EXHIBIT 10.29
ATG INC.
1998 STOCK OWNERSHIP INCENTIVE PLAN
ARTICLE 1. PURPOSE
The purpose of this 1998 Stock Ownership Incentive Plan ("Plan") is to
advance the interests of ATG Inc., a California corporation ("Company"), and its
subsidiaries by encouraging employees who will largely be responsible for the
long-term success and development of the Company to acquire and retain an
ownership interest in the Company. The Plan is also intended to provide
flexibility to the Company in attracting and retaining such employees and
stimulating their efforts on behalf of the Company.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. As used in the Plan, terms defined parenthetically
immediately after their use or otherwise herein shall have the respective
meanings provided by such definitions, and the terms set forth below shall have
the following meanings (in either case, such terms shall apply equally to both
the singular and plural forms of the terms defined):
2.1.1 "Award" shall mean, individually or collectively, a
grant under the Plan of Options, Restricted Stock or Performance Units.
2.1.2 "Board" shall mean the Board of Directors of the
Company.
2.1.3 "Cause" shall mean, unless otherwise defined in an
agreement evidencing an Award, a felony conviction of a Participant or the
failure of a Participant to contest prosecution for a felony, or a
Participant's willful misconduct or dishonesty, or the Participant's gross
insubordination or willful neglect of duty, any of which is determined by the
Board to be directly and materially harmful to the business or reputation of
the Company or its Subsidiaries.
2.1.4 A "Change in Control" shall mean any of the following
events:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company ("Voting Securities") by any
Person immediately after which such Person has Beneficial Ownership (within
the meaning of
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Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a Non-Control Acquisition (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A Non-Control Acquisition shall mean acquisition by (i) the Company
or any Subsidiary, (ii) an employee benefit plan (or a trust forming a part
thereof) maintained by the Company or any Subsidiary or (iii) any Person in
connection with a Non-Control Transaction (as hereinafter defined).
(b) The individuals who, as of the Effective Date
(as hereinafter defined), are members of tho Board ("Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election by the Company's
shareholders, of any new director was approved by a vote of at least a
majority of the Incumbent Board, such new director shall, for purposes of the
Plan, be considered as a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of either an
actual or threatened election contest (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board ("Proxy Contest")
including by reason of any agreement intended to avoid or settle any such
election contest or Proxy Contest; or
(c) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such is a Non-Control Transaction. For purposes of
the Plan, the term "Non-Control Transaction" shall mean a merger, consolidation
or reorganization of the Company in which:
(A) the shareholders of the Company
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least a majority of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger,
consolidation or reorganization ("Surviving Corporation") in substantially the
same respective proportions as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
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(B) the individuals who were members of
the Board immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least a majority of
the members of the board of directors of the Surviving Corporation; and
(C) no Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan (or a trust forming a
part thereof) maintained by the Company, the Surviving Corporation or any
Subsidiary of the Company, or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
the then outstanding Voting Securities) has Beneficial Ownership of 20% or
more of the combined voting power of the Surviving Corporation's then
outstanding voting securities;
(ii) A complete liquidation or dissolution of
the Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person ("Subject Person") acquired Beneficial Ownership of
more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by reducing the
number of Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by the Subject Person; provided, however, that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall be deemed to occur.
2.1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.
2.1.6 "Disability" shall mean the total disability as
determined by the Board in accordance with standards and procedures similar to
those under the Company's long-term disability plan, or, if none, a physical or
mental infirmity which the Board determines impairs the Participant's ability to
perform substantially his or her duties for the Company and its Subsidiaries
for a period of 180 consecutive days.
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2.1.7 "Employee" shall mean an individual who is a full-time
or part-time employee of the Company or a Subsidiary of the Company.
2.1.8 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
2.1.9 "Fair Market Value" of the Shares shall mean, as of any
applicable date, the closing sale price of the Shares on the NASDAQ National
Market or any national or regional stock exchange on which the Shares are
traded, or if no such reported sale of the Shares shall have occurred on such
date, on the next preceding date on which there was such a reported sale. If
there shall be any material alteration in the present system of reporting sale
prices of the Shares, or if the Shares are not included in the NASDAQ National
Market or listed on a national or regional stock exchange, the Fair Market Value
of the Shares as of a particular date shall be determined by such method as
shall be determined by the Board.
