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EXHIBIT 99.2
HALF.COM, INC.
1999 EQUITY COMPENSATION PLAN
The purpose of the Half.com, Inc. 1999 Equity Compensation Plan (the
"Plan") is to provide (i) designated employees of Half.com, Inc. (the "Company")
and its subsidiaries, (ii) certain consultants and advisors (including members
of the Company's Advisory Board) who provide services to the Company or its
subsidiaries and (iii) non-employee members of the Board of Directors of the
Company (the "Board") with the opportunity to receive grants of incentive stock
options, nonqualified stock options and stock awards. The Company believes that
the Plan will encourage the participants to contribute materially to the growth
of the Company, thereby benefitting the Company's shareholders, and will align
the economic interests of the participants with those of the shareholders.
1. Administration
(a) Committee. The Plan shall be administered and interpreted by the
Board or by a committee appointed by the Board. After an initial public offering
of the Company's stock as described in Section 18(b) (a "Public Offering"), the
Plan shall be administered by a committee, which may consist of "outside
directors" as defined under section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"), and related Treasury regulations and "non-employee
directors" as defined under Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). However, the Board may ratify or approve
any grants as it deems appropriate. If a committee administers the Plan,
references in the Plan to the "Board", as they relate to Plan administration,
shall be deemed to refer to the committee.
(b) Board Authority. The Board shall have the sole authority to (i)
determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued grant, and (v) deal with any other matters
arising under the Plan.
(c) Board Determinations. The Board shall have full power and authority
to administer and interpret the Plan, to make factual determinations and to
adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Board's interpretations of the Plan
and all determinations made by the Board pursuant to the powers vested in it
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hereunder shall be conclusive and binding on all persons having any interest in
the Plan or in any awards granted hereunder. All powers of the Board shall be
executed in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated individuals.
2. Grants
Awards under the Plan may consist of grants of incentive stock options
as described in Section 5 ("Incentive Stock Options"), nonqualified stock
options as described in Section 5 ("Nonqualified Stock Options") (Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options") and stock awards as described in Section 6 ("Stock Awards")
(hereinafter collectively referred to as "Grants"). All Grants shall be subject
to the terms and conditions set forth herein and to such other terms and
conditions consistent with this Plan as the Board deems appropriate and as are
specified in writing by the Board to the individual in a grant instrument or an
amendment to the grant instrument (the "Grant Instrument"). The Board shall
approve the form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the grantees.
3. Shares Subject to the Plan
(a) Shares Authorized. Subject to adjustment as described below, the
aggregate number of shares of common stock of the Company ("Company Stock") that
may be issued or transferred under the Plan is 1,960,784 shares. After a Public
Offering, the maximum aggregate number of shares of Company Stock that shall be
subject to Grants made under the Plan to any individual during any calendar year
shall be 400,000 shares, subject to adjustment as described below. The shares
may be authorized but unissued shares of Company Stock or reacquired shares of
Company Stock, including shares purchased by the Company on the open market for
purposes of the Plan. If and to the extent Options granted under the Plan
terminate, expire, or are canceled, forfeited, exchanged or surrendered without
having been exercised or if any Stock Awards are forfeited, the shares subject
to such Grants shall again be available for purposes of the Plan. If shares of
Company Stock are used to pay the exercise price of an Option, only the net
number of shares received by the grantee pursuant to such exercise shall be
considered to have been issued or transferred under the Plan with respect to
such Option, and the remaining number of shares subject to the Option shall
again be available for purposes of the Plan.
(b) Adjustments. If there is any change in the number or kind of shares
of Company Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares
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of Company Stock available for Grants, the maximum number of shares of Company
Stock that any individual participating in the Plan may be granted in any year,
the number of shares covered by outstanding Grants, the kind of shares issued
under the Plan, and the price per share of such Grants may be appropriately
adjusted by the Board to reflect any increase or decrease in the number of, or
change in the kind or value of, issued shares of Company Stock to preclude, to
the extent practicable, the enlargement or dilution of rights and benefits under
such Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. Any adjustments determined by the Board shall be
final, binding and conclusive.
