Exhibit 4.1
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ONVANTAGE, INC.
AMENDED AND RESTATED
2000 Omnibus Equity Incentive Plan
(Adopted December 12, 2000)
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TABLE OF CONTENTS
PAGE
1. Establishment and Purpose...............................................1
2. Definitions.............................................................1
"Affiliate"................................................................1
"Award"....................................................................1
"Board of Directors".......................................................1
"Change in Control"........................................................1
"Code".....................................................................2
"Committee"................................................................2
"Common-Law Employee"......................................................2
"Company"..................................................................2
"Consultant"...............................................................2
"Disability"...............................................................2
"Exchange Act".............................................................2
"Exercise Price"...........................................................2
"Fair Market Value"........................................................2
"Incentive Stock Option"...................................................3
"Key Contributor"..........................................................3
"Nonstatutory Stock Option"................................................3
"Option"...................................................................3
"Optionee".................................................................3
"Outside Director".........................................................3
"Parent"...................................................................3
"Participant"..............................................................3
"Plan".....................................................................3
"Purchase Price"...........................................................3
"Restricted Share".........................................................3
"Restricted Share Purchase Agreement ".....................................4
"Securities Act"...........................................................4
"Service"..................................................................4
"Share"....................................................................4
"Stock"....................................................................4
"Stock Appreciation Right".................................................4
"Stock Appreciation Rights Agreement"......................................4
"Stock Option Agreement"...................................................4
"Stock Purchase Agreement".................................................4
"Stock Unit"...............................................................4
"Stock Unit Agreement".....................................................4
"Subsidiary"...............................................................4
"Ten Percent Stockholder"..................................................4
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3. Administration..........................................................5
3.1 Committee Procedures.................................................5
3.2 Committee Responsibilities...........................................5
4. Eligibility.............................................................6
4.1 General Rule.........................................................6
4.2 Outside Directors....................................................6
4.3 Limitation on Grants.................................................7
4.4 Ten Percent Stockholders.............................................7
5. Stock Subject Plan......................................................7
5.1 Basic Limitation.....................................................7
5.2 Annual Increase in Shares............................................7
5.3 Additional Shares....................................................7
5.4 Dividend Equivalents.................................................7
6. Restricted Shares.......................................................8
6.1 Restricted Share Purchase Agreement..................................8
6.2 Payment for Awards...................................................8
6.3 Vesting..............................................................8
6.4 Voting and Dividend Rights...........................................8
7. Other Terms and Conditions of Awards Other than Options.................8
7.1 Duration of Offers and Nontransferability of Rights..................8
7.2 Purchase Price.......................................................9
7.3 Withholding Taxes....................................................9
7.4 Restrictions on Transfer of Shares...................................9
8. Terms and Conditions of Options..........................................9
8.1 Stock Option Agreement................................................9
8.2 Number of Shares......................................................9
8.3 Exercise Price........................................................9
8.4 Withholding Taxes.....................................................9
8.5 Exercisability and Term..............................................10
8.6 Nontransferability...................................................10
8.7 Exercise of Options Upon Termination of Service......................10
8.8 Leaves of Absence....................................................10
8.9 No Rights as a Stockholder...........................................11
8.10 Modification, Extension and Renewal of Options....................11
8.11 Restrictions on Transfer of Shares................................11
8.12 Buyout Provisions.................................................11
9. Payment For Shares......................................................11
9.1 General Rule.........................................................11
9.2 Surrender of Stock...................................................11
9.3 Services Rendered....................................................12
9.4 Cashless Exercise....................................................12
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9.5 Exercise/Pledge......................................................12
9.6 Promissory Note......................................................12
9.7 Other Forms of Payment...............................................12
10. Stock Appreciation Rights...............................................12
10.1 Stock Appreciation Rights Agreement...............................12
10.2 Number of Shares..................................................12
10.3 Exercise Price....................................................12
10.4 Exercisability and Term...........................................13
10.5 Exercise of Stock Appreciation Rights.............................13
10.6 Modification or Assumption of Stock Appreciation Rights...........13
11. Stock Units.............................................................13
11.1 Stock Unit Agreement..............................................13
11.2 Payment for Awards................................................14
11.3 Vesting Conditions................................................14
11.4 Voting and Dividend Rights........................................14
11.5 Form and Time of Settlement of Stock Units........................14
11.6 Death of Recipient................................................14
11.7 Rights as Creditor................................................15
12. Protection Against Dilution.............................................15
12.1 Adjustments.......................................................15
12.2 Dissolution or Liquidation........................................15
12.3 Reorganizations...................................................15
12.4 Reservation of Rights.............................................16
13. Deferral of Awards......................................................16
14. Awards Under Other Plans................................................17
15. Payment of Director's Fees..............................................17
15.1 Effective Date....................................................17
15.2 Elections to Receive Nonstatutory Stock Options, Restricted
Shares or Stock Units.............................................17
15.3 Number and Terms of Nonstatutory Stock Options, Restricted
Shares or Stock Units.............................................17
16. Effect of Change in Control.............................................17
17. Legal and Regulatory Requirements.......................................17
18. Withholding Taxes.......................................................18
18.1 General...........................................................18
18.2 Share Withholding.................................................18
19. Limitation on Parachute Payments........................................18
19.1 Scope of Limitation...............................................18
19.2 Basic Rule........................................................18
19.3 Reduction of Payments.............................................18
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19.4 Overpayments and Underpayments....................................19
19.5 Related Corporations..............................................19
20. No Employment Rights....................................................19
21. Financial Reports.......................................................19
22. Duration and Amendments.................................................19
22.1 Term of the Plan..................................................19
22.2 Right to Amend or Terminate the Plan..............................20
22.3 Effect of Amendment or Termination................................20
23. Execution...............................................................20
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ONVANTAGE, INC.
