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EXHIBIT 10.06
DATAINSIGHT, INC.
EQUITY INCENTIVE COMPENSATION PLAN
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DATAINSIGHT, INC. (the "Company") sets forth herein the terms of this
Equity Incentive Compensation Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Company by
providing eligible officers, employees, directors and consultants of the Company
(as designated pursuant to Section 4 below) with incentives to improve business
results, by providing an opportunity to acquire or increase a proprietary
interest in the Company, which thereby will create a stronger incentive to
expend maximum effort for the growth and success of the Company and will
encourage such persons to remain in the employ or service of the Company. To
this end, the Plan provides for the grant of stock options and shares of
restricted stock, all as set out herein.
Each stock option granted under the Plan (an "Option") is intended to
be an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), or the
corresponding provision of any subsequently enacted tax statute ("Incentive
Stock Option"), except (i) to the extent that any such Option would exceed the
limitations set forth in Section 7 below; (ii) any Option specifically
designated at the time of grant as not being an "incentive stock option"; and
(iii) any Option that otherwise would not satisfy the requirements of Section
422 of the Code at the time of grant (collectively, "Non-qualified Stock
Options"). Further, grants may be made of shares of restricted Class B Common
Stock ("Restricted Stock"), in accordance with the provisions of Section 6 below
("Restrictive Stock Awards"). Such Option grants and Restricted Stock Awards
are referred to collectively as "Incentive Awards." Each Incentive Award shall
be evidenced by a written agreement between the Company and the recipient
employee setting out the terms and conditions of the grant (an "Agreement").
Except where the context otherwise requires, the term "Company" shall include
the parent corporation and all subsidiaries of the Company within the meaning of
Sections 424(e) and 424(f) of the Code.
2. ADMINISTRATION
(a) Board of Directors. The Plan shall be administered by the
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Board of Directors of the Company (the "Board"), which shall have the full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Agreement or any Incentive Award granted or
associated agreement entered into hereunder and all such other actions and
determinations consistent with the specific terms and provisions of the Plan
deemed by the Board to be necessary or appropriate to the administration of the
Plan or any Incentive Award granted or Agreement entered into hereunder. All
such actions and determinations shall be by the affirmative vote of a majority
of the members of the Board present at a meeting at which any issue relating to
the Plan is properly raised for consideration or by written consent of the Board
executed in accordance with the Company's articles of incorporation, bylaws and
with applicable law. The interpretation and construction by the Board of any
provision of the Plan or of any Incentive Award granted or Agreement entered
into hereunder shall be final and conclusive.
(b) Committee. The Board may from time to time appoint an Equity
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Incentive Compensation Plan Committee (the "Committee") consisting of two or
more members of the Board and such Committee may be comprised only of directors
who qualify as outside directors for purposes of Section 162(m) of the Code.
The Board, in its sole discretion, may provide that the role of the Committee
shall be limited to making recommendations to the Board concerning any
determinations to be made and actions to be taken by the Board pursuant to or
with respect to the Plan or the Board may delegate to the Committee such powers
and authorities related to the administration of the Plan, as set forth in
Section 2(a) above, as the Board shall determine, and as shall be consistent
with the articles of incorporation and bylaws of the Company and applicable law.
The Board may remove members, add members and fill vacancies on the Committee
from time to time, all in accordance with the
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Company's articles of incorporation and bylaws, and with applicable law. The
majority vote of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.
(c) No Liability. No member of the Board or of the Committee
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shall be liable for any action or determination made in good faith with respect
to the Plan or any Incentive Award granted or Agreement entered into hereunder.
(d) Delegation to the Committee. In the event that the Plan or
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any Incentive Award granted or Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board, such action may
be taken by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as provided
for in Section 2(b) above. Unless otherwise expressly determined by the Board,
any such action or determination by the Committee shall be final and conclusive.