4. Eligibility for Participation
(a) Eligible Persons. All employees of the Company and its subsidiaries
("Employees"), including Employees who are officers or members of the Board, and
members of the Board who are not Employees ("Non-Employee Directors") shall be
eligible to participate in the Plan. Consultants and advisors (including members
of the Company's Advisory Board) who provide services to the Company or any of
its subsidiaries ("Key Advisors") shall be eligible to participate in the Plan
if the Key Advisors render bona fide services to the Company or its
subsidiaries, the services are not in connection with the offer and sale of
securities in a capital-raising transaction, and the Key Advisors do not
directly or indirectly promote or maintain a market for the Company's
securities.
(b) Selection of Grantees. The Board shall select the Employees,
Non-Employee Directors and Key Advisors to receive Grants and shall determine
the number of shares of Company Stock subject to a particular Grant in such
manner as the Board determines. Employees, Key Advisors and Non-Employee
Directors who receive Grants under this Plan shall hereinafter be referred to as
"Grantees".
5. Granting of Options
(a) Number of Shares. The Board shall determine the number of shares of
Company Stock that will be subject to each Grant of Options to Employees,
Non-Employee Directors and Key Advisors.
(b) Type of Option and Price.
(i) The Board may grant Incentive Stock Options that are intended
to qualify as "incentive stock options" within the meaning of section 422 of the
Code or Nonqualified Stock Options that are not intended so to qualify or any
combination of Incentive Stock Options and Nonqualified Stock Options, all in
accordance with the terms and conditions set forth herein. Incentive Stock
Options may be granted only to Employees. Nonqualified Stock Options may be
granted to Employees, Non-Employee Directors and Key Advisors.
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(ii) The purchase price (the "Exercise Price") of Company Stock
subject to an Option shall be determined by the Board and may be equal to,
greater than, or less than the Fair Market Value (as defined below) of a share
of Company Stock on the date the Option is granted; provided, however, that (x)
the Exercise Price of an Incentive Stock Option shall be equal to, or greater
than, the Fair Market Value of a share of Company Stock on the date the
Incentive Stock Option is granted and (y) an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary of the Company, unless the Exercise
Price per share is not less than 110% of the Fair Market Value of Company Stock
on the date of grant.
(iii) If the Company Stock is publicly traded, then the Fair
Market Value per share shall be determined as follows: (x) if the principal
trading market for the Company Stock is a national securities exchange or the
Nasdaq National Market, the last reported sale price thereof on the relevant
date or (if there were no trades on that date) the latest preceding date upon
which a sale was reported, or (y) if the Company Stock is not principally traded
on such exchange or market, the mean between the last reported "bid" and "asked"
prices of Company Stock on the relevant date, as reported on Nasdaq or, if not
so reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Board determines. If the Company Stock is not publicly traded or, if publicly
traded, is not subject to reported transactions or "bid" or "asked" quotations
as set forth above, the Fair Market Value per share shall be as determined by
the Board.
(c) Option Term. The Board shall determine the term of each Option. The
term of any Option shall not exceed ten years from the date of grant. However,
an Incentive Stock Option that is granted to an Employee who, at the time of
grant, owns stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company, or any parent or subsidiary of the
Company, may not have a term that exceeds five years from the date of grant.
(d) Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Board and specified in the Grant Instrument. The Board may
accelerate the exercisability of any or all outstanding Options at any time for
any reason.
(e) Termination of Employment, Disability or Death.
(i) Except as provided below, an Option may only be exercised
while the Grantee is employed by, or providing service to, the Company as an
Employee, Key Advisor or member of the Board. In the event that a Grantee ceases
to be employed by, or provide service to, the Company for any reason other than
Disability, death, or termination for Cause, any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within 90 days after
the date on which the Grantee ceases to be employed by, or provide service to,
the
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Company (or within such other period of time as may be specified by the Board),
but in any event no later than the date of expiration of the Option term. Except
as otherwise provided by the Board, any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by, or provide service to, the Company shall terminate as of such date.
(ii) In the event the Grantee ceases to be employed by, or
provide service to, the Company on account of a termination for Cause by the
Company, any Option held by the Grantee shall terminate as of the date the
Grantee ceases to be employed by, or provide service to, the Company. In
addition, notwithstanding any other provisions of this Section 5, if the Board
determines that the Grantee has engaged in conduct that constitutes Cause at any
time while the Grantee is employed by, or providing service to, the Company or
after the Grantee's termination of employment or service, any Option held by the
Grantee shall immediately terminate, and the Grantee shall automatically forfeit
all shares underlying any exercised portion of an Option for which the Company
has not yet delivered the share certificates, upon refund by the Company of the
Exercise Price paid by the Grantee for such shares. Upon any exercise of an
Option, the Company may withhold delivery of share certificates pending
resolution of an inquiry that could lead to a finding resulting in a forfeiture.
