EXHIBIT 10.8
URS CORPORATION
1999 EQUITY INCENTIVE PLAN
ADOPTED JULY 13, 1999
APPROVED BY STOCKHOLDERS OCTOBER 12, 1999
AMENDED EFFECTIVE OCTOBER 14, 2003
AMENDED EFFECTIVE JANUARY 21, 2004
AMENDED EFFECTIVE JULY 12, 2004
TERMINATION DATE: JULY 12, 2009
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive Stock
Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) rights to acquire restricted stock and (iv) Non-Executive
Director Stock Awards.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CHANGE IN CONTROL" means any transaction, or series of transactions
that occur within a twelve (12) month period, as a result of which the
stockholders of the Company immediately prior to the completion of the
transaction (or, in the case of a series of transactions, immediately prior to
the first transaction in the series) hold, directly or indirectly, less than
fifty percent (50%) of the beneficial ownership (within the meaning of Rule
13d-3 of the Exchange Act or comparable successor rules) of the outstanding
securities of the surviving entity, or, if more than one entity survives the
transaction or transactions, the controlling entity, following such transaction
or transactions.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means URS Corporation, a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.
(i) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.
(j) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(k) "DIRECTOR" means a member of the Board of Directors of the Company.
(l) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(m) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(n) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(o) "FAIR MARKET VALUE" means the closing sales price of a share of Common
Stock on the last market trading day prior to the day of determination, as
reported in The Wall Street Journal or such other source as the Board deems
reliable.
(p) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(q) "1991 PLAN" means the URS Corporation 1991 Stock Incentive Plan.
(r) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(s) "NON-EXECUTIVE DIRECTOR" means a Director who is not an Employee.
(t) "NON-EXECUTIVE DIRECTOR STOCK AWARD" means a Stock Award made to a
Non-Executive Director pursuant to Section 8.
(u) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(v) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(w) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(x) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(y) "OPTIONEE" means a person to whom an Option is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Option.
(z) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(aa) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(bb) "PLAN" means this URS Corporation 1999 Equity Incentive Plan.
(cc) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(dd) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(ee) "STOCK AWARD" means any right granted under the Plan, including an
Option, a right to acquire restricted stock and a Non-Executive Director Stock
Award.
(ff) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(gg) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c). Any interpretation of the Plan by the Board and any decision by
the Board under the Plan shall be final and binding on all persons.
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in Section 14.
(iv) To suspend or terminate the Plan as provided in Section 15.
(v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. Subject to the limitation set forth in subsection
3(c)(ii), the Board may delegate administration of the Plan to a Committee or
Committees of one (1) or more members of the Board, and the term "Committee"
shall apply to any person or persons to whom such authority has been delegated.
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.
(ii) LIMITATION ON DELEGATION. Notwithstanding anything to the
contrary in subsection 3(c)(i), the Board may not delegate the administration of
the Plan to a Committee to the extent such administration would in any way
affect Non-Executive Director Stock Awards described in Section 8.
(iii) COMMITTEE COMPOSITION. The Committee shall consist solely of
two or more Non-Employee Directors, in accordance with Rule 16b-3 and, in the
discretion of the Board, may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code. Within the scope of such authority,
the Board or the Committee may (1) delegate to a committee of one or more
members of the Board who are not Outside Directors, the authority to grant Stock
Awards to eligible persons who are either (a) not then Covered Employees and are
not expected to be Covered Employees at the time of recognition of income
resulting from such Stock Award or (b) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code and/or (2) delegate to
a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.
(d) DELEGATION TO ONE OR MORE COMPANY OFFICERS.
