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EXHIBIT 4.2
2000 EQUITY PARTICIPATION PLAN
OF
ELECTRONICS BOUTIQUE HOLDINGS CORP.
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TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS.......................................................1
1.1. General.....................................................1
1.2. Award Limit.................................................1
1.3. Board.......................................................1
1.4. Change in Control...........................................1
1.5. Code........................................................2
1.6. Committee...................................................2
1.7. Common Stock................................................2
1.8. Company.....................................................2
1.9. Corporate Transaction.......................................2
1.10. Director....................................................2
1.11. Dividend Equivalent.........................................2
1.12. Employee....................................................2
1.13. Exchange Act................................................3
1.14. Fair Market Value...........................................3
1.15. Incentive Stock Option......................................3
1.16. Independent Director........................................3
1.17. Non-Qualified Stock Option..................................3
1.18. Option......................................................3
1.19. Optionee....................................................3
1.20. Plan........................................................3
1.21. QDRO........................................................4
1.22. Rule 16b-3..................................................4
1.23. Section 162(m) Participant..................................4
1.24. Share.......................................................4
1.25. Subsidiary..................................................4
1.26. Termination of Consultancy..................................4
1.27. Termination of Directorship.................................4
1.28. Termination of Employment...................................4
ARTICLE 2. SHARES SUBJECT TO PLAN............................................5
2.1. Shares Subject to Plan......................................5
2.2. Add-back of Options and Other Rights........................5
ARTICLE 3. GRANTING OF OPTIONS...............................................6
3.1. Eligibility.................................................6
3.2. Disqualification for Stock Ownership........................6
3.3. Qualification of Incentive Stock Options....................6
3.4. Granting of Options.........................................6
ARTICLE 4. TERMS OF OPTIONS..................................................7
4.1. Option Agreement............................................7
4.2. Option Price................................................7
4.3. Option Term.................................................8
4.4. Option Vesting..............................................8
4.5. Continued Employment........................................9
ARTICLE 5. EXERCISE OF OPTIONS...............................................9
5.1. Partial Exercise............................................9
(i)
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.2. Manner of Exercise..........................................9
5.3. Conditions to Issuance of Stock............................10
5.4. Rights as Stockholders.....................................11
5.5. Ownership and Transfer Restrictions........................11
5.6. Limitations on Exercise of Options.........................11
ARTICLE 6. ADMINISTRATION...................................................12
6.1. Compensation Committee.....................................12
6.2. Duties and Powers of Committee.............................12
6.3. Majority Rule; Unanimous Written Consent...................12
6.4. Compensation; Professional Assistance: Good
Faith Actions..............................................12
ARTICLE 7. MISCELLANEOUS PROVISIONS.........................................13
7.1. Not Transferable...........................................13
7.2. Amendment, Suspension or Termination of this Plan..........13
7.4. Approval of Plan by Stockholders...........................16
7.5. Tax Withholding............................................16
7.6. Loans......................................................17
7.7. Forfeiture Provisions......................................17
7.8. Limitations Applicable to Section 16 Persons and
Performance-Based Compensation.............................17
7.9. Effect of Plan Upon Options and Compensation Plans.........17
7.10. Compliance with Laws.......................................18
7.11. Titles.....................................................18
7.12. Governing Law..............................................18
(ii)
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THE 2000 EQUITY PARTICIPATION PLAN
OF ELECTRONICS BOUTIQUE HOLDINGS CORP.
Electronics Boutique Holdings Corp., a Delaware corporation (the
"Company"), has adopted the 2000 Equity Participation Plan (the "Plan"),
effective February 1, 2000, for the benefit of eligible employees, consultants
and directors of the Company.
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors, key Employees and
consultants to further the growth, development and financial success of the
Employer by personally benefitting through the ownership of Company stock and/or
rights which recognize such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
directors and of key Employees and consultants considered essential to the long
range success of the Company offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.
ARTICLE 1. DEFINITIONS
1.1. GENERAL. Wherever the following initially capitalized terms
are used in this Plan they shall have the meanings specified below, unless the
context clearly indicates otherwise.
1.2. AWARD LIMIT. "Award Limit" shall mean 250,000 shares of Common
Stock.
