AMENDED AND RESTATED
SCHOOL SPECIALTY, INC.
1998 STOCK INCENTIVE PLAN
as of June 20, 2000
PURPOSE SCHOOL SPECIALTY, INC., a Delaware
corporation (the "Company"), wishes to
recruit, reward, and retain employees,
consultants, independent contractors,
advisors, officers and outside
directors. To further these objectives,
the Company hereby sets forth the School
Specialty, Inc. 1998 Stock Incentive
Plan (the "Plan") to provide options
("Options") or direct grants ("Stock
Grants" and, together with the Options,
"Awards") to employees, consultants,
independent contractors, advisors,
officers and outside directors with
respect to shares of the Company's
common stock (the "Common Stock"). The
Plan was originally effective as of the
effective date (the "Effective Date") of
the Company's registration under Section
12 of the Securities Exchange Act of
1934 (the "Exchange Act") with respect
to its initial public offering ("IPO"),
and this amendment and restatement is
effective as of June 20, 2000.
PARTICIPANTS The following persons are eligible to
receive Options and Stock Grants under
the Plan: (1) current and prospective
Employees (as defined below) of the
Company and any Eligible Subsidiary (as
defined in the Eligible Subsidiary
section below), (2) consultants,
advisors and independent contractors of
the Company and any Eligible Subsidiary
and (3) officers and directors of the
Company and any Eligible Subsidiary who
are not Employees ("Eligible Officers
and Eligible Directors"). Eligible
persons become "Optionees" when the
Administrator grants them an option
under this Plan or "Recipients" when
they receive a direct grant of Common
Stock. (Optionees and Recipients are
referred to collectively as
"Participants." The term Participant
also includes, where appropriate, a
person authorized to exercise an Award
in place of the original Optionee.)
Employee means any person employed as a
common law employee of the Company or an
Eligible Subsidiary.
ADMINISTRATOR The Administrator will be the
Compensation Committee of the Board of
Directors of the Company (the
"Compensation Committee"), unless the
Board specifies another committee. The
Board may also act under the Plan as
though it were the Compensation
Committee.
The Administrator is responsible for the
general operation and administration of
the Plan and for carrying out its
provisions and has full discretion in
interpreting and administering the
provisions of the Plan. Subject to the
express provisions of the Plan, the
Administrator may exercise such powers
and authority of the Board as the
Administrator may find necessary or
appropriate to carry out its functions.
The Administrator may delegate its
functions (other than those described in
the Granting of Awards section) to
Employees of the Company.
The Administrator's powers will include,
but not be limited to, the power to
amend, waive, or extend any provision or
limitation of any Award. The
Administrator may act through meetings
of a majority of its members or by
unanimous consent.
GRANTING OF Subject to the terms of the Plan, the
AWARDS Administrator will, in its sole
discretion, determine:
the Participants who receive Awards,
the terms of such Awards,
the schedule for exercisability or
nonforfeitability (including any
requirements that the Participant
or the Company satisfy performance
criteria),
the time and conditions for
expiration of the Award, and
the form of payment due upon
exercise, if any.
The Administrator's determinations under
the Plan need not be uniform and need
not consider whether possible
Participants are similarly situated.
Options granted to Employees may be
nonqualified stock options ("NQSOs") or
"incentive stock options" ("ISOs")
within the meaning of Section 422 of the
Internal Revenue Code of 1986, as
amended from time to time (the "Code"),
or the corresponding provision of any
subsequently enacted tax statute.
Options granted to consultants,
independent contractors, advisors,
Eligible Officers and Eligible
Directors, including Formula Options (as
defined below), must be NQSOs. The
Administrator will not grant ISOs unless
the stockholders either have already
approved the granting of ISOs or give
such approval within 12 months after the
grant.
The Administrator may impose such
conditions on or charge such price for
the Stock Grants as it deems
appropriate.
