EXHIBIT 10.1
LOUDEYE CORP.
2005 INCENTIVE AWARD PLAN
ARTICLE 1
PURPOSE
The purpose of the Loudeye Corp. 2005 Incentive Award Plan (the "Plan")
is to promote the success and enhance the value of Loudeye Corp. (the "Company")
by linking the personal interests of members of the Board, Employees and
Consultants to those of Company stockholders and by providing such individuals
with an incentive for outstanding performance to generate superior returns to
Company stockholders. The Plan is further intended to provide flexibility to the
Company in its ability to motivate, attract, and retain the services of members
of the Board, Employees and Consultants upon whose judgment, interest, and
special effort the successful conduct of the Company's operation is largely
dependent.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates.
2.1 "Award" means an Option, a Restricted Stock award, a Stock
Appreciation Right award, a Performance Share award, a Performance Stock Unit
award, a Dividend Equivalents award, a Stock Payment award, a Deferred Stock
award, a Restricted Stock Unit award, an Other Stock-Based Award, a Performance
Bonus Award, or a Performance-Based Award granted to a Participant pursuant to
the Plan.
2.2 "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award, including through an electronic
medium.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change in Control" means and includes each of the following:
(a) A transaction or series of transactions (other than a merger or
consolidation) whereby any "person" or related "group" of "persons" (as such
terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than
the Company, any of its subsidiaries, an employee benefit plan maintained by the
Company or any of its subsidiaries or a "person" that, prior to such
transaction, directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company possessing more than 50% of the total combined voting
power of the Company's securities outstanding immediately after such
acquisition; or
(b) During any period of two consecutive years, individuals who, at
the beginning of such period, constitute the Board together with any new
director(s) (other than a director designated by a person who shall have entered
into an agreement with the Company to effect a transaction described in Section
2.4(a) or Section 2.4(c)) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the beginning of
the two year period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority thereof; or
(c) The consummation by the Company (whether directly involving the
Company or indirectly involving the Company through one or more intermediaries)
of (x) a merger, consolidation, reorganization, or business combination or (y) a
sale or other disposition of all or substantially all of the
Company's assets in any single transaction or series of related transactions or
(z) the acquisition of assets or stock of another entity, in each case other
than a transaction:
(i) Which results in the Company's voting securities
outstanding immediately before the transaction continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
Company or the person that, as a result of the transaction, controls, directly
or indirectly, the Company or owns, directly or indirectly, all or substantially
all of the Company's assets or otherwise succeeds to the business of the Company
(the Company or such person, the "Successor Entity")) directly or indirectly, at
least a majority of the combined voting power of the Successor Entity's
outstanding voting securities immediately after the transaction, and
(ii) After which no person or group beneficially owns voting
securities representing 50% or more of the combined voting power of the
Successor Entity; provided, however, that no person or group shall be treated
for purposes of this Section 2.4(c)(ii) as beneficially owning 50% or more of
combined voting power of the Successor Entity solely as a result of the voting
power held in the Company prior to the consummation of the transaction; or
(d) The Company's stockholders approve a liquidation or dissolution
of the Company.
The Committee shall have full and final authority, which shall be exercised in
its discretion, to determine conclusively whether a Change in Control of the
Company has occurred pursuant to the above definition, and the date of the
occurrence of such Change in Control and any incidental matters relating
thereto.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Committee" means the committee of the Board described in Article
12.
2.7 "Consultant" means any consultant or adviser if:
(a) The consultant or adviser renders bona fide services to the
Company or any Subsidiary;
(b) The services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities; and
(c) The consultant or adviser is a natural person who has
contracted directly with the Company or Subsidiary to render such services.
2.8 "Covered Employee" means an Employee who is, or could be, a
"covered employee" within the meaning of Section 162(m) of the Code.
2.9 "Deferred Stock" means a right to receive a specified number of
shares of Stock during specified time periods pursuant to Article 8.
2.10 "Dividend Equivalents" means a right granted to a Participant
pursuant to Article 8 to receive the equivalent value (in cash or Stock) of
dividends paid on Stock.
2.11 "Effective Date" shall have the meaning set forth in Section 13.1.
2.12 "Eligible Individual" means any person who is a member of the
Board, an Employee or a Consultant, as determined by the Committee.
2.13 "Employee" means any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.15 "Fair Market Value" means, as of any given date, the fair market
value of a share of Stock on the date determined by such methods or procedures
as may be established from time to time by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of a share of Stock as of any
date shall be (i) the mean between the highest and lowest selling price of a
share of Common Stock on the principal exchange on which shares of Common Stock
are then trading, if any, on such date, or if shares were not traded on such
date, then on the closest preceding date on which a trade occurred; or (ii) if
Common Stock is not traded on an exchange, the mean between the closing
representative bid and asked prices for the Common Stock on such date as
reported by NASDAQ or, if NASDAQ is not then in existence, by its successor
quotation system; or (iii) if Common Stock is not publicly traded, the Fair
Market Value of a share of Common Stock as established by the Committee acting
in good faith.
