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EXHIBIT 10.20
SUNRISE ASSISTED LIVING, INC.
1995 STOCK OPTION PLAN, AS AMENDED
SUNRISE ASSISTED LIVING, INC., a Delaware corporation (the
"Corporation"), sets forth herein the terms of this 1995 Stock Option Plan, as
amended (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Corporation
and any subsidiary thereof within the meaning of Rule 405 of Regulation C under
the Securities Act of 1933, as amended (with the term "person" as used in such
Rule 405 being defined as in Section 2(2) of such Act) (a "Subsidiary"), by
providing eligible individuals (as designated pursuant to Section 4 below) with
incentives to improve business results, by providing an opportunity to acquire
or increase a proprietary interest in the Corporation, which thereby will
create a stronger incentive to expend maximum effort for the growth and success
of the Corporation and its Subsidiaries, and will encourage such eligible
individuals to continue to serve the Corporation and its Subsidiaries, whether
as an employee, as a director, as a consultant or advisor or in some other
capacity. To this end, the Plan provides for the grant of stock options, as
set out herein.
This Plan provides for the grant of stock options (each of which
is an "Option") in accordance with the terms of the Plan. An Option may be an
incentive stock option (an "ISO") intended to satisfy the applicable
requirements under Section 422 of the Internal Revenue Code of 1986, as amended
from time to time, or the corresponding provision of any subsequently-enacted
tax statute (the "Code"), or a nonqualified stock option (an "NSO"). An Option
is an NSO to the extent that the Option would exceed the limitations set forth
in Section 7 below. An Option is also an NSO if either (i) the Option is
specifically designated at the time of grant as an NSO or not being an ISO or
(ii) the Option does not otherwise satisfy the requirements of Code Section 422
at the time of grant. Each Option shall be evidenced by a written agreement
between the Corporation and the recipient individual that sets out the terms
and conditions of the grant as further described in Section 8.
2. ADMINISTRATION
(a) BOARD
The Plan shall be administered by the Board of Directors of the
Corporation (the "Board"), which shall have the full power and authority to
take all actions and to make all determinations required or provided for under
the Plan or any Option granted or Option Agreement (as defined in Section 8
below)
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entered into hereunder and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Option granted or Option Agreement entered into hereunder. The interpretation
and construction by the Board of any provision of the Plan or of any Option
granted or Option Agreement entered into hereunder shall be final, binding and
conclusive.
(b) ACTION BY COMMITTEE
The Board from time to time may appoint a Stock Option Committee
consisting of two or more members of the Board of Directors who, in the sole
discretion of the Board, may be the same Directors who serve on the
Compensation Committee, subject to Section 2(d), or may appoint the
Compensation Committee to serve as the Stock Option Committee (the
"Committee"), subject to Section 2(d). The Board, in its sole discretion, may
provide that the role of the Committee shall be limited to making
recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to or with respect to the Plan, or
the Board may delegate to the Committee such powers and authorities related to
the administration of the Plan, as set forth in Section 2(a) above, as the
Board shall determine, consistent with the Certificate of Incorporation and
By-laws of the Corporation and applicable law. In the event that the Plan or
any Option granted or Option Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board, such action may
be taken by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as provided
for in this Section. Unless otherwise expressly determined by the Board, any
such action or determination by the Committee shall be final and conclusive.
(c) NO LIABILITY
No member of the Board or of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted or Option Agreement entered into hereunder.
(d) APPLICABILITY OF RULE 16b-3
Those provisions of the Plan that make express reference to Rule
16b-3 shall apply to the Corporation only at such time as the Corporation's
Stock (as defined in Section 3) or any other equity security of the Corporation
is registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and then only to such persons as are required to file reports
under Section 16(a) of the Exchange Act (each of whom is a "Reporting Person").
Unless not required by Rule 16b-3, from and after such time as the
Corporation's Stock or any other equity security of the Corporation is
registered
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under the Exchange Act (the "Registration Date"), the Board may act under the
Plan (i) only if all members of the Board are "disinterested persons" as
defined in Rule 16b-3 or (ii) by the determination of the Committee constituted
as set forth in the following sentence. From and after the Registration Date,
unless not required by Rule 16b-3, the Committee appointed pursuant to Section
2(b) shall consist of not fewer than two members of the Board each of whom
shall qualify (at the time of appointment to the Committee and during all
periods of service on the Committee) in all respects as a "disinterested
person" as defined in Rule 16b-3.
