EXHIBIT 10.1
COMVERSE TECHNOLOGY, INC.
2005 STOCK INCENTIVE COMPENSATION PLAN
1. Purposes of the Plan.
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The purposes of the Plan are to assist the Company, its Subsidiaries and
Affiliates in attracting and retaining valued Directors, Employees and
Consultants, to align their respective interests with shareholders' interests
through equity-based compensation and to permit the granting of awards that is
intended to constitute performance-based compensation for certain executive
officers under Section 162(m) of the Code.
2. Definitions.
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2.1 "Affiliate" means any entity other than the Subsidiaries in which the
Company has a substantial direct or indirect equity interest, as determined by
the Board.
2.2 "Award" means an award of Deferred Stock, Restricted Stock, Options
or SARs under the Plan.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change in Control" means: (i) the Board (or, if approval of the
Board is not required as a matter of law, the shareholders of the Company) shall
approve (a) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (b) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company or (c) the
adoption of any plan or proposal for the liquidation or dissolution of the
Company; (ii) any person (as such term is defined in Section 13(d) of the 1934
Act), corporation or other entity other than the Company shall make a tender
offer or exchange offer to acquire any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration, provided
that (a) at least a portion of such securities sought pursuant to the offer in
question is acquired and (b) after consummation of such offer, the person,
corporation or other entity in question is the "beneficial owner" (as such term
is defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or
more of the outstanding shares of Common Stock (calculated as provided in
paragraph (d) of such Rule 13d-3 in the case of rights to acquire Common Stock);
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the entire Board ceased for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or (iv) the occurrence of any other
event the Committee determines shall constitute a "Change in Control" hereunder.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Committee" means the committee designated by the Board to administer
the Plan under Section 4. The Committee shall have at least three members, each
of whom shall be a member of the Board, a Non-Employee Director and an Outside
Director.
2.7 "Common Stock" means the common stock of the Company, par value $.10
per share, or such other class or kind of shares or other securities resulting
from the application of Section 10.
2.8 "Company" means Comverse Technology, Inc., a New York corporation, or
any successor corporation.
2.9 "Consultant" means any person (other than an Employee or a Director)
who is engaged by the Company, a Subsidiary or an Affiliate to render consulting
or advisory services to the Company or such Subsidiary or Affiliate.
2.10 "Continuous Service" means that the provision of services to the
Company or a Subsidiary or Affiliate in any capacity of Employee, Director or
Consultant is not interrupted or terminated. In jurisdictions requiring notice
in advance of an effective termination as an Employee, Director or Consultant,
Continuous Service shall be deemed terminated upon the actual cessation of
providing services to the Company or a Subsidiary or Affiliate notwithstanding
any required notice period that must be fulfilled before a termination as an
Employee, Director or Consultant can be effective under applicable labor laws.
Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Subsidiary or
Affiliate, or any successor, in any capacity of Employee, Director or
Consultant, or (iii) any change in status as long as the individual remains in
the service of the Company or a Subsidiary or Affiliate in any capacity of
Employee, Director or Consultant (except as otherwise provided in the Award
agreement). An approved leave of absence shall include sick leave, military
leave, or any other authorized personal leave. For purposes of each Incentive
Stock Option granted under the Plan, if such leave exceeds ninety (90) days, and
reemployment upon expiration of such leave is not guaranteed by statute or
contract, then the Incentive Stock Option shall be treated as a Non-Qualified
Option on the day three (3) months and one (1) day following the expiration of
such ninety (90) day period.
2.11 "Deferral Period" means the period during which the receipt of a
Deferred Stock Award under Section 6 of the Plan will be deferred.
2.12 "Deferred Stock" means an Award made under Section 6 of the Plan to
receive Common Stock at the end of a specified Deferral Period.
2.13 "Director" means each member of the Board who is not an Employee,
who does not receive compensation from the Company or any Subsidiary in any
capacity other than as a Director and whose membership on the Board is not
attributable to any contract between the Company and such Director or any other
entity with which such Director is affiliated.
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2.14 "Employee" means an officer or other employee of the Company, a
Subsidiary or an Affiliate, including a director who is such an employee.
