Telecom Communications, Inc.
2002 Stock Option Plan
Approved by Board of Directors on December 18, 2002
Telecom Communications, Inc.
2002 Stock Option Plan
1. Section Purpose; Definitions.
1.1 Purpose. The purpose of the Telecom Communications, Inc. 2002 Stock Option
Plan is to enable the Company to offer to its employees, officers, directors and
consultants whose past, present and/or potential contributions to the Company
and its Subsidiaries have been, are or will be important to the success of the
Company, an opportunity to acquire a proprietary interest in the Company. The
various types of long-term incentive awards that may be provided under the Plan
will enable the Company to respond to changes in compensation practices, tax
laws, accounting regulations and the size and diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall
----------- be defined as set forth below:
(a) "Agreement" means the agreement between the Company and the Holder setting
forth the terms and conditions of an award under the Plan.
(b)"Board" means the Board of Directors of the Company.
(c)"Code" means the Internal Revenue Code of 1986, as amended from time to time.
(d) "Committee" means the Stock Option Committee of the Board or any other
committee of the Board that the Board may designate to administer the Plan or
any portion thereof. If no Committee is so designated, then all references in
this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, $.001 par value per
share.
(f) "Company" means Telecom Communications, Inc., a corporation organized under
the laws of the State of Indiana.
(g) "Deferred Stock" means Common Stock to be received, under an award made
pursuant to Section 8, below, at the end of a specified deferral period.
(h) "Disability" means physical or mental impairment as determined under
procedures established by the Committee for purposes of the Plan.
(i) "Effective Date" means the date set forth in Section 12.1, below.
(j) "Fair Market Value", unless otherwise required by any applicable provision
of the Code or any regulations issued thereunder, means, as of any given date:
(i) if the Common Stock is listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq SmallCap Market, the last sale price of the
Common Stock in the principal trading market for the Common Stock on such date,
as reported by the exchange or Nasdaq, as the case may be; (ii) if the Common
Stock is not listed on a national securities exchange or quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, but is traded in the over-the-counter
market, the closing bid price for the Common Stock on such date, as reported by
the OTC Bulletin Board or the National Quotation Bureau, Incorporated or similar
publisher of such quotations; and (iii) if the fair market value of the Common
Stock cannot be determined pursuant to clause (i) or (ii) above, such price as
the Committee shall determine, in good faith.
(k) "Holder" means a person who has received an award under the Plan.
(l) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(m)"Nonqualified Stock Option" means any Stock Option that is not an Incentive
Stock Option.
(n) "Normal Retirement" means retirement from active employment with the Company
or any Subsidiary on or after age 65.
(o) "Other Stock-Based Award" means an award under Section 9, below, that is
valued in whole or in part by reference to, or is otherwise based upon, Common
Stock.
(p) "Parent" means any present or future "parent corporation" of the Company, as
such term is defined in Section 424(e) of the Code.
(q) "Plan" means the Telecom Communications, Inc. 2002 Stock Option Plan, as
hereinafter amended from time to time.
(r) "Repurchase Value" shall mean the Fair Market Value in the event the award
to be repurchased under Section 10.2 is comprised of shares of Common Stock and
the difference between Fair Market Value and the Exercise Price (if lower than
Fair Market Value) in the event the award is a Stock Option or Stock
Appreciation Right; in each case, multiplied by the number of shares subject to
the award.
(s) "Restricted Stock" means Common Stock, received under an award made pursuant
to Section 7, below, that is subject to restrictions under said Section 7.
(t) "SAR Value" means the excess of the Fair Market Value (on the exercise date)
over the exercise price that the participant would have otherwise had to pay to
exercise the related Stock Option, multiplied by the number of shares for which
the Stock Appreciation Right is exercised.
(u) "Stock Appreciation Right" means the right to receive from the Company, on
surrender of all or part of the related Stock Option, without a cash payment to
the Company, a number of shares of Common Stock equal to the SAR Value divided
by the Fair Market Value (on the exercise date).
(v) "Stock Option" or "Option" means any option to purchase shares of Common
Stock which is granted pursuant to the Plan.
(w)"Stock Reload Option" means any option granted under Section 5.3 of the Plan.
(x) "Subsidiary" means any present or future "subsidiary corporation" of the
Company, as such term is defined in Section 424(f) of the Code.
