EXHIBIT 10.2
NEON COMMUNICATIONS, INC.
STOCK INCENTIVE PLAN
Section 1. PURPOSE. The purpose of the NEON Communications, Inc. Stock
Incentive Plan (as amended from time to time, the "Plan") is to promote the
interests of NEON Communications, Inc., a Delaware corporation (the "Company"),
and any Parent or Subsidiary thereof and the interests of the Company's
stockholders by providing an opportunity to selected employees, directors and
officers of, and consultants to, the Company or any Parent or Subsidiary thereof
as of the date of the adoption of the Plan or at any time thereafter to purchase
Common Stock of the Company. By encouraging such stock ownership the Company
seeks to attract, retain and motivate such employees, directors and officers and
other persons and to encourage such employees, directors and officers and other
persons to devote their best efforts to the business and financial success of
the Company. It is intended that this purpose will be effected by the granting
of "non-qualified stock options" and/or "incentive stock options" to acquire the
Common Stock of the Company or "restricted shares" or other awards based on the
Company's Common Stock. Under the Plan, the Committee (as hereinafter defined)
shall have the authority (in its sole discretion) to grant "incentive stock
options" within the meaning of Section 422(b) of the Code and "non-qualified
stock options" as described in Treasury Regulation Section 1.83-7 or any
successor regulation thereto or restricted shares of the Company's Common Stock,
or other awards based on the Company's Common Stock.
Section 2. DEFINITIONS. For purposes of the Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context:
2.1. "AWARD" shall mean any of the following: (i) ISO, (ii)
Non-Qualified Stock Option, (iii) Restricted Share, and (iv) any other
stock-based awards.
2.2. "BOARD OF DIRECTORS" shall mean the Board of Directors of
the Company.
2.3. "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
2.4. "COMMITTEE" shall mean the committee of the Board of
Directors referred to in Section 5 hereof, provided, that if no such committee
is appointed by the Board of Directors, the Board of Directors shall have all of
the authority and obligations of the Committee under the Plan.
2.5. "COMMON STOCK" shall mean the Common Stock $0.001 par
value, of the Company.
2.6. "COMPANY" has the meaning set forth in Section 1.
2.7. "EMPLOYEE" shall mean with respect to an ISO, any person,
including without limitation, an officer of the Company, who, at the time an ISO
is granted to such person hereunder, is employed by the Company or any Parent or
Subsidiary of the Company, and (ii) with respect to a Non-Qualified Option, any
person employed by, or performing services for, the Company or any Parent or
Subsidiary of the Company, including, without limitation, consultants, officers
and directors.
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2.8. "FAIR MARKET VALUE" of a share of Common Stock as of any
day shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq Stock Market, then the Fair Market Value shall
be the closing selling price per share of Common Stock
on the date in question, as the price is reported by
the National Association of Securities Dealers on the
Nasdaq National Market. If there is no closing selling
price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing
selling price on the last preceding date for which
such quotation exists.
(ii) If the Common Stock is at the time listed on any stock
exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the
date in question on the stock exchange determined by
the Committee to be the primary market for the Common
Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value
shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on
any stock exchange nor traded on the Nasdaq Stock
Market, then the Fair Market Value shall be determined
by the Committee after taking into account such
factors as the Committee shall deem appropriate.
2.9. "ISO" shall mean an Option granted to a Participant
pursuant to the Plan that constitutes and shall be treated as an "incentive
stock option" as defined in Section 422(b) of the Code.
2.10. "NON QUALIFIED OPTION" shall mean an Option granted to a
Participant pursuant to the Plan that is intended to be, and qualifies as, a
"non qualified stock option" as described in Treasury Regulation Section 1.83-7
or any successor regulation thereto and that shall not constitute or be treated
as an ISO.
2.11. "OPTION" shall mean any ISO or Non-Qualified Option
granted to an Employee pursuant to the Plan.
2.12. "OPTION SHARES" shall mean shares of Common Stock issued
or issuable upon exercise of an Option.
