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EXHIBIT 4.5
eLOYALTY CORPORATION
2000 STOCK INCENTIVE PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 2000 Stock Incentive Plan (the "Plan")
of eLoyalty Corporation, a Delaware corporation (the "Company"), are to (i)
align the interests of the Company's stockholders and the recipients of awards
under this Plan by increasing the proprietary interest of such recipients in the
Company's growth and success, subject to the limitations set forth in Section
1.5 hereof, (ii) advance the interests of the Company by attracting and
retaining employees of, and consultants and independent contractors performing
services for, the Company or any of its Subsidiaries (as defined below) and
(iii) motivate such persons to act in the long-term best interests of the
Company's stockholders.
1.2 CERTAIN DEFINITIONS.
"AGREEMENT" means the written agreement evidencing an award hereunder
between the Company and the recipient of such award.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" has the meaning set forth in Section 3.8(b).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means one or more committees of the Board that have been
designated by the Board to carry out certain respective actions under this Plan
on behalf of the Board, subject to the limitations provided by the Board in any
such designations; provided, however, that where necessary for compliance with
Section 16 of the Exchange Act, and the rules and regulations promulgated
thereunder, or where the Board deems it to be advisable for any reason
whatsoever, such committee will consist of two or more members of the Board,
each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3
under the Exchange Act. Notwithstanding any such committee designations, the
Board retains the right to assume full authority to administer the Plan in all
respects hereunder pursuant to Section 1.3 hereof.
"COMMON STOCK" means the common stock, $.01 par value, of the Company.
"COMPANY" has the meaning set forth in Section 1.1 hereof.
"CORPORATE TRANSACTION" has the meaning set forth in Section 3.8(b)(3)
hereof.
"EFFECTIVE DATE" has the meaning set forth in Section 3.1 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means the closing transaction price of a share of
Common Stock as reported by The Nasdaq Stock Market or the principal national
securities exchange on which the Common Stock is then traded, on the date as of
which such value is being determined, or, if there are no reported transactions
for such date, on the next preceding date for which transactions were reported;
provided, however, that if the Fair Market Value for any date cannot be so
determined, Fair Market Value will be determined by the Committee by whatever
means or method as the Committee, in the good faith exercise of its discretion,
shall at such time deem appropriate.
"INCUMBENT BOARD" has the meaning set forth in Section 3.8(b)(2) hereof.
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"MATURE SHARES" mean shares of Common Stock for which the holder thereof
has good title, free and clear of all liens and encumbrances, and which such
holder has held for at least six months.
"NON-EMPLOYEE DIRECTOR" means any director of the Company who is not an
officer or employee of the Company or any Subsidiary.
"NON-STATUTORY STOCK OPTION" means a stock option that is not intended to
be an "incentive stock option" pursuant to Section 422 of the Code.
"OUTSTANDING COMMON STOCK" has the meaning set forth in Section 3.8(b)(1)
hereof.
"OUTSTANDING VOTING SECURITIES" has the meaning set forth in Section
3.8(b)(1) hereof.
"PERFORMANCE MEASURES" mean the criteria and objectives, established by the
Committee, which shall be satisfied or met as a condition to the exercisability
of all or a portion of an option. In the discretion of the Committee, and
subject to Section 3.2 hereof, the Committee may amend the Performance Measures
or other terms and conditions of an outstanding award in recognition of unusual
or nonrecurring events affecting the Company or its financial statements or
changes in law or accounting principles. Such criteria and objectives may
include one or more of the following: the attainment by a share of Common Stock
of a specified Fair Market Value for a specified period of time, earnings per
share, return to stockholders (including dividends), operating income, operating
income margin, return on equity, earnings of the Company, revenues, market
share, cash flow or cost reduction goals, or any combination of the foregoing.
"PERMANENT AND TOTAL DISABILITY" has the meaning set forth in Section
22(e)(3) of the Code or any successor thereto.
"PERSON" has the meaning set forth in Section 3.8(b)(1) hereof.
"POOLING TRANSACTION" has the meaning set forth in Section 3.8(c) hereof.
"SUBSIDIARY" means any of the Company's subsidiaries within the meaning of
Code Section 424(f).
"TAX DATE" has the meaning set forth in Section 3.5.
