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EXHIBIT 4.6
ILLINOIS SUPERCONDUCTOR CORPORATION
A DELAWARE CORPORATION
1993 STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH JULY 28, 2000)
1. Purpose. The purposes of this Amended and Restated Plan are to attract
and retain the best available personnel, to provide additional incentive to the
Employees, Consultants and Outside Directors of Illinois Superconductor
Corporation, a Delaware corporation (the "Company"), and to promote the success
of the Company's business.
Options granted hereunder may, consistent with the terms of this Plan,
be either Incentive Stock Options or Nonstatutory Stock Options, at the
discretion of the Committee and as reflected in the terms of the written option
agreement.
2. Definitions. As used in this Plan, the following definitions shall
apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means any of the following: (i) willful malfeasance or
willful misconduct by the Employee or Consultant in connection with his or
her employment; (ii) gross negligence in performing any of the Employee's
or Consultant's duties to the Company; (iii) conviction of, or entry of a
plea of guilty to, or entry of a plea of nolo contendere with respect to,
any crime other than a traffic violation or infraction which is a
misdemeanor; or (iv) willful and continuing breach of any written policy
applicable to all employees adopted by the Company concerning conflicts of
interest, political contributions, standards of business conduct or fair
employment practices, procedures with respect to compliance with securities
laws or any similar matters, or adopted by the Company pursuant to the
requirements of any government contract or regulation.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
(d) "Committee" means the Committee appointed by the Board or
otherwise determined in accordance with Section 4(a) of this Plan.
(e) "Common Stock" means the common stock of the Company, par value
$.001 per share.
(f) "Consultant" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting services and is compensated for
such consulting services; provided that the term Consultant shall not
include directors who are not compensated for their services or are paid
only a director's fee by the Company.
(g) "Continuous Status as an Employee, Consultant or Outside Director"
means the absence of any interruption or termination of service as an
Employee, Consultant or Outside Director, as applicable. Continuous Status
as an Employee, Consultant or Outside Director shall not be considered
interrupted in the case of sick leave or military leave, any other leave
provided pursuant to a written policy of the Company in effect at the time
of determination, or any other leave of absence approved by the Board or
the Committee; provided that such leave is for a period of not more than
the greatest of (i) 90 days, (ii) the date of the resumption of such
service upon the expiration of such leave which is guaranteed by contract
or statute or is provided in a written policy of the Company which was in
effect upon the commencement of such leave, or (iii) such period of leave
as may be determined by the Board or the Committee in its sole discretion.
(h) "Disinterested Person" shall have the meaning set forth in Rule
16b-3(d)(3), or any successor definition adopted by the Commission,
provided the person is also an "outside director" under Section 162(m) of
the Code.
(i) "DSU" means a deferred stock unit granted pursuant to this Plan.
(j) "Employee" means any person employed by the Company or any Parent
or Subsidiary of the Company, including employees who are also officers or
directors or both of the Company or any Parent or
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Subsidiary of the Company. The payment of a director's fee by the Company
shall not be sufficient to constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated
thereunder.
(l) "Good Reason" means any of the following: (i) any change in, or
diminution of, the Employee's or Consultant's duties or responsibilities
that is inconsistent in any material and adverse respect with such person's
duties and responsibilities with the Company immediately prior to the
Change of Control; (ii) any reduction in the Employee's or Consultant's
base salary or annual target bonus opportunity as in effect immediately
prior to the Change of Control; or (iii) any requirement that the Employee
or Consultant relocate his or her principal office to a location that is
more than 35 miles from such person's principal office immediately prior to
the Change of Control. No action taken by the Company in good-faith shall
constitute Good Reason unless the Employee or Consultant provides the Chief
Executive Officer of the Company and the Committee with a written notice
describing the action(s) that the Employee or Consultant believes to
constitute Good Reason and the Company fails to remedy such action(s)
within 30 days after the Chief Executive Officer of the Company and the
Committee receive such written notice.
(m) "Grantee" means an Employee, Consultant or Outside Director who
receives an Option or an Employee who receives a Deferred Stock Unit (a
"DSU").
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, and
the rules and regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Option" means a stock option granted pursuant to this Plan.
(q) "Optioned Stock" means the Common Stock subject to an Option.
(r) "Outside Director" means any member of the Board of Directors of
the Company who is not an Employee or Consultant.
(s) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(t) "Plan" means this Illinois Superconductor Corporation Plan, as
amended from time to time.
