<PAGE> 1
EXHIBIT 4.1
AMENDED AND RESTATED
ASHWORTH, INC.
2000 EQUITY INCENTIVE PLAN
ARTICLE I
PURPOSE OF PLAN
The Company has adopted this Plan to promote the interests of the
Company and its stockholders by using investment interests in the Company to
attract, retain and motivate its management and other persons, to encourage and
reward their contributions to the performance of the Company, and to align their
interests with the interests of the Company's stockholders. Capitalized terms
not otherwise defined herein have the meanings ascribed to them in Article IX.
ARTICLE II
EFFECTIVE DATE AND TERM OF PLAN
2.1 TERM OF PLAN.
This Plan became effective as of the Effective Date and will continue
in effect until the Expiration Date, at which time this Plan will automatically
terminate.
2.2 EFFECT ON AWARDS.
Awards may be granted only during the Plan Term, but each Award granted
during the Plan Term will remain in effect after the Expiration Date until such
Award has been exercised, terminated or expired in accordance with its terms and
the terms of this Plan.
2.3 STOCKHOLDER APPROVAL.
This Plan must be approved by the Company's stockholders within 12
months before or after the Effective Date. The effectiveness of any Awards
granted prior to such stockholder approval will be subject to such stockholder
approval and rescinded if stockholder approval is not obtained.
ARTICLE III
SHARES SUBJECT TO PLAN
3.1 NUMBER OF SHARES.
The maximum number of shares of Common Stock that may be issued
pursuant to Awards under this Plan (including previous versions hereof or other
plans that are replaced or restated by this Plan) is 1,900,000, subject to
adjustment as set forth in Section 3.4.
3.2 SOURCE OF SHARES.
The Common Stock to be issued under this Plan will be made available,
at the discretion of the Administrator, either from authorized but unissued
shares of Common Stock or from previously issued shares of Common Stock
reacquired by the Company.
<PAGE> 2
3.3 AVAILABILITY OF UNUSED SHARES.
Shares of Common Stock subject to unexercised portions of any Award
that expire, terminate or are canceled, and shares of Common Stock issued
pursuant to an Award that are reacquired by the Company pursuant to this Plan or
the terms of the Award under which such shares were issued, will again become
available for the grant of further Awards under this Plan as part of the shares
available under Section 3.1. However, if the exercise price of, or withholding
taxes incurred in connection with, an Award is paid with shares of Common Stock,
or if shares of Common Stock otherwise issuable pursuant to Awards are withheld
by the Company in satisfaction of an exercise price or the withholding taxes
incurred in connection with any exercise or vesting of an Award, then the number
of shares of Common Stock available for issuance under the Plan will be reduced
by the gross number of shares for which the Award is exercised or for which it
vests, as applicable, and not by the net number of shares of Common Stock issued
to the holder of such Award.
3.4 ADJUSTMENT PROVISIONS.
(a) Adjustments. If the Company consummates any Reorganization
in which holders of shares of Common Stock are entitled to receive in respect of
such shares any additional shares or new or different shares or securities, cash
or other consideration (including, without limitation, a different number of
shares of Common Stock), or if the outstanding shares of Common Stock are
increased, decreased or exchanged for a different number or kind of shares or
other securities through merger, consolidation, sale or exchange of assets of
the Company, reorganization, recapitalization, reclassification, combination,
stock dividend, stock split, reverse stock split, spin-off, or similar
transaction then, subject to Section 8.1, an appropriate and proportionate
adjustment shall be made by the Administrator in its discretion in: (i) the
maximum number and kind of shares subject to this Plan as provided in Section
3.1; (ii) the number and kind of shares or other securities subject to then
outstanding Awards; (iii) the price for each share or other unit of any other
securities subject to, or measurement criteria applicable to, then outstanding
Awards; and/or (iv) the number and kind of shares or other securities to be
issued as Non-Employee Director Options.
(b) No Fractional Interests. No fractional interests will be
issued under the Plan resulting from any adjustments.
(c) Adjustments Related to Company Stock. To the extent any
adjustments relate to stock or securities of the Company, such adjustments will
be made by the Administrator, whose determination in that respect will be final,
binding and conclusive.
(d) Right to Make Adjustment. The grant of an Award will not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
(e) Limitations. No adjustment to the terms of an Incentive
Stock Option may be made unless such adjustment either: (i) would not cause the
Option to lose its status as an Incentive Stock Option; or (ii) is agreed to in
writing by the Administrator and the Recipient.
3.5 RESERVATION OF SHARES.
The Company will at all times reserve and keep available shares of
Common Stock equaling at least the total number of shares of Common Stock
issuable pursuant to all outstanding Awards.
2
<PAGE> 3
ARTICLE IV
ADMINISTRATION OF PLAN
4.1 ADMINISTRATOR.
(a) Plan Administration. This Plan will be administered by the
Board and may also be administered by a Committee of the Board appointed
pursuant to Section 4.1(b).
(b) Administration by Committee. The Board in its sole
discretion may from time to time appoint a Committee of not less than two (2)
Board members with authority to administer this Plan in whole or part and,
subject to applicable law, to exercise any or all of the powers, authority and
discretion of the Board under this Plan. As long as the Company has a class of
equity securities registered under Section 12 of the Exchange Act, this Plan
will be administered by a Committee of not less than two (2) Board members
appointed by the Board in its sole discretion from time to time, each of whom is
(i) a "Non-Employee Director" within the meaning of Rule 16b-3 promulgated under
the Exchange Act, and (ii) an "Outside Director" as defined in the regulations
adopted under Section 162(m) of the IRC. The Board may from time to time
increase or decrease (but not below two (2)) the number of members of the
Committee, remove from membership on the Committee all or any portion of its
members, and/or appoint such person or persons as it desires to fill any vacancy
existing on the Committee, whether caused by removal, resignation or otherwise.
Unless otherwise required by this Section 4.1(b), the Board may disband the
Committee at any time.
4.2 AUTHORITY OF ADMINISTRATOR.
(a) Authority to Interpret Plan. Subject to the express
provisions of this Plan, the Administrator will have the power to implement,
interpret and construe this Plan and any Awards and Award Documents or other
documents defining the rights and obligations of the Company and Recipients
hereunder and thereunder, to determine all questions arising hereunder and
thereunder, and to adopt and amend such rules and regulations for the
administration hereof and thereof as it may deem desirable. The interpretation
and construction by the Administrator of any provisions of this Plan or of any
Award or Award Document, and any action taken by, or inaction of, the
Administrator relating to this Plan or any Award or Award Document, will be
within the discretion of the Administrator and will be conclusive and binding
upon all persons. Subject only to compliance with the express provisions hereof,
the Administrator may act in its discretion in matters related to this Plan and
any and all Awards and Award Documents.
(b) Authority to Grant Awards. Subject to the express
provisions of this Plan, the Administrator may from time to time in its
discretion select the Eligible Persons to whom, and the time or times at which,
Awards will be granted or sold, the nature of each Award, the number of shares
of Common Stock or the number of rights that make up or underlie each Award, the
exercise price and period (if applicable) for the exercise of each Award, and
such other terms and conditions applicable to each individual Award as the
Administrator may determine. Any and all terms and conditions of Awards may be
established by the Administrator without regard to existing Awards or other
grants and without incurring any obligation of the Company in respect of
subsequent Awards. The Administrator may grant at any time new Awards to an
Eligible Person who has previously received Awards or other grants (including
other stock options) regardless of the status of such other Awards or grants.
The Administrator may grant Awards singly or in combination or in tandem with
other Awards as it determines in its discretion.
(c) Procedures. Subject to the Company's charter or bylaws or
any Board resolution conferring authority on the Committee, any action of the
Administrator with respect to the administration
3
<PAGE> 4
of this Plan must be taken pursuant to a majority vote of the authorized number
of members of the Administrator or by the unanimous written consent of its
members; provided, however, that (i) if the Administrator is the Committee and
consists of two (2) members, then actions of the Administrator must be
unanimous, and (ii) actions taken by the Board will be valid if approved in
accordance with applicable law.
4.3 NO LIABILITY.
No member of the Board or the Committee or any designee thereof will be
liable for any action or inaction with respect to this Plan or any Award or any
transaction arising under this Plan or any Award except in circumstances
constituting bad faith of such member.
