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EXHIBIT 10.22
NOVAMED EYECARE, INC.
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
(as of May 17, 2000)
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TABLE OF CONTENTS
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Page
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ARTICLE I ESTABLISHMENT.............................. A-3
ARTICLE II DEFINITIONS................................ A-3
ARTICLE III ADMINISTRATION............................. A-6
3.1 Committee Structure and Authority.......... A-6
ARTICLE IV SHARES SUBJECT TO PLAN..................... A-8
4.1 Number of Shares........................... A-8
4.2 Release of Shares.......................... A-8
4.3 Restrictions on Shares..................... A-8
4.4 Shareholder Rights......................... A-9
4.5 Anti-Dilution.............................. A-9
ARTICLE V ELIGIBILITY................................ A-9
5.1 Eligibility................................ A-9
ARTICLE VI OPTIONS.................................... A-9
6.1 General.................................... A-9
6.2 Grant...................................... A-10
6.3 Terms and Conditions....................... A-10
6.4 Termination by Reason of Death............. A-11
6.5 Termination by Reason of Disability........ A-11
6.6 Other Termination.......................... A-11
6.7 Cashing-Out of Options..................... A-11
ARTICLE VII CHANGE IN CONTROL PROVISIONS............... A-12
7.1 Impact of Event............................ A-12
7.2 Definition of Change in Control............ A-12
7.3 Change in Control Price.................... A-12
ARTICLE VIII MISCELLANEOUS.............................. A-13
8.1 Amendments and Termination................. A-13
8.2 Unfunded Status of Plan.................... A-13
8.3 Limits on Transferability.................. A-13
8.4 Status of Options Under Code Section 162(m)... A-13
8.5 General Provisions......................... A-13
8.6 Mitigation of Excise Tax................... A-15
Options in Substitution for Options Granted
8.7 by Other Entities.......................... A-15
8.8 Procedure for Adoption..................... A-15
8.9 Procedure for Withdrawal................... A-15
8.10 Delay...................................... A-15
8.11 Headings................................... A-15
8.12 Severability............................... A-15
8.13 Successors and Assigns..................... A-16
8.14 Entire Agreement........................... A-16
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NOVAMED EYECARE, INC.
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
ARTICLE I
ESTABLISHMENT
In May 1999, NovaMed Holdings Inc., an Illinois corporation merged with and
into NovaMed Eyecare, Inc., a Delaware corporation (the "Company"). The Plan
(as defined herein) was originally established by NovaMed Holdings Inc. on
December 20, 1996 (i) to replace and substitute for, and assume certain options
granted under, the NovaMed Eyecare Management, LLC Equity Incentive Plan ("LLC
Plan") and (ii) to authorize new stock options, subject to the terms and
conditions of the Plan and any Agreement. In May 1999, the Company amended the
Plan to, among other things, (i) authorize new stock options subject to the
terms and conditions of the Plan and any Agreement and (ii) provide that, upon
the consummation of an initial public offering of equity securities of the
Company, (a) options previously granted under the Plan to purchase shares of
Series A Preferred Stock and Series B Preferred Stock shall instead represent
options to purchase a like number of shares of Common Stock and (b) there shall
no longer be reserved and available for distribution pursuant to the Plan any
options to purchase shares of Series A Preferred Stock or Series B Preferred
Stock. In September 1999, the Company amended and restated the Plan to (i)
reflect the merger of NovaMed Holdings Inc. with and into NovaMed Eyecare,
Inc., (ii) reflect the consummation of the Company's initial public offering of
equity securities and (iii) incorporate all prior amendments to the Plan. This
Plan is amended and restated effective May 17, 2000, to authorize new stock
options, subject to the terms and conditions of the Plan and any Agreement. The
purpose of the Plan is to promote the overall financial objectives of the
Company, its shareholders and its Affiliates by motivating those persons
selected to participate in the Plan (which shall include those persons with
outstanding options under the LLC Plan) to achieve long-term growth in the
shareholder equity in the Company and by retaining the association of those
individuals who are instrumental in achieving this growth.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
"Affiliate" means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
association or other entity (other than the Company) that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, the Company, including, without limitation, any
shareholder of an affiliated group of which the Company is a common parent
corporation as provided in Section 1504 of the Code.
"Agreement" or "Option Agreement" means, individually or collectively, any
agreement entered into pursuant to the Plan pursuant to which an Option is
granted to a Participant.
"Beneficiary" means the person, persons, trust or trusts which have been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under
the Plan upon such Participant's death or to which Options are transferred if
and to the extent permitted hereunder. If, upon a Participant's death, there is
no designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means person, persons, trust or trust entitled by will or the laws
of descent and distribution to receive such benefits.
"Board of Directors" or "Board" means the Board of Directors of the Company.