1.3. BOARD. "Board" shall mean the Board of Directors of the
Company, as comprised from time to time.
1.4. CHANGE IN CONTROL. "Change in Control" shall mean a change in
ownership or control of the Company effected through either of the following
transactions.
1.4.1. any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled by, or
is under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding, securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the Board does
not recommend such stockholders to accept; or
1.4.2. there is a change in the composition of the Board over
a period of thirty-six (36) consecutive months (or less) such that a majority of
the Board members (rounded up to the nearest whole number) ceases, by reason of
one or more proxy contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved hy the Board.
1.5. CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.6. COMMITTEE. "Committee" shall mean the Compensation Committee
of the Board, appointed as provided in Section 6.1, as comprised from time to
time, or such other Committee designated by the Board to administer the
provisions of this Plan.
1.7. COMMON STOCK. "Common Stock" shall mean the common stock of
the Company, par value $.01 per share.
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1.8. COMPANY. "Company" shall mean Electronics Boutique Holdings
Corp., a Delaware corporation, and where the context requires, shall include all
Subsidiaries.
1.9. CORPORATE TRANSACTION. "Corporate Transaction" shall mean any
of the following stockholder-approved transactions to which the Company is a
party:
(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
(i) change the State in which the Company is incorporated, (ii) form a holding
company, or (iii) effect a similar reorganization as to form whereupon this Plan
and all Options are assumed by the successor entity;
(b) the sale, transfer, exchange or other disposition of all
or substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions to
clause (a), above; or
(c) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred or issued to a person or persons different from those who held such
securities immediately prior to such merger.
1.10. DIRECTOR. "Director" shall mean a member of the Board.
1.11. DIVIDEND EQUIVALENT. "Dividend Equivalent" shall mean a right
to receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock, awarded under Article 7 of this Plan.
1.12. EMPLOYEE. "Employee" shall mean any officer or other employee
(as defined in accordance with Section 3401(c) of the Code) of the Company.
Employee shall also include individuals employed by Walden Books who have a
title of Store Manager or above and who are covered by the Consulting Agreement
dated July 23, 1993 between the Company and Walden Books.
1.13. EXCHANGE ACT. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.14. FAIR MARKET VALUE. "Fair Market Value" of a share of Common
Stock, as of a given date shall be (i) the closing price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, either the (i)
closing sale price or (i) the mean between the closing representative bid and
asked prices for the Common Stock on the trading day previous to such date as
reported by NASDAQ or such successor quotation systems, as may be appropriate,
or (iii) if Common Stock is not publicly traded on an exchange and not quoted on
NASDAQ or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Committee (or the Board, in the case of
Options granted to Independent Directors) acting in good faith.
1.15. INCENTIVE STOCK OPTION. "Incentive Stock Option" shall mean an
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.
1.16. INDEPENDENT DIRECTOR. "Independent Director" shall mean a
member of the Board who is not also an Employee of the Company.
1.17. NON-QUALIFIED STOCK OPTION. "Non-Qualified Stock Option" shall
mean an Option which is not designated as an Incentive Stock Option by the
Committee.
1.18. OPTION. "Option" shall mean a stock option granted under
Article 3 of this Plan. An Option granted
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under this Plan shall, as determined by the Committee, be either a Non-Qualified
Stock Option or an Incentive Stock Option; PROVIDED, HOWEVER, that Options
granted to Independent Directors and consultants shall be Non-Qualified Stock
Options.
1.19. OPTIONEE. "Optionee" shall mean an Employee, consultant or
Independent Director granted an Option under this Plan.
1.20. PLAN. "Plan" shall mean the 2000 Equity Participation Plan of
Electronics Boutique Holdings Corp., as amended from time to time.
1.21. QDRO. "QDRO" shall mean a qualified domestic relations order
as defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
1.22. RULE 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to time.
1.23. SECTION 162(m) PARTICIPANT. "Section 162(m) Participant" shall
mean any key Employee designated by the Committee as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code, as determined by the Committee in its
sole discretion.
1.24. SHARE. "Share" shall mean a share of Common Stock, as adjusted
in accordance with Section 7.3 of the Plan.
1.25. SUBSIDIARY. "Subsidiary" shall mean a corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then 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 such chain.
