EDGE TECHNOLOGY GROUP, INC.
2002 STOCK INCENTIVE PLAN
Adopted Effective June 25, 2002
TABLE OF CONTENTS
ARTICLE 1. PURPOSE OF PLAN.................................. 1
ARTICLE 2. EFFECTIVE DATE AND TERM OF PLAN................... 1
2.1 Term of Plan........................................ 1
2.2 Effect on Awards.................................... 1
2.3 Stockholder Approval................................ 1
ARTICLE 3. SHARES SUBJECT TO PLAN............................ 1
3.1 Number of Shares.................................... 1
3.2 Source of Shares.................................... 1
3.3 Availability of Unused Shares....................... 1
3.4 Adjustment Provisions............................... 2
3.5 Substitute Awards................................... 2
ARTICLE 4. ADMINISTRATION OF PLAN........................... 3
4.1 Administering Body.................................. 3
4.2 Authority of Administering Body..................... 3
4.3 Eligibility......................................... 4
4.4 No Liability........................................ 4
4.5 Amendments.......................................... 4
4.6 Other Compensation Plans............................ 5
4.7 Plan Binding on Successors.......................... 5
4.8 References to Successor Statutes,
Regulations and Rules............................. 5
4.9 Issuances for Compensation Purposes Only............ 5
4.10 Invalid Provisions................................. 5
4.11 Governing Law...................................... 5
ARTICLE 5. GENERAL AWARD PROVISIONS......................... 6
5.1 Participation in the Plan........................... 6
5.2 Award Agreements.................................... 6
5.3 Exercise of Awards.................................. 6
5.4 Payment for Awards.................................. 7
5.5 No Employment or Other Continuing Rights............ 7
5.6 Restrictions Under Applicable Laws and Regulations.. 8
5.7 Additional Conditions............................... 8
5.8 No Privileges of Stock Ownership.................... 9
5.9 Non-Transferable.................................... 9
5.10 Information to Recipients.......................... 9
5.11 Withholding Taxes.................................. 10
5.12 Legends on Common Stock Certificates............... 10
5.13 Effect of Termination of Employment on Awards...... 10
5.14 Effect of Termination of Engagement on
Awards - Non-Employees Only...................... 10
5.15 Transfer; Leave of Absence......................... 11
5.16 Limits on Awards to Certain Eligible Persons....... 11
ARTICLE 6. STOCK OPTIONS.................................... 12
6.1 Nature of Stock Options............................. 12
6.2 Option Exercise Price............................... 12
6.3 Option Period and Vesting........................... 12
6.4 Special Provisions Regarding Incentive
Stock Options..................................... 12
6.5 Reload Options...................................... 13
6.6 Restrictions........................................ 13
ARTICLE 7. RESTRICTED STOCK AWARDS........................... 13
7.1 Nature of Restricted Stock Awards................... 13
7.2 Rights as Stockholders.............................. 13
7.3 Restriction......................................... 13
7.4 Repurchase or Restricted Stock...................... 14
7.5 Escrows............................................. 14
7.6 Vesting of Restricted Stock......................... 14
7.7 Waiver, Deferral and Reinvestment of Dividends...... 14
ARTICLE 8. UNRESTRICTED STOCK AWARDS......................... 14
8.1 Grant or Sale of Unrestricted Stock................. 14
ARTICLE 9. PERFORMANCE STOCK AWARDS.......................... 14
9.1 Nature of Performance Stock Awards.................. 15
9.2 Rights as a Stockholder............................. 15
9.3 Acceleration, Waiver, Etc........................... 15
ARTICLE 10. DIVIDEND EQUIVALENT RIGHTS....................... 15
10.1 Dividend Equivalent Rights......................... 15
10.2 Interest Equivalents............................... 15
ARTICLE 11. STOCK APPRECIATION RIGHTS........................ 15
11.1 Grant of Stock Appreciation Rights................. 16
11.2 Coupled Stock Appreciation Rights.................. 16
11.3 Independent Stock Appreciation Rights.............. 16
11.4 Payment and Limitations on Exercise................ 17
ARTICLE 12. REORGANIZATIONS................................. 17
12.1 Corporate Transactions Not Involving a
Change in Control................................ 17
12.2 Corporate Transactions Involving a Change
in Control....................................... 17
ARTICLE 13. DEFINITIONS..................................... 18
EDGE TECHNOLOGY GROUP, INC.
2002 STOCK INCENTIVE PLAN
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1. PURPOSE OF PLAN
The Company has adopted this Plan to promote the interests of the
Company, its Affiliated Entities and its stockholders by using
investment interests in the Company to attract, retain and
motivate its management and other persons, including officers,
directors, key employees and certain consultants, to encourage
and reward such persons' contributions to the performance of the
Company and to align their interests with the interests of the
Company's stockholders. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in Article 13.
2. EFFECTIVE DATE AND TERM OF PLAN
2.1 Term of Plan. This Plan became effective as of the
Effective Date and shall continue in effect until the Expiration
Date, at which time this Plan shall automatically terminate.
2.2 Effect on Awards. Awards may be granted during the
Plan Term, but no Awards may be granted after the Plan Term.
Notwithstanding the foregoing, each Award properly granted under
this Plan during the Plan Term shall remain in effect after
termination of this Plan until such Award has been exercised,
terminated or expired, as applicable, in accordance with its
terms and the terms of this Plan.
2.3 Stockholder Approval. This Plan shall be approved by
the Company's stockholders within 12 months after the Effective
Date. The effectiveness of any Awards granted prior to such
stockholder approval shall be specifically subject to, and
conditioned upon, such stockholder approval.
3. SHARES SUBJECT TO PLAN
3.1 Number of Shares. The maximum number of shares of
Common Stock reserved and available for issuance under this Plan
shall be 12,000,000, subject to adjustment as set forth in
Section 3.4.
3.2 Source of Shares. The Common Stock to be issued under
this Plan will be made available, at the discretion of the Board,
either from authorized but unissued shares of Common Stock or
from previously issued shares of Common Stock reacquired by the
Company, including without limitation, shares purchased on the
open market.
3.3 Availability of Unused Shares. Shares of Common Stock
underlying unexercised, unearned or yet-to-be acquired portions
of any Award granted under this Plan that expire, terminate or
are canceled, and shares of Common Stock issued pursuant to
Awards under this Plan that are reacquired by the Company
pursuant to the terms under which such shares were issued, will
again become available for the grant of further Awards under this
Plan. Notwithstanding the provisions of this Section 3.3, no
shares of Common Stock may again be optioned, granted or awarded
if such action would cause an Incentive Stock Option to fail to
qualify as an incentive stock option under Section 422 of the
IRC.
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3.4 Adjustment Provisions.
(a) If (i) the outstanding shares of Common Stock of
the Company are increased, decreased or exchanged for a
different number or kind of shares or other securities, or
if additional shares or new or different shares or other
securities are distributed in respect of such shares of
Common Stock (or any stock or securities received with
respect to such Common Stock), through merger,
consolidation, sale or exchange of all or substantially all
of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock
split, reverse stock split, spin-off or other distribution
with respect to such shares of Common Stock (or any stock or
securities received with respect to such Common Stock), or
(ii) the value of the outstanding shares of Common Stock of
the Company is reduced by reason of an extraordinary cash
dividend, an appropriate and proportionate adjustment may be
made in (1) the maximum number and kind of shares or
securities available for issuance under this Plan, (2) the
number and kind of shares or other securities that can be
granted to any one individual Recipient under his or her
Awards, (3) the number and kind of shares or other
securities subject to then outstanding Awards under this
Plan, and/or (4) the price for each share or other unit of
any other securities subject to then outstanding Awards
under this Plan, without changing the aggregate exercise
price (i.e., the exercise price multiplied by the number of
securities comprising such Awards) as to which such Awards
remain exercisable.
