Exhibit 10.1
TREX COMPANY, INC.
AMENDED AND RESTATED 1999 STOCK OPTION AND INCENTIVE PLAN
TABLE OF CONTENTS
Page
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1. PURPOSE .................................................................... 1
2. DEFINITIONS ................................................................ 1
3. ADMINISTRATION OF THE PLAN ................................................. 4
3.1. Board ............................................................... 4
3.2. Committee ........................................................... 5
3.3. Grants .............................................................. 5
3.4. No Liability ........................................................ 6
3.5. Applicability of Rule 16b-3 ......................................... 6
4. STOCK SUBJECT TO THE PLAN .................................................. 6
4.1. Aggregate Limitation ................................................ 6
4.2. Other Plan Limits ................................................... 7
4.3. Payment Shares ...................................................... 7
4.4. Application of Aggregate Limitation ................................. 7
4.5. Per-Grantee Limitation .............................................. 7
5. EFFECTIVE DATE AND TERM OF THE PLAN ........................................ 8
5.1. Effective Date ...................................................... 8
5.2. Term ................................................................ 8
6. PERMISSIBLE GRANTEES ....................................................... 8
6.1. Employees and Service Providers ..................................... 8
6.2. Multiple Grants ..................................................... 9
7. LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS ........................... 9
8. AWARD AGREEMENT ............................................................ 9
9. OPTION PRICE ............................................................... 10
10. VESTING, TERM AND EXERCISE OF OPTIONS ...................................... 10
10.1. Vesting and Option Period ........................................... 10
10.2. Term ................................................................ 10
10.3. Acceleration ........................................................ 10
10.4. Termination of Employment or Other Relationship for a
Reason Other than Retirement, Death or Disability ................... 10
10.5. Rights in the Event of Death ........................................ 11
10.6. Rights in the Event of Disability ................................... 11
10.7. Rights in the Event of Retirement ................................... 11
10.8. Limitations on Exercise of Option ................................... 12
10.9. Method of Exercise .................................................. 12
10.10. Rights as a Stockholder; Dividend Equivalents ....................... 13
10.11. Delivery of Stock Certificates ...................................... 13
11. TRANSFERABILITY OF OPTIONS ................................................. 13
11.1. General Rule ........................................................ 13
11.2. Family Transfers .................................................... 13
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12. RESTRICTED STOCK ............................................................. 14
12.1. Grant of Restricted Stock or Restricted Stock Units .................... 14
12.2. Restrictions ........................................................... 14
12.3. Restricted Stock Certificates .......................................... 15
12.4. Rights of Holders of Restricted Stock .................................. 15
12.5. Rights of Holders of Restricted Stock Units ............................ 15
12.6. Termination of Employment or Other Relationship for a Reason
Other than Death or Disability ......................................... 16
12.7. Rights in the Event of Death ........................................... 16
12.8. Rights in the Event of Disability ...................................... 16
12.9. Delivery of Shares and Payment Therefor ................................ 17
13. STOCK APPRECIATION RIGHTS .................................................... 17
13.1. Grant of Stock Appreciation Rights ..................................... 17
13.2. Nature of a Stock Appreciation Right ................................... 17
13.3. Terms and Conditions Governing SARs .................................... 17
14. UNRESTRICTED STOCK ........................................................... 18
15. PARACHUTE LIMITATIONS ........................................................ 18
16. REQUIREMENTS OF LAW .......................................................... 18
16.1. General ................................................................ 18
16.2. Rule 16b-3 ............................................................. 19
17. AMENDMENT AND TERMINATION OF THE PLAN ........................................ 20
18. EFFECT OF CHANGES IN CAPITALIZATION .......................................... 20
18.1. Changes in Stock ....................................................... 20
18.2. Reorganization, Sale of Assets or Sale of Stock ........................ 20
18.3. Adjustments ............................................................ 22
18.4. No Limitations on Company .............................................. 22
19. DISCLAIMER OF RIGHTS ......................................................... 22
20. NONEXCLUSIVITY OF THE PLAN ................................................... 22
21. WITHHOLDING TAXES ............................................................ 23
22. CAPTIONS ..................................................................... 23
23. OTHER PROVISIONS ............................................................. 23
24. NUMBER AND GENDER ............................................................ 24
25. SEVERABILITY ................................................................. 24
26. GOVERNING LAW ................................................................ 24
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TREX COMPANY, INC.
AMENDED AND RESTATED 1999 STOCK OPTION AND INCENTIVE PLAN
Trex Company, Inc., a Delaware corporation (the "Company"), sets forth
herein the terms of its Amended and Restated 1999 Stock Option and Incentive
Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to enhance the Company's ability to attract and
retain highly qualified officers, key employees, outside directors and other
persons, and to motivate such officers, key employees, outside directors and
other persons to serve the Company and its affiliates (as defined herein) and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such officers, key employees, outside directors and
other persons an opportunity to acquire or increase a direct proprietary
interest in the operations and future success of the Company. To this end, the
Plan provides for the grant of stock options, restricted stock, restricted stock
units, unrestricted stock and stock appreciation rights in accordance with the
terms hereof. Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein, except that stock
options granted to outside directors and all Service Providers shall in all
cases be non-qualified stock options.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:
2.1. "Affiliate" of, or person "affiliated" with, a person means any company
or other trade or business that controls, is controlled by or is under
common control with such person within the meaning of Rule 405 of
Regulation C under the Securities Act.
2.2. "Award Agreement" means the stock option agreement, restricted stock
agreement, restricted stock unit agreement, stock appreciation right
agreement or other written agreement between the Company and a Grantee
that evidences and sets out the terms and conditions of a Grant.
