Exhibit 4.6
CELSION CORPORATION
2004 STOCK INCENTIVE PLAN
EFFECTIVE: MAY 25, 2004
TABLE OF CONTENTS
PAGE
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1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS...............................3
2. DEFINITIONS..............................................................3
3. ADMINISTRATION...........................................................6
(a) Procedure..........................................................6
(b) Secondary Committees and Sub-Plans.................................7
(c) Powers of the Committee............................................7
(d) Limited Liability..................................................9
(e) Indemnification....................................................9
(f) Effect of Committee's Decision.....................................9
(g) Apprising the Board................................................9
4. STOCK AVAILABLE UNDER THE PLAN; MAXIMUM AWARDS...........................9
(a) Stock Available Under the Plan.....................................9
(b) Maximum Awards to Covered Employees...............................10
5. PARTICIPATION...........................................................10
6. STOCK OPTIONS...........................................................10
(a) Grant of Option...................................................10
(b) Exercise Price....................................................10
(c) Payment...........................................................11
(d) Term of Options...................................................11
(e) Restrictions on Incentive Stock Options...........................11
(f) Other Terms and Conditions........................................12
7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.............................12
(a) In General........................................................12
(b) Vesting Conditions and Other Restrictions.........................12
(c) Stock Issuance and Stockholder Rights.............................13
8. STOCK APPRECIATION RIGHTS...............................................14
(a) Award of Stock Appreciation Rights................................14
(b) Restrictions of Tandem SARs.......................................14
(c) Amount of Payment upon Exercise of SARs...........................14
(d) Form of Payment upon Exercise of SARs.............................14
9. PHANTOM STOCK...........................................................15
10. PERFORMANCE AWARDS......................................................15
(a) In General........................................................15
(b) Covered Employee Targets..........................................15
11. WITHHOLDING AND REPORTING OF TAXES......................................16
12. TRANSFERABILITY.........................................................16
13. ADJUSTMENTS; BUSINESS COMBINATIONS......................................17
(a) Adjustments.......................................................17
(b) Change in Control.................................................17
(c) Dissolution and Liquidation.......................................17
(d) Other Adjustments.................................................18
14. TERMINATION AND AMENDMENT...............................................18
(a) Amendment or Termination by the Board.............................18
(b) Amendments by the Committee.......................................18
(c) Approval of Grantees..............................................19
15. NON-GUARANTEE OF EMPLOYMENT.............................................19
16. TERMINATION OF EMPLOYMENT...............................................19
17. WRITTEN AGREEMENT.......................................................19
18. NON-UNIFORM DETERMINATIONS..............................................19
19. LIMITATION ON BENEFITS..................................................19
20. LISTING AND REGISTRATION................................................20
21. COMPLIANCE WITH SECURITIES LAW..........................................20
22. NO TRUST OR FUND CREATED................................................20
23. NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS.............................21
24. NO RESTRICTION OF CORPORATE ACTION......................................21
25. GOVERNING LAW...........................................................21
26. PLAN SUBJECT TO CHARTER AND BYLAWS......................................21
27. EFFECTIVE DATE; TERMINATION DATE........................................21
ii
CELSION CORPORATION
2004 STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
Celsion Corporation, a Delaware corporation (the Company) hereby
establishes the Celsion Corporation 2004 Stock Incentive Plan (the "Plan"). The
purpose of the Plan is to promote the long-term growth and profitability of the
"Company" by (i) providing incentives to improve stockholder value and to
contribute to the growth and financial success of the Company, and (ii) enabling
the Company to attract, retain and reward the best available persons for
positions of substantial responsibility.
The Plan permits the granting of Awards in the form of Incentive Stock
Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights, Phantom Stock, and Performance Awards, in each case
as such term is defined below, and any combination of the foregoing.
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Affiliate" shall mean any entity other than a Subsidiary, if
the Company and/or one or more Subsidiaries own directly or indirectly not less
than fifty percent (50%) of such entity.
(b) "Awards" shall mean Incentive Stock Options, Nonqualified
Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Phantom Stock, and Performance Awards, and any combination of the
foregoing.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Change in Control" shall mean:
(i) The consummation of an amalgamation, merger or
consolidation of the Company with or into another entity or any other
corporate reorganization of the Company, if more than fifty percent
(50%) of the combined voting power of the continuing or surviving
entity's securities outstanding immediately after such amalgamation,
merger, consolidation or other reorganization (or, if applicable, more
than fifty percent (50%) of the combined voting power of the ultimate
parent company that directly or indirectly has beneficial ownership of
the securities of such continuing or surviving entity) is not owned
directly or indirectly by persons who were holders of the Company's
then-outstanding voting securities immediately prior to such
amalgamation, merger, consolidation or other reorganization;
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(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets to an entity that is not a
Parent, a Subsidiary or an Affiliate of the Company;
(iii) Any transaction as a result of which any person becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
at least fifty percent (50%) of the total voting power represented by
the Company's then-outstanding voting securities. For purposes of this
subsection, the term "person" shall have the same meaning as when used
in sections 13(d) and 14(d) of the Exchange Act but shall exclude: (A)
any Parent, Subsidiary or Affiliate of the Company, (B) any employee
benefit plan (or related trust) sponsored or maintained by the Company,
a Parent, or any Subsidiary or Affiliate, and (C) any underwriter
temporarily holding securities pursuant to an offering of such
securities; or
(iv) A change in the composition of the Board over a period
of twenty four (24) consecutive months or less as a result of which
individuals who, at the beginning of such period, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
subsequently becoming a director whose election, or nomination for
election by the Company's Stockholders, was approved by a vote of at
least a majority of the directors then comprising the Board (either by
a specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director, without written
objection to such nomination) shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any regulations issued thereunder.
