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VITAMINS.COM, INC.
1999 STOCK INCENTIVE PLAN
1. Purpose.
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The purpose of this Plan is to strengthen Vitamins.com, Inc., a
Delaware corporation (the "Company"), by providing an incentive to its
employees, officers, directors and consultants and thereby encouraging them to
devote their abilities and industry to the success of the Company's business
enterprise. It is intended that this purpose be achieved by extending to
employees (including future employees who have received a formal written offer
of employment), officers, directors, advisors and consultants of the Company and
its Subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through the grant of Incentive Stock Options, Nonqualified Stock
Options, Formula Options, Stock Appreciation Rights, Dividend Equivalent Rights,
Performance Awards, Share Awards, Phantom Stock and Restricted Stock (as each
term is herein defined).
2. Definitions.
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For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
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Control, the highest price per Share paid to holders of the Shares in any
transaction (or series of related transactions) constituting or resulting in a
Change in Control other than pursuant to Section 2.10(b).
2.2 "Affiliate" means, with respect to any Person, any other Person
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that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or under common control with, such Person. Any Relative (for
this purpose, "Relative" means a spouse, child, parent, parent of spouse,
sibling or grandchild) of an individual shall be deemed to be an Affiliate of
such individual for purposes hereof. Neither the Company nor any Person
controlled by the Company shall be deemed to be an Affiliate of any holder of
Company stock.
2.3 "Agreement" means the written agreement between the Company and
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an Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.
2.4 "Award" means a grant of Restricted Stock, Phantom Stock, a Stock
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Appreciation Right, a Performance Award, a Dividend Equivalent Right, a Share
Award, or any or all of them.
2.5 "Beneficial Ownership" means ownership within the meaning of Rule
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13d-3 promulgated under the Exchange Act.
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2.6 "Beneficiary" means an individual, trust or estate who or which,
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by a written designation of the Optionee or Grantee filed with the Company by
operation of law succeeds to the rights and obligations of the Optionee or
Grantee under the Plan and an Agreement upon the Opionee's or Grantee's death.
2.7 "Board" means the Board of Directors of the Company.
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2.8 "Cause" means:
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(a) for purposes of Section 6.4, the term "Cause" shall mean (i)
intentional failure to perform duties as a Director, (ii) intentional
misrepresentation or the commission of an act of fraud in the performance of
such duties, (iii) breach of fiduciary duty involving personal profit including,
without limitation, embezzlement, misappropriation or conversion of assets or
opportunities of the Company or any of its Subsidiaries or (iv) willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) in connection with the performance of duties as a Director; or
(b) in the case of an Optionee or Grantee whose employment with
the Company or a Subsidiary is at any time subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or Subsidiary, which
employment agreement includes a definition of "Cause," the term "Cause" as used
in this Plan or any Agreement shall have the meaning set forth in such
employment agreement during the period that such employment agreement remains in
effect; or
(c) in all other cases, the term "Cause" as used in this Plan or
any Agreement shall mean (i) intentional failure to perform reasonably assigned
duties, (ii) dishonesty or willful misconduct in the performance of duties,
(iii) involvement in a transaction in connection with the performance of duties
to the Company or any of its Subsidiaries which transaction is adverse to the
interests of the Company or any of its Subsidiaries and which is engaged in for
personal profit, (iv) willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) in connection with the performance
of duties or (v) a determination of by the Board or the Company's Chief
Executive Officer that an employee has regularly and materially failed to
perform his duties in accordance with the standards established by the Company.
2.9 "Change in Capitalization" means any increase or reduction in the
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number of Shares, or any change (including, without limitation, in the case of a
spin-off, dividend or other distribution in respect of Shares, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization, spin-
off, split-up, issuance of warrants or rights or debentures, stock dividend,
stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or a substantially similar transaction.
2.10 A "Change in Control" shall mean the occurrence of any of the
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following:
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(a) An acquisition in one transaction or a series of related
transactions (other than directly from the Company or pursuant to Options or
Awards granted under this Plan or otherwise by the Company) of any Voting
Securities of the Company by any Person, immediately after which such Person has
Beneficial Ownership of fifty percent (50%) or more of the combined voting power
of the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred pursuant to this Section
2.10(a), Voting Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i)
an employee benefit plan (or a trust forming a part thereof) maintained by (A)
the Company or (B) any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (for purposes of this definition, a
"Related Entity"), (ii) the Company or any Related Entity, or (iii) any Person
in connection with a "Non-Control Transaction" (as hereinafter defined);
(b) The consummation of:
(i) A merger, consolidation or reorganization involving the
Company unless:
(A) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own directly
or indirectly immediately following such merger,
consolidation or reorganization, more than fifty percent
(50%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization;
(B) (1) the individuals who were members of the Board
as of the date of this Plan are who are also members of the
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least a majority of the members of the board
of directors of the Surviving Corporation, or a corporation
Beneficially Owning directly or indirectly a majority of the
voting securities of the Surviving Corporation or (2) the
stockholders of the Company continue to have the right,
immediately after such merger, consolidation or
reorganization, to appoint or elect at least a majority or
the members of the board of directors of the Surviving
Corporation, or a corporation Beneficially Owning, directly
or indirectly, a majority of the voting securities of the
Surviving Corporation; and
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(C) no Person other than (1) the Company, (2) any
Related Entity, (3) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
merger, consolidation or reorganization, was maintained by
the Company, the Surviving Corporation, or any Related
Entity or (4) any Person who, together with its Affiliates,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifty percent
(50%) or more of the then outstanding Voting Securities,
owns, together with its Affiliates, Beneficial Ownership of
fifty percent (50%) or more of the combined voting power of
the Surviving Corporation's then outstanding voting
securities.
(D) a transaction described in clauses (A) through (C)
above shall herein be referred to as a "Non-Control
Transaction."
(ii) A complete liquidation or dissolution of the Company;
or
(iii) The sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than a
transfer to a Related Entity or the distribution to the Company's
stockholders of the stock of a Related Entity or any other
assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of fifty percent (50%) or more of the combined voting power of the
Company's then outstanding Voting Securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the number of Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and (1) before such share
acquisition by the Company the Subject Person becomes the Beneficial Owner of
any new or additional Voting Securities in a related transaction or (2) after
such share acquisition by the Company the Subject Person becomes the Beneficial
Owner of any new or additional Voting Securities which in either case increases
the percentage of the then outstanding Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.
2.11 "Code" means the Internal Revenue Code of 1986, as amended.
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2.12 "Committee" means a committee, as described in Section 3.1,
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appointed by the Board from time to time to administer the Plan and to perform
the functions set forth herein.
2.13 "Company" means Vitamins.com, Inc.
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2.14 "Director" means a director of the Company.
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2.15 "Disability" means:
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(a) in the case of an Optionee or Grantee whose employment with
the Company or a Subsidiary is at any time subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or Subsidiary, which
employment agreement includes a definition of "Disability," the term
"Disability" as used in this Plan or any Agreement shall have the meaning set
forth in such employment agreement during the period that such employment
agreement remains in effect; or
(b) in all other cases, the term "Disability" as used in this
Plan or any Agreement shall mean a physical or mental infirmity which impairs
the Optionee's or Grantee's ability to perform substantially his or her duties
for a period of one hundred eighty (180) consecutive days.
2.16 "Disability Date" means the date which is six (6) months after
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the date on which an Optionee or Grantee is first absent from active employment
with the Company by reason of a Disability.
2.17 "Dividend Equivalent Right" means a right to receive all or some
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portion of the cash dividends that are or would be payable with respect to
Shares.
2.18 "Division" means any of the operating units or divisions of the
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Company designated as a Division by the Committee.
2.19 "Eligible Individual" means any of the following individuals who
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is designated by the Committee as eligible to receive Options or Awards subject
to the conditions set forth herein: (a) any director (other than a Nonemployee
Director), officer or employee of the Company or a Subsidiary, (b) any
individual to whom the Company or a Subsidiary has extended a formal, written
offer of employment, or (c) any consultant or advisor of the Company or a
Subsidiary.