(iii) In the event the Grantee ceases to be employed by, or
provide service to, the Company because the Grantee is Disabled, any Option
which is otherwise exercisable by the Grantee shall terminate unless exercised
within one year after the date on which the Grantee ceases to be employed by, or
provide service to, the Company (or within such other period of time as may be
specified by the Board), but in any event no later than the date of expiration
of the Option term. Except as otherwise provided by the Board, any of the
Grantee's Options which are not otherwise exercisable as of the date on which
the Grantee ceases to be employed by, or provide service to, the Company shall
terminate as of such date.
(iv) If the Grantee dies while employed by, or providing service
to, the Company or within 90 days after the date on which the Grantee ceases to
be employed or provide service on account of a termination specified in Section
5(e)(i) above (or within such other period of time as may be specified by the
Board), any Option that is otherwise exercisable by the Grantee shall terminate
unless exercised within one year after the date on which the Grantee ceases to
be employed by, or provide service to, the Company (or within such other period
of time as may be specified by the Board), but in any event no later than the
date of expiration of the Option term. Except as otherwise provided by the
Board, any of the Grantee's Options that are not otherwise exercisable as of the
date on which the Grantee ceases to be employed by, or provide service to, the
Company shall terminate as of such date.
(v) For purposes of this Section 5(e) and Section 6:
(A) The term "Company" shall mean the Company and its parent and
subsidiary corporations.
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(B) "Employed by, or provide service to, the Company" shall mean
employment or service as an Employee, Key Advisor or member of the Board
(so that, for purposes of exercising Options and satisfying conditions
with respect to Stock Awards, a Grantee shall not be considered to have
terminated employment or service until the Grantee ceases to be an
Employee, Key Advisor and member of the Board), unless the Board
determines otherwise.
(C) "Disability" shall mean a Grantee's becoming disabled within
the meaning of section 22(e)(3) of the Code.
(D) "Cause" shall mean, except to the extent specified otherwise
by the Board, a finding by the Board that the Grantee (i) has breached
his or her employment or service contract with the Company, (ii) has
engaged in disloyalty to the Company, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty
in the course of his or her employment or service, (iii) has disclosed
trade secrets or confidential information of the Company to persons not
entitled to receive such information or (iv) has engaged in such other
behavior detrimental to the interests of the Company as the Board
determines.
(f) Exercise of Options. A Grantee may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Company with payment of the Exercise Price. The Grantee shall pay the
Exercise Price for an Option as specified by the Board (x) in cash, (y) with the
approval of the Board, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Board deems appropriate) and having
a Fair Market Value on the date of exercise equal to the Exercise Price or by
attestation (on a form prescribed by the Board) to ownership of shares of
Company Stock having a Fair Market Value on the date of exercise equal to the
Exercise Price, or (z) by such other method as the Board may approve, including
after a Public Offering payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board. The Board may authorize
loans by the Company to Grantees in connection with the exercise of an Option,
upon such terms and conditions as the Board, in its sole discretion, deems
appropriate. Shares of Company Stock used to exercise an Option shall have been
held by the Grantee for the requisite period of time to avoid adverse accounting
consequences to the Company with respect to the Option. The Grantee shall pay
the Exercise Price and the amount of any withholding tax due (pursuant to
Section 7) at the time of exercise.
(g) Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the stock on the date of the
grant with respect to which Incentive Stock Options are exercisable for the
first time by a Grantee during any calendar year, under the Plan or any other
stock option plan of the Company or a parent or subsidiary,
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exceeds $100,000, then the Option, as to the excess, shall be treated as a
Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any
person who is not an Employee of the Company or a parent or subsidiary (within
the meaning of section 424(f) of the Code).
6. Stock Awards
The Board may issue or transfer shares of Company Stock to an Employee,
Non-Employee Director or Key Advisor under a Stock Award, upon such terms as the
Board deems appropriate. The following provisions are applicable to Stock
Awards:
(a) General Requirements. Shares of Company Stock issued or transferred
pursuant to Stock Awards may be issued or transferred for consideration or for
no consideration, and subject to restrictions or no restrictions, as determined
by the Board. The Board may establish conditions under which restrictions on
Stock Awards shall lapse over a period of time or according to such other
criteria as the Board deems appropriate. The period of time during which the
Stock Award will remain subject to restrictions will be designated in the Grant
Instrument as the "Restriction Period".
