Exhibit 10.1
SCANSOFT, INC.
2000 STOCK PLAN
(AS PROPOSED TO BE AMENDED AT THE 2005 ANNUAL MEETING OF STOCKHOLDERS)
1. Purposes of the Plan. The purposes of this Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees, Directors and Consultants,
and
- to promote the success of the Company's business.
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, Stock Purchase Rights, Stock Appreciation Rights, and Restricted Stock
Units.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Affiliated SAR" means an SAR that is granted in connection with a
related Option, and which automatically will be deemed to be exercised at
the same time that the related Option is exercised.
(c) "Applicable Laws" means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or
will be, granted under the Plan.
(d) "Annual Revenue" means the Company's or a business unit's net
sales for the Fiscal Year, determined in accordance with generally accepted
accounting principles; provided, however, that prior to the Fiscal Year,
the Committee shall determine whether any significant item(s) shall be
excluded or included from the calculation of Annual Revenue with respect to
one or more Participants.
(e) "Award" means, individually or collectively, a grant under the
Plan of Options, Stock Purchase Rights, Stock Appreciation Rights, and
Restricted Stock Units.
(f) "Award Agreement" means the written or electronic agreement
setting forth the terms and provisions applicable to each Award granted
under the Plan. The Award Agreement is subject to the terms and conditions
of the Plan.
(g) "Board" means the Board of Directors of the Company.
(h) "Cash Position" means the Company's level of cash and cash
equivalents.
(i) "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code herein will be a reference to any
successor or amended section of the Code.
(j) "Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.
(k) "Common Stock" means the common stock of the Company.
(l) "Company" means ScanSoft, Inc. a Delaware corporation. With
respect to the definitions of the Performance Goals, the Committee may
determine that "Company" means ScanSoft, Inc. and its consolidated
subsidiaries.
(m) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
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(n) "Controllable Profits" means as to any Plan Year, a business
unit's Annual Revenue minus (a) cost of sales, (b) research, development,
and engineering expense, (c) marketing and sales expense, (d) general and
administrative expense, (e) extended receivables expense, and (f) shipping
requirement deviation expense.
(o) "Customer Satisfaction MBOs" means as to any Participant for any
Plan Year, the objective and measurable individual goals set by a
"management by objectives" process and approved by the Committee, which
goals relate to the satisfaction of external or internal customer
requirements(p) .
(p) "Director" means a member of the Board.
(q) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(r) "Earnings Per Share" means as to any Fiscal Year, the Company's or
a business unit's Net Income, divided by a weighted average number of
common shares outstanding and dilutive common equivalent shares deemed
outstanding, determined in accordance with generally accepted accounting
principles.
(s) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall
be sufficient to constitute "employment" by the Company.
(t) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(u) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day
on the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the
Administrator.
(v) "Fiscal Year" means the fiscal year of the Company.
(w) "Freestanding SAR" means an SAR that is granted independent of any
Option.
(x) "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.
(y) "Individual Objectives" means as to a Participant, the objective
and measurable goals set by a "management by objectives" process and
approved by the Committee (in its discretion).
(z) "Net Income" means as to any Fiscal Year, the income after taxes
of the Company for the Fiscal Year determined in accordance with generally
accepted accounting principles, provided that prior to the Fiscal Year, the
Committee shall determine whether any significant item(s) shall be included
or excluded from the calculation of Net Income with respect to one or more
Participants.
(aa) "New Orders" means as to any Plan Year, the firm orders for a
system, product, part, or service that are being recorded for the first
time as defined in the Company's order Recognition Policy.
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(bb) "Nonstatutory Stock Option" means an Option that by its terms
does not qualify or is not intended to qualify as an Incentive Stock
Option.
(cc) "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.
(dd) "Operating Cash Flow" means the Company's or a business unit's
sum of Net Income plus depreciation and amortization less capital
expenditures plus changes in working capital comprised of accounts
receivable, inventories, other current assets, trade accounts payable,
accrued expenses, product warranty, advance payments from customers and
long-term accrued expenses, determined in accordance with generally
acceptable accounting principles.