3. STOCK
The stock that may be issued pursuant to an Option under the Plan can
either be shares of Class A Common Stock, no par value, or Class B Common Stock,
no par value, of the Company (collectively the "Stock"), which shares may be
treasury shares or authorized but unissued shares, or issued and outstanding
shares of Stock made available for such purpose by one or more shareholders of
the Company ("Outstanding Shares"). The stock that may be issued pursuant to a
Restricted Stock Award can only be Class B Common Stock, no par value, of the
Company, which shares may be treasury shares or authorized but unissued shares,
or Outstanding Shares. The number of shares of Class A Common Stock that may be
issued pursuant to Incentive Awards under the Plan shall not exceed, in the
aggregate, 16,724 shares, which number of shares is subject to adjustment as
hereinafter provided in Section 18 below. The number of shares of Class B
Common Stock that may be issued pursuant to Incentive Awards under the Plan
shall not exceed in the aggregate 947,573, which number of shares is subject to
adjustment as hereinafter provided in Section 18 below. If any Incentive Award
expires, terminates, or is terminated for any reason prior to exercise or
vesting in full, the shares of Stock that were subject to the unexercised,
forfeited or terminated portion of such Incentive Award shall be available for
future grants of Incentive Awards under the Plan, except that any Outstanding
Shares that were subject to the unexercised, forfeited or terminated portion of
an Incentive Award shall be returned to the shareholder who made such
Outstanding Shares available for grant under the Plan.
4. ELIGIBILITY
Incentive Awards may be granted under the Plan to any employee or
director of, or any consultant to the Company or any subsidiary (including any
such employee who is an officer or director of the Company or any subsidiary) as
the Board shall determine and designate from time to time prior to expiration or
termination of the Plan. An individual may hold more than one Incentive Award,
subject to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of the date of
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adoption by the Board (the "Effective Date"), subject to approval of the Plan
within one year of the Effective Date by a majority of the votes cast at a duly
held meeting of the shareholders of the Company at which a quorum representing
at least a majority of outstanding shares of stock of the Company entitled to
vote thereon is, either in person or by proxy, present and voting on the Plan or
by unanimous written consent in accordance with the articles of incorporation
and bylaws of the Company and in accordance with applicable law; provided,
however, that upon approval of the Plan by the shareholders of the Company as
set forth above, all Incentive Awards granted under the Plan on or after the
Effective Date shall be fully effective as if the shareholders of the Company
had approved the Plan on the Effective Date. If the shareholders fail to
approve the Plan within one year of the Effective Date, any Incentive Awards
granted hereunder shall be null and void and of no effect.
(b) Term. The Plan shall terminate on the date ten years from the
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Effective Date.
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6. GRANT OF OPTIONS AND SHARES OF RESTRICTED STOCK
(a) Options. Subject to the terms and conditions of the Plan, the
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Board may, at any time and from time to time prior to the date of termination of
the Plan, grant to such eligible individuals as the Board may determine
("Optionees") Options to purchase such number of shares of the Stock on such
terms and conditions as the Board may determine, including any terms or
conditions which may be necessary to qualify such Options as Incentive Stock
Options.
(b) Restricted Stock Awards. Subject to the terms of the Plan,
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the Board may, at any time and from time to time prior to the date of
termination of the Plan, grant to such eligible individuals as the Board may
determine ("Holders") shares of Restricted Stock, subject to (i) payment by
Holder of not less than the par value of such Restricted Stock and (ii) the
attainment of such performance objectives (if any) and the completion of such
service requirements (if any) as the Board shall determine and specify as a
condition to making such grant. Only shares of the Company's Class B Common
Stock may be granted pursuant to a Restricted Stock Award and each such grant
shall be effected by the execution of an Agreement setting out the terms and
conditions applicable thereto and by the issuance of shares of Restricted
Stock. The Secretary of the Company shall hold such certificates for Holder's
benefit until such time as the Restricted Stock is forfeited to the Company or
the restrictions lapse. Upon attainment of the specified objectives and
requirements (or, to the extent specified by the Board, partial attainment of
such objectives and requirements), Holder shall be entitled to shares of Stock
specified in the grant (or the portion of such shares earned by partial
attainment of the objectives and requirements, as applicable) free of
restrictions, except that such shares of Stock shall continue to be subject to
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the restrictions set out in Section 11. Upon (1) the failure of Holder to pay
the price specified for the shares ("Option Price") within the time set by the
Board at the time of the grant, (2) the expiration of the specified period for
attaining performance objectives without such objectives having been achieved or
(3) termination of Holder's employment without Holder having satisfied the
service requirement specified at the time of grant except as shall otherwise
have been specified in the Agreement at the time of grant or in an amendment
thereto; the shares of Restricted Stock (or appropriate portion thereof) shall
be forfeited and shall again be available for regrant under the terms of the
Plan. The Board may require that the certificates evidencing the grant of
shares of Restricted Stock hereunder be held in escrow until such restrictions
have expired. The Board may also cause a legend to be placed on such
certificates making appropriate reference to the restrictions to which the
shares are subject.
