Exhibit 4.1
FIRST AMENDED AND RESTATED
TOTAL RENAL CARE HOLDINGS, INC.
1994 EQUITY COMPENSATION PLAN
SECTION 1. Purpose. The purposes of this Total Renal Care Holdings,
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Inc. 1994 Equity Compensation Plan (the "Plan") are to promote the interests of
Total Renal Care Holdings, Inc. (together with any successor thereto, the
"Company") and its stockholders by (i) attracting and retaining key employees,
directors, consultants and advisers of the Company and its Affiliates; (ii)
motivating such individuals by means of performance-related incentives to
achieve longer-range performance goals; and (iii) enabling such individuals to
participate in the long-term growth and financial success of the Company.
SECTION 2. Definitions. As used in the Plan, the following terms
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shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or through one or
more intermediaries, controls or is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, as determined by
the Committee.
"Award" shall mean any Option or Purchased Shares Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant, unless otherwise determined by the
Committee.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean "Cause" as defined in the applicable employment
agreement between the Participant and the Company, or if there is no such
agreement at the relevant time or such agreement does not define such term, then
(i) a Participant's willful and continued failure substantially to perform his
duties with, or services for, the Company or its Affiliates (other than as a
result of death or Disability), (ii) a Participant's dishonesty in the
performance of his duties with, or services for, the Company or its Affiliates,
(iii) an act or acts on a Participant's part constituting a felony under the
laws of the United States or any state thereof, (iv) any other act or omission
by a Participant which is materially injurious to the financial condition or
business reputation of the Company or any of its Affiliates, or (v) the
occurrence of a Non-Compete Trigger or Confidentiality Trigger.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean (i) a committee of the Board designated by the
Board to administer the Plan and composed of not less than the minimum number of
persons from time to time required by any applicable law and, during any period
in which the Company has become subject to the provisions of Section 16, Rule
16b-3, each of whom, to the extent
necessary to comply with Rule 16b-3 only, is a "disinterested person" within the
meaning of Rule 16b-3 or (ii) if the Board has not so designated a committee,
the Board.
"Confidentiality Trigger" shall mean a Participant's disclosure or use
for his own benefit or purposes or for the benefit or purposes of any person,
firm, partnership, joint venture, association, corporation or other business
organization, entity or enterprise other than the Company and any of its
Subsidiaries or Affiliates (whether during or after the termination of his
employment, consulting or advisory relationship with the Company), of any trade
secrets, information, data, or other confidential information relating to
customers, development, programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, financing methods, plans, or
the business and affairs of the Company generally, or of any Subsidiary or
Affiliate of the Company; provided that the foregoing shall not apply to
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information which is not unique to the Company or which is generally known to
the industry or the public other than as a result of the Participant's breach of
this covenant or to disclosure that is required by any applicable law, rule or
regulation (including compliance with any oral or written questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process to which the Participant is subject).
"Disability" shall mean "Disability" as defined in the applicable
employment agreement between the Participant and the Company, or if there is no
such agreement at the relevant time or such agreement does not define such term,
then the physical or mental incapacity resulting in the Participant being unable
for a period of six (6) consecutive months or for an aggregate of six (6) months
in any twenty-four (24) consecutive month period to perform his duties with, or
services for, the Company, as determined in good faith by the Committee, which
determination shall be final and conclusive for all purposes of this Plan.
"Effective Date" shall mean the effective date of the Plan as
determined pursuant to Section 9.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, (A) with respect to any property other
than the Shares or any Option, the fair market value of such property determined
by such methods or procedures as shall be established from time to time by the
Committee and (B) with respect to the Shares, except as otherwise provided in
the applicable employment agreement between the Participant and the Company, as
of any date:
(i) if there is a public market for the Shares as of such date (x) the
last reported sales price of the Shares on the principal national securities
exchange on which the Shares are listed or admitted to trading on the date
immediately preceding such date or, if no such reported sale takes place on such
day, the average of the closing bid and asked prices thereon, as reported in The
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Wall Street Journal, or (y) if the Shares are not then
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2.
listed or admitted to trading on a national securities exchange, the last
reported sales price on the NASDAQ National Market System on the date
immediately preceding such date or, if no such reported sale takes place on such
day, the average of the closing bid and asked prices thereon, as reported in The
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Wall Street Journal, or (z) if the Shares are not then quoted on such National
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Market System or listed or admitted to trading on a national securities
exchange, the average of the closing bid and asked prices, as reported by The
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Wall Street Journal for the over-the-counter market on the date immediately
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preceding such date; or
(ii) if there is no public market for the Shares as of such date, then
(x) $1.00 per Share if Fair Market Value is being determined as of a date within
one (1) year of the Effective Date or (y) the per share value as determined by
an accounting firm, investment banking firm or appraisal firm of national
standing selected by the Committee; provided that if such value has previously
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been determined for the Company by an accounting firm, investment banking firm
or appraisal firm of national standing with respect to a date not more than
twelve months prior to such date, at the Committee's option, the Fair Market
Value will equal the value as so determined.
