EXHIBIT 10.40
SCANSOURCE, INC.
1997 STOCK INCENTIVE PLAN
1. PURPOSES
1.1 The purposes of the ScanSource, Inc.1997 Stock Incentive Plan are to (i)
provide an incentive and reward to directors and employees of the Company and
any Parent or Subsidiary, and consultants and advisors to the Company and any
Parent or Subsidiary, who are and have been in a position to contribute
materially to improving the Company's profits, (ii) aid in the growth of the
Company, and (iii) encourage ownership of Shares by directors and employees of
the Company and any Parent or Subsidiary.
2. DEFINITIONS
2.1 For purposes of this Plan the following terms shall have the definition
which is attributed to them below, unless another definition is clearly
indicated by a particular usage and context.
(a) "Agreement" means the written document issued by the Committee to a
---------
Participant whereby an Award is made to that Participant.
(b) "Award" means the issuance pursuant to this Plan of an Option, an
-----
SAR or Restricted Stock.
(c) "Awarded Shares" means Shares subject to outstanding Awards.
--------------
(d) "Board" means the Company's Board of Directors.
-----
(e) "Cause" means theft or destruction of property of the Company, a
-----
Parent or Subsidiary, disregard of Company rules or policies, or conduct
evidencing willful or wanton disregard of the interest of the Company. Such
determination shall be made by the Committee based on information presented
by the Company and the Participant and shall be final and binding on all
parties to the Agreement.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
----
(g) "Committee" means the Stock Incentive Plan Committee(s) appointed by
---------
the Board pursuant to Section 3.1.
(h) "Company" means ScanSource, Inc., a corporation incorporated under
-------
the laws of the state of South Carolina, and any successor thereto.
1
(i) "Consultant" means any person or entity that provides services to
----------
the Company as a consultant or advisor.
(j) "Director" means any individual appointed or elected to the Board.
--------
(k) "Effective Date of Grant" means the effective date on which the
-----------------------
Committee makes an Award.
(l) "Employee" means any individual who performs services as a common
--------
law employee for the Company, a Parent or Subsidiary, and is included on the
regular payroll of the Company, a Parent or Subsidiary.
(m) "Fair Market Value" means the value established by the Committee
-----------------
based upon such factors as the Committee in its sole discretion shall decide
including, but not limited to, a valuation prepared by an independent third
party appraiser selected or approved by the Committee. If at any time the
Shares are traded on an established trading system, it means the last sale
price reported on any stock exchange or over-the counter trading system on
which Shares are trading on a specified date or, if not so trading, the
average of the closing bid and asked prices for a Share on a specified date.
If no sale has been made on the specified date, then prices on the last
preceding day on which any such sale shall have been made shall be used in
determining fair market value under either method prescribed in the previous
sentence.
(n) "Incentive Stock Option" means any option granted under this Plan
----------------------
which meets the requirements of Code (S)422A and any regulations or rulings
promulgated thereunder and is designated by the Committee as an Incentive
Stock Option.
(o) "Nonqualified Stock Option" means any Option granted under this Plan
-------------------------
which is not an Incentive Stock Option.
(p) "Option" means the right to purchase from the Company a stated
------
number of Shares at a specified price.
(q) "Option Price" means the purchase price per Share subject to an
------------
Option and shall be fixed by the Committee.
(r) "Parent" means any corporation (other than the Company) in an
------
unbroken chain of corporations ending with the Company if, at the time of the
granting of the Award, each of the corporations (other than the Company) owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain within the
meaning of Code (S)425(e) and any regulations or rulings promulgated
thereunder.
(s) "Participant" means a Director, an Employee or a Consultant who has
-----------
received an Award under this Plan.
2
(t) "Permanent and Total Disability" shall have the same meaning as
------------------------------
given to that term by Code (S)22(e)(3) and any regulations or rulings
promulgated thereunder.
(u) "Plan" means this ScanSource, Inc. 1997 Stock Incentive Plan, as
----
evidenced herein and as amended from time to time.
(v) "Restricted Stock" means Shares issued to the Participant pursuant
----------------
to Section 9 which are subject to the restrictions of this Plan and the
Agreement.
(w) "Restriction Period" means a period commencing on the Effective Date
------------------
of Grant and ending on such date or upon the achievement of such performance
or other criteria as the Committee shall determine. The Restriction Period
may, in the sole discretion of the Committee, be structured to provide for a
release of restrictions in installments.
