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EXHIBIT 4.7
INPUT/OUTPUT, INC.
2000 LONG-TERM INCENTIVE PLAN
SECTION 1.
GENERAL PROVISIONS RELATING
TO PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1 PURPOSE
The purpose of the Plan is to foster and promote the long-term financial
success of Input/Output, Inc. (the "COMPANY") and its Subsidiaries and to
increase stockholder value by: (a) encouraging the commitment of selected key
Employees and Consultants, (b) motivating superior performance of key Employees
and Consultants by means of long-term performance related incentives, (e)
encouraging and providing key Employees and Consultants with a program for
obtaining ownership interests in the Company which link and align their personal
interests to those of the Company's stockholders, (d) attracting and retaining
key Employees and Consultants by providing competitive incentive compensation
opportunities, and (e) enabling key Employees and Consultants to share in the
long- term growth and success of the Company.
The Plan provides for payment of various forms of incentive compensation.
It is not intended to be a plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended (ERISA). The Plan will be interpreted,
construed and administered consistent with its status as a plan that is not
subject to ERISA.
Subject to approval by the Company's stockholders pursuant to Section 6.1,
the Plan will become effective as of July 1, 2000 (the "EFFECTIVE DATE"). The
Plan will commence on the Effective Date, and will remain in effect, subject to
the right of the Board to amend or terminate the Plan at any time pursuant to
Section 6.7, until all Shares subject to the Plan have been purchased or
acquired according to its provisions. However, in no event may an Incentive
Award that is an Incentive Stock Option be granted under the Plan after the
expiration of ten (10) years from the Effective Date.
1.2 DEFINITIONS
The following terms shall have the meanings set forth below:
(a) APPRECIATION. The difference between the Fair Market Value of a
share of Common Stock on the date of exercise of a Tandem SAR and the
option exercise price per share of the Nonstatutory Stock Option to which
the Tandem SAR relates.
(b) AUTHORIZED OFFICER. The Chairman of the Board, the CEO or any
other senior officer of the Company to whom either of them delegate the
authority to execute any Incentive Agreement for and on behalf of the
Company. No officer or director shall be an Authorized Officer with respect
to any Incentive Agreement for himself.
(c) BOARD. The Board of Directors of the Company.
(d) CAUSE. When used in connection with the termination of a Grantee's
Employment, shall mean the termination of the Grantee's Employment or
Grantee's services as a Consultant by the Company or any Subsidiary by
reason of (i) the conviction of the Grantee by a court of competent
jurisdiction as to which no further appeal can be taken of a crime
involving moral turpitude or a felony; (ii) the proven commission by the
Grantee of a material act of fraud upon the Company or any Subsidiary, or
any customer or supplier thereof; (iii) the willful and proven
misappropriation of any funds or property of the Company or any Subsidiary,
or any customer or supplier thereof; (iv) the willful, continued and
unreasonable failure by the Grantee to perform the material duties assigned
to him which is not cured to the reasonable satisfaction of the Company
within 30 days after written notice of such failure is provided to Grantee
by the Board or by a designated officer of the Company or a Subsidiary; (v)
the knowing engagement by the Grantee in any direct and material conflict
of interest with the Company or any Subsidiary without compliance with the
Company's or Subsidiary's conflict of interest policy, if any, then in
effect; or (vi) the knowing engagement by the Grantee, without the written
approval of the Board, in any material activity which competes with the
business of the Company or any Subsidiary or which would result in a
material injury to the business, reputation or goodwill of the Company or
any Subsidiary; or (vii) the material breach by a Consultant of such
Grantee's contract with the Company.
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(e) CEO. The Chief Executive Officer of the Company.
(f) CHANGE IN CONTROL. Any of the events described in and subject to
Section 5.7.
(g) CODE. The Internal Revenue Code of 1986, as amended, and the
regulations and other authority promulgated thereunder by the appropriate
governmental authority. References herein to any provision of the Code
shall refer to any successor provision thereto.
(h) COMMITTEE. A committee appointed by the Board consisting of at
least two directors, who fulfill the "outside directors" requirements of
Section 162(m) of the Code, to administer the Plan. The Committee may be
the Compensation Committee of the Board, or any subcommittee of the
Compensation Committee.
The Board shall have the power to fill vacancies on the Committee
arising by resignation, death, removal or otherwise. The Board, in its sole
discretion, may bifurcate the powers and duties of the Committee among one
or more separate committees, or retain all powers and duties of the
Committee in a single Committee. The members of the Committee shall serve
at the discretion of the Board.
(i) COMMON STOCK. The common stock of the Company, $.01 per value per
share, and any class of common stock into which such common shares may
hereafter be converted, reclassified, re-capitalized, or exchanged.
(j) COMPANY. Input/Output, Inc., Inc., a corporation organized under
the laws of the State of Delaware, and any successor in interest thereto.
(k) CONSULTANT. An independent agent, consultant, attorney, an
individual who has agreed to become an Employee within the next six months,
or any other individual who is not a Director or employee of the Company
(or any Parent or Subsidiary) and who, in the opinion of the Committee, is
in a position to contribute to the growth or financial success of the
Company (or any Parent or Subsidiary), (ii), is a natural person and (iii)
provides bona fide services to the Company (or any Parent or Subsidiary),
which services are not in connection with the offer or sale of securities
in a capital raising transaction, and do not directly or indirectly promote
or maintain a market for the Company's securities.
(l) COVERED EMPLOYEE. A named executive officer who is one of the
group of covered employees, as defined in Section 162(m) of the Code and
Treasury Regulation ss. 1.162-27(c) (or its successor), during any such
period that the Company is a Publicly Held Corporation.
(m) DEFERRED STOCK. Shares of Common Stock to be issued or transferred
to a Grantee under an Other Stock-Based Award granted pursuant to Section
4. at the end of a specified deferral period, as set forth in the Incentive
Agreement pertaining thereto.
(n) DISABILITY. As determined by the Committee in its discretion
exercised in good faith, a physical or mental condition of the Employee
that would entitle him to disability income payments under the Company's
long term disability insurance policy or plan for employees, as then
effective, if any; or in the event that the Grantee is not covered, for
whatever reason, under the Company's long-term disability insurance policy
or plan, "Disability" means a permanent and total disability as defined in
Section 22(e)(3) of the Code. A determination of Disability may be made by
a physician selected or approved by the Committee and, in this respect, the
Grantee shall submit to any reasonable examination by such physician upon
request.
(o) EMPLOYEE. Any employee of the Company (or any Parent or
Subsidiary) within the meaning of Section 3401(c) of the Code who, in the
opinion of the Committee, is in a position to contribute to the growth,
development or financial success of the Company (or any Parent or
Subsidiary), including, without limitation, officers who are members of the
Board.
(p) EMPLOYMENT. Employment by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Incentive Award
in any transaction described in Section 424(a) of the Code, or by a parent
corporation or a subsidiary corporation of such corporation issuing or
assuming such Incentive Award, as the parent-subsidiary relationship shall
be determined at the time of the corporate action described in Section
424(a) of the Code. In this regard, neither the transfer of a Grantee from
Employment by the Company to Employment by any Parent or Subsidiary, nor
the transfer of a Grantee from Employment by any Parent or Subsidiary to
Employment by the Company, shall be deemed to be a termination of
Employment of the Grantee. Moreover, the Employment of a Grantee shall not
be deemed to have been terminated because of an approved leave of absence
from active Employment on account of temporary illness, authorized vacation
or granted for reasons of
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professional advancement, education, health, government service or military
leave, or during any period required to be treated as a leave of absence by
virtue of any applicable statute, Company personnel policy or agreement.
Whether an authorized leave of absence shall constitute termination of
Employment hereunder shall be determined by the Committee in its
discretion.
Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan is also defined to include
compensatory or advisory services performed by a Consultant for the Company
(or any Parent or Subsidiary).
(q) EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
(r) FAIR MARKET VALUE. While the Company is a Publicly Held
Corporation, the Fair Market Value of one share of Common Stock on the date
in question is deemed to be the closing sales price on the immediately
preceding business day of a share of Common Stock as reported on the New
York Stock Exchange or other principal securities exchange on which Shares
are then listed or admitted to trading, or as quoted on any national
interdealer quotation system, if such shares are not so listed.
