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Exhibit 10.15
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SOFTKEY INTERNATIONAL INC.
LONG TERM EQUITY INCENTIVE PLAN
1. PURPOSE; DEFINITIONS.
A. PURPOSE. The purpose of the Plan is to provide selected
eligible employees of, and consultants to, SoftKey International Inc., a
Delaware corporation, its Subsidiaries (as defined herein) and Affiliates (as
defined herein) an opportunity to participate in SoftKey International Inc.'s
future by offering them long-term, performance-based and other incentives and
equity interests in SoftKey International Inc. so as to retain, attract and
motivate management personnel.
B. DEFINITIONS. For purposes of the Plan, the following terms
have the following meanings:
1. "AFFILIATE" means a parent or subsidiary corporation,
as defined in the applicable provisions (currently Section 425) of the Code.
2. "ANNUAL BASE SALARY" with respect to a participant
who is a Covered Employee as of the end of the year shall mean the annual rate
of base salary of such participant as in effect as of the first day of any
year, without regard to any optional or mandatory deferral of base salary
pursuant to a salary deferral arrangement.
3. "AWARD" means any award under the Plan, including any
Option, Stock Appreciation Right, Restricted Stock, Stock Purchase Right, or
Performance Share Award.
4. "AWARD AGREEMENT" means, with respect to each Award,
the signed written agreement between the Company and the Plan participant
setting forth the terms and conditions of the Award.
5. "BOARD" means the Board of Directors of the Company.
6. "CHANGE IN CONTROL" has the meaning set forth in
Section 10A.
7. "CHANGE IN CONTROL PRICE" has the meaning set forth
in Section 10C.
8. "CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor.
9. "COMMISSION" means the Securities and Exchange
Commission and any successor agency.
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10. "COMMITTEE" means the Committee referred to in
Section 2, or the Board in its capacity as administrator of the Plan in
accordance with Section 2.
11. "COMPANY" means SoftKey International Inc., a
Delaware corporation.
12. "COVERED EMPLOYEE" has the meaning set forth in
Section 162(m)(3) of the Code.
13. "DEEP DISCOUNT OPTION" means an Option described in
Section 5B.1 and Section 5B.3.
14. "DISABILITY" means permanent and total disability as
determined by the Committee for purposes of the Plan.
15. "DISINTERESTED PERSON" has the meaning set forth in
Rule 16b-3(d)(3) under the Exchange Act and any successor definition adopted by
the Commission.
16. "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time, and any successor.
17. "FAIR MARKET VALUE" means as of any given date:
(a) If the Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market, the closing sale price for the Stock or the closing
bid, if no sales are reported, as quoted on such system or exchange (or the
largest such exchange) for the date the value is to be determined (or if there
are no sales for such date, then for the last preceding business day on which
there were sales), as reported in the Wall Street Journal or similar
publication.
(b) If the Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the mean
between the high bid and low asked prices for the Stock on the date the value
is to be determined (or if there are no quoted prices for the date of grant,
then for the last preceding business day on which there were quoted prices).
(c) In the absence of an established market for
the Stock, as determined in good faith by the Committee, with reference to the
Company's net worth, prospective earning power, dividend-paying capacity, and
other relevant factors, including the goodwill of the Company, the economic
outlook in the Company's industry, the Company's position in the industry and
its management and the values of stock of other corporations in the same or a
similar line of business.
18. "INCENTIVE STOCK OPTION" means any Option intended to
be and designated as an "Incentive Stock Option" within the meaning of Section
422 of the Code.
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19. "NON-QUALIFIED STOCK OPTION" means any Option that is
not an Incentive Stock Option or a Deep Discount Option.
20. "OUTSIDE DIRECTOR" has the meaning set forth in
Section 162(m).
21. "OPTION" means an Option granted under Section 5.
22. "PERFORMANCE SHARE" means the equivalent, as of any
time such assessment is made, of the Fair Market Value of one share of Stock.
23. "Performance Share Award" means an Award under
Section 9.
24. "PLAN" means this SoftKey International Inc. Long
Term Equity Incentive Plan, as amended from time to time.
25. "PRE-TAX PROFIT" shall mean the net profit before
income taxes of the Company for each year determined in accordance with
generally accepted accounting principles and reported upon by the Company's
independent accountants.
26. "RESTRICTED STOCK" means an Award of Stock subject to
restrictions, as more fully described in Section 7.
27. "RULE 16b-3" means Rule 16b-3 under Section 16(b) of
the Exchange Act, as amended from time to time, and any successor rule.
28. "SECTION 162(m)" means Section 162(m) of the Code, as
amended from time to time, and any successor provision.
29. "STOCK" means the Common Stock, $0.01 par value, of
the Company, and any successor security.
30. "STOCK APPRECIATION RIGHT" means an Award granted
under Section 6.
31. "STOCK PURCHASE RIGHT" means an Award granted under
Section 8.
32. "SUBSIDIARY" has the meaning set forth in Section 425
of the Code.
33. "TERMINATION" means, for purposes of the Plan, with
respect to a participant, that the participant has ceased to be, for any
reason, with or without cause, an employee of, or a consultant to, the Company,
or a Subsidiary or Affiliate of the Company, such that such participant is
neither an employee of, or a consultant to, the Company, a Subsidiary, or any
Affiliate.
