CORINTHIAN COLLEGES, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the
Corinthian Colleges, Inc. Employee Stock Purchase Plan (this
"Plan").
1. PURPOSE
The purpose of this Plan is to provide Eligible Employees
with an incentive to advance the best interests of the
Corporation (and those Subsidiaries which may be designated
by the Committee as "Participating Corporations") by
providing a method whereby they may voluntarily purchase
Common Stock at a favorable price and upon favorable terms.
2. DEFINITIONS
Capitalized terms used herein which are not otherwise
defined shall have the following meanings.
"Account" means the bookkeeping account maintained by
the Corporation, or by a recordkeeper on behalf of the
Corporation, for a Participant pursuant to
Section 7(a).
"Board" means the Board of Directors of the
Corporation.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" means the committee appointed by the Board
to administer this Plan pursuant to Section 12.
"Common Stock" means the Common Stock, par value
$0.0001 per share, of the Corporation and such other
securities or property as may become the subject of
Options pursuant to an adjustment made under Section
17.
"Company" means, collectively, the Corporation, its
Parent and its Subsidiaries (if any).
"Compensation" means an Eligible Employee's regular
earnings, overtime pay, sick pay, vacation pay, cash
incentive compensation, commissions and bonuses.
Compensation also includes any amounts contributed as
salary reduction contributions to a plan qualifying
under Section 401(k), 125 or 129 of the Code. Any
other form of remuneration is excluded from
Compensation, including (but not limited to) the
following: prizes, awards, relocation or housing
allowances, stock option exercises, stock appreciation
rights, restricted stock exercises, performance awards,
auto allowances, tuition reimbursement and other forms
of imputed income. Notwithstanding the foregoing,
Compensation shall not include any amounts deferred
under or paid from any nonqualified deferred
compensation plan maintained by the Company.
"Contributions" means all bookkeeping amounts credited
to the Account of a Participant pursuant to
Section 7(a).
"Corporation" means Corinthian Colleges, Inc., a
Delaware corporation, and its successors.
"Effective Date" means the date this Plan was adopted
by the Board.
"Eligible Employee" means any employee of the
Corporation, or of any Subsidiary which has been
designated in writing by the Committee as a
"Participating Corporation" (including any Subsidiaries
which have become such after the date that this Plan is
approved by the stockholders of the Corporation).
Notwithstanding the foregoing, "Eligible Employee"
shall not include any employee who has not as of the
Grant Date completed at least twelve months of
continuous employment with the Company.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
"Exercise Date" means, with respect to an Offering
Period, the last day of that Offering Period.
"Fair Market Value" on any date means: (i) if the
Common Stock is listed or admitted to trade on a
national securities exchange, the closing price of a
share of Common Stock on the Composite Tape, as
published in the Western Edition of The Wall Street
Journal, of the principal national securities exchange
on which such stock is so listed or admitted to trade,
on such date, or, if there is no trading of the Common
Stock on such date, then the closing price of a share
of Common Stock as quoted on such Composite Tape on the
next preceding date on which there was trading in such
shares; (ii) if the Common Stock is not listed or
admitted to trade on a national securities exchange,
the last/closing price for a share of Common Stock on
such date, as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through the NASDAQ
National Market Reporting System or a similar
organization if the NASD is no longer reporting such
information; (iii) if the Common Stock is not listed or
admitted to trade on a national securities exchange and
is not reported on the National Market Reporting
System, the mean between the bid and asked price for a
share of Common Stock on such date, as furnished by the
NASD or a similar organization; or (iv) if the Common
Stock is not listed or admitted to trade on a national
securities exchange, is not reported on the National
Market Reporting System and if bid and asked prices for
the Common Stock are not furnished by the NASD or a
similar organization, the value as established by the
Committee at such time for purposes of this Plan.
"Grant Date" means the first day of each Offering
Period, as determined by the Committee and announced to
potential Eligible Employees.
"Offering Period" means the six-consecutive month
period commencing on each Grant Date; provided,
however, that the Committee may declare, as it deems
appropriate and in advance of the applicable Offering
Period, a shorter (not to be less than three months)
Offering Period or a longer (not to exceed 27 months)
Offering Period; provided further that the Grant Date
for an Offering Period may not occur on or before the
Exercise Date for the immediately preceding Offering
Period.