3. STOCK
The stock that may be issued pursuant to Options under the Plan
shall be shares of common stock, par value $.01 per share, of the Corporation
(the "Stock"), which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant to Options
under the Plan shall not exceed, in the aggregate, one million two hundred
ninety eight thousand and sixty-five (1,298,065) shares. If any Option
expires, terminates, or is terminated or canceled for any reason prior to
exercise, the shares of Stock that were subject to the unexercised, forfeited,
terminated or canceled portion of such Option shall be available immediately
for future grants of Options under the Plan; provided, however, shares of Stock
that were subject to an Option that has been purchased pursuant to Section
11(c) shall not be available for future grants of Options under the Plan.
4. ELIGIBILITY
(a) DESIGNATED RECIPIENTS
Subject to the next sentence, Options may be granted under the
Plan to (i) any full-time employee of the Corporation or any Subsidiary
(including any such individual who is an officer or director of the Corporation
or any Subsidiary) as the Board shall determine and designate from time to time
or (ii) any other individual (including a non-employee director of, or
consultant or advisor providing bona fide services to, the Corporation or any
Subsidiary provided that such services must not be in connection with the offer
or sale of securities in a capital-raising transaction) whose participation in
the Plan is determined by the Board to be in the best interests of the
Corporation and is so designated by the Board. Options granted to a full-time
employee of the Corporation or a "subsidiary corporation" thereof within the
meaning of Section 424(f) of the Code shall be either ISOs or NSOs, as
determined in the sole discretion of the Board, and Options granted to any
other individual shall be NSOs.
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(b) SUCCESSIVE GRANTS
An individual may hold more than one Option, subject to such
restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) EFFECTIVE DATE
The Plan shall be effective as of the date of adoption by the
Board, subject to approval of the Plan within one year of such effective date
by the affirmative vote of stockholders who hold more than fifty percent (50%)
of the combined voting power of the outstanding shares of voting stock of the
Corporation present or represented, and entitled to vote thereon at a duly
constituted stockholders' meeting, or by consent as permitted by law and in a
manner that satisfies applicable requirements of Rule 16b-3(b) of the Exchange
Act. Upon approval of the Plan by the stockholders of the Corporation as set
forth above, however, all Options granted under the Plan on or after the
effective date shall be fully effective as if the stockholders of the
Corporation had approved the Plan on the Plan's effective date. If the
stockholders fail to approve the Plan within one year of such effective date,
any Options granted hereunder shall be null and void and of no effect.
(b) TERM
The Plan shall have no termination date, but no grant of an ISO
may occur after the date that is ten years after the effective date.
6. GRANT OF OPTIONS
(a) GENERAL
Subject to the terms and conditions of the Plan, the Board may,
at any time and from time to time, grant to such eligible individuals as the
Board may determine (each of the whom is an "Optionee"), Options to purchase
such number of shares of Stock on such terms and conditions as the Board may
determine, including any terms or conditions that may be necessary to qualify
such Options as ISOs under Section 422 of the Code. Such authority
specifically includes the authority, in order to effectuate the purposes of the
Plan but without amending the Plan, to modify grants to eligible individuals
who are foreign nationals or are individuals who are employed outside the
United States to recognize differences in local law, tax policy, or custom.
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(b) LIMITATION ON GRANTS OF OPTIONS
The maximum number of shares subject to Options that can be
granted under the Plan to any executive officer of the Company or a Subsidiary,
or to any other person eligible for a grant of an Option under Section 4, is
250,000 shares during the first ten years after the effective date of the Plan
and 50,000 shares per year thereafter (in each case, subject to adjustment as
provided in Section 16(a) hereof).
7. LIMITATIONS ON INCENTIVE STOCK OPTIONS
(a) PRICE AND DOLLAR LIMITATIONS
An Option that is designated as being one that is intended to
qualify as an ISO shall qualify for treatment as an ISO only to the extent that
the aggregate fair market value (determined at the time the Option is granted)
of the Stock with respect to which all options that are intended to constitute
"incentive stock options," within the meaning of Code Section 422, are
exercisable for the first time by any Optionee during any calendar year (under
the Plan and all other plans of the Optionee's employer corporation and its
parent and subsidiary corporations within the meaning of Section 422(d) of the
Code) does not exceed $100,000.