"Cause" means, for purposes of whether and when a Participant has incurred a
Termination of Employment for Cause, any act or omission which permits the
Company or an Affiliate to terminate the
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Participant's employment with the Company or an Affiliate for "cause" as
defined in such agreement or arrangement, or in the event there is no such
agreement or arrangement or the agreement or arrangement does not define the
term "cause" or a substantially equivalent term, then Cause means, unless
otherwise defined in the Option Agreement with respect to the corresponding
Option:
(a) any act or failure to act deemed to constitute cause under the
Company's or an Affiliate's established practices, policies or guidelines
applicable to the Participant;
(b) breach of a covenant made by the Participant in conjunction with the
grant of an Option or the transfer of Shares hereunder;
(c) the Participant's gross negligence in the performance of his duties
or material failure or willful refusal to perform his duties;
(d) the determination by the Committee in the exercise of its reasonable
judgment that Participant has committed an act that (i) negatively affects
the Company's or Affiliate's business or reputation or (ii) indicates
alcohol or drug abuse by Participant that adversely affects his performance
hereunder; or
(e) the determination by the Committee in the exercise of its reasonable
judgment that Participant has committed an act or acts constituting a
felony or other act involving dishonesty, disloyalty or fraud against the
Company or an Affiliate.
"Change in Control" and "Change in Control Price" have the meanings set
forth in Sections 7.2 and 7.3, respectively.
"Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, any Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.
"Commission" means the Securities and Exchange Commission or any successor
agency.
"Committee" means the person or persons appointed to administer the Plan,
as further described herein.
"Common Stock" means the regular voting common stock, $0.01 par value per
share, of the Company, whether presently or hereafter issued, and any other
stock or security resulting from adjustment thereof as described hereinafter
or the equity of any successor to the Company which is designated for the
purposes of this Plan.
"Company" means NovaMed Eyecare, Inc., a Delaware corporation, and includes
any successor or assignee entity or entities into which the Company may be
merged, changed or consolidated; any entity for whose securities the
securities of the Company shall be exchanged; and any assignee of or successor
to substantially all of the assets of the Company.
"Covered Employee" means a Participant who is a "covered employee" within
the meaning of Section 162(m) of the Code.
"Disability" means a mental or physical illness that entitles the
Participant to receive benefits under the long term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan
or the Participant is not an employee of the Company or an Affiliate, a mental
or physical illness that renders a Participant totally and permanently
incapable of performing the Participant's duties for the Company or an
Affiliate. Notwithstanding the foregoing, a Disability will not qualify under
this Plan if it is the result of (i) a willfully self-inflicted injury or
willfully self-induced sickness; or (ii) an injury or disease contracted,
suffered, or incurred, while participating in a criminal offense. The
determination of Disability will be made by the Committee. The determination
of Disability for purposes of this Plan will not be construed to be an
admission of disability for any other purpose.
"Effective Date" means December 20, 1996.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Fair Market Value" means, unless otherwise determined by the Committee, the
closing sale price per share reported on a consolidated basis for stock listed
on the principal stock exchange or market on which Common Stock is traded on
the date as of which such value is being determined or, if there is no sale on
that date, then on the last previous day on which a sale was reported.
"Grant Date" means the date as of which an Option is granted pursuant to the
Plan.
"Incentive Stock Option" means an Option to purchase shares of Common Stock
granted under this Plan which satisfies the requirements of Section 422 of the
Code.
"LLC Plan" means the NovaMed Eyecare Management, LLC Equity Incentive Plan,
which plan was terminated in connection with the establishment of this Plan.
"NASDAQ" means the Nasdaq Stock Market, including the Nasdaq National
Market.
"Nonqualified Stock Option" means an Option to purchase Shares granted under
this Plan, the taxation of which is pursuant to Section 83 of the Code.
"Option" or "Stock Option" means an option or right granted to a Participant
(under Article VI hereof) to purchase Shares at a specified price during
specified time periods.
"Option Period" means the period during which an Option shall be exercisable
in accordance with the related Agreement and Article VI.
"Option Price" means the price at which Shares may be purchased under an
Option as provided in Section 6.3.
"Participant" means a person who satisfies the eligibility conditions of
Article V and to whom an Option has been granted by the Committee under this
Plan, and in the event a Representative is appointed for a Participant or
another person becomes a Representative, then the term "Participant" shall mean
such Representative. The term shall also include a trust for the benefit of the
Participant, a partnership the interest of which is held by or for the benefit
of the Participant, the Participant's parents, spouse or descendants, or a
custodian under a uniform gifts to minors act or similar statute for the
benefit of the Participant's descendants, to the extent permitted by the
Committee and not inconsistent with the Rule 16b-3 or the status of the Option
as an Incentive Stock Option, to the extent intended. Notwithstanding the
foregoing, the term "Termination of Employment" shall mean the Termination of
Employment of the person to whom the Option was originally granted.
"Plan" means the NovaMed Eyecare, Inc. Amended and Restated Stock Incentive
Plan, as herein set forth and as may be amended from time to time.
"Representative" means (a) the person or entity acting as the executor or
administrator of a Participant's estate pursuant to the last will and testament
of a Participant or pursuant to the laws of the jurisdiction in which the
Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or
(d) any person to whom an Option has been transferred with the permission of
the Committee or by operation of law; provided that only one of the foregoing
shall be the Representative at any point in time as determined under applicable
law and recognized by the Committee. Any Representative shall be subject to all
terms and conditions applicable to the Participant.