SUBSTITUTIONS The Administrator may also grant
Awards in substitution for options or
other equity interests held by
individuals who become Employees of the
Company or of an Eligible Subsidiary as
a result of the Company's acquiring or
merging with the individual's employer
or acquiring its assets. In addition,
the Administrator may provide for the
Plan's assumption of Awards granted
outside the Plan (including those
granted by an Eligible Subsidiary) to
persons who would have been eligible
under the terms of the Plan to receive
an Award, including both persons who
provided services to any acquired
company or business and persons who
provided services to the Company or any
Eligible Subsidiary. If appropriate to
conform the Awards to the interests for
which they are substitutes, the
Administrator may grant substitute
Awards under terms and conditions
(including Exercise Price) that vary
from those the Plan otherwise requires.
Awards in substitution for U.S. Office
Products' options in connection with the
distribution by U.S. Office Products of
the Company's Common Stock will retain
their pre-distribution exercise schedule
and terms (including Change of Control
provisions) and expiration date.
JUNEBOX Awards in substitution for options
OPTIONS issued by JuneBox.com, Inc. ("JuneBox")
will, unless the Administrator determines otherwise,
retain their pre-distribution exercise
schedule and expiration dates, but any
Change of Control provisions will
thereafter refer to the Company under
the rules set forth in this Plan for any
such awards that have not become fully
exercisable on or before their
assumption under this Plan, unless the
Administrator provides otherwise. In
replacing JuneBox options, the
Administrator may adjust the Exercise
Price and number of shares covered by
JuneBox options in its discretion to
reflect the relative value of JuneBox as
an Eligible Subsidiary of the Company.
It may determine the relative value in
any manner it considers appropriate.
DIRECTOR Each Eligible Director will receive a
FORMULA formula stock option ("Formula
OPTIONS Option") with respect to 15,000 shares
of Common Stock upon the first
to occur of their initial appointment or
election to the Board (with the grant
made as of the date of such appointment
or election). Thereafter, each Eligible
Director serving on the Board will
receive a Formula Option annually with
respect to 5,000 shares of Common Stock
on a date determined by the
Administrator. The Exercise Price for
Formula Options will be the Fair Market
Value on the Date of Grant.
EXERCISE Unless the Administrator specifies
SCHEDULE otherwise, each Formula Option will
become exercisable as to 20% of the
covered shares on the first anniversary
of its Date of Grant (as defined in the
Date of Grant section below), an
additional 30% on the second
anniversary, and the remaining 50% on or
after the third anniversary. A Formula
Option will become exercisable in its
entirety upon the Eligible Director's
death, Disability, or attainment of age
70. Options will be forfeited to the
extent they are not then exercisable if
an Eligible Director resigns or fails to
be reelected as a director. Exercisable
options will expire as provided under
Award Expiration.
DATE OF GRANT The Date of Grant will be the date as of
which this Plan or the Administrator
grants an Award to a Participant, as
specified in the Plan or in the
Administrator's minutes or other written
evidence of action.
EXERCISE PRICE The Exercise Price is the value of the
consideration that a Participant must
provide in exchange for one share of
Common Stock. The Administrator will
determine the Exercise Price under each
Award and may set the Exercise Price
without regard to the Exercise Price of
any other Awards granted at the same or
any other time. The Company may use the
consideration it receives from the
Participant for general corporate
purposes.
The Exercise Price per share for NQSOs
may not be less than 100% of the Fair
Market Value (as defined below) of a
share on the Date of Grant. If an
Option is intended to be an ISO, the
Exercise Price per share may not be less
than 100% of the Fair Market Value (on
the Date of Grant) of a share of Common
Stock covered by the Option; provided,
however, that if the Administrator
decides to grant an ISO to someone
covered by Sections 422(b)(6) and 424(d)
(as a more-than-10%-stockholder), the
Exercise Price of the Option must be at
least 110% of the Fair Market Value (on
the Date of Grant).
The Administrator may satisfy any state
law requirements regarding adequate
consideration for Stock Grants by (i)
issuing Common Stock held as treasury
stock or (ii) charging the Recipients at
least the par value for the shares
covered by the Stock Grant. The
Administrator may designate that a
Recipient may satisfy (ii) above either
by direct payments or by the
Administrator's withholding from other
payments due to the Recipient.
