Appendix A
A-15
2000 STOCK INCENTIVE PLAN
OF
ATLANTIC COAST AIRLINES HOLDINGS, INC.
SECTION 1. PURPOSE OF PLAN
The purpose of this 2000 Stock Incentive Plan (this "Plan")
of Atlantic Coast Airlines Holdings, Inc., a Delaware corporation
(the "Company"), is to enable the Company to attract, retain and
motivate its directors, officers and other key employees, and to
further align the interests of such persons with those of the
stockholders of the Company by providing for or increasing the
proprietary interest of such persons in the Company.
SECTION 2. ADMINISTRATION OF PLAN
2.1 Composition of Committee. Subject to the provisions
for directors pursuant to Section 6.8, this Plan shall be
administered by the Compensation Committee of the Board of
Directors (the "Committee"), as appointed from time to time by
the Board of Directors. The Board of Directors shall fill
vacancies on, and from time to time may remove or add members to,
the Committee. The Committee shall act pursuant to a majority
vote or unanimous written consent. The Board of Directors, in
its sole discretion, may exercise any authority of the Committee
under this Plan in lieu of the Committee's exercise thereof.
Notwithstanding the foregoing, with respect to any Award that is
not intended to satisfy the conditions of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
or Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Committee may appoint one or more
separate committees (any such committee, a "Subcommittee")
composed of one or more directors of the Company (who may but
need not be members of the Committee) and may delegate to any
such Subcommittee(s) the authority to grant Awards, as defined in
Section 5.1 hereof, under the Plan to Eligible Persons, to
determine all terms of such Awards, and/or to administer the Plan
or any aspect of it. Any action by any such Subcommittee within
the scope of such delegation shall be deemed for all purposes to
have been taken by the Committee. The Committee may designate the
Secretary of the Company or other Company employees to assist the
Committee in the administration of the Plan, and may grant
authority to such persons to execute agreements or other
documents evidencing Awards made under this Plan or other
documents entered into under this Plan on behalf of the Committee
or the Company.
2.2 Powers of the Committee. Subject to the express
provisions of this Plan, the Committee shall be authorized and
empowered to do all things necessary or desirable, in its sole
discretion, in connection with the administration of this Plan,
including, without limitation, the following:
(a) to prescribe, amend and rescind rules and
regulations relating to this Plan and to define terms not
otherwise defined herein; provided that, unless the
Committee shall specify otherwise, for purposes of this Plan
(i) the term "fair market value" shall mean, as of any date,
the closing price for a Share (as defined in Section 3.1)
reported for the last trading day prior to such date by the
Nasdaq Stock Market (or such other stock exchange or
quotation system on which Shares are then listed or quoted)
or, if no Shares are traded on the Nasdaq Stock Market (or
such other stock exchange or quotation system) on the date
in question, then for the next preceding date for which
Shares traded on the Nasdaq Stock Market (or such other
stock exchange or quotation system); and (ii) the term
"Company" shall mean the Company and its subsidiaries and
affiliates, unless the context otherwise requires;
(b) to determine which persons are Eligible Persons
(as defined in Section 4), to which of such Eligible
Persons, if any, Awards shall be granted hereunder and the
timing of any such Awards, and to grant Awards;
(c) to grant Awards to Eligible Persons and determine
the terms and conditions thereof, including the number of
Shares subject to Awards and the exercise or purchase price
of such Shares and the circumstances under which Awards
become exercisable or vested or are forfeited or expire,
which terms may but need not be conditioned upon the passage
of time, continued employment, the satisfaction of
performance criteria, the occurrence of certain events
(including events which the Board or the Committee determine
constitute a change of control), or other factors;
(d) to establish, verify the extent of satisfaction
of, adjust, reduce or waive any performance goals or other
conditions applicable to the grant, issuance,
exercisability, vesting and/or ability to retain any Award;
(e) to prescribe and amend the terms of the agreements
or other documents evidencing Awards made under this Plan
(which need not be identical);
(f) to determine whether, and the extent to which,
adjustments are required pursuant to Section 10;
(g) to interpret and construe this Plan, any rules and
regulations under this Plan and the terms and conditions of
any Award granted hereunder, and to make exceptions to any
such provisions in good faith and for the benefit of the
Company; and
(h) to make all other determinations deemed necessary
or advisable for the administration of this Plan.
2.3 Determinations of the Committee. All decisions,
determinations and interpretations by the Committee regarding
this Plan shall be final and binding on all Eligible Persons and
Participants. The Committee shall consider such factors as it
deems relevant to making such decisions, determinations and
interpretations including, without limitation, the
recommendations or advice of any director, officer or employee of
the Company and such attorneys, consultants and accountants as it
may select.