(b) PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
the Optionee with the Corporation, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Optionee (including groups or classes of
participants or beneficiaries of which the Optionee is a member), whether or
not such compensation is deferred, is in cash, or is in the form of a benefit
to or for the Optionee (a "Benefit Arrangement"), if the Optionee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any
Option held by that Optionee and any right to receive any payment or other
benefit under this Plan shall not become exercisable or vested (i) to the
extent that such right to exercise, vesting, payment, or benefit, taking into
account all other rights, payments, or benefits to or for the Optionee under
this Plan, all Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Optionee under this Plan to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code as
then in effect (a "Parachute Payment") and (ii) if, as a result of receiving a
Parachute Payment, the
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aggregate after-tax amounts received by the Optionee from the Corporation under
this Plan, all Other Agreements, and all Benefit Arrangements would be less
than the maximum after-tax amount that could be received by him without causing
any such payment or benefit to be considered a Parachute Payment. In the event
that the receipt of any such right to exercise, vesting, payment, or benefit
under this Plan, in conjunction with all other rights, payments, or benefits to
or for the Optionee under any Other Agreement or any Benefit Arrangement would
cause the Optionee to be considered to have received a Parachute Payment under
this Plan that would have the effect of decreasing the after-tax amount
received by the Optionee as described in clause (ii) of the preceding sentence,
then the Optionee shall have the right, in the Optionee's sole discretion, to
designate those rights, payments, or benefits under this Plan, any Other
Agreements, and any Benefit Arrangements that should be reduced or eliminated
so as to avoid having the payment or benefit to the Optionee under this Plan be
deemed to be a Parachute Payment.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
agreements ("Option Agreements"), to be executed by the Corporation and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same
time need not contain similar provisions; provided, however, that all such
Option Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an
Option (the "Option Price") shall be fixed by the Board and stated in each
Option Agreement. The Option Price shall be not less than the greater of par
value or 100 percent of the fair market value of a share of Stock on the date
on which the Option is granted (as determined in good faith by the Board);
provided, however, that in the event the Optionee would otherwise be ineligible
to receive an ISO by reason of the provisions of Sections 422(b)(6) and 424(d)
of the Code (relating to stock ownership of more than ten percent), the Option
Price of an Option that is intended to be an ISO shall not be less than the
greater of par value or 110 percent of the fair market value of a share of
Stock at the time such Option is granted. In the event that the Stock is
listed on an established national or regional stock exchange or The Nasdaq
Stock Market, is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System, or is publicly traded in an
established securities market, in determining the fair market value of the
Stock, the Board shall use the closing price of the Stock on such exchange or
system or in such market (the highest such closing price if there is more than
one such exchange or market) on the trading date immediately before the Option
is granted (or, if there is no such
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closing price, then the Board shall use the mean between the highest bid and
lowest asked prices or between the high and low prices on such date), or, if no
sale of the Stock has been made on such day, on the next preceding day on which
any such sale shall have been made.
10. TERM AND EXERCISE OF OPTIONS
(a) TERM
Upon the expiration of ten years from the date on which an ISO
is granted or on such date prior thereto as may be fixed by the Board and
stated in the Option Agreement relating to such Option, that ISO shall be
ineligible for treatment as an "incentive stock option," as defined in Section
422 of the Code, and shall be exercisable only as an NSO. In the event the
Optionee otherwise would be ineligible to receive an "incentive stock option"
by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code
(relating to stock ownership of more than 10 percent), such ten year
restriction on exercisability as an ISO shall be read to impose a five year
restriction on such exercisability. If an Optionee shall terminate employment
prior to the ten-year or five-year limitation described in the immediately
preceding sentences, any outstanding ISO shall be ineligible for treatment as
an "incentive stock option," as defined in Section 422 of the Code, and shall
be exercisable only as an NSO, unless exercised within three months after such
termination or, in the case of termination on account of "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code), within one
year after such termination.
(b) OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Option granted under the Plan shall be exercisable, in
whole or in part, at any time and from time to time, over a period commencing
on or after the date of grant and, to the extent that the Board determines and
sets forth a termination date for such Option in the Option Agreement
(including any amendment thereto), ending upon the stated expiration or
termination date. The Board in its sole discretion may specify events or
circumstances, including the giving of notice, which will cause an Option to
terminate as set forth in the Option Agreement or in this Plan. No Option
granted to a Reporting Person shall be exercisable during the first six months
after the date of grant. Without limiting the foregoing but subject to the
terms and conditions of the Plan, the Board may in its sole discretion provide
that an Option may not be exercised in whole or in part for any period or
periods of time during which such Option is outstanding and may condition
exercisability (or vesting) of an Option upon the attainment of performance
objectives, upon continued service, upon certain events or transactions, or a
combination of one or more of such factors, or otherwise, as set forth in the
Option Agreement. Subject to the parachute payment restrictions under Section
7(b), however, the Board, in its
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sole discretion, may rescind, modify, or waive any such limitation or condition
on the exercise of an Option contained in any Option Agreement, so as to
accelerate the time at which the Option may be exercised or extend the period
during which the Option may be exercised. Notwithstanding any other provisions
of the Plan, no Option granted to an Optionee under the Plan shall be
exercisable in whole or in part prior to the date on which the stockholders of
the Corporation approve the Plan, as provided in Section 5 above.
