PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held on December 18, 2007
The
stockholder(s) whose signature(s) appear(s) on the reverse side of this proxy
form hereby appoint(s) Wang Xin and Zhao Hongwei, INDIVIDUALLY or any of them
as
proxies, with full power of substitution, and hereby authorize(s) them to
represent and vote all shares of Common Stock of the Company which the
stockholder(s) would be entitled to vote on all matters which may come before
the Annual Meeting of Stockholders to be held at 10:00 a.m., local time, at
the
offices of Kirkpatrick & Lockhart Preston Gates Ellis LLP, 599 Lexington
Avenue, New York, New York 10022.
This
proxy will be voted in accordance with the instructions indicated on the reverse
side of this card. If no instructions are given, this proxy will be voted FOR
the proposals and in the proxies’ discretion upon such other business as may
properly come before the meeting and any adjournments or postponements thereof.
(To
Be Signed on Reverse Side.)
Please
date, sign and mail your proxy card in the
envelope
provided as soon as possible.
â
Please
detach along perforated line and mail in the envelope provided.
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FOR
THE MATTER SET FORTH BELOW, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
THE MATTER SUBMITTED. PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE INK AS SHOWN HERE
S
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1.
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ELECTION
OF DIRECTORS.
Wang
Xin, Liu Yu, Naizhong Che, Peng Wang, Zhixiang Zhang, Nathaniel K.
Hsieh
and Howard S. Barth
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o
FOR
all nominees, listed above (except as specified
below).
o
WITHHOLD
AUTHORITY to vote for all nominees listed
above.
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2.
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ADOPTION
OF THE
ORSUS
XELENT TECHNOLOGIES, INC. 2007 OMNIBUS LONG-TERM INCENTIVE PLAN (THE
“2007
OMNIBUS PLAN”)
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FOR
the adoption of the 2007 Omnibus Plan.
o
AGAINST
the adoption of the 2007 Omnibus Plan.
o
ABSTAIN.
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INSTRUCTIONS:
TO WITHHOLD AUTHORITY FOR ANY INDICATED NOMINEE, WRITE THE NAME(S) OF THE
NOMINEE(S) IN THE SPACE PROVIDED:
Signature
of Stockholder
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Date:
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Signature
of Stockholder
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Date:
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NOTE:
Please sign exactly as your name or names appear on this Proxy. When shares
are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer
is
a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
Appendix
A
ORSUS
XELENT TECHNOLOGIES, INC.
2007
OMNIBUS LONG-TERM INCENTIVE PLAN
Orsus
Xelent Technologies, Inc., a Delaware corporation (the “Company”), sets forth
herein the terms of its 2007 Omnibus Long-Term Incentive Plan (the “Plan”), as
follows:
1.
PURPOSE
The
Plan
is intended to enhance the Company’s and its Affiliates’ (as defined herein)
ability to attract and retain highly qualified officers, directors, key
employees and other persons, and to motivate such officers, directors, key
employees and other persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or increase
a
direct proprietary interest in the operations and future success of the Company.
To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, restricted stock units, unrestricted
stock and cash awards. Any of these awards may, but need not, be made as
performance incentives to reward attainment of annual or long-term performance
goals in accordance with the terms hereof. Stock options granted under the
Plan
may be non-qualified stock options or incentive stock options, as provided
herein.
2.
DEFINITIONS
For
purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:
2.1.
“
Affiliate
”
means
any company or other trade or business that “controls,” is “controlled by” or is
“under common control” with the Company within the meaning of Rule 405 of
Regulation C under the Securities Act, including, without limitation, any
Subsidiary.
2.2.
“
Annual
Incentive Award
”
means
an Award made subject to attainment of performance goals (as described in
Section 13) over a performance period of a duration as specified by the
Committee.
2.3.
“
Award
”
means
a
grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock
Unit, Unrestricted Stock, or cash award under the Plan.
2.4.
“
Award
Agreement
”
means
a
written agreement between the Company and a Grantee, or notice from the Company
to a Grantee, that evidences and sets out the terms and conditions of an Award.
2.5.
“
Board
”
means
the Board of Directors of the Company.
2.6.
“
Cause
”
means,
as determined by the Committee and unless otherwise provided in an applicable
agreement with the Company or an Affiliate at or before the Grant Date: (i)
engaging in any act, omission or misconduct that is injurious to the Company
or
its Affiliates; (ii) gross negligence or willful misconduct in connection with
the performance of duties; (iii) conviction of a criminal offense (other
than minor traffic offenses); (iv) fraud, embezzlement or misappropriation
of
funds or property of the Company or an Affiliate; (v) material breach of
any term of any employment, consulting or other services, confidentiality,
intellectual property or non-competition agreements, if any, between the Service
Provider and the Company or an Affiliate; (vi) the entry of an order duly issued
by any regulatory agency (including federal, state and local regulatory agencies
and self-regulatory bodies) having jurisdiction over the Company or an Affiliate
requiring the removal from any office held by the Service Provider with the
Company or prohibiting a Service Provider from participating in the business
or
affairs of the Company or any Affiliate; or (vii) the revocation or threatened
revocation of any of the Company’s or an Affiliate’s government licenses,
permits or approvals, which is primarily due to the Service Provider’s action or
inaction and such revocation or threatened revocation would be alleviated or
mitigated in any material respect by the termination of the Service Provider’s
Services.
2.7.
“
Change
in Control
”
shall
have the meaning set forth in Section 15.2.
2.8.
“
Code
”
means
the Internal Revenue Code of 1986, as now in effect or as hereafter amended.
2.9.
“
Committee
”
means
the Compensation Committee of the Board, or such other committee as determined
by the Board. The Compensation Committee of the Board may, in its discretion,
designate a subcommittee of its members to serve as the Committee (to the extent
the Board has not designated another person, committee or entity as the
Committee) or to cause the Committee to (i) consist solely of persons who are
“Nonemployee Directors” as defined in Rule 16b-3 issued under the Exchange Act,
(ii) consist solely of persons who are Outside Directors, or (iii) satisfy
the
applicable requirements of any stock exchange on which the Common Stock may
then
be listed.
2.10.
“
Company
”
means
Orsus Xelent Technologies, Inc., a Delaware corporation, or any successor
corporation.
2.11.
“
Common
Stock
”
or
“
Stock
”
means
share of common stock of the Company, par value $0.001 per share.
2.12.
“
Covered
Employee
”
means
a
Grantee who is a “covered employee” within the meaning of Section 162(m)(3)
of the Code, as qualified by Section 13.4 herein.
2.13.
“
Disability
”
means
the Grantee is unable to perform each of the essential duties of such Grantee’s
position by reason of a medically determinable physical or mental impairment
which is potentially permanent in character or which can be expected to last
for
a continuous period of not less than 12 months;
provided
,
however
,
that,
with respect to rules regarding expiration of an Incentive Stock Option
following termination of the Grantee’s Service, Disability has the meaning as
set forth in Section 22(e)(3) of the Code.
2.14.
“
Effective
Date
”
means
the date set forth in Section 16.10 herein.
2.15.
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
2.16.
“
Fair
Market Value
”
of
a
share of Common Stock as of a particular date shall mean (i) the closing sale
price reported for a share of Common Stock on such date on the national
securities exchange or national market system on which such stock is principally
traded, or if such date is not a trading day, the trading day immediately
preceding such date on which a sale was reported, or (ii) if the shares of
Common Stock are not then listed on a national securities exchange or national
market system, or the value of such shares is not otherwise determinable, such
value as determined by the Board in good faith in its sole discretion (but
in
any event not less than fair market value within the meaning of Section 409A).
2.17.
