RADISYS CORPORATION
1995 STOCK INCENTIVE PLAN
(As Amended Through February 25, 2000)
1. PURPOSE. The purpose of this Stock Incentive Plan (the "Plan") is
to enable RadiSys Corporation (the "Company") to attract and retain the
services of (1) selected employees, officers and directors of the Company or
of any subsidiary of the Company and (2) selected nonemployee agents,
consultants, advisors, persons involved in the sale or distribution of the
Company's products and independent contractors of the Company or any
subsidiary.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided
below and in paragraph 13, the shares to be offered under the Plan shall
consist of Common Stock of the Company, and the total number of shares of
Common Stock that may be issued under the Plan shall not exceed 4,125,000*
shares. The shares issued under the Plan may be authorized and unissued
shares or reacquired shares. If an option, stock appreciation right or
performance unit granted under the Plan expires, terminates or is canceled,
the unissued shares subject to such option, stock appreciation right or
performance unit shall again be available under the Plan. If shares sold or
awarded as a bonus under the Plan are forfeited to the Company or repurchased
by the Company, the number of shares forfeited or repurchased shall again be
available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) EFFECTIVE DATE. The Plan shall become effective as of
August 7, 1995. No option, stock appreciation right or performance unit
granted under the Plan to an officer who is subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended (an "Officer") or a director, and
no incentive stock option, shall become exercisable, however, until the Plan
is approved by the affirmative vote of the holders of a majority of the
shares of Common Stock represented at a shareholders meeting at which a
quorum is present and any such awards under the Plan prior to such approval
shall be conditioned on and subject to such approval. Subject to this
limitation, options, stock appreciation rights and performance units may be
granted and shares may be awarded as bonuses or sold under the Plan at any
time after the effective date and before termination of the Plan.
(b) DURATION. The Plan shall continue in effect until all
shares available for issuance under the Plan have been issued and all
restrictions on such shares have lapsed. The Board of Directors may suspend
or terminate the Plan at any time except with respect to
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* Adjusted to reflect a 3-for-2 stock split of the shares of
Common Stock, without par value, of the Company, effected in
the form of a 50% share dividend in accordance with ORS
60.154, declared by the Board of Directors on October 19,
1999, and paid on November 29, 1999 to shareholders of record
at the close of business on November 8, 1999.
options, performance units and shares subject to restrictions then
outstanding under the Plan. Termination shall not affect any outstanding
options, any right of the Company to repurchase shares or the forfeitability
of shares issued under the Plan.
4. ADMINISTRATION.
(a) BOARD OF DIRECTORS. The Plan shall be administered by
the Board of Directors of the Company, which shall determine and designate
from time to time the individuals to whom awards shall be made, the amount of
the awards and the other terms and conditions of the awards. Subject to the
provisions of the Plan, the Board of Directors may from time to time adopt
and amend rules and regulations relating to administration of the Plan,
advance the lapse of any waiting period, accelerate any exercise date, waive
or modify any restriction applicable to shares (except those restrictions
imposed by law) and make all other determinations in the judgment of the
Board of Directors necessary or desirable for the administration of the Plan.
The interpretation and construction of the provisions of the Plan and related
agreements by the Board of Directors shall be final and conclusive. The Board
of Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any related agreement in the manner and to
the extent it shall deem expedient to carry the Plan into effect, and it
shall be the sole and final judge of such expediency.
(b) COMMITTEE. The Board of Directors may delegate to a
committee of the Board of Directors or specified officers of the Company, or
both (the "Committee") any or all authority for administration of the Plan.
If authority is delegated to a Committee, all references to the Board of
Directors in the Plan shall mean and relate to the Committee except (i) as
otherwise provided by the Board of Directors, (ii) that only the Board of
Directors may amend or terminate the Plan as provided in paragraphs 3 and 15
and (iii) that a Committee including officers of the Company shall not be
permitted to grant options to persons who are officers of the Company. If
awards are to be made under the Plan to Officers or directors, authority for
selection of Officers and directors for participation and decisions
concerning the timing, pricing and amount of a grant or award, if not
determined under a formula meeting the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, shall be delegated to a
committee consisting of two or more disinterested directors.
