INTEROACT SYSTEMS, INCORPORATED
1997 LONG-TERM INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 Purpose. This InteroAct Systems, Incorporated 1997 Long-Term
Incentive Plan (the "Plan") is intended to induce those persons who are in a
position to contribute materially to the success of InteroAct Systems,
Incorporated (the "Company") to remain with the Company, to offer them rewards
in recognition of their contributions to the Company's progress and to offer
them incentives to continue to promote the best interests of the Company.
1.2 Grant of Awards. In order to maintain flexibility in the grant of
incentive benefits, the Plan allows for the grant of Stock Options (both
Incentive Stock Options and Nonqualified Stock Options), Stock Appreciation
Rights, Unrestricted Stock, Restricted Stock and Performance Shares.
ARTICLE 2
DEFINITIONS
2.1 "Award" means any grant of Stock Options, Stock Appreciation
Rights, Unrestricted Stock, Restricted Stock or Performance Shares authorized by
the Committee under this Plan.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the committee appointed by the Board pursuant to
Article 3 of the Plan for the purpose of administering the Plan.
2.5 "Disinterested Person" means a person who is both a "Non-Employee
Director" within the meaning of Rule 16b-3 as promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934 and an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
2.6 "Fair Market Value" means, as of a given date, the closing sales
price per share of the Company's Stock, as reported on the national securities
exchange on which the Stock is principally traded on the day preceding the day
(or the most recent trading day preceding the day) on which the stock is to be
valued. For purposes of this section, the term "national securities exchange"
shall include the National Association of Securities Dealers Automated Quotation
System. If at the time the determination of Fair Market Value is made the Stock
is not admitted to trading on a national securities exchange for which sales
prices are regularly reported, Fair Market Value shall be determined by the
Committee on the basis of such factors as it deems
appropriate; provided, however, that Fair Market Value shall be
determined without regard to any restriction other than a restriction which, by
its terms, shall never lapse.
2.7 "Grantee" means a person who receives an Award pursuant to the
Plan.
2.8 "Incentive Stock Option" means any Stock Option designated as an
Incentive Stock Option within the meaning of Section 422 of Code. Any Stock
Option so designated shall be construed to comply in every respect with Section
422 of the Code.
2.9 "Nontandem Stock Appreciation Right" means any Stock Appreciation
Right granted pursuant to Article 7 of the Plan in a manner not related to a
grant of a Stock Option.
2.10 "Nonqualified Stock Option" means any Stock Option granted
pursuant to the Plan that is not designated as being an Incentive Stock Option
under Section 422 of the Code. Any Stock Option so designated shall not be
subject to Section 422 of the Code.
2.11 "Performance-based Compensation Award" means an Award described in
Article 11 of the Plan.
2.12 "Performance Shares" means shares of Stock that are subject to an
Award pursuant to Article 10 of the Plan.
2.13 "Restricted Stock" means shares of Stock that are issued to a
Grantee subject to restrictions under Article 9 of the Plan.
2.14 "Stock" means the Common Stock, no par value, of the Company or
any successor class of stock.
2.15 "Stock Appreciation Right" means the right to receive, pursuant to
an Award granted pursuant to Article 7 of the Plan, shares of Stock equal in
value to the excess, at the time the right is exercised, of the Fair Market
Value of the number of shares subject to the Award over the Fair Market Value of
such shares at the time the Award was granted. A Stock Appreciation Right may be
a Tandem Stock Appreciation Right or a Nontandem Stock Appreciation Right.
2.16 "Stock Option" means any Incentive Stock Option or Nonqualified
Stock Option to purchase shares of Stock granted to any Grantee pursuant to
Article 6 of the Plan.
2.17 "Subsidiary" means any person, firm, partnership, limited
liability company or corporation at least 50% of the total combined voting power
of which is owned directly or indirectly by the Company.
2.18 "Tandem Stock Appreciation Right" means any Stock Appreciation
Right granted pursuant to Article 7 of the Plan in conjunction with all or part
of any Stock Option granted under the Plan pursuant to a Stock Option agreement
which states that the Grantee may, in lieu of exercising the Stock Option,
surrender the Stock Option and receive shares of Stock equal in
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value to the Stock Appreciation Right.
2.19 "Unrestricted Stock" means an Award of shares of Stock
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pursuant to Article 8 of the Plan.