2.1.10 "ISOs" shall have the meaning given such term in
Section 6.1.
2.1.11 "NQSOs" shall have the meaning given such term in
Section 6.1.
2.1.12 "Option" shall mean an option to purchase Shares
granted pursuant to Article 6.
2.1.13 "Option Agreement" shall mean an agreement evidencing
the grant of an Option as described in Section 6.2.
2.1.14 "Option Exercise Price" shall mean the purchase price
per Share subject to an Option, which shall not be less than the Fair Market
Value of the Share on the date of grant (110% of Fair Market Value in the case
of an ISO granted to a Ten Percent Shareholder).
2.1.15 "Participant" shall mean any Employee selected by the
Board to receive an Award under the Plan.
2.1.16 "Performance Goals" shall have the meaning given such
term in Section 8.4.
2.1.17 "Performance Period" shall have the meaning given such
term in Section 8.3.
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2.1.18 "Performance Unit" shall mean the right to receive a
payment from the Company upon the achievement of specified Performance Goals as
set forth in a Performance Unit Agreement.
2.1.19 "Performance Unit Agreement" shall mean an agreement
evidencing a Performance Unit grant, as described in Section 8.2.
2.1.20 "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
2.1.21 "Plan" shall mean this ATG Inc. 1998 Stock Ownership
Incentive Plan, as the same may be amended from time to time.
2.1.22 "Restriction Period" shall mean the period determined
by the Board during which transfer of Shares is limited in some way or Shares
are otherwise restricted or subject to forfeiture as provided in Article 7.
2.1.23 "Restricted Stock" shall mean Shares granted pursuant
to Article 7 as to which the restrictions have not expired.
2.1.24 "Restricted Stock Agreement" shall mean an agreement
evidencing a Restricted Stock grant, as described in Section 7.2.
2.1.25 "Retirement" shall mean retirement by a Participant in
accordance with the terms of the Company's retirement or pension plans or
policies.
2.1.26 "Shares" shall mean the shares of the Company's common
stock, no par value per share.
2.1.27 "Subsidiary" shall mean, with respect to any company,
any corporation or other Person of which a majority of its voting power, equity
securities, or equity interest is owned directly or indirectly by such company.
2.1.28 "Taxable Event" shall mean any event upon which the
Company has a withholding obligation and which involves the issuance of Shares
to a Participant.
2.1.29 "Ten Percent Shareholder" shall mean an Employee who,
at the time an ISO is granted, owns (within the meaning of section 422(b)(6) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company.
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2.2 Gender and Number. Except where otherwise indicated by the context,
reference to the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Board. The Plan shall be administered by the Board. The Board
in administering the Plan shall meet at such times and places as it determines
and may meet through telephone conference call.
3.2 Authority of the Board. Subject to the provisions of the Plan, the
Board shall have full authority to:
3.2.1 select Participants to whom Awards are granted;
3.2.2 determine the size, types and frequency of Awards
granted under the Plan;
3.2.3 determine the terms and condition of Awards, including
any restrictions on or conditions to the Award, which need not be identical;
3.2.4 cancel or modify, with the consent of the Participant,
outstanding Awards and to grant new Awards in substitution therefor;
3.2.5 accelerate the exercisability of any Award, for any
reason;
3.2.6 construe and interpret the Plan and any agreement or
instrument entered into under the Plan;
3.2.7 establish, amend and rescind rules and regulations for
the Plan's administration; and
3.2.8 amend the terms and conditions of any outstanding Award
to the extent such terms and conditions are within the discretion of the Board
as provided in the Plan.
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The Board shall make all determinations which may be necessary or advisable for
the administration of the Plan. To the extent permitted by law and Rule 16b-3
promulgated under the Exchange Act, the Board may delegate its authority
hereunder.
3.2.9 Decisions Binding. All determinations and decisions made
by the Board pursuant to the provisions of the Plan, and all related orders or
resolutions of the Board, shall be final, conclusive and binding for all
purposes upon all persons, including the Company, its shareholders, Employees,
Participants and their estates and beneficiaries.
