2004 Equity Incentive Plan - Aastrom Biosciences Inc.
AASTROM BIOSCIENCES, INC.
2004 EQUITY INCENTIVE PLAN
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TABLE OF CONTENTS
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1. Establishment, Purpose and Term of Plan............................................................ 1
1.1 Establishment............................................................................... 1
1.2 Purpose..................................................................................... 1
1.3 Term of Plan................................................................................ 1
2. Definitions and Construction....................................................................... 1
2.1 Definitions................................................................................. 1
2.2 Construction................................................................................ 7
3. Administration..................................................................................... 7
3.1 Administration by the Committee............................................................. 7
3.2 Authority of Officers....................................................................... 7
3.3 Administration with Respect to Insiders..................................................... 8
3.4 Committee Complying with Section 162(m)..................................................... 8
3.5 Powers of the Committee..................................................................... 8
3.6 No Repricing................................................................................ 9
3.7 Indemnification............................................................................. 9
4. Shares Subject to Plan............................................................................. 10
4.1 Maximum Number of Shares Issuable........................................................... 10
4.2 Maximum Number of Shares Issuable Pursuant to Incentive Stock Options....................... 10
4.3 Adjustments for Changes in Capital Structure................................................ 10
5. Eligibility and Award Limitations.................................................................. 11
5.1 Persons Eligible for Awards................................................................. 11
5.2 Participation............................................................................... 11
5.3 Incentive Stock Option Limitations.......................................................... 11
5.4 Section 162(m) Award Limits................................................................. 12
6. Terms and Conditions of Options.................................................................... 12
6.1 Exercise Price.............................................................................. 13
6.2 Exercisability and Term of Options.......................................................... 13
6.3 Payment of Exercise Price................................................................... 13
6.4 Effect of Termination of Service............................................................ 14
6.5 Transferability of Options.................................................................. 15
7. Terms and Conditions of Nonemployee Director Awards................................................ 15
7.1 Grant of Nonemployee Director Awards........................................................ 16
7.2 Exercise Price of any Nonemployee Director Option........................................... 16
7.3 Exercisability and Term of Nonemployee Director Options..................................... 17
7.4 Effect of Termination of Service............................................................ 17
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TABLE OF CONTENTS
(continued)
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8. Terms and Conditions of Stock Appreciation Rights.................................................. 18
8.1 Types of SARs Authorized.................................................................... 18
8.2 Exercise Price.............................................................................. 18
8.3 Exercisability and Term of SARs............................................................. 18
8.4 Exercise of SARs............................................................................ 19
8.5 Deemed Exercise of SARs..................................................................... 19
8.6 Effect of Termination of Service............................................................ 19
8.7 Nontransferability of SARs.................................................................. 19
9. Terms and Conditions of Restricted Stock Awards.................................................... 20
9.1 Types of Restricted Stock Awards Authorized................................................. 20
9.2 Purchase Price.............................................................................. 20
9.3 Purchase Period............................................................................. 20
9.4 Payment of Purchase Price................................................................... 20
9.5 Vesting and Restrictions on Transfer........................................................ 20
9.6 Voting Rights; Dividends and Distributions.................................................. 21
9.7 Effect of Termination of Service............................................................ 21
9.8 Nontransferability of Restricted Stock Award Rights......................................... 21
9.9 Measurement of Performance Goals............................................................ 22
10. Terms and Conditions of Restricted Stock Unit Awards............................................... 23
10.1 Grant of Restricted Stock Unit Awards....................................................... 23
10.2 Purchase Price.............................................................................. 23
10.3 Vesting..................................................................................... 23
10.4 Voting Rights, Dividend Equivalent Rights and Distributions................................. 23
10.5 Effect of Termination of Service............................................................ 24
10.6 Settlement of Restricted Stock Unit Awards.................................................. 24
10.7 Nontransferability of Restricted Stock Unit Awards.......................................... 24
11. Deferred Compensation Awards....................................................................... 24
11.1 Establishment of Deferred Compensation Award Programs....................................... 24
11.2 Terms and Conditions of Deferred Compensation Awards........................................ 25
12. Standard Forms of Award Agreement.................................................................. 26
12.1 Award Agreements............................................................................ 26
12.2 Authority to Vary Terms..................................................................... 26
13. Change in Control.................................................................................. 26
13.1 Effect of Change in Control on Options and SARs............................................. 26
13.2 Effect of Change in Control on Restricted Stock Awards...................................... 27
13.3 Effect of Change in Control on Restricted Stock Unit Awards................................. 27
13.4 Effect of Change in Control on Deferred Compensation Awards................................. 28
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TABLE OF CONTENTS
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14. Compliance with Securities Law..................................................................... 28
15. Tax Withholding.................................................................................... 28
15.1 Tax Withholding in General.................................................................. 28
15.2 Withholding in Shares....................................................................... 28
16. Amendment or Termination of Plan................................................................... 29
17. Miscellaneous Provisions........................................................................... 29
17.1 Repurchase Rights........................................................................... 29
17.2 Provision of Information.................................................................... 29
17.3 Rights as Employee, Consultant or Director.................................................. 29
17.4 Rights as a Stockholder..................................................................... 29
17.5 Fractional Shares........................................................................... 30
17.6 Severability................................................................................ 30
17.7 Beneficiary Designation..................................................................... 30
17.8 Unfunded Obligation......................................................................... 30
17.9 Choice of Law............................................................................... 30
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AASTROM BIOSCIENCES, INC.
2004 EQUITY INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The Aastrom Biosciences, Inc. 2004 Equity
Incentive Plan (the "PLAN") is hereby established effective as of November 10,
2004, the date of its approval by the stockholders of the Company (the
"EFFECTIVE DATE"). After the Effective Date, the Company shall terminate, and no
longer issue any awards from under, the Company's 2001 Stock Option Plan.
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options, Stock Appreciation
Rights, Restricted Stock Purchase Rights, Restricted Stock Bonuses, Restricted
Stock Units and Deferred Compensation Awards.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Awards granted under the Plan have lapsed. However, all Awards shall
be granted, if at all, within ten (10) years from the Effective Date.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "AFFILIATE" means (i) an entity, other than a Parent
Corporation, that directly, or indirectly through one or more intermediary
entities, controls the Company or (ii) an entity, other than a Subsidiary
Corporation, that is controlled by the Company directly, or indirectly through
one or more intermediary entities. For this purpose, the term "control"
(including the term "controlled by") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
the relevant entity, whether through the ownership of voting securities, by
contract or otherwise; or shall have such other meaning assigned such term for
the purposes of registration on Form S-8 under the Securities Act.
(b) "AWARD" means any Option, SAR, Restricted Stock Purchase
Right, Restricted Stock Bonus, Restricted Stock Unit or Deferred Compensation
Award granted under the Plan.
(c) "AWARD AGREEMENT" means a written agreement between the
Company and a Participant setting forth the terms, conditions and restrictions
of the Award
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granted to the Participant. An Award Agreement may be an "Option Agreement," an
"SAR Agreement," a "Restricted Stock Purchase Agreement," a "Restricted Stock
Bonus Agreement," a "Restricted Stock Unit Agreement," or a "Deferred
Compensation Award Agreement."
(d) "BOARD" means the Board of Directors of the Company.
(e) "CAUSE" means, unless otherwise defined by the
Participant's Award Agreement or contract of employment or service, any of the
following: (i) the Participant's theft, dishonesty, willful misconduct, breach
of fiduciary duty for personal profit, or falsification of any Participating
Company documents or records; (ii) the Participant's material failure to abide
by a Participating Company's code of conduct or other policies (including,
without limitation, policies relating to confidentiality and reasonable
workplace conduct); (iii) the Participant's unauthorized use, misappropriation,
destruction or diversion of any tangible or intangible asset or corporate
opportunity of a Participating Company (including, without limitation, the
Participant's improper use or disclosure of a Participating Company's
confidential or proprietary information); (iv) any intentional act by the
Participant which has a material detrimental effect on a Participating Company's
reputation or business; (v) the Participant's repeated failure or inability to
perform any reasonable assigned duties after written notice from a Participating
Company of, and a reasonable opportunity to cure, such failure or inability;
(vi) any material breach by the Participant of any employment or service
agreement between the Participant and a Participating Company, which breach is
not cured pursuant to the terms of such agreement; or (vii) the Participant's
conviction (including any plea of guilty or nolo contendere) of any criminal act
involving fraud, dishonesty, misappropriation or moral turpitude, or which
impairs the Participant's ability to perform his or her duties with a
Participating Company.
