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EXHIBIT 10.5
NEXTEL INTERNATIONAL, INC.
INCENTIVE EQUITY PLAN
MAY 25, 2000
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NEXTEL INTERNATIONAL, INC.
INCENTIVE EQUITY PLAN
1. Purpose. The purpose of this Plan is to attract and retain
directors and officers and other key employees of and consultants to Nextel
International, Inc. (the "Corporation") and its Subsidiaries and to provide
such persons with incentives and rewards for superior performance.
2. Definitions. (a) As used in this Plan,
"Accelerated Vesting Period" means the period beginning on the
effective date of a Change of Control and ending on the first anniversary of
such effective date.
"Accelerated Vesting Provision" means an Option Rights agreement
provision pursuant to Section 4(g)(ii) of this Plan, a Deferred Shares agreement
provision pursuant to Section 7(c)(ii) of this Plan or a Performance Shares or
Performance Units agreement provision pursuant to Section 8(b)(ii) of this Plan.
"Appreciation Right" means a right granted pursuant to Section 5 of
this Plan, including a Free-Standing Appreciation Right and a Tandem
Appreciation Right.
"Base Price" means the price to be used as the basis for determining
the Spread upon the exercise of a Free-Standing Appreciation Right.
"Board" means the Board of Directors of the Corporation and, to the
extent of any delegation by the Board to a committee of the Board (or a
subcommittee thereof) pursuant to Section 17(a) of this Plan, such committee (or
subcommittee).
"Cause" means (i) the conviction of a felony involving an intentional
act of fraud, embezzlement or theft in connection with one's duties or otherwise
in the course of one's employment with an Employer, (ii) the intentional and
wrongful damaging of property, contractual interests or business relationships
of an Employer, (iii) the intentional and wrongful disclosure of secret
processes or confidential information of an Employer in violation of an
agreement with or a policy of an Employer, or (iv) intentional conduct contrary
to an Employer's announced policies or practices where either:
(A) the nature and/or severity of the conduct or its consequences
typically would have resulted in immediate termination based on the
Corporation's established employee termination or disciplinary practices in
place on the Reference Date; or
(B) the employee has been provided with written notice detailing the
relevant policy or practice and the nature of the objectionable conduct or other
violation, and within 20 business days of the receipt of such notice the
employee has not remedied the violation or ceased to engage in the objectionable
conduct.
"Change of Control" means the occurrence of any of the following
events:
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(i) (1) while the Parent directly or indirectly holds a majority of the
combined voting power of the outstanding securities of the Corporation, the
Parent is merged or consolidated or reorganized into or with another corporation
or other legal entity and, as a result of such merger, consolidation or
reorganization, less than a majority of the combined voting power of the then
outstanding securities of such resulting corporation or other legal entity
immediately after such transaction is held directly or indirectly in the
aggregate by the holders of voting securities of the Parent immediately prior to
such transaction, including voting securities issuable upon the exercise or
conversion of options, warrants or other securities or rights, or (2) the
Corporation is merged or consolidated or reorganized into or with another
corporation or other legal entity and, as a result of such merger, consolidation
or reorganization, less than a majority of the combined voting power of the then
outstanding securities of such resulting corporation or other entity immediately
after such transaction is held directly or indirectly in the aggregate by the
Parent or the holders of voting securities of the Parent immediately prior to
such transaction, including voting securities issuable upon the exercise or
conversion of options, warrants or other securities or rights;
(ii) (1) while the Parent directly or indirectly holds a majority of
the combined voting power of the outstanding securities of the Corporation, the
Parent sells or otherwise transfers all or substantially all of its assets to
another corporation or other legal entity and, as a result of such sale or other
transfer of assets, less than a majority of the combined voting power of the
then outstanding securities of such corporation or other entity immediately
after such sale or transfer is held directly or indirectly in the aggregate by
the holders of voting securities of the Parent immediately prior to such sale or
transfer, including voting securities issuable upon the exercise or conversion
of options, warrants or other securities or rights, or (2) the Corporation sells
or otherwise transfers all or substantially all of its assets to another
corporation or other legal entity and, as a result of such sale or other
transfer of assets, less than a majority of the combined voting power of the
then outstanding securities of such corporation or other entity immediately
after such sale or transfer is held directly or indirectly in the aggregate by
the Parent or the holders of voting securities of the Corporation immediately
prior to such sale or transfer, including voting securities issuable upon the
exercise or conversion of options, warrants or other securities or rights;
(iii) (1) while the Parent directly or indirectly holds a majority of
the combined voting power of the outstanding securities of the Corporation, a
report is filed on Schedule 13D or Schedule TO (or any successor schedule, form
or report), each as promulgated pursuant to the Exchange Act, disclosing that
any "person" (as that term is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the "beneficial owner" (as that term is used in
Rule 13d-3 promulgated under the Exchange Act) of securities representing 50
percent or more of the voting securities of the Parent (or any successor thereto
by operation of law or by reason of the acquisition of all or substantially all
of the assets of the Parent), including voting securities issuable upon the
exercise or conversion of options, warrants or other securities or rights, or
(2) (a) prior to the Initial Public Offering, the Parent sells, assigns,
distributes or otherwise transfers to a person or persons (other than to a
person or persons that in the aggregate, hold directly or indirectly a majority
of the combined voting power of the outstanding voting securities of the Parent
immediately prior to such sale, assignment, distribution or other transfer) 50
percent or more of the voting securities of the Corporation, including voting
securities issuable upon the exercise or conversion of options, warrants or
other securities or rights, or (b) following the
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Initial Public Offering, a report is filed on Schedule 13D or Schedule TO
(or any successor schedule, form or report) disclosing that any person (other
than Parent or any person or persons that, in the aggregate, hold directly or
indirectly a majority of the combined voting power of the outstanding voting
securities of the Parent immediately prior to the condition or event that is the
subject of such report) has become the beneficial owner of securities
representing 50 percent or more of the voting securities of the Corporation (or
any successor thereto by operation of law or by reason of the acquisition of all
or substantially all of the assets of the Corporation), including voting
securities issuable upon the exercise or conversion of options, warrants or
