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NETSOLVE, INCORPORATED
AMENDED AND RESTATED
LONG-TERM INCENTIVE COMPENSATION PLAN
Section 1. Purpose
NetSolve, Incorporated, a Delaware corporation (the "Company"), hereby
establishes the NetSolve, Incorporated Long-Term Incentive Compensation Plan
(the "Plan") to promote the interests of the Company and its stockholders
through the (i) attraction and retention of executive officers and other key
employees of the Company, as well as directors and other consultants who are
essential to the success of the Company; (ii) motivation of executive officers
and other key employees using performance-related incentives linked to long-
range performance goals and the interests of Company stockholders; and (iii)
enabling of such employees to share in the long-term growth and success of the
Company. The Plan permits the grant of Incentive Stock Options (intended to
qualify under Section 422 of the Code), Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units, Bonus Stock, and any other Stock Unit Awards or
stock-based forms of awards as the Committee, in its sole and complete
discretion, may determine to be appropriate in carrying out the intent and
purposes of this Plan.
Section 2. Definitions
When used in this Plan, the following terms shall have the meanings set
forth below:
2.1 "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
2.2 "Agreement" means a written agreement between the Company and a
Participant implementing and setting forth the particular terms,
conditions and restrictions of each Award. With respect to the grant
of an Option, the Agreement may be referred to herein as an "Option
Agreement," and with respect to any other Award hereunder, the
Agreement may be referred to herein as an "Award Agreement."
2.3 "Award" means a grant under the Plan of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance Units,
Bonus Stock, or other Stock Unit Awards.
2.4 "Award Date" or "Grant Date" means the date on which an Award is made
by the Committee under the Plan.
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2.5 "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act.
2.6 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.7 "Bonus Stock" means an Award granted pursuant to Section 10 of the
Plan.
2.8 "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(a) Any person, corporation, entity or group, including any "group"
as defined in Section 13(d)(3) of the Exchange Act (collectively
"Person"), who, as of the effective of this Plan is unaffiliated
with any current stockholder of the Company, becomes the
beneficial owner of equity securities of the Company comprising
20% or more of the total number of votes that may be cast for the
election of directors of the Company; or
(b) As the result of, or in connection with, any tender or exchange
offer, merger or other business combination, sale of assets, sale
of securities, contested election, or any combination of the
foregoing (a "Transaction"), the persons who were directors of
the Company immediately before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or
any successor to the Company or its assets; or
(c) If at any time: (i) the Company shall consolidate or merge with
any other Person and the Company shall not be the continuing or
surviving entity; (ii) any Person shall consolidate or merge with
the Company, and the Company shall be the continuing or surviving
corporation and in connection therewith, all or part of the
outstanding Common Stock shall be converted into, or exchanged
for, stock or other securities of any other Person or cash or any
other property; (iii) the Company shall be a party to a statutory
share exchange with any other Person after which the Company is a
subsidiary of any other Person; or (iv) the Company shall sell or
otherwise transfer 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any Person
or Persons.
2.9 "Code" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, or any successor law, as amended
from time to time.
2.10 "Committee" means the Compensation Committee of the Board.
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2.11 "Common Stock" or "Stock" means the Common Stock of the Company, $.01
par value per share, or such other security or right or instrument
into which such Common Stock may be changed or converted in the
future.
2.12 "Company" means NetSolve, Incorporated, including all Affiliates and
wholly-owned subsidiaries, or any successor thereto.
2.13 "Covered Participant" means a Participant who is a "covered employee"
as defined in Code Section 162(m)(3) and the regulations promulgated
thereunder.
2.14 "Designated Beneficiary" means the beneficiary designated by the
Participant, pursuant to procedures established by the Committee, to
receive amounts due to the Participant in the event of the
Participant's death. If the Participant does not make an effective
designation, then the Designated Beneficiary will be deemed to be the
Participant's estate.