(b) Number of Shares. The Board shall determine the number of shares of
Company Stock to be issued or transferred pursuant to a Stock Award and the
restrictions applicable to such shares.
(c) Requirement of Employment or Service. If the Grantee ceases to be
employed by, or provide service to, the Company (as defined in Section 5(e))
during a period designated in the Grant Instrument as the Restriction Period, or
if other specified conditions are not met, the Stock Award shall terminate as to
all shares covered by the award as to which the restrictions have not lapsed,
and those shares of Company Stock must be immediately returned to the Company.
The Board may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of the Stock Award except to a Successor Grantee
under Section 8(a). Each certificate for Stock Awards shall contain a legend
giving appropriate notice of the restrictions in the Grant. The Grantee shall be
entitled to have the legend removed from the stock certificate covering the
shares subject to restrictions when all restrictions on such shares have lapsed.
The Board may determine that the Company will not issue certificates for Stock
Awards until all restrictions on such shares have lapsed, or that the Company
will retain possession of certificates for Stock Awards until all restrictions
on such shares have lapsed.
(e) Right to Vote and to Receive Dividends. During the Restriction
Period, the Grantee shall have the right to vote shares subject to Stock Awards
and to receive any dividends
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or other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Board.
(f) Lapse of Restrictions. All restrictions imposed on Stock Awards
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions imposed by the Board. The Board may determine, as
to any or all Stock Awards, that the restrictions shall lapse without regard to
any Restriction Period.
7. Withholding of Taxes
(a) Required Withholding. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company may require that the Grantee or other person receiving
or exercising Grants pay to the Company the amount of any federal, state or
local taxes that the Company is required to withhold with respect to such
Grants, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.
(b) Election to Withhold Shares. If the Board so permits, a Grantee may
elect to satisfy the Company's income tax withholding obligation with respect to
a Grant by having shares withheld up to an amount that does not exceed the
Grantee's minimum applicable withholding tax rate for federal (including FICA),
state and local tax liabilities. The election must be in a form and manner
prescribed by the Board and may be subject to the prior approval of the Board.
8. Transferability of Grants
(a) Nontransferability of Grants. Except as provided below, only the
Grantee may exercise rights under a Grant during the Grantee's lifetime. A
Grantee may not transfer those rights except by will or by the laws of descent
and distribution or, with respect to Grants other than Incentive Stock Options,
if permitted in any specific case by the Board, pursuant to a domestic relations
order (as defined under the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the regulations thereunder). When a Grantee
dies, the personal representative or other person entitled to succeed to the
rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Grant under the Grantee's will or under the applicable laws
of descent and distribution.
(b) Transfer of Nonqualified Stock Options. Notwithstanding the
foregoing, the Board may provide, in a Grant Instrument, that a Grantee may
transfer Nonqualified Stock Options to family members, or one or more trusts or
other entities for the benefit of or owned by family members, consistent with
applicable securities laws, according to such terms as the Board may determine;
provided that the Grantee receives no consideration for the transfer of an
Option
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and the transferred Option shall continue to be subject to the same terms and
conditions as were applicable to the Option immediately before the transfer.
9. Right of First Refusal; Repurchase Right
(a) Offer. Prior to a Public Offering, if at any time an individual
desires to sell, encumber, or otherwise dispose of shares of Company Stock that
were distributed to him or her under this Plan and that are transferable, the
individual may do so only pursuant to a bona fide written offer, and the
individual shall first offer the shares to the Company by giving the Company
written notice disclosing: (a) the name of the proposed transferee of the
Company Stock; (b) the certificate number and number of shares of Company Stock
proposed to be transferred or encumbered; (c) the proposed price; (d) all other
terms of the proposed transfer; and (e) a written copy of the proposed offer.
Within 60 days after receipt of such notice, the Company shall have the option
to purchase all or part of such Company Stock at the then current Fair Market
Value (as defined in Section 5(b)) and may pay such price in installments over a
period not to exceed four years, at the discretion of the Board.