other securities or rights; or
(iv) (1) while the Parent directly or indirectly holds a majority of
the combined voting power of the outstanding securities of the Corporation, the
Parent (or any successor thereto by operation of law or acquisition of all or
substantially all of the assets of the Parent) files a report or proxy statement
pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A
(or any successor schedule, form, report or item therein) that a change of
control of the Parent (or any such successor) has occurred, or (2) the
Corporation (or any successor thereto by operation of law or by acquisition of
all or substantially all of the assets of the Corporation) files a report or
proxy statement pursuant to the Exchange Act disclosing in response to Form 8-K
or Schedule 14A (or any successor schedule, form, report or item therein) that a
change in control of the Corporation (or such successor) has occurred (other
than any Change in Control of the Corporation that results from the Parent
selling, assigning, distributing or otherwise transferring the voting securities
that it owns in the Corporation to a person or persons that, in the aggregate,
hold directly or indirectly a majority of the combined voting power of the
outstanding voting securities of the Parent immediately prior to such sale,
assignment, distribution or other transfer);
provided, however, notwithstanding the provisions of clauses (iii) and (iv)
above, a "Change of Control" shall not be deemed to have occurred solely because
the Parent, or a corporation or other legal entity in which the Parent directly
or indirectly beneficially owns 50 percent or more of the voting securities, or
any Parent-sponsored or Corporation-sponsored employee stock ownership plan or
other employee benefit plan of the Corporation or the Parent, either files or
becomes obligated to file a report or proxy statement under or in response to
Schedule 13D, Schedule TO, Form 8-K or Schedule 14A (or any successor form,
report, schedule or item therein) under the Exchange Act, disclosing beneficial
ownership by it of voting securities of the Parent or the Corporation, whether
in excess of 50 percent or otherwise, or because the Parent or the Corporation,
as appropriate, reports that a change of control of the Parent or the
Corporation, as appropriate, has or may have occurred or will or may occur in
the future by reason of such beneficial ownership.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commission" means the United States Securities and Exchange
Commission.
"Common Shares" means (i) shares of the Common Stock, no par value, of
the Corporation and (ii) any security into which Common Shares may be converted
by reason of any transaction or event of the type referred to in Section 12 of
this Plan.
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"Date of Grant" means the date specified by the Board on which a grant
of Option Rights, Appreciation Rights or Performance Shares or Performance Units
or a grant or sale of Restricted Shares or Deferred Shares shall become
effective, which shall not be earlier than the date on which the Board takes
action with respect thereto.
"Deferral Period" means the period of time during which Deferred Shares
are subject to deferral limitations under Section 7 of this Plan.
"Deferred Shares" means an award pursuant to Section 7 of this Plan of
the right to receive Common Shares at the end of a specified Deferral Period.
"Designated Affiliate" means the Parent or any legal entity (other than
the Corporation or any Subsidiary) in which the Parent now or hereafter directly
or indirectly owns or otherwise controls more than 50 percent of the total
combined voting power represented by all classes of stock or other securities
issued by such legal entity or, in the case of a partnership or other legal
entity that does not have outstanding shares of stock or other securities, in
which the Parent now or hereafter has a direct or indirect ownership interest
(representing the right generally to make decisions for such partnership or
legal entity) of more than 50 percent.
"Employer" means the Corporation, Subsidiary or a successor to any such
entity by merger or otherwise upon or following a Change of Control.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Executive" means any individual who has been designated by the Board
as an executive or officer of the Corporation or any Subsidiary for the purposes
of this Plan.
"Good Reason" means that an Executive shall have made a good faith
determination that one or more of the following has occurred:
(i) any significant and adverse change in the Executive's duties,
responsibilities and authority, as compared in each case to the corresponding
circumstances in place on the Reference Date;
(ii) a relocation of the Executive's principal work location as
established on the Reference Date to a location that is more than 30 miles away
from such location;
(iii) a reduction in the Executive's salary or bonus potential that is
not in either case agreed to by the Executive, or any other significant adverse
financial consequences associated with the Executive's employment as compared to
the corresponding circumstances in place on the Reference Date; or
(iv) a breach by any Employer of its obligations under any agreement to
which the Employer and the Executive are parties that is not cured within 20
business days following the Employer's receipt of a written notice from the
Executive specifying the particulars of such breach in reasonable detail.
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"Free-Standing Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right or similar right.
"Immediate Family" has the meaning ascribed thereto in Rule 16a-1(e),
as promulgated and amended from time to time by the Commission under the
Exchange Act, or any successor rule to the same effect.
"Incentive Stock Option" means an Option Right that is intended to
quality as an "incentive stock option" under Section 422 of the Code or any
successor provision thereto.
"Initial Public Offering" means the initial underwritten offering of
the Common Shares to the general public pursuant to a registration statement
filed with, and declared effective by, the Commission pursuant to the Securities
Act.
"Management Objectives" means the achievement or performance objectives
established pursuant to this Plan for Participants who have received grants of
Performance Shares or Performance Units or, when so determined by the Board,
Restricted Shares.
"Market Value per Share" means the fair market value of the Common
Shares as determined by the Board from time to time.
"Nonaffiliate Director" means a person who (i) is serving (or who has
been elected or appointed and has agreed to serve) as a member of the Board,
(ii) is not an officer or employee of the Corporation or any Subsidiary or a
beneficial owner of 10 percent or more of the outstanding Common Shares, or so
long as the Parent directly or indirectly holds a majority of the combined
voting power of the outstanding securities of the Corporation, a beneficial
owner of shares of capital stock of the Parent representing in the aggregate
voting of 10% or more of the total outstanding voting securities of the Parent,
or so long as the Parent directly or indirectly holds 10 percent or more of the
combined voting power of the outstanding securities of the Corporation, is not
an officer or employee of the Parent, and (iii) was not elected or appointed as
a member of the Board pursuant to or in connection with any contractual or other
commitment on the part of the Corporation or to the Parent to cause such person
to be elected or appointed, or to nominate or otherwise advance such person for
election or appointment, as a member of the Board.