AMENDED AND RESTATED 2000 OMNIBUS EQUITY INCENTIVE PLAN
(Adopted December 12, 2000)
1. ESTABLISHMENT AND PURPOSE. The Plan was adopted by the Board of
Directors on December 12, 2000. The purpose of the Plan is to promote the
long-term success of the Company and the creation of stockholder value by (a)
encouraging Employees, Outside Directors and Consultants to focus on critical
long-range objectives, (b) encouraging the attraction and retention of
Employees, Outside Directors and Consultants with exceptional qualifications and
(c) linking Employees, Outside Directors and Consultants directly to stockholder
interests through increased stock ownership. The Plan seeks to achieve this
purpose by providing for Awards in the form of Restricted Shares, Stock Units,
Options (which may be Incentive Stock Options or Nonstatutory Stock Options) or
Stock Appreciation Rights.
2. DEFINITIONS.
"Affiliate" shall mean any entity other than a Subsidiary, if the
Company and/or one of more Subsidiaries own not less than 50% of such entity.
"Award" shall mean any award of an Option, a Stock Appreciation Right,
a Restricted Share or a Stock Unit under the Plan.
"Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
"Change in Control" shall mean the occurrence of either of the
following events:
(i) A change in the composition of the Board of Directors, as
a result of which fewer than one-half of the incumbent directors are
directors who either:
(A) Had been directors of the Company twenty-four (24)
months prior to such change; or
(B) Were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of
the directors who had been directors of the Company twenty-four
(24) months prior to such change and who were still in office at
the time of the election or nomination; or
(ii) Any "person" (as such term is used in sections 13(d) and
14(d) of the Exchange Act) who, by the acquisition or aggregation of
securities, is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the
"Base Capital Stock"); except that any change in the relative
beneficial ownership of the Company's securities by any person
resulting solely
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from a reduction in the aggregate number of outstanding shares of Base
Capital Stock, and any decrease thereafter in such person's ownership
of securities, shall be disregarded until such person increases in any
manner, directly or indirectly, such person's beneficial ownership of
any securities of the Company. For purposes of this Subsection (ii),
the term "person" shall not include an employee benefit plan
maintained by the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the committee designated by the Board of
Directors, which is authorized to administer the Plan under Section 3 hereof.
The Committee shall have membership composition which enables the Options or
other rights granted under the Plan to qualify for exemption under Rule 16b-3
with respect to persons who are subject to Section 16 of the Exchange Act.
"Common-Law Employee" shall mean an individual paid from W-2 Payroll of
the Company or a Subsidiary. If, during any period, the Company (or a
Subsidiary, as applicable) has not treated an individual as a Common-Law
Employee and, for that reason, has not paid such individual in a manner which
results in the issuance of a Form W-2 and withheld taxes with respect to him or
her, then that individual shall not be an eligible Common-Law Employee for that
period, even if any person, court or government agency determines,
retroactively, that such individual is or was a Common-Law Employee during all
or any portion of that period.
"Company" shall mean Onvantage, Inc., a Nevada corporation.
"Consultant" shall mean a consultant or advisor who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor.
"Disability" means unable to engage in any substantial gainful activity
on behalf of the Company by reason of any medically determinable physical or
mental impairment. The fact that the Company permits a Participant to exercise
an Award due to a Disability shall not give rise to any implication or
presumption (or be admissible in any proceeding as evidence or an admission)
that such Participant was disabled for any other purpose, including without
limitation, state law or the Americans with Disabilities Act of 1990, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall mean, in the case of an Option, the amount for
which one Share may be purchased upon exercise of such Option, as specified in
the applicable Stock Option Agreement. "Exercise Price," in the case of a Stock
Appreciation Right, shall mean an amount, as specified in the applicable Stock
Appreciation Rights Agreement, which is subtracted from the Fair Market Value of
one Share in determining the amount payable upon exercise of such Stock
Appreciation Rights.
"Fair Market Value" shall mean (i) the closing price of a Share on the
principal exchange on which the Shares are trading, on the date on which the
Fair Market Value is determined (if Fair Market Value is determined on a date
the principal exchange is closed, Fair Market Value shall be determined on the
last immediately preceding trading day), or (ii) if the Shares are not traded on
an exchange but are quoted on the Nasdaq National Market or a successor
quotation system, the closing price on the date on which the Fair Market Value
is determined, or (iii) if the Shares are not traded on an exchange or quoted on
the Nasdaq National Market or a successor quotation
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system, the fair market value of a Share, as determined by the Committee in good
faith. Such determination shall be conclusive and binding on all persons.
"Grantee" shall mean the recipient of Stock Grant.
"Incentive Stock Option" shall mean an incentive stock option described
in section 422 of the Code.
"Key Contributor" shall mean (i) any individual who is a Common-Law
Employee, (ii) a member of the Board of Directors, including, without
limitation, an Outside Director, (iii) a member of the board of directors of a
Subsidiary, or (iv) a Consultant. Service as a member of the Board of Directors,
a member of the board of directors of a Subsidiary or a Consultant shall be
considered employment for all purposes of the Plan.
"Nonstatutory Stock Option" shall mean a stock option that is not an
Incentive Stock Option.
"Notice of Stock Option Grant" shall mean a notification delivered to
an Optionee setting forth the nature of the Optionee's Option, the number of
Shares subject to the Option, the Exercise Price and other terms and conditions
of the Option.
"Option" shall mean an Incentive Stock Option or Nonstatutory Stock
Option granted under the Plan and entitling the holder to purchase Shares.
"Optionee" shall mean an individual or estate who holds an Option.
"Outside Director" shall mean a member of the Board of Directors who is
not a Common-Law Employee of the Company or of a Subsidiary.
"Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company 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. A corporation that becomes a Parent on a date after
the adoption of the Plan shall be a Parent commencing as of such date.
"Participant" shall mean an individual or estate who holds an Award.
"Plan" shall mean this Amended and Restated 2000 Omnibus Equity
Incentive Plan of Onvantage, Inc., as amended from time to time.
"Purchase Price" shall mean the consideration for which one Share may
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Committee.
"Restricted Share" shall mean a Share awarded under the Plan.
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"Restricted Share Purchase Agreement " shall mean the agreement between
the Company and the Grantee of Restricted Shares which contains the terms,
conditions and restrictions pertaining to such Restricted Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Service" shall mean service as a Key Contributor.
"Share" shall mean one share of Stock, as adjusted in accordance with
Section 9 (if applicable); "Shares" shall mean more than one share of Stock.
"Stock" shall mean the Common Stock of the Company.