2.15 "Disability" means the mental or physical disability of a Participant
that precludes the Participant from engaging in any occupation or
employment for wage or profit for at least twelve months and appears
to be permanent, as determined by the Committee in its sole
discretion. All decisions by the Committee relating to a
Participant's Disability (including a decision that a Participant is
not disabled), shall be final and binding on all parties.
2.16 "Divestiture" means the sale of, or closing by, the Company of the
business operations in which the Participant is employed.
2.17 "Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, or any successor law as
amended from time to time.
2.18 "Executive Officer" means any employee considered by the Company to
be an Executive Officer.
2.19 "Fair Market Value" means the fair market value of the Stock as
determined by the Committee using any reasonable valuation method.
2.20 "Full-time Employee" means an individual who is employed by the
Company or a Subsidiary in a customary employer-employee
relationship, is on the payroll of the Company or such Subsidiary,
receives compensation directly from the Company or such Subsidiary,
and is designated in the internal payroll or other records of the
Company or a Subsidiary as a regular, full-time employee. This
designation excludes all leased employees (within the meaning of Code
Section 414(n)), part-time
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employees, temporary employees, or contract employees, as well as all
consultants to, the Company.
2.21 "Incentive Stock Option" or "ISO" means an option to purchase Stock,
granted under Section 6 herein, which is designated as an incentive
stock option and is intended to meet the requirements of Code Section
422.
2.22 "Key Employee" means a Full-time Employee who is an officer or other
key employee of the Company or its Subsidiaries as designated or
determined by the Committee.
2.23 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Stock, granted under Article 6 herein, which is not intended to
qualify as, or constitute an Incentive Stock Option.
2.24 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.25 "Other Stock Unit Award" means awards of Stock or other Awards that
are valued in whole or in part by reference to, or are otherwise
based on, the value of the Company's Common Stock.
2.26 "Participant" means a Key Employee or director of, or a consultant
to, the Company who has been granted an Award under the Plan.
2.27 "Performance Criteria" means the objectives established by the
Committee for a Performance Period, for the purpose of determining
when an Award subject to such objectives has been earned.
2.28 "Performance Award" means a performance-based Award made under
Section 9 herein, which may be in the form of either Performance
Shares or Performance Units.
2.29 "Performance Period" means the time period designated by the
Committee during which performance goals must be met in order for a
Participant to obtain a performance-based Award.
2.30 "Performance Share" means an Award, designated as a Performance
Share, granted to a Participant pursuant to Section 9 herein, the
value of which is determined, in whole or in part, by the value of
the Stock in a manner deemed appropriate by the Committee and
described in the applicable Agreement.
2.31 "Performance Unit" means an Award, designated as a Performance Unit,
granted to a Participant pursuant to Section 9 herein, the value of
which is determined, in whole
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or in part, by the attainment of pre-established Performance Criteria
as deemed appropriate by the Committee and described in the
Agreement.
2.32 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is restricted, pursuant to Section 8
herein.
2.33 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
2.34 "Plan" means the NetSolve, Incorporated Long-Term Incentive
Compensation Plan as herein established and as hereafter amended from
time to time.
2.35 "Restricted Stock" means an Award of Stock granted to a Participant
pursuant to Section 8 herein.
2.36 "Restricted Stock Unit" means a fixed or variable dollar denominated
right to acquire Stock, which may or may not be subject to
restrictions, contingently awarded under Section 8 of the Plan.
2.37 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange Act
as adopted in Exchange Act Release No. 34-37260 (May 30, 1996), or
any successor rule as amended from time to time.
2.38 "Section 162(m)" means Section 162(m) of the Code, or any successor
section under the Code, as amended from time to time and as
interpreted by final or proposed regulations promulgated thereunder
from time to time.
2.39 "Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as amended
from time to time.
2.40 "Stock" or "Shares" means the Common Stock of the Company.
2.41 "Stock Appreciation Right" means the right to receive an amount equal
to the excess of the Fair Market Value of a share of Stock (as
determined on the date of exercise) over the Exercise Price of a
related Option or the Fair Market Value of the Stock on the Grant
Date of the Stock Appreciation Right.
