<PAGE> 1
Exhibit B
---------
SYNTHETECH, INC.
2000 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
-------------------
The purpose of the Synthetech, Inc. 2000 Stock Incentive
Plan (the "Plan") is to enhance the profitability and long-term
shareholder value of Synthetech, Inc., an Oregon corporation (the
"Company"), by offering opportunities to selected persons to
participate in the Company's growth and success, and to encourage
them to remain in the service of the Company and its Related
Corporations (as defined in Section 2) and to acquire and
maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
-----------------------
For purposes of the Plan, the following terms shall be
defined as set forth below:
"Award" means an award or grant made pursuant to the Plan,
including awards or grants of Options and Stock Awards, or any
combination of the foregoing.
"Board" means the Board of Directors of the Company.
"Cause," unless otherwise defined in an employment or
services agreement between the Company or a Related Corporation
and a Participant, means dishonesty, fraud, misconduct,
unauthorized use or disclosure of confidential information or
trade secrets, or conviction or confession of a crime punishable
by law (except minor violations), in each case as determined by
the Plan Administrator, and its determination shall be conclusive
and binding.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Common Stock" means the common stock, par value $0.001 per
share, of the Company.
"Corporate Transaction" means either of the following
events:
(a) Consummation of any merger or consolidation of the
Company with or into another corporation or
(b) Consummation of any sale, lease, exchange or other
transfer in one transaction or a series of related transactions
of all or substantially all the Company's outstanding securities
or all or substantially all the Company's assets other than a
transfer of the Company's assets to a majority-owned subsidiary
corporation (as defined in Section 8) of the Company;
<PAGE> 2
provided that a Corporation Transaction shall not include (i) a
merger of the Company in which the holders of shares of Common
Stock immediately prior to the merger hold at least a majority of
the shares of Common Stock in the Successor Corporation
immediately after the merger, (ii) a mere reincorporation of the
Company or (iii) a transaction undertaken for the sole purpose of
creating a holding company.
"Disability," unless otherwise defined by the Plan
Administrator, means "disability" as that term is defined for
purposes of the Company's Long Term Disability Plan or other
similar successor plan applicable to salaried employees.
"Effective Date" has the meaning set forth in Section 15.
"Employment Termination Date" has the meaning set forth in
Section 7.6.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall be as established in good faith by
the Plan Administrator or (a) if the Common Stock is listed on
the Nasdaq National Market, the closing sales price for the
Common Stock as reported by the Nasdaq National Market for a
single trading day or (b) if the Common Stock is listed on the
New York Stock Exchange or the American Stock Exchange, the
closing sales price for the Common Stock as such price is
officially quoted in the composite tape of transactions on such
exchange for a single trading day. If there is no such reported
price for the Common Stock for the date in question, then such
price on the last preceding date for which such price exists
shall be determinative of Fair Market Value.
"Good Reason" means the occurrence of any of the following
events or conditions and the failure of the Successor Corporation
to cure such event or condition within 30 days after receipt of
written notice from the Participant:
(a) a change in the Participant's status, title, position
or responsibilities (including reporting responsibilities) that,
in the Participant's reasonable judgment, represents a
substantial reduction in the status, title, position or
responsibilities as in effect immediately prior thereto; the
assignment to the Participant of any duties or responsibilities
that, in the Participant's reasonable judgment, are materially
inconsistent with such status, title, position or
responsibilities; or any removal of the Participant from or
failure to reappoint or reelect the Participant to any of such
positions, except in connection with the termination of the
Participant's employment for Cause, as a result of his or her
Disability or death, or by the Participant other than for Good
Reason;
(b) a reduction in the Participant's annual base salary;
(c) the Successor Corporation's requiring the Participant
(without the Participant's consent) to be based at any place
outside a 50-mile radius of his or her place of employment prior
to a Corporate Transaction, except for reasonably required travel
on the Successor Corporation's business that is not materially
greater than such travel requirements prior to the Corporate
Transaction;
<PAGE> 3
(d) the Successor Corporation's failure to (i) continue in
effect any material compensation or benefit plan (or the
substantial equivalent thereof) in which the Participant was
participating at the time of a Corporate Transaction, including,
but not limited to, the Plan, or (ii) provide the Participant
with compensation and benefits substantially equivalent (in terms
of benefit levels and/or reward opportunities) to those provided
for under each material employee benefit plan, program and
practice as in effect immediately prior to the Corporate
Transaction;
(e) any material breach by the Successor Corporation of its
obligations to the Participant under the Plan or any
substantially equivalent plan of the Successor Corporation; or
(f) any purported termination of the Participant's
employment or service relationship for Cause by the Successor
Corporation that is not in accordance with the definition of
Cause under the Plan.
