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EXHIBIT 4.1
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
2000 LONG-TERM EQUITY COMPENSATION PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION
a. ESTABLISHMENT OF THE PLAN. Sunrise Technologies International, Inc.,
a Delaware corporation (hereinafter referred to as the "Company"), hereby
establishes an incentive compensation plan to be known as the "Sunrise
Technologies International, Inc. 2000 Long-Term Equity Compensation Plan"
(hereinafter referred to as the "Plan"), as set forth in this document. The Plan
permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and Performance Units.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of April 13, 2000 (the "Effective Date") and shall remain in effect
as provided in Section 1.3 hereof.
b. OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize
the profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link the personal interests of
Participants to those of the Company's stockholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants.
The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract and retain the services of Participants who
make significant contributions to the Company's success and to allow
Participants to share in the success of the Company.
c. DURATION OF THE PLAN. The Plan shall commence on the Effective Date,
as described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 14 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after April 12, 2010.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below, and when the meaning is intended, the initial letter of the
word shall be capitalized:
a. "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act.
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b. "Award" means, individually or collectively, a grant under this Plan
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares or Performance Units.
c. "Award Agreement" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
d. "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such terms in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
e. "Board" or "Board of Directors" means the Board of Directors of the
Company.
f. "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
g. "Committee" means any committee appointed by the Board to administer
the Plan, as specified in Article 3 herein.
h. "Company" means Sunrise Technologies International, Inc., a Delaware
corporation, including any and all Subsidiaries and Affiliates, and any
successor thereto as provided in Article 19 herein.
i. "Consultant" means a consultant or advisor who provides bona fide
services to the Company as an independent contractor. Service as a Consultant
shall be considered employment for all purposes of the Plan, except for purposes
of an ISO grant under Article 6.
j. "Covered Employee" means a Participant who, as of the date of vesting
and/or payout of an Award, as applicable, is one of the group of "covered
employees," as defined in the regulations promulgated under Code Section 162(m),
or any successor statute.
k. "Director" means any individual who is a member of the Board of
Directors of the Company or any Subsidiary or Affiliate.
l. "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan, or if no such plan exists, at
the discretion of the Committee.
m. "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.
n. "Employee" means any full-time, active employee of the Company or its
Subsidiaries or Affiliates. Directors or Consultants who are not employed by the
Company shall not be considered Employees under this Plan.
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o. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
p. "Fair Market Value" shall be determined on the basis of the closing
sale price at which Shares have been sold the regular way on the principal
securities exchange on which the Shares are traded on the last previous day on
which there was such a sale.
q. "Freestanding SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.
r. "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.
s. "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
t. "Non-Employee Director" shall mean a Director who is not also an
Employee. Service as a Non-Employee Director shall be considered employment for
all purposes of the Plan, except for purposes of an ISO grant under Article 6.
u. "Non-Qualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
v. "Option" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
w. "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
x. "Participant" means an Employee, Non-Employee Director or Consultant
who has been selected to receive an Award or who has outstanding an Award
granted under the Plan.
y. "Performance-Based Exception" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
z. "Performance Share" means an Award granted to a Participant, as
described in Article 9 herein.
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aa. "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.
bb. "Period of Restriction" means the period during which the transfer
of Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 8 herein.
cc. "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
dd. "Restricted Stock" means an Award granted to a Participant pursuant
to Article 8 herein.
ee. "Retirement" shall have the meaning ascribed to such term in the
Company's tax-qualified retirement plan.
ff. "Shares" means the shares of common stock of the Company.
gg. "Stock Appreciation Right" or "SAR" means an Award, granted alone
or, in connection with a related Option, designated as an SAR, pursuant to the
terms of Article 7 herein.
hh. "Subsidiary" means any corporation, partnership, joint venture or
other entity in which the Company has a majority voting interest (including all
divisions, affiliates and related entities).
ii. "Tandem SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
ARTICLE 3. ADMINISTRATION
a. THE COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board consisting of not less than two (2) Directors who meet
the "outside director" requirements of Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act and the requirements of Code
Section 162(m), or by any other committee appointed by the Board, provided the
members of such committee meet such requirements.