2.42 "Stock Unit Award" means an award of Common Stock or units granted
under Section 11.
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2.43 "Subsidiary" means a corporation in which the Company owns, either
directly or through one or more of its Subsidiaries, at least 50% of
the total combined voting power of all classes of stock.
Section 3. Administration
3.1 The Committee. The Plan shall be administered and interpreted by the
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Committee which shall have full authority, discretion and power necessary or
desirable for such administration and interpretation. The express grant in this
Plan of any specific power to the Committee shall not be construed as limiting
any power or authority of the Committee. In its sole and complete discretion
the Committee may adopt, alter, suspend and repeal any such administrative
rules, regulations, guidelines, and practices governing the operation of the
Plan as it shall from time to time deem advisable. In addition to any other
powers and, subject to the provisions of the Plan, the Committee shall have the
following specific powers: (i) to determine the terms and conditions upon which
Awards may be made and exercised; (ii) to determine the Participants to which
Awards shall be made; (iii) to determine all terms and provisions of each
Agreement, which need not be identical for types of Awards nor for the same type
of Award to different Participants; (iv) to construe and interpret all terms,
conditions and provisions of the Plan and all Agreements; (v) to establish,
amend, or waive rules or regulations for the Plan's administration; (vi) to
accelerate the exercisability of any Award, the length of a Performance Period
or the termination of any Period of Restriction; and (vii) to make all other
determinations and take all other actions necessary or advisable for the
administration or interpretation of the Plan. The Committee may seek the
assistance or advice of any persons it deems necessary to the proper
administration of the Plan.
3.2 Committee Decisions. Unless strictly and expressly prohibited by
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law, all determinations and decisions made by the Committee pursuant to the
provisions of this Plan shall be final, conclusive, and binding upon all
persons, including Participants, Designated Beneficiaries, the Company, its
stockholders and employees.
Section 4. Eligibility
The Committee shall have sole and complete discretion in designating and
determining Participants in the Plan.
Section 5. Shares Subject to the Plan
5.1 Number of Shares. Subject to adjustment as provided for in Section
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5.4 below, the maximum aggregate number of Shares that may be issued pursuant to
Awards made under the Plan shall not exceed 4,350,000 Shares, which may be in
any combination of Options, Restricted Stock, Restricted Stock Units,
Performance Shares, Bonus Shares, or Other Stock Unit Award. Shares of Common
Stock may be available from the authorized but unissued Shares, Shares issued
and reacquired by the Company or Shares purchased in the open market for
purposes of the Plan. Except as provided in Sections 5.2 and 5.3 herein, the
issuance of Shares in connection with the exercise of,
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or as other payment for, Awards under the Plan shall reduce the number of Shares
available for future Awards under the Plan.
5.2 Lapsed Awards or Forfeited Shares. In the event that: (i) any Option
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or other Award granted under the Plan terminates, expires, or lapses for any
reason without having been exercised in accordance with its terms; (ii) Shares
issued pursuant to the Awards are canceled or forfeited for any reason; or (iii)
Awards are paid in cash, the Shares subject to such Award shall thereafter be
again available for grant of an Award under the Plan.
5.3 Delivery of Shares as Payment. In the event a Participant pays for
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any Option or other Award granted under the Plan through the delivery of
previously acquired shares of Common Stock, the number of shares of Common Stock
available for Awards under the Plan shall be increased by the number of shares
surrendered by the Participant.
5.4 Capital Adjustments. The number and class of Shares subject to each
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outstanding Award, the Option Price and the aggregate number, type and class of
Shares for which Awards thereafter may be made shall be subject to adjustment,
if any, as the Committee deems appropriate, based on the occurrence of a number
of specified and non-specified events. Such specified events are discussed in
this Section 5.4, but such discussion is not intended to provide an exhaustive
list of such events which may necessitate adjustments.