FAIR MARKET Fair Market Value of a share of Common
VALUE Stock for purposes of the
Plan will be determined as follows:
If the Common Stock trades on a
national securities exchange, the
closing sale price on the Date of
Grant;
If the Common Stock does not trade
on any such exchange, the closing
sale price as reported by the
National Association of Securities
Dealers, Inc. Automated Quotation
System ("Nasdaq") for such date;
If no such closing sale price
information is available, the
average of the closing bid and
asked prices that Nasdaq reports
for such date;
If there are no such closing bid
and asked prices, the average of
the closing bid and asked prices as
reported by any other commercial
service for such date; or
If the Company has no publicly-
traded stock, the Administrator
will determine the Fair Market
Value for purposes of the Plan
using any measure of value it
determines in good faith to be
appropriate.
For any date that is not a trading day,
the Fair Market Value of a share of
Common Stock for such date shall be
determined by using the closing sale
price or the average of the closing bid
and asked prices, as appropriate, for
the immediately preceding trading day.
The Administrator can substitute a
particular time of day or other measure
of "closing sale price" if appropriate
because of changes in exchange or market
procedures.
The Fair Market Value will be deemed
equal to the IPO price for any Options
granted as of the date on which the
IPO's underwriters price the IPO or
granted on the following day before
trading opens in the Common Stock.
The Administrator has sole discretion to
determine the Fair Market Value for
purposes of this Plan, and all Awards
are conditioned on the recipient's
agreement that the Administrator's
determination is conclusive and binding
even though others might make a
different and also reasonable
determination.
EXERCISABILITY The Administrator will determine the
times and conditions for exercise of or
purchase under each Award but may not
extend the period for exercise beyond
the tenth anniversary of its Date of
Grant (or five years for ISOs granted to
10% owners covered by Code Sections
422(b)(6) and 424(d)).
Awards will become exercisable at such
times and in such manner as the
Administrator determines and the Award
Agreement, if any, indicates; provided,
however, that the Administrator may, on
such terms and conditions as it
determines appropriate, accelerate the
time at which the Participant may
exercise any portion of an Award or at
which restrictions on Stock Grants
lapse. For Stock Grants, "exercise"
refers to acceptance of the Award or
lapse of restrictions, as appropriate in
context.
If the Administrator does not specify
otherwise, Options will become
exercisable and restrictions on Stock
Grants will lapse as to one-fourth of
the covered shares on each of the first
four anniversaries of the Date of Grant,
so long as the recipient remains
employed or continues his relationship
as a service provider to the Company or
any Eligible Subsidiary, and will expire
as of the tenth anniversary of the Date
of Grant (unless they expire earlier
under the Plan or the Award Agreement).
The Administrator has the sole
discretion to determine that a change in
service-providing relationship
eliminates any further service credit on
the exercise schedule.
No portion of an Award that is
unexercisable at a recipient's
termination of service-providing
relationship (for any reason) will
thereafter become exercisable (and the
recipient will immediately forfeit any
unexercisable portions at his
termination of service-providing
relationship), unless the Award
Agreement or the Plan provides
otherwise, either initially or by
amendment.
Termination of service-providing
relationship will not occur for
recipients who are Employees, officers,
or directors of JuneBox until the
earlier of (i) the date they leave all
service-providing relationships with
both JuneBox and the Company or (ii) the
first day
of the 13th month beginning
after the date JuneBox ceases to be an
Eligible Subsidiary, unless the
Administrator agrees to other treatment.
CHANGE OF Upon a Change of Control (as defined
CONTROL below), all Options held by current
Employees, consultants, advisors,
independent contractors, Eligible
Officers and Eligible Directors will
become fully exercisable and all
restrictions on Stock Grants will lapse.
A Change of Control for this purpose
means the occurrence of any one or more
of the following events:
a person, entity, or group (other
than the Company, any Company
subsidiary, any Company benefit
plan, or any underwriter
temporarily holding securities for
an offering of such securities)
acquires ownership of more than 50%
of the undiluted total voting power
of the Company's then-outstanding
securities eligible to vote to
elect members of the Board
("Company Voting Securities");
completion of a merger or
consolidation of the Company with
or into any other entity-unless the
holders of the Company Voting
Securities outstanding immediately
before such completion, together
with any trustee or other fiduciary
holding securities under a Company
benefit plan, hold securities that
represent immediately after such
merger or consolidation at least
50% of the combined voting power of
the then outstanding voting
securities of either the Company or
the other surviving entity or its
parent; or
the stockholders of the Company
approve (i) a plan of complete
liquidation or dissolution of the
Company or (ii) an agreement for
the Company's sale or disposition
of all or substantially all the
Company's assets, and such
liquidation, dissolution, sale, or
disposition is completed.