4.4 AMENDMENTS.
(a) Plan Amendments. The Administrator may at any time and
from time to time in its discretion, insofar as permitted by applicable law,
rule or regulation and subject to Section 4.4(c), suspend or discontinue this
Plan or revise or amend it in any respect whatsoever, and this Plan as so
revised or amended will govern all Awards, including those granted before such
revision or amendment. Without limiting the generality of the foregoing, the
Administrator is authorized to amend this Plan to comply with or take advantage
of amendments to applicable laws, rules or regulations, including the Securities
Act, the Exchange Act, the IRC, or the rules of any exchange or market system
upon which the Common Stock is listed or trades, or any rules or regulations
promulgated thereunder. No stockholder approval of any amendment or revision
will be required unless such approval is required by applicable law, rule or
regulation.
(b) Award Amendments. The Administrator may at any time and
from time to time in its discretion, but subject to Section 4.4(c) and
compliance with applicable statutory or administrative requirements, accelerate
or extend the vesting or exercise period of any Award as a whole or in part, and
make such other modifications in the terms and conditions of an Award as it
deems advisable. Notwithstanding the foregoing and except as permitted in
Section 3.4, the Administrator may not amend the price for each share or other
unit of any other securities subject to, or measurement criteria applicable to,
then outstanding Awards (such amendment a "Repricing") without receiving prior
approval of the Company's stockholders. Similarly, the Administrator may not
effectively Reprice an outstanding Award by replacing an outstanding Award with
new Award grant.
(c) Limitation. Except as otherwise provided in this Plan or
in the applicable Award Document, no amendment, revision, suspension or
termination of this Plan or an outstanding Award that would cause an Incentive
Stock Option to cease to qualify as such or that would alter, impair or diminish
in any material respect any rights or obligations under any Award theretofore
granted under this Plan may be effected without the written consent of the
Recipient to whom such Award was granted.
4.5 OTHER COMPENSATION PLANS.
This Plan supersedes and replaces all stock option plans of the Company
in effect as of the Effective Date, but the adoption of this Plan will not
affect any other stock option, incentive or other compensation plans in effect
from time to time for the Company, and this Plan will not preclude the Company
from establishing any other forms of incentive or other compensation for
employees, directors, advisors or consultants of the Company, whether or not
approved by stockholders. Notwithstanding the fact that this Plan supersedes and
replaces all stock option plans of the Company in effect as of the Effective
Date, this plan does not affect in any way, any outstanding award grants made
under such other plans prior to the Effective Date.
4
<PAGE> 5
4.6 PLAN BINDING ON SUCCESSORS.
This Plan will be binding upon the successors and assigns of the
Company.
4.7 REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES.
Any reference in this Plan to a particular statute, regulation or rule
will also refer to any successor provision of such statute, regulation or rule.
4.8 INVALID PROVISIONS.
In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability is not to be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions are to
be given full force and effect to the same extent as though the invalid and
unenforceable provision were not contained herein.
4.9 GOVERNING LAW.
This Plan will be governed by and interpreted in accordance with the
internal laws of the State of Delaware, without giving effect to the principles
of the conflicts of laws thereof.
4.10 INTERPRETATION.
Headings herein are for convenience of reference only, do not
constitute a part of this Plan, and will not affect the meaning or
interpretation of this Plan. References herein to Sections or Articles are
references to the referenced Section or Article hereof, unless otherwise
specified.
ARTICLE V
GENERAL AWARD PROVISIONS
5.1 PARTICIPATION IN PLAN.
(a) Eligibility to Receive Awards. A person is eligible to
receive grants of Awards if, at the time of the grant of the Award, such person
is an Eligible Person or has received an offer of employment from the Company,
provided, however, that only Non-Employee Directors are eligible to receive
Non-Employee Director Options, and provided further, that Awards granted to a
person who has received an offer of employment will terminate and be forfeited
without consideration if the employment offer is not accepted within such time
as may be specified by the Company. Status as an Eligible Person will not be
construed as a commitment that any Award will be granted under this Plan to an
Eligible Person or to Eligible Persons generally.
(b) Eligibility to Receive Incentive Stock Options. Incentive
Stock Options may be granted only to Eligible Persons meeting the employment
requirements of Section 422 of the IRC.
(c) Awards to Foreign Nationals. Notwithstanding anything to
the contrary herein, the Administrator may, in order to fulfill the purposes of
this Plan, modify grants of Awards to Recipients who are foreign nationals or
employed outside of the United States to recognize differences in applicable
law, tax policy or local custom.
5
<PAGE> 6
5.2 AWARD DOCUMENTS.
Each Award must be evidenced by an agreement duly executed on behalf of
the Company and by the Recipient or, in the Administrator's discretion, a
confirming memorandum issued by the Company to the Recipient, setting forth such
terms and conditions applicable to the Award as the Administrator may in its
discretion determine. Awards will not be deemed made or binding upon the
Company, and Recipients will have no rights thereto, until such an agreement is
entered into between the Company and the Recipient or such a memorandum is
delivered by the Company to the Recipient, but an Award may have an effective
date prior to the date of such an agreement or memorandum. Award Documents may
be (but need not be) identical and must comply with and be subject to the terms
and conditions of this Plan, a copy of which will be provided to each Recipient
and incorporated by reference into each Award Document. Any Award Document may
contain such other terms, provisions and conditions not inconsistent with this
Plan as may be determined by the Administrator. In case of any conflict between
this Plan and any Award Document, this Plan shall control.
5.3 PAYMENT FOR AWARDS.
(a) Payment of Exercise Price. The exercise price or other
payment for an Award is payable upon the exercise of a Stock Option or upon
other purchase of shares pursuant to an Award granted hereunder by delivery of
legal tender of the United States or payment of such other consideration as the
Administrator may from time to time deem acceptable in any particular instance;
provided, however, that the Administrator may, in the exercise of its
discretion, allow exercise of an Award in a broker-assisted or similar
transaction in which the exercise price is not received by the Company until
promptly after exercise.
(b) Company Assistance. The Company may assist any person to
whom an Award is granted (including, without limitation, any officer or director
of the Company) in the payment of the purchase price or other amounts payable in
connection with the receipt or exercise of that Award, by lending such amounts
to such person on such terms and at such rates of interest and upon such
security (if any) as may be consistent with applicable law and approved by the
Administrator. In case of such a loan, the Administrator may require that the
exercise be followed by a prompt sale of some or all of the underlying shares
and that a portion of the sale proceeds be dedicated to full payment of the
exercise price and amounts required pursuant to Section 5.10.
(c) Cashless Exercise. If permitted in any case by the
Administrator in its discretion, the exercise price for Awards may be paid by
capital stock of the Company delivered in transfer to the Company by or on
behalf of the person exercising the Award and duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, with signatures guaranteed
in accordance with the Exchange Act if required by the Administrator; or
retained by the Company from the stock otherwise issuable upon exercise or
surrender of vested and/or exercisable Awards or other equity awards previously
granted to the Recipient and being exercised (if applicable) (in either case
valued at Fair Market Value as of the exercise date); or such other
consideration as the Administrator may from time to time in the exercise of its
discretion deem acceptable in any particular instance.
(d) No Precedent. Recipients will have no rights to the
assistance described in Section 5.3(b) or the exercise techniques described in
Section 5.3(c), and the Company may offer or permit such assistance or
techniques on an ad hoc basis to any Recipient without incurring any obligation
to offer or permit such assistance or techniques on other occasions or to other
Recipients.
6
<PAGE> 7
5.4 NO EMPLOYMENT RIGHTS.
Nothing contained in this Plan (or in Award Documents or in any other
documents related to this Plan or to Awards) will confer upon any Eligible
Person or Recipient any right to continue in the employ of or engagement by the
Company or any Affiliated Entity or constitute any contract or agreement of
employment or engagement, or interfere in any way with the right of the Company
or any Affiliated Entity to reduce such person's compensation or other benefits
or to terminate the employment or engagement of such Eligible Person or
Recipient, with or without cause. Except as expressly provided in this Plan or
in any statement evidencing the grant of an Award, the Company has the right to
deal with each Recipient in the same manner as if this Plan and any such
statement evidencing the grant of an Award did not exist, including, without
limitation, with respect to all matters related to the hiring, discharge,
compensation and conditions of the employment or engagement of the Recipient.