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2. Section Administration.
2.1 Committee Membership. The Plan shall be administered by the Board or a
Committee. Committee members shall serve for such term as the Board may in each
case determine, and shall be subject to removal at any time by the Board. The
Committee members, to the extent possible and deemed to be appropriate by the
Board, shall be "non-employee directors" as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
"outside directors" within the meaning of Section 162(m) of the Code.
2.2 Powers of Committee. The Committee shall have full authority to award,
pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, (iv) Deferred Stock, (v) Stock Reload Options
and/or (vi) Other Stock-Based Awards. For purposes of illustration and not of
limitation, the Committee shall have the authority (subject to the express
provisions of this Plan):
(a) to select the officers, employees, directors and consultants of the Company
or any Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock, Reload Stock Options and/or Other Stock-Based Awards may
from time to time be awarded hereunder.
(b) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any award granted hereunder (including, but not limited to, number
of shares, share exercise price or types of consideration paid upon exercise of
such options, such as other securities of the Company or other property, any
restrictions or limitations, and any vesting, exchange, surrender, cancellation,
acceleration, termination, exercise or forfeiture provisions, as the Committee
shall determine);
(c) to determine any specified performance goals or such other factors or
criteria which need to be attained for the vesting of an award granted
hereunder;
(d) to determine the terms and conditions under which awards granted hereunder
are to operate on a tandem basis and/or in conjunction with or apart from other
equity awarded under this Plan and cash awards made by the Company or any
Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the Plan under such
rules and procedures as the Committee may establish, including the crediting of
interest on deferred amounts denominated in cash and of dividend equivalents on
deferred amounts denominated in Common Stock;
(f) to determine the extent and circumstances under which Common Stock and other
amounts payable with respect to an award hereunder shall be deferred that may be
either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously granted Stock Options,
which previously granted Stock Options have higher option exercise prices and/or
contain other less favorable terms, and (ii) new awards of any other type for
previously granted awards of the same type, which previously granted awards are
upon less favorable terms.
2.3 Interpretation of Plan.
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(a) Committee Authority. Subject to Section 11, below, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall, from time to time, deem advisable,
to interpret the terms and provisions of the Plan and any award issued under the
Plan (and to determine the form and substance of all Agreements relating
thereto), and to otherwise supervise the administration of the Plan. Subject to
Section 11, below, all decisions made by the Committee pursuant to the
provisions of the Plan shall be made in the Committee's sole discretion and
shall be final and binding upon all persons, including the Company, its
Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive Stock
Options (including but limited to Stock Reload Options or Stock Appreciation
rights granted in conjunction with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without the consent
of the Holder(s) affected, to disqualify any Incentive Stock Option under such
Section 422.
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3. Section Stock Subject to Plan.
3.1 Number of Shares. The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 2,500,000 shares. Shares of
Common Stock under the Plan may consist, in whole or in part, of authorized and
unissued shares or treasury shares. If any shares of Common Stock that have been
granted pursuant to a Stock Option cease to be subject to a Stock Option, or if
any shares of Common Stock that are subject to any Stock Appreciation Right,
Restricted Stock, Deferred Stock award, Reload Stock Option or Other Stock-Based
Award granted hereunder are forfeited or any such award otherwise terminates
without a payment being made to the Holder in the form of Common Stock, such
shares shall again be available for distribution in connection with future
grants and awards under the Plan. If a Holder pays the exercise price of a Stock
Option by surrendering any previously owned shares and/or arranges to have the
appropriate number of shares otherwise issuable upon exercise withheld to cover
the withholding tax liability associated with the Stock Option exercise, then
the number of shares available under the Plan shall be increased by the lesser
of (i) the number of such surrendered shares and shares used to pay taxes; and
(ii) the number of shares purchased under such Stock Option.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any merger,
reorganization, consolidation, dividend (other than a cash dividend) payable on
shares of Common Stock, stock split, reverse stock split, combination or
exchange of shares, or other extraordinary or unusual event occurring after the
grant of an award which results in a change in the shares of Common Stock of the
Company as a whole, the Committee shall determine, in its sole discretion,
whether such change equitably requires an adjustment in the terms of any award
or the aggregate number of shares reserved for issuance under the Plan. Any such
adjustments will be made by the Committee, whose determination will be final,
binding and conclusive.