1.3 ADMINISTRATION. This Plan will be administered by the Committee,
pursuant to and subject to the terms of the Board's designation thereof and
delegation thereto in accordance with Section 1.2 hereof. Notwithstanding any
such Committee designation, the Board retains the right to assume full authority
to administer the Plan in all respects hereunder.
The Committee has the discretion to select eligible persons for
participation in this Plan, subject to the restrictions on eligibility contained
in Section 1.4 hereof, and determine the timing of each award to such persons,
the number of shares of Common Stock subject to such an award, commensurate with
the authority delegated to the Committee in accordance with the preceding
paragraph and subject to the limitations set forth in Section 1.5 hereof, the
exercise price associated with the award, subject to the limitations set forth
in Section 2.1(a) hereof, the time and conditions of exercise of the award and
all other terms and conditions of the award, including, without limitation, the
form of the Agreement evidencing the award. The Board or, if applicable, the
Committee may, in its discretion and for any reason at any time, take action
such that any or all outstanding options under the Plan will become exercisable
in part or in full.
The Board or, if applicable, the Committee shall, subject to the terms of
this Plan, interpret this Plan and the application thereof, establish rules and
regulations it deems necessary or desirable for the administration of this Plan
and may impose, incidental to the grant of an award, conditions with respect to
the award, such as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions will be final, binding and
conclusive.
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1.4 ELIGIBILITY. Participants in this Plan will be limited to employees
of, or consultants and independent contractors performing services for, the
Company or any of its Subsidiaries. Non-Employee Directors are ineligible to
participate in this Plan.
For purposes of this Plan, references to employment also mean an agency or
independent contractor relationship and references to employment by the Company
also mean employment by a Subsidiary. The selection of a person to participate
in this Plan at any time will not require the selection of such person to
participate in this Plan at any other time.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Section 3.7,
the total number of shares of Common Stock available for all grants of awards
over the term of the Plan shall be 2,400,000. To the extent that shares of
Common Stock subject to an outstanding option granted hereunder are not issued
or delivered by reason of the expiration, termination, cancellation or
forfeiture of such award or by reason of the delivery or withholding of shares
of Common Stock to pay all or a portion of the exercise price of an award, if
any, or to satisfy all or a portion of the tax withholding obligations relating
to an award, then such shares of Common Stock will again be available under this
Plan.
Shares of Common Stock will be made available from authorized and unissued
shares of Common Stock, or authorized and issued shares of Common Stock
reacquired and held as treasury shares or otherwise or a combination thereof.
Notwithstanding the foregoing, the maximum percentage of shares of Common
Stock with respect to which awards may be granted under this Plan to officers
and other persons subject to Section 16 of the Exchange Act will be 20% of the
total number of shares available for awards under this Plan, as adjusted
pursuant to Section 3.7.
II. STOCK OPTIONS
2.1 STOCK OPTIONS. The Committee may, in its discretion and commensurate
with the authority delegated to it pursuant to Section 1.3 hereof, grant options
to purchase shares of Common Stock to such eligible persons, as set forth in
Section 1.4 hereof, as may be selected by the Committee. The Committee will
establish the terms and conditions of such options in accordance with this
Section 2.1. All awards made under this Plan to eligible persons will be in the
form of Non-Statutory Stock Options to purchase shares of Common Stock.
Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of Common
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option will be determined by the Committee,
subject to the limitations set forth in Section 1.5 hereof and this Section
2.1(a). The exercise price per share of Common Stock purchasable upon exercise
of the option will not be less than 100% of the Fair Market Value of a share of
Common Stock on the date of grant of an award; provided, however, that for any
option granted in connection with the recipient's hiring, promotion or similar
event, the option exercise price may not be less than the Fair Market Value of a
share of Common Stock on the date on which the recipient is hired or promoted
(or similar event), if the grant of the option occurs not more than 90 days
after the date of such hiring, promotion or similar event.
(b) Option Period and Exercisability. The period during which an option
may be exercised will be determined by the Committee. The Committee may
establish Performance Measures which will be satisfied or met as a condition to
the grant of an option or to the exercisability of all or a portion of an
option. The Committee will determine whether an option will become exercisable
in cumulative or non-cumulative installments and in part or in full at any time.