2.20 "Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
2.21 "Fair Market Value" on any date means the closing sales prices of
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the Shares on such date on the principal national securities exchange on which
such Shares are listed or admitted to trading, or, if such Shares are not so
listed or admitted to trading, the average of the per Share closing bid price
and per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System or such other
market in which such prices are regularly quoted, or, if there have been no
published bid or asked quotations with respect to Shares on such date, the Fair
Market Value shall be the value established by the Board in good faith and, in
the case of an Incentive Stock Option, in accordance with Section 422 of the
Code.
2.22 "Formula Option" means an Option granted pursuant to Section 6.
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2.23 "Grantee" means a person to whom an Award has been granted under
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the Plan.
2.24 "Incentive Stock Option" means an Option satisfying the
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requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.25 "Initial Grant" means Formula Options granted to a Nonemployee
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Director as of June 11, 1999.
2.26 "Initial Public Offering" means the consummation of the first
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public offering of Shares pursuant to a registration statement (other than on
Form S-8 or successor form) filed with, and declared effective by, the
Securities and Exchange Commission.
2.27 "Nonemployee Director" means a director of the Company who is a
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"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.28 "Nonqualified Stock Option" means an Option which is not an
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Incentive Stock Option.
2.29 "Normal Retirement Date" means the date on which an Optionee or
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Grantee terminates active employment with the Company on or after attainment of
age 65, but does not include termination by the Company for Cause.
2.30 "Option" means a Nonqualified Stock Option, an Incentive Stock
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Option, a Formula Option, or any or all of them.
2.31 "Optionee" means a person to whom an Option has been granted
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under the Plan.
2.32 "Outside Director" means a director of the Company who is an
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"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.33 "Parent" means any corporation which is a parent corporation
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(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.34 "Performance Awards" means Performance Units, Performance Shares
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or either or both of them.
2.35 "Performance-Based Compensation" means any Option or Award that
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is intended to constitute "performance based compensation" within the meaning of
Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.
2.36 "Performance Cycle" means the time period specified by the
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Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
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2.37 "Performance Objectives" has the meaning set forth in Section 11.
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2.38 "Performance Shares" means Shares issued or transferred to an
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Eligible Individual under Section 11.
2.39 "Performance Units" means Performance Units granted to an
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Eligible Individual under Section 11.
2.40 "Person" means 'person' as such term is used for purposes of
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Section 13(d) or 14(d) of the Exchange Act, including without limitation, any
individual, corporation, limited liability company, partnership, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity or any group of Persons.
2.41 "Phantom Stock" means a right granted to an Eligible Individual
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under Section 12 representing a number of hypothetical Shares.
2.42 "Plan" means the Vitamins.com, Inc. 1999 Stock Incentive Plan, as
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amended and restated from time to time.
2.43 "Pooling Transaction" means an acquisition of the Company in a
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transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles.
2.44 "Restricted Stock" means Shares issued or transferred to an
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Eligible Individual pursuant to Section 10.
2.45 "Share Award" means a grant of Shares pursuant to Section 12.
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2.46 "Shares" means the common stock, par value $.001 per share, of
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the Company.
2.47 "Stock Appreciation Right" means a right to receive all or some
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portion of the increase in the value of the Shares as provided in Section 8
hereof.
2.48 "Subsidiary" means (i) any corporation which is a subsidiary
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corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company, and (ii) any entity, whether or not incorporated, in which the
Company directly or indirectly owns fifty percent (50%) or more of the
outstanding equity or other ownership interests (including, without limitation,
Vitamins.com, LLC, a Delaware limited liability company).
2.49 "Successor Corporation" means a corporation, or a parent or
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subsidiary thereof, which issues or assumes an Option or Award in a transaction
described in Section 424(a) without regard to Sections 424(a)(1) and (2)
thereof.
2.50 "Ten-Percent Stockholder" means an Eligible Individual, who, at
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the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section
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422(b)(6) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, or of a Parent or
a Subsidiary.
2.51 "Termination of Employment" means the later of (i) severance of
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the employer-employee relationship with the Company or (ii) the resignation,
removal or termination of an officer or Director of the Company.
2.52 "Transition Period" means the period beginning with an Initial
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Public Offering and ending as of the earlier of (i) the date of the first annual
meeting of stockholders of the Company at which Directors are to be elected that
occurs after the close of the third (3rd) calendar year following the calendar
year in which the Initial Public Offering occurs, (ii) the expiration of the
Plan, (iii) a material modification of the Plan within the meaning of Treasury
Regulation (S) 1.162-27(h)(1)(iii), or (iv) the issuance of all Shares that have
been allocated under the Plan.
2.53 "Voting Securities" means all outstanding voting securities of
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the Company entitled to vote generally in the election of the Board of
Directors.
3. Administration.
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3.1 The Plan shall be administered by the Committee, which shall be
appointed by the Board. The Committee shall hold meetings at such times as may
be necessary for the proper administration of the Plan. The Committee shall
keep minutes of its meetings. A quorum shall consist of a majority of the
members of the Committee and a majority of a quorum may authorize any action.
Any decision or determination reduced to writing and signed by all of the
members of the Committee shall be as fully effective as if made by a majority
vote at a meeting duly called and held. The Committee shall consist of at least
two (2) Directors and may consist of the entire Board; provided, however, that
from and after the date of an Initial Public Offering, (A) if the Committee
consists of less than the entire Board, each member shall be a Nonemployee
Director and (B) to the extent necessary for any Option or Award intended to
qualify as Performance-Based Compensation to so qualify, each member of the
Committee, whether or not it consists of the entire Board, shall be an Outside
Director.
3.2 For purposes of the preceding sentence, if one or more members of
the Committee is not a Nonemployee Director and, if necessary for any Option or
Award intended to qualify as Performance-Based Compensation to so qualify, an
Outside Director, but recuses himself or herself or abstains from voting with
respect to a particular action taken by the Committee, then the Committee, with
respect to that action, shall be deemed to consist only of the members of the
Committee who have not recused themselves or abstained from voting.
3.3 No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or otherwise
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dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.
3.4 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Options shall be
granted under the Plan and the number of such Options to be granted and to
prescribe the terms and conditions (which need not be identical) of each such
Option, including the purchase price per Share subject to each Option, and make
any amendment or modification to any Option Agreement consistent with the terms
of the Plan;
(b) select those Eligible Individuals to whom Awards shall be
granted under the Plan and to determine the number of Shares in respect of which
each Award is granted, the terms and conditions (which need not be identical) of
each such Award, including the restrictions or Performance Objectives relating
to Awards and the maximum value of any Award, and make any amendment or
modification to any Award Agreement consistent with the terms of the Plan;
(c) construe and interpret the Plan and the Options and Awards
granted hereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, without limitation, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable, including so that the Plan and the operation of the Plan complies
with the Code to the extent applicable and other applicable law, and otherwise
to make the Plan fully effective. All decisions and determinations by the
Committee in the exercise of this power shall be final, binding and conclusive
upon the Company, its Subsidiaries, the Optionees and Grantees, and all other
persons having any interest therein;
(d) determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(e) exercise its sole discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(f) generally, exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.
4. Stock Subject to the Plan; Grant Limitations.
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4.1 The aggregate number of Shares that may be made the subject of
Options and Awards granted under the Plan shall not exceed 4,009,088. Upon a
Change in
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Capitalization, the maximum number of Shares referred to in the first sentence
of this Section 4.1 shall be adjusted in number and kind pursuant to Section 14.
The Company shall reserve for the purposes of the Plan, out of its authorized
but unissued Shares or out of Shares held in the Company's treasury, or partly
out of each, such number of Shares as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced as follows:
(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof
expires, is canceled, or is otherwise terminated for any reason without having
been exercised or payment having been made in respect of the entire Option or
Award, the Shares allocable to the expired, canceled, or otherwise terminated
portion of the Option or Award may again be the subject of Options or Awards
granted hereunder.
5. Option Grants for Eligible Individuals.
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5.1 Authority of Committee. Subject to the provisions of the Plan,
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the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, the terms and conditions of which shall be
set forth in an Agreement; provided, however, that no Eligible Individual shall
receive any Incentive Stock Options unless he is an employee of the Company, a
Parent or a Subsidiary at the time the Incentive Stock Option is granted.