(i) GENERAL. The Board or the Committee may delegate authority to
one or more Company Officers to (a) grant Stock Awards to eligible persons who
are not then subject to Section 16 of the Exchange Act and (b) determine the
number of such Stock Awards to be received by such eligible persons within such
parameters as the Board or the Committee may establish from time to time. The
delegation of authority shall be subject to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board or the Committee. The Board or the Committee may abolish any such
delegation of authority at any time and revest in the Board or the Committee the
administration of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 12 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate one million five
hundred thousand (1,500,000) shares of Common Stock plus (i) the number of
shares of Common Stock added to the share reserve
pursuant to the next sentence of this subsection 4(a), (ii) the number of shares
of Common Stock remaining available for award under the Company's 1991 Stock
Incentive Plan (the "1991 Plan") on the Effective Date of this Plan, (iii) the
number of shares of Common Stock that were issuable pursuant to options or stock
award agreements under the 1991 Plan that revert to the share reserve pursuant
to subsection 4(b) below and (iv) the number of shares of Common Stock remaining
available for award under the Company's Non-Executive Directors Stock Grant Plan
on the Effective Date of this Plan. As of each July 1, beginning with July 1,
2000 and continuing through and including July 1, 2009, the number of reserved
shares shall be increased automatically by the lesser of (i) five percent (5%)
of the total number of shares of Common Stock outstanding, including for this
purpose outstanding shares of capital stock convertible to Common Stock, on such
date or (ii) one million five hundred thousand (1,500,000) shares of Common
Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE.
(i) EXPIRATION OR TERMINATION OF STOCK AWARD. If any Stock Award
granted under this Plan or any option or stock award agreement granted under the
1991 Plan shall for any reason expire or otherwise terminate, in whole or in
part, without having been exercised in full, the shares of Common Stock not
acquired under such Stock Award shall revert to and again become available for
issuance under the Plan.
(ii) ISSUANCE OF COMMON STOCK. To the extent that any shares of
Common Stock are not issued to a Participant upon the exercise of an Option
granted under this Plan, such shares shall revert to and again become available
for issuance under this Plan. If shares of Common Stock are not issued to a
Participant because the Common Stock issuable upon the exercise of the Option is
used to satisfy an applicable tax withholding requirement, such shares will be
deemed not to have been issued to a Participant. In addition, if the exercise
price of any Option is satisfied by a Participant's tender of shares of Common
Stock to the Company (by actual delivery or attestation), only the number of
shares of Common Stock issued net of the shares so tendered shall be deemed
issued to the Participant.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may be
granted only to Employees. Stock Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants. Non-Executive Director Stock
Awards may be granted only to Non-Executive Directors and only pursuant to the
formula set forth in Section 8.
(b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) CONSULTANTS. A Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act ("Form S-8") is
not available to register either the offer or the sale of the Company's
securities to such Consultant because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by the rules governing the use of Form
S-8, unless the Company determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.
(d) SECTION 162(m) LIMITATION. Subject to the provisions of Section 12
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than one million
(1,000,000) shares of the Common Stock during any fiscal year of the Company.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the provisions
of subsection 5(b) regarding Ten Percent Stockholders, the exercise price of
each Incentive Stock Option shall be not less than one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price of
each Nonstatutory Stock Option shall be not less than one hundred percent (100%)
of the Fair Market Value of the Common Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if (i) such Option is granted with an exercise price of not
less than fifty percent (50%) of the Fair Market Value of the Common Stock
subject to the Option to an individual who is not employed by the Company or an
Affiliate immediately prior to the date of grant of the Option to induce such
individual to accept employment with the Company or an Affiliate or (ii) such
Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option): (1) by delivery to the
Company of other Common Stock that has been held by the Optionee for more than
six (6) months, which delivery may be made by attestation or actual delivery,
(2) by delivery, in a form prescribed by the Company, of an irrevocable
direction to a securities broker approved by the Company to sell Common Stock
and to deliver all or part of the sales proceeds to the Company in payment of
all or part of the purchase price and applicable withholding taxes, (3)
according to a deferred payment or other similar arrangement with the Optionee
or (4) in any other form of legal consideration that may be acceptable to the
Board; provided, however, that at any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the Delaware
General Corporation Law, shall not be made by deferred payment. If, pursuant to
clause (ii)(2) above, the Optionee delivers shares of Common Stock that the
Optionee has acquired pursuant to a restricted stock award made under this Plan
or a stock award agreement made under the 1991 Plan and that have not yet
vested, the restrictions applicable to the delivered shares shall be imposed
upon the Common Stock issued upon the exercise of the Option.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionee only
by the Optionee. Notwithstanding the foregoing, the Optionee may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionee, shall thereafter
be entitled to exercise the Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionee only by the Optionee. Notwithstanding the foregoing, the Optionee
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionee,
shall thereafter be entitled to exercise the Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other
criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary. The provisions of this subsection 6(g) are subject
to any Option provisions governing the minimum number of shares of Common Stock
as to which an Option may be exercised.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise such Option as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionee's Continuous Service (or such
longer or shorter period specified in the Option Agreement) or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination of Continuous Service, the Optionee does not exercise his or
her Option within the time specified in the Option Agreement, the Option shall
terminate.
