercise) or such
longer period as may be agreed to by the Administrator and the Participant and;
(ii) if the repurchase option gives the Company the right to repurchase the
Stock upon the Participant's termination of employment or service at the
original purchase price for such Stock, then (A) the right to repurchase at the
original purchase price shall lapse at the rate of at least 20% of the shares
per year over five (5) years from the date the Award is granted (without respect
to the date the Award was exercised or became exercisable) and (B) the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares within ninety days of termination of employment or
service (or, in the case of shares issued upon exercise of Awards, after such
date of termination, within ninety days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Participant.
21
6.1 Information Rights. To the extent required by Section
260.140.46 of Title 10 of the California Code of Regulations, the Company shall
provide to each Participant and to each individual who acquires Stock pursuant
to the Plan, not less frequently than annually during the period such
Participant has one or more Awards outstanding, and, in the case of an
individual who acquires Stock pursuant to the Plan, during the period such
individual owns such Stock, copies of annual financial statements.
Notwithstanding the preceding sentence, the Company shall not be required to
provide such statements to key employees whose duties in connection with the
Company assure their access to equivalent information.
7.1 Transferability. No Award shall be assigned, transferred, or
otherwise disposed of by a Participant other than by will or the laws of descent
and distribution or, with respect to Awards other than Incentive Stock Options,
as permitted by Rule 701 of the Securities Act.
8.1 Limitation on Number of Shares. At no time shall the total
number of shares of Stock issuable upon exercise of all outstanding Options
under the Plan and any shares of Stock provided for under any bonus or similar
plan or agreement of the Company exceed 30% of the then-outstanding shares of
Stock of the Company, as calculated pursuant to Section 260.140.45 of Title 10
of the California Code of Regulations, unless a percentage higher than 30% is
approved by at least two-thirds of the outstanding securities of the Company
entitled to vote. The number of shares of Stock which may be issued or
transferred pursuant to Awards under the Plan shall be reduced to the extent
necessary to comply with this provision.
22