(ee) "Operating Income" means the Company's or a business unit's
income from operations but excluding any unusual items, determined in
accordance with generally accepted accounting principles.
(ff) "Option" means a stock option granted pursuant to the Plan.
(gg) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(hh) "Optioned Stock" means the Shares subject to an Award.
(ii) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(jj) "Participant" means the holder of an outstanding Award, which
shall include an Optionee.
(kk) "Performance Goals" means the goal(s) (or combined goal(s))
determined by the Committee (in its discretion) to be applicable to a
Participant with respect to an Award. As determined by the Committee, the
Performance Goals applicable to an Award may provide for a targeted level
or levels of achievement using one or more of the following measures: (a)
Annual Revenue, (b) Cash Position, (c) Controllable Profits, (d) Customer
Satisfaction MBOs, (e) Earnings Per Share, (f) Individual Objectives, (g)
Net Income, (h) New Orders, (i) Operating Cash Flow, (j) Operating Income,
(k) Return on Assets, (l) Return on Equity, (m) Return on Sales, and (n)
Total Shareholder Return. The Performance Goals may differ from Participant
to Participant and from Award to Award.
(ll) "Plan" means this 2000 Stock Plan, as amended and restated.
(mm) "Restricted Stock" means Shares acquired pursuant to a grant of
Stock Purchase Rights under Section 9 of the Plan or pursuant to the early
exercise of an Option.
(nn) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Participant evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions
of the Plan and the Notice of Grant.
(oo) "Restricted Stock Unit" means an Award granted to a Participant
pursuant to Section 11.
(pp) "Return on Assets" means the percentage equal to the Company's or
a business unit's Operating Income before incentive compensation, divided
by average net Company or business unit, as applicable, assets, determined
in accordance with generally accepted accounting principles.
(qq) "Return on Equity" means the percentage equal to the Company's
Net Income divided by average stockholder's equity, determined in
accordance with generally accepted accounting principles.
(rr) "Return on Sales" means the percentage equal to the Company's or
a business unit's Operating Income before incentive compensation, divided
by the Company's or the business unit's, as applicable, revenue, determined
in accordance with generally accepted accounting principles.
(ss) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.
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(tt) "Section 16(b)" means Section 16(b) of the Exchange Act.
(uu) "Service Provider" means an Employee, Director or Consultant.
(vv) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
(ww) "Stock Appreciation Right" or "SAR" means an Award, granted alone
or in connection with an Option, that pursuant to Section 10 is designated
as an SAR.
(xx) "Stock Purchase Right" means the right to purchase Shares
pursuant to Section 9 of the Plan.
(yy) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(zz) "Tandem SAR" means an SAR that is granted in connection with a
related Option, the exercise of which will require forfeiture of the right
to purchase an equal number of Shares under the related Option (and when a
Share is purchased under the Option, the SAR will be canceled to the same
extent).
(aaa) "Total Shareholder Return" means the total return (change in
share price plus reinvestment of any dividends) of a Share.
3. Stock Subject to the Plan. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of Shares that may be issued under the
Plan is 11,750,000 Shares (the "Plan Maximum"). In no event shall more than
4,375,000 Shares be issued from the Plan pursuant to Awards of Stock Purchase
Rights and Restricted Stock Units granted on or after May 14, 2004 (the
"Restricted Stock Limit"); provided, that Shares awarded pursuant to Awards of
Stock Purchase Rights and Restricted Stock Units that are returned to the Plan
as a result of forfeiture or repurchase shall not count against this limitation.
Any Shares subject to Options or Stock Appreciation Rights shall be counted
against the numerical limits of the Plan Maximum as one Share for every Share
subject thereto. Any Shares subject to Stock Purchase Rights or Restricted Stock
Units granted on or after March 14, 2005 shall be counted against the numerical
limits of the Plan Maximum and the Restricted Stock Limit as 1.33 Shares for
every one Share subject thereto and any Shares returned to the Plan as a result
of the expiration, termination or cancellation of Stock Purchase Rights or
Restricted Stock Units granted on or after March 14, 2005 shall be counted as
1.33 Shares for every one Share returned to or deemed not issued from the Plan
pursuant to this Section 3.
