MINDLEADERS.COM, INC.
2000 INCENTIVE STOCK PLAN
SECTION l. PURPOSES. The purposes of the MindLeaders.com, Inc. 2000
Incentive Stock Plan are to promote the interests of MindLeaders.com, Inc. and
its shareholders by (a) attracting and retaining exceptional executive personnel
and other key employees of, and advisors and consultants to, and directors of
the Company and its Subsidiaries; (b) motivating such employees, advisors and
consultants and Eligible Directors by means of performance-related incentives to
achieve longer-range performance goals; and (c) providing all long-term
employees of the Company and its Subsidiaries with the opportunity to
participate in the long-term growth and financial success of the Company. The
Plan constitutes an amendment, restatement and combination of the DPEC, Inc.
Amended and Restated Incentive Stock Option Plan and the DPEC, Inc. 1998 Stock
Option Plan.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:
"Award" shall mean any Option; stock appreciation right ("Stock
Appreciation Right"), as described in Section 10, which may be awarded either in
tandem with Options ("Tandem Stock Appreciation Rights") or on a stand-alone
basis ("Nontandem Stock Appreciation Rights"); Restricted Stock Award;
Performance Award or unrestricted Shares ("Unrestricted Shares"), as described
in Section 12, but shall not include any Director Option.
"Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award which may, but need not, be executed
or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Cash Account" shall mean an account established for each Participant to
which amounts withheld through payroll deductions shall be credited to purchase
Shares under the provisions of Section 11.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean: (a) until a registration statement for an initial
public offering of the Shares shall become effective, the full Board and (b)
after such a registration statement shall become effective, a committee of the
Board designated by the Board to administer the Plan which shall satisfy the
requirements contained in Section 1.162-27(c)(4) of the Final Regulations and
which shall be composed of not less than the minimum number of Persons from time
to time required by Rule 16b-3, each of whom shall be (i) a Person from time to
time permitted by the rules promulgated under Section 16 of the Exchange Act in
order for grants of Awards to be
exempt transactions under said Section 16 and (ii) receiving remuneration in no
other capacity than as a director, except as permitted under Section
1.162-27(e)(3) of the Final Regulations.
"Company" shall mean MindLeaders.com, Inc., together with any successor
thereto.
"Covered Employee" shall mean any individual who, on the last day of the
Company's taxable year, is
(a) the chief executive officer of the Company or is acting in such
capacity; or
(b) among the four highest compensated officers of the Company (other
than the chief executive officer).
For this purpose, the determination of an individual's status as the chief
executive officer or one of the four highest compensated officers of the Company
shall be made in accordance with the executive compensation disclosure rules
under the Exchange Act.
"Director Option" shall mean a Non-Qualified Stock Option granted to each
Eligible Director pursuant to Section 6(e) without any action by the Board or
the Committee.
"Effective Date" shall mean the date a registration statement filed
pursuant to the Securities Act of 1933, as amended, to register an initial
public offering of the Shares is declared effective by the SEC.
"Eligible Director" shall mean, on any date, a Person who is serving as a
member of the Board but shall not include (a) a Person who is an Employee of the
Company or a Subsidiary, or (b) a Person who beneficially owns or represents a
Person who beneficially owns more than five percent of the outstanding Shares.
"Employee" shall mean (a) an employee of the Company or of any Subsidiary;
and (b) except with respect to an Incentive Stock Option and a Right to
Purchase, an advisor or consultant to the Company or to any Subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value of the property or
other item being valued, as determined by the Committee in its sole discretion,
provided that the fair market value of Shares shall be determined by reference
to the most recent closing price quotation or, if none, the average of the bid
and asked prices, as reported as of the most recent available date with respect
to the sale of Shares on any quotation system approved by the National
Association of Securities Dealers then reporting sales of Shares or on any
national securities exchange on which the Shares are then listed.
"Final Regulations" shall mean the final regulations promulgated by the
Internal Revenue Service under Section 162(m) of the Code.
-2-
"Incentive Option Plan" shall mean the DPEC, Inc. Amended and Restated
Incentive Stock Option Plan.
"Incentive Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
"Initial Offering Period" shall mean the duration of the initial Offering,
which shall commence on the Effective Date and which shall terminate as of the
close of business on December 31, 2001.
"1998 Plan" shall mean the DPEC, Inc. 1998 Stock Option Plan.
"Non-Qualified Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is not intended to
be an Incentive Stock Option.
"Offering" shall mean an opportunity provided by the Committee to any
Participant to purchase Shares under the provisions of Section 11 of the Plan.
