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EXHIBIT 10.3
SCHULER HOLDINGS, INC.
2000 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSES OF THE PLAN
A. This 2000 Stock Incentive Plan (the "Plan") is hereby adopted to
promote the interests of Schuler Holdings, Inc., a Delaware corporation (the
"Corporation"), by providing a method whereby eligible individuals may be
offered the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation (or its parent or subsidiary
corporations).
B. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered
to be a parent corporation of the Corporation, provided each such
corporation in the unbroken chain (other than the Corporation) owns, at
the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be
considered to be a subsidiary of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
II. STRUCTURE OF THE PLAN.
A. OPTION PROGRAMS. The Plan shall be divided into two separate
components: the Discretionary Option Grant Program described in Article Two and
the Automatic Option Grant Program described in Article Three. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase shares of Class A
Common Stock ("Common Stock") in accordance with the provisions of Article Two.
Under the Automatic Option Grant Program, each eligible member of the
Corporation's Board of Directors (the "Board") will automatically receive an
option grant to purchase shares of Common Stock in accordance with the
provisions of Article Three.
B. GENERAL PROVISIONS. Unless the context clearly indicates otherwise,
the provisions of Articles One and Four of the Plan shall apply to the
Discretionary Option Grant Program and the Automatic Option Grant
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Program and shall accordingly govern the interests of all individuals under the
Plan.
III. ADMINISTRATION OF THE PLAN.
A. The Plan shall be administered by a committee of two (2) or more
Board members appointed by the Board (the "Plan Administrator"). Plan
Administrator members shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time.
B. The Plan Administrator shall have full power and authority (subject
to the express provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for the proper administration of the Discretionary
Option Grant Program and to make such determinations under the Plan and any
outstanding option as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties with an interest in any
outstanding option under the Plan.
C. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Three.
IV. ELIGIBILITY FOR OPTION GRANTS.
A. The persons eligible to participate in the Option Grant Program
under Article Two of the Plan shall be limited to the following:
(i) officers and other employees of the Corporation (or its
parent or subsidiary corporations) who render services which contribute to the
management, growth and financial success of the Corporation (or its parent or
subsidiary corporations);
(ii) non-employee members of the Board (or its parent or
subsidiary corporations); and
(iii) those consultants or independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary corporations).
B. Individuals eligible to participate in the Automatic Option Grant
Program shall be (i) those individuals who are serving as non-employee Board
members on the Effective Date or who are first elected or appointed as
non-employee Board members after such date, whether through appointment by the
Board or election by the Corporation's stockholders, and (ii) those individuals
who continue to serve as non-employee Board members after one or more Annual
Stockholders Meetings held after the Effective Date.
C. The Plan Administrator shall have full authority to determine which
eligible individuals are to receive discretionary option grants under the Plan,
the number of shares to be covered by each such grant, whether the granted
option is to be an incentive stock option ("Incentive Option") which satisfies
the requirements of Section 422 of the Internal Revenue Code or a non-statutory
option not intended to meet such requirements, the time or times at
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which each such option is to become exercisable, and the maximum term for which
the option is to remain outstanding.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 2,000,000 shares.
B. No one person participating in the Plan may receive options or
separately exercisable stock appreciation rights for more than 500,000 shares of
Common Stock in the aggregate in any calendar year.
C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise or (ii) the options are
canceled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise price paid per share, pursuant to the
Corporation's repurchase rights under the Plan, shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent options
under the Plan. Shares subject to any stock appreciation rights exercised under
the Plan shall reduce on a share-for-share basis the number of shares of Common
Stock available for subsequent issuance under the Plan. In addition, should the
exercise price of an option under the Plan be paid with shares of Common Stock
or should shares of Common Stock otherwise issuable under the Plan be withheld
by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.
D. In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the number and/or class of shares
issuable under the Plan, (ii) the number and/or class of shares for which any
one person may be granted options or separately exercisable stock appreciation
rights under the Plan, (iii) the number and/or class of shares and price per
share in effect under each outstanding option under the Plan and (iv) the number
of shares of Common Stock and price per share to be made the subject of each
subsequent automatic option grant. The purpose of such adjustments to the
outstanding options shall be to preclude the enlargement or dilution of rights
and benefits under such options.
