BARRETT BUSINESS SERVICES, INC.
SECOND AMENDED AND RESTATED
1993 STOCK INCENTIVE PLAN
Effective March 1, 1993
(as amended March 16, 2000
and
March 14, 2002)
TABLE OF CONTENTS
PAGE
Article 1 ESTABLISHMENT AND PURPOSE.....................................1
1.1 Establishment....................................................1
1.2 Purpose..........................................................1
Article 2 DEFINITIONS...................................................1
2.1 Defined Terms....................................................1
2.2 Gender and Number................................................5
Article 3 ADMINISTRATION................................................5
3.1 General..........................................................5
3.2 Composition of the Committee.....................................5
3.3 Authority of the Committee.......................................5
3.4 Action by the Committee..........................................6
3.5 Delegation.......................................................6
3.6 Liability of Committee Members...................................6
3.7 Costs of Plan....................................................6
Article 4 DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN...........6
4.1 Duration of the Plan.............................................6
4.2 Shares Subject to the Plan.......................................6
4.3 Grants to California Residents...................................7
Article 5 ELIGIBILITY...................................................7
5.1 Employees and Non-Employee Subsidiary Directors..................7
5.2 Non-Employee Board Directors.....................................7
Article 6 AWARDS........................................................7
6.1 Types of Awards..................................................7
6.2 General..........................................................7
6.3 Nonuniform Determinations........................................8
6.4 Award Agreements.................................................8
6.5 Provisions Governing All Awards..................................8
Article 7 OPTIONS......................................................11
7.1 Types of Options................................................11
7.2 General.........................................................11
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7.3 Option Price....................................................11
7.4 Option Term.....................................................11
7.5 Time of Exercise................................................11
7.6 Special Rules for Incentive Stock Options.......................12
7.7 Restricted Shares...............................................12
7.8 Deferred Compensation Options...................................12
7.9 Reload Options..................................................12
7.10 Limitation on Number of Shares Subject to Options...............12
Article 8 STOCK APPRECIATION RIGHTS....................................13
8.1 General.........................................................13
8.2 Nature of Stock Appreciation Right..............................13
8.3 Exercise........................................................13
8.4 Form of Payment.................................................13
8.5 Limitation on Number of Stock Appreciation Rights...............13
Article 9 RESTRICTED AWARDS............................................13
9.1 Types of Restricted Awards......................................13
9.2 General.........................................................14
9.3 Restriction Period..............................................14
9.4 Forfeiture......................................................14
9.5 Settlement of Restricted Awards.................................15
9.6 Rights as a Shareholder.........................................15
Article 10 PERFORMANCE AWARDS...........................................15
10.1 General.........................................................15
10.2 Nature of Performance Awards....................................15
10.3 Performance Cycles..............................................15
10.4 Performance Goals...............................................15
10.5 Determination of Awards.........................................16
10.6 Timing and Form of Payment......................................16
Article 11 OTHER STOCK BASED AND COMBINATION AWARDS.....................16
11.1 Other Stock-Based Awards........................................16
11.2 Combination Awards..............................................16
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Article 12 DEFERRAL ELECTIONS...........................................16
Article 13 DIVIDEND EQUIVALENTS.........................................17
Article 14 NON-EMPLOYEE BOARD DIRECTORS.................................17
14.1 General.........................................................17
14.2 Eligibility.....................................................17
14.3 Definitions.....................................................17
14.4 Initial Director Options........................................17
14.5 Annual Director Options.........................................18
Article 15 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC..............18
15.1 Plan Does Not Restrict Corporation..............................18
15.2 Adjustments by the Committee....................................18
Article 16 AMENDMENT AND TERMINATION....................................18
Article 17 MISCELLANEOUS................................................19
17.1 Tax Withholding.................................................19
17.2 Unfunded Plan...................................................19
17.3 Payments to Trust...............................................19
17.4 Annulment of Awards.............................................19
17.5 Engaging in Competition With the Corporation....................19
17.6 Other Corporation Benefit and Compensation Programs.............20
17.7 Securities Law Restrictions.....................................20
17.8 Governing Law...................................................20
Article 18 SHAREHOLDER APPROVAL.........................................20
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BARRETT BUSINESS SERVICES, INC.
AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT. Barrett Business Services, Inc. ("Corporation"), hereby
establishes the Barrett Business Services, Inc., 1993 Stock Incentive Plan (the
"Plan"), effective as of March 1, 1993, subject to shareholder approval as
provided in Article 18. The Plan was previously amended effective March 8, 1994
and March 12, 1997. The Plan was amended and restated effective March 16, 2000,
subject to shareholder approval, and subsequently amended and restated effective
March 14, 2002.
1.2 PURPOSE. The purpose of the Plan is to promote and advance the
interests of Corporation and its shareholders by enabling Corporation to
attract, retain, and reward key employees, directors, and outside consultants of
Corporation and its subsidiaries. It is also intended to strengthen the
mutuality of interests between such employees, directors, and consultants and
Corporation's shareholders. The Plan is designed to serve these purposes by
offering stock options and other equity-based incentive awards, thereby
providing a proprietary interest in pursuing the long-term growth,
profitability, and financial success of Corporation.
ARTICLE 2
DEFINITIONS
2.1 DEFINED TERMS. For purposes of the Plan, the following terms shall
have the meanings set forth below:
"AWARD" means an award or grant made to a Participant of Options,
Stock Appreciation Rights, Restricted Awards, Performance Awards, or Other
Stock-Based Awards pursuant to the Plan.
"AWARD AGREEMENT" means an agreement as described in Section 6.4.
"BOARD" means the Board of Directors of Corporation.
"CALIFORNIA OPTION" means any Option granted to a California
resident under the California Plan.
"CALIFORNIA PLAN" means the Barrett Business Services, Inc. Stock
Option Plan for California Residents, attached hereto as Exhibit A as it
may hereafter be amended from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor thereto, together with rules,
regulations, and interpretations promulgated thereunder. Where the context
so requires, any reference to a particular Code section shall be construed
to refer to the successor provision to such Code section.
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"COMMITTEE" means the committee appointed by the Board to administer
the Plan as provided in Article 3 of the Plan.
"COMMON STOCK" means the $.01 par value Common Stock of Corporation
with those voting rights described in Article III of Corporation's
Articles of Incorporation or any security of Corporation issued in
substitution, exchange, or lieu thereof.
"CONSULTANT" means any consultant or adviser to Corporation or a
Subsidiary selected by the Committee, who is not an employee of
Corporation or a Subsidiary.
"CONTINUING RESTRICTION" means a Restriction contained in Sections
6.5(h), 17.5, 17.5, and 17.7 of the Plan and any other Restrictions
expressly designated by the Committee in an Award Agreement as a
Continuing Restriction.
"CORPORATION" means Barrett Business Services, Inc., a Maryland
corporation, or any successor corporation.
"DEFERRED COMPENSATION OPTION" means a Nonqualified Option granted
in lieu of a specified amount of other compensation pursuant to Section
7.8 of the Plan.
"DIRECTOR OPTIONS" means options granted to Non-Employee Board
Directors pursuant to Article 14 of the Plan, including Initial Director
Options and Annual Director Options.
"DISABILITY" means the condition of being permanently "disabled"
within the meaning of Section 22(e)(3) of the Code, namely being unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months. However, the Committee may change the
foregoing definition of "Disability" or may adopt a different definition
for purposes of specific Awards.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
and in effect from time to time, or any successor statute. Where the
context so requires, any reference to a particular section of the Exchange
Act, or to any rule promulgated under the Exchange Act, shall be construed
to refer to successor provisions to such section or rule.
"FAIR MARKET VALUE" means on any given date, the fair market value
per share of the Common Stock determined as follows:
(a) If the Common Stock is traded on an established securities
exchange, the mean between the reported high and low sale prices of Common
Stock as reported for such day by the principal exchange on which Common
Stock is traded (as determined by the Committee) or, if Common Stock was
not traded on such date, on the next preceding day on which Common Stock
was traded;
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(b) If trading activity in Common Stock is reported on The Nasdaq
Stock Market, the mean between the reported high and low sale prices of
Common Stock as reported for such day by the NASDAQ or, if Common Stock
trades were not reported on such date, on the next preceding day on which
Common Stock trades were reported by the NASDAQ;
(c) If trading activity in Common Stock is reported on the OTC
Bulletin Board, the mean between the bid price and asked price quote for
such day as reported by NASDAQ or, if there are no such quotes for Common
Stock for such date, on the next preceding day for which bid and asked
price quotes for Common Stock were reported by NASDAQ; or
(d) If there is no market for Common Stock or if trading activities
for Common Stock are not reported in one of the manners described above,
the fair market value shall be as determined by the Committee.
"INCENTIVE STOCK OPTION" or "ISO" means any Option granted pursuant
to the Plan that is intended to be and is specifically designated in its
Award Agreement as an "incentive stock option" within the meaning of
Section 422 of the Code.
"NON-EMPLOYEE BOARD DIRECTOR" means a member of the Board who is not
an employee of Corporation or any Subsidiary.
