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EXHIBIT 10.3
INTERLEUKIN GENETICS, INC.
2000 EMPLOYEE STOCK COMPENSATION PLAN
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INTERLEUKIN GENETICS, INC.
2000 EMPLOYEE STOCK COMPENSATION PLAN
TABLE OF CONTENTS
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Section
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ARTICLE I - PLAN
Purpose.......................................................................................1.1
Term of Plan..................................................................................1.2
ARTICLE II - DEFINITIONS
Affiliate.....................................................................................2.1
Award.........................................................................................2.2
Award Agreement...............................................................................2.3
Board.........................................................................................2.4
Change of Control.............................................................................2.5
Code..........................................................................................2.6
Committee.....................................................................................2.7
Company.......................................................................................2.8
Corporate Change..............................................................................2.9
Disability...................................................................................2.10
Employee.....................................................................................2.11
Exchange Act.................................................................................2.12
Fair Market Value............................................................................2.13
Holder.......................................................................................2.14
Incentive Option.............................................................................2.15
Mature Shares................................................................................2.16
Non-Employee Director........................................................................2.17
Nonqualified Option..........................................................................2.18
Option.......................................................................................2.19
Option Agreement.............................................................................2.20
Outside Director.............................................................................2.21
Plan.........................................................................................2.22
Restricted Stock.............................................................................2.23
Restricted Stock Agreement...................................................................2.24
Restricted Stock Award.......................................................................2.25
Retirement...................................................................................2.26
Stock........................................................................................2.27
Ten Percent Stockholder......................................................................2.28
Voting Stock.................................................................................2.29
ARTICLE III - ELIGIBILITY
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ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS
Authority to Grant Awards.....................................................................4.1
Dedicated Shares; Maximum Awards..............................................................4.2
Non-Transferability...........................................................................4.3
Requirements of Law...........................................................................4.4
Recapitalization or Reorganization of the Company.............................................4.5
Election Under Section 83(b) of the Code......................................................4.6
ARTICLE V - OPTIONS
Type of Option................................................................................5.1
Exercise Price................................................................................5.2
Duration of Options...........................................................................5.3
Amount Exercisable............................................................................5.4
Exercise of Options...........................................................................5.5
Exercise on Termination of Employment.........................................................5.6
Substitution Options..........................................................................5.7
No Rights as Stockholder......................................................................5.8
ARTICLE VI - RESTRICTED STOCK AWARDS
Restricted Stock Awards.......................................................................6.1
Holder's Rights as Stockholder................................................................6.2
ARTICLE VII - ADMINISTRATION
ARTICLE VIII - AMENDMENT OR TERMINATION OF PLAN
ARTICLE IX - MISCELLANEOUS
No Establishment of a Trust Fund..............................................................9.1
No Employment or Affiliation Obligation.......................................................9.2
Forfeiture ...................................................................................9.3
Tax Withholding...............................................................................9.4
Written Agreement.............................................................................9.5
Indemnification of the Committee and the Board................................................9.6
Gender........................................................................................9.7
Headings......................................................................................9.8
Other Compensation Plans......................................................................9.9
Other Options or Awards......................................................................9.10
Governing Law................................................................................9.11
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ARTICLE I
PLAN
1.1 PURPOSE. The Plan is intended to advance the best
interests of the Company and its stockholders by providing those persons who
have responsibility for the management and growth of the Company and its
Affiliates or other persons who provide services to the Company or any of its
Affiliates with additional incentives and an opportunity to obtain or increase
their proprietary interest in the Company, thereby encouraging them to continue
to serve the Company or any of its Affiliates.
1.2 TERM OF PLAN. The Plan is effective June 5, 2000. The
Plan shall remain in effect until all Awards under the Plan have been satisfied
or expired.
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the
meaning set out in these definitions throughout the Plan, unless the context in
which any such word or phrase appears reasonably requires a broader, narrower,
or different meaning.
2.1 "AFFILIATE" means any parent corporation and any
subsidiary corporation. The term "parent corporation" means any corporation
(other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of the action or transaction, each of the corporations
other than the Company owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations
in the chain. The term "subsidiary corporation" means any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of the action or transaction, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in the chain.