Any limitations or conditions on the vesting periods of Restricted
Stock contained in any Agreement or any employment agreement between the Company
and the Holder may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the date of grant of such
Restricted Stock Award, so as to accelerate the time at which the Restricted
Stock vest. Notwithstanding any other provisions of the Plan, no Restricted
Stock shall be issued to a Holder prior to the date the Plan is approved by the
shareholders of the Company as provided in Section 5 above.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option, other than an Option described in Section 1(ii) or (iii),
shall constitute an Incentive Stock Option only to the extent that the aggregate
fair market value (determined in good faith by the Board at the time the Option
is granted) of the Stock underlying the Options intended to constitute Incentive
Stock Options are exercisable for the first time by any Optionee during any
calendar year (under the Plan and all other plans of Optionee's employer
corporation and its parent and subsidiary corporations within the meaning of
Section 424 of the Code) does not exceed $100,000.
8. AGREEMENTS RELATING TO INCENTIVE AWARDS
All Options granted pursuant to the Plan shall be evidenced by
Agreements to be executed by the Company and by Optionee (and, in the case of
Outstanding Shares, by the shareholder who is making such shares available for
grant under the Plan), in such form or forms as the Board shall from time to
time determine. Agreements covering Options granted from time to time or at the
same time need not contain similar provisions; provided, however, that all such
Agreements shall comply with all terms of the Plan. Any amendment or
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modification to an Agreement shall be made by a written instrument approved by
the Board and executed by or on behalf of the Company and Optionee (or permitted
transferee of Optionee).
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option
(also referred to as "Option Price") shall be determined by the Board and shall
be set forth in each Agreement.
In the case of an Incentive Stock Option, the Option Price shall be
not less than the greater of par value or the fair market value of a share of
the Stock on the date the Option is granted (as determined in good faith by the
Board); provided, however, that in the event Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than ten percent (10%)), the Option Price of an Incentive Stock Option (within
the meaning of Section 422 of the Code) shall be no less than the greater of par
value or 110% of the fair market value (as determined in good faith by the
Board) of a share of Stock at the time such Option is granted. In the case of a
Non-qualified Option, the Option Price shall not be less than the par value of
the Stock underlying the Option.
10. TERM AND EXERCISE OF OPTIONS
(a) Term. Each Option granted under the Plan shall terminate and
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all rights to purchase shares thereunder shall cease upon the expiration of ten
years from the date such Option is granted or on such date prior thereto as may
be fixed by the Board and stated in the Agreement relating to such Option
(subject to earlier termination as provided in the Plan); provided, however,
that in the event Optionee would otherwise be ineligible to receive an Incentive
Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the
Code (relating to stock ownership of more than ten percent (10%)), an Incentive
Stock Option granted to such Optionee shall in no event be exercisable after the
expiration of five years from the date it is granted.
(b) Option Period and Limitations on Exercise. Each Option granted
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under the Plan shall be exercisable, in whole or in part, at any time and from
time to time, over a period commencing on or after the date of grant and ending
upon the expiration or termination of the Option as the Board shall determine
and set forth in the Agreement relating to such Option or any amendment thereto.
Any limitations or conditions on the exercise of an Option contained in any
Agreement or any employment agreement between the Company and Optionee may be
rescinded, modified or waived by the Board, in its sole discretion, at any time
and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised. Without limiting the
foregoing, the Board, subject to the terms and conditions of the Plan, may in
its sole discretion provide that an Option may not be exercised in whole or in
part for any period or periods of time during which such Option is outstanding
and may condition exercisability of an Option upon Optionee's attainment of
performance objectives set forth in the Agreement or any employment agreement
between the Company and Optionee. Notwithstanding any other provisions of the
Plan, no Option granted to an Optionee under the Plan shall be exercisable in
whole or in part prior to the date the Plan is approved by the shareholders of
the Company as provided in Section 5 above.