2.3. "Board" means the Board of Directors of the Company.
2.4. "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.
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2.5. "Committee" means a committee of, and designated from time to time by
resolution of, the Board, which shall consist of no fewer than two
members of the Board, none of whom shall be an officer or other salaried
employee of the Company or any affiliate of the Company.
2.6. "Company" means Trex Company, Inc., a Delaware corporation and any
entity which is treated as a "disregarded entity" pursuant to Section
7701 of the Code.
2.7. "Effective Date" means the date designated by the Board in its
resolution adopting the Plan.
2.8. "Exchange Act" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.
2.9. "Fair Market Value" means the closing price of a share of Stock reported
on the New York Stock Exchange ("NYSE") on the date Fair Market Value is
being determined, provided that if there should be no closing price
reported on such date, the Fair Market Value of a share of Stock on such
date shall be deemed equal to the closing price as reported by the NYSE
for the last preceding date on which sales of shares were reported.
Notwithstanding the foregoing, in the event that the shares of Stock are
listed upon more than one established stock exchange, Fair Market Value
means the closing price of a share of Stock reported on the exchange
that trades the largest volume of shares on such date. If the Stock is
not at the time listed or admitted to trading on a stock exchange, Fair
Market Value means the mean between the lowest reported bid price and
highest reported asked price of the Stock on the date in question in the
over-the-counter market, as such prices are reported in a publication of
general circulation selected by the Board and regularly reporting the
market price of Stock in such market. If the Stock is not listed or
admitted to trading on any stock exchange or traded in the
over-the-counter market, Fair Market Value shall be as determined in
good faith by the Board.
2.10. "Grant" means an award of an Option, Restricted Stock, Restricted Stock
Unit, Unrestricted Stock, or Stock Appreciation Right under the Plan.
2.11. "Grant Date" means, as determined by the Board or authorized Committee,
(i) the date as of which the Board or such Committee approves a Grant or
(ii) such other date as may be specified by the Board or such Committee.
2.12. "Grantee" means a person who receives or holds an Option, Restricted
Stock, Restricted Stock Unit, Stock Appreciation Right or Unrestricted
Stock under the Plan.
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2.13. "Immediate Family Members" means the spouse, children, grandchildren,
parents and siblings of the Grantee.
2.14. "Incentive Stock Option" means an "incentive stock option" within the
meaning of Section 422 of the Code.
2.15. "Option" means an option to purchase one or more shares of Stock
pursuant to the Plan.
2.16. "Option Period" means the period during which Options may be exercised
as set forth in Section 10 hereof.
2.17. "Option Price" means the purchase price for each share of Stock subject
to an Option.
2.18. "Outside Director" means a member of the Board who is not an officer or
employee of the Company or any Subsidiary.
2.19. "Plan" means this Trex Company, Inc. Amended and Restated 1999 Stock
Option and Incentive Plan, as amended from time to time.
2.20. "Reporting Person" means a person who is required to file reports under
Section 16(a) of the Exchange Act.
2.21. "Restricted Period" means the period during which Restricted Stock or
Restricted Stock Units are subject to restrictions or conditions
pursuant to Section 12.2 hereof.
2.22. "Restricted Stock" means shares of Stock, awarded to a Grantee pursuant
to Section 12 hereof, that are subject to restrictions and to a risk of
forfeiture.
2.23. "Restricted Stock Unit" means a unit awarded to a Grantee pursuant to
Section 12 hereof, which represents a conditional right to receive a
share of Stock in the future, and which is subject to restrictions and
to a risk of forfeiture.
2.24. "Securities Act" means the Securities Act of 1933, as now in effect or
as hereafter amended.
2.25. "Service Provider" means a consultant or adviser to the Company, a
manager of the Company's properties or affairs, or other similar service
provider or Affiliate of the Company, and employees of any of the
foregoing, as such
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persons may be designated from time to time by the Board pursuant to
Section 6 hereof.
2.26. "Stock" means the common stock, par value $0.01 per share, of the
Company.
2.27. "Stock Appreciation Right" or "SAR" means a right granted to a Grantee
pursuant to Section 13 hereof.
2.28. "Subsidiary" means any "subsidiary corporation" of the Company within
the meaning of Section 424(f) of the Code.
2.29. "Termination Date" means the date upon which an Option shall terminate
or expire, as set forth in Section Section 10.2 hereof.
2.30. "Unrestricted Stock" means an award of Stock granted to a Grantee
pursuant to Section 14 hereof.
3. ADMINISTRATION OF THE PLAN
3.1. Board
The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company's certificate of
incorporation, bylaws and applicable law. The Board shall have full power and
authority to take all actions and to make all determinations required or
provided for under the Plan, any Grant or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Grant or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company's certificate of incorporation, bylaws
and applicable law. The interpretation and construction by the Board of any
provision of the Plan, any Grant or any Award Agreement shall be final and
conclusive. As permitted by law, the Board may delegate its authority under the
Plan to a member of the Board or an executive officer of the Company; provided,
however, that, unless otherwise provided by resolution of the Board, only the
Board or the Committee may make a Grant to an executive officer of the Company
and establish the number of shares of Stock that may be subject to Grants with
respect to any fiscal period.
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3.2. Committee.
The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in Section 3.1 hereof and in other applicable provisions of the Plan, as
the Board shall determine, consistent with the Company's certificate of
incorporation, bylaws and applicable law. In the event that the Plan, any Grant
or any Award Agreement provides for any action to be taken or determination to
be made by the Board, such action may be taken by or such determination may be
made by the Committee if the power and authority to do so has been delegated to
the Committee by the Board as provided for in this Section 3.2. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive. As permitted by law, the
Committee may delegate the authority delegated to it under the Plan to a member
of the Board of Directors or an executive officer of the Company; provided,
however, that, unless otherwise provided by the Board, only the Board or the
Committee may make a Grant to a Reporting Person of the Company and establish
the number of shares of Stock that may be subject to Grants during any fiscal
period.
