Exhibit 10.19
Consolidated Freightways Corporation
1999 Equity Incentive Plan
1. Purposes.
(a) Eligible Stock Award Recipients. The persons eligible to
receive Stock Awards are the Employees and Consultants of the
Company and its Affiliates.
(b) Available Stock Awards. The purpose of the Plan is to
provide a means by which eligible recipients of Stock Awards may
be given an opportunity to benefit from increases in value of the
Common Stock through the granting of the following Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options,
(iii) stock appreciation rights, (iv) stock bonuses and (v)
rights to acquire restricted stock.
(c) General Purpose. The Company, by means of the Plan, seeks
to retain the services of the group of persons eligible to
receive Stock Awards, to secure and retain the services of new
members of this group and to provide incentives for such persons
to exert maximum efforts for the success of the Company and its
Affiliates.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as
those terms are defined in Sections 424(e) and (f), respectively,
of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means the occurrence of any of the following (and
only the following): (i) conviction of the Participant of any
felony involving fraud or act of dishonesty against the Company
or its Affiliates; (ii) conduct by the Participant which, based
upon good faith and reasonable factual investigation and
determination of the Company (or, if the Participant is a named
executive officer as defined in Item 402(a)(3) of Regulation S-K
promulgated by the Securities Exchange Commission, of the Board
of Directors of the Company), demonstrates gross unfitness to
serve; or, (iii) intentional, material violation by the
Participant of any statutory or fiduciary duty of the Participant
to the Company or its Affiliates, provided that in the event that
any of the foregoing events is capable of being cured, the
Company shall provide written notice to the Participant
describing the nature of such event and the Participant shall
thereafter have thirty (30) days to cure such event. In
addition, if the Participant is not a corporate officer of the
Company, "Cause" shall also include poor performance of the
Participant's services for the Company or its Affiliates as
determined by the Company following (A) written notice to the
Participant describing the nature of such deficiency and (B) the
Participant's failure to cure such deficiency within thirty (30)
days following receipt of such written notice.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of one or more members of the
Board appointed by the Board in accordance with subsection 3(c).
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Consolidated Freightways Corporation, a
Delaware corporation.
(h) "Consultant" means any person, including an advisor, (1)
engaged by the Company or an Affiliate to render consulting or
advisory services and who is compensated for such services or (2)
who is a member of the Board of Directors of an Affiliate.
However, the term "Consultant" shall not include either Directors
of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely
paid a director's fee by the Company for their services as
Directors.
(i) "Continuous Service" means that the Participant's service
with the Company or an Affiliate, whether as an Employee,
Director or Consultant, is not interrupted or terminated. The
Participant's Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as
an Employee, Consultant or Director or a change in the entity for
which the Participant renders such service, provided that there
is no interruption or termination of the Participant's Continuous
Service. For example, a change in status from an Employee of the
Company to a Consultant of an Affiliate or a Director of the
Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the
Company, in that party's sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of
any leave of absence approved by that party, including sick
leave, military leave or any other personal leave.
(j) "Covered Employee" means the chief executive officer and the
four (4) other highest compensated officers of the Company for
whom total compensation is required to be reported to
stockholders under the Exchange Act, as determined for purposes
of Section 162(m) of the Code.
(k) "Disability" means the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code.
(l) "Employee" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's
fee by the Company or an Affiliate shall not be sufficient to
constitute "employment" by the Company or an Affiliate.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of the
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, the Fair Market Value of a share of
Common Stock shall be the most recent closing sales price for
such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) prior to the
time of the grant of the Stock Award, reported in The Wall Street
Journal or such other source as the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(o) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of
the Code and the regulations promulgated thereunder.
(p) "Non-Employee Director" means a Director of the Company who
either (i) is not a current Employee or Officer of the Company or
its parent or a subsidiary, does not receive compensation
(directly or indirectly) from the Company or its parent or a
subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to
which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item
404(b) of Regulation S-K; or (ii) is otherwise considered a "non-
employee director" for purposes of Rule 16b-3.
(q) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(r) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(s) "Option" means an Incentive Stock Option or a Nonstatutory
Stock Option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the
Company and an Optionholder evidencing the terms and conditions
of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.
(u) "Optionholder" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who
holds an outstanding Option.
