<PAGE>
Exhibit 99.1
Amended and Restated 2000 Performance
Incentive Plan of U.S. Interactive, Inc.
1. PURPOSE.
The purposes of the Amended and Restated 2000 Performance Incentive
Plan (the "Plan") of U.S. Interactive, Inc. (the "Company") are to advance the
interests of the Company and its shareholders by strengthening the ability of
the Company to attract, retain and reward employees and consultants, to motivate
employees to achieve business objectives established to promote the long-term
growth, profitability and success of the Company, and to encourage ownership of
the Common Stock of the Company by participating employees. The Plan authorizes
performance-based stock and cash incentive compensation in the form of stock
options, stock appreciation rights, restricted stock, performance grants and
awards, and other stock-based grants and awards. Officers of the Company and
members of the Board of Directors are not permitted to participate in this Plan.
Consultants may be awarded Non-Qualified Stock Options.
2. DEFINITIONS.
For the purposes of the Plan, the following terms shall have the
following meanings:
(a) "Adjusted Net Income" means, with respect to any calendar or other
fiscal year of the Company, the amount reported as "Net Income" in the audited
Consolidated Income Statement of the Company and Subsidiaries for such year (as
set forth in the Company's Annual Report to Shareholders for such year),
adjusted to exclude any of the following items: (i) extraordinary items (as
described in Accounting Principles Board Opinion No. 30); (ii) gains or losses
on the disposition of discontinued operations; (iii) the cumulative effects of
changes in accounting principles; (iv) the writedown of any asset; and (v)
charges for restructuring and rationalization programs.
(b) "Annual Net Income Per Share" means, with respect to any calendar
or other fiscal year of the Company in respect of which a determination thereof
is being or to be made, the Adjusted Net Income for such year divided by the
average number of shares of Common Stock outstanding during such year.
(c) "Award" means any payment or settlement in respect of a grant made
pursuant to the Plan, whether in the form of shares of Common Stock or in cash,
or in any combination thereof.
(d) "Board Of Directors" means the Board of Directors of the Company.
<PAGE>
(e) "Cause", unless otherwise determined by the Committee, means (i) a
Participant's action or failure to act which (a) would materially adversely
affect the reputation, operations or financial condition of the Company or any
of its Subsidiaries; (ii) a willful failure by the Participant to perform such
Participant's duties, except as a result of the Disability or death of the
Participant; or (iii) a Participant's theft, embezzlement, perpetration of
fraud, or misappropriation of any tangible or intangible assets or property of
the Company or any of its Subsidiaries or attempted theft, embezzlement,
perpetration of fraud, or misappropriation of any tangible or intangible assets
or property of the Company or any of its Subsidiaries. In addition, and without
limiting any of the foregoing, "Cause" for purposes of this Plan shall also mean
"Cause" as that term is defined in a Participant's employment agreement, if any,
with the Company or a Subsidiary.
(f) "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor statute thereto, together with the
published rulings, regulations and interpretations duly promulgated thereunder.
(g) "Committee" means the committee of the Board of Directors
established and constituted as provided in Section 5 of the Plan.
(h) "Common Stock" means the common stock, $.001 par value, of the
Company, or any security issued by the Company in substitution or exchange
therefore or in lieu thereof.
(i) "Common Stock Equivalent" means a Unit (or fraction thereof, if
authorized by the Committee) substantially equivalent to a hypothetical share of
Common Stock, credited to a Participant and having a value at any time equal to
the Fair Market Value of a share of Common Stock (or such fraction thereof) at
such time.
(j) "Company" means U.S. Interactive, Inc. a Delaware corporation, or
any successor corporation.
(k) "Consultant" means any person or entity engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services to such
entity.
(l) "Covered Employee" means any person who is a "covered employee"
within the meaning of Section 162(m) of the Code.
(m) "Cumulative Net Income" means, in respect of any Performance
Period, the aggregate cumulative amount of the Adjusted Net Income for the
calendar or other fiscal years of the Company during such Performance Period.
(n) "Cumulative Net Income Per Share" means, in respect of any
Performance Period, the aggregate cumulative amount of the Annual Net Income Per
Share for the calendar or other fiscal years of the Company during such
Performance Period.
<PAGE>
(o) "Disability" shall mean permanent and total disability, as defined
in Section 22(e) of the Code.
(p) "Dividend Equivalent" means, in respect of a Common Stock
Equivalent and with respect to each dividend payment date for the Common Stock,
an amount equal to the cash dividend on one share of Common Stock payable on
such dividend payment date.
(q) "Employee" means any individual, who is on the active payroll of
the Company or a Subsidiary at the relevant time, but excluding any officer of
the Company and any member of the Board of Directors.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, including all rules and regulations
promulgated thereunder.
(s) "Fair Market Value" means, in respect of any date on or as of which
a determination thereof is being or to be made, the average of the high and low
per share sale prices of the Common Stock reported on the exchange on which such
shares are traded on such date (if the grant date is not a business trading day,
the determination shall be made based upon the relevant data for the next
preceding trading day), or, if the Common Stock was not traded on such date, the
average of the highest bid and the lowest ask per share price reported for such
date on the exchange on which such shares of Common Stock are traded. If the
Common Stock is not traded on an exchange, the Fair Market Value shall be that
determined by the Committee in good faith based on such factors as the members
thereof, in the exercise of their business judgment, consider relevant.