3.3 Section 16 Compliance; Bifurcation of Plan. It is the intention of
the Company that the Plan and the administration of the Plan comply in all
respects with Section 16(b) of the Exchange Act and the rules and regulations
promulgated thereunder, if such rules and regulations are applicable to the
Company. If any Plan provision, or any aspect of the administration of the Plan,
is found not to be in compliance with Section 16(b) of the Exchange Act, the
provision or administration shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting the requirements of Rule 16b-3
promulgated under the Exchange Act. Notwithstanding anything in the Plan to the
contrary, the Board, in its discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
Participants who are subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Directors and officers who fall within the definition of "officer"
under Rule 16a-1(f) promulgated under the Exchange Act shall deliver to the
Corporate Secretary of the Company an executed notice of his/her intention to
sell Shares acquired directly or indirectly hereunder. Such notice, in which
there shall be specified the number of Shares which are to be sold and the date
such Shares were acquired, shall be provided at least one full business day in
advance of the proposed date of sale.
ARTICLE 4. SHARES AVAILABLE UNDER THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3,
the maximum number of Shares reserved for issuance under this Plan shall be Five
Hundred Thousand (500,000). Any Shares issued under the Plan may consist, in
whole or in part, of authorized and unissued Shares or treasury Shares. If and
to the extent an Award shall expire or terminate for any reason without having
been exercised in full (including a cancellation and re-grant of an Option), or
shall be forfeited, without, in either case, the Participant having realized
any of the economic benefits of a shareholder (such as the receipt of
dividends or other distributions paid on Shares of Restricted Stock), the
Shares (including Restricted Stock) associated with such Awards shall again
become available for Award under the Plan.
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4.2 Shares of Restricted Stock Available Under the Plan. Subject to
adjustment as provided in Section 4.3, the number of Shares which may be the
subject of Awards granted in the form of Restricted Stock is limited to a
maximum of Two Hundred Fifty Thousand (250,000) Shares.
4.3 Adjustments in Authorized Shares and Outstanding Awards. In the
event of a merger, reorganization, consolidation, recapitalization,
reclassification, split-up, spin-off, stock dividend, stock split, reverse stock
split, cash dividend, property dividend, share repurchase, share combination,
share exchange, or other fundamental change in the corporate structure of the
Company affecting the Shares, the Board may substitute or adjust the total
number and class of Shares or other stock or securities which may be issued
under the Plan, and the number, class and/or price of Shares subject to
outstanding Awards, as it determines to be appropriate and equitable to prevent
dilution or enlargement of the rights of Participants and to preserve, without
increasing, the value of any outstanding Awards; and further provided, that the
number of Shares subject to any Award shall always be a whole number. In the
case of ISOs, such adjustments shall be made in such a manner so as not to
constitute a "modification" within the meaning of section 424(h)(3) of the Code
and only to the extent otherwise permitted by sections 422 and 424 of the Code.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
All Employees of the Company and its Subsidiaries are eligible to
receive Awards under the Plan. In selecting Employees to receive Awards under
the Plan, as well as in determining the number of Shares subject to, and the
other terms and conditions applicable to, each Award, the Board shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan, including the duties of the Employees, their present and potential
contribution to the success of the Company and their anticipated number of years
of active service remaining with the Company or a Subsidiary.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
the Board may grant Options to Participants at any time and from time to time,
in the form of options which are intended to qualify as incentive stock options
within the meaning of section 422 of the Code ("ISOs"), Options which are not
intended to so qualify ("NQSOs"), or a combination thereof.
6.2 Option Agreement. Each Option shall be evidenced by an Option
Agreement that shall specify the Option Exercise Price, the duration of the
Option, the
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number of Shares to which the Option relates and such other provisions as the
Board may determine which are required by the Plan. The Option Agreement shall
also specify whether the Option is intended to be an ISO or a NQSO and shall
include such provisions applicable to the particular type of Option granted.
6.3 Duration of Options. Each Option shall expire at such time as is
determined by the Board at the time of grant ("Expiration Date"); provided,
however, that no Option shall be exercised later than the tenth anniversary of
its grant (fifth anniversary, in the case of an ISO granted to a Ten Percent
Shareholder).
6.4 Exercise of Options. Options shall be exercisable at such times and
be subject to such restrictions and conditions as the Board shall approve at the
time of grant, which need not be the same for each grant or for each
Participant. Options shall be exercised by delivery to the Company of a written
notice of exercise, setting forth the number of Shares with respect to which the
Option is to be exercised and accompanied by full payment of the Option Exercise
Price and all applicable withholding taxes.
