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EXHIBIT 10.29
3/8/96
HPSC, INC.
1995 STOCK INCENTIVE PLAN
AS ADOPTED MARCH 8, 1995
AND AMENDED AND RESTATED MARCH 14, 1996
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TABLE OF CONTENTS
1. PURPOSE; RESTRICTIONS.................................................... 1
2. EFFECTIVE DATE........................................................... 1
3. STOCK COVERED BY THE PLAN................................................ 1
4. ADMINISTRATION........................................................... 2
5. ELIGIBLE RECIPIENTS; AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.......... 2
(A) KEY EMPLOYEES........................................................ 2
(B) NON-EMPLOYEE DIRECTORS............................................... 2
(I) PRICE............................................................. 3
(II) EXERCISE......................................................... 3
(III) EXPIRATION...................................................... 3
(IV) OTHER TERMS...................................................... 3
6. DURATION OF THE PLAN..................................................... 3
7. TERMS AND CONDITIONS OF OPTIONS AND RESTRICTED STOCK AWARDS.............. 3
(A) PRICE................................................................ 4
(B) NUMBER OF SHARES..................................................... 4
(C) VESTING AND OTHER TERMS OF RESTRICTED STOCK AWARDS................... 4
(I) VESTING........................................................... 4
(II) FORFEITURE OF UNVESTED SHARES.................................... 5
(III) ESCROW OF UNVESTED SHARES....................................... 6
(IV) STOCKHOLDER RIGHTS............................................... 6
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(V) OTHER TERMS.......................................................... 6
(D) EXERCISE OF OPTIONS.................................................. 6
(E) PAYMENT.............................................................. 6
(F) WITHHOLDING TAXES; DELIVERY OF SHARES................................ 7
(G) NON-TRANSFERABILITY.................................................. 7
(H) TERMINATION OF PURCHASE AUTHORIZATIONS AND OPTIONS................... 7
(I) RIGHTS AS STOCKHOLDER................................................ 8
(J) REPURCHASE OF SHARES BY THE COMPANY................................. 8
(K) 10% STOCKHOLDER...................................................... 8
(L) CONFIDENTIALITY AGREEMENTS........................................... 9
(M) AGGREGATE LIMITATION................................................. 9
(N) RIGHT TO TERMINATE................................................... 9
8. RESTRICTIONS ON INCENTIVE OPTIONS........................................ 9
9. SUSPENSION OF RIGHTS PRIOR TO A DISSOLUTION, REORGANIZATION, ETC........ 10
10. ADJUSTMENT IN SHARES................................................... 10
11. INVESTMENT REPRESENTATIONS; TRANSFER RESTRICTIONS...................... 10
12. DEFINITIONS............................................................ 11
(A) "BOARD................................................................. 11
(B) "CHANGE IN CONTROL.................................................... 11
(C) "CODE.................................................................. 11
(D) "COMMITTEE............................................................. 11
(E) "COMMON STOCK.......................................................... 11
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(F) "COMPANY" AND "COMPANY GROUP".......................................... 11
(G) "DIRECTOR OPTION....................................................... 11
(H) "DISABILITY............................................................ 11
(I) "EFFECTIVE DATE........................................................ 11
(J) "EMPLOYEE.............................................................. 11
(K) "EVENT................................................................. 11
(L) "EXCHANGE ACT.......................................................... 11
(M) "INCENTIVE OPTION...................................................... 11
(N) "MARKET PRICE"......................................................... 11
(O) "NON-EMPLOYEE DIRECTOR................................................. 12
(P) "NON QUALIFIED OPTION.................................................. 12
(Q) "OPTION................................................................ 12
(R) "PARTICIPANT........................................................... 12
(S) "PERFORMANCE CONDITIONS................................................ 12
(T) "PERFORMANCE PERIOD.................................................... 12
(U) "PLAN.................................................................. 12
(V) "PURCHASE AUTHORIZATION............................................... 12
(W) "SERVICE............................................................... 12
(X) "SERVICE REQUIREMENT".................................................. 12
(Y) "SHARES................................................................ 12
(Z) "SUBSIDIARY............................................................ 12
13. TERMINATION OR AMENDMENT OF PLAN....................................... 12
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14. CHANGE IN CONTROL...................................................... 13
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As adopted 3/8/95
and amended and restated 3/14/96
HPSC, INC.