(u) "Rule 16b-3" means Rule 16b-3, as promulgated by the Securities
and Exchange Commission under Section 16(b) of the Exchange Act, as such
rule is amended from time to time and as interpreted by the Securities and
Exchange Commission.
(v) "Share" means a share of the Common Stock, as adjusted in
accordance with Section of this Plan.
(w) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Scope of Plan. Subject to the provisions of Section 11 of this Plan, and
unless otherwise amended by the Board and approved by the stockholders of the
Company as required by law, the maximum aggregate number of Shares issuable
under this Plan is 6,011,468, and such Shares are hereby made available and
shall be reserved for issuance under this Plan.
If an Option shall expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares subject thereto
shall (unless this Plan shall have terminated) become available for grants of
Options and DSUs under this Plan. If any DSUs granted under this Plan are
forfeited, the Shares subject to such forfeited DSUs shall (unless the Plan
shall have terminated) become available for grants of Options and DSUs under
this Plan.
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4. Administration of Plan.
(a) Procedure. This Plan shall be administered by the Committee
appointed pursuant to this Section 4(a). The Committee shall consist of two
or more Outside Directors appointed by the Board, but all Committee members
must be Disinterested Persons. If the Board fails to appoint such persons,
the Committee shall consist of all Outside Directors who are Disinterested
Persons.
(b) Powers of Committee. Subject to Section 5(b) below and otherwise
subject to the provisions of this Plan, the Committee shall have full and
final authority in its discretion to: (i) grant Incentive Stock Options,
Nonstatutory Stock Options and DSUs, (ii) determine, upon review of
relevant information and in accordance with Section 8 below, the Fair
Market Value of the Common Stock; (iii) determine the exercise price per
share of Options to be granted, in accordance with this Plan, (iv)
determine the Employees and Consultants to whom, and the time or times at
which, Options and DSUs shall be granted, and the number of shares to be
represented by each Option or DSU; (v) cancel, with the consent of the
Grantee, outstanding Options and grant new Options in substitution
therefor; (vi) interpret this Plan; (vii) accelerate or defer (with the
consent of the Grantee) the exercise date of any Option or the vesting date
of any DSU; (viii) prescribe, amend and rescind rules and regulations
relating to this Plan; (ix) determine the terms and provisions of each
Option and DSU granted (which need not be identical) by which Options and
DSUs shall be evidenced and, with the consent of the holder thereof, modify
or amend any provisions (including without limitation provisions relating
to the exercise price of any Option and the obligation of any Grantee to
sell purchased or granted Shares to the Company upon specified terms and
conditions) of any Option or DSU; (x) require withholding from or payment
by a Grantee of any federal, state or local taxes; (xi) appoint and
compensate agents, counsel, auditors or other specialists as the Committee
deems necessary or advisable; (xii) correct any defect or supply any
omission or reconcile any inconsistency in this Plan and any agreement
relating to any Option or DSU, in such manner and to such extent the
Committee determines to carry out the purposes of this Plan, and; (xiii)
construe and interpret this Plan, any agreement relating to any Option or
DSU, and make all other determinations deemed by the Committee to be
necessary or advisable for the administration of this Plan.
A majority of the Committee shall constitute a quorum at any meeting,
and the acts of a majority of the members present, or acts unanimously
approved in writing by the entire Committee without a meeting, shall be the
acts of the committee. Except as provided in Section 5(b), a member of the
Committee shall not participate in any decisions with respect to himself
under this Plan.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Grantees
and any other holders of any Options or DSUs granted under this Plan.
5. Eligibility.
(a) DSUs may be granted to any Employee and Options may be granted to
any Employee, Consultant or Outside Director as the Committee may from time
to time designate, provided that (i) Incentive Stock Options may be granted
only to Employees, and (ii) Options may be granted to Outside Directors
only in accordance with the provisions of Section 5(b) below. In selecting
the individuals to whom Options and DSUs shall be granted, as well as in
determining the number of Options and DSUs granted, the Committee shall
take into consideration such factors as it deems relevant in connection
with accomplishing the purpose of this Plan. Subject to the provisions of
Section 3 above a Grantee may, if he or she is otherwise eligible, be
granted additional Options and/or DSUs if the Committee shall so determine.
Subject to adjustment as provided in Section 11 below, during any calendar
year, Options for no more than 500,000 Shares of Common Stock shall be
granted to any individual Employee, Consultant or Outside Director, and
DSUs for no more than 150,000 Shares of Common Stock shall be granted to
any individual Employee.
(b) All grants of Options to Outside Directors under this Plan shall
be made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted options; provided, that nothing in
this Plan shall be construed to prevent an Outside Director from
declining to receive an Option under this Plan.
