<PAGE> 1
Exhibit 10.1
PROXICOM, INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
Proxicom, Inc., a Delaware corporation (the "Company"), sets forth herein
the terms of the 1996 Stock Option Plan (the "Plan") as follows:
1. PURPOSE
Under the Plan, Awards may be granted to Eligible Employees and Eligible
Nonemployees to purchase shares of the Company's capital stock. The Plan is
designed to enable the Company to attract, retain and motivate its Employees,
consultants and others by providing for or increasing the proprietary interests
of such persons in the Company.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Agreements), the following definitions shall apply:
2.1. "AFFILIATE" means the Company and any company or other trade or
business that is controlled by or under common control with the Company,
determined in accordance with the principles of Section 414(b) and 414(c) of the
Code and the regulations thereunder, or is an affiliate of the Company within
the meaning of Rule 405 of Regulation C under the Securities Act.
2.2. "AGREEMENT" means the Stock Option Agreement under which the Grantee
accepts the Award terms and conditions and receives an Award pursuant to the
Plan.
2.3. "ANNUAL INCENTIVE AWARD" means a conditional right granted to a
Grantee under Section 30 hereof to receive a cash payment, Common Stock or other
Award after the end of a specified fiscal year (or such other period as
determined by the Committee).
2.4. "AWARD" means individually, collectively or in tandem, an incentive
award granted under the Plan, whether in the form of Options, SARs, Restricted
Stock Awards, or performance shares, or such other form and subject to such
terms as the Committee may determine.
2.5. "AWARD PRICE" means the purchase price for each share of Common Stock
subject to an Award.
2.6. "BOARD" means the Board of Directors of the Company.
<PAGE> 2
2.7. "CODE" means the Internal Revenue Code of 1986, as amended. Any
section thereof referenced in the Plan or an Agreement shall include the rules
and regulations thereunder, and any successor provisions thereto.
2.8. "COMMITTEE" means the Compensation Committee of the Board, which must
consist of no fewer than two members of the Board who satisfy the definition
under Rule 16b-3 of the Exchange Act for "nonemployee director".
2.9. "COMMON STOCK" means common stock, par value $.01, issued by the
Company.
2.10. "COMPANY" means Proxicom, Inc., a Delaware corporation, any
Affiliates and any other entity as determined by the Committee.
2.11. "COVERED EMPLOYEE" means a Grantee who is a Covered Employee within
the meaning of Section 162(m)(3) of the Code.
2.12. "EFFECTIVE DATE" means August 26, 1996, the date of adoption of the
Plan by the Board.
2.13. "ELIGIBLE EMPLOYEE" means any Employee of the Company who the
Committee selects to receive an Award.
2.14. "ELIGIBLE NONEMPLOYEE" means any former Employee, consultant or
advisor to the Company who the Committee selects to receive
an Award.
2.15. "EMPLOYEE" means, for the purposes of the Plan, an individual who is
an employee of the Company.
2.16. "EMPLOYER" means the Company.
2.17. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended. Any section thereof referenced in the Plan or an
Agreement shall include the rules and regulations thereunder, and any successor
provisions thereto.
2.18. "FAIR MARKET VALUE" means the value of each share of Common Stock
subject to the Plan determined as follows: (a) if on the Grant Date or other
determination date the shares of Common Stock are listed on an established
national or regional stock exchange, are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System, or are publicly
traded on an established securities market, the Fair Market Value of the shares
of Common Stock shall be the closing price of the shares of Common Stock on such
exchange or in such market (the highest such closing price if there is more than
one such exchange or market) on the trading day immediately preceding the Grant
Date
<PAGE> 3
or such other determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the highest bid and
lowest asked prices or between the high and low sale prices on such trading
day); or (b) if no sale of the shares of Common Stock is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the shares of Common Stock are not listed on such an exchange,
quoted on such System or traded on such a market, Fair Market Value shall be
determined by the Board or Committee in good faith.
2.19. "GRANT DATE" means for a particular Award (i) the date as of which
the Committee approves the Award or (ii) any other date specified by the
Committee, if any.
2.20. "GRANTEE" means an individual to whom one or more Awards have been
granted.
2.21. "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock option
within the meaning of section 422 of the Code. Any Option that is not
specifically designated as an Incentive Stock Option shall under no
circumstances be considered an Incentive Stock Option.
2.22. "NONQUALIFIED STOCK OPTION" means any Option that does not qualify
under section 422 of the Code.
2.23. "OPTION" means an option granted by the Company to purchase Common
Stock pursuant to the provisions of the Plan, including ISOs, Nonqualified Stock
Options and Reload Options.
2.24. "OPTION PERIOD" means the period during which Options may be
exercised as defined in section 13.
2.25. "OPTION TERM" means the period defined under section 13 herein.
2.26 "PERFORMANCE AWARD" means a conditional right granted to a Grantee
under Section 30 hereof to receive cash payments, Common Stock or other Awards
during a designated time period of up to 10 years.
2.27. "PLAN" means the Proxicom, Inc. 1996 Stock Option Plan, as amended.
2.28. "PUBLICLY TRADED" means that time when the shares of Common Stock are
listed on an established national or regional stock exchange, are admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System, or are publicly traded on an established securities market
<PAGE> 4
2.29. "RELOAD OPTION" means the right to receive a further Option for a
number of shares of Common Stock surrendered by the Grantee upon exercise of the
original Option.
2.30. "RESTRICTED PERIOD" means the period of time from the date of
grant of Restricted Stock until the lapse of restrictions attached thereto under
the terms of the Agreement granting such Restricted Stock, pursuant to the
provisions of the Plan or by action of the Committee.
2.31. "RESTRICTED STOCK" shall mean an Award granted by the Committee
entitling the Grantee to acquire, at no cost or for a purchase price determined
by the Committee at the time of grant, shares of Common Stock which are subject
to restrictions in accordance with the provisions hereof.
2.32. "SECURITIES ACT" means the Securities Act of 1933, as now in
effect or as hereafter amended. Any section thereof referenced in the Plan or an
Agreement shall include the rules and regulations thereunder, and any successor
provisions thereto.