(c) METHOD OF EXERCISE
An Option that is exercisable hereunder may be exercised by
delivery to the Corporation on any business day, at the Corporation's principal
office, addressed to the attention of the President, of written notice of
exercise, which notice shall specify the number of shares with respect to which
the Option is being exercised and shall be accompanied by payment in full of
the Option Price of the shares for which the Option is being exercised. The
minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of (i) 100
shares or such lesser number set forth in the applicable Option Agreement and
(ii) the maximum number of shares available for purchase under the Option at
the time of exercise. Payment of the Option Price for the shares of Stock
purchased pursuant to the exercise of an Option shall be made (i) in cash or in
cash equivalents; (ii) to the extent permitted by applicable law and under the
terms of the Option Agreement with respect to such Option, through the tender
to the Corporation of shares of Stock, which shares shall be valued, for
purposes of determining the extent to which the Option Price has been paid
thereby, at their fair market value (determined in accordance with Section 9)
on the date of exercise; (iii) to the extent permitted by applicable law and
under the terms of the Option Agreement with respect to such Option, by the
delivery of a promissory note of the person exercising the Option to the
Corporation on such terms as shall be set out in such Option Agreement; (iv) to
the extent permitted by applicable law and under the terms of the Option
Agreement with respect to such Option, by causing the Corporation to withhold
shares of Stock otherwise issuable pursuant to the exercise of an Option equal
in value to the Option Price or portion thereof to be satisfied pursuant to
this clause (iv); or (v) by a combination of the methods described in (i),
(ii), (iii), and (iv). An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Payment in full of the Option Price need not accompany the written notice of
exercise provided the notice directs that the Stock certificate or certificates
for the shares for which the Option is exercised be delivered to a licensed
broker acceptable to the Corporation as the agent for the individual exercising
the Option and, at the time such Stock certificate or certificates are
delivered, the broker tenders to the Corporation cash (or cash equivalents
acceptable to the Corporation) equal to the Option Price. Promptly after the
exercise of an Option and the payment in full of the Option Price of the
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shares of Stock covered thereby, the individual exercising the Option shall be
entitled to the issuance of a Stock certificate or Stock certificates
evidencing his ownership of such shares. A separate Stock certificate or
separate Stock certificates shall be issued for any shares purchased pursuant
to the exercise of an Option that is an ISO, which certificate or certificates
shall not include any shares that were purchased pursuant to the exercise of an
Option that is an NSO. Unless otherwise stated in the applicable Option
Agreement, an individual holding or exercising an Option shall have none of the
rights of a stockholder (for example, the right to receive cash or stock
dividend payments attributable to the subject shares or to direct the voting of
the subject shares) until the shares of Stock covered thereby are fully paid
and issued to him. Except as provided in Section 16 below, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date of such issuance. Shares issued pursuant to the exercise of any Option
shall be subject to the applicable restrictions set out in Section 11 hereof.
(d) DATE OF GRANT
The date of grant of an Option under this Plan shall be the date
as of which the Board approves the grant.
11. TRANSFERABILITY OF STOCK AND OPTIONS
(a) LIMITATIONS ON TRANSFER
During the lifetime of an Optionee, only such Optionee (or, in
the event of legal incapacity or incompetency, the guardian or legal
representative of the Optionee) may exercise the Option, except as otherwise
specifically permitted by this Section 11(a). No Option shall be assignable or
transferable other than by will or in accordance with the laws of descent and
distribution; provided, however, subject to the terms of the applicable Option
Agreement, and to the extent the transfer is in compliance with any applicable
restrictions on transfers, an Optionee (other than, unless permissible under
Rule 16b-3, an Optionee who is, or during the preceding six months has been, a
Reporting Person) may transfer an NSO to a family member of the Optionee
(defined as an individual who is related to the Optionee by blood or adoption)
or to a trust established and maintained for the benefit of the Optionee or a
family member of the Optionee (as determined under applicable state law and the
Code).
