EXHIBIT 4.3
IRIS INTERNATIONAL, INC.
2007 STOCK INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of the IRIS International, Inc. 2007
Stock Incentive Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide
additional incentive to persons who are selected to be participants in
the Plan, and to promote the success of the Company's business. This
Plan permits the grant of Non-qualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, and Other Stock-Based Awards, each of which shall be subject to
such conditions based upon continued employment with or service to the
Company or its Subsidiaries, passage of time or satisfaction of
performance criteria as shall be specified pursuant to the Plan.
2. DEFINITIONS. In addition to the terms defined elsewhere in this Plan,
as used herein, the following terms shall have the following meanings:
(a) "ADMINISTRATOR" means the Board or any of its Committees as
shall be administering the Plan, in accordance with SECTION 4
of the Plan.
(b) "AWARD" means a Stock Option, Stock Appreciation Right,
Restricted Stock or Restricted Stock Unit, or Other
Stock-Based Award granted to a Participant pursuant to the
Plan, as such terms are defined in SECTION 7(A) herein.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, and the
regulations promulgated thereunder, as such is amended from
time to time, and any reference to a section of the Code shall
include any successor provision of the Code.
(e) "COMMITTEE" means a committee appointed by the Board from
among its members to administer the Plan in accordance with
SECTION 4.
(f) "COMMON STOCK" means the common stock, $0.01 par value, of the
Company.
(g) "COMPANY" means IRIS International, Inc.
(h) "CONSULTANT" means any person, including an advisor, engaged
by the Company or a Subsidiary to render services and who is
compensated for such services; provided 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; and
provided further that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or
who are not otherwise compensated by the Company for their
services as Directors.
(i) "DIRECTOR" means a member of the Board.
(j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee
by the Company shall be sufficient to constitute "employment"
by the Company.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(l) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(m) "PARTICIPANT" means any Employee, Director or Consultant
selected by the Administrator to receive Awards.
(n) "PLAN" means this 2007 Stock Incentive Plan, as amended from
time to time.
(o) "PREEXISTING PLAN" means the IRIS International, Inc. 1998
Stock Incentive Plan, as amended to date.
(p) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan.
(q) "SECTION 162(M)" means Section 162(m) of the Code and the
regulations thereunder, as amended.
(r) "SHARE" means a share of the Common Stock, as adjusted in
accordance with SECTION 10 of the Plan.
(s) "SUBSIDIARY" means any corporation or entity in which the
Company owns or controls, directly or indirectly, fifty
percent (50%) or more of the voting power or economic
interests of such corporation or entity.
3. SHARES SUBJECT TO THE PLAN.
(a) AGGREGATE LIMITS. Subject to the provisions of SECTION 10 of
the Plan, the maximum aggregate number of Shares which may be
issued pursuant to Awards granted under the Plan is One
Million Seven Hundred Fifty Thousand (1,750,000) Shares (the
"FUNGIBLE POOL LIMIT"). The Shares subject to the Plan may be
either Shares reacquired by the Company, including Shares
purchased in the open market, or authorized but unissued
Shares. Any Shares subject to an Award which for any reason
expires or terminates unexercised or is not earned in full
shall be added back to the Fungible Pool Limit and may again
be made subject to an Award under the Plan. The following
Shares shall not be added back to the Fungible Pool Limit and
shall not again be made available for issuance as Awards under
the Plan: (i) Shares not issued or delivered as a result of
the net settlement of an outstanding Stock Appreciation Right,
2
(ii) Shares used to pay the exercise price or withholding
taxes related to an outstanding Award, or (iii) Shares
repurchased on the open market with the exercise price
proceeds received by the Company upon the exercise of an
Award.
(b) TREATMENT OF AWARDS. Each Share issued or to be issued in
connection with any Award other than a Stock Option or Stock
Appreciation Right shall be counted against the Fungible Pool
Limit as one and four-tenths (1.4) Shares. Each Share issued
or to be issued in connection with any Stock Option or Stock
Appreciation Right shall be counted against the Fungible Pool
Limit as one (1.0) Share. For these purposes, the number of
Shares taken into account with respect to a SAR shall be the
number of Shares underlying the SAR at grant, and not the
final number of Shares delivered upon exercise of the SAR. Any
Shares previously the subject of an Award that again become
available for grant pursuant to SECTION 3(A) shall be added
back to the Fungible Pool Limit in the same proportion, and
using the same multiplier, pursuant to which such Awards
reduced the Shares in the Fungible Pool Limit. The
Administrator shall determine the appropriate methodology for
calculating the number of Shares issued pursuant to the Plan.