(i) EXTENSION OF TERMINATION DATE. An Optionee's Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionee's Continuous Service (other than upon the Optionee's death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionee's Continuous Service during which the exercise of the Option would not
be in violation of such registration requirements.
(j) DISABILITY OF OPTIONEE. In the event that an Optionee's Continuous
Service terminates as a result of the Optionee's Disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to
exercise such Option as of the date of termination), but only within such period
of time ending on the earlier of (i) the date twelve (12) months following such
termination (or such longer or shorter period specified in the Option Agreement)
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination of Continuous Service, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
(k) DEATH OF OPTIONEE. In the event (i) an Optionee's Continuous Service
terminates as a result of the Optionee's death or (ii) the Optionee dies within
the period (if any) specified in the Option Agreement after the termination of
the Optionee's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionee was entitled to exercise such
Option as of the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionee's death pursuant to
subsection 6(e) or 6(f), but only within the period ending on the earlier of (1)
the date twelve (12) months following the date of death (or such longer or
shorter period specified in the Option Agreement) or (2) the expiration of the
term of such Option as set forth in the Option Agreement. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate.
(l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time before the Optionee's Continuous
Service terminates to exercise the Option as to any part or all of the shares of
Common Stock subject to the Option prior to the
full vesting of the Option. Any unvested shares of Common Stock so purchased may
be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate.
7. PROVISIONS OF RESTRICTED STOCK AWARDS.
Each restricted stock purchase agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate. The terms
and conditions of restricted stock purchase agreements may change from time to
time, and the terms and conditions of separate restricted stock purchase
agreements need not be identical, but each restricted stock purchase agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:
(a) CONSIDERATION. A restricted stock award may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.
(b) VESTING. Shares of Common Stock acquired under a restricted stock
purchase agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board. The restricted stock award may be subject to such other terms and
conditions on the time or times at which it may be exercised (which may be based
on performance or other criteria) as the Board may deem appropriate. The vesting
provisions of individual restricted stock awards may vary.
(c) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event a
Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.
(d) TRANSFERABILITY. Rights to acquire shares under the restricted stock
purchase agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the restricted stock purchase agreement, as
the Board shall determine in its discretion, so long as Common Stock awarded
under the restricted stock purchase agreement remains subject to the terms of
the restricted stock purchase agreement. Notwithstanding the foregoing, the
Participant may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Participant, shall thereafter be entitled to receive shares of
Common Stock that have become vested as of the date of the Participant's death.
8. NON-EXECUTIVE DIRECTOR STOCK AWARDS.
(a) Without any further action of the Board or any committee thereof, each
Non-Executive Director shall be granted a Non-Executive Director Stock Award at
each of the times specified in subsection 8(a)(1) below, which Non-Executive
Director Award shall have the terms set forth in subsections 8(a)(2) and 8(a)(3)
below. Such award shall result in the issuance and delivery of shares of the
Corporation's Common Stock to the Non-Executive Director on the date of grant.