(b) Sale. In the event the Company (or a shareholder, as described
below) does not exercise the option to purchase Company Stock, as provided
above, the individual shall have the right to sell, encumber, or otherwise
dispose of the shares of Company Stock described in subsection (a) at the price
and on the terms of the transfer set forth in the written notice to the Company,
provided such transfer is effected within 15 days after the expiration of the
option period. If the transfer is not effected within such period, the Company
must again be given an option to purchase, as provided above.
(c) Assignment of Rights. The Board, in its sole discretion, may waive
the Company's right of first refusal and repurchase right under this Section 9.
If the Company's right of first refusal or repurchase right is so waived, the
Board may, in its sole discretion, assign such right to the remaining
shareholders of the Company in the same proportion that each shareholder's stock
ownership bears to the stock ownership of all the shareholders of the Company,
as determined by the Board. To the extent that a shareholder has been given such
right and does not purchase his or her allotment, the other shareholders shall
have the right to purchase such allotment on the same basis.
(d) Purchase by the Company. Prior to a Public Offering, if a Grantee
ceases to be employed by, or provide service to, the Company, the Company shall
have the right to purchase all or part of any Company Stock distributed to him
or her under this Plan at its then current Fair Market Value (as defined in
Section 5(b)) (or at such other price as may be established in the Grant
Instrument); provided, however, that such repurchase shall be made in accordance
with applicable accounting rules to avoid adverse accounting treatment.
(e) Public Offering. On and after a Public Offering, the Company shall
have no further right to purchase shares of Company Stock under this Section 9.
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(f) Shareholder's Agreement. Notwithstanding the provisions of this
Section 9, if the Board requires that a Grantee execute a shareholder's
agreement with respect to any Company Stock distributed pursuant to this Plan,
the provisions of this Section 9 shall not apply to such Company Stock.
10. Change of Control of the Company
As used herein, a "Change of Control" shall be deemed to have occurred
if:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) (other than persons who are shareholders on the effective date
of the Plan) becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the then outstanding securities of the
Company; provided that a Change of Control shall not be deemed to occur as a
result of a change of ownership resulting from the death of a shareholder, and a
Change of Control shall not be deemed to occur as a result of a transaction in
which the Company becomes a subsidiary of another corporation and in which the
shareholders of the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
parent corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote); or
(b) The shareholders of the Company approve (or, if shareholder approval
is not required, the Board approves) an agreement providing for (i) the merger
or consolidation of the Company with another corporation where the shareholders
of the Company, immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), (ii) the sale or other disposition of all
or substantially all of the assets of the Company, or (iii) a liquidation or
dissolution of the Company.
11. Consequences of a Change of Control
(a) Notice and Acceleration. Upon a Change of Control, unless the Board
determines otherwise, (i) the Company shall provide each Grantee with
outstanding Grants written notice of such Change of Control, (ii) all
outstanding Options shall automatically accelerate and become fully exercisable
and (iii) the restrictions and conditions on all outstanding Stock Awards shall
immediately lapse.
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(b) Assumption of Grants. Upon a Change of Control where the Company is
not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Board determines otherwise, all outstanding Options
that are not exercised shall be assumed by, or replaced with comparable options
by, the surviving corporation.
(c) Other Alternatives. Notwithstanding the foregoing, subject to
subsection (d) below, in the event of a Change of Control, the Board may take
one or both of the following actions: the Board may (i) require that Grantees
surrender their outstanding Options in exchange for a payment by the Company, in
cash or Company Stock as determined by the Board, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee's unexercised Options exceeds the Exercise Price of the
Options, or (ii) after giving Grantees an opportunity to exercise their
outstanding Options, terminate any or all unexercised Options at such time as
the Board deems appropriate. Such surrender or termination shall take place as
of the date of the Change of Control or such other date as the Board may
specify.
(d) Limitations. Notwithstanding anything in the Plan to the contrary,
in the event of a Change of Control, the Board shall not have the right to take
any actions described in the Plan (including without limitation actions
described in Subsection (c) above) that would make the Change of Control
ineligible for pooling of interests accounting treatment or that would make the
Change of Control ineligible for desired tax treatment if, in the absence of
such right, the Change of Control would qualify for such treatment and the
Company intends to use such treatment with respect to the Change of Control.
