Exhibit 99
NASTECH PHARMACEUTICAL COMPANY, INC.
2004 STOCK INCENTIVE PLAN
ARTICLE I
GENERAL
1.1 PURPOSE
The Nastech Pharmaceutical Company, Inc. 2004 Stock Incentive Plan (the
"Plan") is designed to provide certain key persons, on whose initiative and
efforts the successful conduct of the business of Nastech Pharmaceutical
Company, Inc. (the "Company") depends, and who are responsible for the
management, growth and protection of the business of the Company, with
incentives to: (a) enter into and remain in the service of the Company, a
Company subsidiary or a Company joint venture, (b) acquire a proprietary
interest in the success of the Company, (c) maximize their performance and (d)
enhance the long-term performance of the Company (whether directly or indirectly
through enhancing the long-term performance of a Company subsidiary or a Company
joint venture). The Plan is also designed to provide certain "performance-based"
compensation to these key persons.
1.2 ADMINISTRATION
(a) Administration by Committee; Constitution of Committee. The Plan
shall be administered by the Compensation Committee of the board of directors of
the Company (the "Board") or such other committee or subcommittee as the Board
may designate or as shall be formed by the abstention or recusal of a
non-Qualified Member (as defined below) of such committee (the "Committee"). The
members of the Committee shall be appointed by, and serve at the pleasure of,
the Board. While it is intended that at all times that the Committee acts in
connection with the Plan, the Committee shall consist solely of at least two
Qualified Members, the fact that the Committee is not so comprised will not
invalidate any grant hereunder that otherwise satisfies the terms of the Plan. A
"Qualified Member" is both a "non-employee director" within the meaning of Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934 (the
"1934 Act") and an "outside director" within the meaning of section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). If the 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 and, in such a case, all references herein to the Committee shall
refer to the Board.
(b) Committee's Authority. The Committee shall have the authority (i)
to exercise all of the powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan and any Grant Certificates executed pursuant to
Section 2.1, (iii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules governing its own operations, (iv) to make
all determinations necessary or advisable in administering the Plan, (v) to
correct any defect, supply any omission and reconcile any inconsistency in the
Plan, and (vi) to amend the Plan to reflect changes in applicable law.
(c) Committee Action; Delegation. Actions of the Committee shall be
taken by the vote of a majority of its members. Any action may be taken by a
written instrument signed by a majority of the Committee members, and action so
taken shall be fully as effective as if it had been taken by a vote at a
meeting. Notwithstanding the foregoing or any other provision of the Plan, to
the fullest extent permitted by Section 157 of the Delaware General Corporation
Law (or any successor provision thereto) the Committee may delegate to one or
more officers of the Company the authority to designate the individuals (other
than such officer(s)), among those eligible to receive awards pursuant to the
terms of the Plan, who will
receive awards under the Plan and the size of each such award, provided that the
Committee shall itself grant awards to those individuals who could reasonably be
considered to be subject to the insider trading provisions of section 16 of the
1934 Act or whose awards could reasonably be expected to be subject to the
deduction limitations of section 162(m) of the Code.
(d) Determinations Final. The determination of the Committee on all
matters relating to the Plan or any Grant Certificate shall be final, binding
and conclusive.
(e) Limit on Committee Members' Liability. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any award thereunder.
1.3 PERSONS ELIGIBLE FOR AWARDS
The persons eligible to receive awards under the Plan are those
officers, directors (whether or not they are employed by the Company) and
executive, managerial, professional or administrative employees of the Company,
its subsidiaries and its joint ventures (collectively, "key persons") as the
Committee in its sole discretion shall select, provided, however, that incentive
stock options only may be granted to persons who are employees of the Company on
the date of grant.
1.4 TYPES OF AWARDS UNDER PLAN
Awards may be made under the Plan in the form of (a) incentive stock
options, (b) non-qualified stock options, (c) stock appreciation rights, (d)
restricted stock, and (e) performance shares, all as more fully set forth in
Article II. The term "award" means any of the foregoing.
1.5 SHARES AVAILABLE FOR AWARDS
(a) Aggregate Number Available; Certificate Legends. The total number
of shares of common stock of the Company ("Common Stock") with respect to which
awards may be granted pursuant to the Plan shall not exceed 600,000 shares.
Shares issued pursuant to the Plan may be authorized but unissued Common Stock,
authorized and issued Common Stock held in the Company's treasury or Common
Stock acquired by the Company for the purposes of the Plan. The Committee may
direct that any stock certificate evidencing shares issued pursuant to the Plan
shall bear a legend setting forth such restrictions on transferability as may
apply to such shares.
(b) Adjustment Upon Changes in Common Stock. Upon certain changes in
Common Stock, the number of shares of Common Stock available for issuance with
respect to awards that may be granted under the Plan pursuant to Section 1.5(a),
shall be adjusted pursuant to Section 3.7(a).
(c) Certain Shares to Become Available Again. The following shares of
Common Stock shall again become available for awards under the Plan: (i) any
shares that are subject to an award under the Plan and that remain unissued,
whether due to the cancellation or termination of such award for any reason
whatsoever, the settlement of such award for cash, or otherwise; and (ii) any
shares of restricted stock forfeited pursuant to Section 2.7(e), provided that
any dividends paid on such shares are also forfeited pursuant to such Section
2.7(e).
(d) Individual Limit. Except for the limits set forth in this Section
1.5(d) and in Section 2.2(h) (relating to incentive stock options), no provision
of this Plan shall be deemed to limit the number or value of shares with respect
to which the Committee may make awards to any eligible person. Subject to
adjustment as provided in Section 3.7(a), the total number of shares of Common
Stock with respect to which awards may be granted to any one employee of the
Company or a subsidiary during any one calendar year shall not exceed 100,000
shares. Stock options and stock appreciation rights granted and
subsequently canceled or deemed to be canceled in a calendar year count against
this limit even after their cancellation.
