Exhibit 10.4
DISPATCH MANAGEMENT SERVICES CORP.
1997 STOCK INCENTIVE PLAN
(As Adopted November [ ], 1997)
DISPATCH MANAGEMENT SERVICES CORP.
1997 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to strengthen Dispatch Management Services
Corp., a Delaware corporation (the "Company"), by providing an incentive to its
employees, officers, consultants and directors and thereby encouraging them to
devote their abilities and industry to the success of the Company's business
enterprise. It is intended that this purpose be achieved by extending to
employees, officers, consultants and directors of the Company and its
Subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through the grant of Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Dividend Equivalent Rights, Performance
Awards and Restricted Stock (as each term is herein defined).
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Affiliate" means any entity, directly or indirectly, controlled
by, controlling or under common control with the Company or any corporation or
other entity acquiring, directly or indirectly, all or substantially all the
assets and business of the Company, whether by operation of law or otherwise.
2.3 "Agreement" means the written agreement between the Company and
an Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.
2.4 "Award" means a grant of Restricted Stock, a Stock Appreciation
Right, a Performance Award, a Dividend Equivalent Right or any or all of them.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Cause" means:
(a) for purposes of Section 6.4, the commission of an act of
fraud or intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the Company or any
of its Subsidiaries; and
(b) in all other cases, (i) intentional failure to perform
reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in connection with the
performance of duties to the Company or any of its Subsidiaries which
transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit or (iv) willful
violation of any law, rule or regulation in connection with the performance of
duties (other than traffic violations or similar offenses).
2.7 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or otherwise.
2.8 A "Change in Control" shall mean the occurrence during the term
of the Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which
such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of [thirty] percent ([30]%) or more of the
then outstanding Shares or the combined voting power of the Company's then
outstanding Voting Securities; provided, however, in determining whether a
Change in Control has occurred, Shares or Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) the Company or (B) any corporation or other
Person of which a majority of its voting power or its voting equity securities
or equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a "Subsidiary"), (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a "Non-Control Transaction"
(as hereinafter defined);
(b) The individuals who, as of the date of the consummation of
the Company's Initial Public Offering are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least two-thirds of the members
of the
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Board; provided, however, that if the election, or nomination for election by
the Company's common stockholders, of any new director was approved by a vote
of at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or into
the Company or in which securities of the Company are issued,
unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean
a merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued where:
(A) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own
directly or indirectly immediately following such merger,
consolidation or reorganization, at least [fifty] percent
([50]%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board
of directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of the
Voting Securities of the Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
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merger, consolidation or reorganization, was maintained by
the Company or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of [thirty] percent
([30]%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of [thirty] percent ([30]%)
or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities or its
common stock.
(ii) A complete liquidation or dissolution of the Company;
or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding Shares or Voting Securities as a result of the acquisition of
Shares or Voting Securities by the Company which, by reducing the number of
Shares or Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Persons, provided that if
a Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Shares or Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Shares or Voting Securities which
increases the percentage of the then outstanding Shares or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall
occur.
If an Eligible Individual's employment is terminated by the Company
without Cause prior to the date of a Change in Control but the Eligible
Individual reasonably demonstrates that the termination (A) was at the
request of a third party who has indicated or intention or taken steps
reasonably calculated to effect a change in control or (B) otherwise arose in
connection with, or in anticipation of, a Change in Control which has been
threatened or proposed, such termination shall be deemed to have occurred
after a Change in Control for purposes of this Plan provided a Change in
Control shall actually have occurred.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Committee" means a committee, as described in Section 3.1,
appointed by the Board from time to time to administer the Plan and to
perform the functions set forth herein.
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2.11 "Company" means Dispatch Management Services Corp.
2.12 "Director" means a director of the Company.
2.13 "Director Option" means an Option granted pursuant to Section 6.
2.14 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment
with the Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or Subsidiary,
which employment agreement includes a definition of "Disability", the term
"Disability" as used in this Plan or any Agreement shall have the meaning set
forth in such employment agreement during the period that such employment
agreement remains in effect; and
(b) in all other cases, the term "Disability" as used in this
Plan or any Agreement shall mean a physical or mental infirmity which impairs
the Optionee's or Grantee's ability to perform substantially his or her
duties for a period of one hundred eighty (180) consecutive days.
2.15 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.16 "Dividend Equivalent Right" means a right to receive all or
some portion of the cash dividends that are or would be payable with respect
to Shares.
2.17 "Eligible Director" means a director of the Company who is not
an employee of the Company or any Subsidiary.
2.18 "Eligible Individual" means any director
[(other than an Eligible Director)], officer or employee of the Company or a
Subsidiary, or any consultant or advisor who is receiving cash compensation
from the Company or a Subsidiary, designated by the Committee as eligible to
receive Options or Awards subject to the conditions set forth herein.
