EXHIBIT 10.3
COMMVAULT SYSTEMS, INC.
LONG-TERM STOCK INCENTIVE PLAN
Mayer, Brown, Rowe & Maw LLP
Chicago, Illinois
COMMVAULT SYSTEMS, INC.
LONG-TERM STOCK INCENTIVE PLAN
COMMVAULT SYSTEMS, INC.
Certificate
I,___________________, ______________ of CommVault Systems, Inc., having
in my custody and possession the corporate records of said corporation, do
hereby certify that attached hereto is a true and correct copy of the CommVault
Systems, Inc. Long-Term Stock Incentive Plan as currently in effect.
WITNESS my hand this ___ day of ____________, 2006.
___________________________________
As Aforesaid
COMMVAULT SYSTEMS, INC.
LONG-TERM STOCK INCENTIVE PLAN
Section 1
GENERAL
1.1 Purpose. The CommVault Systems, Inc. Long-Term Stock Incentive Plan
(the "Plan") has been established by CommVault Systems, Inc. (the
"Company") to (i) attract and retain persons eligible to participate in
the Plan; (ii) motivate Participants, by means of appropriate
incentives, to achieve long-range goals; (iii) provide incentive
compensation opportunities that are competitive with those of other
similar companies; and (iv) further align Participants' interests with
those of the Company's other stockholders through compensation that is
based on the Company's common stock; and thereby promote the long-term
financial interest of the Company and the Subsidiaries, including the
growth in value of the Company's equity and enhancement of long-term
stockholder return.
1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among
the Eligible Individuals (including transferees of Eligible Individuals
to the extent the transfer is permitted by the Plan and the applicable
Award Agreement), those persons who will be granted one or more Awards
under the Plan, and thereby become "Participants" in the Plan.
1.3 Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan,
shall be subject to the provisions of Section 4 (relating to operation
and administration). Capitalized terms in the Plan shall be defined as
set forth in the Plan (including the definition provisions of Section
8).
Section 2
OPTIONS AND SARS
2.1 Definitions.
(a) The grant of an "Option" entitles the Participant to purchase
shares of Stock at an Exercise Price established by the
Committee. Any Option granted under this Section 2 may be
either an incentive stock option (an "ISO") or a non-qualified
option (an "NQO"), as determined in the discretion of the
Committee. An "ISO" is an Option that is intended to satisfy
the requirements applicable to an "incentive stock option"
described in section 422(b) of the Code. An "NQO" is an Option
that is not intended to be an "incentive stock option" as that
term is described in section 422(b) of the Code.
(b) A stock appreciation right (an "SAR") entitles the Participant
to receive, in cash or Stock (as determined in accordance with
subsection 2.5), value equal to (or otherwise based on) the
excess of: (a) the Fair Market Value of a specified number of
shares of Stock at the time of exercise; over (b) an Exercise
Price established by the Committee.
2.2 Exercise Price. The "Exercise Price" of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the
Option or SAR is granted; provided that, the Exercise Price shall not
be less than 100% of the Fair Market Value of a share of Stock on the
date of grant; and further provided that the Exercise Price for an
Option or SAR with respect to a share of Stock shall not be less than
the par value of a share of Stock.
2.3 Exercise. An Option and an SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established
by the Committee.
2.4 Payment of Option Exercise Price. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the
following:
(a) Subject to the following provisions of this subsection 2.4,
the full Exercise Price for shares of Stock purchased upon the
exercise of any Option shall be paid at the time of such
exercise (except that, in the case of an exercise arrangement
approved by the Committee and described in paragraph 2.4(c),
payment may be made as soon as practicable after the
exercise).
(b) The Exercise Price shall be payable in cash or by tendering,
by either actual delivery of shares or by attestation, shares
of Stock valued at Fair Market Value as of the day of
exercise, or in any combination thereof, as determined by the
Committee. Except as otherwise provided by the Committee,
payments made with shares of Stock shall be limited to shares
held by the Participant for not less than six months prior to
the payment date.
(c) The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by irrevocably
authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of
the Option and remit to the Company a sufficient portion of
the sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise.
(d) The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by delivery of a
promissory note containing such terms as the Committee shall
establish.