(x) "SAR" means stock appreciation rights issued to a Participant
---
pursuant to Section 8.
(y) "SAR Price" means the base value established by the Committee for an
---------
SAR on the Effective Date of Grant used in determining the amount of benefit,
if any, paid to a Participant.
(z) "Share" means one share of the common stock of the Company.
-----
(aa) "Subsidiary" means any corporation in an unbroken chain of
----------
corporations beginning with the Company if, at the time of the granting of
the Award, each of the corporations (other than the last corporation) in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain,
within the meaning of Code (S) 425(f) and any regulations or rulings
promulgated thereunder.
(bb) "1933 Act" means the Securities Act of 1933, as amended.
--------
(cc) "1934 Act" means the Securities Exchange Act of 1934, as amended.
--------
3. ADMINISTRATION
3.1 This Plan shall be administered by a Committee, or by more than one
Committee if desired and deemed necessary by the Board in order to provide
separate Committee authority for the granting of Awards to separate categories
of eligible Participants. Any such Committee shall consist of not less than two
members. The members of the Committee shall be appointed by the Board. The
Board may from time to time remove members from or add members to the Committee.
Vacancies on the Committee, howsoever caused, shall be filled by the Board.
3
3.2 The action of a majority of the Committee at which a quorum is present,
or an action approved in writing by a majority of the Committee, shall be the
valid action of the Committee.
3.3 The Committee shall from time to time at its discretion designate the
Directors, Employees and Consultants who shall be Participants, determine all
the terms and conditions as set forth in Section 61 or otherwise, including the
type of Award to be made to each, the exercise period, expiration date and other
applicable time periods for each Award, the number of Shares subject to each
Award, with respect to each Option whether it is an Incentive Stock Option or
Nonqualified Stock Option and, if applicable, the Option Price or SAR Price and
the general terms of the Award.
3.4 The interpretation and construction by the Committee of any provisions
of this Plan or of any Option granted under it and all actions of the Committee
shall be final and binding on all parties hereto. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to this Plan or any Award granted under it.
4. ELIGIBILITY
4.1 Each Participant shall be a Director, an Employee or a Consultant of the
Company, a Parent or a Subsidiary as selected by the Committee in its sole
discretion from time to time.
4.2 A Participant may hold more than one Award, but only on the terms and
subject to the restrictions set forth in this Plan.
5. SHARES SUBJECT TO AWARD
5.1 The securities subject to the Awards shall be 200,000 Shares. Such
number shall be adjusted as appropriate in order to give effect to changes made
in the number of outstanding Shares as a result of a merger, consolidation,
recapitalization, reclassification, combination, stock dividend, stock split, or
other relevant change.
5.2 In the event that any outstanding Award under this Plan expires or is
terminated for any reason, the Awarded Shares subject to that Award may again be
the subject of an Award under this Plan.
6. TERMS AND CONDITIONS
6.1 Awards granted pursuant to this Plan shall be authorized by the
Committee under terms and conditions approved by the Committee and shall be
evidenced by Agreements in such form as the Committee shall from time to time
approve, which Agreements shall contain or shall be subject to the following
terms and conditions, whether or not such terms and conditions are specifically
included therein:
4
(a) Number of Shares. Each Award shall state the number of Shares to
----------------
which it pertains.
(b) Date. Each Award shall state the Effective Date of Grant.
----
(c) Price. With respect to each Award or portion thereof, which requires
-----
payment of an Option Price, it shall state the Option Price. With respect to
an SAR, it shall state the SAR Price.
(d) Method and Time of Payment. With respect to an Award, or portion
--------------------------
thereof, which requires payment of an Option Price, the Option Price shall be
payable on the exercise of the Award and shall be paid in (i) cash, (ii)
Shares, including Shares acquired pursuant to this Plan, or (iii) part in
cash and part in Shares. Shares transferred in payment of the Option Price
shall be valued as of date of transfer based on their Fair Market Value.