(v) "Outside Director" means a Director of the Company who
either (i) is not a current employee of the Company or an
"affiliated corporation" (within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code), is not
a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the
Company or an "affiliated corporation" at any time and is not
currently receiving direct or indirect remuneration from the
Company or an "affiliated corporation" for services in any
capacity other than as a Director or (ii) is otherwise considered
an "outside director" for purposes of Section 162(m) of the Code.
(w) "Participant" means a person to whom a Stock Award is
granted pursuant to the Plan or, if applicable, such other person
who holds an outstanding Stock Award.
(x) "Plan" means this Consolidated Freightways Corporation 1999
Equity Incentive Plan.
(y) "Retirement" means the retirement of an Optionholder or
Participant as a participant under the terms of and within the
meaning of the Company's Pension Plan, as amended from time to
time.
(z) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor to Rule 16b-3, as in effect from time to
time.
(aa) "Securities Act" means the Securities Act of 1933, as
amended.
(bb) "Stock Award" means any right granted under the Plan,
including an Option, a stock appreciation right, a stock bonus
and a right to acquire restricted stock.
(cc) "Stock Award Agreement" means a written agreement between
the Company and a holder of a Stock Award evidencing the terms
and conditions of an individual Stock Award grant. Each Stock
Award Agreement shall be subject to the terms and conditions of
the Plan.
(dd) "Ten Percent Stockholder" means a person who owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of
its Affiliates.
3. Administration.
(a) Administration by Board. The Board will administer the Plan
unless and until the Board delegates administration to a
Committee, as provided in subsection 3(c).
(b) Powers of Board. The board shall have the power, subject
to, and within the limitations of, the express provisions of the
Plan:
(i) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards;
when and how each Stock Award shall be granted; what type or
combination of types of Stock Award shall be granted; the
provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be
permitted to receive stock pursuant to a Stock Award; and the
number of shares with respect to which a Stock Award shall be
granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or inconsistency
in the Plan or in any Stock Award Agreement, in a manner and to
the extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend the Plan or a Stock Award as provided
in Section 12.
(iv) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote
the best interests of the Company which are not in conflict with
the provisions of the Plan.
(v) Any interpretation of the Plan by the Board of
any decision made by it under the Plan shall be final and binding
on all persons.
(c) Delegation to Committee.
(i) General. The Board may delegate administration
of the Plan to a Committee or Committees of one or more members
of the Board, and the term "Committee" shall apply to any person
or persons to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to
delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan
to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration
of the Plan.
(ii) Committee Composition when Common Stock is Publicly Traded.
At such time as the Common Stock is publicly traded, in the
discretion of the Board, a Committee may consist solely of two or
more Outside Directors, in accordance with Section 162(m) of the
Code, and/or solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3. Within the scope of such authority,
the Board or the Committee may (i) delegate to a committee of one
or more members of the Board who are not Outside Directors, the
authority to grant Stock Awards to eligible persons who are
either (a) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting
from such Stock Award or (b) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code and/or
(ii) delegate to a committee of one or more members of the Board
who are not Non-Employee Directors the authority to grant Stock
Awards to eligible persons who are not then subject to Section 16
of the Exchange Act.
4. Shares Subject to the Plan.
(a) Share Reserve. Subject to the provisions of Section 11
relating to adjustments upon changes in stock, the stock that may
be issued pursuant to Stock Awards shall not exceed in the
aggregate two million (2,000,000) shares of Common Stock. No
more than four hundred (400,000) shares of Common Stock may be
issued as restricted stock and stock bonus awards.
(b) Reversion of Shares to the Share Reserve. If any Stock
Award shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full (or
vested in the case of restricted stock bonuses), the stock not
acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. Shares subject to stock
appreciation rights exercised in accordance with the Plan shall
not be available for subsequent issuance under the Plan. If any
Common Stock acquired pursuant to the exercise of an Option shall
for any reason be repurchased by the Company under an unvested
share repurchase option provided under the Plan, the stock
repurchased by the Company under such repurchase option shall not
revert to and again become available for issuance under the Plan.
(c) Source of Shares. The stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or
otherwise.
5. Eligibility.
(a) Eligibility for Specific Stock Awards. Incentive Stock
Options may be granted only to Employees. Stock Awards other
than Incentive Stock Options may be granted to Employees and
Consultants.