"Fair Market Value Per Option" shall mean with respect to any Option,
the excess, if any, of the aggregate Fair Market Value of the Shares represented
by the unexercised and uncancelled portion of such Option over the aggregate
purchase price of such Shares pursuant to such Option.
"Initial Grant Options" shall mean those Options granted as of the
Effective Date pursuant to Section 6(a).
"Initial Public Offering" shall mean the initial sale of Shares
pursuant to an effective registration statement under the Securities Act of 1933
(other than a registration statement on Form S-8 or any successor form), if, as
a result of such sale, the Company receives net proceeds of at least
$15,000,000.
"Initial Purchased Shares" shall mean the Purchased Shares made
available for purchase pursuant to Purchased Shares Awards granted as of the
Effective Date pursuant to Section 6(b).
"Non-Compete Trigger" shall mean the occurrence during the
Participant's employment with or retention by the Company or during the period
from the date the Participant ceases employment with, or providing consulting or
advisory services to, the Company, as the case may be, through the first
anniversary of that date, of (i) the Participant's engagement in or becoming an
employee, director, or principal or shareholder of, consultant to or equity
participant in, any Person that engages in, activities that are in competition
with the Company within the United States of America or such other geographic
area as is specified in the applicable Award Agreement; provided that such
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activities will be limited to those businesses of the Company in which the
Company was engaged during the
3.
term of such Participant's employment or provision of consulting or advisory
services to the Company; provided further that the Participant may make passive
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investments of not more than one percent of the outstanding shares of, or any
other equity interest in, any company or entity listed or traded on a national
securities exchange or in an over-the-counter securities market or (ii) (x) the
Participant's direct or indirect inducement of any employee of the Company or
any of its Subsidiaries, any Medical Director who is an independent contractor
for the Company or its Subsidiaries or any physician referring patients to the
Company or its Subsidiaries to (A) engage in any activity that would result in
the occurrence of a Non-Compete Trigger if engaged in by the Participant or (B)
terminate his or her employment, contractual relationship or referring
relationship, respectively, with the Company or any of its Subsidiaries or (y)
the Participant's direct or indirect employment of, or offer of employment or
other similar arrangement with, any person who is or was during the period of
the Participant's employment or consulting or advisory relationship with the
Company, or was beforehand, employed by the Company or its Subsidiaries, a
Medical Director of a dialysis facility owned or operated by the Company or its
Subsidiaries or a referring physician for any dialysis center owned or operated
by the Company or its Subsidiaries.
"Note" shall have the meaning set forth in Section 6(b)(i) hereof.
"Option" shall mean any Option (including any Initial Grant Option)
granted pursuant to Section 6(a).
"Participant" shall mean any employee or director of, or consultant or
adviser to, the Company granted an Award under the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.
"Pledge" shall have the meaning set forth in Section 6(c)(vi) hereof.
"Prime Rate" shall mean the rate of interest publicly announced by The
Bank of New York from time to time as its prime rate.
"Purchased Shares" shall mean the shares made available for purchase
pursuant to Section 6(b) (including the Initial Purchased Shares).
"Purchased Shares Award" shall have the meaning set forth in Section
6(b) hereof.
"Purchased Shares Loan" shall have the meaning set forth in Section
6(b)(i) hereof.
4.
"Replaced Award" shall have the meaning set forth in Section 6(a)(iv)
hereof.
"Repurchase Notice" shall have the meaning set forth in Section
6(a)(iii) hereof.
"Repurchase Right" shall have the meaning set forth in Section
6(a)(iii) hereof.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time
to time.
"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.
"Section 16" shall mean Section 16 of the Exchange Act, or any
successor provision thereto as in effect from time to time.
"Shareholders Agreement" shall mean an agreement substantially in the
form of Exhibit A to the Subscription Agreement dated as of May 26, 1994 among
DLJ Merchant Banking Partners, L.P., DLJ International Partners, C.V., DLJ
Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., NME Properties
Corp., the Company and National Medical Enterprises, Inc.