"Option" means the stock option to acquire Shares
granted to a Participant pursuant to Section 8.
"Option Price" means the per share exercise price of an
Option as determined in accordance with Section 8(b).
"Parent" means any corporation (other than the
Corporation) in an unbroken chain of corporations
ending with the Corporation in which each corporation
(other than the Corporation) owns stock possessing 50%
or more of the total combined voting power of all
classes of stock in one or more of the other
corporations in the chain.
"Participant" means an Eligible Employee who has
elected to participate in this Plan and who has filed a
valid and effective Subscription Agreement to make
Contributions pursuant to Section 6.
"Plan" means this Corinthian Colleges, Inc. Employee
Stock Purchase Plan, as it may hereafter be amended
from time to time.
"Rule 16b-3" means Rule 16b-3 as promulgated by the
Commission under Section 16, as amended from time to
time.
"Section 16" means Section 16 of the Exchange Act.
"Share" means a share of Common Stock.
"Subscription Agreement" means the written agreement
filed by an Eligible Employee with the Corporation
pursuant to Section 6 to participate in this Plan.
"Subsidiary" means any corporation (other than the
Corporation) in an unbroken chain of corporations
(beginning with the Corporation) in which each
corporation (other than the last corporation) owns
stock possessing 50% or more of the total combined
voting power of all classes of stock in one or more of
the other corporations in the chain.
3. ELIGIBILITY
Any person employed as an Eligible Employee as of a Grant
Date shall be eligible to participate in this Plan during
the Offering Period in which such Grant Date occurs, subject
to the Eligible Employee satisfying the requirements of
Section 6.
4. STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS
(a) Subject to the provisions of Section 17, the capital stock
that may be delivered under this Plan will be shares of the
Corporation's authorized but unissued Common Stock and any of its
shares of Common Stock held as treasury shares. The maximum
number of Shares that may be delivered pursuant to Options
granted under this Plan is 250,000* Shares, subject to
adjustments pursuant to Section 17. In the event that all of the
Shares made available under this Plan are subscribed prior to the
expiration of this Plan, this Plan shall terminate at the end of
that Offering Period and the shares available shall be allocated
for purchase by Participants in that Offering Period on a pro-
rata basis determined with respect to Participants' Account
balances.
(b) The maximum number of Shares that any one individual may
acquire upon exercise of his or her Option with respect to any
one Offering Period is 3,000*, subject to adjustments pursuant to
Section 17 (the "Individual Limit"); provided, however, that the
Committee may amend such Individual Limit, effective no earlier
than the first Offering Period commencing after the adoption of
such amendment, without stockholder approval. The Individual
Limit shall be proportionately adjusted for any Offering Period
of less than six months, and may, at the discretion of the
Committee, be proportionately increased for any Offering Period
of greater than six months.
_______________________________
* Before giving effect to the Corporation's December 2000 stock
dividend.
5. OFFERING PERIODS
During the term of this Plan, the Corporation will offer
Options to purchase Shares in each Offering Period to all
Participants in that Offering Period. Each Option shall
become effective on the Grant Date. Unless otherwise
specified by the Committee in advance of the Offering
Period, an Offering Period that commences on or about July 1
will end the following December 31 and an Offering Period
that commences on or about January 1 will end the following
June 30. The term of each Option shall be the duration of
the related Offering Period and shall end on the Exercise
Date. The first Offering Period shall commence no earlier
than the Effective Date. Offering Periods shall continue
until this Plan is terminated in accordance with Section 18
or 19, or, if earlier, until no Shares remain available for
Options pursuant to Section 4.
6. PARTICIPATION
(a) An Eligible Employee may become a participant in this Plan
by completing a Subscription Agreement on a form approved by and
in a manner prescribed by the Committee (or its delegate). To
become effective, a Subscription Agreement must be signed by the
Eligible Person and filed with the Corporation at the time
specified by the Committee, but in all cases prior to the start
of the Offering Period with respect to which it is to become
effective, and must set forth a whole percentage (or, if the
Committee so provides, a stated amount) of the Eligible
Employee's Compensation to be credited to the Participant's
Account as Contributions each pay period.