(b) Ten Percent Stockholders. No Ten Percent Stockholder shall
be eligible for the grant of an Incentive Stock Option unless the
exercise price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of the Common Stock at the date
of grant and the Option is not exercisable after the expiration
of five (5) years from the date of grant.
(c) Section 162(m) Limitation. Subject to the provisions of
Section 11 relating to adjustments upon changes in stock, no
employee shall be eligible to be granted Stock Awards covering
more than four hundred thousand (400,000) shares of the Common
Stock during any calendar year.
6. Option Provisions.
Each Option shall be in such form and shall contain such
terms and conditions as the Board shall deem appropriate. All
Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and a separate
certificate or certificates will be issued for shares purchased
on exercise of each type of Option. The provisions of separate
Options need not be identical, but each Option shall include
(through incorporation of provisions hereof by reference in the
Option or otherwise) the substance of each of the following
provisions:
(a) Term. Subject to the provisions of subsection 5(b)
regarding Ten Percent Stockholders, no Incentive Stock Option
shall be exercisable after the expiration of ten (10) years from
the date it was granted.
(b) Exercise Price of an Option. Subject to the provisions of
subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the
foregoing, an Incentive Stock Option may be granted with an
exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) Consideration. The purchase price of stock acquired
pursuant to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (i) in cash at the
time the Option is exercised, if at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall
Street Journal, pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash
(or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company
from the sales proceeds, or (ii) at the discretion of the Board
at the time of the grant of the Option (or subsequently in the
case of a Nonstatutory Stock Option) by delivery to the Company
of other Common Stock, according to a deferred payment or other
similar arrangement with the Participant, or in any other form of
legal consideration that may be acceptable to the Board;
provided, however, that at any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par
value," as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.
In the case of any deferred payment arrangement, interest
shall be compounded at least annually and shall be charged at the
minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) Transferability of an Incentive Stock Option. An Incentive
Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during
the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing provisions of this subsection 6(d),
the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.
(e) Transferability of a Nonstatutory Stock Option. A
Nonstatutory Stock Option shall be transferable to the extent
provided in the Option Agreement. If the Nonstatutory Stock
Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by
will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing provisions of this
subsection 6(e), the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the
Option.
(f) Vesting Generally. The total number of shares of Common
Stock subject to an Option may, but need not, vest and therefore
become exercisable in periodic installments which may, but need
not, be equal. The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options
may vary. The provisions of this subsection 6(f) are subject to
any Option provisions governing the minimum number of shares as
to which an Option may be exercised.
(g) Termination of Continuous Service. In the event an
Optionholder's Continuous Service terminates (other than upon the
Optionholder's termination for Cause, Retirement, death or
Disability), the Optionholder may exercise his or her Option (to
the extent that the Optionholder was entitled to exercise it as
of the date of termination) but only within such period of time
ending on the earlier of (i) the date three (3) months in the
event of a voluntary termination and six (6) months in the event
of an involuntary termination following the termination of the
Optionholder's Continuous Service (or such longer or shorter
period specified in the Option Agreement), or (ii) the expiration
of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or
her Option within the time specified in the Option Agreement, the
Option shall terminate. Notwithstanding the foregoing, an
Incentive Stock Option shall be exercised within three (3) months
following termination of the Optionholder's Continuous Service.
(h) Extension of Termination Date. An Optionholder's Option
Agreement may also provide that if the exercise of the Option
following the termination of the Optionholder's Continuous
Service (other than upon the Optionholder's retirement, death or
Disability) would be prohibited at any time solely because the
issuance of shares would violate the registration requirements
under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth
in subsection 6(a) or (ii) the expiration of a period of three
(3) months after the termination of the Optionholder's Continuous
Service during which the exercise of the Option would not be in
violation of such registration requirements.
(i) Disability of Optionholder. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's
Disability, the Optionholder may exercise his or her Option (to
the extent that the Optionholder was entitled to exercise it as
of the date of termination), but only within such period of time
ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period
specified in the Option Agreement) or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her
Option within the time specified herein, the Option shall
terminate.