1.26. TERMINATION OF CONSULTANCY. "Termination of Consultancy" shall
mean the time when the engagement of an Optionee as a consultant to the Employer
is terminated for any reason, with or without cause, including, but not by way
of limitation, by resignation, discharge, death or retirement; but excluding
terminations where there is a simultaneous commencement of employment with the
Employer. The Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to Termination of Consultancy, including,
but not by way of limitation, the question of whether a Termination of
Consultancy resulted from a discharge for good cause, the application of the
provisions of Section 7.7, and all questions of whether particular leaves of
absence constitute Terminations of Consultancy. Notwithstanding any other
provision of this Plan, the Company or any Subsidiary has an absolute and
unrestricted right to terminate a consultant's service at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
1.27. TERMINATION OF DIRECTORSHIP. "Termination of Directorship"
shall mean the time when an Optionee who is an Independent Director ceases to be
a Director for any reason, including, but not by way of limitation, a
termination by resignation, failure to be re-elected, death or retirement. The
Board, in its sole and absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Directorship with respect to
Independent Directors.
1.28. TERMINATION OF EMPLOYMENT. "Termination of Employment" shall
mean the time when the employee-employer relationship between an Optionee and
the Employer is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement, but excluding (i) terminations where there is a
simultaneous reemployment or continuing employment of an Optionee by the
Employer, (ii) at the discretion of the Committee, terminations which result in
a temporary severance of the employee-employer relationship, and (iii) at the
discretion of the Committee, terminations which are followed by the simultaneous
establishment of a consulting relationship by the Employer with the former
employee. The Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to Termination of Employment (subject to
the
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provisions of any agreement between an Employee and the Employer), including,
but not by way of limitation, the question of whether a Termination of
Employment resulted from a discharge for good cause, the application of the
provisions of Section 7.7, and all questions of whether particular leaves of
absence constitute Terminations of Employment, PROVIDED, HOWEVER, that, unless
otherwise determined by the Committee in its discretion, a leave of absence,
change in status from an employee to an independent contractor or other change
the employee-employer relationship shall constitute a Termination of Employment
if, and to the extent that, such leave of absence, change in status or other
change interrupts employment for the purposes of Section 422(a)(2) of the Code
and the then applicable regulations and revenue rulings under said Section.
Notwithstanding, any other provision of this Plan, the Employer has an absolute
and unrestricted right to terminate an Employee's employment at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
ARTICLE 2. SHARES SUBJECT TO PLAN
2.1. SHARES SUBJECT TO PLAN. Subject to the provisions of Section
7.3 of the Plan, the maximum aggregate number of Shares which may be optioned
and sold under the Plan is 2,000,000 Shares, plus an annual increase to be added
on each anniversary date of the adoption of the Plan equal to the lesser of (i)
the number of Shares required to restore the maximum aggregate number of Shares
which may be optioned and sold under the Plan to 2,000,000, or (ii) a lesser
amount determined by the Committee. The Shares may be authorized, but unissued,
or reacquired Common Stock.
(a) The maximum number of shares which may be subject to
Options granted under the Plan to any individual in any fiscal year shall not
exceed the Award Limit. To the extent required by Section 162(m) of the Code,
shares subject to Options which are canceled continue to be counted against the
Award Limit and if, after grant of an Option, the price of shares subject to
such Option is reduced, the transaction is treated as a cancellation of the
Option and a grant of a new Option and both the Option deemed to be canceled and
the Option deemed to be granted are counted against the Award Limit.
2.2. ADD-BACK OF OPTIONS AND OTHER RIGHTS. If any Option expires or
is canceled without having been fully exercised, or is exercised in whole or in
part for cash as permitted by this Plan, the number of shares subject to such
Option but as to which such Option was not exercised prior to its expiration,
cancellation or exercise may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Furthermore, any shares subject to
Options or other awards which are adjusted pursuant to Section 7.3 and become
exercisable with respect to shares of stock of another corporation shall be
considered canceled and may again be optioned hereunder, subject to the
limitations of Section 2.1. Shares of Common Stock which are delivered by the
Optionee or withheld by the Company upon the exercise of any Option under this
Plan, in payment of the exercise price thereof, may again be optioned, granted
or awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding, the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.
