EXHIBIT 10.7
ASSISTED LIVING CONCEPTS, INC.
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. PURPOSE
This Stock Option Plan (the "Plan") is intended as a performance incentive
for officers, employees, consultants and other key persons of Assisted Living
Concepts, Inc. (the "Company") or its Subsidiaries (as hereinafter defined) to
enable the persons to whom options or restricted stock are granted (the
"Grantees") to acquire or increase a proprietary interest in the success of the
Company. The Company intends that this purpose will be effected by the granting
of "incentive stock options" ("Incentive Options") as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified
stock options ("Nonqualified Options") (each individually and collectively, an
"Option) and restricted stock ("Restricted Stock"). The term "Subsidiaries"
includes any corporations in which at the time of the grant of any Option
hereunder, stock possessing fifty percent or more of the total combined voting
power, or fifty percent or more of the value, of all classes of stock is owned
directly or indirectly by the Company. For purposes of Section 422 of the
Internal Revenue Code only, the portion of the Plan providing for the grant of
Restricted Stock is a separate plan.
2. OPTIONS TO BE GRANTED AND ADMINISTRATION
(a) Incentive and Nonqualified Options. Options granted under the Plan may
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be either Incentive Options or Nonqualified Options, and shall be designated as
such at the time of grant. Each Option intended to qualify as an "incentive
stock option" under the Code shall be labeled as an "Incentive Stock Option" at
the time of grant and, if such option shall fail so to qualify, it shall be
deemed to be a Nonqualified Option.
(b) Compensation Committee. The Plan shall be administered by a committee
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(the "Compensation Committee") which shall consist solely of two or more
directors of the Company appointed by the Board of Directors of the Company (the
"Board of Directors") each of whom is both a "non-employee director" as defined
by Rule 16b-3 or any successor rule thereto promulgated under the Securities
Exchange Act of 1934, as amended (the "Act"), and an "outside director" for
purposes of Section 162(m) of the Code. Action by the Compensation Committee
shall require the affirmative vote of a majority of all its members. The Board
of Directors shall conduct the general administration of the Plan with respect
to Options granted to non-employee Directors. In addition, the Board of
Directors, in its absolute discretion, may at any time and from time to time
exercise any and all rights or duties of the Committee under the Plan except
with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or
any regulations or rules issued thereunder, are required to be determined in the
sole and absolute discretion of the Committee.
(c) Powers of Committee. Subject to the Award Limit (as defined below) and
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the terms and conditions of the Plan, the Compensation Committee shall have the
power:
(A) To determine from time to time the Options and Restricted Stock to
be granted to eligible persons under the Plan and to prescribe the terms
and provisions (which need not be identical) of Options and Restricted
Stock granted under the Plan to such persons;
(B) To construe and interpret the Plan and grants thereunder and to
establish, amend, and revoke rules and regulations for administration of
the Plan. In this connection, the Compensation Committee may correct any
defect or supply any omission, or reconcile any inconsistency in the Plan,
in any Option agreement or restricted stock agreement, or in any related
agreements, in the manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective. All decisions and
determinations by the Compensation Committee in the exercise of this power
shall be final and binding upon the Company and the Grantees; and
(C) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Company
with respect to the Plan.
3. STOCK
(a) Number of Shares. The stock granted under the Plan, or subject to the
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Options and Restricted Stock granted under the Plan, shall be shares of the
Company's authorized but unissued common stock, par value $.01 per share (the
"Common Stock"). The total number of shares that may be issued under the Plan
shall not exceed an aggregate of 1,104,000 shares of Common Stock. The maximum
number of shares which may be subject to Options granted under the Plan to any
individual in any calendar year shall not exceed 100,000 shares of Common Stock
(the "Award Limit"). The total number of shares that may be issued under the
Plan and Award Limit shall be subject to adjustment as provided in Section 7
hereof. To the extent required by Section 162(m) of the Code, shares subject to
Options which are canceled continue to be counted against the Award Limit, and
if, after grant of an Option, the price of shares subject to such Option is
reduced, the transaction is treated as a cancellation of the Option and a grant
of a new Option and both the Option deemed to be canceled and the Option deemed
to be granted are counted against the Award Limit.
