COMMUNICATION TELESYSTEMS INTERNATIONAL
1999 STOCK OPTION PLAN/STOCK ISSUANCE PLAN
TABLE OF CONTENTS
PAGE
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1. THE PLAN........................................................ 1
1.1 Purpose......................................................... 1
1.2 Administration and Authorization; Power and Procedure........... 1
1.3 Participation................................................... 2
1.4 Shares Available for Awards; Share Limits....................... 2
1.5 Grant of Awards................................................. 3
1.6 Award Period.................................................... 3
1.7 Limitations on Exercise and Vesting of Awards................... 4
1.8 Acceptance of Notes to Finance Exercise......................... 4
1.9 No Transferability; Limited Exception to Transfer Restrictions.. 4
2. OPTIONS......................................................... 5
2.1 Grants.......................................................... 5
2.2 Option Price.................................................... 5
2.3 Limitations on Grant and Terms of Incentive Stock Options....... 6
2.4 Option Repricing/Cancellation and Regrant/Waiver of
Restrictions.................................................... 7
2.5 Options and Rights in Substitution for Stock Options Granted by
Other Corporations.............................................. 7
3. STOCK APPRECIATION RIGHTS (INCLUDING LIMITED
STOCK APPRECIATION RIGHTS)...................................... 7
3.1 Grants.......................................................... 7
3.2 Exercise of Stock Appreciation Rights........................... 8
3.3 Payment......................................................... 8
3.4 Limited Stock Appreciation Rights............................... 9
4. RESTRICTED STOCK AWARDS......................................... 9
4.1 Grants.......................................................... 9
Restrictions.................................................... 9
Return to the Corporation....................................... 10
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5. PERFORMANCE SHARE AWARDS AND STOCK BONUSES...................... 10
5.1 Grants of Performance Share Awards.............................. 10
5.2 Special Performance-Based Share Awards.......................... 10
5.3 Grants of Stock Bonuses......................................... 12
5.4 Deferred Payments............................................... 12
5.5 Cash Bonus Awards............................................... 12
6. OTHER PROVISIONS................................................ 12
6.1 Rights of Eligible Persons, Participants and Beneficiaries...... 12
6.2 Effects of Termination of Employment; Discretionary Provisions.. 13
6.3 Adjustments; Acceleration....................................... 14
6.4 Compliance with Laws............................................ 15
6.5 Tax Withholding................................................. 16
6.6 Plan Amendment, Termination and Suspension...................... 17
6.7 Privileges of Stock Ownership................................... 17
6.8 Effective Date of the Plan...................................... 18
6.9 Term of the Plan................................................ 18
6.10 Governing Law/Construction/Severability......................... 18
6.11 Captions........................................................ 18
6.12 Effect of Change of Subsidiary Status........................... 19
6.13 Non-Exclusivity of Plan......................................... 19
6.14 No Restriction on Corporate Powers.............................. 19
6.15 Effect on Other Benefits........................................ 19
7. DEFINITIONS..................................................... 19
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COMMUNICATION TELESYSTEMS INTERNATIONAL
1999 STOCK OPTION PLAN/STOCK ISSUANCE PLAN
1. THE PLAN.
1.1 PURPOSE. The purpose of this Plan is to promote the success of the
Company and the interests of its shareholders by attracting, motivating,
retaining and rewarding directors, officers, employees and other
eligible persons with awards and incentives for high levels of
individual performance and improved financial performance of the
Company. Capitalized terms used herein are defined in Section 7.
1.2 ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE.
1.2.1 COMMITTEE. This Plan will be administered by and all Awards will
be authorized by the Committee. Action of the Committee with respect to
the administration of this Plan will be taken pursuant to a majority
vote or by written consent of its members.
1.2.2 PLAN AWARDS; INTERPRETATION; POWERS OF COMMITTEE. Subject to the
express provisions of this Plan and any express limitations on the
delegated authority of a Committee, the Committee will have the
authority to:
(a) determine eligibility and the particular Eligible Persons who
will receive Awards;
(b) grant Awards to Eligible Persons, determine the price at
which securities will be offered or awarded and the amount of
securities to be offered or awarded to any of such persons,
and determine the other specific terms and conditions of
such Awards consistent with the express limits of this Plan,
and establish the installments (if any) in which such Awards
will become exercisable or will vest, or determine that no
delayed exercisability or vesting is required, and establish
the events of termination or reversion of such Awards;
(c) approve the forms of Award Agreements (which need not be
identical either as to type of Award or among Participants);
(d) construe and interpret this Plan and any Award or other
agreements defining the rights and obligations of the Company
and Participants under this Plan, further define the terms
used in this Plan, and prescribe, amend and rescind rules and
regulations relating to the administration of this Plan;
(e) cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or terminate any
or all outstanding Awards held by Eligible Persons, subject to
any required consent under Section 6.6;
(f) accelerate or extend the exercisability or extend the term of
any or all such outstanding Awards within the maximum
ten-year term of Awards under Section 1.6; and
(g) make all other determinations and take such other action as
contemplated by this Plan or as may be necessary or advisable
for the administration of this Plan and the effectuation of
its purposes.
1.2.3 BINDING DETERMINATIONS. Any action taken by, or inaction of, the
Corporation, any Subsidiary, the Board or the Committee relating
or pursuant to this Plan will be within the absolute discretion
of that entity or body and will be conclusive and binding upon
all persons. No member of the Board or Committee, or officer of
the Corporation or any Subsidiary, will be liable for any such
action or inaction of the entity or body, of another person or,
except in circumstances involving bad faith, of himself or
herself. Subject only to compliance with the express provisions
hereof, the Board and Committee may act in their absolute
discretion in matters within their authority related to this Plan.
1.2.4 RELIANCE ON EXPERTS. In making any determination or in taking or
not taking any action under this Plan, the Committee or the
Board, as the case may be, may obtain and may rely upon the
advice of experts, including employees of and professional
advisors to the Corporation. No director, officer or agent of the
Company will be liable for any such action or determination taken
or made or omitted in good faith.
1.2.5 BIFURCATION OF PLAN ADMINISTRATION; DELEGATION. Subject to the
limits of Section 7, the Board may delegate different levels of
authority to different Committees with administration and grant
authority under this Plan, provided that each designated
Committee granting any Awards hereunder shall consist exclusively
of a member or members of the Board. A majority of the members of
the acting Committee shall constitute a quorum. The vote of a
majority of a quorum or the unanimous written consent of the
Committee shall constitute action by the Committee. A Committee
may delegate ministerial, non-discretionary functions to
individuals who are officers or employees of the Company.
1.3 PARTICIPATION. Awards may be granted by the Committee only to those
persons that the Committee determines to be Eligible Persons. An Eligible
Person who has been granted an Award may, if otherwise eligible, be
granted additional Awards if the Committee so determines.
1.4 SHARES AVAILABLE FOR AWARDS; SHARE LIMITS.
1.4.1 SHARES AVAILABLE. Subject to the provisions of Section 6.3, the
capital stock that may be delivered under this Plan will be shares
of the Corporation's authorized but unissued Common Stock and any
shares of its Common Stock held as treasury shares. The shares
may be delivered for any lawful consideration.