"Stock Appreciation Right" shall mean a stock appreciation right
granted under the Plan.
"Stock Appreciation Rights Agreement" shall mean the agreement between
the Company and a Grantee which contains the terms, conditions and restrictions
pertaining to his or her Stock Appreciation Rights.
"Stock Grant" shall mean an Award other than an Option.
"Stock Option Agreement" shall mean the agreement between the Company
and an Optionee consisting of a Notice of Stock Option Grant and the Stock
Option Agreement Terms and Conditions, which sets forth the number of Shares
subject to the Option, the Exercise Price and other terms, conditions and
restrictions pertaining to his or her Option.
"Stock Purchase Agreement" shall mean the agreement between the Company
and Grantee who acquires Shares under the Plan which contains the terms,
conditions and restrictions pertaining to the acquisition of such Shares.
"Stock Unit" shall mean a bookkeeping entry representing the equivalent
of one Share, as awarded under the Plan.
"Stock Unit Agreement" shall mean the agreement between the Company and
the Grantee of a Stock Unit which contains the terms, conditions and
restrictions pertaining to such Stock Unit.
"Subsidiary" shall mean any corporation, if the Company and/or one or
more other Subsidiaries own not less than 50% of the total combined voting power
of all classes of outstanding stock of such corporation. A corporation that
becomes a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
"Ten Percent Stockholder" shall mean a Key Contributor who owns more
than 10% of the total combined voting power of all classes of outstanding stock
of the Company. In determining stock ownership, a Key Contributor shall be
deemed to own the stock owned, directly or indirectly, by or for his or her
brothers, sisters, spouse, ancestors and lineal descendants. Stock owned,
directly or indirectly, by or for a corporation, partnership, estate or trust
shall be deemed to be owned proportionately by or for its shareholders, partners
or
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beneficiaries. "Outstanding stock" shall include all stock actually issued
and outstanding immediately after the Award, but shall not include stock
authorized for issuance under outstanding options held by the Key Contributor or
by any other person.
3. ADMINISTRATION.
3.1 COMMITTEE PROCEDURES. The Plan shall be administered by the Committee.
The Committee shall consist exclusively of two or more directors of the Company,
who shall be appointed by the Board of Directors. The Board of Directors shall
designate one of the members of the Committee as chairman. The Committee may
hold meetings at such times and places as it shall determine. The acts of a
majority of the Committee members present at meetings at which a quorum exists,
or acts reduced to or approved in writing by all Committee members, shall be
valid acts of the Committee.
3.2 COMMITTEE RESPONSIBILITIES. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument, document or agreement required to carry out the purposes of
the Plan;
(iv) To determine the Fair Market Value of Shares and when and to whom
Awards are made;
(v) To select Grantees, Optionees and other recipients of Awards;
(vi) To determine the number of Shares to be offered to each Grantee
or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each Award, including,
without limitation, the Purchase Price, the vesting of the Award, including
the acceleration of the vesting of such Award, and to specify the
provisions of the Stock Purchase Agreement relating to such Award or sale;
(viii) To prescribe the terms and conditions of each Option,
including, without limitation, the Exercise Price, the exercisability,
vesting or duration of the Option, including the acceleration of
exercisability or vesting of the Option, to determine whether such Option
is to be classified as an Incentive Stock Option or as a Nonstatutory Stock
Option, and to specify the provisions of the Stock Option Agreement
relating to such Option;
(ix) To amend any outstanding Stock Purchase Agreement or Stock Option
Agreement, subject to applicable legal restrictions and to the consent of
the Grantee or Optionee who entered into such agreement;
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(x) To prescribe the consideration for the grant of each Option or
other right under the Plan and to determine the sufficiency of such
consideration;
(xi) To determine the disposition of each Option or other right under
the Plan in the event of an Optionee's or Grantee's divorce or dissolution
of marriage;
(xii) To determine whether Options or other rights under the Plan will
be granted in replacement of other grants under an incentive or other
compensation plan of an acquired business;
(xiii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Stock Option Agreement or any Stock Purchase
Agreement; and
(xiv) To take any other actions deemed necessary or advisable for the
administration of the Plan.
Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions,
interpretations and other actions of the Committee shall be final and binding on
all Grantees, Optionees and other recipients of Awards, and all persons deriving
their rights from an Grantee, Optionee or other recipient of an Award. No member
of the Committee shall be liable for any action that in good faith has been
taken or not taken with respect to the Plan, any Award or Option, or any right
to acquire Shares under the Plan.
4. ELIGIBILITY.
4.1 GENERAL RULE. Key Contributors shall be eligible for Awards of
Restricted Shares, Stock Units, Nonstatutory Stock Options or Stock Appreciation
Rights; only Common-Law Employees shall be eligible for Awards of Incentive
Stock Options.
4.2 OUTSIDE DIRECTORS. Any other provision of the Plan notwithstanding, the
participation of Outside Directors in the Plan shall be subject to the following
restrictions:
(i) Outside Directors shall only be eligible for Awards of Restricted
Shares, Stock Units, Nonstatutory Stock Options and Stock Appreciation
Rights.
(ii) The Exercise Price of all Nonstatutory Stock Options granted to
an Outside Director under this Section 4.2 shall be equal to one hundred
percent (100%) of the Fair Market Value of Shares subject to the Option on
the date of grant. The Exercise Price will be payable in one of the forms
described in Sections 9.1, 9.2 or 9.3.
(iii) All Nonstatutory Stock Options granted to an Outside Director
under this Section 4.2 shall terminate on the earliest of (A) the tenth
anniversary of the date of grant of such Options or (B) the date twelve
(12) months after the termination of such Outside Director's Service for
any reason.
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4.3 LIMITATION ON GRANTS. No Key Contributor shall be granted Options to
purchase more than one million (1,000,000) Shares in any fiscal year of the
Company.
4.4 TEN PERCENT STOCKHOLDERS. Ten Percent Stockholders shall not be
eligible for an award of Incentive Stock Options unless such Award satisfies the
requirements of Section 422(c)(6) of the Code.