(c) CODE LIMITS. The aggregate number of Shares subject to Awards
granted under this Plan during any calendar year to any one
Participant shall not exceed 300,000. Notwithstanding anything
to the contrary in this Plan, the foregoing limitations shall
be subject to adjustment under SECTION 10, but only to the
extent that such adjustment will not affect the status of any
Award intended to qualify as "performance-based compensation"
under Section 162(m) of the Code. The aggregate number of
Shares issued pursuant to ISOs granted under the Plan shall
not exceed One Million Seven Hundred Fifty Thousand
(1,750,000) Shares, which limitation shall be subject to
adjustment under SECTION 10 only to the extent that such
adjustment is consistent with adjustments permitted of a plan
authorizing ISOs under Section 422 of the Code.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, the Plan may be administered by different
bodies with respect to Directors, Officers who are
not Directors, and Employees who are neither
Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
SUBJECT TO SECTION 16(B). With respect to Awards
granted to Directors or to Employees who are also
Officers or Directors subject to Section 16(b) of the
Exchange Act, the Plan shall be administered by (A)
the Board, if the Board may administer the Plan in
compliance with the requirements for grants under the
Plan to be exempt acquisitions under Rule 16b-3, or
(B) a committee designated by the Board to administer
the Plan, which committee shall consist of
"Non-Employee Directors" within the meaning of Rule
16b-3. Once appointed, such Committee shall continue
to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board
may increase the size of the Committee and appoint
additional members, remove members (with or without
cause) and substitute new members, fill vacancies
(however caused), and remove all members of the
3
Committee and thereafter directly administer the
Plan, all to the extent permitted by the requirements
for grants under the Plan to be exempt acquisitions
under Rule 16b-3.
(iii) ADMINISTRATION WITH RESPECT TO COVERED EMPLOYEES
SUBJECT TO SECTION 162(M) OF THE CODE. With respect
to Awards granted to Employees who are also "covered
employees" within the meaning of Section 162(m) of
the Code and the regulations thereunder, as amended,
the Plan shall be administered by a committee
designated by the Board to administer the Plan, which
committee shall be constituted to satisfy the
requirements applicable to Awards intended to qualify
as "performance-based compensation" under Section
162(m). Once appointed, such Committee shall continue
to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board
may increase the size of the Committee and appoint
additional members, remove members (with or without
cause) and substitute new members, fill vacancies
(however caused), and remove all members of the
Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules
applicable to Awards intended to qualify as
"performance-based compensation" under Section
162(m).
(iv) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to Awards granted to Employees or Consultants
who are neither Directors nor Officers of the
Company, the Plan shall be administered by (A) the
Board or (B) a committee designated by the Board,
which committee shall be constituted to satisfy the
legal requirements relating to the administration of
stock option plans under state corporate and
securities laws and the Code. Once appointed, such
Committee shall serve in its designated capacity
until otherwise directed by the Board. The Board may
increase the size of the Committee and appoint
additional members, remove members (with or without
cause) and substitute new members, fill vacancies
(however caused), and remove all members of the
Committee and thereafter directly administer the
Plan, all to the extent permitted by applicable laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the express provisions
and limitations set forth in this Plan, and in the case of a
Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall be authorized
and empowered to do all things necessary or desirable, in its
sole discretion, in connection with the administration of this
Plan, including, without limitation, the following:
(i) to prescribe, amend and rescind rules and regulations
relating to this Plan and to define terms not
otherwise defined herein;
(ii) to determine which persons are eligible to be
Participants, to which of such persons, if any,
Awards shall be granted hereunder and the timing of
any such Awards, and to grant Awards;
4
(iii) to grant Awards to Participants and determine the
terms and conditions thereof, including the number of
Shares subject to Awards and the exercise or purchase
price of such Shares and the circumstances under
which Awards become exercisable or vested or are
forfeited or expire, which terms may but need not be
conditioned upon the passage of time, continued
employment, the satisfaction of performance criteria,
the occurrence of certain events, or other factors;
(iv) to establish or verify the extent of satisfaction of
any performance goals or other conditions applicable
to the grant, issuance, exercisability, vesting
and/or ability to retain any Award;
(v) to prescribe and amend the terms of the agreements or
other documents evidencing Awards made under this
Plan (which need not be identical);
(vi) to determine whether, and the extent to which,
adjustments are required pursuant to SECTION 10;
(vii) to interpret and construe this Plan, any rules and
regulations under this Plan and the terms and
conditions of any Award granted hereunder, and to
make exceptions to any such provisions in good faith
and for the benefit of the Corporation; and
(viii) to make all other determinations deemed necessary or
advisable for the administration of this Plan.
(c) DELEGATION AND ADMINISTRATION. The Administrator may delegate
to one or more separate committees (any such committee a
"SUBCOMMITTEE") composed of one or more directors of the
Company (who may but need not be members of any Committee
comprising the Administrator) the ability to grant Awards and
take the other actions described in SECTION 4(B) with respect
to Participants who are not Officers, and such actions shall
be treated for all purposes as if taken by the Administrator.
The Administrator may delegate to a Subcommittee of one or
more officers of the Company the ability to grant Awards and
take the other actions described in SECTION 4(B) with respect
to Participants (other than any such officers themselves) who
are not directors or Officers, PROVIDED, HOWEVER, that the
resolution so authorizing such officer(s) shall specify the
total number of rights or options such Subcommittee may so
award, and such actions shall be treated for all purposes as
if taken by the Administrator. Any action by any such
Subcommittee within the scope of such delegation shall be
deemed for all purposes to have been taken by the
Administrator, and references in this Plan to the
Administrator shall include any such Subcommittee. The
Administrator may delegate the administration of the Plan to
an officer or officers of the Company, and such
administrator(s) may have the authority to execute and
distribute agreements or other documents evidencing or
relating to Awards granted by the Administrator under this
Plan, to maintain records relating to the grant, vesting,
exercise, forfeiture or expiration of Awards, to process or
oversee the issuance of Shares upon the exercise, vesting
5
and/or settlement of an Award, to interpret the terms of
Awards and to take such other actions as the Administrator may
specify. Any action by any such administrator within the scope
of its delegation shall be deemed for all purposes to have
been taken by the Administrator and references in this Plan to
the Administrator shall include any such administrator,
provided that the actions and interpretations of any such
administrator shall be subject to review and approval,
disapproval or modification by the Administrator.