2.16 "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
2.17 "Independent Director" means a member of the Board who is not an
Employee of the Company.
2.18 "Non-Qualified Stock Option" means an Option that is not intended
to be an Incentive Stock Option.
2.19 "Option" means a right granted to a Participant pursuant to
Article 5 of the Plan to purchase a specified number of shares of Stock at a
specified price during specified time periods. An Option may be either an
Incentive Stock Option or a Non-Qualified Stock Option.
2.20 "Other Stock-Based Award" means an Award granted or denominated in
Stock or units of Stock pursuant to Section 8.7 of the Plan.
2.21 "Participant" means any Eligible Individual who, as a member of
the Board, Consultant or Employee, has been granted an Award pursuant to the
Plan.
2.22 "Performance-Based Award" means an Award granted to selected
Covered Employees pursuant to Articles 6 and 8, but which is subject to the
terms and conditions set forth in Article 9. All Performance-Based Awards are
intended to qualify as Qualified Performance-Based Compensation.
2.23 "Performance Bonus Award" has the meaning set forth in Section
8.8.
2.24 "Performance Criteria" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. The Performance Criteria that will
be used to establish Performance Goals are limited to the following: net
earnings (either before or after interest, taxes, depreciation and
amortization), economic value-added (as determined by the Committee), sales or
revenue, pro forma financial performance, net income (either before or after
taxes), operating earnings, cash flow (including, but not limited to, operating
cash flow and free cash flow), cash flow return on capital, return on net
assets, return on stockholders' equity, return on assets, return on capital,
stockholder returns, return on sales, gross or net profit margin, productivity,
expense, margins, operating efficiency, customer satisfaction, employee
turnover, employee satisfaction, working capital, earnings per share, price per
share of Stock, and market share, any of which may be measured either in
absolute terms or as compared to any incremental increase or as compared to
results of a peer group. The Committee shall, within the time prescribed by
Section 162(m) of the Code, define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for such Performance
Period for such Participant.
2.25 "Performance Goals" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (a) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (b) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.
2.26 "Performance Period" means the one or more periods of time, which
may be of varying and overlapping durations, as the Committee may select, over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant's right to, and the payment of, a
Performance-Based Award.
2.27 "Performance Share" means a right granted to a Participant
pursuant to Article 8, to receive Stock, the payment of which is contingent upon
achieving certain Performance Goals or other performance-based targets
established by the Committee.
2.28 "Performance Stock Unit" means a right granted to a Participant
pursuant to Article 8, to receive Stock, the payment of which is contingent upon
achieving certain Performance Goals or other performance-based targets
established by the Committee.
2.29 "Prior Plans" means the Loudeye Corp. 2000 Stock Option Plan and
the Loudeye Corp. 2000 Director Stock Option Plan, as each such plan may be
amended from time to time.
2.30 "Plan" means this Loudeye Corp. 2005 Incentive Award Plan, as it
may be amended from time to time.
2.31 "Qualified Performance-Based Compensation" means any compensation
that is intended to qualify as "qualified performance-based compensation" as
described in Section 162(m)(4)(C) of the Code.
2.32 "Restricted Stock" means Stock awarded to a Participant pursuant
to Article 6 that is subject to certain restrictions and may be subject to risk
of forfeiture.
2.33 "Restricted Stock Unit" means an Award granted pursuant to Section
8.6.
2.34 "Securities Act" shall mean the Securities Act of 1933, as
amended.
2.35 "Stock" means the common stock of the Company, par value $0.01 per
share, and such other securities of the Company that may be substituted for
Stock pursuant to Article 11.
2.36 "Stock Appreciation Right" or "SAR" means a right granted pursuant
to Article 7 to receive a payment equal to the excess of the Fair Market Value
of a specified number of shares of Stock on the date the SAR is exercised over
the Fair Market Value on the date the SAR was granted as set forth in the
applicable Award Agreement.
2.37 "Stock Payment" means (a) a payment in the form of shares of
Stock, or (b) an option or other right to purchase shares of Stock, as part of
any bonus, deferred compensation or other arrangement, made in lieu of all or
any portion of the compensation, granted pursuant to Article 8.
2.38 "Subsidiary" means any "subsidiary corporation" as defined in
Section 424(f) of the Code and any applicable regulations promulgated thereunder
or any other entity of which a majority of the outstanding voting stock or
voting power is beneficially owned directly or indirectly by the Company.
ARTICLE 3
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) Subject to Article 11 and Section 3.1(b), the maximum aggregate
number of shares of Stock that may be issued or transferred pursuant to Awards
under the Plan is 10,000,000, plus an annual increase on the first day of the
Company's fiscal year beginning in 2006 equal to the lesser of (i) 5,000,000
shares, (ii) two percent (2%) of the shares outstanding on the last day of the
immediately preceding fiscal year, or (iii) such lesser number of shares as the
Board shall determine. In order that the applicable regulations under the Code
relating to Incentive Stock Options be satisfied, the maximum number of shares
of Stock that may be delivered upon exercise of Incentive Stock Options shall be
the number specified in this Section 3.1(a), and, if necessary to satisfy such
regulations, such maximum limit shall apply to the number of shares of Stock
that may be delivered in connection with each other type of Award under the Plan
(applicable separately to each type of Award).