5. TYPES OF AWARDS; ELIGIBILITY. The Board of Directors may, from
time to time, take the following action, separately or in combination, under
the Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as provided in
paragraphs 6(a) and 6(b); (ii) grant options other than Incentive Stock
Options ("Non-Statutory Stock Options") as provided in paragraphs 6(a) and
6(c); (iii) award stock bonuses as provided in paragraph 7; (iv) sell shares
subject to restrictions as provided in paragraph 8; (v) grant stock
appreciation rights as provided in paragraph 9; (vi) grant cash bonus rights
as provided in paragraph 10; (vii) grant performance units as provided in
paragraph 11 and (viii) grant foreign qualified awards as provided in
paragraph 12. Any such awards may be made to employees, including employees
who are officers or
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directors, and to other individuals described in paragraph 1 who the Board of
Directors believes have made or will make an important contribution to the
Company or any subsidiary of the Company; provided, however, that only
employees of the Company shall be eligible to receive Incentive Stock Options
under the Plan. The Board of Directors shall select the individuals to whom
awards shall be made and shall specify the action taken with respect to each
individual to whom an award is made. At the discretion of the Board of
Directors, an individual may be given an election to surrender an award in
exchange for the grant of a new award. No employee may be granted options or
stock appreciation rights under the Plan for more than an aggregate of
450,000 shares of Common Stock in connection with the hiring of the employee
or 100,000 shares of Common Stock in any calendar year otherwise.
6. OPTION GRANTS.
(a) GENERAL RULES RELATING TO OPTIONS.
(i) TERMS OF GRANT. The Board of Directors may grant
options under the Plan. With respect to each option grant, the Board of
Directors shall determine the number of shares subject to the option,
the option price, the period of the option, the time or times at which
the option may be exercised and whether the option is an Incentive
Stock Option or a Non-Statutory Stock Option. At the time of the grant
of an option or at any time thereafter, the Board of Directors may
provide that an optionee who exercised an option with Common Stock of
the Company shall automatically receive a new option to purchase
additional shares equal to the number of shares surrendered and may
specify the terms and conditions of such new options.
(ii) EXERCISE OF OPTIONS. Except as provided in
paragraph 6(a)(iv) or as determined by the Board of Directors, no
option granted under the Plan may be exercised unless at the time of
such exercise the optionee is employed by or in the service of the
Company or any subsidiary of the Company and shall have been so
employed or provided such service continuously since the date such
option was granted. Absence on leave or on account of illness or
disability under rules established by the Board of Directors shall not,
however, be deemed an interruption of employment or service for this
purpose. Unless otherwise determined by the Board of Directors, vesting
of options shall not continue during an absence on leave (including an
extended illness) or on account of disability. Except as provided in
paragraphs 6(a)(iv) and 13, options granted under the Plan may be
exercised from time to time over the period stated in each option in
such amounts and at such times as shall be prescribed by the Board of
Directors, provided that options shall not be exercised for fractional
shares. Unless otherwise determined by the Board of Directors, if the
optionee does not exercise an option in any one year with respect to
the full number of shares to which the optionee is entitled in that
year, the optionee's rights shall be cumulative and the optionee may
purchase those shares in any subsequent year during the term of the
option. Unless otherwise determined by the Board of Directors, if an
Officer exercises
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an option within six months of the grant of the option, the shares
acquired upon exercise of the option may not be sold until six months
after the date of grant of the option.
(iii) NONTRANSFERABILITY. Each Incentive Stock Option
and, unless otherwise determined by the Board of Directors with respect
to an option granted to a person who is neither an Officer nor a
director of the Company, each other option granted under the Plan by
its terms shall be nonassignable and nontransferable by the optionee,
either voluntarily or by operation of law, except by will or by the
laws of descent and distribution of the state or country of the
optionee's domicile at the time of death, and shall be exercisable
during the optionee's lifetime only by the optionee.
(iv) TERMINATION OF EMPLOYMENT OR SERVICE.
(A) GENERAL RULE. Unless otherwise
determined by the Board of Directors, in the event the
employment or service of the optionee with the Company or a
subsidiary terminates for any reason other than because of
physical disability or death as provided in subparagraphs
6(a)(iv)(B) and (C), the option may be exercised at any time
prior to the expiration date of the option or the expiration
of 30 days after the date of such termination, whichever is
the shorter period, but only if and to the extent the optionee
was entitled to exercise the option at the date of such
termination.
(B) TERMINATION BECAUSE OF TOTAL DISABILITY.
Unless otherwise determined by the Board of Directors, in the
event of the termination of employment or service because of
total disability, the option may be exercised at any time
prior to the expiration date of the option or the expiration
of 12 months after the date of such termination, whichever is
the shorter period, but only if and to the extent the optionee
was entitled to exercise the option at the date of such
termination. The term "total disability" means a medically
determinable mental or physical impairment which is expected
to result in death or which has lasted or is expected to last
for a continuous period of 12 months or more and which causes
the optionee to be unable, in the opinion of the Company and
two independent physicians, to perform his or her duties as an
employee, director, officer or consultant of the Company and
to be engaged in any substantial gainful activity. Total
disability shall be deemed to have occurred on the first day
after the Company and the two independent physicians have
furnished their opinion of total disability to the Company.
