EXHIBIT 4.1
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SPIRE CORPORATION
2007 STOCK EQUITY PLAN
1. PURPOSE. The purpose of the Spire Corporation 2007 Stock Equity Plan
(the "2007 Plan") is to assist Spire Corporation, a Massachusetts corporation
(the "Company") and its Related Entities (as hereinafter defined) in attracting,
motivating, retaining and rewarding high-quality executives and other employees,
officers, directors, consultants and other persons who provide services to the
Company or its Related Entities by enabling such persons to acquire or increase
a proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's shareholders, and providing
such persons with performance incentives to expend their maximum efforts in the
creation of shareholder value.
2. DEFINITIONS. For purposes of the 2007 Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "AWARD" means any Option, Stock Appreciation Right, Restricted
Stock Award, Deferred Stock Award, Share granted as a bonus or in lieu of
another Award, Dividend Equivalent, Other Stock-Based Award or Performance
Award, together with any other right or interest, granted to a Participant under
the 2007 Plan.
(b) "AWARD AGREEMENT" means any written agreement, contract or other
instrument or document evidencing any Award granted by the Committee hereunder.
(c) "BENEFICIARY" means the person, persons, trust or trusts that have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
2007 Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon
a Participant's death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive such benefits.
(d) "BENEFICIAL OWNER" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act and any successor to such Rule.
(e) "BOARD" means the Company's Board of Directors.
(f) "CAUSE" shall, with respect to any Participant, have the meaning
specified in the Award Agreement. In the absence of any definition in the Award
Agreement, "Cause" shall have the equivalent meaning or the same meaning as
"cause" or "for cause" set forth in any employment, consulting, or other
agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such agreement or any such
definition in such agreement, such term shall mean (i) the failure by the
Participant to perform, in a reasonable manner, his or her duties as assigned by
the Company or a Related Entity, (ii) any violation or breach by the Participant
of his or her employment, consulting or other similar agreement with the Company
or a Related Entity, if any, (iii) any violation or breach by the Participant of
any non-competition, non-solicitation, non-disclosure and/or other similar
agreement with the Company or a Related Entity, (iv) any act by the Participant
of dishonesty or bad faith with respect to the Company or a Related Entity, (v)
use of alcohol, drugs or other similar substances in a manner that adversely
affects the Participant's work performance, or (vi) the commission by the
Participant of any act, misdemeanor, or crime reflecting unfavorably upon the
Participant or the Company or any Related Entity. The good faith determination
by the Committee of whether the Participant's Continuous Service was terminated
by the Company for "Cause" shall be final and binding for all purposes
hereunder.
(g) "CHANGE IN CONTROL" means a Change in Control as defined in
Section 9(b) of the 2007 Plan.
(h) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "COMMITTEE" means a committee designated by the Board to
administer the 2007 Plan; provided, however, that if the Board fails to
designate a committee or if there are no longer any members on the committee so
designated by the Board, then the Board shall serve as the Committee. The
Committee shall consist of at least two directors, and each member of the
Committee shall be (i) a "non-employee director" within the meaning of Rule
16b-3 (or any successor rule) under the Exchange Act, unless administration of
the 2007 Plan by "non-employee directors" is not
then required in order for exemptions under Rule 16b-3 to apply to transactions
under the 2007 Plan, (ii) an "outside director" within the meaning of Section
162(m) of the Code, and (iii) "Independent".
(j) "CONSULTANT" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(k) "CONTINUOUS SERVICE" means the uninterrupted provision of services
to the Company or any Related Entity in any capacity of Employee, Director,
Consultant or other service provider. Continuous Service shall not be considered
to be interrupted in the case of (i) any approved leave of absence, (ii)
transfers among the Company, any Related Entities, or any successor entities, in
any capacity of Employee, Director, Consultant or other service provider, or
(iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in any capacity of Employee, Director,
Consultant or other service provider (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave, military
leave, or any other authorized personal leave.
(l) "COVERED EMPLOYEE" means an Eligible Person who is a "covered
employee" within the meaning of Section 162(m)(3) of the Code, or any successor
provision thereto.
(m) "DEFERRED STOCK" means a right to receive Shares, including
Restricted Stock, cash measured based upon the value of Shares or a combination
thereof, at the end of a specified deferral period.
(n) "DEFERRED STOCK AWARD" means an Award of Deferred Stock granted to
a Participant under Section 6(e) hereof.
(o) "DIRECTOR" means a member of the Board or the board of directors
of any Related Entity.
(p) "DISABILITY" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(q) "DIVIDEND EQUIVALENT" means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Shares, other Awards or other
property equal in value to dividends paid with respect to a specified number of
Shares, or other periodic payments.
(r) "ELIGIBLE PERSON" means each officer, Director, Employee,
Consultant and other person who provides services to the Company or any Related
Entity. The foregoing notwithstanding, only employees of the Company, or any
parent corporation or subsidiary corporation of the Company (as those terms are
defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible
Persons for purposes of receiving any Incentive Stock Options. An Employee on
leave of absence may be considered as still in the employ of the Company or a
Related Entity for purposes of eligibility for participation in the 2007 Plan.
(s) "EMPLOYEE" means any person, including an officer or Director, who
is an employee of the Company or any Related Entity. The payment of a director's
fee by the Company or a Related Entity shall not be sufficient to constitute
"employment" by the Company.
(t) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(u) "FAIR MARKET VALUE" means the fair market value of Shares, Awards
or other property as determined by the Committee, or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of a Share as of any given date shall be the closing sale
price per Share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which Shares are traded on the date as of
which such value is being determined or, if there is no sale on that date, then
on the last previous day on which a sale was reported.
(v) "INCENTIVE STOCK OPTION" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.
(w) "INDEPENDENT", when referring to either the Board or members of
the Committee, shall have the same meaning as used in the rules of the Nasdaq
Stock Market or any national securities exchange on which any securities of the
Company are listed for trading, and if not listed for trading, by the rules of
the Nasdaq Stock Market.