(b) No fractional interests will be issued under this
Plan resulting from any adjustments, but the Administering
Body, in its sole discretion, may make a cash payment in
lieu of any fractional shares of Common Stock issuable as a
result of such adjustments.
(c) To the extent any adjustments relate to stock or
securities of the Company, such adjustments shall be made by
the Administering Body, whose determination in that respect
shall be final, binding and conclusive.
(d) The grant of Awards pursuant to this Plan shall
not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
(e) No adjustment to the terms of an Incentive Stock
Option shall be made unless such adjustment either (i) would
not cause such Incentive Stock Option to lose its status as
an incentive stock option under the provisions of the IRC or
(ii) is agreed to in writing by the Administering Body and
the Recipient.
3.5 Substitute Awards. The Administering Body may grant
Awards under this Plan in substitution for stock and stock based
Awards held by employees of another corporation who become
employees of the Company or a Subsidiary Corporation as a result
of a merger or consolidation of the employing corporation with
the Corporation or a Subsidiary Corporation or the acquisition by
the Company or a Subsidiary Corporation of property or stock of
the employing corporation. The Administering Body may direct
that the substitute Awards be granted on such terms and
conditions as the Administering Body considers appropriate in the
circumstances.
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4. ADMINISTRATION OF PLAN
4.1 Administering Body.
(a) Subject to the provisions of Section 4.1(b)(ii),
this Plan shall be administered by the Board or by the Stock
Plan Committee of the Board appointed pursuant to
Section 4.1(b). The Stock Plan Committee may (but is not
required to be), in the discretion of the Board, the same as
the compensation committee of the Board.
(b)
(i) The Board in its sole discretion may from
time to time appoint a Stock Plan Committee of not less
than two (2) Board members to administer this Plan and,
subject to applicable law, to exercise all of the
powers, authority and discretion of the Board under
this Plan. The Board may from time to time increase or
decrease (but not below two (2)) the number of members
of the Stock Plan Committee, remove from membership on
the Stock Plan Committee all or any portion of its
members, and/or appoint such person or persons as it
desires to fill any vacancy existing on the Stock Plan
Committee, whether caused by removal, resignation or
otherwise. The Board may disband the Stock Plan
Committee at any time and thereby revest in the Board
the administration of this Plan.
(ii) Notwithstanding the foregoing provisions of
this Section 4.1(b) to the contrary, upon becoming and
so long as the Company remains an Exchange Act
Registered Company and has not, by action of the Board,
elected to opt out of the provisions of this
Section 4.1(b)(ii), (1) the Board shall appoint the
Stock Plan Committee, (2) this Plan shall be
administered by the Stock Plan Committee and (3) each
member of the Stock Plan Committee shall be a Non-
employee Director, and, in addition, if Awards are to
be made to persons subject to Section 162(m) of the IRC
and such Awards are intended to constitute Performance-
Based Compensation, then each member of the Stock Plan
Committee shall, in addition to being a Non-employee
Director, be an Outside Director.
(iii) The Stock Plan Committee shall report to
the Board the names of Eligible Persons granted Awards,
the precise type of Award granted, the number of shares
of Common Stock issuable pursuant to such Award and the
terms and conditions of each such Award.
4.2 Authority of Administering Body.
(a) Subject to the express provisions of this Plan,
the Administering Body shall have the power to interpret and
construe this Plan and any agreements or other documents
defining the rights and obligations of the Company and such
Eligible Persons who have been granted Awards hereunder and
thereunder, to determine all questions arising hereunder and
thereunder, to adopt and amend such rules and regulations
for the administration hereof and thereof as it may deem
desirable, and otherwise to carry out the terms of this Plan
and such agreements and other documents. The interpretation
and construction by the Administering Body of any provisions
of this Plan or of any Award shall be conclusive and
binding. Any action taken by, or inaction of, the
Administering Body relating to this Plan or any Award shall
be within the absolute discretion of the Administering Body
and shall be conclusive and binding upon all persons.
Subject only to compliance with the express provisions
hereof, the Administering Body may act in its absolute
discretion in matters related to this Plan and any and all
Awards.
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(b) Subject to the express provisions of this Plan,
the Administering Body may from time to time, in its
discretion, select the Eligible Persons to whom, and the
time or times at which, such Awards shall be granted, the
nature of each Award, the number of shares of Common Stock
that comprise or underlie each Award, the period for the
purchase or exercise of each Award, as applicable, the
Performance Criteria applicable to the Award, if any, and
such other terms and conditions applicable to each
individual Award as the Administering Body shall determine.
The Administering Body may grant, at any time, new Awards to
an Eligible Person who has previously received Awards
whether such prior Awards are still outstanding, have
previously been canceled, disposed of or exercised as a
whole or in part, as applicable, or are canceled in
connection with the issuance of new Awards. The
Administering Body may grant Awards singly, in combination
or in tandem with other Awards, as it determines in its
discretion. Any and all terms and conditions of the Awards,
including the purchase or exercise price, as the case may
be, may be established by the Administering Body without
regard to existing Awards.
(c) Any action of the Administering Body with respect
to the administration of this Plan shall be taken pursuant
to a majority vote of the authorized number of members of
the Administering Body or by the unanimous written consent
of its members; provided, however, that (i) if the
Administering Body is the Stock Plan Committee and consists
of two (2) members, then actions of the Administering Body
must be unanimous and (ii) if the Administering Body is the
Board, actions taken at a meeting of the Board shall be
valid if approved by directors constituting a majority of
the required quorum for such meeting.
4.3 Eligibility. Only Eligible Persons shall be eligible
to receive Awards under this Plan as shall be selected from time
to time by the Administering Body, in its sole and absolute
discretion.
4.4 No Liability. No member of the Board or the Stock Plan
Committee or any designee thereof will be liable for any action
or inaction with respect to this Plan or any Award or any
transaction arising under this Plan or any Award, except in
circumstances constituting bad faith of such member.
4.5 Amendments.
(a) The Administering Body may, insofar as permitted
by applicable law, rule or regulation, from time to time
suspend or discontinue this Plan or revise or amend it in
any respect whatsoever, and this Plan as so revised or
amended will govern all Awards hereunder, including those
granted before such revision or amendment; provided,
however, that no such revision or amendment shall alter,
impair or diminish any rights or obligations under any Award
previously granted under this Plan, without the written
consent of the Recipient. Without limiting the generality
of the foregoing, the Administering Body is authorized to
amend this Plan to comply with or take advantage of
amendments to applicable laws, rules or regulations,
including amendments to the Securities Act, Exchange Act or
the IRC or any rules or regulations promulgated thereunder.
No stockholder approval of any amendment or revision shall
be required unless (i) such approval is required by
applicable law, rule or regulation or (ii) an amendment or
revision to this Plan is required by any stock exchange or
automated quotation system then listing the shares of Common
Stock.
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(b) The Administering Body may, with the written
consent of a Recipient, make such modifications in the terms
and conditions of an Award as it deems advisable. Without
limiting the generality of the foregoing, the Administering
Body may, in its discretion with the written consent of
Recipient, at any time and from time to time after the grant
of any Award (i) accelerate or extend the vesting or
exercise period of any Award as a whole or in part, (ii)
adjust or reduce the purchase or exercise price, as
applicable, of Awards held by such Recipient by cancellation
of such Awards and granting of Awards at lower purchase or
exercise prices or by modification, extension or renewal of
such Awards and (iii) reduce or otherwise modify the
Performance Criteria applicable to any Award. In the case
of Incentive Stock Options, Recipients acknowledge that
extensions of the exercise period may result in the loss of
the favorable tax treatment afforded incentive stock options
under Section 422 of the IRC.
(c) Except as otherwise provided in this Plan or in
the applicable Award Agreement, no amendment, revision,
suspension or termination of this Plan will, without the
written consent of the Recipient, alter, terminate, impair
or adversely affect any right or obligation under any Award
previously granted under this Plan.