(t) "Incentive Stock Option" means any option to purchase shares of
Common Stock granted pursuant to the provisions of Section 6 of the Plan that is
intended to be and is specifically designated as an "incentive stock option"
within the meaning of Section 422 of the Code; provided, however, no option
shall be an incentive stock option unless this Plan is approved by the
stockholders of the Company within twelve (12) months after the effective date
of this Plan.
(u) "Non-Qualified Stock Option" means any option to purchase shares of
Common Stock granted pursuant to the provisions of Section 6 of the Plan that is
not an Incentive Stock Option.
(v) "Option Agreement" has the meaning ascribed thereto in Section 6(a)
of the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "Participant" means any Employee or Consultant of the Company or a
Subsidiary who receives a grant or Award under the Plan.
<PAGE>
(y) "Performance Grant" means a grant made pursuant to Section 9 of the
Plan, the Award of which is contingent on the achievement of specific
Performance Goals during a Performance Period, determined using a specific
Performance Measure, all as specified in the grant agreement relating thereto.
(z) "Performance Goals" mean, with respect to any applicable grant made
pursuant to the Plan, the one or more targets, goals or levels of attainment
required to be achieved in terms of the specified Performance Measure during the
specified Performance Period, all as set forth in the related grant agreement.
(aa) "Performance Measure" means, with respect to any applicable grant
made pursuant to the Plan, one or more of the criteria identified at Section
9(c) of the Plan selected by the Committee for the purpose of establishing, and
measuring attainment of, Performance Goals for a Performance Period in respect
of such grant, as provided in the related grant agreement.
(bb) "Performance Period" means, with respect to any applicable grant
made pursuant to the Plan, the one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select during which the
attainment of one or more Performance Goals will be measured to determine
whether, and the extent to which, a Participant is entitled to receive payment
of an Award pursuant to such grant.
(cc) "Plan" means this Amended and Restated 2000 Performance Incentive
Plan of the Company, as set forth herein and as hereafter amended from time to
time in accordance with the terms hereof.
(dd) "Restricted Stock" means shares of Common Stock issued pursuant to
a Restricted Stock Grant under Section 8 of the Plan so long as such shares
remain subject to the restrictions and conditions specified in the grant
agreement pursuant to which such Restricted Stock Grant is made.
(ee) "Restricted Stock Grant" means a grant made pursuant to the
provisions of Section 8 of the Plan.
(ff) "Stock Appreciation Right" means a grant in the form of a right to
benefit from the appreciation of the Common Stock made pursuant to Section 7 of
the Plan.
(gg) "Stock Option" means and includes any Non-Qualified Stock Option
and any Incentive Stock Option granted pursuant to Section 6 of the Plan.
(hh) "Subsidiary" means any corporation or entity in which the Company
directly or indirectly owns or controls 50% or more of the equity securities
issued by such corporation or entity having the power to vote for the election
of directors.
(ii) "Unit" means a bookkeeping entry used by the Company to record and
account for the grant, settlement or, if applicable, deferral of an Award until
such time as such Award is paid, cancelled, forfeited or terminated, as the case
may be, which, except as otherwise specified by the Committee, shall be equal to
one Common Stock Equivalent.
<PAGE>
3. EFFECTIVE DATE; TERM.
(a) Effective Date. The Plan shall be effective upon approval by the
Board of Directors. Nothing under this Plan shall effect the rights of any
person pursuant to any grant issued under the Plan as originally adopted.
(b) Term. The Plan shall remain in effect until December 31, 2019,
unless sooner terminated by the Board of Directors. Termination of the Plan
shall not affect grants and Awards then outstanding.
4. SHARES OF COMMON STOCK SUBJECT TO PLAN.
(a) Maximum Number of Shares Available for Issuance under the Plan. The
maximum aggregate number of shares of Common Stock which may be issued pursuant
to the Plan, subject to adjustment as provided in Section 4(b) of the Plan,
shall be one million five hundred thousand (1,500,000), subject to the
limitations set forth in Section 6(b) plus (i) any shares of Common Stock issued
under the Plan that are forfeited back to the Company or are cancelled, and (ii)
any shares of Common Stock that are tendered, whether by physical delivery or by
attestation, to the Company by a Participant as full or partial payment of the
exercise price of any Stock Option granted pursuant to the Plan, in connection
with the payment or settlement of any other grant or Award made pursuant to the
Plan, or in payment of any applicable withholding for federal, state, city,
local or foreign income, payroll or other taxes incurred in connection with the
exercise of any Stock Option or Stock Appreciation Right granted under the Plan
or the receipt or settlement of any other grant or Award under the Plan. The
shares of Common Stock which may be issued under the Plan may be authorized and
unissued shares or issued shares which have been reacquired by the Company. No
fractional share of the Common Stock shall be issued under the Plan. Awards of
fractional shares of the Common Stock, if any, shall be settled in cash.