ARTICLE 3. GRANTING OF OPTIONS
3.1. ELIGIBILITY. Any Employee or consultant selected by the
Committee pursuant to Section 3.4.1.1 shall be eligible to be granted an Option.
Each Independent Director of the Company shall be eligible to be granted Options
at the times and in the manner set forth in Section 4.4.1.
3.2. DISQUALIFICATION FOR STOCK OWNERSHIP. No person may be granted
an Incentive Stock Option under this Plan if such person (i) is not an Employee,
or (ii) at the time the Incentive Stock Option is granted, the Employee owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any then existing Subsidiary or parent
corporation (within the meaning of Section 422 of the Code) unless such
Incentive Stock Option conforms to the applicable provisions of Section 422 of
the Code.
3.3. QUALIFICATION OF INCENTIVE STOCK OPTIONS. No Incentive Stock
Option shall be granted to any person who is not an Employee.
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3.4. GRANTING OF OPTIONS.
3.4.1. The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:
3.4.1.1. Determine which Employees are key Employees
and select from among the key Employees or consultants (including
Employees or consultants who have previously received Options or other
awards under this Plan) such of them as in its opinion should be
granted Options;
3.4.1.2. Subject to the Award Limit, determine the
number of shares to be subject to such Options granted to the selected
key Employees or consultants;
3.4.1.3. Subject to Section 3.3, determine whether
such Options are to be Incentive Stock Options or Non-Qualified Stock
Options and whether such Options are to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code; and
3.4.1.4. Determine the terms and conditions of such
Options, consistent with this Plan, provided, however, that the terms
and conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
3.4.2. Upon the selection of a key Employee or consultant to
be granted an Option, the Committee shall instruct the Secretary of the Company
to issue the Option and may impose such conditions on the grant of the Option as
it deems appropriate. Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee or consultant
that the Employee or consultant surrender for cancellation some or all of the
unexercised Options which have been previously granted to him under this Plan or
otherwise. An Option, the grant of which is conditioned upon such surrender, may
have an option price lower (or higher) than the exercise price of such
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.
3.4.3. Any Incentive Stock Option granted under this Plan may
be modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.
ARTICLE 4. TERMS OF OPTIONS
4.1. OPTION AGREEMENT. Each Option shall be evidenced by a written
Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
4.2. OPTION PRICE. The price per share of the shares subject to
each Option shall be set by the Committee, PROVIDED, HOWEVER, that such price
shall be no less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law, and (i) in the case of Incentive Stock
Options and Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, such price shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted; (ii) in the case of Incentive Stock Options granted to an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation thereof
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(within the meaning of Section 422 of the Code) such price shall not be less
than 110% of the Fair Market Value of a share of Common Stock on the date the
Option is granted; and (iii) in the case of Non-Qualified Stock Options granted
to Independent Directors, such price shall equal 100% of the Fair Market Value
of a share of Common Stock on the date the Option is granted; PROVIDED, HOWEVER,
that the price of each share subject to each Option granted to Independent
Directors on the date of the initial public offering of Common Stock shall equal
the initial public offering price per share of Common Stock.
4.3. OPTION TERM. The term of an Option shall be set by the
Committee in its discretion, PROVIDED, however, that, (i) in the case of
Non-Qualified Stock Options granted to Independent Directors, the term shall be
ten (10) years from the date the Option is granted, without variation or
acceleration hereunder, but subject to Section 5.6, and (ii) in the case of
Incentive Stock Options, the term shall not be more than ten (10) years from the
date the Incentive Stock Option granted, or five (5) years from such date if the
Incentive Stock Option is granted to an Employee then owning (within the meaning
of Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary or parent corporation
thereof (within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options and by Section 7.2 hereof, the Committee
may extend the term of any outstanding Option in connection with any Termination
of Employment or Termination of Consultancy of the Optionee, or amend any other
term or condition of such Option relating to such a termination.
4.4. OPTION VESTING
4.4.1. The period during which the right to exercise an Option
in whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; PROVIDED, HOWEVER, that Options
granted to Independent Directors shall become exercisable in cumulative annual
installments of 33 1/3% on each of the first, second and third anniversaries of
the date of Option grant, without variation or acceleration hereunder except as
provided in Section 7.3. At any time after grant of an Option, the Committee
may, in its sole and absolute discretion and subject to whatever terms and
conditions it selects, accelerate the period during which an Option (except an
Option granted to an Independent Director) vests.