12 Requirements for Issuance or Transfer of Shares
(a) Shareholder's Agreement. The Board may require that a Grantee
execute a shareholder's agreement, with such terms as the Board deems
appropriate, with respect to any Company Stock issued or distributed pursuant to
this Plan.
(b) Limitations on Issuance or Transfer of Shares. No Company Stock
shall be issued or transferred in connection with any Grant hereunder unless and
until all legal requirements applicable to the issuance or transfer of such
Company Stock have been complied with to the satisfaction of the Board. The
Board shall have the right to condition any Grant made to any Grantee hereunder
on such Grantee's undertaking in writing to comply with such restrictions on his
or her subsequent disposition of such shares of Company Stock as the Board shall
deem necessary or advisable, and certificates representing such shares may be
legended to reflect any such restrictions. Certificates representing shares of
Company Stock issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be required by applicable
laws, regulations and interpretations, including any requirement that a legend
be placed thereon.
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(c) Lock-Up Period. If so requested by the Company or any representative
of the underwriters (the "Managing Underwriter") in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), a Grantee (including
any successor or assigns) shall not sell or otherwise transfer any shares or
other securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period"). Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.
13 Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time;
provided, however, that the Board shall not amend the Plan without shareholder
approval if such approval is required in order for Incentive Stock Options
granted or to be granted under the Plan to meet the requirements of section 422
of the Code or, after a Public Offering, such approval is required in order to
exempt compensation under the Plan from the deduction limit under section 162(m)
of the Code.
(b) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its effective date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the Board
acts under Section 19(b). The termination of the Plan shall not impair the power
and authority of the Board with respect to an outstanding Grant. Whether or not
the Plan has terminated, an outstanding Grant may be terminated or amended under
Section 19(b) or may be amended by agreement of the Company and the Grantee
consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
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14 Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
15 Rights of Participants
Nothing in this Plan shall entitle any Employee, Key Advisor,
Non-Employee Director or other person to any claim or right to be granted a
Grant under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the employ
of the Company or any other employment rights.
16 No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Board shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
17 Headings
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
18 Effective Date of the Plan.
(a) Effective Date. Subject to approval by the Company's shareholders,
the Plan shall be effective on July 30, 1999.
(b) Public Offering. The provisions of the Plan that refer to a Public
Offering, or that refer to, or are applicable to persons subject to, section 16
of the Exchange Act or section 162(m) of the Code, shall be effective, if at
all, upon the initial registration of the Company Stock under section 12(g) of
the Exchange Act, and shall remain effective thereafter for so long as such
stock is so registered.
19 Miscellaneous
(a) Grants in Connection with Corporate Transactions and Otherwise.
Nothing contained in this Plan shall be construed to (i) limit the right of the
Board to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including Grants to
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<PAGE> 14
employees thereof who become Employees of the Company, or for other proper
corporate purposes, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan. Without limiting the
foregoing, the Board may make a Grant to an employee of another corporation who
becomes an Employee by reason of a corporate merger, consolidation, acquisition
of stock or property, reorganization or liquidation involving the Company or any
of its subsidiaries in substitution for a stock option or Stock Awards grant
made by such corporation. The terms and conditions of the substitute grants may
vary from the terms and conditions required by the Plan and from those of the
substituted stock incentives. The Board shall prescribe the provisions of the
substitute grants.
(b) Compliance with Law. The Plan, the exercise of Options and the
obligations of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to section 16 of the Exchange Act, after a Public Offering it is the
intent of the Company that the Plan and all transactions under the Plan comply
with all applicable provisions of Rule 16b-3 or its successors under the
Exchange Act. In addition, it is the intent of the Company that the Plan and
applicable Grants under the Plan comply with the applicable provisions of
section 162(m) of the Code, after a Public Offering, and section 422 of the
Code. To the extent that any legal requirement of section 16 of the Exchange Act
or section 162(m) or 422 of the Code as set forth in the Plan ceases to be
required under section 16 of the Exchange Act or section 162(m) or 422 of the
Code, that Plan provision shall cease to apply. The Board may revoke any Grant
if it is contrary to law or modify a Grant to bring it into compliance with any
valid and mandatory government regulation. The Board may also adopt rules
regarding the withholding of taxes on payments to Grantees. The Board may, in
its sole discretion, agree to limit its authority under this Section.
(c) Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Instruments issued under the Plan shall be governed and
construed by and determined in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflict of laws provisions thereof.
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