3.3. Grants.
Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority (i) to designate Grantees, (ii) to determine the
types of Grants to be made to a Grantee, (iii) to determine the number of shares
of Stock to be subject to a Grant, (iv) to establish the terms and conditions of
each Grant, including, but not limited to, the Option Price of any Option, the
nature and duration of any restriction or condition (or provision for lapse
thereof, including lapse relating to a change in control of the Company)
relating to the vesting, exercise, transfer or forfeiture of a Grant or the
shares of Stock subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options, (v) to prescribe the
form of each Award Agreement evidencing a Grant, (vi) to make Grants alone, in
addition to, in tandem with, or in substitution or exchange for any other Grant
or any other award granted under another plan of the Company or a Subsidiary,
and (vii) to amend, modify or supplement the terms of any outstanding Grant.
Such authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Grants to eligible
individuals who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law, tax policy or
custom. As a condition to any subsequent Grant, the Board shall have the right,
at its discretion, to require Grantees to return to the Company any Grants
previously awarded under the Plan. Subject to the terms and conditions of the
Plan, any such subsequent Grant shall be upon such terms and conditions as are
specified by the Board at the time the subsequent Grant is made.
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The Company may retain the right in an Award Agreement to cause a
forfeiture of the gain realized by a Grantee on account of actions taken by the
Grantee in violation or breach of or in conflict with any non-competition
agreement, any agreement prohibiting solicitation of employees or clients of the
Company or any affiliate thereof or any confidentiality obligation with respect
to the Company or any affiliate thereof or otherwise in competition with the
Company, to the extent specified in such Award Agreement applicable to the
Grantee. Furthermore, the Company may annul a Grant if the Grantee is an
employee of the Company or an affiliate thereof and is terminated "for cause" as
defined in the applicable Award Agreement. The Board may permit or require the
deferral of any award payment, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of interest
or dividend equivalents, including converting such credits into deferred Stock
equivalents.
3.4. No Liability.
No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Grant or
Award Agreement.
3.5. Applicability of Rule 16b-3.
Those provisions of the Plan that make express reference to Rule 16b-3
under the Exchange Act shall apply only to Reporting Persons.
4. STOCK SUBJECT TO THE PLAN
4.1. Aggregate Limitation.
Subject to adjustment as provided in Section 18 hereof, the aggregate
number of shares of Stock available for issuance under the Plan pursuant to
Options or other Grants shall be one million four hundred thousand (1,400,000)
shares and shares may be authorized but unissued shares, treasury shares or
issued and outstanding shares that are purchased in the open market. Any shares
of Stock granted under the Plan which are forfeited to the Company because of
the failure to meet an award contingency or condition shall again be available
for issuance pursuant to new awards granted under the Plan. Any shares of Stock
covered by an award (or portion of an award) granted under the Plan which is
forfeited or canceled, expires or is settled in cash shall be deemed not to have
been issued for purposes of determining the maximum number of shares of Stock
available for issuance under the Plan. If any stock option is exercised by
tendering shares of Stock, either actually or by attestation, to the Company as
full or partial payment in connection with the exercise of a stock option under
the Plan or any prior plan of the Company as hereinabove described, only the
number of shares of Stock issued net of the
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shares of Stock tendered shall be deemed issued for purposes of determining the
maximum number of shares of Stock available for issuance under the Plan. Shares
of Stock issued under the Plan through the settlement, assumption or
substitution of outstanding awards or obligations to grant future awards
resulting from the acquisition of another entity shall not reduce the maximum
number of shares available for issuance under the Plan.
4.2. Other Plan Limits.
Subject to adjustment as provided in Section 18 hereof, the following
additional limitations are imposed under the Plan. The maximum number of shares
of Stock that may be delivered through stock options intended to be Incentive
Stock Options shall be one million four hundred thousand (1,400,000). Subject to
adjustment as provided in Section 19 hereof, the maximum number of shares of
Stock that may be issued in conjunction with awards granted pursuant to Section
12 and 14 hereof shall be two hundred fifty thousand (250,000); provided,
however, that shares issued in satisfaction of other compensation obligations of
the Company shall not count against this maximum number.
4.3. Payment Shares.
Subject to the overall limitation on the number of shares of Stock that may
be delivered under the Plan, the Board may use available shares of Stock as the
form of payment for compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company, including the plan of any
entity acquired by the Company, and such payment shares shall not count against
the limitation on the maximum number of shares specified in Section 4.2.
4.4. Application of Aggregate Limitation.
The Board may adopt reasonable counting procedures to ensure appropriate
counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock
actually delivered differs from the number of shares of Stock previously counted
in connection with a Grant.
4.5. Per-Grantee Limitation.
During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act:
(i) no person eligible for a Grant under Section 6 hereof may be awarded
Options for purposes of the Plan exercisable for greater than five hundred
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thousand (500,000) shares of Stock (subject to adjustment as provided in
Section 18 hereof);
(ii) the maximum number of shares of Unrestricted Stock and Restricted
Stock that may be awarded under the Plan (including for this purpose any
shares of Stock represented by Restricted Stock Units) to any person
eligible for a Grant under Section 12 and 14 hereof is two hundred fifty
thousand (250,000) for purposes of the Plan (subject to adjustment as
provided in Section 18 hereof);
(iii) the maximum number of shares of Stock that may be the subject of SARs
awarded to any Grantee under Section 13 hereof is two hundred fifty
thousand (250,000) for purposes of the Plan (subject to adjustment as
provided in Section 18 hereof).
