EXHIBIT 10.21
VALUESTAR CORPORATION
2000 EQUITY INCENTIVE PLAN
Section 1. General Purpose of Plan; Definitions.
The name of this plan is the ValueStar Corporation 2000 Equity
Incentive Plan (the "Plan"). The Plan was adopted by the Board (defined below)
on July 21, 2000 and approved by the stockholders of the Company (defined below)
on ___________, 2000. The purpose of the Plan is to enable the Company to
attract and retain highly qualified personnel who will contribute to the
Company's success and to provide incentives to Participants (defined below) that
are linked directly to increases in stockholder value and will therefore inure
to the benefit of all stockholders of the Company. This Plan is a new and
separate plan and therefore does not amend or change any of the Company's
existing plans or grants thereunder.
For purposes of the Plan, the following terms shall be defined
as set forth below:
(a) "Administrator" means the Board, or if and to the extent
the Board does not administer the Plan, the Committee in accordance with Section
2 below.
(b) "Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
(c) "Award" means any award under the Plan.
(d) "Award Agreement" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.
(g) "Committee" means any committee the Board may appoint to
administer the Plan. To the extent necessary and desirable, the Committee shall
be composed entirely of individuals who meet the qualifications referred to in
Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. If at any time
or to any extent the Board shall not administer the Plan, then the functions of
the Board specified in the Plan shall be exercised by the Committee.
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(h) "Common Stock" means the common stock, par value $0.001
per share, of the Company.
(i) "Company" means ValueStar Corporation, a Colorado
corporation (or any successor corporation).
(j) "Deferred Stock" means the right to receive Shares at the
end of a specified deferral period granted pursuant to Section 8 below.
(k) "Disability" means the inability of a Participant to
perform substantially his or her duties and responsibilities to the Company or
to any Parent or Subsidiary by reason of a physical or mental disability or
infirmity (i) for a continuous period of six months, or (ii) at such earlier
time as the Participant submits medical evidence satisfactory to the
Administrator that the Participant has a physical or mental disability or
infirmity that will likely prevent the Participant from returning to the
performance of the Participant's work duties for six months or longer. The date
of such Disability shall be the last day of such six-month period or the day on
which the Participant submits such satisfactory medical evidence, as the case
may be.
(l) "Eligible Recipient" means an officer, director, employee,
consultant or advisor of the Company or of any Parent or Subsidiary.
(m) "Employee Director" means any director of the Company who
is also an employee of the Company or of any Parent or Subsidiary.
(n) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.
(o) "Exercise Price" means the per share price at which a
holder of an Award may purchase the Shares issuable upon exercise of the Award.
(p) "Fair Market Value" as of a particular date shall mean the
fair market value of a share of Common Stock as determined by the Administrator
in its sole discretion; provided, however, that (i) if the Common Stock is
admitted to trading on a national securities exchange, fair market value of a
share of Common Stock on any date shall be the closing sale price reported for
such share on such exchange on such date or, if no sale was reported on such
date, on the last date preceding such date on which a sale was reported, (ii) if
the Common Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation ("Nasdaq") System or other comparable
quotation system and has been designated as a National Market System ("NMS")
security, fair market value of a share of Common Stock on any date shall be the
closing sale price reported for such share on such system on such date or, if no
sale was reported on such date, on the last date preceding such date on which a
sale was reported, (iii) if the Common Stock is admitted to quotation on the
Nasdaq System but has not been designated as an NMS security, fair market value
of a share of Common Stock on any date shall be the average of the highest bid
and lowest asked prices of such share on such system on such date or, if no bid
and ask prices were reported on such date, on the last date preceding such date
on which both bid
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and ask prices were reported; (iv) in the case of a Limited Stock Appreciation
Right, the fair market value of a share of Common Stock shall be the "Change in
Control Price" (as defined in the Award Agreement evidencing such Limited Stock
Appreciation Right) of a share of Common Stock as of the date of exercise.
(q) "Incentive Stock Option" means any Option intended to be
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(r) "Limited Stock Appreciation Right" means a Stock
Appreciation Right that can be exercised only in the event of a "Change in
Control" (as defined in the Award Agreement evidencing such Limited Stock
Appreciation Right).
(s) "Non-Employee Director" means a director of the Company
who is not an employee of the Company or of any Parent or Subsidiary.
(t) "Non-Qualified Stock Option" means any Option that is not
an Incentive Stock Option, including any Option that provides (as of the time
such Option is granted) that it will not be treated as an Incentive Stock
Option.