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2. ADMINISTRATION.
A. COMMITTEE. The Plan shall be administered by the Board or,
upon delegation by the Board, by a committee of the Board, composed, to the
extent required to comply with Rule 16b-3 (unless the Committee determines that
Rule 16b-3 is not applicable to the Plan), of not less than three Board
members, each of whom is a Disinterested Person and, to the extent required to
comply with Section 162(m) (unless the Committee determines that Section 162(m)
is not applicable to the Plan), each of whom is an Outside Director. In
connection with the administration of the Plan, the Committee shall have the
powers possessed by the Board. The Committee may act only by a majority of its
members, except that the Committee (i) may authorize any one or more of its
members or any officer of the Company to execute and deliver documents on
behalf of the Committee and (ii) so long as not otherwise required for the Plan
to comply with Rule 16b-3 (unless the Committee determines that Rule 16b-3 is
not applicable to the Plan) and so long as not otherwise required for the Plan
to comply with Section 162(m) (unless the Committee determines that Section
162(m) is not applicable to the Plan), may delegate to one or more officers or
directors of the Company authority to grant Awards to persons who are not
subject to Section 16 of the Exchange Act with respect to Stock and who are not
Covered Employees. The Board at any time may abolish the Committee and revest
in the Board the administration of the Plan.
B. AUTHORITY. The Committee shall grant Awards to eligible
employees and consultants. In particular and without limitation, the
Committee, subject to the terms of the Plan, shall:
1. Select the officers, other employees and consultants
to whom Awards may be granted;
2. Determine whether and to what extent Awards are to be
granted under the Plan;
3. Determine the number of shares to be covered by each
Award granted under the Plan;
(a) determine the terms and conditions of any
Award granted under the Plan and any related loans to be made by the Company,
based upon factors determined by the Committee;
(b) determine to what extent and under what
circumstances any Award payments may be deferred by a Plan participant; and
4. Make adjustments in the Performance Goals (as
hereinafter defined) in recognition of unusual or non- recurring events
affecting the Company or the financial statements of the Company, or in
response to changes in applicable laws, regulations, or accounting principles.
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C. COMMITTEE DETERMINATIONS BINDING. The Committee may adopt,
alter and repeal administrative rules, guidelines and practices governing the
Plan as it from time to time shall deem advisable, interpret the terms and
provisions of the Plan, any Award, any Award Agreement and otherwise supervise
the administration of the Plan. Any determination made by the Committee
pursuant to the provisions of the Plan with respect to any Award shall be made
in its sole discretion at the time of the grant of the Award or, unless in
contravention of any express term of the Plan or Award, at any later time. All
decisions made by the Committee under the Plan shall be binding on all persons,
including the Company and Plan participants.
3. STOCK SUBJECT TO PLAN.
A. NUMBER OF SHARES. The total number of shares of Stock
reserved and available for issuance pursuant to Awards under the Plan shall be
5,450,000 shares. Such shares may consist, in whole or in part, of authorized
and unissued shares or shares reacquired in private transactions or open market
purchases, but all shares issued under the Plan regardless of source shall be
counted against the 5,450,000 share limitation. If any Option terminates or
expires without being exercised in full or if any shares of Stock subject to an
Award are forfeited or if an Award otherwise terminates without a payment being
made to the participant in the form of Stock, the shares issuable under such
Option or Award shall again be available for issuance in connection with
Awards; provided that, to the extent required for the Plan to comply with Rule
16b-3, in the case of forfeiture, cancellation, exchange or surrender of shares
of Restricted Stock, the number of shares with respect to such Awards shall not
be available for Awards hereunder unless dividends paid on such shares are also
forfeited, canceled, exchanged or surrendered. If any shares of Stock subject
to an Award are repurchased by the Company, the shares issuable under such
Award shall again be available for issuance in connection with Awards other
than Options and Stock Appreciation Rights. To the extent an Award is paid in
cash, the number of shares of Stock representing, at Fair Market Value on the
date of the payment, the value of the cash payment shall not be available for
later grant under the Plan.
B. INDIVIDUAL LIMITS. In any year during the term of this Plan
(commencing January 1, 1995), no Plan participant can receive stock-based
Awards including Options, Stock Appreciation Rights which are granted without
reference to an Option, Restricted Stock, Stock Purchase Rights and Performance
Shares, relating to shares of Stock which in the aggregate exceed 20% of the
total number of shares of Stock authorized pursuant to the Plan, as adjusted
pursuant to the terms hereof.
C. ADJUSTMENTS. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, spin-off, sale of
substantial assets or other change in corporate structure affecting the Stock,
such substitution or adjustments shall be made in the aggregate number and kind
of shares of Stock reserved for issuance under the Plan, in the number, kind
and exercise price of shares subject to outstanding Options, in the number,
kind and purchase price of shares subject to outstanding Stock Purchase Rights
and in the number and kind of shares subject to other outstanding Awards, as
may be determined to be
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appropriate by the Committee in its sole discretion; provided that the number
and kind of shares subject to any Award shall always be rounded down to the
nearest whole number; and provided further that with respect to Incentive Stock
Options, such adjustment shall be made in accordance with Section 424 of the
Code. Such adjusted exercise price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
associated with any Option.