(s) GRANTEE. Any Employee or Consultant who is granted an Incentive
Award under the Plan.
(t) IMMEDIATE FAMILY. With respect to a Grantee, the Grantee's child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister- in-law, including adoptive relationships.
(u) INCENTIVE AWARD. A grant of an award under the Plan to a Grantee,
including any Nonstatutory Stock Option, Incentive Stock Option, Reload
Option, Stock Appreciation Right, Performance Share, or Other Stock-Based
Award, as well as any Supplemental Payment.
(v) INCENTIVE AGREEMENT. The written agreement entered into between
the Company and the Grantee setting forth the terms and conditions pursuant
to which an Incentive Award is granted under the Plan, as such agreement is
further defined in Section 5. 1 (a).
(w) INCENTIVE STOCK OPTION OR ISO. A Stock Option granted by the
Committee to an Employee under Section 2 which is designated by the
Committee as an Incentive Stock Option and intended to qualify as an
Incentive Stock Option under Section 422 of the Code.
(x) INDEPENDENT SAR. A Stock Appreciation Right described in
Section 2.5.
(y) INSIDER. While the Company is a Publicly Held Corporation, 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.
(z) NONSTATUTORY STOCK OPTION. A Stock Option granted by the Committee
to a Grantee under Section 2 that is not designated by the Committee as an
Incentive Stock Option or to which Section 421 of the Code does not apply.
(aa) OPTION PRICE. The exercise price at which a Share may be
purchased by the Grantee of a Stock Option.
(bb) OTHER STOCK-BASED AWARD. An award granted by the Committee to a
Grantee under Section 2 that is valued in whole or in part by reference to,
or is otherwise based upon, Common Stock.
(cc) PARENT. Any corporation (whether now or hereafter existing) which
constitutes a "Parent" of the Company, as defined in Section 424(e) of the
Code.
(dd) PERFORMANCE-BASED EXCEPTION. The performance-based exception from
the tax deductibility limitations of Section 162(m) of the Code, as
prescribed in Code ss. 162(m) and Treasury Regulation ss. 1.162-27(e) (or
its successor), which is applicable during such period that the Company is
a Publicly Held Corporation.
(ee) PERFORMANCE PERIOD. A period of time determined by the Committee
over which performance is measured for the purpose of determining a
Grantee's right to and the payment value of any Performance Share or Other
Stock-Based Award.
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(ff) PERFORMANCE SHARE. An Incentive Award representing a contingent
right to receive shares of Common Stock at the end of a Performance Period.
(gg) PLAN. Input/Output, Inc. 2000 Long-Term Incentive Plan, as set
forth herein and as it may be amended from time to time.
(hh) PUBLICLY HELD CORPORATION. A corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act.
(ii) RETIREMENT. The voluntary termination of Employment from the
Company or any Parent or Subsidiary constituting retirement for age on any
date after the Employee attains the normal retirement age of 65 years, or
such other age as may be designated by the Committee in the Employee's
Incentive Agreement.
(jj) SHARE. A share of Common Stock of the Company.
(kk) SHARE POOL. The number of shares authorized for issuance under
Section 1.4 as adjusted for awards and payouts under Section 1.5 and as
adjusted for changes in corporate capitalization under Section 5.5.
(ll) SPREAD. The difference between the exercise price per Share
specified in any SAR grant and the Fair Market Value of a Share on the date
of exercise of the SAR.
(mm) STOCK APPRECIATION RIGHT OR SAR. A Tandem SAR described in
Section 2.4 or an Independent SAR described in Section 2.5.
(nn) STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an Incentive
Stock Option granted to an Employee, or (ii) a Nonstatutory Stock Option
granted to an Employee or Consultant, whereunder such option the Grantee
has the right to purchase Shares of Common Stock. In accordance with
Section 422 of the Code, only an Employee of the Company, Parent or
Subsidiary may be granted an Incentive Stock Option.
(oo) SUBSIDIARY. Any corporation (whether now or hereafter existing)
which constitutes a "subsidiary" of the Company, as defined in Section
424(f) of the Code.
(pp) SUPPLEMENTAL PAYMENT. Any amount, as described in Sections 2.7,
and/or 3.2, that is dedicated to payment of income taxes which are payable
by the Grantee resulting from an Incentive Award.
(qq) TANDEM SAR. A Stock Appreciation Right that is granted in
connection with a related Stock Option pursuant to Section 2.4, the
exercise of which shall require forfeiture of the right to purchase a Share
under the related Stock Option (and when a Share is purchased under the
Stock Option, the Tandem SAR with respect thereto, shall similarly be
canceled).
1.3 PLAN ADMINISTRATION
(a) AUTHORITY OF THE COMMITTEE. Except as may be limited by law and subject
to the provisions herein, the Committee shall have full power to (i) select
Grantees who shall participate in the Plan; (ii) determine the sizes, duration
and types of Incentive Awards; (iii) determine the terms and conditions of
Incentive Awards and Incentive Agreements; (iv) determine whether any Shares
subject to Incentive Awards will be subject to any restrictions on transfer; (v)
construe and interpret the Plan and any Incentive Agreement or other agreement
entered into under the Plan; and (vi) establish, amend, or waive rules for the
Plan's administration. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of the
Plan.
(b) MEETINGS. The Committee shall designate a chairman from among its
members who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
such times and places as shall be determined by the Committee and the Committee
may hold telephonic meetings.
(c) DECISIONS BINDING. All determinations and decisions made by the
Committee shall be made in its discretion pursuant to the provisions of the
Plan, and shall be final, conclusive and binding on all persons including the
Company, Employees, Grantees, and their estates and beneficiaries. The
Committee's decisions and determinations with respect to any
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Incentive Award need not be uniform and may be made selectively among Incentive
Awards and Grantees, whether or not such Incentive Awards are similar or such
Grantees are similarly situated.
(d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to the
stockholder approval requirements of Section 6.7 if applicable, the Committee
may, in its discretion, provide for the extension of the exercisability of an
Incentive Award, accelerate the vesting or exercisability of an Incentive Award,
eliminate or make less restrictive any restrictions contained in an Incentive
Award, waive any restriction or other provisions of an Incentive Award, or
otherwise amend or modify an Incentive Award in any manner that is either (i)
not adverse to the Grantee to whom such Incentive Award was granted or (ii)
consented to by such Grantee. With respect to an Incentive Award that is an
incentive stock option (as described in Section 422 of the Code), no adjustment
to such option shall be made to the extent constituting a "modification" within
the meaning of Section 424(h)(3) of the Code unless otherwise agreed to by the
optionee in writing.
(e) DELEGATION OF AUTHORITY. The Committee may delegate to designated
officers or other employees of the Company any of its duties and authority under
the Plan pursuant to such conditions or limitations as the Committee may
establish from time to time; provided, however, the Committee may not delegate
to any person the authority to (i) grant Incentive Awards, or (ii) take any
action which would contravene the requirements of Rule 16b-3 under the Exchange
Act or the Performance-Based Exception under Section 162(m) of the Code.
(f) EXPENSES OF COMMITTEE. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel regularly
employed by the Company, and other agents, as the Committee may deem appropriate
for the administration of the Plan. The Committee may rely upon any opinion or
computation received from any such counsel or agent. All expenses incurred by
the Committee in interpreting and administering the Plan, including, without
limitation, meeting expenses and professional fees, shall be paid by the
Company.
(g) INDEMNIFICATION. Each person who is or was a member of the Committee,
or of the Board, shall be indemnified by the Company against and from any
damage, loss, liability, cost and expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by reason
of any action taken or failure to act under the Plan, except for any such act or
omission constituting willful misconduct or gross negligence. Such person shall
be indemnified by the Company for all amounts paid by him in settlement thereof,
with the Company's approval, or paid by him in satisfaction of any judgment in
any such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his 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 Articles or Certificate
of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
(h) AWARDS IN FOREIGN COUNTRIES. The Board shall have the authority to
adopt modifications, procedures, sub-plans, and other similar plan documents as
may be necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its subsidiaries may operate to assure the
viability of the benefits of Incentive Awards made to individuals employed in
such countries and to meet the objectives of the Plan.