(f) "Committee" shall mean the Board or a committee of the Board
appointed pursuant to Section 3 of the Plan to administer the Plan.
(g) "Committee Delegate" shall mean the Chief Executive Officer or
other senior officer of the Company to whom duties and powers of the Board or
Committee hereunder have been delegated pursuant to Section 3(b).
(h) "Covered Employee" shall mean an employee of the Company or
any Parent, Subsidiary or Affiliate who is subject to Code Section 162(m).
(i) "Exchange Act" shall mean the U.S. Securities Exchange Act of
1934, as amended and any rules or regulations promulgated thereunder.
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(j) "Fair Market Value" of the Stock for any purpose on a
particular date shall mean:
(i) if the Stock is traded on a public securities exchange or
a national automated quotation system, the closing price for Stock on
the relevant date, or (if there were no sales on such date) the closing
price on the nearest day before the relevant date, as reported in The
Wall Street Journal or a similar publication selected by the Committee;
or
(ii) if the Stock is not traded on a public securities
exchange or a national quotation system on such date, the price
determined in a manner such as the Committee shall in good faith
determine to be appropriate.
(k) "Grant Agreement" shall mean a written agreement between the
Company and a grantee memorializing the terms and conditions of an Award granted
pursuant to the Plan.
(l) "Grant Date" shall mean the date on which the Committee
formally acts to grant an Award to a grantee or such other date as the Committee
shall so designate at the time of taking such formal action.
(m) "Incentive Stock Options" shall mean Stock options that meet
the requirements of Code Section 422.
(n) "Nonqualified Stock Options" shall mean Stock options that do
not meet the requirements of Code Section 422.
(o) "Parent" shall mean a company, whether now or hereafter
existing, within the meaning of the definition of "parent company" provided in
Section 424(e) of the Code, or any successor thereto of similar import.
(p) "Participant" shall mean a director, officer, employee or
consultant of the Company, or any Parent, Subsidiary or Affiliate, who is
granted an Award under the Plan.
(q) "Performance Award" shall mean an Award under Section 10
hereof.
(r) "Performance Measure" shall mean one or more of the following
criteria, or such other operating objectives as it deems appropriate, selected
by the Committee to measure performance of the Company or any Parent, Subsidiary
or Affiliate or other business division of same for a Performance Period,
whether in absolute or relative terms: basic or diluted earnings per share of
Stock; earnings per share of Stock growth; revenue; operating income; net income
(either before or after taxes); earnings and/or net income before interest and
taxes; earnings and/or net income before interest, taxes, depreciation and
amortization; return on capital; return on equity; return on assets; net cash
provided by operations; free cash flow; Stock price; economic profit; economic
value; total stockholder return; gross margins and costs. Each such measure
shall be determined in accordance with generally accepted accounting principles
as consistently applied and, if so determined by the Committee and, in the case
of a Performance Award to a Covered Employee, to the extent intended to meet the
performance-based compensation exception under
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Code Section 162(m), adjusted to omit the effects of extraordinary items, gain
or loss on the disposal of a business segment, unusual or infrequently occurring
events and transactions and cumulative effects of changes in accounting
principles.
(s) "Performance Period" means a period of not less than one year
over which the achievement of targets for Performance Measures is determined.
(t) "Phantom Stock" shall mean Awards under Section 9.
(u) "Restricted Stock" and "Restricted Stock Units" shall mean
Awards under Section 7.
(v) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the
Exchange Act on the effective date of the Plan, or any successor provision
prescribing conditions necessary to exempt the issuance of securities under the
Plan (and further transactions in such securities) from Section 16(b) of the
Exchange Act.
(w) "Securities Act" shall mean the U.S. Securities Act of 1933,
as amended and any rules or regulations promulgated thereunder.
(x) "Stock" shall mean common stock of the Company, par value
$0.01 per share.
(y) "Stock Appreciation Rights" shall mean Awards under Section 8.
(z) "Subsidiary" and "Subsidiaries" shall mean only a company or
companies, whether now or hereafter existing, within the meaning of the
definition of "subsidiary company" provided in Section 424(f) of the Code, or
any successor thereto of similar import.
(aa) "2001 Plan" shall mean the 2001 Celsion Corporation Stock
Option Plan.
3. ADMINISTRATION
(a) Procedure. The Plan shall be administered by the Board. In the
alternative, the Board may delegate authority to a Committee to administer the
Plan on behalf of the Board, subject to such terms and conditions as the Board
may prescribe. Such Committee shall consist of not less than two (2) members of
the Board each of whom is a "non-employee director" within the meaning of Rule
16b-3 under the Exchange Act, or any successor rule of similar import, and an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
Once appointed, the Committee shall continue to serve until otherwise
directed by the Board. From time to time, the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and, thereafter,
directly administer the Plan. In
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the event that the Board is the administrator of the Plan in lieu of a
Committee, the term "Committee" as used herein shall be deemed to mean the
Board.
Members of the Board or Committee who are either eligible for Awards or
have been granted Awards may vote on any matters affecting the administration of
the Plan or the grant of Awards pursuant to the Plan, except that no such member
shall act upon the granting of an Award to himself or herself, but any such
member may be counted in determining the existence of a quorum at any meeting of
the Board or the Committee during which action is taken with respect to the
granting of an Award to him or her.
The Committee shall meet at such times and places and upon such notice
as it may determine. A majority of the Committee shall constitute a quorum. Any
acts by the Committee may be taken at any meeting at which a quorum is present
and shall be by majority vote of those members entitled to vote. Additionally,
any acts reduced to writing or approved in writing by all of the members of the
Committee shall be valid acts of the Committee.