ARTICLE 3
ADMINISTRATION
3.1 Committee. The Plan shall be administered by a Committee appointed
by the Board consisting of not less than two members, all of whom must be
Disinterested Persons. Any action of the Committee shall be taken by majority
vote at a meeting called in accordance with procedures adopted by the Committee
or by the unanimous written consent of the Committee.
3.2 Authority of Committee. Subject to the other provisions of this
Plan, and with a view to effecting its purpose, the Committee shall have sole
authority in its absolute discretion: (i) to grant Awards under the Plan; (ii)
to determine the officers, employees and directors to whom Awards shall be
granted under the Plan; (iii) to determine the number of shares of Stock subject
to any Award under the Plan; (iv) to establish the price, duration, performance
measures and any other term, restriction or condition of an Award under the
Plan; (v) to accelerate the time at which any outstanding Stock Option or Stock
Appreciation Right may be exercised or the time when restrictions or conditions
on any other Awards will lapse; (vi) to construe and interpret the Plan; (vii)
to prescribe, amend, and rescind rules and regulations relating to the Plan; and
(viii) to make any other determinations necessary or advisable for the
administration of the Plan and to do everything necessary or appropriate to
administer the Plan. Notwithstanding the foregoing, the Board may grant Awards
from time to time to consultants and directors who are not employees of the
Company or any of its Subsidiaries.
3.3 Liability; Indemnification. No member of the Committee or the Board
shall be liable for any action or determination made in good faith with respect
to the Plan or to any Award granted thereunder. In addition, directors and
members of the Committee shall be eligible for indemnification from the Company,
pursuant to the Company's Bylaws, with respect to any matter arising under the
Plan.
ARTICLE 4
STOCK SUBJECT TO PLAN
4.1 Maximum Number of Shares Subject to the Plan. The maximum aggregate
number of shares of Stock available pursuant to the Plan, subject to adjustment
as provided in Article 14 hereof, shall be 500,000 shares of the Stock. If any
Stock Option granted pursuant to the Plan expires or terminates for any reason
before it shall have been exercised in full, the unpurchased shares subject to
such expired or terminated Stock Option shall again be available for the
purposes of the Plan, except that any unpurchased shares that have been subject
to a Stock Option in connection with which a Tandem Stock Appreciation Right has
also been granted shall be reduced by the number of shares issued in connection
with the Tandem Stock Appreciation
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Right. If any Nontandem Stock Appreciation Right granted pursuant to the Plan
expires or terminates for any reason before all shares subject thereto have been
issued, the unissued shares associated with such Nontandem Stock Appreciation
Rights shall again be available for the purposes of the Plan. If any shares
issued pursuant to a Restricted Stock Award shall be forfeited, such shares
shall again be available for the purposes of the Plan. If a Performance Share
Award terminates for any reason before all of the shares associated with such
Performance Shares Award shall have been issued pursuant thereto, such unissued
shares shall again be available for the purposes of the Plan. If any Stock
Appreciation Right or Performance Shares are paid in cash rather than in shares,
in whole or in part, the number of shares of Stock available under the Plan will
be reduced by the number of shares to which the cash payment relates.
4.2 Maximum Number of Shares For Any Individual. Notwithstanding any
other term or provision of the Plan, the aggregate number of shares of Stock
with respect to which Awards under the Plan may be granted to any individual
(including Awards that are subsequently canceled) shall not exceed 150,000
shares of Stock of the Company. If a Stock Option is canceled, terminated or
repriced, the canceled, terminated or repriced Stock Option shall be counted
against the maximum number of shares for which Awards may be granted to such
Grantee. If cash is paid to a Grantee in settlement of any Stock Appreciation
Right or Performance Shares Award, the number of shares to which the cash
payment relates shall be counted against the maximum number of shares for which
Awards may be granted to such Grantee.
4.3 Reservation of Shares of Common Stock. The Company, during the term
of this Plan, will at all times reserve and keep available such number of shares
of the Stock as shall be sufficient to satisfy the requirements of the Plan. In
addition, the Company will from time to time, as is necessary to accomplish the
purposes of this Plan, seek to obtain from any regulatory agency having
jurisdiction any requisite authority in order to issue and sell shares of Stock
hereunder. The inability of the Company to obtain from any regulatory agency
having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any shares of the Stock hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of the Stock as to which the requisite authority shall not have been obtained.