4.6 Other Compensation Plans. The adoption of this Plan
shall not affect any other stock option, securities purchase,
incentive or other compensation plans in effect for the Company,
and this Plan shall not preclude the Company from establishing
any other forms of incentive or other compensation for Employees,
Directors, Consultants or others, whether or not approved by
stockholders.
4.7 Plan Binding on Successors. This Plan shall be binding
upon the successors and assigns of the Company.
4.8 References to Successor Statutes, Regulations and
Rules. Any reference in this Plan to a particular statute,
regulation or rule shall also refer to any successor provision of
such statute, regulation or rule.
4.9 Issuances for Compensation Purposes Only. This Plan
constitutes an "employee benefit plan" as defined in Rule 405
promulgated under the Securities Act. Awards to eligible
Employees or Directors shall be granted for any lawful
consideration, including compensation for services rendered,
promissory notes or otherwise. Awards to Consultants shall be
granted only in exchange for bona fide services rendered by such
consultants or advisors and such services must not be in
connection with the offer and sale of securities in a capital-
raising transaction.
4.10 Invalid Provisions. In the event that any provision of
this Plan is found to be invalid or otherwise unenforceable under
any applicable law, such invalidity or unenforceability shall not
be construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be
given full force and effect to the same extent as though the
invalid and unenforceable provision were not contained herein.
4.11 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of
Texas, without giving effect to the principles of the conflicts
of laws thereof.
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5. GENERAL AWARD PROVISIONS
5.1 Participation in the Plan.
(a) A person shall be eligible to receive Award grants
under this Plan if, at the time of the grant of such Award,
such person is an Eligible Person.
(b) Incentive Stock Options may be granted only to
Employees meeting the employment requirements of Section 422
of the IRC.
(c) Notwithstanding anything to the contrary herein,
the Administering Body may, in order to fulfill the purposes
of this Plan, modify grants of Awards to Recipients who are
foreign nationals or employed outside of the United States
to recognize differences in applicable law, tax policy or
local custom.
5.2 Award Agreements.
(a) Each Award granted under this Plan shall be
evidenced by an Award Agreement, which shall be duly
executed on behalf of the Company and by the Recipient or,
in the Administering Body's discretion, a confirming
memorandum issued by the Company to the Recipient setting
forth such terms and conditions applicable to such Award as
the Administering Body may in its discretion determine.
Award Agreements may but need not be identical and shall
comply with and be subject to the terms and conditions of
this Plan, a copy of which shall be provided to each
Recipient and incorporated by reference into each Award
Agreement. Any Award Agreement may contain such other
terms, provisions and conditions not inconsistent with this
Plan as may be determined by the Administering Body.
(b) In case of any conflict between this Plan and any
Award Agreement, this Plan shall control.
(c) In consideration of the granting of an Award under
the Plan, if requested by the Company, the Recipient shall
agree, in the Award Agreement, to remain in the employ of
(or to consult for or to serve as a Non-employee Director
of, as applicable) the Company or any Affiliated Entity for
a period of at least one (1) year (or such shorter period as
may be fixed in the Award Agreement or by action of the
Administering Body following grant of the Award) after the
Award is granted (or, in the case of a Non-employee
Director, until the next annual meeting of stockholders of
the Company).
5.3 Exercise of Awards. No Award granted hereunder shall
be issuable or exercisable except in respect of whole shares, and
fractional share interests shall be disregarded. Not less than
100 shares of Common Stock (or such other amount as is set forth
in the applicable Award Agreement) may be purchased at one time
and Stock Options, or other Awards, as applicable, must be
purchased or exercised, as applicable, in multiples of 100 unless
the number purchased is the total number at the time available
for purchase under the terms of the Award. An Award shall be
deemed to be claimed or exercised when the Secretary or other
designated official of the Company receives appropriate written
notice, on such form acceptable to the Company, from the
Recipient, together with payment of the applicable purchase or
exercise price made in accordance with the Award Agreement and
any amounts required under Section 5.11. Notwithstanding any
other provision of this Plan, the Administering Body may impose,
by rule and/or in Award Agreements, such conditions upon the
exercise of Awards (including without limitation conditions
limiting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements, including
without limitation Rule 16b-3 and Rule 10b-5 under the Exchange
Act, and any amounts required under Section 5.11 or other
applicable section of or regulation under the IRC.
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5.4 Payment for Awards.
(a) Awards requiring payment of a purchase or exercise
price shall be payable upon the exercise of such Award
pursuant to any Award granted hereunder by delivery of legal
tender of the United States or payment of such other
consideration as the Administering Body may from time to
time deem acceptable in any particular instance.
(b) The Company may assist any person to whom Awards
are granted hereunder (including without limitation any
Employee, Director or Consultant of the Company) in the
payment of the exercise price or other amounts payable in
connection with the receipt or exercise of such Award, by
lending such amounts to such person on such terms and at
such rates of interest and upon such security (if any) as
shall be approved by the Administering Body.
(c) In the discretion of the Administering Body,
payments for purchase or exercise of Awards may be by
matured capital stock of the Company (i.e., owned longer
than six (6) months) delivered in transfer to the Company by
or on behalf of the person exercising the Award and duly
endorsed in blank or accompanied by stock powers duly
endorsed in blank, with signatures guaranteed in accordance
with the Exchange Act if required by the Administering Body
(valued at Fair Market Value as of the exercise date), or
such other consideration as the Administering Body may from
time to time in the exercise of its discretion deem
acceptable in any particular instance; provided, however,
that the Administering Body may, in the exercise of its
discretion, (i) allow exercise of Stock Options in a broker-
assisted or similar transaction in which the exercise price
is not received by the Company until promptly after
exercise, and/or (ii) allow the Company to loan the
applicable purchase or exercise price to the Recipient, if
the purchase or exercise will be followed by a prompt sale
of some or all of the underlying shares and a portion of the
sale proceeds is dedicated to full payment of the purchase
or exercise price and amounts required pursuant to
Section 5.11.
5.5 No Employment or Other Continuing Rights. Nothing
contained in this Plan (or in any Award Agreement or in any other
agreement or document related to this Plan or to Awards granted
hereunder) shall confer upon any Eligible Person or Recipient any
right to continue in the employ (or other business relationship)
of the Company or any Affiliated Entity or constitute any
contract or agreement of employment or engagement, or interfere
in any way with the right of the Company or any Affiliated Entity
to reduce such person's compensation or other benefits or to
terminate the employment or engagement of such Eligible Person or
Recipient, with or without cause. Except as expressly provided
in this Plan or in any Award Agreement pursuant to this Plan, the
Company shall have the right to deal with each Recipient in the
same manner as if this Plan and any such Award Agreement did not
exist, including without limitation with respect to all matters
related to the hiring, retention, discharge, compensation and
conditions of the employment or engagement of the Recipient. Any
questions as to whether and when there has been a termination of
a Recipient's employment or engagement, the reason (if any) for
such termination, and/or the consequences thereof under the terms
of this Plan or any statement evidencing the grant of Awards
pursuant to this Plan shall be determined by the Administering
Body, and the Administering Body's determination thereof shall be
final and binding.
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5.6 Restrictions Under Applicable Laws and Regulations.
(a) All Awards granted under this Plan shall be
subject to the requirement that, if at any time the Company
shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to any
such Award granted under this Plan upon any securities
exchange or under any federal, state or foreign law, or the
consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection
with, the granting of such Awards or the issuance, if any,
or purchase of shares in connection therewith, such Awards
may not be granted or exercised as a whole or in part unless
and until such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any
conditions not acceptable to the Company. During the term
of this Plan, the Company will use reasonable efforts to
seek to obtain from the appropriate regulatory agencies any
requisite qualifications, consents, approvals or
authorizations in order to issue and sell such number of
shares of its Common Stock as shall be sufficient to satisfy
the requirements of this Plan. The inability of the Company
to obtain from any such regulatory agency having
jurisdiction thereof the qualifications, consents, approvals
or authorizations deemed by the Company to be necessary for
the lawful issuance and sale of any shares of its Common
Stock hereunder shall relieve the Company of any liability
in respect of the nonissuance or sale of such stock as to
which such requisite authorization shall not have been
obtained.