If any outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if Shares acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited or
repurchased by the Company, the Shares allocable to the terminated portion of
such Award or such forfeited or repurchased Shares shall again be available for
grant under the Plan. Shares shall not be deemed to have been granted pursuant
to the Plan (a) with respect to any portion of an Award that is settled in cash
or (b) to the extent such Shares are withheld in satisfaction of tax withholding
obligations. Upon payment in Shares pursuant to the exercise of a Stock
Appreciation Right, the number of Shares available for grant under the Plan
shall be reduced only by the number of Shares actually issued in such payment.
If the exercise price of an Option is paid by tender to the Company of Shares
underlying the Option, the number of Shares available for grant under the Plan
shall be reduced by the net number of Shares for which the Option is exercised.
The Shares may be authorized, but unissued, or reacquired Common Stock.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. Different Committees with respect
to different groups of Service Providers may administer the Plan.
(ii) Section 162(m). To the extent that the Administrator determines
it to be desirable to qualify Awards granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of
the Code, the Plan shall be administered by a Committee of two or more
"outside directors" within the
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meaning of Section 162(m) of the Code. For purposes of qualifying grants of
Awards as "performance-based compensation" under Section 162(m) of the
Code, the Committee, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set by the
Committee on or before the latest date permissible to enable the Awards to
qualify as "performance-based compensation" under Section 162(m) of the
Code. In granting Awards which are intended to qualify under Section 162(m)
of the Code, the Committee shall follow any procedures determined by it
from time to time to be necessary or appropriate to ensure qualification of
the Awards under Section 162(m) of the Code (e.g., in determining the
Performance Goals).
(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption
under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Awards may be granted
hereunder;
(iii) to determine the number of Shares to be covered by each Award
granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions,
and any restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;
(vi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(viii) to modify or amend each Award (subject to Section 17(c) of the
Plan), including the discretionary authority to extend the post-termination
exercisability period of Awards longer than is otherwise provided for in
the Plan;
(ix) to allow Participants to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon
exercise of an Award that number of Shares having a Fair Market Value equal
to the minimum amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by a Participant to
have Shares withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable;
(x) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously granted by
the Administrator;
(xi) to allow a Participant to defer the receipt of payment of cash or
the delivery of Shares that would otherwise be due to such Participant
under an Award; or
(xii) to make all other determinations deemed necessary or advisable
for administering the Plan.
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(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Participants and any other holders of Awards.
5. Eligibility. Nonstatutory Stock Options, Stock Purchase Rights, Stock
Appreciation Rights, and Restricted Stock Units may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.
6. Limitations.
(a) Each Option shall be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.
(b) The following limitations shall apply to grants of Options and Stock
Appreciation Rights:
(i) No Service Provider shall be granted, in any Fiscal Year, Options
or Stock Appreciation Rights covering more than 750,000 Shares.
(ii) In connection with his or her initial service, a Service Provider
may be granted Options or Stock Appreciation Rights covering up to an
additional 750,000 Shares, which shall not count against the limit set
forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 14.
(iv) If an Option or Stock Appreciation Right is cancelled in the same
fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 14), the cancelled
Option or Stock Appreciation Right will be counted against the limits set
forth in subsections (i) and (ii) above. For this purpose, if the exercise
price of an Option or Stock Appreciation Right is reduced, the transaction
will be treated as a cancellation of the Option or Stock Appreciation Right
and the grant of a new Option or Stock Appreciation Right.
(c) The exercise price of any Option or SAR outstanding or to be granted in
the future under the Plan shall not be reduced or cancelled and re-granted at a
lower exercise price (including pursuant to any "6 month and 1 day" cancellation
and re-grant scheme), regardless of whether or not the Shares subject to the
cancelled Options or SARs are put back into the available pool for grant. In
addition, the Administrator shall not replace underwater Options or SARs with
restricted stock in an exchange, buy-back or other scheme. Moreover, the
Administrator shall not replace any Options or SARs with new options or stock
appreciation rights having a lower exercise price or accelerated vesting
schedule in an exchange, buy-back or other scheme.
