Exhibit 99.1
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
2003 EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Plan are:
(a) to attract and retain the best available personnel for positions of
substantial responsibility,
(b) to provide additional incentive to selected key Employees,
Consultants and Directors, and
(c) to promote the success of the Company's business.
2. Definitions. For the purposes of this Plan, the following terms will have the
following meanings:
(a) "ADMINISTRATOR" means the Board or any of its Committees that
administer the Plan, in accordance with Section 4.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of and issuance of securities under stock incentive plans,
including, without limitation, the requirements of state corporations law,
federal and state securities law, federal and state tax law, and the
requirements of any stock exchange or quotation system upon which the Shares may
then be listed or quoted. For all purposes of this Plan, references to statutes
and regulations shall be deemed to include any successor statutes and
regulations, to the extent reasonably appropriate as determined by the
Administrator.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CAUSE" shall have the meaning set forth in a Grantee's employment
or consulting agreement with the Company (if any), or if not defined therein,
shall mean (i) acts or omissions by the Grantee which constitute intentional
material misconduct or a knowing violation of a material policy of the Company
or any of its subsidiaries, (ii) the Grantee personally receiving a benefit in
money, property or services from the Company or any of its subsidiaries or from
another person dealing with the Company or any of its subsidiaries, in material
violation of applicable law or Company policy, (iii) an act of fraud,
conversion, misappropriation, or embezzlement by the Grantee or his conviction
of, or entering a guilty plea or plea of no contest with respect to, a felony,
or the equivalent thereof (other than DUI), or (iv) any material misuse or
improper disclosure of confidential or proprietary information of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended. For all
purposes of this Plan, references to Code sections shall be deemed to include
any successor Code sections, to the extent reasonably appropriate as determined
by the Administrator.
(f) "COMMITTEE" means a Committee appointed by the Board in accordance
with Section 4.
(g) "COMMON STOCK" means the common stock of the Company.
(h) "COMPANY" means Superior Industries International, Inc., a
California corporation.
(i) "CONSULTANT" means any person, including an advisor, who (i) is a
natural person, (ii) provides bona fide services to the Company or a Parent or
Subsidiary, and (iii) provides services that are not in connection with the
offer or sale of securities in a capital-raising transaction, and that do not
directly or indirectly promote or maintain a market for the securities of the
Company; provided that the term "Consultant" does not include (A) Employees or
(B) Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(j) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
that the employment, director or consulting relationship is not interrupted or
terminated by the Company, any Parent or Subsidiary, or by the Employee,
Director or Consultant. Continuous Status as an Employee, Director or Consultant
will not be considered interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave, provided, that for purposes of Incentive Stock Options, any such
leave may not exceed 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract (including certain Company policies) or statute;
(ii) transfers between locations of the Company or between the Company, its
Parent, its Subsidiaries or its successor, or (iii) in the case of a
Nonqualified Stock Option or Stock Award, the ceasing of a person to be an
Employee while such person remains a Director or Consultant, the ceasing of a
person to be a Director while such person remains an Employee or Consultant, or
the ceasing of a person to be a Consultant while such person remains an Employee
or Director.
(k) "DIRECTOR" means a member of the Board.
(l) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(m) "EMPLOYEE" means any person, including Officers and Directors
employed as a common law employee by the Company or any Parent or Subsidiary of
the Company. Neither service as a Director nor payment of a director's fee by
the Company will be sufficient, in and of itself, to constitute "employment" by
the Company.
(n) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(o) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including
without limitation, the National Market System of
NASDAQ, the Fair Market Value of a Share of
- 3 -
Common Stock will be (A) the closing sales price for
such stock (or the closing bid, if no sales are
reported) as quoted on that system or exchange (or
the system or exchange with the greatest volume of
trading in Common Stock) on the last market trading
day prior to the day of determination, or (B) any
sales price for such stock (or the closing bid, if no
sales are reported) as quoted on that system or
exchange (or the system or exchange with the greatest
volume of trading in Common Stock) on the day of
determination, as the Administrator may select, as
reported in the Wall Street Journal or any other
source the Administrator considers reliable.
(ii) If the Common Stock is quoted on the NASDAQ System
(but not on the NASDAQ National Market System) or is
regularly quoted by recognized securities dealers but
selling prices are not reported, the Fair Market
Value of a Share of Common Stock will be the mean
between the high bid and low asked prices for the
Common Stock on (A) the last market trading day prior
to the day of determination, or (B) the day of
determination, as the Administrator may select, as
reported in the Wall Street Journal or any other
source the Administrator considers reliable.
(iii) If the Common Stock is not traded as set forth above,
the Fair Market Value will be determined in good
faith by the Administrator with reference to the
earnings history, book value and prospects of the
Company in light of market conditions generally, and
any other factors the Administrator considers
appropriate, such determination by the Administrator
to be final, conclusive and binding.
