EXHIBIT 10.1
BUFFALO WILD WINGS, INC.
2003 EQUITY INCENTIVE PLAN
(As Amended Through February 16, 2006)
SECTION 1.
DEFINITIONS
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As used herein, the following terms shall have the meanings indicated
below:
(a) "Affiliates" shall mean a Parent or Subsidiary of the Company.
(b) "Committee" shall mean a Committee of two or more directors who shall
be appointed by and serve at the pleasure of the Board. If the
Company's securities are registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, then, to the extent
necessary for compliance with Rule 16b-3, or any successor provision,
each of the members of the Committee shall be a "non-employee
director." Solely for purposes of this Section 1(a), "non-employee
director" shall have the same meaning as set forth in Rule 16b-3, or
any successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
(c) The "Company" shall mean Buffalo Wild Wings, Inc., a Minnesota
corporation.
(d) "Fair Market Value" as of any date shall mean (i) if such stock is
listed on the Nasdaq National Market, Nasdaq SmallCap Market, or an
established stock exchange, the price of such stock at the close of
the regular trading session of such market or exchange on such date,
as reported by The Wall Street Journal or a comparable reporting
service, or, if no sale of such stock shall have occurred on such
date, on the next preceding day on which there was a sale of stock;
(ii) if such stock is not so listed on the Nasdaq National Market,
Nasdaq SmallCap Market, or an established stock exchange, the average
of the closing "bid" and "asked" prices quoted by the OTC Bulletin
Board, the National Quotation Bureau, or any comparable reporting
service on such date or, if there are no quoted "bid" and "asked"
prices on such date, on the next preceding date for which there are
such quotes; or (iii) if such stock is not publicly traded as of such
date, the per share value as determined by the Board, or the
Committee, in its sole discretion by applying principles of valuation
with respect to the Company's Common Stock.
(e) The "Internal Revenue Code" is the Internal Revenue Code of 1986, as
amended from time to time.
(f) The "Participant" means (i) an employee of the Company or any
Subsidiary to whom an incentive stock option has been granted pursuant
to Section 9, (ii) a consultant or advisor to or director, employee or
officer of the Company or any Subsidiary to whom a nonqualified stock
option has been granted pursuant to Section 10, or (iii) a consultant
or advisor to, or director, employee or officer of the Company or any
Subsidiary to whom a restricted stock award has been granted pursuant
to Section 17.
(g) "Parent" shall mean any corporation which owns, directly or indirectly
in an unbroken chain, fifty percent (50%) or more of the total voting
power of the Company's outstanding stock.
(h) The "Plan" means the Buffalo Wild Wings, Inc. 2003 Equity Incentive
Plan, as amended from time to time, including the form of Option and
Award Agreements as they may be modified by the Board from time to
time. This Plan amends and restates the Buffalo Wild Wings, Inc. 1995
Stock Option Plan, formerly known as the bw-3, Inc. 1995 Stock Option
Plan, and, prior to that, known as the JMS Associates, Inc. 1995 Stock
Option Plan. For purposes of the ten-year period described in Section
7, this restatement shall be deemed a new stock option plan.
(i) "Stock" shall mean Common Stock of the Company (subject to adjustment
as described in Section 12) reserved for incentive and nonqualified
stock options and restricted stock awards pursuant to this Plan.
(j) A "Subsidiary" shall mean any corporation of which fifty percent (50%)
or more of the total voting power of outstanding stock is owned,
directly or indirectly in an unbroken chain, by the Company.
SECTION 2.
PURPOSE
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The purpose of the Plan is to promote the success of the Company and its
Subsidiaries by facilitating the employment and retention of competent personnel
and by furnishing incentive to officers, directors, employees, consultants, and
advisors upon whose efforts the success of the Company and its Subsidiaries will
depend to a large degree.
It is the intention of the Company to carry out the Plan through the
granting of stock options which will qualify as "incentive stock options" under
the provisions of Section 422 of the Internal Revenue Code, or any successor
provision, pursuant to Section 9 of this Plan, through the granting of
"nonqualified" stock options pursuant to Section 10 of this Plan, and through
the granting of restricted stock awards pursuant to Section 17 of this Plan.
