THE TRANSLATION GROUP, LTD.
A DELAWARE CORPORATION
AMENDED AND RESTATED 1995 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE. The name of the plan is the Amended and Restated 1995
Incentive and Non-Qualified Stock Option Plan (the "Plan"). The purposes of the
Plan are to attract and retain the best available personnel, to provide
additional incentive to the employees, Consultants and non-employee directors of
The Translation Group Ltd., a Delaware corporation, and its subsidiaries
(collectively, the "Company"), and to promote the success of the Company's
business. It is anticipated that providing such persons with a direct link with
the Company's welfare will assure a closer identification of their interests
with those of the Company, thereby stimulating their efforts on the Company's
behalf and strengthen their desire to remain with the Company.
2. DEFINITIONS. As used in this Plan, the following definitions shall
apply:
(a) "ACT" means the Securities Exchange Act of 1934, as amended.
(b) "Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock Awards, Stock Awards, Performance
Share Awards and Stock Appreciation Rights.
(c) "AWARDEE" means the recipient of an Award.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
(f) "COMMISSION" means the United States Securities and Exchange
Commission.
(g) "COMMON STOCK" means the common stock of the Company, par value
$0.01 per share.
(h) "CONSULTANT" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting services and is compensated for such
consulting services; PROVIDED that the term Consultant shall not include
directors who are not compensated for their services or are paid only a
director's fee by the Company.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE, CONSULTANT OR NON-EMPLOYEE
DIRECTOR" means the absence of any interruption or termination of service as an
employee, Consultant or non-employee director, as applicable. Continuous Status
as an Employee, Consultant or non-employee director shall not be considered
interrupted in the case of sick leave or military leave, any other leave
provided pursuant to a written policy of the Company in effect at the time of
determination, or any other leave of absence approved by the Board or the Plan
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Administrator; PROVIDED that such leave is for a period of not more than the
greater of (i) 90 days or (ii) the date of the resumption of such service upon
the expiration of such leave which is guaranteed by contract or statute or is
provided in a written policy of the Company.
(j) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(k) "RULE 16B-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as such rule is amended from time to
time and as interpreted by the Commission.
(l) "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
(m) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of this Plan.
(n) "STOCK APPRECIATION RIGHT" or "SAR" means a right, the value of
which is determined relative to appreciation in value of Shares pursuant to an
award granted under Section 12 hereof.
(o) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. SCOPE OF PLAN. Subject to the provisions of Section 10 of this Plan,
and unless otherwise amended by the Board and approved by the stockholders of
the Company as required by law, the maximum aggregate number of Shares issuable
under this Plan is 2,500,000 and such Shares are hereby made available and shall
be reserved for issuance under this Plan. The Shares may be authorized but
unissued, or reacquired, Common Stock. Notwithstanding the foregoing, on and
after the date that the Plan is subject to Section 162(m) of the Code, Options
with respect to no more than 200,000 shares of Common Stock may be granted to
any one individual during any one calendar-year period.
If an Option shall expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares subject thereto
shall (unless this Plan shall have terminated) become available for grants of
other Options, Restricted Stock Awards, Stock Awards or Performance Share Awards
under this Plan.
4. ADMINISTRATION OF PLAN.
(A) PROCEDURE. The Plan shall be administered by the full Board of
Directors of the Company or a committee of such Board of Directors comprised of
two or more "Non-Employee Directors" within the meaning of Rule 16b-3(a)(3)
promulgated under the Act (the "Plan Administrator").
(B) POWERS OF PLAN ADMINISTRATOR. Subject to the provisions of this
Plan, the Plan Administrator shall have full and final authority in its
discretion to:
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(i) grant Awards under the Plan;
(ii) determine, upon review of relevant information and in
accordance with Section 7 below, the Fair Market Value of the Common Stock;
(iii) determine the exercise price per share of Options and SARs to
be granted, in accordance with this Plan;
(iv) select the directors, officers, employees and Consultants to
whom, and the time or times at which, Awards shall be granted and the number of
shares to be represented by each Award;
(v) cancel, with the consent of the Awardee, outstanding Awards and
grant new Awards in substitution therefor;
(vi) interpret this Plan and any Award under the Plan;
(vii) accelerate or defer (with the consent of Awardee) the
exercise date of any Option;
(viii) prescribe, amend and rescind rules and regulations relating
to this Plan;
(ix) impose limitations on Awards, including limitations on
transfer and repurchase provisions and extend the exercise period within which
Stock Options and SARs may be exercised;
(x) determine the terms and provisions of each Award (which need
not be identical) by which Options, SARs or Shares shall be evidenced and, with
the consent of the holder thereof, modify or amend any provisions (including
without limitation provisions relating to the exercise price and the obligation
of any Optionee to sell purchased Shares to the Company upon specified terms and
conditions) of any Option;
(xi) require withholding from or payment by an Awardee of any
federal, state or local taxes;
(xii) appoint and compensate agents, counsel, auditors or other
specialists as the Plan Administrator deems necessary or advisable;
(xiii) correct any defect or supply any omission or reconcile any
inconsistency in this Plan and any agreement relating to any Option, in such
manner and to such extent the Plan Administrator determines is necessary to
carry out the purposes of this Plan, and;
(xiv) construe and interpret this Plan, any agreement relating to
any Award, and make all other determinations deemed by the Plan Administrator to
be necessary or advisable for the administration of this Plan, even in conflict
with an express provision of the Plan.
