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EXAR CORPORATION
2000 EQUITY INCENTIVE PLAN
ADOPTED SEPTEMBER 7, 2000
STOCKHOLDER APPROVAL NOT REQUIRED
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees of and Consultants to the Company and its Affiliates who are not
Officers or members of the Boards of Directors of the Company or any of its
Affiliates, may be given an opportunity to benefit from increases in value of
the stock of the Company through the granting of (i) Nonstatutory Stock
Options, (ii) stock bonuses and (iii) rights to purchase restricted stock,
all as described below.
The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees of or Consultants to the Company or an
Affiliate and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.
The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof or (ii) stock bonuses
or rights to purchase restricted stock granted pursuant to Section 8 hereof.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined
in Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a committee or subcommittee appointed by the Board
in accordance with subsection 3(c) of the Plan.
(e) "COMPANY" means Exar Corporation, a Delaware corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated
for such services, PROVIDED THAT the term "Consultant" shall not include
Directors.
(g) "CONTINUOUS SERVICE" means that the service of an individual to the
Company, whether as an Employee, Officer, Director or Consultant, is not
interrupted or terminated. The Board or the Committee may determine, in that
party's sole discretion, whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by the Board or the
Committee, including sick leave, military leave, or any other personal leave.
Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which a person renders service to the Company or an
Affiliate, whether such service is as an Employee, Officer, Director or
Consultant or a change in the entity for which the person renders such
service, provided that there is no interruption in the person's service
relationship with the Company or an Affiliate.
(h) "DIRECTOR" means a member of the Board.
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(i) "EMPLOYEE" means any person employed by the Company or any Affiliate
of the Company; PROVIDED HOWEVER, that Officers and Directors of the Company
shall not be considered Employees for purposes of the Plan.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(k) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows:
(1) If the common stock is listed on any established stock exchange
or traded on the Nasdaq National Market or The Nasdaq SmallCap Market, the
Fair Market Value of a share of common stock shall be the mean of the highest
and lowest sales prices for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the Company's common stock) on the
last market trading day prior to the day of determination, as reported in THE
WALL STREET JOURNAL or such other source as the Board deems reliable.
(2) In the absence of such markets for the common stock, the Fair
Market Value shall be determined in good faith by the Board.
(l) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does
not receive compensation (directly or indirectly) from the Company or its
parent or subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would
not be required under Item 404(a) of Regulation S-K promulgated pursuant to
the Securities Act ("Regulation S-K")), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404(a)
of Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(m) "NONSTATUTORY STOCK OPTION" means a stock option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(n) "OFFICER" means a person who possesses the authority of an "officer"
as that term is used in Rule 4460(i)(1)(A) of the Rules of the National
Association of Securities Dealers, Inc. For purposes of the Plan, a person in
the position of "Vice President" or higher shall be classified as an
"Officer" unless the Board or Committee expressly finds that such person does
not possess the authority of an "officer" as that term is used in Rule
4460(i)(1)(A) of the Rules of the National Association of Securities Dealers,
Inc.
(o) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.
(p) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.
(q) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(r) "PLAN" means this 2000 Equity Incentive Plan.
"RULE16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect with respect to the Company at the time
discretion is being exercised regarding the Plan.
(s) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(t) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.
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(u) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Option, a stock bonus, a
right to purchase restricted stock, or a combination of the foregoing; the
provisions of each Stock Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive stock
pursuant to a Stock Award; and the number of shares with respect to which a
Stock Award shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 13.
(4) To terminate or suspend the Plan as provided in Section 14.
(5) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee of
the Board composed of two (2) or more members (the "Committee"), all of the
members of which Committee may be, in the discretion of the Board,
Non-Employee Directors. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to delegate to
a subcommittee any of the administrative powers the Committee is authorized
to exercise (and references in this Plan to the Board shall thereafter be to
the Committee or such a subcommittee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan. In addition,
notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a subcommittee of one or more members of the Board
the authority to grant Stock Awards to eligible persons who are not then
subject to Section 16 of the Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate one million (1,000,000) shares of the Company's
Common Stock. If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full, the
stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Stock Awards may be granted only to Employees or Consultants.
