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Exhibit 10.24
FERROFLUIDICS CORPORATION
AMENDED AND RESTATED 1995 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
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The name of the plan is the Ferrofluidics Corporation Amended and Restated
1995 Stock Option and Incentive Plan (the "Plan"). The purpose of the Plan is to
encourage and enable the officers, employees, Directors and other key persons of
Ferrofluidics Corporation (the "Company") and its Subsidiaries upon whose
judgment, initiative and efforts the Company largely depends for the successful
conduct of its business to acquire a proprietary interest in the Company. It is
anticipated that providing such persons with a direct stake in the Company's
welfare will assure a closer identification of their interests with those of the
Company, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Administrator" means the Board or the Committee.
"Adoption Date" means the date on which the Plan is approved by the Board
of Directors as set forth in Section 17.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Cause" as such term relates to the termination of any person means the
occurrence of one or more of the following: (i) such person is convicted of,
pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement which has an immediate and materially adverse
effect on the Company or any Subsidiary, as determined by the Board in good
faith in its sole discretion, (ii) such person engages in a fraudulent act to
the material damage or prejudice of the Company or any Subsidiary or in conduct
or activities materially damaging to the property, business or reputation of the
Company or any Subsidiary, all as determined by the Board in good faith in its
sole discretion, (iii) any material act or omission by such person involving
malfeasance or negligence in the performance of such person's duties to the
Company or any Subsidiary to the material detriment of the Company or any
Subsidiary, as determined by the Board in good faith in its sole discretion,
which has not been
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corrected by such person within 30 days after written notice from the Company of
any such act or omission, (iv) failure by such person to comply in any material
respect with the terms of his employment agreement, if any, or any written
policies or directives of the Board as determined by the Board in good faith in
its sole discretion, which has not been corrected by such person within 30 days
after written notice from the Company of such failure, or (v) material breach by
such person of his noncompetition agreement with the Company, if any, as
determined by the Board in good faith in its sole discretion.
"Change of Control" is defined in Section 15.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means a committee of two or more Non-Employee Directors
appointed by the Board to administer the Plan.
"Disability" means an individual's inability to perform his or her normal
required services for the Company and its Subsidiaries for a period of six
consecutive months by reason of the individual's mental or physical disability,
as determined by the Administrator in good faith in its sole discretion.
"Dividend Equivalent Right" means Awards granted pursuant to Section 10.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.
"Fair Market Value" on any given date means the last reported sale price at
which Stock is traded on such date or, if no Stock is traded on such date, the
most recent date on which Stock was traded, as reflected on the principal stock
exchange or, if applicable, any other national stock exchange on which the Stock
is traded or admitted to trading.
"Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Employee Director" means any Independent Director who is both a
"Non-Employee Director" within the meaning of Rule 16b-3(b)(3)(i) promulgated
under the Act, or any successor definition under said rule, and an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
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"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to Section 9.
"Restricted Stock Award" means Awards granted pursuant to Section 7.
"Retirement" means an individual's termination of employment (or other
business relationship) with the Company and its Subsidiaries after attainment of
age 65 or attainment of age 55 and completion of 10 years of service.
"Stock" means the Common Stock, par value $.004 per share, of the Company,
subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means any Award granted pursuant to Section 6.
"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company, if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
"Unrestricted Stock Award" means any Award granted pursuant to Section 8.
SECTION 2. ADMINISTRATION OF PLAN; AUTHORITY TO SELECT PARTICIPANTS AND
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DETERMINE AWARDS
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(a) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the officers, employees and key persons of the Company
and its Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Unrestricted Stock Awards, Performance
Share Awards and Dividend Equivalent Rights, or any combination of the
foregoing, granted to any one or more participants;
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(iii) to determine the number of shares of Stock to be covered by any
Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of all or
any portion of any Award;
(vi) subject to the provisions of Section 5(a)(iii), to extend at any
time the period in which Stock Options may be exercised;
(vii) to determine at any time whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or credit
amounts constituting interest (at rates determined by the Administrator) or
dividends or deemed dividends on such deferrals; and
(viii) at any time to adopt, alter and repeal such rules, guidelines
and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on
all persons, including the Company and Plan participants.