"Shares" shall mean shares of Class A Common Stock of the Company,
$.001 par value, and such other securities or property as may become the subject
of Awards or become subject to Awards pursuant to an adjustment made under
Section 4(b) of the Plan.
"Subsidiary" shall mean any entity (including, without limitation, any
partnership) of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions (including, in the case of a partnership, a general
partner) are at the time directly or indirectly owned by the Company.
SECTION 3. Administration. The Plan shall be administered by the
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Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible director or employee of, or consultant or advisor to, the Company;
(iii) determine the number of Shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited, or
5.
suspended; (vi) determine whether, to what extent, and under what circumstances
cash, Shares, other securities, other Awards, other property, and other amounts
payable with respect to an Award shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, any shareholder and any Employee.
SECTION 4. Shares Available for Awards.
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(a) Shares Available. Subject to adjustment as provided in Section
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4(b):
(i) Calculation of Number of Shares Available. The number of Shares
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with respect to which Awards may be granted under the Plan shall be 5,084,447.
If, after the effective date of the Plan, any Shares covered by an Award granted
under the Plan, or to which such an Award relates, are forfeited, or if an Award
otherwise terminates or is canceled without the delivery of Shares or of other
consideration, then the Shares covered by such Award, or to which such Award
relates, or the number of Shares otherwise counted against the aggregate number
of Shares with respect to which Awards may be granted, to the extent of any such
forfeiture, termination or cancellation, shall again be, or shall become, Shares
with respect to which Awards may be granted.
(ii) Accounting for Awards. For purposes of this Section 4, the
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number of Shares covered by any Award, or to which such Award relates, shall be
counted on the date of grant of such Award against the aggregate number of
Shares with respect to which Awards may be granted under the Plan.
provided, that Awards that operate in tandem with (whether granted
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simultaneously with or at a different time from), or that are substituted for,
other Awards may be counted or not counted under procedures adopted by the
Committee in order to avoid double counting. Any Shares delivered by the
Company, any Shares with respect to which Awards are made by the Company, or any
Shares with respect to which the Company becomes obligated to make Awards,
through the assumption of, or in substitution for, outstanding awards previously
granted by an acquired company, shall not, except in the case of Shares with
respect to which Awards are granted to employees of the Company who are officers
or directors of the Company for purposes of Section 16 or any successor section
thereto during any period in
6.
which the Company is subject to Section 16, be counted against the Shares
available for Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any Shares
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delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee determines that any
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dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and type of Shares
(or other securities or property) with respect to which Awards may be granted,
(ii) the number and type of Shares (or other securities or property) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to any
Award or, if deemed appropriate, make provision for a cash payment to the holder
of an outstanding Award; provided that the number of Shares subject to any Award
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denominated in Shares shall always be a whole number.
SECTION 5. Eligibility. Any employee or director of, or consultant
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or adviser to, the Company or any Affiliate who is not a member of the
Committee, including any officer or employee-director of the Company or any
Affiliate, shall be eligible to be designated a Participant.
SECTION 6. Awards.
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(a) Options. The Committee is hereby authorized to grant to any
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Participant an option to purchase Shares (an "Option") which shall contain the
following terms and conditions and such additional terms and conditions, which
are not inconsistent with the provisions of the Plan, as the Committee shall
determine; provided that such Options are not intended to constitute Incentive
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Stock Options within the meaning of Section 422 of the Code:
(i) Exercise Price. The purchase price per Share
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purchasable under an Option shall be such amount as shall be determined by the
Committee in its sole discretion, provided that the purchase price per Share for
any Initial Grant Options shall be $1.00 per Share.
7.
(ii) Time and Method of Exercise. The Committee shall determine the
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time or times during which any Option may be exercised, in whole or in part, and
the conditions, if any, upon which any Option shall vest and become exercisable
on an accelerated basis or be canceled without consideration.
(iii) Restrictions. Except as otherwise provided in any
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applicable Award Agreement, any Shares acquired by a Participant upon the
exercise of an Option shall, if so requested by the Committee in its sole
discretion, be held by the Participant subject to the terms and conditions of
the Shareholders Agreement, by which such Participant shall agree to be bound.