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(x) "INCUMBENT BOARD" means the Incumbent Board as defined in Section
9(b)(ii) of the 2007 Plan.
(y) "OPTION" means a right granted to a Participant under Section 6(b)
hereof, to purchase Shares or other Awards at a specified price during specified
time periods.
(z) "OPTIONEE" means a person to whom an Option is granted under the
2007 Plan or any person who succeeds to the rights of such person under the 2007
Plan.
(aa) "OTHER STOCK-BASED AWARDS" means Awards granted to a Participant
under Section 6(i) hereof.
(bb) "PARTICIPANT" means a person who has been granted an Award under
the 2007 Plan, which remains outstanding, including a person who is no longer an
Eligible Person.
(cc) "PERFORMANCE AWARD" shall mean any Award of Performance Shares or
Performance Units granted pursuant to Section 6(h).
(dd) "PERFORMANCE PERIOD" means that period established by the
Committee at the time any Performance Award is granted or at any time thereafter
during which any performance goals specified by the Committee with respect to
such Award are to be measured.
(ee) "PERFORMANCE SHARE" means any grant pursuant to Section 6(h) of a
unit valued by reference to a designated number of Shares, which value may be
paid to the Participant by delivery of such property as the Committee shall
determine, including cash, Shares, other property, or any combination thereof,
upon achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.
(ff) "PERFORMANCE UNIT" means any grant pursuant to Section 6(h) of a
unit valued by reference to a designated amount of property (including cash)
other than Shares, which value may be paid to the Participant by delivery of
such property as the Committee shall determine, including cash, Shares, other
property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.
(gg) "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and
shall include a "group" as defined in Section 13(d) thereof.
(hh) "PRIOR PLAN" means the Spire Corporation 1996 Equity Incentive
Plan, as amended.
(ii) "RELATED ENTITY" means any Subsidiary, and any business,
corporation, partnership, limited liability company or other entity designated
by the Board, in which the Company or a Subsidiary holds a substantial ownership
interest, directly or indirectly.
(jj) "RESTRICTED STOCK" means any Share issued with the restriction
that the holder may not sell, transfer, pledge or assign such Share and with
such risks of forfeiture and other restrictions as the Committee, in its sole
discretion, may impose (including any restriction on the right to vote such
Share and the right to receive any dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.
(kk) "RESTRICTED STOCK AWARD" means an Award granted to a Participant
under Section 6(d) hereof.
(ll) "RULE 16B-3" means Rule 16b-3, as from time to time in effect and
applicable to the 2007 Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(mm) "SHAREHOLDER APPROVAL DATE" means the date on which the 2007 Plan
is approved shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Code Sections 162(m)
(if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable),
applicable requirements under the rules of any stock exchange or automated
quotation system on which the Shares may be listed on quoted, and other laws,
regulations and obligations of the Company applicable to the 2007 Plan.
(nn) "SHARES" means the shares of common stock of the Company, par
value $0.01 per share, and such other securities as may be substituted (or
resubstituted) for Shares pursuant to Section 10(c) hereof.
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(oo) "STOCK APPRECIATION RIGHT" means a right granted to a Participant
under Section 6(c) hereof.
(pp) "SUBSIDIARY" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
(qq) "SUBSTITUTE AWARDS" means Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, Awards previously
granted, or the right or obligation to make future Awards, by a company acquired
by the Company or any Related Entity or with which the Company or any Related
Entity combines.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The 2007 Plan shall be administered by
the Committee, except to the extent the Board elects to administer the 2007
Plan, in which case the 2007 Plan shall be administered by only those directors
who are Independent Directors, in which case references herein to the
"Committee" shall be deemed to include references to the Independent members of
the Board. The Committee shall have full and final authority, subject to and
consistent with the provisions of the 2007 Plan, to select Eligible Persons to
become Participants, grant Awards, determine the type, number and other terms
and conditions of, and all other matters relating to, Awards, prescribe Award
Agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the 2007 Plan, construe and interpret the
2007 Plan and Award Agreements and correct defects, supply omissions or
reconcile inconsistencies therein, and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the 2007 Plan. In exercising any discretion granted to the
Committee under the 2007 Plan or pursuant to any Award, the Committee shall not
be required to follow past practices, act in a manner consistent with past
practices, or treat any Eligible Person or Participant in a manner consistent
with the treatment of other Eligible Persons or Participants.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee, and not
the Board, shall exercise sole and exclusive discretion on any matter relating
to a Participant then subject to Section 16 of the Exchange Act with respect to
the Company to the extent necessary in order that transactions by such
Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any action
of the Committee shall be final, conclusive and binding on all persons,
including the Company, its Related Entities, Participants, Beneficiaries,
transferees under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and shareholders. The express grant of any specific power
to the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Company or any Related Entity, or
committees thereof, the authority, subject to such terms as the Committee shall
determine, to perform such administrative functions as the Committee may
determine to the extent that such delegation will not result in the loss of an
exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to
Section 16 of the Exchange Act in respect of the Company and will not cause
Awards intended to qualify as "performance-based compensation" under Code
Section 162(m) to fail to so qualify; it being understood that the Committee may
not delegate to officers or managers of the Company or any Related Entity, or
committees thereof, the authority to grant Awards. The Committee may appoint
agents to assist it in administering the 2007 Plan.
(c) LIMITATION OF LIABILITY. The Committee and the Board, and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any officer or Employee, the
Company's independent auditors, Consultants or any other agents assisting in the
administration of the 2007 Plan. Members of the Committee and the Board, and any
officer or Employee acting at the direction or on behalf of the Committee or the
Board, shall not be personally liable for any action or determination taken or
made in good faith with respect to the 2007 Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.