5. EFFECTIVE DATE AND TERM OF THE PLAN
5.1. Effective Date.
The Plan shall be effective as of the Effective Date, subject to approval
of the Plan by the stockholders of the Company, within one year before or after
the date upon which the Plan was adopted by the Board. Such approval shall be by
a majority of the votes cast on the proposal at a meeting of stockholders,
provided that a quorum is present. Upon approval of the Plan by the stockholders
of the Company as set forth above, all Grants made under the Plan on or after
the Effective Date shall be fully effective as if the stockholders of the
Company had approved the Plan on the Effective Date. If the stockholders fail to
approve the Plan within the time period set forth above, any Grants made
hereunder shall be null and void and of no effect.
5.2. Term.
The Plan has no termination date; however, no Incentive Stock Option may be
granted under the Plan on or after April 7, 2009.
6. PERMISSIBLE GRANTEES
6.1. Employees and Service Providers.
Subject to the provisions of Section 7 hereof, Grants may be made under the
Plan to any employee of the Company or any Subsidiary, including any such
employee who is an officer or director of the Company, to an Outside Director,
to a Service Provider or employee of a Service Provider providing, or who has
provided, services to the Company or any Subsidiary, and to any other individual
whose
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participation in the Plan is determined by the Board to be in the best interests
of the Company, as the Board shall determine and designate from time to time.
6.2. Multiple Grants.
An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein.
7. LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS
An Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Grantee's employer and its affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.
8. AWARD AGREEMENT
Each Grant pursuant to the Plan shall be evidenced by an Award Agreement,
in such form or forms as the Board shall from time to time determine. Award
Agreements issued from time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the Plan. Each Award
Agreement evidencing a Grant of Options shall specify whether such Options are
intended to be non-qualified stock options or Incentive Stock Options, and in
the absence of such specification such options shall be deemed non-qualified
stock options.
9. OPTION PRICE
The Option Price of each Option shall be no less than the Fair Market Value
of a share of Stock on the date of grant and stated in the Award Agreement
evidencing such Option; provided, however, that in the event that a Grantee
would otherwise be ineligible to receive an Incentive Stock Option by reason of
the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to
ownership of more than ten percent (10%) of the Company's outstanding shares of
Stock), the Option Price of an Option granted to such Grantee that is intended
to be an Incentive Stock Option shall be not less than one hundred ten percent
(110%) of the Fair Market Value of a share of Stock on the Grant Date. In no
case shall the Option Price of any Option be less than the par value of a share
of Stock.
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10. VESTING, TERM AND EXERCISE OF OPTIONS
10.1. Vesting and Option Period.
Subject to Section 10.2 and 18 hereof, each Option granted under the Plan
shall become exercisable at such times and under such conditions as shall be
determined by the Board and stated in the Award Agreement. For purposes of this
Section 10.1, fractional numbers of shares of Stock subject to an Option shall
be rounded down to the next nearest whole number. The period during which any
Option shall be exercisable shall constitute the "Option Period" with respect to
such Option.
10.2. Term.
Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and thereafter stated in the Award Agreement relating to such Option;
provided, however, that in the event that the Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent (10%) of the outstanding shares of Stock), an Option granted to such
Grantee that is intended to be an Incentive Stock Option shall not be
exercisable after the expiration of five years from its date of grant.
10.3. Acceleration.
Any limitation on the exercise of an Option contained in any Award
Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the Grant Date of such
Option, so as to accelerate the time at which the Option may be exercised.
10.4. Termination of Employment or Other Relationship for a Reason Other
than Retirement, Death or Disability.
Unless otherwise provided by the Board or in the Option Agreement, upon the
termination of a Grantee's employment or other relationship with the Company and
its Subsidiaries other than by reason of death, "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) or retirement, any Option
or portion thereof held by such Grantee that has not vested in accordance with
the provisions of Section 10.1 hereof shall terminate immediately, and any
Option or portion thereof that has vested in accordance with the provisions of
Section 10.1 hereof but has not been exercised shall terminate at the close of
business on the 90th day following the Grantee's termination of employment or
other relationship (or, if such
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90th day is a Saturday, Sunday or holiday, at the close of business on the next
preceding day that is not a Saturday, Sunday or holiday). Upon termination of an
Option or portion thereof, the Grantee shall have no further right to purchase
shares of Stock pursuant to such Option or portion thereof. Whether a leave of
absence or leave on military or government service shall constitute a
termination of employment or other relationship for purposes of the Plan shall
be determined by the Board, whose determination shall be final and conclusive.
For purposes of the Plan, a termination of employment, service or other
relationship shall not be deemed to occur if the Grantee is immediately
thereafter employed with the Company, a Subsidiary or a Service Provider, or is
engaged as a Service Provider or an Outside Director. Whether a termination of a
Grantee's employment or other relationship with the Company and its Subsidiaries
shall have occurred shall be determined by the Board, whose determination shall
be final and conclusive.
10.5. Rights in the Event of Death.
Unless otherwise provided by the Board, if a Grantee dies while employed by
or providing services to the Company, all Options granted to such Grantee that
have not previously terminated shall fully vest on the date of death, and the
executors or administrators or legatees or distributees of such Grantee's estate
shall have the right, at any time within five years after the date of such
Grantee's death and prior to termination of the Option pursuant to Section 10.2
hereof, to exercise any Option held by such Grantee at the date of such
Grantee's death.