5. STOCK SUBJECT PLAN.
5.1 BASIC LIMITATION. Shares offered under the Plan shall be authorized but
unissued Shares or treasury Shares. The maximum aggregate number of Options,
Stock Appreciation Rights, Stock Units and Restricted Shares awarded under the
Plan shall not exceed five million (5,000,000) Shares, plus the additional
Shares described in Sections 5.2 and 5.3; provided, however, that to the extent
required by the California Corporations Code or the regulations thereunder, the
number of Shares subject to Options and Restricted Shares outstanding at any
time under the Plan (together with other Shares that must be aggregated for this
purpose) shall not exceed the limitation imposed by Section 260.140.45 of Title
10 of the California Code of Regulations. The limitation of this Section 5.1
shall be subject to adjustment pursuant to Section 12.
5.2 ANNUAL INCREASE IN SHARES. As of January 1 of each year, commencing
with the year 2001, the aggregate number of Options, Stock Appreciation Rights,
Stock Units and Restricted Shares that may be awarded under the Plan shall
automatically increase by a number equal to the lesser of (i) 2,000,000 Shares,
(ii) five percent (5%) of the outstanding shares on such date or (iii) a lesser
amount determined by the Board of Directors. The aggregate number of Shares
which may be issued under the Plan shall at all times be subject to adjustment
pursuant to Section 12. The number of Shares which are subject to Options or
other rights outstanding at any time under the Plan shall not exceed the number
of Shares which then remain available for issuance under the Plan. The Company,
during the term of the Plan, shall at all times reserve and keep available
sufficient Shares to satisfy the requirements of the Plan.
5.3 ADDITIONAL SHARES. If Shares issued upon the exercise of Options are
forfeited, such Shares shall again become available for Awards under the Plan.
If Stock Units, Options or Stock Appreciation Rights are forfeited or terminate
for any reason before being exercised, then the corresponding Shares shall again
become available for Awards under the Plan. If Stock Units are settled, then
only the number of Shares (if any) actually issued in settlement of such Stock
Units shall reduce the number available under Section 5.1 and the balance shall
again become available for Awards under the Plan. If Stock Appreciation Rights
are exercised, then only the number of Shares (if any) actually issued in
settlement of such Stock Appreciation Rights shall reduce the number available
under Section 5.1 and the balance shall again become available for Awards under
the Plan. The foregoing notwithstanding, the aggregate number of Shares that may
be issued under the Plan upon the exercise of Incentive Stock Options shall not
be increased when Shares are forfeited.
5.4 DIVIDEND EQUIVALENTS. Any dividend equivalents paid or credited under
the Plan shall not be applied against the number of Restricted Shares, Stock
Units, Options or Stock
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Appreciation Rights available for Awards, whether or not such dividend
equivalents are converted into Stock Units.
6. RESTRICTED SHARES.
6.1 RESTRICTED SHARE PURCHASE AGREEMENT. Each Award of Restricted Shares
under the Plan shall be evidenced by a Restricted Share Purchase Agreement
between the recipient and the Company. Such Restricted Shares shall be subject
to all applicable terms of the Plan and may be subject to any other terms that
are not inconsistent with the Plan. The provisions of the various Restricted
Share Purchase Agreements entered into under the Plan need not be identical.
6.2 PAYMENT FOR AWARDS. Subject to the remainder of this Section 6.2, an
Award of Restricted Shares may be made for such consideration as the Committee
may determine, including (without limitation) cash, cash equivalents,
full-recourse promissory notes, past services and future services. To the extent
an Award consists of newly issued Restricted Shares, the Award recipient shall
furnish consideration with a value not less than the par value of such
Restricted Shares in the form of cash, cash equivalents, or past services
rendered to the Company (or a Parent or Subsidiary), as the Committee may
determine. To the extent required by applicable law, including the California
Corporations Code or the regulations thereunder, the Purchase Price of
Restricted Shares shall not be less than 85% of Fair Market Value (100% for Ten
Percent Stockholders).
6.3 VESTING. Each Award of Restricted Shares may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the Restricted Share Purchase Agreement. If required
by applicable law, however, including the California Corporations Code or the
regulations thereunder, Awards of Restricted Shares to Key Contributors who are
not directors, officers or consultants shall vest no less rapidly than the rate
of 20% per year for each of the first five (5) years from the date the Award is
granted. A Restricted Share Purchase Agreement may provide for accelerated
vesting in the event of the Participant's death, Disability or retirement or
other events.
6.4 VOTING AND DIVIDEND RIGHTS. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Restricted Share Purchase Agreement, however,
may require that the holders of Restricted Shares invest any cash dividends
received in additional Restricted Shares. Such additional Restricted Shares
shall be subject to the same conditions and restrictions as the Restricted
Shares with respect to which the dividends were paid.
7. OTHER TERMS AND CONDITIONS OF AWARDS OTHER THAN OPTIONS.
7.1 DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised within thirty (30) days after the grant of such right was
communicated to the Grantee by the Committee. Such right shall not be
transferable and shall be exercisable only by the Grantee to whom such right was
granted; provided, however, that any such right to acquire Shares under the Plan
(other than an Option) shall be transferable by will or the laws of descent and
distribution to the extent required by the California Corporations Code or the
regulations thereunder.
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7.2 PURCHASE PRICE. The Purchase Price shall be payable in one of the forms
described in Sections 9.1, 9.2 or 9.3.
7.3 WITHHOLDING TAXES. As a condition to the purchase of Shares, the
Grantee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
7.4 RESTRICTIONS ON TRANSFER OF SHARES. Any Shares awarded or sold under
the Plan shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares. Any rights of repurchase in favor of
the Company, however, shall comply with the provisions of Sections 260.140.41 or
260.140.42 of Title 10 of the California Code of Regulations, to the extent that
any such provision is applicable.
8. TERMS AND CONDITIONS OF OPTIONS.
8.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The Stock Option Agreement shall specify whether the Option is
an Incentive Stock Option or a Nonstatutory Stock Option. The provisions of the
various Stock Option Agreements entered into under the Plan need not be
identical. Options may be granted in consideration of a reduction in an
Optionee's other compensation. A Stock Option Agreement may provide that a new
Option will be granted automatically to the Optionee when he or she exercises a
prior Option and pays the Exercise Price.