4. ELIGIBILITY.
Awards may be granted to officers and other employees of, and
consultants to, the Company, its Subsidiaries and its Affiliates (excluding any
person who serves only as a director).
5. STOCK OPTIONS.
A. TYPES. Any Option granted under the Plan shall be in such
form as the Committee may from time to time approve. The Committee shall have
the authority to grant to any Plan participant Incentive Stock Options, Deep
Discount Options, Non- Qualified Stock Options, or any type of Option (in each
case with or without Stock Appreciation Rights). No more than 625,000 shares
may be subject to Deep Discount Options. Incentive Stock Options may be
granted only to employees of the Company, its parent (within the meaning of
Section 425 of the Code) or its Subsidiaries. Any portion of an Option that
does not qualify as an Incentive Stock Option shall constitute a Non-Qualified
Stock Option.
B. TERMS AND CONDITIONS. Options granted under the Plan shall be
subject to the following terms and conditions:
1. OPTION TERM. The term of each Option shall be fixed
by the Committee, but no Incentive Stock Option shall be exercisable more than
ten years after the date the Option is granted, no Deep Discount Option shall
be exercisable more than 15 years after the date the Option is granted and no
Non-Qualified Stock Option shall be exercisable more than 11 years after the
date the Option is granted. If, at the time the Company grants an Incentive
Stock Option, the optionee owns directly or by attribution stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or any Affiliate of the Company, the Incentive Stock Option shall not
be exercisable more than five years after the date of grant.
2. GRANT DATE. The Company may grant Options under the Plan at
any time and from time to time before the Plan terminates. The Committee shall
specify the date of grant or, if it fails to do so, the date of grant shall be
the date of action taken by the Committee to grant the Option; provided that no
Option may be exercised prior to execution of the applicable Award Agreement.
However, if an Option is approved in anticipation of employment, the date of
grant shall be the date the intended optionee is first treated as an employee
for payroll purposes.
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3. EXERCISE PRICE. The exercise price per share of Stock
purchasable under a Non-Qualified Stock Option shall be equal to at least 50%,
and not more than 100%, of the Fair Market Value on the date of grant, provided
that no Option granted to an employee whom the Committee determines is likely
to be a Covered Employee at the end of the year shall have an exercise price
below 100% of Fair Market Value on the date of grant. The exercise price per
share of Stock purchasable under a Deep Discount Option shall be equal to at
least 10% (or such other minimum price as may be established by the Internal
Revenue Service as a "safe harbor" against constructive receipt of income upon
grant of the Option by the recipient of the Option), and not more than 40%, of
the Fair Market Value on the date of grant, provided that no Deep Discount
Option may be granted to an employee who the Committee determines is likely to
be a Covered Employee at the end of the year. The exercise price per share of
Stock purchasable under an Incentive Stock Option shall be equal to at least
the Fair Market Value on the date of grant; provided that if at the time the
Company grants an Incentive Stock Option, the optionee owns directly or by
attribution stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Affiliate of the Company the
exercise price shall be not less than 110% of the Fair Market Value on the date
the Incentive Stock Option is granted.
4. EXERCISABILITY. Subject to the other provisions of the Plan,
an Option shall be exercisable in its entirety at the time of grant or at such
times and in such amounts as are specified in the Award Agreement evidencing
the Option. The Committee, in its absolute discretion, at any time may waive
any limitations respecting the time at which an Option first becomes
exercisable in whole or in part.
5. METHOD OF EXERCISE; PAYMENT. To the extent the right to
purchase shares has accrued, Options may be exercised, in whole or in part,
from time to time, by written notice from the optionee to the Company stating
the number of Shares being purchased, accompanied by payment of the exercise
price for the shares. The Committee, in its discretion, may elect at the time
of Option exercise that any Non-Qualified Stock Option be settled in cash
rather than Stock.
6. NO DISQUALIFICATION. Notwithstanding any other provision in
the Plan, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered nor shall any discretion or authority granted
under the Plan be exercised so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the optionee affected, to disqualify any
Incentive Stock Option under such Section 422.
6. STOCK APPRECIATION RIGHTS.
A. RELATIONSHIP TO OPTIONS; NO PAYMENT BY PARTICIPANT. A Stock
Appreciation Right may be awarded either (i) with respect to Stock subject to
an Option held by a participant or (ii) without reference to an Option. If an
Option is an Incentive Stock Option, a Stock Appreciation Right granted with
respect to such Option may be granted only at the time of grant of the related
Incentive Stock Option, but if the Option is a Non-Qualified Stock Option, the
Stock Appreciation Right may be granted either simultaneously with the
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grant of the related Non-Qualified Stock Option or at any time during the term
of such related Non-Qualified Stock Option. No consideration shall be paid by
a participant with respect to a Stock Appreciation Right.