Offerings may be consecutive or concurrent, as determined by the Committee. The
Committee shall designate the maximum number of Shares that may be purchased
under each Offering. Shares not sold under one Offering may be offered again in
any subsequent Offering.
"Offering Effective Date" shall mean the day of the month designated by the
Committee as the start of the Offering Period applicable to an Offering.
"Offering Period" shall mean the duration of an Offering, as designated by
the Committee. The Offering Period for any Offering shall not exceed 24 months.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option but shall not include a Director Option.
"Participant" shall mean any Employee selected by the Committee to receive
an Award under the Plan. In addition, for purposes of Section 11 of the Plan,
the term "Participant" shall include any Employee who has satisfied the
requirements of such section to acquire Shares under the Plan.
"Performance Award" shall mean any right granted under Section 8 of the
Plan.
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"Plan" shall mean the MindLeaders.com, Inc. 2000 Incentive Stock Plan.
-3-
"Restricted Stock" shall mean any Share granted under Section 7 of the
Plan.
"Right to Purchase" shall mean an option to purchase Shares granted to a
Participant who elects to participate in an Offering under the provisions of
Section 11 of the Plan. A Right to Purchase granted for an Offering shall
terminate following the close of business on the last Right to Purchase Date for
that Offering to the extent that such Right to Purchase is not exercised on such
Right to Purchase Date.
"Right to Purchase Date" shall mean (a) the last business day of any period
within an Offering Period as designated by the Committee or (b) the last
business day of an Offering Period, in each case to purchase Shares under the
provisions of Section 11 of the Plan.
"Rule l6b-3" shall mean Rule 16b-3 as promulgated and interpreted by the
SEC under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto and shall include the staff thereof.
"Shares" shall mean Common Shares, no par value, of the Company or such
other securities of the Company as may be designated by the Committee from time
to time.
"Share Account" shall mean an account established for each Participant who
exercises a Right to Purchase under Section 11 of the Plan. A Participant's
Share Account will be credited with the number of Shares purchased on each Right
to Purchase Date and debited for the number of Shares withdrawn by the
Participant after such date.
"Subsidiary" shall mean any corporation which, on the date of
determination, qualified as a subsidiary corporation of the Company under
Section 424(f) of the Code. In addition, the term "Subsidiary" shall include
any trade or business which is under common control with the Company, as
determined under Section 414(c) of the Code.
"Substitute Awards" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.
"Ten Percent Shareholder" shall mean any shareholder who, at the time an
Incentive Stock Option is granted to such shareholder, owns (within the meaning
of Section 425(d) of the Code) more than ten percent of the voting power of all
classes of stock of the Company or a Subsidiary.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. Subject to the
terms of the Plan and applicable law, and in addition to other express powers
and authorizations conferred
-4-
on the Committee by the Plan, the Committee shall have full power and authority
to: (i) designate Participants; (ii) determine the type or types of Awards to
be granted to an eligible Employee; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights or other matters are to be
calculated in connection with, Awards; (iv) determine the terms and conditions
of any Award; (v) determine whether, to what extent and under what circumstances
Awards may be settled or exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vi) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the Plan and
any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Notwithstanding anything else contained in the Plan to the contrary, neither the
Committee nor the Board shall have any discretion regarding whether an Eligible
Director shall receive a Director Option pursuant to Section 6(e) or regarding
the terms of any Director Option, including, without limitation, the number of
Shares subject to such Director Option, the timing of the grant or the
exercisability of such Director Option or the exercise price per Share of such
Director Option.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all Persons, including the Company, any Subsidiary, any Participant, any
holder or beneficiary of any Award, any shareholder and any Employee.
SECTION 4. SHARES AVAILABLE FOR THE PLAN.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section
4(b), the number of Shares available for issuance under the Plan shall be
1,700,000. If, after the effective date of the Plan, any Shares covered by an
Award or Director Option granted under the Plan, or to which such an Award or
Director Option relates, or any Shares issued under Section 11, are forfeited,
or if an Award or Director Option otherwise terminates or is canceled without
the delivery of Shares, then the Shares which may be issued under this Plan, to
the extent of any such settlement, forfeiture, termination or cancellation,
shall again be, or shall become, Shares available for issuance, to the extent
permissible under Rule l6b-3. In the event that any Option, Director Option or
other Award granted hereunder is exercised through the delivery of Shares, the
number of Shares available under the Plan shall be increased by the number of
Shares surrendered, to the extent permissible under Rule l6b-3.