8.2 NUMBER OF SHARES. Each Stock Option Agreement shall specify the number
of Shares subject to the Option and shall provide for the adjustment of such
number in accordance with Section 12. Options granted to an Optionee in a single
fiscal year of the Company shall not be for more than one million (1,000,000)
Shares.
8.3 EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise
Price as determined by the Committee in accordance with this Section 8.3. For
Nonstatutory Stock Options, the Exercise Price shall be not less than 85% of
Fair Market Value. If required by applicable law, including the California
Corporations Code or the regulations thereunder, the Exercise Price of a
Nonstatutory Stock Option shall not be less than 110% of the Fair Market Value
for Ten Percent Stockholders. The Exercise Price of an Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date of
grant (110% for a Ten Percent Stockholder). The Exercise Price shall be payable
in one of the forms described in Section 9.
8.4 WITHHOLDING TAXES. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such exercise. The
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Optionee shall also make such arrangements as the Committee may require for
the satisfaction of any federal, state or local withholding tax obligations
that may arise in connection with the disposition of Shares upon exercise of an
Option.
8.5 EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify the
date when all or any installment of the Option is to become exercisable and the
term of the Option which shall not exceed ten (10) years from the date of grant
(five (5) years for Ten Percent Stockholder). If required by applicable law,
however, including the California Corporations Code or the regulations
thereunder, Options granted to Key Contributors who are not directors, officers
or consultants shall be exercisable no less rapidly than the rate of 20% per
year for each of the first five (5) years from the date the Option is granted. A
Stock Option Agreement may provide for accelerated exercisability in the event
of the Optionee's death, Disability, or retirement or other events and may
provide for expiration prior to the end of its term upon the termination of the
Optionee's Service. Options may be awarded in combination with Stock
Appreciation Rights, and such an Award may provide that the Options will not be
exercisable unless the related Stock Appreciation Rights are forfeited. The
Committee, in its sole discretion, shall determine when all or any installment
of an Option is to become exercisable and when an Option is to expire in
accordance with this Section 8.5. 8.6 NONTRANSFERABILITY. During an Optionee's
lifetime, his or her Option(s) shall be exercisable only by him or her and shall
not be transferable. In the event of an Optionee's death, his or her Option(s)
shall not be transferable other than by will or by the laws of descent and
distribution. To extent that the California Corporations Code or the regulations
thereunder apply, such Option may also be transferred (i) by instrument to an
inter vivos or testamentary trust in which the Option is to be passed to
beneficiaries upon the death of the trustor, or (ii) by gift to "immediate
family" as that term is defined in Rule 16a-1(e) of the Exchange Act.
8.7 EXERCISE OF OPTIONS UPON TERMINATION OF SERVICE. Each Stock Option
Agreement shall set forth the extent to which the Optionee shall have the right
to exercise the Option following termination of the Optionee's Service and the
extent to which any executor or administrator of the Optionee's estate or any
other person who has acquired the Option directly from the Optionee by bequest
or inheritance shall have the right to exercise the Option. Such provisions
shall be determined in the sole discretion of the Committee, need not be uniform
among all Options issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of Service. If required by applicable law,
however, including the California Corporations Code or the regulations
thereunder, each Stock Option Agreement shall provide the Optionee with the
right to exercise the Option following the Optionee's termination of Service
during the Option term (i) for at least thirty (30) days if termination of
Service is due to any reason other than cause, death or Disability, and (ii) for
at least six (6) months after termination of Service if due to death or
Disability.
8.8 LEAVES OF ABSENCE. A Key Contributor's Service shall cease when such
Key Contributor ceases to be actively employed by, or a consultant or adviser
to, the Company (or any Subsidiary) as determined in the sole discretion of the
Board of Directors. For purposes of Options, Service does not terminate when a
Key Contributor takes a bona fide leave of absence, that was approved by the
Company in writing, if the terms of the leave of absence provide for continued
service crediting, or when continued service crediting is required by applicable
law
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For purposes of determining whether an Option is entitled to treatment as
an Incentive Stock Option, a Key Contributor's Service will be treated as
terminating ninety (90) days after such Key Contributor began the leave of
absence, unless such Key Contributor's right to return to active work is
guaranteed by law or contract. A Key Contributor's Service terminates in any
event when the approved leave of absence ends, unless such Key Contributor
immediately returns to active work. The Company shall determine which leaves of
absence count toward Service, and when Service terminates for all purposes under
the Plan.
8.9 NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an Option,
shall have no rights as a stockholder of the Company with respect to any Shares
subject to the Option until the Optionee has exercised the Option in accordance
with the Stock Option Agreement and paid the Exercise Price. No adjustments
shall be made for dividends declared or other rights arising as of a record date
if the applicable record date occurs before the Optionee's exercise of the
Option and payment of the Exercise Price, except as provided in Section 12.
8.10 MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the limitations
of the Plan, the Committee may modify, extend or renew outstanding options or
may accept the cancellation of outstanding options (to the extent not previously
exercised), whether or not granted hereunder, in return for the grant of new
Options for the same or a different number of Shares and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall impair the Optionee's rights or increase the Optionee's obligations
under such Option without the consent of the Optionee.
8.11 RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon exercise of
an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares. Any rights of repurchase in favor of
the Company, however, shall comply with the provisions of Sections 260.140.41 or
260.140.42 of Title 10 of the California Code of Regulations, to the extent that
any such provision is applicable.
8.12 BUYOUT PROVISIONS. The Committee may at any time (a) offer to buy out
for a payment in cash or cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
9. PAYMENT FOR SHARES.
9.1 GENERAL RULE. The entire Exercise Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America at the time
when such Shares are purchased, except as provided in Sections 9.2 through 9.7
below.
9.2 SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
provides, payment of the Exercise Price may be made by surrendering, or
attesting to the ownership of, Shares which have been owned by the Optionee or
his representative for more than twelve (12) months. The Shares which have been
owned by the Optionee shall be valued at their Fair Market Value on the date the
new Shares are acquired under the Plan. The Optionee shall not
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surrender, or attest to the ownership of, Shares in payment of the Exercise
Price if such action would cause the Company to recognize compensation expense
(or additional compensation expense) with respect to the Option for
financial reporting purposes.