(f) "CHANGE IN CONTROL" means, unless otherwise defined by the
Participant's Award Agreement or contract of employment or service, 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), other than (1) a trustee or other fiduciary
holding stock of the Company under an employee benefit plan of a Participating
Company or (2) a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of the
stock of the Company, becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of stock of the
Company representing more than fifty percent (50%) of the total combined voting
power of the Company's then-outstanding voting stock; or
(ii) an Ownership Change Event or series of related
Ownership Change Events (collectively, a "TRANSACTION") in which the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of an Ownership
Change Event described in Section 2.1(z)(iii), the entity to which the assets of
the Company were transferred (the "TRANSFEREE"), as the case may be; or
(iii) a liquidation or dissolution of the Company.
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For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
securities of one or more corporations or other business entities which own the
Company or the Transferee, as the case may be, either directly or through one or
more subsidiary corporations or other business entities. The Committee shall
have the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Ownership Change Events are related, and
its determination shall be final, binding and conclusive.
(g) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(h) "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. If no committee of the Board has been
appointed to administer the Plan, the Board shall exercise all of the powers of
the Committee granted herein, and, in any event, the Board may in its discretion
exercise any or all of such powers.
(i) "COMPANY" means Aastrom Biosciences, Inc., a Michigan
corporation, or any successor corporation thereto.
(j) "CONSULTANT" means a person engaged to provide consulting
or advisory services (other than as an Employee or a member of the Board) to a
Participating Company, provided that the identity of such person, the nature of
such services or the entity to which such services are provided would not
preclude the Company from offering or selling securities to such person pursuant
to the Plan in reliance on registration on a Form S-8 Registration Statement
under the Securities Act.
(k) "DEFERRED COMPENSATION AWARD" means an award of Stock
Units granted to a Participant pursuant to Section 11 of the Plan.
(l) "DIRECTOR" means a member of the Board.
(m) "DISABILITY" means the permanent and total disability of
the Participant, within the meaning of Section 22(e)(3) of the Code.
(n) "DIVIDEND EQUIVALENT" means a credit, made at the
discretion of the Committee or as otherwise provided by the Plan, to the account
of a Participant in an amount equal to the cash dividends paid on one share of
Stock for each share of Stock represented by an Award held by such Participant.
(o) "EMPLOYEE" means any person treated as an employee
(including an Officer or a member of the Board who is also treated as an
employee) in the records of a Participating Company and, with respect to any
Incentive Stock Option granted to such person, who is an employee for purposes
of Section 422 of the Code; provided, however, that neither service as a member
of the Board nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan. The Company shall determine in good faith
and in the exercise of its discretion whether an individual has become or has
ceased to be an Employee and the effective date of such individual's employment
or termination of employment, as the case
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may be. For purposes of an individual's rights, if any, under the Plan as of the
time of the Company's determination, all such determinations by the Company
shall be final, binding and conclusive, notwithstanding that the Company or any
court of law or governmental agency subsequently makes a contrary determination.
(p) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(q) "FAIR MARKET VALUE" means, as of any date, the value of a
share of Stock or other property as determined by the Committee, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:
(i) Except as otherwise determined by the Committee, if,
on such date, the Stock is listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be the closing
price of a share of Stock (or the mean of the closing bid and asked prices of a
share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq
National Market, The Nasdaq SmallCap Market or such other national or regional
securities exchange or market system constituting the primary market for the
Stock, as reported in The Wall Street Journal or such other source as the
Company deems reliable. If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or market system, the date on which
the Fair Market Value shall be established shall be the last day on which the
Stock was so traded prior to the relevant date, or such other appropriate day as
shall be determined by the Committee, in its discretion.
(ii) Notwithstanding the foregoing, the Committee may,
in its discretion, determine the Fair Market Value on the basis of the opening,
closing, high, low or average sale price of a share of Stock or the actual sale
price of a share of Stock received by a Participant, on such date, the preceding
trading day, the next succeeding trading day or an average determined over a
period of trading days. The Committee may vary its method of determination of
the Fair Market Value as provided in this Section for different purposes under
the Plan.
(iii) If, on such date, the Stock is not listed on a
national or regional securities exchange or market system, the Fair Market Value
of a share of Stock shall be as determined by the Committee in good faith
without regard to any restriction other than a restriction which, by its terms,
will never lapse.
(r) "INCENTIVE STOCK OPTION" means an Option intended to be
(as set forth in the Award Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.
(s) "INDEXED OPTION" means an Option with an exercise price
which either increases by a fixed percentage over time or changes by reference
to a published index, as determined by the Committee and set forth in the Option
Agreement.
(t) "INSIDER" means an Officer, Director or any other person
whose transactions in Stock are subject to Section 16 of the Exchange Act.
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(u) "NONEMPLOYEE DIRECTOR" means a Director who is not an
Employee.
(v) "NONEMPLOYEE DIRECTOR OPTION" means an Option granted to a
Nonemployee Director pursuant to Section 7 of the Plan. Nonemployee Director
Options shall be Nonstatutory Stock Options.
(w) "NONSTATUTORY STOCK OPTION" means an Option not intended
to be (as set forth in the Award Agreement) an incentive stock option within the
meaning of Section 422(b) of the Code.
(x) "OFFICER" means any person designated by the Board as an
officer of the Company.
(y) "OPTION" means the right to purchase Stock at a stated
price for a specified period of time granted to a Participant pursuant to
Section 6 or Section 7 of the Plan. An Option may be either an Incentive Stock
Option, a Nonstatutory Stock Option or an Indexed Option.
(z) "OPTION EXCHANGE PROGRAM" means any program instituted by
the Committee which would permit either (i) Participants the opportunity to
transfer any outstanding Options to a financial institution selected by the
Committee or (ii) the cancellation of outstanding Options and/or SARs and the
grant in substitution therefore of any new Awards, including specifically any
new Options and/or SARs having a lower exercise price.
(aa) "OWNERSHIP CHANGE EVENT" means the occurrence of any of
the following with respect to the Company: (i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party; or (iii) the
sale, exchange, or transfer of all or substantially all of the assets of the
Company (other than a sale, exchange or transfer to one or more subsidiaries of
the Company).
(bb) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(cc) "PARTICIPANT" means any eligible person who has been
granted one or more Awards.
(dd) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation, Subsidiary Corporation or Affiliate.
(ee) "PARTICIPATING COMPANY GROUP" means, at any point in
time, all entities collectively which are then Participating Companies.
(ff) "PERFORMANCE GOAL" means a performance goal established
by the Committee pursuant to Section 9.9 of the Plan.
(gg) "PRIOR PLAN OPTIONS" means any option or other award
granted by the Company which is subject to vesting or repurchase by the Company,
including specifically,
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all such options and awards granted pursuant to the Company's 2001 Stock Option
Plan which is outstanding on or after the Effective Date.
(hh) "RESTRICTED STOCK AWARD" means an Award of a Restricted
Stock Bonus or a Restricted Stock Purchase Right.
(ii) "RESTRICTED STOCK BONUS" means Stock granted to a
Participant pursuant to Section 9 of the Plan.
(jj) "RESTRICTED STOCK PURCHASE RIGHT" means a right to
purchase Stock granted to a Participant pursuant to Section 9 of the Plan.
(kk) "RESTRICTED STOCK UNIT" or "STOCK UNIT" means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 10 or Section 11 of the Plan, respectively, to receive a share of Stock
on a date determined in accordance with the provisions of Section 10 or Section
11, as applicable, and the Participant's Award Agreement.
