EXHIBIT 10.21
MEDICIS PHARMACEUTICAL CORPORATION
2004 STOCK INCENTIVE PLAN
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TABLE OF CONTENTS
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SECTION 1. PURPOSE................................................. 1
SECTION 2. DEFINITIONS............................................. 1
SECTION 3. SHARES SUBJECT TO AWARDS................................ 3
SECTION 4. EFFECTIVE DATE; APPROVAL OF SHAREHOLDERS................ 3
SECTION 5. ADMINISTRATION.......................................... 4
SECTION 6. ELIGIBILITY............................................. 4
SECTION 7. AWARDS.................................................. 4
SECTION 8. OPTIONS................................................. 4
SECTION 9. RESTRICTED STOCK........................................ 5
SECTION 10. PERFORMANCE SHARES AND PERFORMANCE CASH BONUSES.......... 6
SECTION 11. ADJUSTMENT............................................... 7
SECTION 12. AMENDMENT OR TERMINATION................................. 7
SECTION 13. SPECIAL PROVISIONS....................................... 7
SECTION 14. GENERAL PROVISIONS....................................... 8
MEDICIS PHARMACEUTICAL CORPORATION
2004 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to promote the interests of Medicis
Pharmaceutical Corporation (the "Company") by granting Awards to the officers,
employees, directors and consultants of the Company and its Subsidiaries in
order to (a) attract and retain officers, employees, directors and consultants
of outstanding ability; (b) provide an additional incentive to selected
individuals to work to increase the value of the Stock; and (c) provide each
such individual with a stake in the future of the Company which corresponds to
the stake of each of the Company's shareholders.
SECTION 2. DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and for any Award granted under
this Plan. For purposes of such definitions, the singular shall include the
plural and the plural shall include the singular. Unless otherwise expressly
indicated, all Section references herein shall be construed to mean references
to a particular Section of this Plan.
2.1 AWARD means an award determined in accordance with the terms of the
Plan.
2.2 BOARD means the Board of Directors of the Company.
2.3 CHANGE OF CONTROL means any of the following:
(a) the acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended from time to time) (the "Exchange
Act"), of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 15% or more of either (i) the then outstanding shares
of Stock (the "Outstanding Company Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Company Voting Securities"), provided,
however, that any acquisition by (x) the Company or any of its subsidiaries, or
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries or (y) any corporation with respect to which,
following such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Stock and
Company Voting Securities immediately prior to such acquisition in substantially
the same portion as their ownership, immediately prior to such acquisition of
the Outstanding Company Stock and Company Voting Securities, as the case may be,
shall not constitute a Change of Control of the Company; or
(b) individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board, provided that any individual becoming a director subsequent to the
Effective Date, whose election or nomination for election by the Company's
shareholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with respect
to which all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Company Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion
as their ownership immediately prior to such Business Combination or the
Outstanding Company Stock and Company Voting Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or
(ii) a sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which, following such
sale or disposition, more than 60% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Stock and Company Voting Securities immediately prior to
such sale or disposition in substantially the same proportion as their ownership
of the Outstanding Company Stock and Company Voting Securities, as the case may
be, immediately prior to such sale or disposition.
2.4 CODE means the Internal Revenue Code of 1986, as amended.
2.5 COMMITTEE means the committee of Non-Employee Directors appointed by
the Board to administer this Plan as contemplated by Section 5.
2.6 COMPANY means Medicis Pharmaceutical Corporation, a Delaware
corporation, and any successor to such corporation.
2.7 CONTINUOUS SERVICE means the Participant's service as an officer,
employee, director or consultant with the Company or a Subsidiary which is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or a Subsidiary as an officer,
employee, director or consultant or a change in the entity for which the
Participant renders such service; provided, that, there is no interruption or
termination of the Participant's Continuous Service other than an approved leave
of absence. The Committee, in its sole discretion, may determine whether
Continuous Service shall be considered interrupted.
2.8 COVERED EMPLOYEE has the meaning set forth in Section 162(m)(3) of the
Code.
2.9 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.10 FAIR MARKET VALUE means the closing quoted selling price for Stock on
the relevant date, as reported in the Wall Street Journal or a similar
publication selected by the Committee.
2.11 GAAP means U.S. Generally Accepted Accounting Principles.
2.12 IMMEDIATE FAMILY MEMBER means, except as otherwise determined by the
Committee, a Participant's spouse, ancestors and descendants.