7. Term of Plan. Subject to Section 20 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 17 of the Plan.
8. Stock Options
(a) Term of Option. The term of each Option shall be stated in the Award
Agreement, but in no event shall the term of an Option be more than seven (7)
years from the date of grant. Moreover, in the case of an Incentive Stock Option
granted to a Participant who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Award Agreement.
(b) Option Exercise Price and Consideration.
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(i) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to the exercise of an Option shall be no less than 100% of
the Fair Market Value per Share on the date of grant. In the case of an
Incentive Stock Option granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of grant.
(ii) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions that must be satisfied
before the Option may be exercised.
(iii) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:
(1) cash;
(2) check;
(3) promissory note;
(4) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Participant for more than
six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised;
(5) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(6) a reduction in the amount of any Company liability to the
Participant, including any liability attributable to the Participant's
participation in any Company-sponsored deferred compensation program or
arrangement;
(7) any combination of the foregoing methods of payment; or
(8) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
(c) Exercise of Option.
(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Award Agreement. An Option may not be exercised for a fraction of a
Share.
a) An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in such form as the Administrator
may specify from time to time) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the
Option is exercised (together with any applicable withholding taxes). Full
payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Award Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of the
Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Shares are issued, except as
provided in Section 14 of the Plan.
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b) Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is
exercised.
(ii) Termination of Relationship as a Service Provider. If a Participant
ceases to be a Service Provider, other than upon the Participant's death or
Disability, the Participant may exercise his or her Option within such period of
time as is specified in the Award Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Award Agreement). In the absence of
a specified time in the Award Agreement, the Option shall remain exercisable for
three (3) months following the Participant's termination. If, on the date of
termination, the Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Participant does not exercise his or her Option
within the time specified by the Administrator, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.
(iii) Disability of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant's Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option shall remain exercisable for twelve (12) months following
the Participant's termination. If, on the date of termination, the Participant
is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Participant does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(iv) Death of Participant. If a Participant dies while a Service Provider,
the Option may be exercised following the Participant's death within such period
of time as is specified in the Award Agreement (but in no event may the Option
be exercised later than the expiration of the term of such Option as set forth
in the Award Agreement), by the Participant's estate or by a person who acquires
the right to exercise the Option by bequest or inheritance, but only to the
extent that the Option is vested on the date of death. In the absence of a
specified time in the Award Agreement, the Option shall remain exercisable for
twelve (12) months following the Participant's termination. If, at the time of
death, the Participant is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option shall immediately revert to the
Plan. The Option may be exercised by the executor or administrator of the
Participant's estate or, if none, by the person(s) entitled to exercise the
Option under the Participant's will or the laws of descent or distribution. If
the Option is not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
(v) Buyout Provisions. The Administrator may at any time offer to buy out
for a payment in cash or Shares an Option previously granted based on such terms
and conditions as the Administrator shall establish and communicate to the
Participant at the time that such offer is made.
9. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other Awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing or electronically, of the terms, conditions and restrictions related to
the offer, including the number of Shares that the offeree shall be entitled to
purchase (subject to the limits set forth in Section 3), the price to be paid,
and the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator. The following limitations shall apply to grants
of Stock Purchase Rights:
(i) No Service Provider shall be granted, in any Fiscal Year, Stock
Purchase Rights covering more than 500,000 Shares.
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(ii) The foregoing limitation shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 14.
(iii) If a Stock Purchase Right is cancelled in the same fiscal year
of the Company in which it was granted (other than in connection with a
transaction described in Section 14), the cancelled Stock Purchase Right
will be counted against the limit set forth in subsection (i) above.
(b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
service with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock Purchase
Agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a stockholder, and
shall be a stockholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 14 of the Plan.