Even if other tests are met, a
Change of Control has not occurred
under any circumstance in which the
Company files for bankruptcy
protection or is reorganized
following a bankruptcy filing.
The Administrator may allow
conditional exercises in advance of
the completion of a Change of
Control that are then rescinded if
no Change of Control occurs.
The Adjustments Upon Changes in Capital
Stock provisions will also apply if the
Change of Control is a Substantial
Corporate Change (as defined in those
sections).
LIMITATION An Option granted to an Employee will be
ON ISOs an ISO only to the extent that
the aggregate Fair Market Value
(determined at the Date of Grant) of the
stock with respect to which ISOs are
exercisable for the first time by the
Optionee during any calendar year (under
the Plan and all other plans of the
Company and its subsidiary corporations,
within the meaning of Code Section
422(d)), does not exceed $100,000. This
limitation applies to Options in the
order in which such Options were
granted. If, by design or operation,
the Option exceeds this limit, the
excess will be treated as an NQSO.
METHOD OF To exercise any exercisable portion of
EXERCISE an Award, the Participant must:
Deliver a notice of exercise to the
Assistant Secretary of the Company
designated by the Board (or to
whomever the Administrator
designates), in a form complying
with any rules the Administrator
may issue, signed or otherwise
authenticated by the Participant,
and specifying the number of shares
of Common Stock underlying the
portion of the Award the
Participant is exercising;
Pay the full Exercise Price, if
any, by cashier's or certified
check for the shares of Common
Stock with respect to which the
Award is being exercised, unless
the Administrator consents to
another form of payment (which
could include the use of Common
Stock); and
Deliver to the Administrator such
representations and documents as
the Administrator, in its sole
discretion, may consider necessary
or advisable.
Payment in full of the Exercise Price
need not accompany the written notice of
exercise if the exercise complies with a
previously-approved cashless exercise
method, including, for example, that the
notice directs that the stock
certificates (or other indicia of
ownership) for the shares issued upon
the exercise be delivered to a licensed
broker acceptable to the Company as the
agent for the individual exercising the
Option and at the time the stock
certificates (or other indicia) are
delivered to the broker, the broker will
tender to the Company cash or cash
equivalents acceptable to the Company
and equal to the Exercise Price and any
required withholding taxes.
If the Administrator agrees to allow an
Optionee to pay through tendering Common
Stock to the Company, the individual can
only tender stock he or she has held for
at least six months at the time of
surrender. Shares of stock offered as
payment will be valued, for purposes of
determining the extent to which the
Participant has paid the Exercise Price,
at their Fair Market Value on the date
of exercise. The Administrator may
also, in its discretion, accept
attestation of ownership of Common Stock
and issue a net number of shares upon
Option exercise or by having a broker
tender to the Company cash equal to the
Exercise Price and any withholding
taxes.