(ll) "RESTRICTION PERIOD" means the period established in
accordance with Section 9.5 of the Plan during which shares subject to a
Restricted Stock Award are subject to Vesting Conditions.
(mm) "RULE 16B-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.
(nn) "SAR" or "STOCK APPRECIATION RIGHT" means a bookkeeping
entry representing, for each share of Stock subject to such SAR, a right granted
to a Participant pursuant to Section 8 of the Plan to receive payment of an
amount equal to the excess, if any, of the Fair Market Value of a share of Stock
on the date of exercise of the SAR over the exercise price.
(oo) "SECTION 162(m)" means Section 162(m) of the Code.
(pp) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(qq) "SERVICE" means a Participant's employment or service
with the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. A Participant's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders such Service or a change in the Participating Company for which the
Participant renders such Service, provided that there is no interruption or
termination of the Participant's Service. Furthermore, a Participant's Service
shall not be deemed to have terminated if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the Company.
However, if any such leave taken by a Participant exceeds ninety (90) days, then
on the one hundred eighty-first (181st) day following the commencement of such
leave any Incentive Stock Option held by the Participant shall cease to be
treated as an Incentive Stock Option and instead shall be treated thereafter as
a Nonstatutory Stock Option, unless the Participant's right to return to Service
with the Participating Company Group is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, a leave of absence
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shall not be treated as Service for purposes of determining vesting under the
Participant's Award Agreement. A Participant's Service shall be deemed to have
terminated either upon an actual termination of Service or upon the entity for
which the Participant performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its discretion, shall determine
whether the Participant's Service has terminated and the effective date of such
termination.
(rr) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.3 of the Plan.
(ss) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
(tt) "TEN PERCENT OWNER" means a Participant who, at the time
an Option is granted to the Participant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company (other than an Affiliate) within the meaning of Section
422(b)(6) of the Code.
(uu) "VESTING CONDITIONS" mean those conditions established in
accordance with Section 9.5 or Section 10.3 of the Plan prior to the
satisfaction of which shares subject to a Restricted Stock Award or Restricted
Stock Unit Award, respectively, remain subject to forfeiture or a repurchase
option in favor of the Company upon the Participant's termination of Service.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE COMMITTEE. The Plan shall be administered
by the Committee. All questions of interpretation of the Plan or of any Award
shall be determined by the Committee, and such determinations shall be final and
binding upon all persons having an interest in the Plan or such Award.
3.2 AUTHORITY OF OFFICERS. Any Officer shall have the authority to
act on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election. The Board may, in
its discretion, delegate to a committee comprised of one or more Officers the
authority to grant one or more Awards, without further approval of the Board or
the Committee, to any Employee, other than a person who, at the time of such
grant, is an Insider; provided, however, that (a) such Awards shall not be
granted for shares in excess of the maximum aggregate number of shares of Stock
authorized for issuance pursuant to Section 4.1, (b) the exercise price per
share of each such Award which is an Option or Stock Appreciation Right shall be
not less than the Fair Market Value per share of the Stock on the effective date
of grant
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(or, if the Stock has not traded on such date, on the last day preceding the
effective date of grant on which the Stock was traded), and (c) each such Award
shall be subject to the terms and conditions of the appropriate standard form of
Award Agreement approved by the Board or the Committee and shall conform to the
provisions of the Plan and such other guidelines as shall be established from
time to time by the Board or the Committee.
3.3 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.
3.4 COMMITTEE COMPLYING WITH SECTION 162(m). If the Company is a
"publicly held corporation" within the meaning of Section 162(m), the Board may
establish a Committee of "outside directors" within the meaning of Section
162(m) to approve the grant of any Award which might reasonably be anticipated
to result in the payment of employee remuneration that would otherwise exceed
the limit on employee remuneration deductible for income tax purposes pursuant
to Section 162(m).
3.5 POWERS OF THE COMMITTEE. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Committee shall
have the full and final power and authority, in its discretion:
(a) to determine the persons to whom, and the time or times at
which, Awards shall be granted and the number of shares of Stock or units to be
subject to each Award;
(b) to determine the type of Award granted and to designate
Options as Incentive Stock Options, Nonstatutory Stock Options or Indexed
Options;
(c) to determine the Fair Market Value of shares of Stock or
other property;
(d) to determine the terms, conditions and restrictions
applicable to each Award (which need not be identical) and any shares acquired
pursuant thereto, including, without limitation, (i) the exercise or purchase
price of shares purchased pursuant to any Award, (ii) the method of payment for
shares purchased pursuant to any Award, (iii) the method for satisfaction of any
tax withholding obligation arising in connection with Award, including by the
withholding or delivery of shares of Stock, (iv) the timing, terms and
conditions of the exercisability or vesting of any Award or any shares acquired
pursuant thereto, (v) the Performance Goals applicable to any Award and the
extent to which such Performance Goals have been attained, (vi) the time of the
expiration of any Award, (vii) the effect of the Participant's termination of
Service on any of the foregoing, and (viii) all other terms, conditions and
restrictions applicable to any Award or shares acquired pursuant thereto not
inconsistent with the terms of the Plan;
(e) to determine whether an Award will be settled in shares of
Stock, cash, or in any combination thereof;
(f) to approve one or more forms of Award Agreement;
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(g) to amend, modify, extend, cancel or renew any Award or to
waive any restrictions or conditions applicable to any Award or any shares
acquired pursuant thereto;
(h) to accelerate, continue, extend or defer the
exercisability or vesting of any Award or any shares acquired pursuant thereto,
including with respect to the period following a Participant's termination of
Service;
(i) without the consent of the affected Participant and
notwithstanding the provisions of any Award Agreement to the contrary, to
unilaterally substitute at any time a Stock Appreciation Right providing for
settlement solely in shares of Stock in place of any outstanding Option,
provided that such Stock Appreciation Right covers the same number of shares of
Stock and provides for the same exercise price (subject in each case to
adjustment in accordance with Section 4.3) as the replaced Option and otherwise
provides substantially equivalent terms and conditions as the replaced Option,
as determined by the Committee;
(j) to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt sub-plans or supplements to, or
alternative versions of, the Plan, including, without limitation, as the
Committee deems necessary or desirable to comply with the laws or regulations of
or to accommodate the tax policy, accounting principles or custom of, foreign
jurisdictions whose citizens may be granted Awards; and
(k) to correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award Agreement and to make all other
determinations and take such other actions with respect to the Plan or any Award
as the Committee may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.
3.6 NO REPRICING. Without the affirmative vote of holders of a
majority of the shares of Stock cast in person or by proxy at a meeting of the
stockholders of the Company at which a quorum representing a majority of all
outstanding shares of Stock is present or represented by proxy, the Board shall
not approve a program providing for the amendment of outstanding Options and/or
SARs to reduce the exercise price thereof. This paragraph shall not be construed
to apply to (i) "issuing or assuming a stock option in a transaction to which
section 424(a) applies," within the meaning of Section 424 of the Code or (ii)
to any Option Exchange Program.
3.7 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or the Committee or as
officers or employees of the Participating Company Group, members of the Board
or the Committee and any officers or employees of the Participating Company
Group to whom authority to act for the Board, the Committee or the Company is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or
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proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2 and Section 4.3, the maximum aggregate number of shares
of Stock that may be issued under the Plan shall be Ten Million One Hundred and
Twenty-Seven Thousand Five Hundred and Twenty-Six (10,127,526), reduced at any
time by the number of shares subject to the Prior Plan Options (which as of the
Effective Date equaled approximately Five Million Six Hundred and Ninety
Thousand Eight Hundred and Fifty-One (5,690,851). Such shares shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof. If any outstanding Award, including any Prior Plan Options, for any
reason, expires or is terminated or canceled without having been exercised or
settled in full, or if shares of Stock acquired pursuant to an Award subject to
forfeiture or repurchase, including any Prior Plan Options, are forfeited or
repurchased by the Company, the shares of Stock allocable to the terminated
portion of such Award, including any Prior Plan Options, or such forfeited or
repurchased shares of Stock shall again be available for grant under the Plan.