5.2 Purchase Price. The purchase price (which may be greater than,
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less than or equal to the Fair Market Value on the date of grant) or the manner
in which the purchase price is to be determined for Shares under each Option
shall be determined by the Committee and set forth in the Agreement pursuant to
which each Option is granted; provided, however, that the purchase price per
Share under each Incentive Stock Option shall not be less than 100% of the Fair
Market Value of a Share on the date the Option is granted (110% in the case of
an Incentive Stock Option granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Options granted hereunder shall be for such
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term as the Committee shall determine, provided, however, that an Option shall
not be exercisable after
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the expiration of ten (10) years from the date it is granted (five (5) years in
the case of an Incentive Stock Option granted to a Ten-Percent Stockholder);
provided, further, however, that the Committee may provide that an Option (other
than an Incentive Stock Option) may, upon the death of the Optionee, be
exercised for up to one (1) year following the date of the Optionee's death even
if such period extends beyond ten (10) years from the date the Option is
granted. The Committee may, subsequent to the granting of any Option, extend the
term thereof, but in no event shall the term as so extended exceed the maximum
term provided for in the preceding sentence.
5.4 Vesting; Exercisability. Subject to Sections 5.5 and 7.5, each
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Option shall vest and shall become exercisable in such installments (which need
not be equal) and at such times as may be designated by the Committee and set
forth in the Agreement. To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the Option expires. The Committee may
accelerate the exercisability of any Option or portion thereof at any time.
5.5 Termination. Subject to Sections 7.5 and 13 and unless otherwise
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provided by the Committee, in its sole discretion, in the applicable Agreement,
the following provisions shall apply to Options upon a Termination of
Employment:
(a) Subject to Section 5.3, unless otherwise determined by the
Committee at the time of grant (and set forth in the applicable Agreement) or at
a later date, except in the case of Disability, retirement on or after the
Optionee's Normal Retirement Date and death as provided in Sections 5.5(c) and
5.5(d) below, upon an Optionee's Termination of Employment with the Company, a
Parent or a Subsidiary for any reason other than a termination for Cause, any
unexercised Option held by such Optionee shall expire three (3) months after the
Optionee has a Termination of Employment and such Option may only be exercised
by the Optionee or his or her Beneficiary to the extent that the Option or a
portion thereof was exercisable on the date of Termination of Employment;
provided, however, that no Option may be exercised after the expiration date
specified for the particular Option in the Agreement.
(b) If the Optionee's Termination of Employment arises as a
result of a termination for Cause, then, unless the Committee determines
otherwise at the time of the Termination of Employment, any unexercised Options
held by such Optionee shall terminate and expire concurrently with the
Optionee's Termination of Employment and no rights thereunder may be exercised.
(c) Subject to Section 5.3, unless otherwise determined by the
Committee at the time of grant (and set forth in the applicable Agreement) or at
a later date, if an Optionee suffers a Disability or retires on or after the
Optionee's Normal Retirement Date, any unexercised Option held by such disabled
or retired Optionee shall expire one (1) year after the Disability Date or date
of Termination of Employment by reason of retirement, as the case may be, and
such Option may only be exercised by the Optionee or his or her guardian or
legal representative to the extent that the Option or a portion thereof was
exercisable on the
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Disability Date or the date of Termination of Employment by reason of
retirement, as the case may be; provided, however, no Option may be exercised
after the expiration date specified for the particular Option in the Agreement.
(d) Subject to Section 5.3, unless otherwise determined by the
Committee at the time of grant (and set forth in the applicable Agreement) or at
a later date, if an Optionee dies while still employed by the Company, the
Options which the Optionee was entitled to exercise on the date of the
Optionee's death may be exercised at any time after the Optionee's death by the
Optionee's Beneficiary; provided, however, that no Option may be exercised after
the earlier of: (i) one (1) year after the Optionee's death or (ii) the
expiration date specified for the particular Option in the Agreement. If an
Optionee dies after his or her Termination of Employment, then the Options which
the Optionee was entitled to exercise on the date of the Optionee's death may be
exercised by his or her Beneficiary within the period specified in Sections
5.5(a) or 5.5(c), as the case may be.
(e) Subject to Section 5.3 and notwithstanding any other
provision of this Section 5.5, upon an Optionee's Termination of Employment at
any time on, or within one (1) year after, the occurrence of a Change in
Control, each Option held by the Optionee that was exercisable as of the date of
such Termination of Employment shall remain exercisable for a period ending not
before the earlier of (A) the first anniversary of the Termination of Employment
or (B) the expiration of the stated term of the Option.
(f) Unless otherwise determined by the Committee at the time of
grant (and set forth in the applicable Agreement) or at a later date, the Option
(or portion thereof), to the extent not yet vested and exercisable as of the
date of the Optionee's Termination of Employment, shall terminate immediately
upon such date.
5.6 Deferred Delivery of Option Shares. The Committee may, in its
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sole discretion, permit Optionees to elect to defer the issuance of Shares upon
the exercise of one or more Nonqualified Stock Options granted pursuant to the
Plan. The terms and conditions of such deferral shall be determined at the time
of the grant of the Option or thereafter and shall be set forth in the Agreement
evidencing the Option.
5.7 Modification. No modification of an Option shall adversely alter
------------
or impair any rights or obligations under the Option without the Optionee's
consent.
5.8 Limitations on Incentive Stock Options. To the extent that the
---------------------------------------
aggregate Fair Market Value (determined as of the date of the grant) of Shares
with respect to which Incentive Stock Options granted under the Plan and
"incentive stock options" (within the meaning of Section 422 of the Code)
granted under all other plans of the Company or its Subsidiaries (in either case
determined without regard to this Section 5.8) are exercisable by an Optionee
for the first time during any calendar year exceeds $100,000, such Incentive
Stock Options shall be treated as Nonqualified Stock Options. In applying the
limitation in the preceding sentence in the case of multiple Option grants,
Options which were intended to be Incentive Stock Options shall be treated as
Nonqualified Stock Options according to the order in
12
<PAGE>
which they were granted such that the most recently granted Options are first
treated as Nonqualified Stock Options.
6. Option Grants for Nonemployee Directors.
---------------------------------------
6.1 Grant. Formula Options may, in the sole discretion of the
-----
Committee, be granted to a Nonemployee Director who is elected or appointed as a
member of the Board on such terms and conditions as determined by the Committee,
as set forth in an Agreement.
6.2 Purchase Price. The purchase price (which may be greater than,
--------------
less than or equal to the Fair Market Value on the date of grant) or the manner
in which the purchase price is to be determined for Shares under each Formula
Option shall be determined by the Committee and set forth in the Agreement
pursuant to which each Formula Option is granted.
6.3 Vesting. Each Formula Option shall vest and be exercisable in
-------
accordance with the Agreement evidencing such Award.
6.4 Maximum Duration. Subject to Section 7.5, each Formula Option
----------------
shall terminate on the date which is the tenth (10th) anniversary of the date of
grant; provided, however, that if an Optionee dies while a Director and prior to
such tenth (10th) anniversary, the Formula Option may be exercised, to the
extent that the Formula Option or portion thereof was exercisable on the date of
death, for up to one (1) year following the date of the Optionee's death even if
such period extends beyond ten (10) years from the date the Formula Option is
granted, unless terminated earlier as follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Disability, death or Cause, the Optionee may for a period of
three (3) months after such termination exercise his or her Formula Option, to
the extent that the Formula Option or portion thereof was exercisable on the
date of such termination, after which time the Formula Option shall
automatically terminate in full.
(b) If an Optionee's service as a Director terminates by reason
of the Optionee's resignation or removal from the Board due to Disability, the
Optionee or his or her guardian or legal representative may, for a period of one
(1) year after such termination, exercise his or her Formula Option, to the
extent that the Formula Option or portion thereof was exercisable on the date of
Disability, after which time the Formula Option shall automatically terminate in
full.
(c) If an Optionee's service as a Director terminates for Cause,
the Formula Option granted to the Optionee hereunder shall immediately terminate
in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director, the Formula Option may
be exercised at any time after the Optionee's death by the Optionee's
Beneficiary, to the extent that the Formula Option or portion thereof was
exercisable by the Optionee on the date of death; provided, however, that no
Formula Option may be exercised after the first anniversary of the
13
<PAGE>
Optionee's death. If an Optionee dies after his or her service as a
Director terminates, then the Formula Option may be exercised by his or her
Beneficiary within the period specified in Sections. 6.4(a) or 6.4 (b), as the
case may be, to the extent that the Formula Option or portion thereof was
exercisable by the Optionee on the date of death.