"Grant Date" means the date on which the Plan Administrator
completes the corporate action relating to the grant of an Award
and all conditions precedent to the grant have been satisfied,
provided that conditions to the exercisability or vesting of
Awards shall not defer the Grant Date.
"Incentive Stock Option" means an Option to purchase Common
Stock granted under Section 7 with the intention that it qualify
as an "incentive stock option" as that term is defined in
Section 422 of the Code.
"Nonqualified Stock Option" means an Option to purchase
Common Stock granted under Section 7 other than an Incentive
Stock Option.
"Option" means the right to purchase Common Stock granted
under Section 7.
"Option Expiration Date" has the meaning set forth in
Section 7.6.
"Option Term" has the meaning set forth in Section 7.3.
"Parent," except as otherwise provided in Section 8 in
connection with Incentive Stock Options, means any entity,
whether now or hereafter existing, that directly or indirectly
controls the Company.
"Participant" means (a) the person to whom an Award is
granted; (b) for a Participant who has died, the personal
representative of the Participant's estate, the person(s) to whom
the Participant's rights under the Award have passed by will or
by the applicable laws of descent and distribution, or the
beneficiary designated in accordance with Section 11; or (c) the
person(s) to whom an Award has been transferred in accordance
with Section 11.
<PAGE> 4
"Plan Administrator" means the Board or any committee or
committees designated by the Board or any person to whom the
Board has delegated authority to administer the Plan under
Section 3.1.
"Related Corporation" means any Parent or Subsidiary of the
Company.
"Retirement" means retirement on or after the individual's
normal retirement date under the Company's 401(k) plan or other
similar successor plan applicable to salaried employees, unless
otherwise defined by the Plan Administrator from time to time for
purposes of the Plan.
"Securities Act" means the Securities Act of 1933, as
amended.
"Stock Award" means an Award of shares of Common Stock or
units denominated in Common Stock granted under Section 9, the
rights of ownership of which may be subject to restrictions
prescribed by the Plan Administrator.
"Subsidiary," except as otherwise provided in Section 8 in
connection with Incentive Stock Options, means any entity that is
directly or indirectly controlled by the Company.
"Successor Corporation" has the meaning set forth in
Section 12.3.
"Vesting Commencement Date" means the Grant Date or such
other date selected by the Plan Administrator as the date from
which the Option begins to vest for purposes of Section 7.4.
SECTION 3. ADMINISTRATION
--------------------------
3.1 Plan Administrator
The Plan shall be administered by the Board and/or a
committee or committees (which term includes subcommittees)
appointed by, and consisting of two or more members of, the Board
(a "Plan Administrator"). If and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the
Board shall consider in selecting the members of any committee
acting as Plan Administrator, with respect to any persons subject
or likely to become subject to Section 16 of the Exchange Act,
the provisions regarding (a) "outside directors" as contemplated
by Section 162(m) of the Code and (b) "nonemployee directors" as
contemplated by Rule 16b-3 under the Exchange Act.
Notwithstanding the foregoing, the Board may delegate the
responsibility for administering the Plan with respect to
designated classes of eligible persons to different committees
consisting of two or more members of the Board, subject to such
limitations as the Board deems appropriate. Committee members
shall serve for such term as the Board may determine, subject to
removal by the Board at any time. To the extent consistent with
applicable law, the Board may authorize one or more officers of
the Company to grant Awards to designated classes of eligible
persons, within the limits specifically prescribed by the Board.
<PAGE> 5
3.2 Administration and Interpretation by Plan Administrator
Except for the terms and conditions explicitly set forth in
the Plan, the Plan Administrator shall have exclusive authority,
in its discretion, to determine all matters relating to Awards
under the Plan, including the selection of individuals to be
granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions,
restrictions and limitations, if any, of an Award and the terms
of any instrument that evidences the Award. The Plan
Administrator shall also have exclusive authority to interpret
the Plan and the terms of any instrument evidencing the Award and
may from time to time adopt and change rules and regulations of
general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and
regulations, and all actions taken and determinations made by the
Plan Administrator pursuant to the Plan, shall be conclusive and
binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
-------------------------------------
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in
Section 12.1, the number of shares of Common Stock that shall be
available for issuance under the Plan shall be 500,000 shares.
