EXHIBIT 4.5
NELLCOR INCORPORATED
1994 EQUITY INCENTIVE PLAN
Adopted by the Board of Directors on July 27, 1994
Approved by the Stockholders on October 24, 1994
As Amended through August 25, 1995
1. PURPOSE.
(a) The purpose of the 1994 Equity Incentive Plan (the "Plan") is to
provide a means by which employees of and consultants to Nellcor Incorporated
(the "Company") and its Affiliates, as defined in subparagraph 1(b), may be
given an opportunity to benefit from increases in value of the stock of the
Company through the granting of (i) incentive stock options, (ii) nonqualified
stock options, (iii) stock grants, including restricted stock grants, and (iv)
rights to purchase restricted stock, all as defined below.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code"), including parents or subsidiaries which become such
after adoption of the Plan.
(c) The Company, by means of the Plan, seeks to retain the services
of persons now employed by or serving as consultants to the Company and its
Affiliates, to secure and retain the services of persons capable of filling such
positions and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.
(d) The Company intends that any and all grants issued under the Plan
("Stock Awards") shall, in the discretion of the Board of Directors of the
Company (the "Board"), or any committee to which responsibility for
administration of the Plan has been delegated pursuant to subparagraph 2(c), be
either (i) stock options granted pursuant to paragraph 5 hereof, including
incentive stock options as that term is used in Section 422 of the Code
("Incentive Stock Options"), or options which do not qualify as Incentive Stock
Options ("Nonqualified Stock Options") (Incentive Stock Options and Nonqualified
Stock Options being hereinafter referred to collectively as "Options"), or (ii)
stock grants, including restricted stock grants, or rights to purchase
restricted stock granted pursuant to paragraph 6 hereof.
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2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) to determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how Stock Awards shall be
granted; whether a Stock Award will be an Incentive Stock Option, a Nonqualified
Stock Option, a stock grant, a restricted stock grant, a right to purchase
restricted stock or a combination of the foregoing; the provisions of each Stock
Award granted (which need not be identical), including the time or times when a
person shall be permitted to purchase or receive stock pursuant to a Stock
Award; and the number of shares with respect to which Stock Awards shall be
granted to each such person;
(2) to construe and interpret the Plan and Stock Awards granted
under it and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award in a manner
and to the extent it shall deem necessary or expedient to make the Plan fully
effective;
(3) to amend the Plan as provided in paragraph 13; and
(4) generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company.
(c) Subject to subparagraph 2(f) below, the Board may delegate
administration of the Plan to a committee composed of not fewer than two (2)
members of the Board (the "Committee"), all of the members of which Committee
shall be disinterested persons if required and as defined by the provisions of
subparagraph 2(d). If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board.
(d) The term "disinterested person," as used in this Plan, shall mean
a director: (i) who was not during the one (1) year prior to service as an
administrator of the Plan granted or awarded equity securities pursuant to the
Plan or any other plan of the Company or any of its Affiliates entitling the
participants therein to acquire equity securities of the Company or any of its
Affiliates except as permitted by Rule 16b-3(c)(2)(i) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (ii) who is
otherwise considered to be a "disinterested person" in accordance with such
Rule, or any other applicable rules, regulations or interpretations of
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the Securities and Exchange Commission. Any such person shall otherwise comply
with the requirements of Rule 16b-3 promulgated under the Exchange Act.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply if the Board or the Committee expressly
declares that such requirement shall not apply.
(f) Notwithstanding the foregoing provisions of this paragraph 2,
grants of Stock Awards to any "covered employee", as such term is defined by
Section 162(m) of the Code ("Named Executive") shall be made only by a
subcommittee of the Committee which, in addition to meeting the other applicable
requirements of this paragraph 2, is composed solely of two or more "outside
directors" (the "Subcommittee"). For this purpose, "outside directors" do not
include directors who are (i) current employees of the Company or any Affiliate,
(ii) former employees of the Company or any Affiliate who are currently
receiving compensation for prior services (other than benefits under a tax-
qualified pension plan), (iii) current or former officers of the Company or any
Affiliate and (iv) persons currently receiving remuneration, from the Company or
any Affiliate for personal services in any capacity other than as a director.