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"Retirement" means the Participant's Termination of Employment after
attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company or an Affiliate, if the Participant is covered by such plan, and if
the Participant is not covered by such a plan, then age 65, or age 55 with the
accrual of 10 years of service.
"Rule 16b-3" means Rule 16b-3, as from time to time in effect and applicable
to the Plan and Participants, promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock,
$0.01 par value, formerly authorized and designated by the Company for purposes
of the Plan.
"Series B Preferred Stock" means the Series B Convertible Preferred Stock,
$0.01 par value, of the Company, formerly authorized and designated by the
Company for purposes of the Plan.
"Shares" means shares of Common Stock.
"Termination of Employment" means the occurrence of any act or event,
whether pursuant to an employment agreement or otherwise, that actually or
effectively causes or results in the person's ceasing, for whatever reason, to
be an officer, independent contractor, board member, consultant, director or
employee of the Company or of any Affiliate, or to be an officer, independent
contractor, board member, consultant, director or employee of any entity that
provides services to the Company or an Affiliate, including, without
limitation, death, Disability, dismissal, severance at the election of the
Participant, Retirement, or severance as a result of the discontinuance,
liquidation, sale or transfer by the Company or its Affiliates of all
businesses owned or operated by the Company or its Affiliates. With respect to
any person who is not an employee with respect to the Company or an Affiliate,
the Agreement will establish what act or event shall constitute a Termination
of Employment for purposes of the Plan. A transfer of employment from the
Company to an Affiliate, or from an Affiliate to the Company, shall not be a
Termination of Employment, unless expressly determined by the Committee. A
Termination of Employment shall occur for an employee who is employed by an
Affiliate if the Affiliate shall cease to be an Affiliate and the Participant
does not immediately thereafter become an employee of the Company or an
Affiliate.
"Voluntary Termination of Employment" means a Termination of Employment at
the election of the Participant, including, with limitation, resignation by the
Participant, but excluding Retirement.
In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. The Plan shall be administered by the
Committee, which shall be composed of one or more members of the Board of
Directors, each of whom is a "non-employee director" within the meaning of Rule
16b-3 of the Exchange Act and an "outside director" for purposes of the
deduction of compensation under Section 162(m) of the Code. The Committee shall
be the Compensation Committee of the Board of Directors, unless such committee
does not exist or the Board establishes a committee whose purpose is the
administration of this Plan. In the absence of an appointment of a Compensation
Committee or another specific committee, the Board shall constitute the
Committee. A majority of the Committee shall constitute a quorum at any meeting
thereof (including by telephone conference) and the acts of a majority of the
members present, or acts approved in writing by a majority of the entire
Committee without a meeting,
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shall be the acts of the Committee for purposes of this Plan. The Committee may
authorize any one or more of its shareholders or an officer of the Company to
execute and deliver documents on behalf of the Committee. A member of the
Committee shall not exercise any discretion respecting himself or herself under
the Plan. In the event that the Compensation Committee of the Board no longer
is the Committee, the Board shall have the authority to remove, replace or fill
any vacancy of any member of the Committee upon notice to the Committee and the
affected member. Any member of the Committee may resign upon notice to the
Board. The Committee may allocate among one or more of its members, or may
delegate to one or more of its agents, such duties and responsibilities as it
determines.
Among other things, the Committee shall have the authority, subject to the
terms of the Plan:
(a) to select those persons to whom Options may be granted from time to
time;
(b) to determine whether and to what extent Options are to be granted
hereunder;
(c) to determine the number of Shares to be covered by each Option
granted hereunder;
(d) to determine the terms and conditions of any Option granted
hereunder (including, but not limited to, the Option Price, the Option
Period, any exercise restriction or limitation and any exercise
acceleration, forfeiture or waiver regarding any Option and the Shares
relating thereto);
(e) to adjust the terms and conditions, at any time or from time to
time, of any Option, subject to the limitations of Section 8.1;
(f) to determine under what circumstances an Option may be settled in
cash or Shares;
(g) to provide for the forms of Agreement to be utilized in connection
with the Plan;
(h) to determine whether a Participant has a Disability or a Retirement;
(i) to determine whether and with what effect an individual has incurred
a Termination of Employment;
(j) to determine what securities law requirements are applicable to the
Plan, Options, and the issuance of Shares and to require of a Participant
that appropriate action be taken with respect to such requirements;
(k) to cancel, with the consent of the Participant or as otherwise
provided in the Plan or an Agreement, outstanding Options;
(l) to interpret and make final determinations with respect to the
remaining number of Shares available under this Plan;
(m) to require as a condition of the exercise of an Option or the
issuance or transfer of a certificate for Shares, the withholding from a
Participant of the amount of any federal, state or local taxes as may be
required by law;
(n) to determine whether the Company or any other person has a right or
obligation to purchase Shares from a Participant and, if so, the terms and
conditions on which such Shares are to be purchased;
(o) to determine the restrictions or limitations on the transfer of
Shares;
(p) to determine whether an Option is to be adjusted, modified or
purchased, or is to become fully exercisable, under the Plan or the terms
of an Agreement;
(q) to determine the permissible methods of Option exercise and payment,
including cashless exercise arrangements;
(r) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan; and
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(s) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Option issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan. The Committee's policies and
procedures may differ with respect to Options granted at different times or to
different Participants.
Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion, and in the case of any determination
relating to an Option, may be made at the time of the grant of the Option or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter. All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company
and Participants. No determination shall be subject to de novo review if
challenged in court.
ARTICLE IV
SHARES SUBJECT TO PLAN
4.1 Number of Shares. Number of Shares. Subject to adjustment under Section
4.5, the total number of Shares reserved and available for distribution
pursuant to Options under the Plan shall be 7,251,800 shares of Common Stock,
as authorized for issuance on the Effective Date and thereafter from time to
time. Such Shares may consist, in whole or in part, of authorized and unissued
Shares or shares of treasury stock. Options previously granted under the Plan
to purchase shares of Series A Preferred Stock and Series B Preferred Stock
shall instead represent options to purchase a like number of shares of Common
Stock. There shall no longer be reserved and available for distribution
pursuant to the Plan any options to purchase shares of Series A Preferred Stock
or Series B Preferred Stock.
4.2 Release of Shares. If any Shares that are subject to an Option cease to
be such, if any Shares that are subject to any Option are forfeited, if any
Option otherwise terminates without issuance of Shares being made to the
Participant, or if any Shares are received by the Company in connection with
the exercise of an Option or the satisfaction of a tax withholding obligation,
such Shares, in the discretion of the Committee, may again be available for
distribution in connection with Options (other than Incentive Stock Options)
under the Plan. If any Shares could not again be available for Options to a
particular Participant under any applicable law, such Shares shall be available
exclusively for Options to Participants who are not subject to such
limitations.
4.3 Restrictions on Shares. Shares issued upon exercise of an Option shall
be subject to the terms and conditions specified herein and to such other
terms, conditions and restrictions as the Committee in its discretion may
determine or provide in an Option Agreement. The Company shall not be required
to issue or deliver any certificates for Shares, cash or other property prior
to: (i) the Participant executing any agreement that the Committee has required
the Participant to execute as a condition for the grant of Shares; (ii) the
listing of such shares on any stock exchange or NASDAQ (or other public market)
on which the Shares may then be listed (or regularly traded), (iii) the
completion of any registration or qualification of such Shares under federal or
state law, or any ruling or regulation of any government body which the
Committee determines to be necessary or advisable, and (iv) the satisfaction of
any applicable withholding obligation in order for the Company or an Affiliate
to obtain a deduction with respect to the exercise of an Option. The Company
may cause any certificate for any Shares to be delivered to be properly marked
with a legend or other notation reflecting the limitations on transfer of such
Shares as provided in this Plan or as the Committee may otherwise require. The
Committee may require any person exercising an Option to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the Shares in compliance with
applicable law or otherwise. Fractional shares shall not be delivered, but
shall be rounded to the next lower whole number of shares.
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4.4 Shareholder Rights. No person shall have any rights of a shareholder as
to Shares subject to an Option until, after proper exercise of the Option or
other action required, such Shares have been recorded on the Company's official
shareholder records as having been issued and transferred. Upon exercise of the
Option or any portion thereof, the Company shall have thirty (30) days in which
to issue the Shares, and the Participant will not be treated as a shareholder
for any purpose whatsoever prior to such issuance. No adjustment shall be made
for cash dividends or other rights for which the record date is prior to the
date such Shares are recorded as issued and transferred in the Company's
official shareholder records, except as provided herein or in an Agreement.
4.5 Anti-Dilution. In the event of any Company stock dividend, stock split,
reverse stock split, combination or exchange of shares, recapitalization or
other change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-up, spin-off,
split-off or distribution to Company shareholders other than a normal cash than
dividend), sale by the Company of all or a substantial portion of its assets
(measured either on a stand-alone or consolidated basis), reorganization,
rights offering, a partial or complete liquidation, or any other corporate
transaction or event involving the Company and having an effect similar to any
of the foregoing, then the Committee may adjust or substitute, as the case may
be, the number of Shares available for Options under the Plan, the number of
Shares covered by outstanding Options, the exercise price per Share of
outstanding Options, and any other characteristics or terms of the Options as
the Committee shall deem necessary or appropriate to reflect equitably the
effects of such changes to the Participants; provided, however, that the
Committee may limit any such adjustment so as to maintain the deductibility of
the Options under Section 162(m) of the Code, and that any fractional shares
resulting from such adjustment shall be eliminated by rounding to the next
lower whole number of shares with appropriate payment for such fractional share
as shall reasonably be determined by the Committee.