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(C) EFFECT OF PLAN ADMINISTRATOR'S DECISION. All decisions
determinations and interpretations of the Plan Administrator shall be final and
binding on all Awardees and any other holders of any Awards granted under this
Plan.
(D) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Plan Administrator, in
its discretion, may delegate to the Chairman of the Company or the Chief
Operating Officer all or part of the Plan Administrator's authority and duties
with respect to granting Awards to individuals who are not subject to the
reporting provisions of Section 16 of the Act or "covered employees" within the
meaning of Section 162(m) of the Code. The Plan Administrator may revoke or
amend the terms of such a delegation at any time, but such revocation shall not
invalidate prior actions of the Chairman or Chief Operating Officer that were
consistent with the terms of the Plan.
5. ELIGIBILITY.
(a) Directors, officers, employees and consultants of the Company or
its Subsidiaries who, in the opinion of the Plan Administrator, are mainly
responsible for the continued growth and development and future financial
success of the business shall be eligible to participate in the Plan. In
addition, non-employee directors are eligible to receive an automatic grant of
Stock Options pursuant to Section 9 hereof.
(b) Anything to the contrary notwithstanding, each non-employee
director who is first elected or appointed to serve as a director shall
automatically be granted Non-Qualified Stock Options to purchase 5,000 shares of
Stock. The Option exercise price for Options granted to non-employee directors
under the Plan will be equal the Fair Market Value of the Stock on the date of
grant. Options granted to non-employee directors under the foregoing provisions
will be granted on the date that such non-employee director is first elected or
appointed to serve as a director and will vest in equal annual installments over
three years commencing on the anniversary of the date of grant and will expire
ten years after grant, subject to earlier termination if the optionee ceases to
serve as a director.
(c) Each Option granted under Section 5(b) above shall be a
Nonstatutory Stock Option. Each other Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. Notwithstanding such designations, if and to the extent that the
aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the Company) exceeds
$100,000, such options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 5(c), Options shall be taken into account in the order
in which they are granted, and the Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(d) This Plan shall not confer upon any Awardee any right with respect
to continuation of employment by or the rendition of services to the Company or
any Parent or Subsidiary, nor shall it interfere in any way with his or her
right or the right of the Company or any Parent or Subsidiary to terminate his
or her employment or services at any time, with or without cause. The terms of
this Plan or any Awards granted hereunder shall not be construed to give any
Awardee the right to any benefits not specifically provided by this Plan or in
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any manner modify the Company's right to modify, amend or terminate any of its
pension or retirement plans.
6. EFFECTIVENESS OF PLAN. The amendments to this Plan shall become
effective upon its adoption by the Board of Directors of the Company (such
adoption to include the approval of at least two non-employee directors) and the
approval thereof by vote of the holders of a majority of the outstanding shares
of the Company present, or represented, and entitled to vote at a meeting to be
duly held (or through written consents in lieu of a meeting) in accordance with
the applicable laws of the State of Delaware. Such meeting shall be held within
twelve months of the adoption of the Plan by the Board of Directors.
7. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the Plan
Administrator as follows:
(i) In the case of an Incentive Stock Option granted to any
employee, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant, but if granted to an employee who,
at the time of the grant of such Incentive Stock Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(ii) With respect to (i) above, the per Share exercise price is
subject to adjustment as provided in Section 10 below. For purposes of this
Section 7(a), if an Option is amended to reduce the exercise price, the date of
grant of such option shall thereafter be considered to be the date of such
amendment.