(i) QUARTERLY GRANTS. Each Non-Executive Director who is serving as
a Non-Executive Director on the last day of each of the Corporation's fiscal
quarters shall be granted a Non-Executive Director Stock Award on such day (a
"Quarterly Grant").
(ii) NUMBER OF SHARES. The number of shares of the Corporation's
Common Stock subject to each Quarterly Grant will be equal to the quotient of
Eight Thousand Seven Hundred Fifty Dollars ($8,750) divided by the Fair Market
Value of the Common Stock on the date of grant, rounded down to the nearest
whole share.
(iii) VESTING. Each Quarterly Grant shall be fully vested on the
date of grant.
(b) DEFERRED STOCK AWARDS. Without any further action of the Board or any
committee thereof, each Non-Executive Director shall be granted a deferred
Non-Executive Director Stock Award at the time specified in subsection 8(b)(1)
below, which deferred Non-Executive Director Stock Award shall have the terms
set forth in subsections 8(b)(2) and 8(b)(3) below. Until shares of the
Corporation's Common Stock are issued pursuant to subsection 8(b)(3) below in
respect of a deferred Non-Executive Director Stock Award, such Award shall
represent a notional number of shares and a promise by the Corporation to issue
to the Non-Executive Director such number of shares (subject to adjustment as
provided in Section 12(a)), and the Non-Executive Director shall have no
stockholder or other ownership rights (including, but not limited to, the right
to receive any dividend paid) in respect of such shares until their issuance.
(i) QUARTERLY GRANTS. Each Non-Executive Director who is serving as
a Non-Executive Director on the last day of each of the Corporation's fiscal
quarters shall be granted a deferred Non-Executive Director Stock Award on such
day (a "Quarterly Deferred Grant").
(ii) NUMBER OF SHARES. Each Quarterly Deferred Grant will entitle
the Non-Executive Director to receive, at the time specified in subsection
8(b)(3) below, a number of shares of the Corporation's Common Stock equal to the
quotient of Eight Thousand Seven Hundred Fifty Dollars ($8,750) divided by the
Fair Market Value of the Common Stock on the date of grant, rounded down to the
nearest whole share (and subject to adjustment as necessary).
(iii) VESTING; ISSUANCE. Each Quarterly Deferred Grant shall be
fully vested on the date of grant; provided that the notional number of shares
of the Corporation's Common Stock in respect of each Quarterly Deferred Grant
shall not be issued or issuable, and instead shall accumulate and be credited by
the Corporation to a bookkeeping account in the name of such Director, until
such time as the Director terminates his or her service on the Board of
Directors for any reason, at which time the Corporation shall issue and deliver
to the Non-Executive Director, within thirty (30) days of such termination of
service, a number of shares of the Corporation's Common Stok equal to the
cumulative notional number of shares (as adjusted) in respect of such Director's
cumulative Quarterly Deferred Grants.
(c) CONSIDERATION. Each Quarterly Grant and Quarterly Deferred Grant shall
be awarded in consideration for services rendered as a Non-Executive Director.
(d) AMENDMENT OF TERMS OF NON-EXECUTIVE DIRECTOR STOCK AWARDS. The Board
may at any time, and from time to time, amend the terms pursuant to which
Non-Executive Director Stock Awards, including the Quarterly Grants and
Quarterly Deferred Grants, shall be granted including, without limitation,
amendment of the dollar amount specified in subsections 8(a)(2) and 8(b)(2)
above and any other provision of this Section 8.
9. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) LEGAL COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards
shall constitute general funds of the Company.
11. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under all plans of the Company and its
Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (A) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (B) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state, local or
foreign tax withholding obligation relating to the exercise or acquisition of
Common Stock under a Stock Award by any of the following means (in addition to
the Company's right to withhold from any compensation paid to the Participant by
the Company) or by a combination of such means: (i) tendering a cash payment,
(ii) authorizing the Company to withhold shares of Common Stock from the shares
of Common Stock otherwise issuable to the Participant as a result of the
exercise or acquisition of Common Stock under the Stock Award or (iii)
delivering to the Company owned and unencumbered shares of the Common Stock.