1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS
Subject to adjustment under Section 5.5, there shall be available for
Incentive Awards that are granted wholly or partly in Common Stock (including
rights or Options that may be exercised or settled in Common Stock) 1,200,000
Shares of Common Stock. In addition to the 1,200,000 Shares reserved pursuant to
the previous sentence, there also be available for grants of Incentive Awards
under the Plan, an additional 909,275 Shares which represents the number of
Shares that were reserved under the Company's now terminated Amended and
Restated 1990 Stock Option Plan (but not covered by exercised or outstanding
options thereunder) and have been assumed under this Plan as of the Effective
Date.
The number of Shares of Common Stock that are the subject of Incentive
Awards under this Plan, that are forfeited or terminated, expire unexercised,
are settled in cash in lieu of Common Stock or in a manner such that all or some
of the Shares covered by an Incentive Award are not issued to a Grantee or are
exchanged for Incentive Awards that do not involve Common Stock, shall again
immediately become available for Incentive Awards hereunder; provided, however,
the aggregate number of Shares which may be issued upon exercise of ISOs shall
in no event exceed 1,200,000 Shares (subject to adjustment pursuant to Section
5.5). The Committee may from time to time adopt and observe such procedures
concerning the counting of Shares against the Plan maximum as it may deem
appropriate.
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While the Company is a Publicly Held Corporation, then unless and until the
Committee determines that a particular Incentive Award granted to a Covered
Employee is not intended to comply with the Performance-Based Exception which
shall be done in accordance with the time periods in Code Section 162(m) and the
regulations thereunder, the following rules shall apply to grants of Incentive
Awards to Covered Employees:
(a) Subject to adjustment as provided in Section 5.5, the maximum
aggregate number of Shares of Common Stock (including Stock Options, SARS,
Performance Shares paid out in Shares, or Other Stock-Based Awards paid out
in Shares) that may be granted or that may vest, as applicable, in any
consecutive four year period pursuant to any Incentive Awards held by any
individual Covered Employee shall be 1,200,000 Shares.
(b) The maximum aggregate cash payout (including SARS and Performance
Shares paid out in cash, or Other Stock- Based Awards paid out in cash)
with respect to Incentive Awards granted in any calendar year which may be
made to any Covered Employee shall be Twenty Million dollars ($20,000,000).
(c) With respect to any Stock Option or Stock Appreciation Right
granted to a Covered Employee that is canceled, the number of Shares
subject to such Stock Option or Stock Appreciation Right shall continue to
count against the maximum number of Shares that may be the subject of Stock
Options or Stock Appreciation Rights granted to such Covered Employee
hereunder and, in this regard, such maximum number shall be determined in
accordance with Section 162(m) of the Code.
1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS.
The following Incentive Awards and payouts shall reduce, on a one Share for
one Share basis, the number of Shares authorized for issuance under the Share
Pool:
(a) Stock Option;
(b) SAR (except a Tandem SAR);
(c) A payout of a Performance Share in Shares;
(d) A payout of an Other Stock-Based Award in Shares.
The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:
(a) A payout of an SAR or Other Stock-Based Award in the form of cash;
(b) A cancellation, termination, expiration, forfeiture, or lapse for
any reason (with the exception of the termination of a Tandem SAR upon
exercise of the related Stock Option, or the termination of a related Stock
Option upon exercise of the corresponding Tandem SAR) of any Shares subject
to an Incentive Award; and
(c) Payment of an Option Price with previously acquired Shares or by
withholding Shares which otherwise would be acquired on exercise (i.e., the
Share Pool shall be increased by the number of Shares turned in or withheld
as payment of the Option Price plus any Shares withheld to pay withholding
taxes).
1.6 COMMON STOCK AVAILABLE.
The Common Stock available for issuance or transfer under the Plan shall be
made available from Shares now or hereafter (a) held in the treasury of the
Company, (b) authorized but unissued shares, or (c) shares to be purchased or
acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.
1.7 PARTICIPATION
(a) ELIGIBILITY. The Committee shall from time to time designate those
Employees or Consultants, if any, to be granted Incentive Awards under the
Plan, the type of Incentive Awards granted, the number of Shares, Stock
Options, rights, as the case may be, which shall be granted to each such
person, and any other terms or conditions relating to the Incentive Awards
as it
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may deem appropriate to the extent consistent with the provisions of the
Plan. A Grantee, who has been granted an Incentive Award may, if otherwise
eligible, be granted additional Incentive Awards at any time.
(b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant shall be
eligible for the grant of any Incentive Stock Option. In addition, no
Employee shall be eligible for the grant of any Incentive Stock Option who
owns or would own immediately before the grant of such Incentive Stock
Option, directly or indirectly, stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company, or any Parent or Subsidiary. This restriction does not apply if,
at the time such Incentive Stock Option is granted, the Incentive Stock
Option exercise price is at least one hundred and ten percent (110%) of the
Fair Market Value on the date of grant and the Incentive Stock Option by
its terms is not exercisable after the expiration of five (5) years from
the date of grant. For the purpose of the immediately preceding sentence,
the attribution rules of Section 424(d) of the Code shall apply for the
purpose of determining an Employee's percentage ownership in the Company or
any Parent or Subsidiary. This paragraph shall be construed consistent with
the requirements of Section 422 of the Code.
1.8 TYPES OF INCENTIVE AWARDS
The types of Incentive Awards under the Plan are Stock Options, Stock
Appreciation Rights and Supplemental Payments as described in Section 2,
Performance Shares and Supplemental Payments as described in Section 3, Other
Stock-Based Awards and Supplemental Payments as described in Section 5, and any
combination of the foregoing.
SECTION 2.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 GRANT OF STOCK OPTIONS
The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees or Consultants and (b) Incentive Stock Options to Employees only, in
accordance with the terms and conditions of the Plan, and with such additional
terms and conditions, not inconsistent with the Plan, as the Committee shall
determine in its discretion. Successive grants may be made to the same Grantee
whether or not any Stock Option previously granted to such person remains
unexercised.
2.2 STOCK OPTION TERMS
(a) WRITTEN AGREEMENT. Each grant of a Stock Option shall be evidenced
by a written Incentive Agreement. Among its other provisions, each
Incentive Agreement shall set forth, subject to Section 422 of the Code,
the extent to which the Grantee shall have the right to exercise the Stock
Option following termination of the Grantee's Employment. Such provisions
shall be determined in the discretion of the Committee, shall be included
in the Grantee's Incentive Agreement, and need not be uniform among all
Stock Options issued pursuant to the Plan.
(b) NUMBER OF SHARES. Each Stock Option shall specify the number of
Shares of Common Stock to which it pertains.
(c) EXERCISE PRICE. The exercise price per Share of Common Stock under
each Stock Option shall be determined by the Committee; provided, however,
that in the case of an Incentive Stock Option, such exercise price shall
not be less than 100% of the Fair Market Value per Share on the date the
Incentive Stock Option is granted (110% for 10% or greater shareholders
pursuant to Section 1.7(b)). To the extent that the Company is a Publicly
Held Corporation and the Stock Option is intended to qualify for the
Performance-Based Exception, the exercise price shall not be less than 100%
of the Fair Market Value per Share on the date the Stock Option is granted.
Each Stock Option shall specify the method of exercise which shall be
consistent with the requirements of Section 2.3(a).
(d) TERM. In the Incentive Agreement, the Committee shall fix the term
of each Stock Option which shall be not more than ten (10) years from the
date of grant (five years for ISO grants to 10% or greater shareholders
pursuant to Section 1.7(b)). In the event no term is fixed, such term shall
be ten (10) years from the date of grant.
(e) EXERCISE. The Committee shall determine the time or times at which
a Stock Option may be exercised in whole or in part. Each Stock Option may
specify the required period of continuous Employment and/or the performance
objectives to be achieved before the Stock Option or portion thereof will
become exercisable. Each Stock Option, the exercise of which, or the timing
of the exercise of which, is dependent, in whole or in part, on the
achievement of designated performance objectives,
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may specify a minimum level of achievement in respect of the specified
performance objectives below which no Stock Options will be exercisable and
a method for determining the number of Stock Options that will be
exercisable if performance is at or above such minimum but short of full
achievement of the performance objectives. All such terms and conditions
shall be set forth in the Incentive Agreement.