(e) Notwithstanding any other provision of this Section 6.4, in the
event an Optionee's service as a Director of the Company is terminated at any
time on, or within one (1) year after, the occurrence of a Change in Control,
the Formula Option held by the Optionee shall remain exercisable, to the extent
that the Formula Option or portion thereof was exercisable by the Optionee on
the date of termination, for a period ending not before the earlier of (A) the
first anniversary of the termination of the Optionee's employment or service or
(B) the expiration of the stated term of the Formula Option.
7. Terms and Conditions Applicable to All Options.
----------------------------------------------
7.1 Additional Terms. The provisions of this Section 7 shall apply
----------------
to all Options.
7.2 Non-Transferability. No Option granted hereunder shall be
-------------------
transferable by the Optionee to whom it is granted otherwise than by will or by
the laws of descent and distribution and an Option shall be exercisable during
the lifetime of such Optionee only by the Optionee or his or her guardian or
legal representative. Notwithstanding the foregoing, the Committee may set
forth in the Agreement evidencing an Option (other than an Incentive Stock
Option) at the time of grant or thereafter, that the Option may be transferred
to members of the Optionee's immediate family, to trusts solely for the benefit
of such immediate family members and to partnerships in which such family
members and/or trusts are the only partners. Following transfer, for purposes
of this Plan, a transferee of an Option shall be deemed to be the Optionee;
provided that the Option shall be exercisable by the transferee only to the
extent and for such periods that the Option would have been exercisable if held
by the original Optionee. For this purpose, immediate family means the
Optionee's spouse, parents, children, stepchildren and grandchildren and the
spouses of such parents, children, stepchildren and grandchildren. The terms of
an Option shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Optionee.
7.3 Method of Exercise.
------------------
(a) The exercise of an Option shall be made only by a written notice
delivered in person or by mail to the Secretary of the Company at the Company's
principal executive office, specifying the number of Shares to be purchased and,
to the extent applicable, accompanied by payment therefor and otherwise in
accordance with such procedures which may be approved by the Committee from time
to time, and in accordance with the Agreement pursuant to which the Option was
granted; provided, however, that Options may not be exercised by an Optionee for
twelve months following a hardship distribution to the Optionee, to the extent
such exercise is prohibited under Treasury Regulation (S) 1.401(k)-
1(d)(2)(iv)(B)(4). The purchase price for any Shares purchased pursuant to the
exercise of an Option shall be paid, as
14
<PAGE>
determined by the Committee in its sole discretion, by any one or a combination
of the following: (a) delivery of cash or a check to the order of the Company or
(b) transferring to the Company Shares that have been held by the Optionee for
at least six (6) months (or such lesser period as may be permitted by the
Committee) prior to the exercise of the Option and that have a Fair Market Value
equal in amount to the purchase price, such transfer to be upon such terms and
conditions as determined by the Committee. In addition, both Options and Formula
Options may be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures which are, from time to time, deemed acceptable by
the Committee. Any Shares transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the Committee,
the Optionee shall deliver the Agreement evidencing the Option to the Secretary
of the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Optionee. No fractional Shares (or cash in lieu thereof)
shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.
(b) If the Fair Market Value of the Shares with respect to which the
Option is being exercised exceeds the purchase price of such Option, an Optionee
may, instead of exercising an Option as provided in Section 7.3(a), request that
the Committee authorize payment to the Optionee of the difference between the
Fair Market Value of part or all of the Shares which are the subject of the
Option and the purchase price of the Option, such difference to be determined as
of the date the Committee receives the request from the Optionee. The
Committee, in its sole discretion, may grant or deny such a request from an
Optionee with respect to part or all of the Shares as to which the Option is
then exercisable and, to the extent granted, shall direct the Company to make
the payment to the Optionee either in cash or in Shares or in any combination
thereof; provided, however, that the payment in Shares shall be based upon the
Fair Market Value of Shares as of the date the Committee received the request
from the Optionee. An Option shall be deemed to have been exercised and shall
be canceled to the extent that the Committee grants a request pursuant to this
Section 7.3(b).
7.4 Rights of Optionees. No Optionee shall be deemed for any purpose
-------------------
to be the owner of any Shares subject to any Option unless and until (a) the
Option shall have been exercised pursuant to the terms thereof, (b) the Company
shall have issued and delivered Shares to the Optionee, and (c) the Optionee's
name shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.
7.5 Effect of Change in Control. Notwithstanding anything contained
---------------------------
in Sections 5 or 6 to the contrary, in the event of a Change in Control, the
Committee, in its sole discretion, may provide in writing in connection with, or
in contemplation of, any such Change in Control for any or all of the following
alternatives (separately or in any combination): (i) for the assumption by the
Successor Corporation of the Options theretofore granted or the substitution by
such corporation for such Options of new options covering the stock of the
Successor Corporation with appropriate adjustments as to the number and kinds of
shares and the
15
<PAGE>
purchase prices; (ii) for the continuation of the Plan in which event the Plan
and the Options shall continue under such terms as may be provided; (iii) for
the accelerated vesting of the Options; or (iv) for the payment in cash upon the
surrender to the Company for cancellation of any Option or portion of an Option
to the extent vested and not yet exercised in an amount equal to the excess, if
any, of (i) (A) in the case of a Nonqualified Stock Option, the greater of (1)
the Fair Market Value, on the date preceding the date of surrender, of the
Shares subject to the Option or portion thereof surrendered or (2) the Adjusted
Fair Market Value of the Shares subject to the Option or portion thereof
surrendered or (B) in the case of an Incentive Stock Option, the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Option or portion thereof surrendered, over (ii) the aggregate purchase price
for such Shares under the Option or portion thereof surrendered. Any vesting of
an Option or portion of an Option pursuant to this Section 7.5 or surrender of
an Option for a cash payment shall be conditioned upon the consummation of the
Change in Control and shall be effective only immediately before the
consummation of the Change in Control. Upon consummation of the Change in
Control, the Plan and all outstanding but unexercised Options shall terminate,
except to the extent provision is made in writing in connection with such
transaction for continuation of the Plan, or the assumption or substitution of
such Options. The Committee shall send written notice of an event that will
result in such a termination to all individuals who hold Options not later than
the time at which the Company gives notice thereof to its stockholders.
8. Stock Appreciation Rights.
-------------------------
The Committee may in its sole discretion, either alone or in connection
with the grant of an Option, grant Stock Appreciation Rights in accordance with
the Plan, the terms and conditions of which shall be set forth in an Agreement.
If granted in connection with an Option, a Stock Appreciation Right shall cover
the same Shares covered by the Option (or such lesser number of Shares as the
Committee may determine) and shall, except as provided in this Section 8, be
subject to the same terms and conditions as the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (a) at
-------------
any time if unrelated to an Option, or (b) if related to an Option, either at
the time of grant, or (except in the case of an Incentive Stock Option) at any
time thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an Option.
---------------------------------------------
(a) Exercise. Subject to Section 8.9, a Stock Appreciation Right
--------
granted in connection with an Option shall be exercisable at such time or times
and only to the extent that the related Options are exercisable (including,
without limitation, exercisability upon Termination of Employment or a Change in
Control), and will not be transferable except to the extent the related Option
may be transferable. A Stock Appreciation Right granted in connection with an
Incentive Stock Option shall expire no later than the expiration of the related
Incentive Stock Option and shall be exercisable only if the Fair Market Value of
a Share on the date of exercise exceeds the purchase price of the Option
specified in the related Incentive Stock Option Agreement.
16
<PAGE>
(b) Treatment of Related Options and Stock Appreciation Rights
----------------------------------------------------------
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
-------------
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right,
the Stock Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an Option.
-----------------------------------------------
(a) Terms. Stock Appreciation Rights unrelated to Options shall
-----
contain such terms and conditions as to exercisability (subject to Section 8.9),
vesting and duration as the Committee shall determine, but in no event shall
they have a term of greater than ten (10) years; provided, however, that the
Committee may provide that Stock Appreciation Rights may, upon the death of the
Grantee, be exercised for up to one (1) year following the date of the Grantee's
death even if such period extends beyond ten (10) years from the date the Stock
Appreciation Right is granted.