9.3 SERVICES RENDERED. At the discretion of the Committee, an Award of
Shares may be made under the Plan in consideration of services rendered to the
Company or a Subsidiary prior to the Award. If an Award of Shares is made in
consideration of services rendered, the Committee shall determine (at the time
of the Award) the value of the services rendered by the Grantee and whether the
consideration satisfies the requirements of Section 6.2.
9.4 CASHLESS EXERCISE. To the extent that a Stock Option Agreement so
provides, payment may be made delivery (on a form prescribed by the Committee)
of an irrevocable direction to a securities broker to sell Shares and to deliver
all or part of the sale proceeds to the Company in payment of the aggregate
Exercise Price.
9.5 EXERCISE/PLEDGE. To the extent that a Stock Option Agreement so
provides, payment may be made by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker or lender to
pledge Shares, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of the aggregate Exercise Price.
9.6 PROMISSORY NOTE. To the extent that a Stock Option Agreement so
provides, payment may be made by delivering (on a form prescribed by the
Company) a full-recourse promissory note; provided, the par value of the Shares
being purchased under the Plan, if newly issued, shall be paid in cash or cash
equivalents.
9.7 OTHER FORMS OF PAYMENT. To the extent that a Stock Option Agreement so
provides, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.
10. STOCK APPRECIATION RIGHTS.
10.1 STOCK APPRECIATION RIGHTS AGREEMENT. Each Award of Stock Appreciation
Rights under the Plan shall be evidenced by a Stock Appreciation Rights
Agreement between the Grantee and the Company. Such Stock Appreciation Rights
Agreement shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Appreciation Rights Agreements entered into
under the Plan need not be identical.
10.2 NUMBER OF SHARES. Each Stock Appreciation Rights Agreement shall
specify the number of Shares to which the Stock Appreciation Rights pertain and
shall provide for the adjustment of such number in accordance with Section 12.
Stock Appreciation Rights granted to any Grantee in a single calendar year shall
in no event pertain to more than one million (1,000,000) Shares. The limitations
set forth in the preceding sentence shall be subject to adjustment in accordance
with Section 12.
10.3 EXERCISE PRICE. Each Stock Appreciation Rights Agreement shall specify
the Exercise Price. A Stock Appreciation Rights Agreement may specify an
Exercise Price that varies in accordance with a predetermined formula while the
Stock Appreciation Rights
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Agreement is outstanding. To the extent required by applicable law, however,
including the California Corporations Code or the regulations thereunder,
the Exercise Price of a Stock Appreciation Right shall not be less than 85% of
Fair Market Value (110% for Ten Percent Stockholders).
10.4 EXERCISABILITY AND TERM. Each Stock Appreciation Rights Agreement
shall specify the date when all or any installment of the Stock Appreciation
Rights are to become exercisable. The Stock Appreciation Rights Agreement shall
also specify the term of the Stock Appreciation Rights. A Stock Appreciation
Rights Agreement may provide for accelerated exercisability the Grantee's death,
Disability, retirement or other events and may provide for expiration prior to
the end of its term upon the termination of the Grantee's Service. Stock
Appreciation Rights may be awarded in combination with Options, and such an
Award may provide that the Stock Appreciation Rights will not be exercisable
unless the related Options are forfeited. Stock Appreciation Rights may be
included in an Incentive Stock Option only at the time of grant but may be
included in a Nonstatutory Stock Option at the time of grant or thereafter.
Stock Appreciation Rights granted under the Plan may provide for exercisability
only in the event of a Change in Control. If required by applicable law,
however, including the California Corporations Code or the regulations
thereunder, Awards of Stock Appreciation Rights to Key Contributors who are not
directors, officers or consultants shall be exercisable no less rapidly than the
rate of 20% per year for each of the first five (5) years from the date the
Award is granted.
10.5 EXERCISE OF STOCK APPRECIATION RIGHTS. Upon exercise of Stock
Appreciation Rights, the Grantee (or any person having the right to exercise the
Stock Appreciation Rights after his or her death) shall receive from the Company
(a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee
shall determine. The amount of cash and/or the Fair Market Value of Shares
received upon exercise of Stock Appreciation Rights shall, in the aggregate, be
equal to the amount by which the Fair Market Value (on the date of surrender) of
the Shares subject to the Stock Appreciation Rights exceeds the Exercise Price.
If, on the date when Stock Appreciation Rights expire, the Exercise Price under
such Stock Appreciation Rights is less than the Fair Market Value of the Shares
on such date and a portion of such Stock Appreciation Rights has not been
exercised or surrendered, then such Stock Appreciation Rights shall
automatically be deemed to be exercised as of such date with respect to such
portion.
10.6 MODIFICATION OR ASSUMPTION OF STOCK APPRECIATION RIGHTS. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Stock Appreciation Rights or may accept the cancellation of outstanding Stock
Appreciation Rights (whether granted by the Company or by another issuer) in
return for the grant of new Stock Appreciation Rights for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of Stock Appreciation Rights shall,
without the consent of the Grantee, alter or impair his or her rights or
obligations under such Stock Appreciation Rights.
11. STOCK UNITS.
11.1 STOCK UNIT AGREEMENT. Each Award of Stock Units under the Plan shall
be evidenced by a Stock Unit Agreement between the recipient and the Company.
Such Stock
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Units shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be awarded in consideration of a reduction in
the recipient's other compensation.
11.2 PAYMENT FOR AWARDS. To the extent that an Award is granted in the form
of Stock Units, no cash consideration shall be required of the Award recipient.
11.3 VESTING CONDITIONS. Each Award of Stock Units may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Stock Unit Agreement. If
required by applicable law, however, including the California Corporations Code
or the regulations thereunder, Awards of Stock Units to Key Contributors who are
not directors, officers or consultants shall vest no less rapidly than the rate
of 20% per year for each of the first five (5) years from the date the Award is
granted. A Stock Unit Agreement may provide for accelerated vesting in the event
of the Participant's death, Disability, retirement or other events.
