ZEBRA TECHNOLOGIES CORPORATION
1997
STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I ESTABLISHMENT. . . . . . . . . . . . . . . . . . . . . . P-1
1.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . P-1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . P-1
2.1 "Affiliate". . . . . . . . . . . . . . . . . . . . . . . . . P-1
2.2 "Agreement" . . . . . . . . . . . . . . . . . . . . . . . . P-1
2.3 "Beneficiary". . . . . . . . . . . . . . . . . . . . . . . . P-1
2.4 "Board of Directors" or "Board". . . . . . . . . . . . . . . P-2
2.5 "Cause". . . . . . . . . . . . . . . . . . . . . . . . . . . P-2
2.6 "Change in Control" and "Change in Control Price". . . . . . P-2
2.7 "Code" or "Internal Revenue Code". . . . . . . . . . . . . . P-2
2.8 "Commission" . . . . . . . . . . . . . . . . . . . . . . . . P-2
2.9 "Committee". . . . . . . . . . . . . . . . . . . . . . . . . P-2
2.10 "Common Stock" . . . . . . . . . . . . . . . . . . . . . . . P-2
2.11 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . P-3
2.12 "Covered Employee" . . . . . . . . . . . . . . . . . . . . . P-3
2.13 "Disability" . . . . . . . . . . . . . . . . . . . . . . . . P-3
2.14 "Dividend Equivalent". . . . . . . . . . . . . . . . . . . . P-3
2.15 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . P-3
2.16 "Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . P-3
2.17 "Fair Market Value". . . . . . . . . . . . . . . . . . . . . P-3
2.18 "Grant Date" . . . . . . . . . . . . . . . . . . . . . . . . P-4
2.19 "Incentive Stock Option" . . . . . . . . . . . . . . . . . . P-4
2.20 "NASDAQ" . . . . . . . . . . . . . . . . . . . . . . . . . . P-4
2.21 "Non-Qualified Stock Option" . . . . . . . . . . . . . . . . P-4
2.22 "Option Period". . . . . . . . . . . . . . . . . . . . . . . P-4
2.23 "Option Price" . . . . . . . . . . . . . . . . . . . . . . . P-4
2.24 "Participant". . . . . . . . . . . . . . . . . . . . . . . . P-4
2.25 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . P-5
2.26 "Representative" . . . . . . . . . . . . . . . . . . . . . . P-5
2.27 "Retirement" . . . . . . . . . . . . . . . . . . . . . . . . P-5
2.28 "Rule 16b-3" and "Rule 16a-1(c)(3)". . . . . . . . . . . . . P-5
2.29 "Securities Act" . . . . . . . . . . . . . . . . . . . . . . P-5
2.30 "Stock Option" or "Option" . . . . . . . . . . . . . . . . . P-5
2.31 "Termination of Employment". . . . . . . . . . . . . . . . . P-5
2.32 "Transfer" . . . . . . . . . . . . . . . . . . . . . . . . . P-6
ARTICLE III ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . P-6
3.1 Committee Structure and Authority. . . . . . . . . . . . . . P-6
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ARTICLE IV STOCK SUBJECT TO PLAN . . . . . . . . . . . . . . . . . P-9
4.1 Number of Shares . . . . . . . . . . . . . . . . . . . . . . P-9
4.2 Release of Shares. . . . . . . . . . . . . . . . . . . . . . P-9
4.3 Restrictions on Shares . . . . . . . . . . . . . . . . . . . P-9
4.4 Stockholder Rights . . . . . . . . . . . . . . . . . . . . . P-10
4.5 Best Efforts To Register . . . . . . . . . . . . . . . . . . P-10
4.6 Anti-Dilution. . . . . . . . . . . . . . . . . . . . . . . . P-10
ARTICLE V ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . P-11
5.1 Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . P-11
ARTICLE VI STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . P-11
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . P-11
6.2 Grant and Exercise . . . . . . . . . . . . . . . . . . . . . P-11
6.3 Terms and Conditions . . . . . . . . . . . . . . . . . . . . P-12
6.4 Termination by Reason of Death . . . . . . . . . . . . . . . P-14
6.5 Termination by Reason of Disability. . . . . . . . . . . . . P-14
6.6 Other Termination. . . . . . . . . . . . . . . . . . . . . . P-14
6.7 Cashing Out of Option. . . . . . . . . . . . . . . . . . . . P-15
6.8 Dividend Equivalents . . . . . . . . . . . . . . . . . . . . P-15
ARTICLE VII PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE
PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . P-15
7.1 Limited Transfer During Offering . . . . . . . . . . . . . . P-15
7.2 Committee Discretion . . . . . . . . . . . . . . . . . . . . P-16
7.3 No Company Obligation. . . . . . . . . . . . . . . . . . . . P-16
ARTICLE VIII CHANGE IN CONTROL PROVISIONS . . . . . . . . . . . . . . P-16
8.1 Impact of Event. . . . . . . . . . . . . . . . . . . . . . . P-16
8.3 Change in Control Price. . . . . . . . . . . . . . . . . . . P-18
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . P-18
9.1 Amendments and Termination . . . . . . . . . . . . . . . . . P-18
9.2 Stand-Alone, Additional, Tandem, and Substitute Options. . . P-19
9.3 Form and Timing of Payment Under Options; Deferrals. . . . . P-19
9.4 Status of Options Under Code Section 162(m). . . . . . . . . P-20
9.5 Unfunded Status of Plan; Limits on Transferability . . . . . P-20
9.6 General Provisions . . . . . . . . . . . . . . . . . . . . . P-20
9.7 Mitigation of Excise Tax . . . . . . . . . . . . . . . . . . P-22
9.8 Rights with Respect to Continuance of Employment . . . . . . P-22
9.9 Options in Substitution for Options Granted by Other
Corporations . . . . . . . . . . . . . . . . . . . . . . . . P-22
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Page
9.10 Procedure for Adoption . . . . . . . . . . . . . . . . . . . P-23
9.11 Procedure for Withdrawal . . . . . . . . . . . . . . . . . . P-23
9.12 Delay. . . . . . . . . . . . . . . . . . . . . . . . . . . . P-23
9.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . P-23
9.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . P-23
9.15 Successors and Assigns . . . . . . . . . . . . . . . . . . . P-24
9.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . P-24
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ZEBRA TECHNOLOGIES CORPORATION 1997 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT
1.1 PURPOSE.
The Zebra Technologies Corporation 1997 Stock Option Plan ("Plan") is
hereby established by Zebra Technologies Corporation ("Company"). The
purpose of the Plan is to promote the overall financial objectives of the
Company and its stockholders by motivating those persons selected to
participate in the Plan to achieve long-term growth in stockholder equity in
the Company and by retaining the association of those individuals who are
instrumental in achieving this growth. The Plan is intended to qualify
certain compensation awarded under the Plan for tax deductibility under
Section 162(m) of the Code (as defined herein) to the extent deemed
appropriate by the Committee (as defined herein). The Plan and the grant of
awards hereunder are expressly conditioned upon the Plan's approval by the
stockholders of the Company. If such approval is not obtained, then this
Plan and all Options (as defined herein) hereunder shall be null and void AB
INITIO. The Plan is adopted, subject to stockholder approval, effective as
of February 11, 1997.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
2.1 "AFFILIATE" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, the Company including, without limitation, any member of an affiliated
group of which the Company is a common parent corporation as provided in
Section 1504 of the Code.