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ARTICLE TWO
OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Article Two shall be authorized by
action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or non-statutory options. Individuals
who are not Employees may only be granted non-statutory options under this
Article Two. Each option granted shall be evidenced by one or more instruments
in the form approved by the Plan Administrator. Each such instrument shall,
however, comply with the terms and conditions specified below, and each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this Article Two.
A. OPTION PRICE.
(1) The option price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section VI of this Article
Two and the instrument evidencing the grant, be payable as follows:
- full payment in cash or check drawn to the
Corporation's order;
- full payment in shares of Common Stock held by the
optionee for the requisite period necessary to
avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at fair
market value on the Exercise Date (as such term is
defined below);
- full payment through a combination of shares of
Common Stock held by the optionee for the
requisite period necessary to avoid a charge to
the Corporation's earnings for financial reporting
purposes and valued at fair market value on the
Exercise Date and cash or cash equivalent; or
- the option price may also be paid through a
broker-dealer sale and remittance procedure
pursuant to which the optionee shall provide (I)
irrevocable written instructions to a designated
brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out
of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate
option price payable for the purchased shares plus
all applicable Federal and State income and
employment taxes required to be withheld by the
Corporation in connection with such purchase and
(II) written instructions to the Corporation to
deliver the certificates for the purchased shares
directly to such brokerage firm in order to
complete the sale transaction.
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For purposes of this subparagraph 1, the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
(2) The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
- If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange
but is traded in the over-the-counter market, the
fair market value shall be the mean between the
highest bid and lowest asked prices (or, if such
information is available, the closing selling
price) per share of Common Stock on the date in
question in the over-the-counter market, as such
prices are reported by the National Association of
Securities Dealers on the Nasdaq National Market
or any successor system. If there are no reported
bid and asked prices (or closing selling price)
for the Common Stock on the date in question, then
the mean between the highest bid price and lowest
asked price (or the closing selling price) on the
last preceding date for which such quotations
exist shall be determinative of fair market value.
- If the Common Stock is at the time listed or
admitted to trading on any national stock
exchange, then the fair market value shall be the
closing selling price per share of Common Stock on
the date in question on the stock exchange
determined by the Plan Administrator to be the
primary market for the Common Stock, as such price
is officially quoted in the composite tape of
transactions on such exchange. If there is no
reported sale of Common Stock on such exchange on
the date in question, then the fair market value
shall be the closing selling price on the exchange
on the last preceding date for which such
quotation exists.
- If the Common Stock is at the time neither listed
nor admitted to trading on any stock exchange nor
traded in the over-the-counter market, then the
fair market value shall be determined by the Plan
Administrator after taking into account such
factors as the Plan Administrator shall deem
appropriate.
B. TERM AND EXERCISE OF OPTIONS.
Each option granted under this Article Two shall be exercisable at
such time or times, during such period, and for such number of shares as shall
be determined by the Plan Administrator and set forth in the instrument
evidencing the option grant. No such option, however, shall have a maximum term
in excess of ten (10) years from the grant date. During the lifetime of the
optionee, the option shall be exercisable only by the optionee and shall not be
assignable or transferable by the optionee otherwise than by will or by the laws
of descent and
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distribution following the optionee's death. Non-statutory options may, to the
extent permitted by the Plan Administrator, be assigned in whole or in part
during the optionee's lifetime (i) as a gift to one or more members of the
optionee's immediate family, to a trust in which the optionee and/or one or more
such family members hold more than fifty percent (50%) of the beneficial
interest or to an entity in which the optionee and/or one or more such family
members hold more than fifty percent (50%) of the voting interests or (ii)
pursuant to a domestic relations order. The terms applicable to the assigned
portion shall be the same as those in effect for the option immediately prior to
such assignment and shall be set forth in such documents issued to the assignee
as the Plan Administrator may deem appropriate.
C. TERMINATION OF SERVICE.
(1) Except to the extent otherwise provided pursuant to Section
VII of this Article Two, the following provisions shall govern the exercise
period applicable to any options held by the optionee at the time of cessation
of Service (where "Service" means service to the Corporation (or its parent or
subsidiary corporations). as an employee, director, consultant or independent
contractor) or death.