(b) Secondary Committees and Sub-Plans. The Board may, in its sole
discretion, divide the duties and powers of the Committee by establishing one or
more secondary Committees to which certain duties and powers of the Board
hereunder are delegated (each of which shall be regarded as a "Committee" under
the Plan with respect to such duties and powers), or delegate all of its duties
and powers hereunder to a single Committee. Additionally, if permitted by
applicable law, the Board or Committee may delegate any or all of its duties and
powers hereunder to the Chief Executive Officer and/or to other senior officers
of the Company subject to such conditions and limitations as the Board or
Committee shall prescribe. However, only the Committee described under
Subsection 3(a) may designate and grant Awards to Participants who are subject
to Section 16 of the Exchange Act or Section 162(m) of the Code. The Committee
shall also have the power to establish sub-plans (which may be included as
appendices to the Plan or the respective Grant Agreements), which may constitute
separate programs, for the purpose of establishing programs which meet any
special tax or regulatory requirements of jurisdictions other than the United
States and its subdivisions. Any such interpretations, rules, administration and
sub-plans shall be consistent with the basic purposes of the Plan.
(c) Powers of the Committee. The Committee shall have all the
powers vested in it by the terms of the Plan, such powers to include authority,
in its sole and absolute discretion, to grant Awards under the Plan, prescribe
Grant Agreements evidencing such Awards and establish programs for granting
Awards. The Committee shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to:
(i) determine the Participants to whom, and the time or
times at which, Awards shall be granted,
(ii) determine the types of Awards to be granted,
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(iii) determine the number of shares of Stock and/or amount of
cash to be covered by or used for reference purposes for each Award,
(iv) impose such terms, limitations, vesting schedules,
restrictions and conditions upon any such Award as the Committee shall
deem appropriate, including without limitation establishing, in its
discretion, Performance Measures that must be satisfied before an Award
vests and/or becomes payable, the term during which an Award is
exercisable, the purchase price, if any, under an Award and the period,
if any, following a grantee's termination of employment or service with
the Company or any Parent, Subsidiary or Affiliate during which the
Award shall remain exercisable,
(v) modify, extend or renew outstanding Awards, accept the
surrender of outstanding Awards and substitute new Awards, provided
that no such action shall be taken with respect to any outstanding
Award that would materially, adversely affect the grantee without the
grantee's consent, or constitute a repricing of stock options without
the consent of the holders of the Company's voting securities under
(vi) below,
(vi) only with the approval of the holders of the voting
securities of the Company to the extent that such approval is required
by applicable law, regulation or the rules of a national securities
exchange or automated quotation system to which the Company is subject,
reprice Incentive Stock Options and Nonqualified Stock Options either
by amendment to lower the exercise price or by accepting such stock
options for cancellation and issuing replacement stock options with a
lower exercise price or through any other mechanism,
(vii) accelerate the time in which an Award may be exercised
or in which an Award becomes payable and waive or accelerate the lapse,
in whole or in part, of any restriction or condition with respect to an
Award,
(viii) establish objectives and conditions, including targets
for Performance Measures, if any, for earning Awards and determining
whether Awards will be paid after the end of a Performance Period, and
(ix) permit the deferral of, or require a Participant to
defer such Participant's receipt of, the delivery of Stock and/or cash
under an Award that would otherwise be due to such Participant and
establish rules and procedures for such payment deferrals.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan as the Committee deems necessary,
desirable or appropriate in accordance with the Bylaws of the Company.
8
(d) Limited Liability. To the maximum extent permitted by law, no
member of the Board or Committee or a Committee Delegate shall be liable for any
action taken or decision made in good faith relating to the Plan or any Award
thereunder.
(e) Indemnification. The members of the Board and Committee and
any Committee Delegate shall be indemnified by the Company in respect of all
their activities under the Plan in accordance with the procedures and terms and
conditions set forth in the Certificate of Incorporation and Bylaws of the
Company as in effect from time to time. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Certificate of Incorporation and
Bylaws, as a matter of law, or otherwise.
(f) Effect of Committee's Decision. All actions taken and
decisions and determinations made by the Committee or a Committee Delegate on
all matters relating to the Plan pursuant to the powers vested in it hereunder
shall be in the Committee's or Committee Delegate's sole and absolute discretion
and shall be conclusive and binding on all parties concerned, including the
Company, its stockholders, any Participants in the Plan and any other employee
of the Company, and their respective successors in interest.
(g) Apprising the Board. The Committee will inform the Board
regarding its activities under the Plan not less frequently than at each
scheduled Board meeting and at such other times as the Board may request. .
4. STOCK AVAILABLE UNDER THE PLAN; MAXIMUM AWARDS
(a) Stock Available Under the Plan.
(i) Subject to adjustments as provided in Section 13 of the
Plan, the Stock that may be delivered or purchased or used for
reference purposes (with respect to Stock Appreciation Rights, or
Phantom Stock) with respect to Awards granted under the Plan, including
with respect to Incentive Stock Options, shall not exceed an aggregate
of ten million (10,000,000) shares of Stock, plus the number of shares
of Stock available from the 2001 Plan as provided in Subsection
4(a)(ii) below. Stock available under the Plan may be, in any
combination, authorized but unissued Stock, treasury Stock and Stock
that is repurchased, in the market, and canceled by the Company. The
Company shall reserve said number of shares of Stock for Awards under
the Plan, subject to adjustments as provided in Section 13 of the Plan.
If any Award, or portion of an Award, issued under the Plan, expires or
terminates unexercised, becomes unexercisable or is forfeited or
otherwise terminated, surrendered or canceled as to any shares of Stock
without the delivery by the Company (or, in the case of Restricted
Shares, without vesting) of Stock or other consideration, the Stock
subject to such Award shall thereafter be available for further Awards
under the Plan.