4.4.2. No portion of an Option which is unexercisable at
Termination of' Employment, Termination of Directorship or Termination of
Consultancy, as the case may be, shall thereafter become exercisable, except as
may be otherwise provided by the Committee (in the case of Options granted to
Employees or consultants) or by the Board (in the case of Options granted to
Independent Directors) either in the Stock Option Agreement or by action of the
Committee or the Board, as the case may be, following the grant of the Option.
4.4.3. To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during, any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required or permitted by Section 422 of the Code. The rule
set forth in the preceding sentence shall be applied by taking Options into
account in the order in which they were granted. For purposes of this Section
4.4.3., the Fair Market Value of stock shall be determined as of the time the
Option with respect to such stock is granted.
4.5. CONTINUED EMPLOYMENT. Nothing in this Plan or in any Stock
Option Agreement hereunder shall confer upon any Optionee any right to continue
in the employ of, or as a consultant for, the Employer, or as a director of the
Company, or shall interfere with or restrict in any the rights of the Employer,
hereby expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without good cause.
ARTICLE 5. EXERCISE OF OPTIONS
5.1. PARTIAL EXERCISE. An exercisable Option may be exercised in
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted
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to Independent Directors) may require that, by the terms of the Option, a
partial exercise can only be effective with respect to a minimum number of
shares.
5.2. MANNER OF EXERCISE. All or a portion of an exercisable Option
shall be deemed exercised upon delivery of all of the following to the Secretary
of the Company or his office:
5.2.1. A written notice complying with the applicable rules
established by the Committee (or the Board, in the case of Options granted to
Independent Directors) stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;
5.2.2. Such representations and documents as the Committee (or
the Board, in the case of Options granted to Independent Directors), in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;
5.2.3. In the event that the Option shall be exercised
pursuant to Section 7.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option
(such as a copy of the appropriate court order); and
5.2.4. Full cash payment to the Secretary of the Company for
the shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee (or the Board, in the case of Options granted to
Independent Directors), may in its discretion (i) allow a delay in payment up to
thirty (30) days from the date the Option, or portion thereof, is exercised,
(ii) allow payment, in whole or in part, through the delivery of shares of
Common Stock owned by the Optionee, duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof; (iii) allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof, (iv) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration, (v)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Committee or the Board, (vi) allow payment, in whole
or in part, through the delivery of a notice that the Optionee has placed a
market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; or (vii) allow payment through any
combination of the consideration provided in the foregoing subparagraphs (iii),
(iv), (v) and (vi). In the case of a promissory note, the Committee (or the
Board, in the case of Options granted to Independent Directors) may also
prescribe the form of such note and the security to be given for such note. The
Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is
prohibited by law.
5.3. CONDITIONS TO ISSUANCE OF STOCK. The Company shall not be
required to issue or deliver any certificate or other indicium evidencing
ownership of shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
5.3.1. The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
5.3.2. The completion of any registration or other
qualification of such shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Committee or Board shall in its absolute
discretion, deem necessary or advisable;
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5.3.3. The obtaining of any approval or other clearance from
any state or federal governmental agency or transfer agent based on Committee
instructions for non-certificated shares which the Committee (or Board, in the
case of Options ranted to Independent Directors) shall, in its absolute
discretion, determine to be necessary or advisable.
5.3.4. The lapse of such reasonable period of time following,
the exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors) may establish from time to time for reasons of
administrative convenience; and
5.3.5. The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
5.4. RIGHTS AS STOCKHOLDERS. The holders of Options shall not be,
nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates or other indicia representing such shares have
been issued by the Company to such holders.
