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EXHIBIT 4.1
THE AMENDED AND RESTATED 1998 EQUITY PARTICIPATION PLAN
OF
NEXTERA ENTERPRISES, INC.
(AS AMENDED AND RESTATED EFFECTIVE APRIL 29, 2000)
Nextera Enterprises, Inc., a Delaware corporation, has adopted The
Amended and Restated 1998 Equity Participation Plan of Nextera Enterprises, Inc.
(the "Plan"), effective April 29, 2000, which amends and restates The 1998
Equity Participation Plan of Nextera Enterprises, Inc., which was adopted
effective December 30, 1998, for the benefit of its eligible employees,
consultants and directors.
The purposes of the Plan are as follows:
(1) To provide an additional incentive for directors, key
Employees and Consultants (as such terms are defined below) to further the
growth, development and financial success of the Company by personally
benefiting through the ownership of Company stock and/or rights which recognize
such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
directors, key Employees and Consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.
ARTICLE I.
DEFINITIONS
1.1. General. Wherever the following terms are used in the Plan
they shall have the meanings specified below, unless the context clearly
indicates otherwise.
1.2. Administrator. "Administrator" shall mean the entity that
conducts the general administration of the Plan as provided herein. With
reference to the administration of the Plan with respect to Options granted to
Independent Directors, the term "Administrator" shall refer to the Board. With
reference to the administration of the Plan with respect to any other Award, the
term "Administrator" shall refer to the Committee (or a delegate of the
Committee under Section 10.5) unless the Board has assumed the authority for
administration of the Plan generally as provided in Section 10.1.
1.3. Award. "Award" shall mean an Option, a Restricted Stock
award, a Performance Award, a Dividend Equivalents award, a Deferred Stock
award, a Stock Payment award or a Stock Appreciation Right which may be awarded
or granted under the Plan (collectively, "Awards").
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1.4. Award Agreement. "Award Agreement" shall mean a written
agreement executed by an authorized officer of the Company and the Holder which
shall contain such terms and conditions with respect to an Award as the
Administrator shall determine, consistent with the Plan.
1.5. Award Limit. "Award Limit" shall mean 850,000 shares of Class
A Common Stock, as adjusted pursuant to Section 11.3 of the Plan.
1.6. Board. "Board" shall mean the Board of Directors of the
Company.
1.7. Change in Control. "Change in Control" shall mean a change in
ownership or control of the Company effected through any of the following
transactions:
(a) any person or related group of persons (other than the
Company or a person that, prior to such transaction, directly or
indirectly controls, is controlled by, or is under common control with,
the Company) directly or indirectly acquires beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the
Board does not recommend such stockholders to accept;
(b) there is a change in the composition of the Board over
a period of thirty-six (36) consecutive months (or less) such that a
majority of the Board members (rounded up to the nearest whole number)
ceases, by reason of one or more proxy contests for the election of Board
members, to be comprised of individuals who either (i) have been Board
members continuously since the beginning of such period or (ii) have been
elected or nominated for election as Board members during such period by
at least a majority of the Board members described in clause (i) who were
still in office at the time such election or nomination was approved by
the Board;
(c) the consummation of a merger or consolidation of the
Company with any other corporation (or other entity), other than a merger
or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 66-2/3% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person acquires more than 25% of the combined voting power of the
Company's then outstanding securities shall not constitute a Change in
Control; or
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
1.8. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
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1.9. Committee. "Committee" shall mean the Compensation Committee
of the Board, or another committee or subcommittee of the Board, appointed as
provided in Section 10.1.
1.10. Class A Common Stock. "Class A Common Stock" shall mean the
Class A Common Stock of the Company, par value $0.001 per share, and any equity
security of the Company issued or authorized to be issued in the future, but
excluding any preferred stock and any warrants, options or other rights to
purchase Class A Common Stock.
1.11. Common Stock. "Common Stock" shall mean the Class A Common
Stock of the Company, par value $0.001 per share, and the Class B Common Stock
of the Company, par value $0.001 per share, and any equity security of the
Company issued or authorized to be issued in the future, but excluding any
preferred stock and any warrants, options or other rights to purchase Common
Stock.
1.12. Company. "Company" shall mean Nextera Enterprises, Inc., a
Delaware corporation.
1.13. Consultant. "Consultant" shall mean any consultant or
adviser if:
(a) the consultant or adviser renders bona fide services to
the Company;
(b) the services rendered by the consultant or adviser are
not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company's securities; and
(c) the consultant or adviser is a natural person who has
contracted directly with the Company to render such services.
1.14. Deferred Stock. "Deferred Stock" shall mean Class A Common
Stock awarded under Article VIII of the Plan.
1.15. Director. "Director" shall mean a member of the Board.
1.16. Dividend Equivalent. "Dividend Equivalent" shall mean a
right to receive the equivalent value (in cash or Class A Common Stock) of
dividends paid on Class A Common Stock, awarded under Article VIII of the Plan.
1.17. Disability. "Disability" shall mean, with respect to any
Holder, (i) the suffering of any mental or physical illness, disability or
incapacity that shall in all material aspects preclude such Holder from
performing his or her employment or consultant duties, or (ii) the absence of
such Holder from his or her employment or consultant duties by reason of any
mental or physical illness, disability or incapacity for a period of ninety (90)
days during any one hundred twenty (120) day period; provided, however, in
either case, that such illness, disability or incapacity shall be reasonably
determined to be of a permanent nature by a licensed, board certified physician.
1.18. DRO. "DRO" shall mean a domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder.
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1.19. Employee. "Employee" shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company, or of any corporation which is a Subsidiary.
1.20. Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.21. Fair Market Value. "Fair Market Value" of a share of Class A
Common Stock as of a given date shall be (a) the average closing price of a
share of Class A Common Stock on the principal exchange on which shares of Class
A Common Stock are then trading, if any (or as reported on any composite index
which includes such principal exchange), on the ten most current trading days
immediately prior to such date, or (b) if Class A Common Stock is not traded on
an exchange but is quoted on NASDAQ or a successor quotation system, the average
mean between the closing representative bid and asked prices for the Class A
Common Stock on the ten (10) most recent trading days immediately prior to such
date as reported by NASDAQ or such successor quotation system; or (c) if Class A
Common Stock is not publicly traded on an exchange and not quoted on NASDAQ or a
successor quotation system, the Fair Market Value of a share of Class A Common
Stock as established by the Administrator acting in good faith. The
Administrator shall determine the Fair Market Value at least once each calendar
quarter and such determination shall apply until the Administrator has made
another determination of Fair Market Value.
1.22. Holder. "Holder" shall mean a person who has been granted or
awarded an Award.
1.23. Incentive Stock Option. "Incentive Stock Option" shall mean
an option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Administrator.
1.24. Independent Director. "Independent Director" shall mean a
member of the Board who is not an Employee of the Company.