2.15 "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
(a) If the Common Stock is listed on any established stock exchange or
a national market system, including without limitation The Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) on the date of determination (or, if no closing sales price
or closing bid was reported on that date, as applicable, on the last trading
date such closing sales price or closing bid was reported), as reported in The
Wall Street Journal or such other source as the Committee deems reliable;
(b) If the Common Stock is regularly quoted on an automated quotation
system (including the OTC Bulletin Board) or by a recognized securities dealer,
but selling prices are not reported, the Fair Market Value of a share of Common
Stock shall be the mean between the high bid and low asked prices for the Common
Stock on the date of determination (or, if no such prices were reported on that
date, on the last date such prices were reported), as reported in The Wall
Street Journal or such other source as the Committee deems reliable; or
(c) In the absence of an established market for the Common Stock of
the type described in (a) and (b), above, the Fair Market Value thereof shall be
determined by the Committee in good faith.
2.16 "Holder" means an individual to whom an Award is made.
2.17 "Hostile Change in Control" means any Change in Control described in
Section 2.4(ii) that is not approved or recommended by the Board.
2.18 "Incentive Stock Option" means an Option intended to meet the
requirements of an incentive stock option as defined in Section 422 of the Code
and designated as an Incentive Stock Option.
2.19 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.20 "Non-Employee Director" means a person defined in Rule 16b-3(b)(3)
promulgated by the Securities and Exchange Commission under the 1934 Act, or any
successor definition adopted by the Securities and Exchange Commission.
2.21 "Non-Qualified Option" means an Option not intended to be an
Incentive Stock Option, and designated as a Non-Qualified Option.
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2.22 "Option" means any stock option granted from time to time under
Section 8 of the Plan.
2.23 "Outside Director" means a member of the Board who is an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
2.24 "Plan" means the Comverse Technology, Inc. 2005 Stock Incentive
Compensation Plan herein set forth, as amended from time to time.
2.25 "Restricted Stock" means Common Stock awarded under Section 7 of the
Plan.
2.26 "Restriction Period" means the period during which Restricted Stock
awarded under Section 7 of the Plan is subject to forfeiture.
2.27 "Retirement" means retirement from Continuous Service pursuant to
the relevant provisions of the applicable pension plan of the applicable entity
or as otherwise determined by the Committee.
2.28 "SAR" means a stock appreciation right awarded under Section 9 of
the Plan.
2.29 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company (or any parent of the
Company) if each of the corporations, other than the last corporation in each
unbroken chain, owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
2.30 "Ten Percent Shareholder" means a person who on any given date owns,
either directly or indirectly (taking into account the attribution rules
contained in Section 424(d) of the Code), stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or a
Subsidiary.
3. Eligibility.
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3.1 Any Director, Employee or Consultant is eligible to receive an Award.
4. Administration and Implementation of Plan.
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4.1 The Plan shall be administered by the Compensation Committee, which
shall have full power to interpret and administer the Plan and full authority to
act in selecting the Directors, Employees and Consultants to whom Awards will be
granted, in determining the type and amount of Awards to be granted to each such
Director, Employee or Consultant, the terms and conditions of Awards granted
under the Plan and the terms of agreements which will be entered into with
Holders.
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4.2 The Committee's powers shall include, but not be limited to:
determining whether, to what extent and under what circumstances an Option may
be exchanged for cash, Common Stock, Restricted Stock, Deferred Stock or some
combination thereof; determining whether, to what extent and under what
circumstances an Award is made and operates in tandem with other Awards made
hereunder; determining whether, to what extent and under what circumstances
Common Stock or cash payable with respect to an Award shall be deferred, either
automatically or at the election of the Holder (including the power to add
deemed earnings to any such deferral); granting Awards (other than Incentive
Stock Options) that are transferable by the Holder; and determining the extent
to which any Award is required to comply, or not comply, with Section 409A of
the Code.
4.3 The Committee shall have the power to adopt regulations for carrying
out the Plan and to make changes in such regulations, as it shall, from time to
time, deem advisable. Any interpretation by the Committee of the terms and
provisions of the Plan and the administration thereof, and all action taken by
the Committee, shall be final and binding on all Holders.