(b) Notwithstanding the foregoing, a Participant's Contribution
election shall be subject to the following limitations:
(i) the 5% ownership and the $25,000 annual purchase limitations
set forth in Section 8(c);
(ii) unless the Committee otherwise provides, an election of a
stated amount of Compensation must result in a Plan Contribution
of at least $10.00 each pay period;
(iii) a Participant may not elect to contribute more than
fifteen percent (15%) of his or her Compensation as Plan
Contributions; and
(iv) such other limits, rules, or procedures as the Committee may
prescribe.
(c) Subscription Agreements shall contain the Eligible
Employee's authorization and consent to the Corporation's
withholding from his or her Compensation the amount of his or her
Contributions. An Eligible Employee's Subscription Agreement,
and his or her participation election and withholding consent
thereon, shall remain valid for all Offering Periods until (i)
the Eligible Employee's participation terminates pursuant to the
terms hereof, (ii) the Eligible Employee files a new Subscription
Agreement that becomes effective, or (iii) the Committee requires
that a new Subscription Agreement be executed and filed with the
Corporation.
7. METHOD OF PAYMENT OF CONTRIBUTIONS
(a) The Corporation shall maintain on its books, or cause to be
maintained by a recordkeeper, an Account in the name of each
Participant. The percentage of Compensation elected to be
applied as Contributions by a Participant shall be deducted from
such Participant's Compensation on each payday during the period
for payroll deductions set forth below and such payroll
deductions shall be credited to that Participant's Account as
soon as administratively practicable after such date. A
Participant may not make any additional payments to his or her
Account. A Participant's Account shall be reduced by any amounts
used to pay the Option Price of Shares acquired, or by any other
amounts distributed pursuant to the terms hereof.
(b) Payroll deductions with respect to an Offering Period shall
commence as of the first day of the payroll period which
coincides with or immediately follows the applicable Grant Date
and shall end on the last day of the payroll period which
coincides with or immediately precedes the applicable Exercise
Date, unless sooner terminated by the Participant as provided in
this Section 7 or until his or her participation terminates
pursuant to Section 11.
(c) A Participant may terminate his or her Contributions during
an Offering Period (and receive a distribution of the balance of
his or her Account in accordance with Section 11) by completing
and filing with the Corporation, in such form and on such terms
as the Committee (or its delegate) may prescribe, a written
withdrawal form which shall be signed by the Participant. Such
termination shall be effective as soon as administratively
practicable after its receipt by the Corporation. A withdrawal
election pursuant to this Section 7(c) with respect to an
Offering Period shall only be effective, however, if it is
received by the Corporation prior to the Exercise Date of that
Offering Period. Partial withdrawals of Accounts, and other
modifications or suspensions of Subscription Agreements, except
as provided in Section 7(e) or 7(f), are not permitted.
(d) During leaves of absence approved by the Corporation and
meeting the requirements of Regulation Section 1.421-7(h)(2)
under the Code, a Participant may continue participation in this
Plan by cash payments to the Corporation on his normal paydays
equal to the reduction in his Plan Contributions caused by his
leave.
(e) A Participant may discontinue, increase, or decrease the
level of his or her Contributions (within Plan limits) by
completing and filing with the Corporation, on such terms as the
Committee (or its delegate) may prescribe, a new Subscription
Agreement which indicates such election. An election pursuant to
this Section 7(e) shall be effective no earlier than the first
Offering Period that commences after the Corporation's receipt of
such election.
(f) A Participant may discontinue (but not increase or otherwise
decrease) the level of his or her Contributions, by filing with
the Corporation, on such terms as the Committee (or its delegate)
may prescribe, a new Subscription Agreement which indicates such
election. A Participant may make only one election under this
Section 7(f) each Offering Period. An election pursuant to this
Section 7(f) shall be effective no earlier than the first payroll
period that starts after the Corporation's receipt of such
election.
8. GRANT OF OPTION
(a) On each Grant Date, each Eligible Employee who is a
participant during that Offering Period shall be granted an
Option to purchase a number of Shares. The Option shall be
exercised on the Exercise Date. The number of Shares subject to
the Option shall be determined by dividing the Participant's
Account balance as of the applicable Exercise Date by the Option
Price.
(b) The Option Price per Share of the Shares subject to an
Option for an Offering Period shall be the lesser of: (i) 90% of
the Fair Market Value of a Share on the applicable Grant Date; or
(ii) 90% of the Fair Market Value of a Share on the applicable
Exercise Date.