(b) The Company shall be under no obligation to
register or qualify the issuance of Awards or underlying
shares of Common Stock under the Securities Act or
applicable state securities laws. Unless the shares of
Common Stock applicable to any such Award have been
registered under the Securities Act and qualified or
registered under applicable state securities laws, the
Company shall be under no obligation to issue any shares of
Common Stock covered by any Award unless the Award and
underlying shares of Common Stock, as applicable, may be
issued pursuant to applicable exemptions from such
registration or qualification requirements. In connection
with any such exempt issuance, the Administering Body may
require the Recipient to provide a written representation
and undertaking to the Company, satisfactory in form and
scope to the Company and upon which the Company may
reasonably rely, that such Recipient is acquiring such
securities for his or her own account as an investment and
not with a view to, or for sale in connection with, the
distribution of any such shares of stock, and that such
person will make no transfer of the same except in
compliance with any rules and regulations in force at the
time of such transfer under the Securities Act and other
applicable law, and that if shares of stock are issued
without such registration, a legend to this effect (together
with any other legends deemed appropriate by the
Administering Body) may be endorsed upon the securities so
issued. The Company may also order its transfer agent to
stop transfers of such securities. The Administering Body
may also require the Recipient to provide the Company such
information and other documents as the Administering Body
may request in order to satisfy the Administering Body as to
the investment sophistication and experience of the
Recipient and as to any other conditions for compliance with
any such exemptions from registration or qualification.
5.7 Additional Conditions. Any Award may also be subject
to such other provisions (whether or not applicable to any other
Award or Eligible Person) as the Administering Body determines
appropriate including without limitation (a) provisions to assist
the Recipient in financing the purchase of Common Stock issuable
as a result of such Award, (b) provisions for the forfeiture of
or restrictions on resale or other disposition of shares of
Common Stock acquired under any form of benefit, (c) provisions
giving the Company the right to repurchase shares of Common Stock
acquired under any form of benefit in the event the Recipient
elects to dispose of such shares, and (d) provisions to comply
with federal and state securities laws and federal and state
income tax withholding requirements.
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5.8 No Privileges of Stock Ownership. Except as otherwise
set forth herein, a Recipient shall have no rights as a
stockholder with respect to any shares issuable or issued in
connection with an Award until the date of the receipt by the
Company of all amounts payable in connection with the purchase or
exercise, as applicable, of the Award, the satisfaction or waiver
of all applicable Performance Criteria and performance by the
Recipient of all obligations applicable thereto. Status as an
Eligible Person shall not be construed as a commitment that any
Award will be granted under this Plan to an Eligible Person or to
Eligible Persons generally. No person shall have any right,
title or interest in any fund or in any specific asset (including
shares of capital stock) of the Company by reason of any Award
granted hereunder. Neither this Plan (nor any documents related
hereto) nor any action taken pursuant hereto (or thereto) shall
be construed to create a trust of any kind or a fiduciary
relationship between the Company and any Person. To the extent
that any Person acquires a right to receive Awards hereunder,
such right shall be no greater than the right of any unsecured
general creditor of the Company.
5.9 Non-Transferable.
(a) No Award under the Plan may be sold, pledged,
assigned or transferred in any manner other than by will or
the laws of descent and distribution or, subject to the
consent of the Administering Body, pursuant to a DRO, unless
and until such Award has been exercised, or the shares
underlying such Award have been issued, and all restrictions
applicable to such shares have lapsed. No Award or interest
or right therein shall be subject to liability for the
debts, contracts or engagements of the Recipient or his or
her successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other
legal or equitable proceedings (including bankruptcy), and
any attempted disposition thereof shall be null and void and
of no effect, except to the extent that such disposition is
permitted by the preceding sentence.
(b) During the lifetime of the Recipient, only he or
she may exercise an Option or other Award (or any portion
thereof) granted to him or her under the Plan, unless it has
been disposed of with the consent of the Administering Body
pursuant to a DRO. After the death of the Recipient, any
exercisable portion of an Option or other Award may, prior
to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by
his personal representative or by any person empowered to do
so under the deceased Recipient's will or under the then
applicable laws of descent and distribution.
5.10 Information to Recipients.
(a) The Administering Body in its sole discretion
shall determine what, if any, financial and other
information shall be provided to Recipients and when such
financial and other information shall be provided after
giving consideration to applicable federal and state laws,
rules and regulations, including without limitation
applicable federal and state securities laws, rules and
regulations.
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(b) The furnishing of financial and other information
that is confidential to the Company shall be subject to the
Recipient's agreement that the Recipient shall maintain the
confidentiality of such financial and other information,
shall not disclose such information to third parties, and
shall not use the information for any purpose other than
evaluating an investment in the Company's securities under
this Plan. The Administering Body may impose other
restrictions on the access to and use of such confidential
information and may require a Recipient to acknowledge the
Recipient's obligations under this Section 5.10(b) (which
acknowledgment shall not be a condition to the Recipient's
obligations under this Section 5.10(b)).
5.11 Withholding Taxes. Whenever the granting, vesting or
exercise of any Award granted under this Plan, or the transfer of
any shares issued upon exercise of any Award, gives rise to tax
or tax withholding liabilities or obligations, the Administering
Body shall have the right to require the Recipient to remit to
the Company an amount sufficient to satisfy any federal, state
and local withholding tax requirements prior to issuance of such
shares. The Administering Body may, in the exercise of its
discretion, allow satisfaction of tax withholding requirements by
accepting delivery of stock of the Company (or by withholding a
portion of the stock otherwise issuable in connection with such
Awards).
5.12 Legends on Common Stock Certificates. Each certificate
representing shares acquired as a result of any Award granted
hereunder shall be endorsed with all legends, if any, required by
applicable federal and state securities and other laws to be
placed on the certificate. The determination of which legends,
if any, shall be placed upon such certificates shall be made by
the Administering Body in its sole discretion and such decision
shall be final and binding.
5.13 Effect of Termination of Employment on Awards -
Employees Only.
(a) Termination. Subject to Section 5.13(b), and
except as otherwise provided in a written agreement between
the Company and the Recipient, which may be entered into at
any time before or after termination of employment of the
Recipient, in the event of the termination of an Employee
Recipient's employment, all of the Recipient's unvested
Awards shall terminate and all of the Recipient's
unexercised Awards shall expire and become unexercisable as
of the earlier of (A) the date such Awards would have
expired in accordance with their terms had the Recipient
remained employed and (B) (i) six (6) months after the
Recipient's engagement is terminated as a result of death or
Permanent Disability and (ii) ninety (90) days after
Recipient's engagement is terminated for any other reason.
(b) Alteration of Vesting and Exercise Periods.
Notwithstanding anything to the contrary in Section 5.13(a),
the Administering Body may in its discretion designate
shorter or longer periods to claim or otherwise exercise
Awards following a Recipient's termination of employment;
provided, however, that any shorter periods determined by
the Administering Body shall be effective only if provided
for in the instrument that evidences the grant to the
Recipient of such Award or if such shorter period is agreed
to in writing by the Recipient. Notwithstanding anything to
the contrary herein, Awards shall be claimed or exercisable
by a Recipient following such Recipient's termination of
employment only to the extent that installments thereof had
become exercisable on or prior to the date of such
termination; and provided, further, that the Administering
Body may, in its discretion, elect to accelerate the vesting
of all or any portion of any Awards that had not vested on
or prior to the date of such termination.