SECTION 3. STOCK SUBJECT TO PLAN
3.1 Aggregate Limits. The aggregate number of shares of
the Company's Common Stock, $.02 par value ("Shares"), issued
pursuant to all Awards granted under this Plan shall not exceed
2,000,000 plus the number of shares subject to awards granted
under the Company's 1992 Stock Option Plan or the Company's 1995
Stock Incentive Plan but which are not issued under such plans as
a result of the cancellation, expiration or forfeiture of such
awards; provided that no more than 15% of such Shares may be
issued pursuant to all Incentive Bonuses and Incentive Stock
Awards granted under this Plan. The aggregate number of Shares
available for issuance under this Plan and the number of Shares
subject to outstanding Options or other Awards shall be subject
to adjustment as provided in Section 10. The Shares issued
pursuant to this Plan may be Shares that either were reacquired
by the Company, including Shares purchased in the open market, or
authorized but unissued Shares.
3.2 Tax Code Limits. The aggregate number of Shares
subject to Options granted under this Plan during any calendar
year to any one Eligible Person shall not exceed 500,000. The
aggregate number of Shares issued or issuable under all Awards
granted under this Plan, other than Options, during any calendar
year to any one Eligible Person shall not exceed 100,000.
Notwithstanding anything to the contrary in this Plan, the
foregoing limitations shall be subject to adjustment under
Section 10 only to the extent that such adjustment will not
affect the status of any Award intended to qualify as
"performance based compensation" under Code Section 162(m). The
foregoing limitations shall not apply to the extent that they are
no longer required in order for compensation in connection with
grants under this Plan to be treated as "performance-based
compensation" under Code Section 162(m). The aggregate number of
Shares that may be issued pursuant to the exercise of ISOs
granted under this Plan shall not exceed 2,000,000, which number
shall be calculated and adjusted pursuant to Section 3.3 and
Section 10 only to the extent that such calculation or adjustment
will not affect the status of any Option intended to qualify as
an ISO under Code Section 422.
3.3 Issuance of Shares. For purposes of Section 3.1, the
aggregate number of Shares issued under this Plan at any time
shall equal only the number of Shares actually issued upon
exercise or settlement of an Award and shall not include Shares
subject to Awards that have been canceled, expired or forfeited
or Shares subject to Awards that have been delivered (either
actually or constructively by attestation) to or retained by the
Company in payment or satisfaction of the purchase price,
exercise price or tax withholding obligation of an Award.
SECTION 4. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an
employee or prospective employee of the Company or any of its
affiliates shall be eligible to be considered for the grant of
Awards hereunder (an "Eligible Person"). For purposes of the
grant provisions under Section 6.8, an "Eligible Person" shall
also include a director of the Company who is not also a salaried
employee (a "Nonemployee Director"). Unless provided otherwise
by the Committee, the term "employee" shall mean an "employee,"
as such term is defined in General Instruction A to Form S-8
under the Securities Act of 1933, as amended, and a "Participant"
is any current or former Eligible Person to whom an Award has
been made and any person (including any estate) to whom an Award
has been assigned or transferred pursuant to Section 9.1. The
status of the chairman of the Board of Directors as an "employee"
shall be determined by the Committee.
SECTION 5. PLAN AWARDS
5.1 Award Types. The Committee, on behalf of the Company,
is authorized under this Plan to enter into certain types of
arrangements with Eligible Persons and to confer certain benefits
on them. The following arrangements or benefits are authorized
under this Plan if their terms and conditions are not
inconsistent with the provisions of this Plan: Options, Incentive
Bonuses and Incentive Stock. Such arrangements and benefits are
sometimes referred to herein as "Awards." The authorized types
of arrangements and benefits for which Awards may be granted are
defined as follows:
(a) Options: An Option is a right granted under
Section 6 to purchase a number of Shares at such exercise
price, at such times, and on such other terms and conditions
as are specified in the agreement or terms and conditions or
other document evidencing the Award (the "Option Document
"). Options intended to qualify as Incentive Stock Options
("ISOs") pursuant to Code Section 422 and Options not
intended to qualify as ISOs ("Nonqualified Options") may be
granted under Section 6. Options may be granted to
Nonemployee Directors only pursuant to Section 6.8.
(b) Incentive Stock: Incentive Stock is an award or
issuance of Shares made under Section 8, the grant,
issuance, retention, vesting and/or transferability of which
is subject during specified periods of time to such
conditions (including continued employment or performance
conditions) and terms as are expressed in the agreement or
other document evidencing the Award (the "Incentive Stock
Document").