B. WHEN EXERCISABLE. A Stock Appreciation Right shall be
exercisable at such times and in whole or in part, each as determined by the
Committee, subject, with respect to Plan participants subject to Section 16(b)
of the Exchange Act, to Rule 16b-3. Any exercise by the participant of a Stock
Appreciation Right for cash shall be made only during the window period
specified in Rule 16b-3(e)(3)(iii) and any successor rule (the "Window
Period"), unless the Committee determines that Rule 16b-3 is not applicable to
the Plan. If a Stock Appreciation Right is granted with respect to an Option,
unless the Award Agreement otherwise provides, the Stock Appreciation Right may
be exercised only to the extent to which shares covered by the Option are not
at the time of exercise subject to repurchase by the Company.
C. EFFECT ON RELATED RIGHT; TERMINATION OF STOCK APPRECIATION
RIGHT. If a Stock Appreciation Right granted with respect to an Option is
exercised, the Option shall cease to be exercisable and shall be canceled to
the extent of the number of shares with respect to which the Stock Appreciation
Right was exercised. Upon the exercise or termination of an Option, related
Stock Appreciation Rights shall terminate to the extent of the number of shares
as to which the Option was exercised or terminated, except that, unless
otherwise determined by the Committee at the time of grant, a Stock
Appreciation Right granted with respect to less than the full number of shares
covered by a related Option shall not be reduced until the number of shares
covered by exercise or termination of the related Option exceeds the number of
shares not covered by the Stock Appreciation Right. A Stock Appreciation Right
granted independently from an Option shall terminate and shall be no longer
exercisable at the time determined by the Committee at the time of grant, but
not later than 10 years from the date of grant. Upon the Termination of the
participant, a Stock Appreciation Right granted with respect to an Option shall
be exercisable only to the extent to which the Option is then exercisable.
D. FORM OF PAYMENT UPON EXERCISE. Despite any attempt by a Plan
participant to elect payment in a particular form upon exercise of a Stock
Appreciation Right, the Committee, in its discretion, may elect to cause the
Company to pay cash, Stock, or a combination of cash and Stock upon exercise of
the Stock Appreciation Right.
E. AMOUNT OF PAYMENT UPON EXERCISE. Upon the exercise of a Stock
Appreciation Right, the Plan participant shall be entitled to receive one of
the following payments, as determined by the Committee under Section 6D.
hereof:
1. STOCK. That number of whole shares of Stock equal to
the number computed by dividing (A) an amount (the "Stock Appreciation Right
Spread"), rounded to the nearest whole dollar, equal to the product computed by
multiplying (x) the excess of (1) if the Stock Appreciation Right may only be
exercised during the Window Period, the highest Fair Market Value on any day
during the Window Period, and otherwise, the Fair Market
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Value on the date the Stock Appreciation Right is exercised, over (2) the
exercise price per share of Stock of the related Option, or in the case of a
Stock Appreciation Right granted without reference to an Option, such other
price as the Committee establishes at the time the Stock Appreciation Right is
granted, by (y) the number of shares of Stock with respect to which a Stock
Appreciation Right is being exercised by (B) (1) if the Stock Appreciation
Right may only be exercised during the Window Period, the highest Fair Market
Value during the Window Period in which the Stock Appreciation Right was
exercised, and (2) otherwise, the Fair Market Value on the date the Stock
Appreciation Right is exercised; plus, if the foregoing calculation yields a
fractional share, an amount of cash equal to the applicable Fair Market Value
multiplied by such fraction (such payment to be the difference of the
fractional share); or
2. CASH. An amount in cash equal to the Stock
Appreciation Right Spread; or
3. CASH AND STOCK. A combination of cash and Stock, the
combined value of which shall equal the Stock Appreciation Right Spread.
7. RESTRICTED STOCK.
Shares of Restricted Stock shall be subject to the following terms and
conditions:
A. PRICE. Plan participants awarded Restricted Stock, within 45
days of receipt of the applicable Award Agreement, which in no event shall be
later than ten (10) days after the Award grant date, shall pay to the Company,
if required by applicable law, an amount equal to the par value of the Stock
subject to the Award. If such payment is not made and received by the Company
by such date, the Award of Restricted Stock shall lapse.
B. RESTRICTIONS. Subject to the provisions of the Plan and the
Award Agreement, during a period set by the Committee, commencing with, and not
exceeding 10 years from, the date of such award (the "Restriction Period"), the
Plan participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber shares of Restricted Stock. Within these limits, the
Committee may in its discretion provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions, in whole or in
part, based on service, performance or such other factors or criteria as the
Committee may determine.
C. DIVIDENDS. Unless otherwise determined by the Committee, cash
dividends with respect to shares of Restricted Stock shall be automatically
reinvested in additional Restricted Stock, and dividends payable in Stock shall
be paid in the form of Restricted Stock.
D. TERMINATION. Except to the extent otherwise provided in the
Award Agreement and pursuant to Section 7B., upon termination of a Plan
participant's employment for any reason during the Restriction Period, all
shares still subject to restriction shall be forfeited by the participant.
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E. SPECIAL PROVISIONS REGARDING AWARDS. Notwithstanding anything
to the contrary contained in this Section 7, (i) all awards of Restricted Stock
granted pursuant to this Section 7 to participants who are employees whom the
Committee determines are likely to be Covered Employees at the end of the year
shall have restrictions which will lapse contingent on the attainment of
performance goals based on the attainment of an amount of Pre-tax Profit of the
Company during a tax year and (ii) in no event shall the grant of Restricted
Stock in any fiscal year be made to an employee whom the Committee determines
is likely to be a Covered Employee at the end of the year with a Fair Market
Value as of the date of grant which exceeds the lesser of (i) 100% of such
Participant's Annual Base Salary and (ii) $500,000.
