CHINA
AGRITECH, INC.
2010
OMNIBUS SECURITIES AND INCENTIVE PLAN
Table Of
Contents
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Page
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ARTICLE
I
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PURPOSE
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1
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ARTICLE
II
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DEFINITIONS
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1
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ARTICLE
III
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EFFECTIVE
DATE OF PLAN
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7
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ARTICLE
IV
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ADMINISTRATION
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7
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Section
4.1
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Composition
of Committee
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7
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Section
4.2
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Powers
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8
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Section
4.3
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Additional
Powers
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8
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Section
4.4
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Committee
Action
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8
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ARTICLE
V
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STOCK
SUBJECT TO PLAN AND LIMITATIONS THEREON
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8
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Section
5.1
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Stock
Grant and Award Limits
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8
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Section
5.2
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Stock
Offered
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9
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ARTICLE
VI
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ELIGIBILITY
FOR AWARDS; TERMINATION OF EMPLOYMENT, DIRECTOR STATUS OR CONSULTANT
STATUS
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9
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Section
6.1
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Eligibility
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9
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Section
6.2
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Termination
of Employment or Director Status
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9
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Section
6.3
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Termination
of Consultant Status
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10
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Section
6.4
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Special
Termination Rule
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11
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Section
6.5
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Termination
for Cause
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11
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ARTICLE
VII
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OPTIONS
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12
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Section
7.1
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Option
Period
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12
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Section
7.2
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Limitations
on Exercise of Option
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12
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Section
7.3
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Special
Limitations on Incentive Stock Options
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12
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Section
7.4
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Option
Agreement
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13
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Section
7.5
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Option
Price and Payment
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13
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Section
7.6
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Stockholder
Rights and Privileges
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13
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Section
7.7
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Options
and Rights in Substitution for Stock Options Granted by Other
Corporations
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14
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Section
7.8
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Prohibition
Against Repricing
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14
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ARTICLE
VIII
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RESTRICTED STOCK AWARDS
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14
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Section
8.1
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Restriction
Period to be Established by Committee
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14
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Section
8.2
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Other
Terms and Conditions
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14
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Section
8.3
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Payment
for Restricted Stock
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15
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Section
8.4
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Restricted
Stock Award Agreements
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15
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ARTICLE
IX
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UNRESTRICTED
STOCK AWARDS
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15
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ARTICLE
X
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RESTRICTED
STOCK UNIT AWARDS
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15
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CHINA
AGRITECH, INC.
2010
OMNIBUS SECURITIES AND INCENTIVE PLAN
Table Of Contents
(continued
)
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Page
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Section
10.1
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Terms
and Conditions
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15
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Section
10.2
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Payments
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16
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ARTICLE
XI
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PERFORMANCE
UNIT AWARDS
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16
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Section
11.1
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Terms
and Conditions
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16
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Section
11.2
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Payments
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16
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ARTICLE
XII
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PERFORMANCE
SHARE AWARDS
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17
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Section
12.1
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Terms
and Conditions
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17
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Section
12.2
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Stockholder
Rights and Privileges
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17
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ARTICLE
XIII
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DISTRIBUTION EQUIVALENT RIGHTS
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17
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Section
13.1
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Terms
and Conditions
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17
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Section
13.2
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Interest
Equivalents
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17
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ARTICLE
XIV
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STOCK APPRECIATION RIGHTS
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18
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Section
14.1
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Terms
and Conditions
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18
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Section
14.2
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Tandem
Stock Appreciation Rights
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18
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ARTICLE
XV
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RECAPITALIZATION
OR REORGANIZATION
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19
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Section
15.1
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Adjustments
to Common Stock
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19
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Section
15.2
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Recapitalization
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19
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Section
15.3
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Other
Events
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20
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Section
15.4
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Powers
Not Affected
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20
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Section
15.5
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No
Adjustment for Certain Awards
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20
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ARTICLE
XVI
AMENDMENT
AND TERMINATION OF PLAN
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20
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ARTICLE
XVII
MISCELLANEOUS
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21
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Section
17.1
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No
Right to Award
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21
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Section
17.2
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No
Rights Conferred
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21
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Section
17.3
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Other
Laws; No Fractional Shares; Withholding
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21
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Section
17.4
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No
Restriction on Corporate Action
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22
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Section
17.5
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Restrictions
on Transfer
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22
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Section
17.6
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Beneficiary
Designations
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22
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Section
17.7
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Rule
16b-3
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22
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Section
17.8
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Section
162(m)
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23
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Section
17.9
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Section
409A
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24
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Section
17.10
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Indemnification
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24
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Section
17.11
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Other
Plans
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24
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Section
17.12
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Limits
of Liability
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24
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Section
17.13
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Governing
Law
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24
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Section
17.14
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Severability
of Provisions
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25
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CHINA
AGRITECH, INC.
2010
OMNIBUS SECURITIES AND INCENTIVE PLAN
Table Of Contents
(continued)
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Page
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Section
17.15
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No
Funding
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25
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Section
17.16
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Headings
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25
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Section
17.17
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Terms
of Award Agreements
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25
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Section
17.18
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California
Information Requirements
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25
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CHINA
AGRITECH, INC.
2010
OMNIBUS SECURITIES AND INCENTIVE PLAN
ARTICLE
I
PURPOSE
The
purpose of this China Agritech, Inc. 2010 Omnibus Securities and Incentive Plan
(the “
Plan
”) is
to benefit the stockholders of China Agritech, Inc., a Delaware corporation (the
“
Company
”), by
assisting the Company to attract, retain and provide incentives to key
management employees and nonemployee directors of, and non-employee consultants
to, the Company and its Affiliates, and to align the interests of such
employees, nonemployee directors and nonemployee consultants with those of the
Company’s stockholders. Accordingly, the Plan provides for the granting of
Distribution Equivalent Rights, Incentive Stock Options, Non-Qualified Stock
Options, Performance Share Awards, Performance Unit Awards, Restricted Stock
Awards, Restricted Stock Unit Awards, Stock Appreciation Rights, Tandem Stock
Appreciation Rights, Unrestricted Stock Awards or any combination of the
foregoing, as may be best suited to the circumstances of the particular
Employee, Director or Consultant as provided herein.
ARTICLE
II
DEFINITIONS
The
following definitions shall be applicable throughout the Plan unless the context
otherwise requires:
“
Affiliate
” shall mean
any corporation which, with respect to the Company, is a “subsidiary
corporation” within the meaning of Section 424(f) of the Code.
“
Award
” shall mean,
individually or collectively, any Distribution Equivalent Right, Option,
Performance Share Award, Performance Unit Award, Restricted Stock Award,
Restricted Stock Unit Award, Stock Appreciation Right or Unrestricted Stock
Award.
“
Award Agreement
”
shall mean a written agreement between the Company and the Holder with respect
to an Award, setting forth the terms and conditions of the Award, and each of
which shall constitute a part of the Plan.
“
Board
” shall mean the
Board of Directors of the Company.
“
Cause
” shall mean (i)
if the Holder is a party to an employment or similar agreement with the Company
or an Affiliate which agreement defines “Cause” (or a similar term) therein,
“
Cause
” shall
have the same meaning as provided for in such agreement, or (ii) for a Holder
who is not a party to such an agreement, “
Cause
” shall mean
termination by the Company or an Affiliate of the employment (or other service
relationship) of the Holder by reason of the Holder’s (A) intentional failure to
perform reasonably assigned duties, (B) dishonesty or willful misconduct in the
performance of the Holder’s duties, (C) involvement in a transaction which is
materially adverse to the Company or an Affiliate, (D) breach of fiduciary duty
involving personal profit, (E) willful violation of any law, rule, regulation or
court order (other than misdemeanor traffic violations and misdemeanors not
involving misuse or misappropriation of money or property), (F) commission of an
act of fraud or intentional misappropriation or conversion of any asset or
opportunity of the Company or an Affiliate, or (G) material breach of any
provision of the Plan or the Holder’s Award Agreement or any other written
agreement between the Holder and the Company or an Affiliate, in each case as
determined in good faith by the Board, the determination of which shall be
final, conclusive and binding on all parties.