2.5 Settlement of Award. Settlement of Options and SARs is subject to
subsection 4.7.
Section 3
OTHER STOCK AWARDS
3.1 Definitions.
(a) A "Bonus Stock" Award is a grant of shares of Stock in return
for previously performed services, or in return for the
Participant surrendering other compensation that may be due,
or in return for amounts paid by the Participant.
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(b) A "Stock Unit" Award is the grant of a right to receive shares
of Stock in the future.
(c) A "Performance Share" Award is a grant of a right to receive
shares of Stock or Stock Units which is contingent on the
achievement of performance or other objectives during a
specified period.
(d) A "Restricted Stock" Award is a grant of shares of Stock, and
a "Restricted Stock Unit" Award is the grant of a right to
receive shares of Stock in the future, with such shares of
Stock or right to future delivery of such shares of Stock
subject to a risk of forfeiture or other restrictions that
will lapse upon the achievement of one or more goals relating
to completion of service by the Participant, or achievement of
performance or other objectives, as determined by the
Committee.
3.2 Restrictions on Awards. Each Bonus Stock Award, Stock Unit Award,
Performance Share Award, Restricted Stock Award and Restricted Stock
Unit Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall be subject to the following:
(a) Any such Award shall be subject to such conditions,
restrictions and contingencies as the Committee shall
determine.
(b) The Committee may designate whether any such Award being
granted to any Participant is intended to be
"performance-based compensation" as that term is used in
section 162(m) of the Code. Any such Awards designated as
intended to be "performance-based compensation" shall be
conditioned on the achievement of one or more Performance
Measures, to the extent required by Code section 162(m). The
Performance Measures established by the Committee may be with
respect to corporate performance, operating group or sub-group
performance, individual company performance, other group or
individual performance, or division performance, may be
measured gross or net and may be on a total or per share
basis. The Performance Measures that may be used by the
Committee for such Awards shall be based on any one or more of
the following, as selected by the Committee: earnings (e.g.,
earnings before income taxes, or "EBIT"; earnings before
income taxes, depreciation and amortization, or "EBITDA";
earnings per share, or "EPS"), financial return ratios (e.g.,
return on investment, or "ROI"; return on invested capital, or
"ROIC"; return on equity, or "ROE"), revenue, operating or net
cash flows, total shareholder return, market share, operating
income or net income, debt load reduction, expense management,
stock price and strategic business objectives, consisting of
one or more objectives based on meeting specific cost targets,
business expansion goals and goals relating to acquisitions or
divestitures. For Awards under this Section 3 intended to be
"performance-based compensation," the grant of the Awards and
the establishment of the Performance Measures shall be made
during the period required under Code section 162(m).
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Section 4
OPERATION AND ADMINISTRATION
4.1 Effective Date. Subject to the approval of the stockholders of the
Company, the Plan shall be effective as of the completion of an initial
public offering of the Stock (the "Effective Date"); provided, however,
that to the extent that Awards are granted under the Plan prior to its
approval by stockholders, the Awards shall be contingent on approval of
the Plan by the stockholders of the Company. The Plan shall be
unlimited in duration and, in the event of Plan termination, shall
remain in effect as long as any Awards under it are outstanding;
provided, however, that no Awards may be granted under the Plan after
the ten-year anniversary of the Effective Date (except for Awards
granted pursuant to commitments entered into prior to such ten-year
anniversary).
4.2 Shares Subject to Plan. The shares of Stock for which Awards may be
granted under the Plan shall be subject to the following:
(a) The shares of Stock with respect to which Awards may be made
under the Plan shall be shares currently authorized but
unissued or currently held or, to the extent permitted by
applicable law, subsequently acquired by the Company as
treasury shares, including shares purchased in the open market
or in private transactions.
(b) Subject to the following provisions of this subsection 4.2,
the maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be
equal to 6,000,000 shares of Stock, plus, if on April 1 of any
year in which the Plan is in effect the number of shares of
Stock with respect to which Awards may be granted is less than
five percent (5%) of the number of outstanding shares of Stock
on such date, an annual increase (determined as of April 1 of
each year) of an amount of shares such that the total number
of shares available for Awards under the Plan is equal to five
percent (5%) of the number of outstanding shares of Stock on
such date.