2.13 INCENTIVE STOCK OPTION means a stock option which is intended to meet
the requirements of Section 422 of the Code.
2.14 NON-EMPLOYEE DIRECTOR means any member of the Board who qualifies as
a "non-employee director" under Rule 16b-3 as promulgated under Section 16 of
the Exchange Act, or any successor rule and who is also an "outside director"
within the meaning of Section 162(m) of the Code.
2.15 NONQUALIFIED STOCK OPTION means any stock option granted under this
Plan to purchase stock which is not intended to be an Incentive Stock Option.
2.16 OPTION means either an Incentive Stock Option or a Nonqualified Stock
Option.
2.17 OPTION PRICE means the price which shall be paid to purchase one
share of Stock upon the exercise of an Option granted under this Plan.
2.18 PARENT CORPORATION means any corporation which is a parent
corporation of the Company within the meaning of Section 424(e) of the Code.
2.19 PARTICIPANT means anyone who is selected to participate in the Plan
in accordance with Section 6.
2.20 PERFORMANCE GOALS means or may be expressed in terms of any of the
following business criteria: revenue, earnings before interest, taxes,
depreciation and amortization ("EBITDA"), funds from operations, funds from
operations per share, operating income, pre or after tax income, cash available
for distribution, cash available for distribution per share, net earnings,
earnings per share, return on equity, return on assets, share price performance,
improvements in the Company's attainment of expense levels, and implementing or
completion of critical projects, or improvement in cash-flow (before or after
tax). A Performance Goal may be measured over a Performance Period on a
periodic, annual, cumulative or average basis and may be established on a
corporate-wide basis or established with respect to one or more operating units,
divisions, subsidiaries, acquired businesses, minority investments, partnerships
or joint ventures.
2.21 PERFORMANCE OBJECTIVE means the level or levels of performance
required to be attained with respect to specified Performance Goals in order
that a Participant shall become entitled to specified rights in connection with
an Award of performance shares. The Committee may provide for adjustments to
performance to eliminate the effects of changes for restructuring, extraordinary
items, discontinued operations, other non-recurring charges, the cumulative
effects of accounting changes, each as defined in GAAP, that occur during a
Performance Period, in each case, to preserve the economic intent of any Award.
2.22 PERFORMANCE PERIOD means the calendar year, or such other shorter or
longer period designated by the Committee, during which performance will be
measured in order to determine a Participant's entitlement to receive payment of
an Award.
2.23 PLAN means this Medicis Pharmaceutical Corporation 2004 Stock
Incentive Plan, as amended from time to time.
2.24 SECURITIES ACT means the Securities Act of 1933, as amended.
2.25 SEC means the Securities Exchange Commission.
2.26 STOCK means the Class A Common Stock, $.014 par value per share, of
the Company.
2.27 SUBSIDIARY means any affiliate of the Company selected by the Board;
provided, that, with respect to Incentive Stock Options, it shall mean any
subsidiary of the Company that is a corporation and which at the time qualifies
as a "subsidiary corporation" within the meaning of Section 424(f) of the Code.
SECTION 3. SHARES SUBJECT TO AWARDS
3.1 Subject to adjustment in accordance with Section 11, the total number
of shares of Stock that shall be available for the grant of Awards under the
Plan shall not exceed 1,200,000 shares of Stock; provided, that, for purposes of
this limitation, any Stock subject to an Option or Award which is canceled,
forfeited or expires prior to exercise or realization shall again become
available for issuance under the Plan. Any shares granted as Options are counted
against this limit as one share for every one share granted. Any shares granted
as Awards other than Options are counted against this limit as 2.75 shares for
every one share granted. Subject to adjustment in accordance with Section 11, no
employee shall be granted, during any one (1) year period, Options to purchase
more than 200,000 shares of Stock and, the number of shares of Stock subject to
any Awards other than Options shall not exceed 72,727 shares of Stock. Stock
available for distribution under the Plan shall be authorized and unissued
shares, treasury shares or shares reacquired by the Company in any manner.
3.2 INCENTIVE STOCK OPTIONS. Notwithstanding Section 3.1, subject to
adjustment in accordance with Section 11, the aggregate number of shares of
Stock with respect to which Incentive Stock Options may be granted under the
Plan shall not exceed 436,364 shares of Stock; provided, that, for purposes of
this limitation, any Stock subject to an Incentive Stock Option which is
canceled, forfeited or expires prior to exercise or realization shall again
become available for issuance under the Plan.