- Should the optionee cease to remain in Service for
any reason other than death or permanent
disability, then the period for which each
outstanding option held by such optionee is to
remain exercisable shall be limited to the three
(3)-month period following the date of such
cessation of Service.
- In the event such Service terminates by reason of
permanent disability (as defined in Section
22(e)(3) of the Internal Revenue Code), then the
period for which each outstanding option held by
the optionee is to remain exercisable shall be
limited to the twelve (12)-month period following
the date of such cessation of Service.
- Should the optionee die while in Service or during
the three (3)-month period following his or her
cessation of Service, then the period for which
each of his or her outstanding options is to
remain exercisable shall be limited to the twelve
(12)-month period following the date of the
optionee's death. During such limited period, the
option may be exercised by the personal
representative of the optionee's estate or by the
person or persons to whom the option is
transferred pursuant to the optionee's will or in
accordance with the laws of descent and
distribution.
- Under no circumstances, however, shall any such
option be exercisable after the specified
expiration date of the option term.
- Each such option shall, during such limited
exercise period, be exercisable for any or all of
the shares for which the option is exercisable on
the date of the optionee's cessation of Service.
Upon the expiration of such limited exercise
period or (if earlier)
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upon the expiration of the option term, the option
shall terminate and cease to be exercisable.
(2) The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the optionee
under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph 1 above, not only with respect to the
number of shares for which each such option is exercisable at the time of the
optionee's cessation of Service but also with respect to one or more subsequent
installments of purchasable shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred.
(3) For purposes of the foregoing provisions of this Section
I.C (and for all other purposes under the Plan):
- The optionee shall be deemed to remain in the
Service of the Corporation for so long as such
individual renders services on a periodic basis to
the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a
non-employee member of the Board or a consultant
or independent contractor.
- The optionee shall be considered to be an
"Employee" for so long as such individual remains
in the employ of the Corporation or one or more of
its parent or subsidiary corporations, subject to
the control and direction of the employer entity
not only as to the work to be performed but also
as to the manner and method of performance.
D. STOCKHOLDER RIGHTS.
An optionee shall have no stockholder rights with respect to any
shares covered by the option until such individual shall have exercised the
option, paid the option price for the purchased shares and been issued a stock
certificate for such shares.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees of the Corporation. Options which are
specifically designated as "non-statutory" options when issued under the Plan
shall not be subject to such terms and conditions.
A. OPTION PRICE. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value of such Common Stock on the grant date.
B. DOLLAR LIMITATION. The aggregate fair market value (determined as
of the respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan may for the first time
become exercisable as incentive
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stock options under the Federal tax laws during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two or more such options which become exercisable for the first
time in the same calendar year, the foregoing limitation on the exercisability
of such options as incentive stock options under the Federal tax laws shall be
applied on the basis of the order in which such options are granted.
C. 10% STOCKHOLDER. If any individual to whom an Incentive Option is
granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing 10% or more of the total combined voting power
of all classes of stock of the Corporation or any one of its parent or
subsidiary corporations, then the option price per share shall not be less than
one hundred and ten percent (110%) of the fair market value per share of Common
Stock on the grant date, and the option term shall not exceed five (5) years,
measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of the Plan shall apply to all Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following stockholder approved
transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is not
the surviving entity, except for a transaction the principal purpose of which is
to change the State of the Corporation's incorporation, or
(ii) any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities are
transferred to holders different from those who held such securities immediately
prior to such merger, then the exercisability of each option outstanding under
this Article Two shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares. However, an outstanding option under this Article Two
shall not so accelerate if and to the extent: (i) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or replaced with a comparable option to purchase
shares of the capital stock of the successor corporation or parent thereof, (ii)
such option is to be replaced by a comparable cash incentive program of the
successor corporation based on the option spread at the time of the Corporate
Transaction, or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of grant. The
determination of comparability under clause (i) or (ii) above shall be made by
the Plan Administrator, and its determination shall be final, binding and
conclusive.
B. Upon the consummation of the Corporate Transaction, all outstanding
options under this Article Two shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company.