2.2 "AGREEMENT" means, individually or collectively, any Stock Option
Agreement entered into pursuant to the Plan.
2.3 "BENEFICIARY" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Options or
other rights are transferred if and to the
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extent permitted hereunder. If, upon a Participant's death, there is no
designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the person, persons, trust or trusts entitled by will or
the laws of descent and distribution to receive such benefits.
2.4 "BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of the
Company.
2.5 "CAUSE" shall mean, for purposes of whether and when a Participant
has incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written agreement or arrangement between
the Participant and the Company or an Affiliate for "cause" as defined in
such agreement or arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the term "cause"
or a substantially equivalent term, then Cause shall mean (a) any act or
omission which the Company believes is of a criminal nature, and the result
of which the Company believes is detrimental to the interests of the Company
or an Affiliate; (b) the material breach of a fiduciary duty owing to the
Company, including without limitation, fraud and embezzlement' or (c)
conduct or the omission of conduct on the part of the Participant which
constitutes a material breach of any statutory or common-law duty of loyalty
to the Company or its Affiliate.
2.6 "CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE" have the meanings
set forth in Sections 8.2 and 8.3, respectively.
2.7 "CODE" or "INTERNAL REVENUE CODE" means the Internal Revenue Code
of 1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.
2.8 "COMMISSION" means the Securities and Exchange Commission or any
successor agency.
2.9 "COMMITTEE" means the Option Committee of the Board and/or such
other Board committee as may be designated by the Board to administer the
Plan; PROVIDED, HOWEVER, that insofar as a Committee is responsible for
granting Options to Participants hereunder, it shall consist solely of two or
more directors, each of whom is a "Non-Employee Director" within the meaning
of Rule 16b-3 and each of whom is also an "outside director" under Section
162(m) of the Code.
2.10 "COMMON STOCK" means the shares of the Company's Class A Common
Stock, $.01 par value, whether presently or hereafter issued, and any other
stock or security resulting from adjustment thereof as described hereinafter
or the common stock of any successor to the Company which is designated for
the purpose of the Plan.
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2.11 "COMPANY" means Zebra Technologies Corporation and includes any
successor or assignee corporation or corporations into which the Company may
be merged, changed or consolidated; any corporation for whose securities the
securities of the Company shall be exchanged; and any assignee of or
successor to substantially all of the assets of the Company.
2.12 "COVERED EMPLOYEE" means a Participant who is a "covered employee"
within the meaning of Section 162(m) of the Code.
2.13 "DISABILITY" means a mental or physical illness that entitles the
Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan
or the Participant is not an employee of the Company or an Affiliate, a
mental or physical illness that renders a Participant totally and permanently
incapable of performing the Participant's duties for the Company or an
Affiliate. Notwithstanding the foregoing, a Disability shall not qualify
under this Plan if it is the result of (i) a willfully self-inflicted injury
or willfully self-induced sickness; or (ii) an injury or disease contracted,
suffered, or incurred while participating in a criminal offense. The
determination of Disability shall be made by the Committee. The
determination of Disability for purposes of this Plan shall not be construed
to be an admission of disability for any other purpose.
2.14 "DIVIDEND EQUIVALENT" means a right, granted to a Participant under
Section 6.8, to receive cash, Common Stock, other Options or other property
equal in value to dividends paid with respect to a specified number of shares
of Common Stock.
2.15 "EFFECTIVE DATE" means February 11, 1997.
2.16 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2.17 "FAIR MARKET VALUE" means the value determined on the basis of the
good faith determination of the Committee, without regard to whether the
Common Stock is restricted or represents a minority interest, pursuant to the
applicable method described below:
(a) if the Common Stock is listed on a national securities exchange
or quoted on NASDAQ, the closing price of the Common Stock on the relevant
date (or, if such date is not a business day or a day on which quotations
are reported, then on the immediately preceding date on which quotations
were reported), as reported by the principal national exchange on which
such shares are traded (in the case of an exchange) or by NASDAQ, as the
case may be;
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(b) if the Common Stock is not listed on a national securities
exchange or quoted on NASDAQ, but is actively traded in the over-the-
counter market, the average of the closing bit and asked prices for the
Common Stock on the relevant date (or, if such date is not a business day
or a day on which quotations are reported, then on the immediately
preceding date on which quotations wee reported), or the most recent
preceding date for which such quotations are reported; and
(c) if, on the relevant date, the Common Stock is not publicly traded
or reported as described in (a) or (b), the value determined in good faith
by the Committee.
2.18 "GRANT DATE" means the date as of which an Agreement is entered
into pursuant to the Plan.
2.19 "INCENTIVE STOCK OPTION" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
2.20 "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq
National Market.
2.21 "NON-QUALIFIED STOCK OPTION" means an Option to purchase Common
Stock in the Company granted under the Plan, the taxation of which is
pursuant to Section 83 of the Code.
2.22 "OPTION PERIOD" means the period during which an Option shall be
exercisable in accordance with the related Agreement and Article VI.
2.23 "OPTION PRICE" means the price at which the Common Stock may be
purchased under an Option as provided in Section 6.3(b).
2.24 "PARTICIPANT" means a person who satisfies the eligibility
conditions of Article V and with whom an Agreement has been entered into
under the Plan, and in the event a Representative is appointed for a
Participant or another person becomes a Representative, then the term
"Participant" shall mean such Representative. The term shall also include a
trust for the benefit of the Participant, the Participant's parents, spouse
or descendants, or a custodian under a uniform gifts to minors act or similar
statute for the benefit of the Participant's descendants, to the extent
permitted by the Committee and not inconsistent with Rule 16b-3.