4. SHARES SUBJECT TO THE 2007 PLAN.
(a) LIMITATION ON OVERALL NUMBER OF SHARES AVAILABLE FOR DELIVERY
UNDER THE 2007 PLAN. Subject to adjustment as provided in Section 10(c) hereof,
the total number of Shares reserved and available for delivery under the 2007
Plan shall be 1,000,000; provided, however, that the maximum number of Shares
issued or available for issuance under the 2007 Plan with respect to Awards
other than Options and Stock Appreciation Rights shall not exceed 500,000. Any
Shares delivered under the 2007 Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
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(b) APPLICATION OF LIMITATION TO GRANTS OF AWARD. No Award may be
granted if the number of Shares to be delivered in connection with such an Award
or, in the case of an Award relating to Shares but settled only in cash (such as
cash-only Stock Appreciation Rights), the number of Shares to which such Award
relates, exceeds the number of Shares remaining available for delivery under the
2007 Plan, minus the number of Shares deliverable in settlement of or relating
to then outstanding Awards. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards) and make adjustments if the
number of Shares actually delivered differs from the number of Shares previously
counted in connection with an Award.
(c) AVAILABILITY OF SHARES NOT DELIVERED UNDER AWARDS AND ADJUSTMENTS
TO LIMITS.
(i) If any Shares subject to an Award are forfeited, expire or
otherwise terminate without issuance of such Shares, or any Award is settled for
cash or otherwise does not result in the issuance of all or a portion of the
Shares subject to such Award, the Shares shall, to the extent of such
forfeiture, expiration, termination, cash settlement or non-issuance, again be
available for Awards under the 2007 Plan, subject to Section 4(c)(v) below.
(ii) Awards that are settled or exercised through the payment of
Shares shall be counted in full against the number of Shares available for award
under the 2007 Plan, regardless of the number of Shares actually issued upon
settlement or exercise of any such Award.
(iii) Substitute Awards shall not reduce the Shares authorized
for grant under the 2007 Plan or authorized for grant to a Participant in any
period. Additionally, in the event that a company acquired by the Company or any
Related Entity or with which the Company or any Related Entity combines has
shares available under a pre-existing plan approved by shareholders and not
adopted in contemplation of such acquisition or combination, the shares
available for delivery pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the 2007 Plan and shall not reduce the Shares authorized for delivery under the
2007 Plan; provided that Awards using such available shares shall not be made
after the date awards or grants could have been made under the terms of the
pre-existing plan, absent the acquisition or combination, and shall only be made
to individuals who were not Employees or Directors prior to such acquisition or
combination.
(iv) Any Shares that again become available for delivery pursuant
to this Section 4(c) shall be added back as one (1) Share.
(v) Notwithstanding anything in this Section 4(c) to the contrary
and solely for purposes of determining whether Shares are available for the
delivery of Incentive Stock Options, the maximum aggregate number of shares that
may be granted under the 2007 Plan shall be determined without regard to any
Shares restored pursuant to this Section 4(c) that, if taken into account, would
cause the 2007 Plan to fail the requirement under Code Section 422 that the 2007
Plan designate a maximum aggregate number of shares that may be issued.
(d) NO FURTHER AWARDS UNDER PRIOR PLAN. In light of the adoption of
the 2007 Plan, no further awards shall be made under the Prior Plan after the
Shareholder Approval Date.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted under
the 2007 Plan only to Eligible Persons. Subject to adjustment as provided in
Section 10(c), in any fiscal year of the Company during any part of which the
2007 Plan is in effect, no Participant may be granted (i) Options or Stock
Appreciation Rights with respect to more than 300,000 Shares or (ii) Restricted
Stock, Deferred Stock, Performance Shares and/or Other Stock-Based Awards with
respect to more than 200,000 Shares. In addition, the maximum dollar value
payable to any one Participant with respect to Performance Units is (x) $1.5
million with respect to any 12 month Performance Period (pro-rated for any
Performance Period that is less than 12 months based upon the ratio of the
number of days in the Performance Period as compared to 365), and (y) with
respect to any Performance Period that is more than 12 months, $1.5 million
multiplied by the number of full 12 months periods that are in the Performance
Period.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
10(e)), such additional terms and conditions, not inconsistent with the
provisions of the 2007 Plan, as the Committee shall
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determine, including terms requiring forfeiture of Awards in the event of
termination of the Participant's Continuous Service and terms permitting a
Participant to make elections relating to his or her Award. The Committee shall
retain full power and discretion to accelerate, waive or modify, at any time,
any term or condition of an Award that is not mandatory under the 2007 Plan.
Except in cases in which the Committee is authorized to require other forms of
consideration under the 2007 Plan, or to the extent other forms of consideration
must be paid to satisfy the requirements of Massachusetts law, no consideration
other than services may be required for the grant (as opposed to the exercise)
of any Award.
(b) OPTIONS. The Committee is authorized to grant Options to any
Eligible Person on the following terms and conditions:
(i) EXERCISE PRICE. Other than in connection with Substitute
Awards, the exercise price per Share purchasable under an Option shall be
determined by the Committee, provided that such exercise price shall not be less
than 100% of the Fair Market Value of a Share on the date of grant of the Option
and shall not, in any event, be less than the par value of a Share on the date
of grant of the Option. If an Employee owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the Company (or any
parent corporation or subsidiary corporation of the Company, as those terms are
defined in Sections 424(e) and (f) of the Code, respectively) and an Incentive
Stock Option is granted to such employee, the exercise price of such Incentive
Stock Option (to the extent required by the Code at the time of grant) shall be
no less than 110% of the Fair Market Value a Share on the date such Incentive
Stock Option is granted. Other than pursuant to Section 10(c), the Committee
shall not be permitted to (A) lower the exercise price per Share of an Option
after it is granted, (B) cancel an Option when the exercise price per Share
exceeds the Fair Market Value of the underlying Shares in exchange for another
Award (other than in connection with Substitute Awards), or (C) take any other
action with respect to an Option that may be treated as a repricing, without
approval of the Company's shareholders.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall determine
the time or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of performance
goals and/or future service requirements), the time or times at which Options
shall cease to be or become exercisable following termination of Continuous
Service or upon other conditions, the methods by which the exercise price may be
paid or deemed to be paid (including in the discretion of the Committee a
cashless exercise procedure), the form of such payment, including, without
limitation, cash, Shares (including, without limitation, the withholding of
Shares otherwise deliverable pursuant to the Award), other Awards or awards
granted under other plans of the Company or a Related Entity, or other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis provided that such deferred payments are not in
violation of the Sarbanes-Oxley Act of 2002, or any rule or regulation adopted
thereunder or any other applicable law), and the methods by or forms in which
Shares will be delivered or deemed to be delivered to Participants.