Unless otherwise set forth in a written agreement binding upon the Company or an
Affiliated Entity, all employees of the Company or an Affiliated Entity are "at
will" employees whose employment may be terminated by the Company or the
Affiliated Entity at any time for any reason or no reason, without payment or
penalty of any kind. Any question(s) as to whether and when there has been a
termination of a Recipient's employment or engagement, the reason (if any) for
such termination, and/or the consequences thereof under the terms of this Plan
or any statement evidencing the grant of an Award pursuant to this Plan will be
determined by the Administrator and the Administrator's determination thereof
will be final and binding.
5.5 RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS.
(a) Government Approvals. All Awards will be subject to the
requirement that, if at any time the Company determines, in its discretion, that
the listing, registration or qualification of the securities subject to Awards
granted under this Plan upon any securities exchange or interdealer quotation
system or under any federal, state or foreign law, or the consent or approval of
any government or regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of such an Award or the issuance, if any, or
purchase of shares in connection therewith, such Award may not be exercised as a
whole or in part unless and until such listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions not
acceptable to the Company. During the term of this Plan, the Company will use
its reasonable efforts to seek to obtain from the appropriate governmental and
regulatory agencies any requisite qualifications, consents, approvals or
authorizations in order to issue and sell such number of shares of its Common
Stock as is sufficient to satisfy the requirements of this Plan. The inability
of the Company to obtain any such qualifications, consents, approvals or
authorizations will relieve the Company of any liability in respect of the
nonissuance or sale of such stock as to which such qualifications, consents,
approvals or authorizations pertain.
(b) No Registration Obligation; Recipient Representations. The
Company will be under no obligation to register or qualify the issuance of
Awards or underlying securities under the Securities Act or applicable state
securities laws. Unless the issuance of Awards and underlying securities have
been registered under the Securities Act and qualified or registered under
applicable state securities laws, the Company shall be under no obligation to
issue any Awards or underlying securities unless the Awards and underlying
securities may be issued pursuant to applicable exemptions from such
registration or qualification requirements. In connection with any such exempt
issuance, the Administrator may require the Recipient to provide a written
representation and undertaking to the Company, satisfactory in form and scope to
the Company, that such Recipient is acquiring such Awards and underlying
securities for such Recipient's own account as an investment and not with a view
to, or for sale in connection with, the distribution of any such securities, and
that such person will make no transfer of the same except in compliance with any
rules and regulations in force at the time of such transfer under the Securities
Act and other applicable law, and that if securities are issued without
registration, a legend
7
<PAGE> 8
to this effect (together with any other legends deemed appropriate by the
Administrator) may be endorsed upon the securities so issued, and to the effect
of any additional representations that are appropriate in light of applicable
securities laws and rules. The Company may also order its transfer agent to stop
transfers of such shares. The Administrator may also require the Recipient to
provide the Company such information and other documents as the Administrator
may request in order to satisfy the Administrator as to the investment
sophistication and experience of the Recipient and as to any other conditions
for compliance with any such exemptions from registration or qualification.
5.6 ADDITIONAL CONDITIONS.
Any Award may be subject to such provisions (whether or not applicable
to any other Award or Recipient) as the Administrator deems appropriate,
including without limitation provisions for the forfeiture of or restrictions on
resale or other disposition of securities of the Company acquired under this
Plan, provisions giving the Company the right to repurchase securities of the
Company acquired under this Plan in the event the Recipient leaves the Company
for any reason or elects to effect any disposition thereof, and provisions to
comply with federal and state securities laws.
5.7 NO PRIVILEGES RE STOCK OWNERSHIP OR SPECIFIC ASSETS.
Except as otherwise set forth herein, a Recipient or a permitted
transferee of an Award will have no rights as a stockholder with respect to any
shares issuable or issued in connection with the Award until the Recipient has
delivered to the Company all amounts payable and performed all obligations
required to be performed in connection with exercise of the Award and the
Company has issued such shares. No person will have any right, title or interest
in any fund or in any specific asset (including shares of capital stock) of the
Company by reason of any Award granted hereunder. Neither this Plan (or any
documents related hereto) nor any action taken pursuant hereto is to be
construed to create a trust of any kind or a fiduciary relationship between the
Company and any person. To the extent that any person acquires a right to
receive an Award hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.
5.8 NONASSIGNABILITY.
No Award is assignable or transferable except: (a) by will or by the
laws of descent and distribution; or (b) subject to the final sentence of this
Section 5.8, upon dissolution of marriage pursuant to a qualified domestic
relations order or, in the discretion of the Administrator and under
circumstances that would not adversely affect the interests of the Company,
transfers for estate planning purposes or pursuant to a nominal transfer that
does not result in a change in beneficial ownership. During the lifetime of a
Recipient, an Award granted to such person will be exercisable only by the
Recipient (or the Recipient's permitted transferee) or such person's guardian or
legal representative. Notwithstanding the foregoing, Stock Options intended to
be treated as Incentive Stock Options (or other Awards subject to transfer
restrictions under the IRC) may not be assigned or transferred in violation of
Section 422(b)(5) of the IRC or the regulations thereunder, and nothing herein
is intended to allow such assignment or transfer.
5.9 INFORMATION TO RECIPIENTS.
(a) Provision of Information. The Administrator in its sole
discretion may determine what, if any, financial and other information is to be
provided to Recipients and when such financial and other information is to be
provided after giving consideration to applicable federal and state laws, rules
and regulations, including, without limitation, applicable federal and state
securities laws, rules and regulations.
8
<PAGE> 9
(b) Confidentiality. The furnishing of financial and other
information that is confidential to the Company is subject to the Recipient's
agreement to maintain the confidentiality of such financial and other
information, and not to use the information for any purpose other than
evaluating the Recipient's position under this Plan. The Administrator may
impose other restrictions on the access to and use of such confidential
information and may require a Recipient to acknowledge the Recipient's
obligations under this Section 5.9(b) (which acknowledgment is not to be a
condition to Recipient's obligations under this Section 5.9(b)).
5.10 WITHHOLDING TAXES.
Whenever the granting, vesting or exercise of any Award, or the
issuance of any securities upon exercise of any Award or transfer thereof, gives
rise to tax or tax withholding liabilities or obligations, the Administrator
will have the right as a condition thereto to require the Recipient to remit to
the Company an amount sufficient to satisfy any federal, state and local
withholding tax requirements arising in connection therewith. The Administrator
may, in the exercise of its discretion, allow satisfaction of tax withholding
requirements by accepting delivery of stock of the Company or by withholding a
portion of the stock otherwise issuable in connection with an Award, in each
case valued at Fair Market Value as of the date of such delivery or withholding,
as the case may be, is determined.
5.11 LEGENDS ON AWARDS AND STOCK CERTIFICATES.
Each Award Document and each certificate representing securities
acquired upon vesting or exercise of an Award must be endorsed with all legends,
if any, required by applicable federal and state securities and other laws to be
placed on the Award Document and/or the certificate. The determination of which
legends, if any, will be placed upon Award Documents or the certificates will be
made by the Administrator in its discretion and such decision will be final and
binding.
5.12 EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS.
(a) Termination of Vesting. Notwithstanding anything to the
contrary herein, but subject to Section 5.12(b) Awards will be exercisable by a
Recipient (or the Recipient's successor in interest) following such Recipient's
termination of employment or service only to the extent that installments
thereof had become exercisable on or prior to the date of such termination and
are not forfeited pursuant to Section 5.15.
(b) Alteration of Vesting and Exercise Periods.
Notwithstanding anything to the contrary herein, the Administrator may in its
discretion (i) designate shorter or longer periods following a Recipient's
termination of employment or service during which Awards may vest or be
exercised; provided, however, that any shorter periods determined by the
Administrator will be effective only if provided for in this Plan or the
instrument that evidences the grant to the Recipient of the affected Award or if
such shorter period is agreed to in writing by the Recipient, and (ii)
accelerate the vesting of all or any portion of any Awards by increasing the
number of shares purchasable at any time.