ARTICLE 5
ELIGIBILITY
Awards under the Plan may be granted to persons identified by the
Committee who are executive or supervisory employees, officers, directors, or
consultants of the Company or any Subsidiary. Notwithstanding the foregoing,
Incentive Stock Options to purchase shares of Stock may be granted pursuant to
the Plan only to executive or supervisory employees of the Company or a
Subsidiary that is a corporation, including directors and officers who are also
employees of the Company or a Subsidiary that is a corporation.
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ARTICLE 6
STOCK OPTIONS
6.1 Grant of Stock Options. The Committee may cause the Company to
grant Stock Options for the purchase of shares of Stock to Grantees under the
Plan in such amounts as the Committee, in its sole discretion, shall determine.
Such Stock Options may be granted either alone or in addition to other Awards
granted under the Plan. The Stock Options granted under the Plan shall be
designated as either: (i) Incentive Stock Options or (ii) Nonqualified Stock
Options.
6.2 Stock Option Terms and Conditions. Stock Options granted under the
Plan shall be evidenced by written agreements in such form as the Committee may
from time to time approve. The terms and conditions of Stock Options granted
under the Plan, including the satisfaction of corporate or individual
performance objectives and other vesting standards, may differ one from another
as the Committee shall, in its discretion, determine, as long as all Stock
Options granted under the Plan satisfy the requirements of the Plan.
6.3 Purchase Price. The purchase price for shares acquired pursuant to
the exercise, in whole or in part, of any Stock Option shall be determined by
the Committee at the time of grant, subject to the limitations set forth in this
Section 6.3. In no event shall the purchase price of any Stock Option be less
than the Fair Market Value of the shares at the time of the grant of the Stock
Option; except that for any Grantee who owns more than 10% of the combined
voting power of all classes of stock of the Company, the purchase price of any
Incentive Stock Option shall not be less than 110% of Fair Market Value. The
applicable Stock Option agreement may provide for adjustments to the purchase
price, as the Committee shall determine, provided that the purchase price shall
never be less than the initial purchase (except to the extent such adjustments
are pursuant to Article 15). The purchase price so determined shall also be
applicable in connection with the exercise of any Tandem Stock Appreciation
Right granted with respect to such Stock Option.
6.4 Duration of Stock Options. Each Stock Option and all rights
thereunder granted pursuant to the terms of the Plan shall expire on the date
specified in the applicable Stock Option agreement, but in no event shall any
Stock Option granted under the Plan expire later than 15 years from the date on
which the Stock Option is granted; provided, however, that no Incentive Stock
Option may be exercisable more than ten years from the date of the Award and no
Incentive Stock Option granted to an employee who owns more than 10% of the
combined voting power of all classes of stock of the Company, may be exercisable
after the date five years from the date of the Award.
6.5 Exercise of Stock Options. Each Stock Option shall be exercisable
in one or more installments during its term, and the right to exercise may be
cumulative. No Stock Option may be exercised for a fraction of a share of Stock.
Unless otherwise provided by the applicable Stock Option agreement, the purchase
price of any shares purchased shall be paid in full in cash or by certified or
cashier's check payable to the order of the Company, by surrender of shares of
Stock held by the Grantee for more than six months and having a value at the
exercise date equal to the exercise price, or through a cashless exercise
through a broker-dealer registered with the
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Securities and Exchange Commission, or by a combination of any of the foregoing.
If any portion of the purchase price is paid in shares of Stock, those shares
shall be valued at their Fair Market Value as of the day of delivery. No
Grantee, or Grantee's executor, administrator, legatee, or distributes, shall be
deemed to be a holder of any shares subject to a Stock Option unless and until a
stock certificate or certificates for such are issued to such Grantee under the
terms of the Plan. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Article 15. The exercise of Stock
Options under the Plan shall be subject to the withholding requirements as set
forth in Section 16.1.
6.6 Written Notice Required. A Stock Option shall be exercised when
written notice of that exercise, stating the number of shares of Stock with
respect to which the Stock Option is being exercised, has been given to the
Company at its principal office, to the attention of the General Counsel, by the
Grantee and full payment for the shares with respect to which the Stock Option
is exercised has been received by the Company.