(b) ADJUSTMENTS. In the event that any dividend or other
distribution (whether in the form of Shares, other securities or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to
-5-
purchase Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is necessary in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall
proportionately adjust any or all (as necessary) of (i) the number of Shares or
other securities of the Company (or number and kind of other securities or
property) which may be issued under this Plan; (ii) the number of Shares or
other securities of the Company (or number and kind of other securities or
property) subject to outstanding Awards; (iii) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
and the purchase price per Share subject to purchase under Section 11 hereof;
and (iv) the grant or exercise price with respect to any Award; provided, in
each case, that with respect to Awards of Incentive Stock Options, no such
adjustment shall be authorized to the extent that such authority would cause the
Plan to violate Section 422(b)(l) of the Code, as from time to time amended.
If, pursuant to the preceding sentence, an adjustment is made to outstanding
Options held by Participants, a corresponding adjustment shall be made to
outstanding Director Options and if, pursuant to the preceding sentence, an
adjustment is made to the number of Shares authorized for issuance under the
Plan, a corresponding adjustment shall be made to the number of Shares subject
to each Director Option thereafter granted pursuant to Section 6(e).
(c) SOURCES OF SHARES. Any Shares issued pursuant to the terms of
this Plan may consist, in whole or in part, of authorized and unissued Shares or
of Treasury Shares.
SECTION 5. ELIGIBILITY FOR AWARDS AND DIRECTOR OPTIONS. Any Employee,
including any officer or employee-director of the Company or any Subsidiary, who
is not a member of the Committee, shall be eligible to be designated a
Participant for purposes of receiving an Award under the Plan. Each Eligible
Director shall receive nondiscretionary Director Options in accordance with, and
only in accordance with, Section 6(e) hereof.
SECTION 6. OPTIONS AND DIRECTOR OPTIONS.
(a) GRANT. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Employees to whom
Options shall be granted, the number of Shares to be covered by each Option, the
option price therefor and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority to grant
Incentive Stock Options or to grant Non-Qualified Stock Options or to grant both
types of options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to, and comply with, such rules as
may be prescribed by Section 422 of the Code, as from time to time amended, and
any regulations implementing such statute, including, without limitation, the
requirements of Code Section 422(d) which limit the aggregate Fair Market Value
of Shares for which Incentive Stock Options are exercisable for the first time
to $100,000 per calendar year. Each provision of the Plan and of each written
option agreement relating to an Option designated as an Incentive Stock Option
shall be construed so that such Option qualifies as an Incentive Stock Option,
and any provision that cannot be so construed shall be disregarded.
-6-
(b) EXERCISE PRICE. The Committee shall establish the exercise price
at the time each Option is granted, which price, except in the case of Options
that are substitute Awards, shall not be less than 100% of the per Share Fair
Market Value on the date of grant. Notwithstanding any provision contained
herein, in the case of an Incentive Stock Option, the exercise price at the time
such Incentive Stock Option is granted to any Employee who, at the time of such
grant, is a Ten Percent Shareholder, shall not be less than 110% of the per
Share Fair Market Value on the date of grant.
(c) EXERCISE. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter; provided,
in the case of an Incentive Stock Option, a Participant may not exercise such
Incentive Stock Option after (i) the date which is ten years (five years in the
case of a Participant who is a Ten Percent Stockholder) after the date on which
such Incentive Stock Option is granted; or (ii) the date which is three months
(twelve months in the case of a Participant who becomes disabled, as defined in
Section 22(e)(3) of the Code, or who dies) after the date on which he ceases to
be an Employee of the Company or a Subsidiary. The Committee may impose such
conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable. The Committee shall have the right to
accelerate the exercisability of any Option or outstanding Option in its
discretion.
(d) PAYMENT. No Shares shall be delivered pursuant to any exercise
of an Option until payment in full of the option price therefor is received by
the Company. Such payment may be made in cash, or its equivalent, or, if and to
the extent permitted by the Committee, by exchanging Shares owned by the
optionee (which are not the subject of any pledge or other security interest) or
by a combination of the foregoing, provided that the combined value of all cash
and cash equivalents and the Fair Market Value of any such Shares so tendered to
the Company as of the date of such tender is at least equal to such option
price.
(e) DIRECTOR OPTIONS. Notwithstanding anything else contained herein
to the contrary:
(i) each Eligible Director who becomes a member of the Board
after the Effective Date, shall receive, on the first business day
after he becomes an Eligible Director, a grant of a Director Option to
purchase a number of Shares determined by dividing $15,000 by the Fair
Market Value of a Share on the date of grant; and
(ii) on the first business day after each annual meeting of
shareholders of the Company beginning with the annual meeting in 2001,
each Eligible
-7-
Director who is serving as a member of the Board on such date and who
is not receiving a Director Option pursuant to (i) above on such
date, shall receive a grant of a Director Option to purchase a
number of Shares determined by dividing $10,000 by the Fair Market
Value of a Share on the date of grant.