4.4 The Committee may condition the grant or vesting of any Award or the
lapse of any Deferral or Restriction Period (or any combination thereof) upon
the Holder's achievement of a Performance Goal that is established by the
Committee before the grant of the Award. For this purpose, a "Performance Goal"
shall mean a goal that must be met by the end of a period specified by the
Committee (but that is substantially uncertain to be met before the grant of the
Award) based upon: (i) the per share price of the Common Stock, (ii) the market
share of the Company, its Subsidiaries or Affiliates (or any business unit
thereof), (iii) sales by the Company, its Subsidiaries or Affiliates (or any
business unit thereof), (iv) earnings per share of Common Stock, (v) pre-tax or
net income of the Company, its Subsidiaries or Affiliates (or any business unit
thereof), (vi) net revenue, operating income, or cash flow of the Company, its
Subsidiaries, or Affiliates (or any business unit thereof), (vii) return on
assets, investments or shareholder equity of the Company, or (viii) costs of the
Company, its Subsidiaries or Affiliates (or any business unit thereof). In
addition, Performance Goals may be based on comparisons to the performance of
other companies or to market indices, such performance to be measured by one or
more of the foregoing criteria. An Award that is subject to the achievement of a
Performance Goal shall, for the purposes of the Plan, be referred to as a
"Performance Based Award." The Committee shall have discretion to determine the
specific targets with respect to each of these categories of Performance Goals.
Before granting an Award or permitting the lapse of any Deferral or Restriction
Period subject to this Section, the Committee shall certify that an individual
has satisfied the applicable Performance Goal. In its discretion, the Committee
may reduce the amount available to vest, become exercisable or be delivered or
paid under any Performance Based Award based on factors it determines
appropriate.
5. Shares of Stock Subject to the Plan.
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5.1 Subject to adjustment as provided in Section 10, the total number of
shares of Common Stock available for Awards under the Plan shall be 6,000,000
shares.
5.2 The maximum number of shares of Common Stock subject to all Awards
that may be awarded to any Director, Employee, or Consultant shall not exceed
1,000,000 during any calendar year (the "Individual Limit"). Notwithstanding the
foregoing, the Individual Limit may be adjusted to reflect the effect on shares
of Common Stock of any transaction or event described in Section 10.
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5.3 Any shares issued by the Company through the assumption or
substitution of outstanding grants from an acquired company shall not (i) reduce
the shares available for Awards under the Plan, or (ii) be counted against the
Individual Limit. Any shares issued hereunder may consist, in whole or in part,
of authorized and unissued shares or treasury shares. If any shares subject to
any Award granted hereunder are forfeited or such Award otherwise terminates
without the issuance of such shares or the payment of other consideration in
lieu of such shares, the shares subject to such Award, to the extent of any such
forfeiture or termination, shall again be available for Awards under the Plan.
6. Deferred Stock.
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An Award of Deferred Stock is an agreement by the Company to deliver to the
recipient a specified number of shares of Common Stock at the end of a specified
deferral period or periods. Such an Award shall be subject to the following
terms and conditions.
6.1 Deferred Stock Awards shall be evidenced by Deferred Stock
agreements. Such agreements shall conform to the requirements of the Plan and
may contain such other provisions, as the Committee shall deem advisable.
6.2 Upon determination of the number of shares of Deferred Stock to be
awarded to a Holder, the Committee shall direct that the same be credited to the
Holder's account on the books of the Company but that issuance and delivery of
the same shall be deferred until the date or dates provided in Section 6.5
hereof. Prior to issuance and delivery hereunder the Holder shall have no rights
as a shareholder with respect to any shares of Deferred Stock credited to the
Holder's account.
6.3 Amounts equal to any dividends declared during the Deferral Period
with respect to the number of shares covered by a Deferred Stock Award may or
may not be paid to the Holder currently, or may or may not be deferred and
deemed to be reinvested in additional Deferred Stock, or otherwise reinvested on
such terms as are determined at the time of the Award by the Committee, in its
sole discretion, and specified in the Deferred Stock agreement.
6.4 The Committee may condition the grant of an Award of Deferred Stock
or the expiration of the Deferral Period upon the Holder's achievement of one or
more Performance Goal(s) specified in the Deferred Stock agreement. If the
Employee or Consultant fails to achieve the specified Performance Goal(s),
either the Committee shall not grant the Deferred Stock Award to such Employee
or Consultant or the Holder shall forfeit the Award and no Common Stock shall be
transferred to him pursuant to the Deferred Stock Award. Unless otherwise
determined by the Committee at the time of an Award, dividends paid during the
Deferral Period on Deferred Stock subject to a Performance Goal shall be
reinvested in additional Deferred Stock and the lapse of the Deferral Period for
such Deferred Stock shall be subject to the Performance Goal(s) previously
established by the Committee. The Deferral Period shall provide a three-year
minimum period before a Deferred Stock award shall be fully delivered.
