EXHIBIT 10.16
1998 STOCK INCENTIVE PLAN
of
MTR GAMING GROUP, INC.
1. PURPOSES OF THE PLAN. This stock incentive plan (the "Plan")
is designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of MTR GAMING GROUP, INC., a Delaware corporation (the "Company"),
or any of its Subsidiaries (as defined in Paragraph 17), and to offer an
additional inducement in obtaining the services of such persons. The Plan
provides for the grant of "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), nonqualified stock options which do not qualify as ISOs ("NQSOs"),
and stock of the Company which may be subject to contingencies or
restrictions (collectively, "Awards"). The Company makes no representation
or warranty, express or implied, as to the qualification of any option as an
"incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Paragraph 10, the aggregate number of shares of Common Stock, $.0001 par
value per share, of the Company ("Common Stock") for which Awards may be
granted under the Plan shall not exceed 800,000. Such shares of Common Stock
may, in the discretion of the Board of Directors of the Company (the "Board
of Directors"), consist either in whole or in part of authorized but unissued
shares of Common Stock or shares of Common Stock held in the treasury of the
Company. Subject to the provisions of Paragraph 11, any shares of Common
Stock subject to an option which for any reason expires, is canceled or is
terminated unexercised or which ceases for any reason to be exercisable or a
restricted stock Award which for any reason is forfeited, shall again become
available for the granting of Awards under the Plan. The Company shall at
all times during the term of the Plan reserve and keep available such number
of shares of Common Stock as will be sufficient to satisfy the requirements
of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Board of Directors or a committee of the Board of Directors consisting of
not less than two directors, each of whom shall be a "non-employee director"
within the meaning of Rule 16b-3 (as defined in Paragraph 17) (collectively,
the "Committee"). Unless otherwise provided in the By-laws of the Company or
by resolution of the Board of Directors, a majority of the members 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, and any acts
approved in writing by all members without a meeting, shall be the acts of
the Committee. Subject to the express provisions of the Plan, the Committee
shall have the authority, in its sole discretion, to determine: the key
employees, consultants and directors who shall be granted Awards; the
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type of Award to be granted; the times when an Award shall be granted; the
number of shares of Common Stock to be subject to each Award; the term of
each option; the date each option shall become exercisable; whether an option
shall be exercisable in whole or in installments and, if in installments, the
number of shares of Common Stock to be subject to each installment, whether
the installments shall be cumulative, the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date
of exercise of any option or installment thereof; whether shares of Common
Stock may be issued upon the exercise of an option as partly paid and, if so,
the dates when future installments of the exercise price shall become due and
the amounts of such installments; the exercise price of each option; the
price, if any, to be paid for a share Award; the form of payment of the
exercise price of an option; whether to restrict the sale or other
disposition of a stock Award or the shares of Common Stock acquired upon the
exercise of an option and, if so, to determine whether such contingencies
and restrictions have been met and whether and under what conditions to waive
any such contingency or restriction; whether and under what conditions to
subject all or a portion of the grant or exercise of an option, the vesting
of a stock Award or the shares acquired pursuant to the exercise of an option
to the fulfillment of certain contingencies or restrictions as specified in
the contract referred to in Paragraph 9 hereof (the "Contract"), including
without limitation, contingencies or restrictions relating to entering into a
covenant not to compete with the Company, any of its Subsidiaries or a Parent
(as defined in Paragraph 17), to financial objectives for the Company, any of
its Subsidiaries or a Parent, a division of any of the foregoing, a product
line or other category, and/or to the period of continued employment of the
Award holder with the Company, any of its Subsidiaries or a Parent, and to
determine whether such contingencies or restrictions have been met; whether
an Award holder is Disabled (as defined in Paragraph 17); the amount, if any,
necessary to satisfy the obligation of the Company, a Subsidiary or Parent to
withhold taxes or other amounts; the Fair Market Value (as defined in
Paragraph 17) of a share of Common Stock; to construe the respective
Contracts and the Plan; with the consent of the Award holder, to cancel or
modify an Award, PROVIDED, that the modified provision is permitted to be
included in an Award granted under the Plan on the date of the modification,
and FURTHER, PROVIDED, that in the case of a modification (within the meaning
of Section 424(h) of the Code) of an ISO, such Award as modified would be
permitted to be granted on the date of such modification under the terms of
the Plan; to prescribe, amend and rescind rules and regulations relating to
the Plan; to approve any provision which under Rule 16b-3 requires the
approval of the Board of Directors, a committee of non-employee directors or
the stockholders to be exempt (unless otherwise specifically provided
herein); and to make all other determinations necessary or advisable for
administering the Plan. Any controversy or claim arising out of or relating
to the Plan, any Award granted under the Plan or any Contract shall be
determined unilaterally by the Committee in its sole discretion. The
determinations of the Committee on the matters referred to in this Paragraph
3 shall be conclusive and binding on the parties. No member or former member
of the Committee shall be liable for any action, failure to act or
determination made in good faith with respect to the Plan or any Award or
Contract hereunder. Prior to the creation and designation of the Committee
by the Board of Directors, all powers and authority allocated hereby to the
Committee shall be allocated to the Board of Directors and all references to
the Committee shall be deemed to be references to the Board of Directors.