Adoption of this Plan shall be and is expressly subject to the condition of
approval by the shareholders of the Company within twelve (12) months before or
after the adoption of the Plan by the Board of Directors.
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SECTION 3.
EFFECTIVE DATE OF PLAN
----------------------
The Plan originally became effective as of its date of adoption by the
Board of Directors on April 18, 1995. The effective date of the restatement of
the Plan is the date such restatement is approved by the Board of Directors,
subject to approval by the shareholders of the Company as required in Section 2.
SECTION 4.
ADMINISTRATION
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The Plan shall be administered by the Board of Directors of the Company
(hereinafter referred to as the "Board") or by a Committee which may be
appointed by the Board from time to time to administer the Plan (collectively
referred to as the "Administrator"). The Administrator shall have all of the
powers vested in it under the provisions of the Plan, including but not limited
to exclusive authority (where applicable and within the limitations described
herein) to determine, in its sole discretion, whether an incentive stock option,
nonqualified stock option or restricted stock award shall be granted, the
individuals to whom, and the time or times at which, options and awards shall be
granted, the number of shares subject to each option or award, the option price,
and terms and conditions of each option or award. The Administrator shall have
full power and authority to administer and interpret the Plan, to make and amend
rules, regulations and guidelines for administering the Plan, to prescribe the
form and conditions of the respective stock option and restricted stock award
agreements (which may vary from Participant to Participant) evidencing each
option or award and to make all other determinations necessary or advisable for
the administration of the Plan. The Administrator's interpretation of the Plan,
and all actions taken and determinations made by the Administrator pursuant to
the power vested in it hereunder, shall be conclusive and binding on all parties
concerned.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the administration
of the Plan. In the event the Board appoints a Committee as provided hereunder,
any action of the Committee with respect to the administration of the Plan shall
be taken pursuant to a majority vote of the Committee members or pursuant to the
written resolution of all Committee members.
SECTION 5.
PARTICIPANTS
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The Administrator shall from time to time, at its discretion and without
approval of the shareholders, designate those employees to whom incentive stock
options shall be granted pursuant to Section 9 of the Plan; those employees,
officers, directors, consultants and advisors of the Company or of any
Subsidiary to whom nonqualified stock options shall be granted pursuant to
Section 10 of the Plan; and those employees, officers, directors, consultants
and advisors of the Company or any Subsidiary to whom restricted stock awards
shall be granted pursuant to Section 11 of the Plan; provided, however, that
consultants or advisors shall not be eligible to receive stock options or
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restricted stock awards hereunder unless such consultant or advisor renders bona
fide services to the Company or Subsidiary and such services 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. The Administrator may grant additional incentive stock options,
nonqualified stock options and restricted stock awards under this Plan to some
or all Participants then holding options or awards or may grant options and
awards solely or partially to new Participants. In designating Participants, the
Administrator shall also determine the number of shares to be optioned or
awarded to each such Participant. The Board may from time to time designate
individuals as being ineligible to participate in the Plan.
SECTION 6.
STOCK
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The Stock to be optioned or awarded under this Plan shall consist of
authorized but unissued shares of Stock. One Million Four Hundred Fifty Thousand
(1,450,000) shares of Stock shall be reserved and available for stock options
and restricted stock awards under the Plan; provided, however, that the total
number of shares of Stock reserved for options and restricted stock awards under
this Plan shall be subject to adjustment as provided in Section 12 of the Plan.
In the event (i) any portion of an outstanding stock option or restricted stock
award under the Plan for any reason expires, (ii) any portion of an outstanding
stock option is terminated prior to the exercise of such option, or (iii) any
portion of a restricted stock award is terminated prior to the lapsing of any
risks of forfeiture on such stock, the shares of Stock allocable to such portion
of the option or award shall continue to be reserved for stock options and
restricted stock awards under the Plan and may be optioned or awarded hereunder.
SECTION 7.
DURATION OF PLAN
----------------
Incentive stock options may be granted pursuant to the Plan from time to
time during a period of ten (10) years from the effective date of the
restatement of this Plan as defined in Section 3. Nonqualified stock options and
restricted stock awards may be granted pursuant to the Plan from time to time
after the effective date of the Plan and until the Plan is discontinued or
terminated by the Board. Any incentive stock option granted during such ten-year
period and any nonqualified stock option or restricted stock award granted prior
to the termination of the Plan by the Board shall remain in full force and
effect until the expiration of the option or award as specified in the written
stock option or restricted stock award agreement and shall remain subject to the
terms and conditions of this Plan.
