Exhibit 10.1
TELECORP PCS, INC.
2000 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
1. DEFINITIONS.
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Telecorp PCS, Inc. 2000 Employee,
Director and Consultant Stock Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated
power to act on its behalf to the Committee, in which case the
Administrator means the Committee.
Affiliate means a corporation that, for purposes of Section 424 of
the Code, is a parent or subsidiary of the Company, direct or
indirect.
Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator
shall approve.
Appreciation Right means a right granted pursuant to the Plan,
including a Free-standing Appreciation Right and a Tandem
Appreciation Right.
Base Price means the price to be used as the basis for determining
the Spread upon the exercise of a Free-standing Appreciation Right.
Board of Directors means the Board of Directors of the Company.
Code means the United States Internal Revenue Code of 1986, as
amended.
Committee means the committee of the Board of Directors to which the
Board of Directors has delegated power to act under or pursuant to
the provisions of the Plan.
Common Stock means shares of the Company's Class A Voting Common
Stock, $.01 par value per share.
Company means Telecorp PCS, Inc., a Delaware corporation.
Deferral Period means the period of time during which Deferred
Shares are subject to deferral limitations under the Plan.
Deferred Shares means an award pursuant to the Plan of the right to
receive Common Stock at the end of a specified Deferral Period.
Disability or Disabled means except as otherwise determined by the
Administrator when an individual is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a
continuous period of not less than three months.
Fair Market Value of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities exchange
or traded in the over-the-counter market and sales prices are
regularly reported for the Common Stock, the closing or last price
of the Common Stock on the Composite Tape or other comparable
reporting system for the trading day immediately preceding the
applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the
trading day referred to in clause (1), and if bid and asked prices
for the Common Stock are regularly reported, the mean between the
bid and the asked price for the Common Stock at the close of trading
in the over-the-counter market for the trading day on which Common
Stock was traded immediately preceding the applicable date; and
(3) If the Common Stock is neither listed on a national securities
exchange nor traded in the over-the-counter market, such value as
the Administrator, in good faith, shall determine.
Free-standing Appreciation Right means an Appreciation Right granted
pursuant to the Plan that is not granted in tandem with an Option or
similar right.
ISO means an option meant to qualify as an incentive stock option
under Section 422 of the Code.
Key Employee means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as
an officer or director of the Company or of an Affiliate),
designated by the Administrator to be eligible to be granted one or
more Stock Rights under the Plan.
Non-Qualified Option means an option which is not intended to
qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
Option Price means the purchase price payable upon the exercise of
an Option.
Participant means a Key Employee, director or consultant to whom one
or more Stock Rights are granted under the Plan. As used herein,
"Participant" shall include "Participant's Survivors" where the
context requires.
Plan means this Telecorp PCS, Inc. 2000 Employee, Director and
Consultant Stock Plan.
Shares means shares of the Common Stock as to which Stock Rights
have been or may be granted under the Plan or any shares of capital
stock into which the Shares are changed or for which they are
exchanged within the provisions of Paragraph 3 of the Plan. The
Shares issued under the Plan may be authorized and unissued shares
or shares held by the Company in its treasury, or both.
Spread means, in the case of a Free-standing Appreciation Right, the
amount by which the Fair Market Value per Share on the date when the
Appreciation Right is exercised exceeds the Base Price specified
therein or, in the case of a Tandem Appreciation Right, the amount
by which the Fair Market Value per Share on the date when the
Appreciation Right is exercised exceeds the Option Price specified
in the related Option.
Stock Grant means a grant by the Company of Shares under the Plan.
Stock Right means a right to Shares of the Company granted pursuant
to the Plan -- an Appreciation Right, Deferred Shares, an ISO, a
Non-Qualified Option, or a Stock Grant.
Survivors means a deceased Participant's legal representatives
and/or any person or persons who acquired the Participant's rights
to a Stock Right by will or by the laws of descent and distribution.
Tandem Appreciation Right means an Appreciation Right granted
pursuant to the Plan that is granted in tandem with an Option or any
similar right granted under any other plan of the Company.
2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Key Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options, Stock Grants, Deferred Shares and Appreciation Rights.
3. SHARES SUBJECT TO THE PLAN.
The number of Shares which may be issued from time to time pursuant to
this Plan shall be 15,000,000, or the equivalent of such number of Shares after
the Administrator, in its sole discretion, has interpreted the effect of any
stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 24 of the Plan.