"Nonqualified Option" means an Option Right that is not intended to
qualify as a Tax-Qualified Option.
"Optionee" means the person so designated in an agreement evidencing an
outstanding Option Right.
"Option Price" means the purchase price payable upon the exercise of an
Option Right.
"Option Right" means the right to purchase Common Shares from the
Corporation upon the exercise of a Nonqualified Option or a Tax-Qualified Option
granted pursuant to Section 4, or a Replacement Option Right granted pursuant to
Section 18(c), of this Plan.
"Participant" means a person who is selected by the Board to receive
benefits under this Plan and (i) at the time award(s) are made to such person
under this Plan, (a) is a Nonaffiliate
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Director or an officer (including but not limited to an officer who may
also be a member of the Board) or other key employee of or a consultant or
advisor to the Corporation or any Subsidiary or (b) has agreed to commence
serving in such capacity to the Corporation or any Subsidiary, or (ii) with
respect to any vested awards held by such person under this Plan, is a former
employee of the Corporation or any of its Subsidiaries, who, at the
Corporation's request, becomes employed by a Designated Affiliate. "Parent"
means Nextel Communications, Inc., a Delaware corporation.
"Performance Period" means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating thereto are to be achieved.
"Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
"Performance Unit" means a bookkeeping entry that records a unit
equivalent to $1.00 awarded pursuant to Section 8 of this Plan.
"Reference Date" means the day before the effective date of any Change
of Control of the Corporation.
"Replacement Option Right" means an Option Right granted pursuant to
Section 18(c) of this Plan in exchange for the surrender and cancellation of an
option to purchase shares of another corporation that is acquired by the
Corporation or a Subsidiary by merger or otherwise.
"Restricted Shares" means Common Shares granted or sold pursuant to
Section 6 of this Plan as to which neither the substantial risk of forfeiture
nor the restrictions on transfer referred to in Section 6 hereof has expired.
"Rule 16b-3" means Rule 16b-3, as promulgated and amended from time to
time by the Commission under the Exchange Act, or any successor rule to the same
effect.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Spread" means, in the case of a Free-Standing Appreciation Right, the
amount by which the Market Value per Share on the date when the Appreciation
Right is exercised exceeds the Base Price specified therein or, in the case of a
Tandem Appreciation Right, the amount by which the Market Value per Share on the
date when the Appreciation Right is exercised exceeds the Option Price specified
in the related Option Right.
"Subsidiary" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Corporation has a direct
or indirect ownership or other equity interest that represents, directly or
indirectly, more than 50 percent of the total combined voting power represented
by all classes of stock or other ownership or equity interest units issued by
such corporation, partnership, joint venture, unincorporated association or
other entity.
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"Tandem Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is granted in tandem with an Option
Right or any similar right granted under any other plan of the Corporation.
"Tax-Qualified Option" means an Option Right that is intended to
qualify under particular provisions of the Code, including but not limited to an
Incentive Stock Option.
As used in this Plan, the term "employment" shall be deemed to refer to
service as a member of the Board or as a consultant, as well as to a traditional
employment relationship, as the case may be.
3. Shares and Performance Units Available under the Plan. (a)(i)
Subject to adjustment as provided in Section 12 of this Plan, the number of
Common Shares covered by outstanding awards, except Replacement Option Rights,
granted under this Plan and issued or transferred upon the exercise or payment
thereof shall not in the aggregate exceed 5,000,000 Common Shares, which may be
Common Shares of original issuance or Common Shares held in treasury or a
combination thereof; provided, however, that the number of Common Shares issued
or transferred as Restricted Shares shall not in the aggregate exceed 200,000
Common Shares, subject to adjustment as provided in Section 12 of this Plan.
(ii) Subject to adjustment as provided in Section 12 of this Plan, the
number of Common Shares covered by Replacement Option Rights granted under this
Plan during any calendar year shall not in the aggregate exceed five percent of
the Common Shares outstanding on January 1 of that year.
(iii) For the purposes of this Section 3(a):
(1) Upon payment in cash of the benefit provided by any award
granted under this Plan, any Common Shares that were covered by that award shall
again be available for issuance or transfer hereunder.
(2) Common Shares covered by any award granted under this Plan
shall be deemed to have been issued or transferred, and shall cease to be
available for future issuance or transfer in respect of any other award granted
hereunder, at the earlier of the time when they are actually issued or
transferred or the time when dividends or dividend equivalents are paid thereon;
provided, however, that Restricted Shares shall be deemed to have been issued or
transferred at the earlier of the time when they cease to be subject to a
substantial risk of forfeiture or the time when dividends are paid thereon.
(b) Subject to adjustment as provided in Section 12 of this Plan, the
number of Performance Units that may be granted under this Plan shall not in the
aggregate exceed 500,000 Performance Units that are granted under this Plan, but
are not earned by the Participant at the end of the Performance Period, shall be
available for future grants of Performance Units hereunder.
(c) Notwithstanding anything in this Section 3, or elsewhere in this
Plan, to the contrary and subject to adjustment as provided in Section 12 of
this Plan, the aggregate number
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of Common Shares actually issued or transferred by the Corporation upon the
exercise of Incentive Stock Options shall not exceed 5,000,000 Common Shares.
4. Option Rights. The Board may authorize grants to Participants of
options to purchase Common Shares upon such terms and conditions as the Board
may determine in accordance with the following provisions:
(a) Each grant shall specify the number of Common Shares to which
it pertains.
(b) Each grant shall specify an Option Price per Common Share, which
shall be equal to or greater than the Market Value per Share on the Date of
Grant; provided, however, that the Option Price per Common Share of a
Replacement Option Right may be less than the Market Value per Share on the Date
of Grant.
(c) Each grant shall specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Corporation, (ii) nonforfeitable,
nonrestricted Common Shares that have been held by a Participant for more than
six months and have a value at the time of exercise that is equal to the Option
Price, (iii) any other legal consideration that the Board may deem appropriate,
including but not limited to any form of consideration authorized under Section
4(d), on such basis as the Board may determine in accordance with this Plan and
(iv) any combination of the foregoing.
