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EXHIBIT 10.6
ADVANCED SWITCHING COMMUNICATIONS, INC.
2000 STOCK INCENTIVE PLAN
AS ADOPTED
AUGUST 17, 2000
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ADVANCED SWITCHING COMMUNICATIONS, INC.
2000 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to strengthen Advanced Switching
Communications, 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, 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, Stock Appreciation Rights, Dividend Equivalent
Rights, Performance Units and Performance Shares, Share Awards, Phantom Stock
and Restricted Stock (as each term is herein defined). After the Effective Date
of this Plan, no further awards shall be made under the Advanced Switching
Communications, Inc. 1998 Nonqualified Stock Option Plan, the Advanced Switching
Communications, Inc. Second 1998 Nonqualified Stock Option Plan and the Advanced
Switching Communications, Inc. 1999 Nonqualified Stock Option Plan (each as
amended and currently in effect, the "Former Plans"). Each award outstanding
under the Former Plans as of the Effective Date of this Plan shall remain
outstanding and continue to be subject to the terms of the Former Plans and the
award agreement under which such award was granted. Each Share that is available
for the granting of new awards under the Former Plans as of the Effective Date
of this Plan and each Share that is the subject of an award under the Former
Plans but is not issued prior to the time that such award expires or otherwise
terminates (collectively, the "Former Plan Shares") shall, after the Effective
Date of this Plan, not be available for the granting of awards under the Former
Plans, but shall instead be available for the granting of Options or Awards
under this Plan.
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
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
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"
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means a spouse, child, stepchild, 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
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 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 13d-3 promulgated under the Exchange Act.
2.6 "Beneficiary" means an individual, trust or estate who or which,
by a written designation of the Optionee or Grantee filed with the Company or by
operation of law succeeds to the rights and obligations of the Optionee or
Grantee under the Plan and an Agreement upon the Optionee's or Grantee's death.
2.7 "Board" means the Board of Directors of the Company.
2.8 "Cause" means:
(a) in the case of an Optionee or Grantee who is a Nonemployee
Director, the commission of an act of fraud or intentional misrepresentation or
an act of embezzlement, misappropriation or conversion of assets or
opportunities of the Company or any of its Subsidiaries, and
(b) in the case of an Optionee or Grantee whose employment
with the Company or a Subsidiary is, as the date of the applicable Agreement,
subject to the terms of an employment agreement between such Optionee or Grantee
and the Company or a 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
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Subsidiaries and which is engaged in for personal profit or (iv) willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) in connection with the performance of duties.
2.9 "Change in Capitalization" means any increase or reduction in
the 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 following:
(a) An acquisition (other than directly from 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 then
outstanding Shares or 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), Shares or
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 individuals who, as of the date hereof, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the members of the Board, or following a Merger (as defined in
paragraph (c)(i) below) which results in a Parent corporation, the board of
directors of the ultimate Parent Corporation (as defined in paragraph (c)(i)(A)
below); provided, however, that if the election, or nomination for election by
the Company's common stockholders, of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual
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or threatened "Election Contest" (as described in Rule 14a-11 promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a "Proxy Contest")
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with
or into the Company or in which securities of the Company are issued (a
"Merger"), unless such Merger is a "Non-Control Transaction." A "Non-Control
Transaction" shall mean a Merger where:
(A) the stockholders of the Company,
immediately before such Merger own directly or indirectly immediately following
such Merger at least fifty percent (50%) of the combined voting power of the
outstanding voting securities of (x) the corporation resulting from such Merger
(the "Surviving Corporation") if fifty percent (50%) or more of the combined
voting power of the then outstanding voting securities of the Surviving
Corporation is not Beneficially Owned, directly or indirectly by another Person
(a "Parent Corporation"), or (y) if there are one or more Parent Corporations,
the ultimate Parent Corporation; and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such Merger constitute at least a majority of the members of the board of
directors of (x) the Surviving Corporation, if there is no Parent Corporation,
or (y) if there are one or more Parent Corporations, the ultimate Parent
Corporation; and
(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 was maintained by the Company or
any Related Entity, or (4) any Person who, together with its Affiliates,
immediately prior to such Merger, had Beneficial Ownership of fifty percent
(50%) or more of the then outstanding Voting Securities or Shares, owns,
together with its Affiliates, Beneficial Ownership of (i) fifty percent (50%) or
more of the combined voting power of the outstanding voting securities or common
stock of (x) the Surviving Corporation if there is no Parent Corporation, or (y)
if there are one or more Parent Corporations, the ultimate Parent Corporation.