(b) REPURCHASE RIGHTS
In the Board's sole discretion, the Board may provide in an
Option Agreement that upon the termination of an Optionee's employment or other
relationship with the Corporation or a Subsidiary (whether as an employee, a
director, a consultant or advisor providing bona fide services to the
Corporation or any Subsidiary, or otherwise), the Corporation shall have the
right, for a
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period of up to twelve months following such termination, to repurchase any or
all of the shares acquired by the individual pursuant to this Plan under an
Option (including shares that were previously transferred pursuant to Section
11(d) below, unless otherwise specified in the Option Agreement), at a price
equal to the fair market value of such shares on the date of termination (or at
such other price or the fair market value on such other date as shall have been
specified by the Board at the time of grant and set out in the appropriate
Option Agreement with respect to the grant). In the Board's sole discretion
and pursuant to the terms of Section 12, the Board may also provide in an
Option Agreement that upon the exercise of an Option following termination of
an Optionee's employment or other relationship with the Corporation or a
Subsidiary (whether as an employee, a director, a consultant or advisor
providing bona fide services to Corporation or any Subsidiary, or otherwise),
the Corporation shall have the right, for a period of up to twelve months
following such exercise, to repurchase any or all such shares of Stock acquired
by the Optionee pursuant to such exercise of such Option at a price that is
equal to the fair market value of such shares (including shares that were
previously transferred pursuant to Section 11(d) below, unless otherwise
specified in the Option Agreement) on the date of exercise (or at such other
price or the fair market value on such other date as shall have been specified
by the Board at the time of grant and set out in the appropriate Option
Agreement with respect to the grant). In the event that the Corporation
determines that it cannot or will not exercise its rights to purchase Stock
under this Section 11(b) and the applicable Option Agreement, in whole or in
part, the Corporation may assign its rights, in whole or in part, to (i) any
holder of stock or securities of the Corporation (a "Stockholder"), (ii) any
employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended) maintained by the
Corporation or a Subsidiary for the benefit of employees of the Corporation or
a Subsidiary (a "Benefit Plan"), or (iii) any corporation or other trade or
business that is controlled by or under common control with the Corporation
(determined in accordance with the principles of Sections 414(b) and (c) of the
Code and regulations thereunder) (an "Affiliate"). The Corporation shall give
reasonable written notice to the individual of any assignment of its rights.
"Fair market value," for purposes of this Section 11(b), shall be determined by
the Board in the same manner used by it in good faith to determine fair market
value for purposes of determining the Option Price pursuant to Section 9.
(c) PURCHASE OF OPTIONS
In the Board's sole discretion, the Board may provide in an
Option Agreement that upon or after the termination of an Optionee's employment
or other relationship with the Corporation or a Subsidiary (whether as an
employee, a director, a consultant or advisor providing bona fide services to
the Corporation or a Subsidiary, or otherwise), the Corporation shall have the
right,
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at all times before the Option is exercised, to purchase in whole or in part
each Option held by the Optionee (and each Option transferred by the Optionee
pursuant to Section 11(a) above unless otherwise specified in the Option
Agreement), at a price equal to the value of such Option on the date such
purchase right is exercised, provided the Corporation delivers to the Optionee
a notice that it is exercising such purchase right within 10 business days of
such date. For this purpose, the value of the Option (or portion thereof being
purchased) is equal to the excess (if any) of the fair market value of the
shares of Stock that are subject to the Option, (determined by the Board in the
same manner used by it in good faith to determine fair market value for
purposes of determining the Option Price pursuant to Section 9) as of the date
of the exercise of such right, over the aggregate Option Price of such shares.
Upon payment (or tender of payment) of the applicable amount to the Optionee
(or transferee of the Option), the Option shall be terminated and, if payment
has been tendered but not made, shall only represent the right to receive such
payment without interest.