"NON-EMPLOYEE SUBSIDIARY DIRECTOR" means a member of the board of
directors of a Subsidiary who is neither an employee of Corporation or a
Subsidiary nor a member of the Board.
"NONQUALIFIED OPTION" or "NQO" means any Option, including a
Deferred Compensation Option, granted pursuant to the Plan that is not an
Incentive Stock Option.
"OPTION" means an ISO, an NQO, a Deferred Compensation Option, or a
Director Option.
"OTHER STOCK-BASED AWARD" means an Award as defined in Section 11.1.
"PARTICIPANT" means an employee or a Consultant of Corporation or a
Subsidiary, a Non-Employee Board Director, or a Non-Employee Subsidiary
Director who is granted an Award under the Plan.
"PERFORMANCE AWARD" means an Award granted pursuant to the
provisions of Article 10 of the Plan, the Vesting of which is contingent
on performance attainment.
"PERFORMANCE CYCLE" means a designated performance period pursuant
to the provisions of Section 10.3 of the Plan.
"PERFORMANCE GOAL" means a designated performance objective pursuant
to the provisions of Section 10.4 of the Plan.
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"PLAN" means this Barrett Business Services, Inc., 1993 Stock
Incentive Plan, as set forth herein and as it may be hereafter amended and
from time to time.
"REPORTING PERSON" means a Participant who is subject to the
reporting requirements of Section 16(a) of the Exchange Act.
"RESTRICTED AWARD" means a Restricted Share or a Restricted Unit
granted pursuant to Article 9 of the Plan.
"RESTRICTED SHARE" means an Award described in Section 9.1(a) of the
Plan.
"RESTRICTED UNIT" means an Award of units representing Shares
described in Section 9.1(b) of the Plan.
"RESTRICTION" means a provision in the Plan or in an Award Agreement
which limits the exercisability or transferability, or which governs the
forfeiture, of an Award or the Shares, cash, or other property payable
pursuant to an Award.
"RETIREMENT" means:
(a) For Participants who are employees, retirement from active
employment with Corporation and its Subsidiaries on or after age 65, or
such earlier retirement date as approved by the Committee for purposes of
the Plan;
(b) For Participants who are Non-Employee Board Directors or
Non-Employee Subsidiary Directors, retirement from the applicable board of
directors after attaining the maximum age (if any) specified in the
articles of incorporation or bylaws of the applicable corporation; or
(c) For Participants who are Consultants, termination of service as
a Consultant after attaining a retirement age specified by the Committee
for purposes of an Award to such Consultant.
However, the Committee may change the foregoing definition of
"Retirement" or may adopt a different definition for purposes of specific
Awards.
"SHARE" means a share of Common Stock.
"STOCK APPRECIATION RIGHT" or "SAR" means an Award to benefit from
the appreciation of Common Stock granted pursuant to the provisions of
Article 8 of the Plan.
"SUBSIDIARY" means a "subsidiary corporation" of Corporation, within
the meaning of Section 425 of the Code, namely any corporation in which
Corporation directly or indirectly controls 50 percent or more of the
total combined voting power of all classes of stock having voting power.
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"VEST" or "VESTED" means:
(a) In the case of an Award that requires exercise, to be or to
become immediately and fully exercisable and free of all Restrictions
(other than Continuing Restrictions);
(b) In the case of an Award that is subject to forfeiture, to be or
to become nonforfeitable, freely transferable, and free of all
Restrictions (other than Continuing Restrictions);
(c) In the case of an Award that is required to be earned by
attaining specified Performance Goals, to be or to become earned and
nonforfeitable, freely transferable, and free of all Restrictions (other
than Continuing Restrictions); or
(d) In the case of any other Award as to which payment is not
dependent solely upon the exercise of a right, election, exercise, or
option, to be or to become immediately payable and free of all
Restrictions (except Continuing Restrictions).
2.2 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine or feminine terminology used in the Plan shall also include the
opposite gender; and the definition of any term in Section 2.1 in the singular
shall also include the plural, and vice versa.
ARTICLE 3
ADMINISTRATION
3.1 GENERAL. The Plan shall be administered by a Committee composed as
described in Section 3.2.
3.2 COMPOSITION OF THE COMMITTEE. The Committee shall be appointed by the
Board and shall consist of not less than a sufficient number of Non-Employee
Board Directors so as to qualify the Committee to administer the Plan as
contemplated by Rule 16b-3 under the Exchange Act. The Board may from time to
time remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. In the event that the
Committee shall cease to satisfy the requirements of Rule 16b-3, the Board shall
appoint another Committee satisfying such requirements.
3.3 AUTHORITY OF THE COMMITTEE. The Committee shall have full power and
authority (subject to such orders or resolutions as may be issued or adopted
from time to time by the Board) to administer the Plan in its sole discretion,
including the authority to:
(a) Construe and interpret the Plan and any Award Agreement;
(b) Promulgate, amend, and rescind rules and procedures relating to
the implementation of the Plan;
(c) Select the employees, Non-Employee Subsidiary Directors, and
Consultants who shall be granted Awards;
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(d) Determine the number and types of Awards to be granted to each
such Participant;
(e) Determine the number of Shares, or Share equivalents, to be
subject to each Award;
(f) Determine the option price, purchase price, base price, or
similar feature for any Award; and
(g) Determine all the terms and conditions of all Award Agreements,
consistent with the requirements of the Plan.
Decisions of the Committee, or any delegate as permitted by the Plan,
shall be final, conclusive, and binding on all Participants.
3.4 ACTION BY THE COMMITTEE. A majority of the members of the Committee
shall constitute a quorum for the transaction of business. Action approved by a
majority of the members present at any meeting at which a quorum is present, or
action in writing by a majority of the members of the Committee, shall be the
valid acts of the Committee.
3.5 DELEGATION. Notwithstanding the foregoing, the Committee may delegate
to one or more officers of Corporation the authority to determine the
recipients, types, amounts, and terms of Awards granted to Participants who are
not Reporting Persons.
3.6 LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan, any Award, or any Participant.
3.7 COSTS OF PLAN. The costs and expenses of administering the Plan shall
be borne by Corporation.
ARTICLE 4
DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN
4.1 DURATION OF THE PLAN. The Plan is effective March 1, 1993, subject to
approval by Corporation's shareholders as provided in Article 18. The Plan shall
remain in effect until Awards have been granted covering all the available
Shares or the Plan is otherwise terminated by the Board. Termination of the Plan
shall not affect outstanding Awards.
4.2 SHARES SUBJECT TO THE PLAN. The shares which may be made subject to
Awards under the Plan shall be Shares of Common Stock, which may be either
authorized and unissued Shares or reacquired Shares. No fractional Shares shall
be issued under the Plan. Subject to adjustment pursuant to Article 15, the
maximum number of Shares for which Awards may be granted under the Plan shall be
1,550,000, of which 200,000 Shares are reserved for issuance to California
residents pursuant to the California Plan attached hereto. If an Award under the
Plan is canceled or expires for any reason prior to having been fully Vested or
exercised by a Participant or is settled in cash in lieu of Shares or is
exchanged for other Awards, all Shares covered by such Awards shall be made
available for future Awards under the Plan or the
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California Plan, as the case may be. In addition, the Committee may in its
discretion transfer shares from the California Plan to the Plan or vice versa,
provided that in no event shall the maximum number of Shares granted under the
Plan exceed 1,550,000.
4.3 GRANTS TO CALIFORNIA RESIDENTS. So long as Shares subject to Awards
under the Plan must be registered under the blue sky laws of the state of
California, no Awards shall be made to a Participant resident in the state of
California except pursuant to the California Plan.
ARTICLE 5
ELIGIBILITY
5.1 EMPLOYEES AND NON-EMPLOYEE SUBSIDIARY DIRECTORS. Officers and other
key employees of Corporation and its Subsidiaries (including employees who may
also be directors of Corporation or a Subsidiary), Consultants, and Non-Employee
Subsidiary Directors who, in the Committee's judgment, are or will be
contributors to the long-term success of Corporation shall be eligible to
receive Awards under the Plan.
5.2 NON-EMPLOYEE BOARD DIRECTORS. All Non-Employee Board Directors shall
be eligible to receive Director Options pursuant to Article 14 of the Plan.
ARTICLE 6
AWARDS
6.1 TYPES OF AWARDS. The types of Awards that may be granted under the
Plan are:
(a) Options governed by Article 7 of the Plan;
(b) Stock Appreciation Rights governed by Article 8 of the Plan;
(c) Restricted Awards governed by Article 9 of the Plan;
(d) Performance Awards governed by Article 10 of the Plan;
(e) Other Stock-Based Awards or combination awards governed by
Article 11 of the Plan; and
(f) Director Options governed by Article 14 of the Plan.
In the discretion of the Committee, any Award (other than a Director
Option) may be granted alone, in addition to, or in tandem with other Awards
under the Plan.
6.2 GENERAL. Subject to the limitations of the Plan, the Committee may
cause Corporation to grant Awards to such Participants, at such times, of such
types, in such amounts, for such periods, with such option prices, purchase
prices, or base prices, and subject to such terms, conditions, limitations, and
restrictions as the Committee, in its discretion, shall deem appropriate. Awards
may be granted as additional compensation to a Participant or in lieu of other
compensation to such Participant. A Participant may receive more than one Award
and more than one type of Award under the Plan.