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5.14 Effect of Termination of Engagement on Awards - Non-
Employees Only.
(a) Termination. Subject to Section 5.14(b), and
except as otherwise provided in a written agreement between
the Company and the Recipient, which may be entered into at
any time before or after termination of engagement of the
Recipient, in the event of the termination of any non-
Employee Recipient's engagement (including, Directors and
Consultants), all of the Recipient's unvested Awards shall
terminate and all of the Recipient's unexercised Awards
shall expire and become unexercisable as of the earlier of
(A) the date such Awards would have expired in accordance
with their terms had the Recipient remained engaged by the
Company and (B)(i) six (6) months after Recipient's
engagement is terminated as a result of death or Permanent
Disability and (ii) ninety (90) days after Recipient's
engagement is terminated for any other reason.
(b) Alternation of Vesting and Exercise Periods.
Notwithstanding anything to the contrary in Section 5.14(a),
the Administering Body may, in its discretion, designate
shorter or longer periods to claim or otherwise exercise
Awards following a non-Employee Recipient's termination of
engagement; provided, however, that any shorter periods
determined by the Administering Body shall be effective only
if provided for in the instrument that evidences the grant
to the Recipient of such Award or if such shorter period is
agreed to in writing by the Recipient. Notwithstanding
anything to the contrary herein, awards shall be claimed or
exercisable by a Recipient following such Recipient's
termination of engagement only to the extent that the
installments thereof had become exercisable on or prior to
the date of such termination; and provided further, that the
Administering Body may, in its discretion, elect to
accelerate the vesting of all or any portion of any Awards
that had not vested on or prior to the date of such
termination.
5.15 Transfer; Leave of Absence. For purposes of this Plan,
the transfer by a Recipient to the employment or engagement of
(i) the Company from a Subsidiary Corporation, (ii) from the
Company to a Subsidiary Corporation or (iii) from one Subsidiary
Corporation to another Subsidiary Corporation (including, with
respect to Consultants, the assignment between the Company and a
Subsidiary Corporation or between two Subsidiary Corporations, as
applicable, of an agreement pursuant to which such services are
rendered) or, with respect solely to Employees, an approved leave
of absence for military service, sickness, or for any other
purpose approved by the Company, shall not be deemed a
termination. In the case of any Employee on an approved leave of
absence, the Administering Body may make such provision
respecting continuance of Awards as the Administering Body in its
discretion deems appropriate, except that in no event shall a
Stock Option or other Award be exercisable after the date such
Award would expire in accordance with its terms had the Recipient
remained continuously employed.
5.16 Limits on Awards to Certain Eligible Persons.
(a) Limitations Applicable to Section 162(m)
Participants. Notwithstanding any other provision of this
Plan, in order for the compensation attributable to Awards
hereunder to qualify as Performance-Based Compensation, no
one Eligible Person shall be granted any one or more Awards
with respect to more than 1,000,000 shares of Common Stock
in any one calendar year. The limitation set forth in this
Section 5.16 shall be subject to adjustment as provided in
Section 3.4 and under Article 11, but only to the extent
such adjustment would not affect the status of compensation
attributable to Awards hereunder as Performance-Based
Compensation.
(b) Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of this Plan, the Plan,
and any Award granted or awarded to any individual who is
then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange
Act (including any amendment to Rule 16b-3 of the Exchange
Act) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such
applicable exemptive rule.
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6. STOCK OPTIONS
6.1 Nature of Stock Options. Subject to the limitations
provided otherwise herein, Stock Options may be Incentive Stock
Options or Non-qualified Stock Options.
6.2 Option Exercise Price. The exercise price for each
Stock Option shall be determined by the Administering Body as of
the date such Stock Option is granted. The exercise price shall
be no less than the Fair Market Value of the Common Stock subject
to the Option. The Administering Body may, with the consent of
the Recipient and subject to compliance with statutory or
administrative requirements applicable to Incentive Stock
Options, amend the terms of any Stock Option to provide that the
exercise price of the shares remaining subject to the Stock
Option shall be reestablished at a price not less than 100% of
the Fair Market Value of the Common Stock on the effective date
of the amendment. No modification of any other term or provision
of any Stock Option that is amended in accordance with the
foregoing shall be required, although the Administering Body may,
in its discretion, make such further modifications of any such
Stock Option as are not inconsistent with this Plan.
6.3 Option Period and Vesting. Stock Options granted
hereunder shall vest and may be exercised as determined by the
Administering Body, except that exercise of such Stock Options
after termination of the Recipient's employment or engagement
shall be subject to Section 5.13 or 5.14, as the case may be.
Each Stock Option granted hereunder and all rights or obligations
thereunder shall expire on such date as shall be determined by
the Administering Body, but not later than ten (10) years after
the date the Stock Option is granted and shall be subject to
earlier termination as provided herein or in the Award Agreement.
The Administering Body may, in its discretion at any time and
from time to time after the grant of a Stock Option, accelerate
vesting of such Option as a whole or in part by increasing the
number of shares then purchasable, provided that the total number
of shares subject to such Stock Option may not be increased.
Except as otherwise provided herein, a Stock Option shall become
exercisable, as a whole or in part, on the date or dates
specified by the Administering Body and thereafter shall remain
exercisable until the expiration or earlier termination of the
Stock Option.
6.4 Special Provisions Regarding Incentive Stock Options.
(a) Notwithstanding anything in this Article 6 to the
contrary, the exercise price and vesting period of any Stock
Option intended to qualify as an Incentive Stock Option
shall comply with the provisions of Section 422 of the IRC
and the regulations thereunder. As of the Effective Date,
such provisions require, among other matters, that (i) the
exercise price must not be less than the Fair Market Value
of the underlying stock as of the date the Incentive Stock
Option is granted, and not less than 110% of the Fair Market
Value as of such date in the case of a grant to a
Significant Stockholder; and (ii) that the Incentive Stock
Option not be exercisable after the expiration of five (5)
years from the date of grant in the case of an Incentive
Stock Option granted to a Significant Stockholder.
(b) The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock
for which one or more Incentive Stock Options granted to any
Recipient under this Plan (or any other option plan of the
Company or any of its Subsidiary Corporations or affiliates)
may for the first time become exercisable as Incentive Stock
Options under the federal tax laws during any one calendar
year shall not exceed $100,000.
(c) Any Options granted as Incentive Stock Options
pursuant to this Plan that for any reason fail or cease to
qualify as such shall be treated as Non-qualified Stock
Options.
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6.5 Reload Options. At the discretion of the Administering
Body, Stock Options granted pursuant to this Plan may include a
"reload" feature pursuant to which a Recipient exercising an
Option by the delivery of a number of shares of matured capital
stock in accordance with Section 5.4(c) hereof and the Award
Agreement would automatically be granted an additional Option
(with an exercise price equal to the Fair Market Value of the
Common Stock on the date the additional Option is granted and
with the same expiration date as the original Option being
exercised, and with such other terms as the Administering Body
may provide) to purchase that number of shares of Common Stock
equal to the number delivered to exercise the original Option.
6.6 Restrictions. The Administering Body, in its sole and
absolute discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Award Agreement
and may be referred to on the certificates evidencing such
shares. The Recipient shall give the Company prompt notice of
any disposition of shares of Common Stock required by exercise of
an Incentive Stock Option within (i) two years from the date of
granting (including the date the Option is modified, extended or
renewed for purposes of section 424(h) of the IRC) such Option to
such Recipient or (ii) one year after the transfer of such shares
to such Recipient.
7. RESTRICTED STOCK AWARDS
7.1 Nature of Restricted Stock Awards. The Administering
Body may grant Restricted Stock Awards to any Eligible Person. A
Restricted Stock Award is an Award entitling the recipient to
acquire, at par value or such other purchase price determined by
the Administering Body (but not less than the par value thereof
unless permitted by applicable state law), shares of Common Stock
subject to such restrictions and conditions as the Administering
Body may determine at the time of grant ("Restricted Stock").