(ii) Each Outside Director who is first elected to the Board after the
adoption of this Plan shall be automatically granted on the date
of such election (whether by the stockholders or by the Board of
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Directors) an Option to purchase 10,000 Shares (subject to
adjustment as provided in Section 11 below). On the date of the
Annual Meeting Stockholders of the Company in each calendar year,
each Outside Director who is reelected at that meeting, or whose
term of office does not expire at that meeting, shall be
automatically granted an option to purchase 10,000 Shares
(subject to adjustment as provided in Section 11 below); provided
that no such automatic annual grant shall be made to an Outside
Director (i) who is first elected to the Board at such Annual
Meeting or was first elected to the Board within three months
prior to such Annual Meeting, or (ii) if there are not sufficient
Shares remaining and available to all Outside Directors eligible
for an automatic grant at the time at which an automatic annual
grant would otherwise be made under this Section 5(b)(ii).
(iii) The terms of each Option granted under this Section 5(b)(ii)
above shall be as follows:
(A) the term of the option shall be ten (10) years;
(B) the Option shall become exercisable cumulatively
with respect to one-third of the Shares on each of
the first, second and third anniversaries of the date
of grant; provided, however, that in no event shall any
option be exercisable prior to obtaining stockholder
approval of this Plan; and
(C) the exercise price per share of Common Stock shall be
100% of the "Fair Market Value" (as defined in
Section 7(b) below) on the date of grant of the Option.
(iv) Subject to the limitation set forth in Section 5(a) above, each
Outside Director may be granted additional Options at the
discretion of the Board. Subject to the provisions of this Plan,
the terms of such discretionary Options shall be set forth in the
Option agreement.
Notwithstanding anything to the contrary herein, no automatic grants of
options shall be made under the Plan during the period commencing on
November 5, 1999 and ending on the date of effectiveness, if any, of an
amendment to the Corporation's Certificate of Incorporation providing for
at least 120 million authorized shares of Common Stock, provided, however,
that, in the event of adoption of such an amendment, any such automatic
grants that would otherwise have been made during such period shall be made
on the first business day following the effective date of the
aforementioned amendment.
(c) Each Option granted under Section 5(b) above shall be a
Nonstatutory Stock Option. Each other Option shall be designated in the
written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. Notwithstanding such designations, if and to the
extent that the aggregate Fair Market Value of the Shares with respect to
which Options designated as Incentive Stock Options are exercisable for the
first time by any Grantee during any calendar year (under all plans of the
Company) exceeds $100,000, such options shall be treated as Nonstatutory
Stock Options. For purposes of this Section 5(c), Options shall be taken
into account in the order in which they are granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.
(d) This Plan shall not confer upon any Grantee any right with
respect to continuation of employment by or the rendition of services to
the Company or any Parent or Subsidiary, nor shall it interfere in any way
with his or her right or the right of the Company or any Parent or
Subsidiary to terminate his or her employment or services at any time, with
or without cause. The terms of this Plan or any Options or DSUs granted
hereunder shall not be construed to give any Grantee the right to any
benefits not specifically provided by this Plan or in any manner modify the
Company's right to modify, amend or terminate any of its pension or
retirement plans.
6. Term of Plan. This Plan shall become effective upon the later to occur
of its adoption by the Board of Directors of the Company (such adoption to
include the approval of at least two Outside Directors) or its approval by vote
of the holders of a majority of the outstanding shares of the Company entitled
to vote on the adoption of this Plan, and shall terminate no later than August
31, 2003. No grants shall be made under this Plan after the date of termination
of this Plan. Any termination, either partially or wholly, shall not affect any
Options then outstanding under this Plan.
7. Exercise Price; Consideration and Tax Withholding.
(a) Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Committee as follows:
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(i) In the case of an Incentive Stock Option 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, but if granted to an Employee
who, at the time of the grant of such Incentive Stock
Option, 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.
(ii) In the case of an Incentive Stock Option granted to
any person other than an Outside Director, the per
Share exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of grant,
but if granted to an Employee who, at the time of the
grant of such Incentive Stock Option, 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. The exercise
price of Options granted pursuant to Section 5(b)
above shall be 100% of the Fair Market Value on the
date of grant of the Option.
For purposes of this Section 7(a), if an Option is amended to
reduce the exercise price, the date of grant of such option
shall thereafter be considered to be the date of such
amendment.
(iii) With respect to (i) or (ii) above, the per Share
exercise price is subject to adjustment as provided
in Section 11 below.