2.13. "PARTICIPANT" shall mean any Employee to whom an Option
is granted under the Plan.
2.14. "PARENT" of the Company shall have the meaning of "parent
corporation" set forth in Section 424(e) of the Code.
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2.15. "PLAN" has the meaning set forth in Section 1.
2.16. "RESTRICTED SHARES" means shares of Common Stock issued
to a Participant under the Plan in accordance with Section 7 of the Plan.
2.17. "SUBSIDIARY" of the Company shall have the meaning of
"subsidiary corporation" set forth in Section 424(f) of the Code.
Section 3. ELIGIBILITY. Awards may be granted to any Employee. The
Committee shall have the sole authority to select the persons to whom Awards are
to be granted hereunder, and to determine whether a person is to be granted a
Non-Qualified Option, an ISO, Restricted Shares, other stock-based Award, or any
combination thereof. No person shall have any right to participate in the Plan.
Any person selected by the Committee for participation during any one period
will not by virtue of such participation have the right to be selected as a
Participant for any other period.
Section 4. COMMON STOCK SUBJECT TO THE PLAN.
4.1. NUMBER OF SHARES. The total number of shares of Common
Stock authorized for Awards under the Plan shall be 2,469,000 shares of Common
Stock (subject to adjustment as provided in Section 7 hereof).
4.2. REISSUANCE. The shares of Common Stock that may be subject
to Awards granted under the Plan may be either authorized and unissued shares or
shares reacquired at any time and now or hereafter held as treasury stock, as
the Committee may determine. In the event that any outstanding Option expires or
is terminated or forfeited for any reason, the shares of Common Stock allocable
to the unexercised, terminated, or forfeited portion of such Option may again be
available for Awards under the Plan. If any Restricted Shares are forfeited
following their award under this Plan, such shares may again be available for
Awards under the Plan. If any Option Shares shall have been repurchased by the
Company, then such shares may again be available for Awards under the Plan. In
the event that shares of Common Stock are delivered to the Company in full or
partial payment of the exercise price for an Option, the number of shares of
Common Stock available for future grants pursuant to this Plan shall be reduced
only by the net number of shares of Common Stock issued upon the exercise of the
Option.
4.3. SPECIAL ISO LIMITATIONS.
(a) The aggregate Fair Market Value (determined as of the date
an ISO is granted) of the shares of Common Stock with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (under
all incentive stock option plans of the Company or any Parent or Subsidiary of
the Company) shall not exceed $100,000.00. To the extent such limitations is
exceeded, such Option shall be considered a Non Qualified Option for purposes of
this Plan.
(b) No ISO shall be granted to an Employee who, at the time the
ISO is granted, owns (actually or constructively under the provisions of Section
424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary of the
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Company, unless (i) the option price is at least 110% of the Fair Market Value
(determined as of the time the ISO is granted) of the shares of Common Stock
subject to the ISO and (ii) the ISO by its terms is not exercisable more than
five years from the date it is granted.
4.4. LIMITATIONS NOT APPLICABLE TO NON-QUALIFIED OPTIONS.
Notwithstanding any other provision of the Plan, the provisions of Sections
4.3(a) (other than the second sentence thereof) and 4.3(b) shall not apply, nor
shall be construed to apply, to any Non-Qualified Option granted under the Plan.
Section 5. ADMINISTRATION OF THE PLAN
5.1. ADMINISTRATION. Subject to the proviso in Section 2.3
hereof, the Plan shall be administered by a committee of the Board of Directors
(the "Committee") established by the Board of Directors. The Committee shall be
appointed from time to time by, and shall serve at the pleasure of, the Board of
Directors. To the extent deemed necessary or appropriate by the Board of
Directors or the Committee, the Committee may be limited to specified members
for purposes of complying with applicable provisions of the Code, securities
laws, or the rules of any exchange on which the Common Stock is traded. To the
extent permitted by applicable law, the Board may delegate to one or more
executive officers of the Company the power to make Awards and exercise such
other powers under the Plan as the Board may determine, provided that the Board
shall fix the maximum number of shares subject to Awards and the maximum number
of shares for any one Participant to be made by any such executive officer.