SECTION 4. EFFECTIVE DATE; APPROVAL OF SHAREHOLDERS
The Plan is effective as of the date it is approved by the affirmative
vote of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of shareholders duly held in
accordance with the applicable laws of the State of Delaware (the "Effective
Date"). Unless the Company determines to submit Section 10 of the Plan and the
definition of Performance Goal to the Company's shareholders at the first
shareholder meeting that occurs in the fifth year following the year in which
the Plan was last approved by shareholders (or any earlier meeting designated by
the Board), in accordance with the requirements of Section 162(m) of the Code,
and such shareholder approval is obtained, then no further Performance Awards
shall be made to Covered Employees under Section 10 after the date of such
annual meeting, but the remainder of the Plan shall continue in effect.
SECTION 5. ADMINISTRATION
5.1 ADMINISTRATION BY COMMITTEE. Subject to the further provisions of this
Section 5, this Plan shall be administered by a Committee consisting solely of
not less than two (2) Non-Employee Directors. All references to the Committee
hereinafter shall mean the Board if no such Committee has been appointed.
5.2 POWERS OF COMMITTEE. The Committee shall (i) approve the selection of
Participants; (ii) determine the type of Awards to be made to Participants;
(iii) determine the number of shares of Stock subject to Awards; (iv) determine
the terms and conditions of any Award granted hereunder (including, but not
limited to, any restriction and forfeiture conditions on such Award); and (v)
have the authority to interpret the Plan, to establish, amend, and rescind any
rules and regulations relating to the Plan, to determine the terms and
provisions of any agreements entered into hereunder, and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem desirable to carry it into effect.
5.3 COMMITTEE ACTION BINDING. Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company and its
Subsidiaries and shareholders, Participants and persons claiming rights from or
through a Participant.
5.4 DELEGATION. The Committee may delegate to officers or employees of the
Company or any Subsidiary, and to service providers, the authority, subject to
such terms as the Committee shall determine, to perform administrative functions
with respect to the Plan and Award agreements.
5.5 INDEMNIFICATION. Members of the Committee and any officer or employee
of the Company or any Subsidiary acting at the direction of, or on behalf of,
the Committee shall not be personally liable for any action or determination
taken or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified by the Company with respect to any such
action or determination.
SECTION 6. ELIGIBILITY
Individuals eligible to receive Awards under the Plan shall be the
officers, employees, directors and consultants of the Company and its
Subsidiaries selected by the Committee; provided, that, only employees of the
Company and its Subsidiaries may be granted Incentive Stock Options.
SECTION 7. AWARDS
Awards under the Plan may consist of Options, restricted Stock, restricted
Stock Units, performance shares, performance share units and cash bonuses.
Awards shall be subject to the terms and conditions of the Plan and shall be
evidenced by an agreement containing such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall deem
desirable.
SECTION 8. OPTIONS
8.1 GRANT OF OPTIONS. The Committee acting in its absolute discretion may
grant Options to eligible individuals under this Plan from time to time to
purchase shares of Stock. Each grant of an Option shall be
evidenced by an Award agreement, and each Award agreement shall state whether or
not the Option will be treated as an Incentive Stock Option or Nonqualified
Stock Option and shall incorporate such terms and conditions as the Committee
acting in its absolute discretion deems appropriate and consistent with the
terms of this Plan. The aggregate Fair Market Value of the Stock for which
Incentive Stock Options granted to any one employee under this Plan or any other
incentive stock option plan of the Company or of any of its Subsidiaries may by
their terms first become exercisable during any calendar year shall not exceed
$100,000, determining Fair Market Value as of the date each respective Option is
granted. In the event such threshold is exceeded in any calendar year, such
excess Options shall be automatically deemed to be Nonqualified Stock Options.
To the extent that any Option granted under this Plan which is intended to be an
Incentive Stock Option fails for any reason to qualify as such at any time, such
Option shall be a Nonqualified Stock Option.
8.2 OPTION PRICE. The Option Price for each share of Stock subject to an
Option shall be determined by the Committee and shall not be less than the Fair
Market Value of a share of Stock on the date the Option is granted; provided,
however, in the case of Incentive Stock Options granted to an employee owning
stock possessing more than 10% of the total combined voting power of all classes
of shares of the Company and its subsidiaries (a "10% shareholder") the price
per share specified in the Award agreement shall not be less than 110% of the
Fair Market Value per share of Stock on the date of grant.