(c) Incentive Bonus: An Incentive Bonus is a bonus
opportunity awarded under Section 7 pursuant to which a
Participant may become entitled to receive an amount based
on satisfaction of such performance criteria as are
specified in the agreement or other document evidencing the
Award (the "Incentive Bonus Document").
5.2 Grants of Awards. An Award may consist of one such
arrangement or benefit or two or more of them in tandem or in the
alternative.
SECTION 6. OPTIONS
The Committee may grant an Option or provide for the grant
of an Option, either from time to time in the discretion of the
Committee or automatically upon the occurrence of specified
events, including, without limitation, the achievement of
performance goals, the satisfaction of an event or condition
within the control of the recipient of the Award or within the
control of others.
6.1 Option Document. Each Option Document shall contain
provisions regarding (a) the number of Shares that may be issued
upon exercise of the Option, (b) the purchase price of the Shares
and the means of payment for the Shares, (c) the term of the
Option, (d) such terms and conditions on the vesting and/or
exercisability of an Option as may be determined from time to
time by the Committee, (e) restrictions on the transfer of the
Option and forfeiture provisions and (f) such further terms and
conditions, in each case not inconsistent with this Plan as may
be determined from time to time by the Committee. Option
Documents evidencing ISOs shall contain such terms and conditions
as may be necessary to qualify, to the extent determined
desirable by the Committee, with the applicable provisions of
Section 422 of the Code.
6.2 Option Price. The purchase price per share of the
Shares subject to each Option granted under this Plan shall equal
or exceed 100% of the fair market value of a Share on the date
the Option is granted.
6.3 Option Term. The "Term" of each Option granted under
this Plan, including any ISOs, shall be 10 years from the date of
its grant, unless the Committee provides for a lesser term.
6.4 Option Vesting. Options granted under this Plan shall
be exercisable at such time and in such installments during the
period prior to the expiration of the Option's Term as determined
by the Committee. The Committee shall have the right to make the
timing of the ability to exercise any Option granted under this
Plan subject to continued employment, the passage of time and/or
such performance requirements as deemed appropriate by the
Committee. At any time after the grant of an Option the
Committee may reduce or eliminate any restrictions surrounding
any Participant's right to exercise all or part of the Option,
except that no Option other than Nonemployee Director Options
shall first become exercisable within one (1) year from its date
of grant, other than upon death or disability of the Eligible
Person or upon a Corporate Change (as defined in Section 11.1
hereof).
6.5 Termination of Employment or Service. Subject to
Section 11, upon a termination of employment by an Eligible
Person prior to the full exercise of an Option, the unexercised
portion of the Option shall be subject to such procedures as the
Committee may establish.
6.6 Payment of Exercise Price. The exercise price of an
Option shall be paid in the form of one of more of the following,
as the Committee shall specify, either through the terms of the
Option Document or at the time of exercise of an Option: (a) cash
or certified or cashiers' check, (b) shares of capital stock of
the Company that have been held by the Participant for such
period of time as the Committee may specify, (c) other property
deemed acceptable by the Committee, (d) a reduction in the number
of Shares or other property otherwise issuable pursuant to such
Option, (e) payment under an arrangement with a broker selected
or approved by the Company where payment is made pursuant to an
irrevocable commitment by the broker to deliver to the Company
proceeds from the sale of the Shares issuable upon exercise of
the Option, or (f) any combination of (a) through (d).
6.7 No Option Repricing. Without the approval of
stockholders, the Company shall not reprice any Options. For
purposes of this Plan, the term "reprice" shall mean lowering the
exercise price of previously awarded Options within the meaning
of Item 402(i) under Securities and Exchange Commission
Regulation S-K (including canceling previously awarded Options
and regranting them with a lower exercise price).
6.8 Non-Employee Director Options. Each fiscal year, each
Nonemployee Director shall automatically be granted a
Nonqualified Option (a "Nonemployee Director Option") not more
than 6,000 Shares, provided that for the year in which a
Nonemployee Director first joins the Board, in lieu of the
foregoing, he or she shall automatically be granted a Nonemployee
Director Option to purchase not more than 10,000 Shares. If, on
any date upon which Nonemployee Director Options are to be
granted pursuant to this Section 6.8, the number of Shares
remaining available for options under this Plan is insufficient
for the grant to each Nonemployee Director of a Nonemployee
Director Option to purchase the entire number of Shares specified
in this Section 6.8, then a Nonemployee Director Option to
purchase a proportionate amount of such available number of
Shares (rounded to the nearest whole share) shall be granted to
each Nonemployee Director on such date.