(b) Termination. Subject to Section 13 and except as provided in
-----------
Section 8.9, and unless otherwise provided by the Committee, in its sole
discretion, in the applicable Agreement, upon a Grantee's Termination of
Employment, a Stock Appreciation Right shall be exercisable by the Grantee to
the same extent that an Option would be exercisable by an Optionee upon the
Optionee's Termination of Employment under the provisions of Section 5.5;
provided, however, no Stock Appreciation Right may be exercised after the
expiration date specified for the particular Stock Appreciation Right in the
applicable Agreement.
8.4 Amount Payable. Subject to Section 8.7, upon the exercise of a
--------------
Stock Appreciation Right, the Grantee shall be entitled to receive an amount
determined by multiplying (x) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
(A) in the case of a Stock Appreciation Right granted in connection with an
Option, the per Share purchase price under the related Option, or (B) in the
case of a Stock Appreciation Right unrelated to an Option, the Fair Market Value
of a Share on the date the Stock Appreciation Right was granted, by (y) the
number of Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
8.5 Non-Transferability. No Stock Appreciation Right shall be
-------------------
transferable by the Grantee to whom it was granted otherwise than by will or by
the laws of descent and distribution and such Stock Appreciation Right shall be
exercisable during the lifetime of such Grantee only by the Grantee or his or
her guardian or legal representative. The terms of such Stock Appreciation
Right shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Grantee.
8.6 Method of Exercise. Stock Appreciation Rights shall be exercised
------------------
by a Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company
17
<PAGE>
at the Company's principal executive office, specifying the number of Shares
with respect to which the Stock Appreciation Right is being exercised. If
requested by the Committee, the Grantee shall deliver the Agreement evidencing
the Stock Appreciation Right being exercised and the Agreement evidencing any
related Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the Grantee.
8.7 Form of Payment. Payment of the amount determined under Section
---------------
8.4 may be made in the sole discretion of the Committee solely in whole Shares
in a number determined at their Fair Market Value on the date preceding the date
of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment
in Shares and the amount payable results in a fractional Share, no fractional
Shares (or cash in lieu thereof) shall be issued upon the exercise of the Stock
Appreciation Right and the number of Shares that will be delivered shall be
rounded to the nearest number of whole Shares.
8.8 Modification. No modification of an Award shall adversely alter
------------
or impair any rights or obligations under the Agreement without the Grantee's
consent.
8.9 Effect of Change in Control. Notwithstanding anything contained
---------------------------
in this Section 8 to the contrary, in the event of a Change in Control, the
Committee, in its sole discretion, may provide in writing in connection with, or
in contemplation of, any such Change in Control for any or all of the following
alternatives (separately or in any combination): (i) for the assumption by the
Successor Corporation of the Stock Appreciation Rights theretofore granted or
the substitution by such corporation for such Stock Appreciation Rights of new
stock appreciation rights covering the stock of the Successor Corporation with
appropriate adjustments as to the number and kinds of shares and the purchase
prices; (ii) for the continuation of the Plan in which event the Plan and the
Stock Appreciation Rights shall continue under such terms as may be provided;
(iii) for the accelerated vesting of the Stock Appreciation Rights; or (iv) with
respect to a Stock Appreciation Right unrelated to an Option, for the payment in
cash upon the surrender to the Company for cancellation of any such Stock
Appreciation Right or portion of a Stock Appreciation Right to the extent vested
and not yet exercised in an amount equal to the excess, if any, of (A) the
greater of (i) the Fair Market Value, on the date preceding the date of
surrender, of the underlying Shares subject to the Stock Appreciation Right or
portion thereof surrendered and (ii) the Adjusted Fair Market Value, on the date
preceding the date of surrender, of the Shares over (B) the aggregate Fair
Market Value, on the date the Stock Appreciation Right was granted, of the
Shares subject to the Stock Appreciation Right or portion thereof surrendered.
Any vesting of Stock Appreciation Rights pursuant to this Section 8.9 or
surrender of a Stock Appreciation Right for a cash payment shall be conditioned
upon the consummation of the Change in Control and shall be effective only
immediately before the consummation of the Change in Control. Upon consummation
of the Change in Control, the Plan and all outstanding but unexercised Stock
Appreciation Rights shall terminate, except to the extent provision is made in
writing in connection with such transaction for the continuation of the Plan, or
the assumption or substitution of such Stock Appreciation Rights. The Committee
shall send written notice of an event that will result in such a termination to
all individuals who hold Stock Appreciation Rights not later than the time at
which the Company gives notice thereof to its stockholders.
18
<PAGE>
9. Dividend Equivalent Rights.
--------------------------
The Committee may in its sole discretion grant Dividend Equivalent
Rights to Eligible Individuals in tandem with an Option or Award or as a
separate Award. The terms and conditions (including, without limitation, terms
and conditions relating to a Change in Control) applicable to each Dividend
Equivalent Right shall be specified in the Agreement under which the Dividend
Equivalent Right is granted. In the sole discretion of the Committee, amounts
payable in respect of Dividend Equivalent Rights may be payable currently or
deferred until the lapsing of restrictions on such Dividend Equivalent Rights or
until the vesting, exercise, payment, settlement or other lapse of restrictions
on the Option or Award to which the Dividend Equivalent Rights relate. In the
event that the amount payable in respect of Dividend Equivalent Rights are to be
deferred, the Committee shall determine whether such amounts are to be held in
cash or reinvested in Shares or deemed (notionally) to be reinvested in Shares.
If amounts payable in respect of Dividend Equivalent Rights are to be held in
cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its sole discretion, may determine. In the sole
discretion of the Committee, Dividend Equivalent Rights may be settled in cash
or Shares or a combination thereof, in a single installment or multiple
installments. With respect to Dividend Equivalent Rights granted in tandem with
an Option, the Agreement may provide that the Optionee may elect to have amounts
payable in respect of such Dividend Equivalent Rights applied against the
purchase price of such Option. To the extent necessary for any Dividend
Equivalent Right intended to qualify as Performance-Based Compensation under
Section 162(m) of the Code to so qualify, the terms and conditions of the
Dividend Equivalent Right shall be such that payment of the Dividend Equivalent
Right is contingent upon attainment of specified Performance Objectives within
the Performance Cycle, as provided for in Section 11, and such Dividend
Equivalent Right shall be treated as a Performance Award for purposes of
Sections 11 and 16.
10. Restricted Stock.
----------------
10.1 Grant. The Committee may in its sole discretion grant Awards to
-----
Eligible Individuals of Restricted Stock, which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement shall contain
such restrictions, terms and conditions as the Committee may, in its sole
discretion, determine and (without limiting the generality of the foregoing)
such Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the terms and
provisions set forth below in this Section 10.
10.2 Rights of Grantee. Shares of Restricted Stock granted pursuant
-----------------
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the sole discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Shares. If a Grantee shall fail to execute the Agreement evidencing a
19
<PAGE>
Restricted Stock Award, the appropriate blank stock powers, an escrow agreement
or any other documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the sole discretion of the Committee, Shares issued in
connection with a Restricted Stock Award shall be deposited together with the
stock powers with an escrow agent (which may be the Company) designated by the
Committee. Unless the Committee determines otherwise and as set forth in the
Agreement, upon delivery of the Shares to the escrow agent, the Grantee shall
have all of the rights of a stockholder with respect to such Shares, including
the right to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.
10.3 Non-transferability. Until all restrictions upon the Shares of
-------------------
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 10.4 and in the manner set forth in the Agreement evidencing the
Award, such Shares shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated, nor shall they be delivered to
the Grantee.
10.4 Lapse of Restrictions.
---------------------
(a) Generally. Subject to Section 10.4(b), restrictions upon
---------
Shares of Restricted Stock awarded hereunder shall lapse at such time or times
and on such terms and conditions as the Committee may determine; provided,
however, that except in the case of Shares of Restricted Stock issued in full or
partial settlement of another Award or other earned compensation, such
restrictions shall not fully lapse prior to the third anniversary of the date on
which such Shares of Restricted Stock were granted. The Agreement evidencing the
Award shall set forth any such restrictions.