Notwithstanding the foregoing, the term "Termination of Employment" shall
mean the Termination of Employment of the person to whom the Option was
originally granted.
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2.25 "PLAN" means the Zebra Technologies Corporation 1997 Stock Option
Plan, as herein set forth and as may be amended from time to time.
2.26 "REPRESENTATIVE" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of
the Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or
(d) any person to whom an Option has been permissibly transferred; provided
that only one of the foregoing shall be the Representative at any point in
time as determined under applicable law and recognized by the Committee.
2.27 "RETIREMENT" means the Participant's Termination of Employment
after attaining either the normal retirement age or the early retirement age
as defined in the principal (as determined by the Committee) tax-qualified
plan of the Company or an Affiliate, if the Participant is covered by such a
plan, or if the Participant is not covered by such a plan, then age 65, or
age 55 with the accrual of 10 years of service.
2.28 "RULE 16b-3" and "RULE 16a-1(c)(3)" mean Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Commission under Section 16 of the Exchange
Act.
2.29 "SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
2.30 "STOCK OPTION" or "OPTION" means a right, granted to a Participant
under Section 6.1 hereof, to purchase Common Stock at a specified price
during specified time periods.
2.31 "TERMINATION OF EMPLOYMENT" means the occurrence of any act or
event, whether pursuant to an employment agreement or otherwise, that
actually or effectively causes or results in the person's ceasing, for
whatever reason, to be an officer, independent contractor, director or
employee of the Company or of any subsidiary of the Company, or to be an
officer, independent contractor, director or employee of any entity that
provides services to the Company or a subsidiary of the Company, including,
without limitation, death, Disability, dismissal, severance at the election
of the Participant, Retirement, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company or its
subsidiaries of all businesses owned or operated by the Company or its
subsidiaries. With respect to any person who is not an employee with respect
to the Company or a subsidiary of the Company, the Agreement shall establish
what act or event shall constitute a Termination of Employment for purposes
of the Plan. A transfer of employment from the Company
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to a subsidiary, or from a subsidiary to the Company, will not be a
Termination of Employment, unless expressly determined by the Committee. A
Termination of Employment shall occur for an employee who is employed by a
subsidiary of the company if the subsidiary shall cease to be a subsidiary
and the Participant shall not immediately thereafter become an employee of
the Company or a subsidiary of the Company.
2.32 "TRANSFER" means any sale, gift, assignment, distribution,
conveyance, pledge, hypothecation, encumbrance or other transfer of title,
whether by operation of law or otherwise.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 COMMITTEE STRUCTURE AND AUTHORITY. The Plan shall be administered
by a committee (the "Committee") of the Board of Directors composed of no
fewer than two directors designated by the Board of Directors. For purposes
of this Plan, (a) "Non-Employee" has the meaning under the tests for the
Plan under the rules and regulations adopted by the Securities and Exchange
Commission under Section 16 of the Securities Exchange Act of 1934 and (b)
"outside" has the meaning under the tests for "outside director" under the
Regulations adopted by the Internal Revenue Service relating to Section
162(m) of the Code, or any successor provision, including all of the
transition rules thereunder. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by all of the members,
shall be the acts of the Committee. This Plan is intended to qualify for
exemption from Section 16(b) of the Securities Exchange Act of 1934 and to
qualify as performance-based compensation under Section 162(m) of the Code
and shall be interpreted in such a way as to result in such qualification.
The Committee may authorize any one or more of its members or an officer of
the Company to execute and deliver documents on behalf of the Committee. A
member of the Committee shall not exercise any discretion respecting himself
or herself under the Plan. The Board shall have the authority to remove,
replace or fill any vacancy of any member of the Committee upon notice to the
Committee and the affected member. Any member of the Committee may resign
upon notice to the Board. The Committee may allocate among one or more of
its members, or may delegate to one or more of its agents, such duties and
responsibilities as it determines.
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Among other things, the Committee shall have the authority, (i) subject
to the terms of the Plan, and (ii) subject to the approval of the Board (to
the extent required to qualify an option granted hereunder for exemption
under Section 16(b) of the Exchange Act and as "performance-based
compensation" under Section 162(m) of the Code):
(a) to select those persons to whom Options may be granted from time
to time;
(b) to determine whether and to what extent Options are to be granted
hereunder;
(c) to determine the number of shares of Common Stock to be covered
by each Option granted hereunder;
(d) to determine the terms and conditions of any Option granted
hereunder (including, but not limited to, the Option Price, the Option
Period, any exercise restriction or limitation and any exercise
acceleration, forfeiture or waiver regarding any Option, any shares of
Common Stock relating thereto, any performance criteria and the
satisfaction of each criteria);
(e) to adjust the terms and conditions, at any time or from time to
time, of any Option, subject to the limitations of Section 9.1;
(f) to determine to what extent and under what circumstances Common
Stock and other amounts payable with respect to an Option shall be
deferred;
(g) to determine under what circumstances an Option may be settled in
cash or Common Stock;
(h) to provide for the forms of Agreements to be utilized in
connection with the Plan;
(i) to determine whether a Participant has a Disability or a
Retirement;
(j) to determine what securities law requirements are applicable to
the Plan, Options and the issuance of shares of Common Stock under the Plan
and to require of a Participant that appropriate action be taken with
respect to such requirements;
(k) to cancel, with the consent of the Participant or as otherwise
provided in the Plan or an Agreement, outstanding Options;
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(l) to interpret and make final determinations with respect to the
remaining number of shares of Common Stock available under this Plan;
(m) to require, as a condition of the exercise of an Option or the
issuance or transfer of a certificate of Common Stock, the withholding from
a Participant of the amount of any Federal, state or local taxes as may be
necessary in order for the Company or any other employer to obtain a
deduction or as may be otherwise required by law;
(n) to determine whether and with what effect a Participant has
incurred a Termination of Employment;
(o) to determine whether the Company or any other person has a right
or obligation to purchase Common Stock from a Participant and, if so, the
terms and conditions on which such Common Stock is to be purchased;
(p) to determine the restrictions or limitations on the transfer of
Common Stock;
(q) to determine whether an Option is to be adjusted, modified or
purchased, or is to become fully exercisable, under the Plan or the terms
of an Agreement;
(r) to determine the permissible methods of Option exercise and
payment, including cashless exercise arrangements;
(s) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan; and
(t) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to interpret the terms and
provisions of the Plan and any Option issued under the Plan (and any
Agreement) and to otherwise supervise the administration of the Plan. The
Committee's policies and procedures may differ with respect to Options
granted at different times or to different Participants.