(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 under conditions that would constitute a
Non-Control Transaction with the disposition of
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the assets being regarded as a Merger for this purpose 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 more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or 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 Shares or
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
Shares or Voting Securities in contemplation of such share acquisition by the
Company or (2) after such share acquisition by the Company the Subject Person
becomes the Beneficial Owner of any new or additional Shares or Voting
Securities which in either case increases the percentage of the then outstanding
Shares or 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.
2.12 "Committee" means a committee, as described in Section 3.1,
appointed by the Board from time to time to administer the Plan and to perform
the functions set forth herein.
2.13 "Company" means Advanced Switching Communications, Inc.
2.14 "Director" means a director of the Company.
2.15 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment
with the Company or a Subsidiary is, as of the date of the applicable Agreement,
subject to the terms of an employment agreement between such Optionee or Grantee
and the Company or a 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.
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2.16 "Disability Date" means the date which is one hundred eighty
(180) consecutive days after 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 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
Company designated as a Division by the Committee.
2.19 "Eligible Individual" means any of the following individuals
who is designated by the Committee as eligible to receive Options or Awards
subject to the conditions set forth herein: (a) any 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 amended.
2.21 "Fair Market Value" on any date means the closing sales prices
of 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 "Former Plans" means the Advanced Switching Communications,
Inc. 1998 Nonqualified Stock Option Plan, the Advanced Switching
Communications, Inc. Second 1998 Nonqualified Stock Option Plan and the
Advanced Switching Communications, Inc. 1999 Nonqualified Stock Option Plan.
2.23 "Good Reason" means
(a) the assignment to the Optionee or Grantee of any duties
inconsistent in any material respects with the Optionee's or Grantee's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities in effect prior to the Change in Control;
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(b) any change in the location of the performance of such
duties, such that the Optionee or Grantee is required to travel or commute a
substantially greater distance than he or she does prior to the change in
location;
(c) the establishment of a base salary for the Optionee or
Grantee which is less than eighty percent (80%) of the amount paid to the
Optionee or Grantee prior to the Change in Control;
(d) the failure to pay base salary other than an
isolated, inadvertent or insubstantial failure, not occurring in bad faith; or
(e) any purported termination of the Optionee's or Grantee's
employment by the Company in material breach of a written employment agreement
between the Company and the Optionee or Grantee;
provided, however, that in the event the Good Reason is for events
or circumstances described in paragraphs (a) and (b) hereof, Company shall have
thirty (30) days following receipt of a written notice from the Optionee or
Grantee to effect a cure of the event or circumstance constituting Good Reason,
and, upon cure thereof by the Company (which cure shall be retroactive with
respect to any monetary matter), such event shall no longer constitute Good
Reason.
2.24 "Grantee" means a person to whom an Award has been granted
under the Plan.
2.25 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.26 "Initial Public Offering" means the consummation of the first
public offering of Shares pursuant to a registration statement (other than a
Form S-8 or successor forms) filed with, and declared effective by, the
Securities and Exchange Commission.
2.27 "Nonemployee Director" means a director of the Company who is a
"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
Incentive Stock Option.
2.29 "Normal Retirement Date" means the date on which an Optionee or
Grantee terminates active employment with the Company on or after attainment of
age 65, but does not include termination by the Company for Cause.
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2.30 "Option" means a Nonqualified Stock Option, an Incentive Stock
Option or both of them.