(u) "Option" means an option to purchase Shares granted
pursuant to Section 6 below.
(v) "Parent" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing 50% or
more of the combined voting power of all classes of stock in one of the other
corporations in the chain.
(w) "Participant" means (i) any Eligible Recipient selected by
the Administrator, pursuant to the Administrator's authority in Section 2 below,
to receive grants of Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, awards of Restricted Stock, Deferred Stock, or Performance
Shares or any combination of the foregoing.
(x) "Performance Shares" means Shares that are subject to
restrictions based upon the attainment of specified performance objectives
granted pursuant to Section 8 below.
(y) "Restricted Stock" means Shares subject to certain
restrictions granted pursuant to Section 8 below.
(z) "Shares" means shares of Common Stock reserved for
issuance under the Plan, as adjusted pursuant to Sections 3 and 4, and any
successor security.
(aa) "Stock Appreciation Right" means the right pursuant to an
Award granted under Section 7 below to receive an amount equal to the excess, if
any, of (i) the Fair Market Value, as of the date such Stock Appreciation Right
or portion thereof is surrendered, of the Shares covered by such right or such
portion thereof, over (ii) the aggregate Exercise Price of such right or such
portion thereof.
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(bb) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
Section 2. Administration.
The Plan shall be administered in accordance with the
requirements of Section 162(m) of the Code (but only to the extent necessary and
desirable to maintain qualification of Awards under the Plan under Section
162(m) of the Code) and, to the extent applicable, Rule 16b-3 under the Exchange
Act ("Rule 16b-3"), by the Board or, at the Board's sole discretion, by the
Committee, which shall be appointed by the Board, and which shall serve at the
pleasure of the Board.
Pursuant to the terms of the Plan, the Administrator shall
have the power and authority to grant to Eligible Recipients Options, Stock
Appreciation Rights or Limited Stock Appreciation Rights, Awards of Restricted
Stock, Deferred Stock or Performance Shares or any combination of the foregoing.
Except as otherwise provided in Section 6(i) below, the Administrator shall have
the authority:
(a) to select those Eligible Recipients who shall be
Participants;
(b) to determine whether and to what extent Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, Awards of Restricted
Stock, Deferred Stock or Performance Shares or a combination of any of the
foregoing, are to be granted hereunder to Participants;
(c) to determine the number of Shares to be covered by each
Award granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of each Award granted hereunder (including, but not
limited to, (x) the restrictions applicable to Awards of Restricted Stock or
Deferred Stock and the conditions under which restrictions applicable to such
Awards of Restricted Stock or Deferred Stock shall lapse, and (ii) the
performance goals and periods applicable to Awards of Performance Shares);
(e) to determine the terms and conditions, not inconsistent
with the terms of the Plan, which shall govern all written instruments
evidencing Options, Stock Appreciation Rights, Limited Stock Appreciation
Rights, Awards of Restricted Stock, Deferred Stock or Performance Shares or any
combination of the foregoing granted hereunder;
(f) to reduce the Exercise Price of any Option to the then
current Fair Market Value if the Fair Market Value of the Shares covered by such
Option has declined since the date such Option was granted, but only with the
advance consent of the Board; and
(g) the Committee may, at any time or from time to time,
authorize the Company, with the consent of the affected Participants, to issue
new Awards in exchange for the surrender and cancellation of any or all
outstanding Awards. The Committee may at any time buy from a Participant an
Award previously granted with payment in cash, Shares (including Restricted
Stock) or other consideration, based on such terms and conditions as the
Committee and the Participant shall agree.
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The Administrator shall have the authority, in its sole
discretion, to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable; to
interpret the terms and provisions of the Plan and any Award issued under the
Plan (and any Award Agreement relating thereto); and to otherwise supervise the
administration of the Plan.
All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants.
Section 3. Shares Subject to Plan.
The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be two million five hundred thousand
(2,500,000) shares. Such shares may consist, in whole or in part, of authorized
and unissued shares or treasury shares. The aggregate number of Shares as to
which Options, Stock Appreciation Rights, and Awards of Restricted Stock,
Deferred Stock and Performance Shares may be granted to any Participant during
any calendar year may not, subject to adjustment as provided in this Section 3,
exceed 50% of the Shares reserved for the purposes of the Plan.