2.33. "STOCK APPRECIATION RIGHT" or "SAR" means a grant entitling the
Grantee to receive an amount in cash or shares of Common Stock or a combination
thereof having a value equal to (or if the Committee shall so determine at the
time of a grant, less than) the excess of the Fair Market Value of a share of
Common Stock on the date of exercise over the Fair Market Value of a share of
Common Stock on the date of grant (or over the Award Price, if the SAR was
granted in tandem with an Option), multiplied by the number of shares with
respect to which the SAR shall have been exercised, with the Committee having
sole discretion to determine the form or forms of payment at the time of grant
of the SAR.
2.34. "STOCK AWARDS" means any Award which is in the form of Restricted
Stock and any outright grants of Common Stock approved by the Committee pursuant
to the Plan.
2.35. "STOCKHOLDER" means a holder of record of at least one share of
the voting stock of the Company.
2.36. "TERMINATION OF EMPLOYMENT" means that event when a person is no
longer employed by the Company or any Affiliate as an employee, advisor,
consultant or otherwise. The Committee may in its discretion determine (a)
whether any leave of absence constitutes a termination of employment for
purposes of the Plan; (b) the impact, if any, of any such leave of absence on
awards
<PAGE> 5
theretofore made under the Plan; and (c) when a change in a nonemployee's
association with the Company constitutes a termination of employment for
purposes of the Plan. Such determinations of the Committee shall be final,
binding and conclusive.
3. ADMINISTRATION
3.1 ADMINISTRATION OF THE PLAN
Prior to the time that the securities of the Company become Publicly
Traded, the Plan shall be administered by the Board (unless and until the Board
appoints the Committee and the members thereof to administer the Plan), in which
case the term "Committee" when used herein with respect to the administration of
the Plan shall be deemed to mean the Board. After the securities of the Company
become Publicly Traded, the Plan shall be administered by the Committee.
3.2 SCOPE OF AUTHORITY
The Committee shall have the full power and authority to take all actions
and to make all determinations required or provided for under the Plan, any
Award granted or Agreement entered into hereunder, and all such other actions
and determinations not inconsistent with the specific terms and provisions of
the Plan deemed by the Committee to be necessary or appropriate to the
administration of the Plan, any Award or Agreement entered into hereunder.
Actions of the Committee shall be taken by the vote of a majority of its
members; provided, however, that the Plan shall be administered so that Awards
granted under the Plan will qualify for the benefits provided by Rule 16b-3 (or
any successor rule) under the Exchange Act and section 162(m) of the Code, and
the regulations thereunder to the extent the Committee intends such grant to
quality under section 162(m). The interpretation and construction by the
Committee of any provision of the Plan or of any Award granted or Agreement
entered into hereunder shall be final and conclusive.
3.3 NO LIABILITY
No member of the Board or of the Committee shall be liable for any action
or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Agreement entered into hereunder.
<PAGE> 6
4. AWARDS; COMMON STOCK
4.1 AWARDS
Awards granted under the Plan may be Incentive Stock Options, Nonqualified
Stock Options, Restricted Stock, Stock Appreciation Rights, and performance
shares, all as more fully set forth herein. No Incentive Stock Option may be
granted to a person who is not an employee of the Company on the date of grant.
Unless otherwise specified in a particular grant, Awards granted under the Plan
are intended to qualify as performance-based compensation for the purposes of
section 162(m) of the Code. Notwithstanding the foregoing, Awards granted under
the Plan may also be Deferred Stock Awards as more fully described in Section
29.
4.2 COMMON STOCK
The stock that may be issued pursuant to Awards granted under the Plan
shall be Common Stock, which shares may be treasury shares or authorized but
unissued shares. The number of shares of Common Stock that may be issued
pursuant to Awards granted under the Plan shall not exceed in the aggregate
28,000,000 shares of Common Stock, which number of shares is subject to
adjustment and increase. If any Award expires, terminates or is terminated for
any reason prior to exercise in full, the shares of Common Stock that were
subject to the unexercised portion of such Award shall be available for future
Awards granted under the Plan. When the exercise price for an Award under this
Plan is paid with previously outstanding shares or with shares as to which the
Award is being exercised, as permitted in section 13, only the number of shares
of stock issued net of the shares of stock tendered shall be deemed delivered
for purposes of determining the maximum number of shares of Stock available for
delivery under the Plan. Shares of stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or obligations to grant future
awards) under the plans or arrangements of another entity shall not reduce the
maximum number of shares of stock available for delivery under the Plan, to the
extent that such settlement, assumption or substitution as a result of the
Company or an Affiliate acquiring another entity (or an interest in another
entity).
4.3 INDIVIDUAL LIMITS
During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, the maximum number of shares of Common
Stock subject to Options that can be awarded in any one calendar year under the
Plan to any person eligible for an Award under Section 5 hereof is two million
(2,000,000). The maximum number of shares that can be awarded under the Plan,
other than pursuant to an Option, to any person eligible for an Award is two
million (2,000,000) per calendar year. The maximum amount that may be earned as
an Annual Incentive Award or other cash Award in any fiscal year by any one
Grantee
<PAGE> 7
shall be $1,000,000 and the maximum amount that may be earned as a
Performance Award or other cash Award in respect of a performance period by any
one Grantee shall be $3,000,000.
5. ELIGIBILITY
Awards may be granted under the Plan to all current and former officers and
executive, administrative, technical or professional employees of the Company;
to current and former consultants of the Company; and to any other individual
whose participation in the Plan is determined to be in the best interests of the
Company by the Committee. An individual may hold more than one Award, subject to
such restrictions as are provided herein.
6. EFFECTIVE DATE AND PLAN TERM
6.1 EFFECTIVE DATE
The Plan is effective as of August 26, 1996, the date of adoption by the
Board, subject to Stockholders' approval of the Plan within one year of such
Effective Date by a majority of the votes cast at a duly held meeting of the
Stockholders of the Company at which a quorum representing a majority of all
outstanding Common Stock is present, either in person or by proxy, and voting on
the matter, or by written consent in accordance with applicable state law and
the Certificate of Incorporation and By-Laws of the Company and in a manner that
satisfies the requirements of section 162(m) of the Code; provided, however,
that upon approval of the Plan by the Stockholders of the Company, all Awards
granted under the Plan on or after the Effective Date shall be fully effective
as if the Stockholders of the Company had approved the Plan on the Effective
Date. If the Stockholders fail to approve the Plan within one year of such
Effective Date, any Awards granted hereunder shall be null, void and of no
effect.