For purposes of this subparagraph 2(f), remuneration received by persons from
the Company or any Affiliate for personal services shall include (i)
remuneration paid to an entity in which the person has a beneficial ownership
interest of greater than 50%; (ii) remuneration paid to an entity that employs
the person (including self-employment) in excess of the lesser of (A) $60,000 or
(B) 5% of the gross income of the entity for the entity's taxable year ending
with or within the Company's or any Affiliate's taxable year ("de minimis
remuneration"), and (iii) remuneration in excess of de minimis remuneration paid
to an entity in which the person has a beneficial ownership interest of at least
5% but not more than 50%.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 11 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
granted under the Plan shall not exceed in the aggregate Two Million Five
Hundred Thousand (2,500,000) shares of the Company's $.001 par value common
stock (the "Common Stock"). If any Stock Award granted under the Plan shall for
any reason expire or otherwise terminate without having been exercised in full,
the Common Stock not purchased under such Stock Award shall again become
available under the Plan. Shares repurchased by the Company pursuant to any
repurchase rights reserved by the Company pursuant to the Plan shall not be
available for subsequent issuance under the Plan.
(b) The Common Stock subject to the Plan may be authorized but
unissued shares or shares reacquired by the Company on the open market or
otherwise.
(c) An Incentive Stock Option may be granted to an eligible person
under the Plan only if the aggregate fair market value (determined at the time
the
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Incentive Stock Option is granted) of the Common Stock with respect to which
incentive stock options (as defined by the Code) are exercisable for the first
time by such optionee during any calendar year under all such plans of the
Company and its Affiliates does not exceed One Hundred Thousand Dollars
($100,000). If it is determined that an entire Option or any portion thereof
does not qualify for treatment as an Incentive Stock Option by reason of
exceeding such maximum, such Option or the applicable portion shall be
considered a Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to employees
(including officers) of the Company or its Affiliates. A director of the
Company shall not be eligible to receive Incentive Stock Options unless such
director is also an employee of the Company or any Affiliate. Stock Awards
other than Incentive Stock Options may be granted only to employees (including
officers) of or consultants to the Company or any Affiliate. A director of the
Company shall not be eligible to receive such Stock Awards, unless, subject to
subparagraph (b) below, such director is also an employee of or a consultant to
the Company or any Affiliate.
(b) A director shall in no event be eligible for the benefits of the
Plan unless at the time discretion is exercised in the selection of the director
as a person to whom options may be granted, or in the determination of the
number of shares which may be covered by options granted to the director: (i)
the Board has delegated its discretionary authority over the Plan to a Committee
which consists solely of "disinterested persons" as defined in subparagraph
2(d); or (ii) the Plan otherwise complies with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect. The Board
shall otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect. This subparagraph 4(b) shall not
apply if the Board or Committee expressly declares that such requirement shall
not apply.
(c) No person shall be eligible for the grant of an Incentive Stock
Option under the Plan if, at the time of grant, such persons owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates, unless the exercise price of such Incentive
Stock Option is at least one hundred and ten percent (110%) of the fair market
value of the Common Stock at the date of grant and the Incentive Stock Option is
not exercisable after the expiration of five (5) years from the date of grant.
5. TERMS OF STOCK OPTIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board or the Committee (or in the case of Options granted to
Named Executives, the Subcommittee) shall deem appropriate. The provisions of
separate
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Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the fair market value of the Common
Stock subject to the Option on the date the Option is granted. The exercise
price of each Nonqualified Stock Option shall be not less than eighty-five
percent (85%) of the fair market value of the Common Stock subject to the Option
on the date the Option is granted; provided, however, that the exercise price of
each Nonqualified Stock Option granted to Named Executives shall not be less
than one hundred percent (100%) of the fair market value of the Common Stock
subject to the Option on the date the Option is granted.
(c) The purchase price of Common Stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations,
either: (i) in cash at the time the Option is exercised; or (ii) at the
discretion of the Board or the Committee (or in the case of Options granted to
Named Executives, the Subcommittee), either at the time of grant or exercise of
the Option, (A) by delivery to the Company of shares of Common Stock of the
Company that have been held for the period required to avoid a charge to the
Company's reported earnings and valued at the fair market value on the date of
exercise, (B) according to a deferred payment or other arrangement with the
person to whom the Option is granted or to whom the Option is transferred
pursuant to subparagraph 5(d) or (C) in any other form of legal consideration
that may be acceptable to the Board or the Committee (or in the case of Options
granted to Named Executives, the Subcommittee) in their respective discretion.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at not less than the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) An Incentive Stock Option shall not be transferable except by
will or the laws of descent and distribution and shall be exercisable during the
lifetime of the optionee to whom the Incentive Stock Option is granted only by
such optionee. An option which is not an Incentive Stock Option shall not be
transferable except by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder (a "QDRO"), and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person or any transferee.
