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Exhibit 4.1
1994 INCENTIVE STOCK OPTION PLAN
A Restatement of the 1984 Incentive Stock Option Plan
effective October 28, 1993
(Amended as of November 1999)
1. Purposes of the Plan. The purposes of this Stock Option Plan are:
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to attract and retain the best available personnel for positions of
substantial responsibility,
to provide additional incentive to Employees and Consultants, and
to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time
of grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
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(a) "Administrator" means the Board or any of its Committees as shall be
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administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
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administration of stock option plans under state corporate and
securities laws and the Code.
(c) "Board" means the Board of Directors of the Company.
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(d) "Code" means the Internal Revenue Code of 1986, as amended.
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(e) "Committee" means a Committee appointed by the Board in accordance
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with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
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(g) "Company" means The Santa Cruz Operation, Inc., a California
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corporation.
(h) "Consultant" means any person, including an advisor, engaged by the
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Company or a Parent or Subsidiary to render services and who is
compensated for such services, provided that the term "Consultant"
shall not include Directors who are paid only a director's fee by the
Company or who are not compensated by the Company for their services
as Directors.
(i) "Continuous Status as an Employee or Consultant" means that the
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employment or consulting relationship is not interrupted or terminated
by the Company, any Parent or Subsidiary. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case
of: (i) any leave of absence approved by the Company, including sick
leave, military leave, or any other personal leave; provided, however,
that for purposes of Incentive Stock Options, any such leave may not
exceed ninety (90) days, unless reemployment upon the expiration of
such leave is guaranteed by contract
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(including certain Company policies) or statute or, if reemployment is
not so guaranteed, Continuous Status as an Employee or Consultant
shall not be considered interrupted, but the Incentive Stock Option
shall automatically be converted into a Nonstatutory Stock Option on
the ninety-first (91st) day of such leave; or (ii) transfers between
locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor.
(j) "Director" means a member of the Board.
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(k) "Disability" means total and permanent disability as defined in
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Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
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employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the
Company shall be sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
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(n) "Fair Market Value" means, as of any date, the value of Common Stock
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determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a
Share of Common Stock shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume of
trading in Common Stock) on the last market trading day prior to the
day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the
Fair Market Value of a Share of Common Stock shall be the mean between
the high bid and low asked prices for the Common Stock on the last
market trading day prior to the day of determination, as reported in
The Wall Street Journal or such other source as the Administrator
deems reliable;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "Incentive Stock Option" means an Option intended to qualify as an
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incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means an Option not intended to qualify as
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an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing certain terms and
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conditions of an individual Option or Stock Purchase Right grant. The
Notice of Grant is part of the Option Agreement.
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(r) "Officer" means a person who is an officer of the Company within the
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meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
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(t) "Option Agreement" means a written agreement between the Company and
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an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(u) "Option Exchange Program" means a program whereby outstanding options
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are surrendered in exchange for options with a lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an Option or Stock
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Purchase Right.
(w) "Optionee" means an Employee or Consultant who holds an outstanding
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Option or Stock Purchase Right.
(x) "Parent" means a "parent corporation", whether now or hereafter
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existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1994 Incentive Stock Option Plan.
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(z) "Restricted Stock" means shares of Common Stock acquired pursuant to a
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grant of Stock Purchase Rights under Section 11 below.
(aa) "Restricted Stock Purchase Agreement" means a written agreement
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between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right.
The Restricted Stock Purchase Agreement is subject to the terms and
conditions of the Plan and the Notice of Grant.
(bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
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successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan.
(cc) "Share" means a share of the Common Stock, as adjusted in
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accordance with Section 13 of the Plan.
(dd) "Stock Purchase Right" means the right to purchase Common Stock
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pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ee) "Subsidiary" means a "subsidiary corporation", whether now or
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hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the
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Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 20,013,665 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock. However, should the Company
reacquire Shares which were issued pursuant to the exercise of an Option or
Stock Purchase Right, such Shares shall not become available for future
grant under the Plan.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an
Option Exchange Program, the unpurchased
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Shares which were subject thereto shall become available for future grant
or sale under the Plan (unless the Plan has terminated); provided, however,
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that Shares that have actually been issued under the Plan, whether upon
exercise of an Option or Right, shall not be returned to the Plan and shall
not become available for future distribution under the Plan, except that if
Shares of Restricted Stock are repurchased by the Company at their original
purchase price, and the original purchaser of such Shares did not receive
any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share
ownership.