4. Section Eligibility.
Awards may be made or granted to employees, officers, directors and
consultants who are deemed to have rendered or to be able to render significant
services to the Company or its Subsidiaries and who are deemed to have
contributed or to have the potential to contribute to the success of the
Company. No Incentive Stock Option shall be granted to any person who is not an
employee of the Company or a Subsidiary at the time of grant.
5. Section Stock Options.
5.1 Grant and Exercise. Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Plan and the Code, as the Committee may from time to time approve. The
Committee shall have the authority to grant Incentive Stock Options or
Non-Qualified Stock Options, or both types of Stock Options which may be granted
alone or in addition to other awards granted under the Plan. To the extent that
any Stock Option intended to qualify as an Incentive Stock Option does not so
qualify, it shall constitute a separate Nonqualified Stock Option.
5.2 Terms and Conditions. Stock Options granted under the Plan shall be subject
to the following terms and conditions:
(a) Option Term. The term of each Stock Option shall be fixed by the Committee;
provided, however, that an Incentive Stock Option may be granted only within the
ten-year period commencing from the Effective Date and may only be exercised
within ten years of the date of grant (or five years in the case of an Incentive
Stock Option granted to an optionee who, at the time of grant, owns Common Stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company ("10% Stockholder").
(b) Exercise Price. The exercise price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee at the time of grant
and may not be less than 100% of the Fair Market Value on the day of grant;
provided, however, that the exercise price of an Incentive Stock Option granted
to a 10% Stockholder shall not be less than 110% of the Fair Market Value on the
date of grant.
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(c) Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee and
as set forth in Section 10, below. If the Committee provides, in its discretion,
that any Stock Option is exercisable only in installments, i.e., that it vests
over time, the Committee may waive such installment exercise provisions at any
time at or after the time of grant in whole or in part, based upon such factors
as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment, exercise and waiting
period provisions are applicable in a particular case, Stock Options may be
exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, which shall be in cash or, if provided in the
Agreement, either in shares of Common Stock (including Restricted Stock and
other contingent awards under this Plan) or partly in cash and partly in such
Common Stock, or such other means which the Committee determines are consistent
with the Plan's purpose and applicable law. Cash payments shall be made by wire
transfer, certified or bank check or personal check, in each case payable to the
order of the Company; provided, however, that the Company shall not be required
to deliver certificates for shares of Common Stock with respect to which an
Option is exercised until the Company has confirmed the receipt of good and
available funds in payment of the purchase price thereof. Payments in the form
of Common Stock shall be valued at the Fair Market Value on the date prior to
the date of exercise. Such payments shall be made by delivery of stock
certificates in negotiable form that are effective to transfer good and valid
title thereto to the Company, free of any liens or encumbrances. Subject to the
terms of the Agreement, the Committee may, in its sole discretion, at the
request of the Holder, deliver upon the exercise of a Nonqualified Stock Option
a combination of shares of Deferred Stock and Common Stock; provided that,
notwithstanding the provisions of Section 8 of the Plan, such Deferred Stock
shall be fully vested and not subject to forfeiture. A Holder shall have none of
the rights of a Stockholder with respect to the shares subject to the Option
until such shares shall be transferred to the Holder upon the exercise of the
Option.
(e) Transferability. Except as may be set forth in the Agreement, no Stock
Option shall be transferable by the Holder other than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable, during the
Holder's lifetime, only by the Holder (or, to the extent of legal incapacity or
incompetency, the Holder's guardian or legal representative).