(b) Effect of Change in Control. Notwithstanding anything in
---------------------------
this Section 10 to the contrary, in the event of a Change in Control, the
Committee, in its sole discretion, may provide in writing in connection with, or
in contemplation of, any such Change in Control for any or all of the following
alternatives (separately or in any combination): (i) for the assumption by the
Successor Corporation of the shares of Restricted Stock theretofore granted or
the substitution by such corporation for such shares of Restricted Stock of new
shares of restricted stock of the Successor Corporation with appropriate
adjustments as to the number and kinds of shares; (ii) for the continuation of
the Plan in which event the Plan and the shares of Restricted Stock shall
continue under such terms as may be provided; or (iii) for the lapse of all
restrictions upon the shares of Restricted Stock. Any vesting of shares of
Restricted Stock pursuant to this Section 10.5(b) shall be conditioned upon the
consummation of the Change in Control and shall be effective only immediately
before the consummation of the Change in Control.
10.5 Terms of Restricted Stock.
-------------------------
(a) Forfeiture of Restricted Stock. Subject to Sections 10.4(b),
------------------------------
10.5(b) and 13, all Restricted Stock shall be forfeited and returned to the
Company and all rights of the Grantee with respect to such Restricted Stock
shall terminate unless the Grantee continues in the service of the Company as an
employee or director until the expiration of the forfeiture period for
20
<PAGE>
such Restricted Stock and satisfies any and all other conditions set forth in
the Agreement. The Committee, in its sole discretion, shall determine the
forfeiture period (which may, but need not, lapse in installments) and any other
terms and conditions applicable with respect to any Restricted Stock Award.
(b) Waiver of Forfeiture Period. Notwithstanding anything
---------------------------
contained in this Section 10 to the contrary, the Committee may, in its sole
discretion, waive the forfeiture period and any other conditions set forth in
any Agreement under appropriate circumstances (including, without limitation,
the death, Disability or retirement of the Grantee or a material change in
circumstances arising after the date of grant) and subject to such terms and
conditions (including, without limitation, forfeiture of a proportionate number
of the Restricted Stock) as the Committee shall deem appropriate, provided that
the Grantee shall at that time have completed at least one (1) year of
employment or service after the date of grant.
10.6 Modification or Substitution. Subject to the terms of the Plan,
----------------------------
including, without limitation, Section 16, the Committee may modify outstanding
Awards of Restricted Stock or accept the surrender of outstanding shares of
Restricted Stock (to the extent the restrictions on such Shares have not yet
lapsed) and grant new Awards in substitution for them. Notwithstanding the
foregoing, no modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's consent.
10.7 Treatment of Dividends. At the time an Award of Shares of
----------------------
Restricted Stock is granted, the Committee may, in its sole discretion,
determine that the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on such Shares by the Company shall be (a) deferred
until the lapsing of the restrictions imposed upon such Shares and (b) held by
the Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in Shares (which shall be held as additional
Shares of Restricted Stock) or held in cash. If deferred dividends are to be
held in cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its sole discretion, may determine. Payment of
deferred dividends in respect of Shares of Restricted Stock (whether held in
cash or as additional Shares of Restricted Stock), together with interest
accrued thereon, if any, shall be made upon the lapsing of restrictions imposed
on the Shares in respect of which the deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in respect of
any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
10.8 Delivery of Shares. Upon the lapse of the restrictions on Shares
------------------
of Restricted Stock set forth herein and the Agreement evidencing the Award, the
Committee shall cause a stock certificate to be delivered to the Grantee with
respect to such Shares, free of all restrictions hereunder and thereunder.
21
<PAGE>
11. Performance Awards.
------------------
11.1 Performance Objectives
----------------------
(a) Establishment. Performance Objectives for Performance
-------------
Awards may be expressed in terms of (i) earnings per Share, (ii) Share price,
(iii) pre-tax profits, (iv) net earnings, (v) return on equity or assets, (vi)
revenues, (vii) EBITDA (earnings before interest, taxes, depreciation and
amortization), (viii) market share, or market penetration, (ix) any combination
of the foregoing or (x) prior to the end of the Transition Period, such other
criteria as the Committee may determine, and may be determined before or after
accounting changes, special charges, foreign currency effects, acquisitions,
divestitures, or other extraordinary events as determined by the Committee.
Performance Objectives may be in respect of the performance of the Company, any
of its Subsidiaries, any of its Divisions or any combination thereof.
Performance Objectives may be absolute or relative (to prior performance of the
Company or to the performance of one or more other entities or external indices)
and may be expressed in terms of a progression within a specified range. The
Performance Objectives with respect to a Performance Cycle shall be established
in writing by the Committee by the earlier of (x) the date on which a quarter of
the Performance Cycle has elapsed or (y) the date which is ninety (90) days
after the commencement of the Performance Cycle, and in any event while the
performance relating to the Performance Objectives remains substantially
uncertain.
(b) Effect of Certain Events. At the time of the granting of a
------------------------
Performance Award, or at any time thereafter, in either case to the extent
permitted under Section 162(m) of the Code and the regulations thereunder
without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, the Committee may provide for the manner in
which performance will be measured against the Performance Objectives (or may
adjust the Performance Objectives) to reflect the impact of specified corporate
transactions, accounting or tax law changes and other extraordinary or
nonrecurring events.
(c) Determination of Performance. Prior to the vesting, payment,
----------------------------
settlement or lapsing of any restrictions with respect to any Performance Award
that is intended to constitute Performance-Based Compensation made to a Grantee
who is subject to Section 162(m) of the Code, the Committee shall certify in
writing that the applicable Performance Objectives have been satisfied.
11.2 Performance Units. The Committee, in its sole discretion, may
-----------------
grant Awards of Performance Units to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Performance Units may be denominated in Shares or a specified
dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to receive payment
as provided in Section 11.2(b) of (i) in the case of Share-denominated
Performance Units, the Fair Market Value of a Share on the date the Performance
Unit was granted, the date the Performance Unit became vested or any other date
specified by the Committee, (ii) in the case of dollar-denominated Performance
Units, the specified dollar amount or (iii) a percentage (which may be more than
100%) of the amount described in clause (i) or (ii) depending on the
22
<PAGE>
level of Performance Objective attainment; provided, however, that, the
Committee may at the time a Performance Unit is granted specify a maximum amount
payable in respect of a vested Performance Unit. Each Agreement shall specify
the number of Performance Units to which it relates, the Performance Objectives
which must be satisfied in order for the Performance Units to vest and the
Performance Cycle within which such Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 11.1(c) and
----------------------
11.4, Performance Units shall become vested in such installments (which need not
be equal) and at such times or times and on such terms, conditions and
satisfaction of Performance Objectives as the Committee may, in its sole
discretion, determine at the time an Award is granted.
(b) Payment of Awards. Subject to Section 11.1(c), payment to
-----------------
Grantees in respect of vested Performance Units shall be made as soon as
practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be set
forth in the Agreement. Subject to Section 11.4, such payments may be made
entirely in Shares valued at their Fair Market Value as of the day preceding the
date of payment or such other date specified by the Committee, entirely in cash,
or in such combination of Shares and cash as the Committee in its sole
discretion shall determine at any time prior to such payment; provided, however,
that if the Committee in its sole discretion determines to make such payment
entirely or partially in Shares of Restricted Stock, the Committee must
determine the extent to which such payment will be in Shares of Restricted Stock
and the terms of such Restricted Stock at the time the Award is granted.
(c) Non-transferability. Until the vesting of Performance
-------------------
Units and the lapse of any transfer restrictions set forth in the Agreement
evidencing such Award, such Performance Units shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.
11.3 Performance Shares. The Committee, in its sole discretion, may
------------------
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the time
-----------------
an Award of Performance Shares is made the time or times at which the actual
Shares represented by such Award shall be issued in the name of the Grantee;
provided, however, that no Performance Shares shall be issued until the Grantee
has executed an Agreement evidencing the Award, the appropriate blank stock
powers and, in the sole discretion of the Committee, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance
of such Performance Shares. If a Grantee shall fail to execute the Agreement
evidencing an Award of Performance Shares, the appropriate blank stock powers,
an escrow agreement and any other documents which the Committee may require
within the time period prescribed by the Committee at the time the Award is
granted, the Award shall be null and void.
23
<PAGE>
At the sole discretion of the Committee, Shares issued in connection with an
Award of Performance Shares shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the Committee.