(b) Adjustments upon Changes in Capital Structure. In the event of any
change in the capital structure, capitalization or Common Stock of the Company
such as a stock dividend, stock split, recapitalization, merger, consolidation,
split-up, combination or exchange of shares or other form of reorganization, or
any other change affecting the Common Stock, such proportionate adjustments, if
any, as the Board of Directors in its discretion may deem appropriate to reflect
such change shall be made with respect to: (i) the maximum number of shares of
Common Stock which may be (1) issued pursuant to the Plan, (2) the subject of
any type of grant or Award under the Plan, and (3) granted, Awarded or issued to
any Participant pursuant to any provision of the Plan; (ii) the number of shares
of Common Stock subject to any outstanding Stock Option, Stock Appreciation
Right or other grant or Award made to any Participant under the Plan; (iii) the
per share exercise price in respect of any outstanding Stock Options and Stock
Appreciation Rights; (iv) the number of shares of Common Stock and the number of
Units or the value of such Units, as the case may be, which are the subject of
grants and Awards then outstanding under the Plan; and (v) any other term or
condition of any grant affected by any such change.
<PAGE>
5. ADMINISTRATION.
(a) The Committee. The Plan shall be administered by the Committee to
be appointed from time to time by the Board of Directors and, except as provided
herein, comprised of not less than two of the then members of the Board of
Directors who qualify as "non-employee directors" within the meaning of Rule
16b-3 promulgated under the Exchange Act and as "outside directors" within the
meaning of Section 162(m) of the Code. Members of the Committee shall serve at
the pleasure of the Board of Directors. The Board of Directors may from time to
time remove members from, or add members to, the Committee. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business and the acts of a majority of the members present at any meeting at
which a quorum is present shall be the acts of the Committee. Any one or more
members of the Committee may participate in a meeting by conference telephone or
similar means where all persons participating in the meeting can hear and speak
to each other, which participation shall constitute presence in person at such
meeting. Action approved in writing by a majority of the members of the
Committee then serving shall be fully as effective as if the action had been
taken by unanimous vote at a meeting duly called and held. The Company shall
make grants and effect Awards under the Plan in accordance with the terms and
conditions specified by the Committee, which terms and conditions shall be set
forth in grant agreements and/or other instruments in such forms as the
Committee shall approve.
(b) Committee Powers. The Committee shall have full power and authority
to operate and administer the Plan in accordance with its terms. The powers of
the Committee include, but are not limited to, the power to: (i) select
Participants; (ii) establish the types of, and the terms and conditions of, all
grants and Awards made under the Plan, subject to any applicable limitations set
forth in, and consistent with the express terms of, the Plan; (iii) make grants
and pay or otherwise effect Awards subject to, and consistent with, the express
provisions of the Plan; (iv) establish Performance Goals, Performance Measures
and Performance Periods, subject to, and consistent with, the express provisions
of the Plan; (v) reduce the amount of any grant or Award; (vi) prescribe the
form or forms of grant agreements and other instruments evidencing grants and
Awards under the Plan; (vii) pay and to defer payment of Awards on such terms
and conditions, not inconsistent with the express terms of the Plan, as the
Committee shall determine; (viii) direct the Company to make conversions,
accruals and payments pursuant to the Plan; (ix) construe and interpret the Plan
and make any determination of fact incident to the operation of the Plan; (x)
promulgate, amend and rescind rules and regulations relating to the
implementation, operation and administration of the Plan; (xi) adopt such
modifications, procedures and subplans as may be necessary or appropriate to
comply with the laws of other countries with respect to Participants or
prospective Participants in such other countries; (xii) delegate to other
persons the responsibility for performing administrative or ministerial acts in
furtherance of the Plan; (xiii) engage the services of persons and firms,
including banks, consultants and insurance companies, in furtherance of the
Plan's activities; and (xiv) make all other determinations and take all other
actions as the Committee may deem necessary or advisable for the administration
and operation of the Plan. In making these determinations, the Committee shall
take into account any limitations on the issuance of grants and Awards that may
exist as a result of agreements entered into by the Company.
<PAGE>
(c) Committee's Decisions Final. Any determination, decision or action
of the Committee in connection with the construction, interpretation,
administration or application of the Plan, and of any grant agreement, shall be
final, conclusive and binding upon all Participants, and all persons claiming
through Participants, affected thereby.
(d) Administrative Accounts. For the purpose of accounting for Awards
deferred as to payment, the Company shall establish bookkeeping accounts
expressed in Units bearing the name of each Participant receiving such Awards.
Each account shall be unfunded, unless otherwise determined by the Committee in
accordance with Section 15(d) of the Plan.
(e) Certifications. In respect of each grant under the Plan to a
Covered Employee which the Committee intends to be "performance based
compensation" under Section 162(m) of the Code, the provisions of the Plan and
the related grant agreement shall be construed to confirm such intent, and to
conform to the requirements of Section 162(m) of the Code, and the Committee
shall certify in writing (which writing may include approved minutes of a
meeting of the Committee) that the applicable Performance Goal(s), determined
using the Performance Measure specified in the related grant agreement, was
attained during the relevant Performance Period at a level that equaled or
exceeded the level required for the payment of such Award in the amount proposed
to be paid and that such Award does not exceed any applicable Plan limitation.