“
Family
Member
”
means
a
person who is a spouse, former spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the applicable individual, any person
sharing the applicable individual’s household (other than a tenant or employee),
a trust in which any one or more of these persons have more than fifty percent
of the beneficial interest, a foundation in which any one or more of these
persons (or the applicable individual) control the management of assets, and
any
other entity in which one or more of these persons (or the applicable
individual) own more than fifty percent of the voting interests.
2.18.
“
Grant
Date
”
means,
as determined by the Committee, the latest to occur of (i) the date as of
which the Committee approves an Award, (ii) the date on which the recipient
of an Award first becomes eligible to receive an Award under Section 6
hereof, or (iii) such other date as may be specified by the Committee in
the Award Agreement.
2.19.
“
Grantee
”
means
a
person who receives or holds an Award under the Plan.
2.20.
“
Incentive
Stock Option
”
means
an “incentive stock option” within the meaning of Section 422 of the Code,
or the corresponding provision of any subsequently enacted tax statute, as
amended from time to time.
2.21.
“
Non-Qualified
Stock Option
”
means
an Option that is not an Incentive Stock Option.
2.22.
“
Option
”
means
an option to purchase one or more shares of Stock pursuant to the Plan.
2.23.
“
Option
Price
”
means
the exercise price for each share of Stock subject to an Option.
2.24.
“
Outside
Director
”
means
a
member of the Board who is not an officer or employee of the Company or an
Affiliate, determined in accordance with the requirements of Section 162(m)
of
the Code.
2.25.
“
Performance
Award
”
means
an Award made subject to the attainment of performance goals (as described
in
Section 13) over a performance period of up to ten (10) years.
2.26.
“
Plan
”
means
this Orsus Xelent Technologies, Inc. 2007 Omnibus Long-Term Incentive Plan.
2.27.
“
Purchase
Price
”
means
the purchase price for each share of Stock pursuant to a grant of Restricted
Stock or Unrestricted Stock.
2.28.
“
Reporting
Person
”
means
a
person who is required to file reports under Section 16(a) of the Exchange
Act.
2.29.
“
Restricted
Stock
”
means
shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.
2.30.
“
Restricted
Stock Unit
”
means
a
bookkeeping entry representing the equivalent of shares of Stock, awarded to
a
Grantee pursuant to Section 10 hereof.
2.31.
“
SAR
Exercise Price
”
means
the per share exercise price of a SAR granted to a Grantee under Section 9
hereof.
2.32.
“
Section
409A
”
shall
mean Section 409A of the Code and all formal guidance and regulations
promulgated thereunder.
2.33.
“
Securities
Act
”
means
the Securities Act of 1933, as now in effect or as hereafter amended.
2.34.
“
Separation
from Service
”
means
a
termination of Service by a Service Provider, as determined by the Committee,
which determination shall be final, binding and conclusive; provided if any
Award governed by Section 409A is to be distributed on a Separation from
Service, then the definition of Separation from Service for such purposes shall
comply with the definition provided in Section 409A.
2.35.
“
Service
”
means
service as a Service Provider to the Company or an Affiliate. Unless otherwise
stated in the applicable Award Agreement, a Grantee’s change in position or
duties shall not result in interrupted or terminated Service, so long as such
Grantee continues to be a Service Provider to the Company or an Affiliate.
2.36.
“
Service
Provider
”
means
an employee, officer or director of the Company or an Affiliate, or a consultant
or adviser currently providing services to the Company or an Affiliate.
2.37.
“
Stock
Appreciation Right
”
or
“
SAR
”
means
a
right granted to a Grantee under Section 9 hereof.
2.38.
“
Subsidiary
”
means
any “subsidiary corporation” of the Company within the meaning of
Section 424(f) of the Code.
2.39.
“
Termination
Date
”
means
the date upon which an Option shall terminate or expire, as set forth in
Section 8.3 hereof.
2.40.
“
Ten
Percent Stockholder
”
means
an individual who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Company, its parent
or
any of its Subsidiaries. In determining stock ownership, the attribution rules
of Section 424(d) of the Code shall be applied.
2.41.
“
Unrestricted
Stock
”
means
an Award pursuant to Section 11 hereof.
3.
ADMINISTRATION
OF THE PLAN
3.1.
General.
The
Committee shall have such powers and authorities related to the administration
of the Plan as are consistent with the Company’s certificate of incorporation
and bylaws and applicable law. The Committee shall have full power and authority
to take all actions and to make all determinations required or provided for
under the Plan, any Award or any Award Agreement, and shall have full power
and
authority to take all such other actions and make all such other determinations
not inconsistent with the specific terms and provisions of the Plan that the
Committee deems to be necessary or appropriate to the administration of the
Plan. The interpretation and construction by the Committee of any provision
of
the Plan, any Award or any Award Agreement shall be final, binding and
conclusive. Without limitation, the Committee shall have full and final
authority, subject to the other terms and conditions of the Plan, to:
(i)
designate Grantees;
(ii)
determine the type or types of Awards to be made to a Grantee;
(iii)
determine the number of shares of Stock to be subject to an Award;
(iv)
establish the terms and conditions of each Award (including, but not limited
to,
the Option Price of any Option, the nature and duration of any restriction
or
condition (or provision for lapse thereof) relating to the vesting, exercise,
transfer, or forfeiture of an Award or the shares of Stock subject thereto,
and
any terms or conditions that may be necessary to qualify Options as Incentive
Stock Options);
(v)
prescribe the form of each Award Agreement; and
(vi)
amend, modify, or supplement the terms of any outstanding Award including the
authority, in order to effectuate the purposes of the Plan, to modify Awards
to
foreign nationals or individuals who are employed outside the United States
to recognize differences in local law, tax policy, or custom.
Notwithstanding
the foregoing, no amendment or modification may be made to an outstanding Option
or SAR that (i) causes the Option or SAR to become subject to
Section 409A, (ii) reduces the Option Price or SAR Exercise Price,
either by lowering the Option Price or SAR Exercise Price or by canceling the
outstanding Option or SAR and granting a replacement Option or SAR with a lower
Option Price or SAR Exercise Price or (iii) would be treated as a repricing
under the rules of the exchange upon which the Company’s Stock trades, without,
with respect to item (i), the Grantee’s written prior approval, and with respect
to items (ii) and (iii), without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to outstanding
Options and SARs pursuant to
Section 15
.
The
Company may retain the right in an Award Agreement to cause a forfeiture of
the
gain realized by a Grantee on account of actions taken by the Grantee in
violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof or otherwise
in
competition with the Company or any Affiliate thereof, to the extent specified
in such Award Agreement applicable to the Grantee. Furthermore, the Company
may
annul an Award if the Grantee is terminated for Cause as defined in the
applicable Award Agreement or the Plan, as applicable. The grant of any Award
may be contingent upon the Grantee executing the appropriate Award Agreement.
3.2.
Deferral
Arrangement.
The
Committee may permit or require the deferral of any Award payment into a
deferred compensation arrangement, subject to such rules and procedures as
it
may establish and in accordance with Section 409A, which may include
provisions for the payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Stock units.
3.3.
No
Liability.
No
member
of the Board or of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan, any Award or Award Agreement.
3.4.
Book
Entry.
Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to
satisfy any requirement under this Plan for the delivery of stock certificates
through the use of book-entry.
4.
STOCK
SUBJECT TO THE PLAN
Subject
to adjustment as provided in
Section 15
hereof,
the maximum number of shares of Stock available for issuance under the Plan
shall be 4,500,000. All such shares of Stock available for issuance under the
Plan shall be available for issuance pursuant to Incentive Stock Options. Stock
issued or to be issued under the Plan shall be authorized but unissued shares;
or, to the extent permitted by applicable law, issued shares that have been
reacquired by the Company. The maximum number of Common Stock that will be
awarded to any one Grantee during any calendar year shall not exceed
675,000.
