VDC Communications, Inc.
1998 STOCK INCENTIVE PLAN, AS AMENDED
(as amended through August 9, 2000)
Section 1. General Purpose of the Plan; Definitions. The name of the
plan is the VDC Communications, Inc. 1998 Stock Incentive Plan, As Amended (the
"Plan"). The purpose of the Plan is to encourage and enable the officers,
employees, directors and consultants of VDC Communications, Inc. (the "Company")
and its Subsidiaries upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Stock Awards, Performance Share Awards and
Stock Appreciation Rights.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Effective Date" means the date on which the Plan is approved by the
stockholders as set forth in Section 19.
"Fair Market Value" of the Stock on any given date means (i) if the
principal market for the Stock is the American Stock Exchange, Inc. ("AMEX"),
any other United States securities exchange or the National Market System of
National Association of the Securities Dealers Automated Quotation System
("NASDAQ"), the Fair Market Value on any date shall be the closing price
reported for the Stock on such exchange or system for such date or, if no sales
were reported for such date, for the last day preceding such date for which a
sale was reported, or (ii) if the principal market for the Stock is not a
national securities exchange or the NASDAQ National Market System, and the Stock
is admitted to quotation on NASDAQ, the Fair Market Value on any given date
shall be the average of the highest bid and lowest asked prices of the Stock
reported for such date or, if no bid and asked prices were reported for such
date, for the last day preceding such date for which such prices were reported;
and (iii) if the Fair Market Value cannot be determined on the basis previously
set forth in this definition on the date that Fair Market Value is to be
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determined, the Board shall in good faith determine the Fair Market Value of the
Stock on such date.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not an
employee or officer of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any Option to purchase shares of Stock
granted pursuant to Section 6.
"Performance Share Award" means any Award granted pursuant to Section
12.
"Restricted Stock Award" means any Award granted pursuant to Section
10.
"Stock" means the Common Stock, par value $.0001 per share, of the
Company, subject to adjustments pursuant to Section 14.
"Stock Appreciation Right" or "SAR" means any Award granted pursuant to
Section 7.
"Stock Award" means any award granted pursuant to Section 11.
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company, if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
Section 2. Administration. The Plan shall be administered by the full
Board of Directors of the Company or a committee of such Board of Directors
comprised of two or more "Non-Employee Directors" within the meaning of Rule
16b-3(a)(3) (or its successor rule) promulgated under the Act (the "Plan
Administrator"). Subject to the provisions of the Plan, the Plan Administrator
is authorized to:
(a) construe the Plan and any Award under the Plan;
(b) select the directors, officers, employees and
consultants of the Company and its Subsidiaries to
whom Awards may be granted;
(c) determine the number of shares of Stock to be covered
by any Award;
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(d) determine and modify from time to time the terms and
conditions, including restrictions, of any Award and
to approve the form of written instrument evidencing
Awards;
(e) accelerate at any time the exercisability or vesting
of all or any portion of any Award and/or to include
provisions in awards providing for such acceleration;
(f) impose limitations on Awards, including limitations
on transfer and repurchase provisions;
(g) extend the exercise period within which Stock Options
may be exercised; and
(h) determine at any time whether, to what extent, and
under what circumstances Stock and other amounts
payable with respect to an Award shall be deferred
either automatically or at the election of the
participant and whether and to what extent the
Company shall pay or credit amounts constituting
interest (at rates determined by the Plan
Administrator) or dividends or deemed dividends on
such deferrals.
The determination of the Plan Administrator on any such matters shall be
conclusive.
Section 3. Delegation of Authority to Grant Awards. The Plan
Administrator, in its discretion, may delegate to the Chairman of the Company
all or part of the Plan Administrator's authority and duties with respect to
granting Awards to individuals who are not subject to the reporting provisions
of Section 16 of the Act or "covered employees" within the meaning of Section
162(m) of the Code. The Plan Administrator may revoke or amend the terms of such
a delegation at any time, but such revocation shall not invalidate prior actions
of the Chairman that were consistent with the terms of the Plan.
Section 4. Eligibility. Directors, officers, employees and consultants
of the Company or its Subsidiaries who, in the opinion of the Plan
Administrator, are mainly responsible for the continued growth and development
and future financial success of the business shall be eligible to participate in
the Plan. In addition, Independent Directors are eligible to receive an
automatic grant of Stock Options pursuant to Section 9 hereof.