6. STOCK OPTIONS.
(a) In General. Options to purchase shares of Common Stock may be
granted under the Plan and may be Incentive Stock Options or Non-Qualified Stock
Options. All Stock Options shall be subject to the terms and conditions of this
Section 6 and shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee shall
determine. Each Option granted hereunder to a Participant shall be embodied in a
written option agreement ("Option Agreement"), signed by the Participant and by
a duly authorized officer of the Company. Stock Options may be granted in
addition to, or in tandem with or independent of Stock Appreciation Rights or
other grants and Awards under the Plan. The Committee may grant Stock Options
that provide for the automatic grant of a replacement Stock Option if payment of
the exercise price and/or any related withholding taxes is made by tendering
(whether by physical delivery or by attestation) shares of Common Stock or by
having shares of Common Stock withheld by the Company. The replacement Stock
Option would cover the number of shares of Common Stock tendered or withheld,
would have a per share exercise price equal to at least 100% of the Fair Market
Value of a share of Common Stock on the date of the exercise of the original
Stock Option, and would have such other terms and conditions as may be specified
by the Committee and set forth in the related grant agreement.
<PAGE>
(b) Eligibility and Limitations. Any Employee of the Company or a
Subsidiary may be granted Stock Options. Consultants may be granted
Non-Qualified Stock Options only. The Committee shall determine, in its
discretion, the persons or entities to whom Stock Options will be granted, the
timing of such grants, and the number of shares of Common Stock subject to each
Stock Option granted; provided, that (i) the maximum aggregate number of shares
of Common Stock which may be issued and delivered upon the exercise of
Non-Qualified Stock Options granted under the Plan shall be one million five
hundred thousand (1,500,000), (ii) the maximum aggregate number of shares of
Common Stock which may be issued and delivered upon the exercise of Incentive
Stock Options shall be one million (1,000,000), (iii) the maximum number of
shares of Common Stock in respect of which Stock Options may be granted to any
Employee or Consultant during any calendar year shall be 400,000, and (iv) in
respect of Incentive Stock Options, the aggregate Fair Market Value (determined
as of the date the Incentive Stock Option is granted) of the shares of Common
Stock with respect to which an Incentive Stock Option becomes exercisable for
the first time by a Participant during any calendar year shall not exceed
$100,000, or such other limit as may be required by the Code, except that, any
Stock Option intended to qualify as an Incentive Stock Option that cannot be
exercised as such because of this limitation shall be converted into and
exercised as a Non-Qualified Stock Option.
In no event shall any Stock Option or Stock Appreciation Right be
granted to a Participant in exchange for the Participant's agreement to the
cancellation of one or more Stock Options or Stock Appreciation Rights then held
by such Participant if the exercise price of the new grant is lower than the
exercise price of the grant to be cancelled and in no event shall any Stock
Option or Stock Appreciation Right be amended to reduce the option price, except
as contemplated by Section 4(b) of the Plan.
(c) Option Exercise Price. The per share exercise price of each Stock
Option granted under the Plan shall be determined by the Committee prior to or
at the time of grant, but in no event shall the per share exercise price of any
Stock Option be less than 100% of the Fair Market Value of the Common Stock on
the date of the grant of such Stock Option. The exercise price of an Incentive
Stock Option issued to any Employee owning more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company, as
determined under Code ss. 424(d) shall be 110% of the Fair Market Value of the
Common Stock on the date of the grant of such Stock Option.
(d) Option Term. The term of each Stock Option shall be fixed by the
Committee; except that in no event shall the term of any Incentive Stock Option
exceed ten years after the date such Incentive Stock Option is granted, or five
years in the case of an Employee owning more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, as determined
under Code ss. 424(d). Any Option granted more than 10 years from the effective
date of the Plan will be a Non-Qualified Stock Option.
(e) Exercisability. A Stock Option shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at the date of grant. Unless the Committee specifies otherwise in the
Option Agreement, every Option granted pursuant to this Plan will vest and
become exercisable with respect to 25% of the Common Stock issuable upon
exercise thereof (rounded to the nearest whole share; rounded up in the event of
a half-share) on each of the first, second and third anniversaries of the date
of grant and the remainder shall vest on the fourth anniversary of the date of
grant.
<PAGE>
(f) Early Expiration upon Termination of Relationship.
(i) Employees. Except as otherwise provided in the applicable Option
Agreement, upon termination of an Employee's employment with the Company or its
Subsidiaries for death, Disability or termination without Cause by the Company
or a Subsidiary, all Options or portions thereof held by such Employee that are
not vested and exercisable on the date of such termination shall expire and be
forfeited as of such date and all vested Options held by such Employee shall
expire to the extent not theretofore exercised at the end of third month (one
year if termination is caused by Employee's death or Disability) following the
date of such termination. Upon voluntary termination of an Employee's employment
or termination for Cause of an Employee's employment by the Company or a
Subsidiary, all unexercised Options, whether or not vested, shall terminate
immediately upon the earlier to occur of the date the Employee receives notice
of the termination or the actual date of termination.