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4. OPTIONS
(a) GRANT. The Committee may from time to time, consistent
with the purposes of the Plan, grant options to such key employees (including
officers and directors who are key employees) of, and consultants to, the
Company or any of its Subsidiaries, and such Outside Directors, as the
Committee may determine, in its sole discretion. Such options granted shall
cover such number of shares of Common Stock as the Committee may determine,
in its sole discretion, as set forth in the applicable Contract; PROVIDED,
HOWEVER, that the maximum number of shares subject to options that may be
granted to any employee during any calendar year under the Plan (the "162(m)
Maximum") shall be 350,000 shares; and FURTHER, PROVIDED, that the aggregate
Fair Market Value (determined at the time the option is granted) of the
shares of Common Stock for which any eligible employee may be granted ISOs
under the Plan or any other plan of the Company, of any of its Subsidiaries
or of a Parent, which are exercisable for the first time by such optionee
during any calendar year shall not exceed $100,000. Such ISO limitation
shall be applied by taking ISOs into account in the order in which they were
granted. Any option granted in excess of such ISO limitation amount shall be
treated as a NQSO to the extent of such excess.
(b) EXERCISE PRICE. The exercise price of the shares of
Common Stock under each option shall be determined by the Committee, in its
sole discretion, as set forth in the applicable Contract; PROVIDED, HOWEVER,
that the exercise price per share of an ISO shall not be less than the Fair
Market Value of a share of Common Stock on the date of grant; and FURTHER,
PROVIDED, that if, at the time an ISO is granted, the optionee owns (or is
deemed to own under Section 424(d) of the Code) stock possessing more than
10% of the total combined voting power of all classes of stock of the
Company, of any of its Subsidiaries or of a Parent, the exercise price per
share of such ISO shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date of grant.
(c) TERM. The term of each option granted pursuant to the
Plan shall be determined by the Committee, in its sole discretion, and set
forth in the applicable Contract; PROVIDED, HOWEVER, that the term of each
ISO shall not exceed 10 years from the date of grant thereof; and FURTHER,
PROVIDED, that if, at the time an ISO is granted, the optionee owns (or is
deemed to own under Section 424(d) of the Code) stock possessing more than
10% of the total combined voting power of all classes of stock of the
Company, of any of its Subsidiaries or of a Parent, the term of the ISO shall
not exceed five years from the date of grant. Options shall be subject to
earlier termination as hereinafter provided.
(d) EXERCISE. An option (or any part or installment
thereof), to the extent then exercisable, shall be exercised by giving
written notice to the Company at its then principal office stating which
option is being exercised, specifying the number of shares of Common Stock as
to which such option is being exercised and accompanied by payment in full of
the aggregate exercise price therefor (or the amount due upon exercise if the
Contract
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permits installment payments) (a) in cash or by certified check or (b) if the
applicable Contract permits, with previously acquired shares of Common Stock
having an aggregate Fair Market Value on the date of exercise equal to the
aggregate exercise price of all options being exercised, or with any
combination of cash, certified check or shares of Common Stock having such
value. The Company shall not be required to issue any shares of Common Stock
pursuant to any such option until all required payments, including any
required withholding, have been made.
The Committee may, in its sole discretion, permit payment of all or
a portion of the exercise price of an option by delivery by the optionee of a
properly executed notice, together with a copy of his irrevocable
instructions to a broker acceptable to the Committee to deliver promptly to
the Company the amount of sale or loan proceeds sufficient to pay such
exercise price. In connection therewith, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.