(b) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Administrator, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to Awards,
including the granting thereof, to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act or "covered employees"
within the meaning of Section 162(m) of the Code. The Administrator may revoke
or amend the terms of a delegation at any time but such action shall not
invalidate any prior actions of the Administrator's delegate or delegates that
were consistent with the terms of the Plan.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
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(a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 750,000 shares. For purposes of
this limitation,
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the shares of Stock underlying any Awards which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under the Plan. Subject to such overall limitation,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that Stock Options or Stock Appreciation
Rights with respect to no more than 200,000 shares of Stock may be granted to
any one individual participant during any 12 month calendar year period. The
shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company. Upon the exercise
of a Stock Appreciation Right settled in shares of Stock, the right to purchase
an equal number of shares of Stock covered by a related Stock Option, if any,
shall be deemed to have been surrendered and will no longer be exercisable, and
said number of shares of Stock shall no longer be available under the Plan.
(b) RECAPITALIZATIONS. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Administrator shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options or Stock Appreciation Rights that can be granted to any one
individual participant, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards and Stock Appreciation Rights under the
Plan, and (iv) the price for each share subject to any then outstanding Stock
Options and Stock Appreciation Rights under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options and Stock Appreciation Rights) as to which such Stock Options and
Stock Appreciation Rights remain exercisable. The adjustment by the
Administrator shall be final, binding and conclusive. No fractional shares of
Stock shall be issued under the Plan resulting from any such adjustment, but the
Administrator in its discretion may make a cash payment in lieu of fractional
shares.
(c) MERGERS. Upon consummation of a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding Stock Options and Stock Appreciation Rights: (i)
provide that such Stock Options shall be assumed or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to the optionees, provide that all
unexercised Stock Options and Stock Appreciation Rights will terminate
immediately prior to the consummation of such transaction unless exercised by
the optionee within a specified period following the date of such notice, and/or
(iii) in the event of
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a business combination under the terms of which holders of the Stock of the
Company will receive upon consummation thereof a cash payment for each share
surrendered in the business combination, make or provide for a cash payment to
the optionees equal to the difference between (A) the value (as determined by
the Administrator) of the consideration payable per share of Stock pursuant to
the business combination (the "Merger Price") times the number of shares of
Stock subject to such outstanding Stock Options and Stock Appreciation Rights
(to the extent then exercisable at prices not in excess of the Merger Price) and
(B) the aggregate exercise price of all such outstanding Stock Options and Stock
Appreciation Rights in exchange for the termination of such Stock Options and
Stock Appreciation Rights.
(d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances.
SECTION 4. ELIGIBILITY
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Participants in the Plan will be such full or part-time officers, and other
employees and key persons of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the
Administrator, in its sole discretion. Independent Directors are also eligible
to participate in the Plan but only to the extent provided in Section 5(c) and
Section 8 below.
SECTION 5. STOCK OPTIONS
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Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after the date
which is 10 years from the date the Plan is approved by the Board of Directors.
(a) STOCK OPTIONS GRANTED TO EMPLOYEES AND KEY PERSONS. The Administrator
in its discretion may grant Stock Options to eligible employees and key persons
of the Company
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or any Subsidiary. Stock Options granted to employees pursuant to this Section
5(a) shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Administrator shall deem desirable:
(i) EXERCISE PRICE. The exercise price per share for the Stock covered
by a Stock Option granted pursuant to this Section 5(a) shall be determined
by the Administrator at the time of grant but shall not be less than 100%
of the Fair Market Value on the date of grant in the case of Incentive
Stock Options, or 85% of the Fair Market Value on the date of grant, in the
case of Non-Qualified Stock Options. Notwithstanding the foregoing, with
respect to Non-Qualified Stock Options which are granted in lieu of cash
bonus, the exercise price per share shall not be less than 50% of the Fair
Market Value on the date of grant. If an employee owns or is deemed to own
(by reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any parent or subsidiary corporation and an Incentive Stock
Option is granted to such employee, the option price of such Incentive
Stock Option shall be not less than 110% of the Fair Market Value on the
grant date.