In addition, (a) any authorized shares not issued or subject
to outstanding awards under the Company's 1995 Stock Incentive
Compensation Plan or its 1990 Stock Incentive Compensation Plan
(the "Prior Plans") on the Effective Date and (b) any shares
subject to outstanding awards under the Prior Plans on the
Effective Date that cease to be subject to such awards (other
than by reason of exercise or payment of the awards to the extent
they are exercised for or settled in vested and nonforfeitable
shares), up to an aggregate maximum of 893,450 shares, shall
cease, as of the date of shareholder approval of the Plan, to be
available for grant and issuance under the Prior Plans, but shall
be available for issuance under the Plan.
Shares issued under the Plan shall be drawn from authorized
and unissued shares or shares now held or subsequently acquired
by the Company.
4.2 Reuse of Shares
Any shares of Common Stock that have been made subject to an
Award that cease to be subject to the Award (other than by reason
of exercise or payment of the Award to the extent it is exercised
for or settled in vested and nonforfeitable shares) shall again
be available for issuance in connection with future grants of
Awards under the Plan.
<PAGE> 6
4.3 Limitations
Subject to adjustment from time to time as provided in
Section 12.1, not more than 350,000 shares of Common Stock may be
made subject to Awards under the Plan to any individual in the
aggregate in any one fiscal year of the Company, such limitation
to be applied in a manner consistent with the requirements of,
and only to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation
under Section 162(m) of the Code.
SECTION 5. ELIGIBILITY
-----------------------
Awards may be granted under the Plan to those officers,
directors and employees of the Company and its Related
Corporations as the Plan Administrator from time to time selects.
Awards may also be made to consultants, agents, advisors and
independent contractors who provide services to the Company and
its Related Corporations; provided, however, that such
Participants (a) are natural persons or an alter ego entity;
(b) render bona fide services that are not in connection with the
offer and sale of the Company's securities in a capital-raising
transaction; and (c) render bona fide services that do not
directly or indirectly promote or maintain a market for the
Company's securities.
SECTION 6. AWARDS
------------------
6.1 Form and Grant of Awards
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of Awards to be made
under the Plan. Awards may be granted singly or in combination.
6.2 Settlement of Awards
The Company may settle Awards through the delivery of shares
of Common Stock, the granting of replacement Awards or any
combination thereof as the Plan Administrator shall determine.
Any Award settlement, including payment deferrals, may be subject
to such conditions, restrictions and contingencies as the Plan
Administrator shall determine. The Plan Administrator may permit
or require the deferral of any Award payment, subject to such
rules and procedures as it may establish, which may include
provisions for the payment or crediting of interest, or dividend
equivalents, including converting such credits into deferred
stock equivalents.
6.3 Acquired Company Awards
Notwithstanding anything in the Plan to the contrary, the
Plan Administrator may grant Awards under the Plan in
substitution for awards issued under other plans, or assume under
the Plan awards issued under other plans, if the other plans are
or were plans of other acquired entities ("Acquired Entities")
(or the parent of the Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger,
consolidation, acquisition of
<PAGE> 7
property or stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that a written
agreement pursuant to which the Acquisition Transaction is
completed is approved by the Board and said agreement sets forth
the terms and conditions of the substitution for or assumption of
outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan
Administrator, except as may be required for compliance with
Rule 16b-3 under the Exchange Act, and the persons holding such
awards shall be deemed to be Participants.
SECTION 7. AWARDS OF OPTIONS
-----------------------------
7.1 Grant of Options
The Plan Administrator is authorized under the Plan, in its
sole discretion, to issue Options as Incentive Stock Options or
as Nonqualified Stock Options, which shall be appropriately
designated.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option
shall be as determined by the Plan Administrator, but shall not
be less than 100% of the Fair Market Value of the Common Stock on
the Grant Date with respect to Incentive Stock Options.
7.3 Term of Options
The term of each Option (the "Option Term") shall be as
established by the Plan Administrator or, if not so established,
shall be ten years from the Grant Date. For Incentive Stock
Options, the Option Term shall be as specified in Sections 8.2
and 8.4.
7.4 Exercise of Options
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option the time at which, or the
installments in which, the Option shall vest and become
exercisable, which provisions may be waived or modified by the
Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall vest and
become exercisable as to 25% of the Option after each year from
the Vesting Commencement Date, which schedule may be waived or
modified by the Plan Administrator at any time.
The Plan Administrator may adjust the vesting schedule of an
Option held by a Participant who works less than "full-time" as
that term is defined by the Plan Administrator.
