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EXHIBIT 10.41
SUNRISE ASSISTED LIVING, INC.
1998 STOCK OPTION PLAN
SUNRISE ASSISTED LIVING, INC., a Delaware corporation (the
"Corporation"), sets forth herein the terms of this 1998 Stock Option Plan
(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) 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
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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, or may appoint the Compensation Committee to serve as
the Stock Option Committee (the "Committee"). 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 Restated 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.
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
(1,000,000) 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.
4. ELIGIBILITY
(A) DESIGNATED RECIPIENTS
Subject to the next sentence, Options may be granted under
the Plan to (i) any director, officer or employee of the Corporation or any
Subsidiary as the Board shall determine and designate from time to time or (ii)
any 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
eligible 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. 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.
(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 500,000 shares during the first ten years after the
effective date of the Plan and 200,000 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
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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
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
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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
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 person who is required to file reports under Section 16(a) of the
Securities Exchange Act of 1934 (as now in effect or as hereafter amended) 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 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
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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 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.
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(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 OPTIONS
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. 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 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).
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.
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
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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). 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, would cause the Plan to not
comply with Sections 162(m) or 422 of 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
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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 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 termination occurs,
except that, by inclusion of appropriate language in an Option
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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 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.
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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
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 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.
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 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
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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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