SECTION 7. INCENTIVE BONUSES
Each Incentive Bonus Award will confer upon the Employee the
opportunity to earn a future payment tied to the level of
achievement with respect to one or more performance criteria
established for a performance period of not less than one year.
7.1 Incentive Bonus Document. Each Incentive Bonus Document
shall contain provisions regarding (a) the target and maximum
amount payable to the Participant as an Incentive Bonus, (b) the
performance criteria and level of achievement versus these
criteria that shall determine the amount of such payment, (c) the
term of the performance period as to which performance shall be
measured for determining the amount of any payment, which term
shall not be less than one year, (d) the timing of any payment
earned by virtue of performance, (e) restrictions on the
alienation or transfer of the Incentive Bonus prior to actual
payment, (f) forfeiture provisions and (g) such further terms and
conditions, in each case not inconsistent with this Plan as may
be determined from time to time by the Committee. The maximum
amount payable as an Incentive Bonus may be a multiple of the
target amount payable, but the maximum amount payable pursuant to
that portion of an Incentive Bonus Award granted under this Plan
for any fiscal year to any Eligible Person that is intended to
satisfy the requirements for "performance based compensation"
under Code Section 162(m) shall not exceed $3,000,000.
7.2 Performance Criteria. The Committee shall establish
the performance criteria and level of achievement versus these
criteria that shall determine the target and maximum amount
payable under an Incentive Bonus Award, which criteria may be
based on financial performance and/or personal performance
evaluations. The Committee may specify the percentage of the
target Incentive Bonus that is intended to satisfy the
requirements for "performance-based compensation" under Code
Section 162(m). Notwithstanding anything to the contrary herein,
the performance criteria for any portion of an Incentive Bonus
that is intended by the Committee to satisfy the requirements for
"performance-based compensation" under Code Section 162(m) shall
be a measure based on one or more Qualifying Performance Criteria
(as defined in Section 9.2) selected by the Committee and
specified at the time the Incentive Bonus Award is granted. The
Committee shall certify the extent to which any Qualifying
Performance Criteria has been satisfied, and the amount payable
as a result thereof, prior to payment of any Incentive Bonus that
is intended to satisfy the requirements for "performance-based
compensation" under Code Section 162(m).
7.3 Timing and Form of Payment. The Committee shall
determine the timing of payment of any Incentive Bonus. The
Committee may provide for or, subject to such terms and
conditions as the Committee may specify, may permit a Participant
to elect for the payment of any Incentive Bonus to be deferred to
a specified date or event. An Incentive Bonus may be payable in
Shares or in cash or other property. Any Incentive Bonus that is
paid in cash or other property shall not affect the number of
Shares otherwise available for issuance under this Plan.
7.4 Discretionary Adjustments. Notwithstanding
satisfaction of any performance goals, the amount paid under an
Incentive Bonus Award on account of either financial performance
or personal performance evaluations may be reduced by the
Committee on the basis of such further considerations as the
Committee shall determine.
SECTION 8. INCENTIVE STOCK
Incentive Stock is an award or issuance of Shares the grant,
issuance, retention, vesting and/or transferability of which is
subject during specified periods of time to such conditions
(including continued employment or performance conditions) and
terms as the Committee deems appropriate.
8.1 Incentive Stock Document. Each Incentive Stock
Document shall contain provisions regarding (a) the number of
Shares subject to such Award or a formula for determining such,
(b) the purchase price of the Shares, if any, and the means of
payment for the Shares, (c) the performance criteria, if any, and
level of achievement versus these criteria that shall determine
the number of Shares granted, issued, retainable and/or vested,
(d) such terms and conditions on the grant, issuance, vesting
and/or forfeiture of the Shares as may be determined from time to
time by the Committee, (e) restrictions on the transferability of
the Shares and (f) such further terms and conditions in each case
not inconsistent with this Plan as may be determined from time to
time by the Committee.
8.2 Sale Price. Subject to the requirements of applicable
law, the Committee shall determine the price, if any, at which
Shares of Incentive Stock shall be sold or awarded to an Eligible
Person, which may vary from time to time and among Eligible
Persons and which may be below the fair market value of such
Shares at the date of grant or issuance.