(d) On or after the Date of Grant of any Nonqualified Option, the Board
may determine that payment of the Option Price may also be made in whole or in
part in the form of Restricted Shares or other Common Shares that in either case
have been held by a Participant for more than six months and that are subject to
risk of forfeiture or restrictions on transfer. Unless otherwise determined by
the Board on or after the Date of Grant, whenever any Option Price is paid in
whole or in part by means of any of the forms of consideration specified in this
Section 4(d), the Common Shares received by the Optionee upon the exercise of
the Nonqualified Option shall be subject to the same risks of forfeiture or
restrictions on transfer as those that applied to the consideration surrendered
by the Optionee; provided, however, that such risks of forfeiture and
restrictions on transfer shall apply only to the same number of Common Shares
received by the Optionee as applied to the forfeitable or restricted Common
Shares surrendered by the Optionee.
(e) Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a broker on the date of exercise of some or all of
the Common Shares to which the exercise relates.
(f) Successive grants may be made to the same Participant regardless of
whether any Option Rights previously granted to the Participant remain
unexercised.
(g) Each grant (i), unless otherwise determined by the Board, shall
become exercisable with respect to fifty percent (50%) of the Common Shares
covered thereby on the second anniversary of the Date of Grant and with respect
to twenty-five percent (25%) of the Common Shares covered thereby on each of the
third and fourth anniversaries of the Date of Grant for so long as the Optionee
remains in the continuous employ of an Employer; provided,
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however, in the event of an Initial Public Offering or Change in Control
prior to the first anniversary of the Date of Grant, twenty-five percent (25%)
of the Common Shares covered thereby shall become exercisable on each of the
first four anniversaries of the Date of Grant for so long as the Optionee
remains in the continuous employ of an Employer or in the event of an Initial
Public Offering or Change in Control on or after the first anniversary of the
Date of Grant but prior to the second anniversary of the Date of Grant,
twenty-five percent (25%) of the Common Shares covered thereby shall become
exercisable on the first to occur of the Initial Public Offering or Change in
Control and twenty-five percent (25%) of the Common Shares covered thereby shall
become exercisable on each of the second, third and fourth anniversaries of the
Date of Grant for so long as the Optionee remains in the continuous employ of an
Employer and (ii), unless otherwise expressly determined in a resolution duly
adopted by the Board on the Date of Grant or such later date on which the Board
may ratify such grant, shall provide that the Option Rights shall (1) if the
Optionee is a Nonaffiliate Director, immediately become fully exercisable upon
the occurrence of a Change of Control of the Corporation or (2) if the Optionee
is recognized by any Employer as a regular full time employee, immediately
become fully exercisable upon the termination of the Optionee's employment by an
Employer without Cause during the Accelerated Vesting Period and also, in the
case of an Optionee who is an Executive, upon the termination of the Optionee's
employment by the Optionee for Good Reason during the Accelerated Vesting
Period; provided, however, that any such Accelerated Vesting Provision or any
acceleration under Section 4(g)(i) shall be deemed void ab initio and shall be
of no force or effect, if it should be determined that any such provision would
prevent a proposed merger or other business combination that is intended by the
parties thereto (which may include either or both of the Parent and the
Corporation) to be accounted for as a pooling of interests from being so
accounted for.
(h) Option Rights granted pursuant to this Section 4 may be
Nonqualified Options or Tax-Qualified Options or combinations thereof.
(i) On or after the Date of Grant of any Nonqualified Option, the Board
may provide for the payment to the Optionee of dividend equivalents thereon in
cash or Common Shares on a current, deferred or contingent basis, or the Board
may provide that any dividend equivalents shall be credited against the Option
Price.
(j) No Option Right granted pursuant to this Section 4 may be
exercised more than 10 years from the Date of Grant.
(k) Each grant shall be evidenced by an agreement that shall be
executed on behalf of the Corporation by any officer thereof and delivered to
and accepted by the Optionee and shall contain such terms and provisions as the
Board may determine consistent with this Plan.
5. Appreciation Rights. The Board may authorize grants to Participants
of Appreciation Rights. An Appreciation Right shall be a right of the
Participant to receive from the Corporation an amount that shall be determined
by the Board and shall be expressed as a percentage (not exceeding 100 percent)
of the Spread at the time of the exercise of the Appreciation Right. Any grant
of Appreciation Rights under this Plan shall be upon such terms and conditions
as the Board may determine in accordance with the following provisions:
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(a) Any grant may specify that the amount payable upon the exercise of
an Appreciation Right may be paid by the Corporation in cash, Common Shares or
any combination thereof and may (i) either grant to the Participant or reserve
to the Board the right to elect among those alternatives or (ii) preclude the
right of the Participant to receive and the Corporation to issue Common Shares
or other equity securities in lieu of cash; provided, however, that no form of
consideration or manner of payment that would cause Rule 16b-3 to cease to apply
to this Plan shall be permitted.
(b) Any grant shall specify that no amount payable upon the exercise of
an Appreciation Right shall be required to be paid to the extent that such
payment would not be permitted under, or would constitute a breach or violation
of, any indenture, loan agreement or other instrument or agreement to which the
Corporation is a party or by which it is bound, and also may specify that the
amount payable upon the exercise of an Appreciation Right shall not exceed a
maximum specified by the Board on the Date of Grant.
(c) Any grant may specify (i) a waiting period or periods before
Appreciation Rights shall become exercisable and (ii) permissible dates or
periods on or during which Appreciation Rights shall be exercisable.
(d) Any grant may specify that an Appreciation Right may be exercised
only in the event of a Change of Control or other similar transaction or event.
(e) On or after the Date of Grant of any Appreciation Rights, the Board
may provide for the payment to the Participant of dividend equivalents thereon
in cash or Common Shares on a current, deferred or contingent basis.
(f) Each grant shall be evidenced by an agreement that shall be
executed on behalf of the Corporation by any officer thereof and delivered to
and accepted by the Participant and shall contain such terms and provisions as
the Board may determine consistent with this Plan.