(c) Notwithstanding anything else contained herein, a person who
is otherwise an Eligible Employee shall not be granted any Option
(or any Option granted shall be subject to compliance with the
following limitations) or other right to purchase Shares under
this Plan to the extent:
(i) it would, if exercised, cause the person to own "stock" (as
such term is defined for purposes of Section 423(b)(3) of the
Code) possessing 5% or more of the total combined voting power or
value of all classes of stock of the Corporation, or of any
Parent, or of any Subsidiary; or
(ii) such Option causes such individual to have rights to
purchase stock under this Plan and any other plan of the
Corporation, any Parent, or any Subsidiary which is qualified
under Section 423 of the Code which accrue at a rate which
exceeds $25,000 of the fair market value of the stock of the
Corporation, of any Parent, or of any Subsidiary (determined at
the time the right to purchase such Stock is granted, before
giving effect to any discounted purchase price under any such
plan) for each calendar year in which such right is outstanding
at any time.
For purposes of the foregoing, a right to purchase stock
accrues when it first become exercisable during the calendar
year. In determining whether the stock ownership of an
Eligible Employee equals or exceeds the 5% limit set forth
above, the rules of Section 424(d) of the Code (relating to
attribution of stock ownership) shall apply, and stock which
the Eligible Employee may purchase under outstanding options
shall be treated as stock owned by the Eligible Employee.
9. EXERCISE OF OPTION
Unless a Participant's Plan participation is terminated as
provided in Section 11, his or her Option for the purchase
of Shares shall be exercised automatically on the Exercise
Date for that Offering Period, without any further action on
the Participant's part, and the maximum number of whole
Shares subject to such Option (subject to the Individual
Limit set forth in Section 4(b) and the limitations
contained in Section 8(c)) shall be purchased at the Option
Price with the balance of such Participant's Account.
If any amount which is not sufficient to purchase a whole
Share remains in a Participant's Account after the exercise
of his or her Option on the Exercise Date: (i) such amount
shall be credited to such Participant's Account for the next
Offering Period, if he or she is then a Participant; or
(ii) if such Participant is not a Participant in the next
Offering Period, or if the Committee so elects, such amount
shall be refunded to such Participant as soon as
administratively practicable after such date. If the Share
limit of Section 4(a) is reached, any amount that remains in
a Participant's Account after the exercise of his or her
Option on the Exercise Date to purchase the number of Shares
that he or she is allocated shall be refunded to the
Participant as soon as administratively practicable after
such date.
If any amount which exceeds the Individual Limit set forth
in Section 4(b) or one of the limitations set forth in
Section 8(c) remains in a Participant's Account after the
exercise of his or her Option on the Exercise Date, such
amount shall be refunded to the Participant as soon as
administratively practicable after such date.
10. DELIVERY
As soon as administratively practicable after the Exercise
Date, the Corporation shall deliver to each Participant a
certificate representing the Shares purchased upon exercise
of his or her Option. The Corporation may make available an
alternative arrangement for delivery of Shares to a
recordkeeping service. The Committee (or its delegate), in
its discretion, may either require or permit the Participant
to elect that such certificates be delivered to such
recordkeeping service. In the event the Corporation is
required to obtain from any commission or agency authority
to issue any such certificate, the Corporation will seek to
obtain such authority. If the Corporation is unable to
obtain from any such commission or agency authority which
counsel for the Corporation deems necessary for the lawful
issuance of any such certificate, or if for any other reason
the Corporation cannot issue or deliver shares of Common
Stock and satisfy Section 21, the Corporation shall be
relieved from liability to any Participant except that the
Corporation shall return to each Participant the amount of
the balance in his or her Account.
11. TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS
(a) Except as provided in the next paragraph, if a Participant
ceases to be an Eligible Employee for any reason, or if the
Participant elects to terminate Contributions pursuant to Section
7(c), at any time prior to the last day of an Offering Period in
which he or she participates, such Participant's Account shall be
paid to him or her or in cash (or, in the event of the
Participant's death, to the person or persons entitled thereto
under Section 13 in cash), and such Participant's Option and
participation in the Plan shall be automatically terminated.