Section 5. Shares Subject to the Plan. The initial number of shares of
Stock which may be issued pursuant to the Plan shall be 5,000,000. For purposes
of the foregoing limitation, the shares of Stock underlying any Awards which are
forfeited, canceled, reacquired by the Company, satisfied without the issuance
of Stock or otherwise terminated (other than by exercise) shall be added back to
the number of shares of Stock available for issuance under the Plan.
Notwithstanding the foregoing, on and after the date that the Plan is subject to
Section 162(m) of the Code, Stock Options with respect to no more than 1,000,000
shares of Stock may be granted to any one individual participant during any one
calendar year period. To the extent that an SAR is granted in conjunction with
an Option, the shares covered by such SAR and Option shall be counted only once.
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Common Stock to be issued under the Plan may be either authorized and unissued
shares or shares held in treasury by the Company.
Section 6. Stock Options. Options granted pursuant to the Plan may be
either Options which are Incentive Stock Options or Non-Qualified Stock Options.
Incentive Stock Options and Non-Qualified Stock Options shall be granted
separately hereunder. The Plan Administrator, shall determine whether and to
what extent Options shall be granted under the Plan and whether such Options
granted shall be Incentive Stock Options or Non-Qualified Stock Options;
provided, however, that: (a) Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code; and (b) No Incentive Stock
Option may be granted following the tenth anniversary of the effective date of
the Plan. The provisions of the Plan and any stock Option agreement pursuant to
which Incentive Stock Options shall be issued shall be construed in a manner
consistent with Section 422 of the Code (or any successor provision) and rules
and regulations promulgated thereunder.
Section 7. Stock Appreciation Rights. The Plan Administrator may, from
time to time, subject to the provisions of the Plan, grant SARs to eligible
participants. Such SARs may be granted (i) alone, (ii) simultaneously with the
grant of an Option (either an Incentive Stock Option or Non-Qualified Stock
Option) and in conjunction therewith or in the alternative thereto or (iii)
subsequent to the grant of a Non-Qualified Stock Option and in conjunction
therewith or in the alternative thereto.
(a) An SAR shall entitle the holder upon exercise thereof
to receive from the Company, upon a written request
filed with the Secretary of the Company at its
principal offices (the "Request"), (i) a number of
shares of Stock (with or without restrictions as to
substantial risk of forfeiture and transferability,
as determined by the Plan Administrator in its
sole discretion), (ii) an amount of cash, or (iii)
any combination of shares of Stock and cash, as
specified in the Request (but subject to the approval
of the Plan Administrator in its sole discretion,
at any time up to and including the time of payment,
as to the making of any cash payment), having an
aggregate Fair Market Value equal to the product of
(i) the excess of the Fair Market Value, on the day
of such Request, of one share of Stock over the
exercise price per share specified in such SAR
or its related Option, multiplied by (ii) the number
of shares of Stock for which such SAR shall be
exercised.
(b) The exercise price of an SAR granted alone shall be
determined by the Plan Administrator, but may not be
less than the Fair Market Value of the underlying
Stock on the date of grant. An SAR granted
simultaneously with or subsequent to the grant of an
Option and in conjunction therewith or in the
alternative thereto shall have the same exercise
price as the related Option, shall be transferable
only upon the same terms and conditions as the
related Option, and shall be exercisable only to the
same extent as the related Option; provided, however,
that an SAR, by its terms, shall be exercisable only
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when the Fair Market Value of the Stock subject to
the SAR and related Option exceeds the exercise price
thereof.
(c) Upon exercise of an SAR granted simultaneously with
or subsequent to an Option and in the alternative
thereto, the number of shares of Stock for which the
related Option shall be exercisable shall be reduced
by the number of shares of Stock for which the SAR
shall have been exercised. The number of shares of
Stock for which an SAR shall be exercisable shall be
reduced upon any exercise of a related Option by the
number of shares of Stock for which such Option shall
have been exercised.
(d) Any SAR shall be exercisable upon such additional
terms and conditions as may be prescribed by the Plan
Administrator.
Section 8. Terms of Options and SARs. Each Option or SAR granted under
the Plan shall be evidenced by an agreement between the Company and the person
to whom such Option or SAR is granted and shall be subject to the following
terms and conditions:
(a) Subject to adjustment as provided in Section 14 of
this Plan, the price at which each share covered
by an Option may be purchased shall be determined in
each case by the Plan Administrator; provided,
however, that such price shall not, in the case
of an Incentive Stock Option, be less than the Fair
Market Value of the underlying Stock at the time the
Option is granted. If an optionee owns (or is deemed
to own under applicable provisions of the Code and
rules and regulations promulgated thereunder) more
than ten percent (10%) of the combined voting power
of all classes of the stock of the Company and an
Option granted to such optionee is intended to
qualify as an Incentive Stock Option, the Option
price shall be no less than 110% of the Fair Market
Value of the Common Stock covered by the Option on
the date the Option is granted.