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1.4.2 SHARE LIMITS. The maximum number of shares of Common Stock that
may be delivered pursuant to Awards granted under this Plan
will not exceed 4,000,000 shares (the "SHARE LIMIT"). The
maximum number of shares subject to those Options and Stock
Appreciation Rights that are granted during any calendar year
to any one individual will be limited to 600,000 and the
maximum individual limit on the number of shares in the
aggregate subject to all Awards that during any calendar year
are granted under this Plan to any one individual will be
600,000. Each of the foregoing numerical limits will be
subject to adjustment as contemplated by this Section 1.4 and
Section 6.3.
1.4.3 SHARE RESERVATION; REPLENISHMENT AND REISSUE OF UNVESTED
AWARDS. No Award may be granted under this Plan unless, on the
date of grant, the sum of (i) the maximum number of shares
issuable at any time pursuant to such Award, plus (ii) the
number of shares that have previously been issued pursuant to
Awards granted under this Plan, other than reacquired shares
available for reissue consistent with any applicable legal
limitations, plus (iii) the maximum number of shares that may
be issued at any time after such date of grant pursuant to
Awards that are outstanding on such date, does not exceed the
Share Limit. Shares that are subject to or underlie Awards
that expire or for any reason are canceled or terminated, are
forfeited, fail to vest, or for any other reason are not paid
or delivered under this Plan, as well as reacquired shares,
will again, except to the extent prohibited by law or the
terms of this Plan, be available for subsequent Awards under
this Plan. Shares of Common Stock issued pursuant to the terms
hereof (including shares of Common Stock offset in
satisfaction of applicable withholding taxes or the exercise
price of an Award) shall reduce on a share-for-share basis the
number of shares of Common Stock remaining available under
this Plan. Except as limited by law, if an Award is or may be
settled only in cash, such Award need not be counted against
any of the limits under this Section 1.4.
1.5 GRANT OF AWARDS. Subject to the express provisions of this Plan, the
Committee will determine the number of shares of Common Stock subject to
each Award, the price (if any) to be paid for the shares or the Award
and, in the case of performance share awards, in addition to matters
addressed in Section 1.2.2, the specific objectives, goals and
performance criteria (such as increase in sales, market value, earnings,
book value over a base period, the years of service before vesting, the
relevant job classification or level of responsibility, or other
factors) that further define the terms of the performance share award.
Each Award will be evidenced by an Award Agreement signed by the
Corporation and, if required by the Committee, by the Participant.
1.6 AWARD PERIOD. Any Option, SAR, warrant or similar right shall expire and
any other Award shall either vest or be forfeited not more than 10 years
after the date of grant; provided, however, that any payment of cash or
delivery of stock pursuant to an Award may be delayed until a future
date if specifically authorized by the Committee in writing; provided
further that each Award will be subject to earlier termination as
provided in or pursuant to Sections 6.2 and 6.3.
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1.7 LIMITATIONS ON EXERCISE AND VESTING OF AWARDS.
1.7.1 PROVISIONS FOR EXERCISE. Unless the Committee otherwise
expressly provides, no Award will be exercisable or will vest
until at least six months after the initial Award Date, and
once exercisable an Award will remain exercisable until the
expiration or earlier termination of the Award.
1.7.2 PROCEDURE. Any exercisable Award will be deemed to be
exercised when the Corporation recleives written notice of
such exercise from the Participant (on a form and in such
manner as may be required by the Committee), together with any
required payment made in accordance with Section 2.2.2 or the
applicable Award Agreement and any written statement required
pursuant to Section 6.4.
1.7.3 FRACTIONAL SHARES/MINIMUM ISSUE. Fractional share interests
will be disregarded, but may be accumulated. The Committee,
however, may determine in the case of Eligible Persons that
cash, other securities, or other property will be paid or
transferred in lieu of any fractional share interests. No
fewer than [100] shares may be purchased on exelrcise of any
Award at one time unless the number purchased is the total
number at the time available for purchase under the Award.
1.8 ACCEPTANCE OF NOTES TO FINANCE EXERCISE. The Corporation may, with the
Committee's express approval, accept one or more notes from any eligible
Person in connection with the exercise or receipt of any outstanding
Award, but any such note will be subject to the following terms and
conditions:
1.8.1 PRINCIPAL. The principal of the note will not exceed the
amount required to be paid to the Corporation upon the
exercise or receipt of one or more Awards under this Plan and
the note will be delivered directly to the Corporation in
consideration of such exercise or receipt.
1.8.2 TERM. The initial term of the note will be determined by the
Committee; but the term of the note, including extensions,
will not exceed a period of five years.
1.8.3 RECOURSE; SECURITY. The note will provide for full recourse to
the Participant and will bear interest at a rate determined by
the Committee but not less than the interest rate necessary to
avoid the imputation of interest under the Code. If required
by the Committee or by applicable law, the note will be
secured by a pledge of any shares or rights financed thereby
in compliance with applicable law. The terms, repayment
provisions, and collateral release provisions of the note and
the pledge securing the note will conform with applicable
rules and regulations of the Federal Reserve Board as then in
effect.
1.9 NO TRANSFERABILITY; LIMITED EXCEPTION TO TRANSFER RESTRICTIONS.
1.9.1 LIMIT ON EXERCISE AND TRANSFER. Unless otherwise expressly
provided in (or pursuant to) this Section 1.9, by applicable
law and by the Award Agreement, as the same may be amended,
(i) all Awards are non-transferable and will not be subject in
any manner to sale, transfer, anticipation, alienation,
assignment,
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pledge, encumbrance or charge; Awards will be exercised only
by the Participant; and (ii) amounts payable or shares
issuable pursuant to an Award will be delivered only to (or
for the account of) the Participant.
1.9.2 EXCEPTIONS. The Committee may permit Awards to be exercised by
and paid only to certain persons or entities related to the
Participant pursuant to such conditions and procedures as the
Committee may establish. Any permitted transfer will be
subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate
and/or tax planning purposes and without consideration (other
than nominal consideration). Notwithstanding anything else in
this Section 1.9.2 or in Section 1.9.3 to the contrary,
Incentive Stock Options and Restricted Stock Awards will be
subject to any and all transfer restrictions under the Code
applicable to such awards.
1.9.3 FURTHER EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and
transfer restrictions in Section 1.9.1 will not apply to:
(a) transfers to the Corporation,
(b) the designation of a beneficiary to receive benefits if
the Participant dies or, if the Participant has died,
transfers to or exercises by the Participant's
beneficiary, or, in the absence of a validly designated
beneficiary, transfers by will or the laws of descent and
distribution,
(c) transfers pursuant to a QDRO if approved or ratified by
the Committee,
(d) if the Participant has suffered a disability, permitted
transfers or exercises on behalf of the Participant by
the Participant's legal representative, or
(e) the authorization by the Committee of "cashless exercise"
procedures with third parties who provide financing for
the purpose of (or who otherwise facilitate) the exercise
of Awards consistent with applicable laws and the express
authorization of the Committee.