An optionee entitled to receive Common Stock upon the exercise of
an option shall not have the rights of a stockholder with respect to such
shares of Common Stock until the date of issuance of a stock certificate for
such shares or, in the case of uncertificated shares, until an entry is made
on the books of the Company's transfer agent representing such shares;
PROVIDED, HOWEVER, that until such stock certificate is issued or book entry
is made, any optionee using previously acquired shares of Common Stock in
payment of an option exercise price shall continue to have the rights of a
stockholder with respect to such previously acquired shares.
In no case may an option be exercised with respect to a fraction of
a share of Common Stock. In no case may a fraction of a share of Common
Stock be purchased or issued under the Plan.
(e) RELOAD OPTIONS. An optionee who, at a time when he is
eligible to be granted options under the Plan, uses previously acquired
shares of Common Stock to exercise an option granted under the Plan (the
"prior option"), shall, upon such exercise, be automatically granted an
option (the "reload option") to purchase the same number of shares of Common
Stock so used (or if there is not a sufficient number of shares available for
grant under the Plan remaining, such number of shares as are then available).
Such reload options shall be of the same type and have the same terms as the
prior option (except to the extent inconsistent with the terms of the Plan);
PROVIDED, HOWEVER, that the exercise price per share of the reload option
shall be equal to the Fair Market Value of a share of Common Stock on the
date of grant of the reload option, and FURTHER, PROVIDED, that if the prior
option was an ISO and at the time the reload option is granted, the optionee
owns (or is deemed to own under Section 424(d) of the Code) stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company, of any of its Subsidiaries or of a Parent, the exercise price
per share shall be equal to 110% of the Fair Market Value of a share of
Common Stock on the date of grant and the term of such option shall not
exceed five years.
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5. RESTRICTED STOCK. The Committee may from time to time,
consistent with the purposes of the Plan, grant shares of Common Stock to
such key employees (including officers and directors who are key employees)
of, or consultants to, the Company or any of its Subsidiaries, as the
Committee may determine, in its sole discretion. The grant may cover such
number of shares as the Committee may determine, in its sole discretion, and
require the Award holder to pay such price per share therefor, if any, as the
Committee may determine, in its sole discretion. Such shares may be subject
to such contingencies and restrictions as the Committee may determine, as set
forth in the Contract. Upon the issuance of the stock certificate for a
share Award, or in the case of uncertificated shares, the entry on the books
of the Company's transfer agent representing such shares, notwithstanding any
contingencies or restrictions to which the shares are subject, the Award
holder shall be considered to be the record owner of the shares, and subject
to the contingencies and restrictions set forth in the Award, shall have all
rights of a stockholder of record with respect to such shares, including the
right to vote and to receive distributions. Upon the occurrence of any such
contingency or restriction, the Award holder may be required to forfeit all
or a portion of such shares back to the Company. The shares shall vest in
the Award holder when all of the restrictions and contingencies lapse.
Accordingly, the Committee may require that such shares be held by the
Company, together with a stock power duly endorsed in blank by the Award
holder, until the shares vest in the Award holder.
6. TERMINATION OF RELATIONSHIP. Except as may otherwise be
expressly provided in the applicable Contract, if an Award holder's
relationship with the Company, its Subsidiaries and Parent as an employee or
a consultant has terminated for any reason (other than as a result of his
death or Disability), the Award holder may exercise the options granted to
him as an employee of, or consultant to, the Company or any of its
Subsidiaries, to the extent exercisable on the date of such termination, at
any time within three months after the date of termination, but not
thereafter and in no event after the date the Award would otherwise have
expired; PROVIDED, HOWEVER, that if such relationship is terminated either
(a) for Cause (as defined in Paragraph 17), or (b) without the consent of the
Company, such option shall terminate immediately.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and the Company, any of its
Subsidiaries or a Parent if, at the time of the determination, the individual
was an employee of such corporation for purposes of Section 422(a) of the
Code. As a result, an individual on military, sick leave or other bona fide
leave of absence shall continue to be considered an employee for purposes of
the Plan during such leave if the period of the leave does not exceed 90
days, or, if longer, so long as the individual's right to reemployment with
the Company, any of its Subsidiaries or a Parent is guaranteed either by
statute or by contract. If the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed by statute or by
contract, the employment relationship shall be deemed to have terminated on
the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, options granted under the Plan shall not be affected by any change in
the status of the Award holder so long as he continues to be an employee of, or
a consultant to, the Company, or any of
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its Subsidiaries or a Parent (regardless of having changed from one to the
other or having been transferred from one corporation to another).
Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship with the Company as an Outside
Director ceases for any reason (other than as a result of his death or
Disability) then options granted to such holder as an Outside Director may be
exercised, to the extent exercisable on the date of such termination, at any
time within three months after the date of termination, but not thereafter
and in no event after the date the Award would otherwise have expired;
PROVIDED, HOWEVER, that if such relationship is terminated for Cause, such
Award shall terminate immediately. An Award granted to an Outside Director,
however, shall not be affected by the Award holder becoming an employee of,
or consultant to, the Company, any of its Subsidiaries or a Parent.
Except as may otherwise be expressly provided in the Contract, upon
the termination of the relationship of an Award holder as an employee of, or
consultant to, the Company, and its Subsidiaries and Parent, or as an Outside
Director, for any reason (including his death or Disability), the share Award
shall cease any further vesting and the unvested portion of such Award as of
the date of such termination shall be forfeited to the Company for no
consideration.
Nothing in the Plan or in any Award granted under the Plan shall
confer on any Award holder any right to continue in the employ of, or as a
consultant to, the Company, any of its Subsidiaries or a Parent, or as a
director of the Company, or interfere in any way with any right of the
Company, any of its Subsidiaries or a Parent to terminate the Award holder's
relationship at any time for any reason whatsoever without liability to the
Company, any of its Subsidiaries or a Parent.
7. DEATH OR DISABILITY. Except as may otherwise be expressly
provided in the applicable Contract, if an Award holder dies (a) while he is
an employee of, or consultant to, the Company, any of its Subsidiaries or a
Parent, (b) within three months after the termination of such relationship
(unless such termination was for Cause or without the consent of the Company)
or (c) within one year following the termination of such relationship by
reason of his Disability, the options that were granted to him as an employee
of, or consultant to, the Company or any of its Subsidiaries, may be
exercised, to the extent exercisable on the date of his death, by his Legal
Representative (as defined in Paragraph 17) at any time within one year after
death, but not thereafter and in no event after the date the option would
otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship as an employee of, or consultant
to, the Company, any of its Subsidiaries or a Parent has terminated by reason
of his Disability, the options that were granted to him as an employee of, or
consultant to the Company or any of its Subsidiaries may be exercised, to the
extent exercisable upon the effective date of such termination, at any time
within one year after such date, but not thereafter and in no event after the
date the option would otherwise have expired.
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Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship as an Outside Director terminates
as a result of his death or Disability, the options granted to him as an
Outside Director may be exercised, to the extent exercisable on the date of
such termination, at any time within one year after the date of termination,
but not thereafter and in no event after the date the Award would otherwise
have expired. In the case of the death of the Award holder, the Award may be
exercised by his Legal Representative.
8. COMPLIANCE WITH SECURITIES LAWS. It is a condition to the
issuance of any share Award and exercise of any option that either (a) a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock to be issued
upon such grant or exercise shall be effective and current at the time of
exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise.
Nothing herein shall be construed as requiring the Company to register shares
subject to any Award under the Securities Act or to keep any Registration
Statement effective or current.
The Committee may require, in its sole discretion, as a condition
to the receipt of an Award or the exercise of any option that the Award
holder execute and deliver to the Company his representations and warranties,
in form, substance and scope satisfactory to the Committee, which the
Committee determines are necessary or convenient to facilitate the perfection
of an exemption from the registration requirements of the Securities Act,
applicable state securities laws or other legal requirement, including,
without limitation, that (a) the shares of Common Stock to be received under
the Award or issued upon the exercise of the option are being acquired by
the Award holder for his own account, for investment only and not with a view
to the resale or distribution thereof, and (b) any subsequent resale or
distribution of shares of Common Stock by such Award holder will be made only
pursuant to (i) a Registration Statement under the Securities Act which is
effective and current with respect to the shares of Common Stock being sold,
or (ii) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption, the Award holder shall prior
to any offer of sale or sale of such shares of Common Stock provide the
Company with a favorable written opinion of counsel satisfactory to the
Company, in form, substance and scope satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution.
In addition, if at any time the Committee shall determine, in its
sole discretion, that the listing or qualification of the shares of Common
Stock subject to any Award or option on any securities exchange, Nasdaq or
under any applicable law, or the consent or approval of any governmental
agency or regulatory body, is necessary or desirable as a condition to, or in
connection with, the granting of an Award or the issuing of shares of Common
Stock thereunder, such Award may not be granted and such option may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
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9. AWARD CONTRACTS. Each Award shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
Award holder, and shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Committee. The terms of
each Award and Contract need not be identical.