An exercisable option, or portion thereof, may be exercised only with respect to
whole shares of Common Stock.
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(c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company, on a form prescribed by the Company for this purpose,
specifying the number of whole shares of Common Stock to be purchased and
accompanied by payment therefor in full (or arrangement made for such payment to
the Company's satisfaction) either (A) in cash or by certified or cashier's
check payable in U.S. currency, (B) by tendering (either by actual delivery or
by attestation of ownership) Mature Shares having an aggregate Fair Market
Value, determined as of the date of exercise, equal to the aggregate purchase
price payable by reason of such exercise, (C) in cash by a third-party broker
acceptable to the Company to whom the optionee has submitted copies of his or
her irrevocable notice of exercise and irrevocable authorization for such
third-party broker to sell shares of Common Stock acquired upon exercise of the
option and to remit to the Company a sufficient portion of the sales proceeds to
pay the aggregate exercise price for all of the shares of Common Stock acquired
through the exercise of the option and any related tax withholdings pursuant to
Section 3.5 hereof (with the original notice of exercise and authorization to be
submitted to the Company or in accordance with such procedures as the Company
may establish from time to time) or (D) a combination of any of the above, (ii)
by executing such documents and complying with such procedures in connection
therewith as the Committee may establish from time to time, and (iii) by
satisfying an obligation to pay any Federal, state, local or other withholding
taxes due upon the exercise of the option as set forth in Section 3.5 hereof.
The Company will have sole discretion to disapprove of an election pursuant to
any of clauses (B)-(D), and in the case of an optionee who is subject to Section
16 of the Exchange Act, the Company may require that the method of making such
payment be in compliance with Section 16 and the rules and regulations
thereunder. Any fraction of a share of Common Stock which would be required to
pay such purchase price will be disregarded and the remaining amount due will be
paid in cash by the optionee. No certificate representing Common Stock will be
delivered until the full purchase price therefor has been paid (or arrangement
made for such payment to the Company's satisfaction).
2.2 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 1.4, all of
the terms relating to the exercise, cancellation or other disposition of an
option upon a termination of employment with or service to the Company of the
holder of such option, as the case may be, whether by reason of disability,
retirement, death or other termination, will be determined by the Committee.
Such determination will be made at the time of the grant of such option and will
be specified in the Agreement relating to such option.
III. GENERAL
3.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan will not be submitted to
the stockholders of the Company for approval. This Plan became effective as of
May 12, 2000 (the "Effective Date"), the date as of which the Board approved
this Plan. This Plan will terminate ten years after its Effective Date, unless
terminated earlier by the Board. Termination of this Plan will not affect the
terms or conditions of any award granted prior to termination.
3.2 AMENDMENTS. The Board may amend or terminate this Plan as it deems
advisable, prior to the expiration date set forth in Section 3.1 hereof, subject
to any requirement of stockholder approval then required by applicable law, rule
or regulation. No amendment may impair the rights of a holder of an outstanding
award, without the consent of such holder.
3.3 AGREEMENT. Each award under this Plan will be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award will be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award will be effective as of the effective date
set forth in the Agreement.
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The Agreement is subject to all terms of this Plan. In the event of a
discrepancy between the Agreement, or any document referencing or describing the
Agreement, and this Plan, this Plan will govern in all respects.
3.4 NON-TRANSFERABILITY OF AWARDS. Unless otherwise specified in the
Agreement relating to an award, no award may be transferable other than upon the
option holder's death to his or her designated beneficiary, which beneficiary
was designated pursuant to beneficiary designation procedures established by the
Committee from time to time, or if no beneficiary was so designated, then by
will or, if no will exists, then by the laws of descent and distribution. Except
to the extent permitted by the first sentence of this Section 3.4, or the
Agreement relating to an award, each award may be exercised or settled during
the holder's lifetime only by the holder or the holder's legal representative or
similar person. Except to the extent permitted by the first sentence of this
Section 3.4 or the Agreement relating to an award, no award may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any such award, other than
as permitted by the first sentence of this Section 3.4 or the Agreement relating
to an award, such award and all rights thereunder will immediately become null
and void.