10.6. Rights in the Event of Disability.
Unless otherwise provided by the Board, if a Grantee's employment or other
relationship with the Company is terminated by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Grantee, such Grantee's Options that have not previously terminated shall fully
vest, and shall be exercisable for a period of five years after such termination
of employment or other relationship, subject to earlier termination of the
Option as provided in Section 10.2 hereof. Whether a termination of employment
or other relationship is considered to be by reason of "permanent and total
disability" for purposes of the Plan shall be determined by the Board, whose
determination shall be final and conclusive.
10.7. Rights in the Event of Retirement.
Unless otherwise provided by the Board, if a Grantee retires under the
terms of any Company retirement plan applicable to the Grantee or as determined
by the Board, the Grantee shall be considered retired and all Options granted to
such Grantee that have not previously terminated shall fully vest on the date of
retirement, and the Grantee shall have the right, at any time within five years
after
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the date of such Grantee's retirement and prior to termination of the Option
pursuant to Section 10.2 hereof, to exercise any Option held by such Grantee at
the date of such Grantee's retirement.
10.8 Limitations on Exercise of Option.
Notwithstanding any other provision of the Plan, in no event may any Option
be exercised, in whole or in part, prior to the date the Plan is approved by the
stockholders of the Company as provided herein, or after ten years following the
date upon which the Option is granted, or after the occurrence of an event
referred to in Section 18 hereof which results in termination of the Option.
10.9 Method of Exercise.
An Option that is exercisable may be exercised by the Grantee's delivery to
the Company of written notice of exercise on any business day, at the Company's
principal office, addressed to the attention of the Board. Such notice shall
specify the number of shares of Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option Price of the
shares of Stock for which the Option is being exercised. The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of (i) 100 shares or such lesser number
set forth in the applicable Award Agreement and (ii) the maximum number of
shares of Stock available for purchase under the Option at the time of exercise.
Payment of the Option Price for the shares of Stock purchased pursuant to the
exercise of an Option shall be made (i) in cash or in cash equivalents
acceptable to the Company; (ii) to the extent permitted by law and at the
Board's discretion, through the actual or constructive tender to the Company of
shares of Stock, which shares of Stock, if acquired from the Company, shall have
been held for at least six months prior to such tender and which shall be
valued, for purposes of determining the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise; or (iii)
to the extent permitted by law and at the Board's discretion, by a combination
of the methods described in clauses (i) and (ii). The Board may provide, by
inclusion of appropriate language in an Award Agreement, that payment in full of
the Option Price need not accompany the written notice of exercise, provided
that the notice is accompanied by delivery of an unconditional and irrevocable
undertaking by a licensed broker acceptable to the Company as the agent for the
individual exercising the Option to deliver promptly to the Company sufficient
funds to pay the Option Price and directs that the certificate or certificates
for the shares of Stock for which the Option is exercised be delivered to a
licensed broker acceptable to the Company as the agent for the individual
exercising the Option and, at the time such certificate or certificates are
delivered, the broker tenders to the Company cash (or cash equivalents
acceptable to the Company) equal to the Option Price for the shares of Stock
purchased pursuant to the exercise of the
12
Option plus the amount (if any) of federal or other taxes which the Company may
in its judgment be required to withhold with respect to the exercise of the
Option. An attempt to exercise any Option granted hereunder other than as set
forth above shall be invalid and of no force and effect.
10.10. Rights as a Stockholder; Dividend Equivalents.
Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock) until the shares of Stock covered thereby are fully
paid and issued to such individual. Except as provided in Section 18 hereof, no
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date of such issuance. However, the Board may,
on such conditions as it deems appropriate, provide that a Grantee will receive
a benefit in lieu of cash dividends that would have been payable on any or all
shares of Stock subject to the Grant if such shares of Stock had been
outstanding. Without limitation, the Board may provide for payment to the
Grantee of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Grantee.
10.11. Delivery of Stock Certificates.
Promptly after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the issuance of a
Stock certificate or certificates evidencing such Grantee's ownership of the
shares of Stock subject to the Option.
11. TRANSFERABILITY OF OPTIONS
11.1. General Rule
Except as provided in Section 11.2 hereof, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise an Option. Except as
provided in Section 11.2 hereof, no Option shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.
11.2. Family Transfers.
To the extent permitted by the Board and under such rules and conditions as
imposed by the Board, a Grantee may transfer all or part of an Option that is
not an Incentive Stock Option to (i) any Immediate Family Member, (ii) a trust
or trusts
13
for the exclusive benefit of any Immediate Family Member or (iii) a partnership
or limited liability company in which Immediate Family Members are the only
partners or members, provided that (x) there may be no consideration for any
such transfer, and (y) subsequent transfers of transferred Options or transfers
of an interest in a trust, partnership, or limited liability company to which an
Option has been transferred are prohibited except those in accordance with this
Section 11.2 or by will or the laws of descent and distribution. Following such
transfer, any such Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer, provided that,
for purposes of this Section 11.2, the term "Grantee" shall be deemed to refer
to the transferee. The events of termination of employment or other relationship
referred to in Section 10.4 hereof shall continue to be applied with respect to
the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent and for the periods specified in Section 10.4,
10.5, 10.6 or 10.7 hereof.
12. RESTRICTED STOCK
12.1. Grant of Restricted Stock or Restricted Stock Units.
The Board from time to time may grant Restricted Stock or Restricted Stock
Units to persons eligible to receive Grants under Section 6 hereof, subject to
such restrictions, conditions and other terms as the Board may determine.
12.2. Restrictions.
At the time a Grant of Restricted Stock or Restricted Stock Units is made,
the Board shall establish a period of time (the "Restricted Period") applicable
to such Restricted Stock or Restricted Stock Units. Unless otherwise determined
by the Board, unless the Grant is being made in consideration of compensation
due under another plan, or unless vesting is subject to performance, the
Restricted Period will be a minimum of three years. Each Grant of Restricted
Stock or Restricted Stock Units may be subject to a different Restricted Period.