2.2 "AWARD" means any Incentive Option, Nonqualified Option,
or Restricted Stock Award granted under the Plan.
2.3 "AWARD AGREEMENT" has the meaning ascribed to it in
Section 9.5.
2.4 "BOARD" means the board of directors of the Company.
2.5 "CHANGE OF CONTROL" means the occurrence of any of the
following after the date on which the applicable Award is granted:
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(i) the consummation of:
(x) a merger, consolidation or reorganization of the
Company with or into any other person if as a result of such
merger, consolidation or reorganization, 50 percent or less
of the combined voting power of the then- outstanding
securities of the continuing or surviving entity immediately
after such merger, consolidation or reorganization are held
in the aggregate by the holders of Voting Stock immediately
prior to such merger, consolidation or reorganization;
(y) any sale, lease, exchange or other transfer of
all or substantially all the assets of the Company and its
consolidated subsidiaries to any other person if as a result
of such sale, lease, exchange or other transfer, 50 percent
or less of the combined voting power of the then- outstanding
securities of such other person immediately after such sale,
lease, exchange or other transfer are held in the aggregate
by the holders of Voting Stock immediately prior to such
sale, lease, exchange or other transfer; or
(z) the stockholders of the Company approve the
dissolution of the Company.
A transaction shall not constitute a Change in
Control if its sole purpose is to change the state of the
Company's incorporation or to create a holding company that
will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before
such transaction.
2.6 "CODE" means the Internal Revenue Code of 1986, as
amended.
2.7 "COMMITTEE" means a committee of at least two persons
appointed by the Board. The Committee shall be comprised solely of persons who
are both Non-Employee Directors and Outside Directors.
2.8 "COMPANY" means Interleukin Genetics, Inc, a Texas
corporation.
2.9 "CORPORATE CHANGE" shall have the meaning ascribed to it
in Section 4.5.
2.10 "DISABILITY" means a medically determinable mental or
physical impairment which, in the opinion of a physician selected by the
Committee, shall prevent the Holder from engaging in any substantial gainful
activity and which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months and
which: (a) was not contracted, suffered or incurred while the Holder was
engaged in, or did not result from having engaged in, a felonious criminal
enterprise; (b) did not result from alcoholism or addiction
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to narcotics; (c) did not result from an injury incurred while a member of the
Armed Forces of the United States for which the Holder receives a military
pension; and (d) did not result from an intentionally self-inflicted injury.
2.11 "EMPLOYEE" means a person employed by the Company or any
Affiliate.
2.12 "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
2.13 "FAIR MARKET VALUE" of the Stock as of any date means
(a) the average of the high and low sale prices of the Stock on that date (or,
if there was no sale on such date, the next preceding date on which there was
such a sale) on the principal securities exchange on which the Stock is listed;
or (b) if the Stock is not listed on a securities exchange, an amount as
determined by the Committee in its sole discretion.
2.14 "HOLDER" means a person who has been granted an Award,
or any person who is entitled to payment under an Award in accordance with the
terms of the Plan.
2.15 "INCENTIVE OPTION" means an Option granted under the
Plan which is designated as an "Incentive Option" and satisfies the
requirements of section 422 of the Code.
2.16 "MATURE SHARES" means shares of Stock that the Holder
has held for at least six months.
2.17 "NON-EMPLOYEE DIRECTOR" means a "non-employee director"
as defined in Rule 16b-3 of the Exchange Act.
2.18 "NONQUALIFIED OPTION" means an Option granted under the
Plan other than an Incentive Option.
2.19 "OPTION" means either an Incentive Option or a
Nonqualified Option granted under the Plan to purchase shares of Stock.
2.20 "OPTION AGREEMENT" means the written agreement which
sets out the terms of an Option.
2.21 "OUTSIDE DIRECTOR" means a member of the Board serving
on the Committee who qualifies as an outside director as defined in Department
of Treasury regulations promulgated under section 162(m) of the Code.