2.31 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.32 "Outside Director" means a director of the Company who is an
"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
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.34 "Performance Awards" means Performance Units, Performance
Shares or either or both of them.
2.35 "Performance-Based Compensation" means any Option or Award that
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
Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.37 "Performance Objectives" has the meaning set forth in
Section 11.
2.38 "Performance Shares" means Shares issued or transferred to an
Eligible Individual under Section 11.
2.39 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 11.
2.40 "Person" means 'person' as such term is used for purposes of
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
under Section 12 representing a number of hypothetical Shares.
2.42 "Plan" means the Advanced Switching Communications, Inc.
2000 Stock Incentive Plan, as amended and restated from time to time.
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2.43 "Pooling Transaction" means an acquisition of the Company in a
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
Eligible Individual pursuant to Section 10.
2.45 "Share Award" means a grant of Shares pursuant to Section
12.
2.46 "Shares" means the common stock, par value $0.005 per share, of
the Company and any other securities into which such shares are changed or for
which such shares are exchanged.
2.47 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8
hereof.
2.48 "Subsidiary" means (i) except as provided in subsection (ii)
below, any corporation which is or becomes a subsidiary corporation (within the
meaning of Section 424(f) of the Code) with respect to the Company, and (ii)
with respect to provisions relating to the eligibility to receive Options or
Awards other than Incentive Stock Options and to continued employment for
purposes of Options and Awards (unless the Committee determines otherwise), 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.
2.49 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof, which issues or assumes an Option or Award in a transaction
described in Section 424(a) of the Code without regard to Sections 424(a)(1) and
(2) thereof.
2.50 "Tax Benefit" means an actual decrease in the Company's
liability for taxes in any period.
2.51 "Ten-Percent Stockholder" means an Eligible Individual, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 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.
2.52 "Termination of Employment" means
(a) in the case of a Director, the termination of the
Optionee's or Grantee's service as a Director, or
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(b) in all other cases, the later of (i) severance of the
employer-employee relationship with the Company, a Parent or a Subsidiary or
(ii) the resignation, removal or termination of an officer or Director of the
Company, a Parent or a Subsidiary.
2.53 "Transition Period" means the period beginning with an Initial
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 or (ii) the expiration of the
"reliance period" under Treasury Regulation Section 1.162-27(f)(2).
2.54 "Voting Securities" means all outstanding voting securities of
the Company entitled to vote generally in the election of the Board of
Directors.
3. Administration.
3.1 (a) The Plan shall be administered by the Committee, which 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. If the Committee
consists of more than one (1) member, a quorum shall consist of not fewer than
two (2) 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 one (1) Director 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, then with respect to any
Option or Award to an Eligible Individual who is subject to Section 16 of the
Exchange Act, the Committee shall consist of at least two (2) Directors each of
whom 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, the Committee shall consist of at least two (2) Directors each of whom
shall be an Outside Director. 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. Subject to applicable law, the Committee may delegate its authority
under the Plan to any other person or persons.
3.2 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
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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 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.
3.3 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, the vesting schedule and the
duration of 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 Rule 16b-3 under the Exchange Act, 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
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(f) exercise, generally, 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.
4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under this Plan, including the Former Plan Shares,
shall not exceed 6,000,000 plus the aggregate number of Shares that would have
been available for the granting of new awards under the Former Plans after the
Effective Date of this Plan (but for the prospective termination of the Former
Plans), including the Shares that were available for new grants under each of
the Former Plans as of the Effective Date of this Plan and the Shares that are
subject to outstanding awards granted under any of the Former Plans which Shares
are not issued prior to the expiration of such awards (including Shares subject
to awards that expire or terminate after the expiration of the term of a Former
Plan; provided, however, that in the aggregate, not more than one-third of the
number of allotted Shares may be made the subject of Restricted Stock Awards
under Section 10 of the Plan (other than shares of Restricted Stock made in
settlement of Performance Units pursuant to Section 11.2(b)). 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
under this Plan or the Former Plans 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
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terminated portion of the Option or Award may again be the subject of Options or
Awards granted hereunder.