1.25. Non-Qualified Stock Option. "Non-Qualified Stock Option"
shall mean an Option which is not designated as an Incentive Stock Option by the
Administrator.
1.26. Option. "Option" shall mean a stock option granted under
Article IV of the Plan. An Option granted under the Plan shall, as determined by
the Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.
1.27. Performance Award. "Performance Award" shall mean a cash
bonus, stock bonus or other performance or incentive award that is paid in cash,
Class A Common Stock or a combination of both, awarded under Article VIII of the
Plan.
1.28. Performance Criteria. "Performance Criteria" shall mean the
following business criteria with respect to the Company, any Subsidiary or any
division or operating unit: (a) net income, (b) pre-tax income, (c) operating
income, (d) cash flow, (e) earnings per share, (f) return on equity, (g) return
on invested capital or assets, (h) cost reductions or savings, (i) funds from
operations, (j) appreciation in the fair market value of Class A Common Stock
and (k)
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earnings before any one or more of the following items: interest, taxes,
depreciation or amortization.
1.29. Plan. "Plan" shall mean The 1998 Equity Participation Plan
of Nextera Enterprises, Inc.
1.30. Restricted Stock. "Restricted Stock" shall mean Class A
Common Stock awarded under Article VII of the Plan.
1.31. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to time.
1.32. Section 162(m) Participant. "Section 162(m) Participant"
shall mean any key Employee designated by the Administrator as a key Employee
whose compensation for the fiscal year in which the key Employee is so
designated or a future fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m) of the Code.
1.33. Securities Act. "Securities Act" shall mean the Securities
Act of 1933, as amended.
1.34. Stock Appreciation Right. "Stock Appreciation Right" shall
mean a stock appreciation right granted under Article IX of the Plan.
1.35. Stock Payment. "Stock Payment" shall mean (a) a payment in
the form of shares of Class A Common Stock, or (b) an option or other right to
purchase shares of Class A Common Stock, as part of a deferred compensation
arrangement, made in lieu of all or any portion of the compensation, including
without limitation, salary, bonuses and commissions, that would otherwise become
payable to a key Employee or Consultant in cash, awarded under Article VIII of
the Plan.
1.36. Subsidiary. "Subsidiary" shall mean (a) any corporation in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain, (b) any partnership in
which the Company is a general partner, (c) any limited liability company in
which the Company is a managing member, or (d) any partnership or limited
liability company in which the Company possesses a 50% or greater interest in
the total capital or total income of such partnership.
1.37. Substitute Award. "Substitute Award" shall mean an Option
granted under this Plan upon the assumption of, or in substitution for,
outstanding equity awards previously granted by a company or other entity in
connection with a corporate transaction, such as a merger, combination,
consolidation or acquisition of property or stock; provided, however, that in no
event shall the term "Substitute Award" be construed to refer to an award made
in connection with the cancellation and repricing of an Option.
1.38. Termination for Cause. "Termination for Cause" shall mean
the time when the employee-employer or Consultant-employer relationship between
a Holder and the Company or any Subsidiary is terminated for cause, as
termination for cause is defined in the Holder's employment or consultancy
agreement; provided however, that if termination for cause
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is not therein defined, the following shall constitute "Cause" for the
termination of the Holder's employee-employer or Consultant-client relationship:
(a) material dishonest statements or acts of the Holder
with respect to the Company or any affiliate of the Company;
(b) indictment of the Holder for (i) a felony or (ii) any
misdemeanor involving moral turpitude, deceit, dishonesty or fraud
("indictment," for these purposes, meaning an indictment, probable cause
hearing or any other procedure pursuant to which an initial determination
of probable or reasonable cause with respect to such offense is made);
(c) willful misconduct by the Holder after three (3) days
written notice and an opportunity to cure;
(d) gross negligence, or willful failure or refusal of the
Holder to comply with explicit directions of the Board after fifteen (15)
days written notice and an opportunity to cure.
In making any determination under this Section 1.38 the Board
shall act fairly and in good faith and shall give the Holder an opportunity to
appear and be heard at a meeting of the Board or any committee thereof and
present evidence on his behalf.
1.39. Termination of Consultancy. "Termination of Consultancy"
shall mean the time when the engagement of a Holder as a Consultant to the
Company or a Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, by resignation, discharge, death or
retirement; but excluding terminations where there is a simultaneous
commencement of employment with the Company or any Subsidiary. The
Administrator, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Consultancy, including, but not
by way of limitation, the question of whether a Termination of Consultancy
resulted from a discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a Consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
1.40. Termination of Directorship. "Termination of Directorship"
shall mean the time when a Holder who is an Independent Director ceases to be a
Director for any reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The Board, in its
sole and absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Directorship with respect to Independent
Directors.
1.41. Termination of Employment. "Termination of Employment" shall
mean the time when the employee-employer relationship between a Holder and the
Company or any Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death, Disability or retirement; but excluding (a) terminations where
there is a simultaneous reemployment or continuing employment of a Holder by the
Company or any Subsidiary, (b) at the discretion of the Administrator,
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terminations which result in a temporary severance of the employee-employer
relationship, and (c) at the discretion of the Administrator, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The Administrator, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
for good cause, and all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, with respect
to Incentive Stock Options, unless otherwise determined by the Administrator in
its discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1. Shares Subject to Plan.
(a) The shares of stock subject to Awards shall be Class A
Common Stock, initially shares of the Company's Class A Common Stock, par
value $0.001 per share. The aggregate number of such shares which may be
issued upon exercise of such Options or rights or upon any such awards
under the Plan shall not exceed Twelve Million (12,000,000). The shares
of Class A Common Stock issuable upon exercise of such Options or rights
or upon any such awards may be either previously authorized but unissued
shares or treasury shares.
(b) The maximum number of shares which may be subject to
Awards, granted under the Plan to any individual in any calendar year
shall not exceed the Award Limit. To the extent required by Section
162(m) of the Code, shares subject to Options which are canceled continue
to be counted against the Award Limit.
2.2. Add-back of Options and Other Rights. If any Option, or other
right to acquire shares of Class A Common Stock under any other Award under the
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by the Plan, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration, cancellation or exercise
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1. Furthermore, any shares subject to Awards which are adjusted
pursuant to Section 11.3 and become exercisable with respect to shares of stock
of another corporation shall be considered canceled and may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. Shares
of Class A Common Stock which are delivered by the Holder or withheld by the
Company upon the exercise of any Award under the Plan, in payment of the
exercise price thereof or tax withholding thereon, may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. If any
shares of Restricted Stock are surrendered by the Holder or repurchased by the
Company pursuant to Section 7.4 or 7.5 hereof, such shares may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Notwithstanding the provisions of this Section 2.2, no shares of Class A
Common Stock may again be optioned, granted or awarded if such action would
cause an Incentive Stock Option to fail to qualify as an incentive stock option
under Section 422 of the Code.
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ARTICLE III.