(d) NONTRANSFERABILITY OF SHARES
In the Board's sole discretion, the Board may provide in an
Option Agreement that an Optionee (or such other individual who is entitled to
exercise an Option) shall not sell, pledge, assign, gift, transfer, or
otherwise dispose of any shares of Stock acquired pursuant to an Option to
anyone without first offering such shares to the Corporation for purchase on
the same terms and conditions as those offered the proposed transferee. If
such a restriction applies to an individual pursuant to an Option Agreement, an
individual who proposes such a transfer (the "Transferor") shall notify the
Corporation, in writing, of the identity of the proposed transferee and the
terms and conditions of such proposed transfer. The Corporation may exercise
its right of first refusal within 90 days after receiving such notice of the
proposed transfer. The Corporation may assign its right of first refusal under
this Section 11(d), in whole or in part, to a Stockholder, a Benefit Plan, or
an Affiliate. The Corporation shall give reasonable written notice to the
Transferor of any such assignment of its rights. If the Corporation (or its
permitted assignee) fails to exercise such right of first refusal during this
90-day period, the Transferor may proceed with the proposed transfer at any
time within the next 45 days, and if he does not do so, the restrictions of
this Section 11(d) shall re-apply. The Option Agreement may provide that the
restrictions of this Section 11(d) re-apply to any person to whom Stock that
was originally acquired pursuant to an Option is sold, pledged, assigned,
bequeathed, gifted, transferred or otherwise disposed of, without regard to the
number of such subsequent 1transferees or the manner in which they acquire the
Stock, but the Option Agreement may provide that the restrictions of this
Section 11(d) do not apply to a transfer of Stock that occurs as a result of
the death of the Transferor or of any subsequent transferee (but
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shall apply to the executor, the administrator or personal representative, the
estate, and the legatees, beneficiaries and assigns thereof).
(e) LEGEND
In order to enforce the restrictions imposed upon shares of
Stock under this Plan or as provided in an Option Agreement, the Board may
cause a legend or legends to be placed on any certificate representing shares
issued pursuant to this Plan that complies with the applicable securities laws
and regulations and makes appropriate reference to the restrictions imposed
under it.
(f) PUT RIGHTS
The Board, by inclusion of appropriate language in the Option
Agreement, may grant the person acquiring shares of Stock thereunder the right
to put such shares to the Corporation at the fair market value of such shares
(as determined hereunder) at the time of exercise of such put, or at such other
value as shall be specified in the Option Agreement, subject to such further
terms and conditions as the Board shall include in the Option Agreement.
(g) TERMINATION OF SECTIONS 11(b) THROUGH 11(f)
Sections 11(b) through 11(f) shall terminate, and shall be of no
further force and effect, from and after the Registration Date.
12. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP OF OPTIONEE
In the Board's sole discretion, the Board may include language
in an Option Agreement providing for the termination of any unexercised Option
in whole or in part upon or at any time after the termination of employment or
other relationship of the Optionee with the Corporation or a Subsidiary
(whether as an employee, a director, a consultant or advisor providing bona
fide services to the Corporation or a Subsidiary, or otherwise). Whether a
leave of absence or leave on military or government service shall constitute a
termination of employment or other relationship of the Optionee with the
Corporation or a Subsidiary for purposes of the Plan shall be determined by the
Board, which determination shall be final and conclusive.
13. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock
pursuant to the exercise of Options granted under the Plan shall constitute
general funds of the Corporation.
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14. REQUIREMENTS OF LAW
The Corporation shall not be required to sell or issue any
shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the Optionee, the individual exercising the Option,
or the Corporation of any provisions of any law or regulation of any
governmental authority, including without limitation any federal or state
securities laws or regulations. If at any time the Corporation shall
determine, in its discretion, that the listing, registration, or qualification
of any shares subject to the Option upon any securities exchange or under any
state or federal law, or the consent or approval of any government regulatory
or self-regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares, the Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any
conditions not acceptable to the Corporation, and any delay caused thereby
shall in no way affect the date of termination of the Option. Specifically in
connection with the Securities Act of 1933 (as now in effect or as hereafter
amended), upon the exercise of any Option, unless a registration statement
under such Act is in effect with respect to the shares of Stock covered
thereby, the Corporation shall not be required to sell or issue such shares
unless the Board has received evidence satisfactory to it that the holder of
such Option may acquire such shares pursuant to an exemption from registration
under such Act. Any determination in this connection by the Board shall be
final, binding, and conclusive. The Corporation may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act of 1933 (as now in effect or as hereafter amended) or to register its
common stock pursuant to the Securities Exchange Act of 1934 (as now in effect
or as hereafter amended). The Corporation shall not be obligated to take any
affirmative action in order to cause the exercisability or vesting of an Option
or to cause the exercise of an Option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority. As
to any jurisdiction that expressly imposes the requirement that an Option shall
not be exercisable unless and until the shares of Stock covered by such Option
are registered or are subject to an available exemption from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
15. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend,
suspend, or terminate the Plan as to any shares of Stock as to which Options
have not been granted; provided, however, that any amendment by the Board
which, if not approved by the Corporation's stockholders in accordance with
applicable requirements of Rule 16b-3, would cause the Plan to not comply with
Rule 16b-3
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(or any successor rule or other regulatory requirements) or the Code shall not
be effective unless approved by the affirmative vote of stockholders who hold
more than fifty percent (50%) of the combined voting power of the outstanding
shares of voting stock of the Corporation present or represented, and entitled
to vote thereon at a duly constituted stockholders' meeting, or by consent as
permitted by law. The Corporation, however, may retain the right in an Option
Agreement to convert an ISO into an NSO. The Corporation may also retain the
right in an Option Agreement to cause a forfeiture of the shares of Stock or
gain realized by a holder of an Option (a) if the holder violates any agreement
covering non-competition with the Corporation or any Subsidiary or
nondisclosure of confidential information of the Corporation or any Subsidiary,
(b) if the holder's employment is terminated for cause or (c) if the Board
determines that the holder committed acts or omissions which would have been
the basis for a termination of holder's employment for cause had such acts or
omissions been discovered prior to termination of holder's employment.