At the time a Grant of Restricted Stock or Restricted Stock Units is made, the
Board may, in its sole discretion, prescribe restrictions in addition to or
other than the expiration of the Restricted Period, including the satisfaction
of corporate or individual performance objectives, which may be applicable to
all or any portion of the Restricted Stock or Restricted Stock Units. Such
performance objectives shall be established in writing by the Board by not later
than the 90th day of the period of service to which such performance objectives
relate and while the outcome is substantially uncertain. Performance objectives
may be stated either on an absolute or relative basis and may be based on any of
the following criteria: earnings per share, total stockholder return, operating
earnings, growth in assets, return on equity, return on capital, market share,
stock price, net income, cash flow, sales growth (in general, by type of product
and by type of customer), retained earnings, completion of acquisitions,
completion of divestitures and asset sales, cost or expense reductions,
introduction
14
or conversion of product brands and achievement of specified management
information systems objectives. Performance objectives may include positive
results, maintaining the status quo or limiting economic losses. Subject to the
fifth sentence of this Section 12.2, the Board also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock or Restricted Stock
Units. Neither Restricted Stock nor Restricted Stock Units may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period or prior to the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Stock or Restricted
Stock Units.
12.3. Restricted Stock Certificates.
The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, Stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the Company shall hold such certificates for
the Grantee's benefit until such time as the Restricted Stock is forfeited to
the Company or the restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend or legends complying with the applicable securities laws and regulations
and making appropriate reference to the restrictions imposed under the Plan and
the Award Agreement.
12.4. Rights of Holders of Restricted Stock.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such shares of Stock and the right
to receive any dividends declared or paid with respect to such shares of Stock.
The Board may provide that any dividends paid on Restricted Stock must be
reinvested in shares of Stock, which may or may not be subject to the same
vesting conditions and restrictions applicable to such Restricted Stock. All
distributions, if any, received by a Grantee with respect to Restricted Stock as
a result of any stock split, stock dividend, combination of shares or other
similar transaction shall be subject to the restrictions applicable to the
original Grant.
12.5. Rights of Holders of Restricted Stock Units.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock Units shall have no rights as stockholders of the Company. The
Board may provide in an Award Agreement evidencing a Grant of Restricted Stock
Units that the holder of such Restricted Stock Units shall be entitled to
receive, upon the Company's payment of a cash dividend on its outstanding shares
of Stock, a cash payment for each Restricted Stock Unit held equal to the
per-share dividend
15
paid on the shares of Stock. Such Award Agreement may also provide that such
cash payment will be deemed reinvested in additional Restricted Stock Units at a
price per unit equal to the Fair Market Value of a share on the date that such
dividend is paid.
12.6. Termination of Employment or Other Relationship for a Reason Other
than Death or Disability.
Unless otherwise provided by the Board, upon the termination of a Grantee's
employment or other relationship with the Company and its Subsidiaries, in
either case other than, in the case of individuals, by reason of death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code), any Restricted Stock or Restricted Stock Units held by such Grantee that
have not vested, or with respect to which all applicable restrictions and
conditions have not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Restricted Stock Units, the Grantee shall have
no further rights with respect to such Grant, including, but not limited to, any
right to vote Restricted Stock or any right to receive dividends with respect to
Restricted Stock or Restricted Stock Units. Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship for purposes of the Plan shall be determined by the Board,
whose determination shall be final and conclusive. For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to
occur if the Grantee is immediately thereafter employed with the Company or any
other Service Provider, or is engaged as a Service Provider or an Outside
Director. Whether a termination of a Grantee's employment or other relationship
with the Company and its Subsidiaries shall have occurred shall be determined by
the Board, whose determination shall be final and conclusive.
12.7. Rights in the Event of Death.
Unless otherwise provided by the Board, if a Grantee dies while employed by
the Company or a Service Provider, or while serving as a Service Provider, all
Restricted Stock or Restricted Stock Units granted to such Grantee shall fully
vest on the date of death unless the Board provided otherwise in the Award
Agreement relating to such Restricted Stock or Restricted Stock Units. Upon such
vesting, the shares of Stock represented thereby shall be deliverable in
accordance with the terms of the Plan to the executors, administrators, legatees
or distributees of the Grantee's estate.
12.8. Rights in the Event of Disability.
Unless otherwise provided by the Board, if a Grantee's employment or other
relationship with the Company or a Service Provider, or service as a Service
16
Provider, is terminated by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Grantee, such
Grantee's then unvested Restricted Stock or Restricted Stock Units shall be
fully vested. Whether a termination of employment, service or other relationship
is to be considered by reason of "permanent and total disability" for purposes
of the Plan shall be determined by the Board, whose determination shall be final
and conclusive.
12.9. Delivery of Shares and Payment Therefor.
Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to Restricted Stock or Restricted Stock Units shall lapse, and,
unless otherwise provided in the Award Agreement, upon payment by the Grantee to
the Company, in cash or by check, of the greater of (i) the aggregate par value
of the shares of Stock represented by such Restricted Stock or Restricted Stock
Units or (ii) the purchase price, if any, specified in the Award Agreement
relating to such Restricted Stock or Restricted Stock Units, a certificate for
such shares shall be delivered, free of all such restrictions, to the Grantee or
the Grantee's beneficiary or estate, as the case may be.
13. STOCK APPRECIATION RIGHTS
13.1. Grant of Stock Appreciation Rights.
The Board may from time to time grant SARs to persons eligible to receive
grants under Section 6 hereof, subject to the provisions of this Section 13 and
to such restrictions, conditions and other terms as the Board may determine.