10. Stock Appreciation Rights
(a) Grant of SARs. Subject to the terms and conditions of the Plan, an SAR
may be granted to Service Providers at any time and from time to time as will be
determined by the Administrator, in its sole discretion. The Administrator may
grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination
thereof.
(b) Number of Shares. The Administrator will have complete discretion to
determine the number of SARs granted to any Service Provider.
(c) Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will determine the terms and conditions of SARs granted
under the Plan; provided, that, the exercise price of an SAR is at least 100% of
the Fair Market Value of the Shares subject to the SAR; provided, further, the
exercise price of Tandem or Affiliated SARs will equal the exercise price of the
related Option.
(d) Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. With respect to a Tandem SAR granted in connection with an
Incentive Stock Option: (i) the Tandem SAR will expire no later than the
expiration of the underlying Incentive Stock Option; (ii) the value of the
payout with respect to the Tandem SAR will be for no more than one hundred
percent (100%) of the difference between the exercise price of the underlying
Incentive Stock Option and the Fair Market Value of the Shares subject to the
underlying Incentive Stock Option at the time the Tandem SAR is exercised; and
(iii) the Tandem SAR will be exercisable only when the Fair Market Value of the
Shares subject to the Incentive Stock Option exceeds the Exercise Price of the
Incentive Stock Option.
(e) Exercise of Affiliated SARs. An Affiliated SAR will be deemed to be
exercised upon the exercise of the related Option. The deemed exercise of an
Affiliated SAR will not necessitate a reduction in the number of Shares subject
to the related Option.
(f) Exercise of Freestanding SARs. Freestanding SARs will be exercisable
on such terms and conditions as the Administrator, in its sole discretion, will
determine.
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(g) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement
that will specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Administrator, in its sole
discretion, will determine.
(h) Expiration of SARs. An SAR granted under the Plan will expire upon the
date determined by the Administrator, in its sole discretion, and set forth in
the Award Agreement. Notwithstanding the foregoing, the rules of Section 8(c)
also will apply to SARs.
(i) Payment of SAR Amount. Upon exercise of an SAR, a Participant will be
entitled to receive payment from the Company in an amount determined by
multiplying:
(i) The difference between the Fair Market Value of a Share on the
date of exercise over the exercise price; times
(ii) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Administrator, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in some combination thereof.
11. Restricted Stock Units.
(a) Grant of Restricted Stock Units. Restricted Stock Units may be granted
to Service Providers at any time and from time to time, as will be determined by
the Administrator, in its sole discretion. The Administrator will have complete
discretion in determining the number of Restricted Stock Units granted to each
Participant, subject to the limits set forth in Section 3 of the Plan. The
following limitations shall apply to grants of Restricted Stock Units:
(i) No Service Provider shall be granted, in any Fiscal Year,
Restricted Stock Units covering more than 500,000 Shares.
(ii) The foregoing limitation shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 14.
(iii) If a Restricted Stock Unit is cancelled in the same fiscal year
of the Company in which it was granted (other than in connection with a
transaction described in Section 14), the cancelled Restricted Stock Unit
will be counted against the limit set forth in subsection (i) above.
(b) Value of Restricted Stock Units. Each Restricted Stock Unit will have
an initial value that is established by the Administrator on or before the date
of grant.
(c) Performance Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions (including, without
limitation, continued status as a Service Provider) in its discretion which,
depending on the extent to which they are met, will determine the number or
value of Restricted Stock Units that will be paid out to the Service Providers.
The time period during which the performance objectives or other vesting
provisions must be met will be called the "Performance Period." Each award of
Restricted Stock Units will be evidenced by an Award Agreement that will specify
the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. The Administrator may set
performance objectives based upon the achievement of Company-wide, divisional,
or individual goals, applicable federal or state securities laws, or any other
basis determined by the Administrator in its discretion.
(d) Earning of Restricted Stock Units. After the applicable Performance
Period has ended, the holder of Restricted Stock Units will be entitled to
receive a payout of the number of Restricted Stock Units earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any performance
objectives or other vesting provisions for such Restricted Stock Unit.