1995 STOCK INCENTIVE PLAN
1. PURPOSE; RESTRICTIONS. The purpose of this HPSC, Inc. 1995 Stock
Incentive Plan (the "Plan") is to advance the interests of HPSC, Inc., a
Delaware corporation (the "Company"), and of its shareholders by strengthening
the ability of the Company to attract, retain and motivate key employees of the
Company or any present or future Subsidiary1 of the Company (the Company and all
such Subsidiaries shall be collectively referred to as the "Company Group") by
providing such employees with an opportunity to purchase or receive as bonuses
stock of the Company and to attract, retain and motivate non-employee directors
of the Company by providing such directors with an opportunity to purchase stock
of the Company, thereby permitting such employees and directors to share in the
Company's success while aligning their interests with those of the Company's
shareholders. It is intended that this purpose will be effected by granting (i)
incentive stock options ("Incentive Options"), which are intended to qualify
under the provisions of Section 422 of the Code, and non-statutory stock options
("Nonqualified Options"), which are not intended to meet the requirements of
Section 422 of the Code and which are intended to be taxed upon exercise under
Section 83 of the Code (both Incentive Options and Nonqualified Options shall be
collectively referred to as "Options") and (ii) restricted stock awards that are
subject to performance-vesting requirements ("Restricted Stock Awards").
Notwithstanding the foregoing, no Incentive Options shall be granted
under this Plan unless this Plan shall have been approved by the stockholders of
the Company within twelve (12) months after the Effective Date.
2. EFFECTIVE DATE. This Plan was adopted on March 8, 1995, which is
also the Effective Date of the Plan. This Plan has been amended and restated on
March 14, 1996, effective as of March 8, 1995.
3. STOCK COVERED BY THE PLAN. Subject to adjustment as provided in
Sections 9 and 10 below, the shares that may be made subject to Options or
Restricted Stock Awards under this Plan ("Shares") shall not exceed in the
aggregate 550,000 shares of the common stock, $.01 par value, of the Company
("Common Stock"). Any Shares subject to an Option or Restricted Stock Award
which for any reason expires or is terminated unexercised as to such Shares and
any Shares withheld or reacquired by the Company pursuant to withholding,
payment, forfeiture or a repurchase right hereunder may again be the subject of
an Option or Restricted Stock Award under the Plan. The Shares
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(1) Capitalized terms not otherwise defined herein are
defined in Section 12 below.
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purchased or issued under the Plan may, in whole or in part, be either
authorized but unissued Shares or issued Shares reacquired by the Company.
4. ADMINISTRATION. This Plan shall be administered by the
Compensation Committee of the Board (the "Committee"); provided that each of the
members of the Committee shall be a person who in the opinion of counsel to the
Company is (i) a "disinterested person" as such term is used in Rule 16b-3
promulgated under the Exchange Act and (ii) an "outside director" as such term
is used in proposed regulation Section 1.162.27(e)(3) under Section 162(m) of
the Code. The Committee shall have authority, subject to the express provisions
of the Plan, to construe the Plan and the respective Options, Restricted Stock
Awards, and related agreements, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine, within the limits of the Plan,
the amounts, times, forms, terms, conditions and status (as Incentive or
Nonqualified Options) of the respective Options, Restricted Stock Awards, and
related agreements (other than the terms and conditions of Director Options set
forth in Section 5(b)), and to make all other determinations in the judgment of
the Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option, Restricted Stock Award, or related
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency.
Notwithstanding the foregoing, the Committee shall have authority to
establish guidelines for the grant of Options and Restricted Stock Awards to key
employees of the Company Group who are not executive officers of the Company and
to delegate to the Company's chief executive officer authority to grant Options
and Restricted Stock Awards, within such guidelines, to such eligible
non-executive key employees.
No member of the Committee and no delegate of the Committee shall be
liable for any action or determination under the Plan taken or made in good
faith.
5. ELIGIBLE RECIPIENTS; AUTOMATIC GRANTS TO NON-EMPLOYEE
DIRECTORS.
(a) KEY EMPLOYEES. Subject to the restrictions of this Plan, Options
and Restricted Stock Awards may be granted to such key employees of the Company
Group ("Employees"), including without limitation directors of the Company who
are Employees, as are selected by the Committee or (except as to Employees who
are Company executive officers) by the Committee's delegate pursuant to Section
4 above (an "Employee Participant" or a "Participant").
(b) NON-EMPLOYEE DIRECTORS. Subject to the restrictions of this Plan,
Nonqualified Options will be granted annually pursuant to this Section 5(b) to
each director of the Company who is a director on the date of grant and who is
not an Employee ("Non-Employee Directors"). Each Non-Employee Director who is
such at the conclusion of any regular annual meeting of the Company's
stockholders while this Plan is in effect and who will continue to serve on the
Board thereafter (a "Director
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Participant" or, unless the context otherwise requires, a "Participant") shall
receive on such date a Nonqualified Option to purchase 1,000 Shares, subject to
adjustment as provided in Section 10 below (a "Director Option"). Each Director
Option shall be subject to the following terms and conditions:
(i) PRICE. The purchase price per Share payable upon the
exercise of a Director Option shall be one hundred percent (100%) of the Market
Price per Share on the date of grant of the Director Option.