5.2. GRANT OF AWARDS. The Committee shall have the sole
authority and discretion under the Plan (i) to select the Employees who are to
be granted Awards hereunder; (ii) to designate whether any Option to be granted
hereunder is to be an ISO or a Non-Qualified Option; (iii) to establish the
number of shares of Common Stock that may be subject to each Award; (iv) to
determine the time and the conditions subject to which Options may be exercised
in whole or in part; (v) to determine the amount (not less than the par value
per share) and the form of the consideration that may be used to purchase Option
Shares (including, without limitation, the circumstances under which issued and
outstanding shares of Common Stock owned by a Participant may be used by the
Participant to exercise an Option); (vi) to impose restrictions and/or
conditions with respect to Restricted Shares or Option Shares; (vii) to
determine the circumstances under which Restricted Shares or Option Shares may
be subject to repurchase by the Company; (viii) to determine the circumstances
and conditions subject to which Restricted Shares or Option Shares may be sold
or otherwise transferred, including, without limitation, the circumstances and
conditions subject to which a proposed sale of Restricted Shares or Option
Shares may be subject to the Company's right of first refusal (as well as the
terms and conditions of any such right of first refusal); (ix) to establish a
forfeiture period for any Restricted Shares or vesting provision for any Option
relating to the time when (or the circumstances under which) the Option may be
exercised by a Participant, including, without limitation, vesting provisions or
lapse of forfeiture periods that may be contingent upon (A) the Company's
meeting specified financial goals, (B) a change of control of the Company or (C)
the occurrence of other specified events; (x) to accelerate the time when
outstanding Options may be exercised or advance the lapse of any forfeiture
period relating to Restricted Shares; and (xi) to establish any other terms,
restrictions and/or conditions applicable to any Restricted Share or Option not
inconsistent with the provisions of the Plan.
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5.3. INTERPRETATION. The Committee shall be authorized to
interpret the Plan in its discretion and may, from time to time, adopt such
rules and regulations, not inconsistent with the provisions of the Plan, as it
may deem advisable to carry out the purposes of the Plan.
5.4. FINALITY. The interpretation and construction by the
Committee of any provision of the Plan, any Award granted hereunder or any
agreement evidencing any such Award shall be final and conclusive upon all
parties.
5.5. EXPENSES, ETC. All expenses and liabilities incurred by
the Committee in the administration of the Plan shall be borne by the Company.
The Committee may employ attorneys, consultants, accountants or other persons in
connection with the administration of the Plan. The Company, and its officers
and directors, shall be entitled to rely upon the advice, opinions or valuations
of any such persons. No member of the Committee shall be liable for any action,
determination or interpretation taken or made in good faith with respect to the
Plan or any Award granted hereunder.
Section 6. TERMS AND CONDITIONS OF OPTIONS.
6.1. ISOs. The terms and conditions of each ISO granted under
the Plan shall be specified by the Committee and shall be set forth in an ISO
agreement between the Company and the Participant in such form as the Committee
shall approve. The terms and conditions of each ISO shall be such that each ISO
issued hereunder shall constitute and shall be treated as an "incentive stock
option" as defined in Section 422(b) of the Code; provided that to the extent an
Option intended to be an ISO does not qualify as an ISO under the applicable
requirements of the Code, such Option shall be considered a Non-Qualified Option
for purposes of this Plan. The terms and conditions of any ISO granted hereunder
need not be identical to those of any other ISO granted hereunder.
The terms and conditions of each ISO shall include the following:
(a) The exercise price shall be fixed by the Committee
but shall in no event be less than 100% (or 110% in the case of an Employee
referred to in Section 4.3(b) hereof) of the Fair Market Value of the shares of
Common Stock subject to the ISO on the date the ISO is granted.
(b) ISOs, by their terms, shall not be transferable
otherwise than by will or the laws of descent and distribution, and, during a
Participant's lifetime an ISO shall be exercisable only by the Participant.