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6.3 NONUNIFORM DETERMINATIONS. The Committee's determinations under the
Plan or under one or more Award Agreements, including without limitation, (a)
the selection of Participants to receive Awards, (b) the type, form, amount, and
timing of Awards, (c) the terms of specific Award Agreements, and (d) elections
and determinations made by the Committee with respect to exercise or payments of
Awards, need not be uniform and may be made by the Committee selectively among
Participants and Awards, whether or not Participants are similarly situated.
6.4 AWARD AGREEMENTS. Each Award shall be evidenced by a written Award
Agreement between Corporation and the Participant. Award Agreements may, subject
to the provisions of the Plan, contain any provision approved by the Committee.
6.5 PROVISIONS GOVERNING ALL AWARDS. All Awards shall be subject to the
following provisions:
(a) ALTERNATIVE AWARDS. If any Awards are designated in their Award
Agreements as alternative to each other, the exercise of all or part of
one Award automatically shall cause an immediate equal (or pro rata)
corresponding termination of the other alternative Award or Awards.
(b) RIGHTS AS SHAREHOLDERS. No Participant shall have any rights of
a shareholder with respect to Shares subject to an Award until such Shares
are issued in the name of the Participant.
(c) EMPLOYMENT RIGHTS. Neither the adoption of the Plan nor the
granting of any Award shall confer on any person the right to continued
employment with Corporation or any Subsidiary or the right to remain as a
director of or a Consultant to Corporation or any Subsidiary, as the case
may be, nor shall it interfere in any way with the right of Corporation or
a Subsidiary to terminate such person's employment or to remove such
person as a Consultant or as a director at any time for any reason, with
or without cause.
(d) NONTRANSFERABLE. Each Award (other than Restricted Shares after
they Vest) shall not be transferable otherwise than by will or the laws of
descent and distribution and shall be exercisable (if exercise is
required) during the lifetime of the Participant, only by the Participant
or, in the event the Participant becomes legally incompetent, by the
Participant's guardian or legal representative.
(e) TERMINATION OF EMPLOYMENT. The terms and conditions under which
an Award may be exercised, if at all, after a Participant's termination of
employment or service as a Non-Employee Subsidiary Director or a
Consultant shall be determined by the Committee and specified in the
applicable Award Agreement.
(f) CHANGE IN CONTROL. The Committee, in its discretion, may provide
in any Award Agreement that in the event of a change in control of
Corporation (as the Committee may define such term in the Award
Agreement), as of the date of such change in control:
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(i) All, or a specified portion of, Awards requiring exercise
shall become fully and immediately exercisable, notwithstanding any
other limitations on exercise;
(ii) All, or a specified portion of, Awards subject to
Restrictions shall become fully Vested; and
(iii) All, or a specified portion of, Awards subject to
Performance Goals shall be deemed to have been fully earned.
Unless the Committee specifically provides otherwise in the change
in control provision for a specific Award Agreement, Awards shall become
exercisable, become Vested, or become earned as of a change in control
date only if, or to the extent, such acceleration in the exercisability,
Vesting, or becoming earned of the Awards does not result in an "excess
parachute payment" within the meaning of Section 280G(b) of the Code. The
Committee, in its discretion, may include change in control provisions in
some Award Agreements and not in others, may include different change in
control provisions in different Award Agreements, and may include change
in control provisions for some Awards or some Participants and not for
others.
(g) CONDITIONING OR ACCELERATING BENEFITS. The Committee, in its
discretion, may include in any Award Agreement a provision conditioning or
accelerating the Vesting of an Award or the receipt of benefits pursuant
to an Award, either automatically or in the discretion of the Committee,
upon the occurrence of specified events including, without limitation, a
change in control of Corporation (subject to the foregoing paragraph (f)),
a sale of all or substantially all the property and assets of Corporation,
or an event of the type described in Section Article 15 of this Plan.
(h) PAYMENT OF PURCHASE PRICE AND WITHHOLDING. The Committee, in its
discretion, may include in any Award Agreement a provision permitting the
Participant to pay the purchase or option price, if any, for the Shares or
other property issuable pursuant to the Award, or the Participant's
federal, state, or local tax, or tax withholding, obligation with respect
to such issuance in whole or in part by any one or more of the following:
(i) By delivering previously owned Shares (including Restricted
Shares, whether or not vested);
(ii) By surrendering outstanding other Vested Awards under the
Plan denominated in Shares or in Share equivalent units;
(iii) By reducing the number of Shares or other property
otherwise Vested and issuable pursuant to the Award;
(iv) By delivering to Corporation a promissory note payable on
such terms and over such period as the Committee shall determine;
(v) By delivery (in a form approved by the Committee) of an
irrevocable direction to a securities broker acceptable to the
Committee:
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(A) To sell Shares subject to the Option and to deliver
all or a part of the sales proceeds to Corporation in payment
of all or a part of the option price and taxes or withholding
taxes attributable to the issuance; or
(B) To pledge Shares subject to the Option to the broker
as security for a loan and to deliver all or a part of the loan
proceeds to Corporation in payment of all or a part of the
option price and taxes or withholding taxes attributable to the
issuance; or
(vi) In any combination of the foregoing or in any other form
approved by the Committee.
If Restricted Shares are surrendered in full or partial payment of
the purchase or option price of Shares issuable under an Award, a
corresponding number of the Shares issued upon exercise of the Award shall
be Restricted Shares subject to the same Restrictions as the surrendered
Restricted Shares. Shares withheld or surrendered as described above shall
be valued based on their Fair Market Value on the date of the transaction.
Any Shares withheld or surrendered with respect to a Reporting Person
shall be subject to such additional conditions and limitations as the
Committee may impose to comply with the requirements of the Exchange Act.
(i) REPORTING PERSONS. With respect to all Awards granted to
Reporting Persons:
(i) Awards requiring exercise shall not be exercisable until at
least six months after the date the Award was granted, except in the
case of the death or Disability of the Participant; and
(ii) Shares issued pursuant to any other Award may not be sold
by the Participant for at least six months after acquisition, except
in the case of the death or Disability of the Participant;
provided, however, that (unless an Award Agreement provides otherwise) the
limitation of this Section 6.5(i) shall apply only if or to the extent
required by Rule 16b-3 under the Exchange Act. Award Agreements for Awards
to Reporting Persons shall also comply with any future restrictions
imposed by such Rule 16b-3.
(j) SERVICE PERIODS. At the time of granting Awards, the Committee
may specify, by resolution or in the Award Agreement, the period or
periods of service performed or to be performed by the Participant in
connection with the grant of the Award.
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ARTICLE 7
OPTIONS
7.1 TYPES OF OPTIONS. Options granted under the Plan may be in the form of
Incentive Stock Options or Nonqualified Options (including Deferred Compensation
Options and Director Options). The grant of each Option and the Award Agreement
governing each Option shall identify the Option as an ISO or an NQO. In the
event the Code is amended to provide for tax-favored forms of stock options
other than or in addition to Incentive Stock Options, the Committee may grant
Options under the Plan meeting the requirements of such forms of options.
7.2 GENERAL. Options shall be subject to the terms and conditions set
forth in Article 6 and this Article 7 and Award Agreements governing Options
shall contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee shall deem desirable; PROVIDED,
HOWEVER, that California Options shall be governed by the California Plan.
7.3 OPTION PRICE. Each Award Agreement for Options shall state the option
exercise price per Share of Common Stock purchasable under the Option, which
shall not be less than:
(a) $.01 per share in the case of a Deferred Compensation
Option;
(b) 75 percent of the Fair Market Value of a Share on the date
of grant for all other Nonqualified Options (except Director
Options); or
(c) 100 percent of the Fair Market Value of a Share on the date
of grant for all Incentive Stock Options.
7.4 OPTION TERM. The Award Agreement for each Option shall specify the
term of each Option, which may be unlimited or may have a specified period
during which the Option may be exercised, as determined by the Committee.
7.5 TIME OF EXERCISE. The Award Agreement for each Option shall specify,
as determined by the Committee:
(a) The time or times when the Option shall become exercisable
and whether the Option shall become exercisable in full or in
graduated amounts based on: (i) continuation of employment over a
period specified in the Award Agreement, (ii) satisfaction of
performance goals or criteria specified in the Award Agreement, or
(iii) a combination of continuation of employment and satisfaction
of performance goals or criteria;
(b) Such other terms, conditions, and restrictions as to when
the Option may be exercised as shall be determined by the Committee;
and
(c) The extent, if any, that the Option shall remain
exercisable after the Participant ceases to be an employee,
Consultant, or director of Corporation or a Subsidiary.
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An Award Agreement for an Option may, in the discretion of the Committee,
provide whether, and to what extent, the time when an Option becomes exercisable
shall be accelerated or otherwise modified (i) in the event of the death,
Disability, or Retirement of the Participant, or (ii) upon the occurrence of a
change in control of Corporation. The Committee may, at any time in its
discretion, accelerate the time when all or any portion of an outstanding Option
becomes exercisable.