In addition, except as otherwise provided in any applicable Award Agreement,
upon termination of a Participant's employment, consulting or advising
relationship with the Company, or upon the occurrence of a Non-Compete Trigger
or a Confidentiality Trigger (whether during or after the termination of such
relationship), any portion of an Option which is not canceled by reason of such
termination and each Share acquired upon exercise of an Option shall be subject
to repurchase by the Company (the "Repurchase Right") at (A) Fair Market Value
Per Option or Fair Market Value Per Share, as the case may be, in the event of
such Participant's death, voluntary termination of his employment, consulting or
advisory relationship with the Company, or termination of such relationship due
to Disability or by the Company without Cause, as the case may be; provided than
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such Repurchase Right shall not arise solely by reason of a voluntary
termination of such relationship with the Company or termination by reason of
the Participant's death or Disability, if such event occurs after an Initial
Public Offering and (B) 80% of Fair Market Value Per Option or Fair Market Value
per Share, as the case may be, in the event of the termination of such
Participant's relationship with the Company by the Company with Cause or upon
the occurrence of a Non-Compete Trigger or Confidentiality Trigger. The Company
may exercise its Repurchase Right by giving written notice (a "Repurchase
Notice") to the Participant by no later than the 30th day following the date on
which such Repurchase Right arises. The closing for the exercise of the
Repurchase Right shall occur as promptly as practicable (but no later than 120
days) after delivery of the Repurchase Notice. On or prior to the closing of
the exercise of the Repurchase Right, the Participant shall deliver to a
representative of the Company certificates representing all the Shares subject
to the Repurchase Right, duly endorsed, together with all documents required to
be executed in connection with the sale of such Shares (it being understood that
in no event will the Participant be obligated to make any representations and
warranties, or to provide indemnities, with respect to any matters other than
title to the Shares subject to the Repurchase Right held by the Participant and
the authority to sell such Shares).
(iv) Substitute Awards. In the event an Option is granted hereunder
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in substitution for an option or other award granted under this Plan or any
other plan or arrangement (a "Replaced Award"), the grant of the Option
hereunder may be conditioned and contingent upon the Participant's execution of
a written acknowledgement that such Option is in satisfaction in full of all
obligations and liabilities of the Company, its Subsidiaries and Affiliates with
respect to the Replaced Award.
8.
(b) Purchased Shares. The Committee is hereby authorized to grant to
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any Participant the right to purchase Shares from the Company (the "Purchased
Shares") at a purchase price to be determined in the sole discretion of the
Committee (a "Purchased Shares Award"); provided that the purchase price with
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respect to the Initial Purchased Shares shall be equal to $1.00 per Share. The
Purchased Shares shall be subject to such conditions or restrictions as may be
determined by the Committee as evidenced in the applicable Award Agreement.
Without limiting the generality of the foregoing, except as otherwise provided
in any applicable Award Agreement, the Purchased Shares shall, if so requested
by the Committee in its sole discretion, be held by the Participant subject to
the terms and conditions of the Shareholders Agreement, by which such
Participant shall agree to be bound, and each Purchased Share shall be subject
to the Company's Repurchase Right at (A) Fair Market Value Per Share in the
event of such Participant's death, voluntary termination of his employment,
consulting or advisory relationship with the Company, or termination of such
relationship due to Disability or by the Company without Cause, as the case may
be; provided that such Repurchase Right shall not arise solely by reason of a
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voluntary termination of such relationship with the Company or termination by
reason of the Participant's death or Disability, if such event occurs after an
Initial Public Offering, and (B) 80% of Fair Market Value Per Share in the event
of the termination of such Participant's relationship with the Company by the
Company with Cause or upon the occurrence of a Non-Compete Trigger or
Confidentiality Trigger (whether during or after the termination of such
relationship). The Company may exercise its Repurchase Right by giving a
Repurchase Notice to the Participant by no later than the 30th day following the
date on which such Repurchase Right arises. The closing for the exercise of the
Repurchase Right shall occur as promptly as practicable (but no later than 120
days) after delivery of the Repurchase Notice. On or prior to the closing of
the exercise of the Repurchase Right, the Participant shall deliver to a
representative of the Company certificates representing all the Shares subject
to the Repurchase Right, duly endorsed, together with all documents required to
be executed in connection with the sale of such Shares (it being understood that
in no event will the Participant be obligated to make any representations and
warranties, or to provide indemnities, with respect to any matters other than
title to the Shares subject to the Repurchase Right held by the Participant and
the authority to sell such Shares).