(b) To the extent that an Award terminates, expires, or lapses for
any reason, any shares of Stock subject to the Award shall again be available
for the grant of an Award pursuant to the Plan. Additionally, any shares of
Stock tendered or withheld to satisfy the grant or exercise price or tax
withholding obligation pursuant to any Award shall again be available for the
grant of an Award pursuant to the Plan. To the extent permitted by applicable
law or any exchange rule, shares of Stock issued in assumption of, or in
substitution for, any outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary shall not be counted against shares
of Stock available for grant pursuant to this Plan.
3.2 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding
any provision in the Plan to the contrary, and subject to Article 11, the
maximum number of shares of Stock with respect to one or more Awards that may be
granted to any one Participant during any one fiscal year of the Company shall
be 2,500,000.
ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. Each Eligible Individual shall be eligible to be
granted one or more Awards pursuant to the Plan.
4.2 Participation. Subject to the provisions of the Plan, the Committee
may, from time to time, select from among all Eligible Individuals, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No Eligible Individual shall have any right to be granted an Award
pursuant to this Plan.
4.3 Foreign Participants. In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of
the Plan as in effect for any other purpose; provided, however, that no such
supplements, amendments, restatements, or alternative versions shall increase
the share limitations contained in Sections 3.1 and 3.3 of the Plan.
ARTICLE 5
STOCK OPTIONS
5.1 General. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock subject
to an Option shall be determined by the Committee and set forth in the Award
Agreement; provided that the exercise price for any Option shall not be less
than 100% of the Fair Market Value of a share of Stock on the date of grant.
(b) Time and Conditions of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part;
provided that the term of any Option granted under the Plan shall not exceed ten
years. The Committee shall also determine the performance or other conditions,
if any, that must be satisfied before all or part of an Option may be exercised.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation: (i) cash, (ii) promissory note bearing interest at no less than such
rate as shall then preclude the imputation of interest under the Code, (iii)
shares of Stock held for such period of time as may be required by the Committee
in order to avoid adverse accounting consequences and having a Fair Market Value
on the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof, or (iv) other property acceptable to the Committee
(including through the delivery of a notice that the Participant has placed a
market sell order with a broker with respect to shares of Stock then issuable
upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; provided that payment of such
proceeds is then made to the Company upon settlement of such sale), and the
methods by which shares of Stock shall be delivered or deemed to be delivered to
Participants. Notwithstanding any other provision of the Plan to the contrary,
no Participant who is a member of the Board or an "executive officer" of the
Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to pay the exercise price of an Option in any method which would
violate Section 13(k) of the Exchange Act.
(d) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award Agreement
shall include such additional provisions as may be specified by the Committee.
5.2 Incentive Stock Options. The terms of any Incentive Stock Options
granted pursuant to the Plan must comply with the conditions and limitations
contained in Section 13.2 and this Section 5.2.
(a) Eligibility. Incentive Stock Options may be granted only to
Employees of the Company or any "subsidiary corporation" thereof (within the
meaning of Section 424(f) of the Code and the applicable regulations promulgated
thereunder).
(b) Exercise Price. The exercise price per share of Stock shall be
set by the Committee; provided that subject to Section 5.2(e) the exercise price
for any Incentive Stock Option shall not be less than 100% of the Fair Market
Value on the date of grant.
(c) Expiration. Subject to Section 5.2(e), an Incentive Stock
Option may not be exercised to any extent by anyone after the tenth anniversary
of the date it is granted, unless an earlier time is set in the Award Agreement.
(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a Participant
in any calendar year may not exceed $100,000 or such other limitation as imposed
by Section 422(d) of the Code, or any successor provision. To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.
(e) Ten Percent Owners. An Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.
(f) Notice of Disposition. The Participant shall give the Company
prompt notice of any disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of grant of such
Incentive Stock Option or (ii) one year after the transfer of such shares of
Stock to the Participant.
(g) Right to Exercise. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant.
5.3 Substitution of Stock Appreciation Rights. The Committee may
provide in the Award Agreement evidencing the grant of an Option that the
Committee, in its sole discretion, shall have the right to substitute a Stock
Appreciation Right for such Option at any time prior to or upon exercise of such
Option, subject to the provisions of Section 7.2 hereof; provided that such
Stock Appreciation Right shall be exercisable with respect to the same number of
shares of Stock for which such substituted Option would have been exercisable.
5.4 Paperless Exercise. In the event that the Company establishes, for
itself or using the services of a third party, an automated system for the
exercise of Options, such as a system using an internet website or interactive
voice response, then the paperless exercise of options by a Participant may be
permitted through the use of such an automated system.
5.5 Granting of Options to Independent Directors. The Board may from
time to time, in its sole discretion, and subject to the limitations of the
Plan:
(a) Select from among the Independent Directors (including
Independent Directors who have previously been granted Options under the Plan)
such of them as in its opinion should be granted Options;
(b) Subject to Section 3.3, determine the number of shares of Stock
that may be purchased upon exercise of the Options granted to such selected
Independent Directors; and
(c) Subject to the provisions of this Article 5, determine the
terms and conditions of such Options, consistent with the Plan.