(b) FAIR MARKET VALUE. The "Fair Market Value" of a share of Common
Stock on any day means: (a) if the principal market for the Common Stock is a
national securities exchange or the NASDAQ National Market System, the closing
sales price of the Common Stock on such day as reported by such exchange or
market system, or on a consolidated tape reflecting transactions on such
exchange or market system, or (b) if the principal market for the Common Stock
is not a national securities exchange or the NASDAQ National Market System, and
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System, the mean between the closing bid and the closing
asked prices for the Common Stock on such day as quoted on such system, or (c)
if the principal market for the Common Stock is not a national securities
exchange or the NASDAQ National Market System, and the Common Stock is not
quoted on the National Association of Securities Dealers Automated Quotation
System, the mean between the highest bid and lowest asked priced for the Common
Stock on such day as reported by the National Quotation Bureau, Inc.; provided
that if clauses (a), (b) and (c) of this paragraph are all inapplicable, or if
no trades have been made or no quotes are available for such day, the Fair
Market Value of the Common Stock shall be determined by the Plan Administrator
by any method which it deems to be appropriate. The determination of the Plan
Administrator shall be conclusive as to the Fair Market Value of the Common
Stock.
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(C) CONSIDERATION. The Option exercise price of each share purchased
pursuant to an Option shall be paid in full at the time of each exercise (the
"Payment Date") of the Option (i) in cash; (ii) by delivering to the Company a
notice of exercise with an irrevocable direction to a broker-dealer registered
under the Act to sell a sufficient portion of the shares and deliver the sale
proceeds directly to the Company to pay the exercise price; (iii) in the
discretion of the Plan Administrator, through the delivery to the Company of
previously-owned shares of Common Stock having an aggregate Fair Market Value
equal to the Option exercise price of the shares being purchased pursuant to the
exercise of the Option; provided, however, that shares of Common Stock delivered
in payment of the Option price must have been held by the participant for at
least six (6) months in order to be utilized to pay the Option price; (iv) in
the discretion of the Plan Administrator, through an election to have shares of
Common Stock otherwise issuable to the optionee withheld to pay the exercise
price of such Option; or (v) in the discretion of the Plan Administrator,
through any combination of the payment procedures set forth in subsections
(i)-(iv) of this Section 7(c).
(D) TAX WITHHOLDING.
(i) Whenever Shares are to be issued or cash is to be paid under
the Plan, the Company shall have the right to require the participant to remit
to the Company an amount sufficient to satisfy federal, state and local tax
withholding requirements prior to the delivery of any certificate for Shares or
any proceeds; provided, however, that in the case of a participant who receives
an Award of Shares under the Plan which is not fully vested, the participant
shall remit such amount on the first business day following the Tax Date. The
"Tax Date" for purposes of this Section 7 shall be the date on which the amount
of tax to be withheld is determined. If a participant makes a disposition of
shares acquired upon the exercise of an Incentive Stock Option within either two
years after the Option was granted or one year after its exercise by the
participant, the participant shall promptly notify the Company and the Company
shall have the right to require the participant to pay to the Company an amount
sufficient to satisfy federal, state and local tax withholding requirements.
(ii) A participant who is obligated to pay the Company an amount
required to be withheld under applicable tax withholding requirements may pay
such amount (i) in cash; (ii) in the discretion of the Plan Administrator,
through the delivery to the Company of previously-owned Shares having an
aggregate Fair Market Value on the Tax Date equal to the tax obligation provided
that the previously owned shares delivered in satisfaction of the withholding
obligations must have been held by the participant for at least six (6) months;
or (iii) in the discretion of the Plan Administrator, through a combination of
the procedures set forth in subsections (i) and (ii) of this Section 7(d).
(iii) A participant who is obligated to pay to the Company an
amount required to be withheld under applicable tax withholding requirements in
connection with either the exercise of a Non-Qualified Stock Option, or the
receipt of a Restricted Stock Award, Stock Award or Performance Share Award
under the Plan may, in the discretion of the Plan Administrator, elect to
satisfy this withholding obligation, in whole or in part, by requesting that the
Company withhold shares of stock otherwise issuable to the participant having a
Fair Market Value on the Tax Date equal to the amount of the tax required to be
withheld; provided, however, that shares may be withheld by the Company only if
such withheld shares have vested. Any fractional amount shall be paid to the
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Company by the participant in cash or shall be withheld from the participant's
next regular paycheck.
(iv) An election by a participant to have shares of stock withheld
to satisfy federal, state and local tax withholding requirements pursuant to
Section 7(d) must be in writing and delivered to the Company prior to the Tax
Date.
8. OPTIONS.
(a) TERM OF OPTION. The term of each Option granted (other than an
Option granted under Section 5(b) above) shall be for a period of no more than
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Option agreement. However, in the case of an Option granted to
an Optionee who, at the time the Option 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 or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter time as may be provided in
the Option Agreement.