F. TIME AND FORM OF PAYMENT. In the case of Plan participants
who are Covered Employees as of the end of the year, unless otherwise
determined by the Committee, shares of Restricted Stock shall be released from
restrictions only after achievement of the applicable performance goals has
been certified by the Committee.
8. STOCK PURCHASE RIGHTS.
A. PRICE. The Committee may grant Stock Purchase Rights which
shall enable the recipients to purchase Stock at a price equal to not less than
50%, and not more than 100%, of Fair Market Value on the date of grant.
B. EXERCISABILITY. Stock Purchase Rights shall be exercisable
for a period determined by the Committee not exceeding 30 days from the date of
grant. The Committee, however, may provide that, if required under Rule 16b-3,
Stock Purchase Rights granted to persons subject to Section 16(b) of the
Exchange Act shall not become exercisable until six months and one day after
the grant date and shall then be exercisable for 10 trading days at the
purchase price specified by the Committee in accordance with Section 8A.
C. SPECIAL PROVISIONS REGARDING AWARDS. In no event shall any
awards be granted under this Section 8 to an employee who the Committee
determines is likely to be a Covered Employee at the end of the year.
9. PERFORMANCE SHARES.
A. AWARDS. The Committee shall determine the nature, length
(which shall in no event be greater than 10 years) and starting date of the
performance (the "Performance Period") for each Performance Share Award. The
consideration payable to a participant with respect to a Performance Share
Award shall be an amount determined by the Committee in the exercise of the
Committee's discretion at the time of the Award; provided that the amount of
consideration may be zero and may in no event exceed 50% of a Plan
participant's Annual Base Salary at the time of grant. The Committee shall
determine the performance objectives to be used in awarding Performance Shares
(the "Performance Goals") and the extent to which such Performance Shares have
been earned. Performance Periods may overlap and participants may participate
simultaneously with respect to Performance Share Awards that
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are subject to different Performance Periods and different performance factors
and criteria. At the beginning of each Performance Period, the Committee shall
determine for each Performance Share Award subject to such Performance Period
the number of shares of Stock (which may constitute Restricted Stock) to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Performance Share
Award are met. Such number of shares of Stock may be fixed or may vary in
accordance with such performance or other criteria as may be determined by the
Committee. The Committee may provide that amounts equivalent to interest at
such rates as the Committee may determine or amounts equivalent to dividends
paid shall be payable with respect to Performance Share Awards. In addition
to the provisions set forth in Section 11J., the Committee, in its discretion,
may modify the terms of any Performance Share Award (except for those
Participants who are Covered Employees), including the specification and
measurement of performance goals.
B. TERMINATION OF EMPLOYMENT. Except as otherwise provided in
the Award Agreement or determined by the Committee, in the event of Termination
during a Performance Period for any reason, then the Plan participant shall not
be entitled to any payment with respect to the Performance Shares subject to
the Performance Period.
C. FORM OF PAYMENT. Payment shall be made in the form of cash or
whole shares of Stock as the Committee, in its discretion, shall determine.
D. SPECIAL PROVISIONS REGARDING AWARDS. In no event shall any
awards be granted under this Section 9 to an employee whom the Committee
determines is likely to be a Covered Employee at the end of the year.
10. CHANGE IN CONTROL.
A. DEFINITION OF "CHANGE IN CONTROL". For purposes of Section
1B., a "Change in Control" means the occurrence of either of the following:
1. Any "person", as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Company Subsidiary, a
Company Affiliate, or a Company employee benefit plan, including any trustee of
such plan acting as trustee) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company (or a successor to the Company) representing 35% or more of the
combined voting power of the then outstanding securities of the Company or such
successor; or
2. At any time that the Company has registered shares
under the Exchange Act, at least 40% of the directors of the Company constitute
persons who were not at the time of their first election to the Board,
candidates proposed by a majority of the Board in office prior to the time of
such first election; or
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3. The dissolution of the Company or liquidation of more
than 50% in value of the Company or a sale of assets involving 50% or more in
value of the assets of the Company, (x) any merger or reorganization of the
Company whether or not another entity is the survivor, (y) a transaction
pursuant to which the holders, as a group, of all of the shares of the Company
outstanding prior to the transaction hold, as a group, less than 50% of the
combined voting power of the Company or any successor company outstanding after
the transaction, or (z) any other event which the Board determines, in its
discretion, would materially alter the structure of the Company or its
ownership.