Any determination made by the Committee pursuant to the provisions of
the Plan shall be made in its sole discretion, and in the case of any
determination relating to an Option, may be made at the time of the grant of
the Option or, unless in contravention of any express term of the Plan or an
Agreement, at any time thereafter. All decisions made by the Committee
pursuant to the provisions of the Plan shall be
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final and binding on all persons, including the Company and Participants. No
determination shall be subject to DE NOVO review if challenged in court.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 NUMBER OF SHARES. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for
distribution pursuant to Options under the Plan shall be 531,500 shares of
Common Stock authorized for issuance on the Effective Date. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
4.2 RELEASE OF SHARES. Subject to Section 6.3(f), if any shares of
Common Stock that are subject to any Option cease to be subject to an Option
or are forfeited, if any Option otherwise terminates without issuance of
shares of Common Stock being made to the Participant, or if any shares
(whether or not restricted) of Common Stock are received by the Company in
connection with the exercise of an Option, including the satisfaction of tax
withholding, such shares, in the discretion of the Committee, may again be
available for distribution in connection with Options under the Plan.
4.3 RESTRICTIONS ON SHARES. Shares of Common Stock issued as or in
conjunction with an Option shall be subject to the terms and conditions
specified herein and to such other terms, conditions and restrictions as the
Committee in its discretion may determine or provide in an Agreement. The
Company shall not be required to issue or deliver any certificates for shares
of Common Stock, cash or other property prior to (i) the listing of such
shares on any stock exchange or NASDAQ (or other public market) on which the
Common Stock may then be listed (or regularly traded), (ii) the completion of
any registration or qualification of such shares under Federal or state law,
or any ruling or regulation of any government body which the Committee
determines to be necessary or advisable, and (iii) the satisfaction of any
applicable withholding obligation in order for the Company or an Affiliate to
obtain a deduction with respect to the exercise of an Option. The Company
may cause any certificate for any share of Common Stock to be delivered to be
properly marked with a legend or other notation reflecting the limitations on
transfer of such Common Stock as provided in this Plan or as the Committee
may otherwise require. The Committee may require any person exercising an
Option to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the
shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next
lower whole number of shares.
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4.4 STOCKHOLDER RIGHTS. No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Option until, after
proper exercise of the Option or other action required, such shares shall
have been recorded on the Company's official stockholder records as having
been issued or transferred. Upon exercise of the Option or any portion
thereof, the Company will have thirty (30) days in which to issue the shares,
and the Participant will not be treated as a stockholder for any purpose
whatsoever prior to such issuance. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date such
shares are recorded as issued or transferred in the Company's official
stockholder records, except as provided herein or in an Agreement.
4.5 BEST EFFORTS TO REGISTER. The Company will register under the
Securities Act the Common Stock delivered or deliverable pursuant to Options
on Commission Form S-8 if available to the Company for this purpose (or any
successor or alternate form that is substantially similar to that form to the
extent available to effect such registration), in accordance with the rules
and regulations governing such forms, as soon after stockholder approval of
the Plan as the Committee, in its sole discretion, shall deem such
registration appropriate. The Company will use its best efforts to cause the
registration statement to become effective and will file such supplements and
amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the Option Period of the last Option outstanding, (b) the
date the Company is no longer a reporting company under the Exchange Act and
(c) the date all Participants have disposed of all shares delivered pursuant
to any Option.
4.6 ANTI-DILUTION. In the event of any Company stock dividend, stock
split, combination or exchange of shares, recapitalization or other change in
the capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale
by the Company of all or a substantial portion of its assets (measured on
either a stand-alone or consolidated basis), reorganization, rights offering,
a partial or complete liquidation, or any other corporate transaction,
Company stock offering or event involving the Company and having an effect
similar to any of the foregoing, then the Committee shall adjust or
substitute, as the case may be, the number of shares of Common Stock
available for Options under the Plan, the number of shares of Common Stock
covered by outstanding Options, the exercise price per share of outstanding
Options, and performance conditions and any other characteristics or terms of
the Options as the Committee shall deem necessary or appropriate to reflect
equitably the effects of such changes to the Participants; provided, however,
that the Committee may limit any such adjustment so as to maintain the
deductibility of the Options under Section 162(m) and that any fractional
shares resulting from such adjustment shall be eliminated by rounding to the
next lower whole number of shares with appropriate payment for such
fractional shares as shall reasonably be determined by the Committee.
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ARTICLE V
ELIGIBILITY
5.1 ELIGIBILITY. Except as herein provided, the persons who shall be
eligible to participate in the Plan and be granted Options shall be those
persons who are directors, officers, and employees of the Company or any
subsidiary of the Company, who shall be in a position, in the opinion of the
Committee, to make contributions to the growth, management, protection and
success of the Company and its subsidiaries. Of those persons described in
the preceding sentence, the Committee may, from time to time, select persons
to be granted Options and shall determine the terms and conditions with
respect thereto. In making any such selection and in determining the form of
the Option, the Committee may give consideration to the person's functions
and responsibilities, the person's contributions to the Company and its
subsidiaries, the value of the individual's service to the Company and its
subsidiaries and such other factors deemed relevant by the Committee. The
Committee may designate in writing any person who is not eligible to
participate in the Plan if such person would otherwise be eligible to
participate in this Plan (and members of the Committee are expressly excluded
from participation in the Plan).
ARTICLE VI
STOCK OPTIONS
6.1 GENERAL. The Committee shall have authority to grant Stock Options
under the Plan at any time or from time to time. Stock Options may be either
Incentive Stock Options or Non-Qualified Stock Options. An Option shall
entitle the Participant to receive shares of Common Stock upon exercise of
such Option, subject to the Participant's satisfaction in full of any
conditions, restrictions or limitations imposed in accordance with the Plan
or an Option Agreement (the terms and provisions of which may differ from
other Agreements), including, without limitation, payment of the Option
Price. During any calendar year, Options to purchase no more than 100,000
shares of Common Stock shall be granted to any Participant.
6.2 GRANT AND EXERCISE. The grant of a Stock Option shall occur as of
the date the Committee determines. Each Option granted under this Plan shall
be evidenced by an Agreement, in a form approved by the Committee, which
shall embody the terms and conditions of such Option and which shall be
subject to the express terms and conditions set forth in the Plan. Such
Agreement shall become effective upon execution by the Participant. Only a
person who is a common-law employee of the Company, any parent corporation of
the Company or a subsidiary (as such terms are defined in Section 424 of the
Code) on the date of grant shall be
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eligible to be granted an Option which is intended to be and is an Incentive
Stock Option. To the extent that any Stock Option is not designated as an
Incentive Stock Option or even if so designated does not qualify as an
Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be exercised, so
as to disqualify the Plan under Section 422 of the Code or, without the
consent of the Participant affected, to disqualify any Incentive Stock Option
under such Section 422.