Conditions may be based on continuing employment (or other
business relationships) and/or the achievement of pre-established
Performance Criteria.
7.2 Rights as Stockholders. Subject to Section 7.3, upon
delivery of the shares of the Restricted Stock to the escrow
holder pursuant to Section 7.5, the Recipient shall have, unless
otherwise provided by the Administering Body, all the rights of a
stockholder with respect to said shares, subject to the
restrictions in his or her Award 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 Administering Body, any extraordinary
distributions with respect to the Common Stock shall be subject
to the restrictions set forth in Section 7.3.
7.3 Restriction. All shares of Restricted Stock issued
under this Plan (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 Award Agreement, be
subject to such restrictions as the Administering Body shall
provide, which restrictions may include, without limitation,
restrictions concerning voting rights and transferability and
restrictions based on duration of employment or engagement with
the Company or its Affiliated Entities, Company performance and
individual performance; provided, however, that, unless the
Administering Body otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a
person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six (6) months
and one (1) day have elapsed from the date on which the
Restricted Stock was issued, and provided, further, that, except
with respect to shares of Restricted Stock granted to
Section 162(m) participants, by action taken after the Restricted
Stock is issued, the Administering Body 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 Award
Agreement. Restricted Stock may not be sold or encumbered until
all restrictions are terminated or expire.
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7.4 Repurchase of Restricted Stock. The Administering Body
shall provide in the terms of each individual Award Agreement
that the Company shall have a right to repurchase from the
Recipient the Restricted Stock then subject to restrictions under
the Award Agreement immediately upon a termination of employment
(with or without cause and for any reason whatsoever) or, if
applicable, upon a termination of engagement (with or without
cause and for any reason whatsoever) between the Recipient and
the Company, at a cash price per share equal to the price paid by
the Recipient for such Restricted Stock; provided, however, that
except with respect to shares of Restricted Stock granted to
Section 162(m) participants, the Administering Body in its sole
and absolute discretion may provide that no such right of
repurchase shall exist in the event of a termination of
employment or engagement following a Change in Control of the
Company or because of the Recipient's death or Permanent
Disability.
7.5 Escrows. The Secretary of the Company or such other
escrow holder as the Administering Body may appoint shall retain
physical custody of each certificate representing Restricted
Stock until all of the restrictions imposed under the Award
Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
7.6 Vesting of Restricted Stock. The Administering Body at
the time of grant shall specify the date or dates and/or
attainment of pre-established Performance Criteria and other
conditions on which Restricted Stock shall become vested, subject
to such further rights of the Company or its assigns as may be
specified in the instrument evidencing the Restricted Stock
Award.
7.7 Waiver, Deferral and Reinvestment of Dividends. The
written instrument evidencing the Award of Restricted Stock may
require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
8. UNRESTRICTED STOCK AWARDS
8.1 Grant or Sale of Unrestricted Stock.
(a) Grant or Sale of Unrestricted Stock. The
Administering Body may, in its sole discretion, grant (or
sell at a purchase price determined by the Administering
Body) an Unrestricted Stock Award to any Eligible Person,
pursuant to which such individual may receive shares of
Common Stock free of any vesting restrictions ("Unrestricted
Stock") under the Plan. Unrestricted Stock Awards may be
granted or sold as described in the preceding sentence in
respect of past services or other valid consideration, or in
lieu of any cash compensation due to such individual.
(b) Deferral of Awards. Each Recipient who has made
an election to receive shares of Unrestricted Stock under
this Article 8 will have the right to defer receipt of up to
100% of such shares of Unrestricted Stock payable to such
Recipient in accordance with such rules and procedures as
may from time to time be established by the Administering
Body for that purpose, and such election shall be effective
on the later of the date six (6) months and one (1) day from
the date of such election or the beginning of the next
calendar year. The deferred Unrestricted Stock shall be
entitled to receive Dividend Equivalent Rights settled in
shares of Common Stock.
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9. PERFORMANCE STOCK AWARDS
9.1 Nature of Performance Stock Awards. A Performance
Stock Award is an Award entitling the Recipient to acquire shares
of Common Stock upon the attainment of specified Performance
Criteria. The Administering Body may make Performance Stock
Awards independent of or in connection with the granting of any
other Award under the Plan. Performance Stock Awards may be
granted under the Plan to any Eligible Person. The Administering
Body, in its sole discretion, shall determine whether and to whom
Performance Stock Awards shall be made, the Performance Criteria
applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and
conditions applicable to the awarded shares; provided, however,
that the Administering Body may rely on the Performance Criteria
and other standards applicable to other performance unit plans of
the Company in setting the standards for Performance Stock Awards
under the Plan.
9.2 Rights as a Stockholder. A Recipient receiving a
Performance Stock Award shall have the rights of a stockholder
only as to shares actually received by the Recipient under the
Plan and not with respect to shares subject to the Award but not
actually received by the Recipient. A Recipient shall be
entitled to receive a stock certificate evidencing the
acquisition of shares of Common Stock under a Performance Stock
Award only upon satisfaction of all conditions specified in the
Award Agreement evidencing the Performance Stock Award (or in a
performance plan adopted by the Administering Body).
9.3 Acceleration, Waiver, Etc. At any time prior to the
Participant's termination of employment (or other business
relationship) by the Company, the Administering Body may, in its
sole discretion, accelerate, waive or, subject to the other
provisions of this Plan, amend any and all of the goals,
restrictions or conditions imposed under any Performance Stock
Award.
10. DIVIDEND EQUIVALENT RIGHTS
10.1 Dividend Equivalent Rights. A Dividend Equivalent
Right is an Award entitling the Recipient to receive credits
based on cash dividends that would be paid on the shares of
Common Stock specified in the Dividend Equivalent Right (or other
Award to which it relates) if such shares were held by the
Recipient. A Dividend Equivalent Right may be granted hereunder
to any Eligible Person, as a component of another Award or as a
freestanding Award. The terms and conditions of Dividend
Equivalent Rights shall be specified in the Award Agreement.
Dividend equivalents credited to the holder of a Dividend
Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Common Stock, which may
thereafter accrue additional equivalents. Any such reinvestment
shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan
sponsored by the Company, if any. Dividend Equivalent Rights may
be settled in cash or shares of Common Stock or a combination
thereof, in a single installment or installments. A Dividend
Equivalent Right granted as a component of another Award may
provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement or payment of, or lapse of restrictions on,
such other Award and that such Dividend Equivalent Right shall
expire or be forfeited or annulled under the same conditions as
such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions
different from such other Award.
10.2 Interest Equivalents. Any Award under this Plan that
is settled in whole or in part in cash on a deferred basis may
provide in the grant for interest equivalents to be credited with
respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as
may be specified by the grant.
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11. STOCK APPRECIATION RIGHTS
11.1 Grant of Stock Appreciation Rights. A Stock
Appreciation Right may be granted to any Eligible Person selected
by the Administering Body. A Stock Appreciation Right may be
granted (a) in connection and simultaneously with the grant of a
Stock Option, (b) with respect to previously granted Stock
Options, or (c) independent of a Stock Option. A Stock
Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Administering Body shall
impose and shall be evidenced by an Award Agreement.
11.2 Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall
be related to a particular Stock Option and shall be
exercisable only when and to the extent the related Stock
Option is exercisable.
(b) A CSAR may be granted to the Recipient for no more
than the number of shares subject to the simultaneously or
previously granted Stock Option to which it is coupled.