The
Committee may adopt reasonable procedures for making adjustments in accordance
with
Section 15
.
If the
Option Price of any Option granted under the Plan, or if pursuant to
Section 16.3
the
withholding obligation of any Grantee with respect to an Option or other Award,
is satisfied by tendering shares of Stock to the Company (by either actual
delivery or by attestation) or by withholding shares of Stock, the number of
shares of Stock issued net of the shares of Stock tendered or withheld shall
be
deemed delivered for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan. To the extent that an Award under
the Plan is canceled, expired, forfeited, settled in cash, settled by issuance
of fewer shares than the number underlying the Award, or otherwise terminated
without delivery of shares to the Grantee, the shares retained by or returned
to
the Company will be available under the Plan; and shares that are withheld
from
such an Award or separately surrendered by the Grantee in payment of any
exercise price or taxes relating to such an Award shall be deemed to constitute
shares not delivered to the Grantee and will be available under the Plan. In
addition, in the case of any Award granted in assumption of or in substitution
for an award of a company or business acquired by the Company or a Subsidiary
or
Affiliate or with which the Company or a Subsidiary or Affiliate combines,
shares issued or issuable in connection with such substitute Award shall not
be
counted against the number of shares reserved under the Plan.
5.
EFFECTIVE
DATE, DURATION AND AMENDMENTS
5.1.
Term.
The
Plan
shall be effective as of the Effective Date and shall terminate on the ten
(10) year anniversary of the Effective Date, and may be terminated on any
earlier date as provided in
Section 5.2
.
5.2.
Amendment
and Termination of the Plan.
The
Board
may, at any time and from time to time, amend, suspend, or terminate the Plan
as
to any Awards which have not been made. An amendment shall be contingent on
approval of the Company’s stockholders to the extent stated by the Board,
required by applicable law or required by applicable stock exchange listing
requirements. No Awards shall be made after termination of the Plan. No
amendment, suspension, or termination of the Plan shall, without the consent
of
the Grantee, impair rights or obligations under any Award theretofore awarded.
6.
AWARD
ELIGIBILITY AND LIMITATIONS
6.1.
Service
Providers and Other Persons.
Subject
to this
Section 6
,
Awards
may be made to any Service Provider, including any Service Provider who is
an
officer or director of the Company or of any Affiliate, as the Committee shall
determine and designate from time to time in its discretion.
6.2.
Successive
Awards.
An
eligible person may receive more than one Award, subject to such restrictions
as
are provided herein.
6.3.
Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards
may, in the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution or exchange for, any other Award or
any
award granted under another plan of the Company, any Affiliate, or any business
entity to be acquired by the Company or an Affiliate, or any other right of
a
Grantee to receive payment from the Company or any Affiliate. Such additional,
tandem, and substitute or exchange Awards may be granted at any time. If an
Award is granted in substitution or exchange for another Award, the Committee
shall have the right to require the surrender of such other Award in
consideration for the grant of the new Award. The Board shall have the right,
in
its discretion, to make Awards in substitution or exchange for any other award
under another plan of the Company, any Affiliate, or any business entity to
be
acquired by the Company or an Affiliate. In addition, Awards may be granted
in
lieu of cash compensation, including in lieu of cash amounts payable under
other
plans of the Company or any Affiliate, in which the value of Stock subject
to
the Award is equivalent in value to the cash compensation (for example,
Restricted Stock Units or Restricted Stock).
7.
AWARD
AGREEMENT
Each
Award shall be evidenced by an Award Agreement, in such form or forms as the
Committee shall from time to time determine. Without limiting the foregoing,
an
Award Agreement may be provided in the form of a notice which provides that
acceptance of the Award constitutes acceptance of all terms of the Plan and
the
notice. Award Agreements granted from time to time or at the same time need
not
contain similar provisions but shall be consistent with the terms of the Plan.
Each Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-Qualified Stock Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-Qualified Stock Options.
8.
TERMS
AND CONDITIONS OF OPTIONS
8.1.
Option
Price.
The
Option Price of each Option shall be fixed by the Committee and stated in the
related Award Agreement. The Option Price of each Incentive Stock Option shall
be at least the Fair Market Value of a share of Stock on the Grant Date;
provided
,
however
,
that
(i) in the event that a Grantee is a Ten Percent Stockholder as of the
Grant Date, the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall be not less than 110 percent
of
the Fair Market Value of a share of Stock on the Grant Date, and (ii) with
respect to Awards made in substitution for or in exchange for awards made by
an
entity acquired by the Company or an Affiliate, the Option Price does not need
to be at least the Fair Market Value on the Grant Date. In no case shall the
Option Price of any Option be less than the par value of a share of
Stock.
8.2.
Vesting.
Subject
to
Section 8.3
hereof,
each Option shall become exercisable at such times and under such conditions
(including without limitation performance requirements) as shall be determined
by the Committee and stated in the Award Agreement. For purposes of this
Section 8.2
,
fractional numbers of shares of Stock subject to an Option shall be rounded
down
to the next nearest whole number.
8.3.
Term.
Each
Option shall terminate, and all rights to purchase shares of Stock thereunder
shall cease, upon the expiration of ten
years
from the Grant Date, or under such circumstances and on such date prior thereto
as is set forth in the Plan or as may be fixed by the Committee and stated
in
the related Award Agreement (the “Termination Date”);
provided
,
however
,
that in
the event that the Grantee is a Ten Percent Stockholder, an Option granted
to
such Grantee that is intended to be an Incentive Stock Option at the Grant
Date
shall not be exercisable after the expiration of five years from its Grant
Date.
8.4.
Separation
from Service.
Except
as
otherwise provided in an Award Agreement, if a Grantee’s employment with or
service to the Company or Affiliate terminates for any reason other than Cause,
(i) Op-tions granted to such Grantee, to the extent that they are exercisable
at
the time of such termination, shall remain exercisable for a period of not
more
than 90 days after such termination (one year in the case of termination by
reason of death or Disability), on which date they shall expire, and (ii)
Options granted to such Grantee, to the extent that they were not exercisable
at
the time of such termi-nation, shall expire on the date of such termina-tion.
In
the event of the termination of a Grantee’s employment or service for Cause, all
out-standing Options granted to such Grantee shall expire on the date of such
termina-tion. Not-with-standing the forego-ing, no Option shall be exercis-able
after the expiration of its term.
8.5.
Limitations
on Exercise of Option.
Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, (i) prior to the date the Plan is approved by the
stockholders of the Company as provided herein or (ii) after the occurrence
of an event referred to in
Section 15
hereof
which results in termination of the Option.
8.6.
Method
of Exercise.
An
Option
that is exercisable may be exercised by the Grantee’s delivery to the Company of
written notice of exercise on any business day, at the Company’s principal
office, on the form specified by the Company. Such notice shall specify the
number of shares of Stock with respect to which the Option is being exercised
and shall be accompanied by payment in full of the Option Price of the shares
for which the Option is being exercised plus the amount (if any) of federal
and/or other taxes which the Company may, in its judgment, be required to
withhold with respect to an Award. Except as otherwise provided by the
Committee, payments hereunder shall be made in cash or cash equivalents
acceptable to the Company. Notwithstanding anything contained herein to the
contrary, the Committee may, solely in its discretion, approve payment in whole
or in part by an alternative method, including (i) by means of any cashless
exercise procedure approved by the Committee, (ii) in the form of unrestricted
shares of Stock already owned by the Grantee on the date of surrender to the
extent the shares of Stock have a Fair Market Value on the date of surrender
equal to the aggregate Option Price of the shares as to which such Option shall
be exercised,
provided
that,
in
the case of an Incentive Stock Option, the right to make payment in the form
of
already owned shares of Stock may be authorized only at the time of grant,
or
(iii) any combination of the foregoing.