(c) Leave of Absence. In the case of any employee on an
approved leave of absence, the Administrator may make such provision respecting
continuance of Awards granted to such employee as the Administrator in its
discretion deems appropriate, except that in no event will an Award be
exercisable after the date such Award would expire in accordance with its terms
had the Recipient remained continuously employed.
(d) General Cessation. Except as otherwise set forth in this
Plan or an Award Document or as determined by the Administrator in its
discretion, all Awards granted to a Recipient, and
9
<PAGE> 10
all of such Recipient's rights thereunder, will terminate upon termination for
any reason of such Recipient's employment or service with the Company or any
Affiliated Entity (or cessation of any other service relationship between the
Recipient and the Company or any Affiliated Entity in place as of the date the
Award was granted).
5.13 LOCK-UP AGREEMENTS.
Each Recipient agrees as a condition to receipt of an Award that, in
connection with any public offering by the Company of its equity securities and
upon the request of the Company and the principal underwriter (if any) in such
public offering, any shares of Common Stock acquired or that may be acquired
upon exercise or vesting of an Award may not be sold, offered for sale,
encumbered, or otherwise disposed of or subjected to any transaction that will
involve any sales of securities of the Company, without the prior written
consent of the Company or such underwriter, as the case may be, for a period of
not more than 365 days after the effective date of the registration statement
for such public offering. Each Recipient will, if requested by the Company or
the principal underwriter, enter into a separate agreement to the effect of this
Section 5.13.
5.14 RESTRICTIONS ON COMMON STOCK AND OTHER SECURITIES.
Common Stock or other securities of the Company issued or issuable in
connection with any Award will be subject to all of the restrictions imposed
under this Plan upon Common Stock issuable or issued upon exercise of Stock
Options, except as otherwise determined by the Administrator.
5.15 CANCELLATION AND RESCISSION OF AWARDS.
Unless an Award Document or other separate written agreement binding
upon the Company provides otherwise, the Administrator may cancel any unexpired,
unpaid or deferred Award (whether or not vested) at any time if the Recipient
thereof fails at any time to comply with all applicable provisions of the Award
Document or this Plan, or does any of the following:
(a) During employment or engagement with the Company or any
Affiliated Entity or at any time within 365 days after termination of employment
or engagement with the Company or any Affiliated Entity, renders services for
any organization or engages directly or indirectly in any business that, in the
judgment of the Chief Executive Officer of the Company or other senior officer
designated by the Administrator, is or becomes competitive with the Company or
any Affiliated Entity, or which organization or business, or the rendering of
services to such organization or business, is or becomes otherwise prejudicial
to or in conflict with the business or interests of the Company or any
Affiliated Entity. For a Recipient whose employment has terminated, the judgment
of the Chief Executive Officer or such other senior officer shall be based upon
the Recipient's position and responsibilities while employed by the Company or
any Affiliated Entity, the Recipient's post-employment responsibilities and
position with the other organization or business, the extent of past, current
and potential competition or conflict between the Company or any Affiliated
Entity and the other organization or business, the effect on the customers,
suppliers and competitors of the Company or Affiliated Entity of the Recipient's
assuming the post-employment position, the guidelines established in any
employee handbook, any employment agreement with the Recipient, and such other
considerations as are deemed by the Company to be relevant given the applicable
facts and circumstances.
(b) During employment or engagement with the Company or any
Affiliated Entity or at any time thereafter, fails to comply with any
confidentiality agreement with the Company or any Affiliated Entity to which the
Recipient is party, or with the policies of the Company or Affiliated Entity
regarding nondisclosure of confidential information, or without prior written
authorization from the
10
<PAGE> 11
Company or any Affiliated Entity, discloses to anyone outside the Company or any
Affiliated Entity, or uses for any purpose or in any context other than in
performance of the Recipient's duties to the Company or any Affiliated Entity,
any confidential or trade secret information of the Company or any Affiliated
Entity.
(c) During employment or engagement with the Company or any
Affiliated Entity or at any time thereafter, fails to comply with any agreement
with the Company or any Affiliated Entity regarding assignment of inventions, or
to otherwise disclose promptly and assign to the Company or any Affiliated
Entity all right, title and interest in any invention or idea, patentable or
not, made or conceived by the Recipient during and within the scope of
employment or engagement by the Company or any Affiliated Entity, relating in
any manner to the actual or anticipated business, research, or development work
of the Company or any Affiliated Entity, or to do anything reasonably necessary
to enable the Company or any Affiliated Entity to secure a patent where
appropriate in the United States and other countries.
(d) During employment or engagement with the Company or any
Affiliated Entity or at any time thereafter, breaches any agreement with or duty
to the Company or any Affiliated Entity.
Upon and as a condition to exercise of any Award, a Recipient shall
certify on a form acceptable to the Company that he or she is in compliance with
the terms and conditions of this Plan and any applicable Award Document and has
not done any of the things described in this Section 5.15. Furthermore, if a
Recipient does any of the things described in this Section 5.15 within 180 days
after any exercise, payment or delivery pursuant to an Award, the Company may
rescind such exercise, payment or delivery. The Company shall notify the
Recipient in writing of any such rescission within two years after such
exercise, payment or delivery. Within ten days after receiving such notice from
the Company, a Recipient shall pay to the Company the amount of any gain
realized or payment received as a result of the rescinded exercise, payment or
delivery pursuant to an Award. Such payment shall be made by returning to the
Company all shares of capital stock that the Recipient received in connection
with the rescinded exercise, payment or delivery, or if such shares have been
transferred by the Recipient, then by paying the equivalent value thereof at the
time of their transfer to the Company in cash. To assist in enforcement of the
Company's rescission right described above, the Company may, in its discretion,
retain any Common Stock or other consideration otherwise deliverable to a
Recipient in connection with an Award until the rescission period described
above has lapsed.
5.16 LIMITS ON AWARDS TO ELIGIBLE PERSONS.
Notwithstanding any other provision of this Plan, in order for the
compensation attributable to Awards hereunder to qualify as Performance-Based
Compensation, no one Eligible Person shall be granted awards with respect to
more than 250,000 shares of Common Stock in any one calendar year. The
limitation set forth in this Section 5.16 will be subject to adjustment as
provided in Section 3.4 or under Article VIII, but only to the extent such
adjustment would not affect the status of compensation attributable to Awards as
Performance-Based Compensation.
ARTICLE VI
AWARDS
6.1 STOCK OPTIONS.
(a) Nature of Stock Options. Stock Options may be Incentive
Stock Options or Nonqualified Stock Options.
11
<PAGE> 12
(b) Option Exercise Price. The exercise price for each Stock
Option will be determined by the Administrator as of the date such Stock Option
is granted.
(c) Option Period and Vesting. Stock Options granted hereunder
will vest and may be exercised as determined by the Administrator, except that
exercise of Stock Options after termination of the Recipient's employment or
service shall be subject to Section 5.12 and Section 6.1(e). Each Stock Option
granted hereunder and all rights or obligations thereunder shall expire on such
date as may be determined by the Administrator, but not later than ten (10)
years after the date the Stock Option is granted and may be subject to earlier
termination as provided herein or in the Award Document. Except as otherwise
provided herein, a Stock Option will become exercisable, as a whole or in part,
on the date or dates specified by the Administrator and thereafter will remain
exercisable until the exercise, expiration or earlier termination of the Stock
Option.
(d) Exercise of Stock Options. The exercise price for Stock
Options will be paid as set forth in Section 5.3. No Stock Option will be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded. Not fewer than 100 shares of Common Stock may be purchased
at one time and Stock Options must be exercised in multiples of 100 unless the
number purchased is the total number of shares for which the Stock Option is
exercisable at the time of exercise. A Stock Option will be deemed to be
exercised when the Secretary or other designated official of the Company
receives written notice of such exercise from the Recipient in the form of
Exhibit A hereto or such other form as the Company may specify from time to
time, together with payment of the exercise price in accordance with Section 5.3
and any amounts required under Section 5.10 or, with permission of the
Administrator, arrangement for such payment. Notwithstanding any other provision
of this Plan, the Administrator may impose, by rule and/or in Award Documents,
such conditions upon the exercise of Stock Options (including, without
limitation, conditions limiting the time of exercise to specified periods) as
may be required to satisfy applicable regulatory requirements, including,
without limitation, Rule 16b-3 and Rule 10b-5 under the Exchange Act, and any
amounts required under Section 5.10, or any applicable section of or regulation
under the IRC.