(ii) EXERCISE. Each Director Option shall be exercisable for
the full amount or for any part thereof immediately on the date of grant. Any
unexercised portion of a Director Option may be subsequently exercised for the
full amount or for any part thereof at any time and from time to time (until
exhausted) prior to the expiration or other termination of the Option.
(iii) EXPIRATION. Each Director Option shall terminate and
may no longer be exercised upon the earliest of (1) ten years after the date of
grant, (2) six months after termination of the Participant's Service due to
death or Disability, (3) three months after termination of the Participant's
Service for any other reason except termination for cause, and (4) immediately
upon termination of the Participant's Service for cause. The Board's good faith
determination of whether the termination of a Director Participant's Service was
for cause shall be binding for purposes of the Plan.
(iv) OTHER TERMS. Each Director Option shall be subject to
all other terms of the Plan (including without limitation the terms of Sections
7, 9, 10 and 11) except to the extent that such terms are inconsistent with the
express provisions of this Section 5(b).
6. DURATION OF THE PLAN. This Plan shall terminate ten years from the
Effective Date hereof, unless terminated earlier pursuant to Section 13 below,
and no Options or Restricted Stock Awards may be granted or made thereafter.
7. TERMS AND CONDITIONS OF OPTIONS AND RESTRICTED STOCK AWARDS. Options
and Restricted Stock Awards granted or made under this Plan shall be evidenced
by grant forms or agreements in such form and containing such terms and
conditions as the Committee or (except as to grants and awards to Employees who
are Company executive officers) the Committee's delegate shall determine;
provided, however, that such grant forms and agreements shall evidence among
their terms and conditions the following:
(a) PRICE. The purchase price per Share payable
upon the exercise of each Option (other than a Director Option) or the
consideration (if any) in addition to services of the Participant required
pursuant to each Restricted Stock Award granted or made hereunder shall be
determined by the Committee at the time the Option or Restricted Stock Award is
granted or made subject to the following restrictions. Subject to Section
7(k)(i), if applicable, the purchase price per Share payable upon the exercise
of each Incentive Option granted hereunder shall not be less than one hundred
percent
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(100%) of the Market Price per Share on the day the Incentive Option is granted.
The purchase price per Share payable upon the exercise of each Nonqualified
Option granted hereunder shall be not less than eighty-five percent (85%) of the
Market Price per Share on the date of the grant. Restricted Stock Awards may be
issued in consideration of services to be rendered, which shall be valued for
such purposes by the Committee. No Share shall be issued for less than its par
value, if any, paid in cash, property or services.
(b) NUMBER OF SHARES. Each grant or award form or agreement
shall specify the number of Shares to which it pertains.
(c) VESTING AND OTHER TERMS OF RESTRICTED STOCK AWARDS. All
Shares covered by a Restricted Stock Award will be issued promptly after the
date of grant of the award, subject to the following terms and conditions:
(i) VESTING. Such Shares shall remain unvested and
subject to the restrictions of this Section 7(c) until such time (if at all) as
(I) one or both of the following performance conditions (the "Performance
Conditions") are met within the period of five years beginning on the date of
grant of the Restricted Stock Award (the "Performance Period") and (II) the
Service requirement (the "Service Requirement") is also met with respect to a
Participant throughout the Performance Period.
The Partial Performance Condition is met when the
closing price of a share of the Common Stock as reported on the NASDAQ National
Market System for a consecutive ten-day period equals or exceeds 134.175% of the
Market Price of a share on the first day of the Performance Period. If the
Partial Performance Condition is met for a Restricted Stock Award, then fifty
percent (50%) of the Shares covered by the award shall vest in the Participant
who holds the award, and the restrictions of this Section 7(c) shall terminate
with respect to such vested Shares (but not with respect to the remaining
unvested Shares), as follows: (I) on the fifth anniversary of the date of grant
of the Restricted Stock Award, provided that the Participant meets the Service
Requirement described below on such fifth anniversary; or (II) upon the later of
(A) termination of the Participant's Service by the Company without cause or by
reason of death or Disability and (B) the date that the Partial Performance
Condition is met, provided that the Partial Performance Condition is met no
later than the last day that the Participant is deemed to still meet the Service
Requirement; and (III) subject in each case to payment by the Participant of any
additional consideration required under the Restricted Stock Award.