6.7 Maximum Amount of Incentive Stock Options in Any Calendar Year. The
aggregate Fair Market Value (determined as of the time the option is granted) of
the Stock with respect to which Incentive Stock Options are first exercisable by
any Grantee during any calendar year under the terms of this Plan and all other
such plans of the Company and any parent and Subsidiary shall not exceed
$100,000. Any Stock Option in excess of the foregoing limitation shall be deemed
a Nonqualified Stock Option to the extent of such excess.
6.8 Cancellation of Stock Appreciation Rights. Upon exercise of all or
a portion of a Stock Option, any related Tandem Stock Appreciation Rights shall
be canceled with respect to an equal number of shares of Stock.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. The Committee may cause the
Company to grant Stock Appreciation Rights to Grantees under the Plan in such
amounts as the Committee, in its sole discretion, shall determine. Such Stock
Appreciation Rights may be granted either alone or in addition to other Awards
granted under the Plan. The Stock Appreciation Rights granted under the Plan
shall be designated as either: (i) Tandem Stock Appreciation Rights or (ii)
Nontandem Stock Appreciation Rights.
7.2 Stock Appreciation Rights Terms and Conditions. Stock Appreciation
Rights granted under the Plan shall be evidenced by written agreements in such
form as the Committee may from time to time approve. The terms and conditions of
Stock Appreciation Rights granted under the Plan, including the satisfaction of
corporate or individual performance objectives and other vesting standards, may
differ one from another as the Committee shall, in its discretion, determine, as
long as all Stock Appreciation Rights granted under the Plan satisfy the
requirements of the Plan.
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7.3 Tandem Stock Appreciation Rights.
7.3.1 Award of Tandem Stock Appreciation Rights. Tandem Stock
Appreciation Rights may be granted by the Committee in connection with
any Stock Option granted under the Plan, either at the time the Stock
Option is granted or thereafter at any time prior to the exercise,
termination or expiration of the Stock Option, except that in the case
of an Incentive Stock Option, such rights may be granted only at the
time of the grant of such Incentive Stock Option.
7.3.2 Limitations on Exercise of Tandem Stock Appreciation
Rights. A Tandem Stock Appreciation Right shall be exercisable only to
the extent that the related Stock Option is exercisable and shall be
exercisable only for such period as the Committee may determine (which
period may expire prior to the expiration date of the related Stock
Option). Upon the exercise of all or a portion of Tandem Stock
Appreciation Rights, the related Stock Option shall be canceled with
respect to the shares of Stock to which the exercised portion of the
Tandem Stock Appreciation Rights relates.
7.3.3 Surrender or Exchange of Tandem Stock Appreciation
Rights. A Tandem Stock Appreciation Right shall entitle the Grantee to
surrender to the Company unexercised the related Stock Option, or any
portion thereof, and to receive from the Company in exchange therefor
that number of shares of Stock having an aggregate Fair Market Value
equal to (i) the excess of (A) the Fair Market Value of one (1) share
of Common Stock at the time the Tandem Stock Appreciation Right is
exercised over (B) the purchase price per share specified in such Stock
Option, multiplied by (ii) the number of shares of Stock subject to the
Stock Option, or portion thereof, which is surrendered.
Cash shall be delivered in lieu of any fractional shares.
7.4 Nontandem Stock Appreciation Rights.
7.4.1 Award of Nontandem Stock Appreciation Rights. Nontandem
Stock Appreciation Rights may be granted by the Committee in a manner
not related to a grant of a Stock Option. At the time of grant of a
Nontandem Stock Appreciation Right, the Committee shall specify the
number of shares of Stock covered by such right and the base price of
shares of Stock to be used in connection with the calculation described
in Section 7.4.2 below. The base price of a Nontandem Stock
Appreciation Right shall be not less than 100% of the Fair Market Value
of a share of Common Stock on the date of grant. A Nontandem Stock
Appreciation Right shall be exercisable during such period as the
Committee shall determine.