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(ii) There shall be available for issuance under the Plan the
sum of (A) the number of shares of Stock remaining available for
issuance under the 2001 Plan at the effective date of this Plan, plus
(B) shares of Stock subject to any stock options issued under the 2001
Plan to the extent such stock options subsequently expire or terminate
unexercised, become unexercisable or are forfeited or otherwise
terminated, surrendered or canceled, without delivery of shares of
Stock or other consideration to the holder.
(b) Maximum Awards to Covered Employees. The maximum number of
shares of Stock subject to Awards that may be granted during any one calendar
year to any one Covered Employee shall be limited to two million (2,000,000). To
the extent required by Section 162(m) of the Code and so long as Section 162(m)
of the Code is applicable to persons eligible to participate in the Plan, shares
of Stock subject to the foregoing maximum with respect to which the related
Award is terminated, surrendered or canceled shall nonetheless continue to be
taken into account with respect to such maximum for the calendar year in which
granted.
5. PARTICIPATION
Participation in the Plan shall be open to all directors, officers,
employees and consultants of the Company, or of any Parent, Subsidiary or
Affiliate of the Company, as may be selected by the Committee from time to time.
Notwithstanding the foregoing, participation in the Plan with respect to Awards
of Incentive Stock Options shall be limited to employees of the Company or of
any Parent or Subsidiary of the Company.
Awards may be granted to such Participants and for or with respect to
such number of shares of Stock as the Committee shall determine, subject to the
limitations in Section 4 of the Plan. A grant of any type of Award made in any
one year to a Participant shall neither guarantee nor preclude a further grant
of that or any other type of Award to such person in that year or subsequent
years.
6. STOCK OPTIONS
Subject to the other applicable provisions of the Plan, the Committee
may from time to time grant to Participants Awards of Nonqualified Stock Options
and/or Incentive Stock Options. The stock option Awards granted shall be subject
to the following terms and conditions.
(a) Grant of Option. The grant of a stock option shall be
evidenced by a Grant Agreement, executed by the Company and the grantee, stating
the number of shares of Stock subject to the stock option evidenced thereby, the
exercise price and the terms and conditions of such stock option, in such form
as the Committee may from time to time determine.
(b) Exercise Price. The price per share payable upon the exercise
of each stock option shall be determined by the Committee
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(c) Payment. Stock options may be exercised in whole or in part by
payment of the exercise price of the Stock to be acquired in accordance with the
provisions of the Grant Agreement, and/or such rules and regulations as the
Committee may have prescribed, and/or such determinations, orders, or decisions
as the Committee may have made. Payment may be made in cash (or cash equivalents
acceptable to the Committee) or, if provided in the Grant Agreement and
permitted by applicable law, in shares of Stock which have been held by grantee
for at least six (6) months, or a combination of cash and such Stock, or by such
other means as the Committee may prescribe. The Fair Market Value of Stock
delivered on exercise of stock options shall be determined as of the date of
exercise.
If the Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, the Committee, subject to such limitations as it may determine, may
authorize payment of the exercise price, in whole or in part, by delivery of a
properly executed exercise notice, together with irrevocable instructions, to:
(i) a brokerage firm to deliver promptly to the Company the aggregate amount of
sale or loan proceeds to pay the exercise price and any withholding tax
obligations that may arise in connection with the exercise, and (ii) the Company
to deliver the certificates for such purchased Stock directly to such brokerage
firm.
(d) Term of Options. The term during which each stock option may
be exercised shall be determined by the Committee; provided, however, that in no
event shall a stock option be exercisable more than ten years from the date it
is granted. Prior to the exercise of the stock option and delivery of the Stock
certificates represented thereby, the grantee shall have none of the rights of a
stockholder with respect to any Stock represented by an outstanding stock
option.
(e) Restrictions on Incentive Stock Options. Incentive Stock
Option Awards granted under the Plan shall comply in all respects with Code
Section 422 and, as such, shall meet the following additional requirements:
(i) Grant Date. An Incentive Stock Option must be granted
within ten (10) years of the earlier of the Plan's adoption by the
Board of Directors or approval by the Company's stockholders.
(ii) Exercise Price and Term. The exercise price of an
Incentive Stock Option shall not be less than one hundred percent
(100%) of the Fair Market Value of the Stock on the date the stock
option is granted and the term of the stock option shall not exceed ten
(10) years. Also, the exercise price of any Incentive Stock Option
granted to a grantee who owns (within the meaning of Section 422(b)(6)
of the Code, after the application of the attribution rules in Section
424(d) of the Code) more than ten percent (10%) of the total combined
voting power of all classes of shares of Stock of the Company or any
Parent or Subsidiary of the Company shall be not less than one hundred
ten percent (110%)
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of the Fair Market Value of the Stock on the grant date and the term of
such stock option shall not exceed five (5) years.
(iii) Maximum Grant. The aggregate Fair Market Value
(determined as of the Grant Date) of Stock of the Company with respect
to which all Incentive Stock Options first become exercisable by any
grantee in any calendar year under this or any other plan of the
Company and its Parent and Subsidiaries may not exceed One Hundred
Thousand Dollars ($100,000) or such other amount as may be permitted
from time to time under Section 422 of the Code. To the extent that
such aggregate Fair Market Value shall exceed One Hundred Thousand
Dollars ($100,000), or other applicable amount, such stock options to
the extent of the Stock in excess of such limit shall be treated as
Nonqualified Stock Options. In such case, the Company may designate the
shares of Stock that are to be treated as Stock acquired pursuant to
the exercise of an Incentive Stock Option.
(iv) Grantee. Incentive Stock Options shall only be issued to
employees of the Company or of a Parent, Subsidiary or Affiliate of the
Company.
(v) Designation. No stock option shall be an Incentive Stock
Option unless so designated by the Committee at the time of grant or in
the Grant Agreement evidencing such stock option.