Notwithstanding anything in the Plan, or any Award Agreement to the contrary,
shares underlying Options transferred under any Option Exchange Program to a
financial institution described in Section 2.1(z)(i) shall not be again
available for grant under the Plan. Shares of Stock shall not be deemed to have
been issued pursuant to the Plan (a) with respect to any portion of an Award
that is settled in cash or (b) to the extent such shares are withheld or
reacquired by the Company in satisfaction of tax withholding obligations
pursuant to Section 15.2. Upon payment in shares of Stock pursuant to the
exercise of an SAR, the number of shares available for issuance under the Plan
shall be reduced only by the number of shares actually issued in such payment.
If the exercise price of an Option is paid by tender to the Company, or
attestation to the ownership, of shares of Stock owned by the Participant, the
number of shares available for issuance under the Plan shall be reduced by the
net number of shares for which the Option is exercised.
4.2 MAXIMUM NUMBER OF SHARES ISSUABLE PURSUANT TO INCENTIVE STOCK
OPTIONS. Subject to adjustment as provided in Section 4.3, the maximum aggregate
number of shares of Stock that may be issued under the Plan pursuant to the
exercise of Incentive Stock Options (the "ISO SHARE LIMIT") shall not exceed Ten
Million One Hundred and Twenty-Seven Thousand Five Hundred and Twenty-Six
(10,127,526). The maximum aggregate number of shares of Stock that may be issued
under the Plan pursuant to all Awards other than Incentive Stock Options shall
be the number of shares determined in accordance with Section 4.1, subject to
adjustment as provided in Section 4.3.
4.3 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. Subject to any
required action by the stockholders of the Company, in the event of any change
in the Stock effected without receipt of consideration by the Company, whether
through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in the event of
payment of a dividend
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or distribution to the stockholders of the Company in a form other than Stock
(excepting normal cash dividends) that has a material effect on the Fair Market
Value of shares of Stock, appropriate adjustments shall be made in the number
and kind of shares subject to the Plan and to any outstanding Awards, in the ISO
Share Limit set forth in Section 4.2, in the Nonemployee Director Options to be
granted automatically pursuant to Section 7, and in the exercise or purchase
price per share under any outstanding Award in order to prevent dilution or
enlargement of Participants' rights under the Plan. For purposes of the
foregoing, conversion of any convertible securities of the Company shall not be
treated as "effected without receipt of consideration by the Company." Any
fractional share resulting from an adjustment pursuant to this Section 4.3 shall
be rounded down to the nearest whole number, and in no event may the exercise or
purchase price under any Award be decreased to an amount less than the par
value, if any, of the stock subject to such Award. The Committee in its sole
discretion, may also make such adjustments in the terms of any Award to reflect,
or related to, such changes in the capital structure of the Company or
distributions as it deems appropriate, including modification of Performance
Goals. The adjustments determined by the Committee pursuant to this Section 4.3
shall be final, binding and conclusive.
5. ELIGIBILITY AND AWARD LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR AWARDS. Awards may be granted only to
Employees, Consultants and Directors. For purposes of the foregoing sentence,
"Employees," "Consultants"and "Directors" shall include prospective Employees,
prospective Consultants and prospective Directors to whom Awards are granted in
connection with written offers of an employment or other service relationship
with the Participating Company Group; provided, however, that no Stock subject
to any such Award shall vest, become exercisable or be issued prior to the date
on which such person commences Service. A Nonemployee Director Option may be
granted only to a person who, at the time of grant, is a Nonemployee Director.
5.2 PARTICIPATION. Awards other than Nonemployee Director Options
are granted solely at the discretion of the Committee. Eligible persons may be
granted more than one Award. However, excepting Nonemployee Director Options,
eligibility in accordance with this Section shall not entitle any person to be
granted an Award, or, having been granted an Award, to be granted an additional
Award.
5.3 INCENTIVE STOCK OPTION LIMITATIONS.
(a) PERSONS ELIGIBLE. An Incentive Stock Option may be granted
only to a person who, on the effective date of grant, is an Employee of the
Company, a Parent Corporation or a Subsidiary Corporation (each being an
"ISO-QUALIFYING CORPORATION"). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to
such person may be granted only a Nonstatutory Stock Option. An Incentive Stock
Option granted to a prospective Employee upon the condition that such person
become an Employee of an ISO-Qualifying Corporation shall be deemed granted
effective on the date such person commences Service with an ISO-Qualifying
Corporation, with an exercise price determined as of such date in accordance
with Section 6.1.
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(b) FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by a
Participant for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portion
of such options which exceeds such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide for a
limitation different from that set forth in this Section, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section, the Participant may designate which portion of such Option the
Participant is exercising. In the absence of such designation, the Participant
shall be deemed to have exercised the Incentive Stock Option portion of the
Option first. Upon exercise, shares issued pursuant to each such portion shall
be separately identified.
5.4 SECTION 162(m) AWARD LIMITS. The following limits shall apply to
the grant of any Award if, at the time of grant, the Company is a "publicly held
corporation" within the meaning of Section 162(m).
(i) OPTIONS AND SARS. Subject to adjustment as provided in
Section 4.3, no Employee shall be granted within any fiscal year of the Company
one or more Options or Freestanding SARs which in the aggregate are for more
than Five Hundred Thousand (500,000) shares of Stock, provided, however, that
the Company may make an additional one-time grant to any newly-hired Employee of
an Option and/or SAR for the purchase of up to an additional Two Hundred and
Fifty Thousand (250,000) shares of Stock. An Option which is canceled (or a
Freestanding SAR as to which the exercise price is reduced to reflect a
reduction in the Fair Market Value of the Stock) in the same fiscal year of the
Company in which it was granted shall continue to be counted against such limit
for such fiscal year.
(ii) RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS.
Subject to adjustment as provided in Section 4.3, no Employee shall be granted
within any fiscal year of the Company one or more Restricted Stock Awards or
Restricted Stock Units, subject to Vesting Conditions based on the attainment of
Performance Goals, for more than Five Hundred Thousand (500,000) shares of
Stock, provided, however, that the Company may make an additional one-time grant
to any newly-hired Employee of a Restricted Stock Award or Restricted Stock
Units of up to an additional Two Hundred and Fifty Thousand (250,000) shares of
Stock.
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Award Agreements specifying the number
of shares of Stock covered thereby, in such form as the Committee shall from
time to time establish. No Option or purported Option shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing Options may incorporate all or any of the
terms of the Plan by reference and, except as otherwise set forth in
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Section 7 with respect to Nonemployee Director Options, shall comply with and be
subject to the following terms and conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the discretion of the Committee; provided, however, that (a) the
exercise price per share shall be not less than the Fair Market Value of a share
of Stock on the effective date of grant of the Option, (b) no Incentive Stock
Option granted to a Ten Percent Owner shall have an exercise price per share
less than one hundred ten percent (110%) of the Fair Market Value of a share of
Stock on the effective date of grant of the Option, and (c) notwithstanding
anything to the contrary in this Section 6.1, in the case of an Indexed Option,
the Committee shall determine the exercise price of such Indexed Option and the
terms and conditions that affect, if any, any adjustments to the exercise price
of such Indexed Option. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than the minimum exercise price set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner qualifying under the provisions of Section 424(a) of the
Code.
6.2 EXERCISABILITY AND TERM OF OPTIONS. Options shall be exercisable
at such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such Option; provided,
however, that (a) no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
and (c) no Option granted to a prospective Employee, prospective Consultant or
prospective Director may become exercisable prior to the date on which such
person commences Service. Subject to the foregoing, unless otherwise specified
by the Committee in the grant of an Option, any Option granted hereunder shall
terminate ten (10) years after the effective date of grant of the Option, unless
earlier terminated in accordance with its provisions.
6.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check or in
cash equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice of
exercise together with irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with respect to some
or all of the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of the
Federal Reserve System) (a "CASHLESS EXERCISE"), (iv) by such other
consideration as may be approved by the Committee from time to time to the
extent permitted by applicable law, or (v) by any combination thereof. The
Committee may at any time or from time to time grant Options which do not permit
all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
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(b) LIMITATIONS ON FORMS OF CONSIDERATION.