If an Option ceases to be "outstanding", in whole or in part, or if the
Company shall reacquire any Shares issued pursuant to a Stock Grant or Deferred
Shares, the Shares which were subject to such Option and any Shares so
reacquired by the Company shall be available for the granting of other Stock
Rights under the Plan. Any Option shall be treated as "outstanding" until such
Option is exercised in full, or terminates or expires under the provisions of
the Plan, or by agreement of the parties to the pertinent Agreement. Upon
payment in cash of the benefit provided by any award granted under the Plan, any
Shares that were covered by that award shall again be available for the granting
of Stock Rights under the Plan.
4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to the Committee, in
which case the Committee shall be the Administrator. Subject to the provisions
of the Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Stock Rights and to
make all rules and determinations which it deems necessary or
advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall
be designated as Key Employees and which of the Key Employees,
directors and consultants shall be granted Stock Rights;
c. Determine the number of Shares for which a Stock Right or Stock
Rights shall be granted, provided, however, that in no event shall
Stock Rights with respect to more than 5,000,000 shares be granted
to any Participant in any fiscal year; and
d. Specify the terms and conditions upon which a Stock Right or Stock
Rights may be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under
it shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee. The Administrator may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
Agreement in the manner and to the extent it shall deem expedient to effectuate
the purposes of the Plan. No member of the Board of Directors, and no officer or
employee of the Company, shall be liable for any act or failure to act
hereunder, by any other member of the Board of Directors or any officer or
employee or by any agent to whom duties in connection with the administration of
the Plan have been delegated or, except in circumstances involving his bad
faith, gross negligence or fraud, for any act or failure to act by the member of
the Board of Directors or any officer or employee.
5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time a Stock
Right is granted. Notwithstanding the foregoing, the Administrator may authorize
the grant of a Stock Right to a person not then an employee, director or
consultant of the Company or of an Affiliate; provided, however, that the actual
grant of such Stock Right shall be conditioned upon such person becoming
eligible to become a Participant at or prior to the time of the delivery of the
Agreement evidencing such Stock Right. ISOs may be granted only to Key
Employees. Non-Qualified Options, Stock Grants, Deferred Shares and Appreciation
Rights may be granted to any Key Employee, director or consultant of the Company
or an Affiliate. The granting of any Stock Right to any individual shall neither
entitle that individual to, nor disqualify him or her from, participation in any
other grant of Stock Rights.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto.
A. Non-Qualified Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest
of the Company, subject to the following minimum standards for any
such Non-Qualified Option:
a. Option Price: Each Option Agreement shall state the option
price (per share) of the Shares covered by each Option, which
option price shall be determined by the Administrator but
shall not be less than the par value per share of Common
Stock;
b. Each Option Agreement shall state the number of Shares to
which it pertains;
c. Each Option Agreement shall state the date or dates on which
it first is exercisable and the date after which it may no
longer be exercised, and may provide that the Option rights
accrue or become exercisable in installments over a period of
months or years, or upon the occurrence of certain conditions
or the attainment of stated goals or events; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase agreement in form
satisfactory to the Administrator providing for certain
protections for the Company and its other shareholders,
including requirements that:
i. The Participant's or the Participant's Survivors' right
to sell or transfer the Shares may be restricted; and
ii. The Participant or the Participant's Survivors may be
required to execute letters of investment intent and
must also acknowledge that the Shares will bear legends
noting any applicable restrictions.
B. ISOs: Each Option intended to be an ISO shall be issued only to a
Key Employee and be subject to the following terms and conditions,
with such additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with Section 422 of
the Code and relevant regulations and rulings of the Internal
Revenue Service:
a. Minimum standards: The ISO shall meet the minimum standards
required of Non-Qualified Options, as described in Paragraph
6(A) above, except clause (a) thereunder.
b. Option Price: Immediately before the Option is granted, if
the Participant owns, directly or by reason of the applicable
attribution rules in Section 424(d) of the Code:
i. Ten percent (10%) or less of the total combined voting
power of all classes of stock of the Company or an
Affiliate, the Option price per share of the Shares
covered by each Option shall not be less than one
hundred percent (100%) of the Fair Market Value per
share of the Shares on the date of the grant of the
Option.