(a) If the outstanding Shares are increased, decreased or exchanged
through merger, consolidation, sale of all or substantially all of the
property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or
other distribution in respect to such Shares, for a different number
or type of Shares, or if additional Shares or new or different Shares
are distributed with respect to such Shares, an appropriate and
proportionate adjustment shall be made in: (i) the maximum number of
shares of Stock available for the Plan as provided in Section 5.1
herein; (ii) the type of shares or other securities available for the
Plan; (iii) the number of shares of Stock subject to any then
outstanding Awards under the Plan; and (iv) the price (including
Exercise Price) for each share of Stock (or other kind of shares or
securities) subject to then outstanding Awards, but without change in
the aggregate purchase price as to which such Options remain
exercisable or Restricted Stock releasable.
(b) In the event other events not specified above in this Section 5.4,
such as any extraordinary cash dividend, split-up, reverse split,
spin-off, combination, exchange of shares, warrants or rights offering
to purchase Common Stock, or other similar corporate event, affect the
Common Stock such that an adjustment is necessary to maintain the
benefits or potential benefits intended to be provided under this
Plan, then the Committee in its discretion may make adjustments to any
or all of: (i) the number and type of shares which thereafter may be
optioned and sold or awarded or made subject to Stock Appreciation
Rights under the Plan; (ii) the grant, exercise or
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conversion price of any Award made under the Plan thereafter; and
(iii) the number and price (including Exercise Price) of each share
of Stock (or other kind of shares or securities) subject to the then
outstanding Awards.
(c) Any adjustment made by the Committee pursuant to the provisions of
this Section 5.4 shall be final, binding and conclusive. A notice of
such adjustment, including identification of the event causing such
adjustment, the calculation method of such adjustment, and the change
in price and the number of shares of Stock, or securities, cash or
property purchasable subject to each Award shall be sent to each
Participant. No fractional interests shall be issued under the Plan
based on such adjustments.
Section 6. Stock Options
6.1 Grant of Stock Options. Subject to the terms and provisions of the
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Plan and applicable law, the Committee, at any time and from time to time, may
grant Options to Key Employees as it shall determine. The Committee shall have
sole and complete discretion in determining the type of Option granted, the
Option Price (as hereinafter defined), the duration of the Option, the number of
Shares to which an Option pertains, any conditions imposed upon the
exercisability or the transferability of the Options, including vesting
conditions, the conditions under which the Option may be terminated, and any
such other provisions as may be warranted to comply with the law or rules of any
securities trading system or stock exchange. Each Option grant shall have such
specified terms and conditions detailed in an Option Agreement. The Option
Agreement shall specify whether the Option is intended to be an Incentive Stock
Option or a Nonqualified Stock Option.
6.2 Option Price. The exercise price per share of Stock covered by an
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Option ("Option Price") shall be determined on the Grant Date by the Committee;
provided that the Option Price of an Option intended to constitute an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the Common
Stock on the Grant Date.
6.3 Exercisability. Options granted under the Plan shall be exercisable
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at such times and be subject to such restrictions and conditions as the
Committee shall determine, which will be specified in the Option Agreement and
need not be the same for each Participant. However, no Option granted under the
Plan may be exercisable after the expiration of ten years from the Grant Date.
6.4 Method of Exercise. Options shall be exercised by the delivery of a
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written notice from the Participant to the Company in a form prescribed by the
Committee setting forth the number of Shares with respect to which the Option is
to be exercised, accompanied by full payment or provision for full payment for
the Shares. The Option Price shall be payable to the Company in full in cash,
or its equivalent, or by delivery of Shares of Stock (not subject to any
security interest or pledge) having a Fair Market Value at the time of exercise
equal to the exercise price of the Shares, or by a combination of the foregoing.
As soon as practicable, after receipt of written notice and full
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payment of the Option Price, the Company shall deliver to the Participant a
stock certificate, issued in the Participant's name, evidencing the number of
Shares with respect to which the Option was exercised.