(c) A CSAR shall entitle the Recipient (or other
person entitled to exercise the Stock Option pursuant to the
Plan) to surrender to the Company unexercised a portion of
the Stock Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from
the Company in exchange therefore an amount determined by
multiplying the difference obtained by subtracting the Stock
Option exercise price from the Fair Market Value of a share
of Common Stock on the date of exercise of the CSAR by the
number of shares of Common Stock with respect to which the
CSAR shall have been exercised, subject to any limitations
the Administering Body may impose.
11.3 Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR")
shall be unrelated to any Stock Option and shall have the
terms set by the Administering Body. An ISAR shall be
exercisable in such installments as the Administering Body
may determine. An ISAR shall cover such number of shares of
Common Stock as the Administering Body may determine;
provided, however, that unless the Administering Body
otherwise provides in the terms of the ISAR or otherwise, no
ISAR granted to a person subject to Section 16 of the
Exchange Act shall be exercisable until at least six (6)
months and one day has elapsed from the date on which the
Stock Option was granted. The exercise price per share of
the Common Stock subject to each ISAR shall be set by the
Administering Body. An ISAR is exercisable only while the
Recipient remains employed or engaged by the Company;
provided that the Administering Body may determine that the
ISAR may be exercised subsequent to termination of
employment or engagement or following a Change in Control of
the Company, or because of the Recipient's retirement, death
or Permanent Disability, or otherwise.
(b) An ISAR shall entitle the Recipient (or other
person entitled to exercise the ISAR pursuant to the Plan)
to exercise all or a specified portion of the ISAR (to the
extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying
the difference obtained by subtracting the exercise price
per share of the ISAR from the Fair Market Value of a share
of Common Stock on the date of exercise of the ISAR by the
number of shares of Common Stock with respect to which the
ISAR shall have been exercised, subject to any limitations
the Administering Body may impose.
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11.4 Payment and Limitations on Exercise.
(a) Payment of the amounts determined under
Section 11.2(c) and 11.3(b) above shall be in cash, in
Common Stock (based on its Fair Market Value as of the date
the Stock Appreciation Right is exercised) or a combination
of both, as determined by the Administering Body. To the
extent such payment is effected in Common Stock it shall be
made subject to satisfaction of all provisions of the Plan
pertaining to Stock Options.
(b) Holders of Stock Appreciation Rights may be
required to comply with any timing or other restrictions
with respect to the settlement or exercise of a Stock
Appreciation Right, including a window-period limitation, as
may be imposed in the discretion of the Administering Body.
12. REORGANIZATIONS
12.1 Corporate Transactions Not Involving a Change in
Control. If the Company shall consummate any Reorganization not
involving a Change in Control in which holders of shares of
Common Stock are entitled to receive in respect of such shares
any securities, cash or other consideration (including without
limitation a different number of shares of Common Stock), each
Award outstanding under this Plan shall thereafter be claimed or
exercisable, in accordance with this Plan, only for the kind and
amount of securities, cash and/or other consideration receivable
upon such Reorganization by a holder of the same number of shares
of Common Stock as are subject to that Award immediately prior to
such Reorganization, and any adjustments will be made to the
terms of the Award, and the underlying Award Agreement, in the
sole discretion of the Administering Body as it may deem
appropriate to give effect to the Reorganization.
12.2 Corporate Transactions Involving a Change in Control.
As of the effective time and date of any Change in Control, this
Plan and any then outstanding Awards (whether or not vested)
shall automatically terminate unless (a) provision is made in
writing in connection with such transaction for the continuance
of this Plan and for the assumption of such Awards, or for the
substitution for such Awards of new grants covering the
securities of a successor entity or an affiliate thereof, with
appropriate adjustments as to the number and kind of securities
and exercise prices, in which event this Plan and such
outstanding Awards shall continue or be replaced, as the case may
be, in the manner and under the terms so provided; or (b) the
Board otherwise has provided or shall provide in writing for such
adjustments as it deems appropriate in the terms and conditions
of the then-outstanding Awards (whether or not vested), including
without limitation (i) accelerating the vesting of outstanding
Awards and/or (ii) providing for the cancellation of Awards and
their automatic conversion into the right to receive the
securities, cash and/or other consideration that a holder of the
shares underlying such Awards would have been entitled to receive
upon consummation of such Change in Control had such shares been
issued and outstanding immediately prior to the effective date
and time of the Change in Control (net of the appropriate option
exercise prices). If, pursuant to the foregoing provisions of
this Section 12.2, this Plan and the Awards granted hereunder
shall terminate by reason of the occurrence of a Change in
Control without provision for any of the actions described in
clause (a) or (b) hereof, then any Recipient holding outstanding
Awards shall have the right, at such time immediately prior to
the consummation of the Change in Control as the Board shall
designate, to convert, claim or exercise, as applicable, the
Recipient's Awards to the full extent not theretofore converted,
claimed or exercised, including any installments which have not
yet become vested.
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13. DEFINITIONS
Capitalized terms used in this Plan and not otherwise defined
shall have the meanings set forth below:
"Administering Body" shall mean the Board as long as no Stock
Plan Committee has been appointed and is in effect and shall mean
the Stock Plan Committee as long as the Stock Plan Committee is
appointed and in effect.
"Affiliated Entity" means any Parent Corporation or Subsidiary
Corporation.
"Award" or "Awards," except where referring to a particular
category or grant under the Plan, shall include Incentive Stock
Options, Non-qualified Stock Options, Restricted Stock Awards,
Unrestricted Stock Awards, Performance Stock Awards, Dividend
Equivalent Rights and Stock Appreciation Rights.
"Award Agreement" means the agreement or confirming memorandum
setting forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Change in Control" means the following and shall be deemed to
occur if any of the following events occur:
(a) Any Person becomes after the Effective Date the
beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either
the then outstanding shares of Common Stock or the combined
voting power of the Company's then outstanding securities
entitled to vote generally in the election of directors; or
(b) Individuals who, as of the effective date hereof,
constitute the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after
the effective date hereof whose election, or nomination for
election by the Company's stockholders, is approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered to be a member of
the Incumbent Board unless that individual was nominated or
elected by any Person having the power to exercise, through
beneficial ownership, voting agreement and/or proxy, 50% or
more of either the outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election
of directors, in which case that individual shall not be
considered to be a member of the Incumbent Board unless such
individual's election or nomination for election by the
Company's stockholders is approved by a vote of at least two-
thirds of the directors then comprising the Incumbent Board;
or
(c) Consummation by the Company of the sale or other
disposition by the Company of all or substantially all of
the Company's assets or a reorganization or merger or
consolidation of the Company with any other person, entity
or corporation, other than
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(i) a reorganization or merger or consolidation
that would result in the voting securities of the
Company outstanding immediately prior thereto (or, in
the case of a reorganization or merger or consolidation
that is preceded or accomplished by an acquisition or
series of related acquisitions by any Person, by tender
or exchange offer or otherwise, of voting securities
representing 5% or more of the combined voting power of
all securities of the Company, immediately prior to
such acquisition or the first acquisition in such
series of acquisitions) continuing to represent, either
by remaining outstanding or by being converted into
voting securities of another entity, more than 50% of
the combined voting power of the voting securities of
the Company or such other entity outstanding
immediately after such reorganization or merger or
consolidation (or series of related transactions
involving such a reorganization or merger or
consolidation), or
(ii) a reorganization or merger or consolidation
effected to implement a recapitalization or
reincorporation of the Company (or similar transaction)
that does not result in a material change in beneficial
ownership of the voting securities of the Company or
its successor; or
(d) Approval by the stockholders of the Company or any
order by a court of competent jurisdiction of a plan of
liquidation of the Company.
(e) Notwithstanding the foregoing, a Change in Control
of the type described in paragraph (b), (c) or (d) shall be
deemed to be completed on the date it occurs, and a Change
in Control of the type described in paragraph (a) shall be
deemed to be completed as of the date the entity or group
attaining 50% or greater ownership has elected its
representatives to the Company's Board of Directors and/or
caused its nominees to become officers of the Company with
the authority to terminate or alter the terms of employee's
employment.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company as
constituted on the Effective Date of this Plan, and as thereafter
adjusted as a result of any one or more events requiring
adjustment of outstanding Awards under Section 3.4 above.