1.6 DEFINITIONS OF CERTAIN TERMS
(a) The "Fair Market Value" of a share of Common Stock on any day shall
be the closing price on the NASDAQ National Market or such other national
securities exchange on which the Common Stock is traded, as reported for such
day in The Wall Street Journal or, if no such price is reported for such day,
the average of the high bid and low asked price of Common Stock as reported for
such day. If no quotation is made for the applicable day, the Fair Market Value
of a share of Common Stock on such day shall be determined in the manner set
forth in the preceding sentence using quotations for the next preceding day for
which there were quotations, provided that such quotations shall have been made
within the ten (10) business days preceding the applicable day. Notwithstanding
the foregoing, if deemed necessary or appropriate by the Committee, the Fair
Market Value of a share of Common Stock on any day shall be determined by the
Committee. In no event shall the Fair Market Value of any share of Common Stock
be less than its par value.
(b) The term "incentive stock option" means an option that is intended
to qualify for special federal income tax treatment pursuant to sections 421 and
422 of the Code as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in the applicable
Grant Certificate. Any option that is not specifically designated as an
incentive stock option shall under no circumstances be considered an incentive
stock option. Any option that is not an incentive stock option is referred to
herein as a "non-qualified stock option."
(c) A grantee shall be deemed to have a "termination of employment"
upon (i) the date the grantee ceases to be employed by, or to provide consulting
services for, the Company, any Company subsidiary or Company joint venture, or
any corporation (or any of its subsidiaries) which assumes the grantee's award
in a transaction to which section 424(a) of the Code applies or (ii) the date
the grantee ceases to be a Board member, provided, however, that in the case of
a grantee (x) who is at the time of reference both an employee or consultant and
a Board member or (y) who ceases to be engaged as an employee, consultant or
Board member and immediately is engaged in another of such relationships with
the Company, any Company subsidiary or Company joint venture, the grantee shall
be deemed to have a "termination of employment" upon the later of the dates
determined pursuant to subparagraphs (i) and (ii) above. For purposes of clause
(i) above, a grantee who continues his or her employment or consulting
relationship with: (A) a Company subsidiary subsequent to its sale by the
Company, or (B) a Company joint venture subsequent to the Company's sale of its
interests in such joint venture, shall have a termination of employment upon the
date of such sale. The Committee may in its discretion determine whether any
leave of absence constitutes a termination of employment for purposes of the
Plan and the impact, if any, of any such leave of absence on awards theretofore
made under the Plan.
(d) The terms "parent corporation" and "subsidiary corporation" shall
have the meanings given them in sections 424(e) and (f) of the Code,
respectively.
(e) The term "employment" shall be deemed to mean an employee's
employment with the Company, any Company subsidiary or any Company joint venture
and each Board member's service as a Board member.
(f) The term "cause" in connection with a termination of employment by
reason of a dismissal for cause shall mean:
(i) to the extent that there is an employment, severance or
other agreement governing the relationship between the grantee and
the Company, a Company subsidiary or a Company joint venture,
which agreement contains a definition of "cause," cause shall
consist of those acts or omissions that would constitute "cause"
under such agreement; and otherwise,
(ii) the grantee's termination of employment by the Company or
an affiliate on account of any one or more of the following:
(A) any failure by the grantee substantially to perform
the grantee's employment duties;
(B) any excessive unauthorized absenteeism by the
grantee;
(C) any refusal by the grantee to obey the lawful orders
of the Board or any other person or committee to whom the
grantee reports;
(D) any act or omission by the grantee that is or may be
injurious to the Company, monetarily or otherwise;
(E) any act by the grantee that is inconsistent with the
best interests of the Company;
(F) the grantee's material violation of any of the
Company's policies, including, without limitation, those
policies relating to discrimination or sexual harassment;
(G) the grantee's unauthorized (a) removal from the
premises of the Company or an affiliate of any document (in
any medium or form) relating to the Company or an affiliate or
the customers or clients of the Company or an affiliate or (b)
disclosure to any person or entity of any of the Company's, or
its affiliates', confidential or proprietary information;
(H) the grantee's commission of any felony or any other
crime involving moral turpitude; and
(I) the grantee's commission of any act involving
dishonesty or fraud.
Notwithstanding the foregoing, in determining whether a termination of
employment by reason of a dismissal for cause has occurred pursuant to this
Section 1.6(f)(ii) for the purposes of Section 3.8(b)(iii) (relating to a
termination of employment following a Change in Control), reference shall be
made solely to subsections (B), (C), (F), (G), (H), and (I) of Section
1.6(f)(ii).
Any rights the Company may have hereunder in respect of the events
giving rise to cause shall be in addition to the rights the Company may have
under any other agreement with a grantee or at law or in equity. Any
determination of whether a grantee's employment is (or is deemed to have been)
terminated for cause for purposes of the Plan or any award hereunder shall be
made by the Committee in its discretion. If, subsequent to a grantee's voluntary
termination of employment or involuntary termination of employment without
cause, it is discovered that the grantee's employment could have been terminated
for cause, the Committee may deem such grantee's employment to have been
terminated for cause. A grantee's termination of employment for cause shall be
effective as of the date of the occurrence of the event giving rise to cause,
regardless of when the determination of cause is made.
ARTICLE II
AWARDS UNDER THE PLAN
2.1 CERTIFICATES EVIDENCING AWARDS
Each award granted under the Plan shall be evidenced by a written
certificate ("Grant Certificate") which shall contain such provisions as the
Committee may in its sole discretion deem necessary or desirable. By accepting
an award pursuant to the Plan, a grantee thereby agrees that the award shall be
subject to all of the terms and provisions of the Plan and the applicable Grant
Certificate.
2.2 GRANT OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
(a) Stock Option Grants. The Committee may grant incentive stock
options and non-qualified stock options (collectively, "options") to purchase
shares of Common Stock from the Company, to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms
and conditions, as the Committee shall determine in its sole discretion, subject
to the provisions of the Plan.