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(e) The total number of shares of Common Stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). From time to time during each of such installment periods, the
Option may become exercisable ("vest") with respect to some or all of the shares
allotted to that period and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the Option
was not fully exercised. During the remainder of the term of the Option (if its
term extends beyond the end of the installment periods), the Option may be
exercised from time to time with respect to any shares then remaining subject to
the Option. The provisions of this subparagraph 5(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.
(f) The Company may require any optionee, or any person to whom an
Option is transferred under subparagraph 5(d), as a condition of exercising any
such Option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative who has such knowledge and experience in
financial and business matters, (ii) to give written assurances satisfactory to
the Company that he or she is capable of evaluating, alone or together with the
purchaser's representative, the merits and risks of exercising the Option; and
(iii) to give written assurances satisfactory to the Company stating that such
person is acquiring the Common Stock subject to the Option for such person's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if: (x) the issuance of the shares upon the
exercise of the Option has been registered under a then currently effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"); or (y) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities law.
(g) An Option shall terminate three (3) months after termination of
the optionee's employment or relationship as a consultant with the Company or an
Affiliate, unless: (i) such termination is due to such person's permanent and
total disability within the meaning of Section 422(c)(6) of the Code in which
case the Option may, but need not, provide that it may be exercised at any time
within one (1) year following such termination of employment or relationship as
a consultant; (ii) the optionee dies while in the employ of or while serving as
a consultant to the Company or an Affiliate, or within not more than three (3)
months after termination of such employment or relationship as a consultant, in
which case the Option may, but need not, provide that it may be exercised at any
time within eighteen (18) months following the death of the optionee by the
person or persons to whom the optionee's rights under such Option pass by will
or by the laws of descent and distribution; or (iii) the Option by its term
specifies either (A) that it shall terminate sooner than three (3) months after
termination of the optionee's employment or relationship as a consultant with
the Company or an Affiliate; or (B) that it may be exercised more than three (3)
months after termination of the optionee's employment or
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relationship as a consultant with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any Option or to
permit anyone to exercise the Option after expiration of its term nor shall it
be construed to increase the number of shares as to which any Option is
exercisable from the amount exercisable on the date of termination of the
optionee's employment or relationship as a consultant.
(h) The Option may, but need not, include a provision whereby the
optionee may elect at any time during the term of his or her employment or
relationship as a consultant with the Company or any Affiliate to exercise the
Option as to any part or all of the shares subject to the Option prior to the
stated vesting dates of the Option. Any shares so purchased from any unvested
installment or Option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee determines to be
appropriate.
(i) To the extent provided by the terms of an Option, each optionee
may satisfy any federal, state or local tax withholding obligation relating to
the exercise of such Option by any of the following means or by a combination of
such means: (i) tendering a cash payment; (ii) authorizing the Company to
withhold from the shares of the Common Stock otherwise issuable to the optionee
as a result of the exercise of the Option a number of shares having a fair
market value less than or equal to the amount of the withholding tax obligation;
or (iii) delivering to the Company owned and unencumbered shares of the Common
Stock having the fair market value less than or equal to the amount of the
withholding tax obligation.
(j) No individual shall be granted Options representing more than
200,000 shares of Common Stock in any single calendar year.
6. TERMS OF STOCK GRANTS, RESTRICTED STOCK GRANTS AND PURCHASES OF
RESTRICTED STOCK.
Each stock grant agreement, restricted stock grant agreement or
restricted stock purchase agreement shall be in such form and shall contain such
terms and conditions as the Board or the Committee (or in the case of grants of
stock, including restricted stock grants, or rights to purchase restricted stock
to Named Executives, the Subcommittee) shall deem appropriate. The terms and
conditions of stock grant , restricted stock grant or restricted stock purchase
agreements may change from time to time, and the terms and conditions of
separate agreements need not be identical, but each stock grant agreement,
restricted stock grant agreement or restricted stock purchase agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions as
appropriate:
(a) The purchase price under each restricted stock purchase agreement
shall be such amount as the Board or Committee (or in the case of grants of
stock, including restricted stock grants, or rights to purchase restricted stock
to Named
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Executives, the Subcommittee) shall determine and designate in such agreement.