(f) Termination by Reason of Death. If a Holder's employment by the Company or a
Subsidiary terminates by reason of death, any Stock Option held by such Holder,
unless otherwise determined by the Committee at the time of grant and set forth
in the Agreement, shall thereupon automatically terminate, except that the
portion of such Stock Option that has vested on the date of death may thereafter
be exercised by the legal representative of the estate or by the legatee of the
Holder under the will of the Holder, for a period of one year (or such other
greater or lesser period as the Committee may specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's employment by the Company
or any Subsidiary terminates by reason of Disability, any Stock Option held by
such Holder, unless otherwise determined by the Committee at the time of grant
and set forth in the Agreement, shall thereupon automatically terminate, except
that the portion of such Stock Option that has vested on the date of termination
may thereafter be exercised by the Holder for a period of one year (or such
other greater or lesser period as the Committee may specify at the time of
grant) from the date of such termination of employment or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions of Section 13.3, below, and
unless otherwise determined by the Committee at the time of grant and set forth
in the Agreement, if a Holder is an employee of the Company or a Subsidiary at
the time of grant and if such Holder's employment by the Company or any
Subsidiary terminates for any reason other than death or Disability, the Stock
Option shall thereupon automatically terminate, except that if the Holder's
employment is terminated by the Company or a Subsidiary without cause or due to
Normal Retirement, then the portion of such Stock Option that has vested on the
date of termination of employment may be exercised for the lesser of three
months after termination of employment or the balance of such Stock Option's
term.
(i) Additional Incentive Stock Option Limitation. In the case of an Incentive
Stock Option, the aggregate Fair Market Value (on the date of grant of the
Option) with respect to which Incentive Stock Options become exercisable for the
first time by a Holder during any calendar year (under all such plans of the
Company and its Parent and Subsidiary) shall not exceed $100,000.
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(j) Buyout and Settlement Provisions. The Committee may at any time, in its sole
discretion, offer to repurchase a Stock Option previously granted, based upon
such terms and conditions as the Committee shall establish and communicate to
the Holder at the time that such offer is made.
5.3 Stock Reload Option. If a Holder tenders shares of Common Stock to pay the
exercise price of a Stock Option ("Underlying Option"), and/or arranges to have
a portion of the shares otherwise issuable upon exercise withheld to pay the
applicable withholding taxes, the Holder may receive, at the discretion of the
Committee, a new Stock Reload Option to purchase that number of shares of Common
Stock equal to the number of shares tendered to pay the exercise price and the
withholding taxes ( but only if such shares were held by the Holder for at least
six months). Stock Reload Options may be any type of option permitted under the
Code and will be granted subject to such terms, conditions, restrictions and
limitations as may be determined by the Committee, from time to time. Such Stock
Reload Option shall have an exercise price equal to the Fair Market Value as of
the date of exercise of the Underlying Option. Unless the Committee determines
otherwise, a Stock Reload Option may be exercised commencing one year after it
is granted and shall expire on the date of expiration of the Underlying Option
to which the Reload Option is related.
6. Section Stock Appreciation Rights.
6.1 Grant and Exercise. The Committee may grant Stock Appreciation Rights to
participants who have been, or are being granted, Stock Options under the Plan
as a means of allowing such participants to exercise their Stock Options without
the need to pay the exercise price in cash. In the case of a Nonqualified Stock
Option, a Stock Appreciation Right may be granted either at or after the time of
the grant of such Nonqualified Stock Option. In the case of an Incentive Stock
Option, a Stock Appreciation Right may be granted only at the time of the grant
of such Incentive Stock Option.
6.2 Terms and Conditions. Stock Appreciation Rights shall be subject to the
following terms and conditions:
(a) Exercisability. Stock Appreciation Rights shall be exercisable as shall be
determined by the Committee and set forth in the Agreement, subject to the
limitations, if any, imposed by the Code, with respect to related Incentive
Stock Options.
(b) Termination. A Stock Appreciation Right shall terminate and shall no longer
be exercisable upon the termination or exercise of the related Stock Option.
(c) Method of Exercise. Stock Appreciation Rights shall be exercisable upon such
terms and conditions as shall be determined by the Committee and set forth in
the Agreement and by surrendering the applicable portion of the related Stock
Option. Upon such exercise and surrender, the Holder shall be entitled to
receive a number of shares of Common Stock equal to the SAR Value divided by the
Fair Market Value on the date the Stock Appreciation Right is exercised.
(d) Shares Affected Upon Plan. The granting of a Stock Appreciation Right shall
not affect the number of shares of Common Stock available under for awards under
the Plan. The number of shares available for awards under the Plan will,
however, be reduced by the number of shares of Common Stock acquirable upon
exercise of the Stock Option to which such Stock Appreciation Right relates.