2.19 "Employee Option" means an Option granted pursuant to Section 5.
2.20 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.21 "Fair Market Value" on any date means the [closing]
[average of the high and low] sales prices of the Shares on such date on the
principal national
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securities exchange on which such Shares are listed or admitted to trading,
or, if such Shares are not so listed or admitted to trading, the average of
the per Share closing bid price and per Share closing asked price on such
date as quoted on the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are regularly
quoted, or, if there have been no published bid or asked quotations with
respect to Shares on such date, the Fair Market Value shall be the value
established by the Board in good faith and, in the case of an Incentive Stock
Option, in accordance with Section 422 of the Code.
2.22 "Grantee" means a person to whom an Award has been granted
under the Plan.
2.23 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.24 "Initial Public Offering" means the consummation of the first
public offering of Shares pursuant to a registration statement (other than on
Form S-8 or successor forms) filed with, and declared effective by, the
Securities and Exchange Commission.
2.25 "Nonemployee Director" means a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.26 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.27 "Option" means a Nonqualified Stock Option, an Incentive Stock
Option, a Director Option, or any or all of them.
2.28 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.29 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.30 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the
Company.
2.31 "Performance Awards" means Performance Units, Performance
Shares or either of both of them.
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2.32 "Performance Cycle" means the time period specified by the
Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.33 "Performance Objectives" has the meaning set forth in
Section 11.
2.34 "Performance Shares" means Shares issued or transferred to an
Eligible Individual under Section 11.
2.35 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 11.
2.36 "Plan" means the Dispatch Management Services Corp. 1997 Stock
Incentive Plan, as amended and restated from time to time.
2.37 "Pooling Transaction" means an acquisition of the Company in a
transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles.
2.38 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 10.
2.39 "Shares" means the common stock, par value $[ ] per
share, of the Company.
2.40 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8
hereof.
2.41 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect
to the Company.
2.42 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of
the Code applies.
2.43 "Ten-Percent Stockholder" means an Eligible Individual, who, at
the time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) 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 a Parent or a Subsidiary.
3. Administration.
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3.1 The Plan shall be administered by the Committee, which shall
hold meetings at such times as may be necessary for the proper administration
of the Plan. The Committee shall keep minutes of its meetings. A quorum shall
consist of not fewer than two members of the Committee and a majority of a
quorum may authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members of the Committee shall
be as fully effective as if made by a majority vote at a meeting duly called
and held. Prior to the date of an Initial Public Offering, the Committee
shall consist of at least two (2) directors of the Company and may consist of
the entire Board. From and after the date of an Initial Public Offering, the
Committee shall consist of at least two (2) directors of the Company and may
consist of the entire Board; provided, however, that (A) if the Committee
consists of less than the entire Board, each member shall be a Nonemployee
Director and (B) to the extent necessary for any Option or Award intended to
qualify as performance-based compensation under Section 162(m) of the Code to
so qualify, each member of the Committee, whether or not it consists of the
entire Board, shall be an Outside Director. No member of the Committee shall
be liable for any action, failure to act, determination or interpretation
made in good faith with respect to this Plan or any transaction hereunder,
except for liability arising from his or her own willful misfeasance, gross
negligence or reckless disregard of his or her duties. The Company hereby
agrees to indemnify each member of the Committee for all costs and expenses
and, to the extent permitted by applicable law, any liability incurred in
connection with defending against, responding to, negotiating for the
settlement of or otherwise dealing with any claim, cause of action or dispute
of any kind arising in connection with any actions in administering this Plan
or in authorizing or denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Employee
Options shall be granted under the Plan and the number of such Employee
Options to be granted and to prescribe the terms and conditions (which need
not be identical) of each such Employee Option, including the purchase price
per Share subject to each Employee Option, and make any amendment or
modification to any Option Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall be
granted under the Plan and to determine the number of Stock Appreciation
Rights, Performance Awards, Shares of Restricted Stock and/or Dividend
Equivalent Rights to be granted pursuant to each Award, the terms and
conditions of each Award, including the restrictions or Performance
Objectives relating to Shares, the maximum value of each Performance Share
and make any amendment or modification to any Award Agreement consistent with
the terms of the Plan;
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(c) to construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable so that the Plan complies with
applicable law including Rule 16b-3 under the Exchange Act and the Code to
the extent applicable, and otherwise to make the Plan fully effective. All
decisions and determinations by the Committee in the exercise of this power
shall be final, binding and conclusive upon the Company, its Subsidiaries,
the Optionees and Grantees, and all other persons having any interest therein;
(d) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for purposes of
the Plan;
(e) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of
the Company with respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is [ ]; provided,
however, [that in the aggregate, not more than one-third of the number of
allotted Shares may be made the subject of Restricted Stock Awards under
Section 10 of the Plan (other than shares of Restricted Stock made in
settlement of Performance Units pursuant to Section 11.2(b)]. The maximum
number of Shares that an Eligible Individual may receive [in any calendar year
period] in respect of Options and Awards may not exceed [ ]
Shares. The maximum dollar amount of cash or the Fair Market Value of Shares
that any Eligible Individual may receive [in any calendar year] during the term
of the Plan in respect of Performance Units denominated in dollars may not
exceed [$ ]. Upon a Change in Capitalization, the maximum number
of Shares referred to in the first two sentences of this Section 4.1 shall be
adjusted in number and kind pursuant to Section 13. The Company shall reserve
for the purposes of the Plan, out of its authorized but unissued Shares or out
of Shares held in the Company's treasury, or partly out of each, such number of
Shares as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows:
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(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount
equal to the quotient of (i) the dollar amount in which the Performance Unit
is denominated, divided by (ii) the Fair Market Value of a Share on the date
the Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof
expires, is canceled or is otherwise terminated for any reason without having
been exercised or payment having been made in respect of the entire Option or
Award, the Shares allocable to the expired, canceled or otherwise terminated
portion of the Option or Award may again be the subject of Options or Awards
granted hereunder.