(vi) Stockholder Approval. No stock option issued under the
Plan shall be an Incentive Stock Option unless the Plan is approved by
the stockholders of the Company within twelve (12) months of its
adoption by the Board in accordance with the Bylaws of the Company and
governing law relating to such matters.
(f) Other Terms and Conditions. Stock options may contain such
other provisions, not inconsistent with the provisions of the Plan, as the
Committee shall determine appropriate from time to time.
7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
(a) In General. Subject to the other applicable provisions of the
Plan and applicable law, the Committee may at any time and from time to time
grant Restricted Stock or Restricted Stock Units to Participants, in such
amounts and subject to such vesting conditions, other restrictions and
conditions for removal of restrictions as it determines. Unless determined
otherwise by the Committee, Participants receiving Restricted Stock or
Restricted Stock Units are not required to pay the Company cash consideration
therefor (except as may be required for applicable tax withholding).
(b) Vesting Conditions and Other Restrictions. Each Award for
Restricted Stock and Restricted Stock Units shall be evidenced by a Grant
Agreement that specifies the applicable vesting conditions and other
restrictions, if any, on such Award, the
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duration of such restrictions, and the time or times at which such restrictions
shall lapse with respect to all or a specified number of the shares of Stock
that are part of the Award. Notwithstanding the foregoing, the Committee may
reduce or shorten the duration of any vesting or other restriction applicable to
any Restricted Stock or Restricted Stock Units awarded to any grantee under the
Plan.
(c) Stock Issuance and Stockholder Rights.
(i) Restricted Stock. Stock certificates with respect to Stock
granted pursuant to a Restricted Stock Award shall be issued, and/or
Stock shall be registered, at the time of grant of the Restricted Stock
Award, subject to forfeiture if the Restricted Stock does not vest or
other restrictions do not lapse. Any Stock certificates shall bear an
appropriate legend with respect to the restrictions applicable to such
Restricted Stock Award and the grantee may be required to deposit the
certificates with the Company during the period of any restriction
thereon and to execute a blank stock power or other instrument of
transfer therefor. Except as otherwise provided by the Committee,
during the period of restriction following issuance of Restricted Stock
certificates, the grantee shall have all of the rights of a holder of
Stock, including but not limited to the rights to receive dividends (or
amounts equivalent to dividends) and to vote with respect to the
Restricted Stock. The Committee, in its discretion, may provide that
any dividends or distributions paid with respect to Stock subject to
the unvested portion of a Restricted Stock Award will be subject to the
same restrictions as the Restricted Stock to which such dividends or
distributions relate.
(ii) Restricted Stock Units. Stock certificates for the shares
of Stock subject to a Restricted Stock Unit shall be issued, and/or
Stock shall be registered, upon vesting and lapse of any other
restrictions with respect to the issuance of Stock under such Award.
The grantee will not be entitled to vote such Stock or to any of the
other rights of stockholders during the period prior to issuance of the
certificates for such Stock and/or the registration of the Stock. An
Award of Restricted Stock Units may provide the Participant with the
right to receive amounts equivalent to dividends and distributions paid
with respect to Stock subject to the Award while the Award is
outstanding, which payments may, in the Committee's discretion, either
be made currently or credited to an account for the Participant, and
may be settled in cash or Stock, all as determined by the Committee.
Unless otherwise determined by the Committee with respect to a
particular Award, each outstanding Restricted Stock Unit shall accrue
such dividend equivalents, deferred as equivalent amounts of additional
Restricted Stock Units, which amounts will be paid only when and if the
Restricted Stock Unit (on which such dividend equivalents were accrued)
vests and becomes payable. To the extent that a Restricted Stock Unit
does not vest or is otherwise forfeited, any accrued and unpaid
dividend equivalents shall be forfeited.
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8. STOCK APPRECIATION RIGHTS
(a) Award of Stock Appreciation Rights. Subject to the other
applicable provisions of the Plan, the Committee may at any time and from time
to time grant Stock Appreciation Rights ("SARs") to Participants, either on a
free-standing basis (without regard to or in addition to the grant of a stock
option) or on a tandem basis (related to the grant of an underlying stock
option), as it determines. SARs granted in tandem with or in addition to a stock
option may be granted either at the same time as the stock option or at a later
time; provided, however, that a tandem SAR shall not be granted with respect to
any outstanding Incentive Stock Option Award without the consent of the grantee.
SARs shall be evidenced by Grant Agreements, executed by the Company and the
grantee, stating the number of shares of Stock subject to the SAR evidenced
thereby and the terms and conditions of such SAR, in such form as the Committee
may from time to time determine. The term during which each SAR may be exercised
shall be determined by the Committee. In no event shall a SAR be exercisable
more than ten years from the date it is granted. The grantee shall have none of
the rights of a stockholder with respect to any Stock represented by a SAR.
(b) Restrictions of Tandem SARs. No Incentive Stock Option may be
surrendered in connection with the exercise of a tandem SAR unless the Fair
Market Value of the Stock subject to the Incentive Stock Option is greater than
the exercise price for such Incentive Stock Option. SARs granted in tandem with
stock options shall be exercisable only to the same extent and subject to the
same conditions as the stock options related thereto are exercisable. The
Committee may, in its discretion, prescribe additional conditions to the
exercise of any such tandem SAR.
(c) Amount of Payment upon Exercise of SARs. A SAR shall entitle
the grantee to receive, subject to the provisions of the Plan and the Grant
Agreement, a payment having an aggregate value equal to the product of (i) the
excess of (A) the Fair Market Value on the exercise date of one share of Stock
over (B) the base price per share of Stock specified in the Grant Agreement,
times (ii) the number of shares of Stock specified by the SAR, or portion
thereof, that is exercised. In the case of exercise of a tandem SAR, such
payment shall be made in exchange for the surrender of the unexercised related
stock option (or any portion or portions thereof which the grantee from time to
time determines to surrender for this purpose).