ii. More than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or an
Affiliate, the Option price per share of the Shares
covered by each Option shall not be less than one
hundred ten percent (110%) of the said Fair Market Value
on the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total combined voting
power of all classes of stock of the Company or an
Affiliate, each Option shall terminate not more than ten
(10) years from the date of the grant or at such earlier
time as the Option Agreement may provide.
ii. More than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or an
Affiliate, each Option shall terminate not more than
five (5) years from the date of the grant or at such
earlier time as the Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in
any calendar year (under this or any other ISO plan of the
Company or an Affiliate) so that the aggregate Fair Market
Value (determined at the time each ISO is granted) of the
stock with respect to which ISOs are exercisable for the
first time by the Participant in any calendar year does not
exceed one hundred thousand dollars ($100,000), provided that
this subparagraph (d) shall have no force or effect if its
inclusion in the Plan is not necessary for Options issued as
ISOs to qualify as ISOs pursuant to Section 422(d) of the
Code.
7. TERMS AND CONDITIONS OF STOCK GRANTS.
Each offer of a Stock Grant to a Participant shall state the date prior to
which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in an Agreement, duly executed by
the Company and, to the extent required by law or requested by the Company, by
the Participant. The Stock Grant Agreement shall be in a form approved by the
Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, subject to
the following minimum standards:
(a) Each Stock Grant Agreement shall state the purchase price (per
share), if any, of the Shares covered by each Stock Grant, which
purchase price shall be determined by the Administrator but shall
not be less than the minimum consideration required by the Delaware
General Corporation Law on the date of the grant of the Stock Grant.
(b) Each Stock Grant Agreement shall state the number of Shares to which
the Stock Grant pertains.
(c) Each Stock Grant Agreement shall include the terms of any right of
the Company to restrict or reacquire the Shares subject to the Stock
Grant, including the time and events upon which such reacquisition
rights shall accrue and the purchase price therefor, if any.
8. TERMS AND CONDITIONS OF APPRECIATION RIGHTS.
The Administrator may authorize grants to Participants of Appreciation
Rights. An Appreciation Right shall be a right of the Participant to receive
from the Company an amount, which shall be determined by the Administrator and
shall be expressed as a percentage (not exceeding 100%) of the Spread at the
time of the exercise of an Appreciation Right. Each grant shall be evidenced by
an Agreement, duly executed by the Company and to the extent required by law or
requested by the Company, by the Participant which shall be in a form approved
by the Administrator and shall contain terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, in accordance with the following provisions:
(a) Any grant may specify that the amount payable upon the exercise of
an Appreciation Right may be paid by the Company in cash, Shares or
any combination thereof and may (i) either grant to the Participant
or reserve to the Administrator the right to elect among those
alternatives or (ii) preclude the right of the Participant to
receive and the Company to issue Shares or other equity securities
in lieu of cash.
(b) Any grant may specify that the amount payable upon the exercise of
an Appreciation Right shall not exceed a maximum specified by the
Administrator on the date of the grant.
(c) Each grant shall specify (i) the period or periods of continuous
employment, or continuous engagement of the consulting services, of
the Participant by the Company or any Affiliate that are necessary
and/or the individual or aggregate performance criteria that must be
satisfied before the Appreciation Rights or installments thereof
shall become exercisable and (ii) permissible dates or periods on or
during which Appreciation Rights shall be exercisable.
(d) Any grant may specify that an Appreciation Right may be exercised
only in the event of a change in control of the Company or other
similar transaction or event.
(e) Any grant may provide for the payment to the Participant of dividend
equivalents thereon in cash or Shares on a current, deferred or
contingent basis.
(f) Regarding Tandem Appreciation Rights only: Each grant shall provide
that a Tandem Appreciation Right may be exercised only (i) at a time
when the related Option (or any similar right granted under any
other plan of the Company) is also exercisable and the Spread is
positive and (ii) by surrender of the related Option (or such other
right) for cancellation.
(g) Regarding Free-standing Appreciation Rights only:
(i) Each grant shall specify in respect of each Free-standing
Appreciation Right a Base Price per Share, which shall be equal to
or greater than the Fair Market Value per Share on the date of the
grant;
(ii) Successive grants may be made to the same Participant
regardless of whether any Free-standing Appreciation Rights
previously granted to the Participant remain unexercised; and
(iii) No Free-standing Appreciation Right granted under the
Plan may be exercised more than 10 years from the date of the grant.