13.2. Nature of a Stock Appreciation Right.
An SAR shall confer on the Grantee a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one share of Stock on the date of
exercise over (B) the grant price of the SAR, as determined by the Board. Unless
the Board provides otherwise in the Award Agreement, the grant price of an SAR
shall not be less than the Fair Market Value of a share of Stock on the Grant
Date.
13.3. Terms and Conditions Governing SARs.
The Board shall determine at the Grant Date or thereafter the time or times
at which and the circumstances under which an SAR may be exercised in whole or
in part (including exercise based on achievement of performance objectives or
future service requirements), the time or times at which and the circumstances
under which an SAR shall cease to be exercisable, the method of exercise, the
method of settlement, form of consideration payable in settlement, whether or
not an SAR
17
shall be in tandem or in combination with any other Grant, and any other terms
and conditions of any SAR.
14. UNRESTRICTED STOCK
The Board may, in its sole discretion, grant Stock (or sell Stock at par
value or such other higher purchase price determined by the Board) free of
restrictions other than those required under federal or state securities laws
("Unrestricted Stock") to persons eligible to receive grants under Section 6
hereof. Unrestricted Stock may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such Grantee.
15. PARACHUTE LIMITATIONS
If the Grantee is a "disqualified individual" (as defined in Section 280G(c)
of the Code), any Option, Restricted Stock, Restricted Stock Unit or SAR and any
other right to receive any payment or benefit under the Plan shall not vest or
become exercisable (i) to the extent that the right to vest or any other right
to any payment or benefit, taking into account all other rights, payments or
benefits to or for the Grantee, would cause any payment or benefit to the
Grantee under the Plan to be considered a "parachute payment" within the meaning
of Section 280G(b)(2) of the Code as then in effect (a "Parachute Payment") and
(ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Grantee from the Company under any Award Agreements, the
Plan, and all other rights, payments or benefits to or for the Grantee would be
less than the maximum after-tax amount that could be received by the Grantee
without causing the payment or benefit to be considered a Parachute Payment. In
the event that, but for the provisions of this Section 15, the Grantee would be
considered to have received a Parachute Payment under any Award Agreements that
would have the effect of decreasing the after-tax amount received by the Grantee
as described in clause (ii) of the preceding sentence, then the Grantee shall
have the right, in the Grantee's sole discretion, to designate any rights,
payments or benefits under any Award Agreements, the Plan, any other agreements
and any benefit arrangements to be reduced or eliminated so as to avoid having
the payment or benefit to the Grantee under any Award Agreements be deemed to be
a Parachute Payment.
16. REQUIREMENTS OF LAW
16.1. General.
The Company shall not be required to sell or issue any shares of Stock under
any Grant if the sale or issuance of such shares of Stock would constitute a
violation by the Grantee, any other person exercising a right emanating from
such Grant, or the Company of any provision of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the
18
listing, registration or qualification of any shares of Stock subject to a Grant
upon any securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of shares of Stock hereunder, no shares of Stock may be issued or sold
to the Grantee or any other person exercising a right emanating from such Grant
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company,
and any delay caused thereby shall in no way affect the date of termination of
the Grant. Without limiting the generality of the foregoing, upon the exercise
of any Option or any SAR that may be settled in shares of Stock or the delivery
of any Restricted Stock or shares of Stock underlying Restricted Stock Units,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Stock covered by such Grant, the Company shall not be
required to sell or issue such shares of Stock unless the Board has received
evidence satisfactory to it that the Grantee or any other person exercising a
right emanating from such Grant may acquire such shares of Stock pursuant to an
exemption from registration under the Securities Act. Any such determination by
the Board shall be final, binding and conclusive. The Company may, but shall in
no event be obligated to, register any securities covered hereby pursuant to the
Securities Act. The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or an SAR or the issuance of
shares of Stock pursuant to the Plan to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option (or SAR that may be settled in shares of Stock) shall
not be exercisable until the shares of Stock covered by such Option (or SAR) are
registered or are exempt from registration, the exercise of such Option (or SAR)
under circumstances in which the laws of such jurisdiction apply shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.
16.2. Rule 16b-3.
During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the Company that
Grants pursuant to the Plan and the exercise of Options and SARs granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or action by the
Board does not comply with the requirements of Rule 16b-3, such provision or
action shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board, and shall not affect the validity of the Plan. In the
event that Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify the Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the revised exemption
or its replacement.
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17. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or terminate
the Plan as to any shares of Stock as to which Grants have not been made. Except
as permitted under this Section 17 or Section 18 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the Grantee,
alter or impair rights or obligations under any Grant theretofore awarded under
the Plan.
18. EFFECT OF CHANGES IN CAPITALIZATION
18.1. Changes in Stock.
Subject to Section 18.2 hereof, in the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend,
spin-off, split-up, share combination or other change in the corporate structure
of the Company affecting the shares of Stock, (a) such adjustment may be made in
the number and class of shares which may be delivered under Section 4 hereof and
the Grant limits under Section 4 hereof, and in the number and class of or price
of shares subject to outstanding Grants as may be determined to be appropriate
and equitable by the Board, in its sole discretion, to prevent dilution or
enlargement of existing rights; and (b) the Board or, if another legal entity
assumes the obligations of the Company hereunder, the board of directors,
compensation committee or similar body of such other legal entity shall either
(i) make appropriate provision for the protection of outstanding Grants by the
substitution on an equitable basis of appropriate equity interests or awards
similar to the Grants, provided that the substitution neither enlarges nor
diminishes the value and rights under the Grants, or (ii) upon written notice to
the Grantees, provide that Grants shall be exercised distributed, canceled or
exchanged for value pursuant to such terms and conditions (including the waiver
of any existing terms or conditions) as shall be specified in the notice. Any
adjustment of an Incentive Stock Option under this Section 18.1 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. The conversion of any convertible securities of
the Company shall not be treated as a change in the corporate structure of the
Company affecting the shares of Stock. Subject to any contrary language in an
Award Agreement evidencing a Grant of Restricted Stock, any restrictions
applicable to such Restricted Stock shall apply as well to any replacement
shares received by the Grantee as a result of the merger, reorganization or
other transaction referred to in this Section 18.1.