(ii) GRANT OF DISCOUNT OPTIONS IN LIEU OF CASH BONUS. Upon the request
of an eligible employee and with the consent of the Administrator, such
employee may elect each calendar year to receive a Non-Qualified Stock
Option in lieu of any cash bonus to which he may become entitled during the
following calendar year pursuant to any other plan of the Company, but only
if such employee makes an irrevocable election to waive receipt of all or a
portion of such cash bonus. Such election shall be made on or before the
date set by the Administrator which date shall be no later than 15 days (or
such shorter period permitted by the Administrator) preceding January 1 of
the calendar year for which the cash bonus would otherwise be paid. A
Non-Qualified Stock Option shall be granted to each employee who made such
an irrevocable election on the date the waived cash bonus would otherwise
be paid. The exercise price per share shall be determined by the
Administrator but shall not be less than 50% of the Fair Market Value of
the Stock on the date the Stock Option is granted. The number of shares of
Stock subject to the Stock Option shall be determined by dividing the
amount of the waived cash bonus by the difference between the Fair Market
Value of the Stock on the date the Stock Option is granted and the exercise
price per Stock Option. The Stock Option shall be granted for whole number
of shares so determined; the value of any fractional share shall be paid in
cash.
(iii) OPTION TERM. The term of each Stock Option shall be fixed by the
Administrator, but no Incentive Stock Option shall be exercisable more than
ten years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or
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parent corporation and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years from
the date of grant.
(iv) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or after the
grant date; provided, however, that Stock Options granted in lieu of cash
bonus shall be exercisable in full as of the grant date. The Administrator
may at any time accelerate the exercisability of all or any portion of any
Stock Option. An optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
(v) METHOD OF EXERCISE. Stock Options may be exercised in whole or in
part, by giving written notice of exercise to the Company, specifying the
number of shares to be purchased. Payment of the purchase price may be made
by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held by the
optionee for at least six months, if permitted by the Administrator in
its discretion. Such surrendered shares shall be valued at Fair Market
Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the purchase price; provided that in the event
the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Administrator shall prescribe as a condition of such payment
procedure.
Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to
the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in
the Stock Option or applicable provisions of laws.
(vi) TERMINATION BY REASON OF DEATH. Any Stock Option held by an
optionee whose employment by (or other business relationship with) the
Company and its
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Subsidiaries is terminated by reason of death shall become fully
exercisable and may thereafter be exercised by the legal representative or
legatee of the optionee, for a period of 12 months (or such longer period
as the Administrator shall specify at any time) from the date of death, or
until the expiration of the stated term of the Option, if earlier.
(vii) TERMINATION BY REASON OF DISABILITY.
(A) Any Stock Option held by an optionee whose employment by (or
other business relationship with) the Company and its Subsidiaries is
terminated by reason of Disability shall become fully exercisable and
may thereafter be exercised, for a period of 12 months (or such longer
period as the Administrator shall specify at any time) from the date
of such termination of employment (or business relationship), or until
the expiration of the stated term of the Option, if earlier.
(B) The Administrator shall have sole authority and discretion to
determine whether a participant's employment (or business
relationship) has been terminated by reason of Disability.
(C) Except as otherwise provided by the Administrator at any
time, the death of an optionee during the period provided in this
Section 5(a)(vii) for the exercise of a Stock Option shall extend such
period for 12 months from the date of death, subject to termination on
the expiration of the stated term of the Option, if earlier.
(viii) TERMINATION BY REASON OF RETIREMENT.
(A) Any Stock Option held by an optionee whose employment by (or
other business relationship with) the Company and its Subsidiaries is
terminated by reason of Retirement may thereafter be exercised, to the
extent it was exercisable at the time of such termination, for a
period of 12 months (or such other period as the Administrator shall
specify at any time) from the date of such termination of employment
(or business relationship), or until the expiration of the stated term
of the Option, if earlier.
