EXHIBIT 10.1
CLOSURE MEDICAL CORPORATION
AMENDED AND RESTATED 1996 EQUITY COMPENSATION PLAN
As Amended Effective as of June 18, 2002
The purpose of the Closure Medical Corporation 1996 Equity Compensation
Plan (the "Plan") is to provide (i) designated officers and other employees of
Closure Medical Corporation (the "Company") and its subsidiaries, (ii)
non-employee members of the board of directors of the Company (the "Board"), and
(iii) independent contractors and consultants who perform valuable services for
the Company or its subsidiaries, with the opportunity to receive grants of
incentive stock options, nonqualified stock options, stock appreciation rights
and restricted stock. The Company believes that the Plan will cause the
participants to contribute materially to the growth of the Company, thereby
benefiting the Company's stockholders, and will align the economic interests of
the participants with those of the stockholders.
1. Administration
The Plan shall be administered and interpreted by a committee (the
"Committee"), which shall consist of two or more persons appointed by the Board.
The Committee may consist of "outside directors" as defined under section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code") and related
Treasury regulations, and may be "non-employee directors" as defined under Rule
16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act").
Other than grants to Non-Employee Directors (as hereinafter defined),
whose grants shall be determined by the Committee and be subject to the approval
of the Board, the Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for vesting
and the acceleration of vesting and (iv) deal with any other matters arising
under the Plan.
The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and for
the conduct of its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in any
awards granted hereunder. All powers of the Committee shall be executed in its
sole discretion (except with respect to grants to Non-Employee Directors), in
the best interest of the Company and in keeping with the objectives of the Plan
and need not be uniform as to similarly situated individuals.
2. Grants
Incentives under the Plan shall consist of grants of incentive stock
options, nonqualified stock options, stock appreciation rights and restricted
stock (hereinafter collectively referred to as "Grants"). All Grants shall be
subject to the terms and conditions set forth herein and to those other terms
and conditions consistent with this Plan as the Committee deems appropriate and
as are specified in writing by the Committee to the individual (the "Grant
Letter"). All Grants to Non-Employee Directors shall be subject to approval of
the Board. The Committee shall approve the form and provisions of each Grant
Letter to an individual. Grants under a particular Section of the Plan need not
be uniform as among the grantees.
3. Shares Subject to the Plan
(a) Subject to the adjustment specified below, the aggregate
number of shares of common stock of the Company (the "Company Stock") that may
be issued or transferred under the Plan is 6,000,000 shares in the aggregate.
Notwithstanding anything in the Plan to the contrary, the maximum aggregate
number of shares of Company Stock that
shall be subject to Grants made under the Plan to any individual during any
calendar year shall be 500,000 shares. The shares may be authorized but unissued
shares of Company Stock or reacquired shares of Company Stock, including shares
purchased by the Company on the open market for purposes of the Plan. If and to
the extent options or stock appreciation rights granted under the Plan
terminate, expire, or are canceled, forfeited, exchanged or surrendered without
having been exercised or if any shares of restricted stock are forfeited, the
shares subject to such Grants shall again be available for purposes of the Plan.
(b) If there is any change in the number or kind of shares of
Company Stock outstanding by reason of a stock dividend, recapitalization, stock
split, or combination or exchange of shares, or a merger, reorganization or
consolidation in which the Company is the surviving corporation,
reclassification or change in par value or by reason of any other extraordinary
or unusual events affecting the outstanding Company Stock as a class without the
Company's receipt of consideration, or if the value of outstanding shares of
Company Stock is substantially reduced due to the Company's payment of an
extraordinary dividend or distribution, then (i) the maximum number of shares of
Company Stock available for Grants, (ii) the maximum number of shares of Company
Stock which any one individual participating in the Plan may be granted during
the term of the Plan, (iii) the number of shares covered by outstanding Grants,
and (iv) the price per share or the applicable market value of such Grants shall
be proportionately adjusted by the Committee to reflect any increase or decrease
in the number or kind of issued shares of Company Stock to preclude the
enlargement or dilution of rights and benefits under such Grants; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated. The adjustments determined by the Committee shall be final, binding
and conclusive. Notwithstanding the foregoing, no adjustment shall be authorized
or made pursuant to this Section to the extent that such authority or adjustment
would cause any incentive stock option to fail to comply with section 422 of the
Code.