(e) Form and Timing of Payment of Restricted Stock Units. Payment of
earned Restricted Stock Units will be made as soon as practicable after the
expiration of the applicable Performance Period. The Administrator, in its sole
discretion, may pay earned Restricted Stock Units in the form of cash, in Shares
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(which have an aggregate Fair Market Value equal to the value of the earned
Restricted Stock Units at the close of the applicable Performance Period) or in
a combination thereof.
(f) Cancellation of Restricted Stock Units. On the date set forth in the
Award Agreement, all unearned or unvested Restricted Stock Units will be
forfeited to the Company, and again will be available for grant under the Plan.
12. Leaves of Absence. Unless the Administrator provides otherwise,
vesting of Awards granted hereunder will be suspended during any unpaid leave of
absence. A Service Provider will not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, or any Subsidiary. For
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three months following the 91st day of such
leave any Incentive Stock Option held by the Participant will cease to be
treated as an Incentive Stock Option and will be treated for tax purposes as a
Nonstatutory Stock Option.
13. Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as
the Administrator deems appropriate.
14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number and class of Shares that may be
delivered under the Plan and/or the number, class, and price of Shares covered
by each outstanding Award, and the numerical Share limits in Sections 3, 6, 9
and 11 of the Plan, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Award.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each Participant
as soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for a Participant to have the
right to exercise his or her Award until ten (10) days prior to such transaction
as to all of the Optioned Stock covered thereby, including Shares as to which
the Award would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any Shares purchased
upon exercise of an Award shall lapse as to all such Shares, provided the
proposed dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Award shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Award, the Participant will fully vest in and have
the right to exercise all of his or her outstanding Options and Stock
Appreciation Rights, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock will
lapse, and, with respect to Restricted Stock Units, all Performance Goals or
other vesting criteria will be deemed achieved at target levels and all other
terms and conditions met.
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In addition, if an Option or Stock Appreciation Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator will notify the Participant in writing or
electronically that the Option or Stock Appreciation Right will be fully vested
and exercisable for a period of 15 days from the date of such notice, and the
Option or Stock Appreciation Right will terminate upon the expiration of such
period.
For the purposes of this paragraph, the Award shall be considered assumed
if, following the merger or sale of assets, the Award confers the right to
purchase or receive, for each Share subject to the Award immediately prior to
the merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) or, in the case of a Stock Appreciation Right upon the
exercise of which the Administrator determines to pay cash or a Restricted Stock
Unit which the Administrator can determine to pay in cash, the fair market value
of the consideration received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets is
not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of an Option or Stock
Appreciation Right or upon the payout of a Restricted Stock Unit, for each Share
subject to such Award (or in the case of Restricted Stock Units, the number of
implied shares determined by dividing the value of the Restricted Stock Units by
the per Share consideration received by holders of Common Stock in the merger or
sale of assets), to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per Share consideration received by
holders of Common Stock in the merger or sale of assets.
Notwithstanding anything in this Section 14(c) to the contrary, an Award
that vests, is earned or paid-out upon the satisfaction of one or more
Performance Goals will not be considered assumed if the Company or its successor
modifies any of such Performance Goals without the Participant's consent;
provided, however, a modification to such Performance Goals only to reflect the
successor corporation's corporate structure post-merger or post-sale of assets
will not be deemed to invalidate an otherwise valid Award assumption.
15. No Effect on Employment or Service. Neither the Plan nor any Award
will confer upon a Participant any right with respect to continuing the
Participant's relationship as a Service Provider with the Company, nor will they
interfere in any way with the Participant's right or the Company's right to
terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.
16. Date of Grant. The date of grant of an Award shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Participant within a
reasonable time after the date of such grant.
17. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.
18. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Award unless the exercise of such Award and the issuance and delivery of
such Shares shall comply with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such compliance.
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(b) Investment Representations. As a condition to the exercise of an
Award, the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
19. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
20. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
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