(b) Fair Market Value. The "Fair Market Value" of the Common Stock
shall be determined by the Committee in its discretion; provided, that if the
Common Stock is listed on a stock exchange, the Fair Market Value per Share
shall be the closing price on such exchange on the date of grant of the Option
as reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by the exchange, and (ii) if not reported on the date of grant, then on
the last prior date on which a sale of the Common Stock was reported); or if not
listed on an exchange but traded on the National Association of Securities
Dealers Automated Quotation National Market System ("NASDAQ"), the Fair Market
Value per Share shall be the closing price per share of the Common Stock for the
date of grant, as reported in the Wall Street Journal (or, (i) if not so
reported, as otherwise reported by NASDAQ, and (ii) if not reported on the date
of grant, then on the last prior date on which a sale of the Common Stock was
reported); or, if the Common Stock is otherwise publicly traded, the mean of the
closing bid price and asked price for the last known sale.
(c) Consideration. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Committee (and in the case of an Incentive Stock Option, shall
be determined at the time of grant) and may consist entirely of (i) cash; (ii)
check; (iii) the Grantee's personal interest bearing full recourse promissory
note with such terms and provisions as the Committee may authorize (provided
that no person who is not an Employee of the Company may purchase Shares with a
promissory note); (iv) other Shares of Common Stock which (X) either have been
owned by the Grantee for more than six (6) months on the date of surrender or
were not acquired directly or indirectly from the Company, and (Y) have a Fair
Market Value on the date of surrender (determined without regard to any
limitations on transferability imposed by securities laws) equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised; (v) any combination of such methods of payment; or (vi) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable laws.
(d) Withholding. No later than the date as of which an amount first
becomes includable in the gross income of the Grantee for Federal income tax
purposes with respect to an option, the Grantee shall pay to the Company (or
other entity identified by the Committee), or make arrangements satisfactory to
the Company or other entity identified by the Committee regarding the payment
of, any Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount required in order for the Company to obtain
a current deduction. Unless otherwise determined by the Committee, withholding
obligations may be settled with Common Stock, including Common Stock underlying
the subject option, provided that any applicable requirements under Section 16
of the Exchange Act are satisfied so as to avoid liability thereunder. The
obligations of the Company under this Plan shall be conditional upon such
payment or arrangements, and the Company shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment otherwise due to the
Grantee.
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8. Options.
(a) Term of Option. The term of each Option granted (other than an
Option granted under Section 5(b) above) shall be for a period of no more than
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Option agreement. However, in the case of an Option granted to a
Grantee who, at the time the 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 Option shall be five (5)
years from the date of grant thereof or such shorter time as may be provided in
the Option Agreement.
(b) Exercise of Options.
(i) Procedure for Exercise; Rights as a Shareholder. Any Option
granted under this Plan (other than an Option granted pursuant
to Section 5(b) above) shall be exercisable at such times and
under such conditions as determined by the Committee, including
performance criteria with respect to the Company and/or the
Grantee, and as shall otherwise be permissible under the terms
of this Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full
payment may, as authorized by the Committee, consist of any
consideration and method of payment allowable under Section 7 of
this Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate
evidencing such Shares, 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 upon exercise of the Option If the exercise
of an Option is treated in part as the exercise of an Incentive
Stock Option and in part as the exercise of a Nonstatutory Stock
Option pursuant to Section 5(b) above, the Company shall issue a
separate stock certificate evidencing the Shares treated as
acquired upon exercise of an Incentive Stock Option and a
separate stock certificate evidencing the Shares treated as
acquired upon exercise of a Nonstatutory Stock Option and shall
identify each such certificate accordingly in its stock transfer
records. 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 of this
Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both
for purposes of this Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(ii) Method of Exercise. A Grantee may exercise an Option, in whole
or in part, at any time during the option period by the
Grantee's giving written notice of exercise on a form provided
by the Committee (if available) to the Company specifying the
number of shares of Common Stock subject to the Option to be
purchased. Such notice shall be accompanied by payment in full
of the purchase price by cash or check or such other form of
payment as the Company may accept. If approved by the Committee,
payment in full or in part may also be made (A) by delivering
Common Stock already owned by the Grantee having a total Fair
Market Value on the date of such delivery equal to the exercise
price of the subject Option; (B) by the execution and delivery
of a note or other evidence of indebtedness (and any security
agreement thereunder) satisfactory to the Committee; (C) by
authorizing the Company to retain shares of Common Stock which
would otherwise be issuable upon exercise of the Option having a
total Fair Market Value on the date of delivery equal to the
exercise price of the subject Option; (D) by the delivery of
cash by a broker-dealer to whom the Grantee has submitted an
irrevocable notice of exercise (in accordance with Part 220,
Chapter II, Title 12 of the Code of Federal Regulations,
so-called "cashless" exercise); or (E) by any combination of the
foregoing. In the case of an Incentive Stock Option, the right
to make a payment in the form of already owned shares of Common
Stock of the same class as the Common Stock subject to the
Option may be authorized only at the time the Option is granted.