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C. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, provided the aggregate
option price payable for such securities shall remain the same. In addition, the
class and number of securities available for issuance under the Plan following
the consummation of the Corporate Transaction shall be appropriately adjusted.
D. The grant of options under this Article Two shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
E. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any anticipated Change in Control or at the
time of an actual Change in Control, to provide for the automatic acceleration
of one or more outstanding options under this Article Two upon the occurrence of
the Change in Control. The Plan Administrator shall also have full power and
authority to condition any such option acceleration upon the subsequent
termination of the optionee's Service within a specified period following the
Change in Control.
F. For purposes of this Section III, a Change in Control shall be
deemed to occur in the event:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934 ("1934 Act")) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer; or
(ii) there is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a majority of
the Board members (rounded up to the next whole number) cease, by reason of one
or more proxy contests for the election of Board members, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least two-thirds of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.
G. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until their expiration or earlier termination of
the option term.
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H. The exercisability as incentive stock options under the Federal tax
laws of any options accelerated under this Section III in connection with a
Corporate Transaction or Change in Control shall remain subject to the dollar
limitation of Section II.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under this Article Two and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than eighty-five percent (85%) of the fair market value of the Common Stock on
the new grant date (or one hundred percent (100%) of such fair market value in
the case of an Incentive Option).
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the fair market
value (on the option surrender date) of the number of shares in which the
optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at fair market value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights the optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
D. One or more officers of the Corporation subject to the short-swing
profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under this Article Two. Upon the
occurrence of a Hostile Take-Over, each outstanding option with such a limited
stock appreciation right shall automatically be canceled and the optionee shall
in return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to the canceled option (whether or not the option is otherwise
at the time exercisable for such shares) over (ii) the
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aggregate exercise price payable for such shares. The cash distribution payable
upon such cancellation shall be made within five (5) days following the
consummation of the Hostile Take-Over. Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection with
such option cancellation and cash distribution.
E. For purposes of Section V.D, the following definitions shall be in
effect:
A Hostile Take-Over shall be deemed to occur in the event any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer which the Board
does not recommend the Corporation's stockholders to accept.
The Take-Over Price per share shall be deemed to be equal to the
greater of (a) the fair market value per share on the date of cancellation, as
determined pursuant to the valuation provisions of Section I.A.3 of this Article
Two, or (b) the highest reported price per share paid in effecting such Hostile
Take-Over. However, if the canceled option is an Incentive Option, the Take-Over
Price shall not exceed the clause (a) price per share.
F. The shares of Common Stock subject to any option surrendered or
canceled for an appreciation distribution pursuant to this Section V shall not
be available for subsequent option grant under the Plan.
VI. LOANS OR GUARANTEE OF LOANS
The Plan Administrator may assist any optionee (including any officer)
in the exercise of one or more outstanding options under this Article Two by (a)
authorizing the extension of a loan to such optionee from the Corporation, (b)
permitting the optionee to pay the option price for the purchased Common Stock
in installments over a period of years or (c) authorizing a guarantee by the
Corporation of a third-party loan to the optionee. The terms of any loan,
installment method of payment or guarantee (including the interest rate and
terms of repayment) will be established by the Plan Administrator in its sole
discretion. Loans, installment payments and guarantees may be granted without
security or collateral (other than to optionees who are consultants or
independent contractors, in which event the loan must be adequately secured by
collateral other than the purchased shares), but the maximum credit available to
the optionee shall not exceed the sum of (i) the aggregate option price (less
par value) of the purchased shares plus (ii) any Federal and state income and
employment tax liability incurred by the optionee in connection with the
exercise of the option.