(d) EFFECT OF CHANGE IN STATUS. The Committee shall have the
discretion to determine the effect upon an Award and upon an
individual's status as an employee under the Plan (including
whether a Participant shall be deemed to have experienced a
termination of employment or other change in status) and upon
the vesting, expiration or forfeiture of an Award in the case
of (i) any individual who is employed by an entity that ceases
to be a Subsidiary of the Corporation, (ii) any leave of
absence approved by the Corporation or a Subsidiary, (iii) any
transfer between locations of employment with the Corporation
or a Subsidiary or between the Corporation and any Subsidiary
or between any Subsidiaries, (iv) any change in the
Participant's status from an employee to a consultant or
member of the Board of Directors, or vice versa, and (v) at
the request of the Corporation or a Subsidiary, any employee
who becomes employed by any partnership, joint venture,
corporation or other entity not meeting the requirements of a
Subsidiary.
(e) DETERMINATIONS OF THE ADMINISTRATOR. All decisions,
determinations and interpretations by the Administrator
regarding this Plan shall be final and binding on all
Participants or other persons claiming rights under the Plan
or any Award. The Administrator shall consider such factors as
it deems relevant to making such decisions, determinations and
interpretations including, without limitation, the
recommendations or advice of any director, officer or employee
of the Company and such attorneys, consultants and accountants
as it may select. A Participant or other holder of an Award
may contest a decision or action by the Administrator with
respect to such person or Award only on the grounds that such
decision or action was arbitrary or capricious or was
unlawful, and any review of such decision or action shall be
limited to determining whether the Administrator's decision or
action was arbitrary or capricious or was unlawful.
5. ELIGIBILITY. Awards may be granted to any person who is a Participant
under this Plan; provided that ISOs may be granted only to Employees.
If otherwise eligible, a Participant who has been granted an Award may
be granted additional Awards.
6. TERM OF THE PLAN. The Plan was approved by the Board on June 1, 2007
and will become effective, subject to shareholder approval, on July 13,
2007. The Plan shall remain available for the grant of Awards until May
31, 2017 or such earlier date as the Board may determine. The
expiration of the Administrator's authority to grant Awards under the
Plan will not affect the operation of the terms of the Plan or the
Company's and Participants' rights and obligations with respect to
Awards granted on or prior to the expiration date of the Plan.
6
7. PLAN AWARDS.
(a) AWARD TYPES. The Administrator, on behalf of the Company, is
authorized under this Plan to grant, award and enter into the
following arrangements or benefits under the Plan provided
that their terms and conditions are not inconsistent with the
provisions of the Plan: Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, and Other
Stock-Based Awards. Such arrangements and benefits are
sometimes referred to herein as "Awards." The Administrator,
in its discretion, may determine that any Award granted
hereunder shall be a performance Award the grant, issuance,
retention, vesting and/or settlement of which is subject to
satisfaction of one or more of the Qualifying Performance
Criteria specified in SECTION 8(E).
(i) STOCK OPTIONS. A "STOCK OPTION" is a right to
purchase a number of Shares at such exercise price,
at such times, and on such other terms and conditions
as are specified in or determined pursuant to the
document(s) evidencing the Award (the "OPTION
AGREEMENT"). The Committee may grant Stock Options
intended to be eligible to qualify as incentive stock
options ("ISOS") pursuant to Section 422 of the Code
and Stock Options that are not intended to qualify as
ISOs ("NON-QUALIFIED STOCK OPTIONS"), as it, in its
sole discretion, shall determine.
(ii) STOCK APPRECIATION RIGHTS. A "STOCK APPRECIATION
RIGHT" or "SAR" is a right to receive, in cash or
stock (as determined by the Administrator), value
with respect to a specific number of Shares equal to
or otherwise based on the excess of (i) the market
value of a Share at the time of exercise over (ii)
the exercise price of the right, subject to such
terms and conditions as are expressed in the
document(s) evidencing the Award (the "SAR
AGREEMENT").
(iii) RESTRICTED STOCK. A "RESTRICTED STOCK" Award is an
award of Shares, the grant, issuance, retention
and/or vesting of which is subject to such conditions
as are expressed in the document(s) evidencing the
Award (the "RESTRICTED STOCK AGREEMENT").
(iv) RESTRICTED STOCK UNIT. A "RESTRICTED STOCK UNIT"
Award is an award of a right to receive, in cash or
stock (as determined by the Administrator) the market
value of one Share, the grant, issuance, retention
and/or vesting of which is subject to such conditions
as are expressed in the document(s) evidencing the
Award (the "RESTRICTED STOCK UNIT AGREEMENT").