To the extent that an Option has vested and become
exercisable, the Option may be exercised from time to time by
delivery to the Company of a written stock option exercise
agreement or notice, in a form and in accordance with procedures
established by the Plan Administrator, setting forth the number
of shares with respect to which the Option is being
<PAGE> 8
exercised, the restrictions imposed on the shares purchased under
such exercise agreement, if any, and such representations and
agreements as may be required by the Plan Administrator,
accompanied by payment in full as described in Section 7.5. An
Option may be exercised only for whole shares and may not be
exercised for less than a reasonable number of shares at any one
time, as determined by the Plan Administrator.
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option
shall be paid in full to the Company by delivery of consideration
equal to the product of the Option exercise price and the number
of shares purchased. Such consideration must be paid in cash or
by check (acceptable to the Plan Administrator) or, unless the
Plan Administrator in its sole discretion determines otherwise,
either at the time the Option is granted or at any time before it
is exercised, in any combination of
(a) cash;
(b) check (acceptable to the Plan Administrator);
(c) tendering (either actually or, if and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, by attestation) shares of Common Stock already
owned by the Participant for at least six months (or any shorter
period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the
day prior to the exercise date equal to the aggregate Option
exercise price;
(d) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a
properly executed exercise notice, together with irrevocable
instructions, to (i) a brokerage firm designated by the Company
to deliver promptly to the Company the aggregate amount of sale
or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the
exercise and (ii) the Company to deliver the certificates for
such purchased shares directly to such brokerage firm, all in
accordance with the regulations of the Federal Reserve Board; or
(e) such other consideration as the Plan Administrator may
permit.
In addition, to assist a Participant (including a
Participant who is an officer or a director of the Company) in
acquiring shares of Common Stock pursuant to an Award granted
under the Plan, the Plan Administrator, in its sole discretion,
may authorize, either at the Grant Date or at any time before the
acquisition of Common Stock pursuant to the Award, (i) the
payment by a Participant of a full-recourse promissory note,
(ii) the payment by the Participant of the purchase price, if
any, of the Common Stock in installments, or (iii) the guarantee
by the Company of a full-recourse loan obtained by the
Participant from a third party. Subject to the foregoing, the
Plan Administrator shall in its sole discretion specify the terms
of any loans, installment payments or loan guarantees, including
the interest rate and terms of and security for repayment.
<PAGE> 9
7.6 Post-Termination Exercises
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option whether the Option shall
continue to be exercisable, and the terms and conditions of such
exercise, if a Participant ceases to be employed by, or to
provide services to, the Company or its Related Corporations,
which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall be exercisable
according to the following terms and conditions, which may be
waived or modified by the Plan Administrator at any time:
(a) Any portion of an Option that is not vested and
exercisable on the date of termination of the Participant's
employment or service relationship (the "Employment Termination
Date") shall expire on such date.
(b) Any portion of an Option that is vested and exercisable
on the Employment Termination Date shall expire upon the earliest
to occur of
(i) if the Participant's Employment Termination Date
occurs for reasons other than Cause, Retirement, Disability or
death, the three-month anniversary of such Employment Termination
Date;
(ii) if the Participant's Employment Termination Date
occurs by reason of Retirement, Disability or death, the one-year
anniversary of such Employment Termination Date; and
(iii) the last day of the Option Term (the "Option
Expiration Date").
Notwithstanding the foregoing, if the Participant dies after
the Employment Termination Date while the Option is otherwise
exercisable, the portion of the Option that is vested and
exercisable on such Employment Termination Date shall expire upon
the earlier to occur of (y) the last day of the Option Term and
(z) the first anniversary of the date of death, unless the Plan
Administrator determines otherwise.
Also notwithstanding the foregoing, in case of termination
of the Participant's employment or service relationship for
Cause, the Option shall automatically expire at the time the
Company first notifies the Participant of such termination,
unless the Plan Administrator determines otherwise. If a
Participant's employment or service relationship with the Company
is suspended pending an investigation of whether the Participant
shall be terminated for Cause, all the Participant's rights under
any Option likewise shall be suspended during the period of
investigation. If any facts that would constitute termination
for Cause are discovered after the Participant's relationship
with the Company or a Related Corporation has ended, any Option
then held by the Participant may be immediately terminated by the
Plan Administrator, in its sole discretion.
(c) A Participant's transfer of employment or service
relationship between or among the Company and a Related
Corporation, or a change in status from an employee to a
consultant,
<PAGE> 10
agent, advisor or independent contractor or a change in status
from a consultant, agent, advisor or independent contractor to an
employee, shall not be considered a termination of employment or
service relationship for purposes of this Section 7. The effect
of a Company-approved leave of absence on the terms and
conditions of an Option shall be determined by the Plan
Administrator, in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
----------------------------------------------
To the extent required by Section 422 of the Code, Incentive
Stock Options shall be subject to the following additional terms
and conditions:
8.1 Dollar Limitation
To the extent the aggregate Fair Market Value (determined as
of the Grant Date) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time during
any calendar year (under the Plan and all other stock option
plans of the Company) exceeds $100,000, such portion in excess of
$100,000 shall be treated as a Nonqualified Stock Option. In the
event the Participant holds two or more such Options that become
exercisable for the first time in the same calendar year, such
limitation shall be applied on the basis of the order in which
such Options are granted.