4. Administration of the Plan.
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(a) Procedure.
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(i) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
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Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are
neither Directors nor Officers.
(ii) Administration With Respect to Directors and Officers Subject to
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Section 16(b). With respect to Option or Stock Purchase Right grants
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made to Employees who are also Officers or Directors subject to
Section 16(b) of the Exchange Act, the Plan shall be administered by
(A) the Board, if the Board may administer the Plan in compliance with
the rules governing a plan intended to qualify as a discretionary plan
under Rule 16b-3, or (B) a committee designated by the Board to
administer the Plan, which committee shall be constituted to comply
with the rules governing a plan intended to qualify as a discretionary
plan under Rule 16b-3. Once appointed, such Committee shall continue
to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the
Committee and appoint additional members, remove members (with or
without cause) and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules
governing a plan intended to qualify as a discretionary plan under
Rule 16b-3.
(iii) Administration With Respect to Other Persons. With respect to
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Option or Stock Purchase Right grants made to Employees or Consultants
who are neither Directors nor Officers of the Company, the Plan shall
be administered by (A) the Board or (B) a committee designated by the
Board, which committee shall be constituted to satisfy Applicable
Laws. Once appointed, such Committee shall serve in its designated
capacity until otherwise directed by the Board. The Board may increase
the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee
and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
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and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have
the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
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(ii) to select the Consultants and Employees to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be covered
by each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Options or Stock Purchase Rights may be exercised
(which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the shares
of Common Stock relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, shall determine;
(vii) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value
of the Common Stock covered by such Option or Stock Purchase Right
shall have declined since the date the Option or Stock Purchase Right
was granted;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan;
(x) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan);
(xi) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase
Right previously granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to determine the terms and restrictions applicable to Options
and Stock Purchase Rights and any Restricted Stock; and
(xiv) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
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determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be
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granted to Employees, Directors and Consultants. Incentive Stock Options
may be granted only to Employees. If
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otherwise eligible, an Employee or Consultant who has been granted an
Option or Stock Purchase Right may be granted additional Options or Stock
Purchase Rights.
6. Limitations.
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(a) Each Option shall be designated in the Notice of Grant as either an
Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate
Fair Market Value:
(i) of Shares subject to an Optionee's incentive stock options
granted by the Company, any Parent or Subsidiary, which (ii) become
exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory
Stock Options. For purposes of this Section 6(a), incentive stock
options shall be taken into account in the order in which they were
granted, and the Fair Market Value of the Shares shall be determined
as of the time of grant.
(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's
employment or consulting relationship with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right
to terminate such employment or consulting relationship at any time,
with or without cause.
(c) The following limitations shall apply to grants of Options and Stock
Purchase Rights to Officers:
(i) no Officer shall be granted in any fiscal year of the Company,
Options and Stock Purchase Rights to purchase more than the number of
shares issuable under the Plan; and
(ii) over the remaining term of the Plan, no Officer shall be granted
Options and Stock Purchase Rights to purchase more than the number of
shares issuable under the Plan.
The foregoing limitations set forth in this Section 6(c) are intended
to satisfy the requirements applicable to Options and Stock Purchase
Rights intended to qualify as "performance-based compensation" (within
the meaning of Section 162(m) of the Code). In the event the
Administrator determines that such limitations are not required to
qualify Options and Stock Purchase Rights as performance-based
compensation, the Administrator may modify or eliminate such
limitations.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
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effective upon its adoption by the Board of Directors on October 28,1993,
subject to its approval by the shareholders of the Company as described in
Section 19 of the Plan. It shall continue in effect for a term of ten (10)
years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice of
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Grant; provided, however, that in the case of an Incentive Stock Option,
the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant. Moreover, in the case of
an Incentive Stock Option granted to an Optionee who, at the time the
Incentive Stock
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Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five (5) years
from the date of grant or such shorter term as may be provided in the
Notice of Grant.
9. Option Exercise Price and Consideration.
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(a) Exercise Price. The per share exercise price for the Shares to be
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issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall
be no less than 110% of the Fair Market Value per Share on the
date of grant.
(B) granted to any Employee, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
(b) Waiting Period and Exercise Dates. At the time an Option is granted,
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the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied
before the Option may be exercised. In so doing, the Administrator
may specify that an Option may not be exercised until the completion
of a service period.