(j) Death of Optionholder. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's
death or (ii) the Optionholder dies within the period (if any)
specified in the Option Agreement after the termination of the
Optionholder's Continuous Service and prior to the expiration of
the Option for a reason other than death, then the Option may be
exercised (to the extent the Optionholder was entitled to
exercise the Option as of the date of death) by the
Optionholder's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance, or by a person
designated to exercise the option upon the Optionholder's death
pursuant to subsection 6(d) or 6(e), but only within the period
ending on the earlier of (1) the date eighteen (18) months
following the date of death (or such longer or shorter period
specified in the Option Agreement) or (2) the expiration of the
term of such Option as set forth in the Option Agreement. If,
after death, the Option is not exercised within the time
specified herein, the Option shall terminate.
(k) Retirement of Optionholder. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's
Retirement, the Optionholder may exercise his or her Option (to
the extent that the Optionholder was entitled to exercise it as
of the date of termination), but only within such period of time
ending on the earlier of (i) the date thirty-six (36) months
following such termination (or such longer or shorter period
specified in the Option Agreement) or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her
Option within the time specified herein, the Option shall
terminate.
(l) Termination of Continuous Service for Cause. In the event
an Optionholder's Continuous Service terminates for Cause, the
Optionholder's Option shall terminate immediately.
(m) Early Exercise. The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before
the Optionholder's Continuous Service terminates to exercise the
Option as to any part or all of the shares subject to the Option
prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to an unvested share repurchase option
in favor of the Company or to any other restriction the Board
determines to be appropriate.
(n) Re-Load Options. Without in any way limiting the authority
of the Board to make or not to make grants of Options hereunder,
the Board shall have the authority (but not an obligation) to
include as part of any Option Agreement a provision entitling the
Optionholder to a further Option (a "Re-Load Option") in the
event the Optionholder exercises the Option evidenced by the
Option Agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms
and conditions of the Option Agreement. Any such Re-Load Option
shall (i) provide for a number of shares equal to the number of
shares surrendered as part or all of the exercise price of such
Option; (ii) have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to
such Re-Load Option; and (iii) have an exercise price which is
equal to one hundred percent (100%) of the Fair Market Value of
the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option. Notwithstanding the foregoing,
a Re-Load Option shall be subject to the same exercise price and
term provisions heretofore described for Options under the Plan.
Any such Re-Load Option may be an Incentive Stock
Option or a Nonstatutory Stock Option, as the Board may designate
at the time of the grant of the original Option; provided,
however, that the designation of any Re-Load Option as an
Incentive Stock Option shall be subject to the one hundred
thousand dollars ($100,000) annual limitation on exercisability
of Incentive Stock Options described in subsection 10(d) and in
Section 422(d) of the Code. There shall be no Re-Load Options on
a Re-Load Option. Any such Re-Load Option shall be subject to
the availability of sufficient shares under subsection 4(a) and
the "Section 162(m) Limitation" on the grants of Options under
subsection 5(c) and shall be subject to such other terms and
conditions as the Board may determine which are not inconsistent
with the express provisions of the Plan regarding the terms of
Options.
7. Provisions of Stock Awards other than Options.
(a) Stock Bonus Awards. Each stock bonus agreement shall be in
such form and shall contain such terms and conditions as the
Board shall deem appropriate. The terms and conditions of stock
bonus agreements may change from time to time, and the terms and
conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement
or otherwise) the substance of each of the following provisions:
(i) Consideration. A stock bonus may be awarded
solely in consideration for past services actually rendered to
the Company for its benefit.
(ii) Vesting. Shares of Common Stock awarded under
the stock bonus agreement may, but need not, be subject to a
share repurchase option in favor of the Company in accordance
with a vesting schedule to be determined by the Board.
(iii) Termination of Participant's Continuous Service.
In the event a Participant's Continuous Service terminates, the
Company may reacquire any or all of the shares of Common Stock
held by the Participant which have not vested as of the date of
termination under the terms of the stock bonus agreement.
(iv) Transferability. Rights to acquire shares under
the stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth
in the stock bonus agreement, as the Board shall determine in its
discretion, so long as stock awarded under the stock bonus
agreement remains subject to the terms of the stock bonus
agreement.