(iii) INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock
Option granted under the 2007 Plan shall comply in all respects with the
provisions of Section 422 of the Code. Anything in the 2007 Plan to the contrary
notwithstanding, no term of the 2007 Plan relating to Incentive Stock Options
(including any Stock Appreciation Right issued in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the 2007 Plan be exercised, so as to disqualify either the 2007 Plan or
any Incentive Stock Option under Section 422 of the Code, unless the Participant
has first requested, or consents to, the change that will result in such
disqualification. Thus, if and to the extent required to comply with Section 422
of the Code, Options granted as Incentive Stock Options shall be subject to the
following special terms and conditions:
(A) The Option shall not be exercisable more than ten years
after the date such Incentive Stock Option is granted; provided, however, that
if a Participant owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company (or any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively) and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more than five years from
the date of grant; and
(B) The aggregate Fair Market Value (determined as of the
date the Incentive Stock Option is granted) of the Shares with respect to which
Incentive Stock Options granted under the 2007 Plan and all other option plans
of the Company (and any parent corporation or subsidiary corporation of the
Company, as those terms are defined in Sections 424(e) and (f) of the Code,
respectively) that become exercisable for the first time by the Participant
during any calendar year shall not (to the extent required by the Code at the
time of the grant) exceed $100,000.
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(c) STOCK APPRECIATION RIGHTS. The Committee may grant Stock
Appreciation Rights to any Eligible Person in conjunction with all or part of
any Option granted under the 2007 Plan or at any subsequent time during the term
of such Option (a "Tandem Stock Appreciation Right"), or without regard to any
Option (a "Freestanding Stock Appreciation Right"), in each case upon such terms
and conditions as the Committee may establish in its sole discretion, not
inconsistent with the provisions of the 2007 Plan, including the following:
(i) RIGHT TO PAYMENT. A Stock Appreciation Right shall confer on
the Participant to whom it is granted a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one Share on the date of exercise
over (B) the grant price of the Stock Appreciation Right as determined by the
Committee. The grant price of a Stock Appreciation Right shall not be less than
the Fair Market Value of a Share on the date of grant, in the case of a
Freestanding Stock Appreciation Right, or less than the associated Option
exercise price, in the case of a Tandem Stock Appreciation Right. Other than
pursuant to Section 10(c), the Committee shall not be permitted to (A) lower the
grant price per Share of a Stock Appreciation Right after it is granted, (B)
cancel a Stock Appreciation Right when the grant price per Share exceeds the
Fair Market Value of the underlying Shares in exchange for another Award (other
than in connection with Substitute Awards), or (C) take any other action with
respect to a Stock Appreciation Right that may be treated as a repricing,
without shareholder approval.
(ii) OTHER TERMS. The Committee shall determine at the date of
grant or thereafter, the time or times at which and the circumstances under
which a Stock Appreciation Right may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements),
the time or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon other
conditions, the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Shares will be delivered or
deemed to be delivered to Participants, whether or not a Stock Appreciation
Right shall be in tandem or in combination with any other Award, and any other
terms and conditions of any Stock Appreciation Right.
(iii) TANDEM STOCK APPRECIATION RIGHTS. Any Tandem Stock
Appreciation Right may be granted at the same time as the related Option is
granted or, for Options that are not Incentive Stock Options, at any time
thereafter before exercise or expiration of such Option. Any Tandem Stock
Appreciation Right related to an Option may be exercised only when the related
Option would be exercisable and the Fair Market Value of the Shares subject to
the related Option exceeds the exercise price at which Shares can be acquired
pursuant to the Option. In addition, if a Tandem Stock Appreciation Right exists
with respect to less than the full number of Shares covered by a related Option,
then an exercise or termination of such Option shall not reduce the number of
Shares to which the Tandem Stock Appreciation Right applies until the number of
Shares then exercisable under such Option equals the number of Shares to which
the Tandem Stock Appreciation Right applies. Any Option related to a Tandem
Stock Appreciation Right shall no longer be exercisable to the extent the Tandem
Stock Appreciation Right has been exercised, and any Tandem Stock Appreciation
Right shall no longer be exercisable to the extent the related Option has been
exercised.
(d) RESTRICTED STOCK AWARDS. The Committee is authorized to grant
Restricted Stock Awards to any Eligible Person on the following terms and
conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock Awards shall be
subject to such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, or as otherwise provided in
the 2007 Plan, covering a period of time specified by the Committee (the
"Restriction Period"). The terms of any Restricted Stock Award granted under the
2007 Plan shall be set forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the 2007 Plan.
The restrictions may lapse separately or in combination at such times, under
such circumstances (including based on achievement of performance goals and/or
future service requirements), in such installments or otherwise, as the
Committee may determine at the date of grant or thereafter. Except to the extent
restricted under the terms of the 2007 Plan and any Award Agreement relating to
a Restricted Stock Award, a Participant granted Restricted Stock shall have all
of the rights of a shareholder, including the right to vote the Restricted Stock
and the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). During the
Restriction Period, subject to Section 10(b) below, the Restricted Stock may not
be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by
the Participant.
(ii) FORFEITURE. Except as otherwise determined by the Committee,
upon termination of a Participant's Continuous Service during the applicable
Restriction Period, the Participant's Restricted Stock that is at that time
subject to a risk of forfeiture that has not lapsed or otherwise been satisfied
shall be forfeited and reacquired by the Company; provided that the Committee
may provide, by rule or regulation or in any Award Agreement, or may determine
in any individual case, that forfeiture conditions relating to Restricted Stock
Awards shall be waived in whole or in part in the event of terminations
resulting from specified causes.