Options granted to Independent Directors shall be Non-Qualified Stock Options.
ARTICLE 6
RESTRICTED STOCK AWARDS
6.1 Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to any Participant selected by the Committee in such
amounts and subject to such terms and
conditions as determined by the Committee. All Awards of Restricted Stock shall
be evidenced by a written Restricted Stock Award Agreement.
6.2 Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.
6.3 Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that
the Committee may (a) provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and (b) in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.
6.4 Certificates for Restricted Stock. Restricted Stock granted
pursuant to the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical
possession of the certificate until such time as all applicable restrictions
lapse.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may
be granted to any Participant selected by the Committee. A Stock Appreciation
Right may be granted (a) in connection and simultaneously with the grant of an
Option, (b) with respect to a previously granted Option, or (c) independent of
an Option. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose and
shall be evidenced by an Award Agreement.
7.2 Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.
(b) A CSAR may be granted to a Participant for no more than
the number of shares subject to the simultaneously or previously granted Option
to which it is coupled.
(c) A CSAR shall entitle the Participant (or other person
entitled to exercise the Option pursuant to the Plan) to surrender to the
Company the unexercised portion of the Option to which the CSAR relates (to the
extent then exercisable pursuant to its terms) and to receive from the Company
in exchange therefor an amount determined by multiplying the difference obtained
by subtracting the Option exercise price from the Fair Market Value of a share
of Stock on the date of exercise of the CSAR by the number of shares of Stock
with respect to which the CSAR shall have been exercised, subject to any
limitations the Committee may impose.
7.3 Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Stock as the Committee may determine.
The exercise price per share of Stock subject to each ISAR shall be set by the
Committee; provided, however, that the exercise price for any ISAR shall not be
less than 100% of the Fair Market Value on the date of grant; and provided,
further, that, the Committee in its sole and absolute discretion may provide
that the ISAR may be exercised subsequent to a termination of employment or
service, as applicable, or following a Change in Control of the Company, or
because of the Participant's retirement, death or disability, or otherwise.
(b) An ISAR shall entitle the Participant (or other person
entitled to exercise the ISAR pursuant to the Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Stock on the date of exercise of the ISAR by
the number of shares of Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.
7.4 Payment and Limitations on Exercise.
(a) Payment of the amounts determined under Sections 7.2(c)
and 7.3(b) above shall be in cash, in Stock (based on its Fair Market Value as
of the date the Stock Appreciation Right is exercised) or a combination of both,
as determined by the Committee.
(b) To the extent payment for a Stock Appreciation Right is to be
made in cash, the Award Agreement shall, to the extent necessary to comply with
the requirements to Section 409A of the Code, specify the date of payment which
may be different than the date of exercise of the Stock Appreciation Right. If
the date of payment for a Stock Appreciation Right is later than the date of
exercise, the Award Agreement may specify that the Participant be entitled to
earnings on such amount until paid
(c) To the extent any payment under Section 7.2(c) or 7.3(b)
is effected in Stock it shall be made subject to satisfaction of all provisions
of Article 5 above pertaining to Options.
ARTICLE 8
OTHER TYPES OF AWARDS
8.1 Performance Share Awards. Any Participant selected by the Committee
may be granted one or more Performance Share awards which shall be denominated
in a number of shares of Stock and which may be linked to any one or more of the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular Participant.
8.2 Performance Stock Units. Any Participant selected by the Committee
may be granted one or more Performance Stock Unit awards which shall be
denominated in units of value including dollar value of shares of Stock and
which may be linked to any one or more of the Performance Criteria or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of
award) the contributions, responsibilities and other compensation of the
particular Participant.
8.3 Dividend Equivalents.
(a) Any Participant selected by the Committee may be granted
Dividend Equivalents based on the dividends declared on the shares of Stock that
are subject to any Award, to be credited as of dividend payment dates, during
the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee.
(b) Dividend Equivalents granted with respect to Options or
SARs that are intended to be Qualified Performance-Based Compensation shall be
payable, with respect to pre-exercise periods, regardless of whether such Option
or SAR is subsequently exercised.
8.4 Stock Payments. Any Participant selected by the Committee may
receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares shall be determined by the Committee and may be
based upon the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.
8.5 Deferred Stock. Any Participant selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Stock underlying a Deferred Stock award will not be issued until the
Deferred Stock award has vested, pursuant to a vesting schedule or performance
criteria set by the Committee. Unless otherwise provided by the Committee, a
Participant awarded Deferred Stock shall have no rights as a Company stockholder
with respect to such Deferred Stock until such time as the Deferred Stock Award
has vested and the Stock underlying the Deferred Stock Award has been issued.
8.6 Restricted Stock Units. The Committee is authorized to make Awards
of Restricted Stock Units to any Participant selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.