“
Change of Control
”
shall mean (i) for a Holder who is a party to an employment or consulting
agreement with the Company or an Affiliate which agreement defines “Change of
Control” (or a similar term) therein, “
Change of Control
”
shall have the same meaning as provided for in such agreement, or (ii) for a
Holder who is not a party to such an agreement, “
Change of Control
”
shall mean the satisfaction of any one or more of the following conditions (and
the “Change of Control” shall be deemed to have occurred as of the first day
that any one or more of the following conditions shall have been
satisfied):
(a) Any
person (as such term is used in paragraphs 13(d) and 14(d)(2) of the Exchange
Act, hereinafter in this definition, “
Person
”), other than
the Company or an Affiliate or an employee benefit plan of the Company or an
Affiliate, 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 combined voting power of the Company’s then
outstanding securities;
(b) The
closing of a merger, consolidation or other business combination (a “
Business
Combination
”) other than a Business Combination in which holders of the
Common Stock immediately prior to the Business Combination have substantially
the same proportionate ownership of common stock of the surviving corporation
immediately after the Business Combination as immediately before;
(c) The
closing of an agreement for the sale or disposition of all or substantially all
of the Company’s assets to any entity that is not an Affiliate;
(d) The
approval by the holders of shares of Common Stock of a plan of complete
liquidation of the Company other than a liquidation of the Company into any
subsidiary or a liquidation a result of which persons who were stockholders of
the Company immediately prior to such liquidation have substantially the same
proportionate ownership of shares of common stock of the surviving corporation
immediately after such liquidation as immediately before; or
(e) Within
any twenty-four (24) month period, the Incumbent Directors shall cease to
constitute at least a majority of the Board or the board of directors of any
successor to the Company;
provided
,
however
, that any
director elected to the Board, or nominated for election, by a majority of the
Incumbent Directors then still in office, shall be deemed to be an Incumbent
Director for purposes of this paragraph (e), but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of an individual, entity or “group” other than the
Board (including, but not limited to, any such assumption that results from
paragraphs (a), (b), (c), or (d) of this definition).
Notwithstanding
the foregoing, a “Change of Control” shall not be deemed to occur if the Company
files for bankruptcy, liquidation or reorganization under the United States
Bankruptcy Code.
“
Code
” shall mean the
Internal Revenue Code of 1986, as amended. Reference in the Plan to any section
of the Code shall be deemed to include any amendments or successor provisions to
any section and any regulation under such section.
“
Committee
” shall mean
a committee comprised of not less than three (3) members of the Board who are
selected by the Board as provided in Section 4.1.
“
Common Stock
” shall
mean the Company’s common stock, par value $0.001 per share, of the
Company.
“
Company
” shall mean
China Agritech, Inc., a Delaware corporation, and any successor
thereto.
“
Consultant
” shall
mean any non-Employee (individual or entity) advisor to the Company or an
Affiliate who or which has contracted directly with the Company or an Affiliate
to render bona fide consulting or advisory services thereto.
“
Director
” shall mean
a member of the Board or a member of the board of directors of an Affiliate, in
either case, who is not an Employee.
“
Distribution Equivalent
Right
” shall mean an Award granted under Article XIII of the Plan which
entitles the Holder to receive bookkeeping credits, cash payments and/or Common
Stock distributions equal in amount to the distributions that would have been
made to the Holder had the Holder held a specified number of shares of Common
Stock during the period the Holder held the Distribution Equivalent
Right.
“
Distribution Equivalent
Right Award Agreement
” shall mean a written agreement between the Company
and a Holder with respect to a Distribution Equivalent Right Award.
“
Effective Date
” shall
mean June 9, 2010.
“
Employee
” shall mean
any employee, including officers, of the Company or an Affiliate.
“
Exchange Act
” shall
mean the Securities Exchange Act of 1934, as amended.
“
Fair Market Value
”
shall mean, as determined consistent with the applicable requirements of
Sections 409A and 422 of the Code, as of any specified date, the closing sales
price of the Common Stock for such date (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date) on the
Nasdaq Stock Market or a domestic or foreign national securities exchange
(including London’s Alternative Investment Market) on which the Common Stock may
be listed, as reported in The Wall Street Journal or The Financial
Times. If the Common Stock is not listed on the Nasdaq Stock Market
or on a national securities exchange, but is quoted on the OTC Bulletin Board or
by the National Quotation Bureau, the Fair Market Value of the Common Stock
shall be the mean of the bid and asked prices per share of the Common Stock for
such date. If the Common Stock is not quoted or listed as set forth
above, Fair Market Value shall be determined by the Board in good faith by any
fair and reasonable means (which means, with respect to a particular Award
grant, may be set forth with greater specificity in the applicable Award
Agreement). The Fair Market Value of property other than Common Stock
shall be determined by the Board in good faith by any fair and reasonable means,
and consistent with the applicable requirements of Sections 409A and 422 of the
Code.
“
Family Member
” shall
mean any child, stepchild, grandchild, parent, stepparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, any person sharing the Holder’s household (other than a tenant or
employee of the Holder), a trust in which such persons have more than fifty
percent (50%) of the beneficial interest, a foundation in which such persons (or
the Holder) control the management of assets, and any other entity in which such
persons (or the Holder) own more than fifty percent (50%) of the voting
interests.
“
Holder
” shall mean an
Employee, Director or Consultant who has been granted an Award or any such
individual’s beneficiary, estate or representative, to the extent
applicable.
“
Incentive Stock
Option
” shall mean an Option which is intended by the Committee to
constitute an “incentive stock option” under Section 422 of the
Code.
“
Incumbent Director
”
shall mean, with respect to any period of time specified under the Plan for
purposes of determining whether or not a Change of Control has occurred, the
individuals who were members of the Board at the beginning of such
period.
“
Non-Qualified Stock
Option
” shall mean an Option which is not an Incentive Stock
Option.
“
Option
” shall mean an
Award granted under Article VII of the Plan of an option to purchase shares of
Common Stock and includes both Incentive Stock Options and Non-Qualified Stock
Options.
“
Option Agreement
”
shall mean a written agreement between the Company and a Holder with respect to
an Option.
“
Performance Criteria
”
shall mean the criteria that the Committee selects for purposes of establishing
the Performance Goal(s) for a Holder for a Performance Period.
“
Performance Goals
”
shall mean, for a Performance Period, the written goal or goals established by
the Committee for the Performance Period based upon the Performance
Criteria.
“
Performance Period
”
shall mean one or more periods of time, which may be of varying and overlapping
durations, selected by the Committee, over which the attainment of one or more
Performance Goals or other business objectives shall be measured for purposes of
determining a Holder’s right to, and the payment of, a Qualified
Performance-Based Award.
“
Performance Share
Award
” shall mean an Award granted under Article XII of the Plan under
which, upon the satisfaction of predetermined individual and/or Company (and/or
Affiliate) performance goals and/or objectives, shares of Common Stock are paid
to the Holder.
“
Performance Share Award
Agreement
” shall mean a written agreement between the Company and a
Holder with respect to a Performance Share Award.
“
Performance Unit
”
shall mean a Unit awarded to a Holder pursuant to a Performance Unit
Award.
“
Performance Unit
Award
” shall mean an Award granted under Article XI of the Plan under
which, upon the satisfaction of predetermined individual and/or Company (and/or
Affiliate) performance goals and/or objectives, a cash payment shall be made to
the Holder, based on the number of Units awarded to the Holder.
“
Performance Unit Award
Agreement
” shall mean a written agreement between the Company and a
Holder with respect to a Performance Unit Award.
“
Plan
” shall mean this
China Agritech, Inc. 2010 Omnibus Securities and Incentive Plan, as amended from
time to time, together with each of the Award Agreements utilized
hereunder.
“
Qualified Performance-Based
Award
” shall mean Awards intended to qualify as “performance-based”
compensation under Section 162(m) of the Code.
“
Restricted Stock
Award
” shall mean an Award granted under Article VIII of the Plan of
shares of Common Stock, the transferability of which by the Holder shall be
subject to Restrictions.
“
Restricted Stock Award
Agreement
” shall mean a written agreement between the Company and a
Holder with respect to a Restricted Stock Award.
“
Restricted Stock Unit
Award
” shall mean an Award granted under Article X of the Plan
under which, upon the satisfaction of predetermined individual service-related
vesting requirements, a cash payment shall be made to the Holder, based on the
number of Units awarded to the Holder.