(d) Form of Payment upon Exercise of SARs. Payment by the Company
of the amount receivable upon any exercise of a SAR may be made by the delivery
of Stock or cash, or any combination of Stock and cash, as determined in the
sole discretion of the Committee from time to time. If upon settlement of the
exercise of a SAR a grantee is to receive a portion of such payment in Stock,
the number of shares of Stock shall be determined by dividing such portion by
the Fair Market Value of a share of Stock on the exercise date. No fractional
shares shall be used for such payment and the Committee shall determine whether
cash shall be given in lieu of such fractional shares or whether such fractional
shares shall be eliminated.
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9. PHANTOM STOCK
The grant of Phantom Stock shall be evidenced by a Grant Agreement,
executed by the Company and the grantee, that incorporates the terms of the Plan
and states the number of shares of Phantom Stock evidenced thereby and the terms
and conditions of such Phantom Stock in such form as the Committee may from time
to time determine. Phantom Stock granted to a Participant shall be credited to a
bookkeeping reserve account solely for accounting purposes and shall not require
a segregation of any of the Company's assets. Each share of Phantom Stock shall
represent the value of one share of Stock. Phantom Stock shall become payable in
whole or in part in such form, at such time or times and pursuant to such
conditions in accordance with the provisions of the Grant Agreement, and/or such
rules and regulations as the Committee may prescribe, and/or such
determinations, orders or decisions as the Committee may make. Except as
otherwise provided in the applicable Grant Agreement, the grantee shall have
none of the rights of a stockholder with respect to any shares represented by
Phantom Stock as a result of the grant of Phantom Stock to the grantee. Phantom
Stock may contain such other provisions, not inconsistent with the provisions of
the Plan, as the Committee shall determine desirable or appropriate from time to
time.
10. PERFORMANCE AWARDS
(a) In General. The Committee, in its discretion, may establish
targets for Performance Measures for selected Participants and authorize the
granting, vesting, payment and/or delivery of Performance Awards in the form of
Incentive Stock Options, Nonqualified Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, and/or Phantom Stock to such
Participants upon achievement of such targets for Performance Measures during a
Performance Period. The Committee, in its discretion, shall determine the
Participants eligible for Performance Awards, the targets for Performance
Measures to be achieved during each Performance Period, and the type, amount,
and terms and conditions of any Performance Awards. Performance Awards may be
granted either alone or in addition to other Awards made under the Plan.
(b) Covered Employee Targets. After the Company is subject to Code
Section 162(m), in connection with any Performance Awards granted to a Covered
Employee that are intended to meet the performance-based compensation exception
under Code Section 162(m), the Committee shall (i) establish in the applicable
Grant Agreement the specific targets relative to the Performance Measures which
must be attained before the respective Performance Award is granted, vests, or
is otherwise paid or delivered, (ii) provide in the applicable Grant Agreement
the method for computing the portion of the Performance Award which shall be
granted, vested, paid and/or delivered if the target or targets are attained in
full or part, and (iii) at the end of the relevant Performance Period and prior
to any such grant, vesting, payment or delivery certify the extent to which the
applicable target or targets were achieved and whether any other material terms
were in fact satisfied. The specific targets and the method for computing the
portion of such Performance Award which shall be granted, vested, paid or
delivered to any Covered Employee shall be established by the Committee prior to
the earlier to occur of (A) ninety
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(90) days after the commencement of the Performance Period to which the
Performance Measure applies and (B) the elapse of twenty-five percent (25%) of
the Performance Period and in any event while the outcome is substantially
uncertain. In interpreting Plan provisions applicable to Performance Measures
and Performance Awards that are intended to meet the performance-based
compensation exception under Code Section 162(m), it is the intent of the Plan
to conform with the standards of Section 162(m) of the Code and Treasury
Regulations Section 1.162-27(e)(2), and the Committee in interpreting the Plan
shall be guided by such provisions.
11. WITHHOLDING AND REPORTING OF TAXES
The Company may require, as a condition to the grant of any Award under
the Plan, vesting or exercise pursuant to such Award or to the delivery of
certificates for shares of Stock issued or payments of cash to a grantee
pursuant to the Plan or a Grant Agreement, that the grantee pay to the Company,
in cash or, if approved by the Company, in Stock, including Stock acquired upon
grant of the Award or exercise of the Award, valued at Fair Market Value on the
date as of which the withholding tax liability is determined, any federal, state
or local taxes of any kind or any applicable taxes or other required withholding
of any other jurisdiction required by law to be withheld with respect to any
taxable event under the Plan. The Company, to the extent permitted or required
by law, shall have the right to deduct from any payment of any kind (including
salary or bonus) otherwise due to a grantee any federal, state or local taxes of
any kind or any applicable taxes or other required withholding of any other
jurisdiction required by law to be withheld with respect to the grant, vesting,
exercise or payment of or under any Award under the Plan or a Grant Agreement,
or to retain or sell a sufficient number of the shares of Stock to be issued to
such grantee to cover any such taxes. The Company or any Parent, Subsidiary or
Affiliate shall comply with any applicable tax reporting requirements of any
jurisdiction imposed on it by law with respect to the granting, vesting,
exercise and/or payment of Awards.