(c) The Committee shall fix the term of all ISOs
granted pursuant to the Plan (including, without limitation, the date on which
such ISO shall expire and terminate), provided, however, that such term shall in
no event exceed ten years from the date on which such ISO is granted (or, in the
case of an ISO granted to an Employee referred to in Section 4.3(b) hereof, such
term shall in no event exceed five years from the date on which such ISO is
granted). Each ISO shall be exercisable in such amount or amounts, under such
conditions and at such times or intervals or in such installments as shall be
determined by the Committee in its sole discretion.
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(d) To the extent that the Company or any Parent or
Subsidiary of the Company is required to withhold any Federal, state or local
taxes in respect of any compensation income realized by any Participant as a
result of any "disqualifying disposition" of any shares of Common Stock acquired
upon exercise of an ISO granted hereunder, the Company shall deduct from any
payments of any kind otherwise due to such Participant the aggregate amount of
such Federal, state or local taxes required to be so withheld or, if such
payments are insufficient to satisfy such Federal, state or local taxes, such
Participant will be required to pay to the Company, or make other arrangements
satisfactory to the Company regarding payment to the Company of, the aggregate
amount of any such taxes. All matters with respect to the total amount of taxes
to be withheld in respect of any such compensation income shall be determined by
the Board of Directors, in its sole discretion.
(e) The terms and conditions of each ISO may include
the following provisions:
(i) In the event a Participant's employment by the Company or
any Parent or Subsidiary of the Company shall be
terminated for cause or shall be terminated by the
Participant for any reason whatsoever other than as a
result of the Participant's death or "disability" (within
the meaning of Section 22(e)(3) of the Code), the
unexercised portion of any ISO held by such Participant
at that time may only be exercised within one month after
the date on which the Participant ceased to be so
employed, and only to the extent that the Participant
could have otherwise exercised such ISO as of the date on
which he ceased to be so employed.
(ii) In the event a Participant's employment by the Company or
any Parent or Subsidiary of the Company shall terminate
for any reason other than (x) a termination specified in
clause (i) above or (y) by reason of the Participant's
death or "disability" (within the meaning of Section
22(e)(3) of the Code), the unexercised portion of any ISO
held by such Participant at that time may only be
exercised within three months after the date on which the
Participant ceased to be so employed, and only to the
extent that the Participant could have otherwise
exercised such ISO as of the date on which he ceased to
be so employed.
(iii) In the event a Participant shall cease to be employed by
the Company or any Parent or Subsidiary of the Company by
reason of his "disability" (within the meaning of Section
22(e)(3) of the Code), the unexercised portion of any ISO
held by such Participant at that time may only be
exercised within one year after the date on which the
Participant ceased to be so employed, and only to the
extent that the Participant could have otherwise
exercised such ISO as of the date on which he ceased to
be so employed.
(iv) In the event a Participant shall die while in the employ
of the Company or a Parent or Subsidiary of the Company
(or within a period of three months after ceasing to be
an Employee for any reason other than his "disability"
(within the meaning of Section 22(e)(3) of the Code) or
within a period of one year after ceasing to be an
Employee by reason of such "disability"), the unexercised
portion of any ISO held by such Participant at the time
of his death may only be exercised within one year after
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the date of such Participant's death, and only to the
extent that the Participant could have otherwise
exercised such ISO at the time of his death. In such
event, such ISO may be exercised by the executor or
administrator of the Participant's estate or by any
person or persons who shall have acquired the ISO
directly from the Participant by bequest or inheritance.
6.2. NON-QUALIFIED OPTIONS. The terms and conditions of each
Non-Qualified Option granted under the Plan shall be specified by the Committee,
in its sole discretion, and shall be set forth in a written option agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each Non-Qualified Option will be such (and
each Non-Qualified Option agreement shall expressly so state) that each
Non-Qualified Option issued hereunder shall not constitute nor be treated as an
"incentive stock option" as defined in Section 422(b) of the Code, but will be a
"non-qualified stock option" for Federal, state and local income tax purposes.