9. TERMS AND CONDITIONS OF DEFERRED SHARES.
The Administrator may authorize grants or sales of Deferred Shares to
Participants which grants or sales shall be evidenced by an Agreement, duly
executed by the Company and to the extent required by law or requested by the
Company, by the Participant which shall be in a form approved by the
Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, in
accordance with the following provisions:
(a) Each grant or sale shall constitute the agreement by the Company to
issue or transfer Shares to the Participant in the future in
consideration of the performance of services, subject to the
fulfillment during the Deferral Period of such conditions as the
Administrator may specify.
(b) Each Deferred Share Agreement shall state the number of Shares to
which the Deferred Share grant or sale pertains.
(c) Each grant or sale may be made without additional consideration from
the Participant or in consideration of a payment by the Participant
that may be less than the Fair Market Value per Share on the date of
the grant.
(d) Each grant or sale shall provide that the Deferred Shares covered
thereby shall be subject to a Deferral Period, which shall be fixed
by the Administrator on the date of the grant, and any grant or sale
may provide for the earlier termination of the Deferral Period in
the event of a change in control of the Company or other similar
transaction or event.
(e) During the Deferral Period, unless otherwise determined by the
Administrator, the Participant shall not have any right to transfer
any rights under the subject award, shall not have any rights of
ownership in the Deferred Shares and shall not have any right to
vote the Deferred Shares, but the Administrator may on or after the
date of the grant authorize the payment of dividend equivalents on
the Deferred Shares in cash or additional Shares on a current,
deferred or contingent basis.
10. EXERCISE OF OPTIONS AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal executive office address,
together with provision for payment of the full purchase price in accordance
with this Paragraph for the Shares as to which the Option is being exercised,
and upon compliance with any other condition(s) set forth in the Option
Agreement. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such
Option is being exercised shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option, or (c) at the discretion of
the Administrator, by having the Company retain from the shares otherwise
issuable upon exercise of the Option, a number of shares having a Fair Market
Value equal as of the date of exercise to the exercise price of the Option, or
(d) at the discretion of the Administrator, by delivery of the grantee's
personal recourse note bearing interest payable not less than annually at no
less than 100% of the applicable Federal rate, as defined in Section 1274(d) of
the Code, or (e) at the discretion of the Administrator, in accordance with a
cashless exercise program established with a securities brokerage firm, and
approved by the Administrator, or (f) at the discretion of the Administrator, by
any combination of (a), (b), (c), (d) and (e) above. Notwithstanding the
foregoing, the Administrator shall accept only such payment on exercise of an
ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 27) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.
The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any ISO shall be made only after
the Administrator, after consulting the counsel for the Company, determines
whether such amendment would constitute a "modification" of any Option which is
an ISO (as that term is defined in Section 424(h) of the Code) or would cause
any adverse tax consequences for the holder of such ISO.
11. ACCEPTANCE OF STOCK GRANTS, APPRECIATION RIGHTS, DEFERRED SHARES AND
ISSUE OF SHARES.
A Stock Grant, Appreciation Right, or Deferred Share grant (or any part or
installment thereof) shall be accepted by executing the applicable Agreement and
delivering it to the Company at its principal office address, together with
provision for payment of the full purchase price, if any, in accordance with
this Paragraph for the Shares as to which such Stock Grant, Appreciation Right
or Deferred Share grant is being accepted, and upon compliance with any other
conditions set forth in the applicable Agreement. Payment of the purchase price
for the Shares as to which such Stock Grant, Appreciation Right or Deferred
Share grant, if any, is being accepted shall be made (a) in United States
dollars in cash or by check, or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock having a Fair Market Value equal as
of the date of acceptance of the Stock Grant, Appreciation Right or Deferred
Share grant to the purchase price of the Stock Grant, Appreciation Right or
Deferred Share grant or (c) at the discretion of the Administrator, by delivery
of the grantee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by
any combination of (a), (b) and (c) above.
The Company shall then reasonably promptly deliver the Shares, if
applicable, as to which such Stock Grant, Appreciation Right or Deferred Share
grant was accepted to the Participant (or to the Participant's Survivors, as the
case may be), subject to any escrow provision set forth in the applicable
Agreement. In determining what constitutes "reasonably promptly," it is
expressly understood that the issuance and delivery of the Shares may be delayed
by the Company in order to comply with any law or regulation (including, without
limitation, state securities or "blue sky" laws) which requires the Company to
take any action with respect to the Shares prior to their issuance.