(e) Termination of Employment.
(i) Termination for Just Cause. Subject to Section
5.12 and except as otherwise provided in a written agreement between the Company
or an Affiliated Entity and the Recipient, which may be entered into at any time
before or after termination of employment or service, in the event of a Just
Cause Dismissal of a Recipient all of the Recipient's unexercised Stock Options,
whether or not vested, will expire and become unexercisable as of the date of
such Just Cause Dismissal.
(ii) Termination Other Than for Just Cause. Subject
to Section 5.12 and except as otherwise provided in a written agreement between
the Company or an Affiliated Entity and the Recipient, which may be entered into
at any time before or after termination of employment or service, if a
Recipient's employment or service with the Company or any Affiliated Entity
terminates for:
(A) any reason other than for Just Cause
Dismissal, death, Permanent Disability or Retirement, the Recipient's Stock
Options, whether or not vested, will expire and become unexercisable as of the
earlier of: (A) the date such Stock Options would expire in accordance with
their terms had the Recipient remained employed; and (B) 90 days after the date
of termination of employment or service in the case of Stock Options intended to
be treated as Incentive Stock Options, or 180 days after the date of termination
of employment or service in the case of Nonqualified Stock Options.
(B) death or Permanent Disability or
Retirement, the Recipient's unexercised Awards will, whether or not vested,
expire and become unexercisable as of the earlier of:
12
<PAGE> 13
(A) the date such Awards would expire in accordance with their terms had the
Recipient remained employed; and (B) 365 days after the date of termination of
employment or service.
(f) Special Provisions Regarding Incentive Stock Options.
Notwithstanding anything herein to the contrary,
(i) The exercise price and vesting period of any
Stock Option intended to be treated as an Incentive Stock Option must comply
with the provisions of Section 422 of the IRC and the regulations thereunder. As
of the Effective Date, such provisions require, among other matters, that: (A)
the exercise price must not be less than the Fair Market Value of the underlying
stock as of the date the Incentive Stock Option is granted, and not less than
110% of the Fair Market Value as of such date in the case of a grant to a
Significant Stockholder; and (B) that the Incentive Stock Option not be
exercisable after the expiration of ten (10) years from the date of grant or the
expiration of five (5) years from the date of grant in the case of an Incentive
Stock Option granted to a Significant Stockholder.
(ii) The aggregate Fair Market Value (determined as
of the respective date or dates of grant) of the Common Stock for which one or
more Stock Options granted to any Recipient under this Plan (or any other option
plan of the Company or any of its subsidiaries or affiliates) may for the first
time become exercisable as Incentive Stock Options under the federal tax laws
during any one calendar year may not exceed $100,000.
(iii) Any Stock Options granted as Incentive Stock
Options pursuant to this Plan that for any reason fail or cease to qualify as
such will be treated as Nonqualified Stock Options. If the limit described in
Section 6.1(f)(ii) is exceeded, the earliest granted Stock Options will be
treated as Incentive Stock Options, up to such limit.
(g) Non-Employee Director Options. Article VII will govern
Non-Employee Director Options to the extent inconsistent with this Section 6.1.
6.2 PERFORMANCE AWARDS.
(a) Grant of Performance Award. The Administrator will
determine in its discretion the performance criteria (which need not be
identical and may be established on an individual or group basis) governing
Performance Awards, the terms thereof, and the form and time of payment of
Performance Awards.
(b) Payment of Award. Upon satisfaction of the conditions
applicable to a Performance Award, payment will be made to the Recipient in
cash, in shares of Common Stock valued at Fair Market Value as of the date
payment is due, or in a combination of Common Stock and cash, as the
Administrator in its discretion may determine.
6.3 RESTRICTED STOCK.
(a) Award of Restricted Stock. The Administrator will
determine the Purchase Price (if any), the terms of payment of the Purchase
Price, the restrictions upon the Restricted Stock, and when such restrictions
will lapse.
(b) Requirements of Restricted Stock. All shares of Restricted
Stock granted or sold pursuant to this Plan will be subject to the following
conditions:
13
<PAGE> 14
(i) No Transfer. The shares may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, alienated
or encumbered until the restrictions are removed or expire;
(ii) Certificates. The Administrator may require that
the certificates representing Restricted Stock granted or sold to a Recipient
remain in the physical custody of an escrow holder or the Company until all
restrictions are removed or expire;
(iii) Restrictive Legends. Each certificate
representing Restricted Stock granted or sold to a Recipient pursuant to this
Plan will bear such legend or legends making reference to the restrictions
imposed upon such Restricted Stock as the Administrator in its discretion deems
necessary or appropriate to enforce such restrictions; and
(iv) Other Restrictions. The Administrator may impose
such other conditions on Restricted Stock as the Administrator may deem
advisable, including, without limitation, restrictions under the Securities Act,
under the Exchange Act, under the requirements of any stock exchange or
interdealer quotation system upon which such Restricted Stock or other
securities of the Company are then listed or traded and under any blue sky or
other securities laws applicable to such shares.
(c) Lapse of Restrictions. The restrictions imposed upon
Restricted Stock will lapse in accordance with such terms or other conditions as
are determined by the Administrator.
(d) Rights of Recipient. Subject to the provisions of Section
6.3(b) and any restrictions imposed upon the Restricted Stock, the Recipient
will have all rights of a stockholder with respect to the Restricted Stock
granted or sold to such Recipient under this Plan, including, without
limitation, the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.
(e) Termination of Employment. Unless the Administrator in its
discretion determines otherwise, if a Recipient's employment or service with the
Company or any Affiliated Entity terminates for any reason, all of the
Recipient's Restricted Stock remaining subject to restrictions on the date of
such termination of employment or service will be repurchased by the Company at
the Purchase Price (if any) paid by the Recipient to the Company, without
interest or premium, and otherwise returned to the Company without
consideration.
6.4 STOCK APPRECIATION RIGHTS.
(a) Granting of Stock Appreciation Rights. The Administrator
may at any time and from time to time approve the grant to Eligible Persons of
Stock Appreciation Rights, related or unrelated to Stock Options.
(b) SARs Related to Options.
(i) A Stock Appreciation Right related to a Stock
Option will entitle the holder of the related Stock Option, upon exercise of the
Stock Appreciation Right, to surrender such Stock Option, or any portion thereof
to the extent previously vested but unexercised, with respect to the number of
shares as to which such Stock Appreciation Right is exercised, and to receive
payment of an amount computed pursuant to Section 6.4(b)(iii). Such Stock Option
will, to the extent surrendered, then cease to be exercisable.
14
<PAGE> 15
(ii) A Stock Appreciation Right related to a Stock
Option hereunder will be exercisable at such time or times, and only to the
extent that, the related Stock Option is exercisable, and will not be
transferable except to the extent that such related Stock Option may be
transferable (and under the same conditions), will expire no later than the
expiration of the related Stock Option, and may be exercised only when the
market price of the Common Stock subject to the related Stock Option exceeds the
exercise price of the Stock Option.
(iii) Upon the exercise of a Stock Appreciation Right
related to a Stock Option, the Recipient will be entitled to receive payment of
an amount determined by multiplying: (A) the difference obtained by subtracting
the exercise price of a share of Common Stock specified in the related Stock
Option from the Fair Market Value of a share of Common Stock on the date of
exercise of such Stock Appreciation Right (or as of such other date or as of the
occurrence of such event as may have been specified in the instrument evidencing
the grant of the Stock Appreciation Right), by (B) the number of shares as to
which such Stock Appreciation Right is exercised.
(c) SARs Unrelated to Options. The Administrator may grant
Stock Appreciation Rights unrelated to Stock Options. Section 6.4(b)(iii) will
govern the amount payable at exercise under such Stock Appreciation Right,
except that in lieu of an option exercise price the initial base amount
specified in the Award shall be used.
(d) Limits. Notwithstanding the foregoing, the Administrator,
in its discretion, may place a dollar limitation on the maximum amount that will
be payable upon the exercise of a Stock Appreciation Right.