4.4 In no event may more than 6,000,000 Shares be issued upon the
exercise of Incentive Stock Options granted under the Plan.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the Plan,
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. Incentive Stock Options may be granted only to
Eligible Individuals who are employees of the Company or any Subsidiary.
5.2 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 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 Option intended to qualify as Performance-Based Compensation
shall not be less than 100% of the Fair Market Value of a Share on the Date the
Option is granted and provided, further, 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
term as the Committee shall determine; provided, however, that an Option shall
not be exercisable after 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 prior to the expiration of the Option, 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 Exercisability. Subject to Sections 5.5 and 7.5, each Option
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.
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5.5 Termination. Subject to Sections 5.3, 7.5 and 13 and unless
otherwise provided by the Committee, in its sole discretion, at the time of
grant (and set forth in the applicable Agreement) or at a later date, the
following provisions shall apply to Options upon a Termination of Employment:
(a) Except in the case of termination for Cause, Disability,
retirement on or after the Optionee's Normal Retirement Date, and death as
provided in Sections 5.5(b), (c) and (d) below, upon an Optionee's Termination
of Employment with the Company, a Parent or a Subsidiary for any reason, any
unexercised Option (or portion thereof) held by such Optionee shall expire three
(3) months after the Optionee has a Termination of Employment and such Option
(or portion thereof) 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.
(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
(whether or not vested and exercisable) held by such Optionee shall terminate
and expire concurrently with the Optionee's Termination of Employment and no
rights thereunder may be exercised.
(c) If an Optionee suffers a Disability or retires on or after
the Optionee's Normal Retirement Date, any unexercised Option (or portion
thereof) 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 (or portion thereof) 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 Disability
Date or the date of Termination of Employment by reason of retirement, as the
case may be.
(d) If an Optionee dies while still employed by, or serving as
a Director for, the Company, the Options (or portions thereof) 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 (or portion thereof) 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 (or
portions thereof) 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 remaining
portion of the period specified in Sections 5.5(a) or 5.5(c), as the case may
be.
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<PAGE> 16
(e) Notwithstanding any other provision of this Section 5.5,
in the event of (i) an Optionee's Termination of Employment by the Company other
than for Cause or (ii) an Optionee's Termination of Employment for Good Reason
at any time on, or within one (1) year after, the occurrence of a Change in
Control, each Option (or portion thereof) held by the Optionee shall immediately
vest and be deemed to have vested the date immediately preceding the date of
such Termination of Employment and 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, provided,
however, that in order to obtain the rights described in Section 5.5(e)(ii) with
respect to a Termination of Employment for Good Reason, the Optionee or Grantee
shall provide to Company a written notice within ninety (90) days after the
Optionee or Grantee knows or has reason to know of the occurrence of any event
or circumstance which would constitute Good Reason, and the Optionee or Grantee
shall specify in reasonable detail the event or circumstance which would
constitute Good Reason.
(f) 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
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 a 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 which they were granted
such that the most recently granted Options are first treated as Nonqualified
Stock Options.
6. Intentionally Omitted.
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7. Terms and Conditions Applicable to All Options.
7.1 Additional Terms. The provisions of this Section 7 shall
apply to all Options, unless otherwise provided by the Committee, in its sole
discretion, in the applicable Agreement.
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 or, in the case of an Option other than an
Incentive Stock Option, in the Committee's sole discretion, pursuant to a
domestic relations order (within the meaning of Rule 16a-12 promulgated under
the Exchange Act) (a "Domestic Relations Transfer"), and, except with respect to
an Option transferred pursuant to a Domestic Relations Transfer, 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 Section 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, in any of the
following forms: (a) cash or (b) the transfer, either actually or by
attestation, to the Company of Shares that have been held by the Optionee for at
least six (6) months (or such lesser
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<PAGE> 18
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 or
(c) a combination of cash and the transfer of Shares, provided, however, that
the Committee, in its sole discretion, may determine that the purchase price
shall be paid only in cash. In addition, 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.