(C) TERMINATION BECAUSE OF DEATH. Unless
otherwise determined by the Board of Directors, in the event
of the death of an optionee while employed by or providing
service to the Company or a subsidiary, the option may be
exercised at any time prior to the expiration date of the
option or
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the expiration of 12 months after the date of death,
whichever is the shorter period, but only if and to the extent
the optionee was entitled to exercise the option at the date
of death and only by the person or persons to whom such
optionee's rights under the option shall pass by the
optionee's will or by the laws of descent and distribution of
the state or country of domicile at the time of death.
(D) AMENDMENT OF EXERCISE PERIOD APPLICABLE
TO TERMINATION. The Board of Directors, at the time of grant
or, with respect to an option that is not an Incentive Stock
Option, at any time thereafter, may extend the 30-day and
12-month exercise periods any length of time not longer than
the original expiration date of the option, and may increase
the portion of an option that is exercisable, subject to such
terms and conditions as the Board of Directors may determine.
(E) FAILURE TO EXERCISE OPTION. To the
extent that the option of any deceased optionee or of any
optionee whose employment or service terminates is not
exercised within the applicable period, all further rights to
purchase shares pursuant to such option shall cease and
terminate.
(v) PURCHASE OF SHARES. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an option
granted under the Plan only upon receipt by the Company of notice in
writing from the optionee of the optionee's intention to exercise,
specifying the number of shares as to which the optionee desires to
exercise the option and the date on which the optionee desires to
complete the transaction, and if required in order to comply with the
Securities Act of 1933, as amended, containing a representation that it
is the optionee's present intention to acquire the shares for
investment and not with a view to distribution. Unless the Board of
Directors determines otherwise, on or before the date specified for
completion of the purchase of shares pursuant to an option, the
optionee must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Board of Directors,
cash that may be the proceeds of a loan from the Company (provided
that, with respect to an Incentive Stock Option, such loan is approved
at the time of option grant)) or, with the consent of the Board of
Directors (which, in the case of an Incentive Stock Option, shall be
given only at the time of option grant), in whole or in part, in Common
Stock of the Company valued at fair market value*, restricted stock,
performance units or other contingent awards denominated in either
stock or cash,
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* The Board of Directors has consented to the use of Common Stock
in payment of the purchase price, at a fair market value equal to
the closing price of the Common Stock as reported in THE WALL
STREET JOURNAL on the last trading day preceding the date the
option is exercised.
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promissory notes and other forms of consideration. The fair market
value of Common Stock provided in payment of the purchase price shall
be determined by the Board of Directors. If the Common Stock of the
Company is not publicly traded on the date the option is exercised,
the Board of Directors may consider any valuation methods it deems
appropriate and may, but is not required to, obtain one or more
independent appraisals of the Company. If the Common Stock of the
Company is publicly traded on the date the option is exercised, the
fair market value of Common Stock provided in payment of the purchase
price shall be the closing price of the Common Stock as reported in THE
WALL STREET JOURNAL on the last trading day preceding the date the
option is exercised, or such other reported value of the Common Stock
as shall be specified by the Board of Directors. No shares shall be
issued until full payment for the shares has been made. With the
consent of the Board of Directors (which, in the case of an Incentive
Stock Option, shall be given only at the time of option grant), an
optionee may request the Company to apply automatically the shares to
be received upon the exercise of a portion of a stock option (even
though stock certificates have not yet been issued) to satisfy the
purchase price for additional portions of the option. Each optionee who
has exercised an option shall immediately upon notification of the
amount due, if any, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local tax withholding
requirements. If additional withholding is or becomes required beyond
any amount deposited before delivery of the certificates, the optionee
shall pay such amount to the Company on demand. If the optionee fails
to pay the amount demanded, the Company may withhold that amount from
other amounts payable by the Company to the optionee, including salary,
subject to applicable law. With the consent of the Board of Directors
(which in the case of an Incentive Stock Option, shall be given only at
the time of option grant), an optionee may satisfy this obligation, in
whole or in part, by having the Company withhold from the shares to be
issued upon the exercise that number of shares that would satisfy the
withholding amount due or by delivering to the Company Common Stock to
satisfy the withholding amount. Upon the exercise of an option, the
number of shares reserved for issuance under the Plan shall be reduced
by the number of shares issued upon exercise of the option.