(b) EXERCISE OF OPTIONS.
(i) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted under this Plan (other than an Option granted pursuant to Section 5(b)
above) shall be exercisable at such times and under such conditions as
determined by the Plan Administrator, including performance criteria with
respect to the Company and/or the Optionee, and as shall otherwise be
permissible under the terms of this Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Plan Administrator, consist of
any consideration and method of payment allowable under Section 7 of this Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the optioned stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. If the
exercise of an Option is treated in part as the exercise of an Incentive Stock
Option and in part as the exercise of a Nonstatutory Stock Option pursuant to
Section 5(b) above, the Company shall issue a separate stock certificate
evidencing the Shares treated as acquired upon exercise of an Incentive Stock
Option and a separate stock certificate evidencing the Shares treated as
acquired upon exercise of a Nonstatutory Stock Option and shall identify each
such certificate accordingly in its stock transfer records. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of this
Plan.
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Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of this
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(ii) METHOD OF EXERCISE. An Optionee may exercise an Option, in
whole or in part, at any time during the option period by the Optionee's giving
written notice of exercise on a form provided by the Plan Administrator (if
available) to the Company specifying the number of shares of Common Stock
subject to the Option to be purchased. Such notice shall be accompanied by
payment in full of the purchase price in a manner provided for under Section
7(c) above. No shares of Common Stock shall be issued until full payment
therefor has been made. An Optionee shall have all of the rights of a
stockholder of the Company holding the class of Common Stock that is subject to
such Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the Optionee has given written notice of
exercise, has paid in full for such shares and such shares have been recorded on
the Company's official stockholder records as having been issued or transferred.
(iii) COMPANY LOAN OR GUARANTEE. Upon the exercise of any Option
and subject to the pertinent Option agreement and the discretion of the Plan
Administrator, the Company may at the request of the Optionee; (A) lend to the
Optionee, with recourse, an amount equal to such portion of the option exercise
price as the Plan Administrator may determine; or (B) guarantee a loan obtained
by the Optionee from a third-party for the purpose of tendering the option
exercise price.
(c) TERMINATION OF STATUS AS AN EMPLOYEE, CONSULTANT OR NON-EMPLOYEE
DIRECTOR. An Option or SAR may be exercised in whole at any time, or in part
from time to time, within such period or periods (not to exceed ten years from
the granting of the Option in the case of an Incentive Stock Option) as may be
determined by the Plan Administrator and set forth in the agreement (such period
or periods being hereinafter referred to as the "Option Period"), provided that,
unless the agreement provides otherwise:
(i) If a participant who is an employee of the Company shall cease
to be employed by the Company, all Options and SARs to which the employee is
then entitled to exercise may be exercised only within three months after the
termination of employment and within the Option Period or, if such termination
was due to disability or retirement (as hereinafter defined), within one year
after termination of employment and within the Option Period. Notwithstanding
the foregoing: (a) in the event that any termination of employment shall be for
Cause (as defined herein) or the participant becomes an officer or director of,
a consultant to or employed by a Competing Business (as defined herein), during
the Option Period, then any and all Options and SARs held by such participant
shall forthwith terminate; and(b) the Plan Administrator may, in its sole
discretion, extend the Option Period of any Option or SAR for up to three years
from the date of termination of employment regardless of the original Option
Period. For purposes of the Plan, retirement shall mean the termination of
employment with the Company, other than for Cause, at any time after the age 65.
For purposes of this Plan, the term "Cause" shall mean (a) with respect
to an individual who is party to a written agreement with the Company which
contains a definition of "cause" or "for cause" or words of similar import for
purposes of termination of employment thereunder by the Company, "cause" or "for
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cause" as defined in such agreement; (b) in all other cases (I) the willful
commission by an employee of a criminal or other act that causes substantial
economic damage to the Company or substantial injury to the business reputation
of the Company; (II) the commission of an act of fraud in the performance of
such person's duties to or on behalf of the Company; or (III) the continuing
willful failure of a person to perform the duties of such person to the Company
(other than a failure to perform duties resulting from such person's incapacity
due to illness) after written notice thereof (specifying the particulars thereof
in reasonable detail) and a reasonable opportunity to cure such failure is given
to the person by the Board of Directors of the Company or the Plan
Administrator. For purposes of the Plan, no act, or failure to act, on the part
of any person shall be considered "willful" unless done or omitted to be done by
the person other than in good faith and without reasonable belief that the
person's action or omission was in the best interest of the Company.