The Service Requirement is met by continuous Service
from the date of grant of a Restricted Stock Award; provided that if a
Participant's Service is terminated by the Company without cause or by reason of
death or Disability prior to the date that both Performance Conditions are met,
the Participant shall be deemed to meet the Service Requirement until the first
day of the fifth month following such termination. The Committee's good faith
determination of whether the termination of a Participant's Service (other than
a Director Participant's Service) was without cause or for cause shall be
binding for purposes of the Plan.
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The Full Performance Condition is met when the
closing price of a share of the Common Stock as reported on the NASDAQ National
Market System for a consecutive ten-day period equals or exceeds 168.35% of the
Market Price of a share on the first day of the Performance Period. If the Full
Performance Condition is met for a Restricted Stock Award, then the remaining
fifty percent (50%) or, if the Partial Performance Condition was not previously
met, one hundred percent (100%) of the Shares covered by the award shall vest in
the Participant who holds the award, and the restrictions of this Section 7(c)
shall terminate with respect to such vested Shares, as follows: (I) on the fifth
anniversary of the date of grant of the Restricted Stock Award, provided that
the Participant meets the Service Requirement described above on such fifth
anniversary; or (II) upon the later of (A) termination of the Participant's
Service by the Company without cause or by reason of death or Disability and (B)
the date that the Full Performance Condition is met, provided that the Full
Performance Condition is met no later than the last day that the Participant is
deemed to still meet the Service requirement; and (III) subject in each case to
payment by the Participant of any additional consideration required under the
Restricted Stock Award.
Notwithstanding any of the foregoing, if a Change in
Control of the Company occurs while any Shares covered by a Restricted Stock
Award remain unvested pursuant to the foregoing provisions of this Section 7(c),
but before the date of forfeiture pursuant to this Section 7(c) of such Shares,
all such unvested but unforfeited Shares covered by the award shall thereupon
vest in the Participant and the restrictions of this Section 7(c) shall
terminate, subject to payment by the Participant of any additional consideration
required (without regard to the occurrence of a Change in Control) in the
Restricted Stock Award.
(ii) FORFEITURE OF UNVESTED SHARES. If the
Performance Condition applicable to Shares covered by a Restricted Stock Award
to a Participant has not been met by the end of the Performance Period or if any
such Shares remain unvested at a time when the Participant fails to meet the
Service Requirement, the Shares as to which the Performance Condition has not
been met or the Shares which remain unvested when the Participant fails to meet
the Service requirement (as the case may be) shall thereupon be forfeited to the
Company without any further action by the Company or the Participant and for no
consideration other than the amount (if any) of cash or other property paid by
the Participant for such Shares. A Participant shall be deemed to fail to meet
the Service Requirement on the first day of the fifth month following
termination of his or her Service without cause or by reason of death or
Disability and on the date of termination of his or her Service for any other
reason (including without limitation, termination for cause and any voluntary
termination by the Participant).
(iii) ESCROW OF UNVESTED SHARES. While Shares
covered by a Restricted Stock Award remain unvested, they shall be held in
escrow by the Company in certificate or book-entry form and they may not be
sold, hypothecated, or otherwise disposed of by the Participant or anyone
claiming through him or her.
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(iv) STOCKHOLDER RIGHTS. Subject to the
restrictions of this Section 7(c), each Participant shall enjoy all the benefits
of ownership with respect to all Shares covered by a Restricted Stock Award
(including the rights to vote such Shares and to receive dividends thereon),
regardless of whether such Shares are vested or unvested; provided that all such
rights shall immediately cease with respect to any unvested Shares upon the
forfeiture of such Shares.
(v) OTHER TERMS. Each Restricted Stock Award shall
be subject to all other terms of the Plan (including without limitation the
other terms of this Section 7 and of Sections 9, 10 and 11) and of any form or
agreement embodying the award, except to the extent that such terms are
inconsistent with the express provisions of this Section 7(c).
(d) EXERCISE OF OPTIONS. Each Option (other than a
Director Option) shall be exercisable for the full amount or for any part
thereof at such time or at such intervals and in such installments as the
Committee (or its delegate, if applicable) may determine at the time it grants
such Option; provided, however, that no Option shall be exercisable with respect
to any Shares later than ten years after the date of the grant of such Option
(or five years in the case of Incentive Options to which Section 7(k)(ii)
applies) and provided, further, that each outstanding Option shall become
immediately exercisable for the full amount or any part thereof upon the
occurrence of a Change in Control of the Company. An Option shall be exercisable
only by delivery of a written notice to the Company's Treasurer, or any other
officer of the Company designated by the Committee to accept such notices on its
behalf, specifying the number of Shares for which the Option is exercised and
accompanied by either (i) payment or (ii) if permitted by the Committee,
irrevocable instructions to a broker to promptly deliver to the Company full
payment in accordance with Section 7(e)(ii) below of the amount necessary to pay
the aggregate exercise price. With respect to an Incentive Option, the
permission of the Committee referred to in clause (ii) of the preceding sentence
must be granted at the time the Incentive Option is granted.