6.5 Payment of Option Exercise Price. The Option Exercise Price for
Shares as to which an Option is exercised shall be paid to the Company in full
at the time of exercise either (a) in cash in the form of currency or other cash
equivalent acceptable to the Company, (b) by rendering Shares having a Fair
Market Value at the time of exercise equal to the Option Exercise Price, (c) any
other reasonable consideration that the Board may deem appropriate or (d) by a
combination of the forms of consideration described in (a), (b) and (c) of this
Section 6.5. The Board may permit the cashless exercise of Options, subject to
applicable securities law restrictions and the requirements of Regulation T
promulgated by the Federal Reserve Board, or by any other means which the Board
determines to be consistent with the Plan's purpose and applicable law; except
that in the case of any Participant subject to Section 16(b) of the Exchange Act
such cashless exercise of his or her Option may not occur within six months of
the date of grant of such Option, to the extent such exercise during such
six-month period would not be exempted from Section 16(b) of the Exchange Act by
virtue of Rule 16b-3 promulgated thereunder.
6.6 Vesting Upon Change in Control. Upon a Change in Control, any then
outstanding Options held by Participants shall become fully vested and
immediately exercisable.
6.7 Termination of Employment. If the employment of a Participant is
terminated for Cause, all then outstanding Options of such Participant, whether
or not exercisable, shall terminate immediately. If the employment of a
Participant is terminated for any reason other than for Cause, death, Disability
or Retirement, to the
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extent then outstanding Options of such Participant are exercisable, such
Options may be exercised by such Participant or such Participant's personal
representative at any time prior to the Expiration Date of the Options or
within 60 days after the date of such termination of employment, whichever is
earlier. In the event of the Retirement of a Participant, to the extent then
outstanding Options of such Participant are exercisable, such Options may be
exercised by the Participant (a) in the case of NQSOs, within two years after
the date of Retirement and (b) in the case of ISOs, within 90 days after
Retirement; provided, however, that no such Options may be exercised on a date
subsequent to their Expiration Date. In the event of the death or Disability
of a Participant while employed by the Company or a Subsidiary, all then
outstanding Options of such Participant shall become fully vested and
immediately exercisable, and may be exercised at any time (x) in the case of
NQSOs, within two years after the date of death or determination of Disability
and (y) in the case of ISOs, within one year after the date of death or
determination of Disability; provided, however that no such Options may be
exercised on a date subsequent to their Expiration Date. In the event of the
death of a Participant, the Option may be exercised by the person or persons
to whom rights pass by will or by the laws of descent and distribution, or if
appropriate, the legal representative of the deceased Participant's estate. In
the event of the Disability of a Participant, the Option may be exercised by
the Participant, or if such Participant is incapable of exercising the Option,
by such Participant's legal representative.
ARTICLE 7. RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Board may grant shares of Restricted Stock to Participants at any
time and from time to time and upon such terms and conditions as it may
determine. The purchase price per share, if any, of Restricted Stock granted
shall be determined by the Board, but shall not be less than the par value per
Share.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement which shall specify the Restriction
Period, the number of shares of Restricted Stock granted and such other
provisions as the Board may determine and which are required by the Plan.
7.3 Non-Transferability of Restricted Stock. Except as provided in
this Article 7, shares of Restricted Stock may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated until the end of the
applicable Restriction Period as specified in the Restricted Stock Agreement,
or upon earlier satisfaction of any other conditions determined at the time of
grant specified in the Restricted Stock Agreement.
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7.4 Other Restrictions. The Committee may impose such other
restrictions on any shares of Restricted Stock as it may deem advisable,
including, without limitation, restrictions based upon the achievement of
Performance Goals, years of service and/or restrictions under applicable Federal
or state securities laws. The Committee may provide that any share of Restricted
Stock shall be held (together with a stock power executed in blank by the
Participant) in custody by the Company until any or all restrictions thereon
shall have lapsed.