11.4 VOTING AND DIVIDEND RIGHTS. The holders of Stock Units shall have no
voting rights. Prior to settlement or forfeiture, Stock Unit awarded under the
Plan may, at the Committee's discretion, carry with it a right to dividend
equivalents, which will entitle the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
any combination of cash and Shares, as determined by the Committee. Prior to
distribution, any dividend equivalents which are not paid shall be subject to
the same conditions and restrictions as the Stock Units to which they attach.
11.5 FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement of vested Stock
Units may be made in the form of cash, Shares or any combination of cash and
Shares, as determined by the Committee. The actual number of Stock Units
eligible for settlement may be larger or smaller than the number included in the
original Award, based on predetermined performance factors. Methods of
converting Stock Units into cash may include (without limitation) a method based
on the average Fair Market Value of Shares over a series of trading days. Vested
Stock Units may be settled in a lump sum or in installments. The distribution
may occur or commence when all vesting conditions applicable to the Stock Units
have been satisfied or have lapsed, or it may be deferred to any later date. The
amount of a deferred distribution may be increased by an interest factor or by
dividend equivalents. Until an Award of Stock Units is settled, the number of
such Stock Units shall be subject to adjustment pursuant to Section 12.
11.6 DEATH OF RECIPIENT. Any Award of Stock Units that becomes payable
after the Participant's death shall be distributed to the Participant's
beneficiary or beneficiaries. Each Participant of an Award of Stock Units under
the Plan shall designate one or more beneficiaries for this purpose by filing
the prescribed form with the Company. A beneficiary designation may be changed
by filing the prescribed form with the Company at any time before the
Participant's death. If no beneficiary was designated or if no designated
beneficiary survives the Participant, then any Award of Stock Units that becomes
payable after the Participant's death shall be distributed to the Participant's
estate.
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11.7 RIGHTS AS CREDITOR. A holder of Stock Units shall have no rights other
than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Unit Agreement.
12. PROTECTION AGAINST DILUTION.
12.1 ADJUSTMENTS. In the event of a subdivision of the outstanding Shares,
a declaration of a dividend payable in Shares, a declaration of a dividend
payable in a form other than Shares in an amount that has a material effect on
the price of Shares, a combination or consolidation of the outstanding Shares
(by reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or more
of:
(i) The number of Options, Stock Appreciation Rights, Restricted
Shares and Stock Units available for future Awards under Section 5;
(ii) The limitations set forth in Sections 8.2 and 10.2;
(iii) The number of NSOs to be granted to Outside Directors under
Section 4.2;
(iv) The number of Shares covered by each outstanding Option and Award
of Stock Appreciation Rights;
(v) The Exercise Price under each outstanding Option and Award of
Stock Appreciation Rights; or
(vi) The number of Stock Units included in any prior Award which has
not yet been settled.
Except as provided in this Section 12, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
12.2 DISSOLUTION OR LIQUIDATION. To the extent not previously exercised or
settled, Options, Stock Appreciation Rights and Stock Units shall terminate
immediately prior to the dissolution or liquidation of the Company.
12.3 REORGANIZATIONS. If the Company is a party to a merger or other
reorganization, outstanding Awards shall be subject to the agreement of merger
or reorganization. Such agreement shall provide for one or more of the
following, in all cases without the consent of the Optionee, Grantee or other
Participant being required:
(i) The continuation of the outstanding Awards by the Company, if the
Company is a surviving corporation;
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(ii) The assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary;
(iii) The substitution by the surviving corporation or its parent or
subsidiary of its own awards for the outstanding Awards;
(iv) Full exercisability and/or vesting and or accelerated expiration
of the outstanding Awards; or
(v) Settlement of the full value of the outstanding Awards in cash or
cash equivalents followed by cancellation of such Awards.
12.4 RESERVATION OF RIGHTS. Except as provided in this Section 12, an
Optionee or Grantee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend or
any other increase or decrease in the number of shares of stock of any class.
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to issue or sell any shares of stock of any class, to
merge or consolidate or to dissolve, liquidate, sell or transfer all or any part
of its business or assets.
13. DEFERRAL OF AWARDS. The Committee (in its sole discretion) may permit
or require a Participant to:
(i) Have cash that otherwise would be paid to such Participant as a
result of the exercise of Stock Appreciation Rights or the settlement of
Stock Units credited to a deferred compensation account established for
such Participant by the Committee as an entry on the Company's books;
(ii) Have Shares that otherwise would be delivered to such Participant
as a result of the exercise of an Option or Stock Appreciation Rights
converted into an equal number of Stock Units; or
(iii) Have Shares that otherwise would be delivered to such
Participant as a result of the exercise of an Option or Stock Appreciation
Rights or the settlement of Stock Units converted into amounts credited to
a deferred compensation account established for such Participant by the
Committee as an entry on the Company's books. Such amounts shall be
determined by reference to the Fair Market Value of such Shares as of the
date when they otherwise would have been delivered to such Participant.
A deferred compensation account established under this Section 13 may be
credited with interest or other forms of investment return, as determined by the
Committee. A Participant for whom such an account is established shall have no
rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or
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required, the Committee (in its sole discretion) may establish rules, procedures
and forms pertaining to such Awards, including (without limitation) the
settlement of deferred compensation accounts established under this Section 13.
14. AWARDS UNDER OTHER PLANS. The Company may grant awards under other
plans or programs. Such awards may be settled in the form of Shares issued under
this Plan. Such Shares shall be treated for all purposes under the Plan like
Shares issued in settlement of Stock Units and shall, when issued, reduce the
number of Shares available under Section 5.
15. PAYMENT OF DIRECTOR'S FEES.
15.1 EFFECTIVE DATE. No provision of this Section 15 shall be effective
unless and until the Board of Directors has determined to implement such
provision.
15.2 ELECTIONS TO RECEIVE NONSTATUTORY STOCK OPTIONS, RESTRICTED SHARES OR
STOCK UNITS. An Outside Director may elect to receive his or her annual retainer
payments and/or meeting fees from the Company in the form of cash, Nonstatutory
Stock Options, Restricted Shares or Stock Units, or a combination thereof, as
determined by the Board of Directors. Such Nonstatutory Stock Options,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Section 15 must be made before the Outside Director has rendered the
services giving rise to such payments and/or fees, and shall be filed with the
Company on the prescribed form.