8.3 OPTION PERIOD. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable after the expiration of seven (7)
years from the date the Option is granted; provided, that, in the case of
Incentive Stock Options granted to 10% Shareholders, the term of such Option
shall not exceed five (5) years from the date of grant.
8.4 EXERCISABILITY. Each Option shall vest and become exercisable at a
rate determined by the Committee on the date of grant, with a minimum vesting
period of one year.
8.5 METHOD OF EXERCISE. Options may be exercised, in whole or in part, by
giving written notice of exercise to the Company in a form approved by the
Company specifying the number shares of Stock to be purchased. Such notice shall
be accompanied by the payment in full of the Option Price. The exercise price of
the Option may be paid by (i) cash or certified or bank check; (ii) surrender of
Stock held by the Optionee for at least six (6) months prior to exercise (or
such longer or shorter period as may be required to avoid a charge to earnings
for financial accounting purposes) or the attestation of ownership of such
shares, in either case, if so permitted by the Company; (iii) if established by
the Company, through a "same day sale" commitment from the optionee and a
broker-dealer selected by the Company that is a member of the National
Association of Securities Dealers (an "NASD Dealer") whereby the optionee
irrevocably elects to exercise the Option and to sell a portion of the shares so
purchased sufficient to pay for the total exercise price and whereby the NASD
Dealer irrevocably commits upon receipt of such shares to forward the total
exercise price directly to the Company; (iv) through additional methods
prescribed by the Committee; or (v) by any combination of the foregoing, and, in
all instances, to the extent permitted by applicable law. Options may not be
exercised for fractional shares of Stock. A Participant's subsequent transfer or
disposition of any Stock acquired upon exercise of an Option shall be subject to
any federal and state laws then applicable, specifically securities law, and the
terms and conditions of this Plan.
8.6 PROHIBITION ON REPRICING. No Option granted hereunder shall be amended
to reduce the Option Price under such Option, or surrendered in exchange for a
replacement Option having a lower purchase price per share; provided, that, this
Section 8.6 shall not restrict or prohibit any adjustment or other action taken
pursuant to Section 12 below.
SECTION 9. RESTRICTED STOCK
The Committee may from time to time award restricted Stock under the Plan
to eligible Participants. Shares of restricted Stock may not be sold, assigned,
transferred or otherwise disposed of, or pledged or hypothecated as collateral
for a loan or as security for the performance of any obligation or for any other
purpose, for such period (the "Restricted Period") as the Committee shall
determine. The Committee may define the Restricted Period in terms of the
passage of time or in any other manner it deems appropriate. The Committee may
alter or waive at any time any term or condition of restricted Stock that is not
mandatory under the Plan. Unless otherwise determined by the Committee, upon
termination of a Participant's Continuous Service with the Company for any
reason prior to the end of the Restricted Period, the restricted Stock shall be
forfeited and the Participant shall have no right with
respect to the Award. Except as restricted under the terms of the Plan and any
Award agreement, any Participant awarded restricted Stock shall have all the
rights of a shareholder including, without limitation, the right to vote
restricted Stock. If a share certificate is issued in respect of restricted
Stock, the certificate shall be registered in the name of the Participant, but
shall be held by the Company for the account of the Participant until the end of
the Restricted Period. The Committee may also award restricted Stock in the form
of restricted Stock units having a value equal to an identical number of shares
of Stock. Payment of restricted Stock units shall be made in Stock or in cash or
in a combination thereof (based upon the Fair Market Value of the Stock on the
day the Restricted Period expires), all as determined by the Committee in its
sole discretion. Restricted Stock Awards shall vest at a rate determined by the
Committee on the date of grant, with a minimum vesting period of one year.
SECTION 10. PERFORMANCE SHARES AND PERFORMANCE CASH BONUSES
10.1 PERFORMANCE SHARES. Performance shares may be granted in the form of
actual shares of Stock or Stock units having a value equal to an identical
number of shares of Stock. In the event that a share certificate is issued in
respect of performance shares, such certificate shall be registered in the name
of the Participant, but shall be held by the Company until the time the
performance shares are earned. In addition, the Committee may make cash bonuses
to Participants based on the Performance Objectives described herein
(performance shares and performance cash bonuses to be collectively referred to
as "Performance Awards"). The Performance Objectives and the length of the
Performance Period shall be determined by the Committee. The Committee shall
determine in its sole discretion whether Performance Awards granted in the form
of Stock units shall be paid in cash, Stock, or a combination of cash and Stock.