2. OPTIONS.
2.1 GRANTS. One or more Options may be granted under this Section 2 to any
Eligible Person. Each Option granted will be designated in the
applicable Award Agreement, by the Committee, as either an Incentive
Stock Option, subject to Section 2.3, or a Nonqualified Stock Option.
2.2 OPTION PRICE.
2.2.1 PRICING LIMITS. The purchase price per share of the Common
Stock covered by each Option will be determined by the
Committee at the time of the Award, but in the case of
Incentive Stock Options will not be less than 100% (110% in
the case of a Participant described in Section 2.3.4) of the
Fair Market Value of the
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Common Stock on the date of grant and in all cases will not be
less than the par value thereof.
2.2.2 PAYMENT PROVISIONS. The purchase price of any shares purchased
on exercise of an Option granted under this Section 2 will be
paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash or by
electronic funds transfer, (ii) by certified cashier's check
payable to the order of the Corporation; (iii) if authorized by
the Committee or specified in the applicable Award Agreement,
by a promissory note of the Participant consistent with the
requirements of Section 1.8; (iv) by notice and third party
payment in such manner as may be authorized by the Committee;
or (v) by the delivery of shares of Common Stock of the
Corporation already owned by the Participant, but the
Committee may in its absolute discretion limit the
Participant's ability to exercise an Award by delivering such
shares, and any shares delivered that were initially acquired
upon exercise of a stock option must have been owned by the
Participant at least six months as of the date of delivery.
Shares of Common Stock used to satisfy the exercise price of
an Option will be valued at their Fair Market Value on the
date of exercise. Without limiting the generality of the
foregoing, the Committee may provide that the Option can be
exercised and payment made by delivering a properly executed
exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Corporation the amount of
sale proceeds necessary to pay the exercise price and, unless
otherwise prohibited by the Committee or applicable law, any
applicable tax withholding under Section 6.5. The Corporation
will not be obligated to deliver certificates for the shares
unless and until it receives full payment of the exercise
price therefor and any related withholding obligations and
other conditions to exercise have been satisfied.
2.3 LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS.
2.3.1 $100,000 LIMIT. To the extent that the aggregate "FAIR MARKET
VALUE" of stock with respect to which incentive stock options
first become exercisable by a Participant in any calender year
exceeds $100,000, taking into account both Common Stock
subject to Incentive Stock Options under this Plan and stock
subject to incentive stock options under all other plans of
the Company or any parent corporation, such options will be
treated as Nonqualified Stock Options. For this purpose, the
"FAIR MARKET VALUE" of the stock subject to options will be
determined as of the date the options were awarded. In
reducing the number of options treated as incentive stock
options to meet the $100,000 limit, the most recently granted
options will be reduced first. To the extent a reduction of
simultaneously granted options is necessary to meet the
$100,000 limit, the Committee may, in the manner and to the
extent permitted by law, designate which shares of Common
Stock are to be treated as shares acquired pursuant to the
exercise of an Incentive Stock Option.
2.3.2 OPTION PERIOD. Subject to Section 1.6, each Option and all
rights thereunder will expire no later than 10 years after the
Award Date.
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2.3.3 OTHER CODE LIMITS. Incentive Stock Options may only be granted to
Eligible Employees of the Corporation or a Subsidiary that
satisfies the other eligibility requirements of the Code. There
will be imposed in any Award Agreement relating to Incentive Stock
Options such other terms and conditions as from time to time are
required in order that the Option be an "incentive stock option"
as that term is defined in Section 422 of the Code.
2.3.4 LIMITS ON 10% HOLDERS. No Incentive Stock Option may be granted to
any person who, at the time the Option is granted, owns (or is
deemed to own under Section 424(d) of the Code) shares of
outstanding Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation,
unless the exercise price of such Option is at least 110% of the
Fair Market Value of the stock subject to the Option and such
Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
2.3.5 ISO NOTICE OF SALE REQUIREMENT. Any Participant who exercises an
Incentive Stock Option shall give prompt written notice to the
Corporation of any sale or other transfer of the shares of Common
Stock acquired within one year after the exercise date or two
years after the date of grant.
2.4 OPTION REPRICING/CANCELLATION AND REGRANT/WAIVER OF RESTRICTIONS.
Subject to Section 1.4 and Section 6.6 and the specific limitations on
Awards contained in this Plan, the Committee from time to time may
authorize, generally or in specific cases only, for the benefit of any
Eligible Person any adjustment in the exercise or purchase price, the
vesting schedule, the number of shares subject to, or the restrictions
upon the term of, an Award granted under this Section 2 by cancellation
of an outstanding Award and a subsequent regranting of an Award, by
amendment, by substitution of an outstanding Award, by waiver or by
other legally valid means. Such amendment or other action may result
among other changes in an exercise or purchase price that is higher or
lower than the exercise or purchase price of the original or prior
Award, provide for a greater or lesser number of shares subject to the
Award, or provide for a longer or shorter vesting or exercise period.
2.5 OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS. Options and Stock Appreciation Rights may be granted to
Eligible Persons under this Plan in substitution for employee stock
options granted by other entities, in connection with a distribution,
merger or reorganization by or with the granting entity or an affiliated
entity, or the acquisition by the Company, directly or indirectly, of
all or a substantial part of the stock or assets of the employing entity.
3. STOCK APPRECIATION RIGHTS (INCLUDING LIMITED STOCK APPRECIATION RIGHTS).
3.1 GRANTS. The Committee may grant to any Eligible Person Stock
Appreciation Rights either concurrently with the grant of another Award
or in respect of an outstanding Award, in whole or in part, or
independently of any other Award. Any Stock
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Appreciation Right granted in connection with an Incentive Stock Option
will contain such terms as may be required to comply, with the
provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the holder otherwise agrees.
3.2 EXERCISE OF STOCK APPRECIATION RIGHTS.
3.2.1 EXERCISABILITY. Unless the Award Agreement or the Committee
otherwise provides, a Stock Appreciation Right related to another
Award will be exercisable at such times, and to the extent, that
the related Award will be exercisable.
3.2.2 EFFECT ON AVAILABLE SHARES. To the extent that a Stock
Appreciation Right is exercised, only the actual number of
delivered shares of Common Stock will be charged against the
maximum amount of Common Stock that may be delivered pursuant to
Awards under this Plan. The number of shares subject to the Stock
Appreciation Right and the related Option of the Participant will,
however, be reduced by the number of underlying shares as to which
the exercise related, unless the Award Agreement otherwise
provides.
3.2.3 STAND-ALONE SARS. A Stock Appreciation Right granted independently
of any other Award will be exercisable pursuant to the terms of
the Award Agreement but in no event earlier than six months after
the Award Date, except in the case of death or Total Disability.
3.2.4 PROPORTIONATE REDUCTION. If an SAR extends to less than all the
shares covered by the related Award and if a portion of the
related Awards is thereafter exercised, the number of shares
subject to the unexercised SAR shall be reduced only if and to the
extent that the remaining number of shares covered by such related
Award is less than the remaining number of shares subject to such
SAR.
