EXHIBIT 10.1
2000 STOCK OPTION PLAN
OF
SPAR GROUP, INC.
Section 1. Purposes of this Plan. This stock option plan (as the same
may be supplemented, modified, amended or restated from time to time in the
manner provided herein, this "Plan") is intended to provide an incentive to
employees (including directors and officers who are employees), and to
consultants and directors who are not employees, of SPAR Group, Inc., a Delaware
corporation (the "Company"), or any of its Subsidiaries (as such term is defined
in Section 19 hereof), and to offer an additional inducement in obtaining the
services of such individuals. This Plan provides for the grant of "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Tax Code"), and nonqualified stock
options which do not qualify as ISOs ("NQSOs"). The Company makes no
representation or warranty, express or implied, as to the qualification of any
option as an "incentive stock option" under the Tax Code. Each reference to a
consultant in the Plan shall be deemed to include each of the consultant's
employees in the case of a consultant that is not a natural person.
Section 2. Stock Subject to this Plan. (a) Subject to the provisions of
Section 12, the aggregate number of shares of the Company's Common Stock, par
value $.01 per share ("Common Stock"), for which options may be granted under
this Plan shall not exceed the number of shares of Common Stock covered by the
Unissued Reserve (as defined below) and the Voided Options (as defined below),
provided that in no event shall the aggregate number of shares of Common Stock
available under the Plan and the 1995 Plan (as hereinafter defined) exceed
3,600,000. Such shares of Common Stock may, in the discretion of the Board of
Directors of the Company (the "Board of Directors"), consist either in whole or
in part of authorized but unissued shares of Common Stock or shares of Common
Stock held in the treasury of the Company. Subject to the provisions of Section
13 hereof, any shares of Common Stock subject to an option which for any reason
expires, is canceled or is terminated unexercised or which ceases for any reason
to be exercisable shall again become available for the granting of options under
this Plan. The Company shall at all times during the term of this Plan reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Plan.
(b) "Unissued Reserve" shall mean the number of shares of Common Stock
as of the date of the adoption hereof for which options were authorized but not
issued and outstanding under the Company's Amended and Restated 1995 Option Plan
(the "1995 Plan"). "Voided Options" shall mean any and all options in respect of
shares of Common Stock previously granted pursuant to 1995 Plan that become
void, expire, are canceled, terminate unexercised or cease for any reason
whatsoever to become exercisable.
Section 3. Administration of this Plan. (a) This Plan will be
administered by the Board of Directors, or by a committee (the "Committee")
consisting of two or more directors appointed by the Board of Directors. Those
administering this Plan shall be referred to herein as the "Administrators."
Notwithstanding the foregoing, if the Company is or becomes a corporation
issuing any class of common equity securities required to be registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to the extent necessary to preserve any deduction under Section 162(m) of
the Tax Code or to comply with Rule 16b-3 promulgated under the Exchange Act, as
amended, or any successor rule ("Rule 16b-3"), any Committee appointed by the
Board of Directors to administer this Plan shall be comprised of two or more
directors each of whom shall be (i) a "non-employee director" within the meaning
of Rule 16b-3, and (ii) an "outside director" within the meaning of Treasury
Regulation Section 1.162-27(e)(3). The delegation of powers to the Committee
shall be consistent with all applicable law (including, without limitation,
applicable state law and Rule 16b-3). Unless otherwise provided in the By-Laws
of the Company, by resolution of the Board of Directors or applicable law, a
majority of the members of the Board or the Committee shall constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present, and any acts approved in writing by all members without a
meeting, shall be the acts of the Board or the Committee.