(f) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. Notwithstanding
any contrary provision in the Plan, to the extent that the aggregate Fair
Market Value (determined as of the time the Incentive Stock Option is
granted) of the Shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any Grantee during any
single calendar year (under the Plan and any other stock option plans of
the Company and its Subsidiaries or Parent) exceeds the sum of $100,000,
such Incentive Stock Option shall be treated as a Nonstatutory Stock Option
to the extent in excess of the $ 100,000 limit, and not an Incentive Stock
Option, but all other terms and provisions of such Stock Option shall
remain unchanged. This paragraph shall be applied by taking Incentive Stock
Options into account in the order in which they were granted and shall be
construed in accordance with Section 422(d) of the Code. In the absence of
such regulations or other authority, or if such regulations or other
authority require or permit a designation of the Options which shall cease
to constitute Incentive Stock Options, then such Incentive Stock Options,
only to the extent of such excess, shall automatically be deemed to be
Nonstatutory Stock Options but all other terms and conditions of such
Incentive Stock Options, and the corresponding Incentive Agreement, shall
remain unchanged.
2.3 STOCK OPTION EXERCISES
(a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be exercised
by the delivery of a signed written notice of exercise to the Company as of
a date set by the Company in advance of the effective date of the proposed
exercise. The notice shall set forth the number of Shares with respect to
which the Option is to be exercised.
The Option Price upon exercise of any Stock Option shall be payable to
the Company in full either: (i) in cash or its equivalent, or (ii) by
tendering previously acquired Shares having an aggregate Fair Market Value
at the time of exercise equal to the Option Price, or (iii) 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,
or (iv) by any combination of (i), (ii), and (iii) above. Any payment in
Shares shall be effected by surrender of such Shares to the Company in good
form for transfer and shall be valued at their Fair Market Value on the
date when the Stock Option is exercised. The Company shall not withhold
shares, and the Grantee shall not surrender, or attest to the ownership of,
Shares in payment of the Option Price if such action would cause the
Company to recognize compensation expense (or additional compensation
expense) with respect to the Stock Option for financial reporting purposes.
While the Company is a Publicly Held Corporation, the Committee may
also allow the Option Price to be paid with such other consideration as
shall constitute lawful consideration for the issuance of Shares
(including, without limitation, effecting a "cashless exercise" with a
broker or dealer), subject to applicable securities law restrictions and
tax withholdings, or by any other means which the Committee determines to
be consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver, or cause to be
delivered, to or on behalf of the Grantee, in the name of the Grantee or
other appropriate recipient, Share certificates for the number of Shares
purchased under the Stock Option. Such delivery shall be effected for all
purposes when the Company or a stock transfer agent of the Company shall
have deposited such certificates in the United States mail, addressed to
Grantee or other appropriate recipient.
Subject to Section 5.2 during the lifetime of a Grantee, each Option
granted to him shall be exercisable only by the Grantee (or his legal
guardian or personal representative in the event of his Disability) or by a
broker or dealer acting on his behalf pursuant to a cashless exercise under
the foregoing provisions of this Section 2.3(a).
(b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of a
Stock Option as it may deem advisable, including, without limitation,
restrictions under (i) any stockholders' agreement, buy/sell agreement,
right of first refusal, non-competition, and any other agreement between
the Company and any of its securities holders or employees, (ii) any
applicable federal securities laws, (iii) the requirements of any stock
exchange or market upon which such Shares are then listed and/or quoted, or
(iv) any blue sky or state securities law applicable to such Shares. Any
certificate issued to evidence Shares issued upon the exercise of an
Incentive Award may bear such legends and statements as the Committee shall
deem advisable to assure compliance with federal and state laws and
regulations.
<PAGE> 9
Any Grantee or other person exercising an Incentive Award may be
required by the Committee to give a written representation that the
Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution;
provided, however, that the Committee, in its sole discretion, may release
any person receiving an Incentive Award from any such representations
either prior to or subsequent to the exercise of the Incentive Award.
(c) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM INCENTIVE
STOCK OPTIONS. Notwithstanding any other provision of the Plan, a Grantee
who disposes of Shares of Common Stock acquired upon the exercise of an
Incentive Stock Option by a sale or exchange either (i) within two (2)
years after the date of the grant of the Incentive Stock Option under which
the Shares were acquired or (ii) within one (1) year after the transfer of
such Shares to him pursuant to exercise, shall promptly notify the Company
of such disposition, the amount realized and his adjusted basis in such
Shares.
(d) PROCEEDS OF OPTION EXERCISE. The proceeds received by the Company
from the sale of Shares pursuant to Stock Options exercised under the Plan
shall be used for general corporate purposes.
(e) INFORMATION REQUIRED IN CONNECTION WITH EXERCISE OF INCENTIVE
STOCK OPTION. The Company shall provide the Grantee with a written
statement required by Code Section 6039 no later than January 31 of the
year following the calendar year during which the Grantee exercises an
Option that is intended to be an Incentive Stock Option.
2.4 STOCK APPRECIATION RIGHTS IN TANDEM WITH NONSTATUTORY STOCK OPTIONS
(a) GRANT. The Committee may, at the time of grant of a Nonstatutory
Stock Option, or at any time thereafter during the term of the Nonstatutory
Stock Option, grant Stock Appreciation Rights with respect to all or any
portion of the Shares of Common Stock covered by such Nonstatutory Stock
Option. A Stock Appreciation Right in tandem with a Nonstatutory Stock
Option is referred to herein as a "Tandem SAR."
(b) GENERAL PROVISIONS. The terms and conditions of each Tandem SAR
shall be evidenced by an Incentive Agreement. The Option Price per Share of
a Tandem SAR shall be fixed in the Incentive Agreement and shall not be
less than one hundred percent (100%) of the Fair Market Value of a Share on
the grant date of the Nonstatutory Stock Option to which it relates.
(c) EXERCISE. A Tandem SAR may be exercised at any time the
Nonstatutory Stock Option to which it relates is then exercisable, but only
to the extent such Nonstatutory Stock Option is exercisable, and shall
otherwise be subject to the conditions applicable to such Nonstatutory
Stock Option. When a Tandem SAR is exercised, the Nonstatutory Stock Option
to which it relates shall terminate to the extent of the number of Shares
with respect to which the Tandem SAR is exercised. Similarly, when a
Nonstatutory Stock Option is exercised, the Tandem SARs relating to the
Shares covered by such Nonstatutory Stock Option exercise shall terminate.
(d) SETTLEMENT. Upon exercise of a Tandem SAR, the holder shall
receive, for each Share specified in the Tandem SAR grant, an amount equal
to the Spread. The Spread shall be payable in cash, Common Stock, or a
combination of both, as specified in the Incentive Agreement. The
Appreciation shall be paid within 30 calendar days of the exercise of the
Tandem SAR. If the Appreciation is to be paid in Common Stock or cash only,
the resulting shares or cash shall be determined dividing (1) by (2), where
(1) is the number of Shares as to which the Tandem SAR is exercised
multiplied by the Appreciation in such shares and (2) is the Fair Market
Value of a Share on the exercise date. If a portion of the Appreciation is
to be paid in Shares, the Share amount shall be determined by calculating
the amount of cash payable pursuant to the preceding sentence then by
dividing (1) as defined herein, minus the amount of cash payable, by (2) as
defined herein.
2.5 STOCK APPRECIATION RIGHTS INDEPENDENT OF NONSTATUTORY STOCK OPTIONS
(a) GRANT. The Committee may grant Stock Appreciation Rights
independent of Nonstatutory Stock Options ("Independent SARs").
(b) GENERAL PROVISIONS. The terms and conditions of each Independent
SAR shall be evidenced by an Incentive Agreement. The exercise price per
share of Common Stock shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share of Common Stock on the date of grant of
the Independent SAR. The term of an Independent SAR shall be determined by
the Committee.
<PAGE> 10
(c) EXERCISE. Independent SARs shall be exercisable at such time and
subject to such terms and conditions as the Committee shall specify in the
Incentive Agreement for the Independent SAR grant.
(d) SETTLEMENT. Upon exercise of an Independent SAR, the holder shall
receive, for each Share specified in the Independent SAR grant, an amount
equal to the Spread. The Spread shall be payable in cash, Common Stock, or
a combination of both, as specified in the Incentive Agreement. The Spread
shall be paid within 30 calendar days of the exercise of the Independent
SAR. If the Appreciation is to be paid in Common Stock or cash only, the
resulting shares or cash shall be determined by dividing (1) by (2), where
(1) is the number of Shares as to which the Independent SAR is exercised
multiplied by the Spread in such Shares and (2) is the Fair Market Value of
a Share on the exercise date. If a portion of the Appreciation is to be
paid in Shares, the Share amount shall be determined by calculating the
amount of cash payable pursuant to the preceding sentence then by dividing
(1) as defined herein, minus the amount of cash payable, by (2) as defined
herein.