If a Participant (i) ceases to be an Eligible Employee
during an Offering Period but remains an employee of
the Company through the Exercise Date, or (ii) during
an Offering Period commences a sick leave, military
leave, or other leave of absence approved by the
Company, and the leave meets the requirements of
Treasury Regulation Section 1.421-7(h)(2) and the
Participant is an employee of the Company or on such
leave as of the applicable Exercise Date, such
Participant's Contributions shall cease (subject to
Section 7(d)), and the Contributions previously
credited to the Participant's Account for that Offering
Period shall be used to exercise the Participant's
Option as of the applicable Exercise Date in accordance
with Section 9 (unless the Participant makes an
election to terminate Contributions in accordance with
Section 7(c) at any time prior to the last day of the
applicable Offering Period, in which case such
Participant's Account shall be paid to him or her in
cash in accordance with the foregoing paragraph).
(b) A Participant's termination from Plan participation
precludes the Participant from again participating in this Plan
during that Offering Period. However, such termination shall not
have any effect upon his or her ability to participate in any
succeeding Offering Period, provided that the applicable
eligibility and participation requirements are again then met. A
Participant's termination from Plan participation shall be deemed
to be a revocation of that Participant's Subscription Agreement
and such Participant must file a new Subscription Agreement to
resume Plan participation in any succeeding Offering Period.
(c) For purposes of this Plan, if a Participating Corporation
ceases to be a Subsidiary, each person employed by that
Subsidiary will be deemed to have terminated employment for
purposes of this Plan and will no longer be an Eligible Employee,
unless the person continues as an Eligible Employee in respect of
another Company entity.
12. ADMINISTRATION
(a) The Board shall appoint the Committee, which shall be
composed of not less than two members of the Board. Each member
of the Committee, in respect of any transaction at a time when an
affected Participant may be subject to Section 16 of the Exchange
Act, shall be a "non-employee director" within the meaning of
Rule 16b-3. The Board may, at any time, increase or decrease the
number of members of the Committee, may remove from membership on
the Committee all or any portion of its members, and may appoint
such person or persons as it desires to fill any vacancy existing
on the Committee, whether caused by removal, resignation, or
otherwise. The Board may also, at any time, assume or change the
administration of this Plan.
(b) The Committee shall supervise and administer this Plan and
shall have full power and discretion to adopt, amend and rescind
any rules deemed desirable and appropriate for the administration
of this Plan and not inconsistent with the terms of this Plan,
and to make all other determinations necessary or advisable for
the administration of this Plan. The Committee shall act by
majority vote or by unanimous written consent. No member of the
Committee shall be entitled to act on or decide any matter
relating solely to himself or herself or solely to any of his or
her rights or benefits under this Plan. The Committee shall have
full power and discretionary authority to construe and interpret
the terms and conditions of this Plan, which construction or
interpretation shall be final and binding on all parties
including the Corporation, Participants and beneficiaries. The
Committee may delegate ministerial non-discretionary functions to
third parties, including officers or employees of the
Corporation.
(c) Subject only to compliance with the express provisions
hereof, the Board and Committee may act in their absolute
discretion in matters within their authority related to this
Plan. Any action taken by, or inaction of, the Corporation, any
Participating Corporation, the Board or the Committee relating or
pursuant to this Plan shall be within the absolute discretion of
that entity or body and will be conclusive and binding upon all
persons. In making any determination or in taking or not taking
any action under this Plan, the Board or Committee, as the case
may be, may obtain and may rely on the advice of experts,
including professional advisors to the Corporation. No member of
the Board or Committee, or officer or agent of the Company, will
be liable for any action, omission or decision under the Plan
taken, made or omitted in good faith.
13. DESIGNATION OF BENEFICIARY
(a) A Participant may file, in a manner prescribed by the
Committee (or its delegate), a written designation of a
beneficiary who is to receive any Shares or cash from such
Participant's Account under this Plan in the event of such
Participant's death. If a Participant's death occurs subsequent
to the end of an Offering Period but prior to the delivery to him
or her of any Shares deliverable under the terms of this Plan,
such Shares and any remaining balance of such Participant's
Account shall be paid to such beneficiary (or such other person
as set forth in Section 13(b)) as soon as administratively
practicable after the Corporation receives notice of such
Participant's death and any outstanding unexercised Option shall
terminate. If a Participant's death occurs at any other time,
the balance of such Participant's Account shall be paid to such
beneficiary (or such other person as set forth in Section 13(b))
in cash as soon as administratively practicable after the
Corporation receives notice of such Participant's death and such
Participant's Option shall terminate. If a Participant is
married and the designated beneficiary is not his or her spouse,
spousal consent shall be required for such designation to be
effective unless it is established (to the satisfaction of the
Committee or its delegate) that there is no spouse or that the
spouse cannot be located. The Committee may rely on the last
designation of a beneficiary filed by a Participant in accordance
with this Plan.