Consistent with the provisions of Section 162(m) of the Code,
as from time to time applicable, to the extent that (i) an Option expires or is
otherwise terminated without being exercised, or (ii) any Shares subject to any
Award of Restricted Stock, Deferred Stock or Performance Shares granted
hereunder are forfeited, such Shares shall again be available for issuance in
connection with future Awards granted under the Plan. If any Shares have been
pledged as collateral for indebtedness incurred by a Participant in connection
with the exercise of an Option and such Shares are returned to the Company in
satisfaction of such indebtedness, such Shares shall again be available for
issuance in connection with future Awards granted under the Plan.
In the event of any stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration, an
equitable substitution or proportionate adjustment shall be made in (i) the
aggregate number of Shares reserved for issuance under the Plan, (ii) the kind,
number and Exercise Prices of Shares subject to outstanding Options, and (iii)
the kind, number and Exercise Prices of Shares subject to outstanding Awards of
Restricted Stock, Deferred Stock and Performance Shares, in each case as may be
determined by the Administrator, in its sole discretion, subject to any required
action by the Board or the stockholders of the Company and in compliance with
applicable securities laws; provided, however, that fractions of a Share shall
not be issued but shall either be paid in cash at Fair Market Value or shall be
rounded up to the nearest whole share, as determined by the Committee. An
adjusted Exercise Price shall also be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right or Limited Stock
Appreciation Right related to any Option.
Section 4. Corporate Transactions.
(a) Assumption or Replacement of Awards by Successor. In the
event of (i) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different
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jurisdiction, or other transaction in which there is no substantial change in
the stockholders of the Company and the Awards granted under the Plan are
assumed or replaced by the successor corporation, which assumption shall be
binding on all Participants); (ii) a dissolution or liquidation of the Company;
(iii) the sale of substantially all of the assets of the Company; or (iv) any
other transaction which qualifies as a "corporate transaction" under Section
424(a) of the Code wherein the stockholders of the Company give up all of their
equity interest in the Company (except for the acquisition, sale or transfer of
all or substantially all of the outstanding shares of the Company), any or all
outstanding Awards may be assumed or replaced by the successor corporation (if
any) or Parent thereof, which assumption or replacement shall be binding on all
Participants. In the alternative, the successor corporation or Parent thereof
may substitute equivalent awards or provide substantially similar consideration
to Participants as was provided to stockholders of the Company (after taking
into account the existing provisions of the Awards). The successor corporation
or Parent thereof may also issue, in place of outstanding shares of the Company
held by the Participant, substantially similar shares or other property subject
to repurchase restrictions no less favorable to the Participant. In the event
such successor corporation (if any) or Parent thereof does not assume or
substitute awards, as provided above, pursuant to a transaction described in
this Section 4(a), such Awards shall automatically become fully vested and
exercisable and be released from any restrictions on transfer and repurchase or
forfeiture rights, immediately prior to the specified effective date of such
transaction, for all the Shares at the time represented by such Awards. In such
event, effective upon the consummation of the transaction, or at such other time
and on such conditions as the Board shall determine, all outstanding Awards
under the Plan shall terminate and cease to remain outstanding, except to the
extent assumed by the successor corporation or its Parent.
(b) Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 4, in the
event of the occurrence of any transaction described in Section 4(a), any
outstanding Awards shall be treated as provided in the applicable Award
Agreement or plan of merger, consolidation, dissolution, liquidation, sale of
assets or other "corporate transaction."
(c) Assumption of Awards by the Company. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (i) granting an Award under the Plan in substitution of
such other company's award; or (ii) assuming such award as if it had been
granted under the Plan if the terms of such assumed award could be applied to an
award granted under the Plan. Such substitution or assumption shall be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under the Plan if the other company had applied
the rules of the Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award shall remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted approximately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
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Section 5. Eligibility.
Eligible Recipients shall be eligible to be granted Options,
Stock Appreciation Rights, Limited Stock Appreciation Rights, Awards of
Restricted Stock, Deferred Stock or Performance Shares or any combination of the
foregoing hereunder. The Participants under the Plan shall be selected from time
to time by the Administrator, in its sole discretion, from among the Eligible
Recipients, and the Administrator shall determine, in its sole discretion, the
number of Shares covered by each such Award.
Section 6. Options.
Options may be granted alone or in addition to other Awards
granted under the Plan. Any Option granted under the Plan shall be in such form
as the Administrator may from time to time approve, and the provisions of each
Option need not be the same with respect to each Participant. Participants who
are granted Options shall enter into an Award Agreement with the Company, in
such form as the Administrator shall determine, which Award Agreement shall set
forth, among other things, the Exercise Price of the Option, the term of the
Option and provisions regarding exercisability of the Option granted thereunder.
The Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.
The Administrator shall have the authority to grant to any
officer or employee of the Company or of any Parent or Subsidiary (including
directors who are also officers of the Company) Incentive Stock Options,
Non-Qualified Stock Options, or both types of Options (in each case with or
without Stock Appreciation Rights or Limited Stock Appreciation Rights).
Directors who are not also officers of the Company or of any Parent or
Subsidiary, consultants or advisors to the Company or to any Parent or
Subsidiary may only be granted Non-Qualified Stock Options (with or without
Stock Appreciation Rights or Limited Stock Appreciation Rights). To the extent
that any Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option. More than one Option may be
granted to the same Participant and be outstanding concurrently hereunder.
Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Administrator
shall deem desirable:
(a) Option Exercise Price. The per share Exercise Price of
Shares purchasable under an Option shall be determined by the Administrator in
its sole discretion at the time of grant but shall not, (i) in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of the
Common Stock on such date, (ii) in the case of Non-Qualified Stock Options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, be less than 100% of the Fair Market Value of the
Common Stock on such date and (iii) in any event, be less than the par value (if
any) of the Common Stock. If a Participant owns or is deemed to own (by reason
of the attribution rules applicable under Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or of
any Parent or Subsidiary and an Incentive Stock Option is granted to such
Participant, the per share Exercise Price of such Incentive Stock Option (to the
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extent required at the time of grant by the Code shall be no less than 110% of
the Fair Market Value of the Common Stock on the date such Incentive Stock
Option is granted.
(b) Option Term. The term of each Option shall be fixed by the
Administrator, but no Option shall be exercisable more than ten years after the
date such Option is granted; provided, however, that if an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or of any Parent or Subsidiary and an Incentive Stock Option is granted
to such employee, the term of such Incentive Stock Option (to the extent
required by the Code at the time of grant) shall be no more than five years from
the date of grant.
(c) Exercisability. Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by the
Administrator at or after the time of grant. The Administrator may provide at
the time of grant, in its sole discretion, that any Option shall be exercisable
only in installments, and the Administrator may waive such installment exercise
provisions at any time, in whole or in part, based on such factors as the
Administrator may determine, in its sole discretion, including but not limited
to in connection with any "change in control" of the Company (as defined in the
Award Agreement evidencing such Option).
(d) Method of Exercise. Subject to Section 6(c), Options may
be exercised in whole or in part at any time during the Option period, by giving
written notice of exercise to the Company specifying the number of Shares to be
purchased, accompanied by payment in full of the aggregate Exercise Price of the
Shares so purchased in cash or its equivalent, as determined by the
Administrator. In addition, payment for Shares purchased pursuant to the Plan
may be made, where expressly approved for the Participant by the Committee and
where permitted by law:
(i) by cancellation of indebtedness of the Company to the
Participant;
(ii) by surrender of shares of Common Stock that either
(1) have been owned by Participant for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been
fully paid with respect to such Shares); or (2) were obtained by
Participant in the public market;
(iii) by waiver of compensation due or accrued to
Participant for services rendered;
(iv) by tender of property;
(v) with respect only to purchases upon exercise of an
Option, and provided that a public market for the Common Stock exists: (i)
through a "same day sale" commitment from Participant and a broker-dealer
that is a member of the National Association of Securities Dealers (an
"NASD Dealer") whereby the Participant irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to pay for the
aggregate Exercise Price of the Shares so purchased, and whereby the
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NASD Dealer irrevocably commits upon receipt of such Shares to forward
such Exercise Price directly to the Company; or (ii) through a "margin"
commitment from Participant and an NASD Dealer whereby Participant
irrevocably elects to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the aggregate Exercise Price of the
Shares so purchased, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward such Exercise Price directly to the
Company;
(vi) in the case of the exercise of a Non-Qualified Stock
Option, in the form of Restricted Stock or Performance Shares subject to
an Award hereunder (based, in each case, on the Fair Market Value of the
Common Stock on the date the Option is exercised); provided, however, that
in the case of an Incentive Stock Option, the right to make payment in the
form of already owned shares of Common Stock may be authorized only at the
time of grant. If payment of the Exercise Price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock or
Performance Shares, the Shares received upon the exercise of such Option
shall be restricted in accordance with the original terms of the
Restricted Stock Award or Performance Shares Award in question, except
that the Administrator may direct that such restrictions shall apply only
to that number of Shares equal to the number of shares surrendered upon
the exercise of such Option.