2.6 RELOAD OPTIONS
At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, Stock Options under the Plan that permit the Grantee to
purchase an additional number of Shares equal to the number of previously owned
Shares surrendered by the Grantee to pay for all or a portion of the Option
Price or taxes upon exercise of his Stock Options. The terms and conditions of
such Stock Options shall be set forth in the Incentive Agreement.
2.7 SUPPLEMENTAL PAYMENT ON EXERCISE OF NONSTATUTORY STOCK OPTIONS OR STOCK
APPRECIATION RIGHTS
The Committee, either at the time of grant or as of the time of exercise of
any Nonstatutory Stock Option or Stock Appreciation Right, may provide in the
Incentive Agreement for a Supplemental Payment by the Company to the Grantee
with respect to the exercise of any Nonstatutory Stock Option or Stock
Appreciation Right. The Supplemental Payment shall be in the amount specified by
the Committee, which amount shall not exceed the amount necessary to pay the
federal and state income tax payable with respect to both the exercise of the
Nonstatutory Stock Option and/or Stock Appreciation Right and the receipt of the
Supplemental Payment, assuming the holder is taxed at either the maximum
effective income tax rate applicable thereto or at a lower tax rate as deemed
appropriate by the Committee. The Committee shall have the discretion to grant
Supplemental Payments that are payable solely in cash or Supplemental Payments
that are payable in cash, Common Stock, or a combination of both, as determined
by the Committee at the time of payment.
SECTION 3.
PERFORMANCE SHARES
3.1 PERFORMANCE BASED AWARDS
(a) GRANT. The Committee is authorized to grant Performance Shares to
selected Grantees who are Employees or Consultants. Each grant of
Performance Shares shall be evidenced by an Incentive Agreement in such
amounts and upon such terms as shall be determined by the Committee. The
Committee may make grants of Performance Shares in such a manner that more
than one Performance Period is in progress concurrently. For each
Performance Period, the Committee shall establish the number of Performance
Shares and their contingent values which may vary depending on the degree
to which performance criteria established by the Committee are met.
(b) PERFORMANCE CRITERIA. The Committee may establish performance
goals applicable to Performance Shares based upon criteria in one or more
of the following categories: (i) performance of the Company as a whole,
(ii) performance of a segment of the Company's business, and (iii)
individual performance. Performance criteria for the Company shall relate
to the achievement of predetermined financial objectives for the Company
and its Subsidiaries on a consolidated basis. Performance criteria for a
segment of the Company's business shall relate to the achievement of
financial and operating objectives of the segment for which the participant
is accountable. Examples of performance criteria shall include (but are not
limited to) pre-tax or after-tax profit levels, including: earnings per
share, earnings before interest and taxes, earnings before interest, taxes,
depreciation and amortization, net operating profits after tax, and net
income; total shareholder return; return on assets, equity, capital or
investment; cash flow and cash flow return on investment; economic value
added and economic profit; growth in earnings per share; levels of
operating expense and maintenance expense or measures of customer
satisfaction and customer service as determined from time to time including
the relative improvement therein. Individual performance criteria shall
relate to a participant's overall performance, taking into account, among
other measures of performance, the attainment of individual goals and
objectives. The performance goals may differ among participants.
<PAGE> 11
(c) MODIFICATION. If the Committee determines, in its discretion
exercised in good faith, that the established performance measures or
objectives are no longer suitable to the Company's objectives because of a
change in the Company's business, operations, corporate structure, capital
structure, or other conditions the Committee deems to be appropriate, the
Committee may modify the performance measures and objectives to the extent
it considers to be necessary. The Committee shall not permit any such
modification that would cause the Performance Shares to fail to qualify for
the Performance-Based Exception, if applicable.
(d) PAYMENT. The basis for payment of Performance Shares for a given
Performance Period shall be the achievement of those performance objectives
determined by the Committee at the beginning of the Performance Period as
specified in the Grantee's Incentive Agreement. If minimum performance is
not achieved for a Performance Period, no payment shall be made and all
contingent rights shall cease. If minimum performance is achieved or
exceeded, the number of Performance Shares may be based on the degree to
which actual performance exceeded the pre-established minimum performance
standards. The amount of payment shall be determined by multiplying the
number of Performance Shares granted at the beginning of the Performance
Period times the final Performance Share value. Payments shall be made, in
the discretion of the Committee as specified in the Incentive Agreement,
solely in Common Stock.
(e) SPECIAL RULE FOR COVERED EMPLOYEES. No later than the ninetieth
(90th) day following the beginning of a Performance Period (or twenty-five
percent (25%) of the Performance Period) the Committee shall establish
performance goals as described in Section 3.1(b) applicable to Performance
Shares awarded to Covered Employees in such a manner as shall permit
payments with respect thereto to qualify for the Performance-Based
Exception, if applicable. If a Performance Share granted to a Covered
Employee is intended to comply with the Performance-Based Exception, the
Committee in establishing performance goals shall comply with Treasury
Regulation ss. 1.162-27(e)(2) (or its successor). As soon as practicable
following the Company's determination of the Company's financial results
for any Performance Period, the Committee shall certify in writing: (i)
whether the Company achieved its minimum performance for the objectives for
the Performance Period, (ii) the extent to which the Company achieved its
performance objectives for the Performance Period, (iii) any other terms
that are material to the grant of Performance Shares, and (iv) the
calculation of the payments, if any, to be paid to each Grantee for the
Performance Period.
3.2 SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE SHARES
The Committee, either at the time of grant or at the time of vesting of
Performance Shares, may provide for a Supplemental Payment by the Company to the
Grantee in an amount specified by the Committee, which amount shall not exceed
the amount necessary to pay the federal and state income tax payable with
respect to both the vesting of such Performance Shares and receipt of the
Supplemental Payment, assuming the Grantee is taxed at either the maximum
effective income tax rate applicable thereto or at a lower tax rate as seemed
appropriate by the Committee. The Committee shall have the discretion to grant
Supplemental Payments that are payable in Common Stock.
SECTION 4.
OTHER STOCK-BASED AWARDS
4.1 GRANT OF OTHER STOCK-BASED AWARDS
Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation, Deferred
Stock, purchase rights, Shares of Common Stock awarded which are not subject to
any restrictions or conditions, convertible or exchangeable debentures, other
rights convertible into Shares, Incentive Awards valued by reference to the
value of securities of or the performance of a specified Subsidiary, division or
department, and settlement in cancellation of rights of any person with a vested
interest in any other plan, fund, program or arrangement that is or was
sponsored, maintained or participated in by the Company or any Parent or
Subsidiary. As is the case with other Incentive Awards, Other Stock-Based Awards
may be awarded either alone or in addition to or in tandem with any other
Incentive Awards.
<PAGE> 12
4.2 OTHER STOCK-BASED AWARD TERMS
(a) WRITTEN AGREEMENT. The terms and conditions of each grant of an
Other Stock-Based Award shall be evidenced by an Incentive Agreement.
(b) PURCHASE PRICE. Except to the extent that an Other Stock-Based
Award is granted in substitution for an outstanding Incentive Award or is
delivered upon exercise of a Stock Option, the amount of consideration
required to be received by the Company shall be either (i) no consideration
other than services actually rendered (in the case of authorized and
unissued shares) or to be rendered, or (ii) in the case of an Other
Stock-Based Award in the nature of a purchase right, consideration (other
than services rendered or to be rendered) at least equal to 50% of the Fair
Market Value of the Shares covered by such grant on the date of grant (or
such percentage higher than 50% that is required by any applicable tax or
securities law).
(c) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion, the
Committee may specify such criteria, periods or goals for vesting in Other
Stock-Based Awards and payment thereof to the Grantee as it shall
determine; and the extent to which such criteria, periods or goals have
been met shall be determined by the Committee. All terms and conditions of
Other Stock- Based Awards shall be determined by the Committee and set
forth in the Incentive Agreement. The Committee may also provide for a
Supplemental Payment similar to such payment as described in Section 3.2.