6.2 TERM
The Plan shall terminate on the date ten (10) years after the Effective
Date.
7. GRANT OF AWARDS
7.1 AWARDS
The Committee shall determine the type or types of Awards to be made to
each Grantee. Awards may be granted singly, in combination or in tandem subject
to restrictions set forth herein. Without limiting the foregoing, the Committee
may at any time amend the terms of outstanding Awards or issue new Awards in
exchange for the surrender and cancellation of outstanding Awards. The date on
<PAGE> 8
which the Committee approves the Award shall be considered the date on which
such Award is granted, unless the Committee approves a separate grant date. The
terms and conditions of the Awards granted under this section shall be
determined from time to time by the Committee, as set forth in the Agreement,
and the conditions herein.
7.2 NONQUALIFIED OPTIONS
The Award Price for each share of Common Stock issuable pursuant a
Nonqualified Stock Option shall be set by the Committee, but may not be less
than par value.
7.3 INCENTIVE STOCK OPTIONS
The Award Price for each share of Common Stock issuable pursuant to an
Incentive Stock Option may not be less than the Fair Market Value on the Grant
Date.
7.4 INCENTIVE STOCK OPTIONS - SPECIAL RULES
Options granted in the form of ISOs shall be subject to the following
provisions:
(a) Grant. No Incentive Option shall be granted pursuant to this plan
more than ten (10) years after the Effective Date.
(b) Annual Limit. An Option shall constitute an ISO only to the extent
that the aggregate Fair Market Value (determined at the time the Option is
granted) of the Common Stock with respect to which ISOs are exercisable for
the first time by any Grantee during any calendar year under the Plan and
all other plans of the Grantee's employer Company and its parent and
Affiliates does not exceed $100,000. This limitation shall be applied by
taking Options into account in the order in which such Options were
granted.
(c) 10% Stockholder. If any Grantee to whom an ISO is to be granted
pursuant to the provisions of the Plan is, on the date of grant, an
individual described in section 422(b)(6) of the Code, then the following
special provisions shall be applicable to the Option granted to such
individual:
<PAGE> 9
(i) the Award Price of shares subject to such ISO shall not be
less than 110% of the Fair Market Value of Common Stock on the date of
grant; and
(ii) the Option shall not have a term in excess of five (5) years
from the date of grant.
7.5 CHANGES IN LAW
The Committee may establish rules with respect to, and may grant to
Eligible Employees and Eligible Nonemployees, Options to comply with any
amendment to the Code made after the Effective Date.
7.6 RELOAD OPTIONS
Without in any way limiting the authority of the Committee to make Awards
hereunder, the Committee shall have the authority to grant Reload Options. Any
such Reload Option shall be subject to such other terms and conditions as the
Committee may determine. Notwithstanding the above, (i) the Committee shall have
the right, in its sole discretion, to withdraw a Reload Option to the extent
that the grant thereof will result in any adverse accounting consequences to the
Company and (ii) no additional Reload Options shall be granted upon the exercise
of a Reload Option.
8. AGREEMENTS
All Awards granted pursuant to the Plan shall be evidenced by written
Agreements in such form or forms as the Committee shall from time to time
determine. Agreements covering Awards need not contain similar provisions;
provided, however, that all such Agreements shall comply with the terms of the
Plan and all applicable laws and regulations. By accepting an Award pursuant to
the Plan, a Grantee thereby agrees that the Award shall be subject to all of the
terms and provisions of the Plan and the applicable Agreement.
9. STOCK APPRECIATION RIGHTS
The Committee shall have the authority to grant SARs to Eligible Employees
and Eligible Nonemployees either alone or in connection with an Option. SARs
granted in connection with an Option shall be granted either at the time of
grant of the Option or by amendment to the Option. SARs granted in connection
with an Option shall be subject to the same terms and conditions as the related
Option and shall be exercisable only at such times and to such extent as the
related Option is exercisable. An SAR granted in connection with an Option may
be exercised only when the Fair Market Value of the Common Stock of the Company
exceeds the
<PAGE> 10
Award Price of the related Option. An SAR granted in connection with
an Option shall entitle the Grantee to surrender to the Company unexercised the
related Option, or any portion thereof and to receive from the Company cash
and/or shares of Common Stock equal to that number of shares of Common Stock
having an aggregate value equal to the excess of (i) the Fair Market Value of
one share of Common Stock on the day of the surrender of such Option over (ii)
the Award Price per share of Common Stock multiplied by (iii) the number of
shares of Common Stock that may be exercised under the Option, or surrendered;
provided, however, that no fractional shares shall be issued. An SAR granted
singly shall entitle the Grantee to receive the excess of (i) the Fair Market
Value of a share of Common Stock on the date of exercise over (ii) the Fair
Market Value of a share of Common Stock on the date of grant of the SAR,
multiplied by (iii) the number of SARs exercised. Payment of any fractional
shares of Common Stock shall be made in cash.
10. RESTRICTED STOCK
The Committee may in its sole discretion grant Restricted Stock to Eligible
Employees and Eligible Nonemployees, subject to the following provisions. At the
time a grant of Restricted Stock is made, the Committee shall establish a period
of time (the "Restricted Period") applicable to such Restricted Stock. Each
grant of Restricted Stock may be subject to a different Restricted Period. The
Committee may, in its sole discretion, at the time a grant of Restricted Stock
is made, prescribe restrictions in addition to or other than the expiration of
the Restricted Period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the
Restricted Stock. Such performance objectives shall be established in writing by
the Committee prior to the ninetieth day of the year in which the grant is made
and while the outcome is substantially uncertain. Performance objectives shall
be based on the following business criteria: Common Stock price, market share,
sales, earnings per share, return on equity, or costs.
Performance objectives may include positive results, maintaining the status
quo or limiting economic losses. The Committee also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock. Restricted Stock may not
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the Restricted Period or prior to the satisfaction of any other
restrictions prescribed by the Committee with respect to such Restricted Stock.
10.1 RESTRICTIONS
A Common Stock certificate representing the number of shares of Restricted
Stock granted shall be held in custody by the Company for the Grantee's account.