(vii) by any combination of the foregoing or
(viii) by any other form of consideration permitted by
applicable law.
A Participant shall generally have the rights to dividends and
any other rights of a stockholder with respect to the Shares subject to the
Option only after the Participant has given written notice of exercise, has paid
in full for such Shares, and, if requested, has given the representation
described in Section 11(b).
The Administrator may require the surrender of all or a
portion of any Option granted under the Plan as a condition precedent to the
grant of a new Option. Subject to the provisions of the Plan, such new Option
shall be exercisable at the Exercise Price, during such period and on such other
terms and conditions as are specified by the Administrator at the time the new
Option is granted. Consistent with the provisions of Section 162(m), to the
extent applicable, upon their surrender, Options shall be canceled and the
Shares previously subject to such canceled Options shall again be available for
future grants of Options and other Awards hereunder.
(e) Loans. The Company or any Parent or Subsidiary may make
loans available to Option holders in connection with the exercise of outstanding
Options, as the Administrator, in its sole discretion, may determine. Such loans
shall (i) be evidenced by promissory notes entered into by the Option holders in
favor of the Company or any Parent or Subsidiary, (ii) be subject to the terms
and conditions set forth in this Section 6(e) and such other terms and
conditions, not inconsistent with the Plan, as the Administrator shall
determine, (iii) bear interest at the applicable Federal interest rate or such
other rate as the Administrator shall determine, and (iv) be subject to Board
approval (or to
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approval by the Administrator to the extent the Board may delegate such
authority). In no event may the principal amount of any such loan exceed the sum
of (x) the aggregate Exercise Price less the par value (if any) of the Shares
covered by the Option, or portion thereof, exercised by the holder, and (y) any
Federal, state, and local income tax attributable to such exercise. The initial
term of the loan, the schedule of payments of principal and interest under the
loan, the extent to which the loan is to be with or without recourse against the
holder with respect to principal and/or interest and the conditions upon which
the loan will become payable in the event of the holder's termination of service
to the Company or to any Parent or Subsidiary shall be determined by the
Administrator. Unless the Administrator determines otherwise, when a loan is
made, Shares having an aggregate Fair Market Value at least equal to the
principal amount of the loan shall be pledged by the holder to the Company as
security for payment of the unpaid balance of the loan, and such pledge shall be
evidenced by a pledge agreement, the terms of which shall be determined by the
Administrator, in its sole discretion; provided, however, that each loan shall
comply with all applicable laws, regulations and rules of the Board of Governors
of the Federal Reserve System and any other governmental agency having
jurisdiction.
(f) Non-Transferability of Options. Except under the laws of
descent and distribution, the Participant shall not be permitted to sell,
transfer, pledge or assign any Option, and all Options shall be exercisable,
during the Participant's lifetime, only by the Participant; provided, however,
that the Participant shall be permitted to transfer one or more Non-Qualified
Stock Options to a trust controlled by the Participant during the Participant's
lifetime for estate planning purposes.
(g) Termination of Employment or Service. If a Participant's
employment with or service as a director, consultant or advisor to the Company
or to any Parent or Subsidiary terminates by reason of his or her death,
Disability or for any other reason, the Option may thereafter be exercised to
the extent provided in the Award Agreement evidencing such Option, or as
otherwise determined by the Administrator.
(h) Annual Limit on Incentive Stock Options. To the extent
that the aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of Shares with respect to which Incentive Stock Options
granted to a Participant under this Plan and all other option plans of the
Company or of any Parent or Subsidiary become exercisable for the first time by
the Participant during any calendar year exceeds $100,000 (as determined in
accordance with Section 422(d) of the Code), the portion of such Incentive Stock
Options in excess of $100,000 shall be treated as Non-Qualified Stock Options.
Section 7. Stock Appreciation Rights and Limited Stock Appreciation Rights.
Stock Appreciation Rights and Limited Stock Appreciation
Rights may be granted either alone ("Free Standing Rights") or in conjunction
with all or part of any Option granted under the Plan ("Related Rights"). In the
case of a Non-Qualified Stock Option, Related Rights may be granted either at or
after the time of the grant of such Option. In the case of an Incentive Stock
Option, Related Rights may be granted only at the time of the grant of the
Incentive Stock Option. The Administrator shall determine the Eligible
Recipients to whom, and the time or times at which, grants of Stock Appreciation
Rights or Limited Stock Appreciation Rights shall be made; the number of Shares
to be awarded, the Exercise Price (or, in the case of a Limited Stock
Appreciation Right, the "Change in Control" price),
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and all other conditions of Stock Appreciation Rights and Limited Stock
Appreciation Rights. The provisions of Stock Appreciation Rights and Limited
Stock Appreciation Rights need not be the same with respect to each Participant.