7
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under the
2007 Plan may be evidenced in such manner, as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, and that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.
(iv) DIVIDENDS AND SPLITS. As a condition to the grant of a
Restricted Stock Award, the Committee may require or permit a Participant to
elect that any cash dividends paid on a Share of Restricted Stock be
automatically reinvested in additional Shares of Restricted Stock or applied to
the purchase of additional Awards under the 2007 Plan. Unless otherwise
determined by the Committee, Shares distributed in connection with a stock split
or stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Shares or other property have been
distributed.
(v) MINIMUM VESTING PERIOD. Except for certain limited situations
(including termination of employment, a Change in Control referred to in Section
9, grants to new hires to replace forfeited compensation, grants representing
payment of earned Performance Awards or other incentive compensation, or grants
to Directors), Restricted Stock Awards subject solely to future service
requirements shall have a Restriction Period of not less than three years from
date of grant (but permitting pro-rata vesting over such time).
(e) DEFERRED STOCK AWARD. The Committee is authorized to grant
Deferred Stock Awards to any Eligible Person on the following terms and
conditions:
(i) AWARD AND RESTRICTIONS. Satisfaction of a Deferred Stock
Award shall occur upon expiration of the deferral period specified for such
Deferred Stock Award by the Committee (or, if permitted by the Committee, as
elected by the Participant). In addition, a Deferred Stock Award shall be
subject to such restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including based on
achievement of performance goals and/or future service requirements), separately
or in combination, in installments or otherwise, as the Committee may determine.
A Deferred Stock Award may be satisfied by delivery of Shares, cash equal to the
Fair Market Value of the specified number of Shares covered by the Deferred
Stock, or a combination thereof, as determined by the Committee at the date of
grant or thereafter. Prior to satisfaction of a Deferred Stock Award, a Deferred
Stock Award carries no voting or dividend or other rights associated with Share
ownership.
(ii) FORFEITURE. Except as otherwise determined by the Committee,
upon termination of a Participant's Continuous Service during the applicable
deferral period or portion thereof to which forfeiture conditions apply (as
provided in the Award Agreement evidencing the Deferred Stock Award), the
Participant's Deferred Stock Award that is at that time subject to a risk of
forfeiture that has not lapsed or otherwise been satisfied shall be forfeited;
provided that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that forfeiture conditions
relating to a Deferred Stock Award shall be waived in whole or in part in the
event of terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of any Deferred Stock
Award.
(iii) DIVIDEND EQUIVALENTS. Unless otherwise determined by the
Committee at date of grant, any Dividend Equivalents that are granted with
respect to any Deferred Stock Award shall be either (A) paid with respect to
such Deferred Stock Award at the dividend payment date in cash or in Shares of
unrestricted stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such Deferred Stock Award and the
amount or value thereof automatically deemed reinvested in additional Deferred
Stock, other Awards or other investment vehicles, as the Committee shall
determine or permit the Participant to elect.
(f) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The Committee is
authorized to grant Shares to any Eligible Persons as a bonus, or to grant
Shares or other Awards in lieu of obligations to pay cash or deliver other
property under the 2007 Plan or under other plans or compensatory arrangements,
provided that, in the case of Eligible Persons subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the
Committee to the extent necessary to ensure that acquisitions of Shares or other
Awards are exempt from liability under Section 16(b) of the Exchange Act. Shares
or Awards granted hereunder shall be subject to such other terms as shall be
determined by the Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to any Eligible Person entitling the Eligible Person to
receive cash, Shares, other Awards, or other property equal in value to the
dividends
8
paid with respect to a specified number of Shares, or other periodic payments.
Dividend Equivalents may be Awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents shall be
paid or distributed when accrued or shall be deemed to have been reinvested in
additional Shares, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.
(h) PERFORMANCE AWARDS. The Committee is authorized to grant
Performance Awards to any Eligible Person payable in cash, Shares, or other
Awards, on terms and conditions established by the Committee, subject to the
provisions of Section 8 if and to the extent that the Committee shall, in its
sole discretion, determine that an Award shall be subject to those provisions.
The performance criteria to be achieved during any Performance Period and the
length of the Performance Period shall be determined by the Committee upon the
grant of each Performance Award; provided, however, that a Performance Period
shall not be longer than five years. Except as provided in Section 9 or as may
be provided in an Award Agreement, Performance Awards will be distributed only
after the end of the relevant Performance Period. The performance goals to be
achieved for each Performance Period shall be conclusively determined by the
Committee and may be based upon the criteria set forth in Section 8(b), or in
the case of an Award that the Committee determines shall not be subject to
Section 8 hereof, any other criteria that the Committee, in its sole discretion,
shall determine should be used for that purpose. The amount of the Award to be
distributed shall be conclusively determined by the Committee. Performance
Awards may be paid in a lump sum or in installments following the close of the
Performance Period or, in accordance with procedures established by the
Committee, on a deferred basis.
(i) OTHER STOCK-BASED AWARDS. The Committee is authorized, subject to
limitations under applicable law, to grant to any Eligible Person such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the 2007 Plan. Other Stock-Based
Awards may be granted to Participants either alone or in addition to other
Awards granted under the 2007 Plan, and such Other Stock-Based Awards shall also
be available as a form of payment in the settlement of other Awards granted
under the 2007 Plan. The Committee shall determine the terms and conditions of
such Awards. Shares delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(i) shall be purchased for such consideration,
(including without limitation loans from the Company or a Related Entity
provided that such loans are not in violation of the Sarbanes Oxley Act of 2002,
or any rule or regulation adopted thereunder or any other applicable law) paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Shares, other Awards or other property, as the Committee shall
determine. Except for certain limited situations (including termination of
employment, a Change in Control referred to in Section 9, grants to new hires to
replace forfeited compensation, grants representing payment of earned
Performance Awards or other incentive compensation, or grants to Directors),
Other Stock-Based Awards subject solely to future service requirements shall be
subject to restrictions for a period of not less than three years from date of
grant (but permitting pro-rata vesting over such time).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the 2007 Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
Related Entity, or any business entity to be acquired by the Company or a
Related Entity, or any other right of a Participant to receive payment from the
Company or any Related Entity. Such additional, tandem, and substitute or
exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award or award, the Committee shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any Related Entity, in which the value of Stock subject to the Award is
equivalent in value to the cash compensation (for example, Deferred Stock or
Restricted Stock), or in which the exercise price, grant price or purchase price
of the Award in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options or Stock Appreciation Right granted with an
exercise price or grant price "discounted" by the amount of the cash
compensation surrendered).