6.3 TERMS AND CONDITIONS. Stock Options shall be subject to such terms
and conditions as shall be determined by the Committee, including the
following:
(a) OPTION PERIOD. The Option Period of each Stock Option shall be
fixed by the Committee; provided that no Stock Option shall be exercisable
more than ten (10) years after the date the Stock Option is granted. In
the case of an Incentive Stock Option granted to an individual who owns
more than ten percent (10%) of the combined voting power of all classes of
stock of the Company, a corporation which is a parent corporation of the
Company or any subsidiary of the Company (each as defined in Section 424 of
the Code), the Option Period shall not exceed five (5) years from the date
of grant. No Option which is intended to be an Incentive Stock Option
shall be granted more than ten (10) years from the date the Plan is adopted
by the Company or the date the Plan is approved by the stockholders of the
Company, whichever is earlier.
(b) OPTION PRICE. The Option Price per share of the Common Stock
purchasable under an Option shall be determined by the Committee; provided,
however, that the Option Price per share shall be not less than the Fair
Market Value per share on the date the Option is granted. If such Option
is intended to qualify as an Incentive Stock Option and is granted to an
individual who owns or who is deemed to own stock possessing more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company, a corporation which is a parent corporation of the Company or any
subsidiary of the Company (each as defined in Section 424 of the Code), the
Option Price per share shall not be less than one hundred ten percent
(110%) of such Fair Market Value per share.
(c) EXERCISABILITY. Subject to Section 7.1, Stock Options shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee. If the Committee provides that
any Stock Option is exercisable only in installments, the Committee may, to
the extent such waiver will not cause the Option income to fail to be
deductible under Section 162 (m), at any time waive such installment
exercise provisions, in whole or in part, and, subject to the foregoing,
may at any time accelerate
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the exercisability of any Stock Option. If the Committee intends that
an Option be an Incentive Stock Option, the Committee may, in its
discretion, provide that the aggregate Fair Market Value (determined
at the Grant Date) of the Common Stock as to which such Incentive Stock
Option which is exercisable for the first time during any calendar year
shall not exceed $100,000.
(d) METHOD OF EXERCISE. Subject to the provisions of this Article
VI, a Participant may exercise Stock Options, in whole or in part, at any
time during the Option Period by the Participant's giving written notice of
exercise on a form provided by the Committee (if available) to the Company
specifying the number of shares of Common Stock subject to the Stock Option
to be purchased. Such notice shall be accompanied by payment in full of
the purchase price by cash or check or such other form of payment as the
Company may accept. If approved by the Committee, payment in full or in
part may also be made (i) by delivering Common Stock already owned by the
Participant having a total Fair Market Value on the date of such delivery
equal to the Option Price; (ii) by the execution and delivery of a note or
other evidence of indebtedness (and any security agreement thereunder)
satisfactory to the Committee and permitted in accordance with
Section 6.3(e); (iii) by authorizing the Company to retain shares of Common
Stock which would otherwise be issuable upon exercise of the Option having
a total Fair Market Value on the date of delivery equal to the Option
Price; (iv) by the delivery of cash or the extension of credit by a broker-
dealer to whom the Participant has submitted a notice of exercise or
otherwise indicated an intent to exercise an Option (in accordance with
Part 220, Chapter II, Title 12 of the Code of Federal Regulations,
so-called "cashless" exercise); or (v) by any combination of the foregoing.
In the case of an Incentive Stock Option, the right to make a payment in
the form of already owned shares of Common Stock of the same class as the
Common Stock subject to the Stock Option may be authorized only at the time
the Stock Option is granted. No shares of Common Stock shall be issued
until full payment therefor, as determined by the Committee, has been made.
(e) COMPANY LOAN OR GUARANTEE. Upon the exercise of any Option and
subject to the pertinent Agreement and the discretion of the Committee, the
Company may at the request of the Participant:
(i) lend to the Participant an amount equal to such portion of
the Option Price as the Committee may determine; or
(ii) guarantee a loan obtained by the Participant from a third-
party for the purpose of tendering the Option Price.
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The terms and conditions of any loan or guarantee, including the term,
interest rate and any security interest thereunder and whether the loan
shall be with recourse, shall be determined by the Committee, except that
no extension of credit or guarantee shall obligate the Company for an
amount to exceed the lesser of the aggregate Fair Market Value per share of
the Common Stock on the date of exercise, less the par value of the shares
of Common Stock to be purchased upon the exercise of the Option, or the
amount permitted under applicable laws or the regulations and rules of the
Federal Reserve Board and any other governmental agency having
jurisdiction.
(f) NON-TRANSFERABILITY OF OPTIONS. Except as provided herein or in
an Agreement, no Stock Option or interest therein shall be transferable by
the Participant other than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable during the
Participant's lifetime only by the Participant. If and to the extent
transferability is permitted by Rule 16b-3 or does not result in liability
to any Participant and except as otherwise provided by an Agreement, every
Option granted hereunder shall be freely transferable, but only if such
transfer is consistent with the use of Form S-8 (or the Committee's waiver
of such condition) and consistent with an Option's intended status as an
Incentive Stock Option (as applicable).
6.4 TERMINATION BY REASON OF DEATH. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable for a period of ninety
(90) days following the date of the appointment of a Representative (or such
other period or no period as the Committee may specify) or until the expiration
of the Option Period, whichever period is the shorter.
6.5 TERMINATION BY REASON OF DISABILITY. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Stock Option
held by such Participant shall thereafter be fully exercisable by the
Participant for the period of ninety (90) days (or such other period or no
period as the Committee may specify) immediately following the date of such
Termination of Employment or until the expiration of the Option Period,
whichever period is shorter, and the Participant's death at any time following
such Termination of Employment due to Disability shall not affect the foregoing.