B. IMPACT OF EVENT. Except as expressly provided in any Award
agreement, in the event of a "Change in Control" as defined in Section 10A, the
following provisions shall apply:
1. Any Stock Appreciation Rights and Options outstanding
as of the date such Change in Control is determined to have occurred and not
then exercisable and vested shall become fully exercisable and vested;
provided, that in the case of the holder of Stock Appreciation Rights who is
actually subject to Section 16(b) of the Exchange Act, such Stock Appreciation
Rights shall have been outstanding for at least six months at the date such
Change in Control is determined to have occurred;
2. The restrictions and limitations applicable to any
Restricted Stock and Stock Purchase Rights shall lapse and such Restricted
Stock shall become fully vested;
3. The value (net of any exercise price and required tax
withholdings) of all outstanding Options, Stock Appreciation Rights, Restricted
Stock, and Stock Purchase Rights, unless otherwise determined by the Committee
at or after grant and subject to Rule 16b-3, shall be cashed out on the basis
of the "Change in Control Price," as defined in Section 11C., as of the date
such Change in Control is determined to have occurred or such other date as the
Board may determine prior to the Change in Control;
4. Any outstanding Performance Share Awards shall be
vested and paid in full as if all performance criteria had been met; provided,
however, that the foregoing provision shall only apply, with respect to the
events described in Section 10A.1, 10A.3(x), 10A.3(z), and 10A.4, if and to the
extent so specifically determined by the Committee in the exercise of the
Committee's discretion, which determination may be amended or reversed only by
the affirmative vote of a majority of the persons who were directors at the
time such determination was made.
C. CHANGE IN CONTROL PRICE. For purposes of this Section 10,
"Change in Control Price" means the highest price per share paid in any
transaction reported on any established stock exchange, national market system
or other established market for the Stock, or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the Company
at any time during the preceding 60-day period as determined by the Committee,
except that in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Board decides to cash out such
Options.
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11. GENERAL PROVISIONS.
A. AWARD GRANTS. Any Award may be granted either alone or in
addition to other Awards granted under the Plan. Subject to the terms and
restrictions set forth elsewhere in the Plan, the Committee shall determine the
consideration, if any, payable by the participant for any Award and, in
addition to those set forth in the Plan, any other terms and conditions of the
Awards. The Committee may condition the grant or payment of any Award upon the
attainment of Performance Goals or such other factors or criteria, including
vesting based on continued employment or consulting, as the Committee shall
determine. Performance Goals may vary from Plan participant to Plan
participant and among groups of Plan participants and shall be based upon such
Company, subsidiary, group or division factors or criteria as the Committee may
deem appropriate, including, but not limited to, earnings per share or return
on equity (except as otherwise required for Plan participants who are Covered
Employees as of the end of the year in order to comply with Section 162(m)).
The other provisions of Awards also need not be the same with respect to each
recipient. Unless otherwise specified in the Plan or by the Committee, the
date of grant of an Award shall be the date of action by the Committee to grant
the Award. The Committee may also substitute new Options for previously
granted Options, including previously granted Options having higher exercise
prices.
B. TYPES OF SHARES. The Committee, in its discretion, may
determine at the time of an Award that in lieu of Stock there shall be issuable
under, or applicable to the measurement of, any Award any of the following:
(i) Restricted Stock; (ii) shares of any series of common stock of the Company
other than Stock and shares of any series of common stock of any Subsidiary or
Affiliate of the Company ("Common Shares"); or (iii) shares of any series of
preferred stock of the Company ("Preferred Shares"); provided that (A) with
respect to shares issuable upon exercise of Incentive Stock Options, Common
Shares and Preferred Shares shall be limited to shares of any Subsidiary
authorized as of the date the Plan is approved by the Board and (B) with
respect to shares issuable upon exercise of Deep Discount Options,
Non-Qualified Stock Options and Stock Appreciation Rights, Common Shares and
Preferred Shares shall be limited to shares of any Subsidiary or Affiliate of
the Company. In such event, the Committee shall determine the number of shares
of Stock equivalent to such Restricted Stock, Common Shares or Preferred Shares
for the purpose of calculating the shares of Stock issued under the Plan;
provided that a Common Share or a Preferred Share in no event shall be deemed
equal to less than one share of Stock.
C. AWARD AGREEMENT. As soon as practicable after the date of an
Award grant, the Company and the participant shall enter into a written Award
Agreement specifying the date of grant and the terms and conditions of the
Award.
D. CERTIFICATES. All certificates for shares of Stock or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Commission, any
stock exchange upon which the Stock is then listed, any national market system
over which the Stock is then quoted and any applicable federal, state or
foreign securities law.
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E. TERMINATION. With respect to Awards (other than Options), in
the event of Termination for any reason other than death or Disability, Awards
held at the date of Termination (and only to the extent then exercisable or
payable, as the case may be) may be exercised in whole or in part at any time
within 90 days after the date of Termination, or such lesser period specified
in the Award Agreement (but in no event after the expiration date of the
Award), but not thereafter. With respect to Options, in the event of
Termination for any reason other than death or Disability, Options held at the
date of Termination (to the extent then exercisable) may be exercised in whole
or in part within 90 days after the date of Termination, or such other period
(which may be longer or shorter than 90 days) which shall be specified in the
Award Agreement (but in no event shall any Option remain exercisable after the
expiration date of such Option). If Termination is due to death or Disability,
or a participant dies or becomes disabled within the period that the Award
remains exercisable or payable, as the case may be, after Termination, only
Awards (including Options) held at the date of death or Disability (and only to
the extent then exercisable or payable, as the case may be) may be exercised in
whole or in part by the participant in the case of Disability, by the
participant's personal representative or by the person to whom the Award is
transferred by will or the laws of descent and distribution, at any time within
18 months after the death or one year after the Disability, as the case may be,
of the participant (or such other period which shall be specified in the Award
Agreement, but in no event shall any Award remain exercisable after the
expiration of such Award). In the event of Termination by reason of the
participant's retirement (as determined in the exercise of the Committee's sole
discretion), Awards (including Options) may be exercised in whole or in part at
any time within two years after the date of Termination (or such other period
which shall be specified in the Award Agreement, but in no event shall any
Award remain exercisable after the expiration date of such Award).