8.3 Share Vesting. The grant, issuance, retention and/or
vesting of Shares of Incentive Stock shall be at such time and in
such installments as determined by the Committee or under
criteria established by the Committee. The Committee shall have
the right to make the timing of the grant and/or the issuance,
ability to retain and/or vesting of Shares of Incentive Stock
subject to continued employment, passage of time and/or such
performance criteria and level of achievement versus these
criteria as deemed appropriate by the Committee, which criteria
may be based on financial performance and/or personal performance
evaluations, except that no such condition that is based upon
continued employment or the passage of time shall provide for
full vesting of an Award in less than three (3) years from the
date the Award is made, other than upon the death or disability
of the Eligible Person or upon a Corporate Change (as defined in
Section 11.1 hereof). Notwithstanding anything to the contrary
herein, the performance criteria for any Incentive Stock that is
intended to satisfy the requirements for "performance-based
compensation" under Code Section 162(m) shall be a measure based
on one or more Qualifying Performance Criteria selected by the
Committee and specified at the time the Incentive Stock Award is
granted.
8.4 Discretionary Adjustments. Notwithstanding
satisfaction of any performance goals, the number of Shares
granted, issued, retainable and/or vested under an Incentive
Stock Award on account of either financial performance or
personal performance evaluations may be reduced by the Committee
on the basis of such further considerations as the Committee
shall determine.
8.5 Termination of Employment. Subject to Section 11, upon
a termination of employment by an Eligible Person prior to the
vesting of or the lapsing of restrictions on Incentive Stock, the
Incentive Stock Awards granted to such Eligible Person shall be
subject to such procedures as determined by the Committee.
SECTION 9. OTHER PROVISIONS APPLICABLE TO AWARDS
9.1 Transferability. Unless the agreement or other
document evidencing an Award (or an amendment thereto authorized
by the Committee) expressly states that the Award is transferable
as provided hereunder, no Award granted under this Plan, nor any
interest in such Award, may be sold, assigned, conveyed, gifted,
pledged, hypothecated or otherwise transferred in any manner
prior to the vesting or lapse of any and all restrictions
applicable thereto, other than by will or the laws of descent and
distribution. The Committee may grant an Award or amend an
outstanding Award to provide that the Award is transferable or
assignable (a) in the case of a transfer without the payment of
any consideration, to any "family member" as such term is defined
in Section 1(a)(5) of the General Instructions to Form S-8 under
the 1933 Act, as such may be amended from time to time, and (b)
in any transfer described in clause (ii) of Section 1(a)(5) of
the General Instructions to Form S-8 under the 1933 Act as
amended from time to time, provided that following any such
transfer or assignment the Award will remain subject to
substantially the same terms applicable to the Award while held
by the Participant, as modified as the Committee shall determine
appropriate, and as a condition to such transfer the transferee
shall execute an agreement agreeing to be bound by such terms.
9.2 Qualifying Performance Criteria. For purposes of this
Plan, the term "Qualifying Performance Criteria" shall mean any
one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or
subsidiary, either individually, alternatively or in any
combination, and measured either annually or cumulatively over a
period of years, on an absolute basis or relative to a pre-
established target, to previous years' results or to a designated
comparison group, in each case as specified by the Committee in
the Award: (a) cash flow, (b) earnings per share, (c) earnings
before interest, taxes and amortization, (d) return on equity,
(e) total stockholder return, (f) share price performance, (g)
return on capital, (h) return on assets or net assets,
(i) revenue, (j) income or net income, (k) operating income or
net operating income, (l) operating profit or net operating
profit, (m) operating margin or profit margin, (n) return on
operating revenue, (o) market share, (p) overhead or other
expense reduction, (q) departure or on-time arrival performance,
and (r) baggage handling. The Committee shall appropriately
adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that
occurs during a performance period: (i) asset write-downs,
(ii) litigation or claim judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other such
laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs and (v) any
extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 and/or in management's discussion
and analysis of financial condition and results of operations
appearing in the Company's annual report to stockholders for the
applicable year.
9.3 Dividends. Unless otherwise provided by the Committee,
no adjustment shall be made in Shares issuable under Awards on
account of cash dividends that may be paid or other rights that
may be issued to the holders of Shares prior to their issuance
under any Award. The Committee shall specify whether dividends
or dividend equivalent amounts shall be paid to any Participant
with respect to the Shares subject to any Award that have not
vested or been issued or that are subject to any restrictions or
conditions on the record date for dividends.
9.4 Documents Evidencing Awards. The Committee shall,
subject to applicable law, determine the date an Award is deemed
to be granted, which for purposes of this Plan shall not be
affected by the fact that an Award is contingent on subsequent
stockholder approval of this Plan. The Committee or, except to
the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements or other documents evidencing
Awards under this Plan and may, but need not, require as a
condition to any such agreement's or document's effectiveness
that such agreement or document be executed by the Participant
and that such Participant agree to such further terms and
conditions as specified in such agreement or document. The grant
of an Award under this Plan shall not confer any rights upon the
Participant holding such Award other than such terms, and subject
to such conditions, as are specified in this Plan as being
applicable to such type of Award (or to all Awards) or as are
expressly set forth in the agreement or other document evidencing
such Award.