(B) Except as otherwise provided by the Administrator at any
time, the death of an optionee during a period provided in this
Section 5(a)(viii) for the exercise of a Stock Option shall extend
such period for 12 months from the date of death, subject to
termination on the expiration of the stated term of the Option, if
earlier.
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(ix) TERMINATION FOR CAUSE. If any optionee's employment by (or other
business relationship with) the Company and its Subsidiaries is terminated
for Cause, any Stock Option held by such optionee, including any Stock
Option that is immediately exercisable at the time of such termination,
shall immediately terminate and be of no further force and effect;
provided, however, that the Administrator may, in its sole discretion,
provide that such Stock Option can be exercised for a period of up to 30
days from the date of termination of employment (or business relationship)
or until the expiration of the stated term of the Option, if earlier.
(x) OTHER TERMINATION. Unless otherwise determined by the
Administrator, if an optionee's employment by (or other business
relationship with) the Company and its Subsidiaries terminates for any
reason other than death, Disability, Retirement, or for Cause, any Stock
Option held by such optionee may thereafter be exercised, to the extent it
was exercisable on the date of termination of employment (or business
relationship), for three months (or such longer period as the Administrator
shall specify at any time) from the date of termination of employment (or
business relationship) or until the expiration of the stated term of the
Option, if earlier.
(xi) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
shares of Stock with respect to which Incentive Stock Options granted under
this Plan and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an optionee during
any calendar year shall not exceed $100,000. To the extent that any Stock
Option exceeds this limit, it shall constitute a Non-Qualified Stock
Option.
(b) RELOAD OPTIONS. At the discretion of the Administrator, Options granted
under Section 5(a) may include a "reload" feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(v)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Administrator may provide) to purchase that number of shares of Stock equal to
the number delivered to exercise the original Option.
(c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS.
(i) AUTOMATIC GRANT OF OPTIONS.
(A)(1) Each Independent Director who has served as a Director of
the Company since January 1, 1986 shall automatically be granted on
the Adoption Date a Non-Qualified Stock Option to acquire 8,350 shares
of Stock.
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(A)(2) Each Independent Director who has served as a Director of
the Company since January 1, 1990 shall automatically be granted on
the Adoption Date a Non-Qualified Stock Option to acquire 6,100 shares
of Stock.
(A)(3) Each Independent Director who is serving as a Director of
the Company on the fifth business day after each annual meeting of
shareholders, beginning with the 1995 annual meeting, shall
automatically be granted on such day a Non-Qualified Stock Option to
acquire 3,000 shares of Stock.
(B) The exercise price per share for the Stock covered by a Stock
Option granted under this Section 5(c) shall be equal to the Fair
Market Value of the Stock on the date the Stock Option is granted.
(ii) EXERCISE; TERMINATION.
(A) Except as provided in Section 15, an Option granted under
this Section 5(c) shall be exercisable in full as of the grant date.
An Option issued under this Section 5(c) shall not be exercisable
after the expiration of ten years from the date of grant.
(B) If an Independent Director ceases to be a Director for any
reason other than Cause or death, an Option granted under this Section
5(c) may thereafter be exercised, to the extent it was exercisable on
the date such optionee ceases to be a Director, for a period of six
months from such date or until the expiration of the stated term of
the Option, if earlier. If the optionee ceases to be a Director for
Cause, all rights in an Option granted under this Section 5(c) shall
terminate immediately on the date he ceases to be a Director.
(C) Notwithstanding paragraph (B) above, any Option granted to an
Independent Director and outstanding on the date of his death may be
exercised by the legal representative or legatee of the optionee for a
period of twelve months from the date of death or until the expiration
of the stated term of the Option, if earlier.
(D) Options granted under this Section 5(c) may be exercised only
by written notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price of the shares to be
purchased may be made by one or more of the methods specified in
Section 5(a)(v). An optionee shall have the rights of a stockholder
only as to shares acquired upon the exercise of a Stock Option and not
as to unexercised Stock Options.