10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any
other provision of the Plan, in the event of a stock dividend,
recapitalization, merger in which the Company is the surviving corporation,
spin-off, split-up, combination or exchange of shares or the like which
results in a change in the number or kind of shares of Common Stock which is
outstanding immediately prior to such event, the aggregate number and kind of
shares subject to the Plan, the aggregate number and kind of shares subject
to each outstanding Award, the exercise price of each option, any
contingencies and restrictions based on the number or kind of shares, and the
162(m) Maximum shall be appropriately adjusted by the Board of Directors,
whose determination shall be conclusive and binding on all parties. Such
adjustment may provide for the elimination of fractional shares which might
otherwise be subject to Awards without payment therefor.
In the event of (a) the liquidation or dissolution of the Company,
(b) a merger in which the Company is not the surviving corporation or a
consolidation, or (c) any transaction (or series of related transactions) in
which (i) more than 50% of the outstanding Common Stock is transferred or
exchanged for other consideration or (ii) shares of Common Stock in excess of
the number of shares of Common Stock outstanding immediately preceding the
transaction are issued (other than to stockholders of the Company with
respect to their shares of stock in the Company), any outstanding options,
unvested stock shall terminate upon the earliest of any such event, unless
other provision is made therefor in the transaction.
11. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted
by the Board of Directors on as of January 27, 1998. No ISO may be granted
under the Plan after January 27, 2008. The Board of Directors, without
further approval of the Company's stockholders, may at any time suspend or
terminate the Plan, in whole or in part, or amend it from time to time in
such respects as it may deem advisable, including, without limitation, in
order that ISOs granted hereunder meet the requirements for "incentive stock
options" under the Code, to comply with the provisions of Rule 16b-3, Section
162(m) of the Code, or any change in applicable law, regulations, rulings or
interpretations of any governmental agency or regulatory body; PROVIDED,
HOWEVER, that no amendment shall be effective without the requisite prior or
subsequent stockholder approval which would (a) except as contemplated in
Paragraph 10, increase the maximum number of shares of Common Stock for which
Awards may be granted under the Plan or the 162(m) Maximum, (b) change the
eligibility requirements to receive Awards hereunder, or (c) make any change
for which applicable law, regulation, ruling or interpretation by the
applicable governmental agency or regulatory authority requires stockholder
approval. No termination, suspension or amendment of the Plan shall
adversely affect the rights of any Award holder under an Award without his
prior consent. The power of the Committee to construe and administer any
Awards granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.
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12. NON-TRANSFERABILITY. No option granted under the Plan shall
be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the Award
holder, only by him or his Legal Representatives. Except as may otherwise be
expressly provided in the Contract, a stock Award, to the extent not vested,
shall not be transferable otherwise than by will or the laws of descent and
distribution. Except to the extent provided above, Awards may not be
assigned, transferred, pledged, hypothecated or disposed of in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process, and any such attempted assignment,
transfer, pledge, hypothecation or disposition shall be null and void AB
INITIO and of no force or effect.
13. WITHHOLDING TAXES. The Company, a Subsidiary or Parent may
withhold (a) cash or (b) with the consent of the Committee, shares of Common
Stock to be issued under a stock Award or upon exercise of an option having
an aggregate Fair Market Value on the relevant date, or a combination of cash
and shares having such value, in an amount equal to the amount which the
Committee determines is necessary to satisfy the obligation of the Company,
any of its Subsidiaries or a Parent to withhold federal, state and local
taxes or other amounts incurred by reason of the grant, vesting, exercise or
disposition of an Award, or the disposition of the underlying shares of
Common Stock. Alternatively, the Company may require the holder to pay to
the Company such amount, in cash, promptly upon demand.
14. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such
legend or legends upon the certificates for shares of Common Stock issued
under a stock Award or upon exercise of an option under the Plan and may
issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or
appropriate to (a) prevent a violation of, or to perfect an exemption from,
the registration requirements of the Securities Act and any applicable state
securities laws, (b) implement the provisions of the Plan or any agreement
between the Company and the Award holder with respect to such shares of
Common Stock, or (c) permit the Company to determine the occurrence of a
"disqualifying disposition," as described in Section 421(b) of the Code, of
the shares of Common Stock issued or transferred upon the exercise of an ISO
granted under the Plan.