10.2 PERFORMANCE OBJECTIVES. The Committee shall establish the Performance
Objective for each Performance Award, consisting of one or more business
criteria permitted as Performance Goals hereunder, one or more levels of
performance with respect to each such criteria, and the amount or amounts
payable or other rights that the Participant will be entitled to upon
achievement of such levels of performance. The Performance Objective shall be
established by the Committee prior to, or reasonably promptly following the
inception of, a Performance Period but, to the extent required by Section 162(m)
of the Code, by no later than the earlier of the date that is ninety (90) days
after the commencement of the Performance Period or the day prior to the date on
which twenty-five percent of the Performance Period has elapsed. More than one
Performance Goal may be incorporated in a Performance Objective, in which case
achievement with respect to each Performance Goal may be assessed individually
or in combination with each other. The Committee may, in connection with the
establishment of Performance Objectives for a Performance Period, establish a
matrix setting forth the relationship between performance of two or more
Performance Goals and the amount of the Performance Award payable for that
Performance Period. The level or levels of performance specified with respect to
a Performance Goal may be established in absolute terms, as objectives relative
to performance in prior periods, as an objective compared to the performance of
one or more comparable companies or an index covering multiple companies, or
otherwise as the Committee may determine. Performance Objectives shall be
objective and shall otherwise meet the requirements of Section 162(m) of the
Code. Performance Objectives may differ for Performance Awards granted to any
one Participant or to different Participants. A Performance Award to a
Participant who is a Covered Employee shall (unless the Committee determines
otherwise) provide that in the event of the Participant's termination of
Continuous Service prior to the end of the Performance Period for any reason,
such Performance Award will be payable only (i) if the applicable Performance
Objectives are achieved and (ii) to the extent, if any, as the Committee shall
determine.
10.3 CERTIFICATION. Following the completion of each Performance Period,
the Committee shall certify in writing, in accordance with the requirements of
Section 162(m) of the Code, whether the Performance Objectives and other
material terms of the Performance Award have been achieved or met. Unless the
Committee determines otherwise, Performance Awards shall not be settled until
the Committee has made the certification specified under this Section 10.3.
10.4 ADJUSTMENT. The Committee may, in its discretion, reduce or eliminate
the amount of payment with respect to the Performance Award to a Covered
Employee, notwithstanding the achievement of specified Performance Objectives;
provided, that, no such adjustment shall be made which would adversely impact a
Participant following a Change of Control.
10.5 MAXIMUM AMOUNT PAYABLE. Subject to Section 11, the maximum number of
performance shares subject to any Performance Award to a Covered Employee is
72,727 for each 12 months during the Performance
Period (or, to the extent the performance share units are paid in cash, the
maximum dollar amount of any such Award is the equivalent cash value, based on
the Fair Market Value of the Stock, of such number of shares of Stock on the
last day of the Performance Period). If the Performance Award is a performance
cash bonus, a Participant shall not be granted performance cash bonuses for all
of the Performance Periods commencing in a calendar year that permit the
Participant, in the aggregate, to earn a cash payment in excess of $2,000,000
per calendar year.
SECTION 11. ADJUSTMENT
11.1 CORPORATE TRANSACTION OR EVENT. In the event of any dividend or other
distribution (whether in the form of cash, Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Stock or other securities of the Company, issuance of warrants or
other rights to purchase Stock or other securities of the Company, or other
similar corporate transaction or event (an "Event"), and in the Committee's
opinion, such Event affects the Stock such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to an Award, then the Committee shall, in such manner as it may
deem equitable, including, without limitation, adjust any or all of the
following: (i) the number and kind of shares of Stock (or other securities or
property) with respect to which Awards may be granted or awarded; (ii) the
number and kind of shares of Stock (or other securities or property) subject to
outstanding Awards; and (iii) the grant or exercise price with respect to any
Award. The Committee determination under this Section 11.1 shall be final,
binding and conclusive. Any such adjustment made to an Incentive Stock Option
shall be made in accordance with Section 424(a) of the Code unless otherwise
determined by the Committee, in its sole discretion.