(i) TENDER OF STOCK. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock. Unless otherwise provided by
the Committee, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Participant for more than six (6) months (and not used for
another Option exercise by attestation during such period) or were not acquired,
directly or indirectly, from the Company.
(ii) CASHLESS EXERCISE. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise, including with respect to
one or more Participants specified by the Company notwithstanding that such
program or procedures may be available to other Participants.
6.4 EFFECT OF TERMINATION OF SERVICE.
(a) OPTION EXERCISABILITY. Subject to earlier termination of
the Option as otherwise provided herein and unless otherwise provided by the
Committee in the grant of an Option and set forth in the Award Agreement, an
Option shall be exercisable after a Participant's termination of Service only
during the applicable time period determined in accordance with this Section and
thereafter shall terminate:
(i) DISABILITY. If the Participant's Service terminates
because of the Disability of the Participant, the Option, to the extent
unexercised and exercisable on the date on which the Participant's Service
terminated, may be exercised by the Participant (or the Participant's guardian
or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Participant's Service terminated, but in any
event no later than the date of expiration of the Option's term as set forth in
the Award Agreement evidencing such Option (the "OPTION EXPIRATION DATE").
(ii) DEATH. If the Participant's Service terminates
because of the death of the Participant, the Option, to the extent unexercised
and exercisable on the date on which the Participant's Service terminated, may
be exercised by the Participant's legal representative or other person who
acquired the right to exercise the Option by reason of the Participant's death
at any time prior to the expiration of twelve (12) months after the date on
which the Participant's Service terminated, but in any event no later than the
Option Expiration Date. The Participant's Service shall be deemed to have
terminated on account of death if the Participant dies within three (3) months
after the Participant's termination of Service.
(iii) TERMINATION FOR CAUSE. Notwithstanding any other
provision of the Plan to the contrary, if the Participant's Service is
terminated for Cause, the Option shall terminate and cease to be exercisable
immediately upon such termination of Service.
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(iv) OTHER TERMINATION OF SERVICE. If the Participant's
Service terminates for any reason, except Disability, death or Cause, the
Option, to the extent unexercised and exercisable by the Participant on the date
on which the Participant's Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3) months after the
date on which the Participant's Service terminated, but in any event no later
than the Option Expiration Date.
(b) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, other than termination of Service for Cause, if the exercise of
an Option within the applicable time periods set forth in Section 6.4(a) is
prevented by the provisions of Section 14 below, the Option shall remain
exercisable until three (3) months (or such longer period of time as determined
by the Committee, in its discretion) after the date the Participant is notified
by the Company that the Option is exercisable, but in any event no later than
the Option Expiration Date.
(c) EXTENSION IF PARTICIPANT SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, other than termination of Service for Cause, if a
sale within the applicable time periods set forth in Section 6.4(a) of shares
acquired upon the exercise of the Option would subject the Participant to suit
under Section 16(b) of the Exchange Act, the Option shall remain exercisable
until the earliest to occur of (i) the tenth (10th) day following the date on
which a sale of such shares by the Participant would no longer be subject to
such suit, (ii) the one hundred and ninetieth (190th) day after the
Participant's termination of Service, or (iii) the Option Expiration Date.
6.5 TRANSFERABILITY OF OPTIONS. During the lifetime of the
Participant, an Option shall be exercisable only by the Participant or the
Participant's guardian or legal representative. Prior to the issuance of shares
of Stock upon the exercise of an Option, the Option shall not be subject in any
manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant's beneficiary, except transfer by will or by the laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by the
Committee, in its discretion, an Option shall be assignable or transferable
subject to the applicable limitations, if any, described in the General
Instructions to Form S-8 Registration Statement under the Securities Act.
Notwithstanding any of the foregoing, the Committee may permit further
transferability of any Option, on a general or specific basis, to third parties
in connection with an Option Exchange Program established and approved by the
Committee pursuant to which Participant's may receive a cash payment, or other
consideration, in exchange for the transfer of such Option, and the Committee
may impose any conditions and limitations on any permitted transferability and
may amend, without Participant consent, any outstanding Option as may be
necessary to facilitate the transfer of such Option under any Option Exchange
Program.
7. TERMS AND CONDITIONS OF NONEMPLOYEE DIRECTOR AWARDS
The Committee may grant any Award authorized under this Plan to
Nonemployee Directors. All such Awards shall be evidenced by Award Agreements in
such final form as the Committee shall from time to time establish and shall
specify the type of Award and the number of Nonemployee Director Units
underlying any such Award. For the purposes of this Section 7,
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the term "NONEMPLOYEE DIRECTOR UNIT" shall mean a right to acquire one
bookkeeping unit, purchase right, share of Stock, or the appropriate cash amount
as applicable depending on the type of Award authorized under the Plan (i.e.,
whether granted as an Option, a SAR, a Restricted Stock Award, a RSU or a
Deferred Compensation Award). Such Award Agreements may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to,
as applicable for any such Award, the terms and conditions of Sections 6, 8, 9,
10 and 11 to the extent not inconsistent with this Section and the following
terms and conditions.
7.1 GRANT OF NONEMPLOYEE DIRECTOR AWARDS.
(a) INITIAL AWARD. Subject to the execution by the Nonemployee
Director of an appropriate Award Agreement, each person who first becomes a
Nonemployee Director on or after the Effective Date shall be granted
automatically and without further action of the Committee on the date such
person first becomes a Nonemployee Director an Award (an "INITIAL AWARD") in an
amount equal to Twelve Thousand (12,000) Nonemployee Director Units. The
Committee shall determine, in its sole and absolute discretion, prior to the
grant date of any such Initial Award, the type of Award to be granted to such
Nonemployee Director for such Initial Award.
(b) ANNUAL AWARD. Subject to the execution by the Nonemployee
Director of an appropriate Award Agreement, each Nonemployee Director (including
any Director who previously did not qualify as a Nonemployee Director but who
subsequently becomes a Nonemployee Director) shall be granted automatically and
without further action of the Committee on the day after each annual meeting of
the stockholders of the Company (the "ANNUAL MEETING"), commencing with the
Annual Meeting held in 2004 and continuing for each Annual Meeting held
thereafter during the term of the Plan, immediately following which such person
remains a Nonemployee Director, an Award (an "ANNUAL AWARD") in an amount equal
to Twelve Thousand (12,000) Nonemployee Director Units; provided, however, that
a Nonemployee Director granted an Initial Award on, or within a period of six
(6) months prior to, the date of an Annual Meeting shall not be granted an
Annual Award pursuant to this Section 7.1(b) with respect to the same Annual
Meeting. The Committee shall determine, in its sole and absolute discretion,
prior to the grant date of any such Annual Award, the type of Award to be
granted to such Nonemployee Director for such Annual Award.
(c) RIGHT TO DECLINE NONEMPLOYEE DIRECTOR AWARD.
Notwithstanding the foregoing, any person may elect not to receive a Nonemployee
Director Award by delivering written notice of such election to the Board no
later than the day prior to the date such Nonemployee Director Award would
otherwise be granted. A person so declining a Nonemployee Director Award shall
receive no payment or other consideration in lieu of such declined Nonemployee
Director Award. A person who has declined a Nonemployee Director Award may
revoke such election by delivering written notice of such revocation to the
Board no later than the day prior to the date such Nonemployee Director Award
would be granted pursuant to Section 7.1(a) or (b), as the case may be.
7.2 EXERCISE PRICE OF ANY NONEMPLOYEE DIRECTOR OPTION. The exercise
price per share of Stock subject to any Nonemployee Director Award which has
been determined
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by the Committee to be granted in the form of an Option shall be the Fair Market
Value of a share of Stock on the date of grant of the Nonemployee Director
Option.