(b) Subject to the express provisions of this Plan, the Administrators
shall have the authority, in their sole discretion, to determine (among other
things): (i) the persons who shall be granted options; (ii) the times when they
shall receive options; (iii) whether an option granted to an employee shall be
an ISO or a NQSO; the type (i.e., voting or non-voting) and number of shares of
Common Stock to be subject to each option; (iv) the term of each option,
including any provisions for early termination; (v) the date each option shall
become exercisable; including any provisions for early vesting; (vi) whether an
option shall be exercisable in whole or in installments, and, if in
installments, the number of shares of Common Stock to be subject to each
installment; whether the installments shall be cumulative; the date each
installment shall become exercisable and the term of each installment; (vii)
whether to accelerate the date of
exercise of any option or installment; (viii) whether shares of Common Stock may
be issued upon the exercise of an option as partly paid, and, if so, the dates
when future installments of the exercise price shall become due and the amounts
of such installments; (ix) the exercise price of each option; the form of
payment of the exercise price; (x) the fair market value of a share of Common
Stock; (xi) whether and under what conditions to restrict the pledge, sale or
other disposition of any option granted under this Plan, the shares of Common
Stock acquired upon the exercise of an option and, if so, whether and under what
conditions to waive any such restriction, whether individually, by class or
otherwise; (xii) whether and under what conditions to subject the exercise of
all or any portion of an option to the fulfillment of certain restrictions or
contingencies as specified in the contract referred to in Section 11 hereof (the
"Contract"), including (without limitation) restrictions or contingencies
relating to (A) entering into a covenant not to compete with the Company, its
Parent (if any) (as such term is defined in Section 19 hereof) and any
Subsidiaries, (B) financial objectives for the Company, any of its Subsidiaries,
a division, a product line or other category and/or (C) the period of continued
employment or consulting of the optionee with the Company or any of its
Subsidiaries, and to determine whether such restrictions or contingencies have
been met; (xiii) the amount, if any, necessary to satisfy the obligation of the
Company, any of its Subsidiaries or any Parent to withhold taxes or other
amounts; (xiv) whether an optionee has a Disability (as such term is defined in
Section 19); (xv) to cancel or modify an option either with the consent of the
optionee or as provided in the Contract; provided, however, that the modified
provision is permitted to be included in an option granted under this Plan on
the date of the modification; provided, further, that in the case of a
modification (within the meaning of Section 424(h) of the Tax Code) of an ISO,
such option as modified would be permitted to be granted on the date of such
modification under the terms of this Plan; (xvi) to construe the respective
Contracts and this Plan; (xvii) to prescribe, amend and rescind policies, rules
and regulations relating to this Plan; (xviii) to approve any provision of this
Plan or any option granted under this Plan, or any amendment to either, that
under Rule 16b-3 or Section 162(m) of the Tax Code requires the approval of the
Board of Directors, a committee of non-employee directors or the stockholders,
in order (1) to be exempt under Section 16(b) of the Exchange Act (unless
otherwise specifically provided herein) or (2) to preserve any deduction under
Section 162(m) of the Tax Code; and (xix) to make all other determinations
necessary or advisable for administering this Plan.
(c) Any controversy or claim arising out of or relating to this Plan,
any option granted under this Plan or any Contract shall be determined
unilaterally by the Administrators in their sole and absolute discretion. The
determinations of the Administrators on matters referred to in this Section 3
shall be conclusive and binding on all parties.
(d) No Administrator or former Administrator shall be liable for any
action or determination made in good faith with respect to this Plan or any
option granted hereunder.
Section 4. Eligibility. The Administrators may from time to time,
consistent with the purposes of this Plan, grant options to such employees
(including officers and directors who are employees) of, or consultants to, the
Company or any of its Subsidiaries, and to such directors of the Company who, at
the time of grant, are not common law employees of the Company or of any of its
Subsidiaries, as the Administrators may determine in their sole discretion. Such
options granted shall cover such number of shares of Common Stock as the
Administrators may determine in their sole discretion; provided, however, that
if on the date of grant of an option, any class of common stock of the Company
(including without limitation the Common Stock) is required to be registered
under Section 12 of the Exchange Act, the maximum number of shares subject to
options that may be granted to any employee during any calendar year under this
Plan shall be 1,000,000 shares; and provided, further, that the aggregate market
value (determined at the time the option is granted) of the shares of Common
Stock for which any eligible employee may be granted ISOs under this Plan or any
other plan of the Company, or of a Parent or a Subsidiary of the Company, that
are exercisable for the first time by such optionee during any calendar year
shall not exceed $100,000. The $100,000 ISO limitation amount shall be applied
by taking ISOs into account in the order in which they were granted. Any option
(or portion thereof) granted in excess of such ISO limitation amount shall be
treated as a NQSO to the extent of such excess.