“
Restricted Stock Unit Award
Agreement
” shall mean a written agreement between the Company
and a Holder with respect to a Restricted Stock Unit Award.
“
Restriction Period
”
shall mean the period of time for which shares of Common Stock subject to a
Restricted Stock Award shall be subject to Restrictions, as set forth in the
applicable Restricted Stock Award Agreement.
“
Restrictions
” shall
mean forfeiture, transfer and/or other restrictions applicable to shares of
Common Stock awarded to an Employee, Director or Consultant under the Plan
pursuant to a Restricted Stock Award and set forth in a Restricted Stock Award
Agreement.
“
Rule 16b-3
” shall
mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the
Exchange Act, as such may be amended from time to time, and any successor rule,
regulation or statute fulfilling the same or a substantially similar
function.
“
Stock Appreciation
Right
” shall mean an Award granted under Article XIV of the Plan of a
right, granted alone or in connection with a related Option, to receive a
payment on the date of exercise.
“
Stock Appreciation Right
Award Agreement
” shall mean a written agreement between the Company and a
Holder with respect to a Stock Appreciation Right.
“
Tandem Stock Appreciation
Right
” shall mean a Stock Appreciation Right granted in connection with a
related Option, the exercise of which shall result in termination of the
otherwise entitlement to purchase some or all of the shares of Common Stock
under the related Option, all as set forth in Section 14.2.
“
Ten Percent
Stockholder
” shall mean an Employee who, at the time an Incentive Stock
Option is granted to him or her, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any parent corporation or subsidiary corporation thereof (both as defined
in Section 424 of the Code), within the meaning of Section 422(b)(6) of the
Code.
“
Total and Permanent
Disability
” shall mean the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months, all as
described in Section 22(e)(3) of the Code.
“
Units
” shall mean
bookkeeping units, each of which represents such monetary amount as shall be
designated by the Committee in each Performance Unit Award Agreement, or
represents one (1) share of Common Stock for purposes of each Restricted Stock
Unit Award.
“
Unrestricted Stock
Award
” shall mean an Award granted under Article IX of the Plan of shares
of Common Stock which are not subject to Restrictions.
“
Unrestricted Stock Award
Agreement
” shall mean a written agreement between the Company and a
Holder with respect to an Unrestricted Stock Award.
ARTICLE
III
EFFECTIVE
DATE OF PLAN
The Plan
shall be effective as of the Effective Date, provided that the Plan is approved
by the stockholders of the Company within twelve (12) months of such
date.
ARTICLE
IV
ADMINISTRATION
Section
4.1
Composition of
Committee
. The Plan shall be administered by the Committee,
which shall be appointed by the Board. The Committee shall consist
solely of three (3) or more Directors who are each (i) “outside directors”
within the meaning of Section 162(m) of the Code (“
Outside Directors
”),
(ii) “non-employee directors” within the meaning of Rule 16b-3 and (iii)
“independent” for purposes of any applicable listing requirements (“
Non-Employee
Directors
”);
provided
,
however
, that the
Board or the Committee may delegate to a committee of one or more members of the
Board who are not (x) Outside Directors, the authority to grant Awards to
eligible persons who are not (A) then “covered employees” within the meaning of
Section 162(m) of the Code and are not expected to be “covered employees” at the
time of recognition of income resulting from such Award, or (B) persons with
respect to whom the Company wishes to comply with the requirements of Section
162(m) of the Code, and/or (y) Non-Employee Directors, the authority to grant
Awards to eligible persons who are not then subject to the requirements of
Section 16 of the Exchange Act. If a member of the Committee shall be eligible
to receive an Award under the Plan, such Committee member shall have no
authority hereunder with respect to his or her own Award.
Section
4.2
Powers
. Subject to
the provisions of the Plan, the Committee shall have the sole authority, in its
discretion, to make all determinations under the Plan, including but not limited
to determining which Employees, Directors or Consultants shall receive an Award,
the time or times when an Award shall be made (the date of grant of an Award
shall be the date on which the Award is awarded by the Committee), what type of
Award shall be granted, the term of an Award, the date or dates on which an
Award vests (including acceleration of vesting), the form of any payment to be
made pursuant to an Award, the terms and conditions of an Award (including the
forfeiture of the Award (and/or any financial gain) if the Holder of the Award
violates any applicable restrictive covenant thereof), the Restrictions under a
Restricted Stock Award and the number of shares of Common Stock which may be
issued under an Award, all as applicable. In making such determinations the
Committee may take into account the nature of the services rendered by the
respective Employees, Directors and Consultants, their present and potential
contribution to the Company’s (or the Affiliate’s) success and such other
factors as the Committee in its discretion shall deem relevant.
Section
4.3
Additional
Powers
. The Committee shall have such additional powers as are
delegated to it under the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and the
respective Award Agreements executed hereunder, to prescribe such rules and
regulations relating to the Plan as it may deem advisable to carry out the
intent of the Plan, and to determine the terms, restrictions and provisions of
each Award, including such terms, restrictions and provisions as shall be
requisite in the judgment of the Committee to cause designated Options to
qualify as Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in any Award
Agreement in the manner and to the extent it shall deem expedient to carry it
into effect. The determinations of the Committee on the matters referred to in
this Article IV shall be conclusive and binding on the Company and all
Holders.
Section
4.4
Committee
Action
. In the absence of specific rules to the contrary,
action by the Committee shall require the consent of a majority of the members
of the Committee, expressed either orally at a meeting of the Committee or in
writing in the absence of a meeting. No member of the Committee shall
have any liability for any good faith action, inaction or determination in
connection with the Plan.
ARTICLE
V
STOCK
SUBJECT TO PLAN AND LIMITATIONS THEREON
Section
5.1
Stock Grant and Award
Limits
. The Committee may from time to time grant Awards to
one or more Employees, Directors and/or Consultants determined by it to be
eligible for participation in the Plan in accordance with the provisions of
Article VI. Subject to Article XV, the aggregate number of shares of Common
Stock that may be issued under the Plan shall not exceed Two Million One Hundred
Thousand (2,100,000) shares. Shares shall be deemed to have been issued under
the Plan solely to the extent actually issued and delivered pursuant to an
Award. To the extent that an Award lapses, expires, is canceled, is terminated
unexercised or ceases to be exercisable for any reason, or the rights of its
Holder terminate, any shares of Common Stock subject to such Award shall again
be available for the grant of a new Award. Notwithstanding any provision in the
Plan to the contrary, the maximum number of shares of Common Stock that may be
subject to Awards of Options under Article VII and/or Stock Appreciation Rights
under Article XIV, in either or both cases granted to any one Employee during
any calendar year, shall be Five Hundred Thousand (500,000) shares (subject to
adjustment in the same manner as provided in Article XV with respect to shares
of Common Stock subject to Awards then outstanding). The limitation set forth in
the preceding sentence shall be applied in a manner which shall permit
compensation generated in connection with the exercise of Options or Stock
Appreciation Rights to constitute “performance-based” compensation for purposes
of Section 162(m) of the Code, including, but not limited to, counting against
such maximum number of shares, to the extent required under Section 162(m) of
the Code, any shares subject to Options or Stock Appreciation Rights that are
canceled or repriced.
Section
5.2
Stock
Offered
. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Common Stock, Common Stock purchased on the
open market or Common Stock previously issued and outstanding and reacquired by
the Company.
ARTICLE
VI
ELIGIBILITY
FOR AWARDS; TERMINATION OF
EMPLOYMENT,
DIRECTOR STATUS OR CONSULTANT STATUS
Section
6.1
Eligibility
. Awards
made under the Plan may be granted solely to persons or entities who, at the
time of grant, are Employees, Directors or Consultants. An Award may be granted
on more than one occasion to the same Employee, Director or Consultant, and,
subject to the limitations set forth in the Plan, such Award may include, a
Non-Qualified Stock Option, a Restricted Stock Award, an Unrestricted Stock
Award, a Distribution Equivalent Right Award, a Performance Stock Award, a
Performance Unit Award, a Stock Appreciation Right, a Tandem Stock Appreciation
Right, any combination thereof or, solely for Employees, an Incentive Stock
Option.