The Administrator may, in its discretion, amend any term or condition of
an outstanding Stock Grant, Appreciation Right, Deferred Share grant or
applicable Agreement provided (i) such term or condition as amended is permitted
by the Plan, and (ii) any such amendment shall be made only with the consent of
the Participant to whom the Stock Grant, Appreciation Right or Deferred Share
grant was made, if the amendment is adverse to the Participant.
12. RIGHTS AS A SHAREHOLDER.
No Participant to whom a Stock Right has been granted shall have rights as
a shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant or Deferred
Share grant and tender of the full purchase price, if any, for the Shares being
purchased pursuant to such exercise or acceptance and registration of the Shares
in the Company's share register in the name of the Participant.
13. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.
By its terms, a Stock Right granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as otherwise determined by the Administrator and set
forth in the applicable Agreement. The designation of a beneficiary of a Stock
Right by a Participant, with the prior approval of the Administrator and in such
form as the Administrator shall prescribe, shall not be deemed a transfer
prohibited by this Paragraph. Except as provided above, a Stock Right shall only
be exercisable or may only be accepted, during the Participant's lifetime, by
such Participant (or by his or her legal representative) and shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of any Stock Right or of any rights granted thereunder contrary to the
provisions of this Plan, or the levy of any attachment or similar process upon a
Stock Right, shall be null and void.
14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR
DEATH OR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:
a. A Participant who ceases to be an employee, director or consultant
of the Company or of an Affiliate (for any reason other than
termination "for cause", Disability, or death for which events
there are special rules in Paragraphs 15, 16, and 17,
respectively), may exercise any Option granted to him or her to the
extent that the Option is exercisable on the date of such
termination of service, but only within the period ending sixty
(60) days after the termination of employment, directorship or
consultancy, as the case may be, unless otherwise determined by
the Administrator or set forth in the pertinent Option Agreement.
b. Except as provided in Subparagraph (c) below, or Paragraph 16 or 17,
in no event may an Option Agreement provide, if an Option is
intended to be an ISO, that the time for exercise be later than
three (3) months after the Participant's termination of employment.
c. The provisions of this Paragraph, and not the provisions of
Paragraph 16 or 17, shall apply to a Participant who subsequently
becomes Disabled or dies after the termination of employment,
director status or consultancy.
d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment, termination of director
status or termination of consultancy, but prior to the exercise of
an Option, the Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant
engaged in conduct which would constitute "cause", then such
Participant shall forthwith cease to have any right to exercise any
Option.
e. A Participant to whom an Option has been granted under the Plan who
is absent from work with the Company or with an Affiliate because
of temporary disability (any disability other than a permanent and
total Disability as defined in Paragraph 1 hereof), or who is on
leave of absence for any purpose, shall not, during the period of
any such absence, be deemed, by virtue of such absence alone, to
have terminated such Participant's employment, director status or
consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
f. Except as required by law or as set forth in the pertinent Option
Agreement, Options granted under the Plan shall not be affected by
any change of a Participant's status within or among the Company and
any Affiliates, so long as the Participant continues to be an
employee, director or consultant of the Company or any Affiliate.
15. EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated "for cause"
will immediately be forfeited.
b. For purposes of this Plan, "cause" shall include (and is not
limited to) dishonesty with respect to the Company or any
Affiliate, insubordination, substantial malfeasance or non-feasance
of duty, unauthorized disclosure of confidential information, and
conduct substantially prejudicial to the business of the Company or
any Affiliate. The determination of the Administrator as to the
existence of "cause" will be conclusive on the Participant and the
Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If
the Administrator determines, subsequent to a Participant's
termination of service but prior to the exercise of an Option, that
either prior or subsequent to the Participant's termination the
Participant engaged in conduct which would constitute "cause", then
the right to exercise any Option is forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of
"cause" for termination and which is in effect at the time of such
termination, shall not supersede the definition in this Plan with
respect to such Participant, and the definition in this Plan shall
apply except as otherwise determined by the Administrator.
16. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement or as
determined by the Administrator, a Participant who ceases to be an employee,
director or consultant of the Company or of an Affiliate by reason of Disability
may exercise any Option granted to such Participant to the extent exercisable
but not exercised on the date of Disability and without any proration for
vesting periods during which the Disability occurs.
Unless otherwise set forth in the pertinent Option Agreement or
determined by the Administrator, a Disabled Participant may exercise such rights
only within the period ending sixty (60) days after the date of the
Participant's termination of employment, directorship or consultancy, as the
case may be, notwithstanding that the Participant might have been able to
exercise the Option as to some or all of the Shares on a later date if the
Participant had not become disabled and had continued to be an employee,
director or consultant or, if earlier, within the originally prescribed term of
the Option. In no event may an Option Agreement provide, if an Option is
intended to be an ISO, that the time for exercise be later than one year after
the date of the Disability.
The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (regardless of any procedure for
such determination set forth in another agreement between the Company and such
Participant). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
17. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, or as
determined by the Administrator, in the event of the death of a Participant
while the Participant is an employee, director or consultant of the Company or
of an Affiliate, such Option may be exercised by the Participant's Survivors to
the extent exercisable but not exercised on the date of death and without any
proration for vesting periods during which the death occurs.
Unless otherwise set forth in the pertinent Option Agreement or determined
by the Administrator, if the Participant's Survivors wish to exercise the
Option, they must take all necessary steps to exercise the Option within sixty
(60) days after the date of death of such Participant, notwithstanding that the
decedent might have been able to exercise the Option as to some or all of the
Shares on a later date if he or she had not died and had continued to be an
employee, director or consultant or, if earlier, within the originally
prescribed term of the Option.
18. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS, APPRECIATION RIGHTS AND
DEFERRED SHARES.
In the event of a termination of service (whether as an employee, director
or consultant) with the Company or an Affiliate for any reason before the
Participant has accepted a Stock Grant, Appreciation Right or Deferred Shares
such offer shall terminate.
For purposes of this Paragraph 18, a Participant to whom a Stock Grant,
Appreciation Right or Deferred Shares has been offered under the Plan who is
absent from work with the Company or with an Affiliate because of temporary
disability (any disability other than a permanent and total Disability as
defined in Paragraph 1 hereof), or who is on leave of absence for any purpose,
shall not, during the period of any such absence, be deemed, by virtue of such
absence alone, to have terminated such Participant's employment, director status
or consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
In addition, for purposes of this Paragraph 18, any change of employment
or other service within or among the Company and any Affiliates shall not be
treated as a termination of employment, director status or consultancy so long
as the Participant continues to be an employee, director or consultant of the
Company or any Affiliate.
Except as otherwise provided in the pertinent Stock Grant Agreement, in
the event of a termination of service (whether as an employee, director or
consultant), other than termination "for cause," Disability, or death for which
events there are special rules in Paragraphs 19, 20, and 21, respectively,
before all Company rights of repurchase shall have lapsed, then the Company
shall have the right to repurchase that number of Shares subject to a Stock
Grant as to which the Company's repurchase rights have not lapsed.
The Administrator shall make appropriate provisions in the Agreement
evidencing a grant of Appreciation Rights consistent with Paragraph 8 hereof
with respect to the termination of a grant of Appreciation Rights, in the event
of a termination of service (whether as an employee, director or consultant),
other than termination "for cause," Disability, or death for which events there
are special rules in Paragraphs 19, 20, and 21.
The Administrator shall make appropriate provisions in the Agreement
evidencing a grant or sale of Deferred Shares consistent with Paragraph 9 hereof
with respect to the termination of such grant or offer to purchase Deferred
Shares, in the event of a termination of service (whether as an employee,
director or consultant), other than termination "for cause," Disability, or
death for which events there are special rules in Paragraphs 19, 20, and 21.
19. EFFECT ON STOCK GRANTS, APPRECIATION RIGHTS AND DEFERRED SHARES OF
TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in the pertinent Agreement, the following
rules apply if the Participant's service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated "for cause":
a. All Shares subject to any Stock Grant or Deferred Share grant which
have been issued to the participant shall be immediately subject to
repurchase by the Company at the purchase price, if any, thereof.