(v) OTHER STOCK-BASED AWARDS. An "OTHER STOCK-BASED
AWARD" is an award other than those described in
subsections (i) - (iv) above, that is denominated or
payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Common
Stock or factors that may influence the value of
Common Stock, including, without limitation,
convertible or exchangeable debt securities, other
rights convertible or exchangeable into Common Stock,
purchase rights for Common Stock, Awards with value
and payment contingent upon performance of the
Company or business units thereof or any other
factors designated by the Administrator, and Awards
valued by reference to the book value of Common Stock
or the value of securities of or the performance of
7
specified Subsidiaries or other business units. The
Administrator shall determine the terms and
conditions of such Awards, which shall be expressed
in the document(s) evidencing the Award (the "OTHER
STOCK-BASED AWARD AGREEMENT").
(b) GRANTS OF AWARDS. An Award may consist of one of the foregoing
arrangements or benefits or two or more of them in tandem or
in the alternative.
8. TERMS OF AWARDS.
(a) GRANT, TERMS AND CONDITIONS OF STOCK OPTIONS AND SARS. The
Administrator may grant Stock Options or SARs at any time and
from time to time prior to the expiration of the Plan to
eligible Participants selected by the Administrator. No
Participant shall have any rights as a stockholder with
respect to any Shares subject to Stock Options or SARs
hereunder until said Shares have been issued. Each Stock
Option or SAR shall be evidenced only by such agreements,
notices and/or terms or conditions documented in such form
(including by electronic communications) as may be approved by
the Administrator. Each Stock Option grant will expressly
identify the Stock Option as an ISO or as a Non-qualified
Stock Option. In the absence of a designation, a Stock Option
shall be treated as a Non-qualified Stock Option. Stock
Options or SARs granted pursuant to the Plan need not be
identical but each must contain or be subject to the following
terms and conditions:
(i) PRICE. The purchase price (also referred to as the
exercise price) under each Stock Option or SAR
granted hereunder shall be established by the
Administrator. The purchase price per Share shall not
be less than 100% of the market value of a Share on
the date of grant. For purposes of the Plan, "MARKET
VALUE" shall mean the fair market value of the
Company's common stock determined in good faith by
the Administrator in a manner consistent with the
requirements of Section 409A of the Code. The
exercise price of a Stock Option shall be paid in
cash or in such other form if and to the extent
permitted by the Administrator, including without
limitation by delivery of already owned Shares,
withholding (either actually or by attestation) of
Shares otherwise issuable under such Stock Option
and/or by payment under a broker-assisted sale and
remittance program acceptable to the Administrator.
(ii) NO REPRICING. Other than in connection with a change
in the Company's capitalization (as described in
SECTION 10 of the Plan), the exercise price of a
Stock Option or SAR may not be reduced without
stockholder approval.
(iii) NO RELOAD GRANTS. Stock Options shall not be granted
under the Plan in consideration for and shall not be
conditioned upon the delivery of Shares to the
Company in payment of the exercise price and/or tax
withholding obligation under any other Employee Stock
Option.
8
(iv) DURATION, EXERCISE AND TERMINATION OF STOCK OPTIONS
AND SARS. Each Stock Option or SAR shall be
exercisable at such time and in such installments
during the period prior to the expiration of the
Stock Option or SAR as determined by the
Administrator. The Administrator shall have the right
to make the timing of the ability to exercise any
Stock Option or SAR subject to continued employment,
the passage of time and/or such performance
requirements as deemed appropriate by the
Administrator. At any time after the grant of a Stock
Option, the Administrator may reduce or eliminate any
restrictions on the Participant's right to exercise
all or part of the Stock Option. Each Stock Option or
SAR must expire within a period of not more than ten
(10) years from the grant date. The Option Agreement
or SAR Agreement may provide for expiration prior to
the end of the stated term of the Award in the event
of the termination of employment or service of the
Participant to whom it was granted.
(v) CONDITIONS AND RESTRICTIONS UPON SECURITIES SUBJECT
TO STOCK OPTIONS OR SARS. Subject to the express
provisions of the Plan, the Administrator may provide
that the Shares issued upon exercise of a Stock
Option or SAR shall be subject to such further
conditions or agreements as the Administrator in its
discretion may specify prior to the exercise of such
Stock Option or SAR, including, without limitation,
conditions on vesting or transferability, forfeiture
or repurchase provisions. The obligation to make
payments with respect to SARs may be satisfied
through cash payments or the delivery of Shares, or a
combination thereof as the Administrator shall
determine. The Administrator may establish rules for
the deferred delivery of Common Stock upon exercise
of a Stock Option or SAR with the deferral evidenced
by use of Restricted Stock Units equal in number to
the number of Shares whose delivery is so deferred.
(vi) OTHER TERMS AND CONDITIONS. Stock Options and SARs
may also contain such other provisions, which shall
not be inconsistent with any of the foregoing terms,
as the Administrator shall deem appropriate.