Notwithstanding the foregoing, the Board or the Committee (or in the case of
grants of stock, including restricted stock grants, or rights to purchase
restricted stock to Named Executives, the Subcommittee) may determine that
eligible participants in the Plan may be awarded stock pursuant to a stock grant
agreement or a restricted stock grant agreement.
(b) No rights under a stock grant agreement, restricted stock grant
agreement or restricted stock purchase agreement shall be assignable by an
participant under the Plan, either voluntarily or by operation of law, except
where such assignment is required by law or expressly authorized by the terms of
the applicable agreement.
(c) The purchase price of stock acquired pursuant to a restricted
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee (or in the case
of grants of stock, including restricted stock grants, or rights to purchase
restricted stock to Named Executives, the Subcommittee), according to a deferred
payment or other arrangement with the person to whom the Common Stock is sold;
or (iii) in any other form of legal consideration that may be acceptable to the
Board or the Committee (or in the case of grants of stock, including restricted
stock grants, or rights to purchase restricted stock to Named Executives, the
Subcommittee) in their discretion. Notwithstanding the foregoing, the Board or
the Committee (or in the case of grants of stock including restricted stock
grants or rights to purchase restricted stock to Named Executives, the
Subcommittee) to which administration of the Plan has been delegated may award
Common Stock pursuant to a stock grant agreement or a restricted stock grant
agreement.
(d) Shares of Common Stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee (or in the case of grants of stock, including restricted stock grants,
or rights to purchase restricted stock to Named Executives, the Subcommittee).
(e) In the event a person ceases to be an employee of or ceases to
serve as a consultant to the Company or an Affiliate, the Company may, in its
sole discretion, repurchase or otherwise acquire any or all of the shares of
Common Stock held by that person which have not vested as of the date of
termination under the terms of the stock grant agreement, restricted stock grant
agreement or restricted stock purchase agreement between the Company and such
person.
(f) The Subcommittee is hereby authorized to grant Stock Awards to
Named Executives consisting of stock grants or restricted stock grants which
qualify as performance-based compensation under Section 162(m) of the Code, such
that (i) the issuance of such Stock Awards is contingent upon attainment of pre-
established, objective performance goals of the Company or (ii) the lapsing of
restrictions or the vesting of such Stock Awards is contingent upon attainment
of pre-established, objective
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performance goals of the Company. The performance goals to be used in
connection with such Stock Awards will be revenues and/or operating profit of
the Company, as determined at the sole discretion of the Subcommittee.
Performance goals will be established by the Subcommittee, as the case may be,
prior to the beginning of each performance period, defined as July 1 of each
year or such later date as permitted under the Code or applicable regulations.
(g) No individual shall be granted stock, restricted stock or the
right to purchase restricted stock in an amount greater 50,000 shares of Common
Stock in any single calendar year.
7. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee (or in the case of Options granted to Named
Executives, the Subcommittee) shall have the authority to effect, at any time
and from time to time, with the consent of the affected holders of Options, (i)
the repricing of any outstanding Options under the Plan and/or (ii) the
cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of Common Stock; provided, however, that, in either
case, the new exercise price per share shall not be less than: in the case of
a Nonqualified Stock Option, eighty-five percent (85%) of the fair market value
per share of the Common Stock on the new grant date;, in the case of an
Incentive Stock Option, one hundred percent (100%) of the fair market value per
share of the Common Stock on the new grant date ; in the case of an Option
granted to a Named Executive, one hundred percent (100%) of the fair market
value per share of the Common Stock on the new grant date; or, in the case of an
incentive stock option granted to a 10% stockholder (as defined in subparagraph
4(c)), not less than one hundred and ten percent (110%) of the fair market value
per share of the Common Stock on the new grant date. A repricing of Options
permitted under this paragraph 7 shall be deemed to be the cancellation of the
outstanding Options and the grant in substitution therefore of new Options under
the Plan. Any Options canceled or deemed canceled pursuant to this paragraph 7
shall nevertheless be taken into account in computing the number of shares of
Common Stock granted to an individual in the form of Stock Awards in a given
calendar year for purposes of subparagraph 5(j).
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards granted under the Plan, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards up to the number of shares of Common Stock
authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Common Stock under the Stock Awards granted under
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the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any Stock Award
granted under the Plan or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority that
counsel for the Company deems necessary for the lawful issuance and sale of
Common Stock under the Plan, the Company shall be relieved from any liability
for failure to issue and sell Common Stock upon exercise of such Stock Awards
unless and until such authority is obtained.