(c) To the extent provided by the Committee, any Award may be
settled in cash rather than Stock. To the extent any shares of
Stock covered by an Award are not delivered to a Participant
or beneficiary because the Award is forfeited or canceled, or
the shares of Stock are not delivered because the Award is
settled in cash or used to satisfy the applicable tax
withholding obligation, such shares shall not be deemed to
have been delivered for purposes of determining the maximum
number of shares of Stock available for delivery under the
Plan.
(d) If the exercise price of any stock option granted under the
Plan is satisfied by tendering shares of Stock to the Company
(by either actual delivery or by attestation), only the number
of shares of Stock issued net of the shares of Stock tendered
shall be deemed delivered for purposes of determining the
maximum number of shares of Stock available for delivery under
the Plan.
(e) Subject to paragraph 4.2(f), the following additional maximums
are imposed under the Plan:
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(i) The maximum number of shares of Stock that may be
issued pursuant to Options intended to be ISOs shall
be 25,000,000 shares during the duration of the Plan.
(ii) The maximum number of shares that may be covered by
Awards granted to any one individual pursuant to
Section 2 (relating to Options and SARs) shall be
25,000,000 shares during the duration of the Plan. If
an Option is in tandem with an SAR, such that the
exercise of the Option or SAR with respect to a share
of Stock cancels the tandem SAR or Option right,
respectively, with respect to such share, the tandem
Option and SAR rights with respect to each share of
Stock shall be counted as covering but one share of
Stock for purposes of applying the limitations of
this paragraph (ii).
(iii) For Stock Unit Awards, Performance Share Awards,
Restricted Stock Awards or Restricted Unit Awards
that are intended to be "performance-based
compensation" (as that term is used for purposes of
Code section 162(m)), no more than 25,000,000 shares
of Stock may be subject to such Awards granted to any
one individual during duration of the Plan
(regardless of when such shares are deliverable) and
if such Awards are settable in cash, no more than
$1,000,000 may be subject to such Awards granted to
any individual during any one-calendar-year period
(regardless of when such amounts are deliverable.
(f) In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock
split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee may adjust
Awards to preserve the benefits or potential benefits of the
Awards. Action by the Committee may include: (i) adjustment of
the number and kind of shares which may be delivered under the
Plan; (ii) adjustment of the number and kind of shares subject
to outstanding Awards; (iii) adjustment of the Exercise Price
of outstanding Options and SARs; and (iv) any other
adjustments that the Committee determines to be equitable.
4.3 General Restrictions. Delivery of shares of Stock or other amounts
under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company
shall have no liability to deliver any shares of Stock under
the Plan or make any other distribution of benefits under the
Plan unless such delivery or distribution would comply with
all applicable laws (including, without limitation, the
requirements of the Securities Act of 1933, and the applicable
requirements of any securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the
issuance may be effected on a non-certificated
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basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.
4.4 Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition
the delivery of any shares or other benefits under the Plan on
satisfaction of the applicable withholding obligations. The Committee,
in its discretion, and subject to such requirements as the Committee
may impose prior to the occurrence of such withholding, may permit such
withholding obligations to be satisfied through (a) cash payment by the
Participant, (b) through the surrender of shares of Stock which the
Participant already owns (provided, however, that to the extent shares
described in this paragraph (b) are used to satisfy more than the
minimum statutory withholding obligation, as described below, then,
except as otherwise provided by the Committee, payments made with
shares of Stock in accordance with this paragraph (b) above shall be
limited to shares held by the Participant for not less than six months
prior to the payment date), or (c) through the surrender of shares of
Stock to which the Participant is otherwise entitled under the Plan;
provided, however, that such shares under this paragraph (c) may be
used to satisfy not more than the Company's minimum statutory
withholding obligation (based on minimum statutory withholding rates
for Federal and state tax purposes, including payroll taxes, that are
applicable to such supplemental taxable income).
4.5 Grant and Use of Awards. In the discretion of the Committee, a
Participant may be granted any Award permitted under the provisions of
the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or replacement of awards
granted or outstanding under the Plan, or any other plan or arrangement
of the Company or a Subsidiary (including a plan or arrangement of a
business or entity, all or a portion of which is acquired by the
Company or a Subsidiary). Subject to the overall limitation on the
number of shares of Stock that may be delivered under the Plan, the
Committee may use available shares of Stock as the form of payment for
compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company or a Subsidiary,
including the plans and arrangements of the Company or a Subsidiary
assumed in business combinations.