F. DELIVERY OF PURCHASE PRICE. Plan participants shall make all
or any portion of any payment due to the Company with respect to the
consideration payable for, upon exercise of, or for federal, state, local or
foreign tax payable in connection with, an Award by delivery of cash; and if
and only to the extent authorized by the Committee, all or any portion of such
payment may be made by delivery of any property (including without limitation a
promissory note of the participant or shares of Stock or other securities and,
in the case of an Option, surrender of shares issuable upon exercise of that
Option) other than cash, so long as, if applicable, such property constitutes
valid consideration for the Stock under applicable law. To the extent
participants may make payments due to the Company upon grant or exercise of
Awards by the delivery of shares of Stock or other securities, the Committee,
in its discretion, may permit participants constructively to deliver for any
such payment securities of the Company held by the participant for at least
three months. Constructive delivery shall be effected by (i) identification by
the participant of shares intended to be delivered constructively, (ii)
confirmation by the Company of participant's ownership of such shares (for
example, by reference to the Company's stock records, or by some other means of
verification) and (iii) if applicable, upon exercise, delivery to the
participant of a certificate for that number of shares equal to the number of
shares for which the Award is exercised less the number of shares
constructively delivered.
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G. TAX WITHHOLDING. If and to the extent authorized by the
Committee in its discretion, a person who has received an Award or payment
under an Award may make an election to deliver to the Company a promissory note
of the Plan participant on the terms set forth in Section 11F. or to have
shares of Stock or other securities of the Company withheld by the Company or
to tender any such securities to the Company to pay the amount of tax that the
Committee in its discretion determines to be required to be withheld by the
Company subject to the following limitations:
1. Such election shall be irrevocable;
2. Such election shall be subject to the disapproval of
the Committee;
3. In the case of participants subject to Section 16(b)
of the Exchange Act, the election and the exercise of the Award may not be made
within six months after the grant of the Award (and in the case of a Stock
Appreciation Right, any related Award) to be exercised (except that this
limitation shall not apply in the event of death or Disability of such person
before the six-month period expires); and
4. In the case of participants subject to Section 16(b)
of the Exchange Act, such election may be made either (A) at least six months
before the date that the amount of tax to be withheld in connection with such
exercise is determined or (B) in any ten-day period beginning on the third
business day following the date of release for publication of quarterly or
annual summary statements of sales and earnings.
Any shares or other securities so withheld or tendered will be valued by the
Committee as of the date they are withheld or tendered; provided, that Stock
shall be valued at the Fair Market Value on such date. The value of the shares
withheld or tendered may not exceed the required federal, state, local and
foreign withholding tax obligations as computed by the Company. Unless the
Committee permits otherwise, the Plan participant shall pay to the Company in
cash, promptly when the amount of such obligations becomes determinable, all
applicable federal, state, local and foreign withholding taxes that the
Committee in its discretion determines to result from the lapse of restrictions
imposed upon an Award or upon exercise of an Award or from a transfer or other
disposition of shares acquired upon exercise or payment of an Award or
otherwise related to the Award or the shares acquired in connection with an
Award.
H. NO TRANSFERABILITY. No Award shall be assignable or otherwise
transferable by the participant other than by will or by the laws of descent
and distribution and, during the life of a participant, an Award shall be
exercisable, and any elections with respect to an Award may be made, only by
the Plan participant or such participant's guardian or legal representative.
I. RIGHTS OF FIRST REFUSAL. At the time of grant, the Committee
may provide in connection with any Award that the shares of Stock received as a
result of such Award shall be subject to a right of first refusal pursuant to
which the participant shall be required to offer
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to the Company any shares that the participant wishes to sell at the then Fair
Market Value subject to such other terms and conditions as the Committee may
specify at the time of grant
J. ADJUSTMENT OF AWARDS; WAIVERS. The Committee may adjust the
Performance Goals and measurements applicable to Awards (i) to take into
account changes in law and accounting and tax rules, (ii) to make such
adjustments as the Committee deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events,
or circumstances in order to avoid windfalls or hardships, (iii) to make such
adjustments as the Committee deems necessary or appropriate to reflect any
material changes in business conditions and (iv) in any other manner determined
in its discretion. In the event of hardship or other special circumstances of
a participant and otherwise in its discretion, the Committee may waive in whole
or in part any or all restrictions, conditions, vesting, or forfeiture with
respect to any Award granted to such Plan participant.
K. ELECTION TO DEFER PAYMENT. To the extent, if any, permitted
by the Committee, a Plan participant may elect, at such time as the Committee
may in its discretion specify, to defer payment of all or a portion of an
Award.