(b) Stock Appreciation Right Grants; Types of Stock Appreciation
Rights. The Committee may grant stock appreciation rights to such key persons,
and in such amounts and subject to such vesting and forfeiture provisions and
other terms and conditions, as the Committee shall determine in its sole
discretion, subject to the provisions of the Plan. The terms of a stock
appreciation right may provide that it shall be automatically exercised for a
cash payment upon the happening of a specified event that is outside the control
of the grantee, and that it shall not be otherwise exercisable. Stock
appreciation rights may be granted in connection with all or any part of, or
independently of, any option granted under the Plan. A stock appreciation right
granted in connection with a non-qualified stock option may be granted at or
after the time of grant of such option. A stock appreciation right granted in
connection with an incentive stock option may be granted only at the time of
grant of such option.
(c) Nature of Stock Appreciation Rights. The grantee of a stock
appreciation right shall have the right, subject to the terms of the Plan and
the applicable Grant Certificate, to receive from the Company an amount equal to
(i) the excess of the Fair Market Value of a share of Common Stock on the date
of exercise of the stock appreciation right over the Fair Market Value of a
share of Common Stock on the date of grant (or over the option exercise price if
the stock appreciation right is granted in connection with an option),
multiplied by (ii) the number of shares with respect to which the stock
appreciation right is exercised. Payment upon exercise of a stock appreciation
right shall be in cash or in shares of Common Stock (valued at their Fair Market
Value on the date of exercise of the stock appreciation right) or both, all as
the Committee shall determine in its sole discretion. Upon the exercise of a
stock appreciation right granted in connection with an option, the number of
shares subject to the option shall be reduced by the number of shares with
respect to which the stock appreciation right is exercised. Upon the exercise of
an option in connection with which a stock appreciation right has been granted,
the number of shares subject to the stock appreciation right shall be reduced by
the number of shares with respect to which the option is exercised, provided
that if the number of shares initially subject to the stock appreciation right
is less than the number of shares initially subject to the option, the number of
shares initially subject to the stock appreciation right only shall be reduced
to the extent that it causes the same number of shares to be subject to the
option and the stock appreciation right.
(d) Option Exercise Price. Each Grant Certificate with respect to an
option shall set forth the amount (the "option exercise price") payable by the
grantee to the Company upon exercise of the option evidenced thereby. The option
exercise price per share shall be determined by the Committee in its sole
discretion; provided, however, that the option exercise price of a stock option
shall be at least 100% of the Fair Market Value of a share of Common Stock on
the date the option is granted, and provided further that in no event shall the
option exercise price be less than the par value of a share of Common Stock.
(e) Exercise Period. Each Grant Certificate with respect to an option
or stock appreciation right shall set forth the periods during which the award
evidenced thereby shall be exercisable, whether in whole or in part. Such
periods shall be determined by the Committee in its sole discretion, subject to
Section 2.3 hereof.
(f) Incentive Stock Option Limitation: $100,000 Limitation. To the
extent that the aggregate Fair Market Value (determined as of the time the
option is granted) of the stock with respect to which incentive stock options
are first exercisable by any employee during any calendar year shall exceed
$100,000, or such higher amount as may be permitted from time to time under
section 422 of the Code, such options shall be treated as non-qualified stock
options.
(g) Incentive Stock Option Limitation: 10% Owners. Notwithstanding the
provisions of paragraphs (d) and (e) of this Section 2.2, an incentive stock
option may not be granted under the Plan to an individual who, at the time the
option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of his or her employer corporation or of
its parent or subsidiary corporations (as such ownership may be determined for
purposes of section 422(b)(6) of the Code) unless (i) at the time such incentive
stock option is granted the option exercise price is at least 110% of the Fair
Market Value of the shares subject thereto and (ii) the incentive stock option
by its terms is not exercisable after the expiration of 5 years from the date it
is granted.
2.3 EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS
Subject to the other provisions of this Article II, each option or
stock appreciation right granted under the Plan shall be exercisable as follows:
(a) Time and Method of Exercise.
(i) Beginning of Exercise Period for Employees. Unless the
applicable Grant Certificate otherwise provides, an option or stock
appreciation right for employees shall become exercisable in three
substantially equal installments on each of the first three
anniversaries of the date of grant, provided, however, that in no
event shall an option or stock appreciation right be exercisable
before the first anniversary of the date of grant.
(ii) Beginning of Exercise Period for Non-Employee Directors. An
option or stock appreciation right for non-employee directors shall
become fully exercisable on the first anniversary of the date of
grant, except that a grant made in conjunction with an annual
stockholders meeting shall become fully exercisable on the earlier of
the first anniversary of the date of grant and the next annual
stockholders meeting.
(iii) End of Exercise Period. Unless the applicable Grant
Certificate otherwise provides, once an installment becomes
exercisable, it shall remain exercisable until the earlier of (i) the
tenth anniversary of the date of grant of the award or (ii) the
expiration, cancellation or termination of the award; provided,
however, that no stock option (or a stock appreciation right granted
in connection with a stock option) shall be exercisable more than 10
years after the date of grant.
(iv) Timing and Extent of Exercise. Unless the applicable Grant
Certificate otherwise provides, (A) an option or stock appreciation
right may be exercised from time to time as to all or part of the
shares as to which such award is then exercisable and (B) a stock
appreciation right granted in connection with an option may be
exercised at any time when, and to the same extent that, the related
option may be exercised.
(v) Notice of Exercise. An option or stock appreciation right
shall be exercised by the filing of a written notice with the Company
or the Company's designated exchange agent (the "exchange agent"), on
such form and in such manner as the Committee shall in its sole
discretion prescribe.
(b) Payment of Exercise Price. Any written notice of exercise of an
option shall be accompanied by payment for the shares being purchased. Such
payment shall be made: (i) by certified or official bank check (or the
equivalent thereof acceptable to the Company or its exchange agent) for the full
option exercise price; or (ii) with the consent of the Committee, by delivery of
shares of Common Stock owned by the grantee (whether acquired by option exercise
or otherwise, provided that if such shares were acquired pursuant to the
exercise of a stock option, they were acquired at least six months prior to the
option exercise date or such other period as the Committee may from time to time
determine) having a Fair Market Value (determined as of the exercise date) equal
to all or part of the option exercise price and a certified or official bank
check (or the equivalent thereof acceptable to the Company or its exchange
agent) for any remaining portion of the full option exercise price; or (iii) at
the discretion of the Committee and to the extent permitted by law, by such
other provision, consistent with the terms of the Plan, as the Committee may
from time to time prescribe (whether directly or indirectly through the exchange
agent).