Section
6.2
Termination of Employment or
Director Status
. Except to the extent inconsistent with the
terms of the applicable Award Agreement and/or the provisions of Section 6.4 or
6.5, the following terms and conditions shall apply with respect to the
termination of a Holder’s employment with, or status as a Director of, the
Company or an Affiliate, as applicable, for any reason, including, without
limitation, Total and Permanent Disability or death:
(a) The
Holder’s rights, if any, to exercise any then exercisable Non-Qualified Stock
Options and/or Stock Appreciation Rights shall terminate:
(1) If
such termination is for a reason other than the Holder’s Total and Permanent
Disability or death, ninety (90) days after the date of such termination of
employment or after the date of such termination of Director
status;
(2) If
such termination is on account of the Holder’s Total and Permanent Disability,
one (1) year after the date of such termination of employment or Director
status; or
(3) If
such termination is on account of the Holder’s death, one (1) year after the
date of the Holder’s death.
Upon such
applicable date the Holder (and such Holder’s estate, designated beneficiary or
other legal representative) shall forfeit any rights or interests in or with
respect to any such Non-Qualified Stock Options and Stock Appreciation
Rights.
(b) The
Holder’s rights, if any, to exercise any then exercisable Incentive Stock Option
shall terminate:
(1) If
such termination is for a reason other than the Holder’s Total and Permanent
Disability or death, three (3) months after the date of such termination of
employment;
(2) If
such termination is on account of the Holder’s Total and Permanent Disability,
one (1) year after the date of such termination of employment; or
(3) If
such termination is on account of the Holder’s death, one (1) year after the
date of the Holder’s death.
Upon such
applicable date the Holder (and such Holder’s estate, designated beneficiary or
other legal representative) shall forfeit any rights or interests in or with
respect to any such Incentive Stock Options.
(c) If
a Holder’s employment with, or status as a Director of, the Company or an
Affiliate, as applicable, terminates for any reason prior to the actual or
deemed satisfaction and/or lapse of the Restrictions, vesting requirements,
terms and conditions applicable to a Restricted Stock Award and/or Restricted
Stock Unit Award, such Restricted Stock and/or Restricted Stock Units shall
immediately be canceled, and the Holder (and such Holder’s estate, designated
beneficiary or other legal representative) shall forfeit any rights or interests
in and with respect to any such Restricted Stock and/or Restricted Stock Units.
The immediately preceding sentence to the contrary notwithstanding, the
Committee, in its sole discretion, may determine, prior to or within thirty (30)
days after the date of such termination of employment or Director status, that
all or a portion of any such Holder’s Restricted Stock and/or Restricted Stock
Units shall not be so canceled and forfeited.
Section
6.3
Termination of Consultant
Status
. Except to the extent inconsistent with the terms of the
applicable Award Agreement and/or the provisions of Section 6.4 or 6.5, the
following terms and conditions shall apply with respect to the termination of a
Holder’s status as a Consultant, for any reason:
(a) The
Holder’s rights, if any, to exercise any then exercisable Non-Qualified Stock
Options and/or Stock Appreciation Rights shall terminate:
(1) If
such termination is for a reason other than the Holder’s death, ninety (90) days
after the date of such termination; or
(2) If
such termination is on account of the Holder’s death, one (1) year after the
date of the Holder’s death.
(b) If
the status of a Holder as a Consultant terminates for any reason prior to the
actual or deemed satisfaction and/or lapse of the Restrictions, vesting
requirements, terms and conditions applicable to a Restricted Stock Award and/or
Restricted Stock Unit Award, such Restricted Stock and/or Restricted Stock Units
shall immediately be canceled, and the Holder (and such Holder’s estate,
designated beneficiary or other legal representative) shall forfeit any rights
or interests in and with respect to any such Restricted Stock and/or Restricted
Stock Units. The immediately preceding sentence to the contrary notwithstanding,
the Committee, in its sole discretion, may determine, prior to or within thirty
(30) days after the date of such termination of such a Holder’s status as a
Consultant, that all or a portion of any such Holder’s Restricted Stock and/or
Restricted Stock Units shall not be so canceled and forfeited.
Section
6.4
Special Termination
Rule
. Except to the extent inconsistent with the terms of the applicable
Award Agreement, and notwithstanding anything to the contrary contained in this
Article VI, if a Holder’s employment with, or status as a Director of, the
Company or an Affiliate shall terminate, and if, within ninety (90) days of such
termination, such Holder shall become a Consultant, such Holder’s rights with
respect to any Award or portion thereof granted thereto prior to the date of
such termination may be preserved, if and to the extent determined by the
Committee in its sole discretion, as if such Holder had been a Consultant for
the entire period during which such Award or portion thereof had been
outstanding. Should the Committee effect such determination with respect to such
Holder, for all purposes of the Plan, such Holder shall not be treated as if his
or her employment or Director status had terminated until such time as his or
her Consultant status shall terminate, in which case his or her Award, as it may
have been reduced in connection with the Holder’s becoming a Consultant, shall
be treated pursuant to the provisions of Section 6.3;
provided
,
however
, that any
such Award which is intended to be an Incentive Stock Option shall, upon the
Holder’s no longer being an Employee, automatically convert to a Non-Qualified
Stock Option. Should a Holder’s status as a Consultant terminate, and
if, within ninety (90) days of such termination, such Holder shall become an
Employee or a Director, such Holder’s rights with respect to any Award or
portion thereof granted thereto prior to the date of such termination may be
preserved, if and to the extent determined by the Committee in its sole
discretion, as if such Holder had been an Employee or a Director, as applicable,
for the entire period during which such Award or portion thereof had been
outstanding, and, should the Committee effect such determination with respect to
such Holder, for all purposes of the Plan, such Holder shall not be treated as
if his or her Consultant status had terminated until such time as his or her
employment with the Company or an Affiliate, or his or her Director status, as
applicable, shall terminate, in which case his or her Award shall be treated
pursuant to the provisions of Section 6.2.
Section
6.5
Termination for
Cause
. Notwithstanding anything in this Article VI or
elsewhere in the Plan to the contrary, and unless a Holder’s Award Agreement
specifically provides otherwise, should a Holder’s employment, Director status
or engagement as a Consultant with or for the Company or an Affiliate be
terminated by the Company or Affiliate for Cause, all of such Holder’s then
outstanding Awards shall expire immediately and be forfeited in their entirety
upon such termination.
ARTICLE
VII
OPTIONS
Section
7.1
Option
Period
. The term of each Option shall be as specified in the
Option Agreement;
provided
,
however
, that except
as set forth in Section 7.3, no Option shall be exercisable after the expiration
of ten (10) years from the date of its grant.
Section
7.2
Limitations on Exercise of
Option
. An Option shall be exercisable in whole or in such
installments and at such times as specified in the Option
Agreement.
Section
7.3
Special Limitations on
Incentive Stock Options
. To the extent that the aggregate Fair
Market Value (determined at the time the respective Incentive Stock Option is
granted) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any calendar year under
all plans of the Company and any parent corporation or subsidiary corporation
thereof (both as defined in Section 424 of the Code) which provide for the grant
of Incentive Stock Options exceeds One Hundred Thousand Dollars ($100,000) (or
such other individual limit as may be in effect under the Code on the date of
grant), the portion of such Incentive Stock Options that exceeds such threshold
shall be treated as Non-Qualified Stock Options. The Committee shall determine,
in accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of a Holder’s Options, which were
intended by the Committee to be Incentive Stock Options when granted to the
Holder, will not constitute Incentive Stock Options because of such limitation,
and shall notify the Holder of such determination as soon as practicable after
such determination. No Incentive Stock Option shall be granted to an Employee
if, at the time the Option is granted, such Employee is a Ten Percent
Stockholder, unless (i) at the time such Incentive Stock Option is granted the
Option price is at least one hundred ten percent (110 %) of the Fair Market
Value of the Common Stock subject to the Option, and (ii) such Incentive Stock
Option by its terms is not exercisable after the expiration of five (5) years
from the date of grant. No Incentive Stock Option shall be granted
more than ten (10) years from the date on which the Plan is approved by the
Company’s stockholders. The designation by the Committee of an Option
as an Incentive Stock Option shall not guarantee the Holder that the Option will
satisfy the applicable requirements for “incentive stock option” status under
Section 422 of the Code.
Section
7.4
Option Agreement
.