SECTION 8.
PAYMENT
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Participants may pay for shares upon exercise of stock options granted
pursuant to this Plan with cash, personal check, certified check or, if approved
by the Administrator in its sole discretion, previously-owned shares of the
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Company's Common Stock valued at such Stock's then Fair Market Value, or such
other form of payment as may be authorized by the Administrator. The
Administrator may, in its sole discretion, limit the forms of payment available
to the Participant and may exercise such discretion any time prior to the
termination of the option granted to the Participant or upon any exercise of the
option by the Participant. "Previously-owned shares" means shares of the
Company's Common Stock which the Participant has owned for at least six (6)
months prior to the exercise of the stock option, or for such other period of
time as may be required by generally accepted accounting principles.
With respect to payment in the form of Common Stock of the Company, the
Administrator may require advance approval or adopt such rules as it deems
necessary to assure compliance with Rule 16b-3, or any successor provision, as
then in effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
SECTION 9.
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
-----------------------------------------------
Each incentive stock option granted pursuant to this Section 9 shall be
evidenced by a written stock option agreement (the "Option Agreement"). The
Option Agreement shall be in such form as may be approved from time to time by
the Administrator and may vary from Participant to Participant; provided,
however, that each Participant and each Option Agreement shall comply with and
be subject to the following terms and conditions:
(a) Number of Shares and Option Price. The Option Agreement shall state
the total number of shares covered by the incentive stock option. To
the extent required to qualify the Option as an incentive stock option
under Section 422 of the Internal Revenue Code, or any successor
provision, the option price per share shall not be less than one
hundred percent (100%) of the Fair Market Value of the Common Stock
per share on the date the Administrator grants the option; provided,
however, that if a Participant owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company or of its Parent or any Subsidiary, the option
price per share of an incentive stock option granted to such
Participant shall not be less than one hundred ten percent (110%) of
the Fair Market Value of the Common Stock per share on the date of the
grant of the option. The Administrator shall have full authority and
discretion in establishing the option price and shall be fully
protected in so doing.
(b) Term and Exercisability of Incentive Stock Option. The term during
which any incentive stock option granted under the Plan may be
exercised shall be established in each case by the Administrator. To
the extent required to qualify the Option as an incentive stock option
under Section 422 of the Internal Revenue Code, or any successor
provision, in no event shall any incentive stock option be exercisable
during a term of more than ten (10) years from the date on which it is
granted; provided, however, that if a Participant owns stock
possessing more than ten percent (10%) of the total combined voting
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power of all classes of stock of the Company or of its Parent or any
Subsidiary, the incentive stock option granted to such Participant
shall be exercisable during a term of not more than five (5) years
from the date on which it is granted. The Option Agreement shall state
when the incentive stock option becomes exercisable and shall also
state the maximum term during which the option may be exercised. In
the event an incentive stock option is exercisable immediately, the
manner of exercise of the option in the event it is not exercised in
full immediately shall be specified in the Option Agreement. The
Administrator may accelerate the exercise date of any incentive stock
option granted hereunder which is not immediately exercisable as of
the date of grant.
(c) Withholding. The Company or its Subsidiary shall be entitled to
withhold and deduct from future wages of the Participant all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant's exercise of
an incentive stock option or a "disqualifying disposition" of shares
acquired through the exercise of an incentive stock option as defined
in Internal Revenue Code Section 421(b). In the event the Participant
is required under the Option Agreement to pay the Company, or make
arrangements satisfactory to the Company respecting payment of, such
withholding and employment-related taxes, the Board may, in its
discretion and pursuant to such rules as it may adopt, permit the
Participant to satisfy such obligation, in whole or in part, by
electing to have the Company withhold shares of Common Stock otherwise
issuable to the Participant as a result of the option's exercise
having a Fair Market Value equal to the minimum required tax
withholding, based on the minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that are
applicable to the supplemental income resulting from the option. In no
event may the Company or any Affiliate withhold shares having a Fair
Market Value in excess of such statutory minimum required tax
withholding. The Participant's election to have shares withheld for
this purpose shall be made on or before the date the option is
exercised or, if later, the date that the amount of tax to be withheld
is determined under applicable tax law. Such election shall be
approved by the Board and otherwise comply with such rules as the
Board may adopt to assure compliance with Rule 16b-3, or any successor
provision, as then in effect, of the General Rules and Regulations
under the Securities Exchange Act of 1934, if applicable.
