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EXHIBIT 10.33
LEAP WIRELESS INTERNATIONAL, INC.
2001 NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSES.
(a) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options
are the Employees, Directors and Consultants of the Company and its Affiliates.
(b) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which eligible recipients of Options may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Non-Qualified
Stock Options.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Options, to secure and
retain the services of new members of this group and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any person that is a "parent" or "subsidiary" of
the Company, as those terms are defined under Rule 405 of Regulation C
promulgated under the Securities Act.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c).
(e) "COMMON STOCK" means the common stock, $.0001 par value per share,
of the Company.
(f) "COMPANY" means LEAP WIRELESS INTERNATIONAL, INC., a Delaware
corporation.
(g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting or advisory services and who is
compensated for such services; provided that (i) such person renders bona fide
services to the Company or an Affiliate, (ii) the services rendered by such
person are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company's securities, and (iii) such person is a
natural person who has contracted directly with the Company to render such
services. However, the term "Consultant" shall not include Directors of the
Company who are either not compensated by the Company for their services as
Directors or who are merely paid a fee by the Company for their services as
Directors.
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(h) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
terminated. The Optionholder's Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionholder
renders service to the Company or an Affiliate as an Employee, Director or
Consultant or a change in the entity for which the Optionholder renders such
service, provided that the Optionholder's service is continuous. For example, an
Optionholder's change in status from an Employee to a Consultant or Director
with no intervening period of time during which the Optionholder is not an
Employee, Director or Consultant will not constitute a termination of Continuous
Service.
(i) "DIRECTOR" means a member of the Board of Directors of the Company.
(j) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on The Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported by The Nasdaq Stock Market or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(n) "NON-EMPLOYEE DIRECTOR" means a Director of the Company who is a
"non-employee director" for purposes of Rule 16b-3 promulgated under the
Exchange Act.
(o) "NON-QUALIFIED STOCK OPTION" means an Option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(p) "OFFICER" means a President, Secretary, Treasurer, Chairman of the
Board, Vice President, Assistant Secretary or Assistant Treasurer of the
Company, as such positions are described in the Company's Bylaws, any other
person designated an "officer" of the Company by the Board of Directors in
accordance with the Company's Bylaws or any person who is an
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"officer" within the meaning of Rule 16a-1(f) under the Exchange Act or Nasdaq
Rule 4350(i)(1)(A).
(q) "OPTION" means a Non-Qualified Stock Option granted pursuant to the
Plan.
(r) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(s) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(t) "PLAN" means this Leap Wireless International, Inc. 2001
Non-Qualified Stock Option Plan.
(u) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(v) "SECURITIES ACT" means the Securities Act of 1933, as amended.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board will administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how each Option shall be
granted; the provisions of each Option granted (which need not be identical),
including the time or times when a person shall be permitted to receive stock
pursuant to an Option; and the number of shares with respect to which an Option
shall be granted to each such person.
(ii) To construe and interpret the Plan and Options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend the Plan or an Option as provided in Section 11.
(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
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(c) DELEGATION TO COMMITTEE. The Board may delegate administration of
the Plan to a committee composed of not fewer than two (2) members (the
"Committee"), all of the members of which Committee shall be, in the discretion
of the Board, Non-Employee Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee of two (2) or more Non-Employee Directors any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Notwithstanding
anything in this Section 3 to the contrary, the Board or the Committee may
delegate to a committee of one or more members of the Board the authority to
grant Options to eligible persons who are not then subject to Section 16 of the
Exchange Act.
(d) LEAVES OF ABSENCE. The chief executive officer of the Company, or
the Board, in that party's sole discretion, may determine whether Continuous
Service shall be considered terminated in the case of any leave of absence
approved by that party, including sick leave, military leave or any other
personal leave. The term of each Option may be extended at the discretion of the
party approving the leave of absence (not to extend beyond ten (10) years from
the date of original grant) for the period of any such approved leave of
absence.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 10 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Options shall not exceed in the aggregate Two Million Five Hundred Thousand
(2,500,000) shares of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares not acquired under such Option shall revert
to and again become available for issuance under the Plan.