(c) Delivery of Certificates Upon Exercise. Promptly after receiving
payment of the full option exercise price, or after receiving notice of the
exercise of a stock appreciation right for which payment will be made partly or
entirely in shares, the Company or its exchange agent shall, subject to the
provisions of Section 3.2, deliver to the grantee or to such other person as may
then have the right to exercise the award, a certificate or certificates for the
shares of Common Stock for which the award has been exercised. If the method of
payment employed upon option exercise so requires, and if applicable law
permits, a grantee may direct the Company or its exchange agent, as the case may
be, to deliver the stock certificate(s) to the grantee's stockbroker.
(d) No Stockholder Rights. No grantee of an option or stock
appreciation right (or other person having the right to exercise such award)
shall have any of the rights of a stockholder of the Company with respect to
shares subject to such award until the issuance of a stock certificate to such
person for such shares. No adjustment shall be made for dividends, distributions
or other rights (whether ordinary or extraordinary, and whether in cash,
securities or other property) for which the record date is prior to the date
such stock certificate is issued.
2.4 COMPENSATION IN LIEU OF EXERCISE OF AN OPTION
The Committee may in its sole discretion, with respect to a
non-qualified stock option, and with the written consent of the grantee with
respect to an incentive stock option, determine to substitute for the exercise
of such option compensation to the grantee not in excess of the difference
between the option exercise price and the Fair Market Value of the shares
covered by such option on the date designated by the Committee. Such
compensation may be in cash, in shares of Common Stock, or both, and the payment
thereof may be subject to conditions, all as the Committee shall determine in
its sole discretion. In the event compensation is substituted pursuant to this
Section 2.4 for the exercise, in whole or in part, of an option, the number of
shares subject to the option shall be reduced by the number of shares for which
such compensation is substituted.
2.5 TERMINATION OF EMPLOYMENT; DEATH SUBSEQUENT TO A TERMINATION
OF EMPLOYMENT
(a) General Rule. Except to the extent otherwise provided in paragraphs
(b), (c), (d) or (e) of this Section 2.5 or Section 3.8(b)(iii) (relating to a
termination of employment following a change in control of the Company), a
grantee who incurs a termination of employment may exercise any outstanding
option or stock appreciation right on the following terms and conditions: (i)
exercise may be
made only to the extent that the grantee was entitled to exercise the award on
the termination of employment date; and (ii) exercise must occur within three
months after termination of employment but in no event after the original
expiration date of the award.
(b) Dismissal for Cause; Resignation. If a grantee incurs a termination
of employment as the result of a dismissal for cause, all options and stock
appreciation rights not theretofore exercised shall terminate upon the
commencement of business on the date of the grantee's termination of employment.
(c) Disability. If a grantee incurs a termination of employment by
reason of a disability (as defined below), then any outstanding option or stock
appreciation right shall be exercisable on the following terms and conditions:
(i) exercise may be made only to the extent that the grantee was entitled to
exercise the award on the termination of employment date; and (ii) exercise must
occur by the earlier of (A) the first anniversary of the grantee's termination
of employment, or (B) the original expiration date of the award. For this
purpose "disability" shall mean: (x) except in connection with an incentive
stock option, any physical or mental condition that would qualify a grantee for
a disability benefit under the long-term disability plan maintained by the
Company or, if there is no such plan, a physical or mental condition that
prevents the grantee from performing the essential functions of the grantee's
position (with or without reasonable accommodation) for a period of six
consecutive months and (y) in connection with an incentive stock option, a
disability described in section 422(c)(6) of the Code. The existence of a
disability shall be determined by the Committee in its absolute discretion.
(d) Death.
(i) Termination of Employment as a Result of Grantee's Death.
If a grantee incurs a termination of employment as the result of death,
then any outstanding option or stock appreciation right shall be
exercisable on the following terms and conditions: (A) exercise may be
made only to the extent that the grantee was entitled to exercise the
award on the date of death; and (B) exercise must occur by the earlier
of (1) the first anniversary of the grantee's termination of
employment, or (2) the original expiration date of the award.
(ii) Death Subsequent to a Termination of Employment. If a
grantee terminates employment after age 65 and dies within the
three-month period following such termination of employment, then the
award shall remain exercisable until the earlier to occur of (A) the
first anniversary of the grantee's date of death or (B) the original
expiration date of the award.
(iii) Restrictions on Exercise Following Death. Any such
exercise of an award following a grantee's death shall be made only by
the grantee's executor or administrator or other duly appointed
representative reasonably acceptable to the Committee, unless the
grantee's will specifically disposes of such award, in which case such
exercise shall be made only by the recipient of such specific
disposition. If a grantee's personal representative or the recipient of
a specific disposition under the grantee's will shall be entitled to
exercise any award pursuant to the preceding sentence, such
representative or recipient shall be bound by all the terms and
conditions of the Plan and the applicable Grant Certificate which would
have applied to the grantee including, without limitation, the
provisions of Sections 3.2 and 3.8 hereof.
(e) Special Rules for Incentive Stock Options. No option that remains
exercisable for more than three months following a grantee's termination of
employment for any reason other than death (including death within three months
after the termination of employment) or disability, or for more than one year
following a grantee's termination of employment as the result of disability, may
be treated as an incentive stock option.
(f) Committee Discretion. The Committee, in the applicable Grant
Certificate, may waive or modify the application of the foregoing provisions of
this Section 2.5.