ARTICLE V
ELIGIBILITY
5.1 Eligibility. Except as herein provided, the persons who shall be
eligible to participate in the Plan and be granted Options shall be those
persons who are directors, officers, employees, independent contractors or
consultants with respect to the Company or any Affiliate, who are in a
position, in the opinion of the Committee, to make contributions to the growth,
management, protection and success of the Company and its Affiliates. Of those
persons described in the preceding sentence, the Committee may, from time to
time, select persons to be granted Options and shall determine the terms and
conditions with respect thereto. In making any such selection and in
determining the form of the Option, the Committee may give consideration to the
functions and responsibilities of the person's contributions to the Company and
its Affiliates, the value of the individual's service to the Company and its
Affiliates and such other factors deemed relevant by the Committee. The
Committee may designate as ineligible to participate in the Plan any person who
would otherwise be eligible to participate.
ARTICLE VI
OPTIONS
6.1 General. The Committee shall have authority to grant Options under the
Plan at any time or from time to time. Options may be either Incentive Stock
Options or Nonqualified Stock Options. An Option shall entitle the Participant
to receive Shares upon the exercise of such Option, subject to the
Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement (the terms and
provisions of which may differ from other Agreements) including without
limitation, payment of the Option Price. During any three-calendar-year period,
Options for no more than 1,000,000 shares of Common Stock shall be granted to
any Participant.
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6.2 Grant. The grant of an Option shall occur as of the date the Committee
determines. Each Option granted under this Plan shall be evidenced by an
Agreement, in a form approved by the Committee, which shall embody the terms
and conditions of such Option and which shall be subject to the express terms
and conditions set forth in the Plan. Such Agreement shall become effective
upon execution by the Company and the Participant. Only a person who is a
common-law employee of the Company, any parent corporation of the Company or a
subsidiary (as such terms are defined in Section 424 of the Code) on the date
of grant shall be eligible to be granted an Option which is intended to be and
is an Incentive Stock Option. To the extent that any Option is not designated
as an Incentive Stock Option or even if so designated does not qualify as an
Incentive Stock Option, it shall constitute a Nonqualified Stock Option.
6.3 Terms and Conditions. Except to the extent determined to be appropriate
by the Committee and consented to by the Participant, an Option granted
pursuant to the Plan shall be subject to such terms and conditions as shall be
determined by the Committee, including the following:
(a) Option Period. The Option Period of each Option will be fixed by the
Committee; provided that the Option Period of a Nonqualified Stock Option
shall not exceed ten (10) years from the date the Option is granted. In the
case of an Incentive Stock Option, the Option Period shall not exceed ten
(10) years from the date of grant or five (5) years in the case of an
individual who owns more than ten percent (10%) of the combined voting
power of all classes of stock of the Company, a corporation which is a
parent corporation of the Company or any subsidiary of the Company (each as
defined in Section 424 of the Code). No Option which is intended to be an
Incentive Stock Option shall be granted more than ten (10) years from the
date this Plan is adopted by the Company or the date this Plan is approved
by the shareholders of the Company, whichever is earlier.
(b) Option Price. The Option Price per share of Common Stock purchasable
under an Option shall be determined by the Committee. If an Option is
intended to qualify as an Incentive Stock Option, the Option Price per
share of Common Stock shall be not less than the Fair Market Value per
share of Common Stock on the date the Option is granted, or where granted
to an individual who owns or who is deemed to own stock possessing more
than ten percent (10%) of the combined voting power of all classes of stock
of the Company, a corporation which is a parent corporation of the Company
or any subsidiary of the Company (each as defined in Section 424 of the
Code), not less than one hundred ten percent (110%) of such Fair Market
Value per share.
(c) Exercisability. Subject to Section 7.1, Options shall be exercisable
at such time or times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides that any Option is
exercisable only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part. In addition, the
Committee may at any time accelerate the exercisability of any Option. If
the Committee intends that an Option be an Incentive Stock Option, the
Committee may, in its discretion, provide that the aggregate Fair Market
Value (determined at the Grant Date) of an Incentive Stock Option which is
exercisable for the first time during the calendar year shall not exceed
$100,000.
(d) Method of Exercise. Subject to the provisions of this Article VI, a
Participant may exercise Options, in whole or in part, at any time during
the Option Period by the Participant's giving written notice of exercise on
a form provided by the Committee (if available) to the Company specifying
the number of Shares subject to the Option to be purchased. Such notice
shall be accompanied by payment in full of the purchase price by cash or
check or such other form of payment as the Company may accept. If approved
by the Committee, payment in full or in part may also be made (i) by
delivering Shares already owned by the Participant for a period of at least
six (6) months prior to payment having a total Fair Market Value on the
date of such delivery equal to the Option Price; (ii) by the execution and
delivery of a note or other full recourse evidence of indebtedness (and any
security agreement thereunder) satisfactory to the Committee; (iii) by the
delivery of cash or the extension of credit by a broker-dealer to whom the
Participant has submitted a notice of exercise or otherwise indicated an
intent to exercise an Option (in accordance with Part 220, Chapter II,
Title 12 of the Code of Federal Regulations, so-called "cashless"
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exercise); (iv) by certifying ownership of shares owned by the Participant
to the satisfaction of the Committee for later delivery to the Company as
expected by the Committee and (v) by any combination of the foregoing. No
Shares will be issued until full payment therefor has been made and the
Participant has executed any and all agreements that the Company may
require the Participant to execute. A Participant will have all of the
rights of a shareholder of the Company holding the Shares that are subject
to such Option (including, if applicable, the right to vote the Shares and
the right to receive dividends), when the Participant has given written
notice of exercise, has paid in full for such Shares, executed all relevant
agreements, and such Shares have been recorded on the Company's official
records as having been issued and transferred.