(d) PAYMENT. Other Stock-Based Awards may be paid in Shares of Common
Stock or other consideration related to such Shares, in a single payment or
in installments on such dates as determined by the Committee, all as
specified in the Incentive Agreement.
(e) DIVIDENDS. The Grantee of an Other Stock-Based Award may be
entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to the number of Shares covered by the
Other Stock-Based Award, as determined by the Committee and set forth in
the Incentive Agreement. The Committee may also provide in the Incentive
Agreement that such amounts (if any) shall be deemed to have been
reinvested in additional Shares of Common Stock.
SECTION 5.
PROVISIONS RELATING TO PLAN PARTICIPATION
5.1 PLAN CONDITIONS
(a) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive Award is
granted shall be required to enter into an Incentive Agreement with the
Company, in such a form as is provided by the Committee. The Incentive
Agreement shall contain specific terms as determined by the Committee, in
its discretion, with respect to the Grantee's particular Incentive Award.
Such terms need not be uniform among all Grantees or any similarly-situated
Grantees. The Incentive Agreement may include, without limitation, vesting,
forfeiture and other provisions particular to the particular Grantee's
Incentive Award, as well as, for example, provisions to the effect that the
Grantee (i) shall not disclose any confidential information acquired during
Employment with the Company, (ii) shall abide by all the terms and
conditions of the Plan and such other terms and conditions as may be
imposed by the Committee, (iii) shall not interfere with the employment or
other service of any employee, (iv) shall not compete with the Company or
become involved in a conflict of interest with the interests of the
Company, (v) shall forfeit an Incentive Award as determined by the
Committee (including if terminated for Cause), (vi) shall not be permitted
to make an election under Section 83(b) of the Code when applicable, and
(vii) shall be subject to any other agreement between the Grantee and the
Company regarding Shares that may be acquired under an Incentive Award
including, without limitation, a stockholders' agreement or other agreement
restricting the transferability of Shares by Grantee. An Incentive
Agreement shall include such terms and conditions as are determined by the
Committee, in its discretion, to be appropriate with respect to any
individual Grantee. The Incentive Agreement shall be signed by the Grantee
to whom the Incentive Award is made and by an Authorized Officer.
(b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any instrument
executed pursuant to the Plan shall create any Employment rights (including
without limitation, rights to continued Employment or to continue to
provide services as a Consultant) by any Grantee or affect the right of the
Company to terminate the Employment or services of any Grantee at any time
without regard to the existence of the Plan.
(c) SECURITIES REQUIREMENTS. The Company shall be under no obligation
to effect the registration pursuant to the Securities Act of 1933 of any
Shares of Common Stock to be issued hereunder or to effect similar
compliance under any state laws. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or
delivered any certificates evidencing Shares pursuant to the Plan unless
and until the Company is advised by its counsel that the issuance
<PAGE> 13
and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authorities, and the requirements of any
securities exchange or national quotation system on which Shares are traded
or quoted. The Committee may require, as a condition of the issuance and
delivery of certificates evidencing Shares of Common Stock pursuant to the
terms hereof, that the recipient of such Shares make such covenants,
agreements and representations, and that such certificates bear such
legends, as the Committee, in its discretion, deems necessary or desirable.
If the Shares issuable on exercise of an Incentive Award are not
registered under the Securities Act of 1933, the Company may imprint on the
certificate for such Shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act of 1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH
REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR
SUCH SALE OR TRANSFER.
5.2 TRANSFERABILITY
Incentive Awards granted under the Plan shall not be transferable or
assignable, pledged, or otherwise encumbered other than by will or the laws of
descent and distribution. However, only with respect to Incentive Awards that
are not Incentive Stock Options, the Committee may, in its discretion, authorize
all or a portion of the Nonstatutory Stock Options to be granted on terms which
permit transfer by the Grantee to (i) the members of the Grantee's Immediate
Family, (ii) a trust or trusts for the exclusive benefit of Immediate Family
members, (iii) a partnership in which Immediate Family members are the only
partners, (iv) any other entity owned solely by Immediate Family members, or (v)
pursuant to a domestic relations order that would qualify under Code Section
414(p); provided that (A) the Incentive Agreement pursuant to which such
Nonstatutory Stock Options are granted must expressly provide for
transferability in a manner consistent with this Section 5.2, (B) the actual
transfer must be approved in advance by the committee, and (C) subsequent
transfers of transferred Nonstatutory Stock Options shall be prohibited except
in accordance with the first sentence of this section. Following any permitted
transfer, the Nonstatutory Stock Option shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer, provided
that the term "Grantee" (subject to the immediately succeeding paragraph) shall
be deemed to refer to the transferee. The events of termination of employment,
as set out in Section 5.6 and in the Incentive Agreement, shall continue to be
applied with respect to the original Grantee, and the Incentive Award shall be
exercisable by the transferee only to the extent, and for the periods, specified
in the Incentive Agreement.
Except as may otherwise be permitted under the Code, in the event of a
permitted transfer of a Nonstatutory Stock Option hereunder, the original
Grantee shall remain subject to withholding taxes upon exercise. In addition,
the Company and the Committee shall have no obligation to provide any notices to
any Grantee or transferee thereof, including, for example, notice of the
expiration of an Incentive Award following the original Grantee's termination of
employment.
The designation by a Grantee of a beneficiary of an Incentive Award shall
not constitute a transfer of the Incentive Award. No transfer by will or by the
laws of descent and distribution shall be effective to bind the Company unless
the Committee has been furnished with a copy of the deceased Grantee's
enforceable will or such other evidence as the Committee deems necessary to
establish the validity of the transfer. Any attempted transfer in violation of
this Section 5.2 shall be void and ineffective. The Committee in its discretion
shall make all determinations under this Section 5.2.
5.3 RIGHTS AS A STOCKHOLDER
(a) NO STOCKHOLDER RIGHTS. A Grantee of an Incentive Award (or a
permitted transferee of such Grantee) shall have no rights as a stockholder
with respect to any Shares of Common Stock until the issuance of a stock
certificate for such Shares.
(b) REPRESENTATION OF OWNERSHIP. In the case of the exercise of an
Incentive Award by a person or estate acquiring the right to exercise such
Incentive Award by reason of the death or Disability of a Grantee, the
Committee may require reasonable evidence as to the ownership of such
Incentive Award or the authority of such person and may require such
consents and releases of taxing authorities as the Committee may deem
advisable.
<PAGE> 14
5.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange or quotation system on which Shares
of Common Stock are traded or quoted. The Committee may, in its discretion,
defer the effectiveness of any exercise of an Incentive Award in order to allow
the issuance of Shares of Common Stock to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. The Committee shall inform the Grantee in
writing of its decision to defer the effectiveness of the exercise of an
Incentive Award.
5.5 CHANGE IN STOCK AND ADJUSTMENTS
(a) CHANGES IN LAW. Subject to Section 5.7 (which only applies in the
event of a Change of Control), in the event of any change in applicable law
which warrants equitable adjustment because it interferes with the intended
operation of the Plan, then, if the Committee should determine, in its
absolute discretion, that such change equitably requires an adjustment in
the number or kind of shares of stock or other securities or property
theretofore subject, or which may become subject, to issuance or transfer
under the Plan or in the terms and conditions of outstanding Incentive
Awards, such adjustment shall be made in accordance with such
determination. Such adjustments may include changes with respect to (i) the
aggregate number of Shares that may be issued under the Plan, (ii) the
number of Shares subject to Incentive Awards, and (iii) the price per Share
for outstanding Incentive Awards. Any adjustment under this paragraph of an
outstanding Incentive Stock Option shall be made only to the extent not
constituting a "modification" within the meaning of Section 424(h)(3) of
the Code unless otherwise agreed to by the Grantee in writing. The
Committee shall give notice to each applicable Grantee of such adjustment
which shall be effective and binding.
(b) EXERCISE OF CORPORATE POWERS. The existence of the Plan or
outstanding Incentive Awards hereunder shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stocks ahead of or affecting the Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding whether of a similar character or otherwise.