The terms and conditions of any Non-Qualified Option granted hereunder need not
be identical to those of any other Non-Qualified Option granted hereunder.
The terms and conditions of each Non-Qualified Option Agreement shall
include the following:
(a) The exercise price shall be fixed by the Committee
and may be equal to, more than or less than (but not less than the par value per
share) 100% of the Fair Market Value of the shares of Common Stock subject to
the Non-Qualified Option on the date such Non-Qualified Option is granted.
(b) The Committee shall fix the term of all
Non-Qualified Options granted pursuant to the Plan (including, without
limitation, the date on which such Non-Qualified Option shall expire and
terminate). Such term may not be more than ten years from the date on which such
Non-Qualified Option is granted. Each Non-Qualified Option shall be exercisable
in such amount or amounts, under such conditions (including, without limitation,
provisions governing the rights to exercise such Non-Qualified Option), and at
such times or intervals or in such installments as shall be determined by the
Committee in its sole discretion.
(c) Unless otherwise approved by the Committee,
Non-Qualified Options shall not be transferable otherwise than by will or the
laws of descent and distribution, and during a Participant's lifetime a
Non-Qualified Option shall be exercisable only by the Participant.
(d) The terms and conditions of each Non-Qualified
Option may include the following provisions:
(i) In the event a Participant's employment by the Company or
any Parent or Subsidiary of the Company shall be
terminated for cause or shall be terminated by the
Participant for any reason whatsoever other than as a
result of the Participant's death or "disability" (within
the meaning of Section 22(e)(3) of the Code), the
unexercised portion of any Non-Qualified Option held by
such Participant at that time may only be exercised
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within one month after the date on which the Participant
ceased to be an Employee, and only to the extent that the
Participant could have otherwise exercised such
Non-Qualified Option as of the date on which he ceased to
be an Employee.
(ii) In the event a Participant's employment by the Company or
any Parent or Subsidiary of the Company shall terminate
for any reason other than (x) a termination by the
Company for cause or (y) by reason of the Participant's
death or "disability" (within the meaning of Section
22(e)(3) of the Code), the unexercised portion of any
Non-Qualified Option held by such Participant at that
time may only be exercised within three months after the
date on which the Participant ceased to be an Employee,
and only to the extent that the Participant could have
otherwise exercised such Non-Qualified Option as of the
date on which he ceased to be an Employee.
(iii) In the event a Participant shall cease to be an Employee
of the Company or any Parent or Subsidiary of the Company
by reason of his "disability" (within the meaning of
Section 22(e)(3) of the Code), the unexercised portion of
any Non-Qualified Option held by such Participant at that
time may only be exercised within one year after the date
on which the Participant ceased to be an Employee, and
only to the extent that the Participant could have
otherwise exercised such Non-Qualified Option as of the
date on which he ceased to be an Employee.
(iv) In the event a Participant shall die while an Employee of
the Company or a Parent or Subsidiary of the Company (or
within a period of three months after ceasing to be an
Employee for any reason other than his "disability"
(within the meaning of Section 22(e)(3) of the Code) or
within a period of one year after ceasing to be an
Employee by reason of such "disability"), the unexercised
portion of any Non-Qualified Option held by such
Participant at the time of his death may only be
exercised within one year after the date of such
Participant's death, and only to the extent that the
Participant could have otherwise exercised such
Non-Qualified Option at the time of his death. In such
event, such Non-Qualified Option may be exercised by the
executor or administrator of the Participant's estate or
by any person or persons who shall have acquired the
Non-Qualified Option directly from the Participant by
bequest or inheritance.