(b) Restricted Stock Awards. Each restricted stock purchase
agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and
conditions of the restricted stock purchase agreements may change
from time to time, and the terms and conditions of separate
restricted stock purchase agreements need not be identical, but
each restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement
or otherwise) the substance of each of the following provisions:
(i) Purchase Price. The purchase price, if any, under
each restricted stock purchase agreement shall be such amount as
the Board shall determine and designate in such restricted stock
purchase agreement.
(ii) Consideration. The purchase price, if any, of stock
acquired pursuant to the restricted stock purchase agreement
shall be paid either: (i) in cash at the time of purchase; (ii)
at the discretion of the Board, according to a deferred payment
or other similar arrangement with the Participant; or (iii) in
any other form of legal consideration that may be acceptable to
the Board in its discretion; provided, however, that at any time
that the Company is incorporated in Delaware, payment of the
Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.
(iii) Vesting. Shares of Common Stock acquired
under the restricted stock purchase agreement may, but need not,
be subject to a share repurchase option in favor of the Company
in accordance with a vesting schedule to be determined by the
Board.
(iv) Termination of Participant's Continuous Service.
In the event a Participant's Continuous Service terminates, the
Company may repurchase or otherwise reacquire any or all of the
shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the
restricted stock purchase agreement.
(v) Transferability. Rights to acquire shares under
the restricted stock purchase agreement shall be transferable by
the Participant only upon such terms and conditions as are set
forth in the restricted stock purchase agreement, as the Board
shall determine in its discretion, so long as stock awarded under
the restricted stock purchase agreement remains subject to the
terms of the restricted stock purchase agreement.
(c) Stock Bonuses and Restricted Stock. Stock bonus and
restricted stock awards may be subject to such restrictions on
transferability, other restrictions, if any, and/or conditions to
vesting as the Board may impose at the date of grant or
thereafter, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such
installments, or otherwise, as the Board may determine. Such
restrictions or conditions may include factors relating to the
increase in the value of the stock or individual or Company
performance such as the attainment of certain specified
individual, divisional or Company-wide performance levels. The
performance measures may include: operating profits, revenue,
revenue increases, earnings per share, net income, increase in
net income, pre-tax earnings, pre-tax earnings before interest,
return on designated assets, return on sales, cash flow, return
on capital, return on equity, return on investment, operating
income, economic value added, depreciation and amortization, pre-
tax operating earnings after interest and before incentives,
operating income before incentives, a combination of any of these
criteria or any other measurable performance objective. The
Committee may also impose additional restrictions pursuant to
which a participant may elect to defer the receipt (or
constructive receipt) of a stock bonus or restricted stock award
beyond the date the base restrictions may lapse.
(d) Stock Appreciation Rights.
(i) Authorized Rights. The following three types of
stock appreciation rights shall be authorized for issuance under
the Plan:
(1) Tandem Rights. A "Tandem Right" means a stock appreciation
right granted appurtenant to an Option which is subject to the
same terms and conditions applicable to the particular Option
grant to which it pertains with the following exceptions: The
Tandem Right shall require the holder to elect between the
exercise of the underlying Option for shares of Common Stock and
the surrender, in whole or in part, of such Option for an
appreciation distribution. The appreciation distribution payable
on the exercised the Tandem Right shall be in cash (or, if so
provided, in an equivalent number of shares of Common Stock based
on Fair Market Value on the date of the Option surrender) in an
amount up to the excess of (A) the Fair Market Value (on the date
of the Option surrender) of the number of shares of Common Stock
covered by that portion of the surrendered Option in which the
Optionholder is vested over (B) the aggregate exercise price
payable for such vested shares.
(2) Concurrent Rights. A "Concurrent Right" means a stock
appreciation right granted appurtenant to an Option which applies
to all or a portion of the shares of Common Stock subject to the
underlying Option and which is subject to the same terms and
conditions applicable to the particular Option grant to which it
pertains with the following exceptions: A Concurrent Right shall
be exercised automatically at the same time the underlying Option
is exercised with respect to the particular shares of Common
Stock to which the Concurrent Right pertains. The appreciation
distribution payable on an exercised Concurrent Right shall be in
cash (or, if so provided, in an equivalent number of shares of
Common Stock based on Fair Market Value on the date of the
exercise of the Concurrent Right) in an amount equal to such
portion as determined by the Board at the time of the grant of
the excess of (A) the aggregate Fair Market Value (on the date of
the exercise of the Concurrent Right) of the vested shares of
Common Stock purchased -under the underlying Option which have
Concurrent Rights appurtenant to them over (B) the aggregate
exercise price paid for such shares.