7.4.2 Exercise of Nontandem Stock Appreciation Rights. The
exercise of a Nontandem Stock Appreciation Right shall entitle the
Grantee to receive from the Company that number of shares of Stock
having an aggregate Fair Market Value equal to (i) the excess of (A)
the Fair Market Value of one (1) share of Stock at the time at which
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the Nontandem Stock Appreciation Right is exercised over (B) the base
price of the shares covered by the Nontandem Stock Appreciation Right,
multiplied by (ii) the number of shares of Stock covered by the
Nontandem Stock Appreciation Right, or the portion thereof being
exercised. Cash shall be delivered in lieu of any fractional shares.
7.5 Settlement of Stock Appreciation Rights. As soon as is reasonably
practicable after the exercise of a Stock Appreciation Right, the Company shall
(i) issue, in the name of the Grantee, stock certificates representing the total
number of full shares of Stock to which the Grantee is entitled pursuant to
Section 7.3.3 or Section 7.4.2 hereof and cash in an amount equal to the Fair
Market Value, as of the date of exercise, of any resulting fractional shares,
and (ii) if the Committee causes the Company to elect to settle all or part of
its obligations arising out of the exercise of the Stock Appreciation Right in
cash pursuant to Section 7.6, deliver to the Grantee an amount in cash equal to
the Fair Market Value, as of the date of exercise, of the shares of Stock it
would otherwise be obligated to deliver. The settlement of any Stock
Appreciation Right under the Plan shall be subject to the withholding
requirements as set forth in Section 16.1.
7.6 Cash Settlement. The Committee, in its discretion, may cause the
Company to settle all or any part of its obligation arising out of the exercise
of a Stock Appreciation Right by the payment of cash in lieu of all or part of
the shares of Stock it would otherwise be obligated to deliver in an amount
equal to the Fair Market Value of such shares on the date of exercise.
7.7 Written Notice Required. A Stock Appreciation Right shall be
exercised when written notice of that exercise, stating the number of shares of
Stock with respect to which the Stock Appreciation Right is being exercised, has
been given to the Company at its principal office, to the attention of the
General Counsel, by the Grantee.
ARTICLE 8
UNRESTRICTED STOCK
8.1 Grant of Unrestricted Stock. The Committee may cause the Company to
award Unrestricted Stock to persons eligible under the Plan in such amounts as
the Committee, in its sole discretion, shall determine. Such shares of Stock may
be issued either alone or in addition to other Awards granted under the Plan.
8.2 Delivery of Unrestricted Stock. The Company shall issue, in the
name of each Grantee to whom Unrestricted Stock has been granted, stock
certificates representing the total number shares of Unrestricted Stock granted
to the Grantee and shall deliver such certificates to the Grantee as soon as
reasonably practicable after the date of the Award. The delivery of Unrestricted
Stock under the Plan shall be subject to the withholding requirements as set
forth in Section 16.1.
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ARTICLE 9
RESTRICTED STOCK
9.1 Grant of Restricted Stock. The Committee may cause the Company to
grant Restricted Stock to Grantees under the Plan in such amounts as the
Committee, in its sole discretion, shall determine. Such shares of Restricted
Stock may be issued either alone or in addition to other Awards granted under
the Plan.
9.2 Restrictions and Conditions. Restricted Stock granted under the
Plan shall be evidenced by written agreements in such form as the Committee may
from time to time approve. The restrictions and conditions imposed on Restricted
Stock granted under the Plan, including the satisfaction of corporate or
individual performance objectives, may differ from one Award to another as the
Committee shall, in its discretion, determine as long as all Awards satisfy the
requirements of the Plan; provided, however, that no grant shall require any
payment of cash consideration by the recipient. Each Award of Restricted Stock
shall be effective as of the date so stated in the resolution of the Committee
making the Award.
9.3 Duration of Awards. The restrictions and conditions imposed upon
any Restricted Stock shall lapse, in whole or in part, as provided in the
agreement pursuant to which the Award is made, but in no event later than 10
years from the date of the Award.
9.4 Restricted Stock Certificates. Each certificate issued for shares
of Restricted Stock shall be registered in the name of the Grantee and shall be
deposited by him or her with the Company, to the attention of the Chief
Executive Officer, together with a stock power endorsed in blank. The shares
shall be subject to restrictions as to transferability as provided in Article 13
and to such other restrictions and conditions as may be imposed by the Committee
at the time of making the Award (the "restrictions and conditions"), which shall
be referenced by a conspicuous legend on the reverse side of the stock
certificate representing the shares.