(ii) Consultants. Except as otherwise provided in the applicable
Option Agreement, upon termination of a Consultant's relationship with the
Company or its Subsidiaries for any reason, as determined by the Company, all
Options or portions thereof held by such Consultant that are not vested and
exercisable on the date of such termination shall expire and be forfeited as of
such date and all vested Options held by such Consultant shall expire to the
extent not theretofore exercised at the end of third month following the date of
such termination.
(g) Method of Exercise. A Stock Option may be exercised, in whole or in
part, by giving written notice of exercise to the Company specifying the number
of shares of Common Stock to be purchased. Such notice shall be accompanied by
payment in full of the purchase price, plus any required withholding taxes, in
cash or, if permitted by the terms of the related grant agreement or otherwise
approved in advance by the Committee, in shares of Common Stock already owned by
the Participant valued at the Fair Market Value of the Common Stock on the date
of exercise. The Committee may also permit Participants, either on a selective
or aggregate basis, to simultaneously exercise Stock Options and sell the shares
of Common Stock thereby acquired pursuant to a brokerage or similar arrangement
approved in advance by the Committee and to use the proceeds from such sale to
pay the exercise price and withholding taxes.
<PAGE>
7. STOCK APPRECIATION RIGHTS.
(a) In General. Stock Appreciation Rights in respect of shares of
Common Stock may be granted under the Plan alone, in tandem with, in addition to
or independent of a Stock Option or other grant or Award under the Plan. A Stock
Appreciation Right entitles a Participant to receive an amount equal to the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise over the Fair Market Value of a share of Common Stock on the date of
grant of the Stock Appreciation Right, or such other higher price as may be set
by the Committee, multiplied by the number of shares of Common Stock with
respect to which the Stock Appreciation Right shall have been exercised.
(b) Eligibility And Limitations. Any Employee or Consultant of the
Company or a Subsidiary selected by the Committee may be granted Stock
Appreciation Rights. The Committee shall determine, in its discretion, the
persons or entities to whom Stock Appreciation Rights will be granted, the
timing of such grants and the number of shares of Common Stock in respect of
which each Stock Appreciation Right is granted; provided that (i) the maximum
aggregate number of shares of Common Stock in respect of which Stock
Appreciation Rights may be granted shall be one million, (ii) the maximum
aggregate number of shares of Common Stock which may be issued and delivered in
payment or settlement of Stock Appreciation Rights shall be 500,000, and (iii)
the maximum number of shares of Common Stock in respect of which Stock
Appreciation Rights may be granted to any person or entity during any calendar
year shall be 100,000.
(c) Exercisability. A Stock Appreciation Right may be exercised by a
Participant at such time or times and in such manner as shall be authorized by
the Committee and set forth in the related grant agreement, except that in no
event shall a Stock Appreciation Right be exercisable within the first six
months after the date of grant. The Committee may provide that a Stock
Appreciation Right shall be automatically exercised on one or more specified
dates.
(i) Employees. Except as otherwise provided in the applicable
Stock Appreciation Right grant agreement, no Stock Appreciation Right may be
exercised by an Employee unless the holder thereof is at the time of exercise an
Employee and has been continuously an Employee since the date the Stock
Appreciation Right was granted.
(ii) Consultants. Except as otherwise provided in the
applicable Stock Appreciation Right grant agreement, no Stock Appreciation Right
may be exercised by a Consultant unless the holder thereof is at the time of
exercise a Consultant and has been continuously a Consultant since the date the
Stock Appreciation Right was granted.
<PAGE>
(d) Exercise; Form of Payment. A Stock Appreciation Right may be
exercised, in whole or in part, by giving the Company a written notice
specifying the number of shares of Common Stock in respect of which the Stock
Appreciation Right is to be exercised. Stock Appreciation Rights may be paid
upon exercise in cash, in shares of Common Stock, or in any combination of cash
and shares of Common Stock as determined by the Committee.
8. RESTRICTED STOCK GRANTS AND AWARDS.
(a) In General. A Restricted Stock Grant is the issuance of shares of
Common Stock in the name of an Employee or Consultant, which issuance is subject
to such terms and conditions as the Committee shall deem appropriate, including,
without limitation, restrictions on the sale, assignment, transfer or other
disposition of such shares and the requirement that the Participant forfeit such
shares back to the Company (i) upon termination of employment for specified
reasons within a specified period of time, as applicable, (ii) if any specified
Performance Goals are not achieved during a specified Performance Period, or
(iii) if such other conditions as the Committee may specify are not satisfied.
(b) Eligibility And Limitations. Any Employee or Consultant of the
Company or a Subsidiary selected by the Committee may receive a Restricted Stock
Grant. The Committee, in its sole discretion, shall determine whether a
Restricted Stock Grant shall be made, the Participant to receive the Restricted
Stock Grant, and the conditions and restrictions imposed on the Restricted Stock
Grant. The maximum number of shares of Common Stock which may be issued as
Restricted Stock under the Plan shall be one million. The maximum number of
shares of Common Stock which may be issued to any Participant as Restricted
Stock during any calendar year shall not exceed 50,000. The maximum amount any
Participant may receive as a Restricted Stock Grant in any calendar year shall
not exceed $500,000, determined using the Fair Market Value of such Restricted
Stock Grant as at the date of the grant thereof.
(c) Restriction Period.