AWARD No one may exercise an Award more than
EXPIRATION ten years after its Date of
Grant (or five years, for an ISO granted
to a more-than-10% stockholder). A
recipient will immediately forfeit and
can never exercise any portion of an
Award that is unexercisable at his
termination of service-providing
relationship (for any reason), unless
the Award Agreement or the Plan provides
otherwise, either initially or by
amendment. Unless the Award Agreement
or the Plan provides otherwise, either
initially or by amendment, no one may
exercise otherwise exercisable portions
of an Award after the first to occur of:
EMPLOYMENT The 90th day after the date of
TERMINATION termination of service-providing
relationship (other
than for death or Disability), where
termination of employment means the time
when the employer-employee or other
service providing relationship between
the Employee, consultant, independent
contractor, advisor or Eligible Officer
and the Company (and the Eligible
Subsidiaries) ends for any reason,
including retirement. For grants after
June 20, 2000, the Administrator may
provide that Awards terminate
immediately upon termination of
employment for "cause" under an
Employee's employment or consultant's
services agreement or under another
definition specified in the Award
Agreement. Unless the Award Agreement
provides otherwise, termination of
employment does not include instances in
which the Company immediately rehires an
Employee as a consultant, independent
contractor or advisor. The
Administrator, in its sole discretion,
will determine all questions of whether
particular terminations or leaves of
absence are terminations of employment
and may decide to suspend the exercise
schedule during a leave rather than to
terminate the Award. Unless the Award
Agreement or the Exercisability section
provides otherwise, terminations of
employment include situations in which
the Participant's employer ceases to be
related to the Company closely enough to
be an Eligible Subsidiary for new
grants;
GROSS For the Company's termination of the
MISCONDUCT Participant's service-providing relationship as a
result of the Participant's Gross
Misconduct, the time of such
termination. For purposes of this Plan,
"Gross Misconduct" means the Participant
has
committed fraud, misappropriation,
embezzlement, or willful misconduct
that has resulted or is likely to
result in material harm to the
Company or an Eligible Subsidiary;
committed or been indicted for or
convicted of, or pled guilty or no
contest to, any misdemeanor (other
than for minor infractions or
traffic violations) involving
fraud, breach of trust,
misappropriation, or other similar
activity or otherwise relating to
the Company or an Eligible
Subsidiary, or any felony; or
committed an act of gross
negligence or otherwise acted with
willful disregard for the Company's
or an Eligible Subsidiary's best
interests in a manner that has
resulted or is likely to result in
material harm to the Company or an
Eligible Subsidiary.
If the Participant has a written
employment or other agreement in
effect at the time of his
termination that specifies "cause"
for termination, "Gross Misconduct"
for purposes of his termination
will refer to "cause" under the
employment or other agreement,
rather than to the foregoing
definition.
DlSABILITY For Disability, the earlier of (i) the
first anniversary of the Participant's
termination of employment for Disability
and (ii) 30 days after the Participant
no longer has a Disability, where
"Disability" means the inability to
engage in any substantial gainful
activity by reason of any medically
determinable physical or mental
impairment that can be expected to
result in death or that has lasted or
can be expected to last for a continuous
period of not less than twelve months;
or
DEATH The date 24 months after the
Participant's death.
If exercise is permitted after
termination of service-providing
relationship, the Award will
nevertheless expire as of the date that
the former service provider violates any
covenant not to compete in effect
between the Company or any Eligible
Subsidiary and such person. In
addition, an Optionee who exercises an
Option more than 90 days after
termination of employment with the
Company and/or an Eligible Subsidiary
will only receive ISO treatment to the
extent permitted by law, and becoming or
remaining an employee of another related
company (that is not an Eligible
Subsidiary) or an independent contractor
to the Company and the Eligible
Subsidiaries will not prevent loss of
ISO status because of the formal
termination of employment.
Nothing in this Plan extends the term of
an Award beyond the tenth anniversary of
its Date of Grant, nor does anything in
this Award Expiration section make an
Award exercisable that has not otherwise
become exercisable.
AWARD Award Agreements will set forth the
AGREEMENT terms of each Award and will
include such terms and conditions,
consistent with the Plan, as the
Administrator may determine are
necessary or advisable. To the extent
the agreement is inconsistent with the
Plan, the Plan will govern. The Award
Agreements may contain special rules.
The Administrator may, but is not
required to, issue agreements for Stock
Grants.
STOCK SUBJECT Except as adjusted below under
TO PLAN Adjustments upon Changes in Capital Stock,
the aggregate number of shares of
Common Stock that may be issued
under the Awards (whether ISOs,
NQSOs, or Stock Grants) may not
exceed 20% percent of the total
number of shares of Common Stock
outstanding, determined immediately
after the grant of the Award;
the maximum number of shares that
may be subject to ISOs may not
exceed 3,487,600; and
the maximum number of shares that
may be granted under Awards for a
single individual in a calendar
year may not exceed 1,200,000.
(The individual maximum applies
only to Awards first made under
this Plan and not to Awards made in
substitution of a prior employer's
options or other incentives, except
as Code Section 162(m) otherwise
requires.)
