EXHIBIT 4.1
CARDIA, INC.
1999 OMNIBUS STOCK INCENTIVE PLAN
SECTION CONTENTS PAGE
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1. General Purpose of Plan; Definitions 1
2. Administration 3
3. Stock Subject to Plan 4
4. Stock Options 4
5. Stock Appreciation Rights 7
6. Restricted Stock 7
7. Deferred Stock Awards 9
8. Target Grant Program 10
9. Transfer, Leave of Absence, etc. 12
10. Amendments and Termination 12
11. Unfunded Status of Plan 13
12. General Provisions 13
13. Effective Date of Plan 14
CARDIA, INC.
1999 OMNIBUS STOCK INCENTIVE PLAN
SECTION 1. General Purpose of Plan; Definitions.
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The name of this plan is the Cardia, Inc. 1999 Omnibus Stock Incentive
Plan (the "Plan"). The purpose of the Plan is to enable Cardia, Inc. (the
"Company") to retain and attract executives and other key employees, consultants
and directors who contribute to the Company's success by their ability,
ingenuity and industry, and to enable such individuals to participate in the
long-term success and growth of the Company by giving them a proprietary
interest in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Board" means the Board of Directors of the Company.
b. "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony,
or a participant's willful misconduct or dishonesty, any of
which is directly and materially harmful to the business or
reputation of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Committee" means a Committee established by the Board to
administer the Plan. If, at any time no Committee shall be in
office, then the functions of the Committee shall be
exercised by the Board.
e. "Company" means Cardia, Inc., a corporation organized under
the laws of the State of Minnesota (or any successor
corporation).
f. "Consultant" means any person, including an advisor, engaged
by the Company or a Parent Corporation or a Subsidiary of the
Company to render services and who is compensated for such
services and who is not an employee of the Company or any
Parent Corporation or Subsidiary of the Company. A director
who is not an employee may serve as a Consultant.
g. "Deferred Stock" means an award made pursuant to Section 7
below of the right to receive Stock at the end of a specified
deferral period.
h. "Disability" means permanent and total disability as
determined by the Committee.
i. "Early Retirement" means retirement, with consent of the
Committee at the time of retirement, from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company.
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j. "Fair Market Value" means the value of the Stock on a given
date as determined by the Committee in accordance with Section
422(c)(7) of the Code and any applicable Treasury Department
regulations promulgated thereunder.
k. "Incentive Stock Option" means any Stock Option intended to
be and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
l. "Non-Employee Director" means a "Non-Employee Director"
within the meaning of Rule 16b-3(b)(3) under the Securities
Exchange Act of 1934.
m. "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option, and is intended to be and is
designated as a "Non-Qualified Stock Option."
n. "Normal Retirement" means retirement from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company on or after age 65.
o. "Outside Director" means a Director who: (a) is not a current
employee of the Company or any member of an affiliated group
which includes the Company; (b) is not a former employee of
the Company who receives compensation for prior services
(other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the
Company; (d) does not receive remuneration from the Company,
either directly or indirectly, in any capacity other than as
a director, except as otherwise permitted under Code Section
162(m) and regulations thereunder. For this purpose,
remuneration includes any payment in exchange for good or
services. This definition shall be further governed by the
provisions of Code Section 162(m) and regulations promulgated
thereunder.
p. "Restricted Stock" means an award of shares of Stock that are
subject to restrictions under Section 6 below.
q. "Retirement" means Normal Retirement or Early Retirement.
r. "Stock" means the Common Stock, $.01 par value per share, of
the Company.
s. "Stock Appreciation Right" means the right pursuant to an
award granted under Section 5 below to surrender to the
Company all or a portion of a Stock Option in exchange for an
amount equal to the difference between (i) the Fair Market
Value, as of the date such Stock Option or such portion
thereof is surrendered, of the shares of Stock covered by such
Stock Option or such portion thereof, and (ii) the aggregate
exercise price of such Stock Option or such portion thereof.
u. "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 4 below.
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SECTION 2. Administration.
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The Plan shall be administered by the Committee.
The Committee shall have the power and authority to grant to eligible
persons, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, or (iv) Deferred Stock awards.