(i) Purchased Shares Loan. In order to assist Participants in
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financing the purchase of Shares pursuant to any Purchased Shares Award, with
respect to any Purchased Shares Award the Participant will be eligible to
receive a loan from the Company (the "Purchased Shares Loan") with a principal
amount equal to up to 100% of the aggregate purchase price of the Shares subject
to the Purchased Shares Award, as determined by the Committee. The Purchased
Shares Loan will be evidenced by a full recourse promissory note substantially
in the form of Exhibit I hereto (the "Note") and will be secured by a pledge by
the Participant in favor of the Company of all Shares purchased by the
Participant pursuant to any Purchased Shares Award or otherwise acquired by the
Participant upon the exercise of any Option.
9.
(c) General.
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(i) Awards May Be Granted Separately or Together. Awards may, in the
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discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award granted under the Plan or
any award granted under any other plan of the Company or any Affiliate or under
any plan of an acquired company. Awards granted in addition to or in tandem
with other Awards or awards granted under any other plan of the Company or any
Affiliate may be granted either at the same time as or at different times from
the grant of such other Awards or awards.
(ii) Form of Payment by Company Under Awards. Subject to the
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terms of the Plan and of any applicable Award Agreement, payments or transfers
to be made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall determine,
including, without limitation, cash, Shares, other securities, other Awards or
other property, or any combination thereof and may be made in a single payment
or transfer, in installments, or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments.
(iii) Limits on Transfer of Awards.
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(A) Each Award, and each right under any Award, shall be exercisable
only by the Participant during the Participant's lifetime, or, if permissible
under applicable law, by the Participant's legal representative.
(B) No Award and no right under any such Award, may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of community property or of
descent and distribution (or, in the case of Purchased Shares, to the Company)
and any such purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against the Company or
any Affiliate.
(iv) Term of Awards. The term of each Award shall be for such period
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as may be determined by the Committee; provided, that the term of the Initial
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Grant Options shall be 10 years from the date of grant, subject to earlier
cancellation as provided in the applicable Award Agreement.
(v) Rule 16b-3 Six-Month Limitations. During any period in which the
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Company is subject to the provisions of Section 16, to the extent required in
order to comply with Rule 16b-3 only, any equity security offered pursuant to
the Plan must be held for at least six months after the date of grant, and with
respect to any derivative security issued pursuant to the Plan at least six
months must elapse from the date of acquisition of
10.
such derivative security to the date of disposition (other than upon exercise or
conversion) of the derivative security or its underlying equity security, except
in case of death or disability. Terms used in the preceding sentence shall, for
the purposes of such sentence only, have the meanings, if any, assigned or
attributed to them under Rule 16b-3.
(vi) Share Certificates. All certificates for Shares or other
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securities of the Company or any Affiliate delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the SEC, any stock exchange upon
which such Shares or other securities are then listed, and any applicable
Federal or state laws, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
The Company shall register in the name of the Participant the number of Shares
received by the Participant upon the exercise of any Option or acquired upon the
purchase of Shares pursuant to any Purchased Shares Award; provided that the
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Company may retain possession of the certificates relating to all such Shares,
which Shares shall be pledged (the "Pledge") by the Participant to the Company
as security for any Purchased Shares Loan provided to the Participant pursuant
to Section 6(b) on the terms and conditions set forth in the Note.
(vii) Consideration for Grants. Awards may be granted
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for no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(viii) Delivery of Shares or Other Securities and Payment
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by Participant of Consideration. No Shares or other securities shall be
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delivered pursuant to any Award until payment in full of any amount required to
be paid pursuant to the Plan or the applicable Award Agreement is received by
the Company. Such payment may be made by such method or methods and in such
form or forms as the Committee shall determine, including, without limitation,
cash, Shares, other securities, other Awards or other property, or any
combination thereof; provided that the combined value, as determined by the
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Committee, of all cash and cash equivalents and the Fair Market Value of any
such Shares or other property so tendered to the Company, as of the date of such
tender, is at least equal to the full amount required to be paid pursuant to the
Plan or the applicable Award Agreement to the Company.