At the time of grant, the Committee shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate. At the time of
grant, the Committee shall specify the maturity date applicable to each grant of
Restricted Stock Units which shall be no earlier than the vesting date or dates
of the Award and may be determined at the election of the grantee. On the
maturity date, the Company shall, subject to Section 10.5(b), transfer to the
Participant one unrestricted, fully transferable share of Stock for each
Restricted Stock Unit scheduled to be paid out on such date and not previously
forfeited. The Committee shall specify the purchase price, if any, to be paid by
the grantee to the Company for such shares of Stock.
8.7 Other Stock-Based Awards. Any Participant selected by the Committee
may be granted one or more Awards that provide Participants with shares of Stock
or the right to purchase shares of Stock or that have a value derived from the
value of, or an exercise or conversion privilege at a price related to, or that
are otherwise payable in shares of Stock and which may be linked to any one or
more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular Participant.
8.8 Performance Bonus Awards. Any Participant selected by the Committee
may be granted one or more Performance-Based Awards in the form of a cash bonus
(a "Performance Bonus Award") payable upon the attainment of Performance Goals
that are established by the Committee and relate to one
or more of the Performance Criteria, in each case on a specified date or dates
or over any period or periods determined by the Committee. Any such Performance
Bonus Award paid to a Covered Employee shall be based upon objectively
determinable bonus formulas established in accordance with Article 9. The
maximum amount of any Performance Bonus Award payable to a Covered Employee with
respect to any fiscal year of the Company shall not exceed $1,000,000.
8.9 Term. Except as otherwise provided herein, the term of any Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Stock
Payments, Deferred Stock, Restricted Stock Units or Other Stock-Based Award
shall be set by the Committee in its discretion.
8.10 Exercise or Purchase Price. The Committee may establish the
exercise or purchase price, if any, of any Award of Performance Shares,
Performance Stock Units, Deferred Stock, Stock Payments, Restricted Stock Units
or Other Stock-Based Award; provided, however, that such price shall not be less
than the par value of a share of Stock on the date of grant, unless otherwise
permitted by applicable law.
8.11 Exercise Upon Termination of Employment or Service. An Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Deferred
Stock, Stock Payments, Restricted Stock Units and Other Stock-Based Award shall
only be exercisable or payable while the Participant is an Employee, Consultant
or a member of the Board, as applicable; provided, however, that the Committee
in its sole and absolute discretion may provide that an Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred
Stock, Restricted Stock Units or Other Stock-Based Award may be exercised or
paid subsequent to a termination of employment or service, as applicable, or
following a Change in Control of the Company, or because of the Participant's
retirement, death or disability, or otherwise; provided, however, that any such
provision with respect to Performance Shares or Performance Stock Units shall be
subject to the requirements of Section 162(m) of the Code that apply to
Qualified Performance-Based Compensation.
8.12 Form of Payment. Payments with respect to any Awards granted under
this Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the Committee.
8.13 Award Agreement. All Awards under this Article 8 shall be subject
to such additional terms and conditions as determined by the Committee and shall
be evidenced by a written Award Agreement.
ARTICLE 9
PERFORMANCE-BASED AWARDS
9.1 Purpose. The purpose of this Article 9 is to provide the Committee
the ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the
Committee, in its discretion, decides to grant a Performance-Based Award to a
Covered Employee, the provisions of this Article 9 shall control over any
contrary provision contained in Articles 6 or 8; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees that are based
on Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9.
9.2 Applicability. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.
9.3 Procedures with Respect to Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the
Code, with respect to any Award granted under Articles 6 and 8 which may be
granted to one or more Covered Employees, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (a) designate one or more Covered Employees, (b) select the Performance
Criteria applicable to the Performance Period, (c) establish the Performance
Goals, and amounts of such Awards, as applicable, which may be earned for such
Performance Period, and (d) specify the relationship between Performance
Criteria and the Performance Goals and the amounts of such Awards, as
applicable, to be earned by each Covered Employee for such Performance Period.
Following the completion of each Performance Period, the Committee shall certify
in writing whether the applicable Performance Goals have been achieved for such
Performance Period. In determining the amount earned by a Covered Employee, the
Committee shall have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of individual or
corporate performance for the Performance Period.
9.4 Payment of Performance-Based Awards. Unless otherwise provided in
the applicable Award Agreement, a Participant must be employed by the Company or
a Subsidiary on the day a Performance-Based Award for such Performance Period is
paid to the Participant. Furthermore, a Participant shall be eligible to receive
payment pursuant to a Performance-Based Award for a Performance Period only if
the Performance Goals for such period are achieved.
9.5 Additional Limitations. Notwithstanding any other provision of the
Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.
ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS
10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either alone, in addition
to, or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.
10.2 Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant's employment or service terminates, and the Company's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.
10.3 Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assigned, transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant's family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members of
the Participant's family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the
transfer is being made for estate and/or tax planning purposes (or to a "blind
trust" in connection with the Participant's termination of employment or service
with the Company or a Subsidiary to assume a position with a governmental,
charitable, educational or similar non-profit institution) and on a basis
consistent with the Company's lawful issue of securities.