Section 5. Exercise Price. (a) The exercise price of the shares of
Common Stock under each option shall be determined by the Administrators in
their sole discretion; provided, however, that (i) except as provided below, the
exercise price of an option shall not be less than the fair market value of the
Common Stock subject to such option on the date of grant; (ii) if, at the time
an ISO is granted, the optionee owns (or is deemed to own under Section 424(d)
of the Tax Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, of any of its
Subsidiaries or of a Parent, the exercise price of such ISO shall not be less
than one hundred ten percent (110%) of the fair market value of the Common Stock
subject to such ISO on the date of grant; and (iii) the Administrators must
first obtain the approval of the Board to grant a NQSO with an exercise price
which is less than the
-2-
fair market value of the shares on the date of the granting of the NQSO;
provided, however, that with respect to any NQSO granted to a "covered employee"
(as such term is defined in Section 162(m) of the Tax Code), the exercise price
of the shares of Common Stock underlying such NQSO shall not be less than the
fair market value of such shares on the date of granting of such NQSO.
(b) The fair market value of a share of Common Stock on any day shall
be: (i) if the principal market for the Common Stock is a national securities
exchange, the closing sales price per share of the Common Stock on such day as
reported by such exchange or on a consolidated tape reflecting transactions on
such exchange; (ii) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is quoted on the Nasdaq Stock
Market ("Nasdaq"), and (A) if actual sales price information is available with
respect to the Common Stock, the closing sales price per share of the Common
Stock on such day on Nasdaq, or (B) if such information is not available, the
closing bid and asked prices per share for the Common Stock on such day on
Nasdaq; or (iii) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is not quoted on Nasdaq, the closing
bid and asked prices per share for the Common Stock on such day as reported on
the OTC Bulletin Board Service or by National Quotation Bureau, Incorporated or
a comparable service; provided, however, that if clauses (i), (ii) and (iii) of
this subsection are all inapplicable because the Company's Common Stock is not
publicly traded, or if no trades have been made or no quotes are available for
such day, the fair market value of a share of Common Stock shall be determined
by the Administrators by any method consistent with any applicable regulations
adopted by the Treasury Department relating to stock options.
Section 6. Term. Each option granted pursuant to this Plan shall be for
such term as is established by the Administrators, in their sole discretion, at
or before the time such option is granted; provided, however, that the term of
each option granted pursuant to this Plan shall be for a period not exceeding
ten (10) years from the date of grant thereof, and provided further, that if, at
the time an ISO (but not an NQSO) is granted, the optionee owns (or is deemed to
own under Section 424(d) of the Tax Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
of any of its Subsidiaries or of a Parent, the term of the ISO shall be for a
period not exceeding five (5) years from the date of grant. Options shall be
subject to earlier termination as hereinafter provided.
Section 7. Exercise.
(a) An option (or any installment thereof), to the extent then
exercisable, shall be exercised by giving written notice to the Company at its
principal office (i) specifying the option being exercised and the number of
shares of Common Stock as to which such option is being exercised, and (ii)
accompanied by payment in full of the aggregate exercise price therefor (or the
amount due on exercise if the applicable Contract permits installment payments)
(A) in cash and/or by certified check, (B) with the authorization of the
Administrators, with previously acquired shares of Common Stock having an
aggregate fair market value (determined in accordance with Section 5), on the
date of exercise, equal to the aggregate exercise price of all options being
exercised, (C) with a concurrent sale of option shares to the extent permitted
by subsection (b) of this Section, or (D) some combination thereof; provided,
however, that in no case may shares be tendered if such tender would require the
Company to incur a charge against its earnings for financial accounting
purposes. The Company shall not be required to issue any shares of Common Stock
pursuant to the exercise of any option until all required payments with respect
thereto, including payments for any required withholding amounts, have been
made.
(b) The Administrators may, in their sole discretion, permit payment of
the exercise price of an option by delivery by the optionee of a properly
executed notice, together with a copy of the optionee's irrevocable instructions
to a broker acceptable to the Administrators to sell all or a portion of the
option shares and deliver promptly to the Company the amount of sale or loan
proceeds sufficient to pay such exercise price. In connection therewith, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms.