SECTION 7. Amendment and Termination. Except to the extent
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prohibited by applicable law and unless otherwise expressly provided in an Award
Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
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discontinue, or terminate the Plan without the consent of any shareholder,
Participant, other holder or beneficiary of an Award, or other Person; provided
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that any such amendment,
11.
alteration, suspension, discontinuation, or termination that would impair the
rights of any Participant, or any other holder or beneficiary of any Award
theretofore granted, shall not to that extent be effective except to the extent
the Committee shall have obtained the consent of such Participant, holder or
beneficiary pursuant to Section 7(b); and provided further, that notwithstanding
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any other provision of the Plan or any Award Agreement, in the event the Company
is at such time subject to the requirements of Section 16, without the approval
of the shareholders of the Company no such amendment, alteration, suspension,
discontinuation, or termination shall be made that would:
(i) increase the total number of Shares available for Awards under the
Plan, except as provided in Section 4 of the Plan; or
(ii) otherwise cause the Plan to cease to comply with any tax or
regulatory requirement, including for these purposes any approval or other
requirement which is a prerequisite for exemptive relief from Section 16(b) of
the Exchange Act during any period in which the Company is subject to Section
16.
(b) Amendments to Awards. The Committee may waive any conditions or
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rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Award theretofore granted, prospectively or retroactively,
without the consent of any relevant Participant or holder or beneficiary of an
Award; provided that any such amendment, alteration, suspension,
discontinuation, cancellation or termination that would impair the rights of any
Participant, or any other holder or beneficiary of any Award, shall not to that
extent be effective without the consent of the Participant or such other holder
or beneficiary.
(c) Adjustments of Awards Upon Certain Acquisitions. In the event the
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Company or any Affiliate shall assume outstanding employee awards or the right
or obligation to make future employee awards in connection with the acquisition
of another business or another corporation or business entity, the Committee may
make such adjustments, not inconsistent with the terms of the Plan, in the terms
of Awards as it shall deem appropriate in order to achieve reasonable
comparability or other equitable relationship between the assumed awards and the
Awards as so adjusted.
(d) Adjustment of Awards Upon the Occurrence of Certain Unusual or
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Nonrecurring Events. Notwithstanding any other provision in the Plan or any
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Award granted hereunder, the Committee is hereby authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan.
12.
(e) Correction of Defects, Omissions and Inconsistencies. The
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Committee may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award or Award Agreement in the manner and to
the extent it shall deem desirable to carry the Plan into effect. In the event
of a conflict between any term or provision contained in an Award or an Award
Agreement and a term or provision contained in the Plan, the applicable terms
and conditions of the Plan shall govern and prevail.
SECTION 8. General Provisions.
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(a) No Rights to Awards. No Participant or other Person shall have
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any claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards. The terms and
conditions of Awards need not be the same with respect to each recipient.
(b) Delegation. Subject to the terms of the Plan and applicable law,
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the Committee may delegate to one or more officers or managers of the Company or
any Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify or waive rights with respect to, or to alter,
discontinue, suspend, or terminate Awards held by, Participants who are not
officers or directors of the Company for purposes of Section 16, or any
successor section thereto, or who are otherwise not subject to such Section.
(c) Withholding. The Company or any Affiliate is hereby authorized to
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withhold from any Award, from any payment due or transfer made under any Award
or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Shares, other securities, other Awards or other
property) of any applicable withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes.
(d) No Limit on Other Compensation Arrangements. Nothing contained in
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the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other compensation arrangements (subject to shareholder approval if
such approval is required), and such arrangements may be either generally
applicable or applicable only in specific cases.
(e) No Right to Employment, Etc. The grant of an Award shall not be
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construed as giving a Participant the right to be retained in the employ of, or
to provide continued consulting or advisory services to, the Company or any
Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, consulting or advisory relationship with the
Company, as the case may be, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
13.
(f) Governing Law. The validity, construction, and effect of the Plan
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and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of California. Except as otherwise
provided in the applicable Award Agreement, any and all controversies, claims
and matters of difference arising out of or in respect of Awards that are
granted under the Plan shall be subject to final and binding arbitration in Los
Angeles, California, according to the rules and practices of the American
Arbitration Association, including the selection of an arbitrator from its
Employment panel pursuant to the rules then in effect.
(g) Severability. If any provision of the Plan or any Award is or
------------
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
(h) Other Laws. The Committee may refuse to issue or transfer any
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Shares or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall
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create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(j) No Fractional Shares. No fractional Shares shall be issued or
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delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(k) Headings. Headings are given to the Sections and subsections of
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the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
14.
SECTION 9. Effective Date of the Plan. The Plan shall be effective
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as of the date of its approval by the Board.
SECTION 10. Term of the Plan. No Award shall be granted under the
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Plan after August 31, 2004. However, unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Award theretofore granted may, and
the authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under any such Award shall, extend beyond such date.
15.