"Company" means Edge Technology Group, Inc., a Delaware
corporation.
"Consultant" means any consultant or advisor if:
(a) the consultant or advisor renders bona fide
services to the Company or any Affiliated Entity;
(b) the services rendered by the consultant or advisor
are not in connection with the offer or sale of securities
in a capital-raising transaction and do not directly or
indirectly promote or maintain a market for the Company's
securities; and
(c) the consultant or advisor is a natural person who
has contracted directly with the Company or an Affiliated
Entity to render such services.
"CSAR" means a coupled stock appreciation right as defined in
Section 4.2.
"Director" means any person serving on the Board of the Company
irrespective of whether such person is also an Employee of the
Company.
"Dividend Equivalent Right" shall mean any Award granted pursuant
to Article 10 of this Plan.
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"DRO" shall mean a domestic relations order as defined by the IRC
or Title I of ERISA or the rules thereunder.
"Effective Date" means June 6, 2002, which is the date this Plan
was adopted by the Board.
"Eligible Person" shall include key Employees, Directors and
Consultants of the Company or of any Affiliated Entity.
"Employee" means any officer or other employee (as defined in
accordance with Section 3401(c) of the IRC) of the Company or any
Affiliated Entity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Act Registered Company" means that the Company has any
class of any equity security registered pursuant to Section 12 of
the Exchange Act.
"Expiration Date" means the tenth anniversary of the Effective
Date.
"Fair Market Value" of a share of the Company's capital stock as
of a particular date shall be: (a) if the stock is listed on an
established stock exchange or exchanges (including for this
purpose, the NASDAQ National Market), the closing sale prices of
the stock quoted for such date as reported in the transactions
index of each such exchange, as published in The Wall Street
Journal and determined by the Administering Body, or, if no sale
price was quoted in any such index for such date, then as of the
next preceding date on which such a sale price was quoted; or
(b) if the stock is not then listed on an exchange or the NASDAQ
National Market, the average of the closing bid and asked prices
per share for the stock in the over-the-counter market as quoted
on The NASDAQ Small Cap Market on such date (in the case of (a)
or (b), subject to adjustment as and if necessary and appropriate
to set an exercise price not less than 100% of the Fair Market
Value of the stock on the date an option is granted); or (c) if
the stock is not then listed on an exchange or quoted in the over-
the-counter market, an amount determined in good faith by the
Administering Body; provided, however, that (i) when appropriate,
the Administering Body, in determining Fair Market Value of
capital stock of the Company, may take into account such other
factors as it may deem appropriate under the circumstances and
(ii) if the stock is traded on the NASDAQ Small Cap Market and
both sales prices and bid and asked prices are quoted or
available, the Administering Body may elect to determine Fair
Market Value under either clause (i) or (ii) above.
Notwithstanding the foregoing, the Fair Market Value of capital
stock for purposes of grants of Incentive Stock Options shall be
determined in compliance with applicable provisions of the IRC.
"Incentive Stock Option" means a Stock Option that qualifies as
an incentive stock option under Section 422 of the IRC, or any
successor statute thereto.
"IRC" means the Internal Revenue Code of 1986, as amended.
"ISAR" means an independent stock appreciation right as defined
in Section 11.3.
"Non-employee Director" means any director of the Company who
qualifies as a "non-employee director" within the meaning of
Rule 16b-3.
"Non-qualified Stock Option" means a Stock Option that is not an
Incentive Stock Option.
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"Outside Director" means an "outside director" as defined in the
regulations adopted under Section 162(m) of the IRC.
"Parent Corporation" means any Parent Corporation as defined in
Section 424(e) of the IRC.
"Performance-Based Compensation" means performance-based
compensation as described in Section 162(m) of the IRC. If the
amount of compensation an Eligible Person will receive under any
Award is not based solely on an increase in the value of Common
Stock after the date of grant, the Stock Plan Committee, in order
to qualify Awards as performance-based compensation under
Section 162(m) of the IRC, can condition the granting, vesting or
exercisability or purchase price of such Awards on the attainment
of a pre-established, objective performance goal. For this
purpose, a pre-established, objective performance goal may
include one or more of the following performance criteria:
(a) book value; (b) earnings per share (including earnings before
interest, taxes and amortization); (c) return on equity;
(d) total stockholder return; (e) return on capital; (f) return
on assets or net assets; (g) income or net income; (h) operating
income or net operating income; (i) operating margin; (j)
attainment of stated goals related to the Company's
capitalization, costs, financial condition or results of
operations; and (k) any other similar performance criteria.
"Performance Criteria" shall mean the following business criteria
with respect to the Company, any Affiliated Entity or any
division or operating unit: (a) net income, (b) pre-tax income,
(c) operating income, (d) cash flow, (e) earnings per share, (f)
return on equity, (g) return on invested capital or assets, (h)
cost reductions or savings, (i) funds from operations, (j)
appreciation in the fair market value of Common Stock, (k)
earnings before any one or more of the following items:
interest, taxes, depreciation or amortization and (l) such other
criteria deemed appropriate by the Administering Body.
"Performance Stock Awards" means Awards granted pursuant to
Article 9.
"Permanent Disability" shall mean that the Recipient becomes
physically or mentally incapacitated or disabled so that the
Recipient is unable to perform substantially the same services as
the Recipient performed prior to incurring such incapacity or
disability (the Company, at its option and expense, being
entitled to retain a physician to confirm the existence of such
incapacity or disability, and the determination of such physician
to be binding upon the Company and the Recipient), and such
incapacity or disability continues for a period of three
consecutive months or six months in any 12-month period or such
other period(s) as may be determined by the Stock Plan Committee
with respect to any Award, provided that for purposes of
determining the period during which an Incentive Stock Option may
be exercised pursuant to Section 5.13(b)(ii) hereof, Permanent
Disability shall mean "permanent and total disability" as defined
in Section 22(e) of the IRC.
"Person" means any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding (a) the
Company and its Subsidiary Corporations, (b) any employee stock
ownership or other employee benefit plan maintained by the
Company that is qualified under ERISA and (c) an underwriter or
underwriting syndicate that has acquired the Company's securities
solely in connection with a public offering thereof.
"Plan" means this 2002 Stock Incentive Plan of the Company.
"Plan Term" means the period during which this Plan remains in
effect (commencing on the Effective Date and ending on the
Expiration Date).
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"Recipient" means a person who has received Awards under this
Plan or any person who is the successor in interest to a
Recipient.
"Reorganization" means any merger, consolidation or other
reorganization.
"Restricted Stock" shall have the meaning ascribed thereto in
Section 7.1.
"Restricted Stock Awards" means any Award granted pursuant to
Article 7 of this Plan.
"Rule 16b-3" means Rule 16b-3 under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Stockholder" is an individual who, at the time an
Award is granted to such individual under this Plan, owns more
than 10% of the combined voting power of all classes of stock of
the Company or of any Parent Corporation or Subsidiary
Corporation (after application of the attribution rules set forth
in Section 424(d) of the IRC).
"Stock Appreciation Right" means a stock appreciation right
granted under Article 11 of this Plan.
"Stock Option" or "Option" means a right to purchase stock of the
Company granted under Article 6 of this Plan to an Eligible
Person.
"Stock Plan Committee" means the committee appointed by the Board
to administer this Plan pursuant to Section 4.1.
"Subsidiary Corporation" means any Subsidiary Corporation as
defined in Section 424(f) of the IRC.
"Unrestricted Stock" shall have the meaning ascribed thereto in
Section 8.1.
"Unrestricted Stock Award" means any Award granted pursuant to
Article 8 of this Plan.
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