GRANTING OF AWARDS
3.1. Award Agreement. Each Award shall be evidenced by an Award
Agreement. Award Agreements evidencing Awards intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code. Award Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422 of the Code.
3.2. Provisions Applicable to Section 162(m) Participants.
(a) The Committee, in its discretion, may determine whether
an Award is to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code.
(b) Notwithstanding anything in the Plan to the contrary,
the Committee may grant any Award to a Section 162(m) Participant,
including Restricted Stock the restrictions with respect to which lapse
upon the attainment of performance goals which are related to one or more
of the Performance Criteria and any performance or incentive award
described in Article VIII that vests or becomes exercisable or payable
upon the attainment of performance goals which are related to one or more
of the Performance Criteria.
(c) To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of
the Code, with respect to any Award granted under Articles VII and VIII
which may be granted to one or more Section 162(m) Participants, no later
than ninety (90) days following the commencement of any fiscal year in
question or any other designated fiscal period or period of service (or
such other time as may be required or permitted by Section 162(m) of the
Code), the Committee shall, in writing, (i) designate one or more Section
162(m) Participants, (ii) select the Performance Criteria applicable to
the fiscal year or other designated fiscal period or period of service,
(iii) establish the various performance targets, in terms of an objective
formula or standard, and amounts of such Awards, as applicable, which may
be earned for such fiscal year or other designated fiscal period or
period of service and (iv) specify the relationship between Performance
Criteria and the performance targets and the amounts of such Awards, as
applicable, to be earned by each Section 162(m) Participant for such
fiscal year or other designated fiscal period or period of service.
Following the completion of each fiscal year or other designated fiscal
period or period of service, the Committee shall certify in writing
whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the
Committee shall have the right to reduce (but not to increase) the amount
payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of
individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.
(d) Furthermore, notwithstanding any other provision of the
Plan or any Award which is granted to a Section 162(m) Participant and is
intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall
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be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in Section
162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the
extent necessary to conform to such requirements.
3.3. Limitations Applicable to Section 16 Persons. Notwithstanding
any other provision of the Plan, the Plan, and any Award granted or awarded to
any individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
3.4. Consideration. In consideration of the granting of an Award
under the Plan, the Holder shall agree, in the Award Agreement, to render
faithful and efficient services to the Company or a Subsidiary.
3.5. At-Will Employment. Nothing in the Plan or in any Award
Agreement hereunder shall confer upon any Holder any right to continue in the
employ of, or as a Consultant for, the Company or any Subsidiary, or as a
director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Holder at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in a written employment
agreement between the Holder and the Company and any Subsidiary.
ARTICLE IV.
GRANTING OF OPTIONS TO EMPLOYEES,
CONSULTANTS AND INDEPENDENT DIRECTORS
4.1. Eligibility. Any Employee or Consultant selected by the
Committee pursuant to Section 4.4(a)(i) shall be eligible to be granted an
Option. Each Independent Director of the Company shall be eligible to be granted
Options at the times and in the manner set forth in Section 4.5.
4.2. Disqualification for Stock Ownership. No person may be
granted an Incentive Stock Option under the Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any then existing Subsidiary or parent corporation (within the meaning of
Section 422 of the Code) unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code.
4.3. Qualification of Incentive Stock Options. No Incentive Stock
Option shall be granted to any person who is not an Employee.
4.4. Granting of Options to Employees and Consultants.
(a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of the Plan:
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(i) Determine which Employees are key Employees and
select from among the key Employees or Consultants (including
Employees or Consultants who have previously received Awards under
the Plan) such of them as in its opinion should be granted
Options;
(ii) Subject to the Award Limit, determine the
number of shares to be subject to such Options granted to the
selected key Employees or Consultants;
(iii) Subject to Section 4.3, determine whether such
Options are to be Incentive Stock Options or Non-Qualified Stock
Options and whether such Options are to qualify as
performance-based compensation as described in Section
162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such
Options, consistent with the Plan; provided, however, that the
terms and conditions of Options intended to qualify as
performance-based compensation as described in Section
162(m)(4)(C) of the Code shall include, but not be limited to,
such terms and conditions as may be necessary to satisfy the
applicable provisions of Section 162(m) of the Code.
(b) Upon the selection of a key Employee or Consultant to
be granted an Option, the Committee shall instruct the Secretary of the
Company to issue the Option and may impose such conditions on the grant
of the Option as it deems appropriate.
(c) Any Incentive Stock Option granted under the Plan may
be modified by the Committee, with the consent of the Holder, to
disqualify such Option from treatment as an "incentive stock option"
under Section 422 of the Code.
4.5. Granting of Options to Independent Directors.
The Board shall from time to time, in its absolute
discretion, and subject to applicable limitations of the Plan:
(a) Select from among the Independent Directors (including
Independent Directors who have previously received Options under the
Plan) such of them as in its opinion should be granted Options;
(b) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the selected Independent
Directors;
(c) Subject to the provisions of Article 5, determine the
terms and conditions of such Options, consistent with the Plan.
All the foregoing Option grants authorized by this Section 4.5 are
subject to stockholder approval of the Plan.
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ARTICLE V.
TERMS OF OPTIONS
5.1. Option Price. The price per share of the shares subject to
each Option granted to Employees and Consultants shall be set by the Committee;
provided, however, that such price shall be no less than the par value of a
share of Class A Common Stock, unless otherwise permitted by applicable state
law and:
(a) in the case of Options intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of
the Code, such price shall not be less than 100% of the Fair Market Value
of a share of Class A Common Stock on the date the Option is granted;
(b) in the case of Incentive Stock Options such price shall
not be less than 100% of the Fair Market Value of a share of Class A
Common Stock on the date the Option is granted (or the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the
Code);
(c) in the case of Incentive Stock Options granted to an
individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock
of the Company or any Subsidiary or parent corporation thereof (within
the meaning of Section 422 of the Code), such price shall not be less
than 110% of the Fair Market Value of a share of Class A Common Stock on
the date the Option is granted (or the date the Option is modified,
extended or renewed for purposes of Section 424(h) of the Code).