(b) Application of Available Shares. Whenever any outstanding Option under
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the Plan expires, is canceled or is otherwise terminated (other than by
exercise), or any shares of Restricted Stock are repurchased by the Company
pursuant to Section 15.(f) or forfeited pursuant to Section 15.(e), the shares
of Common Stock allocable to the unexercised portion of such Option and such
shares of Restricted Stock may again be the subject of Options or Restricted
Stock under the Plan.
(c) Issuance of Replacement Options. The Compensation Committee also is
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authorized to grant a new Option to an eligible person under the Plan upon the
surrender for cancellation of an Option previously granted to such person under
the Plan. Provided that the provisions of Section 5.(a) are satisfied, this new
Option may have a lower exercise price per
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share than the Option previously granted to such person.
4. ELIGIBILITY
(a) General. Incentive Options may be granted only to officers or other
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full-time employees of the Company or its Subsidiaries, including members of the
Board of Directors who are also full-time employees of the Company or its
Subsidiaries. Nonqualified Options or Restricted Stock may be granted to
directors, officers or other employees of the Company or its Subsidiaries and to
consultants and other key persons who provide services to the Company or its
Subsidiaries (regardless of whether they are also employees).
(b) Certain Shareholders. No person shall be eligible to receive any
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Incentive Option under the Plan if, at the date of grant, such person
beneficially owns stock representing in excess of ten percent of the voting
power of all outstanding capital stock of the Company, unless notwithstanding
anything in this Plan to the contrary (i) the purchase price for stock subject
to such Option is at least 110% of the fair market value of such stock at the
time of the grant and (ii) the Option by its terms is not exercisable more than
5 years from the date of grant thereof.
(c) Annual Limit. Notwithstanding any other provision of the Plan, the
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aggregate fair market value (determined as of the time the Option is granted) of
the stock with respect to which Incentive Options are exercisable for the first
time by any individual during any calendar year (under all plans of the Company
and any parent and Subsidiaries) shall not exceed $100,000.
(d) Non-Employee Director Grants. Each current Director of the Company who
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is not also a full-time employee of the Company or any of its Subsidiaries shall
automatically be granted a Nonqualified Option to purchase 20,000 shares of
Common Stock upon the consummation of the initial public offering of securities
of the Company that is the subject of a registration statement filed with the
Securities and Exchange Commission (the "Public Offering") at a purchase price
equal to the per share price for Common Stock in the Public Offering. Subject
to the Award Limit, at the time that any other person who is not also a full-
time employee of the Company or any of its Subsidiaries is first elected as a
Director of the Company, such person shall automatically be granted a
Nonqualified Option to purchase 20,000 shares of Common Stock, at a purchase
price per share equal to the fair market value of the Common Stock on the date
of such person's election, as determined pursuant to Section 5.(d) hereof. Each
Option granted pursuant to this Section 4.(d) shall vest with respect to 6,667,
6,667, and 6,666 shares on the first, second and third anniversaries,
respectively, of the grant and shall expire on the earlier of the seventh
anniversary of the date of vesting or one year following the Director's ceasing
to be a Director for any reason; provided that no Option shall vest more than
one year following the Director's ceasing to be a Director. The additional
terms and conditions of such Options shall be as set forth in the Plan and in
the Option agreement with each such Director. The provisions of this Section
4.(d) shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act,
as amended, or the rules thereunder.
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5. TERMS OF THE OPTION AGREEMENTS AND RESTRICTED STOCK AGREEMENTS
Subject to the terms and conditions of the Plan, each Option agreement
shall contain such provisions as the Compensation Committee shall from time to
time deem appropriate; provided, however, option agreements evidencing Options
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code.