(vii) ISOS. Stock Options intending to qualify as ISOs may
only be granted to employees of the Company within
the meaning of the Code, as determined by the
Administrator. An ISO granted to an Employee who, at
the time the ISO is granted, owns stock representing
more than ten percent (10%) of the voting power of
all classes of stock of the Company or any "parent
corporation" as defined in Section 424(e) of the Code
or Subsidiary, must have an exercise price that is
not less than 110% of the market value of the Shares
subject to the ISO, determined as of the date of
grant. To the extent that the Option Agreement
specifies that a Stock Option is intended to be
treated as an ISO, the Stock Option is intended to
qualify to the greatest extent possible as an
"incentive stock option" within the meaning of
Section 422 of the Code, and shall be so construed;
PROVIDED, HOWEVER, that any such designation shall
not be interpreted as a representation, guarantee or
other undertaking on the part of the Company that the
Stock Option is or will be determined to qualify as
an ISO. If and to the extent that any Shares are
issued under a portion of any Stock Option that
exceeds the $100,000 limitation of Section 422 of the
Code, such Shares shall not be treated as issued
under an ISO notwithstanding any designation
9
otherwise. Certain decisions, amendments,
interpretations and actions by the Administrator and
certain actions by a Participant may cause a Stock
Option to cease to qualify for the tax treatment
applicable to ISOs pursuant to the Code and by
accepting a Stock Option the Participant agrees in
advance to such disqualifying action.
(b) GRANT, TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED
STOCK UNITS. The Administrator may grant Restricted Stock or
Restricted Stock Units at any time and from time to time prior
to the expiration of the Plan to eligible Participants
selected by the Administrator. A Participant shall have rights
as a stockholder with respect to any Shares subject to a
Restricted Stock Award hereunder only to the extent specified
in this Plan or the Restricted Stock Agreement evidencing such
Award. Awards of Restricted Stock or Restricted Stock Units
shall be evidenced only by such agreements, notices and/or
terms or conditions documented in such form (including by
electronic communications) as may be approved by the
Administrator. Awards of Restricted Stock or Restricted Stock
Units granted pursuant to the Plan need not be identical but
each must contain or be subject to the following terms and
conditions:
(i) TERMS AND CONDITIONS. Each Restricted Stock Agreement
and each Restricted Stock Unit Agreement shall
contain provisions regarding (a) the number of Shares
subject to such Award or a formula for determining
such, (b) the purchase price of the Shares, if any,
and the means of payment for the Shares, (c) the
performance criteria, if any, and level of
achievement versus these criteria that shall
determine the number of Shares granted, issued,
retainable and/or vested, (d) such terms and
conditions on the grant, issuance, vesting and/or
forfeiture of the Shares as may be determined from
time to time by the Administrator, (e) restrictions
on the transferability of the Shares and (f) such
further terms and conditions as may be determined
from time to time by the Administrator, in each case
not inconsistent with this Plan.
(ii) SALE PRICE. Subject to the requirements of applicable
law, the Administrator shall determine the price, if
any, at which Shares of Restricted Stock or
Restricted Stock Units shall be sold or awarded to a
Participant, which may vary from time to time and
among Participants and which may be below the market
value of such Shares at the date of grant or
issuance.
(iii) SHARE VESTING. The grant, issuance, retention and/or
vesting of Shares under Restricted Stock or
Restricted Stock Unit Awards shall be at such time
and in such installments as determined by the
Administrator or under criteria established by the
Administrator. The Administrator shall have the right
to make the timing of the grant and/or the issuance,
ability to retain and/or vesting of Shares under
Restricted Stock or Restricted Stock Unit Awards
subject to continued employment, passage of time
and/or such performance criteria and level of
achievement versus these criteria as deemed
appropriate by the Administrator, which criteria may
be based on financial performance and/or personal
performance evaluations. Up to 150,000 Shares shall
be available for issuance to Participants as
Restricted Stock or Restricted Stock Unit Awards
having no minimum vesting period. No condition that
10
is based on performance criteria and level of
achievement versus such criteria shall be based on
performance over a period of less than one (1) year,
and no condition that is based upon continued
employment or the passage of time shall provide for
vesting in full of a Restricted Stock or Restricted
Stock Unit Award in less than pro rata installments
over three years from the date the Award is made,
other than with respect to such Awards that are
issued upon exercise or settlement of Stock Options
or SARs or upon the death, disability or retirement
of the Participant, in each case as specified in the
agreement evidencing such Award. Notwithstanding
anything to the contrary herein, the performance
criteria for any Restricted Stock or Restricted Stock
Unit that is intended to satisfy the requirements for
"performance-based compensation" under Section 162(m)
of the Code shall be a measure based on one or more
Qualifying Performance Criteria selected by the
Administrator and specified at the time the
Restricted Stock or Restricted Stock Unit Award is
granted.
(iv) TERMINATION OF EMPLOYMENT. The Restricted Stock or
Restricted Stock Unit Agreement may provide for the
forfeiture or cancellation of the Restricted Stock or
Restricted Stock Unit Award, in whole or in part, in
the event of the termination of employment or service
of the Participant to whom it was granted.
(v) RESTRICTED STOCK UNITS. Except to the extent this
Plan or the Administrator specifies otherwise,
Restricted Stock Units represent an unfunded and
unsecured obligation of the Company and do not confer
any of the rights of a stockholder until Shares are
issued thereunder. Settlement of Restricted Stock
Units upon expiration of the deferral or vesting
period shall be made in Shares or otherwise as
determined by the Administrator. Dividends or
dividend equivalent rights shall be payable in cash
or in additional shares with respect to Restricted
Stock Units only to the extent specifically provided
for by the Administrator. Until a Restricted Stock
Unit is settled, the number of Shares represented by
a Restricted Stock Unit shall be subject to
adjustment pursuant to SECTION 10. Any Restricted
Stock Units that are settled after the Participant's
death shall be distributed to the Participant's
designated beneficiary(ies) or, if none was
designated, the Participant's estate.