Stock Appreciation Rights and Limited Stock Appreciation
Rights granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
(a) Awards. The prospective recipient of a Stock Appreciation
Right or Limited Stock Appreciation Right shall not have any rights with respect
to such Award, unless and until such recipient has executed an Award Agreement
evidencing the Award (a "Stock Appreciation Right Agreement" or "Limited Stock
Appreciation Right Agreement," as appropriate) and delivered a fully executed
copy thereof to the Company, within a period of sixty days (or such other period
as the Administrator may specify) after the award date. Participants who are
granted Stock Appreciation Rights or Limited Stock Appreciation Rights shall
have no rights as stockholders of the Company with respect to the grant or
exercise of such rights.
(b) Exercisability.
(i) Stock Appreciation Rights that are Free Standing
Rights ("Free Standing Stock Appreciation Rights") shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Administrator at or after grant; provided, however, that
no Free Standing Stock Appreciation Right shall be exercisable during the
first six months of its term, except that this additional limitation shall
not apply in the event of a Participant's death or Disability prior to the
expiration of such six-month period.
(ii) Stock Appreciation Rights that are Related Rights
("Related Stock Appreciation Rights") shall be exercisable only at such
time or times and to the extent that the Options to which they relate
shall be exercisable in accordance with the provisions of Section 6 above
and this Section 7 of the Plan; provided, however, that a Related Stock
Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if and when the Fair Market Value of the Common
Stock subject to the Incentive Stock Option exceeds the Exercise Price of
such Option; provided, further, that no Related Stock Appreciation Right
shall be exercisable during the first six months of its term, except that
this additional limitation shall not apply in the event of a Participant's
death or Disability prior to the expiration of such six-month period.
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(iii) Limited Stock Appreciation Rights shall only be
exercised within the 30-day period following a "Change in Control" (as
defined by the Administrator in the Limited Stock Appreciation Right
Agreement evidencing such right) and, with respect to Limited Stock
Appreciation Rights that are Related Rights ("Related Limited Stock
Appreciation Rights"), only to the extent that the Options to which they
relate shall be exercisable in accordance with the provisions of Section 6
above and this Section 7 of the Plan.
(c) Payment Upon Exercise.
(i) Upon the exercise of a Free Standing Stock
Appreciation Right, the Participant shall be entitled to receive up to,
but not more than, an amount in cash or that number of Shares (or any
combination of cash and Shares) equal in value to the excess of the Fair
Market Value as of the date of exercise over the per share Exercise Price
specified in the Free Standing Stock Appreciation Right (which Exercise
Price shall be no less than 100% of the Fair Market Value of the Common
Stock on the date of grant) multiplied by the number of Shares in respect
of which the Free Standing Stock Appreciation Right is being exercised,
with the Administrator having the right to determine the form of payment.
(ii) A Related Right may be exercised by a Participant by
surrendering the applicable portion of the related Option. Upon such
exercise and surrender, the Participant shall be entitled to receive up
to, but not more than, an amount in cash or that number of Shares (or any
combination of cash and Shares) equal in value to the excess of the Fair
Market Value as of the date of exercise over the per share Exercise Price
specified in the related Option multiplied by the number of Shares in
respect of which the Related Stock Appreciation Right is being exercised,
with the Administrator having the right to determine the form of payment.
Options which have been so surrendered, in whole or in part, shall no
longer be exercisable to the extent the Related Rights have been so
exercised.
(iii) Upon the exercise of a Limited Stock Appreciation
Right, the Participant shall be entitled to receive an amount in cash
equal in value to the excess of the "Change in Control Price" (as defined
in the Award Agreement evidencing such Limited Stock Appreciation Right)
of a share of Common Stock Share as of the date of exercise over (A) the
per share Exercise Price specified in the related Option, or (B) in the
case of a Limited Stock Appreciation Right which is a Free Standing Stock
Appreciation Right, the per share Exercise Price specified in the Free
Standing Stock Appreciation Right, such excess to be multiplied by the
number of Shares in respect of which the Limited Stock Appreciation Right
shall have been exercised.
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(a) Non-Transferability.
(i) Free Standing Stock Appreciation Rights shall be
transferable only when and to the extent that an Option would be
transferable under Section 6(f) of the Plan.