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b. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select individuals who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 14 herein)
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law,
the Committee may delegate its authority as identified herein.
c. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Employees, Participants and their
estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
a. NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to Sections 4.2 and
4.3 herein, the maximum number of Shares with respect to which Awards may be
granted to Participants under the Plan shall be two million one hundred thousand
(2,100,000). Shares issued under the Plan may be either authorized but unissued
Shares, treasury Shares or any combination thereof.
Unless and until the Committee determines that an Award to a Covered
Employee shall not be designed to comply with the Performance-Based Exception,
the following rules shall apply to grants of such Awards under the Plan, subject
to Sections 4.2 and 4.3:
(a) STOCK OPTIONS AND SARS: The maximum aggregate number of
Shares that may be subject to Stock Options, with or without Tandem
SARs, or Freestanding SARs, granted in any one fiscal year to any one
Participant shall be one million (1,000,000).
(b) RESTRICTED STOCK: The maximum aggregate grant with respect
to Awards of Restricted Stock which are intended to qualify for the
Performance-Based Exception, and which are granted in any one fiscal
year to any one Participant shall be two hundred thousand (200,000)
Shares.
(c) PERFORMANCE SHARES/PERFORMANCE UNITS: The maximum aggregate
payout (determined as of the end of the applicable performance period)
with respect to Awards of Performance Shares or Performance Units which
are intended to comply with the Performance-Based Exception, and which
are granted in any one fiscal
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year to any one Participant shall be equal to the Fair Market Value of
two hundred thousand (200,000) Shares.
b. LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan. The foregoing notwithstanding, the aggregate number of
Shares that may be issued under the Plan upon the exercise of ISOs shall not be
increased when Restricted Stock or other Shares are forfeited.
c. ADJUSTMENTS. In the event of any change in corporate capitalization
such as a stock split, or a corporate transaction such as any merger,
consolidation, separation, including a spin-off, or other distribution of stock
or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Code Section 368) or
any partial or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares which may be delivered under Section 4.1,
in the number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan, and in the Award limits set forth in subsections 4.1(a),
4.l(b) and 4.l(c), as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of rights;
provided, however, that the number of Shares subject to any Award shall always
be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
a. ELIGIBILITY. Persons eligible to participate in this Plan include
Consultants, Non-Employee Directors and officers and certain key salaried
Employees of the Company with potential to contribute to the success of the
Company or its Subsidiaries, including Employees who are members of the Board.
b. ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Participants those to
whom Awards shall be granted, and shall determine the nature and amount of each
Award.
ARTICLE 6. STOCK OPTIONS
a. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
b. AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The
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Award Agreement also shall specify whether the Option is intended to be an ISO
within the meaning of Code Section 422, or an NQSO, whose grant is intended not
to fall under the provisions of Code Section 422.
c. OPTION PRICE. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
d. DURATION OF OPTIONS. Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time of grant;
provided, however, that no Option shall be exercisable later than the tenth
anniversary date of its grant and provided further that no Option shall be
exercisable later than the fifth anniversary date of its grant for an ISO
granted to a Participant, who at the time of such grant, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company.
e. EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
f. PAYMENT. Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full in a form as determined by the Committee either: (a) in cash or
its equivalent; (b) by tendering previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the total Option Price
(provided that the Shares which are tendered must have been held by the
Participant for at least six (6) months prior to their tender to satisfy the
Option Price); (c) by withholding Shares which otherwise would be acquired on
exercise having an aggregate Fair Market Value at the time of exercise equal to
the total Option Price; (d) by promissory note of the Participant; or (e) by any
combination of the foregoing methods of payment.
The Committee may also allow cashless exercise as permitted under
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
In connection with the exercise of Options granted under the Plan, the
Company may make loans to the Participants as the Committee, in its discretion,
may determine. Such loans shall be subject to the following terms and conditions
and such other terms and conditions as the Committee shall determine not
inconsistent with the Plan. Such loans shall bear interest at such rates as the
Committee shall determine from time to time, which rates may be below then
current market rates or may be made without interest. In no event may any such
loan exceed the Fair Market Value, at the date of exercise, of the Shares
covered by the Option, or portion thereof,
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exercised by the Optionee. No loan shall have an initial term exceeding two
years, but any such loan may be renewable at the discretion of the Committee.