4.4 Unless otherwise stated in the applicable Agreement, whenever
any portion of the purchase price of an Option is paid in previously owned
Shares, the Optionee shall be granted a new Option covering the same number
of Shares used to pay such portion of the purchase price. Such new Option
shall have a per share purchase price equal to the Fair Market Value of a
Share on the date of exercise of the first Option, shall be exercisable six
months after the date of grant of the new Option, and shall terminate on the
same date as the first Option.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, and the terms and conditions
of the grant to such Eligible Individuals shall be set forth in an Agreement.
5.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option
shall be determined by the Committee and set forth in the Agreement;
provided, however, that the purchase price per Share under each
[Incentive Stock][Employee] Option shall not be less than 100% of the Fair
Market Value of a Share on the date the Employee Option is granted (110% in
the case of an Incentive Stock Option granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted hereunder shall be
for such term as the Committee shall determine, provided that an Incentive
Stock Option shall not be exercisable after the expiration of ten (10) years
from the date it is granted (five (5) years in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option
shall not be exercisable after the
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expiration of ten (10) years from the date it is granted. The Committee may,
subsequent to the granting of any Employee Option, extend the term thereof,
but in no event shall the term as so extended exceed the maximum term
provided for in the preceding sentence.
5.4 Vesting. Subject to Section 7.4, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement.
To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Employee Option expires. The Committee may
accelerate the exercisability of any Employee Option or portion thereof at
any time.
5.5 Modification. No modification of an Employee Option shall
adversely alter or impair any rights or obligations under the Employee Option
without the Optionee's consent.
6. Option Grants for Nonemployee Directors.
6.1 Grant. Director Options shall be granted (i) to Eligible
Directors who become members of the Board after the Initial Public Offering
upon election or appointment and (ii) to all Eligible Directors who are
members of the Board as follows:
(a) Initial Grant. Each Eligible Director who becomes a
Director after the date of the Initial Public Offering shall, upon becoming a
Director, be granted a Director Option in respect of [ ]
Shares.
(b) Annual Grant. Each Eligible Director shall be granted a
Director Option in respect of [ ] Shares on the first business day
[after the annual meeting of the stockholders of the Company] [of (month)] in
each year that the Plan is in effect provided that the Eligible Director is a
Director on such date. All Director Options shall be evidenced by an
Agreement containing such other terms and conditions not inconsistent with
the provisions of this Plan as determined by the Board; provided, however,
that such terms shall not vary the price, amount or timing of Director
Options provided under this Section 6, including provisions dealing with
vesting, forfeiture and termination of such Director Options.
6.2 Purchase Price. The purchase price for Shares under each
Director Option shall be equal to 100% of the Fair Market Value of such
Shares on the date the Director Option is granted.
6.3 Vesting. Subject to Sections 6.4 and 7.4, each Director Option
shall become fully vested and exercisable with respect to [ %] of the
Shares subject thereto on each of the [ ] anniversaries of the date of
grant; provided, however, that the Optionee continues to serve as a Director
as of such date. If an Optionee ceases to
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serve as a Director for any reason, the Optionee shall have no rights with
respect to any Director Option which has not then vested pursuant to the
preceding sentence and the Optionee shall automatically forfeit any Director
Option which remains unvested.
6.4 Duration. Subject to Section 7.4, each Director Option shall
terminate on the date which is the tenth anniversary of the date of grant,
unless terminated earlier as follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Disability, death or Cause, the Optionee may for a period
of three (3) months after such termination exercise his or her Option to the
extent, and only to the extent, that such Option or portion thereof was
vested and exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by
reason of the Optionee's resignation or removal from the Board due to
Disability, the Optionee may, for a period of one (l) year after such
termination, exercise his or her Option to the extent, and only to the
extent, that such Option or portion thereof was vested and exercisable, as of
the date the Optionee's service as Director terminated, after which time the
Option shall automatically terminate in full.