The Common Stock will come from either
authorized but unissued shares or from
previously issued shares that the
Company reacquires, including shares it
purchases on the open market. If any
Award expires, is canceled, or
terminates for any other reason, the
shares of Common Stock available under
that Award will again be available for
the granting of new Awards (but will be
counted against that calendar year's
limit for a given individual).
No adjustment will be made for a
dividend or other right (except a stock
dividend) for which the record date
precedes the date of exercise.
The Participant will have no rights of a
stockholder with respect to the shares
of stock subject to an Award except to
the extent that the Company has issued
certificates for, or otherwise confirmed
ownership of, such shares upon the
exercise of the Award.
The Company will not issue fractional
shares pursuant to the exercise of an
Award, but the Administrator may, in its
discretion, direct the Company to make a
cash payment in lieu of fractional
shares.
PERSON WHO During the Participant's lifetime, only
MAY EXERCISE the Participant or his duly
appointed guardian or personal
representative may exercise the Awards.
After his death, his personal
representative or any other person
authorized under a will or under the
laws of descent and distribution may
exercise any then exercisable portion of
an Award. If someone other than the
original recipient seeks to exercise any
portion of an Award, the Administrator
may request such proof as it may
consider necessary or appropriate of the
person's right to exercise the Award.
ADJUSTMENTS Subject to any required action by the
UPON CHANGES IN Company (which it shall
CAPITAL STOCK promptly take) or its stockholders,
and subject to the provisions of
applicable corporate law, if, after the
Date of Grant of an Award,
the outstanding shares of Common
Stock increase or decrease or
change into or are exchanged for a
different number or kind of
security because of any
recapitalization, reclassification,
stock split, reverse stock split,
combination of shares, exchange of
shares, stock dividend, or other
distribution payable in capital
stock, or
some other increase or decrease in
such Common Stock occurs without
the Company's receiving consideration
the Administrator may make a
proportionate and appropriate adjustment
in the number of shares of Common Stock
underlying each Award, so that the
proportionate interest of the
Participant immediately following such
event will, to the extent practicable,
be the same as immediately before such
event. (This adjustment does not apply
to Common Stock that the Optionee has
already purchased nor to Stock Grants
that are already nonforfeitable, except
to the extent of similar treatment for
most stockholders.) Unless the
Administrator determines another method
would be appropriate, any such
adjustment to an Award will not change
the total price with respect to shares
of Common Stock underlying the
unexercised portion of the Award but
will include a corresponding
proportionate adjustment in the Award's
Exercise Price. The Administrator will
make a commensurate change to the
maximum number and kind of shares
provided in the Stock Subject to Plan
section.
Any issue by the Company of any class of
preferred stock, or securities
convertible into shares of common or
preferred stock of any class, will not
affect, and no adjustment by reason
thereof will be made with respect to,
the number of shares of Common Stock
subject to any Award or the Exercise
Price except as this Adjustments section
specifically provides. The grant of an
Award under the Plan will not affect in
any way the right or power of the
Company to make adjustments,
reclassifications, reorganizations or
changes of its capital or business
structure, or to merge or to
consolidate, or to dissolve, liquidate,
sell, or transfer all or any part of its
business or assets.
SUBSTANTIAL Upon a Substantial Corporate Change, the
CORPORATE Plan and any unexercised
CHANGE Awards will terminate unless provision
is made in writing in connection
with such transaction for the assumption
or continuation of outstanding Awards,
or the substitution for such options or
grants of any options or grants covering
the stock or securities of a successor
employer corporation, or a parent or
subsidiary of such successor, with
appropriate adjustments as to the number
and kind of shares of stock and prices,
in which event the Awards will continue
in the manner and under the terms so
provided.
Unless the Administrator determines
otherwise, if an Award would otherwise
terminate under the preceding sentence,
Participants who are then Employees,
consultants, advisors, independent
contractors, Eligible Officers and
Eligible Directors will have the right,
at such time before the consummation of
the transaction causing such termination
as the Administrator reasonably
designates, upon such reasonable notice
as determined by the Administrator, to
exercise any unexercised portions of the
Award, whether or not they had
previously become exercisable. However,
unless the Administrator determines
otherwise, the acceleration will not
occur if it would render unavailable
"pooling of interest" accounting for any
reorganization, merger, or consolidation
of the Company.