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7.5 Effect of Change in Control.
(a) In the event of a Change in Control, the Committee may
provide, in its sole discretion, that all Options outstanding on the date of
such Change in Control shall become immediately and fully exercisable. In
addition, to the extent set forth in an Agreement evidencing the grant of an
Option or provided by the Company, in its sole discretion, subsequent to the
granting of an Option, an Optionee will be permitted to surrender to the
Company for cancellation within sixty (60) days after such Change in Control
any Option or portion of an Option to the extent not yet exercised and the
Optionee will be entitled to receive a cash payment in an amount equal to the
excess, if any, of (a) (i) in the case of a Nonqualified Stock Option, the
greater of (A) the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Option or portion thereof surrendered
or (B) the Adjusted Fair Market Value of the Shares subject to the Option or
portion thereof surrendered or (ii) 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 (b) the
aggregate purchase price for such Shares under the Option or portion thereof
surrendered.
(b) Subject to Section 7.5(d), and to the extent set forth in
the applicable Agreement or provided by the Company, in its sole discretion,
subsequent to the granting of an Option, if, as a result of a Change in Control,
an Option intended to qualify as an Incentive Stock Option fails to so qualify
solely because of the failure to meet the holding requirements of Code Section
422(a)(1) (a "Disqualifying Disposition"), the Company shall make a cash payment
to the Optionee equal to the amount which will, after taking into account all
taxes imposed on the Disqualifying Disposition and the receipt of such payment,
leave the Optionee in the same after-tax position the Optionee would have been
in had the Code Section 422(a)(1) holding requirements been met at the time of
the Disqualifying Disposition (which after-tax position will reflect the total
taxes, if any, that would have been incurred by the Optionee had the
Disqualifying Disposition been subject to federal income tax at capital gains
rates) provided, however, that no payment described in this Section shall exceed
the Tax Benefit to the Company resulting from deductions relating to ordinary
income recognized by the Optionee as a result of the Disqualifying Disposition.
The payment described in this Section shall be made by the Company within thirty
(30) days of the filing by the Company of the federal tax return which includes
the tax items associated with the income recognized by the Optionee as a result
of the Disqualifying Disposition (or, if the Tax Benefit described in the
preceding sentence is not realized until a later year, within thirty (30) days
of the filing by the Company of the federal tax return with respect to which
such Tax Benefit is realized).
(c) Subject to Section 7.5(d), and to the extent set forth in
the applicable Agreement or provided by the Company, in its sole discretion,
subsequent to
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<PAGE> 20
the granting of an Option, and provided that an Optionee is not entitled to
payment under Section 7.5(b) hereof, if, as a result of a Change in Control, an
Option intended to qualify as an Incentive Stock Option fails to so qualify
solely because the vesting of the Option is accelerated pursuant to Section
7.5(a) and such acceleration causes the aggregate fair market value (determined
at the time the Option is granted) of the Shares with respect to which Options
are exercisable for the first time by an Optionee during the calendar year in
which such vesting occurs to exceed $100,000, within the meaning of Code Section
422(d) (a "Disqualified Option"), then, upon exercise of such Disqualified
Option, the Company shall make a cash payment to the Optionee equal to the
amount which will, after taking into account all taxes imposed on the exercise
of such Disqualified Option and the receipt of such payment, leave the Optionee
in the same after-tax position the Optionee would have been in had the
Disqualified Option continued to qualify as an Incentive Stock Option on the
date of exercise and the Optionee sold the Shares received upon exercise of the
Option at their Fair Market Value on the date of exercise, provided, however,
that no payment described in this Section shall exceed the Tax Benefit to the
Company resulting from deductions relating to ordinary income recognized by the
Optionee as a result of exercising the Disqualified Option and the receipt of
such payment. The payment described in this Section shall be made by the Company
within thirty (30) days of the filing by the Company of the federal tax return
which includes the tax items associated with the income recognized by the
Optionee as a result of exercising the Disqualified Option (or, if the Tax
Benefit described in the preceding sentence is not realized until a later year,
within thirty (30) days of the filing by the Company of the federal tax return
with respect to which such Tax Benefit is realized).