For purposes of this Plan, the term "Competing Business" shall mean:
any person, corporation or other entity engaged in the business of (a) providing
translation and localization services, (b) Web site design or hosting services,
or (c) selling or attempting to sell any product or service which is the same as
or similar to products or services sold by the Company within the last year
prior to termination of such person's employment, consultant relationship or
directorship, as the case may be, hereunder.
(ii) If a participant who is a director of the Company shall cease
to serve as a director of the Company, any Options or SARs then exercisable by
such director may be exercised only within three months after the cessation of
service and within the Option Period unless such cessation was due to
disability, in which case such optionee may exercise such Option or SAR within
one year after cessation of service and within the Option Period.
Notwithstanding the foregoing: (a) if any cessation of service as a director was
the result of removal for Cause or the participant becomes an officer or
director of, a consultant to or employed by a Competing Business during the
Option Period, any Options and SARs held by such participant shall forthwith
terminate; and (b) the Plan Administrator may in its sole discretion extend the
Option Period of any Option or SAR for up to three years from the date of
cessation of service regardless of the original Option Period;
(iii) If the participant shall die during the Option Period, any
Options or SARs then exercisable may be exercised only within one year after the
participant's death and within the Option Period and only by the participant's
personal representative or persons entitled thereto under the participant's will
or the laws of descent and distribution;
(iv) The Option or SAR may not be exercised for more shares
(subject to adjustment as provided in Section 10) after the termination of the
participant's employment, cessation of service as a director or the
participant's death, as the case may be, than the participant was entitled to
purchase thereunder at the time of the termination of the participant's
employment or the participant's death; and
(v) If a participant owns (or is deemed to own under applicable
provisions of the Code and regulations promulgated thereunder) more than 10% of
the combined voting power of all classes of stock of the Company (or any parent
or subsidiary corporation of the Company) and an Option granted to such
participant is intended to qualify as an Incentive Stock Option, the Option by
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its terms may not be exercisable after the expiration of five years from the
date such Option is granted.
9. TRANSFERABILITY OF OPTIONS. An Option granted hereunder shall by its
terms not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or the laws of descent and distribution or as
permitted by applicable Federal Securities laws, rules and regulations.
Specifically, employees or consultants may transfer options to family members or
family entities by gift or pursuant to a domestic relations order. For the
purposes of this section, "family member" includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the employee's household (other than a tenant or employee), a trust in
which these persons have more than fifty percent of the beneficial interests, a
foundation in which these persons (or the employee) control the management of
assets, and any other entity in which these persons (or the employee) own more
than fifty percent of the voting interests. An Option shall also be transferable
to the extent such transfer will not cause either the Option or the Plan to no
longer qualify as an Incentive Stock Option under the Code or as meeting the
requirements of Rule 16b-3.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CAPITALIZATION. Subject to any required action by the stockholders
of the Company, the number of shares of Common Stock which have been authorized
for issuance under this Plan but as to which no Options have yet been granted or
which have been returned to this Plan upon cancellation or expiration of an
Option, the number of shares of Common Stock subject to each outstanding Option,
the price per share of Common Stock covered by each such outstanding Option, and
the number of Options that can be granted to any one individual participant
shall be proportionately adjusted by the Plan Administrator for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock of the Company or other similar transaction. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Plan Administrator. The Plan Administrator may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Plan Administrator and give each Optionee
the right to exercise his or her Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable.
(c) SALE OR MERGER. Immediately prior to a Sale, each Optionee may
exercise his or her Option as to all Shares then subject to the Option,
regardless of any vesting conditions otherwise expressed in the Option
Agreement. "Sale" means: (i) sale (other than a sale by the Company) of
securities entitled to more than 75% of the voting power of the Company in a
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single transaction or a related series of transactions; or (ii) sale of
substantially all of the assets of the Company; or (iii) approval by the
stockholders of the Company of a reorganization, merger or consolidation of the
Company, as a result of which the persons who were the stockholders of the
Company immediately prior to such reorganization, merger or consolidation do not
own securities immediately after the reorganization, merger or consolidation
entitled to more than 50% of the voting power of the reorganized, merged or
consolidated company. Voting power, as used in this Section 10(c), shall refer
to those securities entitled to vote generally in the election of directors, and
securities of the Company not entitled to vote but which are convertible into,
or exercisable for, securities of the Company entitled to vote generally in the
election of directors shall be counted as if converted or exercised, and each
unit of voting securities shall be counted in proportion to the number of votes
such unit is entitled to cast.
(d) PURCHASED SHARES. No adjustment under this Section 10 shall apply
to any purchased Shares already deemed issued at the time any adjustment would
occur.