(b) TERM OF AWARDS. The term of each Award shall be for such period as
may be determined by the Committee; provided that in no event shall the term of
any Option or Stock Appreciation Right exceed a period of ten years (or in the
case of an Incentive Stock Option such shorter term as may be required under
Section 422 of the Code).
(c) FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS. Subject to the
terms of the 2007 Plan and any applicable Award Agreement, payments to be made
by the Company or a Related Entity upon the exercise of an Option or other Award
or settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Shares, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. Any installment or deferral provided for in the preceding
sentence shall, however, be subject to the
9
Company's compliance with the provisions of the Sarbanes-Oxley Act of 2002, the
rules and regulations adopted by the Securities and Exchange Commission
thereunder, and all applicable rules of the Nasdaq Stock Market or any national
securities exchange on which the Company's securities are listed for trading
and, if not listed for trading on either the Nasdaq Stock Market or a national
securities exchange, then the rules of the Nasdaq Stock Market. The settlement
of any Award may be accelerated, and cash paid in lieu of Shares in connection
with such settlement, in the discretion of the Committee or upon occurrence of
one or more specified events (in addition to a Change in Control). Installment
or deferred payments may be required by the Committee (subject to Section 10(e)
of the 2007 Plan, including the consent provisions thereof in the case of any
deferral of an outstanding Award not provided for in the original Award
Agreement) or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of a reasonable interest
rate on installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Shares.
(d) EXEMPTIONS FROM SECTION 16(B) LIABILITY. It is the intent of the
Company that the grant of any Awards to or other transaction by a Participant
who is subject to Section 16 of the Exchange Act shall be exempt from Section 16
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
the 2007 Plan or any Award Agreement does not comply with the requirements of
Rule 16b-3 then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
Section 16(b).
(e) (f) CODE SECTION 409A. If and to the extent that the Committee
believes that any Awards may constitute a "non-qualified deferred compensation
plan" under Section 409A of the Code, the terms and conditions set forth in the
Award Agreement for that Award shall be drafted in a manner that is intended to
comply with, and those provisions (and /or the provisions of the Plan applicable
thereto) shall be interpreted in a manner consistent with, the applicable
requirements of Section 409A of the Code, and the Committee, in its sole
discretion and without the consent of any Participant, may amend any Award
Agreement (and the provisions of the Plan applicable thereto) if and to the
extent that the Committee determines necessary or appropriate to comply with the
applicable requirements of Section 409A of the Code.
8. CODE SECTION 162(M) PROVISIONS.
(a) COVERED EMPLOYEES. The Committee, in its discretion, may determine
at the time an Award is granted to an Eligible Person who is, or is likely to
be, as of the end of the tax year in which the Company would claim a tax
deduction in connection with such Award, a Covered Employee, that the provisions
of this Section 8 shall be applicable to such Award.
(b) PERFORMANCE CRITERIA. If an Award is subject to this Section 8,
then the lapsing of restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be contingent upon
achievement of one or more objective performance goals. Performance goals shall
be objective and shall otherwise meet the requirements of Section 162(m) of the
Code and regulations thereunder including the requirement that the level or
levels of performance targeted by the Committee result in the achievement of
performance goals being "substantially uncertain." One or more of the following
business criteria for the Company, on a consolidated basis, and/or for Related
Entities, or for business or geographical units of the Company and/or a Related
Entity (except with respect to the total shareholder return and earnings per
share criteria), shall be used by the Committee in establishing performance
goals for such Awards: (1) earnings per share; (2) revenues or margins; (3) cash
flow; (4) operating margin; (5) return on net assets, investment, capital, or
equity; (6) economic value added; (7) direct contribution; (8) net income;
pretax earnings; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization; earnings after interest expense and before
extraordinary or special items; operating income; income before interest income
or expense, unusual items and income taxes, local, state or federal and
excluding budgeted and actual bonuses which might be paid under any ongoing
bonus plans of the Company; (9) working capital; (10) management of fixed costs
or variable costs; (11) identification or consummation of investment
opportunities or completion of specified projects in accordance with corporate
business plans, including strategic mergers, acquisitions or divestitures; (12)
total shareholder return; (13) debt reduction; (14) market share; (15) entry
into new markets, either geographically or by business unit; (16) customer
retention and satisfaction; (17) strategic plan development and implementation,
including turnaround plans; (18) and/or the Fair Market Value of a Share. Any of
the above goals may be determined on an absolute or relative basis or as
compared to the performance of a published or special index deemed applicable by
the Committee including, but not limited to, the Standard & Poor's 500 Stock
Index or a group of companies that are comparable to the Company. The Committee
shall exclude the impact of an event or occurrence which the Committee
determines should appropriately be excluded, including without limitation
10
(i) restructurings, discontinued operations, extraordinary items, and other
unusual or non-recurring charges, (ii) an event either not directly related to
the operations of the Company or not within the reasonable control of the
Company's management, or (iii) a change in accounting standards required by
generally accepted accounting principles.
(c) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING PERFORMANCE GOALS.
Achievement of performance goals in respect of Performance Awards shall be
measured over a Performance Period no longer than five years, as specified by
the Committee. Performance goals shall be established not later than 90 days
after the beginning of any Performance Period applicable to such Performance
Awards, or at such other date as may be required or permitted for
"performance-based compensation" under Code Section 162(m).