7. Section Restricted Stock.
7.1 Grant. Shares of Restricted Stock may be awarded either alone or in addition
to other awards granted under the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which, grants of Restricted
Stock will be awarded, the number of shares to be awarded, the price (if any) to
be paid by the Holder, the time or times within which such awards may be subject
to forfeiture ("Restriction Period"), the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the awards.
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7.2 Terms and Conditions. Each Restricted Stock award shall be subject to the
following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the Holder to whom such
Restricted Stock shall have been awarded. During the Restriction Period,
certificates representing the Restricted Stock and any securities constituting
Retained Distributions (as defined below) shall bear a legend to the effect that
ownership of the Restricted Stock (and such Retained Distributions), and the
enjoyment of all rights appurtenant thereto, are subject to the restrictions,
terms and conditions provided in the Plan and the Agreement. Such certificates
shall be deposited by the Holder with the Company, together with stock powers or
other instruments of assignment, each endorsed in blank, which will permit
transfer to the Company of all or any portion of the Restricted Stock and any
securities constituting Retained Distributions that shall be forfeited or that
shall not become vested in accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued and outstanding
shares of Common Stock for all corporate purposes. The Holder will have the
right to vote such Restricted Stock, to receive and retain all regular cash
dividends and other cash equivalent distributions as the Board may in its sole
discretion designate, pay or distribute on such Restricted Stock and to exercise
all other rights, powers and privileges of a holder of Common Stock with respect
to such Restricted Stock, with the exceptions that (i) the Holder will not be
entitled to delivery of the stock certificate or certificates representing such
Restricted Stock until the Restriction Period shall have expired and unless all
other vesting requirements with respect thereto shall have been fulfilled; (ii)
the Company will retain custody of the stock certificate or certificates
representing the Restricted Stock during the Restriction Period; (iii) other
than regular cash dividends and other cash equivalent distributions as the Board
may in its sole discretion designate, pay or distribute, the Company will retain
custody of all distributions ("Retained Distributions") made or declared with
respect to the Restricted Stock (and such Retained Distributions will be subject
to the same restrictions, terms and conditions as are applicable to the
Restricted Stock) until such time, if ever, as the Restricted Stock with respect
to which such Retained Distributions shall have been made, paid or declared
shall have become vested and with respect to which the Restriction Period shall
have expired; (iv) a breach of any of the restrictions, terms or conditions
contained in this Plan or the Agreement or otherwise established by the
Committee with respect to any Restricted Stock or Retained Distributions will
cause a forfeiture of such Restricted Stock and any Retained Distributions with
respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with
respect to each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (i) all or part of such Restricted
Stock shall become vested in accordance with the terms of the Agreement, subject
to Section 10, below, and (ii) any Retained Distributions with respect to such
Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested, subject to Section 10, below. Any such
Restricted Stock and Retained Distributions that do not vest shall be forfeited
to the Company and the Holder shall not thereafter have any rights with respect
to such Restricted Stock and Retained Distributions that shall have been so
forfeited.
8. Section Deferred Stock.
8.1 Grant. Shares of Deferred Stock may be awarded either alone or in addition
to other awards granted under the Plan. The Committee shall determine the
eligible persons to whom and the time or times at which grants of Deferred Stock
will be awarded, the number of shares of Deferred Stock to be awarded to any
person, the duration of the period ("Deferral Period") during which, and the
conditions under which, receipt of the shares will be deferred, and all the
other terms and conditions of the awards.
8.2 Terms and Conditions. Each Deferred Stock award shall be subject to the
following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or the Additional
Deferral Period referred to in Section 8.2 (d) below, where applicable), share
certificates shall be issued and delivered to the Holder, or his legal
representative, representing the number equal to the shares covered by the
Deferred Stock award.
(b) Rights of Holder. A person entitled to receive Deferred Stock shall not have
any rights of a Stockholder by virtue of such award until the expiration of the
applicable Deferral Period and the issuance and delivery of the certificates
representing such Common Stock. The shares of Common Stock issuable upon
expiration of the Deferral Period shall not be deemed outstanding by the Company
until the expiration of such Deferral Period and the issuance and delivery of
such Common Stock to the Holder.
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(c) Vesting; Forfeiture. Upon the expiration of the Deferral Period with respect
to each award of Deferred Stock and the satisfaction of any other applicable
restrictions, terms and conditions all or part of such Deferred Stock shall
become vested in accordance with the terms of the Agreement, subject to Section
10, below. Any such Deferred Stock that does not vest shall be forfeited to the
Company and the Holder shall not thereafter have any rights with respect to such
Deferred Stock.