In particular, the Committee shall have the authority:
(i) to select the officers, other key employees,
consultants and directors of the Company or its
Subsidiaries, to whom Stock Options, Stock
Appreciation Rights, Restricted Stock and/or Deferred
Stock awards may from time to time be granted
hereunder;
(ii) to determine whether and to what extent Incentive
Stock Options, Non- Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock or Deferred
Stock awards, or a combination of the foregoing, are
to be granted hereunder;
(iii) to determine the number of shares of stock to be
covered by each such award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award
granted hereunder (including, but not limited to, any
restriction on any grant of a Stock Option,
Restricted Stock or other award and/or the shares of
Stock relating thereto), and to amend such terms and
conditions (including, but not limited to, any
amendment which accelerates the vesting of any
award); and
(v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with
respect to an award under this Plan shall be deferred
either automatically or at the election of the
participant.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.
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SECTION 3. Stock Subject to Plan.
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The total number of shares of common stock reserved and available for
distribution under the Plan shall be 200,000 shares. Such shares shall consist,
in whole or in part, of authorized and unissued shares. The number of shares
reserved for issuance pursuant to awards granted under the Plan shall be
increased each time, commencing after December 31, 1998, that the number of
shares available for grant under the Plan shall have been fully granted and be
no longer available (the "Reset Date"). On each Reset Date, the number of shares
reserved for issuance under the Plan shall be increased to an amount equal to
20% of the total number of shares of common stock outstanding on such date. For
purposes of this Section 3, the number of shares reserved for issuance under the
Plan shall be the aggregate of the number of shares reserved for issuance
pursuant to outstanding but unexercised grants and the number of shares reserved
for issuance that are not subject to such award grants.
Subject to paragraph (b)(iv) of Section 6 below, if any shares that
have been optioned ceased to be subject to Options, or if any shares subject to
any Restricted Stock or Deferred Stock award granted hereunder are forfeited or
such award otherwise terminates without shares being issued therefor such shares
shall again be available for distribution in connection with future awards under
the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding options granted under the Plan, and in the number of
shares subject to Restricted Stock or Deferred Stock awards granted under the
Plan as may be determined to be appropriate and equitable by the Committee, in
its sole discretion, provided that the number of shares subject to any award
shall always be a whole number.
SECTION 4. Stock Options.
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Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after the tenth anniversary of the date
this Plan is adopted by the Company's Board of Directors.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non- Qualified Stock Options, or both types of options (in each
case with or without Stock Appreciation Rights). To the extent that any option
does not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under
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Section 422 of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Option as
an Incentive Stock Option, provided the optionee consents in writing to the
modification or amendment.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option be less than 100% of the Fair Market Value of the Stock on the date
of the grant of the Stock Option. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company and an Incentive Stock Option is granted to such employee, the option
price shall be no less than 110% of the Fair Market Value of the Stock on the
date the option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company and an
Incentive Stock Option is granted to such employee, the term of such option
shall be no more than five years from the date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time, provided, however, that upon the Company becoming subject to the
requirements of Section 16 of the Securities Exchange Act of 1934, as amended, a
Stock Option granted to an officer, director or 10% shareholder of the Company
shall not be exercisable for a period of six (6) months after the date of grant
unless the Stock Option has been approved by the Board, the Committee or
shareholders of the Company. Notwithstanding anything contained in the Plan to
the contrary, the Committee may, in its discretion, extend or vary the term of
any Stock Option or any installment thereof, whether or not the optionee is then
employed by the Company, if such action is deemed to be in the best interests of
the Company.
Notwithstanding the foregoing, unless the Stock Option Agreement
provides otherwise, any Stock Option granted under this Plan shall be
exercisable in full, without regard to any installment exercise provisions, for
a period specified by the Company, but not to exceed sixty (60) days, prior to
the occurrence of any of the following events: (i) dissolution or liquidation of
the Company other than in conjunction with a bankruptcy of the Company or any
similar occurrence, (ii) any merger, consolidation, acquisition, separation,
reorganization, or similar occurrence, where the Company will not be the
surviving entity or (iii) the transfer of substantially all of the assets of the
Company or 75% or more of the outstanding Stock of the Company.
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The grant of a Stock Option pursuant to the Plan shall not limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
exchange or consolidate or to dissolve, liquidate, sell or transfer all or any
part of its business or assets.
(d) Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or by any other form of legal consideration deemed
sufficient by the Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds
to pay the exercise price. As determined by the Committee at the time of grant
or exercise, in its sole discretion, payment in full or in part may also be made
in the form of Stock already owned by the optionee that is not Restricted Stock
(which in the case of Stock acquired upon exercise of an option have been owned
for more than six months on the date of surrender)(based on the Fair Market
Value of the Stock on the date immediately preceding the date the option is
exercised, as determined by the Committee), provided, however, that, in the case
of an Incentive Stock Option, the right to make a payment in the form of already
owned shares may be authorized only at the time the option is granted. No shares
of Stock shall be issued until full payment therefor has been made. An optionee
shall generally have the rights to dividends and other rights of a shareholder
with respect to shares subject to the option when the optionee has given written
notice of exercise, has paid in full for such shares and, if requested, has
given the representation described in paragraph (a) of Section 11.