5.5. OWNERSHIP AND TRANSFER RESTRICTIONS. The Committee (or Board,
in the case of Options granted to Independent Directors), in its absolute
discretion, may impose at the time of grant such restrictions on the ownership
and transferability of the shares purchasable upon the exercise of an Option as
it deems appropriate. Any such restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates or other
indicia evidencing such shares. The Committee may require the Employee to give
the Company prompt notice of any disposition of shares of Common Stock acquired
by exercise of an Incentive Stock Option within (i) two years from the date of
granting such Option to such Employee or (ii) one year after the transfer of
such shares to such Employee. The Committee may direct that the certificates or
other indicia evidencing shares acquired by exercise of an Option refer to such
requirement to give prompt notice of disposition.
5.6. LIMITATIONS ON EXERCISE OF OPTIONS. No Option granted
hereunder may be exercised to any extent by anyone after the first to occur of
the following events:
5.6.1. The expiration of twelve (12) months from the date of
the Optionee's death;
5.6.2. The expiration of twelve (12) months from the date of
the Optionee's Termination of Employment, Consulting or Directorship by reason
of his permanent and total disability (within the meaning of Section 22(e)(3) of
the Code);
5.6.3. The expiration of three (3) months from the date of the
Optionee's Termination of Employment, Consulting or Directorship for any reason
other than such Optionee's death or his permanent and total disability, unless
the Optionee dies within said three-month period; or
5.6.4. The expiration of ten years from the date the Option
was granted.
ARTICLE 6. ADMINISTRATION
6.1. COMPENSATION COMMITTEE. The Compensation Committee (or another
committee or a subcommittee of the Board assuming, the functions of the
Committee under this Plan) shall consist solely of two or more Independent
Directors appointed by and holding office at the pleasure of the Board, each of
whom is both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may be filled by the Board.
6.2. DUTIES AND POWERS OF COMMITTEE. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan
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and the agreements pursuant to which Options are granted or awarded, and to
adopt such rules for the administration, interpretation, and application of this
Plan as are consistent therewith and to interpret, amend or revoke any such
rules. Notwithstanding the foregoing, the full Board, acting by a majority of
its members in office, shall conduct the general administration of the Plan with
respect to Options granted to Independent Directors. Any such grant or award
under this Plan need not be the same with respect to each Optionee. Any such
interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole discretion
of the Committee.
6.3. MAJORITY RULE; UNANIMOUS WRITTEN CONSENT. The Committee shall
act by a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.
6.4. COMPENSATION; PROFESSIONAL ASSISTANCE: GOOD FAITH ACTIONS.
Unless otherwise determined by the Board, members of the Committee shall receive
no compensation for their services. All expenses and liabilities which members
of the Committee incur in connection with the administration of this Plan shall
be borne by the Company. The Committee may, with the approval of the Board,
employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Optionees, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan, or Options and all
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1. NOT TRANSFERABLE. Options under this Plan may not be sold,
pledged, assigned, or transferred in any manner other than by will or the laws
of descent and distribution or pursuant to a QDRO or by transfer to a member of
the Optionee's family or a trust or other entity created for the benefit of or
owned by Optionee or members of his family, unless and until such Options have
been exercised, or the shares underlying such Options have been issued. No
Option or interest or right therein shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
During the lifetime of the Optionee, only he or she or his or
her personal representatives may exercise an Option (or any portion thereof)
granted to him or her under the Plan, unless it has been disposed of pursuant
hereto. After the death of the Optionee or Grantee, any exercisable portion of
an Option or other right or award may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
be exercised by his or her personal representative or by any person empowered to
do so under the deceased Optionee's or Grantee's will or under the then
applicable laws of descent and distribution.
7.2. AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN. Except as
otherwise provided in this Section 7.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. However, without the approval of the
Company's stockholders given within twelve months before or after the action by
the Board or the Committee, no action of the Board or the Committee may, except
as provided in Section 7.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit, and no action of the Board or the Committee may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent of the holder of Options, alter or impair any rights or obligations
under any Options theretofore granted or awarded, unless the award itself
otherwise expressly so provides.
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No Options may be granted or awarded during any period of suspension or after
termination of this Plan, and in no event may any Incentive Stock Option be
granted under this Plan after the first to occur of the following events:
7.2.1. The expiration of ten years from the date the Plan is
adopted by the Board: or
7.2.2. The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 7.4.
7.3. CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY, ACQUISITION
OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.