10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or
appropriate by the Committee. If the Participant is married and resides in a
community property state, a designation of a person other than the Participant's
spouse as his or her beneficiary with respect to more than 50% of the
Participant's interest in the Award shall not be effective without the prior
written consent of the Participant's spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.
10.5 Stock Certificates; Book Entry Procedures.
(a) Notwithstanding anything herein to the contrary, the Company
shall not be required to issue or deliver any certificates evidencing shares of
Stock pursuant to the exercise of any Award, unless and until the Board has
determined, with advice of counsel, that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Stock are listed or traded. All Stock certificates delivered
pursuant to the Plan are subject to any stop-transfer orders and other
restrictions as the Committee deems necessary or advisable to comply with
federal, state, or foreign jurisdiction, securities or other laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate to reference restrictions applicable
to the Stock. In addition to the terms and conditions provided herein, the Board
may require that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements. The Committee shall
have the right to require any Participant to comply with any timing or other
restrictions with respect to the settlement or exercise of any Award, including
a window-period limitation, as may be imposed in the discretion of the
Committee.
(b) Notwithstanding any other provision of the Plan, unless
otherwise determined by the Committee or required by any applicable law, rule or
regulation, the Company shall not deliver to any Participant certificates
evidencing shares of Stock issued in connection with any Award and instead such
shares of Stock shall be recorded in the books of the Company (or, as
applicable, its transfer agent or stock plan administrator).
ARTICLE 11
CHANGES IN CAPITAL STRUCTURE
11.1 Adjustments.
(a) In the event of any stock dividend, stock split, combination or
exchange of shares, merger, consolidation, spin-off, recapitalization,
distribution of Company assets to stockholders (other than normal cash
dividends), or any other corporate event affecting the Stock or the share price
of the Stock, the Committee may make such proportionate adjustments, if any, as
the Committee in its discretion may deem appropriate to reflect such changes
with respect to (i) the aggregate number and type of shares that may be issued
under the Plan (including, but not limited to, adjustments of the limitations in
Sections 3.1 and 3.3); (ii) the terms and conditions of any outstanding Awards
(including, without
limitation, any applicable performance targets or criteria with respect
thereto); and (iii) the grant or exercise price per share for any outstanding
Awards under the Plan. Any adjustment affecting an Award intended as Qualified
Performance-Based Compensation shall be made consistent with the requirements of
Section 162(m) of the Code.
(b) In the event of any transaction or event described in Section
11.1(a) or any unusual or nonrecurring transactions or events affecting the
Company, any affiliate of the Company, or the financial statements of the
Company or any affiliate (including without limitation any Change in Control),
or of changes in applicable laws, regulations or accounting principles, and
whenever the Committee determines that action is appropriate in order to prevent
the dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles, the Committee, in its sole discretion and on
such terms and conditions as it deems appropriate, either by amendment of the
terms of any outstanding Awards or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Participant's
request, is hereby authorized to take any one or more of the following actions:
(i) To provide for either (A) termination of any such Award in
exchange for an amount of cash and/or other property, if any, equal to the
amount that would have been attained upon the exercise of such Award or
realization of the Participant's rights (and, for the avoidance of doubt, if as
of the date of the occurrence of the transaction or event described in this
Section 11.1(b) the Committee determines in good faith that no amount would have
been attained upon the exercise of such Award or realization of the
Participant's rights, then such Award may be terminated by the Company without
payment) or (B) the replacement of such Award with other rights or property
selected by the Committee in its sole discretion;
(ii) To provide that such Award be assumed by the successor or
survivor corporation, or a parent or subsidiary thereof, or shall be substituted
for by similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; and
(iii) To make adjustments in the number and type of shares of
Stock (or other securities or property) subject to outstanding Awards, and in
the number and kind of outstanding Restricted Stock or Deferred Stock and/or in
the terms and conditions of (including the grant or exercise price), and the
criteria included in, outstanding options, rights and awards and options, rights
and awards which may be granted in the future;
(iv) To provide that such Award shall be exercisable or
payable or fully vested with respect to all shares covered thereby,
notwithstanding anything to the contrary in the Plan or the applicable Award
Agreement; and
(v) To provide that the Award cannot vest, be exercised or
become payable after such event.