A Director Option shall be exercisable at a price per Share equal to the Fair
Market Value on the date of grant. A Director Option shall be exercisable
during a period beginning six months after the date of grant and ending on
the earlier to occur of the following two dates: (A) the tenth anniversary
of the date of grant of such Director Option or (B) three months (twelve
months in the case of an Eligible Director who becomes disabled, as defined
in Section 22(e)(3) of the Code, or who dies) after the date the Eligible
Director ceases to be a member of the Board, except that if the Eligible
Director ceases to be a member of the Board after having been convicted of,
or pled guilty or NOLO CONTENDERE to, a felony, his Director Option shall be
canceled on the date he ceases to be a member of the Board. An Eligible
Director may pay the exercise price of a Director Option in the manner
described in Section 6(d).
(f) CONSTRUCTION. Notwithstanding any other provision of the Plan,
to the extent that any of the provisions of the Plan are inconsistent or
conflict with any provision of any Award previously granted pursuant to the
Incentive Option Plan or the 1998 Plan outstanding on the effective date of the
Plan, and the application of any such inconsistent or conflicting provision to
such Award would cause such Award to no longer meet the requirements of Section
422 of the Code, such inconsistent or conflicting provision shall not be
applicable to such Award and the provisions of such Award shall be deemed to
control any interpretation of the provisions of such Award as if such provisions
had been set forth in the Plan.
SECTION 7. RESTRICTED STOCK.
(a) GRANT. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Employees to whom Shares
of Restricted Stock shall be granted, the number of Shares of Restricted Stock
to be granted to each Participant, the duration of the period during which, and
the conditions under which, the Restricted Stock will vest and no longer be
subject to forfeiture to the Company and the other terms and conditions of such
Awards. The Committee shall have the right to accelerate the vesting of any
Restricted Stock or outstanding Restricted Stock in its discretion.
(b) TRANSFER RESTRICTIONS. Until the lapse of applicable
restrictions, Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered except as provided in the Plan or the applicable
Award Agreements. Certificates issued in respect of Shares of Restricted Stock
shall be registered in the name of the Participant and deposited by such
Participant, together with a stock power endorsed in blank, with the Company.
Upon the lapse of the restrictions applicable to such Shares of Restricted
Stock, the Company shall deliver such certificates to the Participant or the
Participant's legal representative.
(c) PAYMENT OF DIVIDENDS. Dividends paid on any Shares of Restricted
Stock may be paid directly to the Participant, or may be reinvested in
additional Shares of Restricted Stock, as determined by the Committee in its
sole discretion.
-8-
SECTION 8. PERFORMANCE AWARDS.
(a) GRANT. The Committee shall have sole and complete authority to
determine the Employees who shall receive a Performance Award denominated in
cash or Shares; (i) valued, as determined by the Committee, in accordance with
the achievement of such performance goals during such performance periods as the
Committee shall establish; and (ii) payable at such time and in such form as the
Committee shall determine.
(b) TERMS AND CONDITIONS. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award and the amount and kind of any
payment or transfer to be made pursuant to any Performance Award.
(c) PAYMENT OF PERFORMANCE AWARDS. Performance Awards may be paid in
a lump sum or in installments following the close of the performance period or,
in accordance with procedures established by the Committee, on a deferred basis.
SECTION 9. CODE SECTION 162(m) LIMITATIONS.
(a) GENERAL LIMITATIONS. Any Awards issued under this Plan to
Covered Employees must satisfy the requirements of this Section 9.
(b) REQUIREMENTS FOR ALL AWARDS. Any Award issued to a Covered
Employee shall constitute qualified performance-based compensation. For this
purpose, an Award shall constitute qualified performance-based compensation to
the extent that:
(i) it is granted by the Committee on account of the attainment
of one or more preestablished, objective performance goals established
by the Committee, in accordance with the provisions of Section
1.162-27(e)(2) of the Final Regulations;
(ii) the material terms of the performance goal under which the
Award is issued are disclosed to and subsequently approved by the
shareholders of the Company, in accordance with the provisions of
Section 1.162-27(e)(4) of the Final Regulations; and
(iii) the Committee certifies, in writing, prior to the payment
of any compensation under the Award, that the performance goals and
any other material terms were in fact satisfied.