(e) To the extent that the Company (or any Parent or
Subsidiary thereof) is required to withhold any Federal, state or local taxes in
respect of any compensation income realized by any Participant in respect of a
Non-Qualified Option granted hereunder or in respect of any shares of Common
Stock acquired upon exercise of a Non-Qualified Option, the Company shall deduct
from any payments of any kind otherwise due to such Participant the aggregate
amount of such Federal, state or local taxes required to be so withheld or, if
such payments are insufficient to satisfy such Federal, state or local taxes, or
if no such payments are due or to become due to such Participant, then, such
Participant will be required to pay to the Company, or make other arrangements
satisfactory to the Company regarding payment to the Company of, the aggregate
amount of any such taxes. All matters with respect to the total amount of taxes
to be withheld in respect of any such compensation income shall be determined by
the Committee, in its sole discretion.
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Section 7. RESTRICTED SHARES.
(a) The Board shall determine the terms and conditions of any
Restricted Share Award, including the conditions for repurchase (or forfeiture)
and the issue price, if any. Any stock certificates issued in respect of a
Restricted Share Award shall be registered in the name of the Participant and,
unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee). At the expiration of the applicable restriction periods, the Company
(or such designee) shall deliver the certificates no longer subject to such
restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
(b) Subject to any restrictions set forth in the applicable Award
agreement, a recipient of Restricted Shares shall have voting, dividend and all
other rights of a stockholder of the Company as of the date such Restricted
Shares are issued and registered in recipient's name (whether or not
certificates evidencing such Restricted Shares are delivered to such recipient).
Except as may otherwise be set forth in the applicable Award agreement, stock
dividends issued with respect to Restricted Shares shall be treated as
additional Restricted Shares under the applicable Award agreement and shall be
subject to the same terms and conditions that apply to the Restricted Shares
with respect to which such dividends are issued.
Section 8. OTHER STOCK-BASED AWARDS. The Committee shall have the right
to grant other Awards based upon the Common Stock having such terms and
conditions as the Committee may determine, including the grant of shares based
upon certain conditions, the grant of securities convertible into Common Stock
and the grant of stock appreciation rights.
Section 9. ADJUSTMENTS.
(a) In the event that, after the adoption of the Plan by the Board of
Directors, the outstanding shares of the Company's Common Stock shall be
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another entity
in each such case (x) without receiving compensation therefor in money, services
or property and (y) through reorganization, merger or consolidation,
recapitalization, reclassification, stock split, split-up, combination or
exchange of shares, declaration of any dividends payable in Common Stock, or any
similar event, the Committee in good faith shall, subject to the provisions of
Section 9(c) below if the circumstances therein specified are applicable,
appropriately adjust (i) the number of shares of Common Stock (and the option
price per share) subject to the unexercised portion of any outstanding Option
(to the nearest possible full share); provided, however, that the limitations of
Section 424 of the Code shall apply with respect to adjustments made to ISOs,
and (ii) the number of shares of Common Stock for which Options may be granted
under the Plan, as set forth in Sections 4.1 and 14(b) hereof, and such
adjustments shall be effective and binding for all purposes of the Plan.
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(b) If any capital reorganization or reclassification of the capital
stock of the Company or any consolidation or merger of the Company with another
entity, or the sale of all or substantially all its assets to another entity,
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, then, subject to the provisions of Section 9(c) below if the
circumstances therein specified are applicable, each holder of an Option shall
thereafter have the right to purchase, upon the exercise of the Option in
accordance with the terms and conditions specified in the option agreement
governing such Option and in lieu of the shares of Common Stock immediately
theretofore receivable upon the exercise of such Option, such shares of stock,
securities or assets (including, without limitation, cash) as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore so receivable had such reorganization, reclassification,
consolidation, merger or sale not taken place.