(e) NOTICE OF ADJUSTMENTS. Whenever the purchase price or the number or
kind of securities issuable upon the exercise of the Option shall be adjusted
pursuant to Section 10, the Company shall give each Optionee written notice
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, and the method by which such adjustment was
calculated.
(f) MITIGATION OF EXCISE TAX. If any payment or right accruing to an
Optionee under this Plan (without the application of this Section), either alone
or together with other payments or rights accruing to the Optionee from the
Company or an affiliate ("Total Payments") would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations thereunder),
the Plan Administrator may in each particular instance determine to (i) reduce
such payment or right to the largest amount or greatest right that will result
in no portion of the amount payable or right accruing under the Plan being
subject to an excise tax under Section 4999 of the Code or being disallowed as a
deduction under Section 280G of the Code, or (ii) take such other actions, or
make such other arrangements or payments with respect to any such payment or
right as the Plan Administrator may determine under the circumstances. Any such
determination shall be made by the Plan Administrator in the exercise of its
sole discretion, and such determination shall be conclusive and binding on the
Optionee. The Optionee shall cooperate as may be requested by the Plan
Administrator in connection with the Plan Administrator's determination,
including providing the Plan Administrator with such information concerning such
Optionee as the Plan Administrator may deem relevant to its determination.
11. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Plan Administrator makes the
determination granting such Option. Notice of the determination shall be given
to each employee, Consultant or non-employee director to whom an Option is so
granted within a reasonable time after the date of such grant. If the Plan
Administrator cancels, with the consent of the Optionee, any Option granted
under this Plan, and a new Option is substituted therefor, the date that the
canceled Option was originally granted shall be the date used to determine the
earliest date for exercising the new substituted Option under Section 7 so that
the Optionee may exercise the substituted Option at the same time as if the
Optionee had held the substituted Option since the date the canceled Option was
granted, unless the canceled Option shall have a new exercise price, in which
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case, the date of grant shall be the date the Plan Administrator makes the
determination to grant the substituted Option.
12. STOCK APPRECIATION RIGHTS. The Plan Administrator may, from time to
time, subject to the provisions of the Plan, grant SARs to eligible
participants. Such SARs may be granted (i) alone, (ii) simultaneously with the
grant of an Option (either an Incentive Stock Option or Non-Qualified Stock
Option) and in conjunction therewith or in the alternative thereto or (iii)
subsequent to the grant of an Option (either an Incentive Stock option or a
Non-Qualified Stock Option) and in conjunction therewith or in the alternative
thereto.
(i) An SAR shall entitle the holder upon exercise thereof to
receive from the Company, upon a written request filed with the Secretary of the
Company at its principal offices (the "Request"), (i) a number of shares of
Common Stock (with or without restrictions as to substantial risk of forfeiture
and transferability, as determined by the Plan Administrator in its sole
discretion), (ii) an amount of cash, or (iii) any combination of shares of
Common Stock and cash, as specified in the Request (but subject to the approval
of the Plan Administrator in its sole discretion, at any time up to and
including the time of payment, as to the making of any cash payment), having an
aggregate Fair Market Value equal to the product of (i) the excess of the Fair
Market Value, on the day of such Request, of one share of Common Stock over the
exercise price per share specified in such SAR or its related Option, multiplied
by (ii) the number of shares of Common Stock for which such SAR shall be
exercised.
(ii) The exercise price of an SAR granted alone shall be determined
by the Plan Administrator, but may not be less than the Fair Market Value of the
underlying Common Stock on the date of grant. An SAR granted simultaneously with
or subsequent to the grant of an Option and in conjunction therewith or in the
alternative thereto shall have the same exercise price as the related Option,
shall be transferable only upon the same terms and conditions as the related
Option, and shall be exercisable only to the same extent as the related Option;
PROVIDED, HOWEVER, that an SAR, by its terms, shall be exercisable only when the
Fair Market Value of the Common Stock subject to the SAR and related Option
exceeds the exercise price thereof.
(iii) Upon exercise of an SAR granted simultaneously with or
subsequent to an Option and in the alternative thereto, the number of shares of
Common Stock for which the related Option shall be exercisable shall be reduced
by the number of shares of Stock for which the SAR shall have been exercised.
The number of shares of Common Stock for which an SAR shall be exercisable shall
be reduced upon any exercise of a related Option by the number of shares of
Common Stock for which such Option shall have been exercised.
(iv) Any SAR shall be exercisable upon such additional terms and
conditions as may be prescribed by the Plan Administrator.