(c) SPECIAL RULES FOR OPTIONS. The grant of an Option to a Covered
Employee under this Plan shall satisfy the requirements of Section 9(b)(i) to
the extent that the following requirements are satisfied:
-9-
(i) subject to the provisions of Section 4(b), no Covered
Employee shall receive Options for more than 50,000 Shares over any
five-year period. For this purpose, to the extent that any Option is
canceled (as described in Section 1.162-27(e)(2)(vi)(B) of the Final
Regulations), such canceled Option shall continue to be counted
against the maximum number of Shares for which Options may be granted
to a Covered Employee under the Plan; and
(ii) under the terms of the Option, the amount of compensation
that the Covered Employee may receive is based solely on an increase
in the value of the Shares after the grant of the Option, unless the
grant of such Option is contingent upon the attainment of a
performance goal that otherwise satisfies the requirements of Section
9(b)(i).
SECTION 10. STOCK APPRECIATION RIGHTS.
(a) GRANTS OF STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any
time prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of a Nontandem Stock Appreciation Right, the Committee shall
specify the number of Shares covered by such right and the base price of Shares
to be used in connection with the calculation described in Section 10(d). The
base price of a Nontandem Stock Appreciation Right shall be not less than 100%
of the per Share Fair Market Value on the date of grant. Stock Appreciation
Rights shall be subject to such terms and conditions not inconsistent with the
other provisions of this Plan as the Committee shall determine.
(b) LIMITATIONS ON EXERCISE. A Tandem Stock Appreciation Right shall
be exercisable only to the extent that the related Option is exercisable and
shall be exercisable only for such period as the Committee may determine (which
period may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be canceled with respect to an equal number of Shares. Shares
subject to Options, or portions thereof, surrendered upon exercise of a Tandem
Stock Appreciation Right, shall not be available for subsequent awards under the
Plan. A Nontandem Stock Appreciation Right shall be exercisable during such
period as the Committee shall determine.
(c) SURRENDER OR EXCHANGE OF TANDEM STOCK APPRECIATION RIGHTS. A
Tandem Stock Appreciation Right shall entitle the Participant to surrender to
the Company unexercised the related Option, or any portion thereof, and to
receive from the Company in exchange therefor that number of Shares having an
aggregate Fair Market Value equal to (i) the excess of (A) the Fair Market Value
of one (1) Share as of the date the Tandem Stock Appreciation Right is exercised
over (B) the exercise price per Share specified in such Option, multiplied by
(ii) the
-10-
number of Shares subject to the Option, or portion thereof, which is
surrendered. Cash shall be delivered in lieu of any fractional shares.
(d) EXERCISE OF NONTANDEM STOCK APPRECIATION RIGHTS. The exercise of
a Nontandem Stock Appreciation Right shall entitle the employee to receive from
the Company that number of Shares having an aggregate Fair Market Value equal to
(i) the excess of (A) the Fair Market Value of one (1) Share as of the date on
which the Nontandem Stock Appreciation Right is exercised over (B) the base
price of the Shares covered by the Nontandem Stock Appreciation Right,
multiplied by (ii) the number of Shares covered by the Nontandem Stock
Appreciation Right, or the portion thereof being exercised. Cash shall be
delivered in lieu of any fractional shares.
(e) SETTLEMENT OF STOCK APPRECIATION RIGHTS. As soon as is
reasonably practicable after the exercise of a Stock Appreciation Right, the
Company shall (i) issue, in the name of the Participant, stock certificates
representing the total number of full Shares to which the Participant is
entitled pursuant to Section 10(c) or 10(d), and cash in an amount equal to the
Fair Market Value, as of the date of exercise, of any resulting fractional
shares, and (ii) if the Committee causes the Company to elect to settle all or
part of its obligations arising out of the exercise of the Stock Appreciation
Right in cash pursuant to Section 10(f), deliver to the Participant an amount in
cash equal to the Fair Market Value, as of the date of exercise, of the Shares
it would otherwise be obligated to deliver.
(f) CASH SETTLEMENT. The Committee, in its discretion, may cause the
Company to settle all or any part of its obligation arising out of the exercise
of a Stock Appreciation Right by the payment of cash in lieu of all or part of
the Shares it would otherwise be obligated to deliver.
SECTION 11. STOCK PURCHASE PLAN.