8.2 More Than 10% Shareholders
If an individual owns more than 10% of the total combined
voting power of all classes of the stock of the Company or of its
parent or subsidiary corporations, then the exercise price per
share of an Incentive Stock Option granted to such individual
shall not be less than 110% of the Fair Market Value of the
Common Stock on the Grant Date and the Option Term shall not
exceed five years. The determination of more than 10% ownership
shall be made in accordance with Section 422 of the Code.
8.3 Eligible Employees
Individuals who are not employees of the Company or one of
its parent corporations or subsidiary corporations may not be
granted Incentive Stock Options.
8.4 Term
Subject to Section 8.2, the Option Term shall not exceed ten years.
8.5 Exercisability
An Option designated as an Incentive Stock Option shall
cease to qualify for favorable tax treatment as an Incentive
Stock Option to the extent it is exercised (if permitted by the
terms of the Option) (a) more than three months after the
Employment Termination Date for reasons other than death or
disability, (b) more than one year after the Employment
Termination Date by reason of disability, or (c) after the
Participant has been on leave of absence for more than
<PAGE> 11
90 days, unless the Participant's reemployment rights are
guaranteed by statute or contract.
8.6 Taxation of Incentive Stock Options
In order to obtain certain tax benefits afforded to
Incentive Stock Options under Section 422 of the Code, the
Participant must hold the shares issued upon the exercise of an
Incentive Stock Option for two years after the Grant Date and one
year from the date of exercise. A Participant may be subject to
the alternative minimum tax at the time of exercise of an
Incentive Stock Option. The Participant shall give the Company
prompt notice of any disposition of shares acquired by the
exercise of an Incentive Stock Option prior to the expiration of
such holding periods.
8.7 Shareholder Approval
If the shareholders of the Company do not approve the Plan
within 12 months after the Board of Director's adoption of the
Plan, any outstanding Incentive Stock Options will become
Nonqualified Stock Options.
8.8 Promissory Notes
The amount of any promissory note delivered pursuant to
Section 7.5 in connection with an Incentive Stock Option shall
bear interest at a rate specified by the Plan Administrator, but
in no case less than the rate required to avoid imputation of
interest (taking into account any exceptions to the imputed
interest rules) for federal income tax purposes.
8.9 Code Definitions
For purposes of this Section 8, "parent corporation,"
"subsidiary corporation" and "disability" shall have the meanings
attributed to those terms for purposes of Section 422 of the
Code.
SECTION 9. STOCK AWARDS
------------------------
9.1 Grant of Stock Awards
The Plan Administrator is authorized to make Awards of
Common Stock or Awards denominated in units of Common Stock on
such terms and conditions and subject to such restrictions, if
any (which may be based on continuous service with the Company or
the achievement of performance goals related to profits, profit
growth, profit-related return ratios, cash flow or total
shareholder return, where such goals may be stated in absolute
terms or relative to comparison companies), as the Plan
Administrator shall determine, in its sole discretion, which
terms, conditions and restrictions shall be set forth in the
instrument evidencing the Award. The terms, conditions and
restrictions that the Plan Administrator shall have the power to
determine shall include, without limitation, the manner in which
<PAGE> 12
shares subject to Stock Awards are held during the periods they are
subject to restrictions and the circumstances under which
forfeiture of the Stock Award shall occur by reason of
termination of the Participant's employment or service
relationship.
9.2 Issuance of Shares
Upon the satisfaction of any terms, conditions and
restrictions prescribed in respect to a Stock Award, or upon the
Participant's release from any terms, conditions and restrictions
of a Stock Award, as determined by the Plan Administrator, the
Company shall release, as soon as practicable, to the Participant
or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate
court directs, the appropriate number of shares of Common Stock.
9.3 Waiver of Restrictions
Notwithstanding any other provisions of the Plan, the Plan
Administrator may, in its sole discretion, waive the forfeiture
period and any other terms, conditions or restrictions on any
Stock Award under such circumstances and subject to such terms
and conditions as the Plan Administrator shall deem appropriate;
provided, however, that the Plan Administrator may not adjust
performance goals for any Stock Award intended to be exempt under
Section 162(m) of the Code for the year in which the Stock Award
is settled in such a manner as would increase the amount of
compensation otherwise payable to a Participant.