(c) Method of Exercise. An Option that is exercisable hereunder
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may be exercised by delivery to the Company on any business day, at its
principal office, addressed to the attention of the Board, of written notice of
exercise, which notice shall specify the number of shares with respect to which
the Option is being exercised, and except as provided in subsections (iii) and
(iv) below, shall be accompanied by payment in full of the Option Price of the
shares for which the Option is being exercised. Payment of the Option Price for
the shares of Stock purchased pursuant to the exercise of an Option shall be
made:
(i) in cash, cash equivalents or assets contributed to the
Company by Optionee;
(ii) through the tender to the Company of shares of Stock
(whether previously owned or acquired in connection with the exercise of
the Option), which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their fair
market value (as determined in good faith by the Board) on the date of
exercise;
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(iii) through the issuance by Optionee to the Company of a
promissory note, which such note shall (A) bear interest at a rate
acceptable to the Board, (B) mature within 12 months from the date of
issuance and (C) be secured by a pledge and security agreement relating to
the shares underlying the Option being exercised; or
(iv) by a combination of the methods described in (i) through
(iii) above.
An attempt to exercise any Option granted hereunder other than as set forth
above shall be invalid and of no force and effect. Promptly after the exercise
of an Option and the payment in full of the Option Price of the shares of Stock
covered thereby, the individual exercising the Option shall be entitled to the
issuance of a certificate or certificates evidencing Optionee's ownership of
such Stock. A separate certificate or certificates shall be issued for any
Stock purchased pursuant to the exercise of an Incentive Stock Option, which
certificate or certificates shall not include any shares which were purchased
pursuant to the exercise of an Option which is not an Incentive Stock Option.
An individual holding or exercising an Option shall have none of the rights of a
shareholder until the shares of Stock covered thereby are fully paid and issued
to him or her and, except as provided in Section 18 below, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date of such issuance. Shares issued pursuant to the exercise shall be subject
to the applicable restrictions set out in Section 11 hereof.
(d) Legend. All Restricted Stock and Stock issued upon exercise of
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Options shall have a legend reflecting the existence of the Company's right to
repurchase Stock. If the Company does not exercise its right to repurchase the
Stock within 13 months after Optionee's or Holder's (as the case may be)
employment or other relationship with the Company is terminated, then Optionee
or Holder (as the case may be) may retain the Stock free and clear of the
repurchase right of the Company hereunder and shall be entitled to have the
legend which refers to the Company's right to repurchase the Stock removed form
the certificate representing the Stock.
11. NON-TRANSFERABILITY OF STOCK AND OPTIONS
(a) Transferability. During the lifetime of an Optionee, only such
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Optionee (or, in the event of legal incapacity or incompetency, the guardian or
legal representative of Optionee) may exercise the Option. No Option shall be
assignable or transferable by the Optionee to whom it is granted, other than by
will or the laws of descent and distribution. No shares of Restricted Stock
shall be assignable or transferable, other than by will or the laws of descent
and distribution, prior to the satisfaction of applicable performance and
service requirements with respect to such shares.
(b) Legend. In order to enforce the restrictions imposed upon
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shares under this Plan or as provided in an Agreement relating to an Incentive
Award, the Board may cause a legend or legends to be placed on any certificate
representing shares of Restricted Stock or shares of Stock issued pursuant to an
Option or Restricted Stock Award which legend or legends shall make appropriate
reference to the restriction imposed under it.
(c) Additional Provisions. The Board may, in its sole discretion,
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include additional provisions in any Incentive Award, including without
limitation, restrictions on transfer, repurchase rights, commitments to pay cash
bonuses, arrangements for loans or transfers of property to Optionees upon
exercise of Options, a requirement to enter into a shareholders agreement by and
among the Company and its shareholders or such other provisions as shall be
determined by the Board; provided, however, that such additional provisions
shall be consistent with any term or condition of the Plan and such additional
provisions shall not cause any Incentive Stock Option granted under the Plan to
fail to qualify as an Incentive Stock Option within the meaning of Section 422
of the Code.