When a loan shall have been made, Shares having a fair market value at least
equal to 150 percent of the principal amount of the loan shall be pledged by the
Participant to the Company as security for payment of the unpaid balance of the
loan.
Subject to any governing rules or regulations, as soon as practicable
after receipt of a written notification of exercise and full payment, the
Company shall deliver to the Participant, in the Participant's name, Share
certificates in an appropriate amount based upon the number of Shares purchased
under the Option(s).
g. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
h. TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT. Each Option
Award Agreement shall set forth the extent to which the Participant shall have
the right to exercise the Option following termination of the Participant's
employment or consulting arrangement with the Company. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be uniform among
all Options issued pursuant to this Article 6, and may reflect distinctions
based on the reasons for termination of employment.
i. NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may
be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant
or the Participant's legal representative (to the extent permitted under
Code Section 422).
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in
a Participant's Award Agreement, no NQSO granted under this Article 6
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such Participant
or the Participant's legal representative.
ARTICLE 7. STOCK APPRECIATION RIGHTS
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a. GRANT OF SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number
of SARs granted to each Participant (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value
of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
b. EXERCISE OF TANDEM SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
c. EXERCISE OF FREESTANDING SARs. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
d. SAR AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
e. TERM OF SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten years.
f. PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) the difference between the Fair Market Value of a Share on
the date of exercise over the grant price; by
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(b) the number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR exercise may be
in cash, in Shares of equivalent value or in some combination thereof. The
Committee's determination regarding the form of SAR payout shall be set forth in
the Award Agreement pertaining to the grant of the SAR.
g. TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT. Each SAR Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the SAR following termination of the Participant's employment
or consulting arrangement with the Company and/or its Subsidiaries. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan and may reflect distinctions
based on the reasons for termination of employment.
h. NONTRANSFERABILITY OF SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or the Participant's legal representative.
ARTICLE 8. RESTRICTED STOCK
a. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
b. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted and such other
provisions as the Committee shall determine.
c. TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted under the Plan may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the
Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant or the Participant's legal
representative.
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d. OTHER RESTRICTIONS. Subject to Article 10 herein, the Committee shall
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional and/or individual),
time-based restrictions on vesting following the attainment of the performance
goals and/or restrictions under applicable federal or state securities laws.
The Company may retain the certificates representing Shares of
Restricted Stock in the Company's possession until such time as all conditions
and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the applicable
Period of Restriction.
e. VOTING RIGHTS. Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction.
f. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate. Without limiting the generality
of the preceding sentence, if the grant or vesting of Restricted Shares granted
to a Covered Employee is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Restricted
Shares, such that the dividends and/or the Restricted Shares maintain
eligibility for the Performance-Based Exception.
g. TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT. Each Restricted
Stock Award Agreement shall set forth the extent to which the Participant shall
have the right to receive unvested Restricted Shares following termination of
the Participant's employment or consulting arrangement with the Company. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with each Participant, need not be
uniform among all Shares of Restricted Stock issued pursuant to the Plan and may
reflect distinctions based on the reasons for termination of employment;
provided, however, that except in the cases of terminations by reason of death
or Disability, the vesting of Shares of Restricted Stock which qualify for the
Performance-Based Exception and which are held by Covered Employees shall occur
at the time they otherwise would have, but for the employment termination.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
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a. GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
b. VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participant. For purposes of this Article 9, the time period during which the
performance goals must be met shall be called a "Performance Period."
c. EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the number and
value of Performance Units/Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
performance goals have been achieved.
d. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made in a single lump sum following the
close of the applicable Performance Period. Subject to the terms of this Plan,
the Committee, in its sole discretion, may pay earned Performance Units/ Shares
in the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may
be granted subject to any restrictions deemed appropriate by the Committee. The
determination of the Committee with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.