(3) Independent Rights. An "Independent Right" means a stock
appreciation right granted independently of any Option but which
is subject to the same terms and conditions applicable to a
Nonstatutory Stock Option with the following exceptions: An
Independent Right shall be denominated in share equivalents. The
appreciation distribution payable on the exercised Independent
Right shall be not greater than an amount equal to the excess of
(a) the aggregate Fair Market Value (on the date of the exercise
of the Independent Right) of a number of shares of Company stock
equal to the number of share equivalents in which the holder is
vested under such Independent Right, and with respect to which
the holder is exercising the Independent Right on such date, over
(b) the aggregate Fair Market Value (on the date of the grant of
the Independent Right) of such number of shares of Company stock.
The appreciation distribution payable on the exercised
Independent Right shall be in cash or, if so provided, in an
equivalent number of shares of Common Stock based on Fair Market
Value on the date of the exercise of the Independent Right.
(i) Relationship to Options. Stock appreciation
rights appurtenant to Incentive Stock Options may be granted only
to Employees. The "Section 162(m) Limitation" provided in
subsection 5(c) and any authority to amend Options shall apply as
well to the grant of stock appreciation rights.
(ii) Exercise. To exercise any outstanding stock
appreciation right, the holder shall provide written notice of
exercise to the Company in compliance with the provisions of the
Stock Award Agreement evidencing such right. Except as provided
in subsection 5(c) regarding the "Section 162(m) Limitation," no
limitation shall exist on the aggregate amount of cash payments
that the Company may make under the Plan in connection with the
exercise of a stock appreciation right.
8. Covenants of the Company.
(a) Availability of Shares. During the terms of the Stock
Awards, the Company shall keep available at all times the number
of shares of Common Stock required to satisfy such Stock Awards.
(b) Securities Law Compliance. The Company shall seek to obtain
from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Stock
Awards and to issue and sell shares of Common Stock upon exercise
of the Stock Awards; provided, however, that this undertaking
shall not require the Company to register under the Securities
Act the Plan, any Stock Award or any stock issued or issuable
pursuant to any such Stock Award. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under
the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Stock
Awards unless and until such authority is obtained.
9. Use of Proceeds from Stock.
Proceeds from the sale of stock pursuant to Stock Awards
shall constitute general funds of the Company.
10. Miscellaneous.
(a) Acceleration of Exercisability and Vesting. The Board shall
have the power to accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award or any
part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which
it will vest.
(b) Stockholder Rights. No Participant shall be deemed to be
the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Stock Award unless and
until such Participant has satisfied all requirements for
exercise of the Stock Award pursuant to its terms.
(c) No Employment or other Service Rights. Nothing in the Plan
or any instrument executed or Stock Award granted pursuant
thereto shall confer upon any Participant or other holder of
Stock Awards any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Stock Award
was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or
without notice and with or without cause, or (ii) the service of
a Consultant pursuant to the terms of such Consultant's agreement
with the Company or an Affiliate.
(d) Incentive Stock Option $100,000 Limitation. To the extent
that the aggregate Fair Market Value (determined at the time of
grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order
in which they were granted) shall be treated as Nonstatutory
Stock Options.
(e) Investment Assurances. The Company may require a
Participant, as a condition of exercising or acquiring stock
under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant's knowledge and
experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks
of exercising the Stock Award; and (ii) to give written
assurances satisfactory to the Company stating that the
Participant is acquiring the stock subject to the Stock Award for
the Participant's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise or acquisition of stock under the Stock
Award has been registered under a then currently effective
registration statement under the Securities Act or (ii) as to any
particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends
on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(f) Withholding Obligations. To the extent provided by the
terms of a Stock Award Agreement, the Participant may satisfy any
federal, state or local tax withholding obligation relating to
the exercise or acquisition of stock under a Stock Award by any
of the following means (in addition to the Company's right to
withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash
payment; (ii) authorizing the Company to withhold shares from the
shares of the Common Stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the
Stock Award; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.