4.6 Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the
right to receive dividend payments or dividend equivalent payments with
respect to Stock subject to the Award (both before and after the Stock
subject to the Award is earned, vested, or acquired), which payments
may be either made currently or credited to an account for the
Participant, and may be settled in cash or Stock, as determined by the
Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject
to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in
Stock equivalents.
4.7 Settlement of Awards. The obligation to make payments and distributions
with respect to Awards may be satisfied through cash payments, the
delivery of shares of Stock, the granting of replacement Awards, or
combination thereof as the Committee shall determine. Satisfaction of
any such obligations under an Award, which is sometimes
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referred to as "settlement" of the Award, may be subject to such
conditions, restrictions and contingencies as the Committee shall
determine. The Committee may permit or require the deferral of any
Award payment, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of
interest or dividend equivalents, and may include converting such
credits into deferred Stock equivalents. Each Subsidiary shall be
liable for payment of cash due under the Plan with respect to any
Participant to the extent that such benefits are attributable to the
services rendered for that Subsidiary by the Participant. Any disputes
relating to liability of a Subsidiary for cash payments shall be
resolved by the Committee.
4.8 Transferability. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the
Participant by will or by the laws of descent and distribution.
4.9 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other
person entitled to benefits under the Plan, and any permitted
modification, or revocation thereof, shall be in writing filed with the
Committee at such times, in such form, and subject to such restrictions
and limitations, not inconsistent with the terms of the Plan, as the
Committee shall require.
4.10 Agreement With Company. An Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the
Committee shall, in its sole discretion, prescribe. The terms and
conditions of any Award to any Participant shall be reflected in such
form of written document as is determined by the Committee. A copy of
such document shall be provided to the Participant, and the Committee
may, but need not require that the Participant sign a copy of such
document. Such document is referred to in the Plan as an "Award
Agreement" regardless of whether any Participant signature is required.
4.11 Action by Company or Subsidiary. Any action required or permitted to be
taken by the Company or any Subsidiary shall be by resolution of its
board of directors, or by action of one or more members of the board
(including a committee of the board) who are duly authorized to act for
the board, or (except to the extent prohibited by applicable law or
applicable rules of any stock exchange) by a duly authorized officer of
such company.
4.12 Gender and Number. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the
plural and the plural shall include the singular.
4.13 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right in or title to
any assets, funds or property of the Company or any Subsidiary
whatsoever, including, without limitation, any specific funds,
assets, or other property which the Company or any Subsidiary,
in its sole discretion, may set aside in anticipation of a
liability under the Plan. A Participant shall have only a
contractual right to the Stock or amounts, if any,
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payable under the Plan, unsecured by any assets of the Company
or any Subsidiary, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company or any
Subsidiary shall be sufficient to pay any benefits to any
person.
(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any participating
employee or other individual the right to be retained in the
employ of the Company or any Subsidiary or the right to
continue to provide services to the Company or any Subsidiary,
nor any right or claim to any benefit under the Plan, unless
such right or claim has specifically accrued under the terms
of the Plan. Except as otherwise provided in the Plan, no
Award under the Plan shall confer upon the holder thereof any
rights as a stockholder of the Company prior to the date on
which the individual fulfills all conditions for receipt of
such rights.
4.14 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
Section 5
CHANGE IN CONTROL
Subject to the provisions of paragraph 4.2(f) (relating to the
adjustment of shares), and except as otherwise provided in the Plan or the Award
Agreement reflecting the applicable Award, (a) upon a Change in Control that is
a merger or consolidation pursuant to which the Company is the surviving
corporation (other than a merger or consolidation pursuant to which the Company
survives but pursuant to which a majority of its outstanding shares of Stock are
converted into securities of another corporation or entity or are exchanged for
other consideration), any Option granted hereunder shall pertain and apply to
the securities which a holder of the number of shares of Stock then subject to
the Option would have been entitled to receive, and (b) upon a Change in Control
that is a dissolution or liquidation of the Company or a merger or consolidation
pursuant to which the Company is not the surviving corporation or pursuant to
which a majority of its outstanding shares of Stock are so converted or
exchanged, every Option hereunder shall terminate; provided, however, that if
any dissolution, liquidation, merger or consolidation described in paragraph (b)
is contemplated, the Company shall either arrange for any corporation succeeding
to the business or assets of the Company to issue to the Participant replacement
awards (which, in the case of ISOs, shall satisfy the requirements of the
Section 424 of the Code) on such corporation's stock or shall make the
outstanding Options fully exercisable (even if they would not otherwise then be
exercisable) at least 20 days before the effective date of any such dissolution,
liquidation, merger or consolidation.