7.3 EXERCISABILITY AND TERM OF NONEMPLOYEE DIRECTOR OPTIONS. Except
as otherwise provided in the Plan or in the Award Agreement evidencing a
Nonemployee Director Option and provided that the Participant's Service has not
terminated prior to the relevant date, each Nonemployee Director Option shall
vest and become exercisable as set forth below and shall terminate and cease to
be exercisable on the tenth (10th) anniversary of the date of grant of the
Nonemployee Director Option, unless earlier terminated in accordance with the
terms of the Plan or the Award Agreement evidencing such Option. Both Initial
Options and Annual Options shall vest and become exercisable in twelve (12)
substantially equal monthly installments after the grant date of such options.
7.4 EFFECT OF TERMINATION OF SERVICE.
(a) OPTION EXERCISABILITY. Subject to earlier termination of
the Nonemployee Director Option as otherwise provided herein, a Nonemployee
Director Option shall be exercisable after the Participant's termination of
Service only during the applicable time period determined in accordance with
this Section and thereafter shall terminate:
(i) DISABILITY. If the Participant's Service terminates
because of the Disability of the Participant, the Nonemployee Director Option,
to the extent unexercised and exercisable on the date on which the Participant's
Service terminated, may be exercised by the Participant (or the Participant's
guardian or legal representative) at any time prior to the expiration of twelve
(12) months after the date on which the Participant's Service terminated, but in
any event no later than the Option Expiration Date.
(ii) DEATH. If the Participant's Service terminates
because of the death of the Participant, the Nonemployee Director Option, to the
extent unexercised and exercisable on the date on which the Participant's
Service terminated, may be exercised by the Participant's legal representative
or other person who acquired the right to exercise the Nonemployee Director
Option by reason of the Participant's death at any time prior to the expiration
of twelve (12) months after the date on which the Participant's Service
terminated, but in any event no later than the Option Expiration Date. The
Participant's Service shall be deemed to have terminated on account of death if
the Participant dies within three (3) months after the Participant's termination
of Service.
(iii) OTHER TERMINATION OF SERVICE. If the Participant's
Service terminates for any reason, except Disability or death, the Nonemployee
Director Option, to the extent unexercised and exercisable by the Participant on
the date on which the Participant's Service terminated, may be exercised by the
Participant at any time prior to the expiration of six (6) months after the date
on which the Participant's Service terminated, but in any event no later than
the Option Expiration Date.
(b) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, if the exercise of a Nonemployee Director Option within the
applicable time periods set forth in Section 7.4(a) is prevented by the
provisions of Section 14 below, the Nonemployee
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Director Option shall remain exercisable until three (3) months after the date
the Participant is notified by the Company that the Nonemployee Director Option
is exercisable, but in any event no later than the Option Expiration Date.
(c) EXTENSION IF PARTICIPANT SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 7.4(a) of shares acquired upon the exercise of the Nonemployee
Director Option would subject the Participant to suit under Section 16(b) of the
Exchange Act, the Nonemployee Director Option shall remain exercisable until the
earliest to occur of (i) the tenth (10th) day following the date on which a sale
of such shares by the Participant would no longer be subject to such suit, (ii)
the one hundred and ninetieth (190th) day after the Participant's termination of
Service, or (iii) the Option Expiration Date.
8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights shall be evidenced by Award Agreements
specifying the number of shares of Stock subject to the Award, in such form as
the Committee shall from time to time establish. No SAR or purported SAR shall
be a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement. Award Agreements evidencing SARs may incorporate all
or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
8.1 TYPES OF SARS AUTHORIZED. SARs may be granted in tandem with all
or any portion of a related Option (a "TANDEM SAR") or may be granted
independently of any Option (a "FREESTANDING SAR"). A Tandem SAR may be granted
either concurrently with the grant of the related Option or at any time
thereafter prior to the complete exercise, termination, expiration or
cancellation of such related Option.
8.2 EXERCISE PRICE. The exercise price for each SAR shall be
established in the discretion of the Committee; provided, however, that (a) the
exercise price per share subject to a Tandem SAR shall be the exercise price per
share under the related Option and (b) the exercise price per share subject to a
Freestanding SAR shall be not less than the Fair Market Value of a share of
Stock on the effective date of grant of the SAR.
8.3 EXERCISABILITY AND TERM OF SARS.
(a) TANDEM SARS. Tandem SARs shall be exercisable only at the
time and to the extent, and only to the extent, that the related Option is
exercisable, subject to such provisions as the Committee may specify where the
Tandem SAR is granted with respect to less than the full number of shares of
Stock subject to the related Option. The Committee may, in its discretion,
provide in any Award Agreement evidencing a Tandem SAR that such SAR may not be
exercised without the advance approval of the Company and, if such approval is
not given, then the Option shall nevertheless remain exercisable in accordance
with its terms. A Tandem SAR shall terminate and cease to be exercisable no
later than the date on which the related Option expires or is terminated or
canceled. Upon the exercise of a Tandem SAR with respect to some or all of the
shares subject to such SAR, the related Option shall be canceled automatically
as to the number of shares with respect to which the Tandem SAR was exercised.
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Upon the exercise of an Option related to a Tandem SAR as to some or all of the
shares subject to such Option, the related Tandem SAR shall be canceled
automatically as to the number of shares with respect to which the related
Option was exercised.
(b) FREESTANDING SARS. Freestanding SARs shall be exercisable
at such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such SAR; provided,
however, that no Freestanding SAR shall be exercisable after the expiration of
ten (10) years after the effective date of grant of such SAR.
8.4 EXERCISE OF SARS. Upon the exercise (or deemed exercise pursuant
to Section 8.5) of an SAR, the Participant (or the Participant's legal
representative or other person who acquired the right to exercise the SAR by
reason of the Participant's death) shall be entitled to receive payment of an
amount for each share with respect to which the SAR is exercised equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of
exercise of the SAR over the exercise price. Payment of such amount shall be
made in cash, shares of Stock, or any combination thereof as determined by the
Committee. Unless otherwise provided in the Award Agreement evidencing such SAR,
payment shall be made in a lump sum as soon as practicable following the date of
exercise of the SAR. The Award Agreement evidencing any SAR may provide for
deferred payment in a lump sum or in installments. When payment is to be made in
shares of Stock, the number of shares to be issued shall be determined on the
basis of the Fair Market Value of a share of Stock on the date of exercise of
the SAR. For purposes of Section 8, an SAR shall be deemed exercised on the date
on which the Company receives notice of exercise from the Participant or as
otherwise provided in Section 8.5.
8.5 DEEMED EXERCISE OF SARS. If, on the date on which an SAR would
otherwise terminate or expire, the SAR by its terms remains exercisable
immediately prior to such termination or expiration and, if so exercised, would
result in a payment to the holder of such SAR, then any portion of such SAR
which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.
8.6 EFFECT OF TERMINATION OF SERVICE. Subject to earlier termination
of the SAR as otherwise provided herein and unless otherwise provided by the
Committee in the grant of an SAR and set forth in the Award Agreement, an SAR
shall be exercisable after a Participant's termination of Service only during
the applicable time period determined in accordance with Section 6.4 (treating
the SAR as if it were an Option) and thereafter shall terminate.
8.7 NONTRANSFERABILITY OF SARS. During the lifetime of the
Participant, a SAR shall be exercisable only by the Participant or the
Participant's guardian or legal representative. Prior to the exercise of a SAR,
the SAR shall not be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant's beneficiary, except transfer by will or
by the laws of descent and distribution. Notwithstanding any of the foregoing,
the Board may permit further transferability of any SAR, on a general or
specific basis, and may impose conditions and limitations on any permitted
transferability.
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9. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
Restricted Stock Awards shall be evidenced by Award Agreements
specifying whether the Award is a Restricted Stock Bonus or a Restricted Stock
Purchase Right and the number of shares of Stock subject to the Award, in such
form as the Committee shall from time to time establish. No Restricted Stock
Award or purported Restricted Stock Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing Restricted Stock Awards may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to
the following terms and conditions:
9.1 TYPES OF RESTRICTED STOCK AWARDS AUTHORIZED. Restricted Stock
Awards may be in the form of either a Restricted Stock Bonus or a Restricted
Stock Purchase Right. Restricted Stock Awards may be granted upon such
conditions as the Committee shall determine, including, without limitation, upon
the attainment of one or more Performance Goals described in Section 9.9. If
either the grant of a Restricted Stock Award or the lapsing of the Restriction
Period is to be contingent upon the attainment of one or more Performance Goals,
the Committee shall follow such procedures established by the Committee for such
purposes.