VII. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to extend
the period of time for which any option granted under this Article Two is to
remain exercisable following the optionee's cessation of Service or death from
the limited period in effect under Section I.C.1 of this Article Two to such
greater period of time as the Plan Administrator shall deem appropriate;
provided, however, that in no event shall such option be exercisable after the
specified expiration
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date of the option term.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
A. ELIGIBLE OPTIONEES. The individuals eligible to receive automatic
option grants pursuant to the provisions of this Article Three shall be limited
to the following:
(i) Each individual who is serving as a non-employee member of
the Board on the Effective Date; and
(ii) Each individual who is first appointed or elected as a
non-employee Board member at any time after the Effective Date.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. GRANT DATES. Option grants will be made under this Article Three on
the dates specified below:
(i) On the date of each Annual Stockholders Meeting held after
the Effective Date, beginning with the 2001 Annual Stockholders Meeting, each
individual who is at the time serving as a non-employee member of the Board
shall automatically be granted at that meeting, whether or not such individual
is standing for re-election as a Board member at that particular meeting, a
non-statutory option under the Plan to purchase 5,000 shares of Common Stock,
provided such individual has served as a non-employee Board member for at least
six (6) months prior to the date of such meeting.
(ii) In no event shall any non-employee Board member be granted
options to purchase greater than 50,000 shares of Common Stock in the aggregate
after the Effective Date of the Plan. The 5,000-share limitation on the
subsequent automatic option grants to be made to each non-employee Board member
shall be subject to periodic adjustment pursuant to the applicable provisions of
paragraph V.D of Article One.
B. EXERCISE PRICE. The exercise price per share shall be equal to one
hundred percent (100%) of the fair market value per share of Common Stock on the
automatic grant date.
C. PAYMENT. The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check made payable to the
Corporation's order;
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(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's reported
earnings and valued at fair market value on the Exercise Date (as such term is
defined below);
(iii) full payment in a combination of shares of Common Stock held
for the requisite period necessary to avoid a charge to the Corporation's
reported earnings and valued at fair market value on the Exercise Date and cash
or check payable to the Corporation's order; or
(iv) the option price may also be paid through a broker-dealer
sale and remittance procedure pursuant to which the optionee shall provide
irrevocable written instructions (I) to the designated broker-dealer to effect
the immediate sale of the purchased shares and remit to the Corporation, out of
the sale proceeds an amount equal to the aggregate option price payable for the
purchased shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Corporation by reason of such purchase and
(II) to the Corporation to deliver the certificates for the purchased shares
directly to such broker-dealer. For purposes of this subparagraph, the Exercise
Date shall be the date on which written notice of the option exercise is
delivered to the Corporation, and the fair market value per share of Common
Stock on any relevant date shall be determined in accordance with the provisions
of paragraph I.A.3 of Article Two. Except to the extent the sale and remittance
procedure specified above is utilized for the exercise of the option, payment of
the exercise price for the purchased shares must accompany such notice.
D. OPTION TERM. Each automatic grant under this Article Three shall
have a maximum term of ten (10) years measured from the automatic grant date.
E. EXERCISABILITY. Each automatic option will become exercisable with
respect to 25% of the option shares upon completion of one (1) year of Board
service measured from the option grant date and with respect to the balance of
the option shares in a series of successive, equal monthly installments over the
thirty-six (36) month period thereafter, provided the optionee remains in Board
service through that date.
F. EFFECT OF TERMINATION OF BOARD MEMBERSHIP.
(1) Should the optionee cease to be a Board member for any
reason (other than death) while holding an automatic option grant under this
Article Three, then such optionee shall have a six (6)-month period following
the date of such cessation of Board membership in which to exercise such option
for any or all of the vested shares of Common Stock for which the option is
exercisable at the time the optionee ceases service as a Board member.
(2) Should the optionee die while serving as a Board member or
during the six (6)-month period following his or her cessation of Board service,
then the option may subsequently be exercised, for any or all of the vested
shares of Common Stock for which the option is exercisable at the time of the
optionee's cessation of Board membership, by the personal representative of the
optionee's estate or by the person or persons to whom the option is transferred
pursuant to the optionee's will or in accordance with the laws of descent and
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distribution. Any such exercise must, however, occur within six (6) months after
the date of the optionee's death.
(3) In no event shall any automatic grant under this Article
Three remain exercisable after the specified expiration date of the ten
(10)-year option term. Upon the expiration of the applicable exercise period in
accordance with subparagraphs 1 and 2 above or (if earlier) upon the expiration
of the ten (10)-year option term, the automatic grant shall terminate and cease
to be exercisable.