(c) Notwithstanding Sections 9(a) and 9(b) hereof, in the event of (i)
any offer to holders of the Company's Common Stock generally relating to the
acquisition of all or substantially all of their shares, including, without
limitation, through purchase, merger or otherwise, or (ii) any proposed
transaction generally relating to the acquisition of substantially all of the
assets or business of the Company (herein sometimes referred to as an
"Acquisition"), the Board of Directors may, in its sole discretion, cancel any
outstanding Options (provided, however, that the limitations of Section 424 of
the Code shall apply with respect to adjustments made to ISOs) and pay or
deliver, or cause to be paid or delivered, to the holder thereof an amount in
cash or securities having a value (as determined by the Board of Directors
acting in good faith) equal to the product of (A) the number of shares of Common
Stock (the "Option Shares") that, as of the date of the consummation of such
Acquisition, the holder of such Option had become entitled to purchase (and had
not purchased) multiplied by (B) the amount, if any, by which (1) the formula or
fixed price per share paid to holders of shares of Common Stock pursuant to such
Acquisition exceeds (2) the option price applicable to such Option Shares.
Section 10. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP. Neither the
Plan nor any Award granted hereunder to a Participant shall be construed as
conferring upon such Participant any right to continue in the employ of (or
otherwise provide services to) the Company or any Subsidiary or Parent thereof,
or limit in any respect the right of the Company or any Subsidiary or Parent
thereof to terminate such Participant's employment or other relationship with
the Company or any Subsidiary or Parent, as the case may be, at any time.
Section 11. AMENDMENT OF THE PLAN. The Board of Directors may amend the
Plan from time to time as it deems desirable; provided, however, that, without
the approval of the holders of a majority of the outstanding capital stock of
the Company entitled to vote thereon or consent thereto, the Board of Directors
may not amend the Plan (i) to increase (except for increases due to adjustments
in accordance with Section 9 hereof) the aggregate number of shares of Common
Stock for which Awards may be granted hereunder, or (ii) to change the class of
Employees eligible to receive ISOs under the Plan.
Section 12. TERMINATION OF THE PLAN. The Board of Directors may
terminate the Plan at any time. Unless the Plan shall theretofore have been
terminated by the Board of Directors, the Plan shall terminate ten years after
the date of its initial adoption by the Board of Directors. No Award may be
granted hereunder after termination of the Plan. The termination or amendment of
the Plan shall not alter or impair any rights or obligations under any Award
theretofore granted under the Plan.
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Section 13. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as
of the effective date of the Company's Chapter 11 Plan, upon which effective
date this Plan shall be deemed, pursuant to Section 303 of the Delaware General
Corporation Law, to have been adopted and approved by the Corporation's Board of
directors and stockholders.
Section 14. CERTAIN RESTRICTIONS.
(a) No amendment of this Plan with respect to this Section 14 may be
made which would (i) increase the maximum amount that can be paid to any one
Participant pursuant to this Plan or (ii) modify the requirements as to
eligibility for participation in this Plan, unless the Company's shareholders
have first approved such amendment in a manner which would permit the deduction
under Section 162(m) (or any successor thereto) of the Code of such payment in
the fiscal year it is paid. The Board of Directors shall amend this Section 14
and such other provisions as it deems appropriate, to cause amounts payable to
Participants under this Plan to satisfy the performance based compensation
requirements of Section 162(m) (or any successor thereto) and the Treasury
regulations promulgated thereunder.
(b) Notwithstanding any provision of this Plan (including the
provisions of this Section 14) to the contrary, the amount of compensation which
a Participant may receive with respect to Options which are granted hereunder
shall be based solely on an increase in the value of the applicable shares of
Common Stock after the date of grant of such Options. Thus, no Option with an
exercise price less than the Fair Market Value of the related shares of Common
Stock on the date of grant may be granted hereunder to a Participant.
Furthermore, the maximum number of shares of Common Stock with respect to which
Awards may be granted hereunder to any Participant during any twelve-month
period may not exceed One Million (1,000,000) shares of Common Stock, subject to
adjustment as provided in Section 9.
Section 15. COMPLIANCE WITH SECURITIES AND OTHER LAWS. Each Award shall
be subject to the requirement that, if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares of
Common Stock subject to such Award upon any securities exchange or under any
State or Federal law, or the consent or approval of any governmental or
regulatory body, is necessary as a condition of, or in connection with, the
issuance or purchase of such shares thereunder, such shares may not be issued
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification.
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