(a) ELIGIBILITY. Each Employee on an Offering Effective Date shall
be eligible to participate in the Offering which is applicable to such Offering
Effective Date. Nothing contained herein and no rules and regulations
prescribed by the Committee shall permit or deny participation in any Offering
contrary to the requirements of the Code (including, without limitation,
Sections 423(b)(3), 423(b)(4) and 423(b)(8) thereof). Nothing contained herein
and no rules and regulations prescribed by the Committee shall permit any
Participant to be granted a Right to Purchase:
(i) if, immediately after such Right to Purchase is granted,
such Participant would own, and/or hold outstanding options or rights
to purchase, shares of the Company or of any Subsidiary, possessing
five percent (5%) or more of the total combined voting power or value
of all classes of shares of the Company or such Subsidiary; or
(ii) which permits a Participant's rights to purchase Shares
under all employee stock purchase plans of the Company and of its
Subsidiaries to accrue
-11-
at a rate which exceeds Twenty-Five Thousand Dollars ($25,000.00) of
Fair Market Value of Shares (determined as of the date such right is
granted) for each calendar year in which such right is outstanding at
any time.
For purposes of clause (a)(i) above, the provisions of Section 424(d) of the
Code shall apply in determining the stock ownership of each Participant. For
purposes of clause (a)(ii) above, the provisions of Section 423(b)(8) of the
Code shall apply in determining whether a Participant's Rights to Purchase and
other rights are permitted to accrue at a rate in excess of the permitted rate.
(b) PURCHASE PRICE. The purchase price for a Share under each
Offering shall be determined by the Committee prior to the Offering Effective
Date and shall be stated as a percentage of the Fair Market Value of a Share on
either the Right to Purchase Date or the Offering Effective Date, whichever is
the lesser, but the purchase price shall not be less than the lesser of
eighty-five percent (85%) of the per share Fair Market Value of the Shares as of
the Offering Effective Date or eighty-five percent (85%) of the per share Fair
Market Value of the Shares as of the Right to Purchase Date for the Offering.
(c) PARTICIPATION IN OFFERINGS. Except as may be otherwise provided
for herein, each Employee who is eligible for and elects to participate in an
Offering shall be granted Rights to Purchase for as many full Shares as he may
elect to purchase during that Offering, to be paid by payroll deductions during
such period. The Committee shall establish administrative rules and regulations
regarding the payroll deduction process for this Section 11, including, without
limitation, minimum and maximum permissible deductions; the timing for initial
elections, changes in elections and suspensions of elections during an Offering
Period and the complete withdrawal by a Participant from an Offering. Amounts
withheld through payroll deductions under this paragraph shall be credited to
each Participant's Cash Account. Such amounts will be delivered to a custodian
for the Plan and held pending the purchase of Shares as described in Section
11(e). All amounts held in a Participant's Cash Account shall bear interest at
a rate as may be agreed upon by the Committee and the custodian for the Plan.
If a Participant withdraws entirely from an Offering (pursuant to rules
established by the Committee), his Cash Account balance will not be used to
purchase Shares on the Right to Purchase Date. Instead, the portion of the Cash
Account equal to the Participant's payroll deductions under the Plan during the
Offering Period will be refunded to the Participant without interest
(notwithstanding any provision contained herein). Such a Participant will not
be eligible to re-enroll in that Offering, but may resume participation on the
Offering Effective Date for the next Offering. In addition, the Committee may
impose such other restrictions on the right to withdraw from Offerings as it may
deem appropriate. An election by a Participant to have any amount in his Cash
Account used to purchase Shares on any subsequent Right to Purchase Date as
described in Section 11(e) shall not constitute a withdrawal from an Offering.
(d) GRANT OF RIGHTS TO PURCHASE. Rights to Purchase with respect to
Shares shall be granted to Participants who elect to participate in an Offering.
Such Rights to Purchase may be exercised on any Right to Purchase Date
applicable to the Offering. The number of Shares subject to Rights to Purchase
on each Right to Purchase Date, when added to the number
-12-
of Shares purchased by a Participant on each Right to Purchase Date during any
Offering, shall not exceed the number of Shares authorized for issuance during
the applicable Offering.
(e) EXERCISE OF RIGHTS TO PURCHASE. Except as otherwise provided
herein, each Right to Purchase shall be exercised on the applicable Right to
Purchase Date. Each Participant automatically and without any act on his part
will be deemed to have exercised a Right to Purchase on each Right to Purchase
Date to the extent that the amount in his Cash Account on such Right to Purchase
Date is sufficient to purchase whole Shares, unless the Participant otherwise
notifies the Committee in accordance with the administrative rules and
regulations established by the Committee. Fractional Shares will not be issued
under the Plan. Any remaining amount credited to a Participant's Cash Account
which is not sufficient to purchase a whole Share shall remain in such
Participant's Cash Account for use during the balance of an Offering or in the
next Offering unless withdrawn by the Participant. The Company shall deliver to
the custodian for the Plan as soon as practicable after each Right to Purchase
Date a certificate for the total number of whole Shares purchased by all
Participants on such Right to Purchase Date. The custodian shall allocate the
proper number of Shares to the Share Account of each Participant. If the
aggregate Cash Account balances of all Participants on any Right to Purchase
Date exceeds the amount required to purchase all of the Shares subject to Rights
to Purchase on that Right to Purchase Date, then the Shares subject to Rights to
Purchase shall be allocated pro rata among the Participants in the proportion
that the number of Shares subject to Rights to Purchase bears to the number of
Shares that could have been purchased with such aggregate amount available, if
an unlimited number of Shares were available for purchase. Any balances
remaining in Participants' Cash Accounts due to over subscription will remain in
the Participants' Cash Accounts for use during the balance of an Offering or in
the next Offering unless withdrawn by the Participant.