(iii) LIMITED TO INDEPENDENT DIRECTORS. The provisions of this Section
5(c) shall apply only to Options granted or to be granted to Independent
Directors, and shall
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not be deemed to modify, limit or otherwise apply to any other provision of
this Plan or to any Option issued under this Plan to a participant who is
not an Independent Director of the Company. To the extent inconsistent with
the provisions of any other Section of this Plan, the provisions of this
Section 5(c) shall govern the rights and obligations of the Company and
Independent Directors respecting Options granted or to be granted to
Independent Directors.
(d) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Administrator
may provide in an option agreement evidencing a Non-Qualified Stock Option that
the optionee may transfer, without consideration for the transfer, such
Non-Qualified Stock Option to members of his immediate family, to trusts for the
benefit of such family members, to partnerships in which such family members are
the only partners, or to charitable organizations, provided that the transferee
agrees in writing with the Company to be bound by all of the terms and
conditions of the Plan and the applicable option agreement.
(e) FORM OF SETTLEMENT. Shares of Stock issued upon exercise of a Stock
Option shall be free of all restrictions under the Plan, except as otherwise
provided in the Plan.
SECTION 6. STOCK APPRECIATION RIGHTS.
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(a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an
Award entitling the recipient to receive an amount in cash or shares of Stock or
a combination thereof having a value equal to the excess of the Fair Market
Value of the Stock on the date of exercise over the exercise price per Stock
Appreciation Right set by the Administrator at the time of grant, which price
shall not be less than 85% of the Fair Market Value of the Stock on the date of
grant (or over the option exercise price per share, if the Stock Appreciation
Right was granted in tandem with a Stock Option) multiplied by the number of
shares of Stock with respect to which the Stock Appreciation Right shall have
been exercised, with the Administrator having the right to determine the form of
payment.
(b) GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted to any eligible employee or key person of the Company or
any Subsidiary by the Administrator in tandem with, or independently of, any
Stock Option granted pursuant to Section 5 of the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock Option, such
Stock Appreciation Right may be granted either at or after the time of the grant
of such Option. In the case of a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, such Stock Appreciation Right may be granted only at
the time of the grant of the Option.
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A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.
(c) TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Administrator, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with an Option shall
be transferable only when and to the extent that the underlying Option
would be transferable. Stock Appreciation Rights not granted in tandem with
a Option shall not be transferable otherwise than by will or the laws of
descent or distribution. All Stock Appreciation Rights shall be exercisable
during the participant's lifetime only by the participant or the
participant's legal representative.
SECTION 7. RESTRICTED STOCK AWARDS
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(a) NATURE OF RESTRICTED STOCK AWARDS. The Administrator may grant
Restricted Stock Awards to any employee or key person of the Company or any
Subsidiary. A Restricted Stock Award is an Award entitling the recipient to
acquire, at no cost or for a purchase price determined by the Administrator,
shares of Stock subject to such restrictions and conditions as the Administrator
may determine at the time of grant ("Restricted Stock"). Conditions may be based
on continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(b) RIGHTS AS A STOCKHOLDER. Upon execution of a written instrument setting
forth the Restricted Stock Award and paying any applicable purchase price, a
participant shall have the rights of a stockholder with respect to the voting of
the Restricted Stock, subject to such conditions contained in the written
instrument evidencing the Restricted Stock Award. Unless the Administrator shall
otherwise determine, certificates evidencing the Restricted Stock shall remain
in the possession of the Company until such Restricted Stock is vested as
provided in Section 7(e) below.