(e) PAYMENT. Payment shall be made in full (i)at the
time the Option is exercised, (ii) promptly after the Participant forwards the
irrevocable instructions referred to in Section 7(d)(ii) above to the
appropriate broker, if exercise of an Option is made pursuant to Section
7(d)(ii) above, or (iii) at the time specified in the Restricted Stock Award if
any payment is required pursuant to the Award. Payment shall be made either (I)
in cash, (II) by check, (III) if permitted by the Committee (with respect to an
Incentive Option, such permission to have been granted at the time of the
Incentive Option grant), by delivery and assignment to the Company of shares of
Company stock having a fair market value (as determined by the Committee) equal
to the exercise or purchase price, or (IV) by a combination of one or more of
the foregoing methods. If shares of Company stock are to be used to pay the
exercise price of an Incentive Option, the Company prior to such payment must be
furnished with evidence satisfactory to it that the acquisition of such shares
and their transfer in payment of the exercise price satisfy the requirements of
Section 422 of the Code and other applicable laws.
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(f) WITHHOLDING TAXES; DELIVERY OF SHARES. The
Company's obligation to deliver Shares upon exercise of an Option or pursuant to
a Restricted Stock Award shall be subject to the Participant's satisfaction of
all applicable federal, state and local income and employment tax withholding
obligations. Without limiting the generality of the foregoing, the Company shall
have the right to deduct from payments of any kind otherwise due to the
Participant any federal, state or local taxes of any kind required by law to be
withheld with respect to any Shares issued upon exercise of Options or pursuant
to Restricted Stock Awards. Furthermore, to the extent possible, each
Participant shall satisfy such obligations by having the Company withhold vested
and unrestricted Shares or by delivering to the Company already owned
unrestricted Shares, having a value equal to the amount required to be withheld,
as determined by the Committee.
(g) NON-TRANSFERABILITY. No Option or Restricted
Stock Award shall be transferable by the Participant otherwise than by will or
the laws of descent or distribution, and each Option shall be exercisable during
the Participant's lifetime only by the Participant.
(h) TERMINATION OF RESTRICTED STOCK AWARDS AND
OPTIONS. Each Restricted Stock Award shall be subject to the termination and
forfeiture provisions of Section 7(c) above. Except to the extent the Committee
provides specifically in a grant form or Option agreement for a lesser period
(or a greater period, in the case of Nonqualified Options only), each Option
(other than a Director Option) shall terminate and may no longer be exercised if
the Participant ceases for any reason to render continuous Service, in
accordance with the following provisions:
(i) if the Participant ceases to render Service for
any reason other than death, Disability or termination for
cause, the Participant may, at any time within a period of
three months after the date of such cessation of Service,
exercise the Option to the extent that the Option was
exercisable on the date of such cessation;
(ii) if the Participant ceases to render Service
because of termination for cause, the Option shall terminate
immediately and may no longer be exercised on and after the
date of such termination for cause;
(iii) if the Participant ceases to render Service
because of Disability, the Participant may, at any time within
a period of six months after the date of such cessation of
Service, exercise the Option to the extent that the Option was
exercisable on the date of such cessation; and
(iv) if the Participant ceases to render Service
because of death, the Option, to the extent that the
Participant was entitled to exercise it on the date of death,
may be exercised within a period of six months after the
Participant's death by the person or persons to whom the
Participant's
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rights under the Option pass by will or by the laws of descent or
distribution;
provided, however, that no Option may be exercised to any extent by anyone after
the date of its expiration; and provided, further, that Options may be exercised
at any time only as to Shares which at such time are available for acquisition
pursuant to the terms of the applicable grant form or agreement.
(i) RIGHTS AS STOCKHOLDER. A Participant shall have no rights
as a stockholder with respect to any Shares covered by an Option until the date
of issuance of a stock certificate in the Participant's name for such Shares. A
Participant shall have such rights as a stockholder with respect to any Shares
covered by a Restricted Stock Award as are provided in Section 7(c) above.
(j) REPURCHASE OF SHARES BY THE COMPANY. Any Shares acquired
upon exercise of an Option (other than a Director Option) may in the discretion
of the Committee be subject to repurchase by or forfeiture to the Company if and
to the extent and at the repurchase price, if any, specifically set forth in the
Option grant form or agreement pursuant to which the Shares were acquired.