Section 7. Stock Appreciation Rights
7.1 Grant of Stock Appreciation Rights. Subject to the terms and
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provisions of the Plan and applicable law, the Committee, at any time and from
time to time, may grant freestanding Stock Appreciation Rights, Stock
Appreciation Rights in tandem with an Option, or Stock Appreciation Rights in
addition to an Option. Stock Appreciation Rights granted in tandem with an
Option or in addition to an Option may be granted at the time of the Option or
at a later time. No Stock Appreciation Rights granted under the Plan may be
exercisable after the expiration of ten years from the Grant Date.
7.2 Price. The exercise price of each Stock Appreciation Right shall be
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determined at the time of grant by the Committee, subject to the limitation that
the grant price shall not be less than 100% of Fair Market Value of the Common
Stock on the Grant Date.
7.3 Exercise. Stock Appreciation Rights shall be exercised by the
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delivery of a written notice from the Participant to the Company in a form
prescribed by the Committee. Upon such exercise, the Participant shall be
entitled to receive an amount equal to the excess of the Fair Market Value of a
Share over the grant price thereof on the date of exercise of the Stock
Appreciation Right multiplied by the number of Shares for which the Stock
Appreciation Right was granted.
7.4 Payment. Payment upon exercise of the Stock Appreciation Right shall
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be in the amount of the full exercise price therefor, and shall be made in the
form of cash, cash installments, Shares of Common Stock, or a combination
thereof, as determined in the sole and complete discretion of the Committee.
However, if any payment in the form of Shares results in a fractional share,
such payment for the fractional share shall be made in cash.
Section 8. Restricted Stock and Restricted Stock Units
8.1 Grant of Restricted Stock. Subject to the terms and provisions of
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the Plan and applicable law, the Committee, at any time and from time to time,
may grant shares of Restricted Stock and Restricted Stock Units under the Plan
to such Participants, and in such amounts and for such duration and/or
consideration as it shall determine.
8.2 Restricted Stock Award Agreement. Each Restricted Stock and
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Restricted Stock Unit granted hereunder shall be evidenced by an Award Agreement
that shall specify the Period of Restriction, the conditions which must be
satisfied prior to removal of the restriction, the number of Shares of
Restricted Stock or Restricted Stock Units granted, payment terms for each such
Award (e.g. whether the Award will be paid in shares of Stock, cash or a
combination thereof, and whether payment will be in a lump sum or installments),
and such other provisions as the Committee shall
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determine. The Committee may specify, but is not limited to, the following types
of restrictions in the Award Agreement: (i) restrictions on acceleration or
achievement of terms or vesting based on any Performance Criteria, including,
but not limited to, absolute or relative increases in total shareholder return,
revenues, sales, net income, or net worth of the Company, any of its
Subsidiaries, divisions, business units or other areas of the Company; and (ii)
any other restrictions which the Committee may deem advisable, including
requirements established pursuant to the Securities Act, the Exchange Act, the
Code and, if applicable, any securities trading system or stock exchange upon
which such Shares under the Plan may be listed.
8.3 Nontransferability. Except as provided in this Section 8, the Shares
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of Restricted Stock or Restricted Stock Units granted under the Plan may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until the termination of the applicable Period of Restriction or upon earlier
satisfaction of other conditions as specified by the Committee in its sole
discretion and set forth in the applicable Award Agreement. All rights with
respect to the Restricted Stock and Restricted Stock Units granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or his or her guardian or legal representative.
8.4 Removal of Restrictions. Except as otherwise noted in this Section
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8, Restricted Stock and Restricted Stock Units covered by each Award made under
the Plan shall become freely transferable by the Participant after the last day
of the Period of Restriction and/or upon the satisfaction of other conditions as
determined by the Committee.
8.5 Voting Rights. During the Period of Restriction, Participants in
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whose name Restricted Stock is granted under the Plan may exercise full voting
rights with respect to those shares.