8.7.
Rights
of Holders of Options.
Unless
otherwise stated in the related Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in
Section 15
hereof,
no adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date of such issuance.
8.8.
Delivery
of Stock Certificates.
Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares of
Stock subject to the Option.
8.9.
Transferability
of Options.
Except
as
provided in
Section 8.10
,
during
the lifetime of a Grantee, only the Grantee (or, in the event of legal
incapacity or incompetence, the Grantee’s guardian or legal representative) may
exercise an Option. Except as provided in
Section 8.10
,
no
Option shall be assignable or transferable by the Grantee to whom it is granted,
other than by will or the laws of descent and distribution.
8.10.
Family
Transfers.
If
authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Option which is not an Incentive Stock Option to any
Family Member. For the purpose of this
Section 8.10
,
a “not
for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights;
or
(iii) a transfer to an entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Grantee) in exchange for
an
interest in that entity. Following a transfer under this
Section 8.10
,
any
such Option shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer. Subsequent transfers of
transferred Options are prohibited except to Family Members of the original
Grantee in accordance with this
Section 8.10
or by
will or the laws of descent and distribution. Notwithstanding the foregoing,
the
Committee may also provide that Options may be transferred to persons other
than
Family Members. The events of termination of Service of
Section 8.4
hereof
shall continue to be applied with respect to the original Grantee, following
which the Option shall be exercisable by the transferee only to the extent,
and
for the periods specified, in
Section 8.4
.
8.11.
Limitations
on Incentive Stock Options.
An
Option
shall constitute an Incentive Stock Option only (i) if the Grantee of such
Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement;
and (iii) to the extent that the aggregate Fair Market Value (determined at
the time the Option is granted) of the shares of Stock with respect to which
all
Incentive Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans of the
Grantee’s employer and its Affiliates) does not exceed $100,000. This limitation
shall be applied by taking Options into account in the order in which they
were
granted.
9.
TERMS
AND CONDITIONS OF STOCK APPRECIATION RIGHTS
9.1.
Right
to Payment.
A
SAR
shall confer on the Grantee a right to receive, upon exercise thereof, the
excess of (i) the Fair Market Value of one share of Stock on the date of
exercise over (ii) the SAR Exercise Price, as determined by the Committee.
The Award Agreement for an SAR shall specify the SAR Exercise Price, which
shall
be fixed on the Grant Date. SARs may be granted alone or in conjunction with
all
or part of an Option or at any subsequent time during the term of such Option
or
in conjunction with all or part of any other Award. A SAR granted in tandem
with
an outstanding Option following the Grant Date of such Option may have a grant
price that is equal to the Option Price.
9.2.
Other
Terms.
The
Committee shall determine at the Grant Date or thereafter, the time or times
at
which and the circumstances under which a SAR may be exercised in whole or
in
part (including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of Service or upon other conditions, the
method of exercise, whether or not a SAR shall be in tandem or in combination
with any other Award, and any other terms and conditions of any SAR.
9.3.
Term
of SARs.
The term
of a SAR granted under the Plan shall be determined by the Committee, in its
sole discretion; provided, however, that such term shall not exceed ten
years.
9.4.
Payment
of SAR Amount.
Upon
exercise of a SAR, a Grantee shall be entitled to receive payment from the
Company in an amount determined by multiplying:
(i)
the
difference between the Fair Market Value of a Share on the date of exercise
over
the SAR Exercise Price; by
(ii)
the
number of Shares with respect to which the SAR is exercised.
SARs
may
be settled in cash
or
Stock,
as determined by the Committee and set forth in the Award
Agreement.
10.
TERMS
AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS
10.1.
Restrictions.
At
the
time of grant, the Committee may, in its sole discretion, establish a period
of
time (a “restricted period”) and any additional restrictions including the
satisfaction of corporate or individual performance objectives applicable to
an
Award of Restricted Stock or Restricted Stock Units in accordance with
Section 13.1
and
13.2
.
Each
Award of Restricted Stock or Restricted Stock Units may be subject to a
different restricted period and additional restrictions. Neither Restricted
Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged
or
otherwise encumbered or disposed of during the restricted period or prior to
the
satisfaction of any other applicable restrictions.
10.2.
Restricted
Stock Certificates.
The
Company shall issue stock, in the name of each Grantee to whom Restricted Stock
has been granted, stock certificates or other evidence of ownership representing
the total number of shares of Restricted Stock granted to the Grantee, as soon
as reasonably practicable after the Grant Date. The Committee may provide in
an
Award Agreement that either (i) the Secretary of the Company shall hold
such certificates for the Grantee’s benefit until such time as the Restricted
Stock is forfeited to the Company or the restrictions lapse, or (ii) such
certificates shall be delivered to the Grantee,
provided
,
however
,
that
such certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.
10.3.
Rights
of Holders of Restricted Stock.
Unless
the Committee otherwise provides in an Award Agreement, holders of Restricted
Stock shall have the right to vote such Stock and the right to receive any
dividends declared or paid with respect to such Stock. The Committee may provide
that any dividends paid on Restricted Stock must be reinvested in shares of
Stock, which may or may not be subject to the same restrictions applicable
to
such Restricted Stock. All distributions, if any, received by a Grantee with
respect to Restricted Stock as a result of any stock split, stock dividend,
combination of shares, or other similar transaction shall be subject to the
restrictions applicable to the original Award.
10.4.
Rights
of Holders of Restricted Stock Units.
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10.4.1.
|
Settlement
of Restricted Stock Units.
|
Restricted
Stock Units may be settled in cash or Stock, as determined by the Committee
and
set forth in the Award Agreement. The Award Agreement shall also set forth
whether the Restricted Stock Units shall be settled (i) within the time
period specified in
Section 16.9.1
for
short
term deferrals or (ii) otherwise within the requirements of
Section 409A, in which case the Award Agreement shall specify upon which
events such Restricted Stock Units shall be settled.
|
10.4.2.
|
Voting
and Dividend Rights.
|
Holders
of Restricted Stock Units shall have no rights as stockholders of the Company.
The Committee may provide in an Award Agreement that the holder of such
Restricted Stock Units shall be entitled to receive, upon the Company’s payment
of a cash dividend on its outstanding Stock, a cash payment for each Restricted
Stock Unit held equal to the per-share dividend paid on the Stock, which may
be
deemed reinvested in additional Restricted Stock Units at a price per unit
equal
to the Fair Market Value of a share of Stock on the date that such dividend
is
paid to shareholders.
|
10.4.3.
|
Creditor’s
Rights.
|
A
holder
of Restricted Stock Units shall have no rights other than those of a general
creditor of the Company. Restricted Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions of
the
applicable Award Agreement.
10.5.
Termination
of Service.
Unless
the Committee otherwise provides in an Award Agreement or in writing after
the
Award Agreement is issued, upon the termination of a Grantee’s Service, any
Restricted Stock or Restricted Stock Units held by such Grantee that have not
vested, or with respect to which all applicable restrictions and conditions
have
not lapsed, shall immediately be deemed forfeited, and the Grantee shall have
no
further rights with respect to such Award.
10.6.
Purchase
of Restricted Stock.
The
Grantee shall be required, to the extent required by applicable law, to purchase
the Restricted Stock from the Company at a Purchase Price equal to the greater
of (i) the aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any, specified in the
related Award Agreement. If specified in the Award Agreement, the Purchase
Price
may be deemed paid by Services already rendered. The Purchase Price shall be
payable in a form described in
Section 12
or,
in
the discretion of the Committee, in consideration for past Services rendered.
10.7.
Delivery
of Stock.
Upon
the
expiration or termination of any restricted period and the satisfaction of
any
other conditions prescribed by the Committee, the restrictions applicable to
shares of Restricted Stock or Restricted Stock Units settled in Stock shall
lapse, and, unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee’s beneficiary or estate, as the case may be.