Except as restricted by the terms of the Agreement, upon delivery of the Shares
to the escrow agent, the Grantee shall have, in the sole discretion of the
Committee, all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
(b) Non-transferability. Until any restrictions upon the
-------------------
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 11.3(c) or 11.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may also
impose such other restrictions and conditions on the Performance Shares, if any,
as it deems appropriate.
(c) Lapse of Restrictions. Subject to Sections 11.1(c) and 11.4,
---------------------
restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time or times and on such terms,
conditions and satisfaction of Performance Objectives as the Committee may, in
its sole discretion, determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of Performance
----------------------
Shares is granted, the Committee may, in its sole discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on Shares represented by such Award which have been issued by the Company
to the Grantee shall be (i) deferred until the lapsing of the restrictions
imposed upon such Performance Shares and (ii) held by the Company for the
account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Performance Shares) or
held in cash. If deferred dividends are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest on the amount of
the account at the beginning of the year at a rate per annum as the Committee,
in its sole discretion, may determine. Payment of deferred dividends in respect
of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on
------------------
Performance Shares awarded hereunder and in the Agreement evidencing such Award,
the Committee shall cause a stock certificate to be delivered to the Grantee
with respect to such Shares, free of all restrictions hereunder.
11.4 Effect of Change in Control. Notwithstanding anything in this
---------------------------
Section 11 to the contrary, in the event of a Change in Control, the Committee,
in its sole discretion, may
24
<PAGE>
provide in writing in connection with, or in contemplation of, any such Change
in Control for any or all of the following alternatives (separately or in any
combination): (i) for the assumption by the Successor Corporation of the
Performance Awards theretofore granted or the substitution by such corporation
for such Performance Awards of new performance awards of the Successor
Corporation with appropriate adjustments as to the applicable performance
objectives and, if necessary, the number and kinds of shares; (ii) for the
continuation of the Plan in which event the Plan and the Performance Awards
shall continue under such terms as may be provided; or (iii) for the vesting of
outstanding Performance Awards as if all Performance Objectives had been
satisfied at the maximum level and, in the case of Performance Units which
become vested as a result of a Change in Control, for a payment which may be
made entirely in Shares valued at their Fair Market Value as of the day
preceding the payment, entirely in cash, or in such combination of Shares and
cash as the Committee shall determine in its sole discretion at any time prior
to such payment; provided that such payment shall be made within ten (10)
business days after such Change in Control. Any vesting of Performance Awards
pursuant to this Section 11.4 shall be conditioned upon the consummation of the
Change in Control and shall be effective only immediately before the
consummation of the Change in Control.
11.5 Termination. Except as provided in Section 13, and unless
-----------
otherwise provided by the Committee, in its sole discretion, in the applicable
Agreement, the following provisions shall apply to Performance Awards upon a
Termination of Employment:
(a) Termination of Employment Prior to End of Performance Cycle.
-----------------------------------------------------------
Except as provided in Sections 11.5(b) and (d), in the case of a Grantee's
Termination of Employment, prior to the end of a Performance Cycle, the Grantee
will not be entitled to any Performance Awards, and any Performance Shares shall
be forfeited.
(b) Disability, Retirement or Death Prior to End of Performance
-----------------------------------------------------------
Cycle. Unless otherwise provided by the Committee, in its sole discretion, in
the Agreement, if a Grantee's Disability Date or Termination of Employment by
reason of retirement on or after the Grantee's Normal Retirement Date or death
occurs following at least twelve (12) months of participation in any Performance
Cycle, but prior to the end of a Performance Cycle, the Grantee or such
Grantee's Beneficiary, as the case may be, shall be entitled to receive a pro-
rata share of his or her Performance Award as determined under Subsection (c).
(c) Pro-Rata Payment.
----------------
(i) Performance Units. With respect to Performance Units,
-----------------
the amount of any payment made to a Grantee (or Beneficiary) under circumstances
described in Section 11.5(b) will be the amount determined by multiplying the
amount of the Performance Units payable in Shares or dollars which would have
been earned, determined at the end of the Performance Cycle, had such employment
not been terminated, by a fraction, the numerator of which is the number of
whole months such Grantee was employed during the Performance Cycle, and the
denominator of which is the total number of months of the Performance Cycle.
Any such payment shall be made as soon as practicable after the end of the
respective
25
<PAGE>
Performance Cycle, and shall relate to attainment of Performance Objectives over
the entire Performance Cycle.
(ii) Performance Shares. With respect to Performance
------------------
Shares, the amount of Performance Shares held by a Grantee (or Beneficiary) with
respect to which restrictions shall lapse under circumstances described in
Section 11.5(b) will be the amount determined by multiplying the amount of the
Performance Shares with respect to which restrictions would have lapsed,
determined at the end of the Performance Cycle, had such employment not been
terminated, by a fraction, the numerator of which is the number of whole months
such Grantee was employed during the Performance Cycle, and the denominator of
which is the total number of months of the Performance Cycle. The Committee
shall determine the amount of Performance Shares with respect to which
restrictions shall lapse under this Section 11.5(c)(ii) as soon as practicable
after the end of the respective Performance Cycle, and such determination shall
relate to attainment of Performance Objectives over the entire Performance
Cycle. At that time, all Performance Shares relating to that Performance Cycle
with respect to which restrictions shall not lapse shall be forfeited.
(d) Other Events. Notwithstanding anything to the contrary in
------------
this Section 11, the Committee may, in its sole discretion, determine to pay all
or any portion of a Performance Award to a Grantee who has a Termination of
Employment prior to the end of a Performance Cycle under certain circumstances
(including, without limitation, a material change in circumstances arising after
the date of grant) and subject to such terms and conditions as the Committee
shall deem appropriate, provided that the Grantee shall have completed at his or
her date of Termination of Employment at least one (1) year of employment after
the date of grant.
(e) Termination of Employment After End of Performance Cycle.
--------------------------------------------------------
Subject to Section 11.5(f), in the case of a Grantee's Termination of Employment
after the end of a Performance Cycle in which the applicable Performance
Objectives have been satisfied, the Grantee shall not be entitled to any
Performance Awards that have not yet vested as of the date of the Grantee's
Termination of Employment.
(f) Waiver of Forfeiture. Notwithstanding anything to the
--------------------
contrary in Section 11.5(e), in the case of a Grantee's Termination of
Employment after the end of a Performance Cycle in which the applicable
Performance Objectives have been satisfied, the Committee may, in its sole
discretion, waive the forfeiture of Performance Awards and any other conditions
set forth in any Agreement under appropriate circumstances (including, without
limitation, the death, Disability, or retirement of the Grantee or a material
change in circumstances arising after the date of grant) and subject to such
terms and conditions as the Committee shall deem appropriate.
11.6 Modification or Substitution. Subject to the terms of the Plan,
----------------------------
including, without limitation, Section 16, the Committee may modify outstanding
Performance Awards or accept the surrender of outstanding Performance Awards and
grant new Performance Awards in substitution for them. Notwithstanding the
foregoing, no modification of a Performance Award
26
<PAGE>
shall adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent.
12. Other Share Based Awards.
------------------------
12.1 Share Awards. The Committee may, in its sole discretion, grant a
------------
Share Award to any Eligible Individual on such terms and conditions as the
Committee may, in its sole discretion, determine. Share Awards may be made as
additional compensation for services rendered by the Eligible Individual or may
be in lieu of cash or other compensation to which the Eligible Individual is
entitled from the Company.
12.2 Phantom Stock Awards.
--------------------
(a) Grant. The Committee may, in its sole discretion, grant
-----
shares of Phantom Stock to any Eligible Individual. Such Phantom Stock shall be
subject to the terms and conditions established by the Committee and set forth
in the applicable Agreement.
(b) Payment of Awards. Upon the vesting of a Phantom Stock
-----------------
Award, the Grantee shall be entitled to receive a cash payment in respect of
each share of Phantom Stock which shall be equal to the Fair Market Value of a
Share as of the date the Phantom Stock Award was granted, or such other date as
determined by the Committee at the time the Phantom Stock Award was granted. The
Committee may, at the time a Phantom Stock Award is granted, provide a
limitation on the amount payable in respect of each share of Phantom Stock. In
lieu of a cash payment, the Committee may settle Phantom Stock Awards with
Shares having a Fair Market Value on the date of vesting equal to the cash
payment to which the Grantee has become entitled.