2.6 TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
Except as otherwise provided in an applicable Grant Certificate
evidencing an option or stock appreciation right, during the lifetime of a
grantee, each option or stock appreciation right granted to a grantee shall be
exercisable only by the grantee and no option or stock appreciation right shall
be assignable or transferable otherwise than by will or by the laws of descent
and distribution. The Committee may, in any applicable Grant Certificate
evidencing an option (other than an incentive stock option to the extent
inconsistent with the requirements of section 422 of the Code applicable to
incentive stock options), permit a grantee to transfer all or some of the
options to (A) the grantee's spouse, children or grandchildren ("Immediate
Family Members"), (B) a trust or trusts for the exclusive benefit of such
Immediate Family Members, or (C) other parties approved by the Committee in its
absolute discretion. Following any such transfer, any transferred options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to the transfer.
2.7 GRANT OF RESTRICTED STOCK
(a) Restricted Stock Grants. The Committee may grant restricted shares
of Common Stock to such key persons, in such amounts, and subject to such
transferability provisions and other terms and conditions as the Committee shall
determine in its sole discretion, subject to the provisions of the Plan.
Notwithstanding the foregoing, unless the applicable Grant Certificate otherwise
provides, a restricted stock award shall vest in three substantially equal
annual installments on each of the first three anniversaries of the date of
grant, provided, however, that in no event shall a restricted stock award vest
before the first anniversary of the date of grant. Restricted stock awards may
be made independently of or in connection with any other award under the Plan. A
grantee of a restricted stock award shall have no rights with respect to such
award unless such grantee accepts the award within such period as the Committee
shall specify by accepting delivery of a Grant Certificate in such form as the
Committee shall determine and, in the event the restricted shares are newly
issued by the Company, makes payment to the Company or its exchange agent by
certified or official bank check (or the equivalent thereof acceptable to the
Company) in an amount at least equal to the par value of the shares covered by
the award.
(b) Issuance of Stock Certificate(s). Promptly after a grantee accepts
a restricted stock award, the Company or its transfer agent shall issue to the
grantee a stock certificate or stock certificates for the shares of Common Stock
covered by the award or shall establish an account evidencing ownership of the
stock in uncertificated form. Upon the issuance of such stock certificate(s), or
establishment of such account, the grantee shall have the rights of a
stockholder with respect to the restricted stock, subject to: (i) the
nontransferability restrictions and forfeiture provision described in paragraphs
(d) and (e) of this Section 2.7; (ii) in the Committee's discretion, a
requirement that any dividends paid on such shares shall be held in escrow until
all restrictions on such shares have lapsed; and (iii) any other restrictions
and conditions contained in the applicable Grant Certificate.
(c) Custody of Stock Certificate(s); Stockholder Rights. Unless the
Committee shall otherwise determine, any stock certificates issued evidencing
shares of restricted stock shall remain in the possession of the Company until
such shares are free of any restrictions specified in the applicable Grant
Certificate. The Committee may direct that such stock certificate(s) bear a
legend setting forth the applicable restrictions on transferability.
(d) Nontransferability. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
otherwise specifically provided in this Plan or the applicable Grant
Certificate. The Committee at the time of grant shall specify the date or dates
(which may depend upon or be related to the attainment of performance goals and
other conditions) on which the nontransferability of the restricted stock shall
lapse.
(e) Consequence of Termination of Employment. Except as otherwise
provided in the applicable Grant Certificate, a grantee's termination of
employment for any reason (including death) shall cause the immediate forfeiture
of all shares of restricted stock that have not yet vested as of the date of
such termination of employment. All dividends paid on such shares also shall be
forfeited, whether by termination of any escrow arrangement under which such
dividends are held, by the grantee's repayment of dividends received directly,
or otherwise.
2.8 GRANT OF PERFORMANCE SHARES
(a) Performance Share Grants. The Committee may grant performance share
awards to such key persons, and in such amounts and subject to such vesting and
forfeiture provisions and other terms and conditions, as the Committee shall in
its sole discretion determine, subject to the provisions of the Plan. Such an
award shall entitle the grantee to acquire shares of Common Stock, or to be paid
the value thereof in cash, as the Committee shall determine, if specified
performance goals are met. Performance shares may be awarded independently of,
or in connection with, any other award under the Plan. A grantee shall have no
rights with respect to a performance share award unless such grantee accepts the
award by accepting delivery of a Grant Certificate at such time and in such form
as the Committee shall determine.
(b) Stockholder Rights. The grantee of a performance share award will
have the rights of a stockholder only as to shares for which a stock certificate
has been issued pursuant to the award and not with respect to any other shares
subject to the award.
(c) Consequence of Termination of Employment. Except as may otherwise
be provided by the Committee at any time prior to a grantee's termination of
employment, the rights of a grantee of a performance share award shall
automatically terminate upon the grantee's termination of employment for any
reason (including death).
(d) Exercise Procedures; Automatic Exercise. At the discretion of the
Committee, the applicable Grant Certificate may set out the procedures to be
followed in exercising a performance share award or it may provide that such
exercise shall be made automatically after satisfaction of the applicable
performance goals.
(e) Tandem Grants; Effect on Exercise. Except as otherwise specified by
the Committee, (i) a performance share award granted in tandem with an option
may be exercised only while the option is exercisable, (ii) the exercise of a
performance share award granted in tandem with any other award shall reduce the
number of shares subject to such other award in the manner specified in the
applicable Grant Certificate, and (iii) the exercise of any award granted in
tandem with a performance share award shall reduce the number of shares subject
to the performance share award in the manner specified in the applicable Grant
Certificate.
(f) Nontransferability. Performance shares may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as otherwise
specifically provided in this Plan or the applicable Grant Certificate.
ARTICLE III
MISCELLANEOUS
3.1 AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS
(a) Amendment of the Plan. Subject to Section 3.1(b), the Board may
from time to time suspend, discontinue, revise or amend the Plan in any respect
whatsoever, except that no such amendment shall materially impair any rights or
materially increase any obligations under any award theretofore made under the
Plan without the consent of the grantee (or, upon the grantee's death, the
person having the right to exercise the award). For purposes of this Section
3.1, any action of the Board or the Committee that in
any way alters or affects the tax treatment of any award shall not be considered
to materially impair any rights of any grantee.
(b) Stockholder Approval Requirement. Stockholder approval shall be
required with respect to any amendment to the Plan which is required by
applicable law or stock exchange rules.