8.6 Dividends and Other Distributions. During the Period of Restriction,
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Participants in whose name Restricted Stock is granted under the Plan shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares. If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions on transferability and
forfeitability as the Restricted Stock with respect to which they were
distributed.
Section 9. Performance Awards
9.1 Grant of Performance Awards. Subject to the terms and provisions of
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the Plan and applicable law, the Committee, at any time and from time to time,
may issue Performance Awards in the form of either Performance Shares or
Performance Units to Participants subject to the Performance Criteria,
Performance Period and other consideration or restrictions as it shall
determine. The Committee shall have complete discretion in determining the
number and value of Performance Units or Performance Shares granted to each
Participant.
9.2 Value of Performance Awards. The Committee shall determine the
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number and value of Performance Units or Performance Shares granted to each
Participant as a Performance Award.
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The Committee shall set Performance Criteria in its discretion for each
Participant who is granted a Performance Award. The extent to which such
Performance Criteria are met will determine the value of the Performance Unit or
Performance Share to the Participant. Such Performance Criteria may be
particular to a Participant, may relate to the performance of the Company or
Subsidiary which employs him or her, or any combination of the foregoing. The
Performance Criteria may be based on achievement of financial statement
objectives, or any other objectives established by the Committee. The
Performance Criteria may be absolute in their terms or measured against, or in
relationship to, other companies comparably, similarly or otherwise situated.
The terms and conditions of each Performance Award will be set forth in an Award
Agreement.
9.3 Settlement of Performance Awards. After a Performance Period has
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ended, the holder of a Performance Unit or Performance Share shall be entitled
to receive the value thereof based on the degree to which the Performance
Criteria established by the Committee and set forth in the Award Agreement have
been satisfied.
9.4 Form of Payment. Payment of the amount to which a Participant shall
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be entitled upon the settlement of the Performance Award shall be made in cash,
Stock, or a combination thereof and may be made in a lump sum or installments
all as determined by the Committee and set forth in the related Award Agreement.
Section 10. Bonus Stock
Subject to the terms and provisions of the Plan and applicable law, the
Committee may, at any time and from time to time, award shares of Bonus Stock to
participants under the Plan without cash consideration. The Committee shall
determine and indicate in the related Award Agreement whether such shares of
Bonus Stock shall be unencumbered of any restrictions (other than those which
the Committee deems necessary or advisable to comply with law) or shall be
subject to restrictions and limitations similar to those referred to in Section
9. In the event the Committee assigns any restrictions on the shares of Bonus
Stock, then such shares shall be subject to at least the following restrictions:
(a) No Shares of Bonus Stock may be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated if such Shares are subject to
restrictions which have not lapsed or been satisfied.
(b) If any condition of vesting of the shares of Bonus Stock are not
met, all such Shares subject to such vesting shall be delivered to
the Company (in a manner determined by the Committee) within 60 days
of the failure to meet such conditions without any payment from the
Company.
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Section 11. Other Stock Based Awards
11.1 Grant of Other Stock Based Awards. Subject to the terms and
---------------------------------
provisions of the Plan and applicable law, the Committee may, at any time and
from time to time, issue to Participants, either alone or in addition to other
Awards made under the Plan, Stock Unit Awards which may be in the form of Common
Stock or other securities. The value of each such Award shall be based, in
whole or in part, on the value of the underlying Common Stock on the Grant Date.
The Committee, in its sole and complete discretion, may determine that an Award,
either in the form of a Stock Unit Award under this Section 11 or as an Award
granted pursuant to Sections 6 through 10, may provide to the Participant (i)
dividends or dividend equivalents (payable on a current or deferred basis) and
(ii) cash payments in lieu of or in addition to an Award. Subject to the
provisions of the Plan, the Committee, in its sole and complete discretion,
shall determine the terms, restrictions, conditions, vesting requirements, and
payment rules of the Award. The Award Agreement shall specify the rules of each
Award as determined by the Committee. However, each Stock Unit Award need not
be subject to identical rules.