18.2. Reorganization, Sale of Assets or Sale of Stock.
Upon the dissolution or liquidation of the Company or upon a merger,
consolidation or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, or upon a sale of
substantially all of
20
the assets of the Company to another entity, or upon any transaction (including,
without limitation, a merger or reorganization in which the Company is the
surviving entity) approved by the Board that results in any person or entity (or
person or entities acting as a group or otherwise in concert) owning eighty
percent (80%) or more of the combined voting power of all classes of securities
of the Company, (i) all outstanding Restricted Stock and Restricted Stock Units
shall be deemed to have vested, and all restrictions and conditions applicable
to such Restricted Stock and Restricted Stock Units shall be deemed to have
lapsed, immediately prior to the occurrence of such transaction, and (ii) all
Options and SARs outstanding hereunder shall become immediately exercisable for
a period of fifteen days immediately prior to the scheduled consummation of such
transaction. Any exercise of an Option or SAR during such fifteen-day period
shall be conditioned upon the consummation of the transaction and shall be
effective only immediately before the consummation of the transaction.
This Section 18.2 shall not apply to any transaction to the extent that (A)
provision is made in writing in connection with such transaction for the
continuation of the Plan or the assumption of the Options, SARs, Restricted
Stock and Restricted Stock Units theretofore granted, or for the substitution
for such Options, SARs, Restricted Stock and Restricted Stock Units of new
options, stock appreciation rights, restricted stock and restricted stock units
covering the stock of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares or units and
exercise prices, in which event the Plan and Options, SARs, Restricted Stock and
Restricted Stock Units theretofore granted shall continue in the manner and
under the terms so provided or (B) a majority of the full Board determines that
such transaction shall not trigger application of the provisions of this Section
18.2 and limited by any "change in control" provision in any employment
agreement or Award Agreement applicable to the Grantee. Upon consummation of any
such transaction, the Plan and all outstanding but unexercised Options and SARs
shall terminate, except to the extent provision is made in writing in connection
with such transaction for the continuation of the Plan or the assumption of such
Options and SARs theretofore granted, or for the substitution for such Options
and SARs of new options and stock appreciation rights covering the shares of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan and Options and SARs theretofore granted shall continue
in the manner and under the terms so provided. The Board shall send written
notice of an event that will result in such a termination to all individuals who
hold Options and SARs not later than the time at which the Company gives notice
thereof to its stockholders.
21
18.3. Adjustments.
Adjustments under this Section 18 related to shares of Stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final and conclusive. No fractional shares or other securities shall be
issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.
18.4. No Limitations on Company.
The making of Grants pursuant to the Plan shall not affect or limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
19. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Grant or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate thereof, or to interfere in any way with
any contractual or other right or authority of the Company or Service Provider
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any affiliate thereof. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement or employment agreement, no Grant
awarded under the Plan shall be affected by any change of duties or position of
the Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company. The obligation of the Company to pay any
benefits pursuant to the Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein. The Plan shall in no way be interpreted to require
the Company to transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any participant or beneficiary
under the terms of the Plan. No Grantee shall have any of the rights of a
stockholder with respect to the shares of Stock subject to an Option or SAR
except to the extent such shares of Stock shall have been issued upon the
exercise of the Option or SAR.
20. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive
22
compensation arrangements (which arrangements may be applicable either generally
to a class or classes of individuals or specifically to a particular individual
or particular individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of Stock options otherwise than
under the Plan.
21. WITHHOLDING TAXES
The Company or a Subsidiary, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any federal, state
or local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the exercise of an Option or SAR or the grant of
Unrestricted Stock. At the time of such vesting, lapse or exercise, the Grantee
shall pay to the Company or the Subsidiary, as the case may be, any amount that
the Company or the Subsidiary may reasonably determine to be necessary to
satisfy such withholding obligation. Subject to the prior approval of the
Company or the Subsidiary, which may be withheld by the Company or the
Subsidiary, as the case may be, in its sole discretion, the Grantee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company or the
Subsidiary to withhold shares of Stock otherwise issuable to the Grantee or (ii)
by delivering to the Company or the Subsidiary shares of Stock already owned by
the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations. The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the Subsidiary as of the date that the
amount of tax to be withheld is to be determined. A Grantee who has made an
election pursuant to this Section 21 may satisfy such Grantee's withholding
obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirement.
22. CAPTIONS
The use of captions in the Plan or any Award Agreement is for convenience of
reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement.
23. OTHER PROVISIONS
Each Grant awarded under the Plan may contain such other terms and conditions
not inconsistent with the Plan as may be determined by the Board, in its sole
discretion.
23
24. NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include the
plural form and, the masculine gender shall include the feminine gender, as the
context requires.
25. SEVERABILITY
If any provision of the Plan or any Award Agreement shall be finally
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
26. GOVERNING LAW
The validity and construction of this Plan and the instruments evidencing the
Grants awarded hereunder shall be governed by the laws of the State of Delaware
(without giving effect to the choice of law provisions thereof).
* * * *
24