At the discretion of the Committee, Participants may be entitled to
receive any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares, but not
yet distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture and payout restrictions as apply to dividends earned with
respect to Shares of Stock, as set forth in Section 8.6 herein). In addition,
Participants may, at the discretion of the Committee, be entitled to exercise
their voting rights with respect to such Shares.
e. TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT DUE TO DEATH,
DISABILITY OR RETIREMENT. Unless determined otherwise by the Committee and set
forth in the Participant's Award Agreement, in the event the employment or
consulting arrangement of the Participant is terminated by reason of death,
Disability or Retirement during a Performance Period, the Participant shall
receive a payout of the Performance Units/Shares which is prorated,
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as specified by the Committee in its discretion. Payment of earned Performance
Units/Shares shall be made at a time specified by the Committee in its sole
discretion and set forth in the Participant's Award Agreement. Notwithstanding
the foregoing, with respect to Covered Employees who retire during a Performance
Period, payments shall be made at the same time as payments are made to
Participants who did not terminate employment during the applicable Performance
Period.
f. TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT FOR OTHER
REASONS. In the event the Participant's employment or consulting arrangement
terminates for any reason other than those reasons set forth in Section 9.5
herein, all Performance Units/Shares shall be forfeited by the Participant to
the Company unless determined otherwise by the Committee, as set forth in the
Participant's Award Agreement.
g. NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant or the
Participant's legal representative.
ARTICLE 10. PERFORMANCE MEASURES
Unless and until the Committee proposes for stockholder vote and
stockholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees which are designed to
qualify for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall be chosen from among net income either
before or after taxes, market share, customer satisfaction, profits, share
price, earnings per share, total stockholder return, return on assets, return on
equity, operating income, return on capital or investments, or economic value
added (including, but not limited to, any or all of such measures in comparison
to the Company's competitors, the industry or some other competitor group).
The Committee shall have the discretion to adjust the determinations of
the degree of attainment of the preestablished performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Covered Employees, may not be adjusted upward
(the Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is
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advisable to grant Awards which shall not qualify for the Performance-Based
Exception, the Committee may make such grants without satisfying the
requirements of Code Section 162(m).
ARTICLE 11. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, the Participant's beneficiary shall be paid
to the Participant's estate.
ARTICLE 12. DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or goals with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
ARTICLE 13. RETENTION RIGHTS
a. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate the services of any Participant at any
time, nor confer upon any Participant any right to continue as an Employee,
Non-Employee Director or Consultant.
b. PARTICIPATION. No Participant shall have the right to be selected to
receive an Award under this Plan or, having been so selected, to be selected to
receive a future Award.
ARTICLE 14. AMENDMENT, MODIFICATION, TERMINATION AND ADJUSTMENTS
a. AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms of the
Plan, the Board, upon recommendation of the Committee, may at any time and from
time to time, alter, amend, suspend or terminate the Plan in whole or in part.
b. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.3 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations or accounting
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principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan; provided that
unless the Committee determines otherwise, no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the Plan
or Awards meeting the requirements of Code Section 162(m), as from time to time
amended.
c. AWARDS PREVIOUSLY GRANTED. Notwithstanding any other provision of the
Plan to the contrary (but subject to Section 14.2 hereof), no termination,
amendment or modification of the Plan shall adversely affect in any material way
any Award previously granted under the Plan without the written consent of the
Participant holding such Award.
d. COMPLIANCE WITH CODE SECTION 162(m). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards available under the Plan, the Committee may, subject to this
Article 14, make any adjustments it deems appropriate.
ARTICLE 15. PAYMENT OF PLAN AWARDS AND CONDITIONS THEREON
a. EFFECT OF COMPETITIVE ACTIVITY. Anything contained in the Plan to the
contrary notwithstanding, if the employment of any Participant who is an
Employee shall terminate, for any reason other than death, while any Award to
such Participant is outstanding hereunder, and such Participant has not yet
received the Shares covered by such Award or otherwise received the full benefit
of such Award, such Participant, if otherwise entitled thereto, shall receive
such Shares or benefit only if, during the entire period from the date of such
Participant's termination to the date of such receipt, such Participant shall
have earned out such Award by: (i) making himself or herself available, upon
request, at reasonable times and upon a reasonable basis, to consult with,
supply information to, and otherwise cooperate with the Company or any
Subsidiary or Affiliate thereof with respect to any matter that shall have been
handled by him or her or under his or her supervision while he or she was in the
employ of the Company or of any Subsidiary or Affiliate thereof; and (ii)
refraining from engaging in any activity that is directly or indirectly in
competition with any activity of the Company or any Subsidiary or Affiliate
thereof.