Furthermore, the Corporation may, in the Option Agreement, retain the right to
annul the grant of an Option, if the holder of such grant was an employee of
the Corporation or a Subsidiary and the holder's employment is terminated for
cause, as defined in the applicable Option Agreement. Except as permitted
under this Section 15 or Section 16 hereof, no amendment, suspension, or
termination of the Plan shall, without the consent of the holder of the Option,
alter or impair rights or obligations under any Option theretofore granted
under the Plan.
16. EFFECT OF CHANGES IN CAPITALIZATION
(a) CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged for a different
number or kind of shares or other securities of the Corporation on account of
any recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of
consideration by the Corporation, occurring after the effective date of the
Plan, the number and kind of shares for the acquisition of which Options may be
granted under the Plan, and the limitations on the maximum number of shares
subject to Options that can be granted to any individual under the Plan as set
forth in Section 6(b) hereof, shall be adjusted proportionately and accordingly
by the Corporation. In addition, the number and kind of shares for which
Options are outstanding shall be adjusted proportionately and accordingly so
that the proportionate interest of the holder of the Option immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options
shall not change the aggregate Option Price payable with respect to shares that
are subject to the
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unexercised portion of the Option outstanding but shall include a corresponding
proportionate adjustment in the Option Price per share.
(b) REORGANIZATION IN WHICH THE CORPORATION IS THE
SURVIVING CORPORATION
Subject to Subsection (c)(iv) hereof, if the Corporation shall
be the surviving corporation in any reorganization, merger, or consolidation of
the Corporation with one or more other corporations, any Option theretofore
granted pursuant to the Plan shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to such Option would
have been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the Option
Price per share so that the aggregate Option Price thereafter shall be the same
as the aggregate Option Price of the shares remaining subject to the Option
immediately prior to such reorganization, merger, or consolidation.
(c) DISSOLUTION, LIQUIDATION, SALE OF ASSETS,
REORGANIZATION IN WHICH THE CORPORATION IS NOT THE SURVIVING
CORPORATION, ETC.
The Plan and all Options outstanding hereunder shall terminate
(i) upon the dissolution or liquidation of the Corporation, or (ii) upon a
merger, consolidation, or reorganization of the Corporation with one or more
other corporations in which the Corporation is not the surviving corporation,
or (iii) upon a sale of substantially all of the assets of the Corporation to
another person or entity, or (iv) upon a merger, consolidation or
reorganization (or other transaction if so determined by the Board in its sole
discretion) in which the Corporation is the surviving corporation, that is
approved by the Board and that results in any person or entity (other than
persons who are holders of Stock of the Corporation at the time the Plan is
approved by the stockholders and other than an Affiliate) owning 80 percent or
more of the combined voting power of all classes of stock of the Corporation,
except to the extent provision is made in writing in connection with any such
transaction covered by clauses (i) through (iv) for the continuation of the
Plan or the assumption of such Options theretofore granted, or for the
substitution for such Options of new options covering the stock of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and exercise prices, in which event the Plan
and Options theretofore granted shall continue in the manner and under the
terms so provided. In the event of any such termination of the Plan, each
individual holding an Option shall have the right (subject to the general
limitations on exercise set forth in Section 10(b) above), during such period
occurring before such termination as the Board in its sole discretion shall
determine and designate, and in any event immediately before the occurrence of
such termination, to exercise such Option in whole or in part, to the extent
that such Option was otherwise exercisable at the time such
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termination occurs, except that, by inclusion of appropriate language in an
Option Agreement, the Board may provide that the Option may be exercised before
termination without regard to any installment limitation or other condition on
exercise imposed pursuant to Section 10(b) above. The Corporation shall send
written notice of a transaction or event that will result in such a termination
to all individuals who hold Options not later than the time at which the
Corporation gives notice thereof to its stockholders.