Certificates representing Shares subject to such repurchase or forfeiture may be
subject to such escrow and stock legending provisions as may be set forth in the
Option grant form or agreement pursuant to which the Shares were acquired. Any
Shares issued pursuant to a Restricted Stock Award shall be subject to such
forfeiture to the Company and to such escrow provisions as are specified in
Section 7(c) above and may be subject to such additional repurchase and
forfeiture rights and escrow and stock legending provisions as the Committee (in
its discretion) may set forth in any form or agreement embodying the award.
(k) 10% STOCKHOLDER. If any Participant to whom an Incentive
Option is granted pursuant to the provisions of the Plan is on the date of grant
the owner of stock (as determined under Section 424(d) of the Code) possessing
more than ten percent (10%) of the total combined voting power or value of all
classes of stock of the Company, its parent, if any, or Subsidiaries, then the
following special provisions shall be applicable:
(i) The exercise price per Share subject to such
Option shall not be less than one hundred and ten percent
(110%) of the Market Price of each Share on the date of
grant; and
(ii) The Option shall not have a term in excess of
five years from the date of grant.
(l) CONFIDENTIALITY AGREEMENTS. Each Participant shall
execute, prior to or contemporaneously with the grant of any Option or
Restricted Stock Award hereunder, the Company's then standard form of agreement,
if any, relating to nondisclosure of confidential information, assignment of
inventions and related matters.
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(m) AGGREGATE LIMITATION. The maximum number of Shares with
respect to which any Options and Restricted Stock Awards may be granted under
the Plan to any individual during each successive twelve-month period commencing
on the Effective Date of the Plan shall not exceed 200,000 shares.
(n) RIGHT TO TERMINATE. Nothing contained in the Plan or in
any Option or Restricted Stock Award granted hereunder shall restrict the right
of any member of the Company Group to terminate the employment of any
Participant or other Service by the Participant at any time and for any reason,
with or without notice. Nothing contained in the Plan or in any Option granted
hereunder shall give any Non-Employee Director the right to continue in Service
as a director.
8. RESTRICTIONS ON INCENTIVE OPTIONS. Incentive Options granted under
this Plan shall be specifically designated as such and shall be subject to the
additional restriction that the aggregate Market Price, determined as of the
date the Incentive Option is granted, of the Shares with respect to which
Incentive Options are exercisable for the first time by a Participant during any
calendar year shall not exceed $100,000. If an Incentive Option which exceeds
the $100,000 limitation of this Section 8 is granted, the portion of such Option
which is exercisable for Shares in excess of the $100,000 limitation shall be
treated as a Nonqualified Option pursuant to Section 422(d) of the Code. In the
event that such Participant is eligible to participate in any other stock
incentive plans of the Company, its parent, if any, or a Subsidiary which are
also intended to comply with the provisions of Section 422 of the Code, such
annual limitation shall apply to the aggregate number of shares for which
options may be granted under all such plans.
9. SUSPENSION OF RIGHTS PRIOR TO A DISSOLUTION, REORGANIZATION,ETC.
Prior to any dissolution, liquidation, merger, consolidation or reorganization
of the Company as to which the Company will not be the surviving corporation, or
the sale or exchange of substantially all of the Common Stock or the sale of
substantially all of the assets of the Company (the "Event"), unless such Event
would constitute a Change in Control of the Company, the Board or the Committee
may decide to terminate each outstanding Option and Restricted Stock Award. If
the Board or the Committee so decides, each Option (including Director Options)
and Restricted Stock Award shall terminate as of the effective date of the
Event, but the Board or the Committee shall suspend the exercise of all
outstanding Options a reasonable time prior to the Event, giving each person
affected thereby not less than fourteen days written notice of the date of
suspension, prior to which date such person may purchase in whole or in part the
Shares otherwise available to him or her as of the date of purchase. If the
Event is not consummated, the suspension shall be removed and all Options and
Restricted Stock Awards shall continue in full force and effect, subject to
their terms.
10. ADJUSTMENT IN SHARES. Appropriate adjustment shall be made by the
Committee in the maximum number of Shares subject to the Plan and in the number,
kind, and exercise or purchase price of Shares covered by outstanding Options
and Restricted Stock Awards granted hereunder and in the number and kind of
Shares in each
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Director Option subsequently granted pursuant to Section 5(b) to
give effect to any stock dividends, stock splits, stock combinations,
recapitalizations and other similar changes in the capital structure of the
Company after the Effective Date of the Plan. In the event of a change of the
Common Stock resulting from a merger or similar reorganization as to which the
Company is the surviving corporation, the number and kind of Shares which
thereafter may be purchased pursuant to an Option or issued pursuant to a
Restricted Stock Award under the Plan and the number and kind of Shares then
subject to Options or Restricted Stock Awards granted hereunder and the price
per Share thereof shall be appropriately adjusted in such manner as the
Committee may deem equitable to prevent dilution or enlargement of the rights
available or granted hereunder.