(b) INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
subject to the following additional terms and conditions:
(i) LIMITATION ON AMOUNT OF GRANTS. No employee may
be granted Incentive Stock Options under the Plan if the aggregate fair
market value, on the date of grant, of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
that employee during any calendar year under the Plan and under all
incentive stock option plans (within the meaning of Section 422 of the
Code) of the Company or any parent or subsidiary of the Company exceeds
$100,000.
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(ii) LIMITATIONS ON GRANTS TO 10 PERCENT
SHAREHOLDERS. An Incentive Stock Option may be granted under the Plan
to an employee possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or of any parent or
subsidiary of the Company only if the option price is at least 110
percent of the fair market value, as described in paragraph 6(b)(iv),
of the Common Stock subject to the option on the date it is granted and
the option by its terms is not exercisable after the expiration of five
years from the date it is granted.
(iii) DURATION OF OPTIONS. Subject to paragraphs
6(a)(ii) and 6(b)(ii), Incentive Stock Options granted under the Plan
shall continue in effect for the period fixed by the Board of
Directors, except that no Incentive Stock Option shall be exercisable
after the expiration of 10 years from the date it is granted.
(iv) OPTION PRICE. The option price per share shall
be determined by the Board of Directors at the time of grant. Except as
provided in paragraph 6(b)(ii), the option price shall not be less than
100 percent of the fair market value of the Common Stock covered by the
Incentive Stock Option at the date the option is granted. The fair
market value shall be determined by the Board of Directors. If the
Common Stock of the Company is not publicly traded on the date the
option is granted, the Board of Directors may consider any valuation
methods it deems appropriate and may, but is not required to, obtain
one or more independent appraisals of the Company. If the Common Stock
of the Company is publicly traded on the date the option is exercised,
the fair market value shall be deemed to be the closing price of the
Common Stock as reported in THE WALL STREET JOURNAL on the day
preceding the date the option is granted, or, if there has been no sale
on that date, on the last preceding date on which a sale occurred or
such other value of the Common Stock as shall be specified by the Board
of Directors.
(v) LIMITATION ON TIME OF GRANT. No Incentive Stock
Option shall be granted on or after the tenth anniversary of the
effective date of the Plan.
(vi) CONVERSION OF INCENTIVE STOCK OPTIONS. The Board
of Directors may at any time without the consent of the optionee
convert an Incentive Stock Option to a Non-Statutory Stock Option.
(c) NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock Options
shall be subject to the following terms and conditions in addition to
those set forth in paragraph 6(a) above:
(i) OPTION PRICE. The option price for Non-Statutory
Stock Options shall be determined by the Board of Directors at the time
of grant and may be any amount determined by the Board of Directors.
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(ii) DURATION OF OPTIONS. Non-Statutory Stock Options
granted under the Plan shall continue in effect for the period fixed by
the Board of Directors.
7. STOCK BONUSES. The Board of Directors may award shares under the
Plan as stock bonuses. Shares awarded as a bonus shall be subject to the
terms, conditions, and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and
forfeiture of the shares awarded, together with such other restrictions as
may be determined by the Board of Directors. If shares are subject to
forfeiture, all dividends or other distributions paid by the Company with
respect to the shares shall be retained by the Company until the shares are
no longer subject to forfeiture, at which time all accumulated amounts shall
be paid to the recipient. The Board of Directors may require the recipient to
sign an agreement as a condition of the award, but may not require the
recipient to pay any monetary consideration other than amounts necessary to
satisfy tax withholding requirements. The agreement may contain any terms,
conditions, restrictions, representations and warranties required by the
Board of Directors. The certificates representing the shares awarded shall
bear any legends required by the Board of Directors. Unless otherwise
determined by the Board of Directors, shares awarded as a stock bonus to an
Officer may not be sold until six months after the date of the award. The
Company may require any recipient of a stock bonus to pay to the Company in
cash upon demand amounts necessary to satisfy any applicable federal, state
or local tax withholding requirements. If the recipient fails to pay the
amount demanded, the Company may withhold that amount from other amounts
payable by the Company to the recipient, including salary or fees for
services, subject to applicable law. With the consent of the Board of
Directors, a recipient may deliver Common Stock to the Company to satisfy
this withholding obligation. Upon the issuance of a stock bonus, the number
of shares reserved for issuance under the Plan shall be reduced by the number
of shares issued.