13. Employment Agreement Governs Termination of Employment. An employment
------------------------------------------------------
agreement, if applicable, between an Optionee or Grantee and the Company shall
govern with respect to the terms and conditions applicable to such Option or
Award upon a termination or change in the status of the employment of the
Optionee or Grantee, to the extent that such employment agreement provides for
terms and conditions that differ from the terms and conditions provided for in
the applicable Agreement or the Plan; provided, however, that to the extent
necessary for an Option or Award intended to qualify as performance-based
compensation under Section 162(m) of the Code to so qualify, the terms of the
applicable Agreement or the Plan shall govern the Option or Award; and, provided
further, that the Committee shall have reviewed and, in its sole discretion,
approved the employment agreement.
27
<PAGE>
14. Adjustment Upon Changes in Capitalization.
-----------------------------------------
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the maximum
number and class of Shares or other stock or securities with respect to which
Options or Awards may be granted under the Plan, (ii) the maximum number and
class of Shares or other stock or securities with respect to which Options or
Awards may be granted to any Eligible Individual during any calendar year
period, (iii) the number and class of Shares or other stock or securities which
are subject to outstanding Options or Awards granted under the Plan and the
purchase price therefor, if applicable, (iv) the number and class of Shares or
other securities in respect of which Formula Options are to be granted under
Section 6 and (v) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code and, to the extent necessary for
any Option or Award intended to qualify as Performance-Based Compensation to
continue to so qualify, any such adjustment in the Shares or other stock or
securities subject to such Options and Awards shall be made in such manner as to
comply with Section 162(m) of the Code and the regulations promulgated
thereunder.
(c) If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to, or an Optionee shall be entitled to exercise an Option
with respect to, new, additional or different shares of stock or securities of
the Company or any other corporation, such new, additional or different shares
shall thereupon be subject to all of the conditions, restrictions and
performance criteria which were applicable to the Shares subject to the Award or
Option, as the case may be, prior to such Change in Capitalization.
15. Effect of Certain Transactions. Subject to Sections 7.5, 8.9, 10.4(b)
------------------------------
and 11.4 or as otherwise provided in an Agreement, in the event of (a) the
liquidation or dissolution of the Company or (b) a merger or consolidation of
the Company (a "Transaction"), the Plan and the Options and Awards issued
hereunder shall continue in effect in accordance with their respective terms,
except that following a Transaction each Optionee and Grantee shall be entitled
to receive in respect of each Share subject to any outstanding Options or
Awards, as the case may be, upon exercise of any Option or payment or transfer
in respect of any Award, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Options and Awards prior to such Transaction.
16. Interpretation. Following the required registration of any equity
--------------
security of the Company pursuant to Section 12 of the Exchange Act, unless
otherwise expressly stated in the relevant Agreement, each Option, Stock
Appreciation Right and Performance Award granted under the Plan to a "covered
employee" within the meaning of Section 162(m)(3) of the Code is
28
<PAGE>
intended to be Performance-Based Compensation (except that, in the event of a
Change in Control, payment of Performance Awards to a Grantee who remains a
"covered employee" with respect to such payment may not qualify as Performance-
Based Compensation). The Committee shall not be entitled to exercise any
discretion otherwise authorized hereunder with respect to such Options or Awards
if the ability to exercise such discretion or the exercise of such discretion
itself would cause the compensation attributable to such Options or Awards to
fail to qualify as Performance-Based Compensation. Notwithstanding anything to
the contrary in the Plan, the provisions of the Plan may at any time be
bifurcated by the Board or the Committee in any manner so that certain
provisions of the Plan or any Performance Award intended (or required in order)
to satisfy the applicable requirements of Section 162(m) of the Code are only
applicable to persons whose compensation is subject to Section 162(m).
17. Pooling Transactions. Notwithstanding anything contained in the Plan
--------------------
or any Agreement to the contrary, in the event of a Change in Control which is
also intended to constitute a Pooling Transaction, the Committee shall take such
actions, if any, as are specifically recommended by an independent accounting
firm retained by the Company to the extent reasonably necessary in order to
assure that the Pooling Transaction will qualify as such, including, without
limitation, (a) deferring the vesting, exercise, payment, settlement or lapsing
of restrictions with respect to any Option or Award, (b) providing that the
payment or settlement in respect of any Option or Award be made in the form of
cash, Shares or securities of a successor or acquirer of the Company, or a
combination of the foregoing, and (c) providing for the extension of the term of
any Option or Award to the extent necessary to accommodate the foregoing, but
not beyond the maximum term permitted for any Option or Award.
18. Effective Date, Termination and Amendment of the Plan.
-----------------------------------------------------
18.1 Effective Date. The effective date of this Plan shall be the
--------------
date the Plan is adopted by the Board, subject only to the approval of the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting of the stockholders
duly held in accordance with the applicable laws of the State of Delaware within
twelve (12) months of the adoption of the Plan by the Board.
18.2 Plan Amendment or Termination. The Plan shall terminate on the
-----------------------------
day preceding the tenth anniversary of the date of its adoption by the Board and
no Option or Award may be granted thereafter. The Board may sooner terminate
the Plan and the Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan; and
29
<PAGE>
(b) to the extent necessary under any applicable law, regulation
or exchange requirement no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law, regulation or
exchange requirement.
19. Non-Exclusivity of the Plan. The adoption of the Plan by the Board
---------------------------
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
20. Limitation of Liability. As illustrative of the limitations of
-----------------------
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(a) give any person any right to be granted an Option or Award other
than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any Subsidiary to
terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
21. Regulations and Other Approvals; Governing Law.
----------------------------------------------
21.1 Except as to matters of federal law, the Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Delaware without giving effect to conflicts of
laws principles thereof.
21.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
21.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
21.4 Each Option and Award is subject to the requirement that, if at
any time the Committee determines, in its sole discretion, that the listing,
registration or qualification of
30
<PAGE>
Shares issuable pursuant to the Plan is required by any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option or Award or the issuance of Shares, no Options or
Awards shall be granted or payment made or Shares issued, in whole or in part,
unless listing, registration, qualification, consent or approval has been
effected or obtained free of any conditions as acceptable to the Committee.
21.5 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Company may place on any certificate representing any such
Shares any legend deemed desirable by the Company's counsel to comply with
federal or state securities laws and the Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition precedent to receipt of such Shares, to represent and warrant to the
Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act or the rules and
regulations promulgated thereunder.
22. Miscellaneous.
-------------
22.1 Multiple Agreements. The terms of each Option or Award may
-------------------
differ from other Options or Awards granted under the Plan at the same time, or
at some other time. The Committee may also grant more than one Option or Award
to a given Eligible Individual during the term of the Plan, either in addition
to, or in substitution for, one or more Options or Awards previously granted to
that Eligible Individual.
22.2 Captions. The use of captions in this Plan or any Agreement is
--------
for the convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Agreement.
22.3 Severability. Whenever possible, each provision of the Plan or
------------
an Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of the Plan or an Agreement shall be
held by a court of competent jurisdiction to be prohibited by or invalid or
unenforceable under applicable law, then (a) such provision shall be deemed to
be amended to accomplish the objectives of the provision as originally written
to the fullest extent permitted by law and (b) all other provisions of the Plan
or an Agreement shall remain in full force and effect.
22.4 Withholding of Taxes.
--------------------
(a) At such times as an Optionee or Grantee recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or
31
<PAGE>
Grantee shall pay to the Company an amount equal to the federal, state and local
income taxes and other amounts as may be required by law to be withheld by the
Company in connection with the Taxable Event (the "Withholding Taxes") prior to
the issuance, or release from escrow, of such Shares or the payment of such
cash. The Company shall have the right to deduct from any payment of cash to an
Optionee or Grantee an amount equal to the Withholding Taxes in satisfaction of
the obligation to pay Withholding Taxes. In satisfaction of the obligation to
pay Withholding Taxes to the Company, the Optionee or Grantee may make a written
election (the "Tax Election"), which may be accepted or rejected in the sole
discretion of the Committee, to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
22.5 Post-Transition Period. Any Option or Award granted under the
----------------------
Plan after the expiration of the Transition Period which is intended to be
Performance-Based Compensation shall be subject to the approval of the material
terms of the Plan by a majority of the stockholders of the Company in accordance
with Section 162(m) of the Code and the regulations promulgated thereunder.
32