2.22 "PLAN" means the Interleukin Genetics, Inc. 2000
Employee Stock Compensation Plan, as set forth in this document and as it may
be amended from time to time.
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2.23 "RESTRICTED STOCK" means stock awarded or purchased
under the Plan pursuant to a Restricted Stock Agreement.
2.24 "RESTRICTED STOCK AGREEMENT" means the written agreement
which sets out the terms of a Restricted Stock Award.
2.25 "RESTRICTED STOCK AWARD" means an Award of Restricted
Stock.
2.26 "RETIREMENT" means the termination of an Employee's
employment relationship with the Company and all Affiliates after completing at
least five years of service and attaining the age of 65.
2.27 "STOCK" means the common stock of the Company, no par
value or, in the event that the outstanding shares of common stock are later
changed into or exchanged for a different class of stock or securities of the
Company or another corporation, that other stock or security.
2.28 "TEN PERCENT STOCKHOLDER" means an individual who, at
the time the Option is granted, owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or of
any Affiliate. An individual shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers and sisters (whether by the
whole or half blood), spouse, ancestors, and lineal descendants; and stock
owned, directly or indirectly, by or for a corporation, partnership, estate, or
trust, shall be considered as being owned proportionately by or for its
stockholders, partners, or beneficiaries.
2.29 "VOTING STOCK" means shares of capital stock of the
Company the holders of which are entitled to vote for the election of
directors, but excluding shares entitled to so vote only upon the occurrence of
a contingency unless that contingency shall have occurred.
ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to receive Incentive
Options shall be those key employees of the Company or any of its Affiliates as
the Committee shall determine from time to time. The individuals who shall be
eligible to receive Awards other than Incentive Options shall be those persons,
including employees, consultants, advisors, directors and other persons, who
have responsibility for the management and growth of the Company or any of its
Affiliates or other persons providing services to the Company or any of its
Affiliates as the Committee shall determine from time to time. The Board may
designate one or more individuals who shall not be eligible to receive any
Award under the Plan or under other similar plans of the Company.
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ARTICLE IV
GENERAL PROVISIONS RELATING TO AWARDS
4.1 AUTHORITY TO GRANT AWARDS. The Committee may grant to
those Employees of the Company or any of its Affiliates and other eligible
persons as it shall from time to time determine, Awards under the terms and
conditions of the Plan. Subject only to any applicable limitations set out in
the Plan, the number of shares of Stock to be covered by any Award to be
granted to any person shall be as determined by the Committee.
4.2 DEDICATED SHARES; MAXIMUM AWARDS. The total number of
shares of Stock with respect to which Awards may be granted under the Plan is
2,000,000. The shares of Stock may be treasury shares or authorized but
unissued shares. The total number of shares of Stock with respect to which
Incentive Options may be granted under the Plan is 500,000 shares. The total
number of shares of Stock with respect to which Restricted Stock Awards may be
granted under the Plan is 500,000 shares. The maximum number of shares subject
to Options which may be issued to any person under the Plan during any calendar
year is 500,000 shares. The maximum number of shares subject to Restricted
Stock Awards which may be granted to any person under the Plan during any
calendar year is 500,000 shares. The number of shares stated in this Section
4.2 shall be subject to adjustment in accordance with the provisions of Section
4.5.
If any outstanding Award expires or terminates for any reason
or any Award is surrendered or cancelled, the shares of Stock allocable to the
unexercised portion of that Award may again be subject to an Award under the
Plan.
4.3 NON-TRANSFERABILITY. Incentive Options shall not be
transferable by the Employee other than by will or under the laws of descent
and distribution, and shall be exercisable, during the Employee's lifetime,
only by him. Except as specified in the applicable Award agreements or in
domestic relations court orders, other Awards shall not be transferable by the
Holder other than by will or under the laws of descent and distribution, and
shall be exercisable, during the Holder's lifetime, only by him. In the
discretion of the Committee, any attempt to transfer an Award other than under
the terms of the Plan and the applicable Award agreement may terminate the
Award.