(e) Payments. Payment of the amount determined under the
foregoing provisions may be made solely in whole shares of Common Stock valued
at their Fair Market Value on the date of exercise of the Stock Appreciation
Right or, alternatively, at the discretion of the Administrator, in cash or in a
combination of cash and shares of Common Stock as the Administrator deems
advisable. The Administrator has full discretion to determine the form in which
payment of a Stock Appreciation Right will be made and to consent to or
disapprove the election of a Recipient to receive cash in full or partial
settlement of a Stock Appreciation Right. If the Administrator decides to make
full payment in shares of Common Stock, and the amount payable results in a
fractional share, payment for the fractional share will be made in cash.
6.5 STOCK PAYMENTS.
The Administrator may approve Stock Payments to any Eligible Person on
such terms and conditions as the Administrator may determine. Stock Payments
will replace cash compensation at the Fair Market Value of the Common Stock on
the date payment is due.
6.6 DIVIDEND EQUIVALENTS.
The Administrator may grant Dividend Equivalents to any Recipient who
has received a Stock Option, SAR or other Award denominated in shares of Common
Stock. Dividend Equivalents may be paid in cash, Common Stock or other Awards;
the amount of Dividend Equivalents paid other than in cash will be determined by
the Administrator by application of such formula as the Administrator may deem
appropriate to translate the cash value of dividends paid to the alternative
form of payment of the Dividend Equivalent. Dividend Equivalents will be
computed as of each dividend record date and will be payable to recipients
thereof at such time as the Administrator may determine. However, if it is
intended that an Award qualify as Performance-Based Compensation, and the amount
of compensation the Eligible Person could receive under the Award is based
solely on an increase in value of the underlying stock after
15
<PAGE> 16
the date of the grant or Award, then the payment of any Dividend Equivalents
related to the Award shall not be made contingent on the exercise of the Award.
6.7 STOCK BONUSES.
The Administrator may issue Stock Bonuses to Eligible Persons on such
terms and conditions as the Administrator may determine.
6.8 STOCK SALES.
The Administrator may sell to Eligible Persons shares of Common Stock
on such terms and conditions as the Administrator may determine.
6.9 PHANTOM STOCK.
The Administrator may grant Awards of Phantom Stock to Eligible
Persons. Phantom Stock is a cash payment measured by the Fair Market Value of a
specified number of shares of Common Stock on a specified date, or measured by
the excess of such Fair Market Value over a specified minimum, which may but
need not include a Dividend Equivalent.
6.10 OTHER STOCK-BASED BENEFITS.
The Administrator is authorized to grant Other Stock-Based Benefits.
Other Stock-Based Benefits are any arrangements granted under this Plan not
otherwise described above that: (a) by their terms might involve the issuance or
sale of Common Stock or other securities of the Company; or (b) involve a
benefit that is measured, as a whole or in part, by the value, appreciation,
dividend yield or other features attributable to a specified number of shares of
Common Stock or other securities of the Company.
ARTICLE VII
NON-EMPLOYEE DIRECTOR OPTIONS
7.1 ANNUAL GRANT OF STOCK OPTIONS.
Persons serving as Non-Employee Directors at the start of each fiscal
year shall receive a grant of an option to purchase up to 10,000 shares of the
Company's Common Stock at an exercise price per share equal to the Fair Market
Value of the Common Stock at that time, subject to: (a) vesting as set forth in
Section 7.2, and (b) adjustment as set forth in this Plan. For purposes hereof,
a "Non-Employee Director" is a director of the Company who qualifies as a
"Non-Employee Director" under Rule 16b-3 under the Exchange Act.
7.2 VESTING.
Non-Employee Director Options shall vest ratably (2,500 shares) on the
first day of each fiscal quarter if the Recipient has remained a Non-Employee
Director from the grant date to such vesting time. Notwithstanding the
foregoing, however, Non-Employee Director Options that have not vested and
become exercisable at the time the Recipient ceases to be a Non-Employee
Director shall terminate.
16
<PAGE> 17
7.3 EXERCISE.
Non-Employee Director Options will be exercisable, and the exercise
price therefore shall be paid, in the same manner as provided herein for other
Stock Options.
7.4 TERM OF OPTIONS AND EFFECT OF TERMINATION.
Notwithstanding any other provision of the Plan, no Non-Employee
Director Option granted under the Plan shall be exercisable after the expiration
of ten years from the effective date of its grant. In the event that the
recipient of any Non-Employee Director Options granted under the Plan shall
cease to be a director of the Company, all Non-Employee Director Options granted
under this plan to such recipient shall be exercisable, to the extent already
exercisable at the date such recipient ceases to be a director and regardless of
the reason the recipient ceases to be a director, for a period of 365 days after
that date (or, if sooner, until the expiration of the option according to its
terms), and shall then terminate. In the event of the death of a Recipient while
such Recipient is a director of the Company or within the period after
termination of such status during which he or she is permitted to exercise an
option, such option may be exercised by any person or persons designated by the
Recipient on a beneficiary designation form adopted by the Plan administrator
for such purpose or, if there is no effective beneficiary designation form on
file with the Company, by the executors or administrators of the Recipient's
estate or by any person or persons who shall have acquired the option directly
from the Recipient by his or her will or the applicable laws of descent and
distribution.
7.5 AMENDMENT; SUSPENSION.
The Administrator may at any time and from time to time in its
discretion (a) change the number of shares or vesting periods associated with
the Non-Employee Director Options, and (b) suspend and reactivate this Article
VII.
ARTICLE VIII
CHANGE IN CONTROL
8.1 PROVISION FOR AWARDS UPON CHANGE IN CONTROL.
As of the effective time and date of any Change in Control, this Plan
and any then outstanding Awards (whether or not vested) will automatically
terminate unless: (a) provision is made in writing in connection with such
transaction for the continuance of this Plan and for the assumption of such
Awards, or for the substitution for such Awards of new awards covering the
securities of a successor entity or an affiliate thereof, with appropriate
adjustments as to the number and kind of securities and exercise prices or other
measurement criteria, in which event this Plan and such outstanding Awards will
continue or be replaced, as the case may be, in the manner and under the terms
so provided; or (b) the Board otherwise provides in writing for such adjustments
as it deems appropriate in the terms and conditions of the then-outstanding
Awards (whether or not vested), including, without limitation, (i) accelerating
the vesting of outstanding Awards, and/or (ii) providing for the cancellation of
Awards and their automatic conversion into the right to receive the securities,
cash or other consideration that a holder of the shares underlying such Awards
would have been entitled to receive upon consummation of such Change in Control
had such shares been issued and outstanding immediately prior to the effective
date and time of the Change in Control (net of the appropriate option exercise
prices). If, pursuant to the foregoing provisions of this Section 8.1, this Plan
and the Awards terminate by reason of the occurrence of a Change in Control
without provision for any of the action(s) described in clause (a) or (b)
hereof, then subject to Sections 5.12 and 5.15, any Recipient holding
outstanding Awards will have the right, at such time prior to the consummation
of the Change in Control as the Board designates, to exercise or receive the
full benefit of
17
<PAGE> 18
the Recipient's Awards to the full extent not theretofore exercised, including
any installments which have not yet become vested.
8.2 TERMINATION OF EMPLOYMENT IN CONNECTION WITH A CHANGE IN CONTROL.
(a) Acceleration of Awards. If a Change in Control occurs and
provision for Awards is made as described in part (a) or (b) of Section 8.1 such
that a Recipient continues to own Awards or replacement awards, but in
connection with such Change in Control the Recipient's employment with the
Company or an Affiliated Entity is terminated by the Company or an Affiliated
Entity as described in Section 8.2(b), then, subject to Sections 5.12 and 5.15
and the terms of any written employment agreement between the Company or any
Affiliated Entity and the Recipient and the specific terms of any Award, such
Recipient will have the right to exercise or receive the full benefit of the
Recipient's Awards during the applicable time period provided in Section 5.12,
without regard to any vesting or performance requirements or other milestones.