(i) Except as otherwise provided in the related grant
agreement, Restricted Stock Grants shall provide:
(1) in order for an Employee to receive shares of
Common Stock free of restrictions, the Employee must remain in the employment of
the Company or its Subsidiaries for a period of not less than four years,
commencing on the date of the grant and ending on such later date or dates as
the Committee designates at the time of the grant (the "Employee Restriction
Period"); or
<PAGE>
(2) in order for a Consultant to receive shares of
Common Stock free of restrictions, the Consultant must remain must remain a
Consultant to the Company or its Subsidiaries for a period of not less than four
years, commencing on the date of the grant and ending on such later date or
dates as the Committee designates at the time of the grant (the "Consultant
Restriction Period" and, together with the "Employee Restriction Period", the
"Restriction Period").
(ii) The Committee, in its sole discretion, may provide for
the lapse of restrictions in installments during the Restriction Period. The
Committee may also establish one or more Performance Goals that are required to
be achieved during one or more Performance Periods within the Restriction Period
as a condition to the lapse of the restrictions.
(d) Restrictions. The following restrictions and conditions shall apply
to each Restricted Stock Grant during the Restriction Period: (i) the
Participant shall not be entitled to delivery of the shares of the Common Stock;
(ii) the Participant may not sell, assign, transfer, pledge, hypothecate,
encumber or otherwise dispose of or realize on the shares of Common Stock
subject to the Restricted Stock Grant; and (iii) the shares of the Common Stock
issued as Restricted Stock shall be forfeited to the Company if the Participant
for any reason ceases to be an Employee or Consultant, as applicable, prior to
the end of the Restriction Period, except due to circumstances specified in the
related grant agreement or otherwise approved by the Committee. The Committee
may in, its sole discretion, include such other restrictions and conditions as
it may deem appropriate.
(e) Payment. Upon expiration of the Restriction Period and if all
conditions have been satisfied and any applicable Performance Goals attained,
the shares of the Restricted Stock will be made available to the Participant,
subject to satisfaction of applicable withholding tax requirements, free of all
restrictions except as may be required to comply with federal and state
securities laws, as determined by the Committee in its sole discretion;
provided, that the Committee may, in its discretion, require (i) that the
Restricted Stock be retained by the Company, and (ii) that the Participant
receive a cash payment in lieu of unrestricted shares of Common Stock.
(f) Rights as a Shareholder. A Participant shall have, with respect to
shares of Restricted Stock, all of the rights of a shareholder of the Company,
including the right to vote the shares and receive any cash dividends paid
thereon. Stock dividends distributed with respect to shares of Restricted Stock
shall be treated as additional shares under the Restricted Stock Grant and shall
be subject to the restrictions and other terms and conditions set forth therein.
<PAGE>
9. PERFORMANCE GRANTS AND AWARDS.
(a) Eligibility and Terms. The Committee may grant Employees or
Consultants of the Company and its Subsidiaries the prospective contingent
right, expressed in Units, to receive payments of shares of Common Stock, cash
or any combination thereof, with each Unit equivalent in value to one share of
Common Stock, or equivalent to such other value or monetary amount as may be
designated or established by the Committee ("Performance Grants"), based upon
Company performance over a specified Performance Period. The Committee shall, in
its sole discretion, determine the Participants eligible to receive Performance
Grants. At the time each Performance Grant is made, the Committee shall
establish the Performance Period, the Performance Measure and the targets to be
attained relative to such Performance Measure (the "Performance Goals") in
respect of such Performance Grant. The number of shares of Common Stock and/or
the amount of cash earned and payable in settlement of a Performance Grant shall
be determined at the end of the Performance Period (a "Performance Award").
(b) Limitations on Grants and Awards. The maximum number of shares of
Common Stock which may be issued pursuant to Performance Grants shall be
500,000. The maximum number of shares which may be the subject of Performance
Grants made to any Participant in respect of any Performance Period or during
any calendar year shall be 50,000. The maximum amount any Participant may
receive during any calendar year as Performance Awards pursuant to Performance
Grants shall not exceed $1 million, determined using the Fair Market Value of
such Performance Awards as of the last day of the applicable Performance Period
or Periods or as of the date or dates of the payment thereof, whichever is
higher.
(c) Performance Goals, Performance Measures and Performance Periods.
Each Performance Grant shall provide that, in order for a Participant to receive
an Award of all or a portion of the Units subject to such Performance Grant, the
Company must achieve certain Performance Goals over a designated Performance
Period having a minimum duration of one year, with attainment of the Performance
Goals determined using a specific Performance Measure. The Performance Goals and
Performance Period shall be established by the Committee in its sole discretion.