3.5 TAX WITHHOLDING. The Company has the right to require, prior to the
issuance or delivery of any shares of Common Stock, payment by the holder of
such award of any Federal, state, local or other taxes which may be required to
be withheld or paid in connection with such award. At the Committee's
discretion, and in accordance with procedures established by the Committee from
time to time, the option holder may elect to satisfy any such obligation by any
of the following means: (A) a payment to the Company in cash or by certified or
cashier's check in U.S. currency, (B) by tendering (either by actual delivery or
by attestation of ownership) Mature Shares having an aggregate Fair Market
Value, determined as of the date the obligation to withhold or pay taxes arises
in connection with an award (the "Tax Date"), equal to the amount necessary to
satisfy any such obligation, (C) by authorizing the Company to withhold whole
shares of Common Stock which would otherwise be delivered to the holder under
this Plan, having an aggregate Fair Market Value determined as of the Tax Date,
or withhold an amount of cash which would otherwise be payable to the holder, in
the minimum amount necessary to satisfy any such obligation, (D) a cash payment
by a third-party broker acceptable to the Company to whom the optionee has
submitted copies of his or her irrevocable notice of exercise and authorization
to such third-party broker to sell shares of Common Stock acquired upon exercise
of the option and to remit to the Company a sufficient portion of the sales
proceeds to cover such withholding tax obligations (with the original notice of
exercise and authorization to be submitted to or as directed by the Company in
accordance with Section 2.1(c) hereof), and (E) any combination of the above;
provided, however, that the Company has the sole discretion to disapprove of an
election pursuant to any of clauses (B)-(E), and that in the case of a holder
who is subject to Section 16 of the Exchange Act, the Company may require that
the method of satisfying such an obligation be in compliance with Section 16 and
the rules and regulations thereunder. Any fraction of a share of Common Stock
which would be required to satisfy such an obligation will be disregarded and
the remaining amount due will be paid in cash by the holder.
3.6 RESTRICTIONS ON SHARES. Each award made hereunder will be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares will not be delivered unless such listing, registration,
qualification, consent, approval or other action has been effected or obtained,
free of any conditions not acceptable to the Company. The Company may require
that certificates evidencing shares of Common Stock delivered pursuant to any
award made hereunder bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is prohibited except in compliance with the
Securities Act of 1933, as amended, and the rules and regulations thereunder.
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3.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination or exchange
of shares, liquidation, split-up, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a regular cash dividend, the Board or, if applicable, the Committee will
make adjustments to the number and class of securities available under this
Plan, the number and class of securities subject to each outstanding option, and
the purchase price per security for outstanding options and any other
adjustments that the Board or Committee determines to be equitable and
appropriate to preserve the benefits or potential benefits of awards under this
Plan. The decision of the Board or Committee regarding any such adjustment will
be final, binding and conclusive. If any such adjustment would result in a
fractional security being (a) available under this Plan, such fractional
security will be disregarded, or (b) subject to an option under this Plan, the
Company will pay the holder of such option, in connection with the first
exercise thereof in whole or in part occurring after such adjustment, an amount
in cash determined by multiplying (i) the fraction of such security (rounded to
the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value
on the exercise date over (B) the exercise price, if any, of such option.
3.8 CHANGE IN CONTROL.
(a) Notwithstanding any provision in this Plan or any Agreement, and
subject to Section 3.7 hereof, in the event of a Change in Control, the Board
may, but is not required to, make such adjustments to outstanding awards
hereunder as it deems appropriate, including, without limitation, electing that
each outstanding option will be surrendered to the Company by the holder
thereof, and that each such option will immediately be cancelled by the Company,
and that the holder will receive, within a specified period of time from the
occurrence of the Change in Control, a cash payment from the Company in an
amount equal to the number of shares of Common Stock then subject to such
option, multiplied by the excess, if any, of the greater of (A) the highest per
share price offered to stockholders of the Company in any transaction whereby
the Change in Control takes place or (B) the Fair Market Value of a share of
Common Stock on the date of occurrence of the Change in Control, over the
purchase price per share of Common Stock subject to the option. The Company may,
but is not required to, cooperate with any person who is subject to Section 16
of the Exchange Act to assure that any cash payment in accordance with the
foregoing to such person is made in compliance with Section 16 and the rules and
regulations thereunder.