(b) Employment Termination. For purposes of this Section, and
subject to any separate written agreement binding upon the Company, a
Recipient's employment with the Company or any Affiliated Entity will be deemed
to have been terminated in connection with a Change in Control if: (i) the
Recipient is removed from the Recipient's employment by, or resigns the
Recipient's employment upon the request of, a Person exercising practical voting
control over the Company following the Change in Control or a person acting upon
authority or at the instruction of such Person; or (ii) the Recipient's position
is eliminated as a result of a reduction in force made to reduce over-capacity
or unnecessary duplication of personnel within 180 days after the consummation
of the Change in Control and the Recipient is not offered a replacement position
with compensation substantially similar to the compensation in effect
immediately before the Change in Control. Unless otherwise provided in a written
agreement with the Company or any Affiliated Entity, assignment of a Recipient
to different duties or reporting will not be deemed to constitute or justify
termination of Recipient's employment in connection with the Change in Control.
ARTICLE IX
DEFINITIONS
Capitalized terms used in this Plan and not otherwise defined have the
meanings set forth below:
"ADMINISTRATOR" means the Board as long as no Committee has been
appointed and is in effect and also means the Committee to the extent that the
Board has delegated authority thereto.
"AFFILIATED ENTITY" means any Parent Corporation of the Company or
Subsidiary Corporation of the Company or any other entity controlling,
controlled by, or under common control with the Company.
"APPLICABLE DIVIDEND PERIOD" means (i) the period between the date a
Dividend Equivalent is granted and the date the related Stock Option, SAR, or
other Award is exercised, terminates, or is converted to Common Stock, or (ii)
such other time as the Administrator may specify in the written instrument
evidencing the grant of the Dividend Equivalent.
"AWARD" means any Stock Option, Performance Award, Restricted Stock,
Stock Appreciation Right, Stock Payment, Stock Bonus, Stock Sale, Phantom Stock,
Dividend Equivalent, or Other Stock-Based Benefit granted or sold to an Eligible
Person under this Plan, or any similar award granted by the
18
<PAGE> 19
Company prior to the Effective Date and outstanding as of the Effective Date
that is governed by this Plan.
"AWARD DOCUMENT" means the agreement or confirming memorandum setting
forth the terms and conditions of an Award.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" means the following and shall be deemed to occur if
any of the following events occurs:
(i) Any Person becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty
percent (30%) or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors; or
(ii) Individuals who, as of the effective date hereof,
constitute the Board (the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board, provided that any
individual who becomes a director after the effective date hereof whose
election, or nomination for election by the Company's stockholders, is
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered to be a member of
the Incumbent Board unless that individual was nominated or elected by
any person, entity or group (as defined above) having the power to
exercise, through beneficial ownership, voting agreement and/or proxy,
twenty percent (20%) or more of either the outstanding shares of Common
Stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election of
directors, in which case that individual shall not be considered to be
a member of the Incumbent Board unless such individual's election or
nomination for election by the Company's stockholders is approved by a
vote of at least two-thirds of the directors then comprising the
Incumbent Board; or
(iii) Consummation by the Company of the sale or other
disposition by the Company of all or substantially all of the Company's
assets or a Reorganization of the Company with any other person,
corporation or other entity, other than
(A) a Reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto (or, in
the case of a Reorganization that is preceded or accomplished by an
acquisition or series of related acquisitions by any Person, by tender
or exchange offer or otherwise, of voting securities representing 5% or
more of the combined voting power of all securities of the Company,
immediately prior to such acquisition or the first acquisition in such
series of acquisitions) continuing to represent, either by remaining
outstanding or by being converted into voting securities of another
entity, more than 50% of the combined voting power of the voting
securities of the Company or such other entity outstanding immediately
after such Reorganization (or series of related transactions involving
such a Reorganization), or
(B) a Reorganization effected to implement a
recapitalization or reincorporation of the Company (or similar
transaction) that does not result in a material change in beneficial
ownership of the voting securities of the Company or its successor; or
(iv) Approval by the stockholders of the Company or an order
by a court of competent jurisdiction of a plan of liquidation of the
Company.
19
<PAGE> 20
"COMMITTEE" means any committee appointed by the Board to administer
this Plan pursuant to Section 4.1.
"COMMON STOCK" means the common stock of the Company, as constituted on
the Effective Date, and as thereafter adjusted under Section 3.4.
"COMPANY" means Ashworth, Inc., a Delaware corporation.
"DIVIDEND EQUIVALENT" means a right granted by the Company under
Section 6.6 to a holder of a Stock Option, Stock Appreciation Right or other
Award denominated in shares of Common Stock to receive from the Company during
the Applicable Dividend Period payments equivalent to the amount of dividends
payable to holders of the number of shares of Common Stock underlying such Stock
Option, Stock Appreciation Right, or other Award.
"EFFECTIVE DATE" means December 14, 1999 which is the date this Plan
was adopted by the Board.
"ELIGIBLE PERSON" includes directors, officers, employees, consultants
and advisors of the Company or of any Affiliated Entity.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPIRATION DATE" means the tenth (10th) anniversary of the Effective
Date.
"FAIR MARKET VALUE" of a share of the Company's capital stock as of a
particular date means: (i) if the stock is listed on an established stock
exchange or exchanges (including for this purpose, the Nasdaq National Market),
the arithmetic mean of the highest and lowest sale prices of the stock for the
trading day immediately preceding such date on the primary exchange upon which
the stock trades, as measured by volume, as published in The Wall Street
Journal, or, if no sale price was quoted for such date, then as of the next
preceding date on which such a sale price was quoted; or (ii) if the stock is
not then listed on an exchange or the Nasdaq National Market, the average of the
closing bid and asked prices per share for the stock in the over-the-counter
market on such date (in the case of (i) or (ii), subject to adjustment as and if
necessary and appropriate to set an exercise price not less than 100% of the
fair market value of the stock on the date an Award is granted); or (iii) if the
stock is not then listed on an exchange or quoted in the over-the-counter
market, an amount determined in good faith by the Administrator, provided,
however, that (A) when appropriate, the Administrator in determining Fair Market
Value of capital stock of the Company may take into account such other factors
as it may deem appropriate under the circumstances, and (B) if the stock is
traded on the Nasdaq SmallCap Market and both sales prices and bid and asked
prices are quoted or available, the Administrator may elect to determine Fair
Market Value under either clause (i) or (ii) above. Notwithstanding the
foregoing, the Fair Market Value of capital stock for purposes of grants of
Incentive Stock Options must be determined in compliance with applicable
provisions of the IRC. The Fair Market Value of rights or property other than
capital stock of the Company means the fair market value thereof as determined
by the Administrator on the basis of such factors as it may deem appropriate.
"INCENTIVE STOCK OPTION" means a Stock Option that qualifies as an
incentive stock option under Section 422 of the IRC.
"IRC" means the Internal Revenue Code of 1986, as amended.
20
<PAGE> 21
"JUST CAUSE DISMISSAL" means a termination of a Recipient's employment
for any of the following reasons: (i) the Recipient violates any reasonable rule
or regulation of the Board, the Company's President or Chief Executive Officer
or the Recipient's superiors that results in damage to the Company or any
Affiliated Entity or which, after written notice to do so, the Recipient fails
to correct within a reasonable time not exceeding 15 days; (ii) any willful
misconduct or gross negligence by the Recipient in the responsibilities assigned
to the Recipient; (iii) any willful failure to perform the Recipient's job as
required to meet the objectives of the Company or any Affiliated Entity; (iv)
any wrongful conduct of a Recipient which has an adverse impact on the Company
or any Affiliated Entity or which constitutes a misappropriation of assets of
the Company or any Affiliated Entity; (v) the Recipient does any of the things
described in Section 5.15; or (vi) any other conduct that the Administrator
reasonably determines constitutes Just Cause for Dismissal; provided, however,
that if a Recipient is party to an employment agreement with the Company or any
Affiliated Entity providing for just cause dismissal (or some comparable
concept) of Recipient from Recipient's employment with the Company or any
Affiliated Entity, "Just Cause Dismissal" for purposes of this Plan will have
the same meaning as ascribed thereto or to such comparable concept in such
employment agreement.
"NON-EMPLOYEE DIRECTOR OPTION" means a Stock Option granted pursuant to
Article VII of this Plan.
"NONQUALIFIED STOCK OPTION" means a Stock Option that is not an
Incentive Stock Option.
"OTHER STOCK-BASED BENEFITS" means an Award granted under Section 6.10.
"PARENT CORPORATION" means any Parent Corporation as defined in Section
424(e) of the IRC.