(e) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(f) Termination by Death. If an optionee's employment by the Company
terminates by reason of death, the Stock Option may thereafter be immediately
exercised, to the extent then exercisable (or on such accelerated basis as the
Committee shall determine at or after grant), by the legal representative of the
estate or by the legatee of the optionee under the will of the optionee, for a
period of one year (or such shorter period as the Committee shall specify at
grant) from the date of such death or until the expiration of the stated term of
the option, whichever period is shorter.
(g) Termination by Reason of Disability. If an optionee's employment by
the Company terminates by reason of Disability, any Stock Option held by such
optionee may thereafter be exercised, to the extent it was exercisable at the
time of termination due to Disability (or on such accelerated basis as the
Committee shall determine at or after grant), for a period of one year (or such
shorter period as the Committee shall specify at grant) from the date of such
termination of employment or the expiration of the stated term of the option,
whichever period is the shorter. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, the option will thereafter be treated as a Non-Qualified Stock Option.
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(h) Termination by Reason of Retirement. If an optionee's employment by
the Company terminates by reason of Retirement, any Stock Option held by such
optionee may thereafter be exercised to the extent it was exercisable at the
time of such Retirement, but may not be exercised after three months (or such
longer period as the Committee shall specify at Retirement)from the date of such
termination of employment or the expiration of the stated term of the option,
whichever period is the shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, the option will thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if
an optionee's employment by the Company terminates for any reason other than
death, Disability or Retirement, the Stock Option shall thereupon terminate,
except that the option may be exercised to the extent it was exercisable at such
termination for the lesser of three months (or such shorter period as the
Committee shall specify at grant) or the balance of the option's term, provided,
however, that if the optionee's employment is terminated for Cause, all rights
under the Stock Option shall terminate and expire upon such termination.
(j) Annual Limit on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan is exercisable for
the first time by an optionee during any calendar year shall not exceed
$100,000.
SECTION 5. Stock Appreciation Rights.
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(a) Grant and Exercise. Stock Appreciation Rights may be granted alone
or in conjunction with all or part of any Stock Option granted under the Plan.
In the case of a grant in conjunction with a Non-Qualified Stock Option, such
rights may be granted either at or after the time of the grant of such Option.
In the case of a grant in conjunction with an Incentive Stock Option, such
rights may be granted only at the time of the grant of the option.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee.
SECTION 6. Restricted Stock.
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(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Company and Subsidiaries to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the time or times within which such awards
may be subject to forfeiture, and all other conditions of the awards. The
Committee may also condition the grant of Restricted Stock upon the attainment
of specified performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.
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(b) Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.
(i) Each participant shall be issued a stock certificate in
respect of shares of Restricted Stock awarded under the Plan. Such
certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Cardia, Inc. 1999
Omnibus Stock Incentive Plan and an Agreement entered into
between the registered owner and Cardia, Inc. Copies of such
Plan and Agreement are on file in the offices of Cardia, Inc."
(ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock
power, endorsed in blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. In no event shall the
Restriction Period be less than one (1) year. Within these limits, the
Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(ii) Except as provided in paragraph (c)(i) of this Section 6,
the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional shares of Restricted Stock (to the
extent shares are available under Section 3). Certificates for shares
of unrestricted Stock shall be delivered to the grantee promptly after,
and only after, the period of forfeiture shall have expired without
forfeiture in respect of such shares of Restricted Stock.
(iii) Subject to the provisions of the award agreement and
paragraph (c)(iv) of this Section 6, upon termination of employment for
any reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the participant.
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(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause),
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to such participant's
shares of Restricted Stock.
(v) Notwithstanding the foregoing, all restrictions with
respect to any participant's shares of Restricted Stock shall lapse, on
the date determined by the Committee, prior to, but in no event more
than sixty (60) days prior to, the occurrence of any of the following
events: (i) dissolution or liquidation of the Company, other than in
conjunction with a bankruptcy of the Company or any similar occurrence,
(ii) any merger, consolidation, acquisition, separation,
reorganization, or similar occurrence, where the Company will not be
the surviving entity or (iii) the transfer of substantially all of the
assets of the Company or 75% or more of the outstanding Stock of the
Company.