b. NONFULFILLMENT OF COMPETITIVE ACTIVITY CONDITIONS; WAIVERS UNDER THE
PLAN. In the event of a Participant's nonfulfillment of any condition set forth
in Section 15.1 hereof, such Participant's rights under any Award shall be
forfeited and canceled forthwith; provided, however, that the nonfulfillment of
such condition may at any time (whether before, at the time of, or subsequent to
termination of employment) be waived by the Committee upon its determination
that in its sole judgment there shall not have been and will not be any
substantial
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adverse effect upon the Company or any Subsidiary or Affiliate thereof by reason
of the nonfulfillment of such condition.
c. EFFECT OF INIMICAL CONDUCT. Anything contained in the Plan to the
contrary notwithstanding, all rights of a Participant under any Award shall
cease on and as of the date on which it has been determined by the Committee
that such Participant at any time (whether before or subsequent to termination
of such Participant's employment in the case of a Participant who is an
Employee) acted in manner inimical to the best interests of the Company or any
Subsidiary or Affiliate thereof.
ARTICLE 16. CHANGE IN CONTROL
a. DEFINITION. For purposes of this Plan, a "Change in Control" of the
Company is deemed to have occurred as of the first day that any one or more of
the following conditions shall have been satisfied:
(a) the "Beneficial Ownership" of securities representing more
than thirty-three percent (33%) of the combined voting power of the
Company is acquired by any "person" as defined in Section 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company); or
(b) the stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all
of its assets, or adopt a plan of liquidation; or
(c) during any period of three (3) consecutive years,
individuals who at the beginning of such period were members of the
Board cease for any reason to constitute at least a majority thereof
(unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least a
majority of the directors then still in office who were directors at the
beginning of such period or whose election or nomination was previously
so approved).
b. TREATMENT OF OUTSTANDING AWARDS. Subject to Section 16.3 herein, upon
the occurrence of a Change in Control:
(a) any and all Options and SARs granted hereunder shall
become immediately exercisable and shall remain exercisable
throughout their entire term;
(b) any restriction periods and restrictions imposed on
Restricted Stock which are not performance-based shall lapse;
and
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(c) the target payout opportunities attainable under all
outstanding Awards of performance-based Restricted Stock,
Performance Units and Performance Shares shall be deemed to have
been fully earned for the entire Performance Period(s) as of the
effective date of the Change in Control. The vesting of all
Awards denominated in Shares shall be accelerated as of the
effective date of the Change in Control, and there shall be paid
out to Participants within thirty (30) days following the
effective date of the Change in Control a pro rata number of
Shares (or their cash equivalents) based upon an assumed
achievement of all relevant targeted performance goals and upon
the length of time within the Performance Period which has
elapsed prior to the Change in Control. Awards denominated in
cash shall be paid pro rata to Participants in cash within thirty
(30) days following the effective date of the Change in Control,
with the proration determined as a function of the length of time
within the Performance Period which has elapsed prior to the
Change in Control, and based on an assumed achievement of all
relevant targeted performance goals.
c. TERMINATION, AMENDMENT AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of the Plan or any Award
Agreement provision, the provisions of this Article 16 may not be terminated,
amended or modified on or after the date of an event which is likely to give
rise to a Change in Control to affect adversely any Award theretofore granted
under the Plan without the prior written consent of the Participant with respect
to said Participant's outstanding Awards.
d. POOLING OF INTEREST ACCOUNTING. Notwithstanding anything contained in
the Plan to the contrary, in the event that the consummation of a Change in
Control is contingent on using pooling of interests accounting methodology, the
Board may, in its discretion, take any action necessary to preserve the use of
pooling of interests accounting.
ARTICLE 17. WITHHOLDING
a. TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
b. SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such
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elections shall be irrevocable, made in writing, and signed by the Participant,
and shall be subject to any restrictions or limitations that the Committee, in
its sole discretion, deems appropriate.
ARTICLE 18. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Certificate of Incorporation or Bylaws, as a matter of law or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 19. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
or assets of the Company.
ARTICLE 20. LEGAL CONSTRUCTION
a. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
b. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
c. REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
d. SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under
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the Exchange Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
e. GOVERNING LAW. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of California.
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