(b) Beneficiary designations may be changed by the Participant
(and his or her spouse, if required) at any time on forms
provided and in the manner prescribed by the Committee (or its
delegate). If a Participant dies with no validly designated
beneficiary under this Plan who is living at the time of such
Participant's death, the Corporation shall deliver all Shares
and/or cash payable pursuant to the terms hereof to the executor
or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed, the Corporation, in
its discretion, may deliver such Shares and/or cash to the spouse
or to any one or more dependents or relatives of the Participant,
or if no spouse, dependent or relative is known to the
Corporation, then to such other person as the Corporation may
designate.
14. TRANSFERABILITY
Neither Contributions credited to a Participant's Account
nor any Options or rights with respect to the exercise of
Options or right to receive Shares under this Plan may be
anticipated, alienated, encumbered, assigned, transferred,
pledged or otherwise disposed of in any way (other than by
will, the laws of descent and distribution, or as provided
in Section 13) by the Participant. Any such attempt at
anticipation, alienation, encumbrance, assignment, transfer,
pledge or other disposition shall be without effect and all
amounts shall be paid and all shares shall be delivered in
accordance with the provisions of this Plan. Amounts
payable or Shares deliverable pursuant to this Plan shall be
paid or delivered only to the Participant or, in the event
of the Participant's death, to the Participant's beneficiary
pursuant to Section 13.
15. USE OF FUNDS; INTEREST
All Contributions received or held by the Corporation under
this Plan will be included in the general assets of the
Corporation and may be used for any corporate purpose.
Notwithstanding anything else contained herein to the
contrary, no interest will be paid to any Participant or
credited to his or her Account under this Plan (in respect
of Account balances, refunds of Account balances, or
otherwise).
16. REPORTS
Statements shall be provided to Participants as soon as
administratively practicable following each Exercise Date.
Each Participant's statement shall set forth, as of such
Exercise Date, that Participant's Account balance
immediately prior to the exercise of his or her Option, the
Fair Market Value of a Share, the Option Price, the number
of whole Shares purchased and his or her remaining Account
balance, if any.
17. ADJUSTMENTS OF AND CHANGES IN THE STOCK
Upon or in contemplation of any reclassification,
recapitalization, stock split (including a stock split in
the form of a stock dividend), or reverse stock split; any
merger, combination, consolidation, or other reorganization;
split-up, spin-off, or any similar extraordinary dividend
distribution in respect of the Common Stock (whether in the
form of securities or property); any exchange of Common
Stock or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; or a sale of substantially all
the assets of the Corporation as an entirety occurs; then
the Committee shall, in such manner, to such extent (if any)
and at such time as it deems appropriate and equitable in
the circumstances:
(a) proportionately adjust any or all of (i) the number and type
of shares of Common Stock or the number and type of other
securities that thereafter may be made the subject of Options
(including the specific maxima and numbers of shares set forth
elsewhere in this Plan), (ii) the number, amount and type of
shares of Common Stock (or other securities or property) subject
to any or all outstanding Options, (iii) the Option Price of any
or all outstanding Options, or (iv) the securities, cash or other
property deliverable upon exercise of any outstanding Options; or
(b) make provision for a cash payment or for the substitution or
exchange of any or all outstanding Options for cash, securities
or property to be delivered to the holders of any or all
outstanding Options based upon the distribution or consideration
payable to holders of the Common Stock upon or in respect of such
event.
The Committee may adopt such valuation methodologies for
outstanding Options as it deems reasonable in the event of a
cash or property settlement and, without limitation on other
methodologies, may base such settlement solely upon the
excess (if any) of the amount payable upon or in respect of
such event over the exercise or strike price of the Option.
In each case, no adjustment, substitution, exchange or
settlement will be made (without reasonable compensation
therefor) that would cause this Plan to violate Section 423
of the Code or any successor provisions without the written
consent of the holders materially adversely affected
thereby.
In any of such events, the Committee may take such action
sufficiently prior to such event to the extent that the
Committee deems the action necessary to permit the
Participant to realize the benefits intended to be conveyed
with respect to the underlying shares in the same manner as
is or will be available to stockholders generally.
18. POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS
Upon a dissolution of the Corporation, or any other event
described in Section 17 that the Corporation does not
survive, the Plan and, if prior to the last day of an
Offering Period, any outstanding Option granted with respect
to that Offering Period shall terminate, subject to any
provision that has been expressly made by the Board for the
survival, substitution, assumption, exchange or other
settlement of the Plan and Options. In the event a
Participant's Option is terminated pursuant to this Section
18 without a provision having been made by the Board for a
substitution, exchange or other settlement of the Option,
such Participant's Account shall be paid to him or her in
cash without interest.
19. TERM OF PLAN; AMENDMENT OR TERMINATION
(a) This Plan shall become effective as of the Effective Date.
No new Offering Periods shall commence on or after the tenth
anniversary of the Effective Date and this Plan shall terminate
as of the Exercise Date on or immediately following such tenth
anniversary unless sooner terminated pursuant to Section 4,
Section 18, or this Section 19.
(b) The Board may, at any time, terminate or, from time to time
amend, modify or suspend this Plan, in whole or in part, without
notice. Stockholder approval for any amendment or modification
shall not be required, except to the extent required by
Section 423 of the Code or other applicable law, or deemed
necessary or advisable by the Board. No Options may be granted
during any suspension of this Plan or after the termination of
this Plan, but the Committee will retain jurisdiction as to
Options then outstanding in accordance with the terms of this
Plan. No amendment, modification, or termination pursuant to
this Section 19(b) shall, without written consent of the
Participant, affect in any manner materially adverse to the
Participant any rights or benefits of such Participant or
obligations of the Corporation under any Option granted under
this Plan prior to the effective date of such change. Changes
contemplated by Section 17 or Section 18 shall not be deemed to
constitute changes or amendments requiring Participant consent.
Notwithstanding the foregoing, the Committee shall have the right
to designate from time to time the Subsidiaries whose employees
may be eligible to participate in this Plan and such designation
shall not constitute any amendment to this Plan requiring
stockholder approval.
20. NOTICES
All notices or other communications by a Participant to the
Corporation contemplated by this Plan shall be deemed to
have been duly given when received in the form and manner
specified by the Committee (or its delegate) at the
location, or by the person, designated by the Committee (or
its delegate) for that purpose.
21. CONDITIONS UPON ISSUANCE OF SHARES
This Plan, the granting of Options under this Plan and the
offer, issuance and delivery of shares of Common Stock are
subject to compliance with all applicable federal and state
laws, rules and regulations (including but not limited to
state and federal securities laws) and to such approvals by
any listing, regulatory or governmental authority as may, in
the opinion of counsel for the Corporation, be necessary or
advisable in connection therewith. The person acquiring any
securities under this Plan will, if requested by the
Corporation and as a condition precedent to the exercise of
his or her Option, provide such assurances and
representations to the Corporation as the Committee may deem
necessary or desirable to assure compliance with all
applicable legal and accounting requirements.
22. PLAN CONSTRUCTION
(a) It is the intent of the Corporation that transactions
involving Options under this Plan in the case of Participants who
are or may be subject to the prohibitions of Section 16 satisfy
the requirements for applicable exemptions under Rule 16
promulgated by the Commission under Section 16 so that such
persons (unless they otherwise agree) will be entitled to the
exemptive relief of Rule 16b-3 or other exemptive rules under
Section 16 in respect of those transactions and will not be
subject to avoidable liability thereunder.
(b) This Plan and Options are intended to qualify under
Section 423 of the Code.
(c) If any provision of this Plan or of any Option would
otherwise frustrate or conflict with the intents expressed above,
that provision to the extent possible shall be interpreted so as
to avoid such conflict. If the conflict remains irreconcilable,
the Committee may disregard the provision if it concludes that to
do so furthers the interest of the Corporation and is consistent
with the purposes of this Plan as to such persons in the
circumstances.
23. EMPLOYEES' RIGHTS
(a) Nothing in this Plan (or in any other documents related to
this Plan) will confer upon any Eligible Employee or Participant
any right to continue in the employ or other service of the
Company, constitute any contract or agreement of employment or
other service or effect an employee's status as an employee at
will, nor shall interfere in any way with the right of the
Company to change such person's compensation or other benefits or
to terminate his or her employment or other service with or
without cause. Nothing contained in this Section 23(a), however,
is intended to adversely affect any express independent right of
any such person under a separate employment or service contract
other than a Subscription Agreement.