11.
TERMS
AND CONDITIONS OF UNRESTRICTED STOCK AWARDS
The
Committee may, in its sole discretion, grant (or sell at par value or such
other
higher purchase price determined by the Committee) an Award of Unrestricted
Stock to any Grantee pursuant to which such Grantee may receive shares of Stock
free of any restrictions (“Unrestricted Stock”) under the Plan. Awards of
Unrestricted Stock may be granted or sold as described in the preceding sentence
in respect of past Services rendered and other valid consideration, or in lieu
of, or in addition to, any cash compensation due to such Grantee. Unless
otherwise provided by the Committee, Awards of Unrestricted Stock shall be
paid
within the time period specified in
Section 16.9.1
for
short-term deferrals.
12.
FORM
OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK
12.1.
General
Rule.
Payment
of the Option Price for the shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock shall be made in cash or
in
cash equivalents acceptable to the Company, except as provided in this
Section 12
.
12.2.
Surrender
of Stock.
To
the
extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to the exercise of an Option or the Purchase Price for
Restricted Stock may be made all or in part through the tender to the Company
of
shares of Stock, which shares shall be valued, for purposes of determining
the
extent to which the Option Price or Purchase Price has been paid thereby, at
their Fair Market Value on the date of exercise or surrender.
12.3.
Cashless
Exercise.
With
respect to an Option only (and not with respect to Restricted Stock), to the
extent permitted by law and to the extent the Award Agreement so provides,
payment of the Option Price may be made all or in part by delivery (on a form
acceptable to the Committee) of an irrevocable direction to a licensed
securities broker acceptable to the Company to sell shares of Stock and to
deliver all or part of the sales proceeds to the Company in payment of the
Option Price and any withholding taxes described in
Section 16.3
.
12.4.
Other
Forms of Payment.
To
the
extent the Award Agreement so provides, payment of the Option Price or the
Purchase Price may be made in any other form that is consistent with applicable
laws, regulations and rules.
13.
TERMS
AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS
13.1.
Performance
Conditions.
The
right
of a Grantee to exercise or receive a grant or settlement of any Award, and
the
timing thereof, may be subject to such performance conditions as may be
specified by the Committee. The Committee may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under
Sections
13.2
hereof
in
the case of a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m).
|
13.2.
|
Performance
or Annual Incentive Awards Granted to Designated Covered Employees.
|
If
and to
the extent that the Committee determines that a Performance or Annual Incentive
Award to be granted to a Grantee who is designated by the Committee as likely
to
be a Covered Employee should qualify as “performance-based compensation” for
purposes of Code Section 162(m), the grant, exercise and/or settlement of
such Performance or Annual Incentive Award shall be contingent upon achievement
of pre-established performance goals and other terms set forth in this
Section 13.2
.
|
13.2.1.
|
Performance
Goals Generally.
|
The
performance goals for such Performance or Annual Incentive Awards shall consist
of one or more business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Committee consistent
with this
Section 13.2
.
Performance goals shall be objective and shall otherwise meet the requirements
of Code Section 162(m) and regulations thereunder including the requirement
that the level or levels of performance targeted by the Committee result in
the
achievement of performance goals being “substantially uncertain.” The Committee
may determine that such Performance or Annual Incentive Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance or Annual Incentive Awards.
Performance goals may differ for Performance or Annual Incentive Awards granted
to any one Grantee or to different Grantees.
|
13.2.2.
|
Business
Criteria.
|
One
or
more of the following business criteria for the Company, on a consolidated
basis, and/or specified subsidiaries or business units of the Company (except
with respect to the total stockholder return and earnings per share criteria),
shall be used exclusively by the Committee in establishing performance goals
for
such Performance or Annual Incentive Awards: (i) total stockholder return;
(ii) such total stockholder return as compared to total return (on a
comparable basis) of a publicly available index such as, but not limited to,
the
Standard & Poor’s 500 Stock Index; (iii) net income;
(iv) pretax earnings; (v) earnings before interest expense, taxes,
depreciation and amortization; (vi) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or special
items; (vii) operating margin; (viii) earnings per share;
(ix) return on equity; (x) return on capital; (xi) return on
investment; (xii) operating earnings; (xiii) working capital;
(xiv) ratio of debt to stockholders’ equity and (xv) revenue.
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13.2.3.
|
Timing
for Establishing Performance Goals.
|
Performance
goals shall be established not later than 90 days after the beginning of any
performance period applicable to such Performance or Annual Incentive Awards,
or
at such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).
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13.2.4.
|
Settlement
of Performance or Annual Incentive Awards; Other Terms.
|
Settlement
of such Performance or Annual Incentive Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The Committee
may,
in its discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance or Annual Incentive Awards. The Committee
shall
specify the circumstances in which such Performance or Annual Incentive Awards
shall be paid or forfeited in the event of termination of Service by the Grantee
prior to the end of a performance period or settlement of Performance Awards.
13.3.
Written
Determinations.
All
determinations by the Committee as to the establishment of performance goals,
the amount of any Performance Award pool or potential individual Performance
Awards and as to the achievement of performance goals relating to Performance
Awards, and the amount of any Annual Incentive Award pool or potential
individual Annual Incentive Awards and the amount of final Annual Incentive
Awards, shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). To the extent permitted by Code
Section 162(m), the Committee may delegate any responsibility relating to
such Performance Awards or Annual Incentive Awards.
13.4.
Status
of Section 13.2 Awards Under Code Section 162(m).
It
is the
intent of the Company that Performance Awards and Annual Incentive Awards under
Section 13.2
hereof
granted to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m)
and regulations thereunder. Accordingly, the terms of
Section 13.2
,
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Grantee will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the
term
Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect to that fiscal year.
If
any provision of the Plan or any agreement relating to such Performance Awards
or Annual Incentive Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.
14.
REQUIREMENTS
OF LAW
14.1.
General.
The
Company shall not be required to sell or issue any shares of Stock under any
Award if the sale or issuance of such shares would constitute a violation by
the
Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. If
at
any time the Company shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to an Award upon any
securities exchange or under any governmental regulatory body is necessary
or
desirable as a condition of, or in connection with, the issuance or purchase
of
shares hereunder, no shares of Stock may be issued or sold to the Grantee or
any
other individual exercising an Option pursuant to such Award unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company,
and
any delay caused thereby shall in no way affect the date of termination of
the
Award. Specifically, in connection with the Securities Act, upon the exercise
of
any Option or the delivery of any shares of Stock underlying an Award, unless
a
registration statement under such Act is in effect with respect to the shares
of
Stock covered by such Award, the Company shall not be required to sell or issue
such shares unless the Committee has received evidence satisfactory to it that
the Grantee or any other individual exercising an Option may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Committee shall be final, binding,
and
conclusive. The Company may, but shall in no event be obligated to, register
any
securities covered hereby pursuant to the Securities Act. The Company shall
not
be obligated to take any affirmative action in order to cause the exercise
of an
Option or the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction
that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the
laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
14.2.
Rule
16b-3.
During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards
and the exercise of Options granted hereunder will qualify for the exemption
provided by Rule 16b-3 under the Exchange Act. To the extent that any provision
of the Plan or action by the Board or Committee does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board, and shall not affect the
validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the
Board may exercise its discretion to modify this Plan in any respect necessary
to satisfy the requirements of, or to take advantage of any features of, the
revised exemption or its replacement.
15.
EFFECT
OF CHANGES IN CAPITALIZATION
15.1
Changes
in Stock.