9.2 PURCHASE PRICE. The purchase price for shares of Stock issuable
under each Restricted Stock Purchase Right shall be established by the Committee
in its discretion. No monetary payment (other than applicable tax withholding)
shall be required as a condition of receiving shares of Stock pursuant to a
Restricted Stock Bonus, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit. Notwithstanding the
foregoing, the Participant shall furnish consideration in the form of cash or
past services rendered to a Participating Company or for its benefit having a
value not less than the par value of the shares of Stock subject to such
Restricted Stock Award.
9.3 PURCHASE PERIOD. A Restricted Stock Purchase Right shall be
exercisable within a period established by the Committee, which shall in no
event exceed thirty (30) days from the effective date of the grant of the
Restricted Stock Purchase Right; provided, however, that no Restricted Stock
Purchase Right granted to a prospective Employee, prospective Consultant or
prospective Director may become exercisable prior to the date on which such
person commences Service.
9.4 PAYMENT OF PURCHASE PRICE. Except as otherwise provided below,
payment of the purchase price for the number of shares of Stock being purchased
pursuant to any Restricted Stock Purchase Right shall be made (a) in cash, by
check, or in cash equivalent, (b) by such other consideration as may be approved
by the Committee from time to time to the extent permitted by applicable law, or
(iii) by any combination thereof. The Committee may at any time or from time to
time grant Restricted Stock Purchase Rights which do not permit all of the
foregoing forms of consideration to be used in payment of the purchase price or
which otherwise restrict one or more forms of consideration. Restricted Stock
Bonuses shall be issued in consideration for past services actually rendered to
a Participating Company or for its benefit.
9.5 VESTING AND RESTRICTIONS ON TRANSFER. Shares issued pursuant to
any Restricted Stock Award may or may not be made subject to Vesting Conditions
based upon the
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satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 9.9, as shall be established by the Committee and set forth
in the Award Agreement evidencing such Award. During any Restriction Period in
which shares acquired pursuant to a Restricted Stock Award remain subject to
Vesting Conditions, such shares may not be sold, exchanged, transferred,
pledged, assigned or otherwise disposed of other than pursuant to an Ownership
Change Event, as defined in Section 2.1(aa), or as provided in Section 9.8. Upon
request by the Company, each Participant shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.
9.6 VOTING RIGHTS; DIVIDENDS AND DISTRIBUTIONS. Except as provided
in this Section, Section 9.5 and any Award Agreement, during the Restriction
Period applicable to shares subject to a Restricted Stock Award, the Participant
shall have all of the rights of a stockholder of the Company holding shares of
Stock, including the right to vote such shares and to receive all dividends and
other distributions paid with respect to such shares. However, in the event of a
dividend or distribution paid in shares of Stock or any other adjustment made
upon a change in the capital structure of the Company as described in Section
4.3, any and all new, substituted or additional securities or other property
(other than normal cash dividends) to which the Participant is entitled by
reason of the Participant's Restricted Stock Award shall be immediately subject
to the same Vesting Conditions as the shares subject to the Restricted Stock
Award with respect to which such dividends or distributions were paid or
adjustments were made.
9.7 EFFECT OF TERMINATION OF SERVICE. Unless otherwise provided by
the Committee in the grant of a Restricted Stock Award and set forth in the
Award Agreement, if a Participant's Service terminates for any reason, whether
voluntary or involuntary (including the Participant's death or disability), then
(a) the Company shall have the option to repurchase for the purchase price paid
by the Participant any shares acquired by the Participant pursuant to a
Restricted Stock Purchase Right which remain subject to Vesting Conditions as of
the date of the Participant's termination of Service and (b) the Participant
shall forfeit to the Company any shares acquired by the Participant pursuant to
a Restricted Stock Bonus which remain subject to Vesting Conditions as of the
date of the Participant's termination of Service. The Company shall have the
right to assign at any time any repurchase right it may have, whether or not
such right is then exercisable, to one or more persons as may be selected by the
Company.
9.8 NONTRANSFERABILITY OF RESTRICTED STOCK AWARD RIGHTS. Prior to
the issuance of shares of Stock pursuant to a Restricted Stock Award, rights to
acquire such shares shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance or
garnishment by creditors of the Participant or the Participant's beneficiary,
except transfer by will or the laws of descent and distribution. All rights with
respect to a Restricted Stock Award granted to a Participant hereunder shall be
exercisable during his or her lifetime only by such Participant or the
Participant's guardian or legal representative.
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9.9 MEASUREMENT OF PERFORMANCE GOALS. Performance Goals shall be
established by the Committee on the basis of targets to be attained
("PERFORMANCE TARGETS") with respect to one or more measures of business or
financial performance (each, a "PERFORMANCE MEASURE"), subject to the following:
(a) PERFORMANCE MEASURES. Performance Measures shall have the
same meanings as used in the Company's financial statements, or, if such terms
are not used in the Company's financial statements, they shall have the meaning
applied pursuant to generally accepted accounting principles, or as used
generally in the Company's industry. Performance Measures shall be calculated
with respect to the Company and each Subsidiary Corporation consolidated
therewith for financial reporting purposes or such division or other business
unit as may be selected by the Committee. For purposes of the Plan, the
Performance Measures applicable to any Award shall be calculated in accordance
with generally accepted accounting principles, but prior to the accrual or
payment of any Award for the same performance period and excluding the effect
(whether positive or negative) of any change in accounting standards or any
extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the
Award. Each such adjustment, if any, shall be made solely for the purpose of
providing a consistent basis from period to period for the calculation of
Performance Measures in order to prevent the dilution or enlargement of the
Participant's rights with respect to an Award. Performance Measures may be one
or more of the following, as determined by the Committee:
(i) sales revenue;
(ii) gross margin;
(iii) operating margin;
(iv) operating income;
(v) pre-tax profit;
(vi) earnings before interest, taxes and depreciation, and
amortization;
(vii) net income;
(viii) expenses;
(ix) earnings per share;
(x) return on stockholder equity;
(xi) return on capital;
(xii) return on net assets;
(xiii) economic value added;
(xiv) number of customers;
(xv) product development progress;
(xvi) clinical trial progress;
(xvii) product regulatory approval progress; and
(xviii) market share.
(b) PERFORMANCE TARGETS. Performance Targets may include a
minimum, maximum, target level and intermediate levels of performance, with the
final value of an Award determined under the applicable formula by the level
attained during the applicable performance period. A Performance Target may be
stated as an absolute value or as a value determined relative to a standard
selected by the Committee.
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10. TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARDS.
Restricted Stock Unit Awards shall be evidenced by Award Agreements
specifying the number of Restricted Stock Units subject to the Award, in such
form as the Committee shall from time to time establish. No Restricted Stock
Unit Award or purported Restricted Stock Unit Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing Restricted Stock Units may incorporate all or any of
the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:
10.1 GRANT OF RESTRICTED STOCK UNIT AWARDS. Restricted Stock Unit
Awards may be granted upon such conditions as the Committee shall determine,
including, without limitation, upon the attainment of one or more Performance
Goals described in Section 9.9. If either the grant of a Restricted Stock Unit
Award or the Vesting Conditions with respect to such Award is to be contingent
upon the attainment of one or more Performance Goals, the Committee shall follow
such procedures established by the Committee for such purposes.
10.2 PURCHASE PRICE. No monetary payment (other than applicable tax
withholding, if any) shall be required as a condition of receiving a Restricted
Stock Unit Award, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit.
10.3 VESTING. Restricted Stock Units may or may not be made subject
to Vesting Conditions based upon the satisfaction of such Service requirements,
conditions, restrictions or performance criteria, including, without limitation,
Performance Goals as described in Section 9.9, as shall be established by the
Committee and set forth in the Award Agreement evidencing such Award.