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6.5 The Deferred Stock agreement shall specify the duration of the
Deferral Period and the performance, employment or other conditions (including
the termination of a Holder's Continuous Service whether due to death,
disability, Retirement or other cause) under which the Deferred Stock may be
forfeited to the Company. The Deferral Period may consist of one or more
installments. The Deferral Period shall be determined at the discretion of the
Committee. At the end of the Deferral Period or any installment thereof (unless
the Holder elects a longer period for distribution, if permitted by the
Committee) the shares of Deferred Stock applicable to such installment credited
to the account of a Holder shall be issued and delivered to the Holder (or,
where appropriate, the Holder's legal representative) in accordance with the
terms of the Deferred Stock agreement. The Committee may, in its sole
discretion, accelerate the delivery of all or any part of a Deferred Stock Award
or waive the deferral limitations for all or any part of a Deferred Stock Award
in certain circumstances including, among others, a Holder's death, disability
or a Change in Control.
7. Restricted Stock.
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An Award of Restricted Stock is a grant by the Company of a specified number of
shares of Common Stock to the Employee or Consultant, which shares are subject
to forfeiture upon the happening of specified events. Such an Award shall be
subject to the following terms and conditions:
7.1 Restricted Stock shall be evidenced by Restricted Stock agreements.
Such agreements shall conform to the requirements of the Plan and may contain
such other provisions, as the Committee shall deem advisable.
7.2 Upon determination of the number of shares of Restricted Stock to be
granted to the Holder, the Committee shall direct that a certificate or
certificates representing the number of shares of Common Stock be issued to the
Holder with the Holder designated as the registered owner. The certificate(s)
representing such shares shall be legended as to sale, transfer, assignment,
pledge or other encumbrances during the Restriction Period and deposited by the
Holder, together with a stock power endorsed in blank, with the Company, to be
held in escrow during the Restriction Period.
7.3 Unless otherwise determined by the Committee at the time of an Award,
during the Restriction Period the Holder shall have the right to receive
dividends on and to vote the shares of Restricted Stock.
7.4 The Committee may condition the grant of an Award of Restricted Stock
or the expiration of the Restriction Period upon the Employee or Consultant's
achievement of one or more Performance Goal(s) specified in the Restricted Stock
agreement. If the Employee or Consultant fails to achieve the specified
Performance Goal(s), either the Committee shall not grant the Restricted Stock
to such Employee or Consultant or the Holder shall forfeit the Award of
Restricted Stock and the Common Stock shall be forfeited to the Company. The
Restriction Period shall provide a three-year minimum period before a Restricted
Stock award shall fully vest.
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7.5 The Restricted Stock agreement shall specify the duration of the
Restriction Period and the performance, employment or other conditions
(including the termination of a Holder's Continuous Service whether due to
death, disability, Retirement or other cause) under which the Restricted Stock
may be forfeited to the Company. The Restriction Period shall be determined at
the discretion of the Committee. At the end of the Restriction Period (unless
the Holder elects a longer period for distribution, if permitted by the
Committee) the restrictions imposed hereunder shall lapse with respect to the
number of shares of Restricted Stock as determined by the Committee, and the
legend shall be removed and such number of shares delivered to the Holder (or,
where appropriate, the Holder's legal representative). The Committee may, in its
sole discretion, modify or accelerate the vesting and delivery of shares of
Restricted Stock in certain circumstances including, among others, a Holder's
death, disability or a Change in Control.
8. Options.
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Options give an Employee, Consultant or Director the right to purchase a
specified number of shares of Common Stock, Deferred Stock or Restricted Stock
(as selected by the Committee) from the Company for a specified time period at a
fixed price. Options granted to Employees may be either Incentive Stock Options
or Non-Qualified Options. Options granted to Directors and Consultants shall be
Non-Qualified Options. The grant of Options shall be subject to the following
terms and conditions:
8.1 Options shall be evidenced by Option agreements. Such agreements
shall conform to the requirements of the Plan, and may contain such other
provisions, as the Committee shall deem advisable.