If
the
number of outstanding shares of Stock is increased or decreased or the shares
of
Stock are changed into or exchanged for a different number or kind of shares
or
other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange
of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration
by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall
be
adjusted proportionately and accordingly by the Company; provided that any
such
adjustment shall comply with Section 409A. In addition, the number and kind
of shares for which Awards are outstanding shall be adjusted proportionately
and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options or
SARs shall not change the aggregate Option Price or SAR Exercise Price payable
with respect to shares that are subject to the unexercised portion of an
outstanding Option or SAR, as applicable, but shall include a corresponding
proportionate adjustment in the Option Price or SAR Exercise Price per share.
The conversion of any convertible securities of the Company shall not be treated
as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (including an
extraordinary cash dividend but excluding a non-extraordinary dividend payable
in cash or in stock of the Company) without receipt of consideration by the
Company, the Company shall in such manner as the Company deems appropriate,
adjust (i) the number and kind of shares subject to outstanding Awards
and/or (ii) the exercise price of outstanding Options and Stock
Appreciation Rights to reflect such distribution.
15.2.
Definition
of Change in Control.
Unless
an
Award Agreement provides for a different meaning, a “Change in Control” shall
mean the occurrence of any of the following:
|
(i)
|
Any
‘person’ (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the ‘beneficial owner’ (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the total voting power
represented by the Company’s then-outstanding voting securities,
provided
,
however
,
that a Change in Control shall not be deemed to occur if an employee
benefit plan (or a trust forming a part thereof) maintained by the
Company, directly or indirectly, becomes the beneficial owner of
more than
fifty percent (50%) of the then-outstanding voting securities of the
Company after such acquisition;
|
|
(ii)
|
A
majority of the members of the Board is replaced during any 12-month
period commencing on the Effective Date, by directors whose appointment
or
election is not endorsed by a majority of the members of the Board
prior
to the date of the appointment;
|
|
(iii)
|
The
consummation of a merger or consolidation of the Company with any
other
corporation, other than a merger or consolidation which would result
in
(a) the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or
being converted into voting securities of the surviving entity) at
least
fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (b) the directors
of the Company immediately prior thereto continuing to represent
at least
fifty percent (50%) of the directors of the Company or such surviving
entity immediately after such merger or consolidation; or
|
|
(iv)
|
The
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets.
|
Notwithstanding
the foregoing, if it is determined that an Award hereunder is subject to the
requirements of Section 409A, the Company will not be deemed to have undergone
a
Change in Control unless the Company is deemed to have undergone a change in
control pursuant to the definition in Section 409A.
15.3.
Effect
of Change in Control; Corporate Transactions
The
Committee shall determine the effect of a Change in Control upon Awards, and
such effect may be set forth in the appropriate Award Agreement.
Unless
an
Award Agreement explicitly provides otherwise, if the Company is to be
consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company’s assets other than a transaction to merely
change the state of incorporation (a “Corporate Transaction”), the Committee or
the board of directors of any entity assuming the obligations of the Company
hereunder (the “Successor Board”), shall, as to outstanding Options and/or SARs,
either (i) make appropriate provision for the continuation of such Options
and/or SARs by substituting on an equitable basis for the Shares then subject
to
such Options and/or SARs either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Corporate Transaction
or securities of any successor or acquiring entity; or (ii) upon written
notice to the Grantees, provide that all Options and/or SARs must be exercised
(either to the extent then exercisable or, at the discretion of the Committee
or, upon a change of control of the Company, all Options and/or SARs being
made
fully exercisable for purposes of this Section 15.3), within a specified number
of days of the date of such notice, at the end of which period the Options
and/or SARs shall terminate; or (iii) terminate all Options and/or SARs in
exchange for a cash payment equal to the excess of the Fair Market Value of
the
Shares subject to such Options and/or SARs (either to the extent then
exercisable or, at the discretion of the Committee, all Options and/or SARs
being made fully exercisable for purposes of this Section 15.3) over the
exercise price thereof.
Unless
an
Award Agreement explicitly provides otherwise, with respect to outstanding
grants of Restricted Stock, Restricted Stock Units and/or Unrestricted Stock,
the Committee or the Successor Board, shall either (i) make appropriate
provisions for the continuation of such grants of Restricted Stock, Restricted
Stock Units and/or Unrestricted Stock by substituting on an equitable basis
for
the Shares then subject to such Restricted Stock, Restricted Stock Units and/or
Unrestricted Stock either the consideration payable with respect to the
outstanding Shares of Common Stock in connection with the Corporate Transaction
or securities of any successor or acquiring entity; or (ii) upon written notice
to the Grantees, provide that all grants of Restricted Stock, Restricted Stock
Units and/or Unrestricted Stock must be accepted (to the extent then subject
to
acceptance) within a specified number of days of the date of such notice, at
the
end of which period the offer of the Restricted Stock, Restricted Stock Units
and/or Unrestricted Stock shall terminate; or (iii) terminate all grants of
Restricted Stock, Restricted Stock Units and/or Unrestricted Stock in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Restricted Stock, Restricted Stock Units and/or Unrestricted
Stock over the purchase price thereof, if any. In addition, in the event of
a
Corporate Transaction, the Administrator may waive any or all Company repurchase
rights with respect to outstanding Restricted Stock and/or Restricted Stock
Units.
15.4.
Reorganization
Which Does Not Constitute a Change in Control.
If
the
Company undergoes any reorganization, merger, or consolidation of the Company
with one or more other entities which does not constitute a Change in Control,
any Option or SAR theretofore granted pursuant to the Plan shall pertain to
and
apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share
so
that the aggregate Option Price or SAR Exercise Price thereafter shall be the
same as the aggregate Option Price or SAR Exercise Price of the shares remaining
subject to the Option or SAR immediately prior to such reorganization, merger,
or consolidation. Subject to any contrary language in an Award Agreement, any
restrictions applicable to such Award shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger or
consolidation.
15.5.
Adjustments.
Adjustments
under this
Section 15
related
to shares of Stock or securities of the Company shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
No
fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share.
15.6.
No
Limitations on Company.
The
making of Awards pursuant to the Plan shall not affect or limit in any way
the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part
of
its business or assets.
16.
GENERAL
PROVISIONS
16.1.
Disclaimer
of Rights.
No
provision in the Plan or in any Award Agreement shall be construed to confer
upon any individual the right to remain in the employ or service of the Company
or any Affiliate, or to interfere in any way with any contractual or other
right
or authority of the Company either to increase or decrease the compensation
or
other payments to any individual at any time, or to terminate any employment
or
other relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under the Plan shall
be affected by any change of duties or position of the Grantee, so long as
such
Grantee continues to be a Service Provider, if applicable. The obligation of
the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.
16.2.
Nonexclusivity
of the Plan.
Neither
the adoption of the Plan nor the submission of the Plan to the stockholders
of
the Company for approval shall be construed as creating any limitations upon
the
right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or
particular individuals), including, without limitation, the granting of stock
options as the Board in its discretion determines desirable.
16.3.
Withholding
Taxes.
The
Company or an Affiliate, as the case may be, shall have the right to deduct
from
payments of any kind otherwise due to a Grantee any federal, state, or local
taxes of any kind required by law to be withheld (i) with respect to the
vesting of or other lapse of restrictions applicable to an Award, (ii) upon
the issuance of any shares of Stock upon the exercise of an Option, or
(iii) pursuant to an Award. At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Company or the Affiliate, as the case
may
be, any amount that the Company or the Affiliate may reasonably determine to
be
necessary to satisfy such withholding obligation. Subject to the prior approval
of the Company or the Affiliate, which may be withheld by the Company or the
Affiliate, as the case may be, in its sole discretion, the Grantee may elect
to
satisfy such obligations, in whole or in part, (i) by causing the Company
or the Affiliate to withhold shares of Stock otherwise issuable to the Grantee
or (ii) by delivering to the Company or the Affiliate shares of Stock
already owned by the Grantee. The shares of Stock so delivered or withheld
shall
have an aggregate Fair Market Value equal to such withholding obligations.