(p) "FAMILY MEMBER" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons (or the Grantee) control the management of assets, and any other entity
in which these persons (or the Grantee) own more than fifty percent of the
voting interests.
(q) "GRANT NOTICE" shall mean a written notice evidencing certain terms
and conditions of an individual Option grant. The Grant Notice is part of the
Option Agreement.
(r) "GRANTEE" shall mean (i) any Optionee or (ii) any Employee,
Consultant or Director to whom a Stock Appreciation Right or Stock Award has
been granted pursuant to this Plan.
(s) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
- 4 -
(t) "NASDAQ" means the National Association of Securities Dealers, Ltd.
Automated Quotation System.
(u) "NONQUALIFIED STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(v) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(w) "OPTION" means a stock option granted under this Plan.
(x) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement is subject to the terms and conditions of this
Plan.
(y) "OPTION EXCHANGE PROGRAM" means a program in which outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(z) "OPTIONED STOCK" means the Common Stock subject to an Option.
(aa) "OPTIONEE" means an Employee, Consultant or Director who holds an
outstanding Option.
(bb) "PARENT" means a "parent corporation" with respect to the Company,
whether now or later existing, as defined in Section 424(e) of the Code.
(cc) "PLAN" means this 2003 Equity Incentive Plan.
(dd) "SECTION" means, except as otherwise specified, a section of this
Plan.
(ee) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 16.
(ff) "STOCK APPRECIATION RIGHT" means a right, granted by the
Administrator under this Plan, to receive a payment based on the increase in the
Fair Market Value of a Share after the date of grant.
(gg) "STOCK AWARD" shall mean a grant or sale by the Company of a
specified number of Shares upon terms and conditions determined by the
Administrator. A Stock Award may be in the form of a "Stock Bonus," a "Stock
Unit", or "Restricted Stock," as such terms are defined in Section 14.
(hh) "SUBSIDIARY" means (i) a "subsidiary corporation" with respect to
the Company, whether now or later existing, as defined in Section 424(f) of the
Code, or (ii) a limited liability company, whether now or later existing, which
would be a "subsidiary corporation" with respect to the Company under Section
424(f) of the Code if it were a corporation.
- 5 -
3. Stock Subject to the Plan. Subject to the provisions of Section 16 of the
Plan, the maximum aggregate number of Shares which may be issued under the Plan
will be 3,000,000 Shares of Common Stock. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option or Stock Appreciation Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, or if a Stock Award shall be cancelled or
surrendered or expire for any reason without having been received in full, the
Shares that were not purchased or received or that were cancelled will become
available for future grant or sale under the Plan (unless the Plan has
terminated). If the Company repurchases Shares which were issued pursuant to the
exercise of an Option or Stock Appreciation Right or grant of a Stock Award,
however, those repurchased Shares will not be available for future grant under
the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Composition of the Administrator. The Plan will be
administered by (A) the Board, or (B) a Committee
designated by the Board, which Committee will be
constituted to satisfy Applicable Laws. Once
appointed, a Committee will serve in its designated
capacity until otherwise directed by the Board. The
Board may increase the size of the Committee and
appoint additional members, remove members (with or
without cause) and substitute new members, fill
vacancies (however caused), and remove all members of
the Committee and thereafter directly administer the
Plan. Notwithstanding the foregoing, unless the Board
expressly resolves to the contrary, from and after
such time as the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan will be
administered only by a Committee, which will then
consist solely of persons who are both "non-employee
directors" within the meaning of Rule 16b-3
promulgated under the Exchange Act and "outside
directors" within the meaning of Section 162(m) of
the Code; provided, however, the failure of the
Committee to be composed solely of individuals who
are both "non-employee directors" and "outside
directors" shall not render ineffective or void any
awards or grants made by, or other actions taken by,
such Committee.
(ii) Multiple Administrative Bodies. The Plan may be
administered by different bodies with respect to
Directors, Officers who are not Directors, and
Employees and Consultants who are neither Directors
nor Officers.