4. Eligibility for Participation
All employees of the Company and its subsidiaries ("Employees"),
including Employees who are officers or members of the Board, shall be eligible
to participate in the Plan. Any independent contractors or consultants who
perform valuable services to the Company or any of its subsidiaries
("Consultants") and Non-Employee Directors shall be eligible to participate in
the Plan, but shall not be eligible to receive incentive stock options.
The Committee shall select the Employees and Consultants to receive
Grants and determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Committee determines. The Committee,
subject to the approval of the Board, shall select the Non-Employee Directors to
receive grants and determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Committee, subject to the approval of the
Board, determines. Employees, Consultants, and Non-Employee Directors who
receive Grants under this Plan shall hereinafter be referred to as "Grantees".
Nothing contained in this Plan shall be construed to (i) limit the
right of the Committee to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including options
granted to employees thereof who become Employees of the Company, or for other
proper corporate purpose, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan.
5. Granting of Options
(a) Number of Shares. The Committee, in its sole discretion, shall
determine the number of shares of Company Stock that will be subject to each
Grant of stock options to any Employee or Consultant. The Committee, subject to
approval by the Board, shall determine the number of shares of Company Stock
that will be subject to each Grant of stock options to any Non-Employee
Director.
(b) Type of Option and Price. The Committee may grant options
intended to qualify as "incentive stock options" within the meaning of section
422 of the Code ("Incentive Stock Options") or options which are not intended to
so qualify ("Nonqualified Stock Options") or any combination of Incentive Stock
Options and Nonqualified Stock Options (hereinafter collectively the "Stock
Options"), all in accordance with the terms and conditions set forth herein.
The purchase price of Company Stock subject to a Stock Option shall be
determined by the Committee, subject
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to approval by the Board in the case of Grants to Non-Employee Directors and may
be equal to, greater than, or less than the Fair Market Value (as defined below)
of a share of such Stock on the date such Stock Option is granted; provided,
however, that (i) the purchase price of Company Stock subject to an Incentive
Stock Option shall be equal to, or greater than, the Fair Market Value of a
share of such Stock on the date such Stock Option is granted and (ii) an
Incentive Stock Option may not be granted to an Employee who, at the time of
grant, owns stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or any parent or subsidiary of the
Company, unless the option price per share is not less than 110% of the Fair
Market Value of Company Stock on the date of grant.
If the Company Stock is traded in a public market, then the Fair Market
Value per share shall be (i) if the principal trading market for the Company
Stock is a national securities exchange or the National Market segment of the
Nasdaq Stock Market, the last reported sale price thereof on the relevant date
or (if there were no trades on that date) the latest preceding date upon which a
sale was reported, or (ii) if the Company Stock is not principally traded on
such exchange or market, the mean between the last reported "bid" and "asked"
prices thereof on the relevant date, as reported on Nasdaq, or, if not so
reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Committee determines. If the Company Stock is not traded in a public market or
subject to reported transactions or "bid" or "ask" quotations as set forth
above, the Fair Market Value per share shall be as determined by the Committee.
(c) Option Term. The Committee shall determine the term of each
Stock Option, subject to approval by the Board in the case of Grants to
Non-Employee Directors. The term of any Stock Option shall not exceed ten years
from the date of grant. Notwithstanding the foregoing, an Incentive Stock Option
may not be granted to an Employee who, at the time of grant, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary of the Company,
unless the option term does not exceed five years from the date of grant.
(d) Exercisability of Options. Stock Options shall become
exercisable in accordance, subject to approval by the Board in the case of
Grants to Non-Employee Directors, with the terms and conditions determined by
the Committee, in its sole discretion, and specified in the Grant Letter. The
Committee, in its sole discretion, may accelerate the exercisability of any or
all outstanding Stock Options at any time for any reason. A Grantee's
outstanding Stock Options shall become fully exercisable if the Grantee dies
while employed by or providing services to the Company. In addition, all
outstanding Stock Options automatically shall become fully and immediately
exercisable upon a Change of Control (as defined herein) in accordance with the
provisions of Section 10.
(e) Manner of Exercise. A Grantee may exercise a Stock Option
which has become exercisable, in whole or in part, by delivering a notice of
exercise to the Committee with accompanying payment of the option price in
accordance with Subsection (g) below. Such notice may instruct the Company to
deliver shares of Company Stock due upon the exercise of the Stock Option to any
registered broker or dealer designated by the Committee in lieu of delivery to
the Grantee. Such instructions must designate the account into which the shares
are to be deposited.
(f) Termination of Employment, Disability or Death.