(c) Modification of Awards. The Committee may cancel any award under
the Plan. The Committee also may amend any outstanding Grant Certificate,
including, without limitation, by amendment which would: (i) accelerate the time
or times at which the award becomes unrestricted or may be exercised; (ii) waive
or amend any goals, restrictions or conditions set forth in the Grant
Certificate; or (iii) waive or amend the operation of Section 2.5 with respect
to the termination of the award upon termination of employment, provided
however, that no amendment may lower the exercise price of an option. However,
any such cancellation or amendment (other than an amendment pursuant to Sections
3.7 or 3.8(b)) that materially impairs the rights or materially increases the
obligations of a grantee under an outstanding award shall be made only with the
consent of the grantee (or, upon the grantee's death, the person having the
right to exercise the award).
3.2 CONSENT REQUIREMENT
(a) No Plan Action Without Required Consent. If the Committee shall at
any time determine that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the granting of any award
under the Plan, the issuance or purchase of shares or other rights thereunder,
or the taking of any other action thereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee.
(b) Consent Defined. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or qualifications
in respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies.
3.3 NONASSIGNABILITY
Except as provided in Sections 2.5(e), 2.6, 2.7(d), and 2.8(f): (a) no
award or right granted to any person under the Plan or under any Grant
Certificate shall be assignable or transferable other than by will or by the
laws of descent and distribution; and (b) all rights granted under the Plan or
any Grant Certificate shall be exercisable during the life of the grantee only
by the grantee or the grantee's legal representative.
3.4 REQUIREMENT OF NOTIFICATION OF ELECTION UNDER SECTION 83(B) OF
THE CODE
If any grantee shall, in connection with the acquisition of shares of
Common Stock under the Plan, make the election permitted under section 83(b) of
the Code (i.e., an election to include in gross income in the year of transfer
the amounts specified in section 83(b)), such grantee shall notify the Company
of such election within 10 days of filing notice of the election with the
Internal Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under the authority of Code section 83(b).
3.5 REQUIREMENT OF NOTIFICATION UPON DISQUALIFYING DISPOSITION
UNDER SECTION 421(B) OF THE CODE
Each grantee of an incentive stock option shall notify the Company of
any disposition of shares of Common Stock issued pursuant to the exercise of
such option under the circumstances described in section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition.
3.6 WITHHOLDING TAXES
(a) With Respect to Cash Payments. Whenever cash is to be paid pursuant
to an award under the Plan, the Company shall be entitled to deduct therefrom an
amount sufficient in its opinion to satisfy all federal, state and other
governmental tax withholding requirements related to such payment.
(b) With Respect to Delivery of Common Stock. Whenever shares of Common
Stock are to be delivered pursuant to an award under the Plan, the Company shall
be entitled to require as a condition of delivery that the grantee remit to the
Company an amount sufficient in the opinion of the Company to satisfy all
federal, state and other governmental tax withholding requirements related
thereto. With the approval of the Committee, which the Committee shall have sole
discretion whether or not to give, the grantee may satisfy the foregoing
condition by electing to have the Company withhold from delivery shares having a
value equal to the amount of tax to be withheld. Such shares shall be valued at
their Fair Market Value as of the date on which the amount of tax to be withheld
is determined. Fractional share amounts shall be settled in cash. Such a
withholding election may be made with respect to all or any portion of the
shares to be delivered pursuant to an award.
3.7 ADJUSTMENT UPON CHANGES IN COMMON STOCK
(a) Shares Available for Grants. In the event of any change in the
number of shares of Common Stock outstanding by reason of any stock dividend or
split, reverse stock split, recapitalization, merger, consolidation, combination
or exchange of shares or similar corporate change, the maximum number of shares
of Common Stock with respect to which the Committee may grant awards under
Article II hereof, as described in Section 1.5(a), and the individual annual
limit described in Section 1.5(d), shall be appropriately adjusted by the
Committee. In the event of any change in the number of shares of Common Stock
outstanding by reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of shares of Common
Stock with respect to which awards: (i) may be granted under Article II hereof
and (ii) granted to any one employee of the Company or a subsidiary during any
one calendar year, in each case as the Committee may deem appropriate, unless
such adjustment would cause any award that would otherwise qualify as
performance based compensation with respect to a "162(m) covered employee" (as
defined in Section 3.9(a)(i)), to cease to so qualify.
(b) Outstanding Restricted Stock and Performance Shares. Unless the
Committee in its absolute discretion otherwise determines, any securities or
other property (including dividends paid in cash) received by a grantee with
respect to a share of restricted stock which has not yet vested, as a result of
any dividend, stock split, reverse stock split, recapitalization, merger,
consolidation, combination, exchange of shares or otherwise, will not vest until
such share of restricted stock vests, and shall be promptly deposited with the
Company or other custodian designated pursuant to Section 2.7(c) hereof.
The Committee may, in its absolute discretion, adjust any grant of
performance shares to reflect any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
similar corporate change as the Committee may deem appropriate to prevent the
enlargement or dilution of rights of grantees.
(c) Outstanding Options and Stock Appreciation Rights -- Increase or
Decrease in Issued Shares Without Consideration. Subject to any required action
by the stockholders of the Company, in the event of any increase or decrease in
the number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend (but
only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company,
the Committee shall proportionally adjust the number of shares of Common Stock
subject to each outstanding option and stock appreciation right, and the
exercise price-per-share of Common Stock of each such option and stock
appreciation right.
(d) Outstanding Options and Stock Appreciation Rights -- Certain
Mergers. Subject to any required action by the stockholders of the Company, in
the event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
option and stock appreciation right outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities which a holder of the
number of shares of Common Stock subject to such option or stock appreciation
right would have received in such merger or consolidation.