The
Fair Market Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or the Affiliate as of the date
that the amount of tax to be withheld is to be determined. A Grantee who has
made an election pursuant to this
Section 16.3
may
satisfy his or her withholding obligation only with shares of Stock that are
not
subject to any repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.
16.4.
Captions.
The
use
of captions in this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of the Plan
or
any Award Agreement.
16.5.
Other
Provisions.
Each
Award Agreement may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Committee, in its sole discretion.
16.6.
Number
and Gender.
With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires.
16.7.
Severability.
If
any
provision of the Plan or any Award Agreement shall be determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.
16.8.
Governing
Law.
The
validity and construction of this Plan and the instruments evidencing the Awards
hereunder shall be governed by the laws of the State of Delaware, without regard
to any choice of law principles thereof or of any other jurisdiction.
16.9.
Section 409A.
|
16.9.1.
|
Short-Term
Deferrals.
|
For
each
Award intended to comply with the short-term deferral exception provided for
under Section 409A, the related Award Agreement shall provide that such
Award shall be paid out by the later of (i) the 15
th
day of
the third month following the Grantee’s first taxable year in which the Award is
no longer subject to a substantial risk of forfeiture or (ii) the
15
th
day of
the third month following the end of the Company’s first taxable year in which
the Award is no longer subject to a substantial risk of forfeiture.
To
the
extent that the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain deferred compensation arrangements
pursuant to Section 409A as a result of any provision of any Award, to the
extent permitted by Section 409A, such provision shall be deemed amended to
the minimum extent necessary to avoid application of such additional tax. The
Board shall determine the nature and scope of such amendment.
16.10.
Stockholder
Approval; Effective Date of Plan.
The
Plan
shall be effective as of October 29, 2007, the date of its approval by the
Board
(the "Effective Date"). Any Option that is designated as an Incentive Stock
Option shall be a Non-Qualified Stock Option if the Plan is not approved by
the
shareholders of the Company within twelve (12) months after the Effective Date
of the Plan. No award that is intended to qualify as performance-based
compensation within the meaning of section 162(m) of the Code shall be effective
unless and until the Plan is approved by the stockholders of the
Company
APPENDIX
B
Audit
Committee Charter
Purpose
The
primary functions of the Audit Committee are to assist the Board of Directors
in
fulfilling its oversight responsibilities with respect to: (i) the Company's
systems of internal controls regarding finance, accounting, legal compliance
and
ethical behavior; (ii) the Company's auditing, accounting and financial
reporting processes generally; (iii) the Company's financial statements and
other financial information provided by the Company to its stockholders, the
public and others; (iv) the Company's compliance with legal and regulatory
requirements; and (v) the performance of the Company's Corporate Audit
Department and independent auditors. Consistent with these functions, the
Committee will encourage continuous improvement of, and foster adherence to,
the
Company's policies, procedures and practices at all levels.
Although
the Committee has the powers and responsibilities set forth in this Charter,
the
role of the Committee is oversight. The members of the Committee are not
full-time employees of the Company and may or may not be accountants or auditors
by profession or experts in the fields of accounting or auditing and, in any
event, do not serve in such capacity. Consequently, it is not the duty of the
Committee to conduct audits or to determine that the Company's financial
statements and disclosures are complete and accurate and are in accordance
with
generally accepted accounting principles and applicable rules and regulations.
These are the responsibilities of Management and the independent
auditors.
Organization
The
Audit
Committee shall be comprised of three or more Directors as determined by the
Board of Directors, each of whom shall satisfy the independence, financial
literacy and experience requirements of Section 10A of the Securities Exchange
Act of 1934, the American Stock Exchange and any other regulatory requirements.
At least one Committee member shall be a designated "audit committee financial
expert". No committee member shall serve on the audit committees of more than
three public companies (including the Company).
Committee
members shall be elected by the Board at the annual organizational meeting
of
the Board of Directors on the recommendation of the Corporate Governance
Committee; members shall serve until their successors shall be duly elected
and
qualified. Notwithstanding the foregoing, if a member ceases to be
"independent", such person shall immediately resign as a Committee member.
The
Committee's Chairperson shall be designated by the full Board or, if it does
not
do so, the Committee members shall elect a Chairperson by vote of a majority
of
the full Committee.
The
Committee may form and delegate authority to subcommittees when
appropriate.
Meetings
The
Audit
Committee shall meet four times per year on a quarterly basis, or more
frequently as circumstances require. The Committee shall require members of
Management, the Corporate Audit Department, the independent auditors and others
to attend meetings and to provide pertinent information, as necessary. As part
of its job to foster open communications, the Committee shall meet in separate
executive sessions during each of its four regularly scheduled meetings with
Management, the head of the Corporate Audit Department and the Company's
independent auditors to discuss any matters that the Committee (or any of these
groups) believes should be discussed privately.
Responsibilities
and duties
The
Audit
Committee shall be responsible for the appointment, compensation, retention
and
oversight of the work of any accounting firm engaged for the purpose of
preparing and issuing an audit report or performing other audit, review or
attestation services for the Company (including resolution of any disagreements
between Management and the independent auditors regarding financial reporting);
such accounting firms shall report directly to the Committee. The Committee
shall consult with Management but shall not delegate these
responsibilities.
To
fulfill its responsibilities and duties, the Audit Committee
shall:
With
respect to the independent auditors
:
1.
|
Be
directly responsible for the appointment, compensation and oversight
of
the work of the independent auditors (including resolution of
disagreements between Management and the independent auditors regarding
financial reporting) for the purpose of preparing its audit report
or
related work.
|
2.
|
Have
the sole authority to review in advance, and grant any appropriate
pre-approvals of, (i) all auditing services to be provided by the
independent auditors and (ii) all non-audit services to be provided
by the
independent auditors as permitted by Section 10A of the Securities
Exchange Act of 1934, and in connection therewith to approve all
fees and
other terms of engagement. The Committee shall also review and approve
disclosures required to be included in Securities and Exchange Commission
periodic reports filed under Section 13(a) of the Securities Exchange
Act
of 1934 with respect to non-audit services.
|
3.
|
Review
the performance of the Company's independent auditors on at least
an
annual basis.
|
4.
|
On
an annual basis, review and discuss with the independent auditors
all
relationships the independent auditors have with the Company in order
to
evaluate the independent auditors' continued independence. The Committee:
(i) shall ensure that the independent auditors submit to the Committee
on
an annual basis a written statement (consistent with Independent
Standards
Board Standards No. 1) delineating all relationships and services
that may
impact the objectivity and independence of the independent auditors;
(ii)
shall discuss with the independent auditors any disclosed relationship
or
services that may impact the objectivity and independence of the
independent auditors; and (iii) shall satisfy itself as to the independent
auditors' independence.
|
5.
|
At
least annually, obtain and review an annual report from the independent
auditors describing (i) the independent auditors' internal quality
control
procedures and (ii) any material issues raised by the most recent
internal
quality control review, or peer review, of the independent auditors,
or by
any inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent
audits
carried out by the independent auditors, and any steps taken to deal
with
any such issues.
|
6.
|
Confirm
that the lead audit partner, or the lead audit partner responsible
for
reviewing the audit, for the Company's independent auditors has not
performed audit services for the Company for each of the five previous
fiscal years. Consider whether, in order to assure continuing auditor
independence, it is appropriate to adopt a policy of rotating the
independent auditors on a regular basis.
|
7.
|
Review
all reports required to be submitted by the independent auditors
to the
Committee under Section 10A of the Securities Exchange Act of 1934.
|
8.
|
Review,
based upon the recommendation of the independent auditors and the
Corporate Audit Department, the scope and plan of the work to be
done by
the independent auditors for each fiscal year.