(c) SUSPENSION OR TERMINATION OF AWARDS. If at any time (including
with respect to Stock Options or SARs after a notice of
exercise has been delivered) the Administrator, including any
Subcommittee or administrator authorized pursuant to SECTION
4(C) (any such person, an "AUTHORIZED OFFICER"), reasonably
believes that a Participant has committed an act of misconduct
as described in this Section, the Authorized Officer may
suspend the Participant's right to exercise any Stock Option
or SAR or suspend the vesting of Shares under the
Participant's Restricted Stock or Restricted Stock Unit
Awards, as the case may be, pending a determination of whether
an act of misconduct has been committed. If the Administrator
or an Authorized Officer determines a Participant has
committed an act of embezzlement, fraud, dishonesty,
nonpayment of any obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of Company rules
resulting in loss, damage or injury to the Company, or if a
11
Participant makes an unauthorized disclosure of any Company
trade secret or confidential information, engages in any
conduct constituting unfair competition, induces any customer
to breach a contract with the Company or induces any principal
for whom the Company acts as agent to terminate such agency
relationship, neither the Participant nor his or her estate
shall be entitled to exercise any Stock Option or SAR
whatsoever and the Participant's Restricted Stock or
Restricted Stock Unit Agreement shall be forfeited and
cancelled. Any determination by the Administrator or an
Authorized Officer with respect to the foregoing shall be
final, conclusive and binding on all interested parties. For
any Participant who is an Officer, the determination of the
Administrator or of the Authorized Officer shall be subject to
the approval of the Board.
(d) TRANSFERABILITY. Unless the agreement or other document
evidencing an Award (or an amendment thereto authorized by the
Administrator) expressly states that the Award is transferable
as provided hereunder, no Award granted under this Plan, nor
any interest in such Award, may be sold, assigned, conveyed,
gifted, pledged, hypothecated or otherwise transferred in any
manner, other than by will or the laws of descent and
distribution. The Administrator may grant an Award or amend an
outstanding Award to provide that the Award is transferable or
assignable (a) in the case of a transfer without the payment
of any consideration, to any "family member" as such term is
defined in Section 1(a)(5) of the General Instructions to Form
S-8 under the Securities Act of 1933, as such may be amended
from time to time, and (b) in any transfer described in clause
(ii) of Section 1(a)(5) of the General Instructions to Form
S-8 under the 1933 Act as amended from time to time, PROVIDED
that following any such transfer or assignment the Award will
remain subject to substantially the same terms applicable to
the Award while held by the Participant to whom it was
granted, as modified as the Administrator shall determine
appropriate, and as a condition to such transfer the
transferee shall execute an agreement agreeing to be bound by
such terms; PROVIDED, FURTHER, that an ISO may be transferred
or assigned only to the extent consistent with Section 422 of
the Code. Any purported assignment, transfer or encumbrance
that does not qualify under this SECTION 8(D) shall be void
and unenforceable against the Company.
(e) QUALIFYING PERFORMANCE CRITERIA. For purposes of this Plan,
the term "QUALIFYING PERFORMANCE CRITERIA" shall mean any one
or more of the following performance criteria, either
individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or
Subsidiary, either individually, alternatively or in any
combination, and measured either annually or cumulatively over
a period of years, on an absolute basis or relative to a
pre-established target, to previous years' results or to a
designated comparison group, in each case as specified by the
Administrator in the Award: (a) cash flow, (b) earnings per
share, (c) earnings before interest, taxes and amortization,
(d) return on equity, (e) total stockholder return, (f) share
price performance, (g) return on capital, (h) return on assets
or net assets, (i) revenue, (j) income or net income, (k)
operating income or net operating income, (l) operating profit
or net operating profit, (m) operating margin or profit
margin, (n) return on operating revenue, (o) return on
invested capital, (p) market segment share, (q) product
release schedules, (r) new product innovation, (s) product
cost reduction through advanced technology, (t) brand
recognition/acceptance, (u) product ship targets, (v) customer
12
satisfaction, (w) strategic initiatives, or (x) acquisitions.
The Administrator may appropriately adjust any evaluation of
performance under a Qualifying Performance Criteria to exclude
any of the following events that occurs during a performance
period: (i) asset write-downs, (ii) litigation or claim
judgments or settlements, (iii) the effect of changes in or
provisions under tax law, accounting principles or other such
laws or provisions affecting reported results, (iv) accruals
for reorganization and restructuring programs, and (v) any
extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 and/or in management's
discussion and analysis of financial condition and results of
operations appearing in the Company's annual report to
stockholders for the applicable year. Notwithstanding
satisfaction of any completion of any Qualifying Performance
Criteria, to the extent specified at the time of grant of an
Award, the number of Shares, Stock Options, SARs, Restricted
Stock Units or other benefits granted, issued, retainable
and/or vested under an Award on account of satisfaction of
such Qualifying Performance Criteria may be reduced by the
Administrator on the basis of such further considerations as
the Administrator in its sole discretion shall determine.