(g) Regarding Tandem Appreciation Rights only: Each grant shall
specifically identify the related Option Right (or similar right granted under
any other plan of the Corporation) and shall provide that the Tandem
Appreciation Right may be exercised only (i) at a time when the related Option
Right (or such similar right) is also exercisable and the Spread is positive and
(ii) by surrender of the related Option Right (or such similar right) for
cancellation.
(h) Regarding Free-Standing Appreciation Rights only:
(i) Each grant shall specify in respect of each Free-Standing
Appreciation Right a Base Price per Common Share, which shall be equal to or
greater than the Market Value per Share on the Date of Grant;
(ii) Successive grants may be made to the same Participant
regardless of whether any Free-Standing Appreciation Rights previously granted
to the Participant remain unexercised;
(iii) Each grant shall specify the period or periods of
continuous employment of the Participant by the Corporation or any Subsidiary
that are necessary before the Free-
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Standing Appreciation Rights or installments thereof shall become
exercisable, and any grant may provide for the earlier exercise of the
Free-Standing Appreciation Rights in the event of a Change of Control or other
similar transaction or event; and
(iv) No Free-Standing Appreciation Right granted under this Plan
may be exercised more than 10 years from the Date of Grant.
6. Restricted Shares. The Board may authorize grants or sales to
Participants of Restricted Shares upon such terms and conditions as the Board
may determine in accordance with the following provisions:
(a) Each grant or sale shall constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to dividend, voting and
other ownership rights, subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.
(b) Each grant or sale may be made without additional consideration
from the Participant or in consideration of a payment by the Participant that is
less than the Market Value per Share on the Date of Grant.
(c) Each grant or sale shall provide that the Restricted Shares covered
thereby shall be subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code for a period to be determined by the Board on
the Date of Grant, and any grant or sale may provide for the earlier termination
of such period in the event of a Change of Control or other similar transaction
or event.
(d) Each grant or sale shall provide that, during the period for which
such substantial risk of forfeiture is to continue, the transferability of the
Restricted Shares shall be prohibited or restricted in the manner and to the
extent prescribed by the Board on the Date of Grant. Such restrictions may
include without limitation rights of repurchase or first refusal in the
Corporation or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee.
(e) Any grant or sale may require that any or all dividends or other
distributions paid on the Restricted Shares during the period of such
restrictions be automatically sequestered and reinvested on an immediate or
deferred basis in additional Common Shares, which may be subject to the same
restrictions as the underlying award or such other restrictions as the Board may
determine.
(f) Each grant or sale shall be evidenced by an agreement that shall be
executed on behalf of the Corporation by any officer thereof and delivered to
and accepted by the Participant and shall contain such terms and provisions as
the Board may determine consistent with this Plan. Unless otherwise directed by
the Board, all certificates representing Restricted Shares, together with a
stock power that shall be endorsed in blank by the Participant with respect to
the Restricted Shares, shall be held in custody by the Corporation until all
restrictions thereon lapse.
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7. Deferred Shares. The Board may authorize grants or sales of
Deferred Shares to Participants upon such terms and conditions as the Board
may determine in accordance with the following provisions:
(a) Each grant or sale shall constitute the agreement by the
Corporation to issue or transfer Common Shares to the Participant in the future
in consideration of the performance of services, subject to the fulfillment
during the Deferral Period of such conditions as the Board may specify.
(b) Each grant or sale may be made without additional consideration
from the Participant or in consideration of a payment by the Participant that is
less than the Market Value per Share on the Date of Grant.
(c) Each grant or sale (i) shall provide that the Deferred Shares
covered thereby shall be subject to a Deferral Period, which shall be determined
by the Board on the Date of Grant, and (ii), unless otherwise expressly
determined in a resolution duly adopted by the Board on the Date of Grant or
such later date on which the Board may ratify such grant or sale, shall provide
for the earlier termination of the Deferral Period, and the immediate vesting of
the Participant's rights to all of the Deferred Shares subject to the grant or
sale, (1) if the Participant is a Nonaffiliate Director, upon the occurrence of
a Change of Control of the Corporation or (2) if the Participant is recognized
by any Employer as a regular full time employee, upon the termination of the
Participant's employment by an Employer without Cause during the Accelerated
Vesting Period and also, in the case of a Participant who is an Executive, upon
the termination of the Participant's employment by the Participant for Good
Reason during the Accelerated Vesting Period; provided, however, that any such
Accelerated Vesting Provision shall be deemed void ab initio and shall be of no
force or effect, if it should be determined that any such provision would
prevent a proposed merger or other business combination that is intended by the
parties thereto (which may include either or both of the Parent and the
Corporation) to be accounted for as a pooling of interests from being so
accounted for.
(d) During the Deferral Period, the Participant shall not have any
rights of ownership in the Deferred Shares, shall not have any right to vote the
Deferred Shares and, except as provided in Section 11(c), shall not have any
right to transfer any rights under the subject award, but the Board may on or
after the Date of Grant authorize the payment of dividend equivalents on the
Deferred Shares in cash or additional Common Shares on a current, deferred or
contingent basis.
(e) Each grant or sale shall be evidenced by an agreement that shall be
executed on behalf of the Corporation by any officer thereof and delivered to
and accepted by the Participant and shall contain such terms and provisions as
the Board may determine consistent with this Plan.
8. Performance Shares and Performance Units. The Board may authorize
grants of Performance Shares and Performance Units, which shall become payable
to the Participant upon the achievement of specified Management Objectives, upon
such terms and conditions as the Board may determine in accordance with the
following provisions:
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(a) Each grant shall specify the number of Performance Shares or
Performance Units to which it pertains, which may be subject to adjustment to
reflect changes in compensation or other factors.