8. RESTRICTED STOCK. The Board of Directors may issue shares under
the Plan for such consideration (including promissory notes and services) as
determined by the Board of Directors. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board of
Directors. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares
issued, together with such other restrictions as may be determined by the
Board of Directors. If shares are subject to forfeiture or repurchase by the
Company, all dividends or other distributions paid by the Company with
respect to the shares shall be retained by the Company until the shares are
no longer subject to forfeiture or repurchase, at which time all accumulated
amounts shall be paid to the recipient. All Common Stock issued pursuant to
this paragraph 8 shall be subject to a purchase agreement, which shall be
executed by the Company and the prospective recipient of the shares prior to
the delivery of certificates representing such shares to the recipient. The
purchase agreement may contain any terms, conditions, restrictions,
representations and warranties required by the Board of Directors. The
certificates representing the shares shall bear any legends required by the
Board of Directors. Unless otherwise determined by the Board of Directors,
shares issued under this paragraph 8 to an
8
Officer may not be sold until six months after the shares are issued. The
Company may require any purchaser of restricted stock to pay to the Company
in cash upon demand amounts necessary to satisfy any applicable federal,
state or local tax withholding requirements. If the purchaser fails to pay
the amount demanded, the Company may withhold that amount from other amounts
payable by the Company to the purchaser, including salary, subject to
applicable law. With the consent of the Board of Directors, a purchaser may
deliver Common Stock to the Company to satisfy this withholding obligation.
Upon the issuance of restricted stock, the number of shares reserved for
issuance under the Plan shall be reduced by the number of shares issued.
9. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted under the
Plan by the Board of Directors, subject to such rules, terms, and conditions as
the Board of Directors prescribes.
(b) EXERCISE.
(i) Each stock appreciation right shall entitle the
holder, upon exercise, to receive from the Company in exchange therefor
an amount equal in value to the excess of the fair market value on the
date of exercise of one share of Common Stock of the Company over its
fair market value on the date of grant (or, in the case of a stock
appreciation right granted in connection with an option, the excess of
the fair market value of one share of Common Stock of the Company over
the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares covered
by the stock appreciation right or the option, or portion thereof, that
is surrendered. No stock appreciation right shall be exercisable at a
time that the amount determined under this subparagraph is negative.
Payment by the Company upon exercise of a stock appreciation right may
be made in Common Stock valued at fair market value, in cash, or partly
in Common Stock and partly in cash, all as determined by the Board of
Directors.
(ii) A stock appreciation right shall be exercisable
only at the time or times established by the Board of Directors. If a
stock appreciation right is granted in connection with an option, the
following rules shall apply: (1) the stock appreciation right shall be
exercisable only to the extent and on the same conditions that the
related option could be exercised; (2) the stock appreciation rights
shall be exercisable only when the fair market value of the stock
exceeds the option price of the related option; (3) the stock
appreciation right shall be for no more than 100 percent of the excess
of the fair market value of the stock at the time of exercise over the
option price; (4) upon exercise of the stock appreciation right, the
option or portion thereof to which the stock appreciation right relates
terminates; and (5) upon exercise of the option, the related stock
appreciation right or portion thereof terminates. Unless otherwise
determined by
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the Board of Directors, no stock appreciation right granted to an
Officer or director may be exercised during the first six months
following the date it is granted.
(iii) The Board of Directors may withdraw any stock
appreciation right granted under the Plan at any time and may impose
any conditions upon the exercise of a stock appreciation right or adopt
rules and regulations from time to time affecting the rights of holders
of stock appreciation rights. Such rules and regulations may govern the
right to exercise stock appreciation rights granted prior to adoption
or amendment of such rules and regulations as well as stock
appreciation rights granted thereafter.
(iv) For purposes of this paragraph 9, the fair
market value of the Common Stock shall be determined as of the date the
stock appreciation right is exercised, under the methods set forth in
paragraph 6(b)(iv).
(v) No fractional shares shall be issued upon
exercise of a stock appreciation right. In lieu thereof, cash may be
paid in an amount equal to the value of the fraction or, if the Board
of Directors shall determine, the number of shares may be rounded
downward to the next whole share.
(vi) Each stock appreciation right granted in
connection with an Incentive Stock Option, and unless otherwise
determined by the Board of Directors with respect to a stock
appreciation right granted to a person who is neither an Officer nor a
director of the Company, each other stock appreciation right granted
under the Plan by its terms shall be nonassignable and nontransferable
by the holder, either voluntarily or by operation of law, except by
will or by the laws of descent and distribution of the state or country
of the holder's domicile at the time of death, and each stock
appreciation right by its terms shall be exercisable during the
holder's lifetime only by the holder.