(c) RECAPITALIZATION OF THE COMPANY. Subject to Section 5.7 (which
only applies in the event of a Change in Control), in the event that the
Committee shall determine that any dividend or other distribution (whether
in the form of cash, Common Stock, other securities, or other property),
re-capitalization, stock split, reverse stock split, rights offering,
reorganization, merger, consolidation, split-up, spin-off, split-off,
combination, subdivision, repurchase, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate
transaction or event affects the Common Stock such that an adjustment is
determined by the Committee to be appropriate to prevent the dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it
deems equitable, adjust any or all of (i) the number of shares and type of
Common Stock (or the securities or property) which thereafter may be made
the subject of Incentive Awards, (ii) the number of shares and type of
Common Stock (or other securities or property) subject to outstanding
Incentive Awards, (iii) the number of shares and type of Common Stock (or
other securities or property) subject to the annual per-individual
limitation under Section 1.4 (a) of the Plan, (iv) the Option Price of each
outstanding Incentive Award, and (v) the number of or Option Price of
shares of Common Stock then subject to outstanding SARs previously granted
and unexercised under the Plan to the end that the same proportion of the
Company's issued and outstanding shares of Common Stock in each instance
shall remain subject to exercise at the same aggregate Option Price;
provided however, that the number of shares of Common Stock (or other
securities or property) subject to any Incentive Award shall always be a
whole number. In lieu of the forgoing, if deemed appropriate, the Committee
may make provision for a cash payment to the holder of an outstanding
Incentive Award. Notwithstanding the foregoing, no such adjustment or cash
payment shall be made or authorized to the extent that such adjustment or
cash payment would cause the Plan or any Stock Option to violate Code
Section 422. Such adjustments shall be made in accordance with the rules of
any securities exchange, stock market, or stock quotation system to which
the Company is subject.
Upon the occurrence of any such adjustment or cash payment, the Company
shall provide notice to each affected Grantee of its computation of such
adjustment or cash payment, which shall be conclusive and shall be binding
upon each such Grantee.
(d) ISSUE OF COMMON STOCK BY THE COMPANY. Except as herein above
expressly provided in this Section 5.5 and subject to Section 5.7 in the
event of a Change in Control, the issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
for cash or property, or for labor or services, either upon direct sale or
upon the
<PAGE> 15
exercise of rights or warrants to subscribe therefor, or upon any
conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of, or Fair Market Value
of, any Incentive Awards then outstanding under previously granted
Incentive Awards.
(e) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS.
Notwithstanding any other provision of the Plan, the Committee, in its
absolute discretion, may authorize the assumption and continuation under
the Plan of outstanding and unexercised stock options or other types of
stock-based incentive awards that were granted under a stock option plan
(or other type of stock incentive plan or agreement) that is or was
maintained by a corporation or other entity that was merged into,
consolidated with, or whose stock or assets were acquired by, the Company
as the surviving corporation. Any such action shall be upon such terms and
conditions as the Committee, in its discretion, may deem appropriate,
including provisions to preserve the holder's rights under the previously
granted and unexercised stock option or other stock-based incentive award,
such as, for example, retaining an existing exercise price under an
outstanding stock option. Any such assumption and continuation of any such
previously granted and unexercised incentive award shall be treated as an
outstanding Incentive Award under the Plan and shall thus count against the
number of Shares reserved for issuance pursuant to Section 1.4. In
addition, any Shares issued by the Company through the assumption or
substitution of outstanding grants from an acquired company shall reduce
the Shares available for grants under Section 1.4.
(f) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Unless otherwise
determined by the Committee in its discretion pursuant to the next
paragraph, but subject to the accelerated vesting and other provisions of
Section 5.7 that apply in the event of a Change in Control, in the event of
a Corporate Event (defined below), each Grantee shall be entitled to
receive, in lieu of the number of Shares subject to Incentive Awards, such
shares of capital stock (or other securities or property) as may be
issuable or payable with respect to or in exchange for the number of Shares
which Grantee would have received had he exercised the Incentive Award
immediately prior to such Corporate Event, together with any adjustments
(including, without limitation, adjustments to the Option Price and the
number of Shares issuable on exercise of outstanding Stock Options). A
"Corporate Event" means any of the following: (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, or (iii) a merger, consolidation or combination involving
the Company (other than a merger, consolidation or combination (A) in which
the Company is the continuing or surviving corporation and (B) which does
not result in the outstanding Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof).
The Committee shall take whatever other action it deems appropriate to
preserve the rights of Grantees holding outstanding Incentive Awards.
Subject to the accelerated vesting and other provisions of Section 5.7 that
apply in the event of a Change in Control, in the event of a Corporate
Event, the Committee in its discretion shall have the right and power to:
i) cancel, effective immediately prior to the occurrence of the
Corporate Event, each outstanding Incentive Award (whether or not then
exercisable) and, in full consideration of such cancellation, pay to
the Grantee an amount in cash equal to the excess of (A) the value, as
determined by the Committee, of the property (including cash) received
by the holders of Common Stock as a result of such Corporate Event
over (B) the exercise price of such Incentive Award, if any; or
ii) provide for the exchange or substitution of each Incentive
Award outstanding immediately prior to such Corporate Event (whether
or not then exercisable) for another award with respect to the Common
Stock or other property for which such Incentive Award is exchangeable
and, incident thereto, make an equitable adjustment as determined by
the Committee, in its discretion, in the exercise price of the
Incentive Award, if any, or in the number of Shares or amount of
property (including cash) subject to the Incentive Award; or
iii) provide for the assumption of the Plan and such outstanding
Incentive Awards by the surviving entity or its parent.
The Committee, in its discretion, shall have the authority to take
whatever action it deems to be necessary or appropriate to effectuate
the provisions of this subsection (f).
5.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
(a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly provided in
the Grantee's Incentive Agreement, if the Grantee's Employment or services
as a Consultant is terminated for any reason other than due to his death,
Disability, Retirement, or for Cause, any non-vested portion of any Stock
Option or other applicable Incentive Award at the time of such
<PAGE> 16
termination shall automatically expire and terminate and no further vesting
shall occur after the termination date. In such event, except as otherwise
expressly provided in his Incentive Agreement, the Grantee shall be
entitled to exercise his rights only with respect to the portion of the
Incentive Award that was vested as of his termination of Employment date
for a period that shall end on the earlier of (i) the expiration date set
forth in the Incentive Agreement or (ii) one hundred eighty (180) days
after the date of his termination, except with respect to Incentive Stock
Options, in which case such period shall be three (3) months.
(b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, in the event of the
termination of a Grantee's Employment for Cause, all vested and non-vested
Stock Options and other Incentive Awards granted to such Grantee shall
immediately expire, and shall not be exercisable to any extent, as of 12:01
a.m., Houston, Texas time, on the date of such termination of Employment
for cause.
(c) RETIREMENT. Unless otherwise expressly provided in the Grantee's
Incentive Agreement, upon the termination of Employment due to the
Retirement of any Employee who is a Grantee:
i) any non-vested portion of any outstanding Option or other
Incentive Award shall thereupon automatically be accelerated and
become fully vested; and
ii) any vested Option or other Incentive Award shall expire on
the earlier of (A) the expiration date set forth in the Incentive
Agreement for such Incentive Award; or (B) the expiration of (1)
twelve months after the date of his termination of Employment due to
Retirement in the case of any Incentive Award other than an Incentive
Stock Option or (2) three months after his termination date in the
case of an Incentive Stock Option.
(d) DISABILITY OR DEATH. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon termination of employment as a result
of the Grantee's Disability or death:
i) any non-vested portion of any outstanding Option or other
applicable incentive Award shall immediately terminate upon
termination of Employment and no further vesting shall occur; and
ii) any vested Incentive Award shall expire on the earlier of
either (A) the expiration date set forth in the Incentive Agreement or
(B) the one year anniversary date of the Grantee's termination of
Employment date.
In the case of any vested Incentive Stock Option held by an Employee
following termination of Employment, notwithstanding the definition of
"Disability" in Section 1.2, whether the Employee has incurred a
"Disability" for purposes of determining the length of the Option exercise
period following termination of Employment under this paragraph (d) shall
be determined by reference to Section 22(e)(3) of the Code to the extent
required by Section 422(c)(6) of the Code. The Committee shall determine
whether a Disability for purposes of this subsection (d) has occurred.