(c) SOURCE OF SHARES. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) RESTRICTIONS ON ELIGIBILITY. Notwithstanding anything herein to the
contrary, the aggregate number of shares issued or reserved for issuance
pursuant to Options granted to persons other than Officers and Directors must
exceed fifty percent (50%) of the total number of shares issued or reserved for
issuance pursuant to Options granted under the Plan as determined on the
three-year anniversary of the adoption of the Plan by the Board and on each
yearly anniversary of the adoption of the Plan thereafter.
(b) CONSULTANTS. A Consultant shall not be eligible for the grant of an
Option if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not
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available to register either the offer or the sale of the Company's securities
to such Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or
(B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such
grant complies with the securities laws of all other relevant jurisdictions.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) EXERCISE PRICE. The exercise price of each Option shall be not less
than eighty-five percent (85%) of the Fair Market Value of the stock subject to
the Option on the date the Option is granted. Notwithstanding the foregoing, an
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board (1) by delivery to the Company of other Common
Stock, (2) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
Common Stock) with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, an Option
may not be exercised by delivery to the Company of other Common Stock (i) to the
extent such delivery would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock and
(ii) unless such shares either have been owned by the Optionee for more than six
(6) months or were not acquired, directly or indirectly, from the Company; and
provided, further, that at any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the Delaware
General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
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(d) TRANSFERABILITY. An Option shall be transferable to the extent
provided in its Option Agreement. If such Option Agreement does not provide for
transferability, then the Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. Notwithstanding the
foregoing provisions of this subsection 6(d), the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(e) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments which may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(f) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than due to the Optionholder's death or
Disability), the Optionholder may exercise his or her Option, but only within
such period of time as is determined by the Board, and only to the extent
provided in the Option Agreement and not inconsistent with the terms of the
Plan. In no event shall an Option be exercisable after the expiration of the
term of such Option as set forth in the Option Agreement. If at the date of
termination of Continuous Service, the Optionholder is not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of
such Option shall revert to and again become available for issuance pursuant to
Options granted under the Plan to the extent provided under Section 4. If after
termination of Continuous Service, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, such Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance pursuant to Options granted under the Plan to the
extent provided under Section 4.
(i) DISABILITY. In the event an Optionholder's Continuous Service
terminates as a result of the Optionholder's Disability, then: (i) the Option
may continue to vest and remain outstanding, if so provided in the Option
Agreement, or (ii) if the Option Agreement does not provide for such
continuation of the Option, then the Optionholder may exercise his or her
Option, but only within twelve (12) months from the date of such termination (or
such shorter period specified in the Option Agreement), and only to the extent
that the Optionholder was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). If, at the date of termination of
Continuous Service, the Option does not continue under its original terms and
the Optionholder is not entitled to exercise his or her entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance pursuant to Options granted under the Plan.
If, after termination of Continuous Service, the Option does not continue under
its original terms and the Optionholder does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall terminate,
and the shares covered by such
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Option shall revert to and again become available for issuance pursuant to
Options granted under the Plan to the extent provided under Section 4.
(ii) DEATH. In the event an Optionholder's Continuous Service
terminates as a result of the Optionholder's death or due to the Optionholder's
Disability and such termination due to Disability is followed by the
Optionholder's death within the period following termination of the
Optionholder's Continuous Service due to the Optionholder's Disability during
which the Optionholder would be entitled to exercise the Option, then the Option
may be exercised, at any time within twelve (12) months following the date of
death, or such shorter period specified in the Option Agreement (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement), by the Optionholder's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to the extent the
Optionholder was entitled to exercise the Option at the date of death; provided
that Option may, but need not, provide for the acceleration of vesting of all
unvested shares as of the date of the death of the Optionholder. If the Option
Agreement does not provide for the acceleration of the vesting of all unvested
shares and, at the time of death, the Optionholder was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of
such Option shall revert to and again become available for issuance pursuant to
Options granted under the Plan to the extent provided under Section 4. If, after
death, the Optionholder's estate or a person who acquired the right to exercise
the Option by bequest or inheritance does not exercise the Option within the
time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance pursuant to
Options granted under the Plan to the extent provided under Section 4.