12. TERMINATION OF SERVICE
(a) Unvested Options Terminate. Upon the termination of Optionee's
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or Holder's (as the case may be) employment or service with the Company other
than for Cause (as defined in Section 12(c)) or by reason of death or "permanent
and total disability" of such individual, any Option or shares of Restricted
Stock that have not become vested to such individual pursuant to the Agreement
shall terminate immediately and any Option or Restricted Stock Award that has
vested pursuant to the Agreement but has not been exercised shall terminate at
the
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close of business on the 90th day following the Optionee's or Holder's (as
the case may be) termination of employment or service with the Company. Upon
termination of Optionee's or Holder's (as the case may be) employment or service
with the Company for Cause (as defined below), all Options or shares of
Restricted Stock that have not become vested to such individual pursuant to the
Agreement shall terminate immediately and any Option or Restricted Stock Award
that has vested pursuant to the Agreement but has not been exercised shall
terminate immediately. Notwithstanding the foregoing, the Board may provide, by
inclusion of appropriate language in any related Agreement or amendment thereto,
that Optionee or Holder (as the case may be) may (subject to the general
limitations on exercise set forth in Section 10 above), in the event of
termination of employment or service with the Company, exercise an Option or
receive shares of Restricted Stock, in whole or in part, at any time subsequent
to such termination of employment and prior to termination of the Incentive
Award as provided in Sections 6 and 10 above, either subject to or without
regard to any installment limitation, condition on exercise or transfer, or
vesting requirement imposed pursuant to such sections. Whether a leave of
absence or leave on military or government service shall constitute a
termination of employment or service for purposes of the Plan shall be
determined by the Board, which determination shall be final and conclusive. For
purposes of the Plan, a termination of employment or service with the Company
shall not be deemed to occur if Optionee or Holder (as the case may be) is
immediately thereafter employed by or engaged with the Company in any capacity.
(b) Company's Right to Repurchase Stock. Upon the termination of
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Optionee's or Holder's (as the case may be) employment or service with the
Company other than by reason of death or "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such individual, the
Company shall have the right (but not the obligation), within 13 months
following the date of termination, to repurchase all (or any portion thereof)
shares of Stock issued to Optionee or Holder (as the case may be) pursuant to
any Incentive Award. The price per share at which the Company may repurchase
such Stock is as follows: (i) if the termination of employment or other
relationship with the Company is for Cause (as defined below), then the price
per share shall be equal to the lesser of (A) the fair market value (as
determined in good faith by the Board) of such Stock as of the date the Company
notifies Optionee or Holder (as the case may be) of its intent to repurchase the
Stock or (B) the Option Price paid by Optionee or Holder (as the case may be)
for such Stock being repurchased; (ii) if the termination of employment or other
relationship with the Company is not for Cause (as defined below), then the
price per share shall be equal to the fair market value (as determined in good
faith by the Board) of such Stock as of the date the Company notifies the
Optionee or Holder (as the case may be) of its intent to repurchase the Stock;
or (iii) any other price per share as is determined by the Board in its sole
discretion. The form of consideration used by the Company to repurchase Stock
pursuant to this Section 12(b) shall be at the sole discretion of the Board.
(c) "Cause" Defined. For purposes of the Plan, "Cause" shall mean
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(i) the willful failure or refusal of Optionee or Holder (as the case may be) to
perform his or her duties to the Company (other than any such failure resulting
from incapacity due to physical or mental illness), which has not ceased within
10 business days after written demand for substantial performance is delivered
by the Company to Optionee or Holder (as the case may be), which demand
identifies the manner in which the Company believes that Optionee or Holder (as
the case may be) has not performed such duties and the steps required to cure
such failure to perform, (ii) intentional misconduct which is materially
injurious to the Company, monetarily or otherwise, (iii) fraud, theft or
embezzlement of Company funds or property, (iv) the conviction of Optionee or
Holder (as the case may be) or the plea of nolo contendere by such individual
with respect to a felony or (v) any other conduct defined as 'Cause' (or similar
meaning thereto) in any Agreement or employment agreement between Optionee or
Holder (as the case may be) and the Company.
(d) Company's Right to Purchase Vested Options & Vested Restricted
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Stock. Upon the termination of Optionee's or Holder's (as the case may be)
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employment or service with the Company other than by reason of death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such individual, the Company shall have the right (but not the
obligation), within 90 days following the date of termination, to purchase all
(or any portion thereof) vested Options and all vested Restricted Stock issued
to Optionee or Holder (as the case may be) pursuant to any Incentive Award. The
price per share at which the Company may repurchase such Incentive Awards shall
be equal to either (i) the difference between the fair market value of the Stock
(as determined in good faith by the Board) and the Option Price or (ii) any
other price per share as is determined by the Board in its sole discretion. The
form of consideration used by the Company to purchase Incentive Awards pursuant
to this Section 12(d) shall be at the sole discretion of the Board.