(c) An optionee shall not have the rights of a stockholder with respect
to such shares of Common Stock to be received upon the exercise of an option
until the date of issuance of a stock certificate to the optionee for such
shares or, in the case of uncertificated shares, until the date an entry is made
on the books of the Company's transfer agent representing such shares; provided,
however, that until such stock certificate is issued or until such book entry is
made, any optionee using previously acquired shares of Common Stock in payment
of an option exercise price shall continue to have the rights of a stockholder
with respect to such previously acquired shares.
(d) In no case may a fraction of a share of Common Stock be purchased
or issued under this Plan.
-3-
Section 8. Termination of Relationship. (a) Except as may otherwise be
expressly provided in the applicable Contract or optionee's written employment
or consulting or termination contract, any optionee whose employment or
consulting relationship with the Company, its Parent, any of its Subsidiaries
and, in the case of consultants, with any Affiliate or other consultant of the
Company has terminated for any reason (other than the optionee's death or
Disability) may exercise any option granted to the optionee as an employee or
consultant, to the extent exercisable on the date of such termination, at any
time within three (3) months after the date of termination, but not thereafter
and in no event after the date the option would otherwise have expired;
provided, however, that if such relationship is terminated for Cause (as defined
in Section 19), such option shall terminate immediately.
(b) For the purposes of this Plan, an employment or consulting
relationship shall be deemed to exist between an individual and the Company if,
at the time of the determination, the individual was an employee of the Company,
its Parent, any of its Subsidiaries or any of its consultants (including any of
its Affiliates). As a result, an individual on military leave, sick leave or
other bona fide leave of absence shall continue to be considered an employee or
consultant for purposes of this Plan during such leave if the period of the
leave does not exceed ninety (90) days, or, if longer, so long as the
individual's right to re-employment with the Company, any of its Subsidiaries,
Parent or Affiliate or other consultant, as the case may be is guaranteed either
by statute or by contract or the Company, its Parent, any of its Subsidiaries or
Affiliate or other consultant, as the case may be, has consented in writing to
longer absence. If the period of leave exceeds ninety (90) days and the
individual's right to re-employment is not guaranteed by statute, contract or
consent, the employment or consulting relationship shall be deemed to have
terminated on the 91st day of such leave.
(c) Except as may otherwise be expressly provided in the applicable
Contract, an optionee whose directorship with the Company has terminated for any
reason (other than the optionee's death or Disability) may exercise the options
granted to the optionee as a director who was not an employee of or consultant
to the Company or any of its Subsidiaries, to the extent exercisable on the date
of such termination, at any time within three (3) months after the date of
termination, but not thereafter and in no event after the date the option would
otherwise have expired; provided, however, that if the optionee's directorship
is terminated for Cause, such option shall terminate immediately.
(d) Nothing in this Plan or in any option granted under this Plan shall
confer on any person any right to continue in the employ of or as a director of
or consultant to the Company, its Parent, any of its Subsidiaries or any of
their respective Affiliates, or as a director of the Company, or interfere in
any way with any right of the Company, its Parent, any of its Subsidiaries or
any of their respective Affiliates to terminate such relationship at any time
for any reason whatsoever without liability to the Company, its Parent, any of
its Subsidiaries or any of their respective Affiliates.
Section 9. Death or Disability of an Optionee. (a) Except as may
otherwise be expressly provided in the applicable Contract or optionee's written
employment or consulting or termination contract, if an optionee dies (i) while
he is employed by, or a consultant to, the Company, its Parent or any of its
Subsidiaries, (ii) within three (3) months after the termination of the
optionee's employment or consulting relationship with the Company, its Parent
and its Subsidiaries (unless such termination was for Cause or without the
consent of the Company) or (iii) within one (1) year following the termination
of such employment or consulting relationship by reason of the optionee's
Disability, the options granted to the optionee as an employee of, or consultant
to, the Company or any of its Subsidiaries, will become fully vested and may be
exercised, by the optionee's Legal Representative (as such term is defined in
Section 19), at any time within one (1) year after death, but not thereafter and
in no event after the date the option would otherwise have expired. Except as
may otherwise be expressly provided in the applicable Contract or optionee's
written employment or consulting or termination contract, any optionee whose
employment or consulting relationship with the Company, its Parent and its
Subsidiaries has terminated by reason of the optionee's Disability may exercise
such options, to the extent exercisable upon the effective date of such
termination, at any time within one (1) year after such date, but not thereafter
and in no event after the date the option would otherwise have expired.