No shares of Common Stock shall be issued until full payment
therefor has been made. A Grantee
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shall have all of the rights of a shareholder of the Company
holding the class of Common Stock that is subject to such Option
(including, if applicable, the right to vote the shares and the
right to receive dividends), when the Grantee has given written
notice of exercise, has paid in full for such shares and such
shares have been recorded on the Company's official shareholder
records as having been issued or transferred.
(iii) Termination of Status as an Employee, Consultant or Outside
Director. If a Grantee's Continuous Status as an Employee,
Consultant or Outside Director (as the case may be) is
terminated for any reason whatever, such Grantee may, but only
within such period of time as provided in the Option agreement,
after the date of such termination (but in no event later than
the date of expiration of the term of such Option as set forth
in the Option agreement), exercise the Option to the extent that
such Employee, Consultant or Outside Director was entitled to
exercise it at the date of such termination pursuant to the
terms of the Option agreement. To the extent that such Employee,
Consultant or Outside Director was not entitled to exercise the
Option at the date of such termination, or if such Employee,
Consultant or Outside Director does not exercise such Option
(which such Employee, Consultant or Outside Director was
entitled to exercise) within the time specified in the Option
agreement, the Option shall terminate.
(iv) Company Loan or Guarantee. Upon the exercise of any Option and
subject to the pertinent Option agreement and the discretion of
the Committee, the Company may at the request of the Grantee;
(A) lend to the Grantee, with recourse, an amount equal to such
portion of the option exercise price as the Committee may
determine; or (B) guarantee a loan obtained by the Grantee from
a third-party for the purpose of tendering the option exercise
price.
9. Deferred Stock Units.
(a) Grant of Deferred Stock Units. Subject to such terms and
conditions as the Committee shall determine, an Employee may be granted
Deferred Stock Units ("DSUs"), entitling the Employee to receive Shares of
Common Stock without any payment in cash or property in one or more
installments at a future date or dates. DSUs shall be non-transferable and
may be conditioned on such matters as the Committee shall determine,
including continued employment or attainment of performance goals. No
Shares of Common Stock will be issued at the time an award of DSUs is made
and the Company shall not be required to set aside a fund for the payment
of any such award. The Company will establish a separate recordkeeping
account for the Employee and will record in such account the number of DSUs
awarded to the Grantee. The Committee may permit Grantees to further defer
receipt of Shares of Common Stock payable with respect to DSUs.
(b) Rights as a Stockholder; Dividend Equivalents. A Grantee shall
not have any right in respect of DSUs awarded pursuant to the Plan to vote
on any matter submitted to the Company's stockholders until such time as
the Shares of Common Stock attributable to such DSUs have been issued to
such Grantee or his beneficiary. The Committee will determine whether and
to what extent to pay dividend equivalents to Grantees of DSUs.
(c) Settlement of Deferred Stock. An Employee shall receive one
share of Common Stock for each vested DSU on such date or dates and/or upon
the occurrence of such event as the Committee may specify in the award
agreement or on such later date as may be elected by the Grantee in a
deferral election made accordance with the rules and procedures established
by the Committee. If a Grantee's Continuous Status as an Employee is
terminated for any reason, the Grantee shall immediately forfeit all rights
with respect to any nonvested DSUs credited to his or her account.
10. Non-transferability of Options and DSUs. Except as otherwise provided
in an Option Agreement, Options and DSUs granted hereunder shall by their terms
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or the laws of descent and distribution. Except as
otherwise provided in an Option Agreement, an Option may be exercised during the
Grantee's lifetime only by the Grantee.
Notwithstanding the foregoing, upon written approval of the
Compensation Committee, a Grantee may transfer Options to any Family Member (as
defined below), to any trust in which the Grantee and/or the Grantee's Family
Members have more than fifty percent (50%) of the beneficial interest, any
foundation in which the Grantee and/or the Grantee's Family Members control the
management of assets, and any other entity in which the Grantee and/or the
Grantee's Family Members own more than fifty percent of the voting interest;
provided that such transfer is not a transfer for value. For purposes of the
preceding sentence, the following transfers will not be considered prohibited
transfers for value:
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(i) A transfer under a domestic relations order in settlement of
marital property rights; and
(ii) A transfer to an entity in which more than fifty percent (50%)
of the voting interests are owned by the Grantee and/or the
Grantee's Family Members in exchange for an interest in that
entity.