G. STOCKHOLDER RIGHTS. The holder of an automatic option grant under
this Article Three shall have no stockholder rights with respect to any shares
covered by such option until such individual shall have exercised the option,
paid the exercise price for the purchased shares and been issued a stock
certificate for such shares.
H. REMAINING TERMS. The remaining terms and conditions of each
automatic option grant shall be as the terms in effect for option grants made
under the Option Grant Program.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of a Corporate Transaction (as such term is defined in
Section III.A of Article Two), then the shares of Common Stock at the time
subject to each outstanding option but not otherwise vested shall automatically
vest in full so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable for all
of the shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Upon the consummation of the Corporate Transaction, all automatic option
grants under this Article Three shall terminate and cease to be outstanding.
B. In connection with any Change in Control (as such term is defined
in Paragraph F of Section III of Article Two above), the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the specified effective date for the Change in Control, become fully exercisable
for all of the shares of Common Stock at the time subject to such option and may
be exercised for all or any portion of such shares as fully-vested shares of
Common Stock.
C. Upon the occurrence of a Hostile Take-Over, each outstanding
automatic option grant shall automatically be canceled in return for a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the shares of Common Stock at the time subject to the
canceled option (whether or not the option is otherwise at the time exercisable
for such shares) over (ii) the aggregate exercise price payable for such shares.
The cash distribution payable upon such cancellation shall be made within five
(5) days following the consummation of the Hostile Take-Over. Neither the
approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such option cancellation and cash distribution.
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D. For purposes of this Article Three, Hostile Take-Over shall have
the meaning assigned to such term in paragraph V.E of Section III of Article
Two. The Take-Over Price per share shall be deemed to be equal to the greater of
(a) the fair market value per share on the date of cancellation, as determined
pursuant to the valuation provisions of paragraph I.A.2 of Article Two, or (b)
the highest reported price per share paid in effecting such Hostile Take-Over.
E. The shares of Common Stock subject to each option canceled in
connection with the Hostile Take-Over shall not be available for subsequent
issuance under this Plan.
F. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
ARTICLE FOUR
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares or cash upon the
exercise of stock options or stock appreciation rights granted under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and upon such terms
and conditions as it may deem appropriate (including the applicable safe-harbor
provisions of SEC Rule 16b-3) provide any or all holders of outstanding option
grants under the Plan with the election to have the Corporation withhold, from
the shares of Common Stock otherwise issuable upon the exercise of such options,
one or more of such shares with an aggregate fair market value equal to the
designated percentage (any multiple of 5% specified by the optionee) of the
Federal and state withholding taxes ("Taxes") incurred in connection with the
acquisition of such shares. In lieu of such direct withholding, one or more
optionees may also be granted the right to deliver shares of Common Stock to the
Corporation in satisfaction of such Taxes. The withheld or delivered shares
shall be valued at the fair market value on the applicable determination date
for such Taxes or such other date required by the applicable safe-harbor
provisions of SEC Rule 16b-3.
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III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective on October 12, 2000 (the "Effective
Date"). If stockholder approval of the Plan is not obtained within twelve (12)
months of the Board's adoption of the Plan, then any options previously granted
shall terminate and no further options shall be granted. Subject to the
foregoing limitations, the Plan Administrator may grant options under the Plan
at any time before the date fixed herein for termination of the Plan.
B. The Plan shall terminate upon the earlier of (i) the tenth (10th)
anniversary of the Effective Date or (ii) the date on which all shares available
for issuance under the Plan have been issued as vested shares pursuant to the
exercise of options granted under Article Two or Article Three. If the date of
termination is determined under clause (i) above, then no options outstanding on
such date shall be affected by the termination of the Plan, and such securities
shall thereafter continue to have force and effect in accordance with the
provisions of the stock option agreements evidencing such options.
C. Options may be granted under this Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided each option granted is not to become exercisable, in whole or in
part, at any time prior to stockholder approval of an amendment authorizing a
sufficient increase in the number of shares issuable under the Plan.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
V. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder,
and the issuance of stock upon the exercise or surrender of any such option
shall be subject to the procurement by the Corporation of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the stock issued pursuant to it.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of the
Plan shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's employment or service at any time and for any reason, with or
without cause.
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