Section 6
COMMITTEE
6.1 Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the
"Committee") in accordance with this Section 6. The Committee shall be
the Committee appointed by the Board. If the
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Committee does not exist, or for any other reason determined by the
Board, the Board may take any action under the Plan that would
otherwise be the responsibility of the Committee.
6.2 Powers of Committee. The Committee's administration of the Plan shall
be subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have
the authority and discretion to select from among the Eligible
Individuals those persons who shall receive Awards, to
determine the time or times of receipt, to determine the types
of Awards and the number of shares covered by the Awards, to
establish the terms, conditions, performance criteria,
restrictions, and other provisions of such Awards, to make
adjustments to Awards to reflect changes in the Participant's
relationship with the Company and (subject to the restrictions
imposed by Section 7) to cancel or suspend Awards.
(b) To the extent that the Committee determines that the
restrictions imposed by the Plan preclude the achievement of
the material purposes of the Awards in jurisdictions outside
the United States, the Committee will have the authority and
discretion to modify those restrictions as the Committee
determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside
of the United States.
(c) The Committee will have the authority and discretion to
interpret the Plan, to establish, amend, and rescind any rules
and regulations relating to the Plan, to determine the terms
and provisions of any Award Agreement made pursuant to the
Plan, and to make all other determinations that may be
necessary or advisable for the administration of the Plan.
(d) Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is final and binding on all
persons.
(e) In controlling and managing the operation and administration
of the Plan, the Committee shall take action in a manner that
conforms to the articles and by-laws of the Company, and
applicable state corporate law.
6.3 Delegation by Committee. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any
one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it.
Any such allocation or delegation may be revoked by the Committee at
any time.
6.4 Information to be Furnished to Committee. The Company and Subsidiaries
shall furnish the Committee with such data and information as it
determines may be required for it to discharge its duties. The records
of the Company and Subsidiaries as to an employee's or Participant's
employment (or other provision of services), termination of employment
(or cessation of the provision of services), leave of absence,
reemployment and compensation shall be conclusive on all persons unless
determined to be incorrect.
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Participants and other persons entitled to benefits under the Plan must
furnish the Committee such evidence, data or information as the
Committee considers desirable to carry out the terms of the Plan.
Section 7
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that
no amendment or termination may, in the absence of written consent to the change
by the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; and further provided that adjustments
pursuant to paragraph 4.2(f) shall not be subject to the foregoing limitations
of this Section 7. Notwithstanding the foregoing, it is the intent of the
Company that the Plan and Awards made hereunder comply with the requirements of
section 409A of the Code. The Board retains the right to amend the Plan, and the
Committee retains the right to amend any Awards made under the Plan, to the
extent it deems necessary or desirable to conform to the requirements of section
409A and applicable guidance issued thereunder.
Section 8
DEFINED TERMS
In addition to the other definitions contained herein, the following
definitions shall apply:
(a) Award. The term "Award" shall mean any award or benefit
granted under the Plan, including, without limitation, the
grant of Options, SARs, Bonus Stock Awards, Stock Unit Awards,
Restricted Stock Awards, Restricted Stock Unit Awards, and
Performance Share Awards.
(b) Board. The term "Board" shall mean the Board of Directors of
the Company.