7.6 SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. In the case of an Option
designated as an Incentive Stock Option, the terms of the Option and the Award
Agreement shall conform with the statutory and regulatory requirements specified
pursuant to Section 422 of the Code, as in effect on the date such ISO is
granted. ISOs may be granted only to employees of Corporation or a Subsidiary.
ISOs may not be granted under the Plan after ten years following the date
specified in Section 4.1, unless the ten-year limitation of Section 422(b)(2) of
the Code is removed or extended.
7.7 RESTRICTED SHARES. In the discretion of the Committee, the Shares
issuable upon exercise of an Option may be Restricted Shares if so provided in
the Award Agreement for the Option.
7.8 DEFERRED COMPENSATION OPTIONS. The Committee may, in its discretion,
grant Deferred Compensation Options with an option price less than Fair Market
Value to provide a means for deferral to future dates of compensation otherwise
payable to a Participant. The option price shall be determined by the Committee
subject to Section 7.3(a)) of the Plan. The number of Shares subject to a
Deferred Compensation Option shall be determined by the Committee, in its
discretion, by dividing the amount of compensation to be deferred by the
difference between the Fair Market Value of a Share on the date of grant and the
option price of the Deferred Compensation Option. Amounts of compensation
deferred with Deferred Compensation Options may include amounts payable under
Awards granted under the Plan or under any other compensation program or
arrangement of Corporation as permitted by the Committee. The Committee shall
grant Deferred Compensation Options only if it reasonably determines that the
recipient of such an Option is not likely to be deemed to be in constructive
receipt for income tax purposes of the income being deferred.
7.9 RELOAD OPTIONS. The Committee, in its discretion, may provide in an
Award Agreement for an Option that in the event all or a portion of the Option
is exercised by the Participant using previously acquired Shares, the
Participant shall automatically be granted (subject to the available pool of
Shares subject to grants of Awards as specified in Section 4.2 of the Plan) a
replacement Option (with an option price equal to the Fair Market Value of a
Share on the date of such exercise) for a number of Shares equal to (or equal to
a portion of) the number of shares surrendered upon exercise of the Option. Such
reload Option features may be subject to such terms and conditions as the
Committee shall determine, including without limitation, a condition that the
Participant retain the Shares issued upon exercise of the Option for a specified
period of time.
7.10 LIMITATION ON NUMBER OF SHARES SUBJECT TO OPTIONS. In no event may
Options for more than 200,000 Shares be granted to any individual under the Plan
during any calendar year.
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ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 GENERAL. Stock Appreciation Rights shall be subject to the terms and
conditions set forth in Article 6 and this Article 8 and Award Agreements
governing Stock Appreciation Rights shall contain such additional terms and
conditions, not inconsistent with the express terms of the Plan, as the
Committee shall deem desirable.
8.2 NATURE OF STOCK APPRECIATION RIGHT. A Stock Appreciation Right is an
Award entitling a Participant to receive an amount equal to the excess (or, if
the Committee shall determine at the time of grant, a portion of the excess) of
the Fair Market Value of a Share of Common Stock on the date of exercise of the
SAR over the base price, as described below, on the date of grant of the SAR,
multiplied by the number of Shares with respect to which the SAR shall have been
exercised. The base price shall be designated by the Committee in the Award
Agreement for the SAR and may be the Fair Market Value of a Share on the grant
date of the SAR or such other higher or lower price as the Committee shall
determine.
8.3 EXERCISE. A Stock Appreciation Right may be exercised by a Participant
in accordance with procedures established by the Committee. The Committee may
also provide that a SAR shall be automatically exercised on one or more
specified dates or upon the satisfaction of one or more specified conditions. In
the case of SARs granted to Reporting Persons, exercise of the SAR shall be
limited by the Committee to the extent required to comply with the applicable
requirements of Rule 16b-3 under the Exchange Act.
8.4 FORM OF PAYMENT. Payment upon exercise of a Stock Appreciation Right
may be made in cash, in installments, in Shares, by issuance of a Deferred
Compensation Option, or in any combination of the foregoing, or in any other
form as the Committee shall determine. 8.5 LIMITATION ON NUMBER OF STOCK
APPRECIATION RIGHTS. In no event may more than 200,000 Stock Appreciation Rights
be granted to any individual under the Plan during any calendar year.
8.5 LIMITATION ON NUMBER OF STOCK APPRECIATION RIGHTS. In no event may more
than 200,000 Stock Appreciation Rights be granted to any individual under the
Plan during any calendar year.
ARTICLE 9
RESTRICTED AWARDS
9.1 TYPES OF RESTRICTED AWARDS. Restricted Awards granted under the Plan
may be in the form of either Restricted Shares or Restricted Units.
(a) RESTRICTED SHARES. A Restricted Share is an Award of Shares
transferred to a Participant subject to such terms and conditions as
the Committee deems appropriate, including, without limitation,
restrictions on the sale, assignment, transfer, or other disposition
of such Restricted Shares and may include a requirement that the
Participant forfeit such Restricted Shares back to Corporation upon
termination of Participant's employment (or service as a
Non-Employee Subsidiary Director or a Consultant) for specified
reasons within a specified period of time or upon other conditions,
as set forth in the Award Agreement for such Restricted Shares. Each
Participant receiving a Restricted Share shall be issued a stock
certificate in respect of such Shares, registered in the name of
such Participant, and shall execute a stock power in blank with
respect to the
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Shares evidenced by such certificate. The certificate evidencing
such Restricted Shares and the stock power shall be held in custody
by Corporation until the Restrictions thereon shall have lapsed.
(b) RESTRICTED UNITS. A Restricted Unit is an Award of units
(with each unit having a value equivalent to one Share) granted to a
Participant subject to such terms and conditions as the Committee
deems appropriate, and may include a requirement that the
Participant forfeit such Restricted Units upon termination of
Participant's employment (or service as a Non-Employee Subsidiary
Director or a Consultant) for specified reasons within a specified
period of time or upon other conditions, as set forth in the Award
Agreement for such Restricted Units.
9.2 GENERAL. Restricted Awards shall be subject to the terms and
conditions of Article 6 and this Article 9 and Award Agreements governing
Restricted Awards shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
9.3 RESTRICTION PERIOD. Award Agreements for Restricted Awards shall
provide that Restricted Awards, and the Shares subject to Restricted Awards, may
not be transferred, and may provide that, in order for a Participant to Vest in
such Restricted Awards, the Participant must remain in the employment (or remain
as a Non-Employee Subsidiary Director or a Consultant) of Corporation or its
Subsidiaries, subject to relief for reasons specified in the Award Agreement,
for a period commencing on the grant date of the Award and ending on such later
date or dates as the Committee may designate at the time of the Award (the
"Restriction Period"). During the Restriction Period, a Participant may not
sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares
received under or governed by a Restricted Award grant. The Committee, in its
sole discretion, may provide for the lapse of restrictions in installments
during the Restriction Period. Upon expiration of the applicable Restriction
Period (or lapse of Restrictions during the Restriction Period where the
Restrictions lapse in installments) the Participant shall be entitled to
settlement of the Restricted Award or portion thereof, as the case may be.
Although Restricted Awards shall usually Vest based on continued employment (or
service as a Non-Employee Subsidiary Director or a Consultant) and Performance
Awards under Article 10 shall usually Vest based on attainment of Performance
Goals, the Committee, in its discretion, may condition Vesting of Restricted
Awards on attainment of Performance Goals as well as continued employment (or
service as a Non-Employee Subsidiary Director or a Consultant). In such case,
the Restriction Period for such a Restricted Award shall include the period
prior to satisfaction of the Performance Goals.
9.4 FORFEITURE. If a Participant ceases to be an employee (or Consultant
or Non-Employee Subsidiary Director) of Corporation or a Subsidiary during the
Restriction Period for any reason other than reasons which may be specified in
an Award Agreement (such as death, Disability, or Retirement) the Award
Agreement may require that all non-Vested Restricted Awards previously granted
to the Participant be forfeited and returned to Corporation.
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9.5 SETTLEMENT OF RESTRICTED AWARDS.
(a) RESTRICTED SHARES. Upon Vesting of a Restricted Share Award, the
legend on such Shares will be removed and the Participant's stock power
will be returned and the Shares will no longer be Restricted Shares. The
Committee may also, in its discretion, permit a Participant to receive, in
lieu of unrestricted Shares at the conclusion of the Restriction Period,
payment in cash, installments, or by issuance of a Deferred Compensation
Option equal to the Fair Market Value of the Restricted Shares as of the
date the Restrictions lapse.
(b) RESTRICTED UNITS. Upon Vesting of a Restricted Unit Award, a
Participant shall be entitled to receive payment for Restricted Units in
an amount equal to the aggregate Fair Market Value of the Shares covered
by such Restricted Units at the expiration of the Applicable Restriction
Period. Payment in settlement of a Restricted Unit shall be made as soon
as practicable following the conclusion of the applicable Restriction
Period in cash, in installments, in Shares equal to the number of
Restricted Units, by issuance of a Deferred Compensation Option, or in any
other manner or combination of such methods as the Committee, in its sole
discretion, shall determine.