7.3.1. Subject to Section 7.3, in the event that the Committee
(or the Board, in the case of Options granted to Independent Directors)
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), on account of a
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company (including,
but not limited to, a Corporate Transaction), or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee's sole discretion (or in the
case of Options granted to Independent Directors, the Board's sole discretion),
affects the Common Stock such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an Option, then the Committee (or the Board, in the case of Options granted
to Independent Directors) shall, in such manner as it may deem equitable, adjust
any or all of
7.3.1.1. the number and kind of shares of Common
Stock (or other securities or property) with respect to which Options
may be granted under the Plan (including, but not limited to,
adjustments of the limitations in Section 2.1 on the maximum number and
kind of shares which may be issued and adjustments of the Award Limit),
7.3.1.2. the number and kind of shares of Common
Stock, (or other securities or property) subject to outstanding
Options, and
7.3.1.3. the grant or exercise price with respect to
any Option.
7.3.2. Subject to this Section 7.3, in the event of any
Corporate Transaction or other transaction or event described in Section 7.3.1
or any unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee (or the Board, in the case of Options granted to
Independent Directors) in its discretion is hereby authorized to take any one or
more of the following actions whenever the Committee (or the Board, in the case
of Options granted to Independent Directors) determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to any option under this Plan, to facilitate such transactions or events or to
give effect to such changes in laws, regulations or principles:
7.3.2.1. In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to Independent Directors) may
provide, either by the terms of the agreement or by action taken prior
to the occurrence of such transaction or event and either automatically
or upon the optionee's request, for either the purchase of any such
Option for the payment of an amount of cash equal to the amount that
could have been attained upon the exercise of such option, right or
award or realization of the optionee's rights had such option been
currently exercisable or payable or fully vested or the replacement of
such option with other rights or property selected by the Committee (or
the Board, in the case of Options granted to Independent Directors) in
its sole discretion;
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7.3.2.2. In its sole and absolute discretion, the
Committee (or the Board, in the case of Options granted to Independent
Directors) may provide in terms of such Option that it cannot be
exercised after such event;
7.3.2.3. In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to Independent Directors) may
provide, either by the terms of such Option or by action taken prior to
the occurrence of such transaction or event, that for a specified
period of time prior to such transaction or event, such option shall be
exercisable as to all shares covered thereby, notwithstanding anything
to the contrary in (i) Section 4.4 or (ii) the provisions of such
Option;
7.3.2.4. In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to Independent Directors) may
provide, either by the terms of such Option or by action taken prior to
the occurrence of such transaction or event, that upon such event, such
option be assumed by the successor or survivor corporation, or a parent
or subsidiary thereof, or shall be substituted for by similar options
covering the stock of the successor or survivor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices; and
7.3.2.5. In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to Independent Directors) may
make adjustments in the number and type of shares of Common Stock (or
other securities or property) subject to outstanding Options and/or in
the terms and conditions of (including the grant or exercise price),
and the criteria included in, outstanding options and options which may
be granted in the future.
7.3.2.6. None of the foregoing discretionary actions
taken under this Section 7.3 shall be permitted with respect to Options
granted to Independent Directors to the extent that such discretion
would be inconsistent with the applicable exemptive conditions of Rule
16b-3. In the event of a Change in Control or a Corporate Transaction,
to the extent that the Board does not have the ability under Rule 16b-3
to take or to refrain from taking the discretionary actions set forth
in Section 7.3.2.3 above, each Option granted to an Independent
Director shall be exercisable as to all shares covered thereby upon
such Change in Control or during the five days immediately preceding
the consummation of such Corporate Transaction and subject to such
consummation, notwithstanding anything to the contrary in Section 4.4
or the vesting schedule of such Options. In the event of a Corporate
Transaction, to the extent that the Board does not have the ability
under Rule 16b-3 to take or to refrain from taking the discretionary
actions set forth in Section 7.3.2.3 above, no Option granted to an
Independent Director may be exercised following such Corporate
Transaction unless such Option is, in connection with such Corporate
Transaction, either assumed by the successor or survivor corporation
(or parent or subsidiary thereof) or replaced with a comparable right
with respect to shares of the capital stock of the successor or
survivor corporation (or parent or subsidiary thereof).