(b) The aggregate Fair Market Value of shares of Stock
with respect to which Incentive Stock Options are
first exercisable by the optionee in any calendar
year (under all plans of the Company) shall not
exceed the limitations, if any, imposed by Section
422(d) of the Code (or any successor provision). If
any Option designated as an Incentive Stock Option,
either alone or in conjunction with any other Option
or Options, exceeds the foregoing limitation, the
portion of such Option in excess of such limitation
shall automatically be reclassified (in whole share
increments and without fractional share portions) as
a Non-Qualified Stock Option, with later granted
Options being so reclassified first.
(c) Options and SARs shall not be transferable by the
participant otherwise than by will or by the laws of
descent and distribution or pursuant to a domestic
relations order. After the death of the participant,
the Option or SAR may be transferred to the Company
upon such terms and conditions, if any, as the Plan
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Administrator and the personal representative or
other person entitled to exercise the Option or SAR
may agree within the period specified in subsection
8(d)(iii) hereof.
(d) An Option or SAR may be exercised in whole at any
time, or in part from time to time, within such
period or periods (not to exceed ten years from the
granting of the Option in the case of an Incentive
Stock Option) as may be determined by the Plan
Administrator and set forth in the agreement (such
period or periods being hereinafter referred to as
the "Option Period"), provided that, unless the
agreement provides otherwise:
(i) If a participant who is an employee of the
Company or a Subsidiary shall cease to be
employed by the Company or the Subsidiary,
as the case may be, all Options and SARs
to which the employee is then entitled to
exercise may be exercised only within three
months after the termination of employment
and within the Option Period or, if such
termination was due to disability or
retirement (as hereinafter defined), within
two years after termination of employment
and within the Option Period.
Notwithstanding the foregoing, if an
employee of the Company ceases to be an
employee of the Company but immediately
continues as an employee of a Subsidiary
(i.e. there is not more than a two week gap
between such employments) or an employee of
a Subsidiary ceases to be an employee of
that Subsidiary but immediately continues as
an employee of the Company or another
Subsidiary (i.e. there is not more than
a two week gap between such employments),
then said participant's Options shall remain
unaffected by said transition in employment.
Notwithstanding the foregoing: (a) in the
event that any termination of employment
shall be for Cause (as defined herein) or
the participant becomes an officer or
director of, a consultant to or employed
by a Competing Business (as defined herein),
during the Option Period, then any and all
Options and SARs held by such participant
shall forthwith terminate and all vested
Options shall be forfeited; and (b) the Plan
Administrator may, in its sole discretion,
extend the Option Period of any Option
or SAR for up to three years from the date
of termination of employment regardless
of the original Option Period. For
purposes of the Plan, retirement shall mean
the termination of employment with the
Company (or a Subsidiary, as the case may
be), other than for Cause, at any time after
the age 65.
For purposes of this Plan, the term "Cause"
shall mean (a) with respect to an individual
who is party to a written agreement with the
Company (or a Subsidiary, as the case may
be) which contains a definition of "cause"
or "for cause" or words of similar import
for purposes of termination of employment
thereunder by the Company (or a Subsidiary,
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as the case may be), "cause" or "for cause"
as defined in such agreement; (b) in all
other cases (I) the willful commission by an
employee of a criminal or other act that
causes substantial economic damage to the
Company (or a Subsidiary, as the case may
be) or substantial injury to the business
reputation of the Company (or a Subsidiary,
as the case may be); (II) the commission of
an act of fraud in the performance of such
person's duties to or on behalf of the
Company (or a Subsidiary, as the case may
be); or (III) the continuing willful failure
of a person to perform the duties of such
person to the Company (or a Subsidiary, as
the case may be) (other than a failure to
perform duties resulting from such person's
incapacity due to illness) after written
notice thereof (specifying the particulars
thereof in reasonable detail) and a
reasonable opportunity to cure such failure
are given to the person by the Board of
Directors of the Company (or a Subsidiary,
as the case may be) or the Plan
Administrator. For purposes of the Plan, no
act, or failure to act, on the part of any
person shall be considered "willful" unless
done or omitted to be done by the person
other than in good faith and without
reasonable belief that the person's action
or omission was in the best interest of the
Company (or a Subsidiary, as the case may
be).