A "Family Member" shall include any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law, including any adoptive relationships, or any other person sharing
the Grantee's household (other than a tenant or employee).
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock
which have been authorized for issuance under this Plan but as to
which no Options or DSUs have yet been granted or which have been
returned to this Plan upon cancellation or expiration of an Option, or
forfeiture of a DSU, the maximum number of Shares for which Options or
DSUs may be granted to any Employee, Consultant or Outside Director
during any calendar year (as provided in Section 5(a) above), and the
number of shares of Common Stock subject to each outstanding Option
and DSU, as well as the exercise price per share of Common Stock
covered by each outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of shares of Common Stock
issued as a result of a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock of the
Company or the payment of a stock dividend with respect to the Common
Stock. 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 made with respect to, the number or exercise price of
shares of Common Stock subject to an Option or DSU.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action, unless
otherwise provided by the Committee. The Committee may, in the
exercise of its sole discretion in such instances, declare that any
Option shall terminate as of a date fixed by the Committee and give
each Grantee the right to exercise his or her Option as to all or any
part of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable. In the event of a proposed
dissolution or liquidation of the Company, each nonvested DSU shall be
forfeited, unless otherwise provided by the Committee, and the
deferred Shares of Common Stock payable with respect to each vested
DSU shall be issued to the Grantee immediately prior to the
consummation of the proposed action notwithstanding any deferral
election made by the Grantee.
(c) Change of Control. For purposes of this Plan, a "Change of
Control" shall be deemed to have occurred if (i) if any corporation,
person or other entity (other than the Company, a majority-owned
subsidiary of the Company or any of its subsidiaries, or an employee
benefit plan (or related trust) sponsored or maintained by the
Company), including a "group" as defined in Section 13(d)(3) of the
Exchange Act, becomes the beneficial owner of stock (other than as a
result of a purchase of such stock from the Company) representing more
than 25% of the combined voting power of the Company's then
outstanding securities; (ii) (A) the stockholders of the Company
approve a definitive agreement to merge or consolidate the Company
with or into another corporation other than a majority-owned
subsidiary of the Company, or to sell or otherwise dispose of all or
substantially all of the Company's assets, and (B) the persons who
were the members of the Board prior to such approval do not represent
a majority of the directors of the surviving, resulting or acquiring
entity or the parent thereof; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board and any new director whose election by the Board
or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved, cease
for any reason to constitute a majority of the Board. With respect to
Options granted to any Employee or Consultant prior to February 15,
2000 and with respect to any Options granted to any Outside Director
(whether granted before or after February 15, 2000), each such Option
that is outstanding immediately prior to a Change of Control shall
become exercisable in full regardless of any vesting conditions
otherwise expressed in the award agreement. Except as otherwise
provided in an award agreement with respect to Options or DSUs granted
to an Employee or Consultant on or after February 15, 2000 and prior
to a Change of Control, each such outstanding DSU shall vest, and each
such outstanding Option shall become exercisable in full, regardless
of any vesting conditions otherwise expressed in the award agreement,
upon the
<PAGE> 9
Employee's or Consultant's termination of employment with the Company
following the Change of Control of the Company if the Employee's or
Consultant's employment is terminated by the Company without Cause or
by the Employee or Consultant for Good Reason.
(d) Purchased Shares. No adjustment under this Section 11
shall apply to any purchased Shares already deemed issued at the time
any adjustment would occur.
(e) Notice of Adjustments. Whenever the purchase price or the
number or kind of securities issuable upon the exercise of the Option
shall be adjusted pursuant to Section 11, the Company shall give each
Grantee written notice setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, and the method
by which such adjustment was calculated.