(i) Except as provided below, a Stock Option may only be
exercised while the Grantee is employed by the Company as an Employee,
Consultant or member of the Board. In the event that a Grantee ceases to be
employed by the Company for any reason other than a "disability", death, or
"termination for cause", any Stock Option which is otherwise exercisable by the
Grantee shall terminate unless exercised within 90 days after the date on which
the Grantee ceases to be employed by the Company (or within such other period of
time as may be specified in the Grant Letter), but in any event no later than
the date of expiration of the option term. Any of the Grantee's Stock Options
which are not otherwise exercisable as of the date on which the Grantee ceases
to be employed by the Company as described in this subsection (i) shall
terminate as of such date.
(ii) In the event the Grantee ceases to be employed by the
Company on account of a "termination for cause" by the Company, any Stock Option
held by the Grantee shall terminate as of the date the Grantee ceases to be
employed by the Company.
(iii) In the event the Grantee ceases to be employed by the
Company because the Grantee is "disabled",
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any Stock Option which is otherwise exercisable by the Grantee shall terminate
unless exercised within one year after the date on which the Grantee ceases to
be employed by the Company (or within such other period of time as may be
specified in the Grant Letter), but in any event no later than the date of
expiration of the option term. Any of the Grantee's Stock Options which are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by the Company as described in this subsection (iii) shall terminate as of such
date.
(iv) If the Grantee dies while employed by the Company or
within 90 days after the date on which the Grantee ceases to be employed by the
Company on account of a termination of employment specified in Section 5(f)(i)
above (or within such other period of time as may be specified in the Grant
Letter), any Stock Option which is otherwise exercisable by the Grantee (subject
to the provisions of Section 5(d)) shall terminate unless exercised within one
year after the date on which the Grantee ceases to be employed by the Company
(or within such other period of time as may be specified in the Grant Letter),
but in any event no later than the date of expiration of the option term. Except
as provided in Section 5(d), any of the Grantee's Stock Options which are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by the Company shall terminate as of such date.
(v) For purposes of this Section 5(f), the term "Company"
shall include the Company's subsidiaries, and the following terms shall be
defined as follows: (A) "disability" shall mean a Grantee's becoming disabled
within the meaning of section 22(e)(3) of the Code and (B) "termination for
cause" shall mean, except to the extent otherwise provided in a Grantee's Grant
Letter, a finding by the Committee, after full consideration of the facts
presented on behalf of both the Company and the Grantee, that the Grantee has
breached his or her employment or service contract with the Company, or has been
engaged in disloyalty to the Company, including, without limitation, fraud,
embezzlement, theft, commission of a felony or proven dishonesty in the course
of his or her employment or service, or has disclosed trade secrets or
confidential information of the Company to persons not entitled to receive such
information. In such event, in addition to the immediate termination of the
Stock Option, the Grantee shall automatically forfeit all option shares for any
exercised portion of a Stock Option for which the Company has not yet delivered
the share certificates upon refund by the Company of the option price paid by
the Grantee for such shares.
(g) Satisfaction of Option Price. The Grantee shall pay the option
price specified in the Grant Letter in (i) cash, (ii) with the approval of the
Committee, by delivering shares of Company Stock owned by the Grantee (including
Company Stock acquired in connection with the exercise of a Stock Option,
subject to such restrictions as the Committee deems appropriate) and having a
Fair Market Value on the date of exercise equal to the option price or (iii)
through any combination of (i) and (ii). The Grantee shall pay the option price
and the amount of withholding tax due, if any, at the time of exercise. Shares
of Company Stock shall not be issued or transferred upon exercise of a Stock
Option until the option price is fully paid and any required withholding is
made.
(h) Limits on Incentive Stock Options. Each Incentive Stock Option
shall provide that, to the extent that the aggregate Fair Market Value of the
stock on the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year under the
Plan or any other stock option plan of the Company or a parent or subsidiary
exceeds $100,000, then such option as to the excess shall be treated as a
Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any
participant who is not an Employee of the Company or any parent or subsidiary
(within the meaning of section 424(f) of the Code).
6. Restricted Stock Grants
The Committee may issue or transfer shares of Company Stock to an
Employee or Consultant under a Grant of restricted stock (a "Restricted Stock
Grant"), upon such terms as the Committee deems appropriate. The following
provisions are applicable to Restricted Stock Grants:
(a) General Requirements. Shares of Company Stock issued pursuant
to Restricted Stock Grants may be issued for consideration or for no
consideration, at the sole discretion of the Committee. The Committee shall
establish conditions under which restrictions on the transfer of shares of
Company Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate. The period of years during which
the Restricted Stock Grant will remain subject to restrictions will be
designated in the Grant Letter as the "Restriction Period."