Any election by a Holder to receive cash in full or partial settlement
of a SAR, and any exercise of a SAR for cash, may be made only by a request
filed with the Corporate Secretary of the Company during the period beginning on
the third business day following the date of release for publication by the
Company of quarterly or annual summary statements of earnings and ending on the
twelfth business day following such date. Within thirty (30) days after the
receipt by the Company of a request to receive cash in full or partial
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settlement of a SAR or to exercise such SAR for cash, the Plan Administrator
shall, in its sole discretion, either consent to or disapprove, in whole or in
part, such request.
If the Plan Administrator disapproves in whole or in part any election
by a Holder to receive cash in full or partial settlement of a SAR or to
exercise such SAR for cash, such disapproval shall not affect such Holder's
right to exercise such SAR at a later date, to the extent that such SAR shall be
otherwise exercisable, or to elect the form of payment at a later date, provided
that an election to receive cash upon such later exercise shall be subject to
the approval of the Plan Administrator. Additionally, such disapproval shall not
affect such Holder's right to exercise any related Option or Options granted to
such Holder Under the Plan.
13. RESTRICTED STOCK AWARDS.
(a) The Plan Administrator may grant Restricted Stock Awards to any
officer, employee or Consultant of the Company and its Subsidiaries. A
Restricted Stock Award entitles the recipient to acquire shares of Stock subject
to such restrictions and conditions as the Plan Administrator may determine at
the time of grant ("Restricted Stock"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(b) Upon execution of a written instrument setting forth the
Restricted Stock Award and paying any applicable purchase price, a participant
shall have the rights of a stockholder with respect to the Stock subject to the
Restricted Stock Award, including, but not limited to the right to vote and
receive dividends with respect thereto; provided, however, that shares of Stock
subject to Restricted Stock Awards that have not vested shall be subject to the
restrictions on transferability described in Section 10(d) below. Unless the
Plan Administrator shall otherwise determine, certificates evidencing the
Restricted Stock shall remain in the possession of the Company until such
Restricted Stock is vested as provided in Section 13(c) below.
(c) The Plan Administrator at the time of grant shall specify the
date or dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which Restricted Stock shall become vested,
subject to such further rights of the Company or its assigns as may be specified
in the instrument evidencing the Restricted Stock Award. If the Awardee or the
Company, as the case may be, fails to achieve the designated goals or the
Awardee's relationship with the Company is terminated prior to the expiration of
the vesting period, the Awardee shall forfeit all shares of Stock subject to the
Restricted Stock Award which have not then vested.
(d) Unvested Restricted Stock may not be sold, assigned
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument evidencing the
Restricted Stock Award.
14. STOCK AWARDS. The Plan Administrator may, in its sole discretion,
grant (or sell at a purchase price determined by the Plan Administrator) a Stock
Award to any officer, employee or Consultant of the Company or its Subsidiaries,
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pursuant to which such individual may receive shares of Common Stock free of any
vesting restrictions (a "Stock Award") under the Plan. Stock Awards may be
granted or sold as described in the preceding sentence in respect of past
services or other valid consideration, or in lieu of any cash compensation due
to such individual.
15. Performance Share Awards. A Performance Share Award is an Award
entitling the recipient to acquire shares of Common Stock upon the attainment of
specified performance goals. The Plan Administrator may make Performance Share
Awards independent of or in connection with the granting of any other Award
under the Plan. Performance Share Awards may be granted under the Plan to any
officer, employee or Consultant of the Company or its Subsidiaries, including
those who qualify for awards under other performance plans of the Company. The
Plan Administrator in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Plan Administrator may rely on the performance goals
and other standards applicable to other performance plans of the Company in
setting the standards for Performance Share Awards under the Plan.
16. AMENDMENT AND TERMINATION OF PLAN.
(a) AMENDMENT AND TERMINATION. The Board or the Plan Administrator may
amend, waive or terminate this Plan, including any express provision contained
herein, from time to time in such respects as it shall deem advisable; PROVIDED
that, to the extent necessary to comply with Rule 16b-3 or with Section 422 of
the Code (or any other successor or applicable law or regulation), the Company
shall obtain stockholder approval of any Plan amendment in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
Notwithstanding the foregoing, neither the provisions of Section 5(b) of this
Plan, nor any other provisions pertaining to the automatic option grants to
non-employee directors, shall be amended more than once every six months, other
than to comport with changes in the Code or other applicable laws or any rules
or regulations promulgated thereunder. The Plan shall terminate no later than
October 31, 2004.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of this Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Plan Administrator, which agreement must be in writing and signed by the
Optionee and the Company.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
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As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
18. RESTRICTIONS ON SHARES. Shares of Common Stock issued upon exercise of
an Option shall be subject to the terms and conditions specified herein and to
such other terms, conditions and restrictions as the Plan Administrator in its
discretion may determine or provide in the grant. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (a) the listing of such shares on any stock exchange
(or other public market) on which the Common Stock may then be listed (or
regularly traded), (b) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Plan Administrator determines to be necessary or
advisable, and (c) the satisfaction of any applicable withholding obligation in
order for the Company or an affiliate to obtain a deduction with respect to the
exercise of an Option. The Company may cause any certificate for any share of
Common Stock to be delivered to be properly marked with a legend or other
notation reflecting the limitations on transfer of such Common Stock as provided
in this Plan or as the Plan Administrator may otherwise require. The Plan
Administrator may require any person exercising an Option to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares of Common Stock in
compliance with applicable law or otherwise. Fractional shares shall not be
delivered, but shall be rounded to the next lower whole number of shares.