11.2 TERMINATION; CASH-OUT. Upon the occurrence of an Event in which
outstanding Awards are not to be assumed or otherwise continued following such
an Event, the Committee may, in its discretion, terminate any outstanding Award
without a Participant's consent and (i) provide for either the purchase of any
such Award for an amount of cash equal to the amount that could have been
attained upon the exercise of such Award or realization of the Participant's
rights had such Award been currently exercisable or payable or fully vested or
the replacement of such Award with other rights or property selected by the
Committee in its sole discretion and/or (ii) provide that such Award shall be
exercisable (whether or not vested) as to all shares covered thereby for at
least ten (10) days prior to such Event.
11.3 NO RESTRICTIONS ON ADJUSTMENTS. The existence of the Plan, the Award
agreement and the Awards granted hereunder shall not affect or restrict in any
way the right or power of the Company or the shareholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or consolidation of
the Company, any issue of stock or of options, warrants or rights to purchase
stock or of bonds, debentures, preferred or prior preference stocks whose rights
are superior to or affect the Stock or the rights thereof or which are
convertible into or exchangeable for Stock, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 12. AMENDMENT OR TERMINATION
The Board may amend, suspend or terminate the Plan or any portion thereof
at any time, provided, that, (a) no amendment shall be made without shareholder
approval if such approval is necessary to comply with any applicable law,
regulation or stock exchange rule and (b) except as provided in Section 11, no
amendment shall be made that would adversely affect the rights of a Participant
under an Award theretofore granted, without such Participant's written consent.
SECTION 13. SPECIAL PROVISIONS
13.1 CHANGE OF CONTROL. Unless otherwise provided in an Award agreement,
upon a Change of Control in which outstanding Awards are not terminated in
accordance with Section 11 of the Plan, all Options granted under this Plan
prior to such Change of Control shall immediately become vested and exercisable
to the full extent of the original grant and all restrictions or performance
conditions, if any, on any other Awards shall
automatically lapse. The Committee may, in its discretion, include such further
provisions and limitations in any agreement documenting such Awards as it may
deem equitable and in the best interests of the Company.
13.2 FORFEITURE. Notwithstanding anything in the Plan to the contrary and
unless otherwise specifically provided in an Award agreement, in the event of a
serious breach of conduct by a Participant or former Participant (including,
without limitation, any conduct prejudicial to or in conflict with the Company
or any Subsidiary) the Committee may (i) cancel any outstanding Award granted to
such Participant or former Participant, in whole or in part, whether or not
vested, and/or (ii) if such conduct or activity occurs within 1 year following
the exercise or payment of an Award, require such Participant or former
Participant to repay to the Company any gain realized or payment received upon
the exercise or payment of such Award (with such gain or payment valued as of
the date of exercise or payment). Such cancellation or repayment obligation
shall be effective as of the date specified by the Committee. Any repayment
obligation shall be satisfied in cash or, if permitted in the sole discretion of
the Committee, it may be satisfied in shares of Stock (based upon the Fair
Market Value of the share of Stock on the date of payment), and the Committee
may provide for an offset to any future payments owed by the Company or any
Subsidiary to the Participant or former Participant if necessary to satisfy the
repayment obligation. The determination of whether a Participant or former
Participant has engaged in a serious breach of conduct or any activity in
competition with any of the businesses of the Company or any Subsidiary shall be
determined by the Committee in good faith and in its sole discretion.
SECTION 14. GENERAL PROVISIONS
14.1 REPRESENTATIONS. The Committee may require each Participant
purchasing or acquiring shares pursuant to an Award under the Plan to represent
to and agree with the Company in writing that such Participant is acquiring the
shares for investment and without a view to distribution thereof.
14.2 RESTRICTIONS. All certificates for Stock delivered under the Plan
pursuant to any Award shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the SEC, any stock exchange upon which the Stock is
then listed, and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions. If the Committee determines
that the issuance of Stock hereunder is not in compliance with, or subject to an
exemption from, any applicable federal or state securities laws, such shares
shall not be issued until such time as the Committee determines that the
issuance is permissible.
14.3 SECTION 16. It is the intent of the Company that the Plan satisfy,
and be interpreted in a manner that satisfies, the applicable requirements of
Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that
Participants will be entitled to the benefit of Rule 16b-3, or any other rule
promulgated under Section 16 of the Exchange Act, and will not be subject to
short-swing liability under Section 16 of the Exchange Act. Accordingly, if the
operation of any provision of the Plan would conflict with the intent expressed
in this Section 15.3, such provision to the extent possible shall be interpreted
and/or deemed amended so as to avoid such conflict.