- 6 -
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to that Committee, the Administrator will have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(o);
(ii) to select the Consultants, Employees or Directors to
whom Options, Stock Appreciation Rights or Stock
Awards may be granted;
(iii) to determine whether and to what extent Options,
Stock Appreciation Rights or Stock Awards are
granted, and whether Options are intended as
Incentive Stock Options or Nonqualified Stock
Options;
(iv) to determine the number of Shares to be covered by
each Option, Stock Appreciation Right or Stock Award
granted;
(v) to approve forms of Grant Notices, Option Agreements
and agreements governing Stock Appreciation Rights
and Stock Awards;
(vi) to determine the terms and conditions, not
inconsistent with the terms of this Plan, of any
grant of Options, Stock Appreciation Rights or Stock
Awards, including, but not limited to, (A) the
Options' exercise price, (B) the time or times when
Options or Stock Appreciation Rights may be exercised
or Stock Awards will be vested, which may be based on
performance criteria or other reasonable conditions
such as Continuous Status as an Employee, Director or
Consultant, (C) any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or
limitation regarding any Option, Stock Appreciation
Right, Optioned Stock or Stock Award, based in each
case on factors that the Administrator determines in
its sole discretion, including but not limited to a
requirement subjecting the Optioned Stock or Shares
to (1) certain restrictions on transfer (including
without limitation a prohibition on transfer for a
specified period of time and/or a right of first
refusal in favor of the Company), and (2) a right of
repurchase in favor of the Company upon termination
of the Grantee's Continuous Status as an Employee,
Director or Consultant;
(vii) to reduce the exercise price of any Option to the
Fair Market Value at the time of the reduction, if
the Fair Market Value of the Common Stock covered by
that Option has declined since the date it was
granted;
(viii) to construe and interpret the terms of this Plan;
(ix) to prescribe, amend, and rescind rules and
regulations relating to the administration of this
Plan;
- 7 -
(x) to modify or amend any Option, Stock Appreciation
Right or Stock Award, subject to Section 18(c);
(xi) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant
of an Option, Stock Appreciation Right or Stock Award
previously granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to accelerate the vesting or exercisability of an
Option, Stock Appreciation Right or Stock Award;
(xiv) to determine the terms and restrictions applicable to
Options, Stock Appreciation Rights or Stock Awards;
and
(xv) to make all other determinations it considers
necessary or advisable for administering this Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations will be final and binding on all holders of
Options or Stock Awards. The Administrator shall not be required to exercise its
authority or discretion on a uniform or nondiscriminatory basis.
5. Eligibility. Options granted under this Plan may be Incentive Stock Options
or Nonqualified Stock Options, as determined by the Administrator at the time of
grant. Nonqualified Stock Options, Stock Appreciation Rights and Stock Awards
may be granted to Employees, Consultants and Directors. Incentive Stock Options
may be granted only to Employees; provided, however, that Incentive Stock
Options shall not be granted to Employees of a Subsidiary that is a limited
liability company unless such limited liability company is wholly-owned by the
Company or by a Subsidiary that is a corporation. If otherwise eligible, an
Employee, Consultant or Director who has been granted an Option, Stock
Appreciation Right, or Stock Award may be granted additional Options, Stock
Appreciation Rights or Stock Awards.
6. Limitations on Grants of Incentive Stock Options. Each Option will be
designated in the Grant Notice as either an Incentive Stock Option or a
Nonqualified Stock Option. However, notwithstanding such designations, if the
Shares subject to an Optionee's Incentive Stock Options (granted under all plans
of the Company or any Parent or Subsidiary), which become exercisable for the
first time during any calendar year, have a Fair Market Value in excess of
$100,000, the Options accounting for this excess will be treated as Nonqualified
Stock Options. For purposes of this Section 6, Incentive Stock Options will be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares will be determined as of the time of grant.
7. Limit on Annual Grants to Individuals. From and after such time as the
Company is required to be registered pursuant to Section 12 of the Exchange Act,
no Grantee may receive grants, during any fiscal year of the Company or portion
thereof, of Options and Stock Appreciation Rights, which, in the aggregate,
cover more than 3,000,000 Shares,
- 8 -
subject to adjustment as provided in Section 16. If an Option or Stock
Appreciation Right expires or terminates for any reason without having been
exercised in full, the unpurchased Shares subject to that expired or terminated
Option or Stock Appreciation Right will continue to count against the maximum
numbers of Shares for which Options and Stock Appreciation Rights may be granted
to a Grantee during any fiscal year of the Company or portion thereof.
8. Term of the Plan. Subject to Section 22, this Plan will become effective upon
the earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company as described in Section 22. It will continue in
effect for a term of ten years unless terminated earlier under Section 18.
Unless otherwise provided in this Plan, its termination will not affect the
validity of any Option, Stock Appreciation Right or Stock Award outstanding at
the date of termination.
9. Term of Option. The term of each Option will be stated in the Option
Agreement; provided, however, that in no event may the term be more than ten
years from the date of grant. In addition, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent of the voting power of
all classes of capital stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option will be five years from the date of grant or
any shorter term specified in the Option Agreement, which shall continue to be
governed by the terms of this Plan as though it remained in effect.
10. Option Exercise Price and Consideration.
(a) Exercise Price of Incentive Stock Options. The exercise price for
Shares to be issued pursuant to exercise of an Incentive Stock Option will be
determined by the Administrator provided that the per Share exercise price will
be no less than 100% of the Fair Market Value per Share on the date of grant;
provided, further that in the case of an Incentive Stock Option granted to an
Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than 10% of the voting power of all classes of capital stock
of the Company or any Parent or Subsidiary, the per Share exercise price will be
no less than 110% of the Fair Market Value per Share on the date of grant.