9.5 Tandem Stock or Cash Rights. Either at the time an
Award is granted or by subsequent action, the Committee may, but
need not, provide that an Award shall contain as a term thereof,
a right, either in tandem with the other rights under the Award
or as an alternative thereto, of the Participant to receive,
without payment to the Company, a number of Shares, cash or a
combination thereof, the amount of which is determined by
reference to the value of the Award.
9.6 Financing. The Committee may in its discretion provide
financing to a Participant in a principal amount sufficient to
pay the purchase price of any Award and/or to pay the amount of
taxes required by law to be withheld with respect to any Award.
Any such loan shall be subject to all applicable legal
requirements and restrictions pertinent thereto, including
Regulation G promulgated by the Federal Reserve Board. The grant
of an Award shall in no way obligate the Company or the Committee
to provide any financing whatsoever in connection therewith.
9.7 Additional Restrictions on Awards. Either at the time
an Award is granted or by subsequent action, the Committee may,
but need not, impose such restrictions, conditions or limitations
as it determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by a
Participant of any Shares issued under an Award, including
without limitation (a) restrictions under an insider trading
policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by Participants, and (c) restrictions
as to the use of a specified brokerage firm for such resales or
other transfers.
SECTION 10. CHANGES IN CAPITAL STRUCTURE
10.1 Corporate Actions Unimpaired. The existence of
outstanding Awards (including any Options) shall not affect in
any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the Company's
capital structure or its business, or any merger or consolidation
of the Company, or any issuance of Shares or other securities or
subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or
affecting the Shares or other securities of the Company or the
rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a
similar character or otherwise. Further, except as expressly
provided herein or by the Committee, (a) the issuance by the
Company of shares of stock of any class of securities convertible
into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, (b) the payment of a dividend in property other than
Shares, or (c) the occurrence of any similar transaction, and in
any case whether or not for fair value, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number of Shares subject to Options or other Awards theretofore
granted or the purchase price per Share, unless the Committee
shall determine in its sole discretion that an adjustment is
necessary to provide equitable treatment to a Participant.
10.2 Adjustments Upon Certain Events. If the outstanding
Shares or other securities of the Company, or both, for which the
Award is then exercisable or as to which the Award is to be
settled shall at any time be changed or exchanged by declaration
of a stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the Committee may, and if
such event occurs after a Corporate Change the Committee shall,
appropriately and equitably adjust the number and kind of Shares
or other securities which are subject to the Plan or subject to
any Awards theretofore granted, and the exercise or settlement
prices of such Awards, so as to maintain the proportionate number
of Shares or other securities without changing the aggregate
exercise or settlement price, provided, however, that such
adjustment shall be made so as to not affect the status of any
Award intended to qualify as an ISO or as "performance based
compensation" under Section 162(m) of the Code. If the Company
recapitalizes or otherwise changes its capital structure, or
merges, consolidates, sells all of its assets or dissolves (each
of the foregoing a "Fundamental Change"), then thereafter upon
any exercise of an Option or settlement of an Award theretofore
granted, the Participant shall be entitled to purchase under such
Option or receive under such Award, in lieu of the number of
Shares as to which such Option shall then be exercisable or such
Award shall then be subject, the number and class of shares of
stock and securities to which the Participant would have been
entitled pursuant to the terms of the Fundamental Change if,
immediately prior to such Fundamental Change, the Participant had
been the holder of record of the number of Shares as to which
such Option or Award is then subject.
SECTION 11. CHANGE OF CONTROL
11.1 Definitions. Unless the Committee provides otherwise,
For purposes of the Plan and Awards granted under the Plan,
the term "Corporate Change" shall mean:
(i) any merger or consolidation in which the Company
shall not be the surviving entity (or survives only as a
subsidiary of another entity whose shareholders did not own
all or substantially all of the Company's Common Stock
immediately prior to such transaction),
(ii) the sale of all or substantially all of the
Company's assets to any other person or entity (other than a
wholly-owned subsidiary),
(iii) the acquisition of beneficial ownership or
control of (including, without limitation, power to vote)
more than 50% of the outstanding shares of Common Stock by
any person or entity (including a "group" as defined by or
under Section 13(d)(3) of the Exchange Act),
(iv) the dissolution or liquidation of the Company,
(v) a contested election of directors, as a result of
which or in connection with which the persons who were
directors of the Company before such election or their
nominees cease to constitute a majority of the Board, or
(vi) any other event specified by the Committee,
regardless of whether at the time an Option is granted or
thereafter.