5.2. Option Term. The term of an Option granted to an Employee or
Consultant shall be set by the Committee in its discretion; provided, however,
that:
(a) No Option may have a term that extends beyond the
expiration of ten (10) years from the date the Option was granted;
(b) In the case of Incentive Stock Options, the term shall
not be more than ten (10) years from the date the Incentive Stock Option
is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an individual then owning (within the meaning of
Section 424(d) of the Code) more than ten percent (10%) of the total
combined voting power of all classes of equity of the Company or any
Subsidiary;
(c) Except as limited by requirements of Section 422 of the
Code and regulations and rulings thereunder applicable to Incentive Stock
Options, the Committee (or the Board in the case of Options granted to
Independent Directors) may extend the term of any outstanding Option in
connection with any Termination of Directorship, Termination of
Employment or Termination of Consultancy of the Holder, or amend any
other term or condition of such Option relating to such a termination;
and
(d) Unless otherwise permitted by applicable securities
laws, in the event of a Holder's Termination of Directorship, Termination
of Employment or Termination of Consultancy for any reason except death,
Disability or Termination for Cause, the Holder shall have at least
ninety (90) days from the date of such Termination of Directorship,
Termination of Employment or Termination of Consultancy to exercise
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the Option, and in the event of a Holder's Termination of Directorship,
Termination of Employment or Termination of Consultancy due to the
Holder's death or Disability, the Holder shall have at least one hundred
eighty (180) days from the date of such Termination of Directorship,
Termination of Employment or Termination of Consultancy to exercise the
Option. Notwithstanding the forgoing, if a Holder's Termination of
Directorship, Termination of Employment or Termination of Consultancy
also qualifies as a Termination for Cause, the Company, in its
discretion, may terminate the Holder's right to exercise his or her
Options on the date of such termination or such other time as the
Committee (or the Board in the case of Options granted to Independent
Directors), in its discretion, shall deem appropriate.
5.3. Option Vesting
(a) The period during which the right to exercise, in whole
or in part, an Option granted to an Employee or a Consultant vests in the
Holder shall be set by the Committee and the Committee may determine that
an Option may not be exercised in whole or in part for a specified period
after it is granted; provided, however, that, unless the Committee
otherwise provides in the terms of the Award Agreement or otherwise, no
Option shall be exercisable by any Holder who is then subject to Section
16 of the Exchange Act within the period ending six months and one day
after the date the Option is granted. At any time after grant of an
Option, the Committee may, in its sole and absolute discretion and
subject to whatever terms and conditions it selects, accelerate the
period during which an Option granted to an Employee or Consultant vests.
(b) No portion of an Option granted to an Employee or
Consultant which is unexercisable at Termination of Employment or
Termination of Consultancy, as applicable, shall thereafter become
exercisable, except as may be otherwise provided by the Committee either
in the Award Agreement or by action of the Committee following the grant
of the Option; provided, however that if a Holder's employment, in the
case of an Employee, or provision of services, in the case of a
Consultant, terminated by reason of death or Disability, the Option shall
become exercisable with respect to one-hundred percent (100%) of the
Class A Common Units subject to such Option.
(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning
of Section 422 of the Code, but without regard to Section 422(d) of the
Code) are exercisable for the first time by a Holder during any calendar
year (under the Plan and all other incentive stock option plans of the
Company and any parent or subsidiary corporation, within the meaning of
Section 422 of the Code) of the Company, exceeds $100,000, such Options
shall be treated as Non-Qualified Options to the extent required by
Section 422 of the Code. The rule set forth in the preceding sentence
shall be applied by taking Options into account in the order in which
they were granted. For purposes of this Section 5.3(c), the Fair Market
Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
5.4. Terms of Options Granted to Independent Directors. The price
per share of the shares subject to each Option granted to an Independent
Director shall equal 100% of the Fair Market Value of a share of Class A Common
Stock on the date the Option is granted. Options granted to Independent
Directors shall become exercisable in cumulative annual
<PAGE> 13
installments of 25% on each of the first, second, third and fourth anniversaries
of the date of Option grant and, subject to Section 6.6, the term of each Option
granted to an Independent Director shall be ten (10) years from the date the
Option is granted. No portion of an Option which is unexercisable at Termination
of Directorship shall thereafter become exercisable.
5.5. Substitute Awards. Notwithstanding the foregoing provisions
of this Article V to the contrary, in the case of an Option that is a Substitute
Award, the price per share of the shares subject to such Option may be less than
the Fair Market Value per share on the date of grant, provided, that the excess
of:
(a) the aggregate Fair Market Value (as of the date such
Substitute Award is granted) of the shares subject to the Substitute
Award; over
(b) the aggregate exercise price thereof; does not exceed
the excess of;
(c) the aggregate fair market value (as of the time
immediately preceding the transaction giving rise to the Substitute
Award, such fair market value to be determined by the Committee) of the
shares of the predecessor entity that were subject to the grant assumed
or substituted for by the Company; over
(d) the aggregate exercise price of such shares.
ARTICLE VI.
EXERCISE OF OPTIONS
6.1. Partial Exercise. An exercisable Option may be exercised in
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Administrator may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
6.2. Manner of Exercise. All or a portion of an exercisable Option
shall be deemed exercised upon delivery of all of the following to the Secretary
of the Company or his office:
(a) A written notice complying with the applicable rules
established by the Administrator stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Holder or other
person then entitled to exercise the Option or such portion of the
Option;
(b) Such representations and documents as the
Administrator, in its absolute discretion, deems necessary or advisable
to effect compliance with all applicable provisions of the Securities Act
and any other federal or state securities laws or regulations. The
Administrator may, in its absolute discretion, also take whatever
additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and
issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised
pursuant to Section 11.1 by any person or persons other than the Holder,
appropriate proof of the right of such person or persons to exercise the
Option; and
<PAGE> 14
(d) Full cash payment to the Secretary of the Company for
the shares with respect to which the Option, or portion thereof, is
exercised and for payment of any applicable withholding or other
applicable employment taxes with respect to which the Option, or portion
thereof, is exercised. However, the Administrator, may in its discretion
(i) allow a delay in payment up to thirty (30) days from the date the
Option, or portion thereof, is exercised; (ii) allow payment, in whole or
in part, through the delivery of shares of the Company's Class A Common
Stock which have been owned by the Optionee for a period of more than six
months, duly endorsed for transfer to the Company, with a Fair Market
Value on the date of delivery equal to the aggregate exercise price of
the Option or exercised portion thereof; (iii) allow payment, in whole or
in part, through the delivery of a full recourse promissory note bearing
interest (at no less than such rate as shall then preclude the imputation
of interest under the Code) and payable upon such terms as may be
prescribed by the Administrator; or (iv) allow payment through any
combination of cash and the consideration provided in the foregoing
subparagraphs (ii) and/or (iii). In the case of a promissory note, the
Administrator may also prescribe the form of such note and the security
to be given for such note. The Option may not be exercised, however, by
delivery of a promissory note or by a loan from the Company when or where
such loan or other extension of credit is prohibited by law.
6.3. Conditions to Issuance of Stock Certificates. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other
qualification of such shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange Commission or any
other governmental regulatory body which the Administrator shall, in its
absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Administrator shall,
in its absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following
the exercise of the Option as the Administrator may establish from time
to time for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
6.4. Rights as Stockholders. Holders shall not be, nor have any of
the rights or privileges of, stockholders of the Company in respect of any
shares purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
Holders.
<PAGE> 15
6.5. Ownership and Transfer Restrictions. The Administrator, in
its absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Award Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Class A Common Stock acquired by exercise of an Incentive Stock Option
within (a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder or (b) one year after the transfer of such shares to such
Holder.