(b) No Participant or other person will have any right, title or
interest in any fund or in any specific asset (including shares
of Common Stock) of the Company by reason of any Option
hereunder. Neither the provisions of this Plan (or of any
related documents), nor the creation or adoption of this Plan,
nor any action taken pursuant to the provisions of this Plan will
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Participant or
other person. To the extent that a Participant or other person
acquires a right to receive payment pursuant to this Plan, such
right will be no greater than the right of any unsecured general
creditor of the Corporation. No special or separate reserve,
fund or deposit will be made to assure any such payment.
(c) A Participant will not be entitled to any privilege of stock
ownership as to any shares of Common Stock not actually delivered
to and held of record by the Participant. No adjustment will be
made for dividends or other rights as a stockholder for which a
record date is prior to such date of delivery.
24. MISCELLANEOUS
(a) This Plan, the Options, and related documents shall be
governed by, and construed in accordance with, the laws of the
State of Delaware. If any provision shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue in effect.
(b) Captions and headings are given to the sections of this Plan
solely as a convenience to facilitate reference. Such captions
and headings shall not be deemed in any way material or relevant
to the construction of interpretation of this Plan or any
provision hereof.
(c) The adoption of this Plan shall not affect any other Company
compensation or incentive plans in effect. Nothing in this Plan
will limit or be deemed to limit the authority of the Board or
Committee (i) to establish any other forms of incentives or
compensation for employees of the Company (with or without
reference to the Common Stock), or (ii) to grant or assume
options (outside the scope of and in addition to those
contemplated by this Plan) in connection with any proper
corporate purpose; to the extent consistent with any other plan
or authority.
(d) Benefits received by a Participant under an Option granted
pursuant to this Plan shall not be deemed a part of the
Participant's compensation for purposes of the determination of
benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Company, except where the
Committee or the Board expressly otherwise provides or authorizes
in writing.
25. EFFECTIVE DATE
This Plan shall be effective on the Effective Date, subject,
however, to the approval of this Plan by the stockholders of
the Corporation within twelve months after the date on which
the Board approved this Plan. Notwithstanding anything else
contained herein to the contrary, no Shares shall be issued
or delivered under this Plan until such stockholder approval
is obtained and, if such stockholder approval is not
obtained within such 12-month period of time, all
Contributions credited to a Participant's Account hereunder
shall be refunded to such Participant as soon as practicable
after the end of such 12-month period.
26. TAX WITHHOLDING
Notwithstanding anything else contained in this Plan herein
to the contrary, the Company may deduct from a Participant's
Account balance as of an Exercise Date, before the exercise
of the Participant's Option is given effect on such date,
the amount of any taxes which the Company reasonably
determines it may be required to withhold with respect to
such exercise. In such event, the maximum number of whole
shares of Common Stock subject to such Option (subject to
the other limits set forth in this Plan) shall be purchased
at the Option Price with the balance of the Participant's
Account (after reduction for the tax withholding amount).
Should the Company for any reason be unable, or elect not
to, satisfy its tax withholding obligations in the manner
described in the preceding paragraph with respect to a
Participant's exercise of an Option, or should the Company
reasonably determine that it has a tax withholding
obligation with respect to a disposition of shares acquired
pursuant to the exercise of an Option prior to satisfaction
of the holding period requirements of Section 423 of the
Code, the Company shall have the right at its option to (i)
require the Participant to pay or provide for payment of the
amount of any taxes which the Company reasonably determines
that it is required to withhold with respect to such event
or (ii) deduct from any amount otherwise payable to or for
the account of the Participant the amount of any taxes which
the Company reasonably determines that it is required to
withhold with respect to such event.
27. NOTICE OF SALE
Any person who has acquired shares of Common Stock under
this Plan shall give prompt written notice to the
Corporation of any sale or other transfer of the shares of
Common Stock if such sale or transfer occurs (i) within the
two-year period after the Grant Date of the Offering Period
with respect to which such Shares were acquired, or (ii)
within the twelve-month period after the Exercise Date of
the Offering Period with respect to which such shares of
Common Stock were acquired.
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