11.2 Rules. The Committee, in its sole and complete discretion, may
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grant a Stock Unit Award subject to the following rules:
(a) If applicable and to the extent Stock Unit Awards are deemed to be
derivative securities within the meaning of Rule 16b-3, the rights
of a Participant who is subject to Section 16 of the Exchange Act
with respect to such Awards shall not vest or be exercisable until
the expiration of at least six months from the Award Date.
(b) All rights with respect to such Stock Unit Awards granted to a
Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant or his or her guardian or legal
representative.
(c) Stock Unit Awards may require the payment of cash consideration by
the Participant in receipt of the Award or provide that the Award,
and any Common Stock or other securities issued in conjunction with
the Award, be delivered without the payment of cash consideration.
(d) The Committee, in its sole and complete discretion, may establish
certain Performance Criteria that may relate in whole or in part to
receipt of Stock Unit Awards.
(e) Stock Unit Awards may be subject to a deferred payment schedule
and/or vesting over a specified period.
(f) The Committee, in its sole and complete discretion, as a result of
certain circumstances, may waive or otherwise remove, in whole or in
part, any restriction or condition imposed on a Stock Unit Award.
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Section 12. Special Provisions Applicable to Covered Participants
If the Company shall become subject to Code Section 162(m), Awards to
Covered Participants shall be governed by the conditions of this Section 12 in
addition to the requirements of Sections 6 through 11 above. Should conditions
set forth under this Section 12 conflict with the requirements of Sections 6
through 11, the conditions of this Section 12 shall prevail.
(a) All Performance Criteria relating to Covered Participants for a
relevant Performance Period shall be established by the Committee in
writing prior to the beginning of the Performance Period, or by such
other later date for the Performance Period as may be permitted
under Section 162(m) of the Code. Performance Criteria may include
alternative and multiple Performance Criteria and will be based on
one or more of the following business criteria: business or
financial goals of the Company, including absolute or relative
levels of total shareholder return, revenues, sales, net income, or
net worth of the Company, any of its Subsidiaries, divisions,
business units, or other areas of the Company.
(b) The Performance Criteria must be objective and must satisfy third
party "objectivity" standards under Code Section 162(m), and the
regulations promulgated thereunder.
(c) The Performance Criteria shall not allow for any discretion by the
Committee as to an increase in any Award, but discretion to lower an
Award is permissible.
(d) The Award and payment of any Award under this Plan to a Covered
Participant with respect to a relevant Performance Period shall be
contingent upon the attainment of the Performance Criteria that are
applicable to such Award. The Committee shall certify in writing
prior to payment of any such Award that such applicable Performance
Criteria have been satisfied. Resolutions adopted by the Committee
may be used for this purpose.
(e) No Awards may be paid (in cash or in shares of Stock or a
combination thereof) to any Covered Participant under the Plan
pursuant to Sections 8, 9, 10 and 11 during any calendar year.
(f) The aggregate maximum number of shares of Stock subject to Options
and SARs made to any Covered Participant during any calendar year
shall be 100,000.
(g) All Awards to Covered Participants under this Plan shall be further
subject to such other conditions, restrictions, and requirements as
the Committee may determine to be necessary to carry out the
purposes of this Section 12.
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Section 13. Change In Control
Notwithstanding any other provision of this Plan, in the event of a Change
in Control: (i) all outstanding Options shall immediately become fully vested
and exercisable; (ii) all Periods of Restriction shall be deemed to have been
completed; (iii) all Performance Criteria shall be deemed to have been satisfied
in full; and (iv) all other restrictions of any kind applicable to all
outstanding Awards shall be deemed to have lapsed or been satisfied in full;
provided that none of the effects described in (i) - (iv) above shall occur if
the Change in Control, or the transaction, event or occurrence causing the
Change in Control was duly and effectively approved in advance by the
affirmative vote of a majority of the Company's Board of Directors.