6.6. Limitations on Exercise of Options Granted to Independent
Directors. No Option granted to an Independent Director may be exercised to any
extent by anyone after the first to occur of the following events:
(a) the expiration of twelve (12) months from the date of
the Holder's death;
(b) the expiration of twelve (12) months from the date of
the Holder's Termination of Directorship by reason of his Disability;
(c) the expiration of three (3) months from the date of the
Holder's Termination of Directorship for any reason other than such
Holder's death or his Disability, unless the Holder dies within said
three-month period; or
(d) the expiration of ten (10) years from the date the
Option was granted.
6.7. Additional Limitations on Exercise of Options. Holders may be
required to comply with any timing or other restrictions with respect to the
settlement or exercise of an Option, including a window-period limitation, as
may be imposed in the discretion of the Administrator.
ARTICLE VII.
AWARD OF RESTRICTED STOCK
7.1. Eligibility. Subject to the Award Limit, Restricted Stock may
be awarded to any Employee who the Committee determines is a key Employee or any
Consultant who the Committee determines should receive such an Award.
7.2. Award of Restricted Stock
(a) The Committee may from time to time, in its absolute
discretion:
(i) Determine which Employees are key Employees and
select from among the key Employees or Consultants (including
Employees or Consultants who have previously received other awards
under the Plan) such of them as in its opinion should be awarded
Restricted Stock; and
<PAGE> 16
(ii) Determine the purchase price, if any, and other
terms and conditions applicable to such Restricted Stock,
consistent with the Plan.
(b) The Committee shall establish the purchase price, if
any, and form of payment for Restricted Stock; provided, however, that
such purchase price shall be no less than the par value of the Class A
Common Stock to be purchased, unless otherwise permitted by applicable
state law. In all cases, legal consideration shall be required for each
issuance of Restricted Stock.
(c) Upon the selection of a key Employee or Consultant to
be awarded Restricted Stock, the Committee shall instruct the Secretary
of the Company to issue such Restricted Stock and may impose such
conditions on the issuance of such Restricted Stock as it deems
appropriate.
7.3. Rights as Stockholders. Subject to Section 7.4, upon delivery
of the shares of Restricted Stock to the escrow holder pursuant to Section 7.6,
the Holder shall have, unless otherwise provided by the Committee, all the
rights of a stockholder with respect to said shares, subject to the restrictions
in his Award Agreement, including the right to receive all dividends and other
distributions paid or made with respect to the shares; provided, however, that
in the discretion of the Committee, any extraordinary distributions with respect
to the Class A Common Stock shall be subject to the restrictions set forth in
Section 7.4.
7.4. Restriction. All shares of Restricted Stock issued under the
Plan (including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with the
Company, Company performance and individual performance; provided, however,
that, unless the Committee otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a person subject
to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued, and provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Award Agreement. Restricted Stock
may not be sold or encumbered until all restrictions are terminated or expire.
If no consideration was paid by the Holder upon issuance, a Holder's rights in
unvested Restricted Stock shall lapse, and such Restricted Stock shall be
surrendered to the Company without consideration, upon Termination of Employment
or, if applicable, upon Termination of Consultancy with the Company; provided,
however, that the Committee in its sole and absolute discretion may provide that
such rights shall not lapse in the event of a Termination of Employment
following a "change of ownership or control" (within the meaning of Treasury
Regulation Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the
Company or because of the Holder's death or Disability; provided, further,
except with respect to shares of Restricted Stock granted to Section 162(m)
Participants, the Committee in its sole and absolute discretion may provide that
no such lapse or surrender shall occur in the event of a
<PAGE> 17
Termination of Employment, or a Termination of Consultancy, without cause or
following any Change in Control of the Company or because of the Holder's
retirement, or otherwise.
7.5. Repurchase of Restricted Stock. The Committee shall provide
in the terms of each individual Award Agreement that the Company shall have the
right to repurchase from the Holder the Restricted Stock then subject to
restrictions under the Award Agreement immediately upon a Termination of
Employment or, if applicable, upon a Termination of Consultancy between the
Holder and the Company, at a cash price per share equal to the price paid by the
Holder for such Restricted Stock; provided, however, that the Committee in its
sole and absolute discretion may provide that no such right of repurchase shall
exist in the event of a Termination of Employment following a "change of
ownership or control" (within the meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Holder's death or Disability; provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole and absolute discretion may provide that no such right
of repurchase shall exist in the event of a Termination of Employment or a
Termination of Consultancy without cause or following any Change in Control of
the Company or because of the Holder's retirement, or otherwise.
7.6. Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Award Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
7.7. Legend. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Award Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.
7.8. Section 83(b) Election. If a Holder makes an election under
Section 83(b) of the Code, or any successor section thereto, to be taxed with
respect to the Restricted Stock as of the date of transfer of the Restricted
Stock rather than as of the date or dates upon which the Holder would otherwise
be taxable under Section 83(a) of the Code, the Holder shall deliver a copy of
such election to the Company immediately after filing such election with the
Internal Revenue Service.
ARTICLE VIII.
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS
8.1. Eligibility. Subject to the Award Limit, one or more
Performance Awards, Dividend Equivalents, awards of Deferred Stock, and/or Stock
Payments may be granted to any Employee whom the Committee determines is a key
Employee or any Consultant whom the Committee determines should receive such an
Award. Each Independent Director of the Company shall be eligible to be granted
one or more Dividend Equivalents at the times and in the manner set forth in
Section 8.3(c).
8.2. Performance Awards. Any key Employee or Consultant selected
by the Committee may be granted one or more Performance Awards. The value of
such Performance Awards may be linked to any one or more of the Performance
Criteria or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date
<PAGE> 18
or dates or over any period or periods determined by the Committee. In making
such determinations, the Committee shall consider (among such other factors as
it deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee or
Consultant.
8.3. Dividend Equivalents.
(a) Any key Employee or Consultant selected by the
Committee may be granted Dividend Equivalents based on the dividends
declared on Class A Common Stock, to be credited as of dividend payment
dates, during the period between the date a Stock Appreciation Right,
Deferred Stock or Performance Award is granted, and the date such Stock
Appreciation Right, Deferred Stock or Performance Award is exercised,
vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Class A
Common Stock by such formula and at such time and subject to such
limitations as may be determined by the Committee.
(b) Any Holder of an Option who is an Employee or
Consultant selected by the Committee may be granted Dividend Equivalents
based on the dividends declared on Class A Common Stock, to be credited
as of dividend payment dates, during the period between the date an
Option is granted, and the date such Option is exercised, vests or
expires, as determined by the Committee. Such Dividend Equivalents shall
be converted to cash or additional shares of Class A Common Stock by such
formula and at such time and subject to such limitations as may be
determined by the Committee.