(vii) Each participant who has exercised a stock
appreciation right shall, upon notification of the amount due, pay to
the Company in cash amounts necessary to satisfy any applicable
federal, state and local tax withholding requirements. If the
participant fails to pay the amount demanded, the Company may withhold
that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the
consent of the Board of Directors a participant may satisfy this
obligation, in whole or in part, by having the Company withhold from
any shares to be issued upon the exercise that number of shares that
would satisfy the withholding amount due or by delivering Common Stock
to the Company to satisfy the withholding amount.
(viii) Upon the exercise of a stock appreciation
right for shares, the number of shares reserved for issuance under the
Plan shall be reduced by the number
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of shares issued. Cash payments of stock appreciation rights shall
not reduce the number of shares of Common Stock reserved for issuance
under the Plan.
10. CASH BONUS RIGHTS.
(a) GRANT. The Board of Directors may grant cash bonus
rights under the Plan in connection with (i) options granted or previously
granted, (ii) stock appreciation rights granted or previously granted, (iii)
stock bonuses awarded or previously awarded and (iv) shares sold or
previously sold under the Plan. Cash bonus rights will be subject to rules,
terms and conditions as the Board of Directors may prescribe. Unless
otherwise determined by the Board of Directors with respect to a cash bonus
right granted to a person who is neither an Officer nor a director of the
Company, each cash bonus right granted under the Plan by its terms shall be
nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution
of the state or country of the holder's domicile at the time of death. The
payment of a cash bonus shall not reduce the number of shares of Common Stock
reserved for issuance under the Plan.
(b) CASH BONUS RIGHTS IN CONNECTION WITH OPTIONS. A cash
bonus right granted in connection with an option will entitle an optionee to
a cash bonus when the related option is exercised (or terminates in
connection with the exercise of a stock appreciation right related to the
option) in whole or in part if, in the sole discretion of the Board of
Directors, the bonus right will result in a tax deduction that the Company
has sufficient taxable income to use. If an optionee purchases shares upon
exercise of an option and does not exercise a related stock appreciation
right, the amount of the bonus, if any, shall be determined by multiplying
the excess of the total fair market value of the shares to be acquired upon
the exercise over the total option price for the shares by the applicable
bonus percentage. If the optionee exercises a related stock appreciation
right in connection with the termination of an option, the amount of the
bonus, if any, shall be determined by multiplying the total fair market value
of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right, including a previously granted bonus right, may
be changed from time to time at the sole discretion of the Board of Directors
but shall in no event exceed 75 percent.
(c) CASH BONUS RIGHTS IN CONNECTION WITH STOCK BONUS. A
cash bonus right granted in connection with a stock bonus will entitle the
recipient to a cash bonus payable when the stock bonus is awarded or
restrictions, if any, to which the stock is subject lapse. If bonus stock
awarded is subject to restrictions and is repurchased by the Company or
forfeited by the holder, the cash bonus right granted in connection with the
stock bonus shall terminate and may not be exercised. The amount and timing
of payment of a cash bonus shall be determined by the Board of Directors.
(d) CASH BONUS RIGHTS IN CONNECTION WITH STOCK PURCHASES. A
cash bonus right granted in connection with the purchase of stock pursuant to
paragraph 8 will entitle
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the recipient to a cash bonus when the shares are purchased or restrictions,
if any, to which the stock is subject lapse. Any cash bonus right granted in
connection with shares purchased pursuant to paragraph 8 shall terminate and
may not be exercised in the event the shares are repurchased by the Company
or forfeited by the holder pursuant to applicable restrictions. The amount of
any cash bonus to be awarded and timing of payment of a cash bonus shall be
determined by the Board of Directors.
(e) TAXES. The Company shall withhold from any cash bonus
paid pursuant to paragraph 10 the amount necessary to satisfy any applicable
federal, state and local withholding requirements.
11. PERFORMANCE UNITS. The Board of Directors may grant performance
units consisting of monetary units which may be earned in whole or in part if
the Company achieves certain goals established by the Board of Directors over
a designated period of time, but not in any event more than 10 years. The
goals established by the Board of Directors may include earnings per share,
return on shareholders' equity, return on invested capital, and such other
goals as may be established by the Board of Directors. In the event that the
minimum performance goal established by the Board of Directors is not
achieved at the conclusion of a period, no payment shall be made to the
participants. In the event the maximum corporate goal is achieved, 100
percent of the monetary value of the performance units shall be paid to or
vested in the participants. Partial achievement of the maximum goal may
result in a payment or vesting corresponding to the degree of achievement as
determined by the Board of Directors. Payment of an award earned may be in
cash or in Common Stock or in a combination of both, and may be made when
earned, or vested and deferred, as the Board of Directors determines.