(b) Except as may otherwise be expressly provided in the applicable
Contract, if an optionee dies (i) while the optionee is a director of the
Company, (ii) within three (3) months after the termination of the optionee's
directorship with the Company (unless such termination was for Cause) or (iii)
within one (1) year after the termination of the optionee's directorship by
reason of the optionee's Disability, the options granted to the optionee as a
director who was not an employee of or consultant to the Company or any of its
Subsidiaries, may be exercised, to the extent exercisable on the date of the
optionee's death, by the optionee's Legal Representative at any time within one
(1) year after death, but not thereafter and in no event after the date the
option would otherwise have expired. Except as may otherwise be
-4-
expressly provided in the applicable Contract, an optionee whose directorship
with the Company has terminated by reason of Disability, may exercise such
options, to the extent exercisable on the effective date of such termination, at
any time within one (1) year after such date, but not thereafter and in no event
after the date the option would otherwise have expired.
Section 10. Compliance with Securities Laws. (a) It is a condition to
the exercise of any option that either (i) a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of Common Stock to be issued upon such exercise shall be effective and
current at the time of exercise, or (ii) there is an exemption from registration
under the Securities Act for the issuance of the shares of Common Stock upon
such exercise. Nothing herein shall be construed as requiring the Company to
register shares subject to any option under the Securities Act or to keep any
Registration Statement effective or current.
(b) The Administrators may require, in their sole discretion, as a
condition to the grant or exercise of an option, that the optionee execute and
deliver to the Company such optionee's representations and warranties, in form,
substance and scope satisfactory to the Administrators, as the Administrators
may determine to be necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirements, including (without
limitation) that (i) the shares of Common Stock to be issued upon exercise of
the option are being acquired by the optionee for the optionee's own account,
for investment only and not with a view to the resale or distribution thereof,
and (ii) any subsequent resale or distribution of shares of Common Stock by such
optionee will be made only pursuant to (A) a Registration Statement under the
Securities Act which is effective and current with respect to the shares of
Common Stock being sold, or (B) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption, the
optionee, prior to any offer of sale or sale of such shares of Common Stock,
shall provide the Company with a favorable written opinion of counsel
satisfactory to the Company, in form, substance and scope satisfactory to the
Company, as to the applicability of such Securities Act exemption to the
proposed sale or distribution.
(c) In addition, if at any time the Administrators shall determine that
the listing or qualification of the shares of Common Stock subject to such
option on any securities exchange, Nasdaq or under any applicable law, or that
the consent or approval of any governmental agency or regulatory body, is
necessary or desirable as a condition to, or in connection with, the granting of
an option or the issuance of shares of Common Stock thereunder, such option may
not be granted or exercised in whole or in part, as the case may be, unless such
listing, qualification, consent or approval shall have been effected or obtained
by the Administrators free of any conditions not acceptable to the
Administrators.
Section 11. Stock Option Contracts. Each option shall be evidenced by
an appropriate Contract duly executed by the Company and the optionee. Such
Contract shall contain such terms, provisions and conditions not inconsistent
herewith as may be determined by the Administrators in their sole discretion.
The terms of each option and Contract need not be identical.
Section 12. Adjustments upon Changes in Common Stock. (a)
Notwithstanding any other provision of this Plan, in the event of any change in
the outstanding Common Stock by reason of a stock dividend, recapitalization,
spin-off, split-up, combination or exchange of shares or the like that results
in a change in the number or kind of shares of Common Stock that were
outstanding immediately prior to such event, the aggregate number and kind of
shares subject to this Plan, the aggregate number and kind of shares subject to
each outstanding option and the exercise price thereof, and the maximum number
of shares subject to options that may be granted to any employee in any calendar
year, shall be appropriately adjusted by the Board of Directors, whose
determination shall be conclusive and binding on all parties. Such adjustment
may provide for the elimination of fractional shares that might otherwise be
subject to options without payment therefor. Notwithstanding the foregoing, no
adjustment shall be made pursuant to this Section 12 if such adjustment (i)
would cause this Plan to fail to comply with Section 422 of the Tax Code or with
Rule 16b-3 (if applicable to such option), or (ii) would be considered as the
adoption of a new plan requiring stockholder approval.