(b) Exercise Price of Nonqualified Stock Options. In the case of a
Nonqualified Stock Option, the exercise price for Shares to be issued pursuant
to the exercise of any such Option will be determined by the Administrator.
(c) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator will fix the period within which the Option may be
exercised and will determine any conditions which must be satisfied before the
Option may be exercised. Exercise of an Option may be conditioned upon
performance criteria or other reasonable conditions such as Continuous Status as
an Employee, Director or Consultant.
(d) Form of Consideration. The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist partially or entirely of:
(i) cash;
- 9 -
(ii) to the extent permitted by Applicable Law, a
promissory note made by the Optionee in favor of the
Company;
(iii) other Shares which have a Fair Market Value on the
date of surrender equal to the aggregate exercise
price of the Shares as to which an Option will be
exercised;
(iv) to the extent permitted by Applicable Law, delivery
of a properly executed exercise notice together with
any other documentation as the Administrator and the
Optionee's broker, if applicable, require to effect
an exercise of the Option and delivery to the Company
of the sale or loan proceeds required to pay the
exercise price; or
(v) any other consideration and method of payment for the
issuance of Shares to the extent permitted by
Applicable Laws.
11. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder will be exercisable according to the terms of the Plan and at times
and under conditions determined by the Administrator and set forth in the Option
Agreement; provided, however, that an Option may not be exercised for a fraction
of a Share.
An Option will be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, (ii) full payment for the Shares with
respect to which the Option is exercised, and (iii) all representations,
indemnifications and documents reasonably requested by the Administrator. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and this Plan. Shares issued
upon exercise of an Option will be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the stock certificate evidencing such Shares is issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder will exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. Subject to the provisions of
Sections 15, 19, and 20, the Company will issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 16 of the
Plan. Notwithstanding the foregoing, the Administrator in its discretion may
require the Company to retain possession of any certificate evidencing Shares of
Common Stock acquired upon exercise of an Option, if those Shares remain subject
to repurchase under the provisions of the Option Agreement or any other
agreement between the Company and the Optionee, or if those Shares are
collateral for a loan or obligation due to the Company.
Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of this Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
- 10 -
(b) Termination of Employment or Consulting Relationship or
Directorship. If an Optionee holds exercisable Options on the date his or her
Continuous Status as an Employee, Director or Consultant terminates (other than
because of termination due to Cause, death or Disability), the Optionee may
exercise the Options that were vested and exercisable as of the date of
termination for a period of 30 days following such termination (or such other
period as is set forth in the Option Agreement or determined by the
Administrator). If the Optionee is not entitled to exercise his or her entire
Option at the date of such termination, the Shares covered by the unexercisable
portion of the Option will revert to the Plan, unless otherwise set forth in the
Option Agreement or determined by the Administrator. The Administrator may
determine in its sole discretion that such unexercisable portion of the Option
will become exercisable at such times and on such terms as the Administrator may
determine in its sole discretion. If the Optionee does not exercise an Option
within the time specified above after termination, that Option will expire, and
the Shares covered by it will revert to the Plan, unless otherwise set forth in
the Option Agreement or determined by the Administrator.
(c) Disability of Optionee. If an Optionee holds exercisable Options on
the date his or her Continuous Status as an Employee, Director or Consultant
terminates because of Disability, the Optionee may exercise the Options that
were vested and exercisable as of the date of termination for a period of 12
months following such termination (or such other period as is set forth in the
Option Agreement or determined by the Administrator). If the Optionee is not
entitled to exercise his or her entire Option at the date of such termination,
the Shares covered by the unexercisable portion of the Option will revert to the
Plan, unless otherwise set forth in the Option Agreement or determined by the
Administrator. The Administrator may determine in its sole discretion that such
unexercisable portion of the Option will become exercisable at such times and on
such terms as the Administrator may determine in its sole discretion. If the
Optionee does not exercise an Option within the time specified above after
termination, that Option will expire, and the Shares covered by it will revert
to the Plan, unless otherwise set forth in the Option Agreement or determined by
the Administrator.
(d) Death of Optionee. If an Optionee holds exercisable Options on the
date his or her death, the Optionee's estate or a person who acquired the right
to exercise the Option by bequest or inheritance may exercise the Options that
were vested and exercisable as of the date of death for a period of 12 months
following the date of death (or such other period as is set forth in the Option
Agreement or determined by the Administrator). If the Optionee is not entitled
to exercise his or her entire Option at the date of death, the Shares covered by
the unexercisable portion of the Option will revert to the Plan, unless
otherwise set forth in the Option Agreement or determined by the Administrator.
The Administrator may determine in its sole discretion that such unexercisable
portion of the Option will become exercisable at such times and on such terms as
the Administrator may determine in its sole discretion. If the Optionee's estate
or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise an Option within the time specified above after
termination, that Option will expire, and the Shares covered by it will revert
to the Plan, unless otherwise set forth in the Option Agreement or determined by
the Administrator.