7.5 Forfeiture. The Committee shall determine and set forth in a
Participant's Restricted Stock Agreement such events upon which a Participant's
shares of Restricted Stock shall be forfeitable, which may include, without
limitation, the termination of a Participant's employment during the Restriction
Period or the nonachievement of Performance Goals. Any such forfeited shares of
Restricted Stock shall be immediately returned to the Company by the
Participant, and the Participant shall only receive the amount, if any, paid by
the Participant for such Restricted Stock.
7.6 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 7.4, each certificate representing shares of
Restricted Stock shall bear the following legend:
"The sale or other transfer of the shares represented by this
Certificate, whether voluntary, involuntary or by operation of
law, is subject to certain restrictions on transfer as set
forth in the ATG Inc. 1998 Stock Ownership Incentive Plan, and
in the related Restricted Stock Agreement. A copy of the Plan
and such Restricted Stock Agreement may be obtained from the
Secretary of ATG Inc."
7.7 Lapse of Restrictions Generally. Except as otherwise provided in
this Article 7, shares of Restricted Stock shall become freely transferable by
the Participant and no longer subject to forfeiture after the last day of the
Restriction Period, provided however, that if the restriction relates to the
achievement of a Performance Goal, the Restriction Period shall not end until
the Board has certified in writing that the Performance Goal has been meet. Once
the shares of Restricted Stock are released from their restrictions, the
Participant shall be entitled to have the legend required by Section 7.6 removed
from the Participant's share certificate, which certificate shall thereafter
represent freely transferable and nonforfeitable Shares free from any and all
restrictions under the Plan.
7.8 Lapse of Restrictions Upon Change in Control. Upon a Change in
Control, any restrictions and other Plan conditions pertaining to then
outstanding shares of Restricted Stock held by Participants, including, but not
limited to, vesting
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requirements, shall lapse and such Shares shall thereafter be immediately
transferable and nonforfeitable.
7.9 Voting Rights: Dividends and Other Distributions. During the
Restriction Period, Participants holding shares of Restricted Stock may exercise
full voting rights, and shall, unless the Board exercises its discretion as
provided in Section 7.10, be entitled to receive all dividends and other
distributions paid with respect to such Restricted Stock. If any dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they were
paid.
7.10 Treatment of Dividends. At the time shares of Restricted Stock are
granted to a Participant, the Board may, in its discretion, determine that the
payment of dividends, or a specified portion thereof, declared or paid on such
shares shall be deferred until the lapse of the restrictions applicable to such
shares, in which event such deferred dividends shall be held by the Company for
the account of the Participant. In the event of such deferral, there may be
credited at the end of each year (or portion thereof) interest on the amount of
the account during the year at a rate per annum as the Board, in its discretion,
may determine. Deferred dividends, together with interest accrued thereon, if
any, shall be (a) paid to the Participant upon the lapse of restrictions on the
shares of Restricted Stock as to which the dividends related or (ii) forfeited
to the Company upon the forfeiture of such shares by the Participant.
7.11 Termination of Employment. If the employment of a Participant is
terminated for any reason other than death or Disability prior to the expiration
of the Restriction Period applicable to any shares of Restricted Stock then held
by the Participant, such shares shall thereupon be forfeited immediately by the
Participant and returned to the Company, and the Participant shall only receive
the amount, if any, paid by the Participant for such Restricted Stock. If the
employment of a Participant is terminated as a result of death or Disability
prior to the expiration of the Restriction Period applicable to any shares of
Restricted Stock then held by the Participant, any restrictions and other
conditions pertaining to such shares then held by the Participant, including,
but not limited to, vesting requirements, shall immediately lapse and such
Shares shall thereafter be immediately transferable and nonforfeitable.
Notwithstanding anything in the Plan to the contrary, except in the case of
Restricted Stock for which a Performance Goal must be achieved, the Board may
determine, in its sole discretion, in the case of any termination of a
Participant's employment other than for Cause, that the restrictions on some or
all of the shares of Restricted Stock awarded to a Participant shall
immediately lapse and such Shares shall thereafter be immediately transferable
and nonforfeitable.
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ARTICLE 8. PERFORMANCE UNITS
8.1 Grant of Performance Units. The Board may, from time to time and
upon such terms and conditions as it may determine, grant Performance Units
which will become payable to a Participant upon certification in writing by the
Board that the Performance Goals related thereto have been achieved.