(e) Non-transferability of Options. Except as provided herein or in an
Agreement, no Option or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution
or by a designation of Beneficiary effective upon the death of the
Participant, and all Options shall be exercisable during the Participant's
lifetime only by the Participant or the Participant's Representative. If
and to the extent transferability is permitted by the Committee as provided
by an Agreement, the Option shall be transferable only if such transfer
does not result in liability under Section 16 of the Exchange Act to the
Participant or other Participants and is consistent with registration of
the Option and sale of Common Stock on Form S-8 (or a successor form) or is
consistent with the use of Form S-8 (or the Committee's waiver of such
condition) and consistent with an Option's intended status as an Incentive
Stock Option (if applicable).
6.4 Termination by Reason of Death. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Option held by such
Participant shall thereafter be fully exercisable for a period of one (1) year
following the date of the appointment of a Representative (or such other period
or no period as the Committee may specify) or until the expiration of the
Option Period, whichever period is the shorter.
6.5 Termination by Reason of Disability. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Option held by
such Participant shall thereafter be fully exercisable by the Participant for
the period of one (1) year (or such other period or no period as the Committee
may specify) immediately following the date of such Termination of Employment
or until the expiration of the Option Period, whichever period is shorter, and
the Participant's death at any time following such Termination of Employment
due to Disability will not affect the foregoing. In the event of Termination of
Employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Option will thereafter be treated as a Nonqualified Stock
Option.
6.6 Other Termination. Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of
Employment due to Retirement, or the Termination of Employment is involuntary
on the part of the Participant (but is not due to death or Disability or for
Cause), any Option held by such Participant shall thereupon terminate, except
that such Option, to the extent then exercisable, may be exercised for the
lesser of the ninety (90)-day period commencing with the date of such
Termination of Employment or until the expiration of the Option Period,
whichever period is shorter. If the Participant incurs a Termination of
Employment which is either (a) for Cause or (b) a Voluntary Termination of
Employment on the part of the Participant, the Option will terminate
immediately. The death or Disability of a Participant after a Termination of
Employment otherwise provided herein will not extend the time permitted to
exercise an Option.
6.7 Cashing-Out of Options. Unless otherwise provided in the Agreement, on
receipt of written notice of exercise, the Committee may elect to cash-out all
or part of the portion of any Option to be exercised by paying the Participant
an amount, in cash or Shares, equal to the excess of (a) the Fair Market Value
of the Shares that are subject to the portion of the Option being cashed-out
over (b) the Option Price, such difference multiplied by (c) the number of
Shares subject to the portion of the Option being cashed out, all as of the
effective date of such cash-out.
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ARTICLE VII
CHANGE IN CONTROL PROVISIONS
7.1 Impact of Event. An Agreement may provide that in the event of a Change
in Control (as defined in Section 7.2):
(a) Any Options outstanding as of the date of such Change in Control and
not then exercisable shall become fully exercisable to the full extent of
the original grant.
(b) Notwithstanding any other provision of the Plan, unless the
Committee shall provide otherwise in an Agreement, in the event of a Change
in Control, a Participant shall have the right, whether or not the Option
is fully exercisable or may be otherwise realized by the Participant, by
giving notice to the Company during the sixty (60)-day period from and
after a Change in Control, to elect to surrender all or part of the Option
to the Company and to receive cash, within thirty (30) days of such notice,
in an amount equal to the amount by which the "Change in Control Price" (as
defined in Section 7.3) per share of the Shares on the date of such
election shall exceed the amount which the Participant must pay to exercise
the Option per share of Shares under the Option (the "Spread") multiplied
by the number of Shares granted under the Option. Notwithstanding the
foregoing, if any right under this Section would cause a transaction to be
ineligible for pooling of interest accounting that would but for the right
hereunder be eligible for such accounting treatment, the Committee may
modify or adjust the right so that pooling of interest accounting shall be
available, including the substitution of Shares having a Fair Market Value
equal to the cash otherwise payable hereunder for the right which caused
the transaction to be ineligible for pooling of interest accounting.
7.2 Definition of Change in Control. For purposes of this Plan, unless
otherwise specified in the Agreement with respect to the corresponding Option,
a "Change in Control" shall be deemed to have occurred if (a) any corporation,
person or other entity (other than the Company, a majority-owned subsidiary of
the Company or any of its subsidiaries, or an employee benefit plan (or related
trust) sponsored or maintained by the Company or an Affiliate), including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, becomes the beneficial owner of Shares representing more than fifty
percent of the combined voting power of the Company's then outstanding
securities; (b)(i) the Company approves, in any transaction or series of
related transactions, a definitive agreement to merge or consolidate the
Company with or into another entity other than a majority-owned subsidiary of
the Company, or to sell or otherwise dispose of all or substantially all of the
Company's assets, and (ii) the persons who were the members of the Board of
Directors prior to such approval do not represent a majority of the Board of
Directors of the surviving, resulting or acquiring entity or the parent
thereof; or (c) the shareholders of the Company approve a plan of liquidation
of the Company.