(c) If an Optionee's service as a Director terminates for
Cause, the Option granted to the Optionee hereunder shall immediately
terminate in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a)
of this Section 6.4 or within twelve (12) months after termination of service
as a Director as described in clause (b) of this Section 6.4, the Option
granted to the Optionee may be exercised at any time within twelve (12)
months after the Optionee's death by the person or persons to whom such
rights under the Option shall pass by will, or by the laws of descent or
distribution, after which time the Option shall terminate in full; provided,
however, that an Option may be exercised to the extent, and only to the
extent, that the Option or portion thereof was exercisable on the date of
death or earlier termination of the Optionee's services as a Director.
6.5 Limitations on Amendment. The provisions in this Section 6
shall not be amended more than once every six months, other than to comport
with changes in the Code or the rules and regulations thereunder.
7. Terms and Conditions Applicable to All Options.
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7.1 Non-Transferability. Unless set forth in the Agreement
evidencing the Option (other than an Incentive Stock Option) at the time of
grant or at any time thereafter, an Option granted hereunder shall not be
transferable by the Optionee to whom granted except by will or the laws of
descent and distribution [or pursuant to a domestic relations order (within
the meaning of Rule 16a-12 promulgated under the Exchange Act)], and an
Option may be exercised during the lifetime of such Optionee only by
the Optionee or his or her guardian or legal representative. The terms of
such Option shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person or by mail to the Secretary of
the Company at the Company's principal executive office, specifying the
number of Shares to be purchased and accompanied by payment therefor and
otherwise in accordance with the Agreement pursuant to which the Option was
granted. The purchase price for any Shares purchased pursuant to the exercise
of an Option shall be paid, as determined by the Committee in its discretion,
in either of the following forms (or any combination thereof): (i) cash or
(ii) the transfer of Shares to the Company upon such terms and conditions as
determined by the Committee. In addition, both Employee Options and Director
Options may be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures [(other than Share withholding)] which are, from
time to time, deemed acceptable by the Committee, and the Committee may
authorize that the purchase price payable upon exercise of an Employee Option
may be paid by having Shares withheld that otherwise would be acquired upon
such exercise. Any Shares transferred to the Company (or withheld upon
exercise) as payment of the purchase price under an Option shall be valued at
their Fair Market Value on the day preceding the date of exercise of such
Option. The Optionee shall deliver the Agreement evidencing the Option to the
Secretary of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Optionee. No fractional Shares (or
cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
7.3 Rights of Optionees. Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a stockholder of record on the
books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares, subject to
such terms and conditions as may be set forth in the applicable Agreement.
7.4 Effect of Change in Control. In the event of a Change in
Control, all Options outstanding on the date of such Change in Control shall
become immediately and fully exercisable. In addition, to the extent set
forth in an Agreement evidencing the grant of an Employee Option, an Optionee
will be permitted to surrender to the Company
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for cancellation within sixty (60) days after such Change in Control any
Employee Option or portion of an Employee Option to the extent not yet
exercised and the Optionee will be entitled to receive a cash payment in an
amount equal to the excess, if any, of (x) (A) in the case of a Nonqualified
Stock Option, the greater of (1) the Fair Market Value, on the date preceding
the date of surrender, of the Shares subject to the Employee Option or
portion thereof surrendered or (2) the Adjusted Fair Market Value of the
Shares subject to the Employee Option or portion thereof surrendered or (B)
in the case of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Employee Option
or portion thereof surrendered, over (y) the aggregate purchase price for
such Shares under the Employee Option or portion thereof surrendered. In the
event an Optionee's employment with, or service as a Director of, the Company
terminates following a Change in Control, each Option held by the Optionee
that was exercisable as of the date of termination of the Optionee's
employment or service shall remain exercisable for a period ending not before
the earlier of (A) the first anniversary of the termination of the Optionee's
employment or service or (B) the expiration of the stated term of the Option.
8. Stock Appreciation Rights.
The Committee may in its discretion, either alone or in connection
with the grant of an Employee Option, grant Stock Appreciation Rights in
accordance with the Plan, the terms and conditions of which shall be set
forth in an Agreement. If granted in connection with an Option, a Stock
Appreciation Right shall cover the same Shares covered by the Option (or such
lesser number of Shares as the Committee may determine) and shall, except as
provided in this Section 8, be subject to the same terms and conditions as
the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (i)
at any time if unrelated to an Option, or (ii) if related to an Option,
either at the time of grant, or at any time thereafter during the term of the
Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. A Stock Appreciation Right granted in connection
with an Option shall be exercisable at such time or times and only to the
extent that the related Options are exercisable, and will not be transferable
except to the extent the related Option may be transferable. A Stock
Appreciation Right granted in connection with an Incentive Stock Option shall
be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation
Right related to an Option, the Grantee shall be entitled to receive an
amount determined by multiplying (A) the excess of the Fair Market Value of a
Share on
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the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the
amount payable with respect to any Stock Appreciation Right by including such
a limit in the Agreement evidencing the Stock Appreciation Right at the time
it is granted.