8.2 Performance Unit Agreement. Each Performance Unit grant shall be
evidenced by a Performance Unit Agreement that shall specify the Performance
Goals, the Performance Period and the number of Performance Units to which it
pertains.
8.3 Performance Period. The period of performance ("Performance
Period") with respect to each Performance Unit shall be such period of time,
which shall not be less than one year, nor more than five years, as determined
by the Board, for the measurement of the extent to which Performance Goals are
attained.
8.4 Performance Goals. The goals ("Performance Goals") that are to be
achieved with respect to each Performance Unit, or Restricted Stock subject to a
requirement that Performance Goals be achieved, shall be those objectives
established by the Board as it deems appropriate, and which may be expressed in
terms of, by way of illustration and not limitation, (a) earnings per Share, (b)
Share price, (c) pre-tax profit, (d) net earnings, (e) return on equity or
assets, (f) revenues or (g) any combination of the foregoing Performance Goals,
in respect of the performance of the Company and its Subsidiaries (which may be
on a consolidated basis), a Subsidiary, a division or other operating unit of
the Company. Performance goals may be absolute or relative and may be expressed
in terms of a progression within a specified range. The Performance Goals with
respect to a Performance Period shall be established by the Board in order to
comply with Rule 16b-3 under the Exchange Act and section 162(m) of the Code, as
applicable.
8.5 Termination of Employment. If the employment of a Participant shall
terminate prior to the expiration of the Performance Period for any reason other
than for death, Disability or Retirement, the Performance Units then held by the
Participant shall immediately terminate. In the case of termination of
employment by reason of death, Disability or Retirement of a Participant prior
to the expiration of the Performance Period, any then outstanding Performance
Units of such Participant shall be payable in an amount equal to the maximum
amount payable under the Performance Unit multiplied by a percentage equal to
the percentage that would have been earned under the terms of the Performance
Unit Agreement assuming that the rate at which the Performance Goals have been
achieved as of the date of such termination of employment would have continued
until the end of the Performance Period; provided,
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however, that if no maximum amount payable is specified in the Performance
Unit Agreement, the amount payable shall be such amount as the Board shall
determine is reasonable.
8.6 Payment Upon Change in Control. Upon a Change in Control, any then
outstanding Performance Units shall become fully vested and immediately payable
in an amount which is equal to the greater of (a) the maximum amount payable
under the Performance Unit multiplied by a percentage equal to the percentage
that would have been earned under the terms of the Performance Unit Agreement
assuming that the rate at which the Performance Goals have been achieved as of
the date of such Change in Control would have continued until the end of the
Performance Period or (b) the maximum amount payable under the Performance Unit
multiplied by the percentage of the Performance Period completed by the
Participant at the time of the Change in Control; provided, however, that if no
maximum amount payable is specified in the Performance Unit Agreement, the
amount payable shall be such amount as the Board shall determine is reasonable.
8.7 Time and Manner of Payment of Performance Units. Subject to such
terms and conditions as the Board may impose, and unless otherwise provided in
the Performance Unit Agreement, Performance Units shall be payable within 90
days following the end of the Performance Period during which the Participant
attained at least the minimum acceptable level of achievement under the
Performance Goals, or 90 days following a Change in Control, as applicable. The
Board, in its discretion, may determine at the time of payment required in
connection with a Performance Unit whether such payment shall be made (a) solely
in cash, (b) solely in Shares (valued at the Fair Market Value of the Shares on
the date of payment) or (c) a combination of cash and Shares; provided, however,
that if a Performance Unit becomes payable upon a Change in Control, the
Performance Unit shall be paid solely in cash.
8.8 Designation of Beneficiary. Each Participant may, from time to
time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom the right to receive payments under a Performance Unit is
to be paid in case of the Participant's death before receiving any or all such
payments. Each such designation shall revoke all prior designations by the
Participant, shall be in a form prescribed by the Company and shall be effective
only when filed by the Participant in writing with the Board or its designee
during the Participant's lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
ARTICLE 9. AMENDMENT, MODIFICATION AND TERMINATION
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9.1 Termination Date. The Plan shall terminate on the earliest to occur
of (a) the tenth anniversary of the adoption of the Plan by the Board, (b) the
date when all Shares available under the Plan shall have been acquired pursuant
to the exercise of Awards and the payment of all benefits in connection with
Performance Unit Award has been made or (c) such other date as the Board may
determine in accordance with Section 9.2.