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13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death. If an Optionee dies while employed by or providing
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service to the Company, the executors, administrators, legatees or distributees
of such individual's estate shall have the right (subject to the general
limitations on exercise set forth in Section 10 above), at any time within one
year after the date of such individual's death and before termination of the
Option as provided in Section 10 above, to exercise any vested Option or vested
Restricted Stock Award held by such individual at the date of such individual's
death; provided, however, that the Board may provide, by inclusion of
appropriate language in any Agreement or any amendment thereto, that in the
event of the death of such individual, the executors, administrators, legatees
or distributees of such individual's estate may exercise an Option (subject to
the general limitations on exercise set forth in Section 10 above), in whole or
in part (whether vested or unvested), at any time subsequent to such
individual's death and prior to termination of the Option as provided in Section
10 above. The extent to which shares of Restricted Stock shall become vested as
a result of the grantee's death while employed by or providing services to the
Company shall be determined by the Board at the time of grant of such shares of
Restricted Stock and specified in the related Agreement.
(b) Disability. If an Optionee terminates employment or service
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with the Company by reason of the "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) of such person, then such person shall
have the right, at any time within one year (subject to the general limitations
on exercise set forth in Section 10 above) after such termination of employment
or service and before termination of the Option as provided in Section 10 above,
to exercise, in whole or in part, any vested Option or vested Restricted Stock
Award held by such person at the date of such termination of employment or
service; provided, however, that the Board may provide, by inclusion of
appropriate language in the Agreement, that such person may, in the event of the
termination of employment or service of the person with the Company by reason of
his or her "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code), exercise an Option or Restricted Stock Award, in whole or
in part (whether vested or unvested), at any time subsequent to such termination
of employment or service and prior to termination of the Incentive Award as
provided in Section 10 above. For purposes of this Plan, whether a termination
of employment is to be considered by reason of "permanent and total disability"
within the meaning of Section 22(e)(3) of the Code shall be determined in good
faith by the Board, which determination shall be final and conclusive The
extent to which shares of Restricted Stock shall become vested as a result of
the Holder's "total and permanent disability" while employed by or engaged in
performing services for the Company shall be determined by the Board at the time
of grant of such shares of Restricted Stock and specified in the related
Agreement.
(c) Company's Right to Repurchase Stock. Upon the termination of
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Optionee's or Holder's (as the case may be) employment or service with the
Company by reason of death or "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) of such individual, the Company shall
have the right (but not the obligation), within 13 months following the date of
termination, to repurchase all (or any portion thereof) shares of Stock issued
to Optionee or Holder (as the case may be) pursuant to any Incentive Award. The
price per share at which the Company may repurchase such Stock shall be equal to
either: (i) the fair market value (as determined in good faith by the Board) of
such Stock as of the date the Company notifies the Optionee or Holder (as the
case may be) of its intent to repurchase the Stock; or (ii) any other price per
share as is determined by the Board in its sole discretion. The form of
consideration used by the Company to repurchase Stock pursuant to this Section
13(c) shall be at the sole discretion of the Board.
(d) Company's Right to Purchase Vested Options & Vested Restricted
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Stock. Upon the termination of Optionee's or Holder's (as the case may be)
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employment or service with the Company by reason of death or "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
individual, the Company shall have the right (but not the obligation), within 12
months following the date of termination, to purchase all (or any portion
thereof) vested Options and all vested Restricted Stock Awards issued to
Optionee or Holder (as the case may be) pursuant to any Incentive Award. The
price per share at which the Company may repurchase such Incentive Awards shall
be equal to either (i) the difference between the fair market value of the Stock
(as determined in good faith by the Board) and the Option Price or (ii) any
other price per share as is determined by the Board in its sole discretion. The
form of consideration used by the Company to purchase Incentive Awards pursuant
to this Section 13(d) shall be at the sole discretion of the Board.
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14. TRIGGERING EVENTS
Unless otherwise set forth in an Agreement, the corporate events set
forth in Section 14(a) through (d) (each, a "Triggering Event") will effect
the vesting of Options and Restricted Stock pursuant to this Section 14.