SECTION 7. Deferred Stock Awards.
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(a) Administration. Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the officers and key employees of the Company to whom and the time or times at
which Deferred Stock shall be awarded, the number of Shares of Deferred Stock to
be awarded to any participant or group of participants, the duration of the
period (the "Deferral Period") during which, and the conditions under which,
receipt of the Stock will be deferred, and the terms and conditions of the award
in addition to those contained in paragraph (b) of this Section 7. The Committee
may also condition the grant of Deferred Stock upon the attainment of specified
performance goals. The provisions of Deferred Stock awards need not be the same
with respect to each recipient.
(b) Terms and Conditions.
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(i) Subject to the provisions of this Plan and the award
agreement, Deferred Stock awards may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Deferral
Period. In no event shall the Deferral Period be less than one (1)
year. At the expiration of the Deferral Period (or Elective Deferral
Period, where applicable), share certificates shall be delivered to the
participant, or his legal representative, in a number equal to the
shares covered by the Deferred Stock award.
(ii) Amounts equal to any dividends declared during the
Deferral Period with respect to the number of shares covered by a
Deferred Stock award will be paid to the participant currently or
deferred and deemed to be reinvested in additional Deferred Stock or
otherwise reinvested, all as determined at the time of the award by the
Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and
paragraph (b)(iv) of this Section 7, upon termination of employment for
any reason during the Deferral Period for a given award, the Deferred
Stock in question shall be forfeited by the participant.
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(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause)
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all of the remaining deferral limitations imposed hereunder with
respect to any or all of the participant's Deferred Stock.
(v) A participant may elect to further defer receipt of the
award for a specified period or until a specified event (the "Elective
Deferral Period"), subject in each case to the Committee's approval and
to such terms as are determined by the Committee, all in its sole
discretion. Subject to any exceptions adopted by the Committee, such
election must generally be made prior to completion of one half of the
Deferral Period for a Deferred Stock award (or for an installment of
such an award).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the Company and the
participant.
SECTION 8. Target Grant Program with Automatic Target Replacement Options.
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(a) Establishment of Target Level. The Committee shall establish target
levels for the number of Options to be held (the "Target Level") by its officers
and key employees (each, a "Target Optionee"). Each Target Optionee's Target
Level is based on the position held by the Target Optionee and the level of
responsibility, as determined by the Committee. The Committee may change each
Target Optionee's Target Level, as a result of changes, increases or decreases
in the Target Optionee's position with the Company or level of responsibilities.
The Committee shall grant to each Target Optionee a number of Stock Options
which when added to the number of Stock Options then held by such Target
Optionee equal the Target Level. These newly granted options will vest and have
a term as provided in paragraph (d) with respect to Target Replacement Options.
Stock Options held by a Target Optionee in an amount equal to the Target Level
shall be referred to herein as the Target Optionee's "Target Options". In the
event a Target Optionee holds Stock Options in excess of his or her Target
Level, the first Stock Options so held and exercised up to the Target Level
shall be deemed Target Options. No Target Replacement Options shall be granted
with respect to Stock Options which are not Target Options.
(b) Target Replacement Options. Unless otherwise provided by the
Committee, upon the exercise of a Target Option or Target Replacement Option, a
Target Optionee shall automatically be granted a new Stock Option on the date of
such exercises to purchase that number of shares of the Company's Common Stock
equal to the number of shares of the Company's Common Stock to which such
exercise relates to bring the number of options held by the Target Optionee
after such exercise back to the Target Level ("Target Replacement Options"). The
Target Optionee shall not be required to exercise Target Options prior to the
exercise of Target Replacement Options. Subject to the provisions set forth
herein, Target Replacement Options may be issued as many times as outstanding
Target Options or Target Replacement Options are exercised.
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(c) Target Replacement Option Price. The Option Price for each share of
Stock subject to the Target Replacement Options shall be the Fair Market Value
of the Stock on the date of exercise of the existing Stock Option which triggers
the automatic grant of the Target Replacement Options.
(d) Exercisability and Option Term. The vesting schedule for each
Target Replacement Option shall be identical to the vesting schedule applicable
to the original Option grant. The term of each Target Replacement Option shall
expire ten (10) years from the date of grant of such Target Replacement Option.