- 11 -
(e) Termination for Cause. If an Optionee's Continuous Status as an
Employee, Director or Consultant is terminated for Cause, then all Options
(including any vested Options) held by Optionee shall immediately be terminated
and cancelled.
(f) Disqualifying Dispositions of Incentive Stock Options. If Common
Stock acquired upon exercise of any Incentive Stock Option is disposed of in a
disposition that, under Section 422 of the Code, disqualifies the holder from
the application of Section 421(a) of the Code, the holder of the Common Stock
immediately before the disposition will comply with any requirements imposed by
the Company in order to enable the Company to secure the related income tax
deduction to which it is entitled in such event.
12. Non-Transferability of Options.
(a) No Transfer. An Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. Notwithstanding the foregoing, to the extent
that the Administrator so authorizes at the time a Nonqualified Stock Option is
granted or amended, (i) such Option may be assigned pursuant to a qualified
domestic relations order as defined by the Code, and exercised by the spouse of
the Optionee who obtained such Option pursuant to such qualified domestic
relations order, and (ii) such Option may be assigned, in whole or in part,
during the Optionee's lifetime to one or more Family Members of the Optionee.
Rights under the assigned portion may be exercised by the Family Member(s) who
acquire a proprietary interest in such Option pursuant to the assignment. The
terms applicable to the assigned portion shall be the same as those in effect
for the Option immediately before such assignment and shall be set forth in such
documents issued to the assignee as the Administrator deems appropriate.
(b) Designation of Beneficiary. An Optionee may file a written
designation of a beneficiary who is to receive any Options that remain
unexercised in the event of the Optionee's death. If a participant is married
and the designated beneficiary is not the spouse, spousal consent will be
required for the designation to be effective. The Optionee may change such
designation of beneficiary at any time by written notice to the Administrator,
subject to the above spousal consent requirement.
(c) Effect of No Designation. If an Optionee dies and there is no
beneficiary validly designated and living at the time of the Optionee's death,
the Company will deliver such Optionee's Options to the executor or
administrator of his or her estate, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such Options to the spouse or to any one or more
dependents or relatives of the Optionee, or if no spouse, dependent or relative
is known to the Company, then to such other person as the Company may designate.
(d) Death of Spouse or Dissolution of Marriage. If an Optionee
designates his or her spouse as beneficiary, that designation will be deemed
automatically revoked if the Optionee's marriage is later dissolved. Similarly,
any designation of a beneficiary will be deemed automatically revoked upon the
death of the beneficiary if the beneficiary predeceases the Optionee. Without
limiting the generality of the preceding sentence, the
- 12 -
interest in Options of a spouse of an Optionee who has predeceased the Optionee
or (except as provided in Section 12(a) regarding qualified domestic relations
orders) whose marriage has been dissolved will automatically pass to the
Optionee, and will not be transferable by such spouse in any manner, including
but not limited to such spouse's will, nor will any such interest pass under the
laws of intestate succession.
13. Stock Appreciation Rights.
(a) Persons Eligible. The Administrator, in its sole discretion, may
grant Stock Appreciation Rights to Employees, Consultants, and Directors.
(b) Terms of Grant. The Administrator shall determine at the time of
the grant of a Stock Appreciation Right the time period during which the Stock
Appreciation Right may be exercised (provided that in no event shall the term of
a Stock Appreciation Right be more than 10 years from the date of grant) and any
other terms that shall apply to the Stock Appreciation Right.
(c) Exercise. A Stock Appreciation Right shall entitle a Participant to
receive a number of Shares (without any payment to the Company, except for
applicable withholding taxes), cash, or Shares and cash, as determined by the
Administrator in accordance with Section 13(d) below. If a Stock Appreciation
Right is issued in tandem with an Option, except as may otherwise be provided by
the Administrator, the Stock Appreciation Right shall be exercisable during the
period that its related Option is exercisable. A Grantee desiring to exercise a
Stock Appreciation Right shall give written notice of such exercise to the
Company, which notice shall state the proportion of Shares and cash that the
Participant desires to receive pursuant to the Stock Appreciation Right
exercised, if the Administrator permits such an election in its discretion. Upon
receipt of the notice from the Grantee, the Company shall deliver to the person
entitled thereto (i) a certificate or certificates for Shares and/or (ii) a cash
payment, in accordance with Section 13(d) below. The date the Company receives
written notice of such exercise hereunder is referred to in this Section 13 as
the "exercise date." The delivery of Shares or cash received pursuant to such
exercise shall take place at the principal offices of the Company within 30 days
following delivery of such notice.