(c) Treatment of Related Options and Stock Appreciation Rights
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and
upon the exercise of an Option granted in connection with a Stock
Appreciation Right, the Stock Appreciation Right shall be canceled to the
extent of the number of Shares as to which the Option is exercised or
surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The Committee
may grant to Eligible Individuals Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall contain such
terms and conditions as to exercisability (subject to Section 8.7), vesting
and duration as the Committee shall determine, but in no event shall they
have a term of greater than ten (10) years. Upon exercise of a Stock
Appreciation Right unrelated to an Option, the Grantee shall be entitled to
receive an amount determined by multiplying (A) the excess of the Fair Market
Value of a Share on the date preceding the date of exercise of such Stock
Appreciation Right over the Fair Market Value of a Share on the date the
Stock Appreciation Right was granted, by (B) number of Shares as to which the
Stock Appreciation Right is being exercised. Notwithstanding the foregoing,
the Committee may limit in any manner the amount payable with respect to any
Stock Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person or by
mail to the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the
Secretary of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Grantee.
8.5 Form of Payment. Payment of the amount determined under
Sections 8.2(b) or 8.3 may be made in the discretion of the Committee solely
in whole Shares in a number determined at their Fair Market Value on the date
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Committee decides to
make full payment in Shares and the amount
15
payable results in a fractional Share, payment for the fractional Share will
be made in cash.
8.6 Modification or Substitution. Subject to the terms of the
Plan, the Committee may modify outstanding Awards of Stock Appreciation
Rights or accept the surrender of outstanding Awards of Stock Appreciation
Rights (to the extent not exercised) and grant new Awards in substitution for
them. Notwithstanding the foregoing, no modification of an Award shall
adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent.
8.7 Effect of Change in Control. In the event of a Change in
Control, all Stock Appreciation Rights shall become immediately and fully
exercisable. In addition, to the extent set forth in an Agreement evidencing
the grant of a Stock Appreciation Right unrelated to an Option, a Grantee
will be entitled to receive a payment from the Company in cash or stock, in
either case, with a value equal to the excess, if any, of (A) the greater of
(x) the Fair Market Value, on the date preceding the date of exercise, of the
underlying Shares subject to the Stock Appreciation Right or portion thereof
exercised and (y) the Adjusted Fair Market Value, on the date preceding the
date of exercise, of the Shares over (B) the aggregate Fair Market Value, on
the date the Stock Appreciation Right was granted, of the Shares subject to
the Stock Appreciation Right or portion thereof exercised. In the event a
Grantee's employment with the Company terminates following a Change in
Control, each Stock Appreciation Right held by the Grantee that was
exercisable as of the date of termination of the Grantee's employment shall
remain exercisable for a period ending not before the earlier of the first
anniversary of (A) the termination of the Grantee's employment or (B) the
expiration of the stated term of the Stock Appreciation Right.
9. Dividend Equivalent Rights.
Dividend Equivalent Rights may be granted to Eligible Individuals
[and Eligible Directors] in tandem with an Option or Award or as a separate
award. The terms and conditions applicable to each Dividend Equivalent Right
shall be specified in the Agreement under which the Dividend Equivalent Right
is granted. Amounts payable in respect of Dividend Equivalent Rights may be
payable currently or deferred until the lapsing of restrictions on such
Dividend Equivalent Rights or until the vesting, exercise, payment,
settlement or other lapse of restrictions on the Option or Award to which the
Dividend Equivalent Rights relate. In the event that the amount payable in
respect of Dividend Equivalent Rights are to be deferred, the Committee shall
determine whether such amounts are to be held in cash or reinvested in Shares
or deemed (notionally) to be reinvested in Shares. If amounts payable in
respect of Dividend Equivalent Rights are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Dividend Equivalent Rights may
be settled
16
in cash or Shares or a combination thereof, in a single installment or
multiple installments.
10. Restricted Stock.
10.1 Grant. The Committee may grant Awards to Eligible Individuals
of Restricted Stock, which shall be evidenced by an Agreement between the
Company and the Grantee. Each Agreement shall contain such restrictions,
terms and conditions as the Committee may, in its discretion, determine and
(without limiting the generality of the foregoing) such Agreements may
require that an appropriate legend be placed on Share certificates. Awards of
Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 10.