(f) Certain Cash Payments. If a Grantee would not be permitted
to exercise an Option or any portion thereof (for purposes of this
subsection (f) only, each such Option being referred to as a "Subject
Option") or dispose of the Shares received upon the exercise thereof
without loss or liability (other than a loss or liability for the
exercise price, applicable withholding or any associated transactional
cost), or if the Board determines that the Grantee may not be
permitted to exercise the same rights or receive the same
consideration with respect to the sale of the Company as a shareholder
of the Company with respect to any Subject Options or portion thereof
or the Shares received upon the exercise thereof, then notwithstanding
any other provision of this Plan and unless the Committee shall
provide otherwise in an agreement with such Grantee with respect to
any Subject Options, such Grantee shall have the right, whether or not
the Subject Option is fully exercisable or may be otherwise realized
by the Grantee, by giving notice during the 60-day period from and
after a Sale to the Company, to elect to surrender all or part of any
Subject Options to the Company and to receive cash, within 30 days of
such notice, in an amount equal to the amount by which the "Sale
Price" (as defined herein) per share of Common Stock on the date of
such election shall exceed the amount which the Grantee must pay to
exercise the Subject Options per share of Common Stock under such
Subject Options (the "Spread") multiplied by the number of shares of
Common Stock granted under the Subject Options as to which the right
granted hereunder shall be applicable and shall have been exercised;
provided, however, that if the end of such 60-day period from and
after a sale of the Company is within six months of the date of grant
of a Subject Option held by a Grantee (except a Grantee who has
deceased during such six month period) who is an officer or director
of the Company (within the meaning of Section 16(b) of the Exchange
Act), such Subject Option shall be canceled in exchange for a payment
to the Grantee, effective on the day which is six months and one day
after the date of grant of such Subject Option, equal to the Spread
multiplied by the number of shares of Common Stock granted under the
Subject Option. With respect to any Grantee who is an officer or
director of the Company (within the meaning of Section 16(b) of the
Exchange Act), the 60-day period shall be extended, if necessary, to
include the "window period" of Rule 16(b)-3 which first commences on
or after the date of the sale of the Company, and the Committee shall
have sole discretion, if necessary, to approve the Grantee's exercise
hereunder and the date on which the Spread is calculated may be
adjusted, if necessary, to a later date if necessary to avoid
liability to such Grantee under Section 16(b). For purposes of the
Plan, "Sale Price" means the higher of (a) the highest reported sales
price of a share of Common Stock in any transaction reported on the
principal exchange on which such shares are listed or on NASDAQ during
the 60-day period prior to and including the date of a sale of the
Company or (b) if the sale of the Company is the result of a tender or
exchange offer or a corporate transaction, the highest price per share
of Common Stock paid in such tender or exchange offer or a corporate
transaction, except that, in the case of Incentive Stock Options, such
price shall be based only on the Fair Market Value of the Common Stock
on the date such Incentive Stock Option is exercised. To the extent
that the consideration paid in any such transaction described above
consists all or in part of securities or other non-cash consideration,
the value of such securities or other non-cash consideration shall be
determined in the sole discretion of the Committee.
(g) Mitigation of Excise Tax. If any payment or right accruing
to a Grantee under this Plan (without the application of this
Section), either alone or together with other payments or rights
accruing to the Grantee from the Company or an affiliate ("Total
Payments") would constitute a "parachute payment" (as defined in
Section 280G of the Code and regulations thereunder), the Committee
may in each particular instance determine to (a) reduce such payment
or right to the largest amount or greatest right that will result in
no portion of the amount payable or right accruing under the Plan
being subject to an excise tax under Section 4999 of the Code or being
disallowed as a deduction under Section 280G of the Code, or (b) take
such other actions, or make such other arrangements or payments with
respect to any such payment or right as the Committee may determine in
the circumstances. Any such determination shall be made by the
Committee in the exercise of its sole discretion, and such
determination shall be conclusive and binding on the Grantee. The
Grantee shall cooperate as may be requested by the Committee
<PAGE> 10
in connection with the Committee's determination, including providing
the Committee with such information concerning such Grantee as the
Committee may deem relevant to its determination.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Committee makes the determination
granting such Option. Notice of the determination shall be given to each
Employee, Consultant or Outside Director to whom an Option is so granted within
a reasonable time after the date of such grant. If the Committee cancels, with
the consent of Grantee, any Option granted under this Plan, and a new Option is
substituted therefor, the date that the canceled Option was originally granted
shall be the date used to determine the earliest date for exercising the new
substituted Option under Section 7 so that the Grantee may exercise the
substituted Option at the same time as if the Grantee had held the substituted
Option since the date the canceled Option was granted.
13. Amendment and Termination of Plan.
(a) Amendment and Termination. The Board or the Committee may amend,
waive or terminate this Plan from time to time in such respects as it shall
deem advisable; provided that, to the extent necessary to comply with the
applicable rules and regulations of the stock exchange or market on which
the Common Stock is then listed for trading or with Section 422 of the Code
(or any successor or applicable law or regulation), the Company shall
obtain stockholder approval of any Plan amendment in such manner and to
such a degree as is required by the rule, regulation or law.