4.4 REQUIREMENTS OF LAW. The Company shall not be required to
sell or issue any Stock under any Award if issuing that Stock would constitute
or result in a violation by the Holder or the Company of any provision of any
law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
other Award, the Company shall not be required to issue any Stock unless the
Committee has received evidence satisfactory to it to the effect that the
Holder of that Award will not transfer the Stock except in accordance with
applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law.
The determination by the Committee on this matter
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shall be final, binding and conclusive. The Company may, but shall in no event
be obligated to, register any Stock covered by the Plan pursuant to applicable
securities laws. In the event the Stock issuable on exercise of an Option or
pursuant to any other Award is not registered, the Company may imprint on the
certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.
4.5 RECAPITALIZATION OR REORGANIZATION OF THE COMPANY.
The existence of outstanding Awards shall not affect in any
way the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Stock outstanding, without
receiving compensation for it in money, services or property, then (a) the
number, class, and per share price of shares of Stock subject to outstanding
Awards under this Plan shall be appropriately adjusted in such a manner as to
entitle a Holder to receive upon exercise of an Award, for the same aggregate
cash consideration, the equivalent total number and class of shares he would
have received had he exercised his Award in full immediately prior to the event
requiring the adjustment; and (b) the number and class of shares of Stock then
reserved to be issued under the Plan shall be adjusted by substituting for the
total number and class of shares of Stock then reserved, that number and class
of shares of Stock that would have been received by the owner of an equal
number of outstanding shares of each class of Stock as the result of the event
requiring the adjustment. Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
If while unexercised Awards remain outstanding under the Plan
(i) the Company shall not be the surviving entity in any merger, consolidation
or other reorganization (or survives only as a subsidiary of an entity other
than an entity that was wholly-owned by the Company immediately prior to such
merger, consolidation or other reorganization), (ii) the Company sells, leases
or exchanges or agrees to sell, lease or exchange all or substantially all of
its assets to any other person or entity (other than an entity wholly-owned by
the Company), or (iii) the Company is to be dissolved and liquidated (each such
event is referred to herein as a "Corporate Change"), then (x) except as
otherwise provided in an Award Agreement or as a result of the Board of
Directors' effectuation of one or more of the alternatives described below,
there shall be no acceleration of the time at which any Award then outstanding
may be exercised, and (y) no later than ten days after the
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approval by the stockholders of the Company of such Corporate Change, the
Committee, acting in its sole and absolute discretion without the consent or
approval of any Holder, shall act to effect one or more of the following
alternatives, which may vary among individual Holders and which may vary among
Awards held by any individual Holder:
(1) accelerate the time at which some or all of the Awards
then outstanding may be exercised so that such Awards may be exercised
in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after
which specified date all such Awards that remain unexercised and all
rights of Holders thereunder shall terminate,
(2) require the mandatory surrender to the Company by all or
selected Holders of some or all of the then outstanding Awards held by
such Holders (irrespective of whether such Awards are then exercisable
under the provisions of this Plan or the Award Agreements evidencing
such Awards) as of a date, before or after such Corporate Change,
specified by the Committee, in which event the Committee shall
thereupon cancel such Awards and the Company shall pay to each such
Holder an amount of cash per share equal to the excess, if any, of the
per share price offered to stockholders of the Company in connection
with such Corporate Change over the exercise price(s) under such
Awards for such shares,
(3) with respect to all or selected Holders, have some or all
of their then outstanding Awards (whether vested or unvested) assumed
or have a new Award substituted for some or all of their then
outstanding Awards (whether vested or unvested) by an entity which is
a party to the transaction resulting in such Corporate Change,
(4) provide that the number and class of shares of Stock
covered by an Award (whether vested or unvested) theretofore granted
shall be adjusted so that such Award shall thereafter cover the number
and class of shares of stock or other securities or property
(including, without limitation, cash) to which the Holder would have
been entitled pursuant to the terms of the agreement and/or plan
relating to such Corporate Change if, immediately prior to such
Corporate Change, the Holder had been the holder of record of the
number of shares of Stock then covered by such Award, or
(5) make any adjustments to Awards then outstanding as the
Committee deems appropriate to reflect such Corporate Change
(provided, however, that the Committee may determine in its sole and
absolute discretion that no such adjustment is necessary).