(a) Purchase of the Company Using Cash. Upon the sale, transfer or
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other disposition of all or substantially all of the assets of the Company or
upon the sale of all or substantially all of the outstanding capital stock of
the Company, the consideration of which is solely cash, the Company shall have
the right (but not the obligation) to purchase all vested Options held by an
Optionee and all vested Restricted Stock Awards held by a Holder at a price per
share equal to either: (i) the difference between the fair market value of the
Stock (as determined in good faith by the Board) and the Option Price or (ii)
any other price per share as is determined by the Board in its sole discretion.
All unvested Options and unvested Restricted Stock Awards may be transferred to
a similar equity incentive plan of the successor entity; provided that such plan
contains terms and provisions at least as favorable to the Optionees and Holders
as the Plan. If no such successor entity plan exists, all unvested Options and
unvested Restricted Stock shall terminate upon consummation of the Triggering
Event.
(b) Purchase of the Company Using Cash and Securities. Upon the
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sale, transfer or other disposition of all or substantially all of the assets of
the Company or upon the sale of all or substantially all of the outstanding
capital stock of the Company, the consideration of which includes, but is not
solely cash, the Company shall have the right (but not the obligation) to
purchase (i) all vested Options held by an Optionee and all vested Restricted
Stock Awards held by a Holder (as the case may be) at a price per share equal to
the difference between the fair market value of the Stock and the Option Price.
All unvested Options and unvested Restricted Stock Awards may be transferred to
a similar equity incentive plan of the successor entity; provided that such plan
contains terms and provisions at least as favorable to the Optionees and Holders
as the Plan. If no such successor entity plan exists, all unvested Options and
unvested Restricted Stock Awards shall terminate upon consummation of the
Triggering Event.
(c) Merger/Stock Exchange. Within five days following the merger,
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consolidation or reorganization of the Company with one or more entities, the
aggregate valuation (as determined by the Board) of which entity is more than
twice the valuation (as determined by the Board) of the Company, the Company
shall have the right (but not the obligation) to purchase each Optionee's vested
Options and each Holder's vested Restricted Stock Awards at a price per share
equal to the difference between the fair market value of the Stock and the
Option Price. All unvested Options and unvested Restricted Stock Awards may be
transferred to a similar equity incentive plan of the successor entity; provided
that such plan contains terms and provisions at least as favorable to the
Optionees and Holders as the Plan. If no such successor entity plan exists, all
unvested Options and unvested Restricted Stock Awards shall terminate upon
consummation of the Triggering Event.
(d) Form of Consideration Used to Repurchase Incentive Awards. The
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type of consideration used by the Company to repurchase Incentive Awards
pursuant to this Section 14 shall be at the sole discretion of the Board.
15. USE OF PROCEEDS
The proceeds received by the Company from the sale of Stock pursuant
to the exercise of Options granted under the Plan and the issuance of shares of
Restricted Stock hereunder shall constitute general funds of the Company.
16. REQUIREMENTS OF LAW
The Company and, in the case of Outstanding Shares, its shareholders,
shall not be required to sell, issue or transfer any shares of Stock under any
Incentive Award if the sale, issuance or transfer of such shares would
constitute a violation by Holder, the individual exercising the Option, the
Company or any shareholder, of any provisions of any law or regulation of any
governmental authority, including without limitation any federal or state
securities laws or regulations. If at any time the Board shall determine, in
its discretion, that the listing, registration or qualification of any
securities subject to the Option upon any securities exchange or under any
<PAGE>
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of securities hereunder, the Option
may not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company, and any delay caused thereby shall
in no way affect the date of termination of the Option. Specifically in
connection with the Securities Act of 1933, as amended (the "Act"), at the time
of grant of Restricted Stock or when such Restricted Stock becomes vested or
upon exercise of any Option, unless a registration statement under the Act is in
effect with respect to the shares of Stock covered thereby, the Company shall
not be required to sell or issue such shares and, in the case of Outstanding
Shares, the shareholders shall not be required to transfer such shares, unless
the Board has received evidence satisfactory to it that Holder or Optionee may
acquire such shares pursuant to an exemption from registration under the Act.
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Act.