(d) If more than one Optionee is entitled to a cash payment
pursuant to Section 7.5(b) or Section 7.5(c) in any single tax year and the Tax
Benefit realized by the Company in such year with respect to all such Optionees
is less than the aggregate amount of the payments due to such Optionees
hereunder, then (i) each such Optionee shall receive a portion of such cash
payment equal to an amount determined by multiplying the amount of the Tax
Benefit realized by the Company in such year by a fraction the numerator of
which is equal to the amount of payment due to such Optionee and the denominator
of which is equal to the aggregate amount due to all such Optionees entitled to
a payment hereunder, and (ii) subject to further application of this Section
7.5(d), shall be entitled to receive the remaining portion within thirty (30)
days of the filing by the Company of the federal tax return with respect to
which such Tax Benefit is realized.
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
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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.
(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. Subject to Section 8.9, stock Appreciation Rights
unrelated to Options shall contain such terms and conditions as to
exercisability, 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 was 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
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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 or, in the Committee's sole discretion,
(except in the case of a Stock Appreciation Right granted in connection with an
Incentive Stock Option), pursuant to domestic relations order (within the
meaning of Rule 16a-12 promulgated under the Exchange Act (a "Domestic Relations
Transfer") and, except with respect to a Stock Appreciation Right transferred
pursuant to a Domestic Relations Transfer, 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 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
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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. In the event of a Change in
Control, the Committee may provide, in its sole discretion, that all Stock
Appreciation Rights shall become immediately and fully exercisable. In addition,
to the extent set forth in an Agreement evidencing the grant of a Stock
Appreciation Right unrelated to an Option or provided by the Company, in its
sole discretion, subsequent to the granting of a Stock Appreciation Right
unrelated to an Option, a Grantee will be entitled to receive a payment from the
Company in cash 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 exercise, of the
underlying Shares subject to the Stock Appreciation Right or portion thereof
exercised and (ii) the Adjusted Fair Market Value, on the date preceding the
date of exercise, 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 exercised.
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. To the
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extent necessary for any Dividend Equivalent Right intended to qualify as
Performance-Based Compensation 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 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, 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.
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<PAGE> 25
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. Unless the Committee shall
determine otherwise at the time of the grant of an Award of Restricted Stock,
the restrictions upon Shares of Restricted Stock shall lapse in the event of (i)
a Grantee's Termination of Employment by the Company other than for Cause or
(ii) a Grantee's Termination of Employment for Good Reason at any time on, or
within one (1) year after, the occurrence of a Change in Control, provided,
however, that in order to obtain the rights described in this Section 10.4(b)
with respect to a Termination of Employment for Good Reason, the Grantee shall
provide to Company a written notice within ninety (90) days after the Grantee
knows or has reason to know of the occurrence of any event or circumstance which
would constitute Good Reason, and the Grantee shall specify in reasonable detail
the event or circumstance which would constitute Good Reason. Notwithstanding
the foregoing, the Committee may provide, in it sole discretion, that the
restrictions upon Shares of Restricted Stock shall lapse upon a 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 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
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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, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
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) after-tax profits, (v) operating profits, (vi) sales
or expenses, (vii) net earnings, (viii) return on equity or assets, (ix)
revenues, (x) EBITDA (earnings before interest, taxes, depreciation and
amortization), (xi) market share, or market penetration, (xii) any combination
of the foregoing or (xiii) prior to the end of the Transition Period,
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such other criteria as the Committee may determine. 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 to the extent necessary for such Award to qualify as Performance-Based
Compensation.
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 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
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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 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.
(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, 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
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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 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 also may
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.