7.3.3. Subject to Section 7.3.4 and 7.8, the Committee (or the
Board, in the case of Options granted to Independent Directors) may, in its
discretion, at the time of grant, include such further provisions and
limitations in any Option agreement or certificate, as it may deem equitable and
in the best interests of the Company.
7.3.4. With respect to Options which are granted to Section
162(m) Participants and are intended to qualify as performance-based
compensation under Section 162(m)(4)(C), no adjustment or action described in
this Section 7.3 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause the Plan to violate
Section 422(b)(1) of the Code or would cause such option to fail to so qualify
under Section 162(m)(4)(C), as the case may be, or any successor provisions
thereto. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the
Committee (or the Board, in the case of Options granted to Independent
Directors) determines that the option is not to comply with such exemptive
conditions. The number of shares of Common Stock subject to any option shall
always be rounded to the next whole number.
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7.4. APPROVAL OF PLAN BY STOCKHOLDERS. This Plan will be submitted
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. Options may be awarded prior
to such stockholder approval, provided that such Options shall not be
exercisable prior to the time when this Plan is approved by the stockholders,
and provided further that if such approval has not been obtained at the end of
said twelve-month period, all Options previously granted shall thereupon be
canceled and become null and void.
7.5. TAX WITHHOLDING. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee
any sums required by federal, state or local tax law to be withheld with respect
to the issuance, vesting or exercise of any Option. The Committee (or the Board,
in the case of Options granted to Independent Directors) may in its discretion
and in satisfaction of the foregoing requirement allow such Optionee to elect to
have the Company withhold shares of Common Stock otherwise issuable under such
Option (or allow the return of shares of Common Stock) having a Fair Market
Value equal to the sums required to be withheld.
7.6. LOANS. The Committee may, in its discretion, extend one or
more loans to key Employees in connection with the exercise of an Option granted
under this Plan. The terms and conditions of any such loan shall be set by the
Committee.
7.7. FORFEITURE PROVISIONS. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall have the right (to the extent consistent with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of Options made
under the Plan, or to require the recipient to agree by separate written
instrument, that (i) any proceeds, gains or other economic benefit actually or
constructively received by the recipient upon any exercise of the Option, or
upon the receipt or resale of any Common Stock underlying such Option, must be
paid to the Company, and (ii) the Option shall terminate and any unexercised
portion of such Option (whether or not vested) shall be forfeited, if (a) a
Termination of Employment, Termination of Consultancy or Termination of
Directorship occurs prior to a specified date, or within a specified time period
following receipt or exercise of the award, or (b) the recipient at any time, or
during a specified time period, engages in any activity in competition with the
Company, or which is inimical, contrary or harmful to the interests of the
Company, as further defined by the Committee (or the Board, as applicable).
7.8. LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND
PERFORMANCE-BASED COMPENSATION. Notwithstanding any other provision of this
Plan, and any Option awarded to any individual who is then subject to Section 16
of the Exchange Act, shall be subject to any additional limitations set forth in
any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan, Options hereunder shall be deemed amended to the extent necessary to
conform to such applicable exemptive rule. Furthermore, notwithstanding any
other provision of this Plan, any Option which is granted to a Section 162(m)
Participant and is intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall be subject to any additional
limitations set forth in Section 162(m) of the Code (including any amendment to
Section 162(m) of the Code) or any regulations or rulings issued thereunder that
are requirements for qualification as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed
amended to the extent necessary to conform to such requirements.
7.9. EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Employer. Nothing in this Plan shall be construed to limit the
right of the Employer (i) to establish any other forms of incentives or
compensation for Employees, Directors or Consultants of the Employer, or (ii) to
grant or assume options or other rights otherwise than under this Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business stock or assets of any corporation, partnership, limited liability
company, firm or association.
7.10. COMPLIANCE WITH LAWS. This Plan, the granting and vesting of
Options under this Plan and the issuance and delivery of shares of Common Stock
or under Options hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin
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requirements) and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. Any securities delivered under this Plan
shall be subject to such restrictions, and the person acquiring such securities
shall, if requested by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. To the extent permitted by
applicable law, the Plan and Options granted shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
7.11. TITLES. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this Plan.
7.12. GOVERNING LAW. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of ___________________ on ____________, 2000.
Executed on this ____ day of _________, 2000.
Secretary,
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