In effecting one or more of alternatives (3), (4) or (5)
above, and except as otherwise may be provided in an Award Agreement,
the Committee, in its sole and
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absolute discretion and without the consent or approval of any Holder,
may accelerate the time at which some or all Awards then outstanding
may be exercised.
In the event of changes in the outstanding Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Section 4.5,
any outstanding Awards and any agreements evidencing such Awards shall be
subject to adjustment by the Committee in its sole and absolute discretion as
to the number and price of shares of stock or other consideration subject to
such Awards. In the event of any such change in the outstanding Stock, the
aggregate number of shares available under this Plan may be appropriately
adjusted by the Committee, whose determination shall be conclusive.
The issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Awards.
4.6 ELECTION UNDER SECTION 83(b) OF THE CODE. No Holder shall
exercise the election permitted under section 83(b) of the Code without written
approval of the Committee. Any Holder doing so may, in the discretion of the
Committee, forfeit any or all Awards issued to him under the Plan.
ARTICLE V
OPTIONS
5.1 TYPE OF OPTION. The Committee shall specify in an Option
Agreement whether a given Option is an Incentive Option or a Nonqualified
Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value (determined as of the time an Incentive Option is
granted) of the Stock with respect to which incentive stock options first
become exercisable by an Employee during any calendar year (under the Plan and
any other incentive stock option plan(s) of the Company or any Affiliate)
exceeds $100,000.00, the Incentive Option shall be treated as a Nonqualified
Option. In making this determination, incentive stock options shall be taken
into account in the order in which they were granted.
5.2 EXERCISE PRICE. The price at which Stock may be purchased
under an Incentive Option shall not be less than 100 percent of the Fair Market
Value of the shares of Stock on the date the Option is granted. In its
discretion, the Committee may provide that the price at which shares of Stock
may be purchased under an Option shall be more than the minimum price specified
above. In the case of any Ten Percent Stockholder, the price at which shares of
Stock may be purchased under an Incentive Option shall not be less than 110
percent of the Fair Market Value
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of the Stock on the date the Incentive Option is granted. The price at which
Stock may be purchased under a Nonqualified Option shall be specified in an
Optionee's Option Agreement, and may be more or less than 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted.
5.3 DURATION OF OPTIONS. The Option Agreement shall specify
the term of the Option; provided that no Option shall be exercisable after the
expiration of ten years from the date the Option is granted. In the case of a
Ten Percent Stockholder, no Incentive Option shall be exercisable after the
expiration of five years from the date the Incentive Option is granted.
5.4 AMOUNT EXERCISABLE. Each Option may be exercised at the
time, in the manner and subject to the conditions the Committee specifies in
the Option Agreement in its sole discretion. Unless the Option Agreement
expressly specifies otherwise, an Option shall not continue to vest after the
Optionee's severance of employment or affiliation relationship with the Company
and all Affiliates for any reason. If specified in the Option Agreement, an
Option will be exercisable in full upon the occurrence of a Change of Control.
Otherwise, a Change of Control shall not effect the exercisability of the
Option, except as set forth in Section 4.5 hereof.
5.5 EXERCISE OF OPTIONS. Each Option shall be exercised by
the delivery of written notice to the Committee setting forth the number of
shares of Stock with respect to which the Option is to be exercised, together
with cash, certified check, bank draft, or postal or express money order
payable to the order of the Company for an amount equal to the exercise price
under the Option, and/or any other form of payment which is acceptable to the
Committee, and specifying the address to which the certificates for the shares
are to be mailed. As promptly as practicable after receipt of written
notification and payment, the Company shall deliver to the Holder certificates
for the number of shares with respect to which the Option has been exercised,
issued in the Holder's name.
The Committee may, in its sole discretion, permit a Holder to
elect to pay the exercise price upon exercise of an Option by authorizing a
third-party broker to sell all or a portion of the shares of Stock acquired
upon exercise of the Option and remit to the Company a sufficient portion of
the sale proceeds to pay the exercise price and any applicable tax withholding
resulting from such exercise.