(b) Effect of Amendment or Termination. Any such amendment or
termination of this Plan shall not affect Options or DSUs already granted
and such Options and DSUs shall remain in full force and effect as if this
Plan had not been amended or terminated, unless mutually agreed otherwise
between the Grantee and the Committee, which agreement must be in writing
and signed by the Grantee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to a DSU or to the exercise of an Option unless the exercise of such
Option and the issuance and delivery of such Shares pursuant to a DSU or upon
exercise of an Option hereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, and the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option 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 by any of
the aforementioned relevant provisions of law.
15. Restrictions on Shares. Shares of Common Stock issued in respect of
DSUs or upon exercise of an Option shall be subject to the terms and conditions
specified herein and to such other terms, conditions and restrictions as the
Committee in its discretion may determine or provide in the grant. The Company
shall not be required to issue or deliver any certificates for shares of Common
Stock, cash or other property prior to (i) the listing of such shares on any
stock exchange (or other public market) on which the Common Stock may then be
listed (or regularly traded), (ii) the completion of any registration or
qualification of such shares under federal or state law, or any ruling or
regulation of any government body which the Committee determines to be necessary
or advisable, and (iii) the satisfaction of any applicable withholding
obligation in order for the Company or an affiliate to obtain a deduction with
respect to the exercise of an Option. The Company may cause any certificate for
any share of Common Stock to be delivered to be properly marked with a legend or
other notation reflecting the limitations on transfer of such Common Stock as
provided in this Plan or as the Committee may otherwise require. The Committee
may require any person exercising an Option or receiving shares in respect of
DSUs to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
of Common Stock in compliance with applicable law or otherwise. Fractional
shares shall not be delivered, but shall be rounded to the next lower whole
number of shares.
16. Shareholder Rights. No person shall have any rights of a shareholder
as to shares of Common Stock subject to an Option or DSU until, after proper
exercise of the Option or other action required or, in the case of DSUs, after
the conditions for delivery of Shares subject to DSUs have been satisfied and
such shares shall have been recorded on the Company's official shareholder
records as having been issued or transferred. Subject to the preceding Section
and upon exercise of the Option or any portion thereof or satisfaction of the
conditions for delivery of Shares subject to DSUs, the Company will have thirty
(30) days in which to issue the shares, and the Grantee will not be treated as a
shareholder for any purpose whatsoever prior to such issuance. No adjustment
shall be made for cash dividends or other rights for which the
<PAGE> 11
record date is prior to the date such shares are recorded as issued or
transferred in the Company's official shareholder records, except as provided
herein or in an agreement.
17. Best Efforts To Register. If there has been a public offering, the
Company may register under the Securities Act the Common Stock delivered or
deliverable pursuant to Options on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon as such forms are available for registration to the Company for
this purpose. The Company will, if it so determines, use its good faith efforts
to cause the registration statement to become effective as soon as possible and
will file such supplements and amendments to the registration statement as may
be necessary to keep the registration statement in effect until the earliest of
(a) one year following the expiration of the option period of the last Option
outstanding (or issuance of the last Share subject to an outstanding DSU), (b)
the date the Company is no longer a reporting company under the Exchange Act and
(c) the date all Grantees have disposed of all shares delivered pursuant to any
Option or DSU. The Company may delay the foregoing actions at any time and from
time to time if the Committee determines in its discretion that any such
registration would materially and adversely affect the Company's interests or if
there is no material benefit to Grantees.
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 permit the exercise of all Options outstanding under this Plan and
the issuance of Shares subject to all outstanding DSUs. 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 for any reason.
19. Option and DSU Agreements. Options and DSUs shall be evidenced by
written agreements in such form as the Committee shall approve.
20. Information to Grantees. To the extent required by applicable law, the
Company shall provide to each Grantee, during the period for which such Grantee
has one or more Options or DSUs outstanding, copies of all annual reports and
other information which are provided to all stockholders of the Company. Except
as otherwise noted in the foregoing sentence, the Company shall have no
obligation or duty to affirmatively disclose to any Grantee, and no Grantee
shall have any right to be advised of, any material information regarding the
Company or any Parent or Subsidiary at any time prior to, upon or otherwise in
connection with, the exercise of an Option.
21. Funding. Benefits payable under this Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund or otherwise
segregate assets to be used for payment of benefits under this Plan.
22. Controlling Law. This Plan shall be governed by the laws of the State
of Delaware applicable to contracts made and performed wholly in Delaware
between Delaware residents.