(d) Additional Deferral Period. A Holder may request to, and the Committee may
at any time, defer the receipt of an award (or an installment of an award) for
an additional specified period or until a specified event ("Additional Deferral
Period"). Subject to any exceptions adopted by the Committee, such request must
generally be made at least one year prior to expiration of the Deferral Period
for such Deferred Stock award (or such installment).
9. Section Other Stock-Based Awards.
Other Stock-Based Awards may be awarded, subject to
limitations under applicable law, that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, shares
of Common Stock, as deemed by the Committee to be consistent with the purposes
of the Plan, including, without limitation, purchase rights, shares of Common
Stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures, or other rights convertible into shares
of Common Stock and awards valued by reference to the value of securities of or
the performance of specified Subsidiaries. Other Stock-Based Awards may be
awarded either alone or in addition to or in tandem with any other awards under
this Plan or any other plan of the Company. Each other Stock-Based Award shall
be subject to such terms and conditions as may be determined by the Committee.
10. Section Accelerated Vesting and Exercisability.
10.1 Non-Approved Transactions. If any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act of 1934, as amended ("Exchange
Act")), is or becomes the "beneficial owner" (as referred in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's then
outstanding securities in one or more transactions, and the Board does not
authorize or otherwise approve such acquisition, then the vesting periods of any
and all Stock Options and other awards granted and outstanding under the Plan
shall be accelerated and all such Stock Options and awards will immediately and
entirely vest, and the respective holders thereof will have the immediate right
to purchase and/or receive any and all Common Stock subject to such Stock
Options and awards on the terms set forth in this Plan and the respective
agreements respecting such Stock Options and awards.
10.2 Approved Transactions. The Committee may, in the event of an acquisition of
substantially all of the Company's assets or at least 50% of the combined voting
power of the Company's then outstanding securities in one or more transactions
(including by way of merger or reorganization) which has been approved by the
Company's Board of Directors, (i) accelerate the vesting of any and all Stock
Options and other awards granted and outstanding under the Plan, and (ii)
require a Holder of any award granted under this Plan to relinquish such award
to the Company upon the tender by the Company to Holder of cash in an amount
equal to the Repurchase Value of such award.
11. Section Amendment and Termination.
The Board may at any time, and from time to time, amend alter, suspend
or discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made that would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without the
Holder's consent.
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12. Section Term of Plan.
12.1 Effective Date. The Plan shall be effective as of December 18, 2002,
subject to the approval of the Plan by the Company's stockholders within one
year after the Effective Date. Any awards granted under the Plan prior to such
approval shall be effective when made (unless otherwise specified by the
Committee at the time of grant), but shall be conditioned upon, and subject to,
such approval of the Plan by the Company's stockholders and no awards shall vest
or otherwise become free of restrictions prior to such approval.
12.2 Termination Date. Unless terminated by the Board, this Plan shall continue
to remain effective until such time as no further awards may be granted and all
awards granted under the Plan are no longer outstanding. Notwithstanding the
foregoing, grants of Incentive Stock Options may be made only during the
ten-year period following the Effective Date.
13. Section General Provisions.
13.1 Written Agreements. Each award granted under the Plan shall be confirmed
by, and shall be subject to the terms, of the Agreement executed by the Company
and the Holder. The Committee may terminate any award made under the Plan if the
Agreement relating thereto is not executed and returned to the Company within 10
days after the Agreement has been delivered to the Holder for his or her
execution.
13.2 Unfunded Status of Plan. The Plan is intended to constitute an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Holder by the Company, nothing contained herein shall give any
such Holder any rights that are greater than those of a general creditor of the
Company.
13.3 Employees.
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(a) Engaging in Competition With the Company; Disclosure of Confidential
Information. If a Holder's employment with the Company or a Subsidiary is
terminated for any reason whatsoever, and within three months after the date
thereof such Holder either (i) accepts employment with any competitor of, or
otherwise engages in competition with, the Company or (ii) discloses to anyone
outside the Company or uses any confidential information or material of the
Company in violation of the Company's policies or any agreement between the
Holder and the Company, the Committee, in its sole discretion, may require such
Holder to return to the Company the economic value of any award that was
realized or obtained by such Holder at any time during the period beginning on
that date that is six months prior to the date such Holder's employment with the
Company is terminated.