(b) Number of Shares. The Committee shall grant to each Grantee a
number of shares of Company Stock
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pursuant to a Restricted Stock Grant in such manner as the Committee determines.
(c) Requirement of Employment. If the Grantee ceases to be
employed by the Company (as an Employee or Consultant) during a period
designated in the Grant Letter as the Restriction Period, or if other specified
conditions are not met, the Restricted Stock Grant shall terminate as to all
shares covered by the Grant as to which restrictions on transfer have not lapsed
and those shares of Company Stock must be immediately returned to the Company.
The Committee may, however, provide for complete or partial exceptions to this
requirement as it deems equitable.
(d) Restrictions on Transfer and Legend on Stock Certificate.
During the Restriction Period, a Grantee may not sell, assign, transfer, pledge
or otherwise dispose of the shares of Company Stock to which such Restriction
Period applies except to a Successor Grantee (as defined below) under Section 9.
Each certificate for a share issued or transferred under a Restricted Stock
Grant shall contain a legend giving appropriate notice of the restrictions in
the Grant. The Grantee shall be entitled to have the legend removed from the
stock certificate covering any of the shares subject to restrictions when all
restrictions on such shares have lapsed.
(e) Right to Vote and to Receive Dividends. During the Restriction
Period, unless the Committee determines otherwise, the Grantee shall have the
right to vote shares subject to the Restricted Stock Grant and to receive any
dividends or other distributions paid on such shares, subject to any
restrictions deemed appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed under the
Restricted Stock Grant shall lapse upon the expiration of the applicable
Restriction Period and the satisfaction of any conditions imposed by the
Committee. The Committee may determine, as to any or all Restricted Stock
Grants, that all the restrictions shall lapse without regard to any Restriction
Period. The restrictions on a Grantee's outstanding Restricted Stock Grants
shall automatically and immediately lapse if the Grantee dies while employed by
or providing services to the Company. All restrictions under all outstanding
Restricted Stock Grants shall automatically and immediately lapse upon a Change
of Control.
7. Stock Appreciation Rights
(a) General Requirements. The Committee may grant stock
appreciation rights ("SARs") to any Grantee in tandem with any Stock Option, for
all or a portion of the applicable Stock Option, either at the time the Stock
Option is granted or at any time thereafter while the Stock Option remains
outstanding; provided, however, that in the case of an Incentive Stock Option,
such rights may be granted only at the time of the Grant of such Stock Option.
Unless the Committee determines otherwise, the base price of each SAR shall be
equal to the greater of (i) the exercise price of the related Stock Option or
(ii) the Fair Market Value of a share of Company Stock as of the date of Grant
of such SAR.
(b) Number of SARs. The number of SARs granted to a Grantee which
shall be exercisable during any given period of time shall not exceed the number
of shares of Company Stock which the Grantee may purchase upon the exercise of
the related Stock Option during such period of time. Upon the exercise of a
Stock Option, the SARs relating to the Company Stock covered by such Stock
Option shall terminate. Upon the exercise of the SAR's, the related Stock Option
shall terminate to the extent of an equal number of shares of Company Stock.
(c) Value of SARs. Upon a Grantee's exercise of some or all of the
Grantee's SARs, the Grantee shall receive in settlement of such SARs an amount
equal to the value of the stock appreciation for the number of SARs exercised,
payable in cash, Company Stock or a combination thereof. The stock appreciation
for an SAR is the amount by which the Fair Market Value of the underlying
Company Stock on the date of exercise of the SAR exceeds the base price of the
SAR as described in subsection (a).
(d) Form of Payment. At the time of such exercise, the Grantee
shall have the right to elect the portion of the amount to be received that
shall consist of cash and the portion that shall consist of shares of Company
Stock, which for purposes of calculating the number of shares of Company stock
to be received, shall be valued at their Fair Market Value on the date of
exercise of such SARs. The Committee shall have the right to disapprove a
Grantee's election to receive cash in full or partial settlement of the SARs
exercised and to require that shares of Company Stock be delivered in lieu of
cash. If shares of Company Stock are to be received upon exercise of an SAR,
cash shall be delivered in lieu of any fractional share.
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(e) Certain Restrictions. An SAR is exercisable only during the
period when the Stock Option to which it is related is also exercisable.