Option agreements need not be identical, but each Option agreement and, with
respect to Section 5.(f), each restricted stock agreement, by appropriate
language shall include the substance of all of the following provisions:
(a) Expiration; Termination of Employment. Notwithstanding any other
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provision of the Plan or of any Option agreement, each Option shall expire on
the date specified in the Option agreement, which date in the case of any
Incentive Option shall not be later than the tenth anniversary of the date on
which the Option was granted. The Option agreement may provide that any
outstanding Option granted to such Grantee under the Plan shall be exercisable
for such period following termination of employment as may be specified in the
Option agreement, subject to the expiration date of such Option.
(b) Minimum Shares Exercisable. The minimum number of shares with respect
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to which an Option may be exercised at any one time shall be one hundred (100)
shares, or such lesser number as is subject to exercise under the Option at the
time.
(c) Exercise. Except as provided in Section 4.(d) hereof with respect to
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Options granted pursuant to that Section, each Option shall be exercisable in
such installments (which need not be equal) and at such times as may be
designated by the Compensation Committee. No Option shall first be exercisable,
either in whole or in part, until the expiration of six months from the date of
grant. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Option expires.
(d) Purchase Price. Except as set forth in Section 4.(d) with respect to
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Options granted pursuant to that Section, the purchase price per share of Common
Stock subject to each Option shall be determined by the Compensation Committee;
provided, however, that the purchase price per share of Common Stock subject to
each Incentive Option and each Option intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, shall be not less
than 100% of the fair market value of the Common Stock on the date such Option
is granted. For the purposes of the Plan (including as to Options granted
pursuant to Section 4.(d)), the fair market value of the Common Stock shall be
determined in good faith by the Compensation Committee; provided, however, that
if the Common Stock is listed on the American Stock Exchange ("AMEX") on the
date the Option is granted, the fair market value shall be the closing price
reported for the Common Stock on the AMEX for such date or, if no sales were
reported for such date, for the last date preceding such date for which a sale
was reported.
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(e) Rights of Grantees. No Grantee shall be deemed for any purpose to be
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the owner of any shares of Common Stock subject to any Option unless and until
(i) the Option shall have been exercised pursuant to the terms thereof, (ii) all
requirements under applicable law and regulations shall have been complied with
to the satisfaction of the Company, (iii) the Company shall have issued and
delivered the shares to the Grantee, and (iv) the Grantee's name shall have been
entered as a stockholder of record on the books of the Company. Thereupon, the
Grantee shall have full voting, dividend and other ownership rights with respect
to such shares of Common Stock.
(f) Transfer. No Option or Restricted Stock granted hereunder shall be
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transferable by the Grantee other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, as amended,
or the rules thereunder, unless and until such Option has been exercised, the
shares underlying such options or Restricted Stock have been issued, and all
restrictions applicable to such shares have lapsed or been removed; and such
Option may be exercised during the Grantee's lifetime only by the Grantee, or
his or her guardian or legal representative.
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Notice. Any Option granted under the Plan may be exercised by the
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Grantee in whole or part, subject to Section 5.(b) hereof, in part by delivering
to the Company on any business day a written notice specifying the number of
shares of Common Stock the Grantee then desires to purchase (the "Notice").
(b) Payment. Payment for the shares of the Common Stock purchased pursuant
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to the exercise of an Option shall be made either: (i) in cash, or by certified
or bank check or other payment acceptable to the Company, equal to the Option
exercise price for the number of shares specified in the Notice (the "Total
Option Price"); (ii) if authorized by the applicable Option agreement and if
permitted by law, by delivery of shares of Common Stock that the Grantee may
freely transfer having a fair market value, determined by reference to the
provisions of Section 5.(d) hereof, equal to or less than the Total Option
Price, plus cash in an amount equal to the excess, if any, of the Total Option
Price over the fair market value of such shares of Common Stock; or (iii) by the
Grantee delivering the Notice to the Company together with irrevocable
instructions to a broker to promptly deliver the Total Option Price to the
Company in cash or by other method of payment acceptable to the Company;
provided, however, that the Grantee and the broker shall comply with such
procedures and enter into such agreements of indemnity or other agreements as
the Company shall prescribe as a condition of payment under this clause (iii).