(f) DIVIDENDS. Unless otherwise provided by the Administrator, no
adjustment shall be made in Shares issuable under Awards on
account of cash dividends that may be paid or other rights
that may be issued to the holders of Shares prior to their
issuance under any Award. The Administrator shall specify
whether dividends or dividend equivalent amounts shall be paid
to any Participant with respect to the Shares subject to any
Award that have not vested or been issued or that are subject
to any restrictions or conditions on the record date for
dividends.
(g) DOCUMENTS EVIDENCING AWARDS. The Administrator shall, subject
to applicable law, determine the date an Award is deemed to be
granted. The Administrator or, except to the extent prohibited
under applicable law, its delegate(s) may establish the terms
of agreements or other documents evidencing Awards under this
Plan and may, but need not, require as a condition to any such
agreement's or document's effectiveness that such agreement or
document be executed by the Participant, including by
electronic signature or other electronic indication of
acceptance, and that such Participant agree to such further
terms and conditions as specified in such agreement or
document. The grant of an Award under this Plan shall not
confer any rights upon the Participant holding such Award
other than such terms, and subject to such conditions, as are
specified in this Plan as being applicable to such type of
Award (or to all Awards) or as are expressly set forth in the
agreement or other document evidencing such Award.
(h) ADDITIONAL RESTRICTIONS ON AWARDS. Either at the time an Award
is granted or by subsequent action, the Administrator may, but
need not, impose such restrictions, conditions or limitations
as it determines appropriate as to the timing and manner of
any resales by a Participant or other subsequent transfers by
a Participant of any Shares issued under an Award, including
without limitation (a) restrictions under an insider trading
policy, (b) restrictions designed to delay and/or coordinate
the timing and manner of sales by the Participant or
Participants, and (c) restrictions as to the use of a
specified brokerage firm for receipt, resales or other
transfers of such Shares.
13
(i) SUBSIDIARY AWARDS. In the case of a grant of an Award to any
Participant employed by a Subsidiary, such grant may, if the
Administrator so directs, be implemented by the Company
issuing any subject Shares to the Subsidiary, for such lawful
consideration as the Administrator may determine, upon the
condition or understanding that the Subsidiary will transfer
the Shares to the Participant in accordance with the terms of
the Award specified by the Administrator pursuant to the
provisions of the Plan. Notwithstanding any other provision
hereof, such Award may be issued by and in the name of the
Subsidiary and shall be deemed granted on such date as the
Administrator shall determine.
9. WITHHOLDING TAXES. To the extent required by applicable federal, state,
local or foreign law, the Administrator may and/or a Participant shall
make arrangements satisfactory to the Company for the satisfaction of
any withholding tax obligations that arise with respect to any Stock
Option, SAR, Restricted Stock or Restricted Stock Unit Award, or any
sale of Shares. The Company shall not be required to issue Shares or to
recognize the disposition of such Shares until such obligations are
satisfied. To the extent permitted or required by the Administrator,
these obligations may or shall be satisfied by having the Company
withhold a portion of the Shares of stock that otherwise would be
issued to a Participant under such Award or by tendering Shares
previously acquired by the Participant.
10. ADJUSTMENTS OF AND CHANGES IN THE COMMON STOCK.
(a) The existence of outstanding Awards shall not affect in any
way the right or power of the Company or its shareholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the Company's
capital structure or its business, or any merger or
consolidation of the Company or any issuance of Shares or
other securities or subscription rights thereto, or any
issuance of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Shares or other securities of
the Company or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act
or proceeding, whether of a similar character or otherwise.
Further, except as expressly provided herein or by the
Administrator, (i) the issuance by the Company of shares of
stock or any class of securities convertible into shares of
stock of any class, for cash, property, labor or services,
upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or
other securities, (ii) the payment of a dividend in property
other than Shares, or (iii) the occurrence of any similar
transaction, and in any case whether or not for fair value,
shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of Shares subject to Stock
Options or other Awards theretofore granted or the purchase
price per Share, unless the Administrator shall determine, in
its sole discretion, that an adjustment is necessary or
appropriate.
(b) If the outstanding Shares or other securities of the Company,
or both, for which the Award is then exercisable or as to
which the Award is to be settled shall at any time be changed
or exchanged by declaration of a stock dividend, stock split,
combination of shares, extraordinary dividend of cash and/or
assets, recapitalization, reorganization or any similar equity
restructuring transaction (as that term is used in Statement
14
of Financial Accounting Standards No. 123 (revised) affecting
the Shares or other securities of the Company, the
Administrator shall adjust the number and kind of Shares or
other securities that are subject to this Plan and to the
limits under SECTION 3 and that are subject to any Awards
theretofore granted, and the exercise or settlement prices of
such Awards, so as to maintain the proportionate number of
Shares or other securities subject to such Awards without
changing the aggregate exercise or settlement price, if any.
(c) No right to purchase fractional Shares shall result from any
adjustment in Stock Options or SARs pursuant to this SECTION
10. In case of any such adjustment, the Shares subject to the
Stock Option or SAR shall be rounded down to the nearest whole
share.