For purposes of this Plan, the term
"Competing Business" shall mean: any person,
corporation or other entity engaged in the
business of (a) providing telecommunications
services or (b) selling or attempting to
sell any product or service which is the
same as or similar to products or services
sold by the Company (or a Subsidiary, as the
case may be) within the last year prior to
termination of such person's employment,
consultant relationship or directorship, as
the case may be, hereunder.
(ii) If a participant who is a director of the
Company shall cease to serve as a director
of the Company, any Options or SARs then
exercisable by such director may be
exercised only within three months after
the cessation of service and within the
Option Period unless such cessation was due
to disability, in which case such optionee
may exercise such Option or SAR within two
years after cessation of service and within
the Option Period. Notwithstanding the
foregoing: (a) if any cessation of service
as a director was the result of removal for
Cause or the participant becomes an officer
or director of, a consultant to or employed
by a Competing Business during the Option
Period, any Options and SARs held by such
participant shall forthwith terminate; and
(b) the Plan Administrator may in its sole
discretion extend the Option Period of any
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Option or SAR for up to three years from
the date of cessation of service regardless
of the original Option Period;
(iii) If the participant shall die during the
Option Period, any Options or SARs then
exercisable may be exercised only within two
years after the participant's death and
within the Option Period and only by the
participant's personal representative or
persons entitled thereto under the
participant's will or the laws of descent
and distribution;
(iv) The Option or SAR may not be exercised for
more shares (subject to adjustment as
provided in Section 14) after the
termination of the participant's employment,
cessation of service as a director,
cessation of service as a consultant, or the
participant's death, as the case may be,
than the participant was entitled to
purchase thereunder at the time of the
termination of the participant's employment,
service, or the participant's death; and
(v) If a participant owns (or is deemed to own
under applicable provisions of the Code and
regulations promulgated thereunder) more
than 10% of the combined voting power of all
classes of stock of the Company (or any
parent or subsidiary corporation of the
Company) and an Option granted to such
participant is intended to qualify as an
Incentive Stock Option, the Option by its
terms may not be exercisable after the
expiration of five years from the date such
Option is granted.
(vi) If a participant who is a consultant to the
Company or a Subsidiary shall cease to serve
as a consultant to the Company or a
Subsidiary, as the case may be, any Options
or SARs then exercisable by such consultant
may be exercised only within three months
of the cessation of service and within the
Option Period. Notwithstanding the
foregoing, the Plan Administrator may in its
sole discretion extend the Option Period
of any Option or SAR for up to three years
from the date of cessation of service
regardless of the original Option Period.
Notwithstanding the foregoing, if a
consultant of the Company ceases to be a
consultant of the Company but immediately
continues as a consultant of a Subsidiary
(i.e. there is not more than a two week gap
between such engagements) or a consultant
of a Subsidiary ceases to be a consultant of
that Subsidiary but immediately continues as
a consultant of the Company or another
Subsidiary (i.e. there is not more than
a two week gap between such engagements),
then said participant's Options shall
remain unaffected by said transition in
engagement.
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(e) The Option exercise price of each share purchased
pursuant to an Option shall be paid in full at the
time of each exercise (the "Payment Date") of the
Option (i) in cash; (ii) by delivering to the
Company a notice of exercise with an irrevocable
direction to a broker-dealer registered under the
Act to sell a sufficient portion of the shares and
deliver the sale proceeds directly to the Company to
pay the exercise price; (iii) in the discretion of
the Plan Administrator, through the delivery to the
Company of previously-owned shares of Common Stock
having an aggregate Fair Market Value equal to the
Option exercise price of the shares being purchased
pursuant to the exercise of the Option; provided,
however, that shares of Common Stock delivered in
payment of the Option price must have been held
by the participant for at least six (6) months in
order to be utilized to pay the Option price; (iv)
in the discretion of the Plan Administrator, through
an election to have shares of Common Stock otherwise
issuable to the optionee withheld to pay the exercise
price of such Option; or (v) in the discretion of
the Plan Administrator, through any combination of
the payment procedures set forth in subsections (i)-
(iv) of this Section 8(e).