The Company shall pay all issuance taxes with respect to the
issuance of shares of Common Stock under a stock Award or upon the exercise
of an option granted under the Plan, as well as all fees and expenses
incurred by the Company in connection with such issuance.
15. USE OF PROCEEDS. The cash proceeds received upon the exercise
of an option, or grant of a stock Award under the Plan shall be added to the
general funds of the Company and used for such corporate purposes as the
Board of Directors may determine.
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16. SUBSTITUTIONS AND ASSUMPTIONS OF AWARDS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the
Board of Directors may, without further approval by the stockholders,
substitute new Awards for prior options, or restricted stock of a Constituent
Corporation (as defined in Paragraph 17) or assume the prior options or
restricted stock of such Constituent Corporation.
17. DEFINITIONS. For purposes of the Plan, the following terms shall
be defined as set forth below:
(a) "Cause" shall mean (i) in the case of an employee or
consultant, if there is a written employment or consulting agreement between
the Award holder and the Company, any of its Subsidiaries or a Parent which
defines termination of such relationship for cause, cause as defined in such
agreement, and (ii) in all other cases, cause as defined by applicable state
law.
(b) "Constituent Corporation" shall mean any corporation
which engages with the Company, any of its Subsidiaries or a Parent in a
transaction to which Section 424(a) of the Code applies (or would apply if
the option assumed or substituted were an ISO), or any Subsidiary or Parent
of such corporation.
(c) "Disability" shall mean a permanent and total disability
within the meaning of Section 22(e)(3) of the Code.
(d) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(e) "Fair Market Value" of a share of Common Stock on any day
shall mean (i) if the principal market for the Common Stock is a national
securities exchange, the average of the highest and lowest sales prices per
share of Common Stock on such day as reported by such exchange or on a
composite tape reflecting transactions on such exchange, (ii) if the
principal market for the Common Stock is not a national securities exchange
and the Common Stock is quoted on Nasdaq, and (A) if actual sales price
information is available with respect to the Common Stock, the average of the
highest and lowest sales prices per share of Common Stock on such day on
Nasdaq, or (B) if such information is not available, the average of the
highest bid and lowest asked prices per share of Common Stock on such day on
Nasdaq, or (iii) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is not quoted on Nasdaq,
the average of the highest bid and lowest asked prices per share of Common
Stock on such day as reported on the OTC Bulletin Board Service or by
National Quotation Bureau, Incorporated or a comparable service; PROVIDED,
HOWEVER, that if clauses (i), (ii) and (iii) of this subparagraph are all
inapplicable, or if no trades have been made or no quotes are available for
such day, the Fair Market Value of a share of Common Stock shall be
determined by the Board of Directors by any method consistent with applicable
regulations adopted by the Treasury Department relating to stock options.
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(f) "Legal Representative" shall mean the executor,
administrator or other person who at the time is entitled by law to exercise
the rights of a deceased or incapacitated optionee with respect to an option
granted under the Plan.
(g) "Nasdaq" shall mean the Nasdaq Stock Market.
(h) "Outside Director" shall mean a person who is a director
of the Company, but on the date of grant is not an employee of, or consultant
to, the Company, any of its Subsidiaries or a Parent.
(i) "Parent" shall have the same definition as "parent
corporation" in Section 424(e) of the Code.
(j) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Exchange Act, as the same may be in effect and interpreted from time to time.
(k) "Subsidiary" shall have the same definition as
"subsidiary corporation" in Section 424(f) of the Code.
18. GOVERNING LAW; CONSTRUCTION. The Plan, the Awards and
Contracts hereunder and all related matters shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
regard to conflict of law provisions that would defer to the substantive laws
of another jurisdiction.
Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include
the singular and plural, and any term stated in the masculine, feminine or
neuter gender shall include the masculine, feminine and neuter.
19. PARTIAL INVALIDITY. The invalidity, illegality or
unenforceability of any provision in the Plan, any Award or Contract shall
not affect the validity, legality or enforceability of any other provision,
all of which shall be valid, legal and enforceable to the fullest extent
permitted by applicable law.
20. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy and entitled to vote hereon
at the next duly held meeting of the Company's stockholders at which a quorum is
present. No Award granted hereunder may vest or be exercised prior to such
approval; PROVIDED, HOWEVER, that the date of grant of any Award shall be
determined as if the Plan had not been subject to such approval.
Notwithstanding the foregoing, if the Plan is not approved by a vote of the
stockholders of the Company on or before January 27, 1999, the Plan and any
Awards granted hereunder shall terminate.
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