Deferred awards shall earn interest on the terms and at a rate determined by
the Board of Directors. Unless otherwise determined by the Board of Directors
with respect to a performance unit granted to a person who is neither an
Officer nor a director of the Company, each performance unit granted under
the Plan by its terms shall be nonassignable and nontransferable by the
holder, either voluntarily or by operation of law, except by will or by the
laws of descent and distribution of the state or country of the holder's
domicile at the time of death. Each participant who has been awarded a
performance unit shall, upon notification of the amount due, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state
and local tax withholding requirements. If the participant fails to pay the
amount demanded, the Company may withhold that amount from other amounts
payable by the Company to the participant, including salary or fees for
services, subject to applicable law. With the consent of the Board of
Directors a participant may satisfy this obligation, in whole or in part, by
having the Company withhold from any shares to be issued that number of
shares that would satisfy the withholding amount due or by delivering Common
Stock to the Company to satisfy the withholding amount. The payment of a
performance unit in cash shall not reduce the number of shares of Common
Stock reserved for issuance under the Plan. The number of shares reserved for
issuance under the Plan shall be reduced by the number of shares issued upon
payment of an award.
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12. FOREIGN QUALIFIED GRANTS. Awards under the Plan may be granted
to such officers and employees of the Company and its subsidiaries and such
other persons described in paragraph 1 residing in foreign jurisdictions as
the Board of Directors may determine from time to time. The Board of
Directors may adopt such supplements to the Plan as may be necessary to
comply with the applicable laws of such foreign jurisdictions and to afford
participants favorable treatment under such laws; provided, however, that no
award shall be granted under any such supplement with terms which are more
beneficial to the participants than the terms permitted by the Plan.
13. CHANGES IN CAPITAL STRUCTURE.
(a) STOCK SPLITS; STOCK DIVIDENDS. If the outstanding
Common Stock of the Company is hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any stock split, combination of shares
or dividend payable in shares, recapitalization or reclassification
appropriate adjustment shall be made by the Board of Directors in the number
and kind of shares available for grants under the Plan. In addition, the
Board of Directors shall make appropriate adjustment in the number and kind
of shares as to which outstanding options, or portions thereof then
unexercised, shall be exercisable, so that the optionee's proportionate
interest before and after the occurrence of the event is maintained.
Notwithstanding the foregoing, the Board of Directors shall have no
obligation to effect any adjustment that would or might result in the
issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Board of Directors. Any such adjustments made by the Board of Directors shall
be conclusive.
(b) MERGERS, REORGANIZATIONS, ETC. In the event of a
merger, consolidation, plan of exchange, acquisition of property or stock,
separation, reorganization or liquidation to which the Company or a
subsidiary is a party or a sale of all or substantially all of the Company's
assets (each, a "Transaction"), the Board of Directors shall, in its sole
discretion and to the extent possible under the structure of the Transaction,
select one of the following alternatives for treating outstanding options
under the Plan:
(i) Outstanding options shall remain in effect in
accordance with their terms.
(ii) Outstanding options shall be converted into
options to purchase stock in the corporation that is the surviving or
acquiring corporation in the Transaction. The amount, type of
securities subject thereto and exercise price of the converted options
shall be determined by the Board of Directors of the Company, taking
into account the relative values of the companies involved in the
Transaction and the exchange rate, if any, used in determining shares
of the surviving corporation to be issued to holders of shares of the
Company. Unless otherwise determined by the Board
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of Directors, the converted options shall be vested only to the extent
that the vesting requirements relating to options granted hereunder
have been satisfied.
(iii) The Board of Directors shall provide a 30-day
period prior to the consummation of the Transaction during which
outstanding options may be exercised to the extent then exercisable,
and upon the expiration of such 30-day period, all unexercised options
shall immediately terminate. The Board of Directors may, in its sole
discretion, accelerate the exercisability of options so that they are
exercisable in full during such 30-day period.
(c) DISSOLUTION OF THE COMPANY. In the event of the
dissolution of the Company, options shall be treated in accordance with
paragraph 13(b)(iii).
(d) RIGHTS ISSUED BY ANOTHER CORPORATION. The Board of
Directors may also grant options, stock appreciation rights, performance units,
stock bonuses and cash bonuses and issue restricted stock under the Plan having
terms, conditions and provisions that vary from those specified in this Plan
provided that any such awards are granted in substitution for, or in connection
with the assumption of, existing options, stock appreciation rights, stock
bonuses, cash bonuses, restricted stock and performance units granted, awarded
or issued by another corporation and assumed or otherwise agreed to be provided
for by the Company pursuant to or by reason of a Transaction.