8.2 The price per share at which Common Stock may be purchased upon
exercise of an Option shall be determined by the Committee, but, in the case of
grants of Incentive Stock Options, shall be not less than the Fair Market Value
of a share of Common Stock on the date of grant. In the case of any Incentive
Stock Option granted to a Ten Percent Shareholder, the option price per share
shall not be less than 110% of the Fair Market Value of a share of Common Stock
on the date of grant. The option price per share for Non-Qualified Options may
be less than the Fair Market Value of a share of Common Stock on the date of
grant only if granted expressly in lieu of cash compensation, and the option
price may be set at a discount of not more than 15% from the Fair Market Value
of a share of Common Stock on the date of grant.
8.3 The Option agreements shall specify when an Option may be exercised
and the terms and conditions applicable thereto. The term of an Option shall in
no event be greater than ten years (five years in the case of an Incentive Stock
Option granted to a Ten Percent Shareholder).
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8.4 Each provision of the Plan and each Option agreement relating to an
Incentive Stock Option shall be construed so that each Incentive Stock Option
shall be an incentive stock option as defined in Section 422 of the Code, and
any provisions of the Option agreement thereof that cannot be so construed shall
be disregarded. Incentive Stock Options may not be granted to employees of
Affiliates.
8.5 No Incentive Stock Option shall be transferable otherwise than by
will or the laws of descent and distribution and, during the lifetime of the
Holder, shall be exercisable only by the Holder. Upon the death of a Holder, the
person to whom the rights have passed by will or by the laws of descent and
distribution may exercise an Incentive Stock Option only in accordance with this
Section 8. Notwithstanding the foregoing, the Holder may designate a beneficiary
of the Holder's Incentive Stock Option in the event of the Holder's death on a
beneficiary designation form if such a form is provided by the Committee.
8.6 Except as provided in an Option agreement, the option price of the
shares of Common Stock upon the exercise of an Option shall be paid in full at
the time of the exercise in cash, in shares of Common Stock valued at Fair
Market Value on the date of exercise or a combination of cash and such shares of
Common Stock, or through a cashless exercise method; provided, however that
shares used for payment must be shares of Common Stock held by the Holder for a
period of more than six (6) months. To facilitate the foregoing, the Company may
enter into agreements for coordinated procedures with one or more brokerage
firms. With the consent of the Committee, payment upon the exercise of a
Non-Qualified Option may be made in whole or in part by Restricted Stock (based
on the fair market value of the Restricted Stock on the date the Option is
exercised, as determined by the Committee). In such case, the Common Stock to
which the Option relates shall be subject to the same forfeiture restrictions
originally imposed on the Restricted Stock exchanged therefor. The Committee may
prescribe any other method of payment that it determines to be consistent with
applicable law and the purpose of the Plan.
8.7 With the Holder's consent, the Committee may amend any outstanding
Option to deliver shares of Deferred Stock or Restricted Stock instead of Common
Stock.
8.8 If a Holder's Continuous Service terminates by reason of death, any
unexercised Option granted to the Holder shall become immediately exercisable
and may thereafter be exercised by the Holder's transferee or legal
representative, until one (1) year after such termination of Continuous Service.
8.9 Except as provided in an Option agreement, if a Holder's Continuous
Service terminates by reason of disability (as determined by the Committee), any
unexercised Option granted to the Holder shall become immediately exercisable
and may thereafter be exercised by the Holder (or, where appropriate, the
Holder's transferee or legal representative), until the earlier of the date
specified in the applicable Option Agreement or 90 days after such termination
of Continuous Service.
8.10 If a Holder's Continuous Service terminates for any reason other
than death or disability, all unexercised Options awarded to the Holder shall
terminate on the date specified in the applicable Option agreement or, if none
is so specified, 90 days after such termination of Continuous Service, except
that if a Director's Continuous Service terminates for any reason other than
death or disability, all unexercised Options awarded to the Holder shall
terminate on the date specified in the applicable Option agreement or, if none
is so specified, three years after such termination of Continuous Service.
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8.11 The Committee or the Board may in their discretion extend the period
during which an Option held by a Director, Employee or Consultant may be
exercised to such period, not to exceed three years following the termination of
a Director's, Employee's or Consultant's Continuous Service, as the Committee or
the Board may determine to be appropriate in any particular instance. The
Committee may, in its sole discretion, modify or accelerate the vesting and
delivery of Options in certain circumstances including, among others, a Holder's
death, disability or a Change in Control.