(d) Other Provisions. The Option Agreement authorized under this Section 9
shall contain such other provisions as the Administrator shall deem
advisable. Any such Option Agreement shall contain such limitations
and restrictions upon the exercise of the option as shall be necessary
to ensure that such option will be considered an "incentive stock
option" as defined in Section 422 of the Internal Revenue Code or to
conform to any change therein.
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SECTION 10.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
--------------------------------------------------
Each nonqualified stock option granted pursuant to this Section 10 shall be
evidenced by a written Option Agreement. The Option Agreement shall be in such
form as may be approved from time to time by the Administrator and may vary from
Participant to Participant; provided, however, that each Participant and each
Option Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares and Option Price. The Option Agreement shall state
the total number of shares covered by the nonqualified stock option.
Unless otherwise determined by the Administrator, the option price per
share shall be one hundred percent (100%) of the Fair Market Value of
the Common Stock per share on the date the Administrator grants the
option; provided, however, that the option price may not be less than
eighty-five percent (85%) of the Fair Market Value of the Common Stock
per share on the date of grant.
(b) Term and Exercisability of Nonqualified Stock Option. The term during
which any nonqualified stock option granted under the Plan may be
exercised shall be established in each case by the Administrator. The
Option Agreement shall state when the nonqualified stock option
becomes exercisable and shall also state the maximum term during which
the option may be exercised. In the event a nonqualified stock option
is exercisable immediately, the manner of exercise of the option in
the event it is not exercised in full immediately shall be specified
in the Option Agreement. The Administrator may accelerate the exercise
date of any nonqualified stock option granted hereunder which is not
immediately exercisable as of the date of grant.
(c) Withholding. The Company or its Subsidiary shall be entitled to
withhold and deduct from future wages of the Participant all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant's exercise of
a nonqualified stock option. In the event the Participant is required
under the Option Agreement to pay the Company or Subsidiary, or make
arrangements satisfactory to the Company or Subsidiary respecting
payment of, such withholding and employment-related taxes, the
Administrator may, in its discretion and pursuant to such rules as it
may adopt, permit the Participant to satisfy such obligation, in whole
or in part, by delivering shares of the Company's Common Stock or by
electing to have the Company or Subsidiary withhold shares of Common
Stock otherwise issuable to the Participant having a Fair Market Value
equal to the minimum required tax withholding, based on the minimum
statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental
income resulting from the exercise of the nonqualified stock option.
In no event may the Company or Subsidiary withhold shares having a
Fair Market Value in excess of such statutory minimum required tax
withholding. The Participant's election to have shares withheld for
this purpose shall be made on or before the date the option is
exercised or, if later, the date that the amount of tax to be withheld
is determined under applicable tax law. Such election shall be
approved by the Administrator and otherwise comply with such rules as
the Administrator may adopt to assure compliance with Rule 16b-3, or
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any successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, if applicable.
(d) Other Provisions. The Option Agreement authorized under this Section
10 shall contain such other provisions as the Administrator shall deem
advisable.
SECTION 11.
TRANSFER OF OPTIONS
-------------------
No incentive stock option shall be transferable, in whole or in part, by
the Participant other than by will or by the laws of descent and distribution.
During the Participant's lifetime, the incentive stock option may be exercised
only by the Participant. If the Participant shall attempt any transfer of any
incentive stock option granted under the Plan during the Participant's lifetime,
such transfer shall be void and the incentive stock option, to the extent not
fully exercised, shall terminate.