(f) The Plan Administrator, in its discretion, may
authorize "stock retention Options" which provide,
upon the exercise of an Option previously granted
under this Plan (a "prior Option"), using previously
owned shares, for the automatic issuance of a new
Option under this Plan with an exercise price equal
to the current Fair Market Value and for up to the
number of shares equal to the number of
previously-owned shares delivered in payment of the
exercise price of the prior Option. Such stock
retention Option shall have the same Option Period as
the prior Option.
(g) Nothing contained in the Plan nor in any Award
agreement shall confer upon any participant any right
with respect to the continuance of employment by the
Company nor interfere in any way with the right of
the Company to terminate his employment or change his
compensation at any time.
(h) The Plan Administrator may include such other terms
and conditions not inconsistent with the foregoing as
the Plan Administrator shall approve. Without
limiting the generality of the foregoing sentence,
the Plan Administrator shall be authorized to
determine that Options or SARs shall be exercisable
in one or more installments during the term of the
Option, subject to the attainment of performance
goals and objectives and the right to exercise may be
cumulative as determined by the Plan Administrator.
Section 9. Independent Director Options. Anything to the contrary
notwithstanding, each Independent Director who is first elected or appointed to
serve as a director commencing June 1, 1998 shall automatically be granted
Non-Qualified Stock Options to purchase 25,000 shares of Stock. The Option
exercise price for Options granted to Independent Directors under the Plan will
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be equal the Fair Market Value of the Stock on the date of grant. Options
granted to Independent Directors under the foregoing provisions will be granted
on the date that such Independent Director is first elected or appointed to
serve as a director and, so long as the Independent Director continuously
remains a director, will vest in equal annual installments over three years
commencing on the anniversary of the date of grant and will expire ten years
after grant; provided, however, that if the optionee ceases to serve as a
director, the Options will terminate ninety days after such cessation.
Section 10. Restricted Stock Awards.
(a) The Plan Administrator may grant Restricted Stock
Awards to any officer, employee or consultant of the
Company and its Subsidiaries. A Restricted Stock
Award entitles the recipient to acquire shares of
Stock subject to such restrictions and conditions as
the Plan Administrator may determine at the time of
grant ("Restricted Stock"). Conditions may be based
on continuing employment (or other business
relationship) and/or achievement of pre-established
performance goals and objectives.
(b) Upon execution of a written instrument setting forth
the Restricted Stock Award and paying any applicable
purchase price, a participant shall have the rights
of a shareholder with respect to the Stock subject to
the Restricted Stock Award, including, but not
limited to the right to vote and receive dividends
with respect thereto; provided, however, that shares
of Stock subject to Restricted Stock Awards that have
not vested shall be subject to the restrictions on
transferability described in Section 10(d) below.
Unless the Plan Administrator shall otherwise
determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company
until such Restricted Stock is vested as provided in
Section 10(c) below.
(c) The Plan Administrator at the time of grant shall
specify the date or dates and/or the attainment of
pre-established performance goals, objectives and
other conditions on which Restricted Stock shall
become vested, subject to such further rights of the
Company or its assigns as may be specified in the
instrument evidencing the Restricted Stock Award. If
the grantee or the Company, as the case may be, fails
to achieve the designated goals or the grantee's
relationship with the Company is terminated prior to
the expiration of the vesting period, the grantee
shall forfeit all shares of Stock subject to the
Restricted Stock Award which have not then vested.
(d) Unvested Restricted Stock may not be sold, assigned
transferred, pledged or otherwise encumbered or
disposed of except as specifically provided herein or
in the written instrument evidencing the Restricted
Stock Award.
Section 11. Stock Awards. The Plan Administrator may, in its sole
discretion, grant (or sell at a purchase price determined by the Plan
Administrator) a Stock Award to any officer, employee or consultant of the
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Company or its Subsidiaries, pursuant to which such individual may receive
shares of Stock free of any vesting restrictions (a "Stock Award") under the
Plan. Stock Awards may be granted or sold as described in the preceding sentence
in respect of past services or other valid consideration, or in lieu of any cash
compensation due to such individual.
Section 12. Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Plan Administrator may make Performance Share
Awards independent of or in connection with the granting of any other Award
under the Plan. Performance Share Awards may be granted under the Plan to any
officer, employee or consultant of the Company or its Subsidiaries, including
those who qualify for awards under other performance plans of the Company. The
Plan Administrator in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Plan Administrator may rely on the performance goals
and other standards applicable to other performance plans of the Company in
setting the standards for Performance Share Awards under the Plan.
Section 13. Tax Withholding.