9.6 RIGHTS AS A SHAREHOLDER. A Participant shall have, with respect to
unforfeited Shares received under a grant of Restricted Shares, all the rights
of a shareholder of Corporation, including the right to vote the shares, and the
right to receive any cash dividends. Stock dividends issued with respect to
Restricted Shares shall be treated as additional Shares covered by the grant of
Restricted Shares and shall be subject to the same Restrictions.
ARTICLE 10
PERFORMANCE AWARDS
10.1 GENERAL. Performance Awards shall be subject to the terms and
conditions set forth in Article 6 and this Article 10 and Award Agreements
governing Performance Awards shall contain such other terms and conditions not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
10.2 NATURE OF PERFORMANCE AWARDS. A Performance Award is an Award of
units (with each unit having a value equivalent to one Share) granted to a
Participant subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, the requirement that the Participant
forfeit such Performance Award or a portion thereof in the event specified
performance criteria are not met within a designated period of time.
10.3 PERFORMANCE CYCLES. For each Performance Award, the Committee shall
designate a performance period (the "Performance Cycle") with a duration to be
determined by the Committee in its discretion within which specified Performance
Goals are to be attained. There may be several Performance Cycles in existence
at any one time and the duration of Performance Cycles may differ from each
other.
10.4 PERFORMANCE GOALS. The Committee shall establish Performance Goals
for each Performance Cycle on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. Performance Goals may
be based on (i) performance
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criteria for Corporation, a Subsidiary, or an operating group, (ii) a
Participant's individual performance, or (iii) a combination of both.
Performance Goals may include objective and subjective criteria. During any
Performance Cycle, the Committee may adjust the Performance Goals for such
Performance Cycle as it deems equitable in recognition of unusual or
nonrecurring events affecting Corporation, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine.
10.5 DETERMINATION OF AWARDS. As soon as practicable after the end of a
Performance Cycle, the Committee shall determine the extent to which Performance
Awards have been earned on the basis of performance in relation to the
established Performance Goals.
10.6 TIMING AND FORM OF PAYMENT. Settlement of earned Performance Awards
shall be made to the Participant as soon as practicable after the expiration of
the Performance Cycle and the Committee's determination under Section 10.5, in
the form of cash, installments, Shares, Deferred Compensation Options, or any
combination of the foregoing or in any other form as the Committee shall
determine.
ARTICLE 11
OTHER STOCK BASED AND COMBINATION AWARDS
11.1 OTHER STOCK-BASED AWARDS. The Committee may grant other Awards under
the Plan pursuant to which Shares are or may in the future be acquired, or
Awards denominated in or measured by Share equivalent units, including Awards
valued using measures other than the market value of Shares. Other Stock-Based
Awards are not restricted to any specified form or structure and may include,
without limitation, Share purchase warrants, other rights to acquire Shares, and
securities convertible into or redeemable for Shares. Such Other Stock-Based
Awards may be granted either alone, in addition to, or in tandem with, any other
type of Award granted under the Plan.
11.2 COMBINATION AWARDS. The Committee may also grant Awards under the
Plan in tandem or combination with other Awards or in exchange of Awards, or in
tandem or combination with, or as alternatives to, grants or rights under any
other employee plan of Corporation, including the plan of any acquired entity.
No action authorized by this section shall reduce the amount of any existing
benefits or change the terms and conditions thereof without the Participant's
consent.
ARTICLE 12
DEFERRAL ELECTIONS
The Committee may permit a Participant to elect to defer receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such
Participant by virtue of the exercise, earn out, or Vesting of an Award made
under the Plan. If any such election is permitted, the Committee shall establish
rules and procedures for such payment deferrals, including, but not limited to:
(a) payment or crediting of reasonable interest or other growth or earnings
factor on such deferred amounts credited in cash, (b) the payment or crediting
of dividend equivalents in respect of deferrals credited in Share equivalent
units, or (c) granting of Deferred Compensation Options.
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ARTICLE 13
DIVIDEND EQUIVALENTS
Any Awards may, at the discretion of the Committee, earn dividend
equivalents. In respect of any such Award which is outstanding on a dividend
record date for Common Stock, the Participant may be credited with an amount
equal to the amount of cash or stock dividends that would have been paid on the
Shares covered by such Award, had such covered Shares been issued and
outstanding on such dividend record date. The Committee shall establish such
rules and procedures governing the crediting of dividend equivalents, including
the timing, form of payment, and payment contingencies of such dividend
equivalents, as it deems are appropriate or necessary.
ARTICLE 14
NON-EMPLOYEE BOARD DIRECTORS
14.1 GENERAL. Awards shall be made to Non-Employee Board Directors only
pursuant to this Article 14. All Non-Employee Board Directors shall receive
Initial Director Options and Annual Director Options. No person, including the
members of the Board or the Committee, shall have any discretion as to the
selection of eligible recipients or the determination of the type, amount, or
terms of Awards pursuant to this Article 14.
14.2 ELIGIBILITY. The persons eligible to receive Awards pursuant to this
Article 14 are all Non-Employee Board Directors of Corporation.
14.3 DEFINITIONS. For purposes of this Article 14, the following terms
shall have the meanings set forth below:
"ANNUAL MEETING DATE" means the date of Corporation's regular annual
meeting of shareholders.
"OFFERING DATE" means the closing date of Corporation's initial public
offering of Shares pursuant to a registration statement which has become
effective under the Securities Act of 1933.
14.4 INITIAL DIRECTOR OPTIONS.
(a) GRANT OF INITIAL DIRECTOR OPTIONS. As of the Offering Date,
each Non-Employee Board Director who is a member of the Board on the
Offering Date shall be granted automatically an Initial Director
Option to purchase 1,500 Shares.
(b) OPTION PRICE. The option purchase price for each Initial
Director Option shall be equal to the public offering price of a
Share.
(c) TERMS OF INITIAL DIRECTOR OPTION. Each Initial Director
Option shall have the terms and conditions specified in the form of
Award Agreement attached to this Plan as Appendix A.
14.5 ANNUAL DIRECTOR OPTIONS.
(a) GRANT OF ANNUAL DIRECTOR OPTIONS. As of each Annual Meeting
Date, each Non-Employee Board Director whose term begins on or
continues after that Annual Meeting Date shall be granted
automatically an Annual Director Option to purchase 1,000 Shares.
(b) OPTION PRICE. The option exercise price for each Annual
Director Option shall be equal to the Fair Market Value of a Share
as of the Annual Meeting Date.
(c) TERMS OF ANNUAL DIRECTOR OPTIONS. Each Annual Director
Option shall have the terms and conditions specified in the form of
Award Agreement attached to this Plan as Appendix A; PROVIDED,
HOWEVER, that if such Option is a California Option, it shall be
issued pursuant to the California Plan.
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ARTICLE 15
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
15.1 PLAN DOES NOT RESTRICT CORPORATION. The existence of the Plan and the
Awards granted under the Plan shall not affect or restrict in any way the right
or power of the Board or the shareholders of Corporation to make or authorize
any adjustment, recapitalization, reorganization, or other change in
Corporation's capital structure or its business, any merger or consolidation of
the Corporation, any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting Corporation's capital stock or the rights thereof,
the dissolution or liquidation of Corporation or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding.
15.2 ADJUSTMENTS BY THE COMMITTEE. In the event of any change in
capitalization affecting the Common Stock of Corporation, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of reorganization, or any other
change affecting the Common Stock, such proportionate adjustments, if any, as
the Committee, in its sole discretion, may deem appropriate to reflect such
change, shall be made with respect to the aggregate number of Shares for which
Awards in respect thereof may be granted under the Plan, the maximum number of
Shares which may be sold or awarded to any Participant, the number of Shares
covered by each outstanding Award, and the base price or purchase price per
Share in respect of outstanding Awards. The Committee may also make such
adjustments in the number of Shares covered by, and price or other value of any
outstanding Awards in the event of a spin-off or other distribution (other than
normal cash dividends), of Corporation assets to shareholders.
ARTICLE 16
AMENDMENT AND TERMINATION
Without further approval of Corporation's shareholders, the Board may at
any time terminate the Plan, or may amend it from time to time in such respects
as the Board may deem advisable, except that the Board may not, without approval
of the shareholders, make any amendment which would (i) materially increase the
benefits accruing to Participants under the Plan, (ii) materially increase the
aggregate number of shares of Common Stock which may be
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issued under the Plan (except for adjustments pursuant to Article 15 of the
Plan), or (iii) materially modify the requirements as to eligibility for
participation in the Plan. Without further shareholder approval, the Board may
amend the Plan to take into account changes in applicable securities, federal
income tax laws, and other applicable laws. Further, should the provisions of
Rule 16b-3, or any successor rule, under the Exchange Act be amended, the Board,
without further shareholder approval, may amend the Plan as necessary to comply
with any modifications to such rule. The provisions of Article 14 may not be
amended more than once every six months, other than to conform with changes in
the Code or in Rule 16b-3 under the Exchange Act.