9.2 Amendment, Modification and Termination. The Board may, at any
time, amend, modify or terminate the Plan. Without the approval of the
shareholders of the Company (as may be required by section 162(m) of the Code,
Section 16 of the Exchange Act and the rules promulgated thereunder, any
national securities exchange or national market system on which the Shares are
then listed, included or reported or a regulatory body having jurisdiction with
respect hereto), however, no such amendment, modification or termination may:
9.2.1 materially increase the benefits accruing to
Participants under the Plan;
9.2.2 increase the total amount of Shares which may be issued
under the Plan, except as provided in Section 4.3;
9.2.3 materially modify the class of Employees eligible to
participate in the Plan;
9.2.4 extend the term of the Plan; or
9.2.5 otherwise modify or add a material term of the Plan (as
determined under section 162(m) of the Code and Proposed Treasury Regulation
section 1.162-27).
9.3 Awards Previously Granted. No amendment, modification or
termination of the Plan shall in any manner adversely affect any outstanding
Award without the written consent of the Participant holding such Award.
ARTICLE 10. NON -TRANSFERABILITY
A Participant's rights under the Plan may not be assigned, pledged or
otherwise transferred other than by will or the laws of descent and
distribution, except that upon a Participant's death, the Participant's rights
to payment pursuant to a Performance Unit may be transferred to a beneficiary
designated in accordance with the provisions of Section 8.8; provided,
however, that in the case of NQSOs, the Participant may, subject
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to any restriction under Section 16(b) of the Exchange Act, if applicable,
transfer the Options to the Participant's spouse, lineal descendants, trusts
for their benefit or a charitable remainder trust of which the Participant or
such family members referred to above are a beneficiary or beneficiaries.
ARTICLE 11. NO GRANTING OF EMPLOYMENT RIGHTS
Neither the Plan, nor any action taken under the Plan, shall be
construed as giving any Employee the right to become a Participant, nor shall an
Award under the Plan be construed as giving a Participant any right with respect
to continuance of employment by the Company or any of its Subsidiaries. The
Company expressly reserves the right to terminate, whether by dismissal,
discharge or otherwise, a Participant's employment at any time, with or without
Cause, except as may otherwise be provided by any written agreement between the
Company and the Participant.
ARTICLE 12. WITHHOLDING
12.1 Tax Withholding. A Participant shall remit to the Company an
amount sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA and Medicare obligation) required by law to be then withheld
by the Company with respect to any grant, exercise or payment made under or as a
result of the Plan.
12.2 Share Withholding. If the Company has a withholding obligation
upon the issuance of Shares under the Plan, a Participant may, subject to the
discretion of the Board, elect to satisfy the withholding requirement, in whole
or in part, by having the Company withhold Shares having a Fair Market Value on
the date the withholding tax is to be determined equal to the amount required to
be withheld under applicable law.
ARTICLE 13. INDEMNIFICATION
Except in relation to matters as to which the Board member was grossly
negligent or engaged in willful misconduct, no member of the Board shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination or interpretation.
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ARTICLE 14. SUCCESSORS
All obligations of the Company with respect to Awards granted under the
Plan shall be binding on any successor to the Company, whether the existence of
such successor is a result of a direct or indirect purchase, merger,
consolidation or otherwise, of all or substantially all of the business and/or
assets of the Company.
ARTICLE 15. GOVERNING LAW
To the extent not preempted by Federal law, the Plan and all agreements
under the Plan, shall be governed by, and construed in accordance with, the laws
of the State of California without regard to its conflict of laws principles.
ARTICLE 16. APPROVAL OF SHAREHOLDERS
This Plan is effective as of the date of adoption by the Board (the
"Effective Date") but is subject to the approval of the holders of a majority of
the outstanding shares of the voting stock of the Company, which approval must
occur no later than one year after the date of the adoption of this Plan by the
Board. Any amendments to the Plan requiring shareholder approval must be
approved by the affirmative vote of the holders of a majority of the outstanding
shares of the voting stock of the Company.
Date Plan Adopted by Board of Directors: February __, 1998
Date Plan Approved by Shareholders: _____________________
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