SECTION 10. WITHHOLDING
------------------------
The Company may require the Participant to pay to the
Company the amount of any withholding taxes that the Company is
required to withhold with respect to the grant, vesting or
exercise of any Award. Subject to the Plan and applicable law,
the Plan Administrator may, in its sole discretion, permit the
Participant to satisfy withholding obligations, in whole or in
part, (a) by paying cash, (b) by electing to have the Company
withhold shares of Common Stock (up to the employer's minimum
required tax withholding rate) or (c) by transferring to the
Company shares of Common Stock (already owned by the Participant
for the period necessary to avoid a charge to the Company's
earnings for financial reporting purposes), in such amounts as
are equivalent to the Fair Market Value of the withholding
obligation. The Company shall have the right to withhold from
any Award or any shares of Common Stock issuable pursuant to an
Award (up to the employer's minimum required tax withholding
rate) or from any cash amounts otherwise due or to become due
from the Company to the Participant an amount equal to such
taxes.
SECTION 11. ASSIGNABILITY
--------------------------
Awards granted under the Plan and any interest therein may
not be assigned, pledged or transferred by the Participant and
may not be made subject to attachment or similar proceedings
otherwise than by will or by the applicable laws of descent and
distribution, and, during the Participant's lifetime, such Awards
may be exercised only by the Participant. Notwithstanding the
foregoing, and to the extent permitted by Section 422 of the
Code, the Plan Administrator, in
<PAGE> 13
its sole discretion, may permit such assignment, transfer and
exercisability and may permit a Participant to designate a
beneficiary who may exercise the Award or receive payment under
the Award after the Participant's death; provided, however, that
any Award so assigned or transferred shall be subject to all the
same terms and conditions contained in the instrument evidencing
the Award.
SECTION 12. ADJUSTMENTS
------------------------
12.1 Adjustment of Shares
In the event that, at any time or from time to time, a stock
dividend, stock split, spin-off, combination or exchange of
shares, recapitalization, merger, consolidation, distribution to
shareholders other than a normal cash dividend, or other change
in the Company's corporate or capital structure results in
(a) the outstanding shares, or any securities exchanged therefor
or received in their place, being exchanged for a different
number or kind of securities of the Company or of any other
corporation or (b) new, different or additional securities of the
Company or of any other corporation being received by the holders
of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the
maximum number and kind of securities subject to the Plan as set
forth in Section 4.1 and the maximum number and kind of
securities that may be made subject to Awards to any individual
as set forth in Section 4.3 and (ii) the number and kind of
securities that are subject to any outstanding Award and the per
share price of such securities, without any change in the
aggregate price to be paid therefor. The determination by the
Plan Administrator as to the terms of any of the foregoing
adjustments shall be conclusive and binding. Notwithstanding the
foregoing, a dissolution or liquidation of the Company or a
Corporate Transaction shall not be governed by this Section 12.1
but shall be governed by Sections 12.2 and 12.3, respectively.
12.2 Dissolution or Liquidation
In the event of the proposed dissolution or liquidation of
the Company, the Plan Administrator shall notify each Participant
as soon as practicable prior to the effective date of such
proposed transaction. The Plan Administrator in its discretion
may permit a Participant to exercise an Option until ten days
prior to such transaction with respect to all vested and
exercisable shares of Common Stock covered thereby and with
respect to such number of unvested shares as the Plan
Administrator shall determine. In addition, the Plan
Administrator may provide that any forfeiture provision or
Company repurchase option applicable to any Award shall lapse as
to such number of shares as the Plan Administrator shall
determine, contingent upon the occurrence of the proposed
dissolution or liquidation at the time and in the manner
contemplated. To the extent an Option has not been previously
exercised, the Option shall terminate automatically immediately
prior to the consummation of the proposed action. To the extent
a forfeiture provision applicable to a Stock Award has not been
waived by the Plan Administrator, the Stock Award shall be
forfeited automatically immediately prior to the consummation of
the proposed action.
<PAGE> 14
12.3 Corporate Transaction
12.3.1 Options
(a) In the event of a Corporate Transaction, except as
otherwise provided in the instrument evidencing the Option, each
outstanding Option shall be assumed or continued or an equivalent
option or right substituted by the surviving corporation, the
successor corporation or its parent corporation, as applicable
(the "Successor Corporation").