(e) Transfer of Option or Stock. No Award, Option, SAR, or Restricted
---------------------------
Stock (prior to the expiration of the Restriction Period) shall be
transferable by the Participant, except by will or the laws of descent and
distribution upon the Participant's death and subject to any other
limitations of this Plan. In addition to any other restriction hereunder or
otherwise provided in the Agreement with the Participant, no Shares acquired
pursuant to an Award of any type may be sold, transferred or otherwise
disposed of prior to the end of the six month period which begins on the
Effective Date of Grant of such Award.
(f) Recapitalization. The Committee shall make appropriate adjustments
----------------
in the number of Awarded Shares or in the Option Price or SAR Price in order
to give effect to changes made in the number of outstanding Shares as a
result of a merger, consolidation, recapitalization, reclassification,
combination, stock dividend, stock split, or other relevant change.
(g) Investment Purpose.
------------------
(i) The Company shall not be obligated to sell or issue any Shares
pursuant to any Award unless such Shares are at that time effectively
registered or exempt from registration under the 1933 Act. The
determination of whether a Share is exempt from registration shall be
made by the Company's legal counsel and its determination shall be
conclusive and binding on all parties to the Agreement.
(ii) Notwithstanding anything in this Plan to the contrary, each
Award under this Plan shall be granted on the condition that the
purchases of Shares thereunder shall be for investment purposes and not
with a view for resale or distribution except that in the event the
Shares subject to such Award are registered under the 1933 Act, or in the
event of a resale of such Shares without such registration that would
otherwise be permissible, such condition shall be inoperative if in the
opinion of counsel for the Company such condition is not required under
the 1933 Act or any other applicable law, regulation, or rule of any
governmental agency.
5
(h) Other Provisions. Awards authorized under this Plan may contain any
----------------
other provisions or restrictions as the Committee in its sole and absolute
discretion shall deem advisable including, but not limited to:
(i) Offering Options in tandem with or reduced by other Options, SARs
or other employee benefits and reducing one Award by the exercise of
another Option, SAR or benefit; or
(ii) Providing for the issuance to the Participant upon exercise of
an Option and payment of the exercise price thereof with previously owned
Shares, of an additional Award for the number of shares so delivered,
having such other terms and conditions not inconsistent with this Plan as
the Committee shall determine.
(i) Duration of Award. Each Award shall be for a term of up to ten
-----------------
years from the Effective Date of Grant as determined in the sole discretion
of the Committee.
6.2 The Company may place such legends on stock certificates representing
the Shares as the Company, in its sole discretion, deems necessary or
appropriate to reflect restrictions under this Plan, the Agreement, the Code,
the securities laws or otherwise.
6.3 Notwithstanding any provision herein to the contrary, employment shall
be at the pleasure of the Board, of its designees, of the Company, a Parent or
Subsidiary, as the case may be, at such compensation as the appropriate board or
designee shall determine. Nothing contained in this Plan or in any Award
granted pursuant to it shall confer upon any Participant any right to continue
in the employ of the Company, Parent or Subsidiary, as the case may be, or to
interfere in any way with the right of the Company, Parent or Subsidiary to
terminate employment at any time. So long as the Participant shall continue to
be a Director, an Employee or a Consultant, the Award shall not be affected by
any change of the Participant's duties or position except to the extent the
Agreement with the Participant provides otherwise.
6.4 Any person entitled to exercise an Option or an SAR may do so in whole
or in part by delivering to the Company at its principal office, attention
Corporate Secretary, a written notice of exercise. The written notice shall
specify the number of Shares for which an Option or SAR is being exercised.
(a) With respect to an Option, the notice shall be accompanied by full
payment of the Option Price for the Shares being purchased.
(b) During the Participant's lifetime, an Option or SAR may be exercised
only by the Participant, or on the Participant's behalf by the Participant's
legal guardian.
6
7. INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
7.1 The Committee in its sole discretion may designate whether an Award to
an Employee is to be considered an Incentive Stock Option or a Nonqualified
Stock Option. AN AWARD TO A NON-EMPLOYEE DIRECTOR OR CONSULTANT MAY BE ONLY A
NONQUALIFIED STOCK OPTION. The Committee may grant both an Incentive Stock
Option and a Nonqualified Stock Option to the same Employee. However, where
both an Incentive Stock Option and a Nonqualified Stock Option are awarded at
one time, such Awards shall be deemed to have been awarded in separate grants,
shall be clearly identified, and in no event will the exercise of one such Award
affect the right to exercise the other such Award except to the extent the
Agreement with the Participant provides otherwise.