11. Adjustments upon Changes in Stock.
(a) Capitalization Adjustments. If any change is made in the
stock subject to the Plan, or subject to any Stock Award, without
the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation,
stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not
involving the receipt of consideration by the Company), the Plan
will be appropriately adjusted in the class(es) and maximum
number of securities subject to the Plan pursuant to subsection
4(a) and the maximum number of securities subject to award to any
person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number
of securities and price per share of stock subject to such
outstanding Stock Awards. Such adjustments shall be made by the
Board, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of
consideration" by the Company.)
(b) Change in Control. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially
all of the assets of the Company, (iii) a merger or consolidation
in which the Company is not the surviving corporation, (iv) a
reverse merger in which the Company is the surviving corporation
but the shares of Common Stock outstanding immediately preceding
the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise,
and in which beneficial ownership of securities of the Company
representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors has changed,
(v) an acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Exchange Act, or any
comparable successor provisions (excluding any employee benefit
plan, or related trust, sponsored or maintained by the Company or
an Affiliate) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at
least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, or (vi) that the
individuals who, as of the date of the adoption of this Plan, are
members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least fifty percent (50%) of the Board,
(if the election, or nomination for election, by the Company's
stockholders of any new director was approved by a vote of at
least fifty percent (50%) of the Incumbent Board, such new
director shall be considered as a member of the Incumbent Board),
any one of which events shall constitute a "Change in Control",
then any surviving corporation or acquiring corporation shall
assume any Stock Awards outstanding under the Plan or shall
substitute similar stock awards (including an award to acquire
the same consideration paid to the stockholders in the
transaction) for those outstanding under the Plan. In the event
any surviving corporation or acquiring corporation refuses to
assume such Stock Awards or to substitute similar stock awards
for those outstanding under the Plan, then with respect to Stock
Awards held by Participants whose Continuous Service has not
terminated, the vesting of such Stock Awards (and, if applicable,
the time during which such Stock Awards may be exercised) shall
be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) at or a reasonable time following
such event as shall be determined by the Board.
(c) Termination of Continuous Service Upon a Change in Control.
If a Participant's Continuous Service is terminated involuntarily
without Cause upon or within twenty-four (24) months after the
occurrence of a Change in Control, then any Stock Awards held by
such Participant shall immediately become fully vested and
exercisable, and any repurchase right by the Company or its
Affiliates with respect to any shares of stock covered by such
Stock Award shall immediately lapse.
12. Amendment of the Plan and Stock Awards.
(a) Amendment of Plan. The Board at any time, and from time to
time, may amend the Plan. However, except as provided in Section
11 relating to adjustments upon changes in stock, no amendment
shall be effective unless approved by the stockholders of the
Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
(b) Stockholder Approval. The Board may, in its sole
discretion, submit any other amendment to the Plan for
stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section
162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive
officers.
(c) Contemplated Amendments. It is expressly contemplated that
the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the
maximum benefits provided or to be provided under the provisions
of the Code and the regulations promulgated thereunder relating
to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance
therewith.
(d) No Impairment of Rights. Rights under any Stock Award
granted before amendment of the Plan shall not be impaired by any
amendment of the Plan unless (i) the Company requests the consent
of the Participant and (ii) the Participant consents in writing.
(e) Amendment of Stock Awards. The Board at any time, and from
time to time, may amend the terms of any one or more Stock
Awards; provided, however, that the rights under any Stock Award
shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the
Participant consents in writing. Notwithstanding the foregoing,
Stock Awards may not be amended to lower the aggregate
consideration payable, nor may Stock Awards be canceled and
reissued, unless approved by stockholders of the Company.
13. Termination or Suspension of the Plan.
(a) Plan Term. The Board may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate on
the day before the tenth (10th) anniversary of the date the Plan
is adopted by the Board or approved by the stockholders of the
Company, whichever is earlier. No Stock Awards may be granted
under the Plan while the Plan is suspended or after it is
terminated.
(b) No Impairment of Rights. Rights and obligations under any
Stock Award granted while the Plan is in effect shall not be
impaired by suspension or termination of the Plan, except with
the written consent of the Participant.
14. Effective Date of Plan.
The Plan shall become effective as determined by the Board,
but no Stock Award shall be exercised (or, in the case of a stock
bonus, shall be granted) unless and until the Plan has been
approved by the stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is
adopted by the Board.