9.5 Rights of Holders of Restricted Stock. Subject to the restrictions
and conditions herein and the written agreement evidencing the Restricted Stock,
the Grantee shall be the owner of the Restricted Stock and shall have all of the
rights of a shareholder, including, but not limited to, the right to receive all
dividends paid on the Restricted Stock and the right to vote the shares. In the
event there is a change in the Stock as described in Article 15, any shares or
other securities issued with respect to shares subject to restrictions and
conditions under the Plan shall be subject to the same restrictions and
conditions, and the certificates therefor, together with a stock power endorsed
in blank, shall be delivered to the Company, to the attention of the Chief
Executive Officer.
9.6 Delivery of Restricted Stock. Following the lapse of the
restrictions and conditions imposed on any Restricted Stock, the certificate or
certificates evidencing such shares shall be reissued by the Company in the name
of the Grantee without legend (except to the extent that a legend may be
necessary for compliance with applicable securities laws) and shall be delivered
to the Grantee. The delivery of Restricted Stock under the Plan shall be subject
to the withholding requirements as set forth in Section 16.1.
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ARTICLE 10
PERFORMANCE SHARES
10.1 Grant of Performance Shares. The Committee may cause the Company
to grant Performance Shares to Grantees under the Plan in such amounts as the
Committee, in its sole discretion, shall determine. Such Performance Shares may
be issued either alone or in addition to other Awards under the Plan. Each
Performance Share grant shall confer upon the Grantee the right to receive a
specified number of shares of Stock contingent upon the achievement of specified
corporate or individual performance objectives within a specified period.
10.2 Terms and Conditions. Performance Shares granted under the Plan
shall be evidenced by written agreements in such form as the Committee may from
time to time approve. The Committee shall specify the performance objectives and
the period of duration of the Performance Shares Award at the time that such
Award is granted. Any Performance Share Award granted under this Plan shall
constitute an unfunded promise to issue shares of Stock to the Grantee in the
future upon the completion of specified conditions. No Grantee shall be deemed
to be a holder of any shares subject to a Performance Shares Award unless and
until a stock certificate or certificates for such are issued to such Grantee
under the terms of the Plan. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
stock certificates are issued pursuant to any Performance Shares Award, except
as provided in Article 15. The settlement of any Performance Shares Award shall
be subject to the withholding requirements as set forth in Section 16.1.
10.3 Cash in Lieu of Stock. In lieu of some or all of the shares earned
by achievement of the specified performance objectives within the specified
period, the Committee may distribute cash in an amount equal to the Fair Market
Value of the Stock at the time that the performance objective is achieved within
the specified period multiplied by the number of Performance Shares.
10.4 Performance Objective Period. The duration of the period within
which to achieve the performance objectives is to be determined by the
Committee, but in no event shall the duration be later than 15 years from the
date of the Award.
ARTICLE 11
PERFORMANCE-BASED COMPENSATION AWARDS
11.1 Awards. All Stock Options and Stock Appreciation Rights granted to
key executive and supervisory employees under the Plan are Performance-based
Compensation Awards because they are required by the terms of the Plan to have
an exercise price that is not less than Fair Market Value at the time of the
Award. Restricted Stock and Performance Shares awarded to key executive and
supervisory employees are also Performance-based Compensation Awards under
this Article if granted subject to a written agreement between the Company and
the Grantee setting forth one or more objective performance goals based on the
criteria set forth in Section 11.2 that are required to be met in order for an
Award to vest in the Grantee. The performance goals must be established in
writing by the Committee prior to the employee's
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performance of the relevant services and while the outcome under the goal or
goals is substantially uncertain.
11.2 Performance Goals. The performance goals established by the
Committee with respect to a specific Performance-based Compensation Award must
be based on one or more of the following criteria: increases in the number of
participating brands; increases in the number of stores installed; achieving
targeted marketing costs; increases in revenue; control of operating expenses;
increases in operating cash flow; increases in operating income; reduction in
net loss; and achieving and increasing net income.
11.3 Limitations of Shares. The maximum number of shares that may be
subject to Awards under the Plan contained in Section 4.1 and the maximum number
of shares for any individual contained in Section 4.2 include Performance-based
Compensation Awards.