(e) Outstanding Options and Stock Appreciation Rights -- Certain Other
Transactions. In the event of (i) a dissolution or liquidation of the Company,
(ii) a sale of all or substantially all of the Company's assets, (iii) a merger
or consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which the
Company is the surviving corporation but the holders of shares of Common Stock
receive securities of another corporation and/or other property, including cash,
the Committee shall, in its absolute discretion, have the power to:
(A) cancel, effective immediately prior to the occurrence of
such event, each option and stock appreciation right outstanding
immediately prior to such event (whether or not then exercisable), and,
in full consideration of such cancellation, pay to the grantee to whom
such option or stock appreciation right was granted an amount in cash,
for each share of Common Stock subject to such option or stock
appreciation right, respectively, equal to the excess of (x) the value,
as determined by the Committee in its absolute discretion, of the
property (including cash) received by the holder of a share of Common
Stock as a result of such event over (y) the exercise price of such
option or stock appreciation right; or
(B) provide for the exchange of each option and stock
appreciation right outstanding immediately prior to such event (whether
or not then exercisable) for an option on or stock appreciation right
with respect to, as appropriate, some or all of the property which a
holder of the number of shares of Common Stock subject to such option
or stock appreciation right would have received and, incident thereto,
make an equitable adjustment as determined by the Committee in its
absolute discretion in the exercise price of the option or stock
appreciation right, or the number of shares or amount of property
subject to the option or stock appreciation right or, if appropriate,
provide for a cash payment to the grantee to whom such option or stock
appreciation right was granted in partial consideration for the
exchange of the option or stock appreciation right.
(f) Outstanding Options and Stock Appreciation Rights -- Other Changes.
In the event of any change in the capitalization of the Company or a corporate
change other than those specifically referred to in Sections 3.7(c), (d) or (e)
hereof, the Committee may, in its absolute discretion, make such adjustments in
the number and class of shares subject to options and stock appreciation rights
outstanding on the date on which such change occurs and in the per-share
exercise price of each such option and stock appreciation right as the Committee
may consider appropriate to prevent dilution or enlargement of rights. In
addition, if and to the extent the Committee determines it is appropriate, the
Committee may elect to cancel each option and stock appreciation right
outstanding immediately prior to such event (whether or not then exercisable),
and, in full consideration of such cancellation, pay to the grantee to whom such
option or stock appreciation right was granted an amount in cash, for each share
of Common Stock subject to such option or stock appreciation right,
respectively, equal to the excess of (i) the Fair Market
Value of Common Stock on the date of such cancellation over (ii) the exercise
price of such option or stock appreciation right.
(g) No Other Rights. Except as expressly provided in the Plan, no
grantee shall have any rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock subject to an award or the
exercise price of any option or stock appreciation right.
3.8 CHANGE IN CONTROL
(a) Change in Control Defined. For purposes of this Section 3.8, a
"Change in Control" shall be deemed to have occurred upon the happening of any
of the following events: (i) any "person," including a "group," as such terms
are defined in sections 13(d) and 14(d) of the 1934 Act and the rules
promulgated thereunder, becomes the beneficial owner, directly or indirectly,
whether by purchase or acquisition or agreement to act in concert or otherwise,
of 20% or more of the outstanding shares of Common Stock of the Company; (ii)
the consummation of the merger, consolidation, or liquidation of the Company, or
the sale of all or substantially all of the assets of the Company; or (iii) a
majority of directors are elected to the Board without having previously been
nominated and approved by a majority of the members of the Board incumbent on
the day immediately preceding such election.
(b) Effect of a Change in Control. Upon the occurrence of a Change in
Control:
(i) notwithstanding any other provision of this Plan, any
award then outstanding shall become fully vested and any award in the
form of an option or stock appreciation right shall be immediately
exercisable;
(ii) to the extent permitted by law, the Committee may, in its
sole discretion, amend any Grant Certificate in such manner as it deems
appropriate;
(iii) a grantee who incurs a termination of employment for any
reason, other than a dismissal for cause, concurrent with or within one
year following the Change in Control may exercise any outstanding
option or stock appreciation right, but only to the extent that the
grantee was entitled to exercise the award on the grantee's termination
of employment date, until the earlier of (A) the original expiration
date of the award and (B) the later of (x) the date provided for under
the terms of Section 2.5 without reference to this Section 3.8(b)(iii)
and (y) the first anniversary of the grantee's termination of
employment.
3.9 LIMITATIONS IMPOSED BY SECTION 162(M)
(a) Qualified Performance-Based Compensation. To the extent the
Committee determines it is desirable to grant an award to an individual it
anticipates might be a "162(m) covered employee" (as defined below), with
respect to which award the compensation realized by the grantee will or may not
otherwise be deductible by operation of section 162(m) of the Code, the
Committee may, as part of its effort to have such an award treated as "qualified
performance-based compensation" within the meaning of Code section 162(m), make
the vesting of the award subject to the attainment of one or more preestablished
objective performance goals.
(i) An individual is a "162(m) covered employee" if,
as of the last day of the Company's taxable year for which the
compensation related to an award would otherwise be deductible (without
regard to section 162(m)), he or she is (A) the chief executive officer
of the
Company (or is acting in such capacity) or (B) one of the four highest
compensated officers of the Company other than the chief executive
officer. Whether an individual is described in either clause (A) or (B)
above shall be determined in accordance with applicable regulations
under section 162(m) of the Code.
(ii) If the Committee has determined to grant an
award to an individual it anticipates might be a 162(m) covered
employee pursuant to this Section 3.9(a), then prior to the earlier to
occur of (A) the first day after 25% of each period of service to which
the performance goal relates has elapsed and (B) the ninety first
(91st) day of such period and, in either case, while the performance
outcome remains substantially uncertain, the Committee shall set one or
more objective performance goals for each such 162(m) covered person
for such period. Such goals shall be expressed in terms of (A) one or
more corporate or divisional earnings-based measures (which may be
based on net income, operating income, cash flow, residual income or
any combination thereof) and/or (B) one or more corporate, divisional
or individual scientific or inventive measures. Each such goal may be
expressed on an absolute and/or relative basis, may employ comparisons
with past performance of the Company (including one or more divisions)
and/or the current or past performance of other companies, and in the
case of earnings-based measures, may employ comparisons to capital,
stockholders' equity and shares outstanding. The terms of the award
shall state an objective formula or standard for computing the amount
of compensation payable, and shall preclude discretion to increase the
amount of compensation payable, if the goal is attained.