Each Option shall be evidenced by an Option Agreement in such form and
containing such provisions not inconsistent with the provisions of the Plan as
the Committee from time to time shall approve, including, but not limited to,
provisions intended to qualify an Option as an Incentive Stock Option. An Option
Agreement may provide for the payment of the Option price, in whole or in part,
by the delivery of a number of shares of Common Stock (plus cash if necessary)
that have been owned by the Holder for at least six (6) months and having a Fair
Market Value equal to such Option price, or such other forms or methods as the
Committee may determine from time to time, in each case, subject to such rules
and regulations as may be adopted by the Committee. Each Option Agreement shall,
solely to the extent inconsistent with the provisions of Sections 6.2, 6.3, 6.4
and 6.5, as applicable, specify the effect of termination of employment,
Director status or Consultant status on the exercisability of the Option.
Moreover, without limited the generality of the foregoing, an Option Agreement
may provide for a “cashless exercise” of the Option, in whole or in part, by (a)
establishing procedures whereby the Holder, by a properly-executed written
notice, directs (i) an immediate market sale or margin loan as to all or a part
of the shares of Common Stock to which he is entitled to receive upon exercise
of the Option, pursuant to an extension of credit by the Company to the Holder
of the Option price, (ii) the delivery of the shares of Common Stock from the
Company directly to a brokerage firm and (iii) the delivery of the Option price
from sale or margin loan proceeds from the brokerage firm directly to the
Company, or (b) reducing the number of shares of Common Stock to be issued upon
exercise of the Option by the number of such shares having an aggregate Fair
Market Value equal to the Option price (or portion thereof to be so paid) as of
the date of the Option’s exercise. Each Option Agreement shall,
solely to the extent inconsistent with the provisions of Sections 6.2, 6.3, 6.4
and 6.5, as applicable, specify the effect of the termination of the Holder’s
employment, Director status or Consultant status on the exercisability of the
Option. An Option Agreement may also include provisions relating to (i) subject
to the provisions hereof, accelerated vesting of Options, including but not
limited to upon the occurrence of a Change of Control, (ii) tax matters
(including provisions covering any applicable Employee wage withholding
requirements and requiring additional “gross-up” payments to Holders to meet any
excise taxes or other additional income tax liability imposed as a result of a
payment made upon a Change of Control resulting from the operation of the Plan
or of such Option Agreement) and (iii) any other matters not inconsistent with
the terms and provisions of the Plan that the Committee shall in its sole
discretion determine. The terms and conditions of the respective Option
Agreements need not be identical.
Section
7.5
Option Price and
Payment
. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee;
provided
,
however
, that such
Option price (i) shall not be less than the Fair Market Value of a share of
Common Stock on the date such Option is granted, and (ii) shall be subject to
adjustment as provided in Article XV. The Option or portion thereof may be
exercised by delivery of an irrevocable notice of exercise to the Company. The
Option price for the Option or portion thereof shall be paid in full in the
manner prescribed by the Committee as set forth in the Plan and the applicable
Option Agreement, which manner, with the consent of the Committee, may include
the withholding of shares of Common Stock otherwise issuable in connection with
the exercise of the Option, for purposes of Section 7.4 (b). Separate stock
certificates shall be issued by the Company for those shares of Common Stock
acquired pursuant to the exercise of an Incentive Stock Option and for those
shares of Common Stock acquired pursuant to the exercise of a Non-Qualified
Stock Option.
Section
7.6
Stockholder Rights and
Privileges
. The Holder of an Option shall be entitled to all the
privileges and rights of a stockholder of the Company solely with respect to
such shares of Common Stock as have been purchased under the Option and for
which certificates of stock have been registered in the Holder’s
name.
Section
7.7
Options and Rights in
Substitution for Stock Options Granted by Other
Corporations
. Options may be granted under the Plan from time
to time in substitution for stock options held by individuals employed by
entities who become Employees as a result of a merger or consolidation of the
employing entity with the Company or any Affiliate, or the acquisition by the
Company or an Affiliate of the assets of the employing entity, or the
acquisition by the Company or an Affiliate of stock of the employing entity with
the result that such employing entity becomes an Affiliate.
Section
7.8
Prohibition Against
Repricing
. Except to the extent (i) approved in advance by
holders of a majority of the shares of the Company entitled to vote generally in
the election of directors, or (ii) as a result of any Change of Control or any
adjustment as provided in Article XV, the Committee shall not have the
power or authority to reduce, whether through amendment or otherwise, the
exercise price of any outstanding Option or Stock Appreciation right, or to
grant any new Award or make any payment of cash in substitution for or upon the
cancellation of Options and/or Stock Appreciation Rights previously
granted.
ARTICLE
VIII
RESTRICTED
STOCK AWARDS
Section
8.1
Restriction Period to be
Established by Committee
. At the time a Restricted Stock Award
is made, the Committee shall establish the Restriction Period applicable to such
Award. Each Restricted Stock Award may have a different Restriction Period, in
the discretion of the Committee. The Restriction Period applicable to a
particular Restricted Stock Award shall not be changed except as permitted by
Section 8.2.
Section
8.2
Other Terms and
Conditions
. Common Stock awarded pursuant to a Restricted
Stock Award shall be represented by a stock certificate registered in the name
of the Holder of such Restricted Stock Award. If provided for under the
Restricted Stock Award Agreement, the Holder shall have the right to vote Common
Stock subject thereto and to enjoy all other stockholder rights, including the
entitlement to receive dividends on the Common Stock during the Restriction
Period, except that (i) the Holder shall not be entitled to delivery of the
stock certificate until the Restriction Period shall have expired, (ii) the
Company shall retain custody of the stock certificate during the Restriction
Period (with a stock power endorsed by the Holder in blank), (iii) the Holder
may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of
the Common Stock during the Restriction Period and (iv) a breach of the terms
and conditions established by the Committee pursuant to the Restricted Stock
Award Agreement shall cause a forfeiture of the Restricted Stock Award. At the
time of such Award, the Committee may, in its sole discretion, prescribe
additional terms and conditions or restrictions relating to Restricted Stock
Awards, including, but not limited to, rules pertaining to the effect of
termination of employment, Director status or Consultant status prior to
expiration of the Restriction Period. Such additional terms, conditions or
restrictions shall, to the extent inconsistent with the provisions of Sections
6.2, 6.3 and 6.4, as applicable, be set forth in a Restricted Stock Award
Agreement made in conjunction with the Award. Such Restricted Stock Award
Agreement may also include provisions relating to (i) subject to the provisions
hereof, accelerated vesting of Awards, including but not limited to accelerated
vesting upon the occurrence of a Change of Control, (ii) tax matters (including
provisions covering any applicable Employee wage withholding requirements and
requiring additional “gross-up” payments to Holders to meet any excise taxes or
other additional income tax liability imposed as a result of a payment made in
connection with a Change of Control resulting from the operation of the Plan or
of such Restricted Stock Award Agreement) and (iii) any other matters not
inconsistent with the terms and provisions of the Plan that the Committee shall
in its sole discretion determine. The terms and conditions of the respective
Restricted Stock Agreements need not be identical. All shares of
Common Stock delivered to a Holder as part of a Restricted Stock Award shall be
delivered and reported by the Company or the Affiliate, as applicable, to the
Holder by no later than by the fifteenth (15
th
) day of
the third (3
rd
)
calendar month next following the end of the Company’s fiscal year in which the
Holder’s entitlement to such shares becomes vested.
Section
8.3
Payment for Restricted
Stock
. The Committee shall determine the amount and form of
any payment from a Holder for Common Stock received pursuant to a Restricted
Stock Award, if any, provided that in the absence of such a determination, a
Holder shall not be required to make any payment for Common Stock received
pursuant to a Restricted Stock Award, except to the extent otherwise required by
law.
Section
8.4
Restricted Stock Award
Agreements
. At the time any Award is made under this Article VIII, the
Company and the Holder shall enter into a Restricted Stock Award Agreement
setting forth each of the matters contemplated hereby and such other matters as
the Committee may determine to be appropriate.
ARTICLE
IX
UNRESTRICTED
STOCK AWARDS
Pursuant
to the terms of the applicable Unrestricted Stock Award Agreement, a Holder may
be awarded (or sold) shares of Common Stock which are not subject to
Restrictions, in consideration for past services rendered thereby to the Company
or an Affiliate or for other valid consideration.