(b) Except as provided below, unless the Administrators shall, in their
sole discretion, determine otherwise, upon (i) the dissolution, liquidation or
sale of all or substantially all of the business, properties and assets of the
Company, (ii) any reorganization, merger or consolidation in which the Company
does not survive, (iii) any reorganization, merger, consolidation or exchange of
securities in which the Company does survive and any of the Company's
stockholders have the opportunity to receive cash, securities of another
corporation and/or other property in exchange for their capital stock of the
Company, or (iv) any acquisition by any person or group (as defined in Section
13(d) of the Exchange Act) of beneficial
-5-
ownership of more than fifty percent (50%) of the Company's then outstanding
shares of Common Stock (each of the events described in clauses (i), (ii), (iii)
and (iv) are referred to herein individually as an "Extraordinary Event"), this
Plan and each outstanding option shall terminate. In such event each optionee
shall have the right to exercise, in whole or in part, any unexpired option or
options issued to the optionee, to the extent that said option is then vested
and exercisable pursuant to the provisions of said option or options and this
Plan within fifteen (15) Business Days of the Company's giving of written notice
to the optionee of such Extraordinary Event.
(c) Except as otherwise expressly provided in this Plan, the applicable
Contract or the optionee's written employment or consulting or termination
contract, the termination of employment of, or the termination of a consulting
or other relationship with, an optionee for any reason shall not, unless the
Administrators decide otherwise, accelerate or otherwise affect the number of
shares with respect to which an option may be exercised; provided, however, that
the option may only be exercised with respect to that number of shares which
could have been purchased under the option had the option been exercised by the
optionee on the date of such termination.
(d) Notwithstanding anything to the contrary contained in this Plan, or
any provision to the contrary contained in a particular Contract, the
Administrators, in their sole discretion, at any time, or from time to time, may
elect to accelerate the vesting or all or any portion of any option then
outstanding. The decision by the Administrators to accelerate an option or to
decline to accelerate an option shall be final, conclusive and binding. In the
event of the acceleration of the exercisability of options as the result of a
decision by the Administrators pursuant to this Section 12, each outstanding
option so accelerated shall be exercisable for a period from and after the date
of such acceleration and upon such other terms and conditions as the
Administrators may determine in their sole discretion; provided, however, that
such terms and conditions (other than terms and conditions relating solely to
the acceleration of exercisability and the related termination of an option
after the stated period) may not adversely affect the rights of any optionee
without the consent of the optionee so adversely affected. Any outstanding
option that has not been exercised by the holder at the end of such stated
period shall terminate automatically and become null and void.
Section 13. Amendments and Termination of this Plan. This Plan was
adopted by the Board of Directors on December 4, 2000. No option may be granted
under this Plan after December 4, 2010. The Board of Directors, without further
approval of the Company's stockholders, may at any time suspend or terminate
this Plan, in whole or in part, or amend it from time to time in such respects
as it may deem advisable, including (without limitation) in order that ISOs
granted hereunder meet the requirements for "incentive stock options" under the
Tax Code, or to comply with the provisions of Rule 16b-3 of the Exchange Act or
Section 162(m) of the Tax Code or any change in applicable laws or regulations,
ruling or interpretation of any governmental agency or regulatory body;
provided, however, that no amendment shall be effective, without the requisite
prior or subsequent stockholder approval, that would (a) except as contemplated
in Section 12, increase the maximum number of shares of Common Stock for which
options may be granted under this Plan or change the maximum number of shares
for which options may be granted to employees in any calendar year, (b) change
the eligibility requirements for individuals entitled to receive options
hereunder, or (c) make any change for which applicable law or any governmental
agency or regulatory body requires stockholder approval. No termination,
suspension or amendment of this Plan shall adversely affect the rights of an
optionee under any option granted under this Plan without such optionee's
consent. The power of the Administrators to construe and administer any option
granted under this Plan prior to the termination or suspension of this Plan
shall continue after such termination or during such suspension.