The Grantee shall have all rights and privileges of a Stockholder as to such
<PAGE> 11
Restricted Stock, including the right to receive dividends and the right to vote
such shares, except that subject to the provisions below, the following
restrictions shall apply: (i) The Grantee shall not be entitled to delivery of
the certificate until the expiration of the Restricted Period; (ii) none of the
shares of Restricted Stock may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period; (iii) the
Grantee shall, if requested by the Company, execute and deliver to the Company,
a Common Stock power endorsed in blank. If a Grantee ceases to be an Employee of
the Company prior to the expiration of the Restricted Period applicable to such
shares, shares of Restricted Stock still subject to restrictions shall be
forfeited unless otherwise determined by the Committee, and all rights of the
Grantee to such shares shall terminate without further obligation on the part of
the Company.
10.2 DELIVERY OF RESTRICTED SHARES
At the end of the Restricted Period, a Common Stock certificate for the
number of shares of Restricted Stock with respect to which the restrictions have
lapsed shall be delivered (less any amount in satisfaction of any withholding
obligation), free of all such restrictions, except applicable securities laws,
to the Grantee. The Company shall not be required to deliver any fractional
shares of Common Stock but shall pay, in lieu thereof, the Fair Market Value (as
of the date the restrictions lapse) of such fractional share to the Grantee.
Notwithstanding the foregoing, the Committee may authorize the delivery of the
Restricted Stock to a Grantee during the Restricted Period, in which event any
Common Stock certificates in respect of any shares of Restricted Stock thus
delivered to a Grantee during the Restricted Period applicable to such shares
shall bear an appropriate legend referring to the terms and conditions,
including the restrictions, applicable thereto.
11. PERFORMANCE SHARES
The Committee may in its sole discretion grant performance share awards
to such individuals and under such terms and conditions as the Committee shall
determine, subject to the provisions of the Plan. Such an award shall entitle a
Grantee to acquire shares of Common Stock of the Company, or to be paid the
value thereof in cash, as the Committee shall determine, if specified
performance goals are met. Performance shares may be awarded independently of or
in connection with any other Award under the Plan. The Grantee of a performance
share award will have the rights of a shareholder only as to shares for which a
certificate has been issued pursuant to the award and not with respect to any
other shares subject to the award. Except as otherwise may be provided by the
Committee at any time prior to termination of employment, the rights of a
Grantee of a performance share award shall automatically terminate upon the
Grantee's Termination of Employment for any reason.
<PAGE> 12
12. AWARD PRICE
The purchase price of each share of Common Stock subject to an Award shall
be fixed by the Committee and stated in each Agreement.
13. TERM, VESTING AND EXERCISE OF AWARDS
13.1 TERM
Each Award granted under the Plan shall terminate and all rights to
purchase Common Stock thereunder shall cease upon the expiration of ten (10)
years from the Grant Date, as otherwise provided herein, or on such date prior
thereto as may be fixed by the Committee and stated in the Agreement relating to
such Award; provided, however, that in the event the Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to Common Stock ownership of
more than 10 percent), an Option granted to such Grantee which is intended to be
an Incentive Stock Option shall in no event be exercisable after the expiration
of five years from the Grant Date (collectively, the "Option Term").
13.2 VESTING
Effective January 26, 2000, unless otherwise expressly provided in an
Agreement and approved by the Committee the initial grant of Options hereunder
to Employees shall become vested and exercisable at the following schedule if
the Grantee is an Employee on the relevant anniversary date and has not
experienced a Termination of Employment prior to such anniversary date: one
fourth (1/4) of the total number of shares optioned shall become vested and
exercisable on the first anniversary of the Grant Date; an additional one
sixteenth (1/16) of the total shares optioned shall become vested and
exercisable at the end of each three month period thereafter until 100% of the
total number of shares optioned are vested and exercisable on and after the
fourth anniversary of the Grant Date.
Unless otherwise expressly provided in an Agreement and approved by the
Committee, subsequent grants of Options hereunder to Employees shall become
vested and exercisable at the schedule indicated below if the Grantee is an
Employee on the relevant vesting date and has not experienced a Termination of
Employment prior to such vesting date:
(a) if the Grantee has been employed by the Company for at least one year
at the end of the first three month period following the Grant Date,
one sixteenth (1/16) of the total number of shares optioned shall
become vested and exercisable at the end of the first three month
period, and an additional one sixteenth (1/16) of the shares optioned
shall become vested and exercisable at the end of each
<PAGE> 13
three month period thereafter until 100% of the total number of shares
optioned are vested and exercisable on and after the fourth
anniversary of the Grant Date; or
(b) if the Grantee has not been employed by the Company for at least one
year at the end of the first three month period following the Grant
Date, at the end of the next three month period following the Grant
Date that occurs after the Grantee has been employed by the Company
for at least one year, the portion of the total number of shares
optioned that is equal to the product of one sixteenth (1/16) and the
number of whole three month periods that have elapsed since the Grant
Date shall become vested and exercisable. An additional one sixteenth
(1/16) of the total shares optioned shall become vested and
exercisable at the end of each three month period thereafter until
100% of the total number of shares optioned are vested and exercisable
on and after the fourth anniversary of the Grant Date.
All Awards that do not vest are forfeited.
13.3 EXERCISE BY GRANTEE
Only the Grantee receiving an Award (or, in the event of the Grantee's
legal incapacity or incompetency, the Grantee's guardian or legal
representative, and in the case of the Grantee's death, the Grantee's estate)
may exercise the Award.
13.4 LIMITATIONS ON EXERCISE AND SALE; FORFEITURE
The Committee, subject to the terms and conditions of the Plan, may in its
sole discretion provide in an Agreement that an Option may not be exercised in
whole or in part for any period or periods of time during which such Option is
outstanding as the Committee shall determine (and as set forth in the Agreement
relating to such Option). Any such limitation on the exercise of an Option
contained in any Agreement may be rescinded, modified or waived by the
Committee, in its sole discretion, at any time and from time to time after the
date of grant of such Option. The Committee may also include such other terms
and conditions as it deems effect the purpose of the Plan and are in the best
interest of the Company.