14.4 SECTION 162(m). To the extent the Committee issues any Award which is
intended to be exempt from the application of Section 162(m) of the Code, the
Committee may, without shareholder or grantee approval, amend the Plan or the
relevant Award agreement retroactively or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company's federal income tax
deduction for compensation paid pursuant to any such Award.
14.5 NO RIGHTS AS SHAREHOLDER. Except as otherwise provided by the
Committee in the applicable grant or Award agreement, a Participant shall have
no rights as a shareholder with respect to any shares of Stock subject to an
Award until a certificate or certificates evidencing shares of Stock shall have
been issued to the Participant and, subject to Section 11, no adjustment shall
be made for dividends or distributions or other rights in respect of any share
for which the record date is prior to the date on which Participant shall become
the holder of record thereof.
14.6 GENDER. Where the context requires, words in any gender shall include
any other gender.
14.7 HEADINGS. Headings of Sections are inserted for convenience and
reference; they do not constitute any part of this Plan.
14.8 EXPIRATION OF THE PLAN. Subject to earlier termination pursuant to
Section 12, no Award may be granted following the ten (10) year anniversary of
the Effective Date and except with respect to outstanding Awards, this Plan
shall terminate.
14.9 NO RIGHT TO CONTINUOUS SERVICE. Nothing contained in the Plan or in
any Award under the Plan shall confer upon any Participant any right with
respect to the continuation of service with the Company or any of its
Subsidiaries, or interfere in any way with the right of the Company or its
Subsidiaries to terminate his or her Continuous Service at any time. Nothing
contained in the Plan shall confer upon any Participant or other person any
claim or right to any Award under the Plan.
14.10 WITHHOLDING. Upon (a) disposition of shares of Stock acquired
pursuant to the exercise of an Incentive Stock Option granted pursuant to the
Plan within two (2) years of the grant of the Incentive Stock Option or within
one (1) year after exercise of the Incentive Stock Option, or (b) exercise of a
Nonqualified Stock Option (or an Incentive Stock Option treated as a
Nonqualified Stock Option), or the vesting or payment of any other Award under
the Plan, or (c) under any other circumstances determined by the Committee in
its sole discretion, the Company shall have the right to require any
Participant, and such Participant by accepting the Awards granted under the Plan
agrees, to pay to the Company the amount of any taxes which the Company shall be
required to withhold with respect thereto. In the event of clauses (a), (b) or
(c), with the consent of the Committee, at its sole discretion, such Participant
may elect to have the Company withhold shares of Stock having a Fair Market
Value equal to the amount of the withholding tax obligation as determined by the
Company; provided, however, that no shares of Stock are withheld with a value
exceeding the minimum amount of tax required to be withheld by law. Such shares
so delivered to satisfy the minimum withholding obligation may be either shares
withheld by the Company upon the exercise of the Option or other shares. At the
Committee's sole discretion, a Participant may elect to have additional taxes
withheld and satisfy such withholding with cash or shares of Stock held for at
least six (6) months prior to exercise, if, in the opinion of the Company's
outside accountants, doing so would not result in a charge against earnings.
14.11 NONTRANSFERABILITY, BENEFICIARIES. Unless otherwise determined by
the Committee with respect to the transferability of Awards (other than
Incentive Stock Options) by a Participant to his Immediate Family Members (or to
trusts or partnerships or limited liability companies established for such
family members), no Award shall be assignable or transferable by the
Participant, otherwise than by will or the laws of descent and distribution or
pursuant to a beneficiary designation, and Options shall be exercisable, during
the Participant's lifetime, only by the Participant (or by the Participant's
legal representatives in the event of the Participant's incapacity). Each
Participant may designate a beneficiary to exercise any Option held by the
Participant at the time of the Participant's death or to be assigned any other
Award outstanding at the time of the Participant's death. If no beneficiary has
been named by a deceased Participant, any Award held by the Participant at the
time of death shall be transferred as provided in his will or by the laws of
descent and distribution. Except in the case of the holder's incapacity, an
Option may only be exercised by the holder thereof.
14.12 GOVERNING LAW. The law of the State of Delaware shall apply to all
Awards and interpretations under the Plan regardless of the effect of such
state's conflict of laws principles.