11.2 Acceleration Upon a Change in Control. Notwithstanding Section
11.1, and except as may otherwise be provided in any applicable Award Agreement
or other written agreement entered into between the Company and a Participant,
if a Change in Control occurs and a Participant's Awards are not converted,
assumed, or replaced by a successor entity, then immediately prior to the Change
in Control such Awards shall automatically be accelerated to the extent of 25%
of the shares then unvested and any repurchase right of the Company with respect
to shares previously issued upon exercise of an award shall lapse as to 25% of
the shares then subject to such repurchase right (with such vesting,
exercisability and/or repurchase right thereafter continuing on the schedule set
forth in the applicable Award Agreement) and each such outstanding award shall
be assumed or replaced with equivalent option or right by the successor
corporation; provided that if the successor corporation does not agree to assume
the award or replace it with an equivalent Award, then the vesting and
exercisability of each outstanding Award shall instead accelerate in full, with
such Options becoming vested and exercisable as to one hundred percent (100%) of
underlying
shares and any repurchase right of the Company applicable to shares previously
issued upon exercise of an Award lapsing as to one hundred percent (100%) of the
underlying shares. Any acceleration provided for under this Section 11.2 shall
occur effective immediately prior to consummation of the Change of Control upon
such conditions as the Administrator shall determine. To the extent that an
Award is not exercised prior to consummation of a Change of Control transaction
in which the Award is not being assumed or replaced with an equivalent option or
stock purchase right by the successor corporation, such Award shall terminate
upon such consummation. Upon, or in anticipation of, a Change in Control, the
Committee may cause any and all Awards outstanding hereunder to terminate at a
specific time in the future, including but not limited to the date of such
Change in Control, and shall give each Participant the right to exercise such
Awards during a period of time as the Committee, in its sole and absolute
discretion, shall determine. In the event that the terms of any agreement
between the Company or any Company subsidiary or affiliate and a Participant
contains provisions that conflict with and are more restrictive than the
provisions of this Section 11.2, this Section 11.2 shall prevail and control and
the more restrictive terms of such agreement (and only such terms) shall be of
no force or effect.
11.3 Outstanding Awards - 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 Stock receive
securities of another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities that a
holder of the number of shares of Stock subject to such Award would have
received in such merger or consolidation.
11.4 Outstanding Awards - Other Changes. In the event of any other
change in the capitalization of the Company or corporate change other than those
specifically referred to in this Article 11, the Committee may, in its absolute
discretion, make such adjustments in the number and kind of shares or other
securities subject to Awards outstanding on the date on which such change occurs
and in the per share grant or exercise price of each Award as the Committee may
consider appropriate to prevent dilution or enlargement of rights.
11.5 No Other Rights. Except as expressly provided in the Plan, no
Participant 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 or pursuant to action of the Committee
under 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 Stock subject to an Award or the grant or exercise price of any Award.
ARTICLE 12
ADMINISTRATION
12.1 Committee. Unless and until the Board delegates administration of
the Plan to a Committee as set forth below, the Plan shall be administered by
the full Board, and for such purposes the term "Committee" as used in this Plan
shall be deemed to refer to the Board. The Board, at its discretion or as
otherwise necessary to comply with the requirements of Section 162(m) of the
Code, Rule 16b-3 promulgated under the Exchange Act or to the extent required by
any other applicable rule or regulation, shall delegate administration of the
Plan to a Committee. The Committee shall consist solely of two or more members
of the Board each of whom is both an "outside director," within the meaning of
Section 162(m) of the Code, and a "non-employee director," as defined in Rule
16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the
Board. Notwithstanding the foregoing, the Committee may delegate its authority
hereunder to the extent permitted by Section 12.5. Appointment of Committee
members shall be effective upon acceptance of appointment. The Board may abolish
the Committee at any time and revest in the Board the administration of the
Plan. Committee members may resign at any time by delivering written notice to
the Board. Vacancies in the Committee may only be filled by the Board.
12.2 Action by the Committee. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present, and acts approved in writing by a majority
of the Committee in lieu of a meeting, shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in good faith, rely or
act upon any report or other information furnished to that member by any officer
or other employee of the Company or any Subsidiary, the Company's independent
certified public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
12.3 Authority of Committee. Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
pursuant to the Plan, including, but not limited to, the exercise price, grant
price, or purchase price, any reload provision, any restrictions or limitations
on the Award, any schedule for lapse of forfeiture restrictions or restrictions
on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based
in each case on such considerations as the Committee in its sole discretion
determines; provided, however, that the Committee shall not have the authority
to accelerate the vesting or waive the forfeiture of any Performance-Based
Awards;
(e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection
with an Award;
(h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the
Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be
required pursuant to the Plan or as the Committee deems necessary or advisable
to administer the Plan.
12.4 Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
12.5 Delegation of Authority. To the extent permitted by applicable
law, the Committee may from time to time delegate to a committee of one or more
members of the Board or one or more officers of the Company the authority to
grant or amend Awards to Participants other than (a) senior executives of the
Company who are subject to Section 16 of the Exchange Act, (b) Covered
Employees, or (c) officers of the Company (or members of the Board) to whom
authority to grant or amend Awards has been delegated hereunder. Any delegation
hereunder shall be subject to the restrictions and limits that the Committee
specifies at the time of such delegation, and the Committee may at any time
rescind the authority so
delegated or appoint a new delegatee. At all times, the delegatee appointed
under this Section 12.5 shall serve in such capacity at the pleasure of the
Committee.
ARTICLE 13
EFFECTIVE AND EXPIRATION DATE
13.1 Effective Date. The Plan is effective as of the date the Plan is
approved by the Company's stockholders (the "Effective Date"). The Plan will be
deemed to be approved by the stockholders if it receives the affirmative vote of
the holders of a majority of the shares of stock of the Company present or
represented and entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Company's Bylaws. As of the Effective Date, each of
the Prior Plans shall expire and no award may be granted pursuant to any Prior
Plan. Any award granted pursuant to any Prior Plan that is outstanding as of the
Effective Date shall remain in force according to the terms of such Prior Plan
and the applicable agreement pursuant to which such award was granted.