7.2 Any Award to an Employee designated by the Committee as an Incentive
Stock Option will be subject to the general provisions applicable to all Awards
granted under this Plan. In addition, the aggregate Fair Market Value of Shares
(determined at the Effective Date of Grant) with respect to which Incentive
Stock Options granted under all Incentive Stock Option Plans of the Company, a
Parent or Subsidiary, are exercisable by the Employee for the first time during
any calendar year shall not exceed $100,000.
7.3 The Option Price shall be established by the Committee in its sole
discretion. With respect to an Incentive Stock Option, the Option Price shall
not be less than 100% of the Fair Market Value of a Share on the Effective Date
of Grant. With respect to a Nonqualified Stock Option, the Option Price shall
not be less than 50% of the Fair Market Value of a Share on the Effective Date
of Grant.
7.4 Any Award to an Employee will be considered to be a Nonqualified Stock
Option to the extent that any or all of the grant is in conflict with Section
7.2 or with any requirement for Incentive Stock Options pursuant to Code (S)422A
and the regulations issued thereunder.
7.5 An Option may be terminated as follows:
(a) During the period of continuous employment with the Company, Parent
or Subsidiary, an Option will be terminated only if it has been fully
exercised or it has expired by its terms.
(b) Upon termination of employment, the Option will terminate upon the
earliest of (i) the full exercise of the Option (ii) the expiration of the
Option by its terms, and (iii) not more than three months following the date
of employment termination; provided, however, should termination of
employment (A) result from the death or Permanent and Total Disability of the
Participant, such period shall be one year or (B) be for Cause, the Option
will terminate on the date of employment termination. For purposes of this
Plan, a leave of absence approved by the Company shall not be deemed to be
termination of employment except with respect to an Incentive Stock Option as
required to comply with Code (S)422A and the regulations issued thereunder.
7
(c) Subject to the terms of the Agreement with the Participant, if a
Participant shall die or becomes subject to a Permanent and Total Disability
prior to the termination of employment with the Company, Parent or Subsidiary
and prior to the termination of an Option, such Option may be exercised to
the extent that the Participant shall have been entitled to exercise it at
the time of death or disability, as the case may be, by the Participant, the
estate of the Participant or the person or persons to whom the Option may
have been transferred by will or by the laws of descent and distribution.
7.6 Except as otherwise expressly provided in the Agreement with the
Participant, in no event will the continuation of the term of an Option beyond
the date of termination of employment allow the Participant, or the
beneficiaries or heirs of the Participant, to accrue additional rights under
this Plan, or to purchase more Shares through the exercise of an Option than
could have been purchased on the day that employment was terminated.
7.7 A Participant shall have no rights as a stockholder with respect to any
Shares subject to an Option until the date of the issuance of a stock
certificate to such Participant for such Shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as provided in Section
6.1.(f).
7.8 The continuous employment of a Consultant will be deemed terminated for
purposes of this Plan upon receipt of written notice from the Company to the
effect that the Company will no longer transact business with the Consultant.
8. STOCK APPRECIATION RIGHTS
8.1 The Committee, in its sole discretion, may grant to a Participant an
SAR.
8.2 The SAR Price shall be established by the Committee in its sole
discretion. The SAR Price shall not be less than 100% of Fair Market Value of a
Share on the Effective Date of Grant for a SAR issued in tandem with an
Incentive Stock Option and for other SARs, shall not be less than 50% of Fair
Market Value of a Share on the Effective Date of Grant.
8.3 Upon exercise of an SAR, the Participant shall be entitled, subject to
the terms and conditions of this Plan and the Agreement, to receive the excess
for each Share being exercised under the SAR (i) the Fair Market Value of a
Share on the date of exercise over (ii) the SAR Price for such Share.
8.4 At the sole discretion of the Committee, the payment of such excess
shall be made in (i) cash, (ii) Shares, or (iii) a combination of cash and
Shares. Shares used for this payment shall be valued at their Fair Market Value
on the date of exercise of the applicable SAR.
8.5 An Award of an SAR shall be considered an Award for purposes of the
number of Shares subject to an Award pursuant to Section 5.1, unless the
Agreement making the Award of
8
the SAR provides that the exercise of an SAR results in the termination of an
unexercised Option for the same number of Shares.