11. INVESTMENT REPRESENTATIONS; TRANSFER RESTRICTIONS. The Company may
require Participants, as a condition of purchasing Shares pursuant to the
exercise of an Option or of receiving Shares pursuant to a Restricted Stock
Award, to give written assurances in substance and form satisfactory to the
Company to the effect that such person is acquiring the Shares for the
Participant's own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate (including without limitation
confirmation that the Participant is aware of any applicable restrictions on
transfer of the Shares, as specified in the by-laws of the Company or otherwise)
in order to comply with federal and applicable state securities laws.
12. DEFINITIONS.
(a) "BOARD" means the Board of Directors of the Company.
(b) "CHANGE IN CONTROL" has the meaning defined in Section 14
below.
(c) "CODE" means the Internal Revenue Code of 1986, as
heretofore and hereafter amended, and the regulations promulgated thereunder.
(d) "COMMITTEE" has the meaning defined in section 4 above.
(e) "COMMON STOCK" has the meaning defined in Section 3
above.
(f) "COMPANY" AND "COMPANY GROUP" have the meanings defined in
Section 1 above.
(g) "DIRECTOR OPTION" has the meaning defined in Section
5(b)above.
(h) "DISABILITY" has the meaning defined in Section 22(e)(3)
of the Code.
(i) "EFFECTIVE DATE has the meaning defined in Section 2
above.
(j) "EMPLOYEE" has the meaning defined in Section 5(a) above.
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(k) "EVENT" has the meaning defined in Section 9 above.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as heretofore and hereafter amended.
(m) "INCENTIVE OPTION" has the meaning defined in Section 1
above.
(n) "MARKET PRICE" means the closing price of the Common Stock
as reported on the NASDAQ National Market System for the relevant date (or, if
such date is not a trading date or if no trades took place on such date, then
such closing price for the last previous trading date or the last previous date
on which a trade occurred, as the case may be); provided that if the Common
Stock is no longer traded on the NASDAQ National Market System on the relevant
date, then the Market Price as of such date shall be as determined by the Board.
(o) "NON-EMPLOYEE DIRECTOR" has the meaning defined in Section
5(b) above.
(P) "NONQUALIFIED OPTION" has the meaning defined in Section 1
above.
(q) "OPTION" has the meaning defined in Section 1 above.
(r) "PARTICIPANT" has the meaning defined in Section 5 above.
(s) "PERFORMANCE CONDITIONS", "Partial Performance Condition"
and "Full Performance Condition" have the meanings defined in Section 7(c)
above.
(t) "PERFORMANCE PERIOD" has the meaning defined in Section
7(c) above.
(u) "PLAN" has the meaning defined in Section 1 above.
(v) "RESTRICTED STOCK AWARD" has the meaning defined in
Section 1 above.
(w) "SERVICE" means the performance of work for one or more
members of the Company Group as an Employee or service as a Non-Employee
Director of the Company.
(x) "SERVICE REQUIREMENT" has the meaning defined in Section
7(c)
(y) "SHARES" has the meaning defined in Section 3 above.
(z) "SUBSIDIARY" has the meaning defined in Section 424(f) of
the Code.
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13. TERMINATION OR AMENDMENT OF PLAN. The Board may by written action
at any time terminate the Plan or make such changes in or additions or deletions
to the Plan as it deems advisable without further action on the part of the
stockholders of the Company, provided:
(a) that no such termination or amendment shall adversely
affect or impair any then outstanding Option or Restricted Stock Award or
related agreement without the consent of the Participant holding such Option or
Restricted Stock Award or related agreement; and
(b) that no such amendment which (i) increases the maximum
number of Shares subject to this Plan (except to the extent provided in Sections
9 and 10), (ii) materially increases the benefits accruing to Participants,
(iii) materially modifies the requirements as to eligibility for participation
in the Plan, (iv) changes any of the terms governing Director Options expressly
set forth in Section 5(b) of this Plan, or (v) makes any other change which,
pursuant to the Code or regulations thereunder or Section 16(b) of the Exchange
Act and the rules and regulations thereunder, requires action by the
stockholders may be made without obtaining, or being conditioned upon,
stockholder approval; and
(c) that no such amendment which would change the amount,
timing or price of the Director Option grants made to Non-Employee Directors
hereunder may be made more often than once every six months except to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the applicable rules and regulations thereunder.