10.2 Rights of Grantee. Shares of Restricted Stock granted pursuant
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee
has executed an Agreement evidencing the Award, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the Agreement
evidencing a Restricted Stock Award, the appropriate blank stock powers and,
in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period prescribed
by the Committee at the time the Award is granted, the Award shall be null
and void. At the discretion of the Committee, Shares issued in connection
with a Restricted Stock Award shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by the
Committee. Unless the Committee determines otherwise and as set forth in the
Agreement, upon delivery of the Shares to the escrow agent, the Grantee shall
have all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
10.3 Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set
forth in Section 10.4, such Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated, nor
shall they be delivered to the Grantee.
10.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine. The Agreement evidencing the Award
shall set forth any such restrictions.
17
(b) Effect of Change in Control. Unless the Committee shall
determine otherwise at the time of the grant of an Award of Restricted Stock,
the restrictions upon Shares of Restricted Stock shall lapse upon a Change in
Control. The Agreement evidencing the Award shall set forth any such
provisions.
10.5 Modification or Substitution. Subject to the terms of the
Plan, the Committee may modify outstanding Awards of Restricted Stock or
accept the surrender of outstanding Shares of Restricted Stock (to the extent
the restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
10.6 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until
the lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of
the year at a rate per annum as the Committee, in its discretion, may
determine. Payment of deferred dividends in respect of Shares of Restricted
Stock (whether held in cash or as additional Shares of Restricted Stock),
together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Shares in respect of which the
deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Shares of Restricted Stock shall
be forfeited upon the forfeiture of such Shares.
10.7 Delivery of Shares. Upon the lapse of the restrictions on
Shares of Restricted Stock, the Committee shall cause a stock certificate to
be delivered to the Grantee with respect to such Shares, free of all
restrictions hereunder.
11. Performance Awards.
11.1 (a) Performance Objectives. Performance Objectives for
Performance Awards may be expressed in terms of (i) earnings per Share, (ii)
Share price, (iii) pre-tax profits, (iv) net earnings, (v) return on equity
or assets, (vi) revenues, (vii) EBITDA, (viii) market share or market
penetration or (ix) any combination of the foregoing. [Consider Other
Criteria] [Also consider indicating whether goal is determined before or after
accounting changes, special charges, foreign currency effects, acquisitions,
divestitures or other extraordinary events.] Performance Objectives may be in
respect of the performance of the Company and its Subsidiaries (which may be
on a consolidated basis), a Subsidiary or a Division. Performance Objectives
may be absolute or relative
18
and may be expressed in terms of a progression within a specified range. The
Performance Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (i) the date on
which a quarter of the Performance Cycle has elapsed or (ii) the date which
is ninety (90) days after the commencement of the Performance Cycle, and in
any event while the performance relating to the Performance Objectives remain
substantially uncertain. At the time of the granting of a Performance Award
and to the extent permitted under Section 162(m) of the Code and the
regulations thereunder, the Committee may provide for the manner in which the
Performance Objectives will be measured to reflect the impact of specified
corporate transactions, extraordinary events, accounting changes and other
similar events.
(b) Determination of Performance. Prior to the vesting,
payment, settlement or lapsing of any restrictions with respect to any
Performance Award made to a Grantee who is subject to Section 162(m) of the
Code, the Committee shall certify in writing that the applicable Performance
Objectives have been satisfied.
11.2 Performance Units. The Committee, in its discretion, may grant
Awards of Performance Units to Eligible Individuals, the terms and conditions
of which shall be set forth in an Agreement between the Company and the
Grantee. Performance Units may be denominated in Shares or a specified dollar
amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to receive
payment as provided in Section 11.2(b) of (i) in the case of
Share-denominated Performance Units, the Fair Market Value of a Share on the
date the Performance Unit was granted, the date the Performance Unit became
vested or any other date specified by the Committee, (ii) in the case of
dollar-denominated Performance Units, the specified dollar amount or (iii) a
percentage (which may be more than 100%) of the amount described in clause
(i) or (ii) depending on the level of Performance Objective attainment;
provided, however, that, the Committee may at the time a Performance Unit is
granted specify a maximum amount payable in respect of a vested Performance
Unit. Each Agreement shall specify the number of Performance Units to which
it relates, the Performance Objectives which must be satisfied in order for
the Performance Units to vest and the Performance Cycle within which such
Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 11.1(b) and
11.4, a Grantee shall become vested with respect to the Performance Units to
the extent that the Performance Objectives set forth in the Agreement are
satisfied for the Performance Cycle.
(b) Payment of Awards. Subject to Section 11.1(b), payment to
Grantees in respect of vested Performance Units shall be made as soon as
practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral
of payment, in which event the terms and conditions of the deferral shall be
set forth in the Agreement. Subject to
19
Section 11.4, such payments may be made entirely in Shares valued at their
Fair Market Value as of the day preceding the date of payment or such other
date specified by the Committee, entirely in cash, or in such combination of
Shares and cash as the Committee in its discretion shall determine at any
time prior to such payment; provided, however, that if the Committee in its
discretion determines to make such payment entirely or partially in Shares of
Restricted Stock, the Committee must determine the extent to which such
payment will be in Shares of Restricted Stock and the terms of such
Restricted Stock at the time the Award is granted.