(b) Termination for Cause. The Committee may, if a Holder's employment with the
Company or a Subsidiary is terminated for cause, annul any award granted under
this Plan to such employee and, in such event, the Committee, in its sole
discretion, may require such Holder to return to the Company the economic value
of any award that was realized or obtained by such Holder at any time during the
period beginning on that date that is six months prior to the date such Holder's
employment with the Company is terminated.
(c) No Right of Employment. Nothing contained in the Plan or in any award
hereunder shall be deemed to confer upon any Holder who is an employee of the
Company or any Subsidiary any right to continued employment with the Company or
any Subsidiary, nor shall it interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of any Holder who is an employee
at any time.
13.4 Investment Representations; Company Policy. The Committee may require each
person acquiring shares of Common Stock pursuant to a Stock Option or other
award under the Plan to represent to and agree with the Company in writing that
the Holder is acquiring the shares for investment without a view to distribution
thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option
or other award under the Plan shall be required to abide by all policies of the
Company in effect at the time of such acquisition and thereafter with respect to
the ownership and trading of the Company's securities.
<page>
13.5 Additional Incentive Arrangements. Nothing contained in the Plan shall
prevent the Board from adopting such other or additional incentive arrangements
as it may deem desirable, including, but not limited to, the granting of Stock
Options and the awarding of Common Stock and cash otherwise than under the Plan;
and such arrangements may be either generally applicable or applicable only in
specific cases.
13.6 Withholding Taxes. Not later than the date as of which an amount must first
be included in the gross income of the Holder for Federal income tax purposes
with respect to any option or other award under the Plan, the Holder shall pay
to the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount. If permitted by the Committee, tax
withholding or payment obligations may be settled with Common Stock, including
Common Stock that is part of the award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditioned
upon such payment or arrangements and the Company or the Holder's employer (if
not the Company) shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Holder from the
Company or any Subsidiary.
13.7 Governing Law. The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
California. All matters relating to or involving corporate law shall be governed
by the laws of the State of Indiana.
13.8 Other Benefit Plans. Any award granted under the Plan shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or any Subsidiary and shall not affect any benefits under any other
benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).
13.9 Non-Transferability. Except as otherwise expressly provided in the Plan or
the Agreement, no right or benefit under the Plan may be alienated, sold,
assigned, hypothecated, pledged, exchanged, transferred, encumbranced or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.
13.10 Applicable Laws. The obligations of the Company with respect to all Stock
Options and awards under the Plan shall be subject to (i) all applicable laws,
rules and regulations and such approvals by any governmental agencies as may be
required, including, without limitation, the Securities Act of 1933, as amended,
and (ii) the rules and regulations of any securities exchange on which the
Common Stock may be listed.
13.11 Conflicts. If any of the terms or provisions of the Plan or an Agreement
conflict with the requirements of Section 422 of the Code, then such terms or
provisions shall be deemed inoperative to the extent they so conflict with such
requirements. Additionally, if this Plan or any Agreement does not contain any
provision required to be included herein under Section 422 of the Code, such
provision shall be deemed to be incorporated herein and therein with the same
force and effect as if such provision had been set out at length herein and
therein. If any of the terms or provisions of any Agreement conflict with any
terms or provisions of the Plan, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any provision required to be
included therein under the Plan, such provision shall be deemed to be
incorporated therein with the same force and effect as if such provision had
been set out at length therein.
13.12 Non-Registered Stock. The shares of Common Stock to be distributed under
this Plan have not been, as of the Effective Date, registered under the
Securities Act of 1933, as amended, or any applicable state or foreign
securities laws and the Company has no obligation to any Holder to register the
Common Stock or to assist the Holder in obtaining an exemption from the various
registration requirements, or to list the Common Stock on a national securities
exchange or any other trading or quotation system, including the Nasdaq National
Market and Nasdaq SmallCap Market.
Plan Amendments
Initials of Attorney
Date Approved Effecting Amendment
Date Approved by Stockholders, if Sections Amended Description of
by Board necessary Amendments
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