12. TRANSFERABILITY
No Award granted under the Plan shall be transferable by a grantee
otherwise than by will or the laws of descent and distribution. Unless otherwise
determined by the Committee in accordance with the provisions of the immediately
preceding sentence, an Award may be exercised during the lifetime of the grantee
only by the grantee or, during the period the grantee is under a legal
disability, by the grantee's guardian or legal representative. Notwithstanding
the foregoing, an Award other than an Incentive Stock Option may, in the
Committee's sole discretion, be transferable by gift or domestic relations order
to (i) the grantee's child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, daughter-in-law, son-in-law, brother-in-law or sister-in-law,
including adoptive relationships (such persons, "Family Members"), (ii) a
Company, partnership, limited liability company or other business entity whose
only stockholders, partners or members, as applicable are the grantee and/or
Family Members, or (iii) a trust in which the Grantee
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and/or Family Members have all of the beneficial interests, and subsequent to
any such transfer any Award may be exercised by any such transferee.
13. ADJUSTMENTS; BUSINESS COMBINATIONS
(a) Adjustments. In the event of a reclassification,
recapitalization, stock split, reverse stock split, stock dividend, combination
of shares or other similar event, the maximum number and kind of shares reserved
for issuance or with respect to which Awards may be granted under the Plan as
provided in Section 4 shall be adjusted to reflect such event, and the Committee
shall make such adjustments as it deems appropriate and equitable in the number,
kind and price of shares covered by outstanding Awards made under the Plan, and
in any other matters that relate to Awards and that are affected by the changes
in the shares referred to above.
(b) Change in Control. In the event of any proposed Change in
Control under Section 2(d)(i), (ii) or (iii), the Committee shall take such
action as it deems appropriate and equitable to effectuate the purposes of this
Plan and to protect the grantees of Awards, which action may include, without
limitation, any one or more of the following: (i) acceleration or change of the
exercise and/or expiration dates of any Award to require that exercise be made,
if at all, prior to the Change in Control; (ii) cancellation of any Award upon
payment to the holder in cash of the Fair Market Value of the Stock subject to
such Award as of the date of (and, to the extent applicable, as established for
purposes of) the Change in Control, less the aggregate exercise price, if any,
of the Award; and (iii) in any case where equity securities of another entity
are proposed to be delivered in exchange for or with respect to Stock of the
Company, arrangements to have such other entity replace the Awards granted
hereunder with awards with respect to such other securities, with appropriate
adjustments in the number of shares subject to, and the exercise prices under,
the Award.
(c) Dissolution and Liquidation. In the event the Company
dissolves and liquidates (other than pursuant to a plan of amalgamation, merger
or reorganization), then notwithstanding any restrictions on exercise set forth
in this Plan or any Grant Agreement, or other agreement evidencing a stock
option, Stock Appreciation Right, Phantom Stock, Restricted Stock or Restricted
Stock Unit Award: (i) each grantee shall have the right to exercise his stock
option, Stock Appreciation Right, or Phantom Stock or to require delivery of
Stock certificates, and/or registration of the Stock, representing any such
Restricted Stock or Restricted Stock Unit Award, at any time up to ten (10) days
prior to the effective date of such liquidation and dissolution; and (ii) the
Committee may make arrangements with the grantees for the payment of appropriate
consideration to them for the cancellation and surrender of any stock option,
Stock Appreciation Right, Phantom Stock, Restricted Stock or Restricted Stock
Unit Award that is so canceled or surrendered at any time up to ten (10) days
prior to the effective date of such liquidation and dissolution. The Committee
may establish a different period (and different conditions) for such exercise,
delivery, cancellation or surrender to avoid subjecting the grantee to liability
under Section 16(b) of the Exchange Act. Any stock option, Stock Appreciation
Right or Phantom Stock not so exercised, canceled or surrendered shall
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terminate on the last day for exercise prior to such effective date; and any
Restricted Stock or Restricted Stock Units as to which there has not been such
delivery of Stock certificates or that has not been so canceled or surrendered,
shall be forfeited on the last day prior to such effective date. The Committee
shall give to each grantee written notice of the commencement of any proceedings
for such liquidation and dissolution of the Company and the grantee's rights
with respect to his outstanding Award.
(d) Other Adjustments. The Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in the preceding paragraphs of this Section 13) affecting
the Company, or the financial statements of the Company or any Parent,
Subsidiary or Affiliate, or of changes in applicable laws, regulations or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
Except as hereinbefore expressly provided, issuance by the Company of
stock of any class or securities convertible into stock of any class, for cash,
property, labor or services, upon direct sale, upon the exercise of rights or
warranty to subscribe therefor, or upon conversion of stock or obligations of
the Company convertible into such stock or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of Stock subject to
Awards theretofore granted or the purchase price per share of Stock subject to
Awards.
14. TERMINATION AND AMENDMENT
(a) Amendment or Termination by the Board. The Board, without
further approval of the stockholders, may amend or terminate the Plan or any
portion thereof at any time, except that no amendment shall become effective
without prior approval of the stockholders of the Company to increase the number
of shares of Stock subject to the Plan or if stockholder approval is necessary
to comply with any tax or regulatory requirement or rule of any exchange or
national automated quotation system upon which the Stock is listed or quoted
(including for this purpose stockholder approval that is required for continued
compliance with Rule 16b-3 or stockholder approval that is required to enable
the Committee to grant Incentive Stock Options pursuant to the Plan).
(b) Amendments by the Committee. The Committee shall be authorized
to make minor or administrative amendments to the Plan as well as amendments to
the Plan that may be dictated by requirements of U.S. federal or state laws
applicable to the Company or that may be authorized or made desirable by such
laws. The Committee may amend any outstanding Award in any manner as provided in
Section 3(c) and to the extent that the Committee would have had the authority
to make such Award as so amended.
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(c) Approval of Grantees. No amendment to the Plan or any Award
may be made that would materially adversely affect any outstanding Award
previously made under the Plan without the approval of the grantee.