ARTICLE
X
RESTRICTED
STOCK UNIT AWARDS
Section
10.1
Terms and
Conditions
. The Committee shall set forth in the applicable
Restricted Stock Unit Award Agreement the individual service-based vesting
requirement which the Holder would be required to satisfy before the Holder
would become entitled to payment pursuant to Section 10.2 and the number of
Units awarded to the Holder. Such payment shall be subject to a
“substantial risk of forfeiture” under Section 409A of the Code. At
the time of such Award, the Committee may, in its sole discretion, prescribe
additional terms and conditions or restrictions relating to Restricted Stock
Unit Awards, including, but not limited to, rules pertaining to the effect of
termination of employment, Director status or Consultant status prior to
expiration of the applicable vesting period. The terms and conditions
of the respective Restricted Stock Unit Award Agreements need not be
identical.
Section
10.2
Payments
. The
Holder of a Restricted Stock Unit shall be entitled to receive a cash payment
equal to the Fair Market Value of a share of Common Stock, or one (1) share of
Common Stock, as determined in the sole discretion of the Committee and as set
forth in the Restricted Stock Unit Award Agreement, for each Restricted Stock
Unit subject to such Restricted Stock Unit Award, if the Holder satisfies the
applicable vesting requirement. Such payment shall be made no later
than by the fifteenth (15
th
) day of
the third (3
rd
)
calendar month next following the end of the calendar year in which the
Restricted Stock Unit first becomes vested.
ARTICLE
XI
PERFORMANCE
UNIT AWARDS
Section
11.1
Terms and
Conditions
. The Committee shall set forth in the applicable
Performance Unit Award Agreement the performance goals and objectives (and the
period of time to which such goals and objectives shall apply) which the Holder
and/or the Company would be required to satisfy before the Holder would become
entitled to payment pursuant to Section 11.2, the number of Units awarded to the
Holder and the dollar value assigned to each such Unit. Such payment
shall be subject to a “substantial risk of forfeiture” under Section 409A of the
Code. At the time of such Award, the Committee may, in its sole
discretion, prescribe additional terms and conditions or restrictions relating
to Performance Unit Awards, including, but not limited to, rules pertaining to
the effect of termination of employment, Director status or Consultant status
prior to expiration of the applicable performance period. The terms
and conditions of the respective Performance Unit Award Agreements need not be
identical.
Section
11.2
Payments
. The
Holder of a Performance Unit shall be entitled to receive a cash payment equal
to the dollar value assigned to such Unit under the applicable Performance Unit
Award Agreement if the Holder and/or the Company satisfy (or partially satisfy,
if applicable under the applicable Performance Unit Award Agreement) the
performance goals and objectives set forth in such Performance Unit Award
Agreement. If achieved, such payment shall be made no later than by
the fifteenth (15
th
) day of
the third (3
rd
)
calendar month next following the end of the Company’s fiscal year to which such
performance goals and objectives relate.
ARTICLE
XII
PERFORMANCE
SHARE AWARDS
Section
12.1
Terms and
Conditions
. The Committee shall set forth in the applicable
Performance Share Award Agreement the performance goals and objectives (and the
period of time to which such goals and objectives shall apply) which the Holder
and/or the Company would be required to satisfy before the Holder would become
entitled to the receipt of shares of Common Stock pursuant to such Holder’s
Performance Share Award and the number of shares of Common Stock subject to such
Performance Share Award. Such payment shall be subject to a
“substantial risk of forfeiture” under Section 409A of the Code and, if such
goals and objectives are achieved, the distribution of such Common Shares shall
be made no later than by the fifteenth (15
th
) day of
the third (3
rd
)
calendar month next following the end of the Company’s fiscal year to which such
goals and objectives relate. At the time of such Award, the Committee
may, in its sole discretion, prescribe additional terms and conditions or
restrictions relating to Performance Share Awards, including, but not limited
to, rules pertaining to the effect of termination of the Holder’s employment,
Director status or Consultant status prior to the expiration of the applicable
performance period. The terms and conditions of the respective
Performance Share Award Agreements need not be identical.
Section
12.2
Stockholder Rights and
Privileges
. The Holder of a Performance Share Award shall have
no rights as a stockholder of the Company until such time, if any, as the Holder
actually receives shares of Common Stock pursuant to the Performance Share
Award.
ARTICLE
XIII
DISTRIBUTION
EQUIVALENT RIGHTS
Section
13.1
Terms and
Conditions
. The Committee shall set forth in the applicable
Distribution Equivalent Rights Award Agreement the terms and conditions, if any,
including whether the Holder is to receive credits currently in cash, is to have
such credits reinvested (at Fair Market Value determined as of the date of
reinvestment) in additional shares of Common Stock or is to be entitled to
choose among such alternatives. Such receipt shall be subject to a “substantial
risk of forfeiture” under Section 409A of the Code and, if such Award becomes
vested, the distribution of such cash or shares of Common Stock shall be made no
later than by the fifteenth (15
th
) day of
the third (3
rd
)
calendar month next following the end of the Company’s fiscal year in which the
Holder’s interest in the Award vests. Distribution Equivalent Rights Awards may
be settled in cash or in shares of Common Stock, as set forth in the applicable
Distribution Equivalent Rights Award Agreement. A Distribution Equivalent Rights
Award may, but need not be, awarded in tandem with another Award, whereby, if so
awarded, such Distribution Equivalent Rights Award shall expire, terminate or be
forfeited by the Holder, as applicable, under the same conditions as under such
other Award.
Section
13.2
Interest
Equivalents
. The Distribution Equivalent Rights Award
Agreement for a Distribution Equivalent Rights Award may provide for the
crediting of interest on a Distribution Rights Award to be settled in cash at a
future date (but in no event later than by the fifteenth (15
th
) day of
the third (3
rd
)
calendar month next following the end of the Company’s fiscal year in which such
interest was credited), at a rate set forth in the applicable Distribution
Equivalent Rights Award Agreement, on the amount of cash payable
thereunder.
ARTICLE
XIV
STOCK
APPRECIATION RIGHTS
Section
14.1
Terms and
Conditions
. The Committee shall set forth in the applicable
Stock Appreciation Right Award Agreement the terms and conditions of the Stock
Appreciation Right, including (i) the base value (the “
Base Value
”) for the
Stock Appreciation Right, which for purposes of a Stock Appreciation which is
not a Tandem Stock Appreciation Right, shall be not less than the Fair Market
Value of a share of the Common Stock on the date of grant of the Stock
Appreciation Right, (ii) the number of shares of Common Stock subject to the
Stock Appreciation Right, (iii) the period during which the Stock Appreciation
Right may be exercised;
provided
,
however
, that no
Stock Appreciation Right shall be exercisable after the expiration of ten (10)
years from the date of its grant, and (iv) any other special rules and/or
requirements which the Committee imposes upon the Stock Appreciation Right. Upon
the exercise of some or all of a Stock Appreciation Right, the Holder shall
receive a payment from the Company, in cash or in the form of shares of Common
Stock having an equivalent Fair Market Value or in a combination of both, as
determined in the sole discretion of the Committee, equal to the product
of:
(a) The
excess of (i) the Fair Market Value of a share of the Common Stock on the date
of exercise, over (ii) the Base Value, multiplied by;
(b) The
number of shares of Common Stock with respect to which the Stock Appreciation
Right is exercised.
Section
14.2
Tandem Stock Appreciation
Rights
. If the Committee grants a Stock Appreciation Right which is
intended to be a Tandem Stock Appreciation Right, the Tandem Stock Appreciation
Right must be granted at the same time as the related Option, and the following
special rules shall apply:
(a) The
Base Value shall be equal to or greater than the per share exercise price under
the related Option;
(b) The
Tandem Stock Appreciation Right may be exercised for all or part of the shares
of Common Stock which are subject to the related Option, but solely upon the
surrender by the Holder of the Holder’s right to exercise the equivalent portion
of the related Option (and when a share of Common Stock is purchased under the
related Option, an equivalent portion of the related Tandem Stock Appreciation
Right shall be cancelled);
(c) The
Tandem Stock Appreciation Right shall expire no later than the date of the
expiration of the related Option;
(d) The
value of the payment with respect to the Tandem Stock Appreciation Right may be
no more than one hundred percent (100%) of the difference between the per share
exercise price under the related Option and the Fair Market Value of the shares
of Common Stock subject to the related Option at the time the Tandem Stock
Appreciation Right is exercised, multiplied by the number of shares of Common
Stock with respect to which the Tandem Stock Appreciation Right is exercised;
and
(e) The
Tandem Stock Appreciation Right may be exercised solely when the Fair Market
Value of a share of Common Stock subject to the related Option exceeds the per
share the exercise price under the related Option.