|
With
respect to financial statements
:
9.
|
Review
and discuss with Management, the Corporate Audit Department and the
independent auditors the Company's quarterly financial statements
(including disclosures made in "Management's Discussion and Analysis
of
Financial Condition and Results of Operations" and the independent
auditors' review of the quarterly financial statements) prior to
submission to stockholders, any governmental body, any stock exchange
or
the public.
|
10.
|
Review
and discuss with Management, the Corporate Audit Department and the
independent auditors the Company's annual audited financial statements
(including disclosures made in "Management's Discussion and Analysis
of
Financial Condition and Results of Operations").
|
11.
|
Discuss
with the independent auditors the matters required to be discussed
by
Statement on Auditing Standards Nos. 61, 89 and 90 as amended, relating
to
the conduct of the audit.
|
12.
|
Recommend
to the Board of Directors, if appropriate, that the Company's annual
audited financial statements be included in the Company's annual
report on
Form 10-K for filing with the Securities and Exchange Commission.
|
13.
|
Prepare
the report required by the Securities and Exchange Commission to
be
included in the Company's annual proxy statement and any other Committee
reports required by applicable securities laws or stock exchange
listing
requirements or rules.
|
Periodic
and Annual Reviews
:
14.
|
Periodically
review separately with each of Management, the independent auditors
and
the Corporate Audit Department (i) any significant disagreement between
Management and the independent auditors or the Corporate Audit Department
in connection with the preparation of the financial statements, (ii)
any
difficulties encountered during the course of the audit (including
any
restrictions on the scope of work or access to required information),
and
(iii) Management's response to each.
|
15.
|
Periodically
discuss with the independent auditors, without Management being present,
(i) their judgments about the quality, appropriateness, and acceptability
of the Company's accounting principles and financial disclosure practices,
as applied in its financial reporting, and (ii) the completeness
and
accuracy of the Company's financial statements.
|
16.
|
Consider
and approve, if appropriate, significant changes to the Company's
accounting principles and financial disclosure practices as suggested
by
the independent auditors, Management or the Corporate Audit Department.
Review with the independent auditors, Management and the Corporate
Audit
Department, at appropriate intervals, the extent to which any changes
or
improvements in accounting or financial practices, as approved by
the
Committee, have been implemented.
|
17.
|
Review
with Management, the independent auditors, the Corporate Audit Department
and the Company's counsel, as appropriate, any legal, regulatory
or
compliance matters that could have a significant impact on the Company's
financial statements, including significant changes in accounting
standards or rules as promulgated by the Financial Accounting Standards
Board, the Securities and Exchange Commission or other regulatory
authorities with relevant jurisdiction.
|
18.
|
Obtain
and review an annual report from Management relating to the accounting
principles used in preparation of the Company's financial statements
(including those policies for which Management is required to exercise
discretion or judgments regarding the implementation thereof).
|
Discussions
with Management
:
19.
|
Review
and discuss with Management the Company's earnings press releases
(including the use of "pro forma" or "adjusted" non-GAAP information)
as
well as financial information and earnings guidance provided to analysts
and rating agencies.
|
20.
|
Review
and discuss with Management all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations) and
other
relationships of the Company with unconsolidated entities or other
persons, that may have a material current or future effect on financial
condition, changes in financial condition, results of operations,
liquidity, capital resources, capital reserves or significant components
of revenues or expenses.
|
21.
|
Inquire
about the application of the Company's accounting policies and its
consistency from period to period, and the compatibility of these
accounting policies with generally accepted accounting principles,
and
(where appropriate) the Company's provisions for future occurrences
which
may have a material impact on the financial statements of the Company.
|
22.
|
Review
and discuss with Management (i) the Company's major financial risk
exposures and the steps Management has taken to monitor and control
such
exposures (including Management's risk assessment and risk management
policies), and (ii) the program that Management has established to
monitor
compliance with its code of business ethics and conduct for Directors,
Officers and employees.
|
23.
|
Review
and discuss with Management all disclosures made by the Company concerning
any material changes in the financial condition or operations of
the
Company.
|
24.
|
Obtain
explanations from Management for unusual variances in the Company's
annual
financial statements from year to year, and review annually the
independent auditors' letter of the recommendations to Management
and
Management's response.
|
With
respect to the internal audit function and internal
controls
:
25.
|
Review,
based upon the recommendation of the independent auditors and the
head of
the Corporate Audit Department, the scope and plan of the work to
be done
by the Corporate Audit Department.
|
26.
|
Review
and approve the appointment and replacement of the head of the Corporate
Audit Department, and review on an annual basis the performance of
the
Corporate Audit Department.
|
27.
|
In
consultation with the independent auditors and the Corporate Audit
Department, (a) review the adequacy of the Company's internal control
structure and system, and the procedures designed to insure compliance
with laws and regulations, and (b) discuss the responsibilities,
budget
and staffing needs of the Corporate Audit Department.
|
28.
|
Establish
procedures for (i) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting
controls
or auditing matters, and (ii) the confidential, anonymous submission
by
employees of the Company of concerns regarding questionable accounting
or
auditing matters.
|
29.
|
Review
(i) the internal control report prepared by Management, including
Management's assessment of the effectiveness of the Company's internal
control over financial reporting and (ii) the independent auditors'
attestation and report, on the assessment made by Management, in
each
case, as and when required by Section 404 of the Sarbanes-Oxley Act
of
2002.
|
30.
|
Review
with Management and the independent auditors any reports or disclosure
submitted by management to the Committee as contemplated by the
Certifications required under Section 302 of the Sarbanes-Oxley Act
of
2002.
|
Other
:
31.
|
Review
and approve all related-party transactions.
|
32.
|
Review
and approve (i) any change or waiver in the Company's code of business
conduct and ethics for Directors or Executive Officers, and (ii)
any
disclosure made on Form 8-K regarding such change or waiver.
|
33.
|
The
Committee shall be required to pre-approve the hiring of any employee
or
former employee of the independent auditors who was a member of the
Company's audit engagement team within the preceding two fiscal years.
The
Committee shall not approve the hiring of any individual for a financial
reporting oversight role if such person is or was an employee of
the
independent auditor and was a member of the Company's audit engagement
team within the preceding two fiscal years unless: (A) (i) such individual
is to be employed for a limited period of time due to an emergency
or
unusual situation and (ii) the Committee determines that the hiring
of
such individual is in the best interests of the Company's shareholders;
or
(B) such individual becomes employed by the Company as a result of
a
business combination and the Committee was made aware of such individual's
prior relationship with the Company as a member of its audit engagement
team.
|
34.
|
Review
any Management decision to seek a second opinion from independent
auditors
other than the Company's regular independent auditors with respect
to any
significant accounting issue.
|
35.
|
Review
with Management and the independent auditors the sufficiency and
quality
of the Corporate Audit Department staff and other financial and accounting
personnel of the Company.
|
36.
|
Review
and reassess the adequacy of this Charter annually and recommend
to the
Board any changes the Committee deems appropriate.
|
37.
|
The
Committee shall conduct an annual performance evaluation of itself.
|
38.
|
Perform
any other activities consistent with this Charter, the Company's
By-laws
and governing law as the Committee or the Board deems necessary or
appropriate.
|
Resources
The
Audit
Committee shall have the authority to retain independent legal, accounting
and
other consultants to advise the Committee. The Committee may request any officer
or employee of the Company or the Company's outside counsel or independent
auditors to attend a meeting of the Committee or to meet with any members of,
or
consultants to, the Committee.
The
Committee shall determine the extent of funding necessary for payment of
compensation to the independent auditors for purpose of rendering or issuing
the
annual audit report and to any independent legal, accounting and other
consultants retained to advise the Committee.