(c) Any Holder of an Option who is an Independent Director
selected by the Board may be granted Dividend Equivalents based on the
dividends declared on Class A Common Stock, to be credited as of dividend
payment dates, during the period between the date an Option is granted,
and the date such Option is exercised, vests or expires, as determined by
the Board. Such Dividend Equivalents shall be converted to cash or
additional shares of Class A Common Stock by such formula and at such
time and subject to such limitations as may be determined by the Board.
(d) Dividend Equivalents granted with respect to Options
intended to be qualified performance-based compensation for purposes of
Section 162(m) of the Code shall be payable, with respect to pre-exercise
periods, regardless of whether such Option is subsequently exercised.
8.4. Stock Payments. Any key Employee or Consultant selected by
the Committee may receive Stock Payments in the manner determined from time to
time by the Committee. The number of shares shall be determined by the Committee
and may be based upon the Performance Criteria or other specific performance
criteria determined appropriate by the Committee, determined on the date such
Stock Payment is made or on any date thereafter.
8.5. Deferred Stock. Any key Employee or Consultant selected by
the Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the Performance Criteria or
other specific performance criteria determined to be appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. Class A Common Stock underlying a
<PAGE> 19
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a Holder of Deferred
Stock shall have no rights as a Company stockholder with respect to such
Deferred Stock until such time as the Award has vested and the Class A Common
Stock underlying the Award has been issued.
8.6. Term. The term of a Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment granted to any Employee or
Consultant shall be set by the Committee in its discretion. The term of a
Dividend Equivalent granted to any Independent Director shall be set by the
Board in its discretion.
8.7. Exercise or Purchase Price. The Committee may establish the
exercise or purchase price of a Performance Award, shares of Deferred Stock, or
shares received as a Stock Payment; provided, however, that such price shall not
be less than the par value for a share of Class A Common Stock, unless otherwise
permitted by applicable state law.
8.8. Exercise Upon Termination of Employment, Termination of
Consultancy or Termination of Directorship. A Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment is exercisable or
payable only while the Holder is an Employee, Consultant or Independent
Director, as applicable; provided, however, that the Administrator in its sole
and absolute discretion may provide that the Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment may be exercised or
paid subsequent to a Termination of Employment following a "change of control or
ownership" (within the meaning of Section 1.162-27(e)(2)(v) or any successor
regulation thereto) of the Company; provided, further, that except with respect
to Performance Awards granted to Section 162(m) Participants, the Administrator
in its sole and absolute discretion may provide that Performance Awards may be
exercised or paid following a Termination of Employment or a Termination of
Consultancy without cause, or following a Change in Control of the Company, or
because of the Holder's retirement, death or Disability, or otherwise.
8.9. Form of Payment. Payment of the amount determined under
Section 8.2 or 8.3 above shall be in cash, in Class A Common Stock or a
combination of both, as determined by the Committee. To the extent any payment
under this Article VIII is effected in Class A Common Stock, it shall be made
subject to satisfaction of all provisions of Section 6.3.
ARTICLE IX.
STOCK APPRECIATION RIGHTS
9.1. Grant of Stock Appreciation Rights. A Stock Appreciation
Right may be granted to any key Employee or Consultant selected by the
Committee. A Stock Appreciation Right may be granted (a) in connection and
simultaneously with the grant of an Option, (b) with respect to a previously
granted Option, or (c) independent of an Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with the Plan as
the Committee shall impose and shall be evidenced by an Award Agreement.
9.2. Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to
the extent the related Option is exercisable.
<PAGE> 20
(b) A CSAR may be granted to the Holder for no more than
the number of shares subject to the simultaneously or previously granted
Option to which it is coupled.
(c) A CSAR shall entitle the Holder (or other person
entitled to exercise the Option pursuant to the Plan) to surrender to the
Company unexercised a portion of the Option to which the CSAR relates (to
the extent then exercisable pursuant to its terms) and to receive from
the Company in exchange therefor an amount determined by multiplying the
difference obtained by subtracting the Option exercise price from the
Fair Market Value of a share of Class A Common Stock on the date of
exercise of the CSAR by the number of shares of Class A Common Stock with
respect to which the CSAR shall have been exercised, subject to any
limitations the Committee may impose.
9.3. Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR") shall
be unrelated to any Option and shall have a term set by the Committee. An
ISAR shall be exercisable in such installments as the Committee may
determine. An ISAR shall cover such number of shares of Class A Common
Stock as the Committee may determine; provided, however, that unless the
Committee otherwise provides in the terms of the ISAR or otherwise, no
ISAR granted to a person subject to Section 16 of the Exchange Act shall
be exercisable until at least six months have elapsed from (but
excluding) the date on which the Option was granted. The exercise price
per share of Class A Common Stock subject to each ISAR shall be set by
the Committee. An ISAR is exercisable only while the Holder is an
Employee or Consultant; provided that the Committee may determine that
the ISAR may be exercised subsequent to Termination of Employment or
Termination of Consultancy without cause, or following a Change in
Control of the Company, or because of the Holder's retirement, death or
Disability, or otherwise.
(b) An ISAR shall entitle the Holder (or other person
entitled to exercise the ISAR pursuant to the Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to
its terms) and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the exercise price per
share of the ISAR from the Fair Market Value of a share of Class A Common
Stock on the date of exercise of the ISAR by the number of shares of
Class A Common Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.
9.4. Payment and Limitations on Exercise.
(a) Payment of the amounts determined under Section 9.2(c)
and 9.3(b) above shall be in cash, in Class A Common Stock (based on its
Fair Market Value as of the date the Stock Appreciation Right is
exercised) or a combination of both, as determined by the Committee. To
the extent such payment is effected in Class A Common Stock it shall be
made subject to satisfaction of all provisions of Section 6.3 above
pertaining to Options.
<PAGE> 21
(b) Holders of Stock Appreciation Rights may be required to
comply with any timing or other restrictions with respect to the
settlement or exercise of a Stock Appreciation Right, including a
window-period limitation, as may be imposed in the discretion of the
Committee.
ARTICLE X.
ADMINISTRATION
10.1. Compensation Committee. Prior to the Company's initial
registration of Class A Common Stock under Section 12 of the Exchange Act, the
Compensation Committee shall consist of the entire Board. Following such
registration, the Compensation Committee (or another committee or a subcommittee
of the Board assuming the functions of the Committee under the Plan) shall
consist solely of two or more Independent Directors appointed by and holding
office at the pleasure of the Board, each of whom is both a "non-employee
director" as defined by Rule 16b-3 and an "outside director" for purposes of
Section 162(m) of the Code. Appointment of Committee members shall be effective
upon acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board.
10.2. Duties and Powers of the Committee. It shall be the duty of
the Committee to conduct the general administration of the Plan in accordance
with its provisions. The Committee shall have the power to interpret the Plan
and the Award Agreements, and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such grant
or award under the Plan need not be the same with respect to each Holder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee. Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general administration of
the Plan with respect to Options and Dividend Equivalents granted to Independent
Directors.
10.3. Majority Rule; Unanimous Written Consent. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by all
members of the Committee.