(b) In the event that the Successor Corporation refuses to
assume, continue or substitute for the Option, each outstanding
Option shall become fully vested and exercisable with respect to
the unvested portion of the Option; provided, that such
acceleration will not occur if, in the opinion of the Company's
outside accountants, such acceleration would render unavailable
"pooling of interests" accounting treatment for any Corporate
Transaction for which pooling of interests accounting treatment
is sought by the Company. In such case, the Plan Administrator
shall notify the Participant in writing or electronically that
the Option shall be fully vested and exercisable for a specified
time period after the date of such notice, and the Option shall
terminate upon the expiration of such period, in each case
conditioned on the consummation of the Corporate Transaction.
(c) For the purposes of this Section 12.3, the Option shall
be considered assumed if following the Corporate Transaction the
option or right confers the right to purchase or receive, for
each share of Common Stock subject to the Option immediately
prior to the Corporate Transaction, the consideration (whether
stock, cash, or other securities or property) received in the
Corporate Transaction by holders of Common Stock for each share
held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the
Corporate Transaction is not solely common stock of the Successor
Corporation, the Plan Administrator may, with the consent of the
Successor Corporation, provide for the consideration to be
received upon the exercise of the Option, for each share of
Common Stock subject thereto, to be solely common stock of the
Successor Corporation equal in fair market value to the per share
consideration received by holders of Common Stock in the
Corporate Transaction.
(d) All Options shall terminate and cease to remain
outstanding immediately following the consummation of the
Corporate Transaction, except to the extent assumed by the
Successor Corporation.
12.3.2 Stock Awards
In the event of a Corporate Transaction, except as otherwise
provided in the instrument evidencing the Award, the vesting of
shares subject to Stock Awards shall accelerate, and the
forfeiture provisions to which such shares are subject shall
lapse, if and to the same extent that the vesting of outstanding
Options accelerates in connection with the Corporate Transaction.
If unvested Options are to be assumed, continued or substituted
by a Successor Corporation
<PAGE> 15
without acceleration upon the occurrence of a Corporate
Transaction, the forfeiture provisions to which such Stock Awards
are subject shall continue with respect to shares of the
Successor Corporation that may be issued in exchange for such
shares.
12.3.3 Acceleration
Any such Awards that are assumed or replaced in the
Corporate Transaction and do not otherwise accelerate at that
time shall automatically become fully vested and exercisable with
respect to the unvested portion of the Award (and the forfeiture
or repurchase provisions to which such Awards may be subject
shall lapse to the same extent) in the event that the
Participant's employment or service relationship with the
Successor Corporation should subsequently terminate within two
years following such Corporate Transaction, unless such
employment or service relationship is terminated by the Successor
Corporation for Cause or by the Participant voluntarily without
Good Reason; provided, that such acceleration shall not occur if,
in the opinion of the Company's outside accountants, such
acceleration would render unavailable "pooling of interests"
accounting treatment for any Corporate Transaction for which
pooling of interests accounting treatment is sought by the
Company.
12.4 Further Adjustment of Awards
Subject to Sections 12.2 and 12.3, the Plan Administrator
shall have the discretion, exercisable at any time before a sale,
merger, consolidation, reorganization, liquidation or change in
control of the Company, as defined by the Plan Administrator, to
take such further action as it determines to be necessary or
advisable, and fair and equitable to the Participants, with
respect to Awards. Such authorized action may include (but shall
not be limited to) establishing, amending or waiving the type,
terms, conditions or duration of, or restrictions on, Awards so
as to provide for earlier, later, extended or additional time for
exercise, lifting restrictions and other modifications, and the
Plan Administrator may take such actions with respect to all
Participants, to certain categories of Participants or only to
individual Participants. The Plan Administrator may take such
action before or after granting Awards to which the action
relates and before or after any public announcement with respect
to such sale, merger, consolidation, reorganization, liquidation
or change in control that is the reason for such action.
12.5 Limitations
The grant of Awards shall in no way affect the Company's
right 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.
12.6 Fractional Shares
In the event of any adjustment in the number of shares
covered by any Award, each such Award shall cover only the number
of full shares resulting from such adjustment.
<PAGE> 16
SECTION 13. AMENDMENT AND TERMINATION OF PLAN
----------------------------------------------
13.1 Amendment of Plan
The Plan may be amended only by the Board in such respects
as it shall deem advisable; provided, however, that to the extent
required for compliance with Section 422 of the Code or any
applicable law or regulation, shareholder approval shall be
required for any amendment that would (a) increase the total
number of shares available for issuance under the Plan,
(b) modify the class of employees eligible to receive Options, or
(c) otherwise require shareholder approval under any applicable
law or regulation. Any amendment made to the Plan that would
constitute a "modification" to Incentive Stock Options
outstanding on the date of such amendment shall not, without the
consent of the Participant, be applicable to such outstanding
Incentive Stock Options but shall have prospective effect only.