No nonqualified stock option shall be transferred, except that the
Administrator may, in its sole discretion, permit the Participant to transfer
any or all nonqualified stock options to any member of the Participant's
"immediate family" as such term is defined in Rule 16a-1(e) promulgated under
the Securities Exchange Act of 1934, or any successor provision, or to one or
more trusts whose beneficiaries are members of such Participant's "immediate
family" or partnerships in which such family members are the only partners;
provided, however, that the Participant cannot receive any consideration for the
transfer and such transferred nonqualified stock option shall continue to be
subject to the same terms and conditions as were applicable to such nonqualified
stock option immediately prior to its transfer.
SECTION 12.
RECAPITALIZATION, SALE, MERGER, EXCHANGE OR LIQUIDATION
-------------------------------------------------------
If, following adoption of this Plan, the Company effects an increase or
decrease in the number of shares of Common Stock in the form of a subdivision or
consolidation of shares, or the payment of a stock dividend, or effects any
other increase or decrease in the number of shares of Common Stock without
receipt of consideration by the Company, the number of shares of Option Stock
reserved under Section 6 hereof and the number of shares of Option Stock covered
by each outstanding option and restricted stock award, and the price per share
thereof, shall be appropriately adjusted by the Board to reflect such change.
Additional shares which may be credited pursuant to such adjustment shall be
subject to the same restrictions as are applicable to the shares with respect to
which the adjustment relates.
Unless otherwise provided in the Option or Award Agreement, in the event of
an acquisition of the Company through the sale of substantially all of the
Company's assets and the consequent discontinuance of its business or through a
merger, consolidation, exchange, reorganization, reclassification, extraordinary
dividend, divestiture or liquidation of the Company (collectively referred to as
a "transaction"), the Board may provide for one or more of the following:
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(a) the equitable acceleration of the exercisability of any outstanding
options and the lapsing of the risks of forfeiture on any restricted
stock awards;
(b) the complete termination of this Plan, the cancellation of outstanding
options not exercised prior to a date specified by the Board (which
date shall give Participants a reasonable period of time in which to
exercise the options prior to the effectiveness of such transaction),
and the cancellation of any restricted stock awards for which the
risks of forfeiture have not lapsed;
(c) that Participants holding outstanding stock options shall receive,
with respect to each share of Stock subject to such options, as of the
effective date of any such transaction, cash in an amount equal to the
excess of the Fair Market Value of such Stock on the date immediately
preceding the effective date of such transaction over the option price
per share of such options; provided that the Board may, in lieu of
such cash payment, distribute to such Participants shares of stock of
the Company or shares of stock of any corporation succeeding the
Company by reason of such transaction, such shares having a value
equal to the cash payment herein;
(d) that Participants holding outstanding restricted stock awards shall
receive, with respect to each share of Stock subject to such awards,
as of the effective date of any such transaction, cash in an amount
equal to the Fair Market Value of such Stock on the date immediately
preceding the effective date of such transaction; provided that the
Board may, in lieu of such cash payment, distribute to such
Participants shares of stock of the Company or shares of stock of any
corporation succeeding the Company by reason of such transaction, such
shares having a value equal to the cash payment herein;
(e) the continuance of the Plan with respect to the exercise of options
which were outstanding as of the date of adoption by the Board of such
plan for such transaction and provide to Participants holding such
options the right to exercise their respective options as to an
equivalent number of shares of stock of the corporation succeeding the
Company by reason of such transaction; and
(f) the continuance of the Plan with respect to restricted stock awards
for which the risks of forfeiture have not lapsed as of the date of
adoption by the Board of such plan for such transaction and provide to
Participants holding such awards the right to receive an equivalent
number of shares of stock of the corporation succeeding the Company by
reason of such transaction.
The Board may restrict the rights of or the applicability of this Section 12 to
the extent necessary to comply with Section 16(b) of the Securities Exchange Act
of 1934, the Internal Revenue Code or any other applicable law or regulation.
The grant of an option or restricted stock award pursuant to the Plan shall not
limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, exchange or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
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SECTION 13.