13.5 METHOD OF EXERCISE
(a) Payment. An Award that is exercisable hereunder may be exercised by
delivery to the Company on any business day, at its principal office addressed
to the attention of the Committee (or such other person identified in an
Agreement), of written notice of exercise, which notice shall specify the number
of shares for which the Award is being exercised, and shall be accompanied by
payment in full of the
<PAGE> 14
Award Price of the shares of Common Stock for which the
Award is being exercised. Payment of the Award Price for the shares of Common
Stock purchased pursuant to the exercise of an Award shall be made, as
determined by the Committee and set forth in the Agreement pertaining to an
Award, (i) in cash or by certified check payable to the order of the Company;
(ii) to the extent the Company is not prohibited from purchasing or acquiring
shares of Common Stock, through the tender to the Company of shares of Common
Stock, which shares shall be valued, for purposes of determining the extent to
which the Award Price has been paid thereby, at their Fair Market Value on the
date of exercise; or (iii) by a combination of the methods described in sections
13.5(a)(i) and (ii) hereof, or such other method permitted by the Committee;
provided, however, that the Committee may in its discretion at any time impose
such limitations or prohibitions on the use of shares of Common Stock to
exercise Awards as it deems appropriate. If and while payment with Common Stock
is permitted for the exercise of an Award granted under this Plan in accordance
with the foregoing provision, the instrument evidencing the Award may also
provide that, in lieu of using previously outstanding shares therefore, the
Grantee may pay the Award Price by directing the Company to retain so many of
the underlying shares as have a market value on the date of exercise equal to
the Award Price, and any such exercise will cause the surrender and cancellation
of the Award to the extent of the shares so retained by the Company. As soon as
practical after receipt of the foregoing written notice of exercise, full
payment of the Award Price, and full payment of all amounts due to satisfy any
applicable tax withholding requirements (which the Grantee shall be required to
pay in cash, rather than by application of shares of Common Stock otherwise
deliverable upon exercise of the Award), the Company shall deliver to the
Grantee, in the Grantee's name, a certificate evidencing the number of shares of
Common Stock purchased upon exercise of the Award. An attempt to exercise any
Award granted hereunder other than as set forth above shall be invalid and of no
force and effect.
An Agreement may provide that on and after the date shares of Common Stock
are publicly traded on an established securities market, payment in full of the
Award Price need not accompany the written notice of exercise provided the
notice directs that the Common Stock certificate or certificates for the shares
for which the Award is exercised be delivered to a licensed broker acceptable to
the Company as the agent for the individual exercising the Award and, at the
time such Common Stock certificate or certificates are delivered, the broker
tenders to the Company cash (or cash equivalents acceptable to the Company)
equal to the Award Price.
(b) Rights. Except as provided in section 10.1, an individual holding or
exercising an Award shall have none of the rights of a Stockholder until the
shares of Common Stock covered thereby are fully paid and issued to such
individual and, except as provided in section 21 hereof, no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date of such issuance.
<PAGE> 15
13.6 FINANCIAL ASSISTANCE
The Company is vested with authority under this Plan to assist any Employee
to whom an Award is granted hereunder in the payment of the Award Price payable
on exercise of the Award, by lending part or all of the amount of such Award
Price to such Employee on such terms and at such rates of interest and upon such
security (or no security) as shall have been authorized by or under authority of
the Committee. The Company is under no obligation to provide such assistance,
however.
14. TRANSFERABILITY OF AWARDS; COMPANY'S RIGHT OF FIRST PURCHASE
14.1 TRANSFERABILITY
Unless otherwise expressly provided in an Agreement, no Award granted under
the Plan may be sold, transferred, pledged, assigned, hypothecated or otherwise
alienated, other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined under the Code or
the Employee Retirement Income Security Act, as amended, or the rules
thereunder. The designation of a beneficiary with respect to an Award shall not
constitute a transfer for purposes of this section.
14.2 RIGHT OF FIRST PURCHASE
While and so long as the securities of the Company have not been Publicly
Traded for at least ninety (90) days, any Common Stock issued on exercise of any
Award granted under this Plan shall be subject to the Company's right of first
purchase. By virtue of that right, (a) such Common Stock may not be transferred
during the Grantee's lifetime to any person other than the Grantee's spouse,
brothers/sisters, parents or other ancestors, and children and other direct
descendants of that individual or of his or her spouse ("Immediate Family"); a
partnership whose members are the Grantee and/or members of the Grantee's
Immediate Family; or a trust for the benefit of the Grantee and/or members of
the Grantee's Immediate Family, unless such transfer occurs within fifteen (15)
days following the expiration of thirty (30) days after the Company has been
given a written notice which correctly identified the prospective transferee or
transferees and which offered the Company an opportunity to purchase the Common
Stock at its Fair Market Value in cash, and such offer was not accepted within
thirty (30) days after the Company's receipt of that notice; and (b) upon the
Grantee's death, the Company shall have the right to purchase all or some of
such Common Stock at its Fair Market Value within nine (9) months after the date
of death. This right of first purchase shall continue to apply to any such
Common Stock after the transfer during the Grantee's lifetime of that Common
Stock to a member of the Grantee's
<PAGE> 16
Immediate Family or to a family partnership
or trust as aforesaid, and after any transfer of that Stock with respect to
which the Company expressly waived its right of first purchase without also
waiving it as to any subsequent transfers thereof, but it shall not apply after
a transfer of that Common Stock with respect to which the Company was offered
but did not exercise or waive its right of first purchase or more than nine
months after the Grantee's death. The Company may assign all or any portion of
its right of first purchase to any one or more of its Stockholders, or to a
pension, retirement or savings plan for Employees of the Company, who may then
exercise the right so assigned. Stock certificates evidencing Common Stock
subject to this right of first purchase shall be appropriately legended to
reflect that right.
15. TERMINATION OF EMPLOYMENT
In the case of Termination of Employment, unless otherwise provided in an
Agreement and other than upon death or Disability (as hereafter defined), Awards
otherwise exercisable on the date of the Termination of Employment will remain
exercisable for a period of three (3) months. If, on the date of the Termination
of Employment, the Grantee is not entitled to exercise the Grantee's entire
Award, the Common Stock covered by the unexercisable portion of the Award shall
revert to the Plan. If, after Termination of Employment, the Grantee does not
exercise the Award within the time prescribed, the Award shall terminate and the
Common Stock covered by such Award shall revert to the Plan. For purposes of the
Plan, a Termination of Employment with the Company or an Affiliate shall not be
deemed to occur if the Grantee is immediately thereafter employed with the
Company or any Affiliate.
16. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
16.1 DEATH
If a Grantee dies while employed by the Company or an Affiliate, the
executors, administrators, legatees or distributees of such Grantee's estate
shall have the right (subject to the general limitations on exercise set forth
in section 13 hereof), at any time within one (1) year (unless otherwise
provided in an Agreement) after the date of such Grantee's death and prior to
the end of the Award Term, to exercise any Award held by such Grantee at the
date of such Grantee's death, to the extent such Award was otherwise exercisable
immediately prior to such Grantee's death.
16.2 DISABILITY
If a Grantee experiences a Termination of Employment with the Company or an
Affiliate by reason of a "permanent and total disability" within the meaning of
Section 22(e)(3) of the Code ("Disability") of such Grantee, then such Grantee
shall have the right (subject to the general limitations on exercise set forth
in section 13
<PAGE> 17
hereof), at any time within one (1) year (unless otherwise
provided in an Agreement) after such Termination of Employment and prior to the
expiration of the Award Term, to exercise, in whole or in part, any Award held
by such Grantee at the date of such Termination of Employment, to the extent
such Award was exercisable immediately prior to such Termination of Employment.
17. USE OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock pursuant
to Awards granted under the Plan shall constitute general funds of the Company.
18. SECURITIES LAWS
The Company shall not be required to sell or issue any Award or shares of
Common Stock under any Award if the sale or issuance of such Award or shares
would constitute a violation of any provisions of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares
subject to the Award upon any securities exchange or under any state or federal
law, or the consent of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
the Award may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the Award.
Specifically in connection with the Securities Act, upon exercise of any Award,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Common Stock covered by such Award, the Company shall
not be required to sell or issue such shares unless the Company has received
evidence satisfactory to the Company that the Grantee may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Company shall be final and conclusive.
The Company may, but shall in no event be obligated, to register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Award or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Award shall not be exercisable unless and until
the shares of Common Stock covered by such Award are registered or are subject
to an available exemption from registration, the exercise of such Award (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.
<PAGE> 18
19. EXCHANGE ACT: RULE 16B-3
19.1 GENERAL
The Plan is intended to comply with Rule 16b-3 (and any successor thereto)
("Rule 16b-3") under the Exchange Act. Any provision or action inconsistent with
Rule 16b-3 shall, to the extent permitted by law and determined to be advisable
by the Committee, be inoperative and void.
19.2 RESTRICTION ON TRANSFER OF COMMON STOCK
Unless otherwise permitted under an exemption under Rule 16b-3, no officer
or other "insider" of the Company subject to section 16 of the Exchange Act
shall be permitted to sell Common Stock (which such "insider" had received upon
exercise of an Award) during the six months immediately following the grant of
such Award.
20. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan or an Agreement governing any Award that has not vested.
Except as permitted under this Plan, no amendment, suspension or termination of
the Plan or an Agreement shall, without the consent of the Grantee, alter or
impair rights or obligations under any vested Award.
21. EFFECT OF CHANGES IN CAPITALIZATION
21.1 CHANGES IN COMMON STOCK
If the shares of Common Stock are changed into or exchanged for a different
number or kind of shares or securities of the Company, whether through
reorganization, recapitalization, reclassification, stock dividend or other
distribution, split, reverse split, combination of interest, exchange of
interests, change in corporate structure or the like, an appropriate and
proportionate adjustment shall be made in the number and kind of shares of
Common Stock subject to the Plan and in the number, kind and per share exercise
price of shares of Common stock subject to unexercised Awards, or portions
thereof granted prior to any such change. In the event of any such adjustment in
an outstanding Award, the Grantee thereafter shall have the right to purchase
the number of shares of Common Stock under such Award at the per share price, as
so adjusted, which the Grantee could purchase at the total purchase price
applicable to the Award immediately prior to such adjustment.
<PAGE> 19
21.2 REORGANIZATION WITH COMPANY SURVIVING
Subject to section 20, if the Company shall be the surviving entity in any
reorganization, merger, consolidation or the like of the Company with one or
more other entities, any Award theretofore granted pursuant to the Plan shall
apply to the securities resulting immediately following such reorganization,
merger, consolidation or the like, with a corresponding proportionate adjustment
of the number of shares and Award Price per share so that the aggregate number
of shares and Award Price thereafter shall be the same as the aggregate share
number and Award Price immediately prior to such reorganization, merger,
consolidation or the like.
21.3 OTHER REORGANIZATIONS; SALE OF ASSETS OR COMMON STOCK
Unless otherwise provided in an Agreement, upon the dissolution or
liquidation of the Company, or upon a merger, consolidation or reorganization of
the Company with one or more other entities in which the Company is not the
surviving entity, or upon a sale of substantially all of the assets of the
Company to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
entity) approved by the Board that results in any person or entity (other than
persons who are holders of Common Stock of the Company at the time the Plan is
approved by the Stockholders and other than an Affiliate) owning fifty (50)
percent or more of the combined voting power of all classes of Common Stock of
the Company, the Plan and all Awards outstanding hereunder shall terminate on
the date of such transaction, except to the extent provision is made in
connection with such transaction for the continuation of the Plan and/or the
assumption of the Awards theretofore granted, or for the substitution for such
Awards of new awards covering the Common Stock of a successor entity, or a
parent or Affiliate thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices, in which event the Plan and Awards
theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, each Grantee shall
have the right (subject to the general limitations on exercise set forth in
section 13 hereof and except as otherwise specifically provided in the Agreement
relating to such Award), immediately prior to the occurrence of such termination
and during such period occurring prior to such termination as the Committee in
its sole discretion shall designate, to exercise such Award in whole or in part,
to the extent such Award was otherwise exercisable at the time such termination
occurs. The Committee shall send written notice of an event that will result in
such a termination to all Grantees not later than the time at which the Company
gives notice thereof to its stockholders. Notwithstanding anything herein to the
contrary, the Committee in its discretion may provide for the acceleration of
the vesting of any Award in the case of a merger, a significant sale of the
common stock or assets of the Company (as determined by the Committee).