(a) Whenever shares are to be issued or cash is to be
paid under the Plan, the Company shall have the right
to require the participant to remit to the Company an
amount sufficient to satisfy federal, state and local
tax withholding requirements prior to the delivery
of any certificate for shares or any proceeds;
provided, however, that in the case of a participant
who receives an Award of shares under the Plan which
is not fully vested, the participant shall remit such
amount on the first business day following the Tax
Date. The "Tax Date" for purposes of this Section 13
shall be the date on which the amount of tax to be
withheld is determined. If a participant makes a
disposition of shares acquired upon the exercise of
an Incentive Stock Option within either two years
after the Option was granted or one year after its
exercise by the participant, the participant shall
promptly notify the Company and the Company shall
have the right to require the participant to pay to
the Company an amount sufficient to satisfy federal,
state and local tax withholding requirements.
(b) A participant who is obligated to pay the Company an
amount required to be withheld under applicable tax
withholding requirements may pay such amount (i) in
cash; (ii) in the discretion of the Plan
Administrator, through the delivery to the Company of
previously-owned shares of Common Stock having an
aggregate Fair Market Value on the Tax Date equal to
the tax obligation provided that the previously owned
shares delivered in satisfaction of the withholding
obligations must have been held by the participant
for at least six (6) months; or (iii) in the
discretion of the Plan Administrator, through a
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combination of the procedures set forth in
subsections (i) and (ii) of this Section 13(b).
(c) A participant who is obligated to pay to the Company
an amount required to be withheld under applicable
tax withholding requirements in connection with
either the exercise of a Non-Qualified Stock Option,
or the receipt of a Restricted Stock Award, Stock
Award or Performance Share Award under the Plan may,
in the discretion of the Plan Administrator, elect
to satisfy this withholding obligation, in whole or
in part, by requesting that the Company withhold
shares of stock otherwise issuable to the participant
having a Fair Market Value on the Tax Date equal to
the amount of the tax required to be withheld;
provided, however, that shares may be withheld by the
Company only if such withheld shares have vested.
Any fractional amount shall be paid to the Company by
the participant in cash or shall be withheld from the
participant's next regular paycheck.
(d) An election by a participant to have shares of stock
withheld to satisfy federal, state and local tax
withholding requirements pursuant to Section 13(c)
must be in writing and delivered to the Company prior
to the Tax Date.
Section 14. Adjustment of Number and Price of Shares.
Any other provision of the Plan notwithstanding:
(a) If, through or as a result of any merger,
consolidation, sale of all or substantially all of
the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar
transaction, the outstanding shares of Stock are
increased or decreased or are exchanged for a
different number or kind of shares or other
securities of the Company, or additional shares or
new or different shares or other securities of the
Company or other non-cash assets are distributed
with respect to such shares of Stock or other
securities, the Plan Administrator shall make an
appropriate or proportionate adjustment in (i) the
number of Stock Options that can be granted to any
one individual participant, (ii) the number and kind
of shares or other securities subject to any then
outstanding Awards under the Plan, and (iii) the
price for each share subject to any then outstanding
Stock Options under the Plan, without changing the
aggregate exercise price (i.e., the exercise price
multiplied by the number of shares) as to which such
Stock Options remain exercisable. The adjustment by
the Plan Administrator shall be final, binding and
conclusive. If this Section 14(a) applies and the
event is also an Acquisition Event (as defined
below), then Section 14(d) shall be applicable to
such event, and this Section 14(a) shall not be
applicable.
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(b) In the event that, by reason of a corporate merger,
consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board
of Directors shall authorize the issuance or
assumption of a stock Option or stock Options in a
transaction to which Section 424(a) of the Code
applies, then, notwithstanding any other provision
of the Plan, the Plan Administrator may grant an
Option or Options upon such terms and conditions as
it may deem appropriate for the purpose of assumption
of the old Option, or substitution of a new Option
for the old Option, in conformity with the
provisions of Code Section 424(a) and the rules and
regulations thereunder, as they may be amended from
time to time. If this Section 14(b) applies and the
event is also an Acquisition Event (as defined
below), then Section 14(d) shall be applicable to
such event, and this Section 14(b) shall not be
applicable.
(c) No adjustment or substitution provided for in this
Section 14 shall require the Company to issue or to
sell a fractional share under any stock Option
agreement or share award agreement and the total
adjustment or substitution with respect to each stock
Option and share award agreement shall be limited
accordingly.