Section 14. General Provisions
14.1 Plan Term. The Plan was adopted by the Board on July 14, 1997, and
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became effective upon receiving stockholder approval on July 29, 1997.
The Plan shall terminate December 31, 2006; however, all Awards made prior
to, and which are outstanding on such date, shall remain valid in accordance
with their terms and conditions.
14.2 Withholding. The Company shall have the right to deduct or
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withhold, or require a Participant to remit to the Company, any taxes required
by law to be withheld from Awards made under this Plan. In the event an Award is
paid in the form of Common Stock, the Committee may require the Participant to
remit to the Company the amount of any taxes required to be withheld from such
payment in Common Stock, or, in lieu thereof, the Company may withhold (or the
Participant may be provided the opportunity to elect to tender) the number of
shares of Common Stock equal in Fair Market Value to the amount required to be
withheld.
14.3 Awards. Each Award granted under the Plan shall be evidenced in a
------
corresponding Award Agreement provided in writing to the Participant, which
shall specify the terms, conditions and any rules applicable to the Award.
14.4 Nontransferability. Except with respect to Nonqualified Stock
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Options, no Award granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, except by will or the laws of
descent and distribution. Further, no lien, obligation, or liability of the
Participant may be assigned to any right or interest of any Participant in an
Award under this Plan.
14.5 No Right to Employment. Neither the Plan, nor any Award made, or
----------------------
any other action taken, hereunder shall be construed as giving any Participant
or other person any right of employment or continued employment with the
Company.
14.6 Rights as Stockholder. Subject to the terms and conditions of each
---------------------
particular Award, no Participant or Designated Beneficiary shall be deemed a
stockholder of the Company nor have
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any rights as such with respect to any shares of Common Stock to be provided
under the Plan until he or she has become the holder of such shares.
14.7 Construction of the Plan. The Plan and all Agreements shall be
------------------------
governed, construed, interpreted and administered in accordance with the laws of
the State of Texas. In the event any provision of the Plan or any Agreement
shall be held invalid, illegal or unenforceable, in whole or in part, for any
reason, such determination shall not affect the validity, legality or
enforceability of any remaining provision, portion of provision or Plan overall,
which shall remain in full force and effect as if the Plan had been absent the
invalid, illegal or unenforceable provision or portion thereof.
14.8 Amendment of Plan. The Committee or the Board of Directors may
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amend, suspend, or terminate the Plan or any portion thereof at any time,
provided such amendment is made with stockholder approval if and to the extent
such stockholder approval is necessary to comply with any legal requirement,
including for these purposes any approval requirement which is a requirement for
the performance-based compensation exception under Code Section 162(m).
14.9 Amendment of Award. In its sole and complete discretion, the
------------------
Committee may at any time amend any Award for the following reasons: (i)
additions and/or changes are made to the Code, any federal or state securities
law, or other law or regulations applicable to the Award; or (ii) any other
event not described in clause (i) occurs and the Participant gives his or her
consent to such amendment.
14.10 Exemption from Computation of Compensation for Other Purposes. By
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acceptance of an applicable Award under this Plan, subject to the conditions of
such Award, each Participant shall be considered in agreement that all shares of
Stock sold or awarded and all Options granted under this Plan shall be
considered extraordinary, special incentive compensation and will not be
included as "earnings," "wages," "salary" or "compensation" in any pension,
welfare, life insurance, or other employee benefit arrangement of the Company.
14.11 Legend. In its sole and complete discretion, the Committee may
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elect to legend certificates representing Shares sold or awarded under the Plan,
to make appropriate references to the restrictions imposed on such Shares.
14.12 Unfunded Plan. The Plan is intended to constitute an unfunded
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deferred compensation arrangement for a select group of management or highly
compensated employees.
EXECUTED as of the 11th day of July, 2000.
NETSOLVE, INCORPORATED
By: /s/ Craig S. Tysdal
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Craig S. Tysdal
President and Chief Executive Officer
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