<PAGE> 20
21.4 ADJUSTMENTS
Adjustments under this Section 21 relating to Common Stock or securities of
the Company shall be made by the Committee, whose determination in that respect
shall be final and conclusive. No fractional shares of Common Stock or units of
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
21.5 NO LIMITATIONS ON COMPANY
The grant of an Award pursuant to the Plan shall not affect or limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
22. WITHHOLDING
The Company or an Affiliate may be obligated to withhold federal and local
income taxes and Social Security taxes to the extent that an Grantee realizes
income in connection with the exercise of an Award. The Company or a Affiliate
may withhold amounts needed to cover such taxes from payments otherwise due and
owing to an Grantee, and upon demand the Grantee will promptly pay to the
Company or a Affiliate having such obligation any additional amounts as may be
necessary to satisfy such withholding tax obligation. Such payment shall be made
in cash or cash equivalents. The Company may also withhold shares or amounts
payable to a Grantee pursuant to court order.
23. DISCLAIMER OF RIGHTS
The existence of this Plan does not, and no provision in the Plan or in any
Award granted or Agreement entered into pursuant to the Plan shall be construed
to, create an employment contract; confer upon any individual the right to
receive an Award; permit a Grantee to remain in the employ of the Company or
alter a Grantee's status as an at-will employee; or allow the Grantee to
interfere in any way with the right and authority of the Company either to
increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. The obligation of the Company to pay any benefits pursuant to the Plan
shall be interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed herein. The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or
<PAGE> 21
otherwise hold any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.
24. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the Plan to the
Stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of Common Stock options otherwise
than under the Plan.
25. GOVERNING LAW
This Plan and all Agreements shall be executed and performed under, and all
Awards to be granted hereunder shall be provided under and governed by, the laws
of the Commonwealth of Virginia (but not including the choice of law rules
thereof). Any disputes concerning the Plan or an Agreement shall be brought
before the federal or state courts of the Commonwealth of Virginia.
26. BINDING EFFECT
Subject to all restrictions provided in this Plan and all applicable laws,
this Plan and all Agreements hereunder shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
27. DISMISSAL FOR CAUSE
Notwithstanding any other provision in this Plan or an Agreement, in the
event that a Grantee's employment is terminated by reason of a Dismissal for
Cause, the Award shall expire on the day immediately preceding the date of the
Termination of Employment. "Dismissal for Cause" means Termination of Employment
for: (a) theft or embezzlement of property of the Company; (b) fraud or other
wrongdoing against the Company; (c) a conviction of a crime of moral turpitude;
(d) receipt of consideration or acceptance of benefits from, or the
participation in business activities with, persons doing business with the
Company in violation of the business ethics of the Company; (e) malicious
destruction of property of the Company; (f) improper disclosure of confidential
information of the Company; (g) actively engaging in or working for a business
in competition with the Company while employed by the Company; or (h) such other
reason that has a material adverse effect on the Company. The Committee shall
have the sole
<PAGE> 22
discretion to determine whether a Termination of Employment has
occurred by reason of Dismissal for Cause.
28. MISCELLANEOUS REQUIREMENTS
28.1 OTHER AWARD PROVISIONS
Awards granted under the Plan shall contain such other terms and provisions
that are not inconsistent with this Plan as the Committee may authorize in its
discretion, providing for (a) special vesting schedules governing the
exercisability of an Award; (b) provisions for acceleration of such vesting
schedules in certain events; (c) arrangements whereby the Company may fulfill
any tax obligations for Employees in connection with an Award; (d) provisions
imposing restrictions upon the transferability of stock acquired on exercise of
such Award, whether required by this Plan or applicable securities laws or
imposed for other reasons; and (e) provisions regarding the termination or
survival of any such Award upon the Grantee's death, retirement or other
termination of employment and the extent, if any, to which any such Award may be
exercised after such event. Any dispute concerning an Award must be brought in
the federal or state courts of Virginia. In interpreting any inconsistencies,
gaps or discrepancies between or among any documents, the Plan shall control
over an Agreement (unless there is an express specific exception in an Agreement
to the Plan), and an Agreement shall control over any letter or other notice or
document describing a grant of an Award.
28.2 CONSENTS
If the Committee shall at any time determine that any Consent (as hereafter
defined) is necessary or desirable as a condition of, or in connection with, the
granting of any Award under the Plan, the issuance or purchase of shares or
other rights thereunder, or the taking of any other action thereunder ("Plan
Action"), then such Plan Action shall not be taken, in whole or in part, unless
and until such Consent shall have been effected or obtained to the full
satisfaction of the Committee. "Consent" with respect to any Plan Action means
(a) any and all listings, registrations or qualifications in respect thereof
upon any securities exchange or under any federal, state or local law, rule or
regulation; (b) any and all written agreements and representations by the
Grantee with respect to the disposition of shares of Common Stock, or with
respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration, or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made; and (c) any and all other
consents, clearances and approvals in respect of a Plan Action.
<PAGE> 23
28.3 NOTICE
Any notice required to be given to the Company hereunder shall be in
writing and shall be addressed to Corporate Secretary, Proxicom, Inc. 11600
Sunrise Valley Drive, Reston, Virginia 20191, or at such other address the
Company may hereafter designate to the Grantee. Any notice to be given to the
Grantee hereunder shall be addressed to the Grantee at the address set forth
beneath his/her signature hereto, or as such other address as the Grantee may
hereafter designate to the Company by notice as provided herein. A notice shall
be deemed to have been duly given when personally delivered or mailed by
registered mail or certified mail to the party entitled to receive it.
28.4 NOTICE OF SECTION 83(B) ELECTION AND DISQUALIFYING DISPOSITION
If any Grantee shall, in connection with the acquisition of Common Stock
make the election permitted under section 83(b) of the Code (i.e., an election
to include in gross income in the year of transfer the amounts specified in
section 83(b)), such Grantee shall notify the Company within ten (10) days of
filing the notice of election with the Internal Revenue Service. Further,
Grantee must notify the Company of any disposition of any Common Stock issued
pursuant to the exercise of such Award under the circumstances described in
section 421(b) of the Code (relating to certain disqualifying dispositions)
within 10 days of such disposition.
29. DEFERRED STOCK AWARDS
29.1. NATURE OF DEFERRED STOCK AWARDS.
The Committee shall have the authority to grant Deferred Stock Awards to
employees of ad hoc Interactive, Inc., a subsidiary of the Company, or to such
Eligible Employees or Eligible Nonemployees as it deems appropriate. A Deferred
Stock Award is an Award of phantom Common Stock units to a Grantee, subject to
restrictions and conditions as the Board may determine at the time of grant.