3.3 PAYMENT.
3.3.1 AMOUNT. Unless the Committee otherwise provides, upon exercise of
a Stock Appreciation Right and the attendant surrender of an
exercisable portion of any related Award, the Participant will be
entitled to receive, subject to Section 6.5, payment of an amount
determined by multiplying:
(a) the difference (which shall not be less than zero) obtained
by subtracting the exercise price per share of Common Stock
under the related Award (if applicable) or the initial share
value specified in the Award from the Fair Market Value of a
share of Common Stock on the date of exercise of the Stock
Appreciation Right, by
(b) the number of shares with respect to which the Stock
Appreciation Right has been exercised.
3.3.2 FORM OF PAYMENT. The Committee, in its sole discretion, will
determine the form in which payment will be made of the amount
determined under Section 3.3.1 above, either solely in cash,
solely in shares of Common Stock (valued at Fair
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Market Value on the date of exercise of the Stock Appreciation
Right), or partly in such shares and partly in cash, but the
Committee will have determined that such exercise and payment are
consistent with applicable law. If the Committee permits the
Participant to elect to receive cash or shares (or a combination
thereof) on such exercise, any such election will be subject to
such conditions as the Committee may impose.
3.4 LIMITED STOCK APPRECIATION RIGHTS. The Committee may grant to any
Eligible Person Stock Appreciation Rights exercisable only upon or in
respect of a change in control or any other specified event ("LIMITED
SARs") and such Limited SARs may relate to or operate in tandem or
combination with, or substitution for, Options, other SARs or other
Awards (or any combination thereof), and may be payable in cash or
shares based on the spread between the base price of the SAR and a
price based upon or equal to the Fair Market Value of the Common Stock
during a specified period or at a specified time within a specified
period before, after or including the date of such event.
4. RESTRICTED STOCK AWARDS.
4.1 GRANTS. The Committee may grant one or more Restricted Stock Awards to
any Eligible Person. Each Restricted Stock Award Agreement will specify
the number of shares of Common Stock to be issued to the Participant,
the date of such issuance, the consideration for such shares (but not
less than the minimum lawful consideration under applicable state law)
to be paid by the Participant, the extent (if any) to which and the
time (if ever) at which the Participant will be entitled to dividends,
voting and other rights in respect of the shares prior to vesting, and
the restrictions (which may be based on performance criteria, passage
of time or other factors or any combination thereof) imposed on such
shares and the conditions of release or lapse of such restrictions.
Such restrictions will not lapse earlier than six months after the
Award Date, except to the extent the Committee may otherwise provide.
Stock certificates evidencing shares of Restricted Stock pending the
lapse of the restrictions ("RESTRICTED SHARES") will bear a legend
making appropriate reference to the restrictions imposed hereunder and
will be held by the Corporation or by a third party designated by the
Committee until the restrictions on such shares have lapsed and the
shares have vested in accordance with the provisions of the Award and
Section 1.7. Upon issuance of the Restricted Stock Award, the
Participant may be required to provide such further assurances and
documents as the Committee may require to enforce the restrictions.
4.2 RESTRICTIONS.
4.2.1 PRE-VESTING RESTRAINTS. Except as provided in Sections 4.1 and
1.9, restricted shares comprising any Restricted Stock Award may
not be sold, assigned, transferred, pledged or otherwise disposed
of or encumbered, either voluntarily or involuntarily, until the
restrictions on such shares have lapsed and the shares have become
vested.
4.2.2 DIVIDEND AND VOTING RIGHTS. Unless otherwise provided in the
applicable Award Agreement, a Participant receiving a Restricted
Stock Award will be
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entitled to cash dividend and voting rights for all shares issued
even though they are not vested, but such rights will terminated
immediately as to any Restricted Shares which cease to be eligible
for vesting.
4.2.3 CASH PAYMENTS. If the Participant has paid or received cash
(including any dividends) in connection with the Restricted Stock
Award, the Award Agreement will specify whether and to what extent
such cash will be returned (with or without an earnings factor)
as to any restricted shares that cease to be eligible for vesting.
4.3 RETURN TO THE CORPORATION. Unless the Committee otherwise expressly
provides, Restricted Shares that remain subject to restrictions at the
time of termination of employment, or are subject to other conditions to
vesting that have not been satisfied by the time specified in the
applicable Award Agreement, will not vest and will be returned to the
Corporation in such manner and on such terms as the Committee provides.
5. PERFORMANCE SHARE AWARDS AND STOCK BONUSES.
5.1 GRANTS OF PERFORMANCE SHARE AWARDS. The Committee may grant Performance
Share Awards to Eligible Employees based upon such factors as the
Committee deems relevant in light of the specific type and terms of the
award. An Award Agreement will specify the maximum number of shares of
Common Stock (if any) subject to the Performance Share Award, the
consideration (but not less than the minimum lawful consideration) to be
paid for any such shares as may be issuable to the Participant, the
duration of the Award and the conditions upon which delivery of any
shares or cash to the Participant will be based. The amount of cash or
shares or other property that may be deliverable pursuant to such Award
will be based upon the degree of attainment over a specified period of
not more than 10 years (a "PERFORMANCE CYCLE") as may be established by
the Committee of such measure(s) of the performance of the company (or
any part thereof) or the Participant as may be established by the
Committee. The Committee may provide for full or partial credit, prior
to completion of such performance cycle or their attainment of the
performance achievement specified in the Award, in the event of the
Participant's death, Retirement, or Total Disability, a Change in
Control Event or in such other circumstances as the Committee
(consistent with Section 6.10.3(b), if applicable) may determined.
5.2 SPECIAL PERFORMANCE-BASED SHARE AWARDS. Options or SAR's granted with an
exercise price not less than Fair Market Value at the applicable date of
grant for Section 162(m) purposes to Eligible Employees which otherwise
satisfy the conditions to deductibility under Section 162(m) are deemed
"Qualifying Awards". Without limiting the generality of the foregoing,
and in addition to Qualifying Awards granted under other provisions of
this Plan, other performance-based awards within the meaning of Section
162(m) ("PERFORMANCE-BASED AWARDS"), whether in the form of restricted
stock, performance stock, phantom stock or other rights, the vesting of
which depends on the performance of the Company on a consolidated,
segment, subsidiary, or division basis, with reference to revenue
growth, net earnings (before or after taxes or before or after taxes,
interest, depreciation, and/or amortization), cash flow, return on
equity or on assets or on net
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investment, stock appreciation, total shareholder return, or cost
containment or reduction, or any combination thereof (the "BUSINESS
CRITERIA") relative to preestablished performance goals, may be granted
under this Plan. To the extent so defined, these terms are used as
applied under generally accepted accounting principles and in the
Company's financial reporting. The applicable business criterion or
criteria and the specific performance goals must be approved by the
Committee in advance of applicable deadlines under the Code and while
the performance relating to such goals remains substantially uncertain.
The applicable performance measurement period may not be less than one
(except as provided in Section 1.6) not more than 10 years. Other types
of performance and non-performance awards may also be granted under the
other provisions of this Plan. The following provisions related to all
Performance-Based Awards (other than Qualifying Awards) granted under
this Plan:
5.2.1 ELIGIBLE CLASS. The eligible class of persons for Awards under
this Section 5.2 is executive officers of the Corporation.