(d) CONTINUATION. Subject to the conditions and limitations of the
Plan and applicable law and regulation in the event that a Grantee ceases
to be an Employee or Consultant, as applicable, for whatever reason, the
Committee and Grantee may mutually agree with respect to any outstanding
Option or other Incentive Award then held by the Grantee (i) for an
acceleration or other adjustment in any vesting schedule applicable to the
Incentive Award, (ii) for a continuation of the exercise period following
termination for a longer period than is otherwise provided under such
Incentive Award, or (iii) to any other change in the terms and conditions
of the Incentive Award. In the event of any such change to an outstanding
Incentive Award, a written amendment to the Grantee's Incentive Agreement
shall be required.
5.7 CHANGE IN CONTROL
In the event of a Change in Control (as defined below), the following
actions shall automatically occur as of the day immediately preceding the Change
in Control date unless expressly provided otherwise in the Grantee's Incentive
Agreement:
(a) all of the Stock Options and Stock Appreciation Rights then
outstanding shall become 100% vested and immediately and fully exercisable;
(b) all of the restrictions and conditions of any Other Stock-Based
Awards then outstanding shall be deemed satisfied, and the Restriction
Period with respect thereto shall be deemed to have expired, and thus each
such Incentive Award shall become free of all restrictions and fully
vested; and
<PAGE> 17
(c) all of the Performance Shares and any Other Stock-Based Awards
shall become fully vested, deemed earned in full, and promptly paid within
thirty (30) days to the affected Grantees without regard to payment
schedules and notwithstanding that the applicable performance cycle,
retention cycle or other restrictions and conditions have not been
completed or satisfied.
Notwithstanding any other provision of this Plan, unless otherwise
expressly provided in the Grantee's Incentive Agreement, the provisions of this
Section 5.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Incentive Awards,
subject, however, to the last paragraph of this Section 5.7.
For all purposes of this Plan, a "Change in Control" of the Company means
the occurrence of any one or more of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person"))
of beneficial ownership(within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of forty percent (40%) or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however,
that the following acquisitions shall not constitute a Change in Control:
(i) any acquisition directly from the Company or any Subsidiary, (ii) any
acquisition by the Company or any Subsidiary or by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, or (iii) any acquisition by any corporation pursuant to a
reorganization, merger, consolidation or similar business combination
involving the Company (a "Merger"), if, following such Merger, the
conditions described in clauses (i) and (ii) of Section 5.7(c) (below) are
satisfied;
(b) Individuals who, as of the Effective Date, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (a solicitation by any person or
group of persons for the purpose of opposing a solicitation of proxies or
consents by the Board with respect to the election or removal of Directors
at any annual or special meeting of stockholders) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(c) Approval by the stockholders of the Company of a Merger, unless
immediately following such Merger, (i) substantially all of the holders of
the Outstanding Company Voting Securities immediately prior to Merger
beneficially own, directly or indirectly, more than 50% of the common stock
of the corporation resulting from such Merger (or its parent corporation)
in substantially the same proportions as their ownership of Outstanding
Company Voting Securities immediately prior to such Merger and (ii) at
least a majority of the members of the board of directors of the
corporation resulting from such Merger (or its parent corporation) were
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such Merger;
(d) The sale or other disposition of all or substantially all of the
assets of the Company.
5.8 EXCHANGE OF INCENTIVE AWARDS
The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.
<PAGE> 18
SECTION 6.
GENERAL
6.1 EFFECTIVE DATE AND GRANT PERIOD
This Plan is adopted by the Board effective as of July 1, 2000 (the
"EFFECTIVE DATE") subject to the approval of the stockholders of the Company
within one year from the Effective Date. Incentive Awards may be granted under
the Plan at any time prior to receipt of such stockholder approval; provided,
however, if the requisite stockholder approval is not obtained then any
Incentive Awards granted hereunder shall automatically become null and void and
of no force or effect. No Incentive Award that is an Incentive Stock Option
shall be granted under the Plan after ten (10) years from the Effective Date.
6.2 FUNDING AND LIABILITY OF COMPANY
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company,
the Board nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
6.3 WITHHOLDING TAXES
(a) TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Grantee 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 the Plan or an Incentive Award hereunder.
(b) SHARE WITHHOLDING. With respect to tax withholding required upon
the exercise of Stock Options or SARs, or upon any other taxable event
arising as a result of any Incentive Awards, Grantees may elect, subject to
the approval of the Committee in its discretion, 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 withholding tax which could be imposed on the transaction. All
such elections shall be made in writing, signed by the Grantee, and shall
be subject to any restrictions or limitations that the Committee, in its
discretion, deems appropriate.
(c) INCENTIVE STOCK OPTIONS. With respect to Shares received by a
Grantee pursuant to the exercise of an Incentive Stock Option, if such
Grantee disposes of any such Shares within (i) two years from the date of
grant of such Option or (ii) one year after the transfer of such shares to
the Grantee, the Company shall have the right to withhold from any salary,
wages or other compensation payable by the Company to the Grantee an amount
sufficient to satisfy federal, state and local tax withholding requirements
attributable to such disqualifying disposition.
6.4 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
6.5 DESIGNATION OF BENEFICIARY BY PARTICIPANT
Each Grantee 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 death before he receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Grantee, shall be in a form prescribed by the Committee, and will be effective
only when filed by the Grantee in writing with the Committee during the
Grantee's lifetime. In the absence of any such designation, benefits remaining
unpaid at the Grantee's death shall be paid to the Grantee's estate.
<PAGE> 19
6.6 DEFERRALS
The Committee may authorize and establish deferred compensation agreements
and arrangements in connection with Incentive Awards under the Plan and may
establish trusts and other arrangements including "rabbi trusts", with respect
to such agreements and appoint one or more trustees for such trusts.
The Committee may permit a Grantee to defer such Grantee's receipt of the
payment of cash or the delivery of Shares that would, otherwise be due to such
Grantee by virtue of the satisfaction of any requirements or goals with respect
to Performance Shares or Other Stock-Based Awards. If any deferral election is
permitted hereunder, the Committee may, in its discretion, establish rules and
procedures for such payment deferrals to the extent required for tax deferral of
compensation under applicable sections of the Code.
6.7 AMENDMENT AND TERMINATION
The Board shall have the power and authority to terminate or amend the Plan
at any time. No termination, amendment, or modification of the Plan shall
adversely affect in any material way any outstanding Incentive Award previously
granted to a Grantee under the Plan, without the written consent of such Grantee
or other designated holder of such Incentive Award.
In addition, to the extent that the Committee determines that (a) the
listing or qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing or
quotation system requirements or to maintain any favorable tax advantages or
qualifications, then the Plan shall not be amended in such respect without
approval of the Company's stockholders.
6.8 GOVERNMENTAL ENTITIES AND SECURITIES EXCHANGES
The granting of Incentive 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. Certificates evidencing shares of Common Stock delivered under this
Plan (to the extent that such shares are so evidenced) may be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules and regulations of the Securities and Exchange Commission, any
securities exchange or transaction reporting system upon which the Common Stock
is then listed or to which it is admitted for quotation, and any applicable
federal or state securities law, if applicable. The Committee may cause a legend
or legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
6.9 SUCCESSORS TO COMPANY
All obligations of the Company under the Plan with respect to Incentive
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 and/or assets of the Company.
6.10 MISCELLANEOUS PROVISIONS
(a) No Employee or Consultant, or other person shall have any claim or
right to be granted an Incentive Award under the Plan. Neither the Plan,
nor any action taken hereunder, shall be construed as giving any Employee
or Consultant, any right to be retained in the Employment or other service
of the Company or any Parent or Subsidiary.
(b) By accepting any Incentive Award, each Grantee and each person
claiming by or through him shall be deemed to have indicated his acceptance
of the Plan.
6.11 SEVERABILITY
In the event that any provision of this Plan shall be held illegal, invalid
or unenforceable for any reason, such provision shall be fully severable, but
shall not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
was not included herein.
<PAGE> 20
6.12 GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used herein
shall include the feminine and neuter, and words used in the singular shall
include the plural. Section headings as used herein are inserted solely for
convenience and reference and constitute no part of the interpretation or
construction of the Plan.
6.13 GOVERNING LAW
The Plan shall be interpreted, construed and constructed in accordance with
the laws of the State of Texas without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States
or applicable provisions of the Delaware General Corporation Law.