ARTICLE 17
MISCELLANEOUS
17.1 TAX WITHHOLDING. Corporation shall have the right to deduct from any
settlement of any Award under the Plan, including the delivery or vesting of
Shares, any federal, state, or local taxes of any kind required by law to be
withheld with respect to such payments or to take such other action as may be
necessary in the opinion of Corporation to satisfy all obligations for the
payment of such taxes. The recipient of any payment or distribution under the
Plan shall make arrangements satisfactory to Corporation for the satisfaction of
any such withholding tax obligations. Corporation shall not be required to make
any such payment or distribution under the Plan until such obligations are
satisfied.
17.2 UNFUNDED PLAN. The Plan shall be unfunded and Corporation shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Any liability of Corporation to any person with respect
to any Award under the Plan shall be based solely upon any contractual
obligations that may be effected pursuant to the Plan. No such obligation of
Corporation shall be deemed to be secured by any pledge of, or other encumbrance
on, any property of Corporation.
17.3 PAYMENTS TO TRUST. The Committee is authorized to cause to be
established a trust agreement or several trust agreements whereunder the
Committee may make payments of amounts due or to become due to Participants in
the Plan.
17.4 ANNULMENT OF AWARDS. Any Award Agreement may provide that the grant
of an Award payable in cash is revocable until cash is paid in settlement
thereof or that grant of an Award payable in Shares is revocable until the
Participant becomes entitled to the certificate in settlement thereof. In the
event the employment (or service as a Non-Employee Subsidiary Director or a
Consultant) of a Participant is terminated for cause (as defined below), any
Award which is revocable shall be annulled as of the date of such termination
for cause. For the purpose of this Section 17.4, the term "for cause" shall have
the meaning set forth in the Participant's employment agreement, if any, or
otherwise means any discharge (or removal) for material or flagrant violation of
the policies and procedures of Corporation or for other job performance or
conduct which is materially detrimental to the best interests of Corporation, as
determined by the Committee.
17.5 ENGAGING IN COMPETITION WITH THE CORPORATION. Any Award Agreement may
provide that, if a Participant terminates employment (or service as a
Non-Employee Subsidiary
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Director or a Consultant) with Corporation or a Subsidiary for any reason
whatsoever, and within a period of time (as specified in the Award Agreement)
after the date thereof accepts employment with any competitor of (or otherwise
engages in competition with) Corporation, the Committee, in its sole discretion,
may require such Participant to return to Corporation the economic value of any
Award that is realized or obtained (measured at the date of exercise, Vesting,
or payment) by such Participant at any time during the period beginning on the
date that is six months prior to the date of such Participant's termination of
employment (or service as a Non-Employee Subsidiary Director or a Consultant)
with Corporation.
17.6 OTHER CORPORATION BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under an Award made pursuant to the
Plan shall not be deemed a part of a Participant's regular, recurring
compensation for purposes of the termination indemnity or severance pay law of
any state or country and shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan or similar
arrangement provided by Corporation or a Subsidiary unless expressly so provided
by such other plan or arrangements, or except where the Committee expressly
determines that an Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of cash compensation. Awards under the Plan may
be made in combination with or in tandem with, or as alternatives to, grants,
awards, or payments under any other Corporation or Subsidiary plans,
arrangements, or programs. The Plan notwithstanding, Corporation or any
Subsidiary may adopt such other compensation programs and additional
compensation arrangements as it deems necessary to attract, retain, and reward
employees and directors for their service with Corporation and its Subsidiaries.
17.7 SECURITIES LAW RESTRICTIONS. No Shares shall be issued under the Plan
unless counsel for Corporation shall be satisfied that such issuance will be in
compliance with applicable federal and state securities laws. Certificates for
Shares delivered under the Plan may be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law. The Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
17.8 GOVERNING LAW. Except with respect to references to the Code or
federal securities laws, the Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the state of Maryland.
ARTICLE 18
SHAREHOLDER APPROVAL
The adoption of the Plan and the grant of Awards under the Plan are
expressly subject to the approval of the Plan by Corporation's shareholders
holding a majority of Corporation's outstanding Shares.
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EXHIBIT A
BARRETT BUSINESS SERVICES, INC.
STOCK OPTION PLAN
FOR CALIFORNIA RESIDENTS
TABLE OF CONTENTS
PAGE
ARTICLE 1 ESTABLISHMENT AND PURPOSE.....................................1
ARTICLE 2 DEFINITIONS...................................................1
2.1 Defined Terms....................................................1
2.2 Gender and Number................................................3
ARTICLE 3 ADMINISTRATIVE MATTERS........................................4
3.1 General..........................................................4
3.2 Composition of the Committee.....................................4
3.3 Authority of the Committee.......................................4
3.4 Action by the Committee..........................................4
3.5 Delegation.......................................................4
3.6 Liability of Committee Members...................................5
3.7 Costs of California Plan.........................................5
3.8 Duration of the California Plan..................................5
3.9 Shares Subject to the California Plan............................5
3.10 Information to Employees.........................................5
ARTICLE 4 AWARDS........................................................5
4.1 Options..........................................................5
4.2 General..........................................................6
4.3 Option Price.....................................................6
4.4 Option Term......................................................6
4.5 Time of Exercise.................................................6
4.6 Adjustments by the Committee.....................................6
4.7 Special Rules for Incentive Stock Options........................7
4.8 Reload Options...................................................7
ARTICLE 5 ADDITIONAL PROVISIONS.........................................7
5.1 Nonuniform Determinations........................................7
5.2 Award Agreements.................................................7
5.3 Provisions Governing All Grants..................................7
ARTICLE 6 MISCELLANEOUS.................................................9
6.1 Amendment and Termination........................................9
6.2 Tax Withholding..................................................9
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6.3 Unfunded Plan....................................................9
6.4 Annulment of Awards.............................................10
6.5 Engaging in Competition With the Corporation....................10
6.6 Other Corporation Benefit and Compensation Programs.............10
6.7 Securities Law Restrictions.....................................10
6.8 Adjustments by the Committee....................................11
6.9 Governing Law...................................................11
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BARRETT BUSINESS SERVICES, INC.
STOCK OPTION PLAN
FOR CALIFORNIA RESIDENTS
ARTICLE 1
ESTABLISHMENT AND PURPOSE
Barrett Business Services, Inc. ("Corporation") hereby establishes this
Stock Option Plan for California residents (the "California Plan"). The purpose
of the California Plan is to promote and advance the interests of Corporation
and its shareholders by enabling Corporation to attract, retain, and reward key
employees, directors, and outside consultants of Corporation and its
subsidiaries resident in the state of California. It is also intended to
strengthen the mutuality of interests between such employees, directors, and
consultants and Corporation's shareholders. The California Plan is designed to
serve these purposes by offering stock options, thereby providing a proprietary
interest in pursuing the long-term growth, profitability, and financial success
of Corporation. In addition to the foregoing, the California Plan is designed to
comply with regulations under California law applicable to the grant of stock
options.
All options under the California Plan will be governed by the terms and
conditions of this plan and a written Award Agreement containing such additional
terms and conditions as are deemed desirable by the Committee and are not
inconsistent with the terms of the California Plan.
ARTICLE 2
DEFINITIONS
2.1 DEFINED TERMS. For purposes of the California Plan, the following
terms shall have the meanings set forth below:
"AWARD AGREEMENT" means an agreement as described in Section 5.2.
"BOARD" means the Board of Directors of Corporation.
"CALIFORNIA OPTION" means any Option granted to a California
resident.
"CALIFORNIA PLAN" means this Barrett Business Services, Inc., Stock
Option Plan For California Residents, as set forth herein and as it may be
hereafter amended and from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, together with rules, regulations, and
interpretations promulgated thereunder.
"COMMITTEE" means the committee appointed by the Board to administer
the California Plan as provided in Article 3.
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"COMMON STOCK" means the common stock, $.01 par value per share of
Corporation, which stock will have voting rights in accordance with
Corporation's certificate of incorporation and Maryland law.
"CONSULTANT" means any consultant or adviser to Corporation or a
Subsidiary selected by the Committee, who is not an employee of
Corporation or a Subsidiary.
"DISABILITY" means the condition of being permanently "disabled"
within the meaning of Section 22(e)(3) of the Code, namely being unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
and in effect from time to time, or any successor statute.
"FAIR MARKET VALUE" means on any given date, the fair market value
per share of the Common Stock determined as follows:
(a) If the Common Stock is traded on an established securities
exchange, the mean between the reported high and low sale prices of Common
Stock as reported for such day by the principal exchange on which Common
Stock is traded (as determined by the Committee) or, if Common Stock was
not traded on such date, on the next preceding day on which Common Stock
was traded;
(b) If trading activity in Common Stock is reported on The Nasdaq
Stock Market, the mean between the reported high and low sale prices of
Common Stock as reported for such day by the NASDAQ or, if Common Stock
trades were not reported on such date, on the next preceding day on which
Common Stock trades were reported by the NASDAQ;
(c) If trading activity in Common Stock is reported on the OTC
Bulletin Board, the mean between the bid price and asked price quote for
such day as reported by NASDAQ or, if there are no such quotes for Common
Stock for such date, on the next preceding day for which bid and asked
price quotes for Common Stock were reported by NASDAQ; or
(d) If there is no market for Common Stock or if trading activities
for Common Stock are not reported in one of the manners described above,
the fair market value shall be as determined by the Committee.