L. NON-COMPETITION. The Committee may condition the Committee's
discretionary waiver of a forfeiture or vesting acceleration at the time of
Termination of a Plan participant holding any unexercised or unearned Award or
the waiver of restrictions upon any Award upon a requirement that such
participant agree to and actually (i) not engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) be
available, unless such participant shall have died, for consultations at the
request of the Company's management, all on such terms and conditions
(including conditions in addition to (i) and (ii)) as the Committee may
determine.
M. DIVIDENDS. The reinvestment of dividends in additional Stock
or Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 3 for
such reinvestment (taking into account then outstanding Awards).
N. REGULATORY COMPLIANCE. Each Award under the Plan shall be
subject to the condition that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Stock upon
any securities exchange or under any state or federal law, (ii) the consent or
approval of any government or regulatory body, or (iii) an agreement or
representations by the participant with respect thereto, is necessary or
desirable, then such Award shall not be consummated in whole or in part unless
such listing, registration, qualification, consent, approval, agreement or
representations shall have been effected or obtained free of any conditions not
acceptable to the Committee.
O. RIGHTS AS STOCKHOLDER. Unless the Plan or the Committee
expressly specifies otherwise, a Plan participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the
participant is entitled, under the terms of the Award, to
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receive such shares. Subject to Sections 3B. and 7C., no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date the certificates are delivered.
P. BENEFICIARY DESIGNATION. The Committee, in its discretion,
may establish procedures for a participant to designate a beneficiary to whom
any amounts payable in the event of the participant's death are to be paid.
Q. ADDITIONAL PLANS. Nothing contained in the Plan shall prevent
the Company or a Subsidiary or Affiliate of the Company from adopting other or
additional compensation arrangements for its employees.
R. NO EMPLOYMENT RIGHTS. The adoption of the Plan shall not
confer upon any employee any right to continued employment nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
of the Company to terminate the employment of any employee at any time.
S. INTERPRETATION. Notwithstanding any provision of the Plan,
the Plan shall always be administered, and Awards shall always be granted and
exercised, in such a manner as to conform to the provisions of Rule 16b-3 and
Section 162(m), unless the Committee determines that Rule 16b-3 or Section
162(m) are not applicable to the Plan. The Plan is designed and intended to
comply with Rule 16b-3 and, to the extent applicable, with Section 162(m), and
all provisions hereof shall be construed in a manner to so comply.
T. GOVERNING LAW. The Plan and all Awards shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
U. USE OF PROCEEDS. All cash proceeds to the Company under the
Plan shall constitute general funds of the Company.
V. UNFUNDED STATUS OF PLAN. The Plan shall constitute an
"unfunded" plan for incentive and deferred compensation. The Committee may
authorize the creation of trusts or arrangements to meet the obligations
created under the Plan to deliver Stock or make payments; provided, that unless
the Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.
W. ASSUMPTION BY SUCCESSOR. The obligations of the Company under
the Plan and under any outstanding Award may be assumed by any successor
corporation, which for purposes of the Plan shall be included within the
meaning of "Company".
X. PLAN DESIGNATION AND STATUS. Notwithstanding the designation
of this document as a plan for convenience of reference and to standardize
certain provisions applicable to all types of Awards, each type of Award shall
be deemed to be a separate "plan" for purposes of Section 16 of the Exchange
Act and any applicable state securities laws.
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12. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuance shall be made which would impair the rights of a
participant under an outstanding Award without the Plan participant's consent.
In addition, to the extent required for the Plan to comply with Rule 16b-3 or
Section 162(m) or, with respect to provisions solely as they relate to
Incentive Stock Options, to the extent required for the Plan to comply with
Section 422A of the Code, the Board may not amend or alter the Plan without the
approval of a majority of the votes cast at a duly held stockholders' meeting
at which a quorum of the voting power of the Company is represented in person
or by proxy, where such amendment or alteration would:
A. Except as expressly provided in the Plan, increase the total
number of shares reserved for issuance pursuant to Awards under the Plan;
B. Except as expressly provided in the Plan, change the minimum
price terms of Section 5B.3 or Section 8A;
C. Change the class of employees and consultants eligible to
participate in the Plan;
D. Extend the maximum Option term under Section 5B. or the
maximum exercise period under Section 8B.; or
E. Materially increase the benefits accruing to participants
under the Plan.
The Board of Directors may, at any time without stockholder approval,
amend the Plan and the terms of any Award outstanding under the Plan, provided
that such amendment is designed to maximize federal income tax benefits
accorded to Awards or, if the Committee determines that Rule 16b-3 is
applicable to the Plan, to comply with Rule 16b-3 and provided further that
with respect to outstanding Awards, the Plan participant consents to such
amendment.
13. EFFECTIVE DATE OF PLAN.
The Plan, and any amendments thereto, shall be effective on the date
the same is adopted by the Board, but all Awards shall be conditioned upon
approval of the Plan, and any amendment thereto requiring such approval, at a
duly held stockholders' meeting by the affirmative vote of the holders of
shares representing a majority of the voting power of the Company represented
in person or by proxy and entitled to vote at the meeting.
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14. TERM OF PLAN.
No Award shall be granted on or after July 1, 2000, but Awards granted
prior to July 1, 2000 (including, without limitation, Performance Share Awards
for Performance Periods commencing prior to July 1, 2000) may extend beyond
that date.
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