Any outstanding Stock Grant Agreement, Stock Appreciation Rights
Agreement or Deferred Shares Agreement shall immediately expire.
b. For purposes of this Plan, "cause" shall include (and is not
limited to) dishonesty with respect to the employer,
insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any
Affiliate. The determination of the Administrator as to the
existence of "cause" will be conclusive on the Participant and the
Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If
the Administrator determines, subsequent to a Participant's
termination of service, that either prior or subsequent to the
Participant's termination the Participant engaged in conduct which
would constitute "cause," then the Company's right to repurchase
all of such Participant's Shares shall apply.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of
"cause" for termination and which is in effect at the time of such
termination, shall not supersede the definition in this Plan with
respect to such Participant, and the definition in this Plan shall
apply unless otherwise determined by the Administrator.
20. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply if a Participant ceases to be an employee, director or
consultant of the Company or of an Affiliate by reason of Disability: to the
extent the Company's rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable without any proration for any vesting
during the period in which the Disability occurs
The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (provided that any procedure for
such determination set forth in another agreement between the Company and such
Participant shall not be used for such determination). If requested, the
Participant shall be examined by a physician selected or approved by the
Administrator, the cost of which examination shall be paid for by the Company.
The Administrator shall make appropriate provision in the Agreement
evidencing a grant of Appreciation Rights consistent with Paragraph 8 hereof
with respect to the termination of a grant of Appreciation Rights in the event
of a termination of service (whether as an employee, director or consultant) by
reason of a Disability.
The Administrator shall make appropriate provision in the Agreement
evidencing a grant or sale of Deferred Shares consistent with Paragraph 9 hereof
with respect to the termination of such grant or offer to purchase Deferred
Shares in the event of a termination of service (whether as an employee,
director or consultant) by reason of a Disability.
21. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply in the event of the death of a Participant while the
Participant is an employee, director or consultant of the Company or of an
Affiliate: to the extent the Company's rights of repurchase have not lapsed on
the date of death, they shall be exercisable without any proration for any
vesting during the period in which the death occurs.
The Administrator shall make appropriate provision in the Agreement
evidencing a grant of Appreciation Rights consistent with Paragraph 8 hereof in
the event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate.
The Administrator shall make appropriate provision in the Agreement
evidencing a grant or sale of Deferred Shares consistent with Paragraph 9 hereof
in the event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate.
22. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the
particular exercise or acceptance of a Stock Right shall have been effectively
registered under the Securities Act of 1933, as now in force or hereafter
amended (the "1933 Act"), the Company shall be under no obligation to issue the
Shares covered by such exercise unless and until the following conditions have
been fulfilled:
a. The person(s) who exercise(s) or accept(s) such Stock Right shall
warrant to the Company, prior to the receipt of such Shares, that
such person(s) are acquiring such Shares for their own respective
accounts, for investment, and not with a view to, or for sale in
connection with, the distribution of any such Shares, in which
event the person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed upon the
certificate(s) evidencing their Shares issued pursuant to such
exercise or such grant:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1)
either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an opinion of
counsel satisfactory to it that an exemption from registration
under such Act is then available, and (2) there shall have
been compliance with all applicable state securities laws."
b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued
upon such particular exercise or acceptance in compliance with the
1933 Act without registration thereunder.
23. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all
Stock Grants, Appreciation Rights and Deferred Shares which have not been
accepted will terminate and become null and void; provided, however, that if the
rights of a Participant or a Participant's Survivors have not otherwise
terminated and expired, the Participant or the Participant's Survivors will have
the right immediately prior to such dissolution or liquidation to exercise or
accept any Stock Right to the extent that the Stock Right is exercisable or
subject to acceptance as of the date immediately prior to such dissolution or
liquidation. Upon the dissolution or liquidation of the Company, any outstanding
Appreciation Rights or grant or offer to purchase Deferred Shares shall
immediately lapse unless otherwise determined by the Administrator.
24. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's rights
with respect to any Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
pertinent Agreement:
A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased proportionately, and appropriate
adjustments may be made in the purchase price per share to reflect such events.
The number of Shares subject to the limitation in Paragraph 4(c) shall also be
proportionately adjusted upon the occurrence of such events.
B. Consolidations or Mergers. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the Administrator, or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph) at the end of which period the Options shall
terminate; or (iii) terminate all Options in exchange for a cash payment equal
to the excess of the Fair Market Value of the Shares subject to such Options
(either to the extent then exercisable or, at the discretion of the
Administrator, all Options being made fully exercisable for purposes of this
Subparagraph) over the exercise price thereof.