"INCENTIVE STOCK OPTION" or "ISO" means any Option granted pursuant
to the California Plan that is intended to be and is specifically
designated in its Award Agreement as an "incentive stock option" within
the meaning of Section 422 of the Code.
"NON-EMPLOYEE DIRECTOR" means a member of the Board who is neither
an employee of Corporation or a Subsidiary.
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"NONQUALIFIED OPTION" or "NQO" means any Option, including a
Deferred Compensation Option, granted pursuant to the California Plan that
is not an Incentive Stock Option.
"OPTION" means an ISO, an NQO, a Deferred Compensation Option, or a
Director Option.
"PARTICIPANT" means an employee or a Consultant of Corporation or a
Subsidiary or a Non-Employee Director, who is granted an Option under the
California Plan.
"REPORTING PERSON" means a Participant who is subject to the
reporting requirements of Section 16(a) of the Exchange Act.
"RETIREMENT" means:
(a) For Participants who are employees, retirement from active
employment with Corporation and its Subsidiaries on or after age 65, or
such earlier retirement date as approved by the Committee for purposes of
the California Plan;
(b) For Participants who are Non-Employee Directors or Non-Employee
Subsidiary Directors, retirement from the applicable board of directors
after attaining the maximum age (if any) specified in the articles of
incorporation or bylaws of the applicable corporation; or
(c) For Participants who are Consultants, termination of service as
a Consultant after attaining a retirement age specified by the Committee
for purposes of an Award to such Consultant.
However, the Committee may change the foregoing definition of
"Retirement" or may adopt a different definition for purposes of specific
Option grants.
"SHARE" means a share of Common Stock.
"SUBSIDIARY" means a "subsidiary corporation" of Corporation, within
the meaning of Section 425 of the Code.
"VEST" or "VESTED" means to be or to become immediately and fully
exercisable.
2.2 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine or feminine terminology used in the California Plan shall also
include the opposite gender; and the definition of any term in Section 2.1 in
the singular shall also include the plural, and vice versa.
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ARTICLE 3
ADMINISTRATIVE MATTERS
3.1 GENERAL. The California Plan shall be administered by a Committee
composed as described in Section 3.2.
3.2 COMPOSITION OF THE COMMITTEE. The Committee shall be appointed by the
Board and shall consist of not less than a sufficient number of Non-Employee
Directors so as to qualify the Committee to administer the California Plan as
contemplated by Rule 16b-3 under the Exchange Act. The Board may from time to
time remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. In the event that the
Committee shall cease to satisfy the requirements of Rule 16b-3, the Board shall
appoint another Committee satisfying such requirements.
3.3 AUTHORITY OF THE COMMITTEE. The Committee shall have full power and
authority (subject to such orders or resolutions as may be issued or adopted
from time to time by the Board) to administer the California Plan in its sole
discretion, including the authority to:
(a) Construe and interpret the California Plan and any Award
Agreement;
(b) Promulgate, amend, and rescind rules and procedures relating to
the implementation of the California Plan;
(c) Select the employees, Non-Employee Directors, and Consultants
who shall be granted Options;
(d) Determine the number of Shares, to be subject to each Option and
the exercise price; and
(e) Determine all the terms and conditions of all Award Agreements,
consistent with the requirements of the California Plan.
Decisions of the Committee, or any delegate as permitted by the
California Plan, shall be final, conclusive, and binding on all
Participants.
3.4 ACTION BY THE COMMITTEE. A majority of the members of the Committee
shall constitute a quorum for the transaction of business. Action approved by a
majority of the members present at any meeting at which a quorum is present, or
action in writing by a majority of the members of the Committee, shall be the
valid acts of the Committee.
3.5 DELEGATION. Notwithstanding the foregoing, the Committee may delegate
to one or more officers of Corporation the authority to determine the
recipients, amounts, and terms of Options granted to Participants who are not
Reporting Persons.
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3.6 LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
California Plan, any Option grant, or any Participant.
3.7 COSTS OF CALIFORNIA PLAN. The costs and expenses of administering the
California Plan shall be borne by Corporation.
3.8 DURATION OF THE CALIFORNIA PLAN. The California Plan shall remain in
effect until the earlier of (i) the date Options have been granted covering all
the available Shares under the California Plan, (ii) the date which is ten years
from the date the plan is adopted or the date the plan is approved by security
holders, whichever is earlier, or (iii) the date the plan is otherwise
terminated by the Board. Termination of the California Plan shall not affect
outstanding Options.
3.9 SHARES SUBJECT TO THE CALIFORNIA PLAN. The shares which may be made
subject to Options under the California Plan shall be Shares of Common Stock,
which may be either authorized and unissued Shares or reacquired Shares. No
fractional Shares shall be issued under the California Plan. Subject to
adjustment pursuant to Section 6.8, the maximum number of Shares for which
Options may be granted under the California Plan shall be 200,000. If Options
under the California Plan are canceled or expire for any reason prior to having
been fully Vested or exercised by a Participant or is settled in cash in lieu of
Shares, all Shares covered by such Options shall be made available for future
Options under the California Plan. Notwithstanding the foregoing, at no time
shall the total number of Shares issuable upon exercise of all outstanding
Options granted under this California Plan or Corporation's 1993 Stock Incentive
Plan, and the total number of Shares provided for under any stock bonus or
similar plan or agreement of Corporation exceed 30 percent of the then
outstanding Shares of Corporation.
3.10 INFORMATION TO EMPLOYEES. Each recipient of an Option will receive
annual financial statements of Corporation within 90 days of the close of the
Corporation's fiscal year unless such Participant's duties with Corporation
assure he or she access to such information or equivalent information.
ARTICLE 4
AWARDS
4.1 OPTIONS. Options granted under the California Option Plan may be in
the form of Incentive Stock Options or Nonqualified Options. The grant of each
Option and the Award Agreement governing each Option shall identify the Option
as an ISO or an NQO. In the event the Code is amended to provide for tax-favored
forms of stock options other than or in addition to Incentive Stock Options, the
Committee may grant Options under the California Plan meeting the requirements
of such forms of options, provided such Options are otherwise in accordance with
California law.
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4.2 GENERAL. Options shall be subject to the terms and conditions set
forth in this Article IV and Article V and Award Agreements governing Options
shall contain such additional terms and conditions, not inconsistent with the
express provisions of the California Plan, as the Committee shall deem
desirable.
4.3 OPTION PRICE. Each Award Agreement for a California Option shall
provide for an option exercise price per Share purchasable under the Option,
which shall not be less than: (a) 85 percent of the Fair Market Value of a Share
on the date of grant for all Nonqualified Options, or (b) 100 percent of the
Fair Market Value of a Share on the date of grant for all Incentive Stock
Options or Director Options; PROVIDED, HOWEVER, that the price shall be 110
percent of the Fair Market Value of a Share if the Option is granted to a person
who owns Shares possessing more than 10 percent of the total combined voting
power of all classes of stock of Corporation.
4.4 OPTION TERM. The Award Agreement for each California Option shall
specify, as determined by the Committee, the term of the Option and the period
within which the option must be exercised, which shall not exceed 120 months.
4.5 TIME OF EXERCISE. The Award Agreement for each California Option shall
specify, as determined by the Committee:
(a) The time or times when the Option shall become exercisable and
whether the Option shall become exercisable in full or in graduated
amounts based on continuation of employment over a period specified in the
Award Agreement; PROVIDED, HOWEVER, that if an Option is granted to an
employee other than an officer, Consultant, or director of Corporation,
that option shall vest at a rate of at least 20 percent a year over five
years from the date the Option is granted;
(b) Such other terms, conditions, and restrictions as to when an
Option may be exercised consistent with the foregoing; and
(c) The extent that the Option shall remain exercisable after a
Participant ceases to be an employee, Consultant, or director of a
Subsidiary, provided that if a Participant is terminated other than for
cause (as defined by applicable law, an employment contract, or the Award
Agreement), the Option shall remain exercisable (to the extent such Award
is exercisable on the date of termination) after the Participant ceases to
be an employee, Consultant, or director of Corporation or a Subsidiary for
a period of: (1) at least six months from the date of termination if
termination was caused by death or Disability, or (2) at least 30 days
from the date of termination if termination was caused by other than death
or Disability.
The Committee may, at any time in its discretion, accelerate the time when
all or any portion of an outstanding California Option becomes exercisable.
4.6 ADJUSTMENTS BY THE COMMITTEE. The Committee shall take appropriate
action to ensure that the number of securities purchasable and the exercise
price
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under outstanding Options are adjusted proportionately in the event of a stock
split, reverse stock split, stock dividend, distribution, recapitalization,
combination or reclassification of Corporation's securities.
4.7 SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. In the case of a California
Option designated as an Incentive Stock Option, the terms of the Option and the
Award Agreement shall conform with the statutory and regulatory requirements
specified pursuant to Section 422 of the Code, as in effect on the date such ISO
is granted. ISOs may be granted only to employees of Corporation or a
Subsidiary. ISOs may not be granted under this California Plan after ten years
following the adoption of the California Plan.