9. USE OF PROCEEDS FROM COMMON STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards
granted under the Plan shall constitute general funds of the Company.
10. MISCELLANEOUS.
(a) The Board or Committee (or in the case of Stock Awards granted to
Named Executives, the Subcommittee) shall have the power to accelerate the time
during which a Stock Award may be exercised or the time during which a Stock
Award or any part thereof will vest notwithstanding the provisions in the Stock
Award stating the time during which it may be exercised or the time during which
it will vest.
(b) Neither an optionee nor any person to whom an Option is
transferred under the provisions of the Plan shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such person has satisfied all requirements for
exercise of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any eligible employee, consultant,
optionee or holder of Stock Awards under the Plan any right to continue in the
employ of the Company or any Affiliate or to continue acting as a consultant or
shall affect the right of the Company or any Affiliate to terminate the
employment or consulting relationship of any eligible employee, consultant,
optionee or holder of Stock Awards under the Plan with or without cause. In the
event that a holder of Stock Awards under the Plan is permitted or otherwise
entitled to take a leave of absence, the Company shall have the unilateral right
to (i) determine whether such leave of absence will be treated as a termination
of employment or relationship as consultant for purposes hereof, and (ii)
suspend or otherwise delay the time or times at which exercisability or vesting
would otherwise occur with respect to any outstanding Stock Awards under the
Plan.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
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If any change is made in the Common Stock subject to the Plan, or
subject to any Stock Award granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
Plan and outstanding Stock Awards will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan and the class(es)
and number of shares and price per share of stock subject to outstanding
Stock Awards.
12. CHANGE OF CONTROL.
(a) Notwithstanding anything to the contrary in this Plan, in the
event of a Change of Control (as hereinafter defined), then, at the sole
discretion of the Board and to the extend permitted by applicable law: (i) any
surviving corporation shall assume the rights and obligations of the Company
under any Stock Awards outstanding under the Plan or shall substitute similar
Stock Awards for those outstanding under the Plan; (ii) the time during which
such Stock Awards become vested or may be exercised shall be accelerated and any
outstanding unexercised rights under any Stock Awards terminated if not
exercised prior to such event; or (iii) such Stock Awards shall continue in full
force and effect.
(b) For purposes of the Plan, a "Change of Control" shall be deemed
to have occurred at any of the following times:
(i) Upon the acquisition (other than from the Company) by any
person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act (excluding, for this purpose, the Company or its Affiliates, or
any employee benefit plan of the Company or its Affiliates which acquires
beneficial ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors; or
(ii) At the time individuals who, as of July 19, 1994, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to July 19, 1994, whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of the Plan, considered as
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though such person were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the Company of a
reorganization, merger, consolidation, (in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than fifty percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or consolidated
company's then outstanding voting securities) or a liquidation or dissolution of
the Company or of the sale of all or substantially all of the assets of the
Company; or
(iv) The occurrence of any other event which the Incumbent Board
in its sole discretion determines constitutes a Change of Control.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 11 relating to adjustments upon changes
in the Common Stock, no amendment shall be effective unless approved within
twelve (12) months before or after the adoption of the amendment by the vote of
the majority of the shares of the Company represented and voting at a duly held
meeting where the amendment will:
(i) Increase the number of shares reserved for Stock Awards
under the Plan;
(ii) Increase the maximum number of shares that may be acquired
in any single calendar year by any individual under the Plan;
(iii) Modify the requirements as to eligibility for participation
in the Plan to the extent such modification requires stockholder approval in
order for the Plan to satisfy the requirements of Section 422(b) of the Code or
to comply with the requirements of Rule 16b-3 promulgated under the Exchange
Act; or
(iv) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 162(m) or 422(b) of the Code or to comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee Incentive Stock
Options and/or to bring the Plan and/or Options granted under it into compliance
therewith.
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(c) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan, unless: (i) the Company requests the consent of the person to whom the
Stock Award was granted; and (ii) such person consents in writing.
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14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on July 19, 20041. No Stock Awards
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Awards granted while the
Plan is in effect shall not be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the Stock Award was
granted.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercisable unless and until the
Plan has been approved by a majority of the Company's stockholders voting (in
person or by proxy) at a stockholder's meeting held within twelve (12) months of
the Board's adoption of the Plan and, if required, an appropriate permit has
been issued by the Commissioner of Corporations of the State of California.
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