(d) Number of Shares or Amount of Cash. Subject to the discretion of
the Administrator to substitute cash for Shares, or Shares for cash, the number
of Shares that may be issued pursuant to the exercise of a Stock Appreciation
Right shall be determined by dividing: (a) the total number of Shares as to
which the Stock Appreciation Right is exercised, multiplied by the amount by
which the Fair Market Value of one Share on the exercise date exceeds the Fair
Market Value of one Share on the date of grant of the Stock Appreciation Right,
by (b) the Fair Market Value of one Share on the exercise date; provided,
however, that fractional shares shall not be issued and in lieu thereof, a cash
adjustment shall be paid. In lieu of issuing Shares upon the exercise of a Stock
Appreciation Right, the Administrator in its sole discretion may elect to pay
the cash equivalent of the Fair Market Value of the Shares on the exercise date
for any or all of the Shares that would otherwise be issuable upon exercise of
the Stock Appreciation Right.
- 13 -
(e) Effect of Exercise. If a Stock Appreciation Right is issued in
tandem with an Option, the exercise of the Stock Appreciation Right or the
related Option will result in an equal reduction in the number of corresponding
Options or Stock Appreciation Rights that were granted in tandem with such Stock
Appreciation Rights and Options.
(f) Termination of Employment. Upon the termination of the Continuous
Status as an Employee, Director or Consultant of a Grantee, any Stock
Appreciation Rights then held by such Participant shall be exercisable within
the time periods, and upon the same conditions with respect to the reasons for
termination of the Continuous Status as an Employee, Director or Consultant, as
are specified in Section 11 with respect to Options.
(g) No Transfer. Except as the Administrator so authorizes at the time
a Stock Appreciation Right is granted or amended, a Stock Appreciation Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee. In the event
of the death or dissolution of marriage of the Grantee, or the death of the
Grantee's spouse, the provisions of Sections 12(b), (c), and (d) shall apply as
if the Stock Appreciation Right were an Option.
14. Stock Awards.
(a) Types of Stock Awards. Stock Awards may consist of Stock Bonuses,
Stock Units, or Restricted Stock. A Stock Bonus shall be an outright grant of
Shares or a sale of Shares to the Grantee below the Fair Market Value of the
Shares on the date of grant. A Stock Grant may be subject to and conditioned
upon certain employment or performance related goals, as determined by the
Administrator in its Discretion. A Stock Unit shall be a measurement component
equal to the Fair Market Value of one Share on the date on which a determination
is made. Restricted Stock shall be Shares granted to sold to a Grantee that are
subject to restrictions of the type set forth in Section 14(c).
(b) Grant. Subject to the express provisions and limitations of the
Plan, the Administrator, in its sole and absolute discretion, may grant Stock
Awards to Employees, Consultants or Directors for a number of Shares on such
terms and conditions and to such Employees, Consultants or Directors as it deems
advisable and specifies in the respective grants. Subject to the limitations and
restrictions set forth in the Plan, an Employee, Consultant or Director who has
been granted an Option, Stock Appreciation Right or Stock Award may, if
otherwise eligible, be granted additional Options, Stock Appreciation Rights or
Stock Awards if the Administrator shall so determine.
(c) Restrictions. The Administrator, in its sole and absolute
discretion, may impose restrictions in connection with any Stock Award,
including without limitation, (i) imposing a restricted period during which all
or a portion of the Common Stock subject to the Stock Award may not be sold,
assigned, transferred, pledged or otherwise encumbered (the "RESTRICTED
PERIOD"), (ii) providing for a vesting schedule with respect to such Common
Stock such that if a Grantee ceases to be an Employee, Consultant or Director
during the Restricted Period, or if certain performance objectives are not met,
some or all of the shares of Common Stock subject to the Stock Award shall be
immediately forfeited and returned to the Company. The Administrator may, at any
time, reduce or terminate the Restricted
- 14 -
Period. Each certificate issued in respect of shares of Common Stock pursuant to
a Stock Award which is subject to restrictions shall be registered in the name
of the Grantee, shall be deposited by the Grantee with the Company together with
a stock power endorsed in blank and shall bear an appropriate legend summarizing
the restrictions imposed with respect to such shares of Common Stock.
(d) Rights As Shareholder. Subject to the terms of any agreement
governing a Stock Award, the Grantee of a Stock Award shall have all the rights
of a shareholder with respect to the Common Stock issued pursuant to a Stock
Award, including the right to vote such Shares; provided, however, that
dividends or distributions paid with respect to any such Shares which have not
vested shall be deposited with the Company and shall be subject to forfeiture
until the underlying Shares have vested unless otherwise provided by the
Administrator in its sole discretion. A Grantee shall not be entitled to
interest with respect to the dividends or distributions so deposited.