(d) ADJUSTMENTS. The Committee may, in its discretion, reduce the
amount of a settlement otherwise to be made in connection with Awards subject to
this Section 8, but may not exercise discretion to increase any such amount
payable to a Covered Employee in respect of an Award subject to this Section 8.
The Committee shall specify the circumstances in which such Awards shall be paid
or forfeited in the event of termination of Continuous Service by the
Participant prior to the end of a Performance Period or settlement of Awards.
(e) COMMITTEE CERTIFICATION. No Participant shall receive any payment
under the 2007 Plan that is subject to this Section 8 unless the Committee has
certified, by resolution or other appropriate action in writing, that the
performance criteria and any other material terms previously established by the
Committee or set forth in the 2007 Plan, have been satisfied to the extent
necessary to qualify as "performance based compensation" under Code Section
162(m).
9. CHANGE IN CONTROL.
(a) EFFECT OF "CHANGE IN CONTROL." If and only to the extent provided
in the Award Agreement, or to the extent otherwise determined by the Committee,
upon the occurrence of a "Change in Control," as defined in Section 9(b):
(i) Any Option or Stock Appreciation Right that was not
previously vested and exercisable as of the time of the Change in Control, shall
become immediately vested and exercisable, subject to applicable restrictions
set forth in Section 10(a) hereof.
(ii) Any restrictions, deferral of settlement, and forfeiture
conditions applicable to a Restricted Stock Award, Deferred Stock Award or an
Other Stock-Based Award subject only to future service requirements granted
under the 2007 Plan shall lapse and such Awards shall be deemed fully vested as
of the time of the Change in Control, except to the extent of any waiver by the
Participant and subject to applicable restrictions set forth in Section 10(a)
hereof.
(iii) With respect to any outstanding Award subject to
achievement of performance goals and conditions under the 2007 Plan, the
Committee may, in its discretion, deem such performance goals and conditions as
having been met as of the date of the Change in Control.
(b) DEFINITION OF "CHANGE IN CONTROL". Unless otherwise specified in
an Award Agreement, a "Change in Control" shall mean the occurrence of any of
the following:
(i) The acquisition by any Person of Beneficial Ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities) (the foregoing Beneficial Ownership hereinafter being referred to as
a "Controlling Interest"); provided, however, that for purposes of this Section
9(b), the following acquisitions shall not constitute or result in a Change of
Control: (v) any acquisition directly from the Company; (w) any acquisition by
the Company; (x) any acquisition by any Person that as of the Shareholder
Approval Date owns Beneficial Ownership of a Controlling Interest; (y) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary; or (z) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B) and
(C) of subsection (iii) below; or
(ii) During any period of two (2) consecutive years (not
including any period prior to the Shareholder Approval Date) individuals who
constitute the Board on the Shareholder Approval Date (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Shareholder
Approval Date whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be
11
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the Company
or any of its Subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or stock of
another entity by the Company or any of its Subsidiaries (each a "Business
Combination"), in each case, unless, following such Business Combination, (A)
all or substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such Business Combination or any Person that as of the Shareholder Approval
Date owns Beneficial Ownership of a Controlling Interest) beneficially owns,
directly or indirectly, fifty percent (50%) or more of the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority of the members of
the Board of Directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
10. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. The Company may, to
the extent deemed necessary or advisable by the Committee, postpone the issuance
or delivery of Shares or payment of other benefits under any Award until
completion of such registration or qualification of such Shares or other
required action under any federal or state law, rule or regulation, listing or
other required action with respect to any stock exchange or automated quotation
system upon which the Shares or other Company securities are listed or quoted,
or compliance with any other obligation of the Company, as the Committee, may
consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Shares or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations.
(b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or other right
or interest granted under the 2007 Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party, or assigned or transferred by such Participant
otherwise than by will or the laws of descent and distribution or to a
Beneficiary upon the death of a Participant, and such Awards or rights that may
be exercisable shall be exercised during the lifetime of the Participant only by
the Participant or his or her guardian or legal representative, except that
Awards and other rights (other than Incentive Stock Options and Stock
Appreciation Rights in tandem therewith) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the Participant, and
may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent such transfers are permitted by the Committee
pursuant to the express terms of an Award Agreement (subject to any terms and
conditions which the Committee may impose thereon). A Beneficiary, transferee,
or other person claiming any rights under the 2007 Plan from or through any
Participant shall be subject to all terms and conditions of the 2007 Plan and
any Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.
(c) ADJUSTMENTS.
(i) ADJUSTMENTS TO AWARDS. In the event that any extraordinary
dividend or other distribution (whether in the form of cash, Shares, or other
property), recapitalization, forward or reverse split, reorganization, merger,
12
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Shares
and/or such other securities of the Company or any other issuer such that a
substitution, exchange, or adjustment is determined by the Committee to be
appropriate, then the Committee shall, in such manner as it may deem equitable,
substitute, exchange or adjust any or all of (A) the number and kind of Shares
which may be delivered in connection with Awards granted thereafter, (B) the
number and kind of Shares by which annual per-person Award limitations are
measured under Section 5 hereof, (C) the number and kind of Shares subject to or
deliverable in respect of outstanding Awards, (D) the exercise price, grant
price or purchase price relating to any Award and/or make provision for payment
of cash or other property in respect of any outstanding Award, and (E) any other
aspect of any Award that the Committee determines to be appropriate.