Section 14. Non-Transferability. (a) Except as otherwise provided below
or in the applicable Contract, no option granted under this Plan shall be
transferable other than by will or the laws of descent and distribution, and
options may be exercised, during the lifetime of the optionee, only by the
optionee or the optionee's Legal Representatives. Except to the extent provided
below or in the applicable Contract, options may not be assigned, transferred,
pledged, hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process,
and any such attempted assignment, transfer, pledge, hypothecation or
disposition shall be null and void ab initio and of no force or effect, unless
and to the extent the Board, in the case of NQSOs, has given its express written
consent to any pledge or hypothecation to (and subsequent disposition by) a
financial institution, which NQSOs shall continue to be subject to the terms and
provisions of this Plan and the applicable Contract and may be subject to such
additional limits, conditions and provisions as the Board may require in its
sole and absolute discretion as a condition of such consent.
-6-
(b) The Administrators may, in their discretion, authorize all or a
portion of any NQSO granted to an optionee to be on terms which permit transfer
by such optionee to (i) the spouse, children or grandchildren of the optionee
("Immediate Family Members"), including (without limitation) adopted children
and grandchildren, (ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, or (iii) a partnership in which such Immediate Family
Members are the only partners, provided that (A) there may be no consideration
for any such transfer (other than natural love and affection, the beneficial or
equity interests therein received in connection with any such transfer to a
trust or partnership, or the legal consideration for such a transfer to be
enforceable), and (B) the Contract pursuant to which such options are granted
must (1) be specifically approved by the Administrators and (2) expressly
provide for transferability in a manner consistent with this Section 14.
(c) Following any permitted transfer, any such options shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that for purposes of Sections 7 and 10 reference to
"optionee" shall be deemed to refer to the transferee. The provisions in Section
8 hereof respecting the effect of termination of employment and Section 9
respecting the effect of death or Disability shall continue to be applied with
respect to the original optionee, following which the options shall be
exercisable by the transferee only to the extent, and for the periods specified
in the Contract. Any permitted transferee shall be required prior to any
transfer of an option or shares of Common Stock acquired pursuant to the
exercise of an option to execute a written undertaking to be bound by the
provisions of this Plan and the applicable Contract.
Section 15. Withholding Taxes. The Company, or its Subsidiary or
Parent, as applicable, may withhold (a) cash or (b) with the consent of the
Administrators (in the Contract or otherwise), shares of Common Stock to be
issued upon exercise of an option or a combination of cash and shares, having an
aggregate fair market value (determined in accordance with Section 5) equal to
the amount which the Administrators determine is necessary to satisfy the
obligation of the Company, a Subsidiary or Parent to withhold Federal, state and
local income taxes or other amounts incurred by reason of the grant, vesting,
exercise or disposition of an option or the disposition of the underlying shares
of Common Stock. Alternatively, the Company may require the optionee to pay to
the Company such amount, in cash, promptly upon demand.
Section 16. Legends; Payment of Expenses. (a) The Company may endorse
such legend or legends upon the certificates for shares of Common Stock issued
upon exercise of an option under this Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it determines,
in its sole discretion, to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, applicable state securities laws or other legal
requirements, (ii) implement the provisions of this Plan or any agreement
between the Company and the optionee with respect to such shares of Common
Stock, or (iii) permit the Company to determine the occurrence of a
"disqualifying disposition," as described in Section 421(b) of the Tax Code, of
the shares of Common Stock transferred upon the exercise of an ISO granted under
this Plan.
(b) The Company shall pay all issuance taxes with respect to the
issuance of shares of Common Stock upon the exercise of an option granted under
this Plan, as well as all fees and expenses incurred by the Company in
connection with such issuance.
Section 17. Use of Proceeds. Except to the extent required by law, the
Company's Certificate of Incorporation, or the Company's By-laws, the cash
proceeds to be received upon the exercise of an option under this Plan shall be
added to the general funds of the Company and used for such corporate purposes
as the Board of Directors may determine, in its sole discretion.
Section 18. Substitutions and Assumptions of Options of Certain
Constituent Corporations. Anything in this Plan to the contrary notwithstanding,
the Board of Directors may, without further approval by the stockholders,
substitute new options for prior options of a Constituent Corporation (as such
term is defined in Section 19) or assume the prior options of such Constituent
Corporation.
Section 19. Definitions.