11.3 Performance Shares. The Committee, in its discretion, may
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company
and the Grantee. Each Agreement may require that an appropriate legend be
placed on Share certificates. Awards of Performance Shares shall be subject
to the following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the
time an Award of Performance Shares is made the time or times at which the
actual Shares represented by such Award shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall be issued until
the Grantee has executed an Agreement evidencing the Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require as a
condition to the issuance of such Performance Shares. If a Grantee shall fail
to execute the Agreement evidencing an Award of Performance Shares, the
appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require
within the time period prescribed by the Committee at the time the Award is
granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with an Award of Performance Shares
shall be deposited together with the stock powers with an escrow agent (which
may be the Company) designated by the Committee. Except as restricted by the
terms of the Agreement, upon delivery of the Shares to the escrow agent, the
Grantee shall have, in the discretion of the Committee, all of the rights of
a stockholder with respect to such Shares, including the right to vote the
Shares and to receive all dividends or other distributions paid or made with
respect to the Shares.
(b) Non-transferability. Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 11.3(c) or 11.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may
also impose such other restrictions and conditions on the Performance Shares,
if any, as it deems appropriate.
(c) Lapse of Restrictions. Subject to Sections 11.1(b) and
11.4, restrictions upon Performance Shares awarded hereunder shall lapse and
such Performance Shares shall become vested at such time or times and on such
terms,
20
conditions and satisfaction of Performance Objectives as the Committee may,
in its discretion, determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividends, or a specified
portion thereof, declared or paid on actual Shares represented by such Award
which have been issued by the Company to the Grantee shall be (i) deferred
until the lapsing of the restrictions imposed upon such Performance Shares
and (ii) held by the Company for the account of the Grantee until such time.
In the event that dividends are to be deferred, the Committee shall determine
whether such dividends are to be reinvested in shares of Stock (which shall
be held as additional Performance Shares) or held in cash. If deferred
dividends are to be held in cash, there may be credited at the end of each
year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in respect of
Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Performance Shares in respect of
which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Performance Shares shall
be forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free
of all restrictions hereunder.
11.4 Effect of Change in Control. In the event of a Change in
Control:
(a) With respect to Performance Units, the Grantee shall (i)
become vested in a percentage of Performance Units as determined by the
Committee at the time of the Award of such Performance Units and as set forth
in the Agreement and (ii) be entitled to receive in respect of all
Performance Units which become vested as a result of a Change in Control a
cash payment within ten (10) days after such Change in Control in an amount
as determined by the Committee at the time of the Award of such Performance
Unit and as set forth in the Agreement.
(b) With respect to Performance Shares, restrictions shall
lapse immediately on all or a portion of the Performance Shares as determined
by the Committee at the time of the Award of such Performance Shares and as
set forth in the Agreement.
(c) The Agreements evidencing Performance Shares and
Performance Units shall provide for the treatment of such Awards (or portions
thereof) which do not become vested as the result of a Change in Control,
including, but not limited to, provisions for the adjustment of applicable
Performance Objectives.
21
11.5 Modification or Substitution. Subject to the terms of the
Plan, the Committee may modify outstanding Performance Awards or accept the
surrender of outstanding Performance Awards and grant new Performance Awards
in substitution for them. Notwithstanding the foregoing, no modification of a
Performance Award shall adversely alter or impair any rights or obligations
under the Agreement without the Grantee's consent.
12. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Option and each Award
shall set forth the terms and conditions applicable to such Option or Award
upon a termination or change in the status of the employment of the Optionee
or Grantee by the Company, a Subsidiary or a Division (including a
termination or change by reason of the sale of a Subsidiary or a Division),
which, except for Director Options, shall be as the Committee may, in its
discretion, determine at the time the Option or Award is granted or
thereafter.
13. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with respect
to which Options or Awards may be granted under the Plan, (ii) the maximum
number and class of Shares or other stock or securities with respect to which
Options or Awards may be granted to any Eligible Individual during the term
of the Plan, (iii) the number and class of Shares or other stock or
securities which are subject to outstanding Options or Awards granted under
the Plan and the purchase price therefor, if applicable, (iv) the number and
class of Shares or other securities in respect of which Director Options are
to be granted under Section 6 and (v) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and
only to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of
an Award shall be entitled to, or an Optionee shall be entitled to exercise
an Option with respect to, new, additional or different shares of stock or
securities, such new, additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria which
were applicable to the Shares subject to the Award or Option, as the case may
be, prior to such Change in Capitalization.