(c) Delivery of Certificates. The delivery of certificates representing
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shares of Common Stock to be purchased pursuant to the exercise of an Option
will be contingent upon the Company's receipt of the Total Option Price and of
any written representations from the Grantee required by the Compensation
Committee, and the fulfillment of any other requirements contained in the Option
agreement or applicable provisions of law.
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7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) General. If the shares of the Company's Common stock as a whole are
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increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or the
like, an appropriate and proportionate adjustment shall be made in the number
and kind of shares subject to the Plan (including, but not limited to,
adjustments of the limitations in Section 3.(a) on the maximum number and kind
of shares which may be issued and adjustments of the Award Limit), and in the
number, kind, and per share exercise price of shares subject to unexercised
Options or portions thereof granted prior to any such change. In the event of
any such adjustment in an outstanding Option, the Grantee thereafter shall have
the right to purchase the number of shares under such Option at the per share
price, as so adjusted, which the Grantee could purchase at the total purchase
price applicable to the Option immediately prior to such adjustment.
(b) Determination and Discretion of Compensation Committee. Adjustments
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under this Section 7 shall be determined by the Compensation Committee and such
determinations shall be conclusive. The Compensation Committee shall have the
discretion and power in any such event to determine and to make effective
provision for acceleration of the time or times at which any Option or portion
thereof shall become exercisable and for acceleration of the time or times at
which any restrictions on any Restricted Stock shall lapse or be removed. No
fractional shares of Common Stock shall be issued under the Plan on account of
any adjustment specified above.
(c) Limitations. No adjustment or action described in this Section 7 or
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in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of the
Code, or any successor provisions thereto. With respect to Options which are
intended to qualify as performance-based compensation under Section 162(m)(4)(C)
of the Code, no adjustment or action described in this Section 7 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Option to fail to so qualify under Section
162(m)(4)(C) of the Code, or any successor provisions thereto except that, to
the extent permitted by Section 162(m) of the Code or the regulations
thereunder, Options may, as determined by the Committee (or the Board of
Directors, in the case of Options granted to non-employees Directors) in its
sole and absolute discretion, become exercisable upon a "change of ownership or
control" (within meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or any
successor regulation thereto). Furthermore, no such adjustment or action shall
be authorized to the extent such adjustment or action would result in short-
swing profits liability under Section 16 or violate the exemptive conditions of
Rule 16b-3 unless the Committee (or the Board of Directors, in the case of
Options granted to non-employees Directors) determines that the Option is not to
comply with such exemptive conditions.
8. EFFECT OF CERTAIN TRANSACTIONS
In the case of (i) the dissolution or liquidation of the Company, (ii) a
reorganization,
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merger, consolidation or other business combination in which the Company is
acquired by another entity or in which the Company is not the surviving entity,
or (iii) the sale of all or substantially all of the assets of the Company to
another entity, the Plan and the Options issued hereunder shall terminate upon
the effectiveness of any such transaction or event, unless provision is made in
connection with such transaction for the assumption of Options theretofore
granted, or the substitution for such Options of new Options of the successor
entity or parent thereof, with appropriate adjustment as to the number and kind
of shares and the per share exercise prices, as provided in Section 7. In the
event of such termination, all outstanding Options shall be exercisable in full
for at least fifteen days prior to the date of such termination whether or not
otherwise exercisable during such period. In the case of any event described
in clause (i), (ii) or (iii) above, in its discretion, and on such terms and
conditions as it deems appropriate, the Compensation Committee may provide
either by the terms of a restricted stock agreement or by a resolution adopted
prior to the occurrence of such event that, for a specified period of time prior
to such event, the restrictions imposed under a restricted stock agreement or
upon some or all shares of Restricted Stock may be terminated, and some or all
shares of such Restricted Stock may cease to be subject to repurchase under
Section 15.(f) or forfeiture under Section 15.(e) after such event
9. TAX WITHHOLDING
(a) Payment by Grantee. Each Grantee shall, no later than the date as of
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which the value of any Option or Restricted Stock granted hereunder or of any
Common Stock issued upon the exercise of such Option first becomes includable in
the gross income of the Grantee for federal income tax purposes (the "Tax
Date"), pay to the Company, or make arrangements satisfactory to the Company
regarding payment of any federal, state, or local taxes of any kind required by
law to be withheld with respect to such income.