15. Withholding Taxes. The Company will have the right to take whatever steps
the Administrator deems necessary or appropriate to comply with all applicable
federal, state, local, and employment tax withholding requirements, and the
Company's obligations to deliver Shares upon the exercise of an Option or Stock
Appreciation Right or in connection with a Stock Award will be conditioned upon
compliance with all such withholding tax requirements. Without limiting the
generality of the foregoing, upon the exercise of an Option or Stock
Appreciation Right, or the vesting of a Stock Award, the Company will have the
right to withhold taxes from any other compensation or other amounts which it
may owe to the Optionee, or to require the Optionee to pay to the Company the
amount of any taxes which the Company may be required to withhold with respect
to the Shares issued on such exercise or with respect to such Shares which have
vested. Without limiting the generality of the foregoing, the Administrator in
its discretion may authorize the Grantee to satisfy all or part of any
withholding tax liability by (a) having the Company withhold from the Shares
which would otherwise be issued in connection with a Stock Award or on the
exercise of an Option or Stock Appreciation Right that number of Shares having a
Fair Market Value, as of the date the withholding tax liability arises, equal to
or less than the amount of the Company's withholding tax liability, or (b) by
delivering to the Company previously-owned and unencumbered Shares of the Common
Stock having a Fair Market Value, as of the date the withholding tax liability
arises, equal to or less than the amount of the Company's withholding tax
liability.
16. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, if the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company or a successor entity, or for other
property (including without limitation, cash), through reorganization,
recapitalization, reclassification, stock combination, stock dividend, stock
split, reverse stock split, spin off or other similar transaction, an
appropriate and proportionate adjustment will be made in the maximum number and
kind of shares as to which Options, Stock Appreciation Rights and Stock Awards
may be granted under this Plan. A corresponding adjustment changing the number
or kind of shares allocated to Stock Awards or unexercised Options and Stock
Appreciation Rights which have been granted
- 15 -
prior to any such change will likewise be made. Any such adjustment in the
outstanding Options will be made without change in the aggregate purchase price
applicable to the unexercised portion of the Options but with a corresponding
adjustment in the price for each share or other unit of any security covered by
the Option. Such adjustment will be made by the Administrator, whose
determination in that respect will be final, binding, and conclusive.
Where an adjustment under this Section 16(a) is made to an Incentive
Stock Option, the adjustment will be made in a manner which will not be
considered a "modification" under the provisions of subsection 424(h)(3) of the
Code.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Stock
Appreciation Right had not been previously exercised or a Stock Award had not
previously vested, it will terminate immediately prior to the consummation of
such proposed dissolution or liquidation. In such instance, the Administrator
may, in the exercise of its sole discretion, declare that any Stock Award shall
become vested or any Option or Stock Appreciation Right will terminate as of a
date fixed by the Administrator and give each Grantee the right to exercise his
or her Option or Stock Appreciation Right as to all or any part of the covered
Shares, including Shares as to which the Option or Stock Appreciation Right
would not otherwise be exercisable.
(c) Corporate Transaction. Upon the happening of a merger,
reorganization or sale of substantially all of the assets of the Company, the
Administrator, may, in its sole discretion, do one or more of the following: (i)
shorten the period during which Options or Stock Appreciation Rights are
exercisable (provided they remain exercisable for at least 30 days after the
date notice of such shortening is given to the Grantees); (ii) accelerate any
vesting schedule to which an Option, Stock Appreciation Right or Stock Award is
subject; (iii) arrange to have the surviving or successor entity or any parent
entity thereof assume the Stock Awards, Stock Appreciation Rights and the
Options or grant replacement options and stock appreciation rights with
appropriate adjustments in the option prices and adjustments in the number and
kind of securities issuable upon exercise or adjustments so that the Options,
Stock Appreciation Rights or their replacements represent the right to purchase
the shares of stock, securities or other property (including cash) as may be
issuable or payable as a result of such transaction with respect to or in
exchange for the number of Shares of Common Stock purchasable and receivable
upon exercise of the Options or Stock Appreciation Rights had such exercise
occurred in full prior to such transaction; or (iv) cancel Options, Stock
Appreciation Rights or Stock Awards upon payment to the Optionees or Grantees in
cash, with respect to each Option, Stock Appreciation Right or Stock Award to
the extent then exercisable or vested (including, if applicable, any Options,
Stock Appreciation Rights or Stock Awards as to which the vesting schedule has
been accelerated as contemplated in clause (ii) above), of an amount that is the
equivalent of the excess of the Fair Market Value of the Common Stock (at the
effective time of the merger, reorganization, sale or other event) over (in the
case of Options) the exercise price of the Option. The Administrator may also
provide for one or more of the foregoing alternatives in any particular Option
Agreement or agreement governing a Stock Appreciation Right or Stock Award.
17. Date of Grant. The date of grant of an Option, Stock Appreciation Right or
Stock Award will be, for all purposes, the date as of which the Administrator
makes the determination
- 16 -
granting such Option, Stock Appreciation Right or Stock Award, or any other,
later date determined by the Administrator and specified in the Option Agreement
or agreement governing the Stock Appreciation Right or Stock Award. Notice of
the determination will be provided to each Grantee within a reasonable time
after the date of grant.
18. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter
or suspend or terminate the Plan.