13.2 Termination of Plan
The Board may suspend or terminate the Plan at any time.
The Plan shall have no fixed expiration date; provided, however,
that no Incentive Stock Options may be granted more than
ten years after the later of (a) the Plan's adoption by the Board
and (b) the adoption by the Board of any amendment to the Plan
that constitutes the adoption of a new plan for purposes of
Section 422 of the Code.
13.3 Consent of Participant
The amendment or termination of the Plan or the amendment of
an outstanding Award shall not, without the Participant's
consent, impair or diminish any rights or obligations under any
Award theretofore granted to the Participant under the Plan. Any
change or adjustment to an outstanding Incentive Stock Option
shall not, without the consent of the Participant, be made in a
manner so as to constitute a "modification" that would cause such
Incentive Stock Option to fail to continue to qualify as an
Incentive Stock Option. Notwithstanding the foregoing, any
adjustments made pursuant to Section 12 shall not be subject to
these restrictions.
SECTION 14. GENERAL
--------------------
14.1 Evidence of Awards
Awards granted under the Plan shall be evidenced by a
written instrument that shall contain such terms, conditions,
limitations and restrictions as the Plan Administrator shall deem
advisable and that are not inconsistent with the Plan.
14.2 No Individual Rights
Nothing in the Plan or any Award granted under the Plan
shall be deemed to constitute an employment contract or confer or
be deemed to confer on any Participant any right to continue in
the employ of, or to continue any other relationship with, the
Company or any
<PAGE> 17
Related Corporation or limit in any way the right of the Company
or any Related Corporation to terminate a Participant's
employment or other relationship at any time, with or without
Cause.
14.3 Issuance of Shares
Notwithstanding any other provision of the Plan, the Company
shall have no obligation to issue or deliver any shares of Common
Stock under the Plan or make any other distribution of benefits
under the Plan unless such issuance, delivery or distribution
would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act), and the
applicable requirements of any securities exchange or similar
entity.
The Company shall be under no obligation to any Participant
to register for offering or resale or to qualify for exemption
under the Securities Act, or to register or qualify under state
securities laws, any shares of Common Stock, security or interest
in a security paid or issued under, or created by, the Plan, or
to continue in effect any such registrations or qualifications if
made.
To the extent that the Plan or any instrument evidencing an
Award provides for issuance of stock certificates to reflect the
issuance of shares of Common Stock, the issuance may be effected
on a noncertificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.
14.4 No Rights as a Shareholder
No Option or Stock Award denominated in units shall entitle
the Participant to any cash dividend, voting or other right of a
shareholder unless and until the date of issuance under the Plan
of the shares that are the subject of such Award.
14.5 Compliance With Laws and Regulations
Notwithstanding anything in the Plan to the contrary, the
Plan Administrator, in its sole discretion, may bifurcate the
Plan so as to restrict, limit or condition the use of any
provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to
other Participants. Additionally, in interpreting and applying
the provisions of the Plan, any Option granted as an Incentive
Stock Option pursuant to the Plan shall, to the extent permitted
by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
14.6 Participants in Foreign Countries
The Plan Administrator shall have the authority to adopt
such modifications, procedures and subplans as may be necessary
or desirable to comply with provisions of the laws of foreign
countries in which the Company or its Related Corporations may
operate to assure the viability of
<PAGE> 18
the benefits from Awards granted to Participants employed in
such countries and to meet the objectives of the Plan.
14.7 No Trust or Fund
The Plan is intended to constitute an "unfunded" plan.
Nothing contained herein shall require the Company to segregate
any monies or other property, or shares of Common Stock, or to
create any trusts, or to make any special deposits for any
immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of
a general unsecured creditor of the Company.
14.8 Severability
If any provision of the Plan or any Award is determined to
be invalid, illegal or unenforceable in any jurisdiction, or as
to any person, or would disqualify the Plan or any Award under
any law deemed applicable by the Plan Administrator, such
provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed
amended without, in the Plan Administrator's determination,
materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or
Award, and the remainder of the Plan and any such Award shall
remain in full force and effect.
14.9 Choice of Law
The Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the laws
of the United States, shall be governed by the laws of the State
of Oregon without giving effect to principles of conflicts of
laws.
SECTION 15. EFFECTIVE DATE
---------------------------
The effective date is the date on which the Plan is approved
by the Company's shareholders (the "Effective Date"), so long
as such approval is within 12 months of the date on which the
Plan was adopted by the Board.