(iii) Except as otherwise provided herein, the
measures used in performance goals set under the Plan shall be
determined in accordance with generally accepted accounting principles
("GAAP") and in a manner consistent with the methods used in the
Company's regular reports on Forms 10-K and 10-Q, without regard to any
of the following unless otherwise determined by the Committee
consistent with the requirements of section 162(m)(4)(C) and the
regulations thereunder: (A) all items of gain, loss or expense for the
period that are related to special, unusual or nonrecurring items,
events or circumstances affecting the Company or the financial
statements of the Company; (B) all items of gain, loss or expense for
the period that are related to (x) the disposal of a business or
discontinued operations or (y) the operations of any business acquired
by the Company during the period; and (C) all items of gain, loss or
expense for the period that are related to changes in accounting
principles or to changes in applicable law or regulations.
(b) Nonqualified Deferred Compensation. Notwithstanding any other
provision hereunder, prior to a Change in Control, if and to the extent that the
Committee determines the Company's federal tax deduction in respect of an award
may be limited as a result of section 162(m) of the Code, the Committee may take
the following actions:
(i) With respect to options or stock appreciation
rights, the Committee may delay the exercise or payment, as the case
may be, in respect of such options or stock appreciation rights until a
date that is within 30 days after the earlier to occur of (A) the date
that compensation paid to the grantee no longer is subject to the
deduction limitation under section 162(m) of the Code and (B) the
occurrence of a Change in Control. In the event that a grantee
exercises an option or stock appreciation right at a time when the
grantee is a 162(m) covered employee, and the Committee determines to
delay the exercise or payment, as the case may be, in respect of any
such award, the Committee shall credit cash or, in the case of an
amount payable in Common Stock, the Fair Market Value of the Common
Stock, payable to the grantee to a book account. The grantee shall have
no rights in respect of such book account and the amount credited
thereto shall not be transferable by the grantee other than by will or
laws of descent and distribution. The Committee may credit additional
amounts to such book account as it may determine in its sole
discretion. Any book account created hereunder shall represent only an
unfunded, unsecured promise by the Company to pay the amount credited
thereto to the grantee in the future.
(ii) With respect to restricted stock or performance
shares, the Committee may require the grantee to surrender to the
Committee any Grant Certificates with respect to such awards, in order
to cancel the awards of such restricted stock or performance shares. In
exchange for such cancellation, the Committee shall credit to a book
account a cash amount equal to the Fair Market Value of the shares of
Common Stock subject to such awards. The amount credited to the book
account shall be paid to the grantee within 30 days after the earlier
to occur of (A) the date that compensation paid to the grantee no
longer is subject to the deduction limitation under section 162(m) of
the Code and (B) the occurrence of a Change in Control. The grantee
shall have no rights in respect of such book account and the amount
credited thereto shall not be transferable by the grantee other than by
will or laws of descent and distribution. The Committee may credit
additional amounts to such book account as it may determine in its sole
discretion. Any book account created hereunder shall represent only an
unfunded, unsecured promise by the Company to pay the amount credited
thereto to the grantee in the future.
3.10 RIGHT OF DISCHARGE RESERVED
Nothing in the Plan or in any Grant Certificate shall confer upon any
grantee the right to continue employment with the Company or affect any right
which the Company may have to terminate such employment.
3.11 NATURE OF PAYMENTS
(a) Consideration for Services Performed. Any and all grants of awards
and issuances of shares of Common Stock under the Plan shall be in consideration
of services performed for the Company by the grantee.
(b) Not Taken into Account for Benefits. All such grants and issuances
shall constitute a special incentive payment to the grantee and shall not be
taken into account in computing the amount of salary or compensation of the
grantee for the purpose of determining any benefits under any pension,
retirement, profit-sharing, bonus, life insurance or other benefit plan of the
Company or under any agreement between the Company and the grantee, unless such
plan or agreement specifically otherwise provides.
3.12 NON-UNIFORM DETERMINATIONS
The Committee's determinations under the Plan need not be uniform and
may be made by it selectively among persons who receive, or who are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee shall
be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Grant Certificates,
as to (a) the persons to receive awards under the Plan, (b) the terms and
provisions of awards under the Plan, and (c) the treatment of leaves of absence
pursuant to Section 1.6(c).
3.13 OTHER PAYMENTS OR AWARDS
Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company from making any award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
3.14 HEADINGS
Any section, subsection, paragraph or other subdivision headings
contained herein are for the purpose of convenience only and are not intended to
expand, limit or otherwise define the contents of such subdivisions.
3.15 EFFECTIVE DATE AND TERM OF PLAN
(a) Adoption; Stockholder Approval. The Plan was adopted by the Board
on April 14, 2004, subject to approval by the Company's stockholders. All awards
under the Plan prior to such stockholder approval are subject in their entirety
to such approval. If such approval is not obtained prior to the first
anniversary of the date of adoption of the Plan, the Plan and all awards
thereunder shall terminate on that date.
(b) Termination of Plan. Unless sooner terminated by the Board or
pursuant to paragraph (a) above, the provisions of the Plan respecting the grant
of awards shall terminate on the tenth anniversary of the adoption of the Plan
by the Board, and no awards shall thereafter be made under the Plan. All such
awards made under the Plan prior to its termination shall remain in effect until
such awards have been satisfied or terminated in accordance with the terms and
provisions of the Plan and the applicable Grant Certificates.
3.16 RESTRICTION ON ISSUANCE OF STOCK PURSUANT TO AWARDS
The Company shall not permit any shares of Common Stock to be issued
pursuant to Awards granted under the Plan unless such shares of Common Stock are
fully paid and non-assessable, within the meaning of Section 152 of the Delaware
General Corporation Law, except as otherwise permitted by Section 153(c) of the
Delaware General Corporation Law.
3.17 GOVERNING LAW
Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
Delaware, without giving effect to principles of conflict of laws.