(b) Payment in Shares. An Grantee may elect to have such tax withholding
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obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Common Stock to be issued pursuant to an Option exercise
a number of shares with an aggregate fair market value (determined by the
Compensation Committee in accordance with Section 5.(d) as of the date the
withholding is effected) that would satisfy the withholding amount due, or (ii)
transferring to the Company shares of Common Stock owned by the Grantee with an
aggregate fair market value (determined by the Compensation Committee in
accordance with Section 5.(d) as of the date the withholding is effected) that
would satisfy the withholding amount due. With respect to any Grantee who is
subject to Section 16(b) of the Act, the following additional restrictions shall
apply:
(A) the election to satisfy tax withholding obligations in the manner
permitted by this Section 9.(b) shall be made either (1) during the period
beginning on the third business day following the date of release of
quarterly or annual summary statements of sales and earnings of the Company
and ending on the twelfth business day following such date, or (2) at least
six months prior to the Tax Date;
(B) such election shall be irrevocable;
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(C) such election shall be subject to the consent or disapproval of
the Compensation Committee; and
(D) such election shall not be made within six months of the date of
grant of the Option or Restricted Stock.
10. AMENDMENT OF THE PLAN
The Board of Directors may discontinue the Plan or amend the Plan at any
time, and from time to time, subject to any required regulatory approval and
provided that any such amendments that require stockholder approval under
applicable laws and regulations shall also be approved by shareholders of the
Company at an annual or special meeting of such shareholders to the extent
required by and in accordance with any such laws or regulations. Furthermore,
no modifications of the Award Limit shall be effective prior to the approval of
the Company's stockholders. Except as provided in Sections 5, 7, and 8
hereof, rights and obligations under any Option granted before any amendment of
the Plan shall not be altered or impaired by such amendment, except with the
consent of the Grantee.
11. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock or stock Options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases. Neither the Plan nor any Option or any Restricted Stock granted
hereunder shall be deemed to confer upon any employee or any other individual
any right to continued employment or service with the Company or its
subsidiaries.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
(a) Application of Laws; Approvals. The obligation of the Company to sell
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and deliver shares of Common Stock with respect to Options and as Restricted
Stock granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Compensation Committee.
(b) Governing Law. The Plan shall be governed by Nevada law, except to the
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extent that such law is preempted by federal law.
(c) Section 16(b) of the Act. Transactions under the Plan are intended to
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comply with Rule 16b-3 or any successor rule thereto promulgated under the Act.
Any provision of the Plan or of any Option agreement or Restricted Stock
agreement inconsistent with such compliance shall be inoperative and shall not
affect the validity of the Plan or the availability of any exemption from
Section 16(b) of the Act.
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13. EFFECTIVE DATE OF PLAN; SHAREHOLDER APPROVAL
The Plan shall become effective upon the date that it is approved by the
Board of Directors of the Company; provided, however, that the Plan shall be
subject to the approval of the Company's shareholders in accordance with
applicable laws and regulations at an annual or special meeting held within
twelve months of such effective date or by written consent of all of the
shareholders of the Company. No Options granted under the Plan prior to such
shareholder approval may be exercised until such approval has been obtained. No
Options may be granted under the Plan after the tenth anniversary of the
effective date of the Plan.
14. CONFLICTS WITH THE COMPANY'S ARTICLES OF INCORPORATION
Notwithstanding any other provision of this Plan, no Grantee shall acquire
or have any right to acquire any Common Stock, and shall not have other rights
under this Plan, which are prohibited under the Company's Articles of
Incorporation.