INVESTMENT PURPOSE
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No shares of Common Stock shall be issued pursuant to the Plan unless and
until there has been compliance, in the opinion of Company's counsel, with all
applicable legal requirements, including without limitation, those relating to
securities laws and stock exchange listing requirements. As a condition to the
issuance of Stock to Participant, the Administrator may require Participant to
(i) represent that the shares of Stock are being acquired for investment and not
resale and to make such other representations as the Administrator shall deem
necessary or appropriate to qualify the issuance of the shares as exempt from
the Securities Act of 1933 and any other applicable securities laws, and (ii)
represent that Participant shall not dispose of the shares of Stock in violation
of the Securities Act of 1933 or any other applicable securities laws or any
company policies then in effect.
As a further condition to the grant of any stock option or the issuance of
Stock to Participant, Participant agrees to the following:
(a) In the event the Company advises Participant that it plans an
underwritten public offering of its Common Stock in compliance with
the Securities Act of 1933, as amended, and the underwriter(s) seek to
impose restrictions under which certain shareholders may not sell or
contract to sell or grant any option to buy or otherwise dispose of
part or all of their stock purchase rights of the underlying Common
Stock, Participant will not, for a period not to exceed 180 days from
the prospectus, sell or contract to sell or grant an option to buy or
otherwise dispose of any stock option granted to Participant pursuant
to the Plan or any of the underlying shares of Common Stock without
the prior written consent of the underwriter(s) or its
representative(s).
(b) In the event the Company makes any public offering of its securities
and determines in its sole discretion that it is necessary to reduce
the number of issued but unexercised stock purchase rights so as to
comply with any state's securities or Blue Sky law limitations with
respect thereto, the Board of Directors of the Company shall have the
right (i) to accelerate the exercisability of any stock option and the
date on which such option must be exercised, provided that the Company
gives Participant prior written notice of such acceleration, and (ii)
to cancel any options or portions thereof which Participant does not
exercise prior to or contemporaneously with such public offering.
(c) In the event of a transaction (as defined in Section 12 of the Plan),
Participant will comply with Rule 145 of the Securities Act of 1933
and any other restrictions imposed under other applicable legal or
accounting principles if Participant is an "affiliate" (as defined in
such applicable legal and accounting principles) at the time of the
transaction, and Participant will execute any documents necessary to
ensure compliance with such rules.
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The Company reserves the right to place a legend on any stock certificate issued
upon the exercise of an option or upon the grant of a restricted stock award
pursuant to the Plan to assure compliance with this Section 13.
SECTION 14.
RIGHTS AS A SHAREHOLDER
-----------------------
A Participant (or the Participant's successor or successors) shall have no
rights as a shareholder with respect to any shares covered by an incentive stock
option or nonqualified stock option until the date of the issuance of a stock
certificate evidencing such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is actually issued (except as otherwise provided in
Section 12 of the Plan).
SECTION 15.
AMENDMENT OF THE PLAN
---------------------
The Board may from time to time, insofar as permitted by law, suspend or
discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment, except as is authorized in Section 12, shall
impair the terms and conditions of any stock option or restricted stock award
which is outstanding on the date of such revision or amendment to the material
detriment of the Participant without the consent of the Participant.
Notwithstanding the foregoing, no such revision or amendment shall (i) increase
the number of shares subject to the Plan except as provided in Section 12
hereof, (ii) change the designation of the class of employees eligible to
receive stock options or restricted stock awards, (iii) decrease the price at
which options may be granted, or (iv) increase the benefits accruing to
Participants under the Plan, without the approval of the shareholders of the
Company if such approval is required for compliance with the requirements of any
applicable law or regulation. Furthermore, the Plan may not, without the
approval of the shareholders, be amended in any manner that will cause incentive
stock options to fail to meet the requirements of Section 422 of the Internal
Revenue Code.
SECTION 16.
NO OBLIGATION TO EXERCISE OPTION
--------------------------------
The granting of a stock option shall impose no obligation upon the
Participant to exercise such option. Further, the granting of a stock option or
restricted stock award hereunder shall not impose upon the Company or any
Subsidiary any obligation to retain the Participant in its employ for any
period.
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SECTION 17.
RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS
-------------------------------------------------
Each restricted stock/restricted stock unit award granted pursuant to the
Plan shall be evidenced by a written restricted stock/restricted stock unit
agreement (the `Restricted Stock Agreement' or `Restricted Unit Agreement,' as
the case may be). The Restricted Stock Agreement or Restricted Stock Unit
Agreement shall be in such form as may be approved from time to time by the
Administrator and may vary from Participant to Participant; provided, however,
that each Participant and each Restricted Stock Agreement or Restricted Stock
Unit Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares. The Restricted Stock Agreement or Restricted Stock
Unit Agreement shall state the total number of shares of Stock covered
by the restricted stock/restricted stock unit award.