(d) Any other provision hereof to the contrary notwithstanding
(except SECTION 10(A)), in the event the Company is a party to
a merger or other reorganization, outstanding Awards shall be
subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption
of outstanding Awards by the surviving corporation or its
parent, for their continuation by the Company (if the Company
is a surviving corporation), for accelerated vesting and
accelerated expiration, or for settlement in cash.
11. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend, alter or
discontinue the Plan and the Administrator may to the extent permitted
by the Plan amend any agreement or other document evidencing an Award
made under this Plan; PROVIDED, HOWEVER, that the Company shall submit
for stockholder approval any amendment (other than an amendment
pursuant to the adjustment provisions of SECTION 10) required to be
submitted for stockholder approval by NASDAQ or that otherwise would:
(a) Increase the maximum number of Shares for which Awards may be
granted under this Plan;
(b) Reduce the price at which Stock Options may be granted below
the price provided for in SECTION 9(A);
(c) Reduce the option price of outstanding Stock Options;
(d) Extend the term of this Plan;
(e) Change the class of persons eligible to be Participants; or
(f) Increase the limits in SECTION 3.
In addition, no such amendment or alteration shall be made which would
impair the rights of any Participant, without such Participant's consent, under
any Award theretofore granted; PROVIDED that no such consent shall be required
with respect to any amendment or alteration if the Administrator determines in
its sole discretion that such amendment or alteration either (i) is required or
advisable in order for the Company, the Plan or the Award to satisfy or conform
to any law or regulation or to meet the requirements of any accounting standard,
15
or (ii) is not reasonably likely to significantly diminish the benefits provided
under such Award, or that any such diminishment has been adequately compensated.
12. COMPLIANCE WITH APPLICABLE LAW. This Plan, the grant and exercise of
Awards hereunder, and the obligation of the Company to sell, issue or
deliver Shares under such Awards, shall be subject to all applicable
federal, state and local laws, rules and regulations and to such
approvals by any governmental or regulatory agency as may be required.
The Company shall not be required to register in a Participant's name
or deliver any Shares prior to the completion of any registration or
qualification of such Shares under any federal, state or local law or
any ruling or regulation of any government body which the Administrator
shall determine to be necessary or advisable. To the extent the Company
is unable to or the Administrator deems it infeasible to obtain
authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary or advisable for the
lawful issuance and sale of any Shares hereunder, the Company shall be
relieved of any liability with respect to the failure to issue or sell
such Shares as to which such requisite authority shall not have been
obtained. No Stock Option shall be exercisable and no Shares shall be
issued and/or transferable under any other Award unless a registration
statement with respect to the Shares underlying such Stock Option is
effective and current or the Company has determined that such
registration is unnecessary.
13. LIABILITY OF COMPANY. The Company shall not be liable to a Participant
or other persons as to: (a) the non-issuance or sale of Shares as to
which the Company has been unable to obtain from any regulatory body
having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder; and
(b) any tax consequence expected, but not realized, by any Participant
or other person due to the receipt, exercise or settlement of any Stock
Option or other Award granted hereunder.
14. NON-EXCLUSIVITY OF PLAN. Neither the adoption of this Plan by the Board
nor the submission of this Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of
the Board or the Administrator to adopt such other incentive
arrangements as either may deem desirable, including, without
limitation, the granting of Stock Options, Stock Appreciation Rights,
Restricted Stock or Restricted Stock Units otherwise than under this
Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
15. UNFUNDED PLAN. Insofar as it provides for Awards, the Plan shall be
unfunded. Although bookkeeping accounts may be established with respect
to Participants who are granted Awards under this Plan, any such
accounts will be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets which may at any time be
represented by Awards, nor shall this Plan be construed as providing
for such segregation, nor shall the Company or the Administrator be
deemed to be a trustee of stock or cash to be awarded under the Plan.
16. LISTING OR QUALIFICATION OF COMMON STOCK. If the Administrator
determines in its discretion that the listing or qualification of the
Shares available for issuance under the Plan on any securities exchange
or quotation or trading system or under any applicable law or
governmental regulation is necessary as a condition to the issuance of
16
such Shares, a Stock Option or SAR may not be exercised in whole or in
part and a Restricted Stock or Restricted Stock Unit Award shall not
vest or be settled unless such listing, qualification, consent or
approval has been unconditionally obtained.
17. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.
18. GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with the laws of the State of Delaware (without giving
effect to conflicts of law principles).
19. AWARDS UNDER PREEXISTING PLAN. Upon approval of the Plan by
stockholders of the Company, no further awards shall be granted under
the Preexisting Plan; PROVIDED, HOWEVER, that any shares of Common
Stock that have been forfeited or cancelled in accordance with the
terms of the applicable award under the Preexisting Plan may be
subsequently again awarded in accordance with the terms of such
Preexisting Plan.
20. SECTION 409A OF THE CODE. To the extent applicable, the Plan is
intended to comply with Section 409A of the Code. Unless the
Administrator determines otherwise, the Administrator shall interpret
and administer the Plan in accordance with Section 409A. The
Administrator shall have the authority unilaterally to accelerate or
delay a payment to which the holder of any Award may be entitled to the
extent necessary or desirable to comply with, or avoid adverse
consequences under, Section 409A.
17