(c) Change in Control. The term "Change in Control" shall mean:
(i) the consummation of transactions approved by the
stockholders of the Company pursuant to a definitive
agreement to merge the Company into or consolidate
the Company with another entity, sell or otherwise
dispose of all or substantially all of its assets or
adopt a plan of liquidation, provided that if the
merger, consolidation, sale of assets or liquidation
is not consummated for any reason, then no Change in
Control shall be deemed to have occurred, and further
provided, that if the merger, consolidation, sale of
assets or liquidation is consummated, then a Change
in Control shall be deemed to have occurred as of the
date of the consummation of the transaction;
provided, however, that a Change in Control shall not
be deemed to have occurred by reason of a
transaction, or a substantially concurrent or
otherwise related series of transactions, upon the
completion of which 50% or more of the beneficial
ownership of the voting power of the Company, the
surviving corporation or corporation directly or
indirectly controlling the Company or the surviving
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corporation, as the case may be, is held by the same
persons (as defined below) (although not necessarily
in the same proportion) as held the beneficial
ownership of the voting power of the Company
immediately prior to the transaction or the
substantially concurrent or otherwise related series
of transactions, except that upon the completion
thereof, employees or employee benefit plans of the
Company may be a new holder of such beneficial
ownership; provided, further, that a transaction with
an "Affiliate" of the Company (as defined in the
Exchange Act) shall not be treated as a Change in
Control; or
(ii) the "beneficial ownership" (as defined in Rule 13d-3
under the Exchange Act) of securities representing
50% or more of the combined voting power of the
Company is acquired, other than from the Company, by
any "person" as defined in Sections 13(d) and 14(d)
of the Exchange Act (other than by an Affiliate or
any trustee or other fiduciary holding securities
under an employee benefit or other similar stock plan
of the Company); or
(iii) at any time during any period of two consecutive
years, individuals who at the beginning of such
period were members of the Board cease for any reason
to constitute at least a majority thereof (unless the
election, or the nomination for election by the
Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the
directors still in office at the time of such
election or nomination who were directors at the
beginning of such period).
Notwithstanding the foregoing, Change in Control shall not be
deemed any change due to a public offering of Stock or any
other securities of the Company.
(d) Code. The term "Code" means the Internal Revenue Code of 1986,
as amended. A reference to any provision of the Code shall
include reference to any successor provision of the Code.
(e) Eligible Individual. The term "Eligible Individual" shall mean
any employee of the Company or a Subsidiary and any
consultant, director, or other person providing services to
the Company or a Subsidiary; provided however, that an ISO may
only be granted to an employee of the Company or a Subsidiary.
An Award may be granted to an individual, in connection with
hiring, retention or otherwise, prior to the date the
individual first performs services for the Company or the
Subsidiaries, provided that such Awards shall not become
vested prior to the date the individual first performs such
services.
(f) Fair Market Value. For purposes of determining the "Fair
Market Value" of a share of Stock as of any date, the
following rules shall apply:
(i) If, as of the date for which a determination is to be
made, the principal market for the Stock is a
national securities exchange or the Nasdaq stock
market, then the "Fair Market Value" shall be the
closing price of the
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Stock on the principal exchange or market on which
the Stock is then listed or admitted to trading
determined as of the business day preceding the date
for which the determination is to be made.
(ii) If, as of the date for which a determination is to be
made, the sale prices are not available or the
principal market for the Stock is not a national
securities exchange and the Stock is not quoted on
the Nasdaq stock market, then the "Fair Market Value"
shall be the closing price for the Stock as reported
on the Nasdaq OTC Bulletin Board Service or by the
National Quotation Bureau, Incorporated or a
comparable service determined as of the business day
preceding the date for which the determination is to
be made.
(iii) If, in accordance with rules established by the
Committee, a determination of "Fair Market Value" is
required as of any date and, as of that date,
paragraphs (i) and (ii) next above are inapplicable,
then the "Fair Market Value" as of that date shall be
determined by a nationally-recognized appraisal or
investment banking firm experienced in appraising
businesses, or by such other person, employee or
entity as shall be determined by the Committee from
time to time or such other method as the Committee
may decide in its sole discretion, with such
valuation to be performed in accordance with such
rules and considerations as are established by the
Committee. The Company shall bear the fees and
expenses of such valuation.
(g) Stock. The term "Stock" shall mean shares of common stock of
the Company.
(h) Subsidiaries. The term "Subsidiary" means any company during
any period in which it is a "subsidiary corporation" (as that
term is defined in Code section 424(f)) with respect to the
Company.
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