An Option may not be exercised for a fraction of a share of
Stock.
5.6 EXERCISE ON TERMINATION OF EMPLOYMENT OR AFFILIATION.
(a) Termination of Employment Other Than As a Result of
Retirement, Death or Disability. Unless it is expressly provided otherwise in
the Option Agreement, an Option shall terminate one day less than three months
after the severance of employment or affiliation relationship between the
Holder and the Company and all Affiliates for any reason, with or without
cause, other than Retirement, death or Disability. Whether authorized leave of
absence or absence
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on military or government service shall constitute severance of the employment
of an Employee shall be determined by the Committee at that time.
(b) Retirement. Unless it is expressly provided otherwise in
the Option Agreement, an Option shall terminate one day less than one year
after the Retirement of the Holder.
(c) Death. After the death of the Holder, his executors,
administrators or any persons to whom his Option may be transferred by will or
by the laws of descent and distribution shall have the right, at any time prior
to the earlier of the Option's expiration or one day less than one year after
the death of the Holder, to exercise it, to the extent to which he was entitled
to exercise it immediately prior to his death, unless it is expressly provided
otherwise in the Option Agreement.
(d) Disability. If, before the expiration of an Option, the
Holder shall be severed from the employ of or affiliation with the Company and
all Affiliates due to Disability, the Option shall terminate on the earlier of
the Option's expiration date or one day less than one year after the date of
his severance due to Disability, unless it is expressly provided otherwise in
the Option Agreement. In the event that the Holder shall be severed from the
employ of or affiliation with the Company and all Affiliates for Disability,
the Holder shall have the right prior to the termination of the Option to
exercise the Option, to the extent to which he was entitled to exercise it
immediately prior to his severance of employment or affiliation due to
Disability, unless it is expressly provided otherwise in the Option Agreement.
(e) Employment With an Entity in a Section 424(a)
Transaction. In determining the employment relationship between the Company and
or any Affiliate and an Employee, employment by a corporation issuing or
assuming a stock option in a transaction to which section 424(a) of the Code
applies shall be considered employment by the Company or an Affiliate.
5.7 SUBSTITUTION OPTIONS. Options may be granted under the
Plan from time to time in substitution for stock options held by employees of
other corporations who are about to become employees of or affiliated with the
Company or any Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or any Affiliate, or the acquisition by
the Company or any Affiliate of the assets of the employing corporation, or the
acquisition by the Company or any Affiliate of stock of the employing
corporation as the result of which it becomes an Affiliate of the Company. The
terms and conditions of the substitute Options granted may vary from the terms
and conditions set out in the Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.
5.8 NO RIGHTS AS STOCKHOLDER. No Holder shall have any rights
as a stockholder with respect to Stock covered by his Option until the date a
stock certificate is issued for the Stock.
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ARTICLE VI
RESTRICTED STOCK AWARDS
6.1 RESTRICTED STOCK AWARDS. The Committee may make Awards of
Restricted Stock to eligible persons selected by it. The amount of, the vesting
and the transferability restrictions applicable to, any Restricted Stock Award
shall be determined by the Committee in its sole discretion. If the Committee
imposes vesting or transferability restrictions on a Holder's rights with
respect to shares of Restricted Stock, the Committee may issue such
instructions to the Company's stock transfer agent in connection therewith as
it deems appropriate. The Committee may also cause the certificate for shares
issued pursuant to a Restricted Stock Award to be imprinted with any legend
which counsel for the Company considers advisable with respect to the
restrictions.
Each Restricted Stock Award shall be evidenced by a
Restricted Stock Award Agreement that contains any vesting, transferability
restrictions and other provisions not inconsistent with the Plan as the
Committee may specify.
6.2 HOLDER'S RIGHTS AS STOCKHOLDER.
(a) From the date a Restricted Stock Award is granted, the
Holder shall have the right to receive all cash dividends or other
distributions paid or made with respect to the shares of Stock subject to the
Award.
(b) Commencing on the date of the transfer of shares of
Restricted Stock to a Holder on the books of the Company pursuant to an Award,
the Holder shall have the right to vote the shares subject to the Award.