(d) ADJUSTMENTS
Adjustments under this Section 16 related to stock or securities
of the Corporation shall be made by the Board, whose determination in that
respect shall be final, binding, and conclusive. No fractional shares of Stock
or units of other securities shall be issued pursuant to any such adjustment,
and any fractions resulting from any such adjustment shall be eliminated in
each case by rounding downward to the nearest whole share or unit.
(e) NO LIMITATIONS ON CORPORATION
The grant of an Option pursuant to the Plan shall not affect or
limit in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.
17. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option
Agreement entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ or service of or to maintain a
relationship with the Corporation or any Subsidiary, or to interfere in any way
with any contractual or other right or authority of the Corporation or any
Subsidiary either to increase or decrease the compensation or other payments to
any individual at any time, or to terminate any employment or other
relationship between any individual and the Corporation or any Subsidiary. The
obligation of the Corporation to pay any benefits pursuant to this Plan shall
be interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Corporation to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any participant or beneficiary under the terms of the
Plan.
18. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan
to the stockholders of the Corporation for approval shall be construed as
creating
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any limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.
19. CAPTIONS
The use of captions in this Plan or any Option Agreement is for
the convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Option Agreement.
20. DISQUALIFYING DISPOSITIONS
If Stock acquired by exercise of an ISO granted under this Plan
is disposed of within two years following the date of grant of the ISO or one
year following the transfer of the subject Stock to the Optionee (a
"disqualifying disposition"), the holder of the Stock shall, immediately prior
to such disqualifying disposition, notify the Corporation in writing of the
date and terms of such disposition and provide such other information regarding
the disposition as the Corporation may reasonably require.
21. WITHHOLDING TAXES
(a) The Corporation shall have the right to deduct from
payments of any kind otherwise due to an Optionee any Federal, state, or local
taxes of any kind required by law to be withheld with respect to any shares
issued upon the exercise of an Option under the Plan or in connection with the
purchase of an Option by the Corporation. At the time of exercise, the
Optionee shall pay to the Corporation any amount that the Corporation may
reasonably determine to be necessary to satisfy such withholding obligation.
The Board in its sole discretion may provide in the Option Agreement that,
subject to the prior approval of the Corporation, which may be withheld by the
Corporation in its sole discretion, the Optionee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Corporation to withhold
shares of Stock otherwise issuable pursuant to the exercise of an Option or
(ii) by delivering to the Corporation shares of Stock already owned by the
Optionee. The shares so delivered or withheld shall have a fair market value
equal to such withholding obligations. The fair market value of the shares
used to satisfy such withholding obligation shall be determined by the
Corporation as of the date that the amount of tax to be withheld is to be
determined. An Optionee who has made an election pursuant to this Section 21(a)
may only satisfy his or her withholding obligation with shares of Stock that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other
similar requirements.
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(b) Notwithstanding the foregoing, in the case of a
Reporting Person, no election to use shares for the payment of withholding
taxes shall be effective unless made in compliance with any applicable
requirements under Rule 16b-3(e) or any successor rule under the Exchange Act.
22. OTHER PROVISIONS
Each Option granted under the Plan may be subject to, and the
Option Agreement relating to such Option may contain, such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion. Notwithstanding the foregoing, each ISO granted under the
Plan shall include those terms and conditions that are necessary to qualify the
ISO as an "incentive stock option" within the meaning of the Section 422 of the
Code or the regulations thereunder and shall not include any terms or
conditions that are inconsistent therewith.
23. NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine
gender, etc., as the context requires.
24. SEVERABILITY
If any provision of the Plan or any Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable
and enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
25. GOVERNING LAW
The validity and construction of this Plan and the instruments
evidencing the Options granted hereunder shall be governed by the laws of the
State of Delaware (excluding its choice of law rules).
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