7.3 Change in Control Price. For purposes of the Plan, unless otherwise
specified in the Agreement with respect to the corresponding Option, "Change in
Control Price" means the higher of (a) the highest reported sales price of a
Share in any transaction reported on the principal exchange on which such
Shares are listed or on NASDAQ during the sixty (60)-day period prior to and
including the date of a Change in Control or (b) if the Change in Control is
the result of a tender or exchange offer, merger, consolidation, liquidation or
sale of all or substantially all of the assets of the Company (in each case a
"Transaction"), the highest price per Share paid in such Transaction. To the
extent that the consideration paid in any Transaction consists all or in part
of securities or other non-cash consideration, the value of such securities or
other non-cash consideration shall be determined in the sole discretion of the
Committee.
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ARTICLE VIII
MISCELLANEOUS
8.1 Amendments and Termination. The Board may amend, alter or discontinue
the Plan at any time, but no amendment, alteration or discontinuation shall be
made which would impair the rights of a Participant under an Option theretofore
granted without the Participant's consent, except such an amendment (a) made to
avoid an expense charge to the Company or an Affiliate, (b) made to cause the
Plan to qualify for the exemption provided by Rule 16b-3 or (c) made to permit
the Company or an Affiliate a deduction under the Code. In addition, no such
amendment shall be made without the approval of the Company's shareholders to
the extent such approval is required by law or agreement.
The Committee may amend, alter or discontinue the Plan or an Option at any
time on the same conditions and limitations (and exceptions to limitations) as
apply to the Board's authority to amend the Plan and further subject to any
approval or limitations the Board may impose.
Notwithstanding anything in the Plan to the contrary, if any right under
this Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee may modify or adjust the right so that
pooling of interest accounting shall be available, including the substitution
of equity interests having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.
8.2 Unfunded Status of Plan. It is intended that the Plan be an "unfunded"
plan for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Shares or make payments; provided, however, that, unless
the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
8.3 Limits on Transferability. Unless otherwise provided in this Plan or in
an Agreement, no Option shall be subject to the claims of Participant's
creditors and no Option may be sold, transferred, assigned, alienated,
encumbered, hypothecated, gifted, conveyed, pledged or disposed of in any way
other than by will or the laws of descent and distribution or to a
Representative upon the death of the Participant.
8.4 Status of Options Under Code Section 162(m). It is the intent of the
Company that Options granted to persons who are Covered Employees within the
meaning of Code Section 162(m) shall constitute "qualified performance-based
compensation" satisfying the requirements of Code Section 162(m). Accordingly,
the provisions of the Plan shall be interpreted in a manner consistent with
Code Section 162(m). If any provision of the Plan or any agreement relating to
such an Option does not comply or is inconsistent with the requirements of Code
Section 162(m), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.
8.5 General Provisions.
(a) Representation. The Committee may require each person purchasing or
receiving shares pursuant to an Option to represent to and agree with the
Company in writing that such person is acquiring the shares without a view
to the distribution thereof. The certificates for such shares may include
any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
(b) No Additional Obligation. Nothing contained in the Plan shall
prevent the Company or an Affiliate from adopting other or additional
compensation arrangements for its employees.
(c) Withholding. No later than the date as of which an amount first
becomes includable in the gross income of the Participant for income tax
purposes with respect to any Option, the Participant shall pay to the
Company (or other entity identified by the Committee), or make arrangements
satisfactory to the Company or other entity identified by the Committee
regarding the payment of, any Federal, state, local or
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foreign taxes of any kind required by law to be withheld with respect to
such amount required in order for the Company or an Affiliate to obtain a
current deduction. Unless otherwise determined by the Committee,
withholding obligations may be settled with Shares, including Shares that
are part of the Option that gives rise to the withholding requirement,
provided that any applicable requirements under Section 16 of the Exchange
Act are satisfied. The obligations of the Company under the Plan will be
conditional on such payment or arrangements, and the Company and its
Affiliates will, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participant. If the
Participant disposes of shares of Common Stock acquired pursuant to an
Incentive Stock Option in any transaction considered to be a disqualifying
transaction under the Code, the Participant must give written notice of
such transfer and the Company shall have the right to deduct any taxes
required by law to be withheld from any amounts otherwise payable to the
Participant. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and its
Affiliates shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participant.
(d) Representative. The Committee shall establish such procedures as it
deems appropriate for a Participant to designate a Representative to whom
any amounts payable in the event of the Participant's death are to be paid.
(e) Controlling Law. The Plan and all Options made and actions taken
thereunder will be governed by and construed in accordance with the laws of
the State of Delaware (other than its law respecting choice of law). The
Plan shall be construed to comply with all applicable law and to avoid
liability to the Company, an Affiliate or a Participant or loss of a
deduction, including, without limitation, liability under Section 16(b) of
the Exchange Act.