ARTICLE VII
ADMINISTRATION
The Plan shall be administered by the Committee. All
questions of interpretation and application of the Plan and Awards shall be
subject to the determination of the Committee. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members. Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it
had been made by a majority vote at a meeting properly called and held. In
carrying out its authority under the Plan, the Committee shall have full and
final authority and discretion, including but not limited to the following
rights, powers and authorities, to:
(a) determine the persons to whom and the time or times at
which Awards will be made,
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(b) determine the number of shares and the exercise price of
Stock covered in each Award, subject to the terms of the Plan,
(c) determine the terms, provisions and conditions of each
Award, which need not be identical,
(d) accelerate the time at which any outstanding Option may
be exercised, or Restricted Stock Award will vest,
(e) define the effect, if any, on an Award of the death,
disability, retirement, or termination of employment or affiliation
relationship between the Holder and the Company and Affiliates,
(f) prescribe, amend and rescind rules and regulations
relating to administration of the Plan, and
(g) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper
administration of the Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of the Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.
ARTICLE VIII
AMENDMENT OR TERMINATION OF PLAN
The Board may amend, terminate or suspend the Plan at any
time, in its sole and absolute discretion. The Board shall have the power to
make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under the Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.
ARTICLE IX
MISCELLANEOUS
9.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be
set aside nor shall a trust fund of any kind be established to secure the
rights of any Holder under the Plan. All Holders shall at all times rely solely
upon the general credit of the Company for the payment of any benefit which
becomes payable under the Plan.
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9.2 NO EMPLOYMENT OR AFFILIATION OBLIGATION. The granting of
any Option or Award shall not constitute an employment contract, express or
implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder. The right of the
Company or any Affiliate to terminate the employment of any person shall not be
diminished or affected by reason of the fact that an Option or Award has been
granted to him.
9.3 FORFEITURE. Notwithstanding any other provisions of the
Plan, if the Committee finds by a majority vote after full consideration of the
facts that the Holder, before or after termination of his employment or
affiliation relationship with the Company or an Affiliate for any reason (a)
committed or engaged in fraud, embezzlement, theft, commission of a felony, or
proven dishonesty in the course of his employment by the Company or an
Affiliate, which conduct damaged the Company or Affiliate, or disclosed trade
secrets of the Company or an Affiliate, or (b) participated, engaged in or had
a material, financial or other interest, whether as an employee, officer,
director, consultant, contractor, stockholder, owner, or otherwise, in any
commercial endeavor in the United States which is competitive with the business
of the Company or an Affiliate without the written consent of the Company or
Affiliate, the Holder shall forfeit all outstanding Options and all outstanding
Awards, and including all exercised Options and other situations pursuant to
which the Company has not yet delivered a stock certificate. Clause (b) shall
not be deemed to have been violated solely by reason of the Holder's ownership
of stock or securities of any publicly owned corporation, if that ownership
does not result in effective control of the corporation.
The decision of the Committee as to the cause of the Holder's
discharge, the damage done to the Company or an Affiliate, and the extent of
the Holder's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Holder by the
Company or an Affiliate in any manner.
9.4 TAX WITHHOLDING. The Company or any Affiliate shall be
entitled to deduct from other compensation payable to each Holder any sums
required by federal, state, or local tax law to be withheld with respect to the
grant or exercise of an Option, or lapse of restrictions on Restricted Stock.