(d) Acquisition; Change in Control Events; Liquidation or
Dissolution.
(i) Definitions
(A) An "Acquisition Event" shall mean:
(1) after August 9, 2000, any
merger or consolidation of
the Company with or into
another entity as a result of
which the Stock is converted
into or exchanged for the
right to receive cash,
securities or other property;
or
(2) after August 9, 2000, any
exchange of shares of the
Company for cash, securities
or other property pursuant to
a statutory share exchange
transaction.
(B) A "Change in Control Event" shall
mean:
(1) after August 9, 2000, any
merger, consolidation, or
transaction (or series of
related transactions which
commence after August 9, 2000
and occur within any 12 month
period) which results in the
voting securities of the
Company outstanding
immediately prior thereto
representing immediately
thereafter (either by
remaining outstanding or by
being converted into voting
securities of the surviving
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or acquiring entity) less
than 62.5% of the combined
voting power of the voting
securities of the Company or
such surviving or acquiring
entity outstanding
immediately after such
merger, consolidation, or
transaction; or
(2) any individual, entity, or
"person," as such term is
used in Sections 13(d) and
14(d) of the Act (other than
(A) the Company, (B) any
trustee or other fiduciary
holding securities under an
employee benefit plan of the
Company, or (C) any person
who, immediately prior August
9, 2000, was the "beneficial
owner" (as defined in Rule
13d-3 (or its successor rule)
under the Act), directly or
indirectly, of more than 10%
of the combined voting power
of the Company's then
outstanding voting
securities), is or becomes,
after August 9, 2000, the
"beneficial owner" (as
defined in Rule 13d-3 (or its
successor rule) under the
Act), directly or indirectly,
of securities of the Company
representing 30% or more of
the combined voting power of
the Company's then
outstanding voting
securities; or
(3) during any period of not more
than two consecutive years,
not including any period
prior to August 9, 2000,
individuals who at the
beginning of such period
constitute the Board, and any
new director (other than a
director whose initial
assumption of office is in
connection with an actual or
threatened election contest,
including, but not limited to
a consent solicitation,
relating to the election of
directors of the Company)
whose election by the Board
or nomination for election by
the Company's stockholders
was approved by a vote of at
least two-thirds (2/3) of the
directors then still in
office who either were
directors at the beginning of
the period or whose election
or nomination for election
was previously so approved,
cease for any reason to
constitute at least a
majority thereof; or
(4) after August 9, 2000, any
sale, lease, exchange or
other transfer (in one
transaction or a series of
related transactions) of all,
or substantially all, of the
assets of the Company, other
than to a wholly-owned
subsidiary of the Company; or
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<PAGE>
(5) the complete liquidation of
the Company.
(ii) Effect on Options
(A) Acquisition Event. Upon the
occurrence of an Acquisition Event
(regardless of whether such event
also constitutes a Change in Control
Event), or the execution by the
Company of any agreement with
respect to an Acquisition Event
(regardless of whether such event
will result in a Change in Control
Event), the Board shall provide that
all outstanding Options shall be
assumed, or equivalent options shall
be substituted, by the acquiring or
succeeding corporation (or an
affiliate thereof); provided that if
such Acquisition Event also
constitutes a Change in Control
Event, such assumed or substituted
options shall be immediately
exercisable in full upon the
occurrence of such Acquisition
Event. For purposes hereof, an
Option shall be considered to be
assumed if, following consummation
of the Acquisition Event, the Option
confers the right to purchase, for
each share of Stock subject to the
Option immediately prior to the
consummation of the Acquisition
Event, the consideration (whether
cash, securities or other property)
received as a result of the
Acquisition Event by holders of
Stock for each share of Stock held
immediately prior to the
consummation of the Acquisition
Event (and if holders were offered a
choice of consideration, the type of
consideration chosen by the holders
of a majority of the outstanding
shares of Stock); provided, however,
that if the consideration received
as a result of the Acquisition Event
is not solely common stock of the
acquiring or succeeding corporation
(or an affiliate thereof), the
Company may, with the consent of the
acquiring or succeeding corporation,
provide for the consideration to be
received upon the exercise of
Options to consist solely of common
stock of the acquiring or succeeding
corporation (or an affiliate
thereof) equivalent in fair market
value to the per share consideration
received by holders of outstanding
shares of Stock as a result of the
Acquisition Event. Notwithstanding
the foregoing, if the acquiring or
succeeding corporation (or an
affiliate thereof) does not agree to
assume, or substitute for, such
Options, then the Plan Administrator
shall, upon written notice to the
participants, provide that all then
unexercised Options will become
exercisable in full as of a
specified time prior to the
Acquisition Event (the Board shall
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<PAGE>
use its best efforts to ensure that
Option holders have at least 90
calendar days, and in no event less
than 30 calendar days, to exercise
their Options) and will terminate
immediately prior to the
consummation of such Acquisition
Event, except to the extent
exercised by the participants before
the consummation of such Acquisition
Event; provided, however, in the
event of an Acquisition Event under
the terms of which holders of Stock
will receive upon consummation
thereof a cash payment for each
share of Stock surrendered pursuant
to such Acquisition Event (the
"Acquisition Price"), then the Board
may instead provide that all
outstanding Options shall terminate
upon consummation of such
Acquisition Event and that each
participant shall receive, in
exchange therefor, a cash payment
equal to the amount (if any) by
which (A) the Acquisition Price
multiplied by the number of shares
of Stock subject to such outstanding
Options (whether or not then
exercisable), exceeds (B) the
aggregate exercise price of such
Options.