The Committee shall establish a Performance Measure for each Performance Period
for determining the portion of the Performance Grant which will be earned or
forfeited based on the extent to which the Performance Goals are achieved or
exceeded. In setting Performance Goals, the Committee may use a Performance
Measure based on any one, or on any combination, of the following Company
performance factors as the Committee deems appropriate: (i) Cumulative Net
Income Per Share; (ii) Cumulative Net Income; (iii) return on sales; (iv) total
shareholder return; (v) return on assets; (vi) economic value added; (vii) cash
flow, (viii) return on equity; and (ix) cumulative operating income (which shall
equal consolidated sales minus cost of goods sold and selling, administrative
and general expense). Performance Goals may include minimum, maximum and target
levels of performance, with the size of Performance Award based on the level
attained. Once established by the Committee and specified in the grant
agreement, and if and to the extent provided in or required by the grant
agreement, the Performance Goals and the Performance Measure in respect of any
Performance Grant (or any Restricted Stock Grant or Stock-Based Grant that
requires the attainment of Performance Goals as a condition to the Award) shall
not be changed. The Committee may, in its discretion, eliminate or reduce (but
not increase) the amount of any Performance Award (or Restricted Stock or
Stock-Based Award) that otherwise would be payable to a Participant upon
attainment of the Performance Goal(s).
<PAGE>
(d) Form of Grants. Performance Grants may be made on such terms and
conditions not inconsistent with the Plan, and in such form or forms, as the
Committee may from time to time approve. Performance Grants may be made alone,
in addition to in tandem with, or independent of other grants and Awards under
the Plan. Subject to the terms of the Plan, the Committee shall, in its
discretion, determine the number of Units subject to each Performance Grant made
to a Participant and the Committee may impose different terms and conditions on
any particular Performance Grant made to any Participant. The Performance Goals,
the Performance Period or Periods, and the Performance Measure applicable to a
Performance Grant shall be set forth in the relevant grant agreement.
(e) Payment of Awards. Each Participant shall be entitled to receive
payment in an amount equal to the aggregate Fair Market Value (if the Unit is
equivalent to a share of Common Stock), or such other value as the Committee
shall specify, of the Units earned in respect of such Performance Award. Payment
in settlement of a Performance Award may be made in shares of Common Stock, in
cash, or in any combination of Common Stock and cash, and at such time or times,
as the Committee, in its discretion, shall determine.
10. OTHER STOCK-BASED GRANTS AND AWARDS.
(a) In General. The Committee may make other grants and Awards pursuant
to which Common Stock is, or in the future may be, acquired by Participants, and
other grants and Awards to Participants denominated in Common Stock Equivalents
or other Units ("Stock-Based Grants"). Such Stock-Based Grants may be granted
alone or in addition to, in tandem with, or independent of any other grant made
or Award effected under the Plan.
(b) Eligibility And Terms. The Committee may make Stock-Based Grants to
Employees or Consultants of the Company and its Subsidiaries. Subject to the
provisions of the Plan, the Committee shall have authority to determine the
Participant to whom, and the time or times at which, Stock-Based Grants will be
made, the number of shares of Common Stock, if any, to be subject to or covered
by each Stock-Based Grant, and any and all other terms and conditions of each
Stock-Based Grant.
(c) Limitations. The aggregate number of shares of Common Stock Issued
to Participants pursuant to Stock-Based Grants made and Awards effected pursuant
to this Section 10 shall not exceed 500,000. No Participant shall receive more
than 50,000 shares of Common Stock in settlement of Stock-Based Grants
("Stock-Based Awards") during any calendar year. The maximum amount any
Participant may receive in Stock-Based Awards during any calendar year shall not
exceed $1 million, determined using the Fair Market Value of any shares of
Common Stock delivered in payment of the Stock-Based Awards on the date or dates
of the payment thereof.
<PAGE>
(d) Form of Grants; Payment of Awards. Stock-Based Grants may be made
in such form or forms and on such terms and conditions, including the attainment
of specific Performance Goals, as the Committee, in its discretion, shall
approve. Payment of Stock-Based Awards may be made in cash, in shares of Common
Stock, or in any combination of cash and shares of Common Stock, and at such
time or times, as the Committee shall determine.
11. WITHHOLDING.
The Committee may, in its discretion, and subject to its prior approval
in the case of any Participant required to file reports pursuant to Section
16(a) of the Exchange Act, at any time a distribution is made under the Plan,
whether in cash or in shares, or at the time any Option is exercised, withhold
from such distribution or shares issuable upon the exercise of an Option, any
amount necessary to satisfy federal, foreign, state and local withholding
requirements with respect to such distribution or exercise of such Option. Such
withholding may be satisfied at the Committee's option either by cash or
withholding of shares. To the extent that any such withholding requirements are
not satisfied, each Participant shall pay to the Company any federal, foreign,
state or local taxes of any kind required by law to be withheld with respect to
a distribution under the Plan or exercise of an Option.
12. DEFERRALS.
The Committee may, whether at the time of grant or at anytime
thereafter prior to payment or settlement, require a Participant to defer, or
permit (subject to such conditions as the Committee may from time to time
establish) a Participant to elect to defer, receipt of all or any portion of any
payment of cash or shares of Common Stock that would otherwise be due to such
Participant in payment or settlement of any Award under the Plan, other than
Incentive Stock Options. If any such deferral is required by the Committee (or
is elected by the Participant with the permission of the Committee), the
Committee shall establish rules and procedures for such payment deferrals. The
Committee may provide for the payment or crediting of interest, at such rate or
rates as it shall in its discretion deem appropriate, on such deferred amounts
credited in cash and the payment or crediting of dividend equivalents in respect
of deferred amounts credited in Common Stock Equivalents. Deferred amounts may
be paid in a lump sum or in installments in the matter and to the extent
permitted, and in accordance with rules and procedures established, by the
Committee.