9. Stock Appreciation Rights.
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SARs are rights to receive a payment in cash, Common Stock, Restricted Stock or
Deferred Stock (as selected by the Committee) equal to the increase in the Fair
Market Value of a specified number of shares of Common Stock from the date of
grant of the SAR to the date of exercise. The grant of SARs shall be subject to
the following terms and conditions:
9.1 SARs shall be evidenced by SAR agreements. Such agreements shall
conform to the requirements of the Plan and may contain such other provisions,
as the Committee shall deem advisable. A SAR may be granted in tandem with all
or a portion of a related Option under the Plan ("Tandem SAR"), or may be
granted separately ("Freestanding SAR"). A Tandem SAR may be granted either at
the time of the grant of the Option or at any time thereafter during the term of
the Option and shall be exercisable only to the extent that the related Option
is exercisable. In no event shall any SAR be exercisable within the first six
months of its grant.
9.2 The base price of a Tandem SAR shall be the option price under the
related Option. The base price of a Freestanding SAR shall be not less than 85%
of the Fair Market Value of the Common Stock, as determined by the Committee, on
the date of grant of the Freestanding SAR.
9.3 A SAR shall entitle the Holder to receive a payment equal to the
excess of the Fair Market Value of the shares of Common Stock covered by the SAR
on the date of exercise over the base price of the SAR. Such payment may be in
cash, in shares of Common Stock, in shares of Deferred Stock, in shares of
Restricted Stock or any combination, as the Committee shall determine. Upon
exercise of a Tandem SAR as to some or all of the shares of Common Stock covered
by the grant, the related Option shall be canceled automatically to the extent
of the number of shares of Common Stock covered by such exercise, and such
shares shall no longer be available for purchase under the Option pursuant to
Section 8. Conversely, if the related Option is exercised as to some or all of
the shares of Common Stock covered by the Award, the related Tandem SAR, if any,
shall be canceled automatically to the extent of the number of shares of Common
Stock covered by the Option exercise.
9.4 SARs shall be subject to the same terms and conditions applicable to
Options as stated in Sections 8.3, 8.5, 8.7, 8.8, 8.9, 8.10, and 8.11.
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10. Adjustments Upon Changes in Capitalization.
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In the event of a reorganization, recapitalization, stock split, spin-off,
split-off, split-up, stock dividend, issuance of stock rights, combination of
shares, merger, consolidation or any other change in the corporate structure of
the Company affecting Common Stock, or any distribution to shareholders other
than a regular cash dividend, the Board shall make appropriate adjustment in the
number and kind of shares authorized by the Plan, the Individual Limit set forth
in Section 5.2, and any adjustments to outstanding Awards as it determines
appropriate. No fractional shares of Common Stock shall be issued pursuant to
such an adjustment. The Committee may determine to pay the Fair Market Value of
any fractional shares resulting from adjustments pursuant to this Section in
cash to the Holder.
11. Adjustments Upon a Change in Control.
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Except as otherwise provided in an applicable agreement, upon the occurrence of
a Change in Control (other than a Hostile Change in Control), the Committee may
elect to provide that all outstanding Options and SARs shall immediately vest
and become exercisable, each Deferral Period and Restriction Period shall
immediately lapse or all shares of Deferred Stock subject to outstanding Awards
shall be issued and delivered to the Holder. In the event of a Hostile Change in
Control, each of the foregoing actions shall occur automatically upon the
occurrence of such Hostile Change in Control. At any time before a Change in
Control, the Committee may, without the consent of any Holder of an Option, (i)
require the entity effecting the Change in Control or a parent or subsidiary of
such entity to assume each outstanding Option and SAR or substitute an
equivalent option or stock appreciation right therefor or (ii) terminate and
cancel all outstanding Options and SARs upon the Change in Control and cause the
payment to the Holder of each such Option or SAR, cash equal to the product of
(x) the excess, if any, of the Fair Market Value of Common Stock on the date of
the Change in Control over the exercise price (or base price) of such Option or
SAR and (y) the number of shares of Common Stock subject to such Option or SAR.