8. Transferability of Grants
Only the Grantee or his or her authorized representative may exercise
rights under a Grant. Such persons may not transfer those rights except by will
or by the laws of descent and distribution or, with respect to Grants other than
Incentive Stock Options, if permitted in any specific case by the Committee in
its sole discretion pursuant to a qualified domestic relations order (as defined
under the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the regulations thereunder). When a Grantee dies, the
representative or other person entitled to succeed to the rights of the Grantee
("Successor Grantee") may exercise such rights. A Successor Grantee must furnish
proof satisfactory to the Company of his or her right to receive the Grant under
the Grantee's will or under the applicable laws of descent and distribution.
Notwithstanding the foregoing, the Committee may provide, in a Grant
Letter, that a Grantee may transfer Nonqualified Stock Options to his or her
children, grandchildren or spouse or to one or more trusts for the benefit of
such family members or to partnerships in which such family members are the only
partners (a "Family Transfer"), provided that the Grantee receives no
consideration for a Family Transfer and the Grant Letters relating to
Nonqualified Stock Options transferred in a Family Transfer continue to be
subject to the same terms and conditions that were applicable to such
Nonqualified Stock Options immediately prior to the Family Transfer.
9. Change of Control of the Company
As used herein, a "Change of Control" shall be deemed to have occurred
if:
(a) As a result of a tender offer, stock purchase, other stock
acquisition, merger, consolidation, recapitalization, reverse split, or sale or
transfer of assets, any person or group (as such terms are used in and under
Section 13(d) of the Exchange Act), but excluding Rolf D. Schmidt and F. William
Schmidt or any entity controlled by either or both of them, becomes the
beneficial owner (as defined in Rule 13-d under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50.1% of the
common stock of the Company or the combined voting power of the Company's then
outstanding securities;
(b) A liquidation or dissolution of the Company, or a sale
(excluding transfers to subsidiaries) of all or substantially all of the
Company's assets occurs; or
(c) During any period of two consecutive years, individuals who,
at the beginning of such period, constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company's stockholders, of at least two-thirds of the
directors who were not directors at the beginning of such period was approved by
a vote of at least two-thirds of the directors then still in office who were
either directors at the beginning of the period or who, in connection with their
election or nomination, received the foregoing two-thirds approval.
10. Consequences of a Change of Control
(a) Notice.
(i) If a Change of Control described in Section 9(a) or (b)
will occur, then, not later than 10 days after the approval by the stockholders
of the Company (or approval by the Board, if stockholder action is not required)
of such Change of Control, the Company shall give each Optionee with any
outstanding Stock Options written notice of such proposed Change of Control.
(ii) If a Change of Control described in Section 9(a) may
occur without approval by the stockholders (or approval by the Board) and does
so occur, or if a Change of Control described in Section 9(c) occurs, then, not
later than 10 days after such Change of Control, the Company shall give each
Optionee with any outstanding Stock Options
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written notice of the Change of Control.
(b) Election Period. In connection with the Change of Control and
effective only upon such Change of Control:
(i) All outstanding Stock Options shall be fully exercisable
and the restrictions on all outstanding Restricted Stock shall immediately
lapse; and
(ii) Each Grantee shall thereupon have the right, within 20
days after such written notice is sent by the Company (the "Election Period"),
to make an election as described in Subsection (c) with respect to all of his or
her outstanding Stock Options (whether the right to exercise such Stock Options
has then accrued or the right to exercise such Stock Options will occur or has
occurred upon the Change of Control).
(c) Election Right. Effective upon a Change of Control, the
Grantees shall have the right to exercise Stock Options as described in
Subsection (i) below, and the Committee may determine, in its sole discretion,
that Grantees will have the right described in Subsection (ii) below. During the
Election Period, subject to the preceding sentence, each Grantee shall have the
right to elect:
(i) To exercise in full any installments of such Stock
Options not previously exercised, or
(ii) If so determined by the Committee, to surrender all or
part of such outstanding Stock Options, in exchange for a payment by the
Company, in cash or Company Stock as determined by the Committee, in an amount
equal to the excess over the purchase price of the then Fair Market Value of the
shares of Company Stock subject to the Grantee's outstanding Stock Options.