15. NON-GUARANTEE OF EMPLOYMENT
Nothing in the Plan or in any Grant Agreement thereunder shall confer
any right on an employee to continue in the employ of the Company or any Parent,
Subsidiary or Affiliate or shall interfere in any way with the right of the
Company or any Parent, Subsidiary or Affiliate to terminate an employee at any
time.
16. TERMINATION OF EMPLOYMENT
For purposes of maintaining a grantee's continuous status as an
employee and accrual of rights under any Award, transfer of an employee among
the Company and the Company's Parent, Subsidiaries or Affiliates shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment for such purposes if an employee is placed on military or sick
leave or such other leave of absence that is considered as continuing intact the
employment relationship; in such a case, the employment relationship shall be
continued until the date when an employee's right to reemployment shall no
longer be guaranteed either by law or contract.
17. WRITTEN AGREEMENT
Each Grant Agreement entered into between the Company and a grantee
with respect to an Award granted under the Plan shall incorporate the terms of
this Plan and shall contain such provisions, consistent with the provisions of
the Plan, as may be established by the Committee.
18. NON-UNIFORM DETERMINATIONS
The Committee's determinations under the Plan (including without
limitation determinations of the persons to receive Awards, the form, amount and
time of such Awards, the terms and provisions of such Awards and the agreements
evidencing same) need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, Awards under the Plan, whether
or not such persons are similarly situated.
19. LIMITATION ON BENEFITS
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
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20. LISTING AND REGISTRATION
If the Company determines that the listing, registration or
qualification of Stock subject to any Award upon any securities exchange or
listing or quotation system established by the National Association of
Securities Dealers, Inc. or under any law is necessary or desirable as a
condition of, or in connection with, the granting of same or the issue or
purchase of Stock thereunder, no such Award may be exercised in whole or in part
and no restrictions on such Award shall lapse, unless such listing, registration
or qualification is effected free of any conditions not acceptable to the
Company.
21. COMPLIANCE WITH SECURITIES LAW
The Company may require that a grantee, as a condition to exercise of
an Award, and as a condition to the delivery of any Stock certificate, provide
to the Company, at the time of each such exercise and each such delivery, a
written representation that the Stock being acquired shall be acquired by the
grantee solely for investment and will not be sold or transferred without
registration or the availability of an exemption from registration under the
Securities Act and applicable state securities laws. The Company may also
require that a grantee submit other written representations that will permit the
Company to comply with applicable federal and state securities laws in
connection with the issuance of the Stock, including representations as to the
knowledge and experience in financial and business matters of the grantee and
the grantee's ability to bear the economic risk of the grantee's investment. The
Company may require that the grantee obtain a "purchaser representative" as that
term is defined in applicable federal and state securities laws. Any Stock
certificates for shares issued pursuant to this Plan may bear a legend
restricting transferability of the Stock unless such shares are registered or an
exemption from registration is available under the Securities Act and applicable
securities laws of the states of the U.S. The Company may notify its transfer
agent to stop any transfer of Stock not made in compliance with these
restrictions. Stock shall not be issued with respect to an Award granted under
the Plan unless the exercise of such Award and the issuance and delivery of
Stock certificates for such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, the rules and regulations promulgated thereunder and the
requirements of any national securities exchange or Nasdaq System upon which the
Stock may then be listed or quoted, and shall be further subject to the approval
of counsel for the Company with respect to such compliance to the extent such
approval is sought by the Committee.
22. NO TRUST OR FUND CREATED
Neither the Plan nor any Award shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company and a grantee or any other person. To the extent that any grantee or
other person acquires a right to receive payments from the Company pursuant to
an Award, such right shall be no greater than the right of any unsecured general
creditor of the Company.
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23. NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS
Nothing contained in the Plan shall prevent the Company or any Parent,
Subsidiary or Affiliate from adopting or continuing in effect other compensation
arrangements (whether such arrangements be generally applicable or applicable
only in specific cases), including without limitation the granting of stock
options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights or
Phantom Stock Units otherwise than under the Plan.
24. NO RESTRICTION OF CORPORATE ACTION
Nothing contained in the Plan shall be construed to limit or impair the
power of the Company or any Parent, Subsidiary or Affiliate to make adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure, or to amalgamate, merge or consolidate, liquidate, sell or transfer
all or any part of its business or assets or, except as otherwise provided
herein, or in a Grant Agreement, to take other actions which it deems to be
necessary or appropriate. No employee, beneficiary or other person shall have
any claim against the Company or any Parent, Subsidiary or Affiliate as a result
of such action.
25. GOVERNING LAW
The validity, construction and effect of the Plan, of Grant Agreements
entered into pursuant to the Plan, and of any rules, regulations, determinations
or decisions made by the Board or Committee relating to the Plan or such Grant
Agreements, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined in accordance with
applicable federal laws and the laws of the State of Maryland. Unless otherwise
provided in the Award Agreement, recipients of an Award under the Plan are
deemed to submit to the exclusive jurisdiction and venue of the federal or local
courts of the State of Maryland, to resolve any and all issues that may arise
out of or relate to the Plan or any related Grant Agreement.
26. PLAN SUBJECT TO CHARTER AND BYLAWS
This Plan is subject to the Certificate of Incorporation and Bylaws of
the Company, as they may be in effect from time to time.
27. EFFECTIVE DATE; TERMINATION DATE
The Plan is effective as of the date on which the Plan is approved by
the stockholders of the Company. No Award shall be granted under the Plan after
the close of business on the day immediately preceding the tenth (10th)
anniversary of the effective date of the Plan. Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to such termination
of the Plan shall remain in effect until such Awards have been satisfied or
terminated in accordance with the Plan and the terms of such Awards.
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Date Approved by the Board: February 27, 2004
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Date Approved by the Stockholders: May 25, 2004
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