14. AMENDMENT OF PLAN. The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason, except that without the approval of the shareholders of the
Company, the Board of Directors may not increase the number of shares authorized
to be issued under paragraph 2 of the Plan (except for adjustments permitted
under paragraph 13(a) of the Plan). Except as provided in paragraphs 6(a)(iv),
9, 10 and 13, however, no change in an award already granted shall be made
without the written consent of the holder of such award.
15. APPROVALS. The obligations of the Company under the Plan are
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will use its best efforts to take steps
required by state or federal law or applicable regulations, including rules and
regulations of the Securities and Exchange Commission and any stock exchange on
which the Company's shares may then be listed, in connection with the grants
under the Plan. The foregoing notwithstanding, the Company shall not be
obligated to issue or deliver Common Stock under the Plan if such issuance or
delivery would violate applicable state or federal securities laws.
16. EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere in any
way with the right of the Company or any
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subsidiary by whom such employee is employed to terminate such employee's
employment at any time, for any reason, with or without cause, or to decrease
such employee's compensation or benefits, or (ii) confer upon any person
engaged by the Company any right to be retained or employed by the Company or
to the continuation, extension, renewal, or modification of any compensation,
contract, or arrangement with or by the Company.
17. RIGHTS AS A SHAREHOLDER. The recipient of any award under the
Plan shall have no rights as a shareholder with respect to any Common Stock
until the date of issue to the recipient of a stock certificate for such
shares. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date occurs
prior to the date such stock certificate is issued.
18. OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.
(a) INITIAL BOARD GRANTS. Each person who becomes a
Non-Employee Director after the Plan is adopted shall be automatically
granted an option to purchase 15,000 shares of Common Stock when he or she
becomes a Non-Employee Director, so long as such person has not previously
served as a director of the Company. A "Non-Employee Director" is a director
who is not an employee of the Company or any of its subsidiaries, but does
not include such a director whose employer prohibits such director from
receiving any grant of an option to purchase shares of Common Stock of the
Company.
(b) ADDITIONAL GRANTS. Each Non-Employee Director shall be
automatically granted an option to purchase additional shares of Common Stock
in each calendar year subsequent to the year in which such Non-Employee
Director was granted an option pursuant to paragraph 18(a), such option to be
granted as of the date of the Company's annual meeting of shareholders held
in such calendar year, provided that the Non-Employee Director continues to
serve in such capacity as of such date. The number of shares subject to each
additional grant shall be 5,000 shares for each Non-Employee Director.
(c) EXERCISE PRICE. The exercise price of all options
granted pursuant to this paragraph 18 shall be equal to 100 percent of the
fair market value of the Common Stock determined pursuant to paragraph
6(b)(iv).
(d) TERM OF OPTION. The term of each option granted
pursuant to this paragraph 18 shall be 10 years from the date of grant.
(e) EXERCISABILITY. Until an option expires or is
terminated and except as provided in paragraphs 18(g) and 13, an option
granted under this paragraph 18 shall be exercisable in full on the date one
year following the grant of the option.
(f) TERMINATION AS A DIRECTOR. If an optionee ceases to be
a director of the Company for any reason, including death, the option may be
exercised at any time prior to the
15
expiration date of the option or the expiration of 30 days (or 12 months in
the event of death) after the last day the optionee served as a director,
whichever is the shorter period, but only if and to the extent the optionee
was entitled to exercise the option as of the last day the optionee served as
a director.
(g) NONTRANSFERABILITY. Each option by its terms shall be
nonassignable and nontransferable by the optionee, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution
of the state or country of the optionee's domicile at the time of death, and
each option by its terms shall be exercisable during the optionee's lifetime
only by the optionee.
(h) EXERCISE OF OPTIONS. Options may be exercised upon
payment of cash or shares of Common Stock of the Company in accordance with
paragraph 6(a)(v).
Adopted: August 7, 1995.
Amended: May 20, 1997 (to increase shares in paragraph 2 to 1,500,000).
Amended: May 18, 1999 (to increase shares in paragraph 2 to 2,250,000 and to
increase individual limits in paragraph 5 to 450,000 and 100,000 shares).
Amended: August 12, 1999 (to increase shares in paragraph 2 to 2,750,000).
Amended: February 25, 2000 (amendments to paragraphs 6(a)(iii), 6(a)(v) and 14).
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