(f) WITHDRAWALS FROM SHARE ACCOUNTS AND DIVIDEND REINVESTMENT. A
Participant may withdraw the Shares credited to his Share Account on a
first-in-first-out basis. The Committee shall establish rules and regulations
governing such withdrawals. All cash dividends paid, if any, with respect to
the Shares credited to a Participant's Share Account shall be added to the
Participant's Cash Account and thereby shall be applied to exercise Rights to
Purchase for whole Shares on the Right to Purchase Date next succeeding the date
such cash dividends are paid by the Company. An election to leave Shares with
the custodian shall constitute an election to apply the cash dividends with
respect to such Shares to the exercise of Rights to Purchase hereunder. Shares
so purchased shall be applied to the Shares credited to each Participant's Share
Account.
(g) TERMINATION OF EMPLOYMENT. If the employment of a Participant
terminates for any reason, including death, disability, retirement or other
cause, his participation in this Section 11 of the Plan shall automatically and
without any act on his part terminate as of the date of termination of his
employment. As soon as practicable following the Participant's termination of
employment, the Company shall refund to such Participant (or beneficiary, in the
case of the Participant's death) any amount in his Cash Account which
constitutes payroll deductions, without interest, and the custodian shall
deliver to such Participant (or beneficiary, in
-13-
the case of the Participant's death) a share certificate issued in his name for
the number of whole Shares credited to his Share Account through prior
Offerings.
SECTION 12. UNRESTRICTED SHARES.
(a) AWARD OF UNRESTRICTED SHARES. The Committee may cause the
Company to grant Unrestricted Shares to Employees at such time or times, in such
amounts and for such reasons as the Committee, in its sole discretion, shall
determine. No payment shall be required for Unrestricted Shares.
(b) DELIVERY OF UNRESTRICTED SHARES. The Company shall issue, in the
name of each Employee to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
Employee, and shall deliver such certificates to the Employee as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.
SECTION 13. AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief from Section
16(b) of the Exchange Act for which or with which the Board deems it necessary
or desirable to qualify or comply; and, provided further, that no amendment may
be made to Section 6(e) or any other provision of the Plan relating to Director
Options within six months of the last date on which any such provision was
amended, other than to comport with changes in the Code or the rules thereunder.
Notwithstanding anything to the contrary herein, the Committee may amend the
Plan, subject to any shareholder approval required under Rule l6b-3, in such
manner as may be necessary so as to have the Plan conform with local rules and
regulations in any jurisdiction outside the United States.
(b) AMENDMENTS TO AWARDS. Subject to the provisions of Section 9,
the Committee may waive any conditions or rights under, amend any terms of, or
alter, suspend, discontinue, cancel or terminate any Award therefore granted,
prospectively or retroactively; provided that any such waiver, amendment,
alteration, suspension, discontinuance, cancellation or termination that would
impair the rights of any Participant or any holder or beneficiary of any Award
therefore granted shall not to that extent be effective without the consent of
the affected Participant, holder or beneficiary.
(c) CANCELLATION OF AWARD. Any provision of this Plan (except
Section 9) or any Award Agreement to the contrary notwithstanding, the Committee
may cause any Award granted hereunder to be canceled in consideration of the
granting to the holder of an alternative Award having a Fair Market Value equal
to the Fair Market Value of such canceled Award.
-14-
SECTION 14. GENERAL PROVISIONS.
(a) NONTRANSFERABILITY.
(i) Each Award, each Director Option and each Right to
Purchase, and each right under any Award, any Director Option or any
Right to Purchase, shall be exercisable during the Participant's or
the Eligible Director's lifetime only by the Participant or the
Eligible Director or, if permissible under applicable law, by the
Participant's or the Eligible Director's guardian or legal
representative or a transferee receiving such Award, Director Option
or Right to Purchase pursuant to a qualified domestic relations order
("QDRO"), as determined by the Committee.