(b) The Performance Period with respect to each Performance Share or
Performance Unit (i) shall be determined by the Board on the Date of Grant and
(ii), unless otherwise expressly determined in a resolution duly adopted by the
Board on the Date of Grant or such later date on which the Board may ratify such
grant, shall provide for the earlier termination of the Performance Period, and
the immediate vesting of the Participant's rights to all of the Performance
Shares or Performance Units subject to the grant, (1) if the Participant is a
Nonaffiliate Director, upon the occurrence of a Change of Control of the
Corporation or (2) if the Participant is recognized by any Employer as a regular
full time employee, upon the termination of the Participant's employment by an
Employer without Cause during the Accelerated Vesting Period and also, in the
case of a Participant who is an Executive, upon the termination of the
Participant's employment by the Participant for Good Reason during the
Accelerated Vesting Period; provided, however, that any such Accelerated Vesting
Provision shall be deemed void ab initio and shall be of no force or effect, if
it should be determined that any such provision would prevent a proposed merger
or other business combination that is intended by the parties thereto (which may
include either or both of the Parent and the Corporation) to be accounted for as
a pooling of interests from being so accounted for.
(c) Each grant shall specify the Management Objectives that are to be
achieved by the Participant, which may be described in terms of Corporation-wide
objectives or objectives that are related to the performance of the individual
Participant or the Subsidiary, division, department or function within the
Corporation or Subsidiary in which the Participant is employed or with respect
to which the Participant provides consulting services.
(d) Each grant shall specify in respect of the specified Management
Objectives a minimum acceptable level of achievement below which no payment will
be made and shall set forth a formula for determining the amount of any payment
to be made if performance is at or above the minimum acceptable level but falls
short of full achievement of the specified Management Objectives.
(e) Each grant shall specify the time and manner of payment of
Performance Shares or Performance Units that shall have been earned, and any
grant may specify that any such amount may be paid by the Corporation in cash,
Common Shares or any combination thereof and may either grant to the Participant
or reserve to the Board the right to elect among those alternatives; provided,
however, that no form of consideration or manner of payment that would cause
Rule 16b-3 to cease to apply to this Plan shall be permitted.
(f) Any grant of Performance Shares shall specify that no amount
payable with respect thereto shall be required to be paid to the extent that
such payment would not be permitted under, or would constitute a breach or
violation of, any indenture, loan agreement or other instrument or agreement to
which the Corporation is a party, or by which it is bound, and also may specify
that the amount payable with respect thereto may not exceed a maximum specified
by the Board on the Date of Grant. Any grant of Performance Units shall specify
that no amount payable with respect thereto shall be required to be paid to the
extent that such
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payment would not be permitted under, or would constitute a breach or
violation or, any indenture, loan agreement or other instrument or agreement to
which the Corporation is a party or by which it is bound, and also may specify
that the amount payable, or the number of Common Shares issuable, with respect
thereto may not exceed a maximum specified by the Board on the Date of Grant
(g) On or after the Date of Grant of Performance Shares, the Board may
provide for the payment to the Participant of dividend equivalents thereon in
cash or additional Common Shares on a current, deferred or contingent basis.
(h) The Board may adjust Management Objectives and the related minimum
acceptable level of achievement if, in the sole judgment of the Board, events or
transactions have occurred after the Date of Grant that are unrelated to the
performance of the Participant and result in distortion of the Management
Objectives or the related minimum acceptable level of achievement.
(i) Each grant shall be evidenced by an agreement that shall be
executed on behalf of the Corporation by any officer thereof and delivered to
and accepted by the Participant and shall contain such terms and provisions as
the Board may determine consistent with this Plan.
9. Corporation's Repurchase Right. Upon cessation of a Participant's
employment with the Corporation, Subsidiary or Designated Affiliate prior to the
Initial Public Offering, regardless of the circumstances thereof, and including
without limitation upon death, disability, retirement, discharge or resignation
for any reason or no reason, and whether voluntary or involuntarily, the
Corporation, or an assignee of the Corporation, shall have the right to
repurchase from the Participant (or, (i) if the Participant is then deceased,
from the Participant's estate or (ii) if the Participant has transferred shares
pursuant to Section 11(d), from the Participant's transferee (a "Permitted
Transfer")) any and all Common Shares that are to be, or have been, issued or
transferred by the Corporation upon the exercise of Option Rights or
Appreciation Rights, upon the termination of the Deferral Period applicable to
Deferred Shares or upon payment under any grant of Performance Shares or
Performance Units, or are to be no longer subject to the substantial risk of
forfeiture and restrictions on transfer referred to in Section 6 of this Plan
then held by the Participant (or his or her estate or his or her Permitted
Transferee) at a repurchase price per Common Share equal to the Market Value per
Share on the date of repurchase; provided, however, that this repurchase right
initially applies only to Common Shares that have been held by a Participant for
more than six months as of the date of cessation of the Participant's employment
and, with respect to Common Shares that have not been held for more than six
months, shall be extended to the date six months after the date upon which such
shares are acquired. The Corporation may exercise its repurchase right by paying
to the Participant (or his or her estate or his or her Permitted Transferee) the
aggregate amount of such repurchase price in cash within 30 days following the
date of such cessation of the Participant's employment (or following the date
upon which the Common Shares have been held for six months, if later), and the
Participant (or his or her estate or his or her Permitted Transferee) shall
endorse and deliver to the Corporation the certificate(s) representing the
Common Shares so repurchased. Until the consummation of an Initial Public
Offering, certificates representing all such Common Shares issued to
Participants under the Plan,
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together with a stock power that shall be endorsed in blank by the
Participant, shall be held in custody by the Corporation.
10. First Refusal Rights; Market Stand-Off. (a) Prior to the Initial
Public Offering, the Corporation shall have the right of first refusal with
respect to any proposed sale or other disposition by the holder of any Common
Shares that are to be, or have been, issued or transferred by the Corporation
upon the exercise of Option Rights or Appreciation Rights, upon the termination
of the Deferral Period applicable to Deferred Shares or upon payment under any
grant of Performance Shares or Performance Units, or are to be no longer subject
to the substantial risk of forfeiture and restrictions on transfer referred to
in Section 6 of this Plan. Such right of first refusal shall be exercisable in
accordance with the terms and conditions set forth in the agreement evidencing
such award; provided, however, that this right of first refusal applies only to
Common Shares that have been held by a Participant for more than six months.