Such vesting shall cease, and the Target Optionee shall forfeit any Target
Option and any Target Replacement Options which are not vested as of the Target
Optionee's termination of employment, without regard for the reason for such
termination. Such Option shall be exercised and payment made in accordance with
the provisions set forth in the Plan.
(e) Restrictions on Number of Shares. The aggregate number of Target
Replacement Options granted during any fiscal year of the Company to any Target
Optionee shall not exceed 100,000 shares.
(f) Restrictions on Additional Options. Unless otherwise provided by
the Committee, no Target Optionee shall be granted Stock Options in addition to
the Target Replacement Options unless the Committee increases the designated
Target Level for such Target Optionee.
(g) Status of Target Optionee. No Target Replacement Options may be
granted to any Target Optionee who is not employed by the Company at the time of
exercise of a Stock Option which triggers the grant of a Target Replacement
Option nor may any such Stock Option be granted to a Non-Employee Director who
is not a director of the Company at the time of exercise of a Stock Option which
triggers the grant of a Target Replacement Option.
(h) Limitation on Sale. During a period set by the Committee commencing
with the date of exercise of any existing Stock Option which triggers the
automatic grant of the Target Replacement Options (the "Holding Period"), the
participant shall not be permitted to sell, transfer, pledge or assign an amount
equal to 50 percent (50%) of the shares obtained from such exercise. In no event
shall the Holding Period be less than one (1) year. Within these limits, the
Committee may provide for the lapse of such restrictions in installments where
deemed appropriate.
(i) Additional Provisions. The grant of a Target Replacement Option is
in all cases subject to the availability of sufficient shares for grant under
the Plan or shareholder approval of an increase in the number of shares reserved
under the Plan to accommodate the grant; and notwithstanding anything contained
herein to the contrary, no Target Replacement Option shall be exercisable if a
required shareholder approval has not been obtained. In addition to the terms of
this Section 9, all Target Replacement Options shall be subject to the terms and
provisions set forth in this Plan which are in effect with respect to
Non-Qualified Stock Options.
(j) Change of Control. After a public announcement by the Company of an
event described in Section 5(c), no further Target Replacement Options shall be
granted with respect to any Target Options or Target Replacement Options then
outstanding.
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(k) Further Restrictions. The Committee may, in its sole discretion,
reduce the designated Target Level in general or with respect to a particular
Target Optionee by reason of a reduction in the Target Optionee's
responsibilities, a change in title or non-performance by the Target Optionee.
SECTION 9. Transfer, Leave of Absence, etc.
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For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and
(b) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.
SECTION 10. Amendments and Termination.
--------------------------
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option, Stock Appreciation Right,
Restricted Stock, Deferred Stock or other Stock-based award theretofore granted,
without the optionee's or participant's consent, or (ii) which without the
approval of the stockholders of the Company would cause the Plan to no longer
comply with Section 422 of the Code or any other regulatory requirements or
rules and regulations promulgated by the Securities and Exchange Commission.
The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his or her consent.
The Committee may also substitute new Stock Options for previously granted
options, including previously granted options having higher option prices.
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SECTION 11. Unfunded Status of Plan.
-----------------------
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
SECTION 12. General Provisions.
------------------
(a) The Committee may require each person purchasing shares pursuant to
a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan pursuant
to any Restricted Stock, Deferred Stock or other Stock-based awards shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(b) Subject to paragraph (d) below, recipients of Restricted Stock,
Deferred Stock and other Stock-based awards under the Plan (other than Stock
Options) are not required to make any payment or provide consideration other
than the rendering of services.
(c) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any Subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.
(d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includable as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the terms of such award so permit, a participant
may elect by written notice to the Company to satisfy part or all of the
withholding tax requirements associated with
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the award by (i) authorizing the Company to retain from the number of shares of
Stock that would otherwise be deliverable to the participant, or (ii) delivering
to the Company from shares of Stock already owned by the participant, that
number of shares having an aggregate Fair Market Value equal to part or all of
the tax payable by the participant under this Section 12(d). Any such election
shall be in accordance with, and subject to, applicable tax and securities laws,
regulations and rulings.
SECTION 13. Effective Date of Plan.
----------------------
The Plan shall be effective on January 27, 1999 (the date of approval
by the Board of Directors), subject to approval by a vote of the holders of a
majority of the Stock entitled to vote to approve the Plan. The Plan shall
expire (unless terminated earlier) as of January 27, 2009. Awards may be granted
under the Plan prior to such Shareholder approval, provided such awards are made
subject to Shareholder approval.
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