(b) Shareholder Approval. The Company will obtain shareholder approval
of any Plan amendment that increases the number of Shares for which Options,
Stock Appreciation Rights or Stock Awards may be granted, or to the extent
necessary and desirable to comply with Section 422 of the Code (or any successor
statute) or other Applicable Laws, or the requirements of any exchange or
quotation system on which the Common Stock is listed or quoted. Such shareholder
approval, if required, will be obtained in such a manner and to such a degree as
is required by the Applicable Law or requirement.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of a Grantee,
unless mutually agreed otherwise between the Grantee and the Administrator. Any
such agreement must be in writing and signed by the Grantee and the Company.
19. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares will not be issued in connection with a
Stock Award or pursuant to the exercise of an Option or Stock Appreciation Right
unless the exercise of such Option or Stock Appreciation Right and the issuance
and delivery of such Shares will comply with all Applicable Laws, and will be
further subject to the approval of counsel for the Company with respect to such
compliance. Any securities delivered under the Plan will be subject to such
restrictions, and the person acquiring such securities will, if requested by the
Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all Applicable
Laws. To the extent permitted by Applicable Laws, the Plan and Options, Stock
Appreciation Rights and Stock Awards granted hereunder will be deemed amended to
the extent necessary to conform to such laws, rules and regulations.
(b) Investment Representation. As a condition to the exercise of an
Option or Stock Appreciation Right or grant of a Stock Award, the Company may
require the person exercising such Option or Stock Appreciation Right or
receiving such Stock Award to represent and warrant at the time of any such
exercise or receipt that the Shares are being acquired only for investment and
without any present intention to sell, transfer, or distribute such Shares.
20. Liability of Company.
(a) Inability to Obtain Authority. If the Company cannot, by the
exercise of commercially reasonable efforts, obtain authority from any
regulatory body having jurisdiction for the sale of any Shares under this Plan,
and such authority is deemed by the
- 17 -
Company's counsel to be necessary to the lawful issuance of those Shares, the
Company will be relieved of any liability for failing to issue or sell those
Shares.
(b) Grants Exceeding Allotted Shares. If the Shares covered by an
Option or Stock Appreciation Right or Shares subject to a Stock Award exceed, as
of the date of grant, the number of Shares which may be issued under the Plan
without additional shareholder approval, that Option, Stock Appreciation Right
or Stock Award will be contingent with respect to such excess Shares, unless and
until shareholder approval of an amendment sufficiently increasing the number of
Shares subject to this Plan is timely obtained in accordance with Section 18(b).
(c) Rights of Participants and Beneficiaries. The Company will pay all
amounts payable under this Plan only to the Grantee, or beneficiaries entitled
thereto pursuant to this Plan. The Company will not be liable for the debts,
contracts, or engagements of any Grantee or his or her beneficiaries, and rights
to cash payments under this Plan may not be taken in execution by attachment or
garnishment, or by any other legal or equitable proceeding while in the hands of
the Company.
21. Reservation of Shares. The Company will at all times reserve and keep
available for issuance a number of Shares sufficient to satisfy this Plan's
requirements during its term.
22. Shareholder Approval. Continuance of this Plan will be subject to approval
by the shareholders of the Company within 12 months before or after the date of
its adoption. Such shareholder approval will be obtained in the manner and to
the degree required under Applicable Laws. Options, Stock Appreciation Rights
and Stock Awards may be granted but Options and Stock Appreciation Rights may
not be exercised, and Stock Awards may not vest, prior to shareholder approval
of the Plan. If any Options, Stock Appreciation Rights or Stock Awards are so
granted and shareholder approval is not obtained within 12 months of the date of
adoption of this Plan by the Board, those Options, Stock Appreciation Rights or
Stock Awards will terminate retroactively as of the date they were granted.
23. Legending Stock Certificates. In order to enforce any restrictions imposed
upon Common Stock issued in connection with a Stock Award or upon exercise of an
Option or Stock Appreciation Right granted under this Plan or to which such
Common Stock may be subject, the Administrator may cause a legend or legends to
be placed on any certificates representing such Common Stock, which legend or
legends will make appropriate reference to such restrictions, including, but not
limited to, a restriction against sale of such Common Stock for any period of
time as may be required by Applicable Laws. Additionally, and not by way of
limitation, the Administrator may impose such restrictions on any Common Stock
issued pursuant to the Plan as it may deem advisable.
24. No Employment Rights. Neither this Plan nor any Option, Stock Appreciation
Right or Stock Award will confer upon a Grantee any right with respect to
continuing the Grantee's employment or consulting relationship with the Company,
or continuing service as a Director, nor will they interfere in any way with the
Grantee's right or the Company's right to terminate such employment or
consulting relationship or directorship at any time, with or without cause.
- 18 -
25. Governing Law. The Plan will be governed by, and construed in accordance
with the laws of the State of California (without giving effect to conflicts of
law principles).
- 19 -