8.6 An SAR may be terminated as follows:
(a) During the period of continuous employment with the Company, Parent
or Subsidiary, an SAR will be terminated only if it has been fully exercised
or it has expired by its terms.
(b) Upon termination of employment, the SAR will terminate upon the
earliest of (i) the full exercise of the SAR (ii) the expiration of the SAR
by its terms, and (iii) not more than three months following the date of
employment termination; provided, however, should termination of employment
(I) result from the death or Permanent and Total Disability of the
Participant, such three month period shall be one year or (II) be for Cause,
the SAR will terminate on the date of employment termination. For purposes
of this Plan, a leave of absence approved by the Company shall not be deemed
to be termination of employment unless otherwise provided in the Agreement or
by the Company on the date of the leave of absence.
(c) Subject to the terms of the Agreement with the Participant if a
Participant shall die or becomes subject to a Permanent and Total Disability
prior to the termination of employment with the Company, Parent or Subsidiary
and prior to the termination of an SAR, such SAR may be exercised to the
extent that the Participant shall have been entitled to exercise it at the
time of death or disability, as the case may be, by the Participant, the
estate of the Participant or the person or persons to whom the SAR may have
been transferred by will or by the laws of descent and distribution.
(d) Except as otherwise expressly provided in the Agreement with the
Participant, in no event will the continuation of the term of an SAR beyond
the date of termination of employment allow the Employee, or his
beneficiaries or heirs, to accrue additional rights under this Plan, have
additional SARs available for exercise or to receive a higher benefit than
the benefit payable as if the SAR was exercised on the date of employment
termination.
8.7 If an SAR which was considered an Award for purposes of Section 8.5 is
terminated or unexercised for any reason, the number of Shares of such SAR that
were unexercised shall be again available for Award under this Plan.
8.8 The Participant shall have no rights as a stockholder with respect to an
SAR. In addition, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or rights except as provided in Section 6.1.(f).
9
9. RESTRICTED STOCK
9.1 The Committee may award to a Participant Restricted Stock under such
terms or conditions as the Committee, in its sole discretion, shall determine
and as otherwise provided herein.
9.2 Restricted Stock shall be Shares which are subject to a Restriction
Period.
9.3 Should the Participant terminate employment for any reason, all
Restricted Stock which is still subject to the Restriction Period shall be
forfeited and returned to the Company for no payment.
9.4 Upon such forfeiture, shares representing such forfeited restricted
Stock shall obtain become available for Award under the Plan.
9.5 The Committee may require under such terms and conditions as it deems
appropriate or desirable that the certificates for Restricted Stock awarded
under this Plan may be held by the Company or its designee until the Restriction
Period expires. In addition, the Committee may place upon such certificate such
legend as the Committee deems necessary or appropriate and may require as a
condition of any receipt of Restricted Stock that the Participant shall deliver
a stock power endorsed in blank relating to the Restricted Stock.
10. AMENDMENT OR DISCONTINUANCE OF PLAN
10.1 The Board may at any time amend, suspend, or discontinue this Plan;
provided, however, that without further approval of the shareholders of the
Company no amendments by the Board shall:
(a) Change the class of Employees eligible to participate; or
(b) Except as provided in Section 5, increase the number of Shares which
may be subject to Options granted under this Plan.
10.2 No amendment to this Plan shall alter or impair any Award granted under
this Plan without the consent of the holder of such Award.
11. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
Directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees, actually incurred in connection with the defense of any pending,
threatened or possible action, suit or proceeding, or in connection
10
with any pending, threatened or possible appeal therein, to which they or any of
them may be a party by reason of any actual or alleged action taken or failure
to act under or in connection with this Plan or any option granted thereunder,
and against all amounts paid by them in settlement thereof (provided such
settlement is approved by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for gross negligence or willful misconduct in the
performance of his duties: provided that within sixty days after institution of
any such action, suit or proceeding a Committee member shall in writing offer
the Company the opportunity, at its own expense, to handle and defend the same.
12. NO OBLIGATION TO EXERCISE OPTION OR SAR
The granting of an Option or SAR shall impose no obligation upon the
Participant to exercise such Option.
13. EFFECTIVE DATE; DURATION OF PLAN
13.1 This Plan shall become effective as of December 4, 1997.
13.2 No Award may be made after the tenth anniversary of the effective date
of this Plan.