For the purposes of this Section, an Option or SAR shall be considered assumed
if, following the closing of the Change in Control transaction, the Option or
SAR confers the right to purchase (or determines appreciation), for each share
of Common Stock subject to the Option or SAR immediately prior to the closing of
such transaction, the consideration (whether stock, cash, or other securities or
property) received in such transaction by holders of Common Stock for each share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in such Change in Control transaction was not solely
common stock of the successor corporation or its parent, the Committee may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or SAR, for each share of Common Stock
subject to the Option or SAR, to be solely (or to be based solely on) common
stock of the successor corporation or its parent equal in fair market value to
the per share consideration received by holders of Common Stock in such
transaction.
12. Effective Date, Termination and Amendment.
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The Plan shall become effective upon approval of the Plan by the shareholders of
the Company and shall remain in full force and effect until the earlier of June
16, 2015 or the date it is terminated by the Board. The Board shall have the
power to amend, suspend or terminate the Plan at any time, provided that no such
amendment shall be made without shareholder approval which shall:
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12.1 Increase (except as provided in Section 10) the total number of
shares available for issuance pursuant to the Plan;
12.2 Reduce the exercise or base prices of outstanding Options or SARs or
cancel or amend outstanding Options or SARs for the purpose of repricing,
replacing, or regranting such Options or SARs with an exercise price that is
less than the exercise or base price of such Options or SARs immediately
preceding such cancellation or amendment;
12.3 Modify the Individual Limit (except as provided Section 10);
12.4 Change the class of individuals eligible to receive an Award; or
12.5 Materially change the provisions of this Section 12.
Termination of the Plan pursuant to this Section 12 shall not affect Awards
outstanding under the Plan at the time of termination.
13. Transferability.
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Except as provided below, Awards may not be pledged, assigned or transferred for
any reason during the Holder's lifetime, and any attempt to do so shall be void.
The Committee may grant Awards (except Incentive Stock Options) that are
transferable by the Holder during such Holder's lifetime, but such Awards shall
be transferable only to the extent specifically provided in the agreement
entered into with the Holder. The transferee of the Holder shall, in all cases,
be subject to the provisions of the agreement between the Company and the
Holder.
14. General Provisions.
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14.1 Nothing contained in the Plan, or any Award granted pursuant to the
Plan, shall confer upon any Holder any right with respect to Continuous Service,
nor interfere in any way with the right of the Company, a Subsidiary or
Affiliate to terminate the Continuous Service of any Holder at any time.
14.2 In connection with the transfer of shares of Common Stock as a
result of the exercise or vesting of an Award or upon any other event that would
subject the Holder to taxation, the Company shall have the right (a) (1) to
require the Holder to pay an amount in cash or (2) to retain or sell without
notice, or to demand surrender of, shares of Common Stock in value sufficient to
cover the minimum amount of any tax, including any Federal, state or local
income tax, required by any governmental entity to be withheld or otherwise
deducted and paid with respect to such transfer ("Withholding Tax"), and (b) to
make payment (or to reimburse itself for payment made) to the appropriate taxing
authority of an amount in cash equal to the amount of such Withholding Tax,
remitting any balance to the employee. For purposes of this Section 14.2, the
value of shares of Common Stock so retained or surrendered shall be the Fair
Market Value on the date that the amount of the Withholding Tax is to be
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determined (the "Tax Date"), and the value of shares of Common Stock so sold
shall be the actual net sale price per share (after deduction of commissions)
received by the Company. Notwithstanding the foregoing, the Holder shall be
entitled to satisfy the obligation to pay any Withholding Tax, in whole or in
part, by providing the Company with funds sufficient to enable the Company to
pay such Withholding Tax or by requiring the Company to retain or to accept upon
delivery thereof shares of Common Stock (other than unvested Restricted Stock)
sufficient in value (determined in accordance with the preceding sentence) to
cover the amount of such Withholding Tax. Each election by a Holder to have
shares retained or to deliver shares for this purpose shall be subject to the
following restrictions: (i) the election must be in writing and made on or prior
to the Tax Date; and (ii) the election shall be subject to the disapproval of
the Committee.
14.3 With respect to Holders subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
14.4 To the extent that Federal laws (such as the 1934 Act, the Code or
the Employee Retirement Income Security Act of 1974) do not otherwise control,
the Plan and all determinations made and actions taken pursuant hereto shall be
governed by the law of New York and construed accordingly.
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