5.2.2 MAXIMUM AWARD. Subject to Section 1.4.2, in no event will grants
in any calendar year to any one individual under this Section 5.2
relate to more than 600,000 shares or, (if payable solely in
cash) a cash amount of more than $1,000,000.
5.2.3 COMMITTEE CERTIFICATION. To the extent required by Section
162(m), before any Performance-Based Award under this Section 5.2
is paid, the Committee must certify that the material terms of
the Performance-Based Award were satisfied.
5.2.4 TERMS AND CONDITIONS OF AWARDS. The Committee will have
discretion to determine the restrictions or other limitations of
the individual Awards under this Section 5.2 (including the
authority to reduce Awards, payouts or vesting or to pay no
Awards, in its sole discretion, if the Committee preserves such
authority at the time of grant by language to this effect in its
authorizing resolutions or otherwise).
5.2.5 STOCK PAYOUT FEATURES. In lieu of cash payment of an Award, the
Committee may require or allow all or a portion of the Award to
be paid in the form of stock, Restricted Shares, an Option, or
another Award.
5.2.6 ADJUSTMENTS FOR MATERIAL CHANGES. Performance goals or other
features of an Award under this Section 5.2 may provide that they
(i) shall be adjusted to reflect a change in corporate
capitalization, a corporate transaction (such as a
reorganization, combination, separation, or merger) or a complete
or partial corporate liquidation, or (ii) shall be calculated
either without regard for or to reflect any change in accounting
policies or practices affecting the Company and/or the business
criteria or performance goals or targets, or (iii) shall be
adjusted for any other circumstance or event, or (iv) any
combination of (i) through (iii), but only the to extent in each
case that such adjustment or determination in respect of
Performance-Based Awards would be consistent with
11
the requirements of Section 162(m) to qualify as
performance-based compensation.
5.3 GRANTS OF STOCK BONUSES. The Committee may grant a Stock Bonus to any
Eligible Person to reward exceptional or special services, contributions
or achievements in the manner and on such terms and conditions
(including any restrictions on such shares) as determined from time to
time by the Committee. The number of shares so awarded will be
determined by the Committee. The Award may be granted independently or
in lieu of a cash bonus.
5.4 DEFERRED PAYMENTS. The Committee may authorize for the benefit of any
Eligible Person the deferral of any payment of cash or shares that may
become due or of cash otherwise payable under this Plan, and provide for
accredited benefits thereon based upon such deferment, at the election
or at the request of such Participant, subject to the other terms of
this Plan. Such deferral will be subject to such further conditions,
restrictions or requirements as the Committee may impose, subject to any
then vested rights of Participants.
5.5 CASH BONUS AWARDS.
5.5.1 PERFORMANCE GOALS. The Committee may establish a program of
annual incentive awards that are payable in cash to Eligible
Persons based upon the extent to which performance goals are met
during the performance period. The performance goals may depend
upon the performance of the Company on a consolidated, subsidiary
division basis with reference to any one or combination of the
business criteria (as such term is used in Section 5.2). In
addition, the award may depend upon the Eligible Person's
individual performance.
5.5.2 PAYMENT IN RESTRICTED STOCK. In lieu of cash payment of an
Award, the Committee may require or allow all or a portion of the
Award to be paid in the form of stock, Restricted Stock, an
Option or other Award.
6. OTHER PROVISIONS.
6.1 RIGHTS OF ELIGIBLE PERSONS, PARTICIPANTS AND BENEFICIARIES.
6.1.1 EMPLOYMENT STATUS. Status as an Eligible Person will not be
construed as a commitment that any Award will be granted under
this Plan to an Eligible Person or to Eligible Persons generally.
6.1.2 NO EMPLOYMENT CONTRACT. Nothing contained in this Plan (or in
any other documents related to this Plan or to any Award) will
confer upon any Eligible Person or other Participant any right to
continue in the employ or other service of the Company or
constitute any contract or agreement of employment or other
service, nor will interfere in any way with the right of the
Company to otherwise change such person's compensation or other
benefits or to terminate the employment of such person, with or
without cause, but nothing contained in this
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Plan or any related document will adversely affect any
independent contractual right of such person without the person's
consent.
6.1.3 PLAN NOT FUNDED. Awards payable under this Plan will be payable
in shares or from the general assets of the Corporation, and
(except as provided in Section 1.4.3) no special or separate
reserve, fund or deposit will be made to assure payment of such
Awards. No Participant, Beneficiary or other person will have any
right, title or interest in any fund or in any specific asset
(including shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Award hereunder.
Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor any
action taken pursuant to the provisions of this Plan will create,
or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any Participant, Beneficiary
or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive payment pursuant to any
Award hereunder, such right will be no greater than the right of
any unsecured general creditor of the Company.
6.1.4 CHARTER DOCUMENTS. The Articles of Incorporation and By-Laws of
the Corporation, as either of them may be amended from time to
time, may provide for additional restrictions and limitations
with respect to the Common Stock (including additional
restrictions and limitations on the transfer of shares). To the
extent that these restrictions and limitations are greater than
those set forth in this Plan or any Award Agreement, such
restrictions and limitations shall apply to any shares of Common
Stock acquired pursuant to the exercise of Awards and are
incorporated herein by reference.
6.2 EFFECTS OF TERMINATION OF EMPLOYMENT; DISCRETIONARY PROVISIONS.
6.2.1 TERMINATION OF EMPLOYMENT OR SERVICES. The Committee shall
establish in respect of each Award the Participant's rights and
benefits (if any) to the Award, which shall be set forth in the
related Award Agreement, should the Participant's employment by
or services to the Company terminate and in so doing may make
distinctions based upon the cause of termination, the nature of
the Award, or otherwise.
6.2.2 COMMITTEE DISCRETION. Notwithstanding Section 6.2.1, in the
event of, or in anticipation of, a termination of employment with
the Company for any reason, other than discharge for cause, the
Committee may increase the portion of the Participant's Award
available to the Participant, or Participant's Beneficiary or
Personal Representative, as the case may be, or, subject to the
provisions of Section 1.6, extend the exercisability period upon
such terms as the Committee determines and expressly sets forth
in or by amendment to the Award Agreement.
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6.3 ADJUSTMENTS; ACCELERATION
6.3.1 ADJUSTMENTS. The following provisions will apply if any
extraordinary dividend or other extraordinary distribution occurs
in respect of the Common Stock (whether in the form of cash,
Common Stock, other securities, or other property), or any
reclassification, recapitalization, stock split (including a
stock split in the form of a stock dividend), reverse stock
split, reorganization, merger, combination, consolidation,
split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction (or event
in respect of the Common Stock) or a sale of substantially all
the assets of the Corporation as an entirety occurs. The
Committee will, in such manner and to such extent (if any) as it
deems appropriate and equitable.