(B) Change in Control Event that is not
an Acquisition Event. Upon the
occurrence of a Change in Control
Event that does not also constitute
an Acquisition Event, all Options
then-outstanding shall automatically
become immediately exercisable in
full.
(iii) Effect on Other Awards
(A) Acquisition Event that is not a
Change in Control Event. The Plan
Administrator shall specify the
effect of an Acquisition Event that
is not a Change in Control Event on
any other Award granted under the
Plan at the time of the grant of
such Award.
(B) Change in Control Event. Upon the
occurrence of a Change in Control
Event (regardless of whether such
event also constitutes an
Acquisition Event), except to the
extent specifically provided to the
contrary in the instrument
evidencing any other Award or any
other agreement between a
participant and the Company, all
other Awards shall become
exercisable, realizable or vested in
full, or shall be free of all
conditions or restrictions, as
applicable to each such Award.
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<PAGE>
(iv) Liquidation or Dissolution. In the event of
a proposed liquidation or dissolution of the
Company, the Plan Administrator shall upon
written notice to the participants provide
that all then unexercised Options will (i)
become exercisable in full as of a
specified time prior to the effective date
of such liquidation or dissolution (the
Board shall use its best efforts to ensure
that Option holders have at least 90
calendar days, and in no event less than 30
calendar days, to exercise their Options)
and (ii) terminate effective upon such
liquidation or dissolution, except to the
extent exercised before such effective date.
The Plan Administrator may specify the
effect of a liquidation or dissolution on
any Restricted Stock Award or other Award
granted under the Plan at the time of the
grant of such Award.
Section 15. Amendment and Discontinuance. The Board of Directors may
alter, amend, suspend or discontinue the Plan, provided that no such action
shall deprive any person without such person's consent of any rights theretofore
granted pursuant hereto.
Section 16. Compliance with Governmental Regulations. Notwithstanding
any provision of the Plan or the terms of any agreement entered into pursuant to
the Plan, the Company shall not be required to issue any shares hereunder prior
to registration of the shares subject to the Plan under the Securities Act of
1933 or the Act, if such registration shall be necessary, or before compliance
by the Company or any participant with any other provisions of either of those
acts or of regulations or rulings of the Securities and Exchange Commission
thereunder, or before compliance with other federal and state laws and
regulations and rulings thereunder, including the rules of AMEX, any applicable
exchange or of the NASDAQ Stock Market. The Company shall use its best efforts
to effect such registrations and to comply with such laws, regulations and
rulings forthwith upon advice by its counsel that any such registration or
compliance is necessary.
Section 17. Compliance with Section 16. With respect to persons subject
to Section 16 of the Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 (or its successor rule and shall be
construed to the fullest extent possible in a manner consistent with this intent
). To the extent that any Award fails to so comply, it shall be deemed to be
modified to the extent permitted by law and to the extent deemed advisable by
the Plan Administrator in order to comply with Rule 16b-3.
Section 18. Participation by Foreign Nationals. The Plan Administrator
may, in order to fulfill the purposes of the Plan and without amending the Plan,
modify grants to foreign nationals or United States citizens employed abroad in
order to recognize differences in local law, tax policy or custom.
Section 19. Effective Date of Plan. The Plan became effective on
September 4, 1998, the date of approval and adoption of the Plan by requisite
vote of the holders of the outstanding shares of Stock.
17