(ii) Related Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying Option would
be transferable under Section 6(f) of the Plan.
(iii) Limited Stock Appreciation Rights shall be
transferable only when and to the extent that an Option would be
transferable under Section 6(f) of the Plan.
(b) Termination of Employment or Service
(i) In the event of the termination of employment or
service of a Participant who has been granted one or more Free Standing
Stock Appreciation Rights, such rights shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined
by the Administrator at or after grant.
(ii) In the event of the termination of employment or
service of a Participant who has been granted one or more Related Stock
Appreciation Rights, such rights shall be exercisable at such time or
times and subject to such terms and conditions as set forth in the related
Options.
(iii) In the event of the termination of employment or
service of a Participant who has been granted one or more Limited Stock
Appreciation Rights, such rights shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Administrator at or after grant.
(c) Term.
(i) The term of each Free Standing Stock Appreciation
Right shall be fixed by the Administrator, but no Free Standing Stock
Appreciation Right shall be exercisable more than ten years after the date
such right is granted.
(ii) The term of each Related Stock Appreciation Right
shall be the term of the Option to which it relates, but no Related Stock
Appreciation Right shall be exercisable more than ten years after the date
such right is granted.
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(iii) The term of each Limited Stock Appreciation Right
shall be fixed by the Administrator, but no Limited Stock Appreciation
Right shall be exercisable more than ten years after the date such right
is granted.
Section 8 Restricted Stock, Deferred Stock and Performance Shares.
Awards of Restricted Stock, Deferred Stock or Performance
Shares may be issued either alone or in addition to other Awards granted under
the Plan. The Administrator shall determine the Eligible Recipients to whom, and
the time or times at which, Awards of Restricted Stock, Deferred Stock or
Performance Shares shall be made; the number of Shares to be awarded; the
Exercise Price, if any, to be paid by the Participant for the acquisition of
Restricted Stock, Deferred Stock or Performance Shares; the Restricted Period
(as defined in Section 8(b)) applicable to Awards of Restricted Stock or
Deferred Stock; the performance objectives applicable to Awards of Deferred
Stock or Performance Shares; and all other conditions of the Awards of
Restricted Stock, Deferred Stock and Performance Shares. Subject to the
requirements of Section 162(m) of the Code, as applicable, the Administrator may
also condition the grant of the Award of Restricted Stock, Deferred Stock or
Performance Shares upon the exercise of Options, or upon such other criteria as
the Administrator may determine, in its sole discretion. The provisions of the
Awards of Restricted Stock, Deferred Stock or Performance Shares need not be the
same with respect to each Participant. In the sole discretion of the
Administrator, loans may be made to Participants in connection with the purchase
of Restricted Stock under substantially the same terms and conditions as
provided in Section 6(e) of the Plan with respect to the exercise of Options.
(a) Awards and Certificates. The prospective recipient of
Awards of Restricted Stock, Deferred Stock or Performance Shares shall not have
any rights with respect to any such Award, unless and until such recipient has
executed an Award Agreement evidencing the Award (a "Restricted Stock Award
Agreement," "Deferred Stock Award Agreement" or "Performance Shares Award
Agreement," as appropriate) and delivered a fully executed copy thereof to the
Company, within a period of sixty days (or such other period as the
Administrator may specify) after the award date. Except as otherwise provided
below in Section 8(b), (i) each Participant who is granted an Award of
Restricted Stock or Performance Shares shall be issued a stock certificate in
respect of such shares of Restricted Stock or Performance Shares; and (ii) such
certificate shall be registered in the name of the Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to any such Award.
The Company may require that the stock certificates evidencing
Restricted Stock or Performance Shares granted hereunder be held in the custody
of the Company until the restrictions thereon shall have lapsed, and that, as a
condition of any Award of Restricted Stock or Performance Shares, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Shares covered by such Award.
With respect to Awards of Deferred Stock, at the expiration of
the Restricted Period, stock certificates in respect of such Shares of Deferred
Stock shall be delivered to the Participant, or his legal representative, in a
number equal to the number of Shares covered by the Deferred Stock Award.