(a) proportionately adjust any or all of (i) the number and type
of shares of Common Stock (or other securities) that
thereafter may be made the subject of Awards (including the
specific maxima and numbers of shares set forth elsewhere in
this Plan), (ii) the number, amount and type of shares of
Common Stock (or other securities or property) subject to
any or all outstanding Awards, (iii) the grant, purchase, or
exercise price of any or all outstanding Awards, (iv) the
securities, cash or other property deliverable upon exercise
of any outstanding Awards, or (v) the performance standards
appropriate to any outstanding Awards, or
(b) in the case of an extraordinary dividend or other
distribution, recapitalization, reclassification, merger,
reorganization, consolidation, combination, sale of assets,
split up, exchange, or spin off, make provision for a cash
payment or for the substitution or exchange of any or all
outstanding Awards or the cash, securities or property
deliverable to the holder of any or all outstanding Awards
based upon the distribution or consideration payable to
holders of the Common Stock upon or in respect of such event.
In each case, with respect to Incentive Stock Options, no such
adjustment will be made that would cause this Plan to violate
Section 422 or 424(a) of the Code or any successor provisions
without the written consent of the holders materially adversely
affected thereby. In any of such events, the Committee may take
such action sufficiently prior to such event if necessary to
permit the Participant to realize the benefits intended to be
conveyed with respect to the underlying shares in the same manner
as is available to shareholders generally.
6.3.2 POSSIBLE ACCELERATION OF AWARDS UPON CHANGE IN CONTROL. Upon
the occurrence of a Change in Control Event, the Committee
may provide that:
(a) each Option and Stock Appreciation Right will become
immediately vested and exercisable;
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(b) Restricted Stock will immediately vest free of restrictions;
and
(c) each Performance Share Award become payable to the
Participant;
subject, in each case, to the Committee's authority to provide
that certain Awards will not accelerate or determine that only
certain or limited benefits under any or all Awards will be
accelerated and the extent to which they will be accelerated,
and/or establish a different time in respect of such Change in
Control Event for such acceleration.
Notwithstanding the foregoing, the Committee may expressly
provide for the accelerated vesting and/or payment of an Award in
the applicable Award Agreement and may accord any Eligible Person
a right to refuse any acceleration, whether pursuant to the Award
Agreement or otherwise, in such circumstances as the Committee
may approve. Any acceleration of Awards will comply with
applicable legal requirements.
6.3.3 POSSIBLE EARLY TERMINATION OF AWARDS. In the event of (i) a
dissolution of the Corporation, or (ii) an event described in
Section 6.3.1 that the Corporation does not survive, or (iii) the
consummation of an event described in Section 6.3.1 involving a
Change in Control Event approved by the Board, each Option or
other right (whether or not vested and/or exercisable at that
time, but only to the extent not previously exercised) will
terminate; subject to any provision that has been expressly made
by the Committee through a plan of reorganization approved by the
Board or otherwise for the survival, substitution, assumption,
exchange or other settlement of such Option or right.
6.4 COMPLIANCE WITH LAWS.
6.4.1 GENERAL. This Plan, the granting and vesting of Awards under
this Plan and the offer, issuance and delivery of shares of
Common Stock and/or the payment of money under this Plan or under
Awards granted hereunder are subject to compliance with all
applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law,
and federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the
opinion of counsel for the Corporation, be necessary or advisable
in connection therewith. Any securities delivered under this Plan
will be subject to such restrictions, and to any restrictions the
Committee may require to preserve a pooling of interests under
generally accepted accounting principles, and the person
acquiring such securities will, if requested by the Corporation,
provide such assurances and representatives to the Corporation as
the Corporation may deem necessary or desirable to assure
compliance with all applicable legal requirements.
6.4.2 COMPLIANCE WITH SECURITIES LAWS. No Participant shall sell,
pledge or otherwise transfer shares of Common Stock acquired
pursuant to an Award or any interest in such shares except in
accordance with the express terms of this Plan and the
15
applicable Award Agreement. Any attempted transfer in violation
of this Section 6.4 shall be void and of no effect. Without in
any way limiting the provisions set forth above, no Participant
shall make any disposition of all or any portion of shares
acquired pursuant to an Award, except in compliance with all
applicable federal and state securities laws and unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(b) such disposition is made in accordance with Rule 144 under
the Securities Act; or
(c) such Participant notifies the Corporation of the proposed
disposition and furnishes the Corporation with a statement
of the circumstances surrounding the proposed disposition,
and, if requested by the Corporation, such Participant
furnishes the Corporation with an opinion of counsel
acceptable to the Corporation's counsel, that such
disposition will not require registration under the
Securities Act and will be in compliance with all applicable
state securities laws.
Notwithstanding anything else herein to the contrary, the Company
has no obligation to register the Common Stock or file any
registration statement under either federal or state securities
laws.
6.5 TAX WITHHOLDING.
6.5.1 PROVISION FOR TAX WITHHOLDING OFFSET. Upon any exercise,
vesting, or payment of any Award or upon the disposition of
shares of Common Stock acquired pursuant to the exercise of an
Incentive Stock Option prior to satisfaction of the holding
period requirements of Section 422 of the Code, the Company shall
have the right at its option to (i) require the Participant (or
Personal Representative or Beneficiary, as the case may be) to
pay or provide for payment of the amount of any taxes which the
Company may be required to withhold with respect to such Award
event or payment, or (ii) deduct from any amount payable in cash
the amount of any taxes which the Company may be required to
withhold with respect to such cash payment. In any case where a
tax is required to be withheld in connection with the delivery of
shares of Common Stock under this Plan, the Committee may in its
sole discretion (subject to Section 6.4) grant (either at the
time of the Award or thereafter) to the Participant the right to
elect, pursuant to such rules and subject to such conditions as
the Committee may establish, to have the Corporation reduce the
number of shares to be delivered by (or otherwise reacquire) the
appropriate number of shares valued at their then Fair Market
Value, to satisfy such withholding obligation. In no event will
the value of shares withheld by the Corporation exceed the
minimum amount of required withholding under applicable law.
16
6.5.2 TAX LOANS. If so provided in the Award Agreement, the Company
may, to the extent permitted by law, authorize a loan to an
Eligible Person in the amount of any taxes that the Company may
be required to withhold with respect to shares of Common Stock
received (or disposed of, as the case may be) pursuant to a
transaction described in Section 6.6.1. Such a loan will be for a
term, at a rate of interest and pursuant to such other terms and
conditions as the Company, under applicable law, may establish
and such loan need not comply with the provisions of Section 1.8.
6.6 PLAN AMENDMENT, TERMINATION AND SUSPENSION.
6.6.1 BOARD AUTHORIZATION. The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan, in whole
or in part. No Awards may be granted during any suspension of
this Plan or after termination of this Plan, but the Committee
will retain jurisdiction as to Awards then outstanding in
accordance with the terms of this Plan.
6.6.2 SHAREHOLDER APPROVAL. To the extent then required under Sections
422 and 424 of the Code or any other applicable law, or deemed
necessary or advisable by the Board, any amendment to this Plan
shall be subject to shareholder approval.
6.6.3 AMENDMENTS TO AWARDS. Without limiting any other express
authority of the Committee under but subject to the express
limits of this Plan, the Committee by agreement or resolution may
waive conditions of or limitations on Awards to Eligible Persons
that the Committee in the prior exercise of its discretion has
imposed, without the consent of a Participant, and may make other
changes to the terms and conditions of Awards that do not affect
in any manner materially adverse to the Participant, the
Participant's rights and benefits under an Award; provided that
changes contemplated by Section 6.3 will not be deemed to
constitute changes or amendments for purposes of this Section 6.6.