<PAGE>
13. NON-TRANSFERABILITY OF GRANTS AND AWARDS.
No grant or Award under the Plan, and no right or interest therein,
shall be (i) assignable, alienable or transferable by a Participant, except by
will or the laws of descent and distribution, or (ii) subject to any obligation,
or the lien or claims of any creditor, of any Participant, or (iii) subject to
any lien, encumbrance or claim of any party made in respect of or through any
Participant, however arising. During the lifetime of a Participant, Stock
Options and Stock Appreciation Rights are exercisable only by, and shares of
Common Stock issued upon the exercise of Stock Options and Stock Appreciation
Rights or in settlement of other Awards will be issued only to, and other
payments in settlement of any Award will be payable only to, the Participant or
his or her legal representative. The Committee may, in its sole discretion,
authorize written designations of beneficiaries and authorize Participants to
designate beneficiaries with the authority to exercise Stock Options and Stock
Appreciation Rights granted to a Participant in the event of his or her death.
Notwithstanding the foregoing, the Committee may, in its sole discretion and on
and subject to such terms and conditions as it shall deem appropriate, which
terms and conditions shall be set forth in the related grant agreement: (i)
authorize a Participant to transfer all or a portion of any Non-Qualified Stock
Option or Stock Appreciation Right, as the case may be, granted to such
Participant; provided, that in no event shall any transfer be made to any person
or persons other than such Participant's spouse, children or grandchildren, or a
trust for the exclusive benefit of one or more such persons, which transfer must
be made as a gift and without any considerations; and (ii) provide for the
transferability of a particular grant or Award pursuant to a qualified domestic
relations order. All other transfers and any retransfer by any permitted
transferee are prohibited and any such purported transfer shall be null and
void. Each Stock Option or Stock Appreciation Right which becomes the subject of
permitted transfer (and the Participant to whom it was granted by the Company)
shall continue to be subject to the same terms and conditions as were in effect
immediately prior to such permitted transfer. The Participant shall remain
responsible to the Company for the payment of all withholding taxes incurred as
a result of any exercise of such Stock Option or Stock Appreciation Right. In no
event shall any permitted transfer of a Stock Option or Stock Appreciation Right
create any right in any party in respect of any Stock Option, Stock Appreciation
Right or other grant or Award, other than the rights of the qualified transferee
in respect of such Stock Option or Stock Appreciation Right specified in the
related grant agreement.
14. CHANGE IN CONTROL.
(a) Effect On Grants. In the event of a Change in Control (as defined
below) of the Company, the Board of Directors, in its sole discretion, may
provide for accelerated exercise and/or vesting of Stock Options, Stock
Appreciation Rights and Restricted Stock Grants, for removal of transfer
restrictions, and/or that Performance Grants and other Stock-Based Grants shall
be deemed to have been fully earned, at the maximum amount of the award
opportunity specified in the grant agreement, as of the date of the Change in
Control.
<PAGE>
(b) Change In Control Defined. A "Change in Control" of the Company
shall occur when: (i) any Acquiring Person (other than the Company, any
Subsidiary, any employee benefit plan of the Company or of any Subsidiary, or
any person or entity organized, appointed or established by the Company or a
Subsidiary for or pursuant to the terms of any such plans), alone, or together
with its Affiliates and Associates, shall become the beneficial owner of
twenty-five percent (25%) or more of the shares of Common Stock then outstanding
(except pursuant to an offer for all outstanding shares of Common Stock at a
price and upon such terms and conditions as a majority of the Continuing
Directors determines to be in the best interest of the Company and its
shareholders); or (ii) the shareholders of the Company approve a definitive
agreement for a merger or consolidation involving the Company which would result
in the Common Stock outstanding immediately prior to such merger or
consolidation continuing to represent (whether by remaining outstanding or by
being converted into voting securities of the surviving entity) less than fifty
percent (50%) of the combined voting power of the Company and such other entity
outstanding immediately after such merger or consolidation; or (iii) the
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company; or (iv) the Continuing Directors
no longer constitute a majority of the Board of Directors. "Acquiring Person"
means any person (any individual, firm, corporation or other entity) who or
which, together with all its Affiliates and Associates, shall be the beneficial
owner of a substantial block of Common Stock. "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 under the
Exchange Act. "Continuing Director" means any individual who is a member of the
Board of Directors, while such individual is a member of the Board of Directors,
who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board of Directors prior to the
occurrence of a Change in Control, and any successor of a Continuing Director,
while such successor is a member of the Board of Directors, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and is recommended or elected to succeed the Continuing Director by a
majority of the Continuing Directors.
15. AMENDMENT, SUSPENSION AND TERMINATION.
The Board or the Committee may suspend or terminate the Plan or any
portion thereof at any time and may amend it from time to time in such respects
as the Board or the Committee may deem advisable; provided, however, that no
such amendment shall be made without stockholder approval to the extent such
approval is required by law, agreement or the rules of any exchange upon which
the Common Stock is listed, and no such amendment, suspension or termination
shall impair the rights of Participants under outstanding Options without the
consent of the Participants affected thereby, except as otherwise provided
herein.