19. STOCKHOLDER RIGHTS. No person shall have any rights of a stockholder
as to shares of Common Stock subject to an Option until, after proper exercise
of the Option or other action required, such shares shall have been recorded on
the Company's official stockholder records as having been issued or transferred.
Subject to the preceding Section and upon exercise of the Option or any portion
thereof, the Company will have thirty (30) days in which to issue the shares,
and the Optionee will not be treated as a stockholder for any purpose whatsoever
prior to such issuance. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such shares are recorded
as issued or transferred in the Company's official stockholder records, except
as provided herein or in an agreement.
20. BEST EFFORTS TO REGISTER. The Company may register under the
Securities Act the Common Stock delivered or deliverable pursuant to Options on
Commission Form S-8 if available to the Company for this purpose (or any
successor or alternate form that is substantially similar to that form to the
extent available to effect such registration), in accordance with the rules and
regulations governing such forms, as soon as such forms are available for
registration to the Company for this purpose. The Company will, if it so
determines, use its good faith efforts to cause the registration statement to
become effective as soon as possible and will file such supplements and
amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the option period of the last Option outstanding, (b) the date
the Company is no longer a reporting company under the Exchange Act and (c) the
date all Optionees have disposed of all shares delivered pursuant to any Option.
The Company may delay the foregoing actions at any time and from time to time if
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the Plan Administrator determines in its discretion that any such registration
would materially and adversely affect the Company's interests or if there is no
material benefit to Optionees.
21. 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 permit the exercise of all Options outstanding under this Plan and
the payment of all Restricted Stock Awards, Stock Awards and Performance Share
Awards under this Plan. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained for any reason.
22. AGREEMENTS. Options, Stock Awards, Restricted Stock Awards and
Performance Share Awards shall be evidenced by written agreements in such form
as the Plan Administrator shall approve.
23. INFORMATION TO AWARDEES. To the extent required by applicable law, the
Company shall provide to each Awardee, during the period for which such Awardee
has one or more Awards outstanding, copies of all annual reports and other
information which are provided to all stockholders of the Company. Except as
otherwise noted in the foregoing sentence, the Company shall have no obligation
or duty to affirmatively disclose to any Awardee, and no Awardee shall have any
right to be advised of, any material information regarding the Company or any
Parent or Subsidiary at any time prior to, upon or otherwise in connection with,
the exercise of an Award.
24. FUNDING. Benefits payable under this Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund or otherwise
segregate assets to be used for payment of benefits under this Plan.
25. INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as directors or as members of the Plan Administrator, the
members of the Plan Administrator shall be indemnified by the Company against
the reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with this
Plan or any option granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding; provided that within 60 days after
institution of any such action, suit or proceeding a Plan Administrator member
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same. The foregoing right of indemnification shall not be
exclusive and shall be independent of any other rights of indemnification to
which such persons may be entitled under the Company's Certificate of
Incorporation or by-laws, by contract, as a matter of law, or otherwise.
26. COMPLIANCE WITH SECTION 16. With respect to persons subject to Section 16 of
the Act, transactions under this Plan are intended to comply with all applicable
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conditions of Rule 16b-3 (or its successor rule and shall be construed to the
fullest extent possible in a manner consistent with this intent ). To the extent
that any Award fails to so comply, it shall be deemed to be modified to the
extent permitted by law and to the extent deemed advisable by the Plan
Administrator in order to comply with Rule 16b-3.
27. PARTICIPATION BY FOREIGN NATIONALS. The Plan Administrator may, in
order to fulfill the purposes of the Plan and without amending the Plan, modify
grants to foreign nationals or United States citizens employed abroad in order
to recognize differences in local law, tax policy or custom.
28. CONTROLLING LAW. This Plan shall be governed by the laws of the State
of New York applicable to contracts made and performed wholly in New Jersey
between New Jersey residents.
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