ARTICLE
XV
RECAPITALIZATION
OR REORGANIZATION
Section
15.1
Adjustments to Common
Stock
. The shares with respect to which Awards may be granted
under the Plan are shares of Common Stock as presently constituted;
provided
,
however
, that if, and
whenever, prior to the expiration or distribution to the Holder of shares of
Common Stock underlying an Award theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such Award may thereafter
be exercised or satisfied, as applicable, (i) in the event of an increase in the
number of outstanding shares, shall be proportionately increased, and the
purchase price per share of the Common Stock shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares, shall
be proportionately reduced, and the purchase price per share of the Common Stock
shall be proportionately increased. Notwithstanding the foregoing or any other
provision of this Article XV, any adjustment made with respect to an Award (x)
which is an Incentive Stock Option, shall comply with the requirements of
Section 424(a) of the Code, and in no event shall any adjustment be made which
would render any Incentive Stock Option granted under the Plan to be other than
an “incentive stock option” for purposes of Section 422 of the Code, and (y)
which is a Non-Qualified Stock Option, shall comply with the requirements of
Section 409A of the Code, and in no event shall any adjustment be made which
would render any Non-Qualified Stock Option granted under the Plan to become
subject to Section 409A of the Code.
Section
15.2
Recapitalization
. If
the Company recapitalizes or otherwise changes its capital structure, thereafter
upon any exercise or satisfaction, as applicable, of a previously granted Award,
the Holder shall be entitled to receive (or entitled to purchase, if applicable)
under such Award, in lieu of the number of shares of Common Stock then covered
by such Award, the number and class of shares of stock and securities to which
the Holder would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization, the Holder had
been the holder of record of the number of shares of Common Stock then covered
by such Award.
Section
15.3
Other
Events
. In the event of changes to the outstanding Common
Stock by reason of extraordinary cash dividend, reorganization, mergers,
consolidations, combinations, split-ups, spin-offs, exchanges or other relevant
changes in capitalization occurring after the date of the grant of any Award and
not otherwise provided for under this Article XV, any outstanding Awards and any
Award Agreements evidencing such Awards shall be adjusted by the Board in its
discretion in such manner as the Board shall deem equitable or appropriate
taking into consideration the applicable accounting and tax consequences, as to
the number and price of shares of Common Stock or other consideration subject to
such Awards. In the event of any adjustment pursuant to Sections 15.1, 15.2 or
this Section 15.3, the aggregate number of shares available under the Plan
pursuant to Section 5.1 (and the Code Section 162(m) limit set forth therein)
may be appropriately adjusted by the Board, the determination of which shall be
conclusive. In addition, the Committee may make provision for a cash
payment to a Participant or a person who has an outstanding
Award. The number of shares of Common Stock subject to any Award
shall be rounded to the nearest whole number.
Section
15.4
Powers Not
Affected
. The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or of the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change of the Company’s capital
structure or business, any merger or consolidation of the Company, any issue of
debt or equity securities ahead of or affecting Common Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.
Section
15.5
No Adjustment for Certain
Awards
. Except as hereinabove expressly provided, the issuance
by the Company of shares of stock of any class or 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, and in any case whether or not for fair value, shall not
affect previously granted Awards, and no adjustment by reason thereof shall be
made with respect to the number of shares of Common Stock subject to Awards
theretofore granted or the purchase price per share, if applicable.
ARTICLE
XVI
AMENDMENT
AND TERMINATION OF PLAN
The Plan
shall continue in effect, unless sooner terminated pursuant to this Article XVI,
until the tenth (10
th
)
anniversary of the date on which it is adopted by the Board (except as to Awards
outstanding on that date). The Board in its discretion may terminate
the Plan at any time with respect to any shares for which Awards have not
theretofore been granted;
provided
,
however
, that the
Plan’s termination shall not materially and adversely impair the rights of a
Holder with respect to any Award theretofore granted without the consent of the
Holder. The Board shall have the right to alter or amend the Plan or any part
hereof from time to time;
provided
,
however
, that without
the approval by a majority of the votes cast at a meeting of shareholders at
which a quorum representing a majority of the shares of the Company entitled to
vote generally in the election of directors is present in person or by proxy, no
amendment or modification of the Plan may (i) materially increase the benefits
accruing to Holders, (ii) except as otherwise expressly provided in Article
XV, materially increase the number of shares of Common Stock subject to the Plan
or the individual Award Agreements specified in Article V, (iii) materially
modify the requirements for participation in the Plan, or (iv) amend,
modify or suspend Section 7.8 (repricing prohibitions) or this Article
XVI. In addition, no change in any Award theretofore granted may be
made which would materially and adversely impair the rights of a Holder with
respect to such Award without the consent of the Holder (unless such change is
required in order to cause the benefits under the Plan to qualify as
“performance-based” compensation within the meaning of Section 162(m) of the
Code) or to exempt the Plan or any Award from Section 409A of the
Code.
ARTICLE
XVII
MISCELLANEOUS
Section
17.1
No Right to
Award
. Neither the adoption of the Plan by the Company nor any
action of the Board or the Committee shall be deemed to give an Employee,
Director or Consultant any right to an Award except as may be evidenced by an
Award Agreement duly executed on behalf of the Company, and then solely to the
extent and on the terms and conditions expressly set forth therein.
Section
17.2
No Rights
Conferred
. Nothing contained in the Plan shall (i) confer upon
any Employee any right with respect to continuation of employment with the
Company or any Affiliate, (ii) interfere in any way with any right of the
Company or any Affiliate to terminate the employment of an Employee at any time,
(iii) confer upon any Director any right with respect to continuation of such
Director’s membership on the Board, (iv) interfere in any way with any right of
the Company or an Affiliate to terminate a Director’s membership on the Board at
any time, (v) confer upon any Consultant any right with respect to continuation
of his or her consulting engagement with the Company or any Affiliate, or (vi)
interfere in any way with any right of the Company or an Affiliate to terminate
a Consultant’s consulting engagement with the Company or an Affiliate at any
time.
Section
17.3
Other Laws; No Fractional
Shares; Withholding
. The Company shall not be obligated by
virtue of any provision of the Plan to recognize the exercise of any Award or to
otherwise sell or issue shares of Common Stock in violation of any laws, rules
or regulations, and any postponement of the exercise or settlement of any Award
under this provision shall not extend the term of such Award. Neither
the Company nor its directors or officers shall have any obligation or liability
to a Holder with respect to any Award (or shares of Common Stock issuable
thereunder) (i) that shall lapse because of such postponement, or
(ii) for any failure to comply with the requirements of any applicable law,
rules or regulations, including but not limited to any failure to comply with
the requirements of Section 409A of this Code. No fractional shares
of Common Stock shall be delivered, nor shall any cash in lieu of fractional
shares be paid. The Company shall have the right to deduct in cash (whether
under this Plan or otherwise) in connection with all Awards any taxes required
by law to be withheld and to require any payments required to enable it to
satisfy its withholding obligations. In the case of any Award satisfied in the
form of shares of Common Stock, no shares shall be issued unless and until
arrangements satisfactory to the Company shall have been made to satisfy any tax
withholding obligations applicable with respect to such Award. Subject to such
terms and conditions as the Committee may impose, the Company shall have the
right to retain, or the Committee may, subject to such terms and conditions as
it may establish from time to time, permit Holders to elect to tender, Common
Stock (including Common Stock issuable in respect of an Award) to satisfy, in
whole or in part, the amount required to be withheld.
Section
17.4
No Restriction on Corporate
Action
. Nothing contained in the Plan shall be construed to
prevent the Company or any Affiliate from taking any corporate action which is
deemed by the Company or such Affiliate to be appropriate or in its best
interest, whether or not such action would have an adverse effect on the Plan or
any Award made under the Plan. No Employee, Director, Consultant, beneficiary or
other person shall have any claim against the Company or any Affiliate as a
result of any such action.