(b) Risks of Forfeiture. The Restricted Stock Agreement or Restricted
Stock Unit Agreement shall set forth the risks of forfeiture, if any,
which shall apply to the shares of Stock covered by the restricted
stock/restricted stock unit award, and shall specify the manner in
which such risks of forfeiture shall lapse. The Administrator may, in
its sole discretion, modify the manner in which such risks of
forfeiture shall lapse but only with respect to those shares of Stock
which are restricted as of the effective date of the modification.
(c) Issuance of Shares; Rights as Shareholder.
(i) With respect to a restricted stock award, the Company shall
cause to be issued a stock certificate representing such shares of
Stock in the Participant's name, and shall deliver such certificate to
the Participant; provided, however, that the Company shall place a
legend on such certificate describing the risks of forfeiture and
other transfer restrictions set forth in the Participant's Restricted
Stock Agreement and providing for the cancellation and return of such
certificate if the shares of Stock subject to the restricted stock
award are forfeited. Until the risks of forfeiture have lapsed or the
shares subject to such restricted stock award have been forfeited, the
Participant shall be entitled to vote the shares of Stock represented
by such stock certificates and shall receive all dividends
attributable to such shares, but the Participant shall not have any
other rights as a shareholder with respect to such shares.
(ii) With respect to a restricted stock unit award, as the risks
of forfeiture on the restricted stock units lapse, the Administrator
shall cause to be issued one or more stock certificates in the
Participant's name and shall deliver such certificates to the
Participant in satisfaction of such restricted stock units. Until the
risks of forfeiture on the restricted stock units have lapsed, the
Participant shall not be entitled to vote any shares of stock which
may be acquired through the restricted stock units, shall not receive
any dividends attributable to such shares, and shall not have any
other rights as a shareholder with respect to such shares.
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(d) Withholding Taxes. The Company or its Subsidiary shall be entitled to
withhold and deduct from future wages of the Participant all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant's restricted
stock/restricted stock unit award. In the event the Participant is
required under the Restricted Stock Agreement or Restricted Stock Unit
Agreement to pay the Company or Subsidiary, or make arrangements
satisfactory to the Company or Subsidiary respecting payment of, such
withholding and employment-related taxes, the Administrator may, in
its discretion and pursuant to such rules as it may adopt, require the
Participant to satisfy such obligations, in whole or in part, by
delivering shares of Stock received pursuant to a restricted
stock/restricted stock unit award on which the risks of forfeiture
have lapsed or to permit the Participant to satisfy such obligations,
in whole or in part, by delivering shares of Common Stock, including
shares of Stock received pursuant to a restricted stock/restricted
stock unit award on which the risks of forfeiture have lapsed. Such
shares shall have a Fair Market Value equal to the minimum required
tax withholding, based on the minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that are
applicable to the supplemental income resulting from the lapsing of
the risks of forfeiture on such restricted stock/restricted stock
unit. In no event may the Participant deliver shares having a Fair
Market Value in excess of such statutory minimum required tax
withholding. The Participant's election to deliver shares of Common
Stock for this purpose shall be made on or before the date that the
amount of tax to be withheld is determined under applicable tax law.
Such election shall be approved by the Administrator and otherwise
comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
(e) Nontransferability. No restricted stock/restricted stock unit award
shall be transferable, in whole or in part, by the Participant, other
than by will or by the laws of descent and distribution, prior to the
date the risks of forfeiture described in the Restricted Stock
Agreement or Restricted Stock Unit Agreement have lapsed. If the
Participant shall attempt any transfer of any restricted
stock/restricted stock unit award granted under the Plan prior to such
date, such transfer shall be void and the restricted stock/restricted
stock unit award shall terminate.
(f) Other Provisions. The Restricted Stock Agreement or Restricted Stock
Unit Agreement authorized under this Section 17 shall contain such
other provisions as the Administrator shall deem advisable.
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