(ii) ADJUSTMENTS IN CASE OF CERTAIN CORPORATE TRANSACTIONS. In
the event of any merger, consolidation or other reorganization in which the
Company does not survive, or in the event of any Change in Control, any
outstanding Awards may be dealt with in accordance with any of the following
approaches, as determined by the agreement effectuating the transaction or, if
and to the extent not so determined, as determined by the Committee: (a) the
continuation of the outstanding Awards by the Company, if the Company is a
surviving corporation, (b) the assumption or substitution for the outstanding
Awards by the surviving corporation or its parent or subsidiary, (c) full
exercisability or vesting and accelerated expiration of the outstanding Awards,
or (d) settlement of the value of the outstanding Awards in cash or cash
equivalents or other property followed by cancellation of such Awards (which
value, in the case of Options or Stock Appreciation Rights, shall be measured by
the amount, if any, by which the Fair Market Value of a Share exceeds the
exercise or grant price of the Option or Stock Appreciation Right as of the
effective date of the transaction). The Committee shall give written notice of
any proposed transaction referred to in this Section 10(c)(ii) a reasonable
period of time prior to the closing date for such transaction (which notice may
be given either before or after the approval of such transaction), in order that
Participants may have a reasonable period of time prior to the closing date of
such transaction within which to exercise any Awards that are then exercisable
(including any Awards that may become exercisable upon the closing date of such
transaction). A Participant may condition his exercise of any Awards upon the
consummation of the transaction.
(iii) OTHER ADJUSTMENTS. The Committee (and the Board if and only
to the extent such authority is not required to be exercised by the Committee to
comply with Section 162(m) of the Code) is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards (including
Performance Awards, or performance goals relating thereto) in recognition of
unusual or nonrecurring events (including, without limitation, acquisitions and
dispositions of businesses and assets) affecting the Company, any Related Entity
or any business unit, or the financial statements of the Company or any Related
Entity, or in response to changes in applicable laws, regulations, accounting
principles, tax rates and regulations or business conditions or in view of the
Committee's assessment of the business strategy of the Company, any Related
Entity or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, Stock Appreciation Rights, Performance
Awards granted pursuant to Section 8(b) hereof to Participants designated by the
Committee as Covered Employees and intended to qualify as "performance-based
compensation" under Code Section 162(m) and the regulations thereunder to
otherwise fail to qualify as "performance-based compensation" under Code Section
162(m) and regulations thereunder.
(d) TAXES. The Company and any Related Entity are authorized to
withhold from any Award granted, any payment relating to an Award under the 2007
Plan, including from a distribution of Shares, or any payroll or other payment
to a Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take such
other action as the Committee may deem advisable to enable the Company or any
Related Entity and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Shares or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.
(e) CHANGES TO THE 2007 PLAN AND AWARDS. The Board may amend, alter,
suspend, discontinue or terminate the 2007 Plan, or the Committee's authority to
grant Awards under the 2007 Plan, without the consent of shareholders or
Participants, except that any amendment or alteration to the 2007 Plan shall be
subject to the approval of the Company's shareholders not later than the annual
meeting next following such Board action if such shareholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the 2007 Plan to shareholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee may waive any
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conditions or rights under, or amend, alter, suspend, discontinue or terminate
any Award theretofore granted and any Award Agreement relating thereto, except
as otherwise provided in the 2007 Plan; provided that, without the consent of an
affected Participant, no such Committee or the Board action may materially and
adversely affect the rights of such Participant under such Award.
(f) LIMITATION ON RIGHTS CONFERRED UNDER THE 2007 PLAN. Neither the
2007 Plan nor any action taken hereunder or under any Award shall be construed
as (i) giving any Eligible Person or Participant the right to continue as an
Eligible Person or Participant or in the employ or service of the Company or a
Related Entity; (ii) interfering in any way with the right of the Company or a
Related Entity to terminate any Eligible Person's or Participant's Continuous
Service at any time, (iii) giving an Eligible Person or Participant any claim to
be granted any Award under the 2007 Plan or to be treated uniformly with other
Participants and Employees, or (iv) conferring on a Participant any of the
rights of a shareholder of the Company including, without limitation, any right
to receive dividends or distributions, any right to vote or act by written
consent, any right to attend meetings of shareholders or any right to receive
any information concerning the Company's business, financial condition, results
of operation or prospects, unless and until such time as the Participant is duly
issued Shares on the stock books of the Company in accordance with the terms of
an Award. None of the Company, its officers or its directors shall have any
fiduciary obligation to the Participant with respect to any Shares awarded
pursuant to the 2007 Plan unless and until the Participant is duly issued Shares
on the stock books of the Company in accordance with the terms of an Award.
Neither the Company nor any of the Company's officers, directors,
representatives or agents are granting any rights under the 2007 Plan to the
Participant whatsoever, oral or written, express or implied, other than those
rights expressly set forth in the 2007 Plan or the Award Agreement.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The 2007 Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Shares pursuant to an Award, nothing contained in the 2007
Plan or any Award shall give any such Participant any rights that are greater
than those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Shares, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the 2007 Plan. Such trusts or other arrangements shall be consistent with
the "unfunded" status of the 2007 Plan unless the Committee otherwise determines
with the consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee may specify
and in accordance with applicable law.
(h) NONEXCLUSIVITY OF THE 2007 PLAN. Neither the adoption of the 2007
Plan by the Board nor its submission to the shareholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not
qualify under Section 162(m) of the Code.
(i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration. No
fractional Shares shall be issued or delivered pursuant to the 2007 Plan or any
Award. The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(j) GOVERNING LAW. The validity, construction and effect of the 2007
Plan, any rules and regulations under the 2007 Plan, and any Award Agreement
shall be determined in accordance with the laws of the Commonwealth of
Massachusetts without giving effect to principles of conflict of laws, and
applicable federal law.
(k) NON-U.S. LAWS. The Committee shall have the authority to adopt
such modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Subsidiaries may operate to assure the viability of the benefits from Awards
granted to Participants performing services in such countries and to meet the
objectives of the 2007 Plan.
(l) 2007 PLAN EFFECTIVE DATE AND SHAREHOLDER APPROVAL; TERMINATION OF
2007 PLAN. The 2007 Plan shall become effective on the Shareholder Approval
Date. The 2007 Plan shall terminate at the earliest of (a) such time as no
Shares remain available for issuance under the 2007 Plan, (b) termination of the
2007 Plan by the Board, or (c) the tenth anniversary of the Shareholder Approval
Date. Awards outstanding upon expiration of the 2007 Plan shall remain in effect
until they have been exercised or terminated, or have expired.
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