11.2 Effect of Change of Control. The Committee may
provide, either at the time an Option is granted or thereafter,
that a Corporate Change shall have such effect as specified by
the Committee, or no effect, as the Committee in its sole
discretion may provide. Without limiting the foregoing, the
Committee may but need not provide, either at the time an Option
is granted or thereafter, that if a Corporate Change occurs, then
effective as of a date selected by the Committee, the Committee
(which for purposes of the Corporate Changes described in (iii)
and (v) above shall be the Committee as constituted prior to the
occurrence of such Corporate Change) acting in its sole
discretion without the consent or approval of any Participant,
will effect one or more of the following alternatives or
combination of alternatives with respect to all outstanding
Options (which alternatives may be conditional on the occurrence
of such of the Corporate Change specified in clause (i) through
(v) above which gives rise to the Corporate Change and which may
vary among individual Participants): (1) in the case of a
Corporate Change specified in clauses (i), (ii) or (iv),
accelerate the time at which Options then outstanding may be
exercised in full for a limited period of time on or before a
specified date (which will permit the Participant to participate
with the Common Stock received upon exercise of such Option in
the event of a Corporate Change specified in clauses (i), (ii) or
(iv), as the case may be) fixed by the Committee, after which
specified date all unexercised Options and all rights of
Participants thereunder shall terminate, (2) accelerate the time
at which Options then outstanding may be exercised so that such
Options may be exercised in full for their then remaining term,
or (3) require the mandatory surrender to the Company of
outstanding Options held by such Participant (irrespective of
whether such Options are then exercisable under the provisions of
the Plan) as of a date, before or not later than sixty days after
such Corporate Change, specified by the Committee, and in such
event the Committee shall thereupon cancel such Options and the
Company shall pay to each Participant an amount of cash equal to
the excess of the fair market value of the aggregate shares
subject to such Option over the aggregate Option price of such
shares; provided, however, the Committee shall not select an
alternative (unless consented to by the Participant) that, if the
Participant exercised his accelerated Options pursuant to
alternative 1 or 2 and participated in the transaction specified
in clause (i), (ii) or (iv) or received cash pursuant to
alternative 3, would result in the Participant's owing any money
by virtue of operation of Section 16(b) of the Exchange Act. If
all such alternatives have such a result, the Committee shall
take such action, which is hereby authorized, to put such
Participant in as close to the same position as such Participant
would have been in had alternative 1, 2 or 3 been selected but
without resulting in any payment by such Participant pursuant to
Section 16(b) of the Exchange Act. Notwithstanding the
foregoing, with the consent of the Participant, the Committee may
in lieu of the foregoing make such provision with respect of any
Corporate Change as it deems appropriate.
SECTION 12. TAXES
12.1 Withholding Requirements. The Committee may make such
provisions or impose such conditions as it may deem appropriate
for the withholding or payment by a Participant of any taxes that
the Committee determines are required in connection with any
Award granted under this Plan, and a Participant's rights in any
Award are subject to satisfaction of such conditions.
12.2 Payment of Withholding Taxes. Notwithstanding the
terms of Section 12.1, the Committee may provide in the agreement
or other document evidencing an Award or otherwise that all or
any portion of the taxes required to be withheld by the Company
or, if permitted by the Committee, desired to be paid by the
Participant, in connection with the exercise, vesting, settlement
or transfer of any other Award shall be paid or, at the election
of the Participant, may be paid by the Company by withholding
shares of the Company's capital stock otherwise issuable or
subject to such Award, or by the Participant delivering
previously owned shares of the Company's capital stock, in each
case having a fair market value equal to the amount required or
elected to be withheld or paid, or by a broker selected or
approved by the Company paying such amount pursuant to an
irrevocable commitment by the broker to deliver to the Company
proceeds from the sale of the Shares issuable under the Award.
Any such election is subject to such conditions or procedures as
may be established by the Committee and may be subject to
approval by the Committee.
SECTION 13. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue this Plan or any
agreement or other document evidencing an Award made under this
Plan but, except as provided pursuant to the anti-dilution
adjustment provisions of Section 10.2, no such amendment shall,
without the approval of the stockholders of the Company:
(a) materially increase the maximum number of shares
of Common Stock for which Awards may be granted under this
Plan;
(b) reduce the price at which Options may be granted
below the price provided for in Section 6.2;
(c) reduce the exercise price of outstanding Options;
(d) extend the term of this Plan;
(e) change the class of persons eligible to be
Eligible Persons or Participants;
(f) increase the number of shares subject to
Nonemployee Director Options granted to a Nonemployee
Director above the number approved by stockholders as set
forth in Section 6.8;
(g) increase the number of shares that are eligible
for non-Option Awards; or
(h) after any Corporate Change, impair the rights of
any Award holder without such holder's consent.