(f) Offset. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value
of any Shares, cash or other thing of value under this Plan or an Agreement
to be transferred to the Participant, and no Shares, cash or other thing of
value under this Plan or an Agreement shall be transferred unless and until
all disputes between the Company and the Participant have been fully and
finally resolved and the Participant has waived all claims to such against
the Company or an Affiliate.
(g) No Rights with Respect to Continuance of Employment. Nothing
contained herein shall be deemed to alter the relationship between the
Company or an Affiliate and a Participant, or the contractual relationship
between a Participant and the Company or an Affiliate if there is a written
contract regarding such relationship. Nothing contained herein shall be
construed to constitute a contract of employment between the Company or an
Affiliate and a Participant. The Company or an Affiliate and each of the
Participants continue to have the right to terminate the employment or
service relationship at any time for any reason, except as provided in a
written contract. The Company or an Affiliate shall have no obligation to
retain the Participant in its employ or service as a result of this Plan.
There shall be no inference as to the length of employment or service
hereby, and the Company or an Affiliate reserves the same rights to
terminate the Participant's employment or service as existed prior to the
individual's becoming a Participant in this Plan.
(h) Fail-Safe. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3, as applicable. To the extent any
provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. Moreover, in the event the Plan does not
include a provision required by Rule 16b-3 to be stated herein, such
provision (other than one relating to eligibility requirements or the price
and amount of Options) shall be deemed to be incorporated by reference into
the Plan with respect to Participants subject to Section 16.
(i) Right to Capitalize. The grant of an Option shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidation,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
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8.6 Mitigation of Excise Tax. Subject to any agreement with a Participant,
if any payment or right accruing to a Participant under this Plan (without the
application of this Section 8.6), either alone or together with other payments
or rights accruing to the Participant from the Company or an Affiliate ("Total
Payments"), would constitute a "parachute payment" (as defined in Section 280G
of the Code and regulations thereunder), such payment or right shall be reduced
to the largest amount or greatest right that will result in no portion of the
amount payable or right accruing under the Plan being subject to an excise tax
under Section 4999 of the Code or being disallowed as a deduction under Section
280G of the Code. The determination of whether any reduction in the rights or
payments under this Plan is to apply shall be made by the Committee in good
faith after consultation with the Participant, and such determination will be
conclusive and binding on the Participant. The Participant shall cooperate in
good faith with the Committee in making such determination and providing the
necessary information for this purpose. The provisions of this Section 8.6
shall apply with respect to any Participant only if, after reduction for any
applicable federal excise tax imposed by Section 4999 of the Code and other
federal income tax imposed by the Code, the Total Payments accruing to such
Participant would be less than the amount of the Total Payments as reduced (i)
if applicable, pursuant to the provisions of this Section 8.6 and any similar
provisions under any other plan of the Company or any Affiliate to mitigate the
applicable federal excise tax, and (ii) by federal income taxes (other than
such excise tax).
8.7 Options in Substitution for Options Granted by Other Entities. Options
may be granted under the Plan from time to time in substitution for options
held by employees, directors or service providers of other entities who are
about to become officers, directors, shareholders or employees of the Company
or an Affiliate. The terms and conditions of the Options so granted may vary
from the terms and conditions set forth in this Plan at the time of such grant
as the majority of the shareholders of the Committee may deem appropriate to
conform, in whole or in part, to the provisions of the Options in substitution
for which they are granted.
8.8 Procedure for Adoption. Any Affiliate of the Company may by resolution
of such Affiliate's board of directors with the consent of the Board of
Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its employees as of the date
specified in the resolution.
8.9 Procedure for Withdrawal. Any Affiliate which has adopted the Plan may,
by resolution of the board of directors of such Affiliate, with the consent of
the Board of Directors and subject to such conditions as may be imposed by the
Board of Directors, terminate its adoption of the Plan.
8.10 Delay. If at the time a Participant incurs a Termination of Employment
(other than due to Cause) or if at the time of a Change in Control, the
Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to
the extent necessary to avoid the imposition of liability will be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six months and one day and not to exceed the Option Period.
The Company shall have the right to suspend or delay any time period described
in the Plan or an Agreement if the Committee shall determine that the action
may constitute a violation of any law or result in liability under any law to
the Company, an Affiliate or a shareholder in the Company until such time as
the action required or permitted will not constitute a violation of law or
result in liability to the Company, an Affiliate or a shareholder of the
Company. The Committee shall have the discretion to suspend the application of
the provisions of the Plan required solely to comply with Rule 16b-3 if the
Committee determines that Rule 16b-3 does not apply to the Plan.
8.11 Headings. The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.
8.12 Severability. If any provision of this Plan is for any reason held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Plan, and this Plan will be construed as if
such invalid or unenforceable provision were omitted.
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8.13 Successors and Assigns. This Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
upon a Participant, and all rights granted to the Company hereunder, shall be
binding upon the Participant's heirs, legal representatives and successors.
8.14 Entire Agreement. This Plan and the Agreement constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of this Plan shall control.
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