10.4. Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation, if any, for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Holders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all
<PAGE> 22
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.
10.5. Delegation of Authority to Grant Awards. The Committee may,
but need not, delegate from time to time some or all of its authority to grant
Awards under the Plan to a committee consisting of one or more members of the
Committee or of one or more officers of the Company; provided, however, that the
Committee may not delegate its authority to grant Awards to individuals (i) who
are subject on the date of the grant to the reporting rules under Section 16(a)
of the Exchange Act, (ii) who are Section 162(m) Participants or (iii) who are
officers of the Company who are delegated authority by the Committee hereunder.
Any delegation hereunder shall be subject to the restrictions and limits that
the Committee specifies at the time of such delegation of authority and may be
rescinded at any time by the Committee. At all times, any committee appointed
under this Section 10.5 shall serve in such capacity at the pleasure of the
Committee.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1. Not Transferable. No Award under the Plan may be sold,
pledged, assigned or transferred in any manner other than by will or the laws of
descent and distribution or, subject to the consent of the Administrator,
pursuant to a DRO, unless and until such Award has been exercised, or the shares
underlying such Award have been issued, and all restrictions applicable to such
shares have lapsed. No Award or interest or right therein shall be liable for
the debts, contracts or engagements of the Holder or his successors in interest
or shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding
sentence.
During the lifetime of the Holder, only he may exercise an Option
or other Award (or any portion thereof) granted to him under the Plan, unless it
has been disposed of with the consent of the Administrator pursuant to a DRO.
After the death of the Holder, any exercisable portion of an Option or other
Award may, prior to the time when such portion becomes unexercisable under the
Plan or the applicable Award Agreement, be exercised by his personal
representative or by any person empowered to do so under the deceased Holder's
will or under the then applicable laws of descent and distribution.
11.2. Amendment, Suspension or Termination of the Plan. Except as
otherwise provided in this Section 11.2, the Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator. However, without approval of the Company's
stockholders given within twelve months before or after the action by the
Administrator, no action of the Administrator may, except as provided in Section
11.3, increase the limits imposed in Section 2.1 on the maximum number of shares
which may be issued under the Plan. No amendment, suspension or termination of
the Plan shall, without the consent of the Holder alter or impair any rights or
obligations under any Award theretofore granted or awarded, unless the Award
itself otherwise expressly so provides. No Awards may be granted or awarded
during any period of suspension or after termination of the Plan, and in no
event may any Incentive Stock Option be granted under the Plan after the first
to occur of the following events:
<PAGE> 23
(a) The expiration of ten (10) years from the date the Plan
is adopted by the Board; or
(b) The expiration of ten (10) years from the date the Plan
is approved by the Company's stockholders under Section 11.4.
11.3. Changes in Class A Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.
(a) Subject to Section 11.3 (d), in the event that the
Administrator determines that any dividend or other distribution (whether
in the form of cash, Class A Common Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets
of the Company, or exchange of Class A Common Stock or other securities
of the Company, issuance of warrants or other rights to purchase Class A
Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Administrator's sole discretion,
affects the Class A Common Stock such that an adjustment is determined by
the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan or with respect to an Award, then the
Administrator shall, in such manner as it may deem equitable, adjust any
or all of
(i) the number and kind of shares of Class A Common
Stock (or other securities or property) with respect to which
Awards may be granted or awarded (including, but not limited to,
adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued and adjustments of
the Award Limit),
(ii) the number and kind of shares of Class A Common
Stock (or other securities or property) subject to outstanding
Awards, and
(iii) the grant or exercise price with respect to
any Award.
(b) Subject to Sections 11.3(d) and (e), in the event of
any transaction or event described in Section 11.3(a) or any unusual or
nonrecurring transactions or events affecting the Company, any affiliate
of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Administrator, in its sole and absolute discretion, and
on such terms and conditions as it deems appropriate, either by the terms
of the Award or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Holder's
request, is hereby authorized to take any one or more of the following
actions whenever the Administrator determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the Plan or
with respect to any Award under the Plan, to facilitate such transactions
or events or to give effect to such changes in laws, regulations or
principles:
<PAGE> 24
(i) To provide for either the purchase of any such
Award for an amount of cash equal to the amount that could have
been attained upon the exercise of such Award or realization of
the Holder's rights had such Award been currently exercisable or
payable or fully vested or the replacement of such Award with
other rights or property selected by the Administrator in its sole
discretion;
(ii) To provide that the Award cannot vest, be
exercised or become payable after such event;
(iii) To provide that such Award shall be
exercisable as to all shares covered thereby, notwithstanding
anything to the contrary in Section 5.3 or 5.4 or the provisions
of such Award;
(iv) To provide that such Award be assumed by the
successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options, rights or
awards covering the stock of the successor or survivor
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; and
(v) To make adjustments in the number and type of
shares of Class A Common Stock (or other securities or property)
subject to outstanding Awards, and in the number and kind of
outstanding Restricted Stock or Deferred Stock and/or in the terms
and conditions of, and the criteria included in, outstanding
options, rights and awards and options, rights and awards which
may be granted in the future.
(vi) To provide that, for a specified period of time
prior to such event, the restrictions imposed under an Award
Agreement upon some or all shares of Restricted Stock or Deferred
Stock may be terminated, and, in the case of Restricted Stock,
some or all shares of such Restricted Stock may cease to be
subject to repurchase under Section 7.5 or forfeiture under
Section 7.4 after such event.
(c) Subject to Sections 11.3(d), 3.2 and 3.3, the
Administrator may, in its discretion, include such further provisions and
limitations in any Award, agreement or certificate, as it may deem
equitable and in the best interests of the Company.
(d) With respect to Awards which are granted to Section
162(m) Participants and are intended to qualify as performance-based
compensation under Section 162(m)(4)(C), no adjustment or action
described in this Section 11.3 or in any other provision of the Plan
shall be authorized to the extent that such adjustment or action would
cause such Award to fail to so qualify under Section 162(m)(4)(C), or any
successor provisions thereto. No adjustment or action described in this
Section 11.3 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause the Plan to violate
Section 422(b)(1) of the Code. Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result
in short-swing profits liability under Section 16 or violate the
exemptive
<PAGE> 25
conditions of Rule 16b-3 unless the Administrator determines that the
Award is not to comply with such exemptive conditions. The number of
shares of Class A Common Stock subject to any Award shall always be
rounded to the next whole number.
(e) Notwithstanding the foregoing, in the event that the
Company becomes a party to a transaction that is intended to qualify for
"pooling of interests" accounting treatment and, but for one or more of
the provisions of this Plan or any Award Agreement would so qualify, then
this Plan and any Award Agreement shall be interpreted so as to preserve
such accounting treatment, and to the extent that any provision of the
Plan or any Award Agreement would disqualify the transaction from pooling
of interests accounting treatment (including, if applicable, an entire
Award Agreement), then such provision shall be null and void. All
determinations to be made in connection with the preceding sentence shall
be made by the independent accounting firm whose opinion with respect to
"pooling of interests" treatment is required as a condition to the
Company's consummation of such transaction.