The Company shall not be obligated to take any affirmative action in
order to cause the exercise of an Option or the issuance of shares pursuant
thereto or pursuant to a grant of Restricted Stock to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Option shall not be exercisable or that shares
of Stock may not be issued pursuant to a grant of Restricted Stock unless and
until the shares of Stock covered by such Incentive Award are registered or are
subject to an available exemption from registration, the exercise of such Option
or issuance of shares of Stock pursuant to such grant (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
17. AMENDMENT AND TERMINATION OF THE PLAN; FORFEITURE OF RIGHTS
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Incentive Awards have
not been made; provided, however, that the Board shall not, without approval of
the Company's shareholders, amend the Plan such that it does not comply with the
Code. The Company at any time shall have the right to cause a forfeiture of the
rights granted herein to Optionee or Holder (as the case may be) on account of
that individual taking actions in "competition with the Company." Unless
otherwise specified in an employment or other agreement between the Company and
Optionee or Holder (as the case may be), Optionee or Holder (as the case may be)
takes actions in "competition with the Company" if he or she directly or
indirectly owns any interest in, operates, joins, controls or participates as a
partner, director, principal, officer, or agent of, enters into the employment
of, acts as a consultant to, or performs any services for, any entity which has
material operations that compete with any business in which the Company or any
of its Affiliates (as defined in Rule 144 of the Act) is engaged during
Optionee's or Holder's (as the case may be) employment or other relationship
with the Company or any of its Affiliates at the time of Optionee's or Holder's
(as the case may be) termination of employment or other relationship.
18. EFFECT OF CHANGES IN CAPITALIZATION;
CORPORATE TRANSACTIONS
(a) Changes in Stock. If the outstanding shares of Stock are
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increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend, or other increase or decrease in such shares
effected without receipt of consideration by the Company, occurring after the
effective date of the Plan, the number and kinds of shares for the issuance of
which Restricted Stock may be awarded and for the acquisition of which Options
may be granted under the Plan shall be adjusted proportionately and accordingly
by the Company. In addition, the number and kind of shares for which Options
and unvested Restricted Stock are outstanding shall be adjusted proportionately
and accordingly so that the economic interest of each Holder and of each
Optionee immediately following such event shall, to the extent practicable, be
the same as immediately before such event. Any such adjustment in outstanding
Options and unvested Restricted Stock shall include a corresponding
proportionate adjustment in the Option Price per share.
(b) Corporate Transactions. For purposes of this Section 18, a
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"Corporate Transaction" shall include any one of the following shareholder-
approved transactions to which the Company is a party:
<PAGE>
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the state of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in liquidation or
dissolution of the Company;
(iii) any reverse merger in which the Company is the surviving
entity but in which beneficial ownership of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities are transferred to holders different from those who
held such securities immediately prior to such merger; or
(iv) the sale, transfer or other disposition of securities
possessing more than fifty percent (50%) of the total combined voting power
of the Company's outstanding securities to holders different from those who
held such securities immediately prior to such sale, whether in a single
transaction or series of transactions.
Each outstanding Option which is assumed in connection with the Corporate
Transaction or is otherwise to continue in effect shall be appropriately
adjusted immediately after such Corporate Transaction to apply and pertain to
the number and class of securities which would have been issued to Optionee in
connection with the consummation of such Corporate Transaction had such person
exercised the Option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price; provided,
however, that the aggregate exercise price payable for such securities shall
remain the same. In addition, the class and number of securities available for
issuance under this Plan following the consummation of the Corporate Transaction
shall be appropriately adjusted.
(c) Adjustments. Adjustments under this Section 18 relating to
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Stock or securities of the Company shall be made by the Board, whose
determination in that respect shall be final, binding, and conclusive. No
fractional shares of Stock or units of other securities shall be issued pursuant
to any such adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the nearest whole share
or unit.
(d) No Limitations on Company. The grant of Incentive Awards
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pursuant to the Plan shall not affect or limit in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve or
liquidate, or to sell or transfer all or any part of its business or assets.
19. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Incentive Award granted or related
agreement entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ or service of the Company or to
interfere in any way with the right and authority of the Company either to
increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. In addition, notwithstanding anything contained herein to the
contrary, the Option shall not be affected by any change of duties or position
of Optionee so long as Optionee continues to be a director, officer, consultant
or employee of the Company or its subsidiaries. The obligation of the Company
to pay any benefits pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the manner and under
the conditions prescribed herein. The Plan shall in no way be interpreted to
require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any participant or
beneficiary under the terms of the Plan. Optionees shall not have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option except to the extent the certificates for such shares of Stock shall have
been issued upon the exercise of the Option.
20. NONEXCLUSIVITY OF THE PLAN
<PAGE>
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of restricted stock, stock options
or stock appreciation rights otherwise than under the Plan.