ARTICLE 12
RELOAD OPTIONS
The Committee may provide in any option agreement entered into pursuant
to the Plan, or by the separate agreement, that if a Grantee makes payment upon
the exercise of any option granted hereunder in whole or in part through the
surrender of shares of Stock, such Grantee shall automatically receive a new
option for the number of shares so surrendered by him at a price equal to the
fair market value of the shares at the time of surrender, exercisable on the
same basis and having the same terms as the underlying option or on such other
basis as the Committee shall determine and provide in the option agreement.
ARTICLE 13
TERMINATION OF EMPLOYMENT
13.1 Termination of Employment. If a Grantee ceases to be employed by
the Company or a Subsidiary for any reason other than death or disability, any
Award granted to such Grantee that is unexercised or still subject to any
restrictions or conditions shall be terminated or forfeited, unless otherwise
provided in the applicable Award agreement.
13.2 Disability. If a Grantee becomes disabled within the meaning of
Section 22(e)(3) of the Code while employed by the Company, or a Subsidiary, any
Stock Option or Stock Appreciation Right granted to such Grantee shall expire
one year after the date of termination of employment due to disability, unless a
longer or shorter period of exercise is provided in the applicable Award
agreement. Any Restricted Stock or Performance Shares granted to such Grantee
shall be terminated or forfeited, unless otherwise provided in the applicable
Award agreement.
13.3 Death of Grantee. If a Grantee dies while employed by the Company,
or a Subsidiary, any Stock Option or Stock Appreciation Right granted to such
Grantee shall expire one year after the date of death, unless a longer or
shorter period of exercise is provided in the
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applicable Award agreement. During the exercise period after death, the Stock
Option or Stock Appreciation Right may be exercised, to the extent provided in
the applicable Award agreement, by the person or persons to whom the Grantee's
rights under the Award Right shall pass by will or by the laws of descent and
distribution but in no event may the Stock Option or Stock Appreciation Right be
exercisable more than ten years from the date of grant. Any Restricted Stock or
Performance Shares granted to such Grantee shall be terminated or forfeited,
unless otherwise provided in the applicable Award agreement.
13.4 Termination as Nonemployee Director of the Company. If a
nonemployee director ceases to serve the Company in that capacity, the Grantee's
rights upon such termination shall be governed in the manner of an Grantee's
rights upon termination of employment as set forth above.
ARTICLE 14
TRANSFER RESTRICTIONS
Stock Options and Stock Appreciation Rights that have not been
exercised by the Grantee and Restricted Stock and Performance Shares that are
subject to restrictions and conditions shall not be subject in any manner to
alienation, sale, transfer, assignment, pledge, attachment or encumbrance of any
kind. Any attempt to alienate, sell, transfer, assign, pledge or otherwise
encumber any such Awards shall be void, except for a transfer by will or by the
laws of descent and distribution. Notwithstanding the foregoing, the Committee
may grant Nonqualified Stock Options that are transferable, without payment of
consideration, to immediate family members of the Grantee or to trusts or
partnerships of such family members, or, to the extent such transfers may be
made in compliance with Rule 16b-3 and applicable tax laws, limited liability
companies of such family members. for purposes of this Article 14, the phrase
"immediate family member" shall mean spouse, children or grandchildren of the
Grantee.
ARTICLE 15
ADJUSTMENTS
If the shares of Stock of the Company are increased, decreased, changed
into, or exchanged for a different number or kind of shares or securities
through merger, consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split in which the Company is the surviving entity, an
appropriate and proportionate adjustment shall be made in the maximum number and
kind of shares as to which Awards may be granted under this Plan. A
corresponding adjustment changing the number or kind of shares allocated to
unexercised or unvested Awards, or portions thereof, which shall have been
granted prior to any such change, shall likewise be made. Any such adjustment in
outstanding Awards shall be made without change in the aggregate purchase price
applicable to the unexercised portion of any such Award, but with a
corresponding adjustment in the price for each share or other unit of any
security covered by the Award. In making any adjustment pursuant to this Article
15, any fractional shares shall be disregarded.
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ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1 Tax Withholding. With respect to any Award under the Plan, the
Company shall have the right to require Grantees or their beneficiaries or legal
representatives to remit to the Company an amount sufficient to satisfy federal,
state and local withholding requirements, or to deduct from all payments under
the Plan amounts sufficient to satisfy all withholding tax requirements. Within
the discretion of the Committee, the Company may withhold the tax required to be
withheld from any other cash compensation then or thereafter payable to the
Grantee, or, if deemed necessary by the Company, the Company may sell or
withhold a portion of shares of Stock to be delivered to the Grantee pursuant to
the Plan to provide sufficient funds for withholding tax and delivery of the
proceeds to the Company.