In the alternative, the Company may require the Holder of an Award to pay such
sums for taxes directly to the Company or any Affiliate in cash or by check
within ten days after the date of exercise or lapse of restrictions. In the
discretion of the Committee, a Holder may use shares of Stock received by the
Holder upon the exercise of a Nonqualified Option to satisfy any required tax
withholding obligations of the Company or an Affiliate that result from the
exercise. The Committee may, in its discretion, permit a Holder to satisfy any
tax withholding obligations arising upon the vesting of Restricted Stock by
delivering to the Holder of the Restricted Stock Award a reduced number of
shares of Stock in the manner specified herein. If permitted by the Committee
and acceptable to the Holder, at the time of vesting of shares of Restricted
Stock, the Company shall (i) calculate the amount of withholding tax due on the
assumption that all such vested shares of Restricted Stock are made available
for delivery, (ii) reduce the number of such shares made available for delivery
so that the Fair Market Value of the shares withheld on the vesting date
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approximates the amount of tax the Company is obliged to withhold and (iii) in
lieu of the withheld shares, remit cash to the United States Treasury and other
applicable governmental authorities, on behalf of the Holder, in the amount of
the withholding tax due. The Company shall withhold only whole shares of Stock
to satisfy its withholding obligation. Where the Fair Market Value of the
withheld shares does not equal the Company's withholding tax obligation, the
Company shall withhold shares with a Fair Market Value slightly in excess of
the amount of its withholding obligation and shall remit the excess cash to the
Holder of the Restricted Stock Award with the shares of Stock made available
for delivery. The withheld shares of Restricted Stock not made available for
delivery by the Company shall be retained as treasury stock or will be
cancelled and, in either case, the Holder's right, title and interest in such
Restricted Stock shall terminate. The Company shall have no obligation upon
exercise of any Option or lapse of restrictions on Restricted Stock until the
Company or an Affiliate has received payment sufficient to cover all tax
withholding amounts due with respect to that exercise. Neither the Company nor
any Affiliate shall be obligated to advise a Holder of the existence of the tax
or the amount which it will be required to withhold.
9.5 WRITTEN AGREEMENT. Each Award shall be embodied in a
written agreement ("Award Agreement") which shall be subject to the terms and
conditions of the Plan and shall be signed by the Holder and by a member of the
Committee on behalf of the Committee and the Company or an executive officer of
the Company, other than the Holder, on behalf of the Company. The agreement may
contain any other provisions that the Committee in its discretion shall deem
advisable which are not inconsistent with the terms of the Plan.
9.6 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD. With
respect to administration of the Plan, the Company shall indemnify each present
and future member of the Committee and the Board against, and each member of
the Committee and the Board shall be entitled without further act on his part
to indemnity from the Company for, all expenses (including attorney's fees, the
amount of judgments and the amount of approved settlements made with a view to
the curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit, or proceeding in which he may be involved by reason of his being
or having been a member of the Committee and/or the Board, whether or not he
continues to be a member of the Committee and/or the Board at the time of
incurring the expenses -- including, without limitation, matters as to which he
shall be finally adjudged in any action, suit or proceeding to have been found
to have been negligent in the performance of his duty as a member of the
Committee or the Board. However, this indemnity shall not include any expenses
incurred by any member of the Committee and/or the Board in respect of matters
as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance
of his duty as a member of the Committee and the Board. In addition, no right
of indemnification under the Plan shall be available to or enforceable by any
member of the Committee and the Board unless, within 60 days after institution
of any action, suit or proceeding, he shall have offered the Company, in
writing, the opportunity to handle and defend same at its own expense. This
right of indemnification shall inure to the benefit of the heirs, executors or
administrators of each member of the Committee and the
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Board and shall be in addition to all other rights to which a member of the
Committee and the Board may be entitled as a matter of law, contract, or
otherwise.
9.7 GENDER. If the context requires, words of one gender when
used in the Plan shall include the other and words used in the singular or
plural shall include the other.
9.8 HEADINGS. Headings of Articles and Sections are included
for convenience of reference only and do not constitute part of the Plan and
shall not be used in construing the terms of the Plan.
9.9 OTHER COMPENSATION PLANS. The adoption of the Plan shall
not affect any other stock option, incentive or other compensation or benefit
plans in effect for the Company or any Affiliate, nor shall the Plan preclude
the Company from establishing any other forms of incentive or other
compensation for employees of the Company or any Affiliate.
9.10 OTHER OPTIONS OR AWARDS. The grant of an Award shall not
confer upon the Holder the right to receive any future or other Awards under
the Plan, whether or not Awards may be granted to similarly situated Holders,
or the right to receive future Awards upon the same terms or conditions as
previously granted.
9.11 GOVERNING LAW. The provisions of the Plan shall be
construed, administered, and governed under the laws of the State of Delaware.
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