(b) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the Securities Act, including the Initial Public Offering,
a person shall not sell, or make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for value
or otherwise agree to engage in any of the foregoing transactions with respect
to, any Common Shares that are to be, or have been, issued or transferred by the
Corporation upon the exercise of Option Rights or Appreciation Rights, upon the
termination of the Deferral Period applicable to Deferred Shares or upon payment
under any grant of Performance Shares or Performance Units, or are to be no
longer subject to the substantial risk of forfeiture and restrictions on
transfer referred to in Section 6 of this Plan without the prior written consent
of the Corporation or its underwriters.
11. Transferability. (a) Except as otherwise determined by the Board,
no Option Right, Appreciation Right or other derivative security granted under
this Plan shall be transferable by a Participant other than by will or the laws
of descent and distribution and, except as otherwise determined by the Board,
Option Rights and Appreciation Rights shall be exercisable during a
Participant's lifetime only by the Participant or his or her guardian or legal
representative.
(b) Prior to the Initial Public Offering, no holder of any Common
Shares that have been issued or transferred by the Corporation upon the exercise
of Option Rights or Appreciation Rights, upon the termination of the Deferral
Period applicable to Deferred Shares, upon payment under any grant of
Performance Shares or Performance Units, or are no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred to in
Section 6 of this Plan, shall sell or transfer such Common Shares during a
period of six months following their issue or transfer by the Corporation in
order to permit the Corporation to exercise the right of first refusal described
in Section 10(a) of this Plan.
(c) The Board also may specify at the Date of Grant that all or any
part of the Common Shares that are to be issued or transferred by the
Corporation upon the exercise of Option Rights or Appreciation Rights, upon the
termination of the Deferral Period applicable to Deferred Shares or upon payment
under any grant of Performance Shares or Performance Units,
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or are to be no longer subject to the substantial risk of forfeiture and
restrictions on transfer referred to in Section 6 of this Plan, shall be subject
to further restrictions on transfer.
(d) Notwithstanding the provisions of Section 11(a), Option Rights
(other than Incentive Stock Options), Appreciation Rights, Restricted Shares,
Deferred Shares, Performance Shares and Performance Units shall be transferable
by a Participant, without payment of consideration therefor by the transferee,
to any one or more members of the Participant's Immediate Family (or to one or
more trusts established solely for the benefit of one or more members of the
Participant's Immediate Family or to one or more partnerships in which the only
partners are members of the Participant's Immediate Family); provided, however,
that (i) no such transfer shall be effective unless reasonable prior notice
thereof is delivered to the Corporation and such transfer is thereafter effected
in accordance with any terms and conditions that shall have been made applicable
thereto by the Corporation or the Board and (ii) any such transferee shall be
subject to the same terms and conditions hereunder as the Participant.
12. Adjustments. The Board may make or provide for such adjustments in
the number of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Deferred Shares and Performance Shares granted hereunder, the Option
Prices per Common Share or Base Prices per Common Share applicable to any such
Option Rights and Appreciation Rights, and the kind of shares (including shares
of another issuer) covered thereby, as the Board may in good faith determine to
be equitably required in order to prevent dilution or expansion of the rights of
Participants that otherwise would result from (a) any stock dividend, stock
split, combination of shares, recapitalization or other change in the capital
structure of the Corporation or (b) any merger, consolidation, spin-off,
spin-out, split-off, split-up, reorganization, partial or complete liquidation
or other distribution of assets, issuance of warrants or other rights to
purchase securities or any other corporate transaction or event having an effect
similar to any of the foregoing. In the event of any such transaction or event,
the Board may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all awards so replaced. On or after the Date of Grant of any award
under this Plan, the Board may provide in the agreement evidencing the award
that the holder of the award may elect to receive an equivalent award in respect
of securities of the surviving entity of any merger, consolidation or other
transaction or event having a similar effect, or the Board may provide that the
holder will automatically be entitled to receive such an equivalent award. The
Board may also make or provide for such adjustments in the numbers of Common
Shares specified in Sections 3(a)(i), 3(a)(ii), 3(b), and 3(c) of this Plan as
the Board may in good faith determine to be appropriate in order to reflect any
transaction or event described in this Section 12.
13. Fractional Shares. The Corporation shall not be required to issue
any fractional Common Shares pursuant to this Plan. The Board may provide for
the elimination of fractions or for the settlement thereof in cash.
14. Withholding Taxes. To the extent that the Corporation is required
to withhold federal, state, local or foreign taxes in connection with any
payment made or benefit realized by a Participant or other person under this
Plan, and the amounts available to the Corporation for the withholding are
insufficient, it shall be a condition to the receipt of any such payment or the
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realization of any such benefit that the Participant or such other person make
arrangements satisfactory to the Corporation for payment of the balance of any
taxes required to be withheld. At the discretion of the Board (to the extent
permitted under any agreements, including without limitation indentures or other
financing agreements, to which the Corporation may be a party), any such
arrangements may include relinquishment of a portion of any such payment or
benefit. In no event, however, shall the Corporation accept Common Shares for
payment of taxes in excess of required tax withholding rates, except that, in
the discretion of the Board (to the extent permitted under any agreements,
including without limitation indentures or other financing agreements, to which
the Corporation may be a party), a Participant may surrender Common Shares held
for more than six months to satisfy any tax obligation resulting from any such
transaction.
15. Certain Terminations of Employment, Hardship and Approved Leaves of
Absence. Notwithstanding any other provision of this Plan to the contrary, in
the event of termination of employment by reason of death, disability, normal
retirement, early retirement with the consent of the Corporation, termination of
employment to enter public service with the consent of the Corporation or leave
of absence approved by the Corporation, or in the event of hardship or other
special circumstances, of a Participant who holds an Option Right or
Appreciation Right that is not immediately and fully exercisable, any Restricted
Shares as to which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, any Deferred Shares as to which the
Deferral Period is not complete, any Performance Shares or Performance Units
that have not been fully earned, or any Common Shares that are subject to any
transfer restriction pursuant to Section 11(c) of this Plan, the Board may take
any action that it deems to be equitable under the circumstances or in the best
interests of the Corporation, including but not limited to waiving or modifying
any limitation or requirement with respect to any award under this Plan.