The Board may amend, alter or discontinue the Plan or any
agreement evidencing an Award made under the Plan, but no
amendment or alteration shall be made which would impair the
rights of any Award holder, without such holder's consent, under
any Award theretofore granted, provided that no such consent
shall be required if the Committee determines in its sole
discretion and prior to the date of any Corporate Change or
change of control (as defined, if applicable, in the agreement
evidencing such Award) that such amendment or alteration either
is required or advisable in order for the Company, the Plan or
the Award to satisfy any law or regulation or to meet the
requirements of any accounting standard.
SECTION 14. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.
This Plan, the grant and exercise of Awards thereunder, and
the obligation of the Company to sell, issue or deliver Shares
under such Awards, shall be subject to all applicable federal,
state and foreign laws, rules and regulations and to such
approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to register in a
Participant's name or deliver any Shares prior to the completion
of any registration or qualification of such Shares under any
federal, state or foreign law or any ruling or regulation of any
government body which the Committee shall determine to be
necessary or advisable. This Plan is intended to constitute an
unfunded arrangement for a select group of management or other
key employees, directors and consultants.
No Option shall be exercisable unless a registration
statement with respect to the Option is effective or the Company
has determined that such registration is unnecessary. Unless the
Awards and Shares covered by this Plan have been registered under
the Securities Act of 1933, as amended, or the Company has
determined that such registration is unnecessary, each person
receiving an Award and/or Shares pursuant to any Award may be
required by the Company to give a representation in writing that
such person is acquiring such Shares for his or her own account
for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.
SECTION 15. OPTION GRANTS BY SUBSIDIARIES
In the case of a grant of an Option to any eligible Employee
employed by a Subsidiary, such grant may, if the Committee so
directs, be implemented by the Company issuing any subject shares
to the Subsidiary, for such lawful consideration as the Committee
may determine, upon the condition or understanding that the
Subsidiary will transfer the shares to the optionholder in
accordance with the terms of the Option specified by the
Committee pursuant to the provisions of the Plan.
Notwithstanding any other provision hereof, such Option may be
issued by and in the name of the Subsidiary and shall be deemed
granted on such date as the Committee shall determine.
SECTION 16. NO RIGHT TO COMPANY EMPLOYMENT
Nothing in this Plan or as a result of any Award granted
pursuant to this Plan shall confer on any individual any right to
continue in the employ of the Company or interfere in any way
with the right of the Company to terminate an individual's
employment at any time. The agreements or other documents
evidencing Awards may contain such provisions as the Committee
may approve with reference to the effect of approved leaves of
absence.
SECTION 17. LIABILITY OF COMPANY
The Company and any Affiliate which is in existence or
hereafter comes into existence shall not be liable to a
Participant, an Eligible Person or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or
sale of shares as to which the Company has been unable to
obtain from any regulatory body having jurisdiction the
authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected,
but not realized, by any Participant, Eligible Person or
other person due to the receipt, exercise or settlement of
any Option or other Award granted hereunder.
SECTION 18. EFFECTIVENESS AND EXPIRATION OF PLAN
This Plan shall be effective on the date the Company's
stockholders adopt this Plan. All Awards granted under this Plan
are subject to, and may not be exercised before, the approval of
this Plan by the stockholders prior to the first anniversary date
of the effective date of this Plan, by the affirmative vote of
the holders of a majority of the outstanding shares of the
Company present, or represented by proxy, and entitled to vote,
at a meeting of the Company's stockholders or by written consent
in accordance with the laws of the State of Delaware; provided
that if such approval by the stockholders of the Company is not
forthcoming, all Awards previously granted under this Plan shall
be void. No Awards shall be granted pursuant to this Plan more
than 10 years after the effective date of this Plan.
SECTION 19. NON-EXCLUSIVITY OF PLAN
Neither the adoption of this Plan by the Board nor the
submission of this Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the
power of the Board or the Committee to adopt such other incentive
arrangements as either may deem desirable, including without
limitation, the granting of restricted stock or stock options
otherwise than under this Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
SECTION 20. GOVERNING LAW
This Plan and any agreements or other documents hereunder
shall be interpreted and construed in accordance with the laws of
the State of Delaware and applicable federal law. The Committee
may provide that any dispute as to any Award shall be presented
and determined in such forum as the Committee may specify,
including through binding arbitration. Any reference in this
Plan or in the agreement or other document evidencing any Award
to a provision of law or to a rule or regulation shall be deemed
to include any successor law, rule or regulation of similar
effect or applicability.