13.2 Expiration Date. The Plan will expire on, and no Incentive Stock
Option or other Award may be granted pursuant to the Plan after, the earlier of
the tenth anniversary of (i) the Effective Date or (ii) the date this Plan is
approved by the Board. Any Awards that are outstanding on the tenth anniversary
of the Effective Date shall remain in force according to the terms of the Plan
and the applicable Award Agreement.
ARTICLE 14
AMENDMENT, MODIFICATION, AND TERMINATION
14.1 Amendment, Modification, And Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (a) to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required, and (b) stockholder approval is
required for any amendment to the Plan that (i) increases the number of shares
available under the Plan (other than any adjustment as provided by Article 11),
(ii) permits the Committee to grant Options with an exercise price that is below
Fair Market Value on the date of grant, or (iii) permits the Committee to extend
the exercise period for an Option beyond ten years from the date of grant.
Notwithstanding any provision in this Plan to the contrary, absent approval of
the stockholders of the Company, no Option may be amended to reduce the per
share exercise price of the shares subject to such Option below the per share
exercise price as of the date the Option is granted and, except as permitted by
Article 11, no Option may be granted in exchange for, or in connection with, the
cancellation or surrender of an Option having a higher per share exercise price.
14.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted pursuant to the Plan without the prior written consent of the
Participant.
ARTICLE 15
GENERAL PROVISIONS
15.1 No Rights to Awards. No Eligible Individual or other person shall
have any claim to be granted any Award pursuant to the Plan, and neither the
Company nor the Committee is obligated to treat Eligible Individuals,
Participants or any other persons uniformly.
15.2 No Stockholders Rights. Except as otherwise provided herein, a
Participant shall have none of the rights of a stockholder with respect to
shares of Stock covered by any Award until the Participant becomes the record
owner of such shares of Stock.
15.3 Withholding. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, local and
foreign taxes (including the Participant's FICA obligation) required by law to
be withheld with respect to any taxable event concerning a Participant arising
as a result of this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have
the Company withhold shares of Stock otherwise issuable under an Award (or allow
the return of shares of Stock) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the
number of shares of Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the
Participant of such Award within six months (or such other period as may be
determined by the Committee) after such shares of Stock were acquired by the
Participant from the Company) in order to satisfy the Participant's federal,
state, local and foreign income and payroll tax liabilities with respect to the
issuance, vesting, exercise or payment of the Award shall be limited to the
number of shares which have a Fair Market Value on the date of withholding or
repurchase equal to the aggregate amount of such liabilities based on the
minimum statutory withholding rates for federal, state, local and foreign income
tax and payroll tax purposes that are applicable to such supplemental taxable
income.
15.4 No Right to Employment or Services. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant's employment or services
at any time, nor confer upon any Participant any right to continue in the employ
or service of the Company or any Subsidiary.
15.5 Unfunded Status of Awards. The Plan is intended to be an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
15.6 Indemnification. To the extent allowable pursuant to applicable
law, each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act pursuant to the Plan and against and from any and all amounts paid by him
or her in satisfaction of judgment in such action, suit, or proceeding against
him or her; provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company's Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.
15.7 Relationship to other Benefits. No payment pursuant to the Plan
shall be taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.
15.8 Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
15.9 Titles and Headings. The titles and headings of the Sections in
the Plan are for convenience of reference only and, in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
15.10 Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up or down as appropriate.
15.11 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
15.12 Government and Other Regulations. The obligation of the Company
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register pursuant to the Securities Act of 1933, as amended, any of the shares
of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may
in certain circumstances be exempt from registration pursuant to the Securities
Act of 1933, as amended, the Company may restrict the transfer of such shares in
such manner as it deems advisable to ensure the availability of any such
exemption.
15.13 Governing Law. The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Delaware.
15.14 Section 409A. To the extent that the Committee determines that
any Award granted under the Plan is subject to Section 409A of the Code, the
Award Agreement evidencing such Award shall incorporate the terms and conditions
required by Section 409A of the Code. To the extent applicable, the Plan and
Award Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the Effective Date. Notwithstanding any
provision of the Plan to the contrary, in the event that following the Effective
Date the Committee determines that any Award may be subject to Section 409A of
the Code and related Department of Treasury guidance (including such Department
of Treasury guidance as may be issued after the Effective Date), the Committee
may adopt such amendments to the Plan and the applicable Award Agreement or
adopt other policies and procedures (including amendments, policies and
procedures with retroactive effect), or take any other actions, that the
Committee determines are necessary or appropriate to (a) exempt the Award from
Section 409A of the Code and/or preserve the intended tax treatment of the
benefits provided with respect to the Award, or (b) comply with the requirements
of Section 409A of the Code and related Department of Treasury guidance.
* * * * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Loudeye Corp. on March 17, 2005.
* * * * *
I hereby certify that the foregoing Plan was approved by the stockholders of
Loudeye Corp. on May 20, 2005.
Executed on this 24th day of May, 2005.
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Eric S. Carnell, Secretary