With the consent of the Participant affected, the Committee may amend
outstanding Options or Restricted Stock Awards or related agreements in a manner
not inconsistent with the Plan. The Committee shall have the right to amend or
modify the terms and provisions of the Plan and of any outstanding Incentive
Options granted under the Plan to the extent necessary to qualify any or all
such Options for such favorable federal income tax treatment (including deferral
of taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code.
14. CHANGE IN CONTROL. A change in control of the Company (a "Change in
Control") will occur upon:
(a) The acquisition by any individual, entity or group (within the
meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20 percent or more of either (i) the then outstanding shares of
the Common Stock or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
the directors (the "Outstanding Company Voting Securities"); provided, however,
that the following acquisitions shall not constitute a Change in Control: (A)
any acquisition directly from the Company (excluding an acquisition by virtue of
the exercise of a conversion privilege); (B) any acquisition by the Company or
by
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any corporation controlled by the Company; (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company; or (D) any acquisition by any
corporation pursuant to a consolidation or merger, if, following such
consolidation or merger, the conditions described in clauses (i), (ii), and
(iii) of paragraph (c) of this Section 14 are satisfied; or
(b) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") ceasing for any reason to constitute at least two-thirds
of the Board over any period of 24 consecutive months or less; provided,
however, that any individual becoming a director subsequent to the Effective
Date whose election, or nomination for election by the Company's shareholders,
was approved by a vote or resolution of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Adoption by the Board of a resolution approving an agreement of
consolidation of the Company with or merger of the Company into another
corporation or business entity in each case, unless, following such
consolidation or merger, (i) more than 60 percent of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
consolidation or merger and/or the combined voting power of the then outstanding
voting securities of such corporation or business entity entitled to vote
generally in the election of directors (or other persons having the general
power to direct the affairs of such entity) is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Common Stock and Outstanding
Company Voting Securities immediately prior to such consolidation or merger in
substantially the same proportions as their ownership, immediately prior to such
consolidation or merger, of the Common Stock and/or Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such corporation or
other business entity resulting from such consolidation or merger and any Person
beneficially owning, immediately prior to such consolidation or merger, directly
or indirectly, 35 percent or more of the Common Stock and/or Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 35 percent or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such consolidation or merger or
the combined voting power of the then outstanding voting securities of such
corporation or business entity entitled to vote generally in the election of its
directors (or other persons having the general power to direct the affairs of
such entity) and (iii) at least two-thirds of the members of the board of
directors (or other group of persons having the general power to direct the
affairs of the corporation or other business entity) resulting from such
consolidation or merger were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such consolidation or merger;
provided that any right which shall vest by reason of the action of the Board
pursuant to this paragraph (c) shall be
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divested, with respect to any such right not already exercised, upon (A) the
rejection of such agreement of consolidation or merger by the stockholders of
the Company or (B) its abandonment by either party thereto in accordance with
its terms; or
(d) Adoption by the requisite majority of the whole Board, or by the
holders of such majority of stock of the Company as is required by law or by the
Certificate of Incorporation or By-Laws of the Company as then in effect, of a
resolution or consent authorizing (i) the dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the assets of the
Company, other than to a corporation or other business entity with respect to
which, following such sale or other disposition, (A) more than 60 percent of,
respectively, the then outstanding shares of common stock of such corporation
and/or the combined voting power of the outstanding voting securities of such
corporation or other business entity entitled to vote generally in the election
of directors (or other persons having the general power to direct the affairs of
such entity) is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in substantially
the same proportions as their ownership, immediately prior to such sale or other
disposition, of the Common Stock and/or Outstanding Company Voting securities,
as the case may be, (B) no Person (excluding the Company and any employee
benefit plan (or related trust) of the Company or such corporation or other
business entity and any Person beneficially owning, immediately prior to such
sale or other disposition, directly or indirectly, 35 percent or more of the
Common Stock and/or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 35 percent or more of, respectively,
the then outstanding shares of common stock of such corporation and/or the
combined voting power of the then outstanding voting securities of such
corporation or other business entity entitled to vote generally in the election
of directors (or other persons having the general power to direct the affairs of
such entity) and (C) at least two-thirds of the members of the board of
directors (or other group of persons having the general power to direct the
affairs of such corporation or other entity) were members of the Incumbent Board
at the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Company; provided
that any right which shall vest by reason of the action of the Board or the
stockholders pursuant to this paragraph (d) shall be divested, with respect to
any such right not already exercised, upon the abandonment by the Company of
such dissolution, or such sale or other disposition of assets, as the case may
be.
A Change in Control shall not occur upon the mere reincorporation of
the Company in another state.
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