(f) The existence of the Plan, the Award Agreement and the
Awards granted hereunder shall not affect or restrict in any way the
right or power of the Company or the shareholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants
or rights to purchase stock or of bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the Class A
Common Stock or the rights thereof or which are convertible into or
exchangeable for Class A Common Stock, or the dissolution or liquidation
of the company, or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
11.4. Approval of Plan by Stockholders. The Plan will be submitted
for the approval of the Company's stockholders (by a majority of the outstanding
common stock entitled to vote thereon with the voting rights set forth in the
Company's Amended and Restated Certificate of Incorporation) within twelve
months after the date of the Board's initial adoption of the Plan. Awards may be
granted or awarded prior to such stockholder approval, provided that such Awards
shall not be exercisable nor shall such Awards vest prior to the time when the
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Awards
previously granted or awarded under the Plan shall thereupon be canceled and
become null and void. In addition, if the Board determines that Awards other
than Options or Stock Appreciation Rights which may be granted to Section 162(m)
Participants should continue to be eligible to qualify as performance-based
compensation under Section 162(m)(4)(C) of the Code, the Performance Criteria
must be disclosed to and approved by the Company's stockholders no later than
the first stockholder meeting that occurs in the fifth year following the year
in which the Company's stockholders previously approved the Performance
Criteria.
11.5. Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Holder of
any sums required by federal, state or local tax law to be withheld with respect
to the issuance, vesting, exercise or payment of any Award. The Administrator
may in its discretion and in satisfaction of the foregoing requirement allow
such Holder to elect to have the Company withhold shares of Class
<PAGE> 26
A Common Stock otherwise issuable under such Award (or allow the return of
shares of Class A Common Stock) having a Fair Market Value equal to the sums
required to be withheld.
11.6. Loans. The Committee may, in its discretion, extend one or
more loans to key Employees in connection with the exercise or receipt of an
Award granted or awarded under the Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under the Plan. The terms and conditions of any such loan
shall be set by the Committee.
11.7. Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to Awards under the Plan, the
Administrator shall have the right to provide, in the terms of Awards made under
the Plan, or to require a Holder to agree by separate written instrument, that
(a) (i) any proceeds, gains or other economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the
receipt or resale of any Class A Common Stock underlying the Award, must be paid
to the Company, and (ii) the Award shall terminate and any unexercised portion
of the Award (whether or not vested) shall be forfeited, if (b)(i) a Termination
of Employment, Termination of Consultancy or Termination of Directorship occurs
prior to a specified date, or within a specified time period following receipt
or exercise of the Award, or (ii) the Holder at any time, or during a specified
time period, engages in any activity in competition with the Company, or which
is inimical, contrary or harmful to the interests of the Company, as further
defined by the Administrator.
11.8. Effect of Plan Upon Options and Compensation Plans.
(a) The adoption of the Plan shall not affect any other
compensation or incentive plans in effect for the Company or any
Subsidiary, other than superseding the Amended and Restated Employee
Equity Participation Plan of Nextera Enterprises, L.L.C., a Delaware
limited liability company ("Nextera LLC"). Nothing in the Plan shall be
construed to limit the right of the Company (i) to establish any other
forms of incentives or compensation for Employees, Directors or
Consultants of the Company or any Subsidiary or (ii) to grant or assume
options or other rights or awards otherwise than under the Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of
the business, stock or assets of any corporation, partnership, limited
liability company, firm or association.
(b) Options granted under this Plan to replace options
granted to the employees of Nextera LLC, shall have the aggregate option
exercise price, the vesting schedule and term as set forth in the Equity
Participation Agreements granted by Nextera LLC to the optionees
thereunder.
11.9. Lock-Up in Connection with Initial Public Offering. Each
Award Agreement issued pursuant to this Plan prior to the initial public
offering of the Company's Common Stock shall include provisions substantially
similar to the following:
"To induce the underwriters that may participate in an initial
public offering (the "Initial Public Offering") of the Company's Common
Stock to continue their efforts in connection with the Initial Public
Offering, the undersigned, during the period
<PAGE> 27
commencing on the date hereof and ending 180 days after the date of the
final prospectus relating to the Initial Public Offering:
(i) agrees not to (x) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, shares of Common Stock or
securities convertible into or exercisable or exchangeable for
Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission) or (y) enter into any swap or
other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause
(x) or (y) is to be settled by the delivery of Common Stock, or
such other securities, in cash or otherwise), without prior
written consent of the lead managing underwriter of such Initial
Public Offering;
(ii) agrees not to make any demand for, or exercise any
right with respect to, the registration of any shares of Common
Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, without the prior written consent
of the lead underwriter; and
(iii) authorizes the Company to cause the transfer agent to
decline to transfer and/or to note stop transfer restrictions on
the transfer books and records of the Company with respect to any
shares of Common Stock and any securities convertible into or
exercisable or exchangeable for Common Stock for which the
undersigned is the record holder and, in the case of any such
shares or securities for which the undersigned is the beneficial
but not the record holder, agrees to cause the record holder to
cause the transfer agent to decline to transfer and/or to note
stop transfer restrictions on such books and records with respect
to such shares or securities.
Notwithstanding the foregoing, the restrictions set forth in clauses (i),
(ii) and (iii) above shall not apply to any transfer of Common Stock to a
"Controlled Affiliate" or pursuant to a "Qualified Transfer" (as each
such term is defined in the Company's Amended and Restated Certificate of
Incorporation); provided that prior to any such transfer the transferee
agrees in writing to be bound by the provisions of this Section 11.9.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into the agreements set forth in this
Section, and that, upon request, the undersigned will execute any
additional documents necessary or desirable in connection with the
enforcement hereof. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and
any
<PAGE> 28
obligations of the undersigned shall be binding upon the heirs, personal
representatives, successors, and assigns of the undersigned."
11.10. Compliance with Laws. The Plan, the granting and vesting of
Awards under the Plan and the issuance and delivery of shares of Class A Common
Stock and the payment of money under the Plan or under Awards granted or awarded
hereunder are subject to compliance with all applicable federal and state laws,
rules and regulations (including but not limited to state and federal securities
law and federal margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for the
Company, be necessary or advisable in connection therewith. Any securities
delivered under the Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal requirements. To the
extent permitted by applicable law, the Plan and Awards granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
11.11. Titles. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of the Plan.
11.12. Governing Law. The Plan and any agreements hereunder shall
be administered, interpreted and enforced under the internal laws of the State
of Delaware without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by the
Board of Directors of Nextera Enterprises, Inc. as of December 30, 1998, amended
and restated as of April 30, 1999 and May 5, 1999, and further amended and
restated effective April 29, 2000.
/s/ Stanley E. Maron
---------------------------------------
Stanley E. Maron
Secretary