In the event of Termination of Employment by reason of Disability, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
6.6 OTHER TERMINATION. Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of
Employment due
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to Retirement, or the Termination of Employment is involuntary on the part of
the Participant (but is not due to death or Disability or with Cause), any
Stock Option held by such Participant shall thereupon terminate, except that
such Stock Option, to the extent then exercisable, may be exercised for the
lesser of the ninety (90) day period commencing with the date of such
Termination of Employment or until the expiration of the Option Period. If
the Participant incurs a Termination of Employment which is voluntary on the
part of the Participant (and is not due to Retirement) the Option shall
terminate 30 days after such Termination. If the Participant's Termination
of Employment is for Cause, the Option shall terminate immediately. The
death or Disability of a Participant after a Termination of Employment
otherwise provided herein shall not extend the time permitted to exercise an
Option.
6.7 CASHING OUT OF OPTION. On receipt of written notice of exercise,
the Committee may elect to cash out all or part of the portion of any Stock
Option with respect to which Option at least six months have elapsed since
the Grant Date (provided that such limitation shall not apply to an Option
granted to a Participant who has subsequently died) to be exercised by paying
the Participant an amount, in cash or Common Stock, equal to the excess of
the Fair Market Value of the Common Stock that is subject to the Option over
the Option Price times the number of shares of Common Stock subject to the
Option on the effective date of such cash-out. Cash-outs relating to Options
held by Participants who are actually or potentially subject to Section 16(b)
of the Exchange Act shall comply with the provisions of Rule 16b-3, to the
extent applicable, and, in the case of cash-outs of Non-Qualified Stock
Options held by such Participants, the Committee may determine Fair Market
Value under the pricing rule set forth in the Plan.
6.8 DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Common Stock, or other property equal in value to dividends paid with
respect to a specified number of shares of Common Stock under Option. The
Committee may provide that Dividend Equivalents will be paid or distributed
when accrued or will be deemed to have been reinvested in additional Common
Stock, or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may specify.
ARTICLE VII
PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
7.1 LIMITED TRANSFER DURING OFFERING. In the event there is an
effective registration statement under the Securities Act pursuant to which
shares of Common Stock shall be offered for sale in an underwritten offering,
a Participant shall not, during the period requested by the underwriters
managing the registered public
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offering, effect any public sale or distribution of shares received directly
or indirectly pursuant to an exercise of an Option.
7.2 COMMITTEE DISCRETION. The Committee may in its sole discretion
include in any Agreement an obligation that the Company purchase a
Participant's shares of Common Stock received upon the exercise of an Option
(including the purchase of any unexercised Options which have not expired),
or may obligate a Participant to sell shares of Common Stock to the Company,
upon such terms and conditions as the Committee may determine and set forth
in an Agreement. The provisions of this Article VII shall be construed by
the Committee in its sole discretion, and shall be subject to such other
terms and conditions as the Committee may from time to time determine.
Notwithstanding any provision herein to the contrary, the Company may upon
determination by the Committee assign its right to purchase shares of Common
Stock under this Article VII, whereupon the assignee of such right shall have
all the rights, duties and obligations of the Company with respect to
purchase of the shares of Common Stock.
7.3 NO COMPANY OBLIGATION. None of the Company, an Affiliate or the
Committee shall have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Common Stock or an Option, and such holder
shall have no right to be advised of, any material information regarding the
Company or any Affiliate at any time prior to, upon or in connection with
receipt or the exercise of an Option or the Company's purchase of Common
Stock or an Option from such holder in accordance with the terms hereof.
ARTICLE VIII
CHANGE IN CONTROL PROVISIONS
8.1 IMPACT OF EVENT. Notwithstanding any other provision of the Plan to
the contrary, unless otherwise provided in an Agreement, in the event of a
Change in Control (as defined in Section 8.2):
(a) Any Stock Options outstanding as of the date of such Change in
Control and not then exercisable shall become fully exercisable to the full
extent of the original grant;
(b) Notwithstanding any other provision of the Plan, unless the
Committee shall provide otherwise in an Agreement, a Participant shall have
the right, whether or not the Option is fully exercisable or may be
otherwise realized by the Participant, by giving notice during the 60-day
period from and after a Change in Control to the Company, to elect to
surrender all or part of an Option to the Company and to receive cash,
within 30 days of such notice,
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in an amount equal to the amount by which the "Change in Control Price"
(as defined in Section 8.3) per share of Common Stock on the date of
such election shall exceed the amount which the Participant must pay to
exercise the Option per share of Common Stock under the Option (the
"Spread") multiplied by the number of shares of Common Stock granted
under the Option as for which the right shall have been exercised;
provided, however, that if the end of such 60-day period from and
after a Change in Control is within six months of the date of grant of
the Option held by a Participant (except a Participant who has died during
such six-month period) who is an officer or director of the Company (within
the meaning of Section 16(b) of the Exchange Act), such Option shall be
cancelled in exchange for a payment to the Participant, effective on the
day which is six months and one day after the date of grant of such Option,
equal to the Spread multiplied by the number of shares of Common Stock
granted under the Option, plus interest on such amount at the prime rate as
reported from time to time in THE WALL STREET JOURNAL, compounded annually
and determined from time to time. With respect to any Participant who is
an officer or director of the Company (within the meaning of Section 16(b)
of the Exchange Act), the 60-day period shall be extended, if necessary, on
or after the date of the Change in Control, and the Committee shall have
sole discretion, if necessary, to approve the Participant's exercise
hereunder and the date on which the Spread is calculated may be adjusted,
if necessary, to a later date if necessary to avoid liability to such
Participant under Section 16(b).
8.2 DEFINITION OF CHANGE IN CONTROL. For purposes of this Plan, a
"Change in Control" shall be deemed to have occurred if (a) any corporation,
person or other entity (other than the Company, a majority-owned subsidiary
of the Company or any of its subsidiaries, an employee benefit plan (or
related trust) sponsored or maintained by the Company, or a "Permitted
Transferee" (as "Permitted Transferee" is defined the Company's Certificate
of Incorporation)), including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner of
stock representing more than the greater of (i) twenty-five percent (25%) of
the combined voting power of the Company's then outstanding securities or
(ii) the percentage of the combined voting power of the Company's then
outstanding securities which equals (A) ten percent (10%) plus (B) the
percentage of the combined voting power of the Company's outstanding
securities held by such corporation, person or entity on the Effective Date;
(b)(i) the stockholders of the Company approve a definitive agreement to
merge or consolidate the Company with or into another corporation other than
a majority-owned subsidiary of the Company, or to sell or otherwise dispose
of all or substantially all of the Company's assets, and (ii) the persons who
were the members of the Board of Directors of the Company prior to such
approval do not represent a majority of the directors of the surviving,
resulting or acquiring entity or the parent thereof; (c) the stockholders of
the Company approve a plan of liquidation of the Company; or (d) within any
period of 24 consecutive
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months, persons who were members of the Board of Directors of the Company
immediately prior to such 24-month period, together with any persons who were
first elected as directors (other than as a result of any settlement of a
proxy or consent solicitation contest or any action taken to avoid such a
contest) during such 24-month period by or upon the recommendation of persons
who were members of the Board of Directors of the Company immediately prior
to such 24-month period and who constituted a majority of the Board of
Directors of the Company at the time of such election, cease to constitute a
majority of the Board.