6.6.4 LIMITATIONS ON AMENDMENTS TO PLAN AND AWARDS. No amendment,
suspension or termination of this Plan or change of or affecting
any outstanding Award will, without written consent of the
Participant, affect in any manner materially adverse to the
Participant any rights or benefits of the Participant or
obligations of the Corporation under any Award granted under this
Plan prior to the effective date of such change. Changes
contemplated by Section 6.3 will not be deemed to constitute
changes or amendments for purposes of this Section 6.6.
6.7 PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise expressly authorized
by the Committee or this Plan, a Participant will not be entitled to any
privilege of stock ownership as to any shares of Common Stock not
actually delivered to and held of record by the Participant. No
adjustment will be made for dividends or other rights as a shareholder
for which a record date is prior to such date of delivery.
17
6.8 EFFECTIVE DATE OF THE PLAN. This Plan is effective upon its approval by
the Board (the "EFFECTIVE DATE"), subject to approval by the
shareholders of the Corporation within twelve months after the date of
such Board approval.
6.9 TERM OF THE PLAN. Unless earlier terminated by the Board, this Plan will
terminate at the close of business on the day before the tenth
anniversary of the Effective Date (the "TERMINATION DATE") and no Awards
may be granted under this Plan after that date. Unless otherwise
expressly provided in this Plan or in an applicable Award Agreement, any
Award granted prior to the Termination Date may extend beyond such date,
and all authority of the Committee with respect to Awards hereunder,
including the authority to amend an Award, will continue during any
suspension of this Plan and in respect of Awards outstanding on the
Termination Date.
6.10 GOVERNING LAW/CONSTRUCTION/SEVERABILITY.
6.10.1 CHOICE OF LAW. This Plan, the Awards, all documents evidencing
Awards and all other related documents will be governed by, and
construed in accordance with, the laws of the state of
California.
6.10.2 SEVERABILITY. If a court of competent jurisdiction holds any
provision invalid and unenforceable, the remaining provisions of
this Plan will continue in effect.
6.10.3 PLAN CONSTRUCTION.
(a) RULE 16b-3. It is the intent of the Corporation that
transactions involving the Awards under this Plan, in the
ease of Participants who are or may be subject to Section 16
of the Exchange Act, satisfy to the extent feasible the
requirements for applicable exemptions under Rule 16 so that
such persons (unless they otherwise agree) will be entitled
to the benefits of Rule 16b-3 or other exemptive rules under
Section 16 of the Exchange Act in respect of those
transactions and will not be subjected to avoidable liability
thereunder.
(b) SECTION 162(m). It is the further intent of the Company that
Options or SARs with an exercise or base price not less than
Fair Market Value on the date of grant and Performance-Based
Awards under Section 5.2 of this Plan that are granted to or
held by a person subject to Section 162(m) will qualify as
performance-based compensation under Section 162(m) to the
extent that the Committee authorizing the Award (or the
payment thereof, as the case may be) satisfies the
administrative requirements thereof. This Plan shall be
interpreted consistent with such intent.
6.11 CAPTIONS. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings will not be deemed in any way material or
relevant to the construction or interpretation of this Plan or any
provision thereof.
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6.12 EFFECT OF CHANGE OF SUBSIDIARY STATUS. For purposes of this Plan and any
Award hereunder, if an entity ceases to be a Subsidiary, a termination
of employment and service will be deemed to have occurred with respect
to each Eligible Person in respect of such Subsidiary who does not
continue as an Eligible Person in respect of another entity within the
Company.
6.13 NON-EXCLUSIVITY OF PLAN. Nothing in this Plan will limit or be deemed to
limit the authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to the
Common Stock, under any other plan or authority.
6.14 NO RESTRICTION ON CORPORATE POWERS. The existence of the Plan and the
Awards granted hereunder shall not affect or restrict in any way the
right or power of the Board or the shareholders of the Corporation to
make or authorize any adjustment, recapitalization, reorganization or
other change in the Corporation's capital structure or its business, any
merger or consolidation of the Corporation, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting
the Corporation's capital stock or the rights thereof, the dissolution
or liquidation of the Corporation or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.
6.15 EFFECT ON OTHER BENEFITS. Payments and other benefits received by a
Participant under an Award made pursuant to this Plan shall not be
deemed a part of a Participant's regular, recurring compensation for
purposes of the termination, indemnity or severance pay law of any
country or state and shall not be included in, nor have any effect on,
the determination of benefits under any other employee benefit plan or
similar arrangement provided by the Corporation or a Subsidiary unless
expressly so provided by such other plan or arrangements. Awards under
this Plan may be made in combination with or in tandem with, or as
alternatives to, grants, awards or payments under any other Corporation
or Subsidiary plan.
7. DEFINITIONS.
"AWARD" means an award of any Option, Stock Appreciation Right, Restricted
Stock, Stock Bonus, performance share award, dividend equivalent or deferred
payment right or other right or security that would constitute a "derivative
security" under Rule 16a-1(c) of the Exchange Act, or any combination
thereof, whether alternative or cumulative, authorized by and granted under
this Plan.
"AWARD AGREEMENT" means any writing setting forth the terms of an Award that
has been authorized by the Committee.
"AWARD DATE" means the date upon which the Committee took the action granting
an Award or such later date as the Committee designates as the Award Date at
the time of the Award.
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"BENEFICIARY" means the person, persons, trust or trusts designated by a
Participant, or, in the absence of a designation, entitled by will or the
laws of descent and distribution, to receive the benefits specified in the
Award Agreement and under this Plan if the Participant dies, and means the
Participant's executor or administrator if no other Beneficiary is designated
and able to act under the circumstances.
"BOARD" means the Board of Directors of the Corporation.
"CHANGE IN CONTROL EVENT" means any of the following:
(a) Approval by the shareholders of the Corporation of the dissolution
or liquidation of the Corporation;
(b) Approval by the shareholders of the Corporation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more
entities that are not Subsidiaries or other affiliates, as a result of
which less than 50% of the outstanding voting securities of the
surviving or resulting entity immediately after the reorganization are,
or will be, owned, directly or indirectly, by shareholders of the
Corporation immediately before such reorganization (assuming for
purposes of such determination that there is no change in the record
ownership of the Corporation's securities from the record date for such
approval until such approval until such reorganization and that such
record owners hold no securities of the other parties to such
reorganization), but including in such determination any securities of
the other parties to such reorganization held by affiliates of the
Corporation);
(c) Approval by the shareholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a
person or entity that is not a Subsidiary or other affiliate; or
(d) Any "PERSON" (as such term is used in Sections (13(d) and 14(d) of
the Exchange Act but excluding any person described in and satisfying
the conditions of Rule 13d-1(b)(1) thereunder), other than a Current
Affiliate, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 50% of the combined voting power of
the Corporation's then outstanding securities entitled to then vote
generally in the election of directors of the Corporation; provided,
however, that a Change in Control Event will not be deemed to have
occurred if a Current Affiliate transfers to an organization described
under Section 501 of the Code beneficial ownership of more than 50% of
the combined voting power of the Corporation's then outstanding
securities entitled to then vote generally in the election of directors
of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
"COMMISSION" means the Securities and Exchange Commission.