(c) RESTRICTIONS. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the written instrument evidencing the Restricted Stock Award. In
the case of Restricted Stock granted to
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an employee, if the participant's employment with the Company and its
Subsidiaries terminates for any reason other than death or Disability, the
Company shall have the right, at the discretion of the Administrator, to
repurchase Restricted Stock with respect to which conditions have not lapsed at
their purchase price, or to require forfeiture of such shares to the Company if
acquired at no cost, from the participant or the participant's legal
representative. The Company must exercise such right of repurchase or forfeiture
not later than the 90th day following such termination of employment (unless
otherwise specified in the written instrument evidencing the Restricted Stock
Award). Restricted Stock granted to a key person who is not an employee shall be
subject to such forfeiture and repurchase provisions as the Administrator shall
specify.
(d) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." A participant whose employment is
terminated for reason of death or Disability shall become fully vested on his
termination date in any Restricted Stock he received as an employee to the
extent such vesting is otherwise contingent only on continued service with the
Company. Where vesting is contingent on attainment of pre-established
performance goals, the vesting of Restricted Stock in the case of death or
Disability shall remain dependent on the attainment of such goals and shall be
determined as of such date or dates specified by the Administrator.
(e) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The written instrument
evidencing the Restricted Stock Award may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock.
SECTION 8. UNRESTRICTED STOCK AWARDS
-------------------------
(a) GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its sole
discretion, grant (or sell at a purchase price determined by the Administrator)
an Unrestricted Stock Award to any employee or key person of the Company or any
Subsidiary, pursuant to which such employee or key person may receive shares of
Stock free of any restrictions ("Unrestricted Stock") under the Plan.
Unrestricted Stock Awards may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such employee or key person.
(b) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF COMPENSATION. Upon
the request of an employee or a key person and with the consent of the
Administrator, each employee or key person may, pursuant to an irrevocable
written election delivered to the Company no later than the date or dates
specified by the Administrator, receive a portion of
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the cash compensation otherwise due to such employee or key person in the form
of shares of Unrestricted Stock (valued at Fair Market Value on the date or
dates the cash compensation would otherwise be paid).
(c) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF DIRECTOR FEES. Each
Independent Director may, pursuant to an irrevocable written election delivered
to the Company no later than the date or dates specified by the Administrator,
receive all or a portion of such Independent Director's director fees in shares
of Unrestricted Stock (valued at Fair Market Value on the date or dates that the
director fees would otherwise be paid in cash).
(d) DEFERRAL OF AWARDS. Each Independent Director who has made an election
to receive shares of Unrestricted Stock under Section 8(c) above will have the
right to defer receipt of up to 100% of such shares of Unrestricted Stock
payable to such Independent Director in accordance with such rules and
procedures as may from time to time be established by the Administrator for that
purpose, provided that such election shall not be effective before the beginning
of the next calendar year. The deferred Unrestricted Stock shall be entitled to
receive Dividend Equivalent Rights settled in shares of Stock.
(e) RESTRICTIONS ON TRANSFERS. The right to receive Unrestricted Stock on a
deferred basis may not be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and distribution.
SECTION 9. PERFORMANCE SHARE AWARDS
------------------------
(a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees or
key persons of the Company or any Subsidiary, including those who qualify for
awards under other performance plans of the Company. The Administrator in its
sole discretion shall determine whether and to whom Performance Share Awards
shall be made, the performance goals applicable under each such Award, the
periods during which performance is to be measured, and all other limitations
and conditions applicable to the awarded Performance Shares; provided, however,
that the Administrator may rely on the performance goals and other standards
applicable to other performance unit plans of the Company in setting the
standards for Performance Share Awards under the Plan.
(b) RESTRICTIONS ON TRANSFER. Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
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(c) RIGHTS AS A SHAREHOLDER. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Administrator).
(d) TERMINATION. Except as may otherwise be provided by the Administrator
at any time prior to termination of employment (or other business relationship),
a participant's rights in all Performance Share Awards shall automatically
terminate upon the participant's termination of employment by (or business
relationship with) the Company and its Subsidiaries for any reason.
(e) ACCELERATION, WAIVER, ETC. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Administrator may in its sole discretion accelerate, waive
or, subject to Section 13, amend any or all of the goals, restrictions or
conditions imposed under any Performance Share Award.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
--------------------------
(a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder to an eligible employee or key person,
as a component of another Award or as a freestanding award. A Dividend
Equivalent Right may also be granted to an Independent Director pursuant to
Section 8(e). The terms and conditions of Dividend Equivalent Rights shall be
specified in the grant. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled
in cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other award.