8.3 CHANGE IN CONTROL PRICE. For purposes of the Plan, "Change in
Control Price" means the higher of (a) the highest reported sales price of a
share of Common Stock in any transaction reported on the principal exchange
on which such shares are listed or on NASDAQ during the 60-day period prior
to and including the date of a Change in Control or (b) if the Change in
Control is the result of a tender or exchange offer, merger, consolidation,
liquidation or sale of all or substantially all of the assets of the Company
(in each case a "Corporate Transaction"), the highest price per share of
Common Stock paid in such Corporate Transaction, except that, in the case of
Incentive Stock Options relating to Incentive Stock Options, such price shall
be based only on the Fair Market Value of the Common Stock on the date any
such Incentive Stock Option is exercised. To the extent that the
consideration paid in any such Corporate Transaction consists all or in part
of securities or other non-cash consideration, the value of such securities
or other non-cash consideration shall be determined in the sole discretion of
the Committee.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a
Participant under a Stock Option, theretofore granted without the
Participant's consent, except such an amendment made to cause the Plan to
qualify for the exemption provided by Rule 16b-3 or (b) disqualify the Plan
from the exemption provided by Rule 16b-3. In addition, no such amendment
shall be made without the approval of the Company's stockholders to the
extent such approval is required by law or agreement.
The Committee may amend the Plan at any time provided that (a) no
amendment shall impair the rights of any Participant under any Option
theretofore granted without the Participant's consent, (b) no amendment shall
disqualify the Plan from the exemption provided by Rule 16b-3, and (c) any
amendment shall be subject to the approval or rejection of the Board.
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The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights
of any Participant without the Participant's consent or reduce an Option
Price, except such an amendment made to cause the Plan or Option to qualify
for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments, and to grant Options which qualify for beneficial
treatment under such rules without stockholder approval. Notwithstanding
anything in the Plan to the contrary, if any right under this Plan would
cause a transaction to be ineligible for pooling of interest accounting that
would, but for the right hereunder, be eligible for such accounting
treatment, the Committee may modify or adjust the right so that pooling of
interest accounting shall be available, including the substitution of Common
Stock having a Fair Market Value equal to the cash otherwise payable
hereunder for the right which caused the transaction to be ineligible for
pooling of interest accounting.
9.2 STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE OPTIONS. Options
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Option or any Option granted under another plan of
the Company, any subsidiary, or any business entity to be acquired by the
Company or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. Such additional, tandem, and
substitute or exchange Options may be granted at any time. If an Option is
granted in substitution or exchange for another Option or award, the
Committee shall require the surrender of such other Option or award in
consideration for the grant of the new Option. In addition, Options may be
granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any subsidiary, in which the Fair
Market Value of Common Stock subject to the Option is equivalent in value to
the cash compensation, or in which the exercise price, grant price or
purchase price of the Option in the nature of a right that may be exercised
is equal to the Fair Market Value of the underlying Common Stock minus the
value of the cash compensation surrendered.
9.3 FORM AND TIMING OF PAYMENT UNDER OPTIONS; DEFERRALS. Subject to
the terms of the Plan and any applicable Agreement, payments to be made by
the Company or an Affiliate upon the exercise of an Option or settlement of
an Option may be made in such forms as the Committee shall determine,
including, without limitation, cash, Common Stock, other Options or other
property, and may be made in a single payment or transfer, in installments,
or on a deferred basis. The settlement of any Option may be accelerated, and
cash paid in lieu of Common Stock in connection with such settlement, in the
discretion of the Committee or upon occurrence of one or more specified
events (in addition to a Change in Control).
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Installment or deferred payments may be required by the Committee (subject to
Section 9.1 of the Plan) or permitted at the election of the Participant.
Payments may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
granting or crediting of Dividend Equivalents in respect of installment or
deferred payments denominated in Common Stock.
9.4 STATUS OF OPTIONS UNDER CODE SECTION 162(m). It is the intent of
the Company that Options granted to persons who are Covered Employees within
the meaning of Code Section 162(m) shall constitute "qualified
performance-based compensation" satisfying the requirements of Code Section
162(m). Accordingly, the provisions of the Plan shall be interpreted in a
manner consistent with Code Section 162(m). If any provision of the Plan or
any agreement relating to such an Option does not comply or is inconsistent
with the requirements of Code Section 162(m), such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements.
9.5 UNFUNDED STATUS OF PLAN; LIMITS ON TRANSFERABILITY. It is intended
that the Plan be an "unfunded" plan for incentive and deferred compensation.
The Committee may authorize the creation of trusts or other arrangements to
meet the obligations created under the Plan to deliver Common Stock or make
payments; provided, however, that, unless the Committee otherwise determines,
the existence of such trusts or other arrangements is consistent with the
"unfunded" status of the Plan. Unless otherwise provided in this Plan or in
an Agreement, no Option shall be subject to the claims of a Participant's
creditors and no Option may be transferred, assigned, alienated or encumbered
in any way other than by will or the laws of descent and distribution or to a
Representative upon the death of the Participant.
9.6 GENERAL PROVISIONS.
(a) REPRESENTATION. The Committee may require each person purchasing
or receiving shares pursuant to an Option to represent to and agree with
the Company in writing that such person is acquiring the shares without a
view to the distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
(b) NO ADDITIONAL OBLIGATION. Nothing contained in the Plan shall
prevent the Company or an Affiliate from adopting other or additional
compensation arrangements for its employees.
(c) WITHHOLDING. No later than the date as of which an amount first
becomes includible in the gross income of the Participant for Federal
income tax purposes with respect to any Option, the Participant shall pay
to the Company
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(or other entity identified by the Committee), or make arrangements
satisfactory to the Company or other entity identified by the Committee
regarding the payment of, any Federal, state, local or foreign taxes of
any kind required by law to be withheld with respect to such amount
required in order for the Company or an Affiliate to obtain a current
deduction. If the Participant disposes of shares of Common Stock
acquired pursuant to an Incentive Stock Option in any transaction
considered to be a disqualifying transaction under the Code, the
Participant must give written notice of such transfer and the Company shall
have the right to deduct any taxes required by law to be withheld from any
amounts otherwise payable to the Participant. Unless otherwise determined
by the Committee, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Option that gives rise to the
withholding requirement, provided that any applicable requirements under
Section 16 of the Exchange Act are satisfied. The obligations of the
Company under the Plan shall be conditional on such payment or
arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Participant.