A Substantial Corporate Change means:
the dissolution or liquidation of
the Company,
merger, consolidation, or
reorganization of the Company with
one or more corporations in which
the Company is not the surviving
corporation,
the sale of substantially all of
the assets of the Company to
another corporation, or
any transaction (including a merger
or reorganization in which the
Company survives) approved by the
Board that results in any person or
entity (other than any affiliate of
the Company as defined in Rule
144(a)(1) under the Securities
Act, any Company subsidiary, any Company
benefit plan, or any underwriter
temporarily holding securities for
an offering of such securities)
owning 100% of the combined voting
power of all classes of stock of
the Company.
ELIGIBLE Eligible Subsidiary means each of the
SUBSIDIARY Company's Subsidiaries, except as
the Administrator otherwise specifies.
For ISO grants, Subsidiary means any
corporation (other than the Company) in
an unbroken chain of corporations
including the Company if, at the time an
ISO is granted to a Participant under
the Plan, each corporation (other than
the last corporation in the unbroken
chain) owns stock possessing 50% or more
of the total combined voting power of
all classes of stock in another
corporation in such chain. For ISO
purposes, Subsidiary also includes a
single-member limited liability company
included within the chain described in
the preceding sentence. For NQSOs, the
Administrator may use a different
definition of Subsidiary in its
discretion and may include other forms
of entity at the same level of equity
relationship (or such other level as the
Board or the Administrator specifies).
LEGAL The Company will not issue any shares of
COMPLIANCE Common Stock under an
Award until all applicable requirements
imposed by Federal and state securities
and other laws, rules, and regulations,
and by any applicable regulatory
agencies or stock exchanges, have been
fully met. To that end, the Company may
require the Participant to take any
reasonable action to comply with such
requirements before issuing such shares,
including compliance with any Company
black-out periods or trading
restrictions. No provision in the Plan
or action taken under it authorizes any
action that is otherwise prohibited by
Federal or state laws.
The Plan is intended to conform to the
extent necessary with all provisions of
the Securities Act of 1933, as amended
(the "Securities Act"), and the
Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and all
regulations and rules the Securities and
Exchange Commission issues under those
laws. Notwithstanding anything in the
Plan to the contrary, the Administrator
must administer the Plan, and Awards may
be granted and exercised, only in a way
that conforms to such laws, rules, and
regulations. To the extent permitted by
applicable law, the Plan and any Awards
will be deemed amended to the extent
necessary to conform to such laws,
rules, and regulations.
PURCHASE FOR Unless a registration statement under
INVESTMENT the Securities Act covers the
AND OTHER shares of Common Stock a Participant
RESTRICTIONS receives upon exercise of his
Award, the Administrator may require, at
the time of such exercise or
receipt of a grant, that the Participant
agree in writing to acquire such shares
for investment and not for public resale
or distribution, unless and until the
shares subject to the Award are
registered under the Securities Act.
Unless the shares are registered under
the Securities Act, the Participant must
acknowledge:
that the shares purchased on
exercise of the Award are not so
registered,
that the Participant may not sell
or otherwise transfer the shares
unless:
the shares have been
registered under the
Securities Act in connection
with the sale or transfer
thereof, or
counsel satisfactory to the
Company has issued an opinion
satisfactory to the Company
that the sale or other
transfer of such shares is
exempt from registration under
the Securities Act, and
such sale or transfer complies
with all other applicable
laws, rules, and regulations,
including all applicable
Federal and state securities
laws, rules, and regulations.
Additionally, the Common Stock, when
issued upon the exercise of an Award,
will be subject to any other transfer
restrictions, rights of first refusal,
and rights of repurchase set forth in or
incorporated by reference into other
applicable documents, including the
Company's articles or certificate of
incorporation, by-laws, or generally
applicable stockholders' agreements.
The Administrator may, in its sole
discretion, take whatever additional
actions it deems appropriate to comply
with such restrictions and applicable
laws, including placing legends on
certificates and issuing stop-transfer
orders to transfer agents and
registrars.