14. EFFECT OF PLAN
The making of an Award under this Plan shall not give the Participant any
right to similar grants in future years or any right to be retained in the
employ of the Company, the Parent or a Subsidiary, but a Participant shall
remain subject to discharge to the same extent as if this Plan were not in
effect.
15. CHANGE IN CONTROL
15.1. Treatment of Outstanding Awards. Upon the occurrence of a Change In
-------------------------------
Control, as defined below, unless otherwise specifically prohibited under
applicable laws, or by the rules and regulations of any governmental agencies or
national securities exchanges, or by the express provisions of any Agreement,
(a) each Option and each SAR then outstanding hereunder that is not otherwise
exercisable shall become immediately and fully exercisable, and shall remain
exercisable throughout their entire term, notwithstanding any provision in the
Agreement relating to such Option or SAR for the exercise of such Option or SAR
in installments or otherwise pursuant to a vesting schedule, and (b) any
Restriction Period and restrictions imposed on Restricted Stock shall lapse.
11
15.2. Change in Control Defined. For purposes of this Section, a Change In
-------------------------
Control shall mean that any of the following events shall have occurred:
(i) A person, partnership, joint venture, corporation or other entity,
or two or more of any of the foregoing acting as a group (or a "person"
within the meaning of Section 13(d)(3) of the 1934 Act), other than the
Company, a majority-owned subsidiary of the Company, an employee benefit plan
(or related trust) of the Company or such subsidiary, become(s) after the
effective date of this Plan the "beneficial owner" (as defined in Rule
13(d)(3) under the 1934 Act) of 50% or more of the then outstanding voting
stock of the Company;
(ii) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Company's Board of Directors
(together with any new director whose election by the Company's Board of
Directors or whose nomination for election by the Company's shareholders, was
approved by the vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors then in office;
(iii) The Company's Board of Directors determines that a tender offer
for the Company's shares indicates a serious intention by the offeror to
acquire control of the Company; or
(iv) The Shareholders of the Company approve (a) a plan of complete
liquidation of the Company; or (b) an agreement for the sale or disposition
of all or substantially all of the Company's assets; or (c) a merger,
consolidation, or reorganization of the Company with or involving any other
corporation, other than a merger, consolidation, or reorganization that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least seventy-
five percent (75%) of the combined voting power of the voting securities of
the Company (or such surviving entity) outstanding immediately after such
merger, consolidation or reorganization.
15.3. Termination, Amendment and Modifications of Change in Control
-------------------------------------------------------------
Provisions. Notwithstanding any other provision of this Plan or any Agreement,
- ----------
the provisions of this Section may not be terminated, amended or modified on or
after the effective date of a Change in Control to affect adversely the
operation of any Award theretofore granted under the Plan without the prior
written consent of the Participant with respect to said Participant's
outstanding Awards.
16. SUCCESSORS; CONSOLIDATION, MERGER AND OTHER EVENTS
16.1. All obligations of the Company under this Plan or any Agreement with
respect to any Award granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase of all or substantially all of the business and/or assets of
the Company, or a merger, consolidation or otherwise. Specifically, in case of
any capital reorganization of the Company, or of any reclassification of
12
any Shares (other than a change as a result of subdivision or combination), or
in case of the consolidation of the Company with or the merger of the Company
with any other corporation (other than a consolidation or merger in which (i)
the Company is the continuing corporation and (ii) the holders of the Shares
immediately prior to such merger or consolidation continue as holders of Shares
after such merger or consolidation) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation,
each Option and each SAR then outstanding shall after such reorganization,
reclassification, consolidation, merger or sale be exercisable, upon the terms
and conditions specified herein and in the Agreement relating to such Option or
SAR, for or with respect to the number of Shares or other securities or property
to which a holder of the number of Shares relating to such Option or SAR (at the
time of such reorganization, reclassification, consolidation, merger or sale)
upon exercise of such Option or SAR would have been entitled in connection with
such reorganization, reclassification, consolidation, merger or sale; and in any
such case, if necessary, the provisions set forth in this Section with respect
to the rights and interests thereafter of the holder of the Option or SAR shall
be appropriately adjusted so as to be applicable, as nearly as may reasonably
be, to any shares of stock or other securities or property thereafter
deliverable on the exercise of the Option or SAR.
13