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(b) A Consultant shall not be eligible for the grant of a Stock Award
if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature
of the services that the Consultant is providing to the Company, or because
the Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that
such grant (A) shall be registered in another manner under the Securities Act
(E.G., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. Except as otherwise provided in Section 7 of the Plan, the
exercise price of each Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the Option on the
date of grant.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or the Committee, at the time of the grant of
the Option, (A) by delivery to the Company of other common stock of the
Company, (B) according to a deferred payment arrangement (however, in the
event the Company is then incorporated in the state of Delaware, then payment
of the common stock's "par value" as defined in the Delaware General
Corporation Law shall not be made by deferred payment), or other arrangement
(which may include, without limiting the generality of the foregoing, the use
of other common stock of the Company) with the person to whom the Option is
granted or to whom the Option is transferred pursuant to subsection 6(d) or
(C) in any other form of legal consideration that may be acceptable to the
Board. In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Option shall not be transferable except by will
or by the laws of descent and distribution, and shall be exercisable during
the lifetime of the person to whom the Option is granted only by such person;
provided, however, that an Option may be transferred to the extent provided
in the Option Agreement. The person to whom the Option is granted may
designate, by delivering written notice of the same to the Company (in a form
acceptable to the Company) during such person's lifetime, a third party who,
in the event of the death of the Optionholder, shall thereafter be entitled
to exercise the Option and receive any and all proceeds thereof.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). From time to time during each of such installment periods,
the Option may become exercisable ("vest") with respect to some or all of the
shares allotted to that period, and may be exercised with respect to some or
all of the shares allotted to such period and/or any prior period as to which
the Option was not fully exercised. During the remainder of the term of the
Option (if its term extends beyond the end of the installment periods), the
Option may be exercised from time to time with respect to any shares then
remaining subject to the Option. The provisions of this subsection 6(e) are
subject to any Option provisions governing the minimum number of shares as to
which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionholder's Continuous Service terminates
(other than upon the Optionholder's death or disability), the Optionholder
may exercise the Option (to the extent that the Optionholder was entitled to
exercise it as of the date of termination) but only within such period of
time ending on the earlier of (i) the date three (3) months following the
termination of the Optionholder's Continuous Service (or such longer or
shorter period as
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specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement; provided, however, if the
Optionholder is terminated for cause, then the Option shall terminate on the
date Optionholder's Continuous Service ceases. If, at the date of
termination, the Optionholder is not entitled to exercise the entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
and again become available for issuance under the Plan. If, after
termination, the Optionholder does not exercise the Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for
issuance under the Plan.
An Optionholder's Option Agreement may also provide that if the
exercise of the Option following the termination of the Optionholder's
Continuous Service (other than upon the Optionholder's death or disability)
would result in liability under Section 16(b) of the Exchange Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of
the Option set forth in the Option Agreement, or (ii) the tenth (10th) day
after the last date on which such exercise would result in such liability
under Section 16(b) of the Exchange Act. Finally, an Optionholder's Option
Agreement may also provide that if the exercise of the Option following the
termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements
under the Securities Act, then the Option shall terminate on the earlier of
(i) the expiration of the term of the Option set forth in the first paragraph
of this subsection 6(f), or (ii) the expiration of a period of three (3)
months after the termination of the Optionholder's Continuous Service during
which the exercise of the Option would not be in violation of such
registration requirements.
(g) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's disability,
the Optionholder may exercise the Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within
such period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the
Optionholder is not entitled to exercise the entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after termination, the
Optionholder does not exercise the Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONHOLDER. In the event of the death of an Optionholder
during, or within a period specified in the Option Agreement after the
termination of, the Optionholder's Continuous Service, the Option may be
exercised (to the extent the Optionholder was entitled to exercise the Option
as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's death
pursuant to subsection 6(d), but only within the period ending on the earlier
of (i) the date eighteen (18) months following the date of death (or such
longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of such Option as set forth in the Option Agreement.
If, at the time of death, the Optionholder was not entitled to exercise the
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after death, the Option is not exercised within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
7. DEFERRED SALARY GRANTS.
(a) Any Employee who is selected by the Board or Committee ("Deferral
Participant") may elect to apply a portion of his or her base salary, in an
amount equal to at least five thousand dollars ($5,000) but in no event more
than fifty thousand dollars ($50,000), to the acquisition of an Option to
purchase shares of the Company's common stock pursuant to the terms of this
Section 7 ("Deferred Salary Option"). Such election is irrevocable and must
be filed with the Company prior to the commencement of the calendar year in
which the base salary to be deferred is earned. Notwithstanding the
foregoing, a newly hired, elected or appointed Deferral Participant may file
an irrevocable election with the Company within thirty (30) days of the date
the Deferral Participant commences employment with the Company.
Each Deferral Participant who files such a timely election shall
automatically be granted an Option under this Section 7 on (i) the first
trading day in January of the
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calendar year for which the deferral election is to be in effect; or (ii) for
a newly hired Deferral Participant, the first trading day of the month
following the month the Deferral Participant files such election.
(b) The number of shares of Company common stock subject to a Deferred
Salary Option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):
X= A / (B x 66-2/3%), where
X is the number of Option shares,
A is the maximum amount of base salary subject to the deferral
election, and
B is the Fair Market Value per share of the common stock on
the Option grant date.
(c) The purchase price per share of common stock of the Company for the
shares to be purchased pursuant to the exercise of any Deferred Salary Option
shall be thirty three and one third percent (33-1/3%) of the fair market
value of the Company's common stock on the date such Deferred Salary Option
is granted.
(d) Each Deferred Salary Option shall vest (become exercisable) equally
over the twelve (12) month period that is the calendar year in which salary
is deferred, and shall terminate on the earlier of (i) ten (10) years from
the date the Option was granted, or (ii) three (3) years following
termination of the Deferral Participant's employment with the Company or an
Affiliate. If the Deferred Salary Option is not exercised during the
applicable period, it shall be deemed to have been forfeited and of no
further force or effect.
8. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such Stock Award Agreement. Notwithstanding the
foregoing, the Board or the Committee may determine that eligible
participants in the Plan may be awarded stock pursuant to a stock bonus
agreement in consideration for past services actually rendered to the Company
or for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable by any Option holder under the Plan,
either voluntarily or by operation of law, except where such assignment is
required by law or expressly authorized by the terms of the applicable Stock
Award Agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to
a deferred payment arrangement or other arrangement with the person to whom
the stock is sold; or (iii) in any other form of legal consideration that may
be acceptable to the Board or the Committee in its discretion.
Notwithstanding the foregoing, the Board or the Committee to which
administration of the Plan has been delegated may award stock pursuant to a
stock bonus agreement in consideration for past services actually rendered to
the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionholder's Continuous Service terminates, the
Company may repurchase or otherwise reacquire any or all of the shares of
stock held by that person which have not vested as of the date of termination
under the terms of the stock bonus or restricted stock purchase agreement
between the Company and such person.
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9. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards up to the number of shares of stock authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register
under the Securities Act either the Plan, any Stock Award granted under the
Plan or any stock issued or issuable pursuant to any such Stock Award. If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such Stock Awards unless and until such authority is
obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
11. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which
it will vest.
(b) Neither an Employee nor a Consultant nor any person to whom a Stock
Award is transferred under subsection 6(d) or 8(b) shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Stock Award pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee or Consultant or
other holder of Stock Awards any right to continue in the employ of the
Company or any Affiliate (or to continue serving as a Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment
of any Employee with or without cause or the right to terminate the
relationship of any Consultant subject to the terms of such Consultant's
agreement with the Company or any Affiliate. In the event that a holder of
Stock Awards is permitted or otherwise entitled to take a leave of absence,
the Board or Committee shall have the unilateral right to (i) determine
whether such leave of absence will be treated as a termination of employment
or relationship as consultant for purposes of the Plan and corresponding
provisions of any outstanding Stock Awards, and (ii) suspend or otherwise
delay the time or times at which the shares subject to the Stock Awards would
otherwise vest. The status as an eligible Employee or Consultant of any
person shall not be construed as a commitment that any Option will be granted
under the Plan to such eligible Employee or Consultant, or to eligible
Employees or Consultants generally.
(d) Payments and other benefits received by an Optionholder under the
Plan or under an Option granted pursuant to the Plan shall not be deemed a
part of an Optionholder's regular, recurring compensation for purposes of the
termination, indemnity or severance pay law of any country and shall not be
included in, nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement provided by the
Company or a Group Company, unless expressly so provided by such other plan,
contract or arrangement, or unless the Board expressly determines that an
Option or portion of an Option should be included to reflect competitive
compensation practices or to recognize that an Option has been granted in
lieu of a portion of competitive cash compensation.
(e) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred pursuant to subsection
6(d) or 8(b), as a condition of exercising or acquiring stock under any Stock
Award, (1) to give written assurances satisfactory to the Company as to such
person's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably
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satisfactory to the Company who is knowledgeable and experienced in financial
and business matters, and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (2) to give written assurances satisfactory
to the Company stating that such person is acquiring the stock subject to the
Stock Award for such person's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements,
and any assurances given pursuant to such requirements, shall be inoperative
if (i) the issuance of the shares upon the exercise of the Option has been
registered under a then currently effective registration statement under the
Securities Act, or (ii) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following means or by a combination
of such means: (1) tendering a cash payment; (2) authorizing the Company to
withhold shares from the shares of the common stock otherwise issuable to the
participant as a result of the exercise or acquisition of stock under the
Stock Award; or (3) delivering to the Company owned and unencumbered shares
of Company common stock. Notwithstanding the foregoing, the Company shall not
be authorized to withhold shares of Common Stock at rates in excess of the
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company), the Plan will be appropriately
adjusted in the type(s) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the outstanding Stock Awards will be
appropriately adjusted in the type(s) and number of securities and price per
share of stock subject to such outstanding Stock Awards. Such adjustments
shall be made by the Board or the Committee, the determination of which shall
be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not
involving the receipt of consideration by the Company.")
(b) In the event of (1) a dissolution or liquidation of the Company; (2)
a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4)
any other capital reorganization in which more than fifty percent (50%) of
the shares of the Company entitled to vote are exchanged, excluding in each
case a capital reorganization in which the sole purpose is to change the
state of incorporation of the Company, then all outstanding Stock Awards
shall become vested and exercisable in full for a period of at least ten (10)
days. Outstanding Stock Awards that have not been exercised prior to such
event shall terminate on the date of such event unless assumed by a successor
corporation.
13. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary
for the Plan to satisfy the requirements of Section 422 of the Code, Rule
16b-3 under the Exchange Act or any Nasdaq or securities exchange listing
requirements.
(b) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
(c) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the
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consent of the person to whom the Stock Award was granted and (ii) such
person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the written consent of the person to whom the Stock Award was
granted.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date on which it is adopted by
the Board.
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