Section
17.5
Restrictions on
Transfer
. No Award under the Plan or any Award Agreement and no rights or
interests herein or therein, shall or may be assigned, transferred, sold,
exchanged, encumbered, pledged or otherwise hypothecated or disposed of by a
Holder except (i) by will or by the laws of descent and distribution, or (ii)
except for an Incentive Stock Option, by gift to any Family Member of the
Holder. An Award may be exercisable during the lifetime of the Holder only by
such Holder or by the Holder’s guardian or legal representative unless it has
been transferred by gift to a Family Member of the Holder, in which case it
shall be exercisable solely by such transferee. Notwithstanding any such
transfer, the Holder shall continue to be subject to the withholding
requirements provided for under Section 17.3 hereof.
Section
17.6
Beneficiary
Designations
. Each Holder may, from time to time, name a
beneficiary or beneficiaries (who may be contingent or successive beneficiaries)
for purposes of receiving any amount which is payable in connection with an
Award under the Plan upon or subsequent to the Holder’s death. Each such
beneficiary designation shall serve to revoke all prior beneficiary
designations, be in a form prescribed by the Company and be effective solely
when filed by the Holder in writing with the Company during the Holder’s
lifetime. In the absence of any such written beneficiary designation, for
purposes of the Plan, a Holder’s beneficiary shall be the Holder’s
estate.
Section
17.7
Rule
16b-3
. It is intended that the Plan and any Award made to a
person subject to Section 16 of the Exchange Act shall meet all of the
requirements of Rule 16b-3. If any provision of the Plan or of any such Award
would disqualify the Plan or such Award under, or would otherwise not comply
with the requirements of, Rule 16b-3, such provision or Award shall be construed
or deemed to have been amended as necessary to conform to the requirements of
Rule 16b-3.
Section
17.8
Section
162(m)
. It is intended that the Plan shall comply fully with
and meet all the requirements of Section 162(m) of the Code so that Awards
hereunder which are made to Holders who are “covered employees” (as defined in
Section 162(m) of the Code) shall constitute “performance-based” compensation
within the meaning of Section 162(m) of the Code. Any Performance Goal(s)
applicable to Qualified Performance-Based Awards shall be objective, shall be
established not later than ninety (90) days after the beginning of any
applicable Performance Period (or at such other date as may be required or
permitted for “performance-based” compensation under Section 162(m) of the Code)
and shall otherwise meet the requirements of Section 162(m) of the Code,
including the requirement that the outcome of the Performance Goal or Goals be
substantially uncertain (as defined in the regulations under Section 162(m) of
the Code) at the time established. The Performance Criteria to be
utilized under the Plan to establish Performance Goals shall consist of
objective tests based on one or more of the following: earnings or earnings per
share, cash flow or cash flow per share, operating cash flow or operating cash
flow per share revenue growth, product revenue growth, financial return ratios
(such as return on equity, return on investment and/or return on assets), share
price performance, stockholder return, equity and/or value, operating income,
operating margins, earnings before interest, taxes, depreciation and
amortization, earnings, pre- or post-tax income, economic value added (or an
equivalent metric), profit returns and margins, credit quality, sales growth,
market share, working capital levels, comparisons with various stock market
indices, year-end cash, debt reduction, assets under management, operating
efficiencies, strategic partnerships or transactions (including co-development,
co-marketing, profit sharing, joint venture or other similar arrangements),
and/or financing and other capital raising transaction. Performance
criteria may be established on a Company-wide basis or with respect to one or
more Company business units or divisions or subsidiaries; and either in absolute
terms, relative to the performance of one or more similarly situated companies,
or relative to the performance of an index covering a peer group of
companies. When establishing Performance Goals for the applicable
Performance Period, the Committee may exclude any or all “extraordinary items”
as determined under U.S. generally accepted accounting principles including,
without limitation, the charges or costs associated with restructurings of the
Company, discontinued operations, other unusual or non-recurring items, and the
cumulative effects of accounting changes, and as identified in the Company’s
financial statements, notes to the Company’s financial statements or
management’s discussion and analysis of financial condition and results of
operations contained in the Company’s most recent annual report filed with the
U.S. Securities and Exchange Commission pursuant to the Exchange
Act. Holders who are “covered employees” (as defined in Section
162(m) of the Code) shall be eligible to receive payment under a Qualified
Performance-Based Award which is subject to achievement of a Performance Goal or
Goals only if the applicable Performance Goal or Goals are achieved within the
applicable Performance Period, as determined by the Committee. If any
provision of the Plan would disqualify the Plan or would not otherwise permit
the Plan to comply with Section 162(m) of the Code as so intended, such
provision shall be construed or deemed amended to conform to the requirements or
provisions of Section 162(m) of the Code. The Committee may postpone
the exercising of Awards, the issuance or delivery of Common Stock under any
Award or any action permitted under the Plan to prevent the Company or any
subsidiary from being denied a federal income tax deduction with respect to any
Award other than an Incentive Stock Option, provided that such deferral
satisfies the requirements of Section 409A of the Code. For
purposes of the requirements of Treasury Regulation Section 1.162-27(e)(4)(i),
the maximum amount of compensation that may be paid to any Employee under the
Plan for a calendar year shall be Five Million Dollars
($5,000,000).
Section
17.9
Section
409A
. Notwithstanding any other provision of the Plan, the
Committee shall have no authority to issue an Award under the Plan with terms
and/or conditions which would cause such Award to constitute non-qualified
“deferred compensation” under Section 409A of the Code. Accordingly,
by way of example but not limitation, no Option shall be granted under the Plan
with a per share Option exercise price which is less than the Fair Market Value
of a share of Common Stock on the date of grant of the
Option. Notwithstanding anything herein to the contrary, no Award
Agreement shall provide for any deferral feature with respect to an Award which
constitutes a deferral of compensation under Section 409A of the
Code. The Plan and all Award Agreements are intended to comply with
the requirements of Section 409A of the Code (so as to be exempt therefrom) and
shall be so interpreted and construed.
Section
17.10
Indemnification
. Each
person who is or shall have been a member of the Committee or of the Board shall
be indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred thereby in
connection with or resulting from any claim, action, suit, or proceeding to
which such person may be made a party or may be involved by reason of any action
taken or failure to act under the Plan and against and from any and all amounts
paid thereby in settlement thereof, with the Company’s approval, or paid thereby
in satisfaction of any judgment in any such action, suit, or proceeding against
such person;
provided
,
however
, that such
person shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be
exclusive and shall be independent of any other rights of indemnification to
which such persons may be entitled under the Company’s Articles of Incorporation
or By-laws, by contract, as a matter of law, or otherwise.
Section
17.11
Other
Plans
. No Award, payment or amount received hereunder shall be
taken into account in computing an Employee’s salary or compensation for the
purposes of determining any benefits under any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate, unless such
other plan specifically provides for the inclusion of such Award, payment or
amount received. Nothing in the Plan shall be construed to limit the
right of the Company to establish other plans or to pay compensation to its
employees, in cash or property, in a manner which is not expressly authorized
under the Plan.
Section
17.12
Limits of
Liability
. Any liability of the Company with respect to an
Award shall be based solely upon the contractual obligations created under the
Plan and the Award Agreement. None of the Company, any member of the Board nor
any member of the Committee shall have any liability to any party for any action
taken or not taken, in good faith, in connection with or under the
Plan.
Section
17.13
Governing
Law
. Except as otherwise provided herein, the Plan shall be
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law.
Section
17.14
Severability of
Provisions
. If any provision of the Plan is held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of the Plan, and the Plan shall be construed and enforced as if such
invalid or unenforceable provision had not been included in the
Plan.
Section
17.15
No
Funding
. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of funds or assets to ensure the payment of any Award.
Section
17.16
Headings
. Headings
used throughout the Plan are for convenience only and shall not be given legal
significance.
Section
17.17
Terms of Award
Agreements
. Each Award shall be evidenced by an Award Agreement, which
Award Agreement, if it provides for the issuance of Common Stock, shall require
the Holder to enter into and be bound by the terms of the Company’s
Stockholders’ Agreement, if any. The terms of the Award Agreements
utilized under the Plan need not be the same.
Section
17.18
California Information
Requirements
. To the extent applicable, the Company shall
comply with the information requirements applicable to the Plan pursuant to
Section 260.140.46 of the California Code of Regulations.