(b) INTEREST EQUIVALENTS. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited
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with respect to such cash payment. Interest equivalents may be compounded and
shall be paid upon such terms and conditions as may be specified by the grant.
SECTION 11. TAX WITHHOLDING
---------------
(a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant.
(b) PAYMENT IN STOCK. Subject to approval by the Administrator, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC
-------------------------------
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.
SECTION 13. AMENDMENTS AND TERMINATION
--------------------------
The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award (or
provide substitute Awards at the same or reduced exercise or purchase price or
with no exercise or purchase price in a manner not inconsistent with the terms
of the Plan), but such price, if any, must satisfy the requirements which would
apply to the substitute or amended Award if it were then initially granted under
this Plan) for the purpose of satisfying changes in law or for any other lawful
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purpose, but no such action shall adversely affect rights under any outstanding
Award without the holder's consent. If and to the extent determined by the
Administrator to be required to ensure that Incentive Stock Options granted
under the Plan are qualified under Section 422 of the Code, Plan amendments
shall be subject to approval by the Company stockholders.
SECTION 14. STATUS OF PLAN
--------------
With respect to the portion of any Award which has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other arrangements to meet
the Company's obligations to deliver Stock or make payments with respect to
Awards hereunder, provided that the existence of such trusts or other
arrangements is consistent with the foregoing sentence.
SECTION 15. CHANGE OF CONTROL PROVISIONS
----------------------------
Upon the occurrence of a Change of Control as defined in this Section 15:
(a) Each outstanding Stock Option and Stock Appreciation Right shall
automatically become fully exercisable notwithstanding any provision to the
contrary herein.
(b) Each Restricted Stock Award and Performance Share Award shall be
subject to such terms, if any, with respect to a Change of Control as have been
provided by the Administrator in connection with such Award.
(c) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Act (other than the Company, any of its Subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together
with all "affiliates" and "associates" (as such terms are defined in Rule
12b-2 under the Act) of such person, shall become the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 15% or more of either
(A) the combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Board ("Voting Securities")
or (B) the then outstanding shares of Stock of the Company (in either such
case other than as a result of an acquisition of securities directly from
the Company); or
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(ii) persons who, as of the Effective Date, constitute the Board (the
"Incumbent Directors") cease for any reason, including, without limitation,
as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that
any person becoming a director of the Company subsequent to the Effective
Date whose election or nomination for election was approved by a vote of at
least a majority of the Incumbent Directors shall, for purposes of this
Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
shareholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate 80% or more of
the voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any),
(B) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company or (C) any
plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases (x) the
proportionate number of shares of Stock beneficially owned by any person to 15%
or more of the shares of Stock then outstanding or (y) the proportionate voting
power represented by the Voting Securities beneficially owned by any person to
15% or more of the combined voting power of all then outstanding Voting
Securities; PROVIDED, HOWEVER, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (i).
SECTION 16. GENERAL PROVISIONS
------------------
(a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The Administrator
may require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.
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(b) DELIVERY OF STOCK CERTIFICATES. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
SECTION 17. EFFECTIVE DATE OF PLAN
----------------------
This Plan shall become effective upon approval by the holders of a majority
of the shares of Stock of the Company present or represented and entitled to
vote at a meeting of stockholders. Subject to such approval by the stockholders
and to the requirement that no Stock may be issued hereunder prior to such
approval, Stock Options and other Awards may be granted hereunder on and after
adoption of this Plan by the Board.
SECTION 18. GOVERNING LAW
-------------
This Plan shall be governed by The Commonwealth of Massachusetts law except
to the extent such law is preempted by federal law.
DATE APPROVED BY BOARD OF DIRECTORS: June 13, 1995
DATE APPROVED BY SHAREHOLDERS: November 15, 1995
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