4.8 RELOAD OPTIONS. The Committee, in its discretion, may provide in an
Award Agreement for a California Option that in the event all or a portion of
the Option is exercised by the Participant using previously acquired Shares, the
Participant shall automatically be granted (subject to the available pool of
Shares subject to grants of California Options) a replacement Option (with an
option price equal to the Fair Market Value of a Share on the date of such
exercise) for a number of Shares equal to (or equal to a portion of) the number
of Shares surrendered upon exercise of the Option. Such reload Option features
may be subject to such terms and conditions as the Committee shall determine
(and as are consistent with the terms of this California Plan), including,
without limitation, a condition that the Participant retain the Shares issued
upon exercise of the Option for a specified period of time.
ARTICLE 5
ADDITIONAL PROVISIONS
5.1 NONUNIFORM DETERMINATIONS. The Committee's determinations under the
California Plan or under one or more Award Agreements, including without
limitation, (a) the selection of Participants, (b) the type, form, amount, and
timing of grants, (c) the terms of specific Award Agreements, and (d) elections
and determinations made by the Committee with respect to exercise, need not be
uniform and may be made by the Committee selectively among Participants, whether
or not Participants are similarly situated.
5.2 AWARD AGREEMENTS. Each Award shall be evidenced by a written Award
Agreement between Corporation and the Participant. Award Agreements may, subject
to the provisions of the California Plan, contain any provision approved by the
Committee.
5.3 PROVISIONS GOVERNING ALL GRANTS. All grants shall be subject to the
following provisions:
(a) RIGHTS AS SHAREHOLDERS. No Participant shall have any rights of
a shareholder with respect to Shares subject to an Option until such
Shares are issued in the name of the Participant.
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(b) EMPLOYMENT RIGHTS. Neither the adoption of the California Plan
nor the granting of any Award shall confer on any person the right to
continued employment with Corporation or any Subsidiary or the right to
remain as a director of or a Consultant to Corporation or any Subsidiary,
as the case may be, nor shall it interfere in any way with the right of
Corporation or a Subsidiary to terminate such person's employment or to
remove such person as a Consultant or as a director at any time for any
reason, with or without cause.
(c) NONTRANSFERABILITY. Options may not be transferred other than by
will, by the laws of descent and distribution, by instrument to an inter
vivos or testamentary trust in which the Options are to be passed to
beneficiaries upon the death of the trustor (settlor), or by gift to
"immediate family" as that term is defined in 17 C.F.R. 240.16a-1(e).
(d) CHANGE IN CONTROL. The Committee, in its discretion, may provide
in any Award Agreement that in the event of a change in control of
Corporation (as the Committee may define such term in the Award
Agreement), as of the date of such change in control, all, or a specified
portion of, an Option shall become fully and immediately Vested,
notwithstanding any other limitations on exercise.
Unless the Committee specifically provides otherwise in the change of
control provision for a specific Award Agreement, Options shall become Vested as
of a change of control date only if, or to the extent, such acceleration in the
Vesting, does not result in an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.
(e) PAYMENT OF PURCHASE PRICE AND WITHHOLDING. The Committee, in its
discretion, may include in any Award Agreement a provision permitting the
Participant to pay the option price, if any, for Shares or the
Participant's federal, state, or local tax, or tax withholding, obligation
with respect to such issuance in whole or in part by any one or more of
the following:
(i) By delivering previously owned Shares;
(ii) By surrendering outstanding other Vested Options;
(iii) By reducing the number of Shares issuable pursuant to the
Award;
(iv) By delivering to Corporation a promissory note payable on
such terms and over such period as the Committee shall determine;
(v) By delivery (in a form approved by the Committee) of an
irrevocable direction to a securities broker acceptable to the
Committee:
(1) To sell Shares subject to the Option and to deliver
all or a part of the sales proceeds to Corporation in payment
of all or a part of the option price and taxes or withholding
taxes attributable to the issuance; or
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(2) To pledge Shares subject to the Option to the broker
as security for a loan and to deliver all or a part of the loan
proceeds to Corporation in payment of all or a part of the
option price and taxes or withholding taxes attributable to the
issuance; or
(vi) In any combination of the foregoing or in any other form
approved by the Committee.
Shares withheld or surrendered as described above shall be valued based on
their Fair Market Value on the date of the transaction. Any Shares withheld or
surrendered with respect to a Reporting Person shall be subject to such
additional conditions and limitations as the Committee may impose to comply with
the requirements of the Exchange Act.
ARTICLE 6
MISCELLANEOUS
6.1 AMENDMENT AND TERMINATION. The Board may at any time terminate the
California Plan, or may amend it from time to time in such respects as the Board
may deem advisable, except that the Board may not, without approval of the
shareholders, make any amendment which would (i) materially increase the
benefits accruing to Participants under the California Plan, (ii) materially
increase the aggregate number of Shares which may be issued under the California
Plan (except for adjustments pursuant to Section 6.8 of the California Plan), or
(iii) materially modify the requirements as to eligibility for participation in
the California Plan. Without further shareholder approval, the Board may amend
the California Plan to take into account changes in applicable securities,
federal income tax, and other applicable laws.
6.2 TAX WITHHOLDING. Corporation shall have the right to deduct from any
settlement of any grant under the California Plan any federal, state, or local
taxes of any kind required by law to be withheld or to take such other action as
may be necessary in the opinion of Corporation to satisfy all obligations for
the payment of such taxes. The recipient of an award under the California Plan
shall make arrangements satisfactory to Corporation for the satisfaction of any
such withholding tax obligations. Corporation shall not be required to make any
such payment or distribution under the California Plan until such obligations
are satisfied.
6.3 UNFUNDED PLAN. The California Plan shall be unfunded and Corporation
shall not be required to segregate any assets that may at any time be
represented by Options under the California Plan. Any liability of Corporation
to any person with respect to any Options under the California Plan shall be
based solely upon any contractual obligations that may be effected pursuant to
the California Plan. No such obligation of Corporation shall be deemed to be
secured by any pledge of, or other encumbrance on, any property of Corporation.
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6.4 ANNULMENT OF AWARDS. Any Award Agreement may provide that the grant of
an Option is revocable until the Participant becomes entitled to the certificate
therefor. In the event the employment (or service as a Non-Employee Director or
a Consultant) of a Participant is terminated for cause (as defined below), any
Award which is revocable shall be annulled as of the date of such termination
for cause. For the purpose of this Section 6.4, the term "for cause" shall have
the meaning set forth in the Participant's employment agreement or applicable
law, if any, or otherwise means any discharge (or removal) for material or
flagrant violation of the policies and procedures of Corporation or for other
job performance or conduct which is materially detrimental to the best interests
of Corporation, as determined by the Committee.
6.5 ENGAGING IN COMPETITION WITH THE CORPORATION. Any Award Agreement may
provide that, if a Participant terminates employment (or service as a
Non-Employee Director or a Consultant) with Corporation or a Subsidiary for any
reason whatsoever, and within a period of time (as specified in the Award
Agreement) after the date thereof accepts employment with any competitor of (or
otherwise engages in competition with) Corporation, the Committee, in its sole
discretion, may require such Participant to return to Corporation the economic
value that is realized or obtained (measured at the date of exercise) by such
Participant at any time during the period beginning on the date that is six
months prior to the date of such Participant's termination of employment (or
service as a Non-Employee Director or a Consultant) with Corporation.
6.6 OTHER CORPORATION BENEFIT AND COMPENSATION PROGRAMS. Benefits received
by a Participant under an Award Agreement shall not be deemed a part of a
Participant's regular, recurring compensation for purposes of the termination
indemnity or severance pay law of any state or country and shall not be included
in, nor have any effect on, the determination of benefits under any other
employee benefit plan or similar arrangement provided by Corporation or a
Subsidiary. Corporation or any Subsidiary may adopt such other compensation
programs and additional compensation arrangements as it deems necessary to
attract, retain, and reward employees and directors for their service with
Corporation and its Subsidiaries.
6.7 SECURITIES LAW RESTRICTIONS. No Shares shall be issued under the
California Plan unless counsel for Corporation shall be satisfied that such
issuance will be in compliance with applicable federal and state securities
laws. Certificates for Shares delivered under the California Plan may be subject
to such stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
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6.8 ADJUSTMENTS BY THE COMMITTEE. In the event of any change in
capitalization affecting the Common Stock of Corporation, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of reorganization, or any other
change affecting the Common Stock, such proportionate adjustments, if any, as
the Committee, in its sole discretion, may deem appropriate to reflect such
change, shall be made with respect to the aggregate number of Shares for which
Options in respect thereof may be granted under the California Plan. The
Committee may also make such adjustments in the number of Shares covered by, and
price or other value of any outstanding Options in the event of a spin-off or
other distribution (other than normal cash dividends), of Corporation assets to
shareholders.
6.9 GOVERNING LAW. Except with respect to references to the Code or
federal securities laws, the California Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the state of
Maryland.
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