(c) Form of Consideration. The Administrator shall determine the
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acceptable form of consideration for exercising an Option, including
the method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee
for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate
Exercise Price of the Exercised Shares; or
(v) delivery of Optionee's promissory note (the "Note") in the form
attached hereto as Exhibit C, in the amount of the aggregate Exercise
Price of the Exercised Shares together with the execution and delivery
by the Optionee of the Security Agreement attached hereto as Exhibit
B. The Note shall bear interest at a rate no less than the "applicable
federal rate" prescribed under the Code and its regulations at time of
purchase, and shall
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be secured by a pledge of the Shares purchased by the Note pursuant to
the Security Agreement.
(iv) any combination of the foregoing methods of payment; or
(v) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
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(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
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hereunder shall be exercisable according to the terms of the Plan and
at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement)
from the person entitled to exercise the Option, and (ii) full payment
for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Option Agreement
and the Plan. Shares issued upon exercise of an Option shall be issued
in the name of the Optionee or, if requested by the Optionee, in the
name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for
a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13
of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Employment or Consulting Relationship. In the event
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that an Optionee's Continuous Status as an Employee or Consultant
terminates (but not in the event of a change of status from Employee
to Consultant (in which case an Employee's Incentive Stock Option
shall automatically convert to a Nonstatutory Stock Option on the
ninety-first (91st) day following such change of status) or from
Consultant to Employee), other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option, but only
within such period of time as is determined by the Administrator, and
only to the extent that the Optionee was entitled to exercise it at
the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant). In the
case of an Incentive Stock Option, the Administrator shall determine
such period of time (in no event to exceed three (3) months from the
date of termination) when the Option is granted. If, at the date of
termination, the Optionee is not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion of the
Option shall revert to the Plan. If, after termination, the Optionee
does not exercise his or
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her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to
the Plan.
(c) Disability of Optionee. Notwithstanding the provisions of Section
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10(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code),
Optionee may, but only within such period of time as is determined by
the Administrator, of at least six (6) months (with such period of
time in the case of an Incentive Stock Option not exceeding twelve
(12) months) from the date of such termination (but in no event later
than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the
date of termination, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option
shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
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(i) during the term of the Option who is at the time of his or her
death an Employee or Consultant of the Company and who shall have been
in Continuous Status as an Employee or Consultant since the date of
grant of the Option, the Option may be exercised by the Optionee's
estate or by a person who acquired the right to exercise the Option by
bequest or inheritance until the term of the option, or such shorter
period as is set forth in the option agreement, expires, and the
Option shall be treated for exercise purposes as if the Optionee had
continued living and had remained in Continuous Status as an Employee
or Consultant for six (6) months after the date of death; or
(ii) after the termination of an Optionee's Continuous Status as an
Employee or Consultant, the Option may be exercised by the Optionee's
estate or by a person who acquired the right to exercise the Option by
bequest or inheritance until the term of the option, or such shorter
period as is set forth in the option agreement, expires, and the
Option shall be treated for exercise purposes as if the Optionee had
continued living and had remained in Continuous Status as an Employee
or Consultant through the date of Optionee's death; and
(iii) if an Option is not exercised within the time specified herein,
the Option shall terminate.
(e) Buyout Provisions. The Administrator may at any time offer to buy out
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for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
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(a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
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in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it
shall advise the offeree in writing, by means of a Notice of Grant, of
the terms, conditions and restrictions related to the offer, including
the number of Shares that the offeree shall be entitled to purchase,
the price to be paid, and the time within which the offeree must
accept such offer, which shall in no event exceed six (6) months from
the
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date upon which the Administrator made the determination to grant the
Stock Purchase Right. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the
Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise, the
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Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any
reason (including death or Disability). The purchase price for Shares
repurchased pursuant to the Restricted Stock purchase agreement shall
be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
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contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock Purchase
Agreements need not be the same with respect to each purchaser.
(d) Rights as a Shareholder. Once the Stock Purchase Right is exercised,
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the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is
entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Stock Purchase Right is
exercised, except as provided in Section 13 of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. An Option or
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Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset Sale
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or Change of Control.