(g) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to an unvested share repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.
7. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Options.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Option or any stock issued or issuable pursuant to any such
Option. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Options unless and until such authority is obtained.
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8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which an Option may first be exercised or the
time during which an Option or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Option stating the time at which it
may first be exercised or the time during which it will vest.
(b) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such Optionholder has satisfied all requirements
for exercise of the Option pursuant to its terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Option granted pursuant thereto shall confer upon any
Optionholder or other holder of Options any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Option was
granted or shall affect the right of the Company or an Affiliate to terminate:
(i) the employment of an Employee with or without notice and with or without
cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.
(d) INVESTMENT ASSURANCES. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the Optionholder's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Optionholder is acquiring the stock subject to
the Option for the Optionholder's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (i)
the issuance of the shares upon the exercise or acquisition of stock under the
Option has been registered under a then currently effective registration
statement under the Securities Act or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
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(e) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of an
Option Agreement, the Optionholder may satisfy any tax withholding obligation
(whether imposed on the Company or its Affiliates) relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the Optionholder as a result of the
exercise or acquisition of stock under the Option; or (iii) delivering to the
Company owned and unencumbered shares of the Common Stock; provided that the
aggregate number of shares of Common Stock which may be so withheld or delivered
within six months after such shares are acquired by the Optionholder from the
Company shall be limited to the number of shares that have an aggregate Fair
Market Value on the date of withholding or delivery equal to the tax withholding
obligations determined based on the minimum statutory withholding rates for
federal and state income tax and payroll tax purposes that are applicable to
such supplemental taxable income.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the stock
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the outstanding Options will be appropriately
adjusted in the class(es) and number of securities and price per share of stock
subject to such outstanding Options. Such adjustments shall be made by the
Board, the determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated as
a transaction "without receipt of consideration" by the Company.)
(b) CHANGE IN CONTROL.
(i) In the event of: (1) the sale of all or substantially all of
the Company's assets, (2) a merger, consolidation or reorganization of the
Company with or into another corporation or other legal person, other than a
merger, consolidation or reorganization in which more than fifty percent (50%)
of the combined voting power of the then-outstanding securities of the surviving
entity (or if more than one entity survives the transaction, the controlling
entity) immediately after such a transaction are held in the aggregate by
holders of voting securities of the Company immediately prior to such
transaction, (3) the acquisition by any person (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing fifty percent
(50%) or more of the combined voting power of the then-outstanding securities of
the Company, or (4) during any period of two (2) consecutive years, individuals
who at the beginning of any such period constitute the Directors of the Company
(the "Incumbent Directors") cease for any reason to constitute at least a
majority
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thereof unless the election or the nomination for election by the Company's
stockholders of a Director of the Company first elected during such period was
approved by the vote of at least two-thirds of the Incumbent Directors,
whereupon such Director shall also be classified as an Incumbent Director
(collectively, a "Change in Control"), then: (A) any surviving corporation shall
assume any Options outstanding under the Plan or shall substitute similar
options for those outstanding under the Plan (including an option to acquire the
same consideration paid to stockholders in the transaction described in this
subsection 10(b)(i)), or (B) such Options shall continue in full force and
effect. In the event any surviving corporation refuses to assume such Options,
or to substitute similar options for those outstanding under the Plan, then, (x)
with respect to Options held by Optionholders then performing services as
Employees, Directors or Consultants, the time at which such Options may first be
exercised in full shall be accelerated and (y) any Options outstanding under the
Plan shall terminate if not exercised prior to such event. In the event of a
dissolution or liquidation of the Company, any Options outstanding under the
Plan shall terminate if not exercised prior to such event.