16. Foreign Participants. In order to facilitate the making of any
award or combination of awards under this Plan, the Board may provide for such
special terms for awards to Participants who are foreign nationals, or who are
employed by or engaged as consultants to the Corporation, any Subsidiary or any
Designated Affiliate outside of the United States of America, as the Board may
consider necessary or appropriate to accommodate differences in local law, tax
policy or custom. In addition, the Board may approve such supplements to, or
amendments, restatements or alternative versions of, this Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of this Plan as in effect for any other purpose; provided, however,
that no such supplements, amendments, restatements or alternative versions shall
include any provisions that are inconsistent with the terms of this Plan, as
then in effect, unless this Plan could have been amended to eliminate the
inconsistency without further approval by the stockholders of the Corporation.
17. Administration of the Plan. (a) This Plan shall be administered by
the Board, which may from time to time delegate all or any part of its authority
under this Plan to a committee of the Board consisting of two or more members of
the Board, or a subcommittee of a committee of the Board consisting exclusively
of two or more "Non-Employee Directors" (as defined in Rule 16b-3), appointed by
the Board. A majority of the committee (or subcommittee) shall constitute a
quorum, and the action of the members of the committee (or subcommittee) present
at any meeting at which a quorum is present, or acts unanimously approved in
writing,
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shall be the acts of the committee (or subcommittee). To the extent of any
such delegation, references in this Plan to the Board shall be deemed to be
references to any such committee or subcommittee.
(b) The Board may from time to time reserve a specified number of
Common Shares, subject to adjustment as provided in Section 12 of this Plan, for
grants of Nonqualified Options to Participants who have agreed to commence
employment with the Corporation or any Subsidiary and may delegate to one or
more officers of the Corporation the authority to determine the Participants to
whom such Nonqualified Options shall be granted, and to determine the number of
such Common Shares to which any such Nonqualified Option shall pertain, subject
to the terms and conditions of this Plan and the terms and conditions of an
agreement evidencing any such Nonqualified Option and approved by resolution of
the Board at the time of such delegation. For the purposes of Section 4(b) of
this Plan, as it relates to any Nonqualified Option that shall be granted
pursuant to this Section 17(b), (i) the Date of Grant shall be the date on which
the Participant agrees to accept employment with the Corporation or any
Subsidiary, which may precede the date on which the Participant's employment
actually commences (or, if such date is not specified in the Participant's
employment offer and acceptance materials, the Date of Grant will be the
commencement date of such Participant's employment with the Corporation or any
Subsidiary), and (ii) the Market Value per Share on the Date of Grant shall be
the closing price of the Common Shares on the Nasdaq Stock Market on the last
trading day immediately preceding the Date of Grant.
(c) The interpretation and construction by the Board of any provision
of this Plan or any agreement, notification or document evidencing the grant of
Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares,
Performance Shares or Performance Units, and any determination by the Board
pursuant to any provision of this Plan or any such agreement, notification or
document, shall be final and conclusive. No member of the Board shall be liable
for any such action taken or determination made in good faith.
18. Amendments and Other Matters. (a) The Board may at any time and
from time to time amend this Plan in whole or in part; provided, however, that
(1) any amendment that must be approved by the stockholders of the Corporation
in order to comply with applicable law or the rules of any national securities
exchange or automated quotation system upon which the Common Shares are traded
or quoted shall not be effective unless and until such approval has been
obtained and (2) the provisions of Sections 4(g), 7(c) and 8(b), including but
not limited to clause (ii) of each of these Sections, may not be amended
following a Change of Control in any way that would adversely affect the rights
of holders of awards granted under Sections 4, 7 and 8 hereof.
(b) With the concurrence of the affected Participant, the Board may
cancel any agreement evidencing Option Rights or any other award granted under
this Plan. In the event of any such cancellation, the Board may authorize the
granting of new Option Rights or other awards hereunder, which may or may not
cover the same number of Common Shares as had been covered by the canceled
Option Rights or other award, at such Option Price, in such manner and subject
to such other terms, conditions and discretion as would have been permitted
under this Plan had the canceled Option Rights or other award not been granted.
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(c) The Board may grant under this Plan any award or combination of
awards authorized under this Plan, including but not limited to Replacement
Option Rights, in exchange for the surrender and cancellation of an award that
was not granted under this Plan (including but not limited to an award that was
granted by the Corporation or a Subsidiary, or by another corporation that is
acquired by the Corporation or a Subsidiary by merger or otherwise, prior to the
adoption of this Plan by the Board), and any such award or combination of awards
so granted under this Plan may or may not cover the same number of Common Shares
as had been covered by the canceled award and shall be subject to such other
terms, conditions and discretion as would have been permitted under this Plan
had the canceled award not been granted.
(d) This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Corporation, any
Subsidiary or Designated Affiliate and shall not interfere in any way with any
right that the Corporation, any Subsidiary or Designated Affiliate would
otherwise have to terminate any Participant's employment or other service at any
time.
(e) To the extent that any provision of this Plan would prevent any
Option Right that was intended to qualify as a Tax-Qualified Option from so
qualifying, any such provision shall be null and void with respect to any such
Option Right; provided, however, that any such provision shall remain in effect
with respect to other Option Rights, and there shall be no further effect on any
provision of this Plan.
(f) The Board may also permit Participants to elect to defer the
issuance of Common Shares or the settlement of awards in cash under this Plan
pursuant to such procedures, programs or rules as the Board may establish for
the purposes of this Plan. The Board may also provide that deferred issuances
and settlements include the payment or crediting of dividend equivalents or
interest on the deferral amounts.
(g) The Board may condition the grant of any award or combination of
awards authorized under this Plan on the surrender or deferral by the
Participant of his or her right to receive a cash bonus or other compensation
otherwise payable by the Corporation or a Subsidiary to the Participant.
(h) All grants, exercises and sales of securities of the Corporation
made pursuant to this Plan must be made in compliance with (and may be modified
without the consent of the grantee to assure compliance with) all applicable
foreign, federal and state laws.
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