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(b) Restrictions and Conditions. The Awards of Restricted
Stock, Deferred Stock and Performance Shares granted pursuant to this Section 8
shall be subject to the following restrictions and conditions:
(i) Subject to the provisions of the Plan and the
Restricted Stock Award Agreement, Deferred Stock Award Agreement or
Performance Shares Award Agreement, as appropriate, governing any such
Award, during such period as may be set by the Administrator commencing on
the date of grant (the "Restricted Period"), the Participant shall not be
permitted to sell, transfer, pledge or assign shares of Restricted Stock,
Deferred Stock or Performance Shares awarded under the Plan; provided,
however, that the Administrator may, in its sole discretion, provide for
the lapse of such restrictions in installments and may accelerate or waive
such restrictions in whole or in part based on such factors and such
circumstances as the Administrator may determine, in its sole discretion,
including, but not limited to, the attainment of certain performance
related goals, the Participant's termination of employment or service as a
director, consultant or advisor to the Company or any Parent or
Subsidiary, the Participant's death or Disability or the occurrence of a
"change in control" as defined in the Restricted Stock Award Agreement,
Deferred Stock Award Agreement or Performance Shares Award Agreement, as
appropriate, evidencing such Award.
(ii) Except as provided in Section 8(c)(i), the
Participant shall generally have the rights of a stockholder of the
Company with respect to Restricted Stock or Performance Shares during the
Restricted Period. The Participant shall generally not have the rights of
a stockholder with respect to Shares subject to Awards of Deferred Stock
during the Restricted Period; provided, however, that dividends declared
during the Restricted Period with respect to the number of Shares covered
by Awards of Deferred Stock shall be paid to the Participant. Certificates
for unrestricted Shares shall be delivered to the Participant promptly
after, and only after, the Restricted Period shall expire without
forfeiture in respect of such Awards of Restricted Stock, Deferred Stock
or Performance Shares except as the Administrator, in its sole discretion,
shall otherwise determine.
(iii) The rights of Participants granted Awards of
Restricted Stock, Deferred Stock or Performance Shares upon termination of
employment or service as a director, consultant or advisor to the Company
or to any Parent or Subsidiary terminates for any reason during the
Restricted Period shall be set forth in the Restricted Stock Award
Agreement, Deferred Stock Award Agreement or Performance Shares Award
Agreement, as appropriate, governing such Awards.
Section 9 Amendment and Termination.
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any Award theretofore granted without such
Participant's consent, or that, without the approval of the stockholders (as
described below), would:
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(a) except as provided in Section 3 of the Plan, increase the
total number of Shares reserved for issuance under the Plan;
(b) change the class of officers, directors, employees,
consultants and advisors eligible to participate in the Plan; or
(c) extend the maximum Option period under Section 6(b) of the
Plan.
Notwithstanding the foregoing, stockholder approval under this
Section 9 shall only be required at such time and under such circumstances as
stockholder approval would be required under Section 162(m) of the Code or other
applicable law, rule or regulation with respect to any material amendment to an
employee benefit plan of the Company.
The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Section 3 of Plan, no
such amendment shall impair the rights of any Participant without his or her
consent.
Section 10 Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
Section 11 General Provisions.
(a) Shares shall not be issued pursuant to the exercise of any
Award granted hereunder unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act and the requirements of any stock exchange upon which
the Common Stock may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(b) The Administrator may require each person acquiring Shares
to represent to and agree with the Company in writing that such person is
acquiring the Shares without a view to distribution thereof. The certificates
for such Shares may include any legend which the Administrator deems appropriate
to reflect any restrictions on transfer.
All certificates for Shares delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Administrator may cause a legend or legends to be placed
on any such certificates to make appropriate reference to such restrictions.
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(c) Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval, if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any Eligible Recipient any right to continued
employment or service with the Company or any Parent or Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or any
Parent or Subsidiary to terminate the employment or service of any of its
Eligible Recipients at any time.
(d) Each Participant shall, no later than the date as of which
the value of an Award first becomes includable in the gross income of the
Participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such Award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant.
(e) No member of the Board or the Administrator, nor any
officer or employee of the Company acting on behalf of the Board or the
Administrator, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or employee
of the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
Section 12 Stockholder Approval; Effective Date of Plan; Effective Date of
Amendments.
(a) The grant of any Award hereunder shall be contingent upon
stockholder approval of the Plan being obtained within 12 months before or after
the date the Board adopts the Plan.
(b) Subject to the approval of the Plan by the stockholders of
the Company within twelve (12) months before or after the date the Plan is
adopted by the Board, the Plan shall be effective as of July 21, 2000.
Section 13 Term of Plan.
No Option, Stock Appreciation Right, Limited Stock Appreciation
Right, or Awards of Restricted Stock, Deferred Stock or Performance Shares shall
be granted pursuant to the Plan on or after July 21, 2010, but Awards
theretofore granted may extend beyond that date.
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