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(e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, 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. In the event of a Change in
Control, unless otherwise determined by the Committee and set forth in the
Agreement evidencing the Award:
(a) With respect to Performance Units, in the event of (i) a
Grantee's Termination of Employment by the Company other than for Cause or (ii)
a Grantee's Termination of Employment for Good Reason at any time on, or within
one (1) year after, the occurrence of a Change in Control, the Grantee shall
become vested in all outstanding Performance Units as if all Performance
Objectives had been satisfied at the maximum level, provided, however, that in
order to obtain the rights described in this Section 11.4(a) with respect to a
Termination of Employment for Good Reason, the Grantee shall provide to Company
a written notice within ninety (90) days after the Grantee knows or has reason
to know of the occurrence of any event or circumstance which would constitute
Good Reason, and the Grantee shall specify in reasonable detail the event or
circumstance which would constitute Good Reason. The Grantee shall be entitled
to receive in respect of all Performance Units which become vested pursuant to
this Section 11.4(a) a cash payment within ten (10) days after such Termination
of Employment. Notwithstanding the foregoing, the Committee may provide, in it
sole discretion, that Performance Units shall vest upon a Change in Control.
(b) With respect to Performance Shares, all restrictions on
outstanding Performance Shares held by a Grantee shall lapse as if all
Performance Objectives had been satisfied at the maximum level in the event of
(i) the Grantee's Termination of Employment by the Company other than for Cause
or (ii) the Grantee's Termination of Employment for Good Reason at any time on,
or within one (1) year after, the occurrence of a Change in Control, provided,
however, that in order to obtain the rights described in this Section 11.4(b)
with respect to a Termination of Employment for Good Reason, the Grantee shall
provide to Company a written notice within ninety (90) days after the Grantee
knows or has reason to know of the occurrence of any event or circumstance which
would constitute Good Reason, and the Grantee shall specify in reasonable detail
the event or circumstance which would constitute Good Reason. Notwithstanding
the foregoing, the Committee may provide, in it sole discretion, that the
restrictions upon Performance Shares shall lapse upon a Change in Control.
(c) The Agreements evidencing Performance Units and
Performance Shares shall provide for the treatment of such Awards (or portions
thereof), if any, which do not become vested pursuant to Section 11.4(a) or
Section 11.4(b), as the
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case may be, including, but not limited to, provisions for the adjustment of
applicable Performance Objectives.
11.5 Termination. Subject to Sections 11.4 and 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 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
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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. Except to the extent a Performance Award is
intended to qualify as Performance-Based Compensation, 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 Sections 11.4 and 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(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 shall
adversely alter or impair any rights or obligations under the Agreement without
the Grantee's consent.
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12. Other Share Based Awards.
12.1 Share Awards. The Committee, in its sole discretion, may grant
a Share Award to any Eligible Individual on such terms and conditions as the
Committee may 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, in its sole discretion, may 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 of 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, in its sole discretion, 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 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.
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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, (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,
and (iv) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or securities
(i) 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 or (ii) subject to
outstanding Options or Awards that are intended to qualify as Performance-Based
Compensation shall be made in such a manner as not to adversely affect the
treatment of the Options or Awards as Performance-Based Compensation.
(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
either (i) each outstanding Option or Award shall be treated as provided for in
the agreement entered into in connection with the Transaction or (ii) if not so
provided in such agreement, 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
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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. The treatment of any Option or Award as provided in this
Section 15 shall be conclusively presumed to be appropriate for purposes of
Section 11.
16. Interpretation.
Following the required registration of any equity security of the
Company pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Committee shall interpret and administer the provisions
of the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
(b) Unless otherwise expressly stated in the relevant Agreement,
each Option, Stock Appreciation Right and Performance Award granted under the
Plan is intended to be 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.
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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
holders of a majority of the outstanding Common Stock of the Company 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
(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;
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(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 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
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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 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
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<PAGE> 39
withheld a portion of the Shares then issuable to him or her having an aggregate
Fair Market Value 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.
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