(a) "Affiliate" shall mean with respect to the Company, any other
corporation or other entity (other than a Parent or a Subsidiary), who directly
or indirectly, is in control of, is controlled by or is under common control
with the Company. For the purposes of this definition, "control" (including,
with correlative meaning, the terms "controlled by" and "under common control
with") as used with respect to any corporation or other entity, shall mean the
possession, directly or indirectly, of the power to direct or cause
-7-
the direction of the management and policies of such corporation or other
entity, whether through the ownership of capital stock, by contract or
otherwise.
(b) "Business Day" shall mean any day other than (i) any Saturday or
Sunday or (ii) New Year's Day, Martin Luther King's Birthday, Presidents' Day,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving, and Christmas.
(c) "Cause," in connection with the termination of an optionee, shall
mean (i) "cause", as such term (or any similar term, such as "with cause") is
defined in any employment, consulting or other applicable agreement for services
or termination agreement between the Company and such optionee, or (ii) in the
absence of such an agreement, "cause" as such term is defined in the Contract
executed by the Company and such optionee pursuant to Section 11, or (iii) in
the absence of both of the foregoing, (A) indictment of such optionee for any
illegal conduct, (B) failure of such optionee to adequately perform any of the
optionee's duties and responsibilities in any capacity held with the Company,
any of its Subsidiaries or any Parent (other than any such failure resulting
solely from such optionee's physical or mental incapacity), (C) the commission
of any act or failure to act by such optionee that involves moral turpitude,
dishonesty, theft, destruction of property, fraud, embezzlement or unethical
business conduct, or that is otherwise injurious to the Company, any of its
Subsidiaries or any Parent or any other affiliate of the Company (or its or
their respective employees), whether financially or otherwise, (D) any violation
by such optionee of any Company rule or policy, or (E) any violation by such
optionee of the requirements of such Contract, any other contract or agreement
between the Company and such optionee or this Plan (as in effect from time to
time); in each case, with respect to clauses (A) through (E), as determined by
the Board of Directors in their sole and absolute discretion.
(d) "Constituent Corporation" shall mean any corporation which engages
with the Company, its Parent or any Subsidiary in a transaction to which Section
424(a) of the Tax Code applies (or would apply if the option assumed or
substituted were an ISO), or any Parent or any Subsidiary of such corporation.
(e) "Disability" shall mean a permanent and total disability within the
meaning of Section 22(e)(3) of the Tax Code.
(f) "Legal Representative" shall mean the executor, administrator or
other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under this
Plan.
(g) "Parent" shall mean a "parent corporation" within the meaning of
Section 424(e) of the Tax Code.
(h) "Subsidiary" shall mean a "subsidiary corporation" within the
meaning of Section 424(f) of the Tax Code.
Section 20. Governing Law. This Plan, such options as may be granted
hereunder, the Contracts and all related matters shall be governed by, and
construed in accordance with, the laws of the State of Delaware (other than
those that would defer to the substantive laws of another jurisdiction).
Section 21. Construction. Neither this Plan nor any Contract shall be
construed or interpreted with any presumption against the Company by reason of
the Company causing this Plan or Contract to be drafted. Whenever from the
context it appears appropriate, any term stated in either the singular or plural
shall include the plural and singular, respectively, and any term stated in the
masculine, feminine or neuter gender shall include the other forms as well.
Captions and headings have been provided for convenience and shall not affect
the meaning or interpretation of this Plan or any Contract.
Section 22. Partial Invalidity. The invalidity, illegality or
unenforceability of any provision in this Plan, any option or Contract shall not
affect the validity, legality or enforceability of any other provision, all of
which shall be valid, legal and enforceable to the fullest extent permitted by
applicable law.
Section 23. Stockholder Approval. This Plan shall be subject to
approval by (a) the holders of a majority of the votes present in person or by
proxy entitled to vote hereon at a duly held meeting of the Company's
stockholders at which a quorum is present or (b) the Company's stockholders
acting in accordance with the provisions of Section 228 of the Delaware General
Corporation Law. No options granted hereunder may be exercised prior to such
approval, provided, however, that the date of grant of any option shall be
determined as if this Plan had not been subject to such approval.
Notwithstanding the foregoing, if this Plan is not approved by a vote of the
stockholders of the Company on or before December 4, 2001, this Plan and any
options granted hereunder shall terminate.
-8-