(d) REINVESTMENT. The reinvestment of dividends in additional Common
Stock at the time of any dividend payment shall be permissible only if
sufficient shares of Common Stock are available under the Plan for such
reinvestment (taking into account then outstanding Options).
(e) REPRESENTATION. The Committee shall establish such procedures as
it deems appropriate for a Participant to designate a Representative to
whom any amounts payable in the event of the Participant's death are to be
paid.
(f) CONTROLLING LAW. The Plan and all Options made and actions taken
thereunder shall be governed by and construed in accordance with the laws
of the State of Illinois (other than its law respecting choice of law).
The Plan shall be construed to comply with all applicable law and to avoid
liability to the Company, an Affiliate or a Participant, including, without
limitation, liability under Section 16(b) of the Exchange Act.
(g) OFFSET. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value
of any shares of Common Stock, cash or other thing of value under this Plan
or an Agreement to be transferred to the Participant, and no shares of
Common Stock, cash or other thing of value under this Plan or an Agreement
shall be transferred unless and until all disputes between the Company and
the Participant have been fully and finally resolved and the Participant
has waived all claims to such against the Company or an Affiliate.
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(h) FAIL SAFE. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3), as applicable. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee. Moreover, in the event the Plan
does not include a provision required by Rule 16b-3 or Rule 16a-1(c)(3) to
be stated herein, such provision (other than one relating to eligibility
requirements or the price and amount of Options) shall be deemed to be
incorporated by reference into the Plan with respect to Participants
subject to Section 16.
9.7 MITIGATION OF EXCISE TAX. If any payment or right accruing to a
Participant under this Plan (without the application of this Section 9.7),
either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate ("Total Payments"), would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to the
largest amount or greatest right that will result in no portion of the amount
payable or right accruing under the Plan being subject to an excise tax under
Section 4999 of the Code or being disallowed as a deduction under Section
280G of the Code. The determination of whether any reduction in the rights or
payments under this Plan is to apply shall be made by the Committee in good
faith after consultation with the Participant, and such determination shall
be conclusive and binding on the Participant. The Participant shall
cooperate in good faith with the Committee in making such determination and
providing the necessary information for this purpose. The foregoing
provisions of this Section 9.7 shall apply with respect to any person only
if, after reduction for any applicable Federal excise tax imposed by Section
4999 of the Code and Federal income tax imposed by the Code, the Total
Payments accruing to such person would be less than the amount of the Total
Payments as reduced, if applicable, under the foregoing provisions of the
Plan and after reduction for only Federal income taxes.
9.8 RIGHTS WITH RESPECT TO CONTINUANCE OF EMPLOYMENT. Nothing
contained herein shall be deemed to alter the relationship between the
Company or an Affiliate and a Participant, or the contractual relationship
between a Participant and the Company or an Affiliate if there is a written
contract regarding such relationship. Nothing contained herein shall be
construed to constitute a contract of employment between the Company or an
Affiliate and a Participant. The Company or an Affiliate and each of the
Participants continue to have the right to terminate the employment or
service relationship at any time for any reason, except as provided in a
written contract.
9.9 OPTIONS IN SUBSTITUTION FOR OPTIONS GRANTED BY OTHER CORPORATIONS.
Options may be granted under the Plan from time to time in substitution for
awards held by employees, directors or service providers of other
corporations who are about
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to become officers, directors or employees of the Company or an Affiliate as
the result of a merger or consolidation of the employing corporation with the
Company or an Affiliate, or the acquisition by the Company or an Affiliate of
the assets of the employing corporation, or the acquisition by the Company or
Affiliate of the stock of the employing corporation, as the result of which
it becomes a designated employer under the Plan. The terms and conditions of
the Options so granted may vary from the terms and conditions set forth in
this Plan at the time of such grant as the majority of the members of the
Committee may deem appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.
9.10 PROCEDURE FOR ADOPTION. Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the
Board of Directors and subject to such conditions as may be imposed by the
Board of Directors, adopt the Plan for the benefit of its employees as of the
date specified in the board resolution.
9.11 PROCEDURE FOR WITHDRAWAL. Any Affiliate which has adopted the Plan
may, by resolution of the board of directors of such Affiliate, with the
consent of the Board of Directors and subject to such conditions as may be
imposed by the Board of Directors, terminate its adoption of the Plan.
9.12 DELAY. If at the time a Participant incurs a Termination of
Employment (other than due to Cause) or if at the time of a Change in
Control, the Participant is subject to "short-swing" liability under Section
16 of the Exchange Act, any time period provided for under the Plan or an
Agreement to the extent necessary to avoid the imposition of liability shall
be suspended and delayed during the period the Participant would be subject
to such liability, but not more than six (6) months and one (1) day and not
to exceed the Option Period, whichever is shorter. The Company shall have
the right to suspend or delay any time period described in the Plan or an
Agreement if the Committee shall determine that the action may constitute a
violation of any law or result in liability under any law to the Company, an
Affiliate or a stockholder of the Company until such time as the action
required or permitted shall not constitute a violation of law or result in
liability to the Company, an Affiliate or a stockholder of the Company. The
Committee shall have the discretion to suspend the application of the
provisions of the Plan required solely to comply with Rule 16b-3 if the
Committee shall determine that Rule 16b-3 does not apply to the Plan.
9.13 HEADINGS. The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.
9.14 SEVERABILITY. If any provision of this Plan shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed
as if such invalid or unenforceable provision were omitted.
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9.15 SUCCESSORS AND ASSIGNS. This Plan shall inure to the benefit of
and be binding upon each successor and assign of the Company. All
obligations imposed upon a Participant, and all rights granted to the Company
hereunder, shall be binding upon the Participant's heirs, legal
representatives and successors.
9.16 ENTIRE AGREEMENT. This Plan and the Agreement constitute the
entire agreement with respect to the subject matter hereof and thereof,
provided that in the event of any inconsistency between the Plan and the
Agreement, the terms and conditions of this Plan shall control.
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Executed on this 11th day of February, 1997.
ZEBRA TECHNOLOGIES CORPORATION
By: /s/ Edward L. Kaplan
-------------------------
Edward L. Kaplan
Chief Executive Officer
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