Notwithstanding the foregoing, the Company shall not be authorized to withhold
shares of Common Stock at rates in excess of the minimum statutory withholding
rates imposed upon the Company for federal and state tax purposes if such
withholding would result in a charge to the Company's earnings for accounting
purposes.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common Stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4(a) and the maximum number of securities subject to award to any
person pursuant to subsection 5(d), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of securities and price per
share of Common Stock subject to such outstanding Stock Awards. The Board shall
make such adjustments, and its determination shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.
(c) CHANGE IN CONTROL. Unless otherwise provided in the Stock Award
Agreement, in the event of a Change in Control, then (i) prior to the completion
of the Change in Control, any surviving entity or controlling entity may assume
any Stock Awards outstanding under the Plan or may substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the Change in Control) for those outstanding under the Plan or
(ii) prior to the completion of the Change in Control, the Board may, in its
sole discretion, make cash payments to Participants holding Stock Awards in
amounts that the Board determines represent the cash value of the outstanding
Stock Awards and such payments shall completely discharge the Company's
obligations under such outstanding Stock Awards. In the event (i) any surviving
corporation or acquiring corporation does not assume such Stock Awards or
substitute similar stock awards for those outstanding under the Plan and (ii)
the Board does not settle the outstanding Stock Awards in cash, then (a) with
respect to Stock Awards held by Participants whose Continuous Service has not
terminated, the vesting of such Stock Awards (and, if applicable, the time
during which such Stock Awards may be exercised) shall be accelerated in full as
of a time designated by the Board, and the Stock Awards shall terminate if not
exercised (if applicable) at or prior to a time designated by the Board and (b)
with respect to any other Stock Awards outstanding under the Plan, such Stock
Awards shall terminate if not exercised (if applicable) prior to a time
designated by the Board.
13. LIMITATION ON PAYMENTS.
(a) BASIC RULE. Any provision of the Plan to the contrary notwithstanding,
in the event that the independent auditors most recently selected by the Board
(the "Auditors") determine that any payment or transfer by the Company to or for
the benefit of a Participant, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Plan or otherwise (a "Payment"),
would be nondeductible by the Company for federal income tax purposes because of
the provisions concerning "excess parachute payments" in Section 280G of the
Code, then the aggregate present value of all Payments shall be reduced (but not
below zero) to the Reduced Amount; provided that the Board, at the time of
granting a Stock Award under this Plan or at any time thereafter, may specify in
writing that such Award shall not be so reduced and shall not be subject to this
Section 13. For purposes of this Section 13, the "Reduced Amount" shall be the
amount, expressed as a present value, which maximizes the aggregate
present value of the Payments without causing any Payment to be nondeductible by
the Company because of section 280G of the Code.
(b) REDUCTION OF PAYMENTS. If the Auditors determine that any Payment
would be nondeductible by the Company because of Section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within ten (10) days of
receipt of notice; provided, however, that such election shall be subject to
Company approval if made on or after the effective date of a Change in Control.
If no such election is made by the Participant within such ten (10) day period,
then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Section 13, present
value shall be determined in accordance with Section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Section 13 shall be binding upon
the Company and the Participant and shall be made within sixty (60) days of the
date when a payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
(c) OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of Section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors determine, based upon
the assertion of a deficiency by the Internal Revenue Service against the
Company or the Participant which the Auditors believe has a high probability of
success, that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
Section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount that is subject to taxation under Section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in Section 7872(f)(2) of the Code.
(d) RELATED CORPORATIONS. For purposes of this Section 13, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with Section 280G(d)(5) of the Code.
14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 12 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect, except with the written consent of the Participant.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date on which it is adopted by the
Board (the "Effective Date"), but no Stock Award shall be exercised unless and
until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is
adopted by the Board.
17. CHOICE OF LAW.
The law of the State of California shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.