14. Effect of Certain Transactions.
22
Subject to Sections 7.4, 8.7, 10.4(b) and 11.4 or as otherwise
provided in an Agreement, in the event of (i) the liquidation or dissolution
of the Company or (ii) a merger or consolidation of the Company (a
"Transaction"), the Plan and the Options and Awards issued hereunder shall
continue in effect in accordance with their respective terms, except that
following a Transaction each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or
Awards, as the case may be, upon exercise of any Option or payment or
transfer in respect of any Award, the same number and kind of stock,
securities, cash, property or other consideration that each holder of a Share
was entitled to receive in the Transaction in respect of a Share; provided,
however, that such stock, securities, cash, property, or other consideration
shall remain subject to all of the conditions, restrictions and performance
criteria which were applicable to the Options and Awards prior to such
Transaction.
15. Interpretation.
Following the required registration of any equity security of the
Company pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
(b) Unless otherwise expressly stated in the relevant
Agreement, each Option, Stock Appreciation Right and Performance Award
granted under the Plan is intended to be performance-based compensation
within the meaning of Section 162(m)(4)(C) of the Code. The Committee shall
not be entitled to exercise any discretion otherwise authorized hereunder
with respect to such Options or Awards if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options or Awards to fail to qualify as
performance-based compensation.
16. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if
any, as are specifically recommended by an independent accounting firm
retained by the Company to the extent reasonably necessary in order to assure
that the Pooling Transaction will qualify as such, including but not limited
to (i) deferring the vesting, exercise, payment, settlement or lapsing of
restrictions with respect to any Option or Award, (ii) providing that the
payment or settlement in respect of any Option or Award be made in the form
of cash,
23
Shares or securities of a successor or acquirer of the Company, or a
combination of the foregoing, and (iii) providing for the extension of the
term of any Option or Award to the extent necessary to accommodate the
foregoing, but not beyond the maximum term permitted for any Option or Award.
17. Termination and Amendment of the Plan.
The Plan shall terminate on the day preceding the tenth anniversary
of the date of its adoption by the Board and no Option or Award may be
granted thereafter. Subject to Section 6.5, the Board may sooner terminate
the Plan and the Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted
under the Plan, except with the consent of the Optionee or Grantee, nor shall
any amendment, modification, suspension or termination deprive any Optionee
or Grantee of any Shares which he or she may have acquired through or as a
result of the Plan; and
(b) to the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law.
18. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
19. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but
not intended to be exhaustive thereof, nothing in the Plan shall be construed
to:
(i) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
24
(iii) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time;
or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period
of time.
20. Regulations and Other Approvals; Governing Law.
20.1 Except as to matters of federal law, the Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of [ ] without giving effect to
conflicts of laws principles thereof.
20.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
20.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock
Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
20.4 Each Option and Award is subject to the requirement that, if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or
obtained free of any conditions as acceptable to the Committee.
20.5 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is
not otherwise exempt from such registration, such Shares shall be restricted
against transfer to the extent required by the Securities Act and Rule 144 or
other regulations thereunder. The Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition
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precedent to receipt of such Shares, to represent and warrant to the Company
in writing that the Shares acquired by such individual are acquired without a
view to any distribution thereof and will not be sold or transferred other
than pursuant to an effective registration thereof under said Act or pursuant
to an exemption applicable under the Securities Act or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
21. Miscellaneous.
21.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same time,
or at some other time. The Committee may also grant more than one Option or
Award to a given Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Options or Awards previously
granted to that Eligible Individual.
21.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or Grantee shall pay to the Company an amount equal to
the federal, state and local income taxes and other amounts as may be
required by law to be withheld by the Company in connection with the Taxable
Event (the "Withholding Taxes") prior to the issuance, or release from
escrow, of such Shares or the payment of such cash. The Company shall have
the right to deduct from any payment of cash to an Optionee or Grantee an
amount equal to the Withholding Taxes in satisfaction of the obligation to
pay Withholding Taxes. In satisfaction of the obligation to pay Withholding
Taxes to the Company, the Optionee or Grantee may make a written election
(the "Tax Election"), which may be accepted or rejected in the discretion of
the Committee, to have withheld a portion of the Shares then issuable to him
or her having an aggregate Fair Market Value equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any
Share or Shares issued to such Optionee pursuant to the exercise of an
Incentive Stock Option within the two-year period commencing on the day after
the date of the grant or within the one-year period commencing on the day
after the date of transfer of such Share or Shares to the Optionee pursuant
to such exercise, the Optionee shall, within ten (10) days of such
disposition, notify the Company thereof, by delivery of written notice to the
Company at its principal executive office.
21.3. Effective Date. The effective date of this Plan shall be
as determined by the Board, subject only to the approval by the affirmative
vote of the holders of a majority of the securities of the Company present,
or represented,
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and entitled to vote at a meeting of stockholders duly held in accordance
with the applicable laws of the State of [ ] within
twelve (12) months of the adoption of the Plan by the Board.
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