In the event of a Change in Control, the Board may, but is not required to,
substitute for each share of Common Stock available under this Plan, whether or
not then subject to an outstanding award, the number and class of shares into
which each outstanding share of Common Stock will be converted pursuant to such
Change in Control. In the event of any such substitution, the purchase price per
share in the case of an option will be appropriately adjusted by the Committee.
The preceding two sentences notwithstanding, in the event of a Change in
Control, the Board will make any and all adjustments required pursuant to
Section 3.7 hereof.
(b) "Change in Control" means one or more of the following events:
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 25% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Common
Stock") or (ii) the combined voting power of the then outstanding securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Voting Securities"); excluding, however, the following: (A) any
acquisition directly from the Company (excluding any acquisition resulting from
the exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired directly from
the Company), (B) any acquisition by the Company, (C) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (D) any acquisition by a
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (3) of this Section 3.8(b); provided further, that for
purposes of clause (B), if any Person (other than the Company or any employee
benefit
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plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company) becomes the beneficial owner of 25% or
more of the Outstanding Common Stock or 25% or more of the Outstanding Voting
Securities by reason of an acquisition by the Company, and such Person, after
such acquisition by the Company, becomes the beneficial owner of any additional
shares of the Outstanding Common Stock or any additional Outstanding Voting
Securities and such beneficial ownership is publicly announced, such additional
beneficial ownership will constitute a Change in Control;
(2) individuals who, as of the Effective Date of this Plan constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided that any individual who becomes a director of
the Company subsequent to the Effective Date whose election, or nomination for
election by the Company's stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board will be deemed a
member of the Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board will not be deemed a member of the Incumbent Board;
(3) the consummation of a reorganization, merger or consolidation of the
Company or sale or other disposition of all or substantially all of the assets
of the Company (a "Corporate Transaction"); excluding, however, a Corporate
Transaction pursuant to which (i) all or substantially all of the individuals or
entities who are the beneficial owners, respectively, of the Outstanding Common
Stock and the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding securities of such corporation entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or indirectly) in
substantially the same proportions relative to each other as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Common Stock
and the Outstanding Voting Securities, as the case may be, (ii) no Person (other
than: the Company; any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company; the
corporation resulting from such Corporate Transaction; and any Person which
beneficially owned, immediately prior to such Corporate Transaction, directly or
indirectly, 25% or more of the Outstanding Common Stock or the Outstanding
Voting Securities, as the case may be) will beneficially own, directly or
indirectly, 25% or more of, respectively, the outstanding shares of common stock
of the corporation resulting from such Corporate Transaction or the combined
voting power of the outstanding securities of such corporation entitled to vote
generally in the election of directors and (iii) individuals who were members of
the Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate Transaction;
or
(4) the consummation of a plan of complete liquidation or dissolution of
the Company.
(c) With respect to any optionee who is subject to Section 16 of the
Exchange Act, notwithstanding the exercise period contained in any Agreement to
which such optionee is a party and notwithstanding the expiration date of the
term of such option, in the event the Company is involved in a business
combination which is intended to be treated as a pooling of interests for
financial accounting purposes (a "Pooling Transaction") or pursuant to which
such optionee receives a substitute option to purchase securities of any entity,
including an entity directly or indirectly acquiring the Company, then each
option (or option in substitution thereof) held by such optionee shall be
exercisable to the extent set forth in the Agreement evidencing such option
until and including the latest of (x) the expiration date of the term of the
option, (y) the date which is six months and one day after the consummation of
such business combination and (z) the date which is ten business days after the
date of expiration of any period during which such optionee may not dispose of a
security issued in the Pooling Transaction to be accounted for as a pooling of
interest.
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3.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person has any right to
participate in this Plan. Neither this Plan nor any award made hereunder confers
upon any person any right to continued employment by or service with the Company
or any of its subsidiaries or affiliates, or affect in any manner the right of
the Company or any of its subsidiaries or affiliates to terminate the employment
of or the performance of services by any person at any time without liability
hereunder.
3.10 RIGHTS AS STOCKHOLDER. No person has any right as a security holder
of the Company or any successor with respect to any shares of Common Stock or
other securities which are or become subject to an award hereunder unless and
until such person becomes a holder of record with respect to such shares of
Common Stock or other securities.
3.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
will be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to the principles of conflicts of
laws.
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