(ii) In addition, with respect to any Optionholder who was
providing Continuous Service immediately prior to the consummation of the Change
in Control, any Options (including an option substituted for an Option) held by
such Optionholder shall immediately become fully vested and exercisable (and any
repurchase right by the Company with respect to shares acquired by such person
under an Option (or an option substituted for an Option) shall lapse) if such
Optionholder's Continuous Service is Involuntarily Terminated Without Cause or
Constructively Terminated within twenty-four (24) months following the Change in
Control. Notwithstanding the preceding sentence, in the event all of the
following occurs: (A) such contemplated Change in Control would occur prior to
the second anniversary of the adoption of this Plan by the Board; (B) such
potential acceleration of vesting (and exercisability) would by itself result in
a contemplated Change in Control that would otherwise be eligible to be
accounted for as a "pooling of interests" accounting transaction to become
ineligible for such accounting treatment; and (C) the potential acquirer of the
Company desires to account for such contemplated Change in Control as a "pooling
of interests" transaction, then such acceleration shall not occur. Additionally,
in the event that the restrictions upon acceleration provided for in the
immediately preceding sentence by itself would result in a contemplated Change
in Control to become ineligible to be accounted for as a "pooling of interests"
accounting transaction, then such restrictions shall be deemed inoperative.
Accounting issues shall be determined by the Company's independent public
accountants applying generally accepted accounting principles.
(iii) "CONSTRUCTIVELY TERMINATED" shall mean the voluntary
termination of employment by an Optionholder after any of the following are
undertaken without the Optionholder's express written consent: (A) the
assignment to the Optionholder of any duties or responsibilities which result in
a material diminution or adverse change of the Optionholder's position, status
or circumstances of employment, but does not include a mere change in title or
reporting relationship; (B) reduction by the Company in the Optionholder's base
salary; (C) any failure by the Company to continue in effect any benefit plan or
arrangement, including incentive plans or plans to receive securities of the
Company, in which the Optionholder is participating (hereinafter referred to as
"BENEFIT PLANS"), or the taking of any action by the Company which
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would adversely affect the Optionholder's participation in or reduce the
Optionholder's benefits under any Benefit Plans or deprive the Optionholder of
any fringe benefit then enjoyed by the Optionholder, provided, however, that the
Optionholder's termination is not deemed to be Constructively Terminated if the
Company offers a range of benefit plans and programs which, taken as a whole,
are comparable to the Benefit Plans; (D) a relocation of the Optionholder or the
Company's principal business offices to a location more than fifty (50) miles
from the location at which the Optionholder performs duties, except for required
travel by the Optionholder on the Company's business to an extent substantially
consistent with the Optionholder's business travel obligations; (E) any breach
by the Company of any material agreement between the Optionholder and the
Company concerning the Optionholder's employment; or (F) any failure by the
Company to obtain the assumption of any material agreement between the
Optionholder and the Company concerning the Optionholder's employment by any
successor or assign of the Company.
(iv) "INVOLUNTARILY TERMINATED WITHOUT CAUSE" shall mean
dismissal or discharge of the Optionholder for any reason other than Cause,
death or Disability.
(v) "CAUSE" shall mean any of the following: (A) an intentional
act which materially injures the Company; (B) an intentional refusal or failure
to follow lawful and reasonable directions of the Board or an individual to whom
the Optionholder reports (as appropriate); (C) a willful and habitual neglect of
duties; or (D) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on the Company.
11. AMENDMENT OF THE PLAN AND OPTIONS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan.
(b) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.
(c) AMENDMENT OF OPTIONS. The Board at any time, and from time to time,
may amend the terms of any one or more Options; provided, however, that the
rights under any Option shall not be impaired by any such amendment unless (i)
the Company requests the consent of the Optionholder and (ii) the Optionholder
consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board. No Options may
be granted under the Plan while the Plan is suspended or after it is terminated.
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(b) NO IMPAIRMENT OF RIGHTS. Rights and obligations under any Option
granted while the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the written consent of the Optionholder.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board.
14. CHOICE OF LAW/INTERPRETATION.
The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules. Notwithstanding the foregoing, it is
expressly intended that approval of the Company's stockholders not be required
as a condition of the effectiveness of the Plan, and the Plan's provisions shall
be interpreted in a manner consistent with such intent for all purposes
(including without limitation, for purposes of determining whether stockholder
approval of the Plan is necessary pursuant to the rules of The Nasdaq Stock
Market or such other securities exchange or quotation system on which the Common
Stock is then listed for quotation and trading).
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