Conditions may be based on continuing employment (or other business
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Deferred Stock Award is contingent on the Grantee
executing the Deferred Stock Award Agreement. The terms and conditions of each
such agreement shall be determined by the Board, and such terms and conditions
may differ among individual Awards and Grantees. At the end of the deferral
period, the Deferred Stock Award, to the extent vested, shall be paid to the
Grantee in the form of shares of Common Stock.
<PAGE> 24
29.2. RIGHTS AS A STOCKHOLDER.
During the deferral period, a Grantee shall have no rights as a
Stockholder; provided, however, that the Grantee may be credited with Dividend
Equivalent Rights with respect to the phantom Common Stock units underlying the
Grantee's Deferred Stock Award, subject to such terms and conditions as the
Board may determine. For the purpose of this Section 29.2, Dividend Equivalent
Right means a right, granted to a Grantee hereof, to receive cash, Common Stock,
other Awards or other property equal in value to dividends paid with respect to
a specified number of shares of Common Stock, or other periodic payments.
29.3. RESTRICTIONS.
A Deferred Stock Award may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of during the deferral period.
30. PERFORMANCE AND ANNUAL INCENTIVE AWARDS
30.1. PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES
If and to the extent that the Committee determines that a Performance Award
to be granted to a Grantee who is designated by the Committee as likely to be a
Covered Employee should qualify as "performance-based compensation" for purposes
of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance objectives relating to the business criteria set forth in Section 10
and other terms set forth in this Section 30.1.
(i) Performance Objectives Generally. The performance objectives
for such Performance Awards shall consist of one or more business
criteria set forth in Section 10 and a targeted level or levels of
performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 30.1.1. Performance objectives
shall be objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the requirement
that the level or levels of performance targeted by the Committee
result in the achievement of performance objectives being
"substantially uncertain." The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance objective or that two or more of
the performance objectives must be achieved as a condition to grant,
exercise and/or settlement of such Performance Awards. Performance
<PAGE> 25
objectives may differ for Performance Awards granted to any one
Grantee or to different Grantees.
(ii) Performance Period; Timing For Establishing Performance
objectives. Achievement of performance objectives in respect of such
Performance Awards shall be measured over a performance period of up
to ten years, as specified by the Committee. Performance objectives
shall be established not later than 90 days after the beginning of any
performance period applicable to such Performance Awards, or at such
other date as may be required or permitted for "performance-based
compensation" under Code Section 162(m).
(iii) Performance Award Pool. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for purposes
of measuring Company performance in connection with Performance
Awards. The amount of such Performance Award pool shall be based upon
the achievement of a performance objective or goals based on one or
more of the business criteria set forth in Section 10 hereof during
the given performance period, as specified by the Committee in
accordance with Section 30.1(II) hereof. The Committee may specify the
amount of the Performance Award pool as a percentage of any of such
business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(iv) Settlement of Performance Awards; Other Terms. Settlement of
such Performance Awards shall be in cash, Common Stock, other Awards
or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to
be made in connection with such Performance Awards. The Committee
shall specify the circumstances in which such Performance Awards shall
be paid or forfeited in the event of termination of employment by the
Grantee prior to the end of a performance period or settlement of
Performance Awards.
30.2 ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES.
If and to the extent that the Committee determines that an Annual Incentive
Award to be granted to a Grantee who is designated by the Committee as likely to
be a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Annual Incentive Award shall be contingent upon achievement of preestablished
<PAGE> 26
performance objectives based on the business criteria set forth in Section 10
and other terms set forth in this Section 30.1.
(i) Annual Incentive Award Pool. The Committee may establish an
Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool shall
be based upon the achievement of a performance objective or goals
based on one or more of the business criteria set forth in Section 10
hereof during the given performance period, as specified by the
Committee in accordance with Section 30.2(II) hereof. The Committee
may specify the amount of the Annual Incentive Award pool as a
percentage of any such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not bear
a strictly mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end of
the 90th day of each fiscal year, or at such other date as may be
required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the eligible persons who will potentially
receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive
Award pool established by such date under Section 30.2(I) hereof or as
individual Annual Incentive Awards. In the case of individual Annual
Incentive Awards intended to qualify under Code Section 162(m), the
amount potentially payable shall be based upon the achievement of a
performance objective or goals based on one or more of the business
criteria set forth in Section 10 hereof in the given performance year,
as specified by the Committee; in other cases, such amount shall be
based on such criteria as shall be established by the Committee. In
all cases, the maximum Annual Incentive Award of any Grantee shall be
subject to the limitation set forth in Section 4.3 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each
fiscal year, the Committee shall determine the amount, if any, of (A)
the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Grantee in the Annual Incentive
Award pool, or (B) the amount of potential Annual Incentive Award
otherwise payable to each Grantee. The Committee may, in its
discretion, determine that the amount payable to any Grantee as an
Annual Incentive Award shall be reduced from the amount of his or her
potential Annual Incentive Award, including a determination to make no
Award whatsoever. The Committee shall specify the circumstances in
which an Annual Incentive
<PAGE> 27
Award shall be paid or forfeited in the event of termination of
employment by the Grantee prior to the end of a fiscal year or
settlement of such Annual Incentive Award.
30.3 WRITTEN DETERMINATIONS.
All determinations by the Committee as to the establishment of performance
objectives, the amount of any Performance Award pool or potential individual
Performance Awards and as to the achievement of performance objectives relating
to Performance Awards under Section 30.1, and the amount of any Annual Incentive
Award pool or potential individual Annual Incentive Awards and the amount of
final Annual Incentive Awards under Section 30.2, shall be made in writing in
the case of any Award intended to qualify under Code Section 162(m). To the
extent required to comply with Code Section 162(m), the Committee may delegate
any responsibility relating to such Performance Awards or Annual Incentive
Awards.
30.4 STATUS OF SECTION 30.1. AND SECTION 30.2 AWARDS UNDER CODE SECTION
162(M)
It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Section 30.1 and Section 30.2 hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Section 30.1 and Section 30.2, including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Grantee will be a Covered Employee with
respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