With respect to outstanding Stock Grants, the Administrator or the
Successor Board, shall either (i) make appropriate provisions for the
continuation of such Stock Grants by substituting on an equitable basis for the
Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Acquisition or securities of any successor or acquiring entity; or (ii) upon
written notice to the Participants, provide that all Stock Grants must be
accepted (to the extent then subject to acceptance) within a specified number of
days of the date of such notice, at the end of which period the offer of the
Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Stock Grants over the purchase price thereof, if any. In
addition, in the event of an Acquisition, the Administrator may waive any or all
Company repurchase rights with respect to outstanding Stock Grants.
C. Recapitalization or Reorganization. In the event of a recapitalization
or reorganization of the Company (other than a transaction described in
Subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock, a
Participant upon exercising or accepting a Stock Right shall be entitled to
receive for the purchase price, if any, paid upon such exercise or acceptance
the securities which would have been received if such Stock Right had been
exercised or accepted prior to such recapitalization or reorganization.
D. Modification of ISOs. Any adjustments made pursuant to Subparagraph A,
B or C with respect to ISOs shall be made only after the Administrator, after
consulting with counsel for the Company, determines whether such adjustments
would constitute a "modification" of such ISOs (as that term is defined in
Section 424(h) of the Code) or would cause any adverse tax consequences for the
holders of such ISOs. If the Administrator determines that such adjustments made
with respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments, unless the holder of an ISO specifically
requests in writing that such adjustment be made and such writing indicates that
the holder has full knowledge of the consequences of such "modification" on his
or her income tax treatment with respect to the ISO.
E. Adjustments to Appreciation Rights and Deferred Shares. Upon the
happening of any of the events described in Subparagraphs A, B or C above, the
Appreciation Rights and Deferred Shares may be appropriately adjusted to reflect
the events described in such Subparagraphs. The Administrator or the Successor
Board shall determine the specific adjustments to be made under this Paragraph
24 and, subject to Paragraph 4, its determination shall be conclusive.
25. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Rights. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company
prior to any issuance of Shares pursuant to a Stock Right.
26. FRACTIONAL SHARES.
No fractional shares shall be issued under the Plan and the person
exercising a Stock Right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.
27. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.
28. WITHHOLDING.
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 29) or upon the lapsing of
any right of repurchase, the Company may withhold from the Participant's
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a
different withholding arrangement, including the use of shares of the Company's
Common Stock or a promissory note, is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant's payment of
such additional withholding.
29. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
30. TERMINATION OF THE PLAN.
The Plan will terminate on October __, 2010, the date which is ten (10)
years from the earlier of the date of its adoption and the date of its approval
by the shareholders of the Company. The Plan may be terminated at an earlier
date by vote of the shareholders of the Company; provided, however, that any
such earlier termination shall not affect any Agreements executed prior to the
effective date of such termination.
31. AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Stock Rights granted under
the Plan or Stock Rights to be granted under the Plan for favorable federal
income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the
extent necessary to qualify the shares issuable upon exercise or acceptance of
any outstanding Stock Rights granted, or Stock Rights to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which the Administrator determines is of a scope
that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under a
Stock Right previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Agreements in a
manner which may be adverse to the Participant but which is not inconsistent
with the Plan. In the discretion of the Administrator, outstanding Agreements
may be amended by the Administrator in a manner which is not adverse to the
Participant.
32. EMPLOYMENT OR OTHER RELATIONSHIP.
NOTHING IN THIS PLAN OR ANY AGREEMENT SHALL BE DEEMED TO PREVENT THE
COMPANY OR AN AFFILIATE FROM TERMINATING THE EMPLOYMENT, CONSULTANCY OR DIRECTOR
STATUS OF A PARTICIPANT, NOR TO PREVENT A PARTICIPANT FROM TERMINATING HIS OR
HER OWN EMPLOYMENT, CONSULTANCY OR DIRECTOR STATUS OR TO GIVE ANY PARTICIPANT A
RIGHT TO BE RETAINED IN EMPLOYMENT OR OTHER SERVICE BY THE COMPANY OR ANY
AFFILIATE FOR ANY PERIOD OF TIME.
33. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of
the State of Delaware.