(ii) No Award, Director Option or Right to Purchase that
constitutes a "derivative security," for purposes of Section 16 of the
Exchange Act, may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant or Eligible
Director otherwise than by will or by the laws of descent and
distribution or pursuant to a QDRO, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be
void and unenforceable against the Company or any Subsidiary; provided
that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.
(b) NO RIGHTS TO AWARDS. No Employee, Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.
(c) SHARE CERTIFICATES. All certificates for Shares or other
securities of the Company or any Subsidiary delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the Plan or the rules, regulations and other requirements
of the SEC, any stock exchange or national securities association upon which
such Shares or other securities are then listed and any applicable federal or
state laws; and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(d) WITHHOLDING. A Participant or Eligible Director may be required
to pay to the Company or any Subsidiary, and the Company or any Subsidiary shall
have the right and is hereby authorized to withhold from any Award, Director
Option or Share otherwise issued under the Plan, from any payment due or
transfer made under any Award or any Director Option or otherwise under the
Plan, or from any compensation or other amount owing to a Participant or
Eligible Director, the amount of any applicable withholding taxes in respect of
an Award, a Director Option or a Share otherwise issued under the Plan, its
exercise or any payment or transfer under an Award, under a Director Option or
otherwise under the Plan and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes. With respect to Participants who are not subject to Section 16 of the
-15-
Exchange Act, the withholding may be in the form of cash, Shares, other
securities, other Awards or other property as the Committee may allow. With
respect to Participants and Eligible Directors who are subject to Section 16 of
the Exchange Act, the withholding shall be in cash or in any other property
permitted by Rule 16b-3 as the Committee may allow. The Committee may provide
for additional cash payments to Participants or Eligible Directors to defray or
offset any tax arising from the grant, vesting, exercise or payments of any
Award or Share otherwise issued under this Plan.
(e) AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an
Award Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto,
including but not limited to the effect on such Award of the death, retirement
or other termination of employment of a Participant and the effect, if any, of a
change in control of the Company.
(f) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Subsidiary from adopting or
continuing in effect other compensation arrangements, which may, but need not,
provide for the grant of options, restricted stock, shares and other types of
awards provided for hereunder (subject to shareholder approval if such approval
is required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(g) NO RIGHT TO EMPLOYMENT. Eligibility for participation in this
Plan or the grant of an Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any Subsidiary. Further,
the Company or a Subsidiary may at any time dismiss a Participant from
employment, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.
(h) NO RIGHTS AS SHAREHOLDER. Subject to the provisions of the Plan
and/or the applicable Award, no Participant or holder or beneficiary of any
Award or Director Option shall have any rights as a shareholder with respect to
any Shares to be distributed under the Plan until he or she has become the
holder of such Shares. Notwithstanding the foregoing, in connection with each
grant of Restricted Stock hereunder, the applicable Award shall specify if and
to what extent the Participant shall not be entitled to the rights of a
shareholder in respect of such Restricted Stock.
(i) GOVERNING LAW. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of Ohio.
(j) SEVERABILITY. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or as to any Person or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to the applicable laws, or if it cannot be construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such
-16-
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(k) OTHER LAWS. The Committee may refuse to issue or transfer any
Shares or other consideration under the Plan if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the issuance of such Shares shall be promptly refunded to the
relevant Participant, holder or beneficiary. Without limiting the generality of
the foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that any such offer,
if made, would be in compliance with all applicable requirements of the U.S.
federal securities laws.
(l) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Subsidiary and a Participant
or any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Subsidiary pursuant to the Plan, such rights
shall be no greater than the right of any unsecured general creditor of the
Company or any Subsidiary
(m) RULE 16b-3 COMPLIANCE. With respect to Persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable terms and conditions of Rule 16b-3 and any successor
provisions. To the extent that 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.
(n) HEADINGS. Headings are given to the sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
(o) NO IMPACT ON BENEFITS. Plan Awards or Shares otherwise issued
under this Plan shall not be treated as compensation for purposes of calculating
an Employee's rights under any employee benefit plan.
(p) INDEMNIFICATION. Each Person who is or shall have been a member
of the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be made a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf.
-17-
The foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such Persons may be
entitled under the Company's Articles of Incorporation or Code of Regulations,
by contract, as a matter of law, or otherwise.
SECTION 15. TERM OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall be effective as of March ,
2000, the date of its approval by the shareholders of the Company.
(b) EXPIRATION DATE. No Award or Right to Purchase shall be granted
under the Plan after March , 2010, the ten year anniversary of the effective
date of the Plan. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after March , 2010.
-18-