15.3 NUMBER AND TERMS OF NONSTATUTORY STOCK OPTIONS, RESTRICTED SHARES OR
STOCK UNITS. The number of Nonstatutory Stock Options, Restricted Shares or
Stock Units to be granted to Outside Directors in lieu of annual retainers and
meeting fees that would otherwise be paid in cash shall be calculated in a
manner determined by the Board of Directors. The terms of such Nonstatutory
Stock Options, Restricted Shares or Stock Units shall also be determined by the
Board of Directors.
16. EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the time
of making an Award or thereafter, that all or part of such Award shall become
vested and/or exercisable upon a Change in Control. If, however, the Company and
the other party to the transaction constituting a Change in Control agree that
such transaction is to be treated as a "pooling of interests" for financial
accounting purposes, and if such transaction in fact is so treated, then the
acceleration of vesting and/or exercisability shall not occur to the extent that
the Company's independent accountants and such other party's independent
accountants separately determine in good faith that such acceleration would
preclude the use of "pooling of interests" accounting. In the case of an
Incentive Stock Option, the acceleration of exercisability shall not occur
without the Optionee's written consent.
17. LEGAL AND REGULATORY REQUIREMENTS. Shares shall not be issued under the
Plan unless the issuance and delivery of such Shares complies with (or is exempt
from) all applicable requirements of law, including (without limitation) the
Securities Act, the rules and regulations promulgated thereunder, state
securities laws and regulations and the regulations of any stock exchange on
which the Company's securities may then be listed, and the Company has obtained
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such approvals or favorable rulings from such governmental agency as the Company
determines to be necessary or advisable.
18. WITHHOLDING TAXES.
18.1 GENERAL. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.
18.2 SHARE WITHHOLDING. The Committee may permit a Participant to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Shares that otherwise would be issued
to him or her or by surrendering all or a portion of any Shares that he or she
previously acquired. Such Shares shall be valued at their Fair Market Value on
the date when taxes otherwise would be withheld in cash.
19. LIMITATION ON PARACHUTE PAYMENTS.
19.1 SCOPE OF LIMITATION. This Section 19 shall apply to any Award unless
the Committee, at the time of making an Award under the Plan or at any time
thereafter, specifies in writing that such Award shall not be subject to this
Section 19. If this Section 19 applies to an Award, it shall supersede any
contrary provision of the Plan or of any Award granted under the Plan.
19.2 BASIC RULE. If the independent auditors most recently selected by the
Board of Directors (the "Auditors") determine that any payment, transfer or
acceleration of vesting or exercisability by the Company under the Plan to or
for the benefit of a Participant (a "Payment") would be nondeductible by the
Company for federal income tax purposes because of the provisions concerning
"excess parachute payments" in Section 280G of the Code, then the aggregate
present value of all Payments shall be reduced (but not below zero) to the
Reduced Amount. For purposes of this Section 19, the "Reduced Amount" shall be
the amount, expressed as a present value, which maximizes the aggregate present
value of the Payments without causing any Payment to be nondeductible by the
Company because of Section 280G of the Code.
19.3 REDUCTION OF PAYMENTS. If the Auditors determine that any Payment
would be nondeductible by the Company because of Section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within ten (10) days of
receipt of notice. If no such election is made by the Participant within such
ten (10) day period, then the Company may elect which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
notify the Participant promptly of such election. For purposes of this Section
19, the present value of Payments shall be determined in accordance with Section
280G(d)(4) of the Code. All
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determinations made by the Auditors under this Section 19 shall be binding upon
the Company and the Participant and shall be made within sixty (60) days of the
date when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
19.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of Section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company that should not have been made (an "Overpayment") or that additional
Payments that will not have been made by the Company that could have been made
(an "Underpayment"), consistent in each case with the calculation of the Reduced
Amount hereunder. In the event that the Auditors, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the
Participant that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
Section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount subject to taxation under Section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has occurred, such
Underpayment shall promptly be paid or transferred by the Company to or for the
benefit of the Participant, together with interest at the applicable federal
rate provided in Section 7872(f)(2) of the Code.
19.5 RELATED CORPORATIONS. For purposes of this Section 19, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with Section 280G(d)(5) of the Code.
20. NO EMPLOYMENT RIGHTS. No provision of the Plan, nor any Award granted
under the Plan, shall be construed to give any person any right to become, to be
treated as, or to remain a Key Contributor. The Company and its Subsidiaries
reserve the right to terminate any person's Service at any time and for any
reason, with or without notice.
21. FINANCIAL REPORTS. To the extent required to comply with the California
Corporations Code or the regulations thereunder, not less often than annually
the Company shall furnish to recipients of Options, Restricted Shares and Stock
Appreciation Rights summary financial information, including a balance sheet,
regarding the Company's financial condition and results of operations, unless
such recipient has duties with the Company that assures him or her access to
equivalent information. Such financial statements need not be audited.
22. DURATION AND AMENDMENTS.
22.1 TERM OF THE PLAN. The Plan shall terminate automatically ten (10)
years after its adoption and may be terminated on any earlier date pursuant to
Section 22.2 below. If the stockholders of the Company fail to approve the Plan
within twelve (12) months after its adoption by the Board, any Awards granted
within such twelve (12) month period shall be null
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<PAGE>
and void, and no additional Awards shall be granted after the expiration of
such twelve (12) month period.
22.2 RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may amend
the Plan at any time and from time to time. Except as otherwise set forth in
Section 12, rights and obligations under any Award granted before amendment of
the Plan shall not be materially impaired by such amendment, except with consent
of the person to whom the Award was granted. An amendment of the Plan shall be
subject to the approval of the Company's stockholders only to the extent
required by applicable laws, regulations or rules.
22.3 EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Award
granted prior to such termination. Except as otherwise set forth in Section 12,
the termination of the Plan, or any amendment thereof, shall not affect any
Share previously issued or any Award previously made under the Plan.
23. EXECUTION. To record the adoption of the Plan by the Board of Directors
effective December 12, 2000, the Company has caused its authorized officer to
execute the same.
ONVANTAGE, INC.
By /S/ LISA NIXON
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Signature
LISA NIXON
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Print Name
CORPORATE SECRETARY
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Title
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