"PERFORMANCE AWARD" means an Award under Section 6.2, payable in cash,
Common Stock or a combination thereof, that vests and becomes payable over a
period of time upon attainment of performance criteria established in connection
with the grant of the Award.
"PERFORMANCE-BASED COMPENSATION" means performance-based compensation
as described in Section 162(m) of the IRC. If the amount of compensation an
Eligible Person will receive under any Award is not based solely on an increase
in the value of Common Stock after the date of grant or award, the
Administrator, in order to qualify an Award as performance-based compensation
under Section 162(m) of the IRC, can condition the grant, award, vesting, or
exercisability of such an Award on the attainment of a preestablished, objective
performance goal. For this purpose, a preestablished, objective performance goal
may include one or more of the following performance criteria: (a) cash flow,
(b) earnings per share (including earnings before interest, taxes, and
amortization), (c) return on equity, (d) total Shareholder return, (e) return on
capital, (f) return on assets or net assets, (g) income or net income, (h)
operating income or net operating income, (i) operating margin, (j) return on
operating revenue, and (k) any other similar performance criteria.
"PERMANENT DISABILITY" means that the Recipient becomes physically or
mentally incapacitated or disabled so that the Recipient is unable to perform
substantially the same services as the Recipient performed prior to incurring
such incapacity or disability (the Company, at its option and expense, being
entitled to retain a physician to confirm the existence of such incapacity or
disability, and the determination of such physician to be binding upon the
Company and the Recipient), and such incapacity or disability continues for a
period of three (3) consecutive months or six (6) months in any 12-month period
or such other period(s) as may be determined by the Administrator with respect
to any Award, provided that for purposes of determining the period during which
an Incentive Stock Option may be exercised pursuant to Section 6.1(e), Permanent
Disability shall mean "permanent and total disability" as defined in Section
22(e) of the IRC.
21
<PAGE> 22
"PERSON" means any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding (i) the Company and
its subsidiaries, (ii) any employee stock ownership or other employee benefit
plan maintained by the Company and (iii) an underwriter or underwriting
syndicate that has acquired the Company's securities solely in connection with a
public offering thereof.
"PHANTOM STOCK" means an Award granted under Section 6.9.
"PLAN" means this 2000 Equity Incentive Plan of the Company.
"PLAN TERM" means the period during which this Plan remains in effect
(commencing the Effective Date and ending on the Expiration Date).
"PURCHASE PRICE" means the purchase price (if any) to be paid by a
Recipient for Restricted Stock as determined by the Administrator (which price
shall be at least equal to the minimum price required under applicable laws and
regulations for the issuance of Common Stock which is nontransferable and
subject to a substantial risk of forfeiture until specific conditions are met).
"RECIPIENT" means a person who has received an Award.
"REORGANIZATION" means any merger, consolidation or other
reorganization.
"RESTRICTED STOCK" means Common Stock that is the subject of an Award
made under Section 6.3 and that is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met, as set forth in this Plan
and in any statement evidencing the grant of such Award.
"RETIREMENT" of a Recipient means the Recipient's resignation from the
Company or any Affiliated Entity after reaching age 60 and at least five years
of full-time employment by the Company or any Affiliated Entity, without any
circumstances that would justify a Just Cause Dismissal of the Recipient.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SIGNIFICANT STOCKHOLDER" is an individual who, at the time a Stock
Option is granted to such individual under this Plan, owns more than ten percent
(10%) of the combined voting power of all classes of stock of the Company or of
any Parent Corporation or Subsidiary Corporation (after application of the
attribution rules set forth in Section 424(d) of the IRC).
"STOCK APPRECIATION RIGHT" or "SAR" means a right granted under Section
6.4 to receive a payment that is measured with reference to the amount by which
the Fair Market Value of a specified number of shares of Common Stock
appreciates from a specified date, such as the date of grant of the SAR, to the
date of exercise.
"STOCK BONUS" means an issuance or delivery of unrestricted or
restricted shares of Common Stock under Section 6.7 as a bonus for services
rendered or for any other valid consideration under applicable law.
"STOCK PAYMENT" means a payment in shares of the Company's Common Stock
under Section 6.5 to replace all or any portion of the compensation or other
payment (other than base salary) that would otherwise become payable to the
Recipient in cash.
"STOCK OPTION" means a right to purchase stock of the Company granted
under Section 6.1 or Article VII of this Plan.
"STOCK SALE" means a sale of Common Stock to an Eligible Person under
Section 6.8.
"SUBSIDIARY CORPORATION" means any Subsidiary Corporation as defined in
Section 424(f) of the IRC.
22
<PAGE> 23
EXHIBIT A TO
ASHWORTH, INC.
2000 EQUITY INCENTIVE PLAN
NOTICE OF EXERCISE
Ashworth, Inc.
RE: STOCK OPTION
Notice is hereby given that I elect to purchase the number of shares
(the "SHARES") set forth below pursuant to the stock option referenced below at
the exercise price applicable thereto:
Option Grant Date: _______________
Total Number of Shares
Underlying Original Option: _______________
Number of Shares for which
Option has been previously
exercised: _______________
Exercise Price Per Share: _______________
Number of Shares Being
Acquired With This Exercise: _______________
A check in the amount of the aggregate price of the shares
being purchased is attached.
I hereby confirm that such shares are being acquired by me for
my own account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof. I will not sell or dispose of my
Shares in violation of the Securities Act of 1933, as amended, or any applicable
federal or state securities laws. Further, I understand that the exemption from
taxable income at the time of exercise is dependent upon my holding such stock
for a period of at least one year from the date of exercise and two years from
the date of grant of the Option.
I understand that the certificate representing the Shares will
bear a restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Shares.
I agree to provide to the Company such additional documents or
information as may be required pursuant to the Company's 2000 Equity Incentive
Plan.
___________________________________________
(signature)
___________________________________________
(name of Optionee)
<PAGE> 24
ASHWORTH, INC.
NOTICE OF OPTION GRANT
This Notice of Option Grant will confirm that as of __________, ____,
Ashworth, Inc. (the "Company") granted a stock option to you pursuant to the
Company's 2000 Equity Incentive Plan (the "Plan") upon the following terms and
conditions:
Option Grant Date: ___________, _____
Type of Option: Incentive
Maximum Number of
Shares of Common
Stock Issuable Upon
Exercise of Option: __________
Exercise Price: $_____ per share
Vesting Schedule:
Expiration Date: ___________, _____
In addition to the terms described herein, this award is subject to the
terms and conditions of the Plan, a copy of which is attached hereto and
incorporated herein by reference.
SALE, TRANSFER OR HYPOTHECATION OF THE OPTION REFERRED TO ABOVE AND
SHARES ISSUABLE UNDER THIS OPTION ARE SUBJECT TO RESTRICTIONS UNDER THE PLAN AND
APPLICABLE LAW.
ASHWORTH, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
<PAGE> 25
ASHWORTH, INC.
2000 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "AGREEMENT") is made effective as of
the Option Grant Date set forth below, by and between Ashworth, Inc., a Delaware
corporation (the "COMPANY"), and _________________________ ("OPTIONEE"). Terms
not otherwise defined in this Agreement shall have the meanings ascribed to them
in the Company's 2000 Equity Incentive Plan (the "PLAN"). The parties agree as
follows:
1. GOVERNING PLAN. Optionee has received a copy of the Plan. This
Agreement is subject in all respects to the applicable provisions of the Plan,
which are incorporated herein by reference. In the case of any conflict between
the provisions of the Plan and this Agreement, the provisions of the Plan shall
control.
2. GRANT OF OPTION. The Company hereby grants to Optionee a stock
option (the "OPTION") to purchase shares of the Company's Common Stock upon the
following terms and conditions:
Option Grant Date: ____________________
Type of Option (Incentive/Nonqualified):
Maximum Number of Shares of Common Stock
Issuable Upon Exercise of Option: ____________________
Purchase Price Per Share: $___________________
Vesting Schedule:
3. GOVERNING LAW. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, of the State of Delaware
applicable to agreements made or to be performed wholly within the State of
Delaware.
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement effective as of the Option Grant Date.
The Company: Optionee:
By: _____________________________ _________________________________________
Its: _____________________________ Name: ___________________________________