"COMMITTEE" means the Board or any one or more committees of director(s)
appointed by the Board to administer this Plan with respect to the Awards
within the scope of authority delegated by the Board. At least one committee
will be comprised only of two or more directors, each of
20
whom, in respect of any decision involving both (i) a Participant affected by
the decision who is or may be subject to Section 162(m), and (ii)
compensation intended as performance-based compensation within the meaning of
Section 162(m), will be Disinterested; in acting on any transaction with or
for the benefit of a Section 16 Person, the participating members of such
Committee also shall be Non-Employee Directors within the meaning of Rule
16b-3.
"COMMON STOCK" means the Common Stock of the Corporation and such other
securities or property as may become the subject of Awards, or become subject
to Awards, pursuant to an adjustment made under Section 6.3 of this Plan.
"COMPANY" means, collectively, the Corporation and its Subsidiaries.
"CORPORATION" means Communication TeleSystems International, a California
corporation, and its successors.
"CURRENT AFFILIATE" means Roger B. Abbott, Rosalind M. Abbott, Gold & Appel
Transfer S.A., Walt Anderson, Atocha, L.P., Tom Cirrito, and/or Edward S.
Soren, or any of their affiliates (within the meaning of the Exchange Act),
successors, heirs, descendants or members of their immediate family.
"DISINTERESTED" means a director who is an "outside director" within the
meaning of Section 162(m) and any applicable legal or regulatory requirements.
"ELIGIBLE EMPLOYEE" means an officer (whether or not a director) or employee
of the Company.
"ELIGIBLE PERSON" means an Eligible Employee, or any Other Eligible Person,
as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time.
"FAIR MARKET VALUE" on any date means (a) if the stock is listed or admitted
to trade on a national securities exchange, the closing price of the stock on
the Composite Tape, as published in the Western Edition of THe Wall Street
Journal, of the principal national securities exchange on which the stock is
so listed or admitted to trade, on such date, or, if there is no trading of
the stock on such date, then the closing price of the stock as quoted on such
Composite Tape on the next preceding date on which there was trading in such
shares; (b) if the stock is not listed or admitted to trade on a national
securities exchange, the last/closing price for the stock on such date, as
furnished by the National Association of Securities Dealers, Inc. ("NASD")
through the NASDAQ National Market Reporting System or a similar organization
if the NASD is no longer reporting such information; (c) if the stock is not
listed or admitted to trade on a national securities exchange and is not
reported on the National Market Reporting System, the mean between the bid
and asked price for the stock on such date, as furnished by the NASD or a
similar organization; or (d) if the stock is not listed or admitted to trade
on a national securities exchange, is not reported on the National Market
Reporting System and if bid and asked prices for the stock are not furnished
by the NASD or a similar organization, the value as established by the
Committee at such time for purposes of this Plan.
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"INCENTIVE STOCK OPTION" means an Option that is designated and intended as
an incentive stock option within the meaning of Section 422 of the Code, the
award of that contains such provisions (including but not limited to the
receipt of shareholder approval of this Plan, if the award is made prior to
such approval) and is made under such circumstances and to such persons as
may be necessary to comply with that section.
"NONQUALIFIED STOCK OPTION" means an Option that is designated as a
Nonqualified Stock Option and will include any Option intended as an
Incentive Stock Option that fails to meet the applicable legal requirements
thereof. Any Option granted hereunder that is not designated as an incentive
stock option will be deemed to be designated a nonqualified stock option
under this Plan and not an incentive stock option under the Code.
"NON-EMPLOYEE DIRECTOR" means a member of the Board of Directors of the
Corporation who is not an officer or employee of the Company.
"OPTION" means an option to purchase Common Stock granted under this Plan.
The Committee will designate any Option granted to an Eligible Person as a
Nonqualified Stock Option or an Incentive Stock Option.
"OTHER ELIGIBLE PERSON" means (i) any individual consultant or advisor or
agent who renders or has rendered BONA FIDE services (other than services in
connection with the offering or sale of securities of the Company in a
capital raising transaction) to the Company, and who (to the extent provided
in the next sentence) is selected to participate in this Plan by the
Committee; or (ii) any director of the Corporation. A person who is neither
an employee, officer, nor director who provides BONA FIDE services to the
Company may be selected as an Other Eligible Person only if such person's
participation in this Plan would not adversely affect (a) the Corporation's
eligibility to use Form S-8 to register under the Securities Act, the
offering of shares issuable under this Plan by the Company, or (b) the
Corporation's compliance with any other applicable laws.
"PARTICIPANT" means an Eligible Person who has been granted an Award under
this Plan.
"PERFORMANCE SHARE AWARD" means an Award of a right to receive shares of
Common Stock under Section 5.1, or to receive shares of Common Stock or other
compensation (including cash) under Section 5.2, the issuance or payment of
which is contingent upon, among other conditions, the attainment of
performance objectives specified by the Committee.
"PERSONAL REPRESENTATIVE" means the person or persons who, upon the
disability or incompetence of a Participant, has acquired on behalf of the
Participant, by legal proceeding or otherwise, the power to exercise the
rights or receive benefits under this Plan by virtue of having become the
legal representative of the Participant.
"PLAN" means this Communication TeleSystems International 1999 Stock Option
Plan/Stock Issuance Plan, as it may hereafter be amended from time to time.
"QDRO" means a qualified domestic relations order as defined in Section
414(p) of the Code or Title I, Section 206(d)(3) of the Employee Retirement
Income Security Act of 1974, as amended )to the same extent as if this Plan
were subject thereto), or the applicable rules thereunder.
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"RESTRICTED SHARES" or "RESTRICTED STOCK" means shares of Common Stock
awarded to a Participant under this Plan, subject to payment of such
consideration, if any, and such conditions on vesting (which may include,
among others, the passage of time, specified performance objectives or other
factors) and such transfer and other restrictions as are established in or
pursuant to this Plan and the related Award Agreement, for so long as such
shares remain unvested under the terms of the applicable Award Agreement.
"RULE 16b-3" means Rule 16b-3 as promulgated by the Commission pursuant to
the Exchange Act, as amended from time to time.
"SECTION 16 PERSON" means a person subject to Section 16(a) of the Exchange
Act.
"SECTION 162(m)" means Section 162(m) of the Code and the regulations
promulgated thereunder.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"STOCK APPRECIATION RIGHT" or "SAR" means a right authorized under this Plan
to receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Common
Stock.
"STOCK BONUS" means an Award of shares of Common Stock granted under this
Plan for no consideration other than past services and without restriction
other than such transfer or other restrictions as the Committee may deem
advisable to assure compliance with law.
"SUBSIDIARY" means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Corporation.
"TOTAL DISABILITY" means a disability where the Participant is unable to
effectively engage in the material activities required for the Participant's
position with the Company be reason of any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted
or can be expected to last for a period of 180 consecutive days of for shorter
periods aggregating 180 days in any consecutive 12 month period.
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