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(a) Changes in Capitalization. Subject to any required action by the
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shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option and Stock Purchase Right, and the
number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Stock Purchase
Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right,
as well as the price per share of Common Stock covered by each such
outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares
of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt
of consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof
shall be
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made with respect to, the number or price of shares of Common Stock
subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
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or liquidation of the Company, to the extent that an Option or Stock
Purchase Right has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. The
Board may, in the exercise of its sole discretion in such instances,
declare that any Option or Stock Purchase Right shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise
his or her Option or Stock Purchase Right as to all or any part of the
Optioned Stock, including Shares as to which the Option or Stock
Purchase Right would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
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hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right shall be substituted by the
successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation does not
agree to assume the Option or Stock Purchase Right or to substitute an
equivalent option or right, the Administrator shall, in lieu of such
assumption or substitution, provide for the Optionee to have the right
to exercise the Option or Stock Purchase Right as to all or a portion
of the Optioned Stock, including Shares as to which it would not
otherwise be exercisable. If the Administrator makes an Option or
Stock Purchase Right exercisable in lieu of assumption or substitution
in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option or Stock Purchase Right shall be
fully exercisable for a period of fifteen (15) days from the date of
such notice, and the Option or Stock Purchase Right will terminate
upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered
assumed if, following the merger or sale of assets, the option or
right confers the right to purchase, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets
by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the
Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common
stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.
(d) Change in Control. In the event of a "Change in Control" of the
-----------------
Company, as defined in paragraph (e) below, then the following
acceleration and valuation provisions shall apply:
(i) Except as otherwise determined by the Administrator, in its
discretion, prior to or after the occurrence of a Change in Control,
any Options and Stock Purchase Rights outstanding on the date such
Change in Control is determined to have occurred that are not yet
exercisable and vested on such date shall become fully exercisable and
vested;
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(ii) Except as otherwise determined by the Administrator, in its
discretion, prior to or after the occurrence of a Change in Control,
all outstanding Options and Stock Purchase Rights, to the extent they
are exercisable and vested (including Options and Stock Purchase
Rights that shall become exercisable and vested pursuant to
subparagraph (i) above), shall be terminated in exchange for a cash
payment equal to the Change in Control Price, (reduced by the exercise
price applicable to such Options or Stock Purchase Rights). These
cash proceeds shall be paid to the Optionee or, in the event of death
of an Optionee prior to payment, to the estate of the Optionee or to a
person who acquired the right to exercise the Option or Stock Purchase
Right by bequest or inheritance.
(e) Definition of "Change in Control". For purposes of this Section 13, a
---------------------------------
"Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a
Company employee benefit plan, including any trustee of such plan
acting as trustee) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than twenty-five percent
(25%) of the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors; or
(ii) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least seventy-five percent (75%) of the total voting power represented
by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets; or
(iii) A change in the composition of the Board of Directors of the
Company occurring within a two-year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are directors of the
Company as of the date the Plan is approved by the stockholders, or
(B) are elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to
the election of directors to the Company).
(f) Change in Control Price. For purposes of this Section 13, "Change in
-----------------------
Control Price" shall be, as determined by the Board, (i) the highest
Fair Market Value of a Share within the 60 day period immediately
preceding the date of determination of the Change in Control Price by
the Board (the "60-Day Period"), or (ii) the highest price paid or
offered per Share, as determined by the Board, in any bona fide
transaction or bona fide offer related to the Change in Control of the
Company, at any time within the 60-Day Period, or (iii) some lower
price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
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14. Date of Grant. The date of grant of an Option or Stock Purchase Right
-------------
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend, alter,
-------------------------
suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval
--------------------
of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule
or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common
Stock is listed or quoted). Such shareholder approval, if required,
shall be obtained in such a manner and to such a degree as is required
by the applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by
the Optionee and the Company.
16. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the exercise
----------------
of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such
Shares shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder,
Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted,
and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and
warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
17. Liability of Company.
--------------------
(a) Inability to Obtain Authority. The inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been
obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an
--------------------------------
Option or Stock Purchase Right exceeds, as of the date of grant, the
number of Shares which may be
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issued under the Plan without additional shareholder approval, such
Option or Stock Purchase Right shall be void with respect to such
excess Optioned Stock, unless shareholder approval of an amendment
sufficiently increasing the number of Shares subject to the Plan is
timely obtained in accordance with Section 15(b) of the Plan.
18. Reservation of Shares. The Company, during the term of this Plan, will at
---------------------
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Shareholder Approval. Continuance of the Plan shall be subject to approval
--------------------
by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be
obtained in the manner and to the degree required under applicable federal
and state law.
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