(d) Termination of Stock Options. If a Grantee does not make a
timely election in accordance with Subsection (c) in connection with a Change of
Control where the Company is not the surviving corporation (or survives only as
a subsidiary of another corporation), the Grantee's Stock Options shall
terminate as of the Change of Control. Notwithstanding the foregoing, a Stock
Option will not terminate if assumed by the surviving or acquiring corporation,
or its parent, upon a merger or consolidation and, with respect to an Incentive
Stock Option, the assumption of the Option shall occur under circumstances which
are not deemed a modification of the Option within the meaning of sections
424(a) and 424(h)(3)(A) of the Code.
(e) Tax Limitations. Notwithstanding the foregoing, if the right
described in Subsection (c)(ii) would make the applicable Change of Control
ineligible for desired tax treatment with respect to such Change of Control and,
but for those provisions, the Change of Control would otherwise qualify for such
treatment, and if the Committee determines that Subsection (c)(ii) shall be
effective, the Grantee shall receive shares of Company Stock with a Fair Market
Value equal to the cash that would otherwise be payable pursuant to Subsection
(c)(ii) in substitution for such cash.
11. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any
time; provided, however, that any amendment that increases the aggregate number
(or individual limit for any single Grantee) of shares of Company Stock that may
be issued or transferred under the Plan (other than by operation of Section
3(b)), or modifies the requirements as to eligibility for participation in the
Plan, shall be subject to approval by the stockholders of the Company and
provided, further, that the Board shall not amend the Plan without stockholder
approval if such approval is required by section 162(m) of the Code.
(b) Termination of Plan. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date unless
terminated earlier by the Board or unless extended by the Board with the
approval of the stockholders.
(c) Termination and Amendment of Outstanding Grants. A termination
or amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
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Committee acts under Section 20(b). The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated
or amended under Section 20(b) or may be amended by agreement of the Company and
the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Company and its successors and assigns.
12. Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
13. Rights of Participants
Nothing in this Plan shall entitle any Employee, Consultant or other
person to any claim or right to be granted a Grant under this Plan. Neither this
Plan nor any action taken hereunder shall be construed as giving any individual
any rights to be retained by or in the employ of the Company or any other
employment rights.
14. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
15. Withholding of Taxes
(a) Required Withholding. The Company shall have the right to
deduct from all Grants paid in cash, or from other wages paid to the Grantee,
any federal, state or local taxes required by law to be withheld with respect to
such cash awards and, in the case of Grants paid in Company Stock, the Grantee
or other person receiving such shares shall be required to pay to the Company
the amount of any such taxes which the Company is required to withhold with
respect to such Grants or the Company shall have the right to deduct from other
wages paid by the Company the amount of any withholding due with respect to such
Grants.
(b) Election to Withhold Shares. A Grantee may make an election to
satisfy the Company income tax withholding obligation with respect to a Stock
Option, SAR or Restricted Stock by having shares withheld up to an amount that
does not exceed the Grantee's maximum marginal tax rate for federal (including
FICA), state and local tax liabilities. Such election must be in the form and
manner prescribed by the Committee and is subject to the prior approval of the
Committee.
16. Requirements for Issuance of Shares
No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Committee shall deem necessary or advisable as a
result of any applicable law, regulation or official interpretation thereof and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued under the
Plan will be subject to such stop-transfer orders and other restrictions as may
be applicable under such laws, regulations and other obligations of the Company,
including any requirement that a legend or legends be placed thereon.
17. Headings
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Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
18. Effective Date of the Plan.
This Plan shall be effective, as amended and restated on June 18, 2002.
19. Miscellaneous
(a) Substitute Grants. The Committee may make a Grant to an
employee of another corporation who becomes an Employee by reason of a corporate
merger, consolidation, acquisition of stock or property, reorganization or
liquidation involving the Company or any of its subsidiaries in substitution for
a stock option or restricted stock grant made by such corporation ("Substituted
Stock Incentives"). The terms and conditions of the substitute grant may vary
from the terms and conditions required by the Plan and from those of the
Substituted Stock Incentives. The Committee shall prescribe the provisions of
the substitute grants.
(b) Compliance with Law. The Plan, the exercise of Stock Options
and the obligations of the Company to issue or transfer shares of Company Stock
under Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee
may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee may
also adopt rules regarding the withholding of taxes on payments to Grantees. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.
(c) Ownership of Stock. A Grantee or Successor Grantee shall have
no rights as a stockholder with respect to any shares of Company Stock covered
by a Grant until the shares are issued or transferred to the Grantee or
Successor Grantee on the stock transfer records of the Company.
(d) Governing Law. The validity, construction, interpretation and
effect of the Plan and Grant Letters issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the State of Delaware.
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