16.2 Termination, Amendment of Plan. The Board may at any time
terminate, amend or revise the terms of the Plan; provided that no amendment or
revision shall, without the approval of the Company's shareholders, (i) increase
the maximum aggregate number of shares that may be sold or distributed pursuant
to Awards granted under this Plan, except as permitted under Article 14; (ii)
change the minimum purchase price for shares of Stock that may be received by
exercise of Stock Option or Stock Appreciation Right under the Plan; (iii)
increase the maximum duration established under the Plan for any Award; or (iv)
permit the granting of an Award to anyone other than specified in Article 5.
16.3 Prior Rights and Obligations. No amendment, suspension, or
termination of the Plan shall, without the consent of the Grantee or other
person who has received an Award, alter or impair any of that Grantee's rights
or obligations under any Award granted under the Plan prior to such amendment,
suspension, or termination.
16.4 Employment. Nothing in the Plan or in any Award shall confer upon
any eligible employee any right to continued employment by the Company, or a
Subsidiary, or limit in any way the right of the Company or a Subsidiary at any
time to terminate or alter the terms of that employment.
16.5 Securities Laws. Shares of Stock issuable pursuant to this Plan
may, at the option of the Company, be registered under applicable federal and
state securities laws, but the Company shall have no obligation to undertake
such registrations and may, in lieu thereof, issue shares hereunder only
pursuant to applicable exemptions from such registrations. In the event that no
such registrations are undertaken, the shares shall be issued only to persons
who qualify to receive such shares in accordance with the exemption from
registration on which the Company relies. In connection with any Award of shares
or the reissuance of certificates under the Plan, the Committee may require
appropriate representations from the recipient of such shares and take such
other action as the Committee may deem necessary, including but not limited to
placing restrictive legends on certificates evidencing such shares and placing
stop transfer instructions in the Company's stock transfer records, or
delivering such instructions to the Company's transfer agent, in order to assure
compliance with any such exemptions. Notwithstanding any other provision of the
Plan, no shares will be issued pursuant to the Plan unless such shares have been
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registered under all applicable federal and state securities laws or unless, in
the opinion of counsel satisfactory to the Company, exemptions from such
registrations are available.
16.6 Compliance with Section 16(b). In the case of Grantees who are or
may be subject to Section 16 of the Securities Exchange Act of 1934, it is the
intent of the Company that this Plan and any Award granted hereunder satisfy and
be interpreted in a manner that satisfies the applicable requirements of Rule
16b-3, so that such Grantees will be entitled to the benefits of Rule 16b-3 or
any other exemptive rule under Section 16 and will not be subjected to liability
thereunder. If any provision of the Plan or any Award would otherwise conflict
with the intent expressed herein, that provision, to the extent possible, shall
be interpreted and deemed amended so as to avoid such conflict. To the extent of
any remaining irreconcilable conflict with such intent, such provision shall be
deemed void as applicable to Grantees who are or may be subject to Section 16.
16.7 Reorganization. Except as otherwise provided in the applicable
Award agreement, in the event of a consolidation or a merger in which the
Company is not the surviving corporation, or any other merger in which the
shareholders of the Company exchange their shares of Stock in the Company for
stock of another corporation, or in the event of complete liquidation of the
Company, or in the case of a tender offer approved, all Awards that are
unexercised or still subject to any restrictions and conditions shall thereupon
be terminated or forfeited, provided that the Committee may, prior to the
effective date of any such transaction, either (i) make all such Award
immediately vested or exercisable or (ii) arrange to have the surviving
corporation grant to the Grantees replacement Award on terms which the Board
shall determine to be fair and reasonable.
16.8 Effective Date and Term of Plan. The effective date of this Plan
is April 30, 1997; provided, however, that no Award granted hereunder may be
exercised or become vested unless and until the Plan is approved by the
shareholders of the Company. No Awards may be granted under the Plan after April
30, 2007.
INTERoACT SYSTEMS, INCORPORATED
By:
Title:
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