TAX The Participant must satisfy all
WITHOLDING applicable Federal, state, and local
income and employment tax withholding
requirements before the Company will
deliver stock certificates or otherwise
recognize ownership upon the exercise of
an Award. The Company may decide to
satisfy the withholding obligations
through additional withholding on salary
or wages. If the Company does not or
cannot withhold from other compensation,
the Participant must pay the Company,
with a cashier's check or certified
check, the full amounts required by
withholding. Payment of withholding
obligations is due before the Company
issues shares with respect to the Award.
If the Administrator so determines, the
Participant may instead satisfy the
withholding obligations by directing the
Company to retain shares from the Award
exercise, by tendering previously owned
shares, or by attesting to his ownership
of shares (with the distribution of net
shares).
TRANSFERS, Unless the Administrator otherwise
ASSIGNMENTS, approves in advance in writing for
AND PLEDGES estate planning or other purposes, an
Award may not be assigned,
pledged, or otherwise transferred in any
way, whether by operation of law or
otherwise or through any legal or
equitable proceedings (including
bankruptcy), by the Participant to any
person, except by will or by operation
of applicable laws of descent and
distribution. If necessary to comply
with Rule 16b-3 of the Exchange Act, the
Participant may not transfer or pledge
shares of Common Stock acquired under a
Stock Grant or upon exercise of an
Option until at least six months have
elapsed from (but excluding) the Date of
Grant, unless the Administrator approves
otherwise in advance in writing. The
Administrator may, in its discretion,
expressly provide that a Participant may
transfer his Award without receiving
consideration to (i) members of his
immediate family (children,
grandchildren, or spouse); (ii) trusts
for the benefit of such family members;
or (iii) partnerships where the only
partners are such family members.
AMENDMENT OR The Board may amend, suspend, or
TERMINATION terminate the Plan at any time,
OF PLAN AND without the consent of the Participants
AWARDS or their beneficiaries; provided
however, that no amendment will
deprive any Participant or beneficiary
of any previously declared Award.
Except as required by law or by the
Adjustments upon Changes in Capital
Stock section, the Board may not,
without the Participant's or
beneficiary's consent, modify the terms
and conditions of an Award so as to
adversely affect the Participant. No
amendment, suspension, or termination of
the Plan will, without the Participant's
or beneficiary's consent, terminate or
adversely affect any right or
obligations under any outstanding
Awards.
PRIVILEGES No Participant and no beneficiary or
OF STOCK other person claiming under or
OWNERSHIP through such Participant will have any
right, title, or interest in or to
any shares of Common Stock allocated or
reserved under the Plan or subject to
any Award except as to such shares of
Common Stock if any, already issued to
such Participant.
EFFECT ON Whether exercising or receiving an Award
OTHER PLANS causes the Participant to
accrue or receive additional benefits
under any pension or other plan is
governed solely by the terms of such
other plan.
LIMITATIONS Notwithstanding any other
ON LIABILITY provisions of the Plan, no individual
acting as an agent of the Company shall
be liable to any Participant, former
Participant, spouse, beneficiary, or any
other person for any claim, loss,
liability, or expense incurred in
connection with the Plan, nor shall such
individual be personally liable because
of any contract or other instrument he
executes in such other capacity. The
Company will indemnify and hold harmless
each agent of the Company to whom any
duty or power relating to the
administration or interpretation of the
Plan has been or will be delegated,
against any cost or expense (including
attorneys' fees) or liability (including
any sum paid in settlement of a claim
with the Administrator's approval)
arising out of any act or omission to
act concerning this Plan unless arising
out of such person's own fraud or bad
faith.
NO EMPLOYMENT Nothing contained in this Plan
CONTRACT constitutes an employment contract
between the Company and the
Participants. The Plan does not give
any Participant any right to be retained
in the Company's employ, nor does it
enlarge or diminish the Company's right
to end the Participant's employment or
other relationship with the Company.
APPLICABLE The laws of the State of Delaware (other
LAW than its choice of law provisions)
govern this Plan and its interpretation.
DURATION Unless the Board extends the Plan's
OF PLAN term, the Administrator may not grant
Awards after June 8, 2008. The Plan
will then terminate but will continue to
govern unexercised and unexpired Awards.