15. AWARD OF RESTRICTED STOCK
(a) Award of Restricted Stock. The Compensation Committee shall from time
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to time, in its absolute discretion:
(A) Select from among the officers, directors, employees, consultants
or other key persons (including officers, directors, employees, consultants
or other key persons who have previously received other awards under this
Plan) such of them as in its opinion should be awarded Restricted Stock;
and
(B) Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with this Plan.
The Compensation Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock. In all cases, legal consideration shall
be required for each issuance of Restricted Stock. Upon the selection of an
officer, director, employee, consultant or other key person to be awarded
Restricted Stock, the Compensation Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.
(b) Restricted Stock Agreement. Restricted Stock shall be issued only
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pursuant to a written restricted stock agreement, which shall be executed by the
selected officer, director, employee, consultant or other key person and an
authorized officer of the Company and which shall contain such terms and
conditions as the Compensation Committee shall determine, consistent with this
Plan.
(c) Consideration. As consideration for the issuance of Restricted Stock,
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in addition to payment of the purchase price, if any, the Restricted Stockholder
shall agree, in the written restricted stock agreement, to remain in the employ
of (or to consult for or continue to serve as a key person or to serve as
Director of, as applicable) the Company or any Subsidiary for
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a period of at least one year after the Restricted Stock is issued (or such
shorter period as may be fixed in the restricted stock agreement or by action of
the Compensation Committee following grant of the Restricted Stock). Nothing in
this Plan or in any restricted stock agreement hereunder shall confer on any
Restricted Stockholder any right to continue in the employ of, or as a
consultant for or as a key person or director of, the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Restricted
Stockholder at any time for any reason whatsoever, with or without good cause.
(d) Rights as Stockholders. Upon delivery of the shares of Restricted
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Stock to the escrow holder pursuant to Section 15.(g), the Restricted
Stockholder shall have, unless otherwise provided by the Compensation Committee,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his restricted stock agreement, including the right to receive
all dividends and other distributions paid or made with respect to the shares;
provided, however that in the discretion of the Compensation Committee,
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any extraordinary with respect to the Common Stock shall be subject to the
restrictions set forth in Section 15.(e).
(e) Restriction. All shares of Restricted Stock issued under this Plan
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(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual restricted stock
agreement, be subject to such restrictions as the Compensation Committee shall
provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company, Company performance and individual performance;
provided, however, that by a resolution adopted after the Restricted Stock is
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issued, the Compensation Committee may, on such terms and conditions as it may
determine to be appropriate, remove any or all of the restrictions imposed by
the terms of the restricted stock agreement. Restricted Stock may not be sold
or encumbered until all restrictions are removed or lapse. Unless provided
otherwise by the Compensation Committee, if no consideration was paid by the
Restricted Stockholder upon issuance, a Restricted Stockholder's rights in
unvested Restricted Stock shall lapse upon termination of employment,
termination of directorship or termination of service, as applicable, with the
Company or a Subsidiary.
(f) Repurchase of Restricted Stock. The Compensation Committee shall
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provide in the terms of each individual restricted stock agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the restricted stock
agreement immediately upon the Restricted Stockholder's termination of
employment, termination of directorship or termination of service, as
applicable, from the Company or a Subsidiary at a cash price per share equal to
the price paid by the Restricted Stockholder for such Restricted Stock;
provided, however, that provision may be made that no such right of repurchase
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shall exist in the event of a termination of employment, termination of
directorship or termination of service without cause, or following a change in
control of the Company or because of the Restricted Stockholder's retirement,
death or disability, or otherwise.
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(g) Escrow. The Secretary of the Company or such other escrow holder as
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the Compensation Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the restricted stock agreement with respect to the shares evidenced by
such certificate lapse or shall have been removed.
(h) Legend. In order to enforce the restrictions imposed upon shares of
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Restricted Stock hereunder, the Compensation Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under restricted stock agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.
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