10.4 VOTING RIGHTS, DIVIDEND EQUIVALENT RIGHTS AND DISTRIBUTIONS.
Participants shall have no voting rights with respect to shares of Stock
represented by Restricted Stock Units until the date of the issuance of such
shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Restricted Stock
Unit Award that the Participant shall be entitled to receive Dividend
Equivalents with respect to the payment of cash dividends on Stock having a
record date prior to date on which Restricted Stock Units held by such
Participant are settled. Such Dividend Equivalents, if any, shall be paid by
crediting the Participant with additional whole Restricted Stock Units as of the
date of payment of such cash dividends on Stock. The number of additional
Restricted Stock Units (rounded to the nearest whole number) to be so credited
shall be determined by dividing (a) the amount of cash dividends paid on such
date with respect to the number of shares of Stock represented by the Restricted
Stock Units previously credited to the Participant by (b) the Fair Market Value
per share of Stock on such date. Such additional Restricted Stock Units shall be
subject to the same terms and conditions and shall be settled in the same manner
and at the same time (or as soon thereafter as practicable) as the Restricted
Stock Units originally subject to the Restricted Stock Unit Award. In the event
of a dividend or distribution paid in shares of Stock or any other adjustment
made upon a change in the capital structure of the Company as described in
Section 4.3, appropriate adjustments shall be made in the Participant's
Restricted Stock Unit
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Award so that it represents the right to receive upon settlement any and all
new, substituted or additional securities or other property (other than normal
cash dividends) to which the Participant would entitled by reason of the shares
of Stock issuable upon settlement of the Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same
Vesting Conditions as are applicable to the Award.
10.5 EFFECT OF TERMINATION OF SERVICE. Unless otherwise provided by
the Committee in the grant of a Restricted Stock Unit Award and set forth in the
Award Agreement, if a Participant's Service terminates for any reason, whether
voluntary or involuntary (including the Participant's death or disability), then
the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the
Participant's termination of Service.
10.6 SETTLEMENT OF RESTRICTED STOCK UNIT AWARDS. The Company shall
issue to a Participant on the date on which Restricted Stock Units subject to
the Participant's Restricted Stock Unit Award vest or on such other date
determined by the Committee, in its discretion, and set forth in the Award
Agreement one (1) share of Stock (and/or any other new, substituted or
additional securities or other property pursuant to an adjustment described in
Section 10.4) for each Restricted Stock Unit then becoming vested or otherwise
to be settled on such date, subject to the withholding of applicable taxes.
Notwithstanding the foregoing, if permitted by the Committee and set forth in
the Award Agreement, the Participant may elect in accordance with terms
specified in the Award Agreement to defer receipt of all or any portion of the
shares of Stock or other property otherwise issuable to the Participant pursuant
to this Section.
10.7 NONTRANSFERABILITY OF RESTRICTED STOCK UNIT AWARDS. Prior to
the issuance of shares of Stock in settlement of a Restricted Stock Unit Award,
the Award shall not be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant's beneficiary, except transfer by will or
by the laws of descent and distribution. All rights with respect to a Restricted
Stock Unit Award granted to a Participant hereunder shall be exercisable during
his or her lifetime only by such Participant or the Participant's guardian or
legal representative.
11. DEFERRED COMPENSATION AWARDS.
11.1 ESTABLISHMENT OF DEFERRED COMPENSATION AWARD PROGRAMS. This
Section 11 shall not be effective unless and until the Committee determines to
establish a program pursuant to this Section. The Committee, in its discretion
and upon such terms and conditions as it may determine, may establish one or
more programs pursuant to the Plan under which:
(a) Participants designated by the Committee who are Insiders
or otherwise among a select group of highly compensated Employees may
irrevocably elect, prior to a date specified by the Committee, to reduce such
Participant's compensation otherwise payable in cash (subject to any minimum or
maximum reductions imposed by the Committee) and to be granted automatically at
such time or times as specified by the Committee one or more Awards of Stock
Units with respect to such numbers of shares of Stock as determined in
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accordance with the rules of the program established by the Committee and having
such other terms and conditions as established by the Committee.
(b) Participants designated by the Committee who are Insiders
or otherwise among a select group of highly compensated Employees may
irrevocably elect, prior to a date specified by the Committee, to be granted
automatically an Award of Stock Units with respect to such number of shares of
Stock and upon such other terms and conditions as established by the Committee
in lieu of:
(i) shares of Stock otherwise issuable to such
Participant upon the exercise of an Option;
(ii) cash or shares of Stock otherwise issuable to such
Participant upon the exercise of an SAR; or
(iii) cash or shares of Stock otherwise issuable to such
Participant upon the settlement of a Restricted Stock Award.
11.2 TERMS AND CONDITIONS OF DEFERRED COMPENSATION AWARDS. Deferred
Compensation Awards granted pursuant to this Section 11 shall be evidenced by
Award Agreements in such form as the Committee shall from time to time
establish. No such Deferred Compensation Award or purported Deferred
Compensation Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement. Award Agreements evidencing
Deferred Compensation Awards may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:
(a) VESTING CONDITIONS. Deferred Compensation Awards shall not
be subject to any vesting conditions.
(b) TERMS AND CONDITIONS OF STOCK UNITS.
(i) VOTING RIGHTS; DIVIDEND EQUIVALENT RIGHTS AND
DISTRIBUTIONS. Participants shall have no voting rights with respect to shares
of Stock represented by Stock Units until the date of the issuance of such
shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company). However, a Participant shall
be entitled to receive Dividend Equivalents with respect to the payment of cash
dividends on Stock having a record date prior to date on which Stock Units held
by such Participant are settled. Such Dividend Equivalents shall be paid by
crediting the Participant with additional whole and/or fractional Stock Units as
of the date of payment of such cash dividends on Stock. The method of
determining the number of additional Stock Units to be so credited shall be
specified by the Committee and set forth in the Award Agreement. Such additional
Stock Units shall be subject to the same terms and conditions and shall be
settled in the same manner and at the same time (or as soon thereafter as
practicable) as the Stock Units originally subject to the Stock Unit Award. In
the event of a dividend or distribution paid in shares of Stock or any other
adjustment made upon a change in the capital structure of the Company as
described in Section 4.3, appropriate adjustments shall be made in the
Participant's Stock Unit Award so that it represent the right to receive upon
settlement any and all new,
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substituted or additional securities or other property (other than normal cash
dividends) to which the Participant would entitled by reason of the shares of
Stock issuable upon settlement of the Award.
(ii) SETTLEMENT OF STOCK UNIT AWARDS. A Participant
electing to receive an Award of Stock Units pursuant to this Section 11, shall
specify at the time of such election a settlement date with respect to such
Award. The Company shall issue to the Participant as soon as practicable
following the earlier of the settlement date elected by the Participant or the
date of termination of the Participant's Service, a number of whole shares of
Stock equal to the number of whole Stock Units subject to the Stock Unit Award.
Such shares of Stock shall be fully vested, and the Participant shall not be
required to pay any additional consideration (other than applicable tax
withholding) to acquire such shares. Any fractional Stock Unit subject to the
Stock Unit Award shall be settled by the Company by payment in cash of an amount
equal to the Fair Market Value as of the payment date of such fractional share.
(iii) NONTRANSFERABILITY OF STOCK UNIT AWARDS. Prior to
their settlement in accordance with the provision of the Plan, no Stock Unit
Award shall be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant's beneficiary, except transfer by will or
by the laws of descent and distribution. All rights with respect to a Stock Unit
Award granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant's guardian or legal
representative.
12. STANDARD FORMS OF AWARD AGREEMENT.
12.1 AWARD AGREEMENTS. Each Award shall comply with and be subject
to the terms and conditions set forth in the appropriate form of Award Agreement
approved by the Committee and as amended from time to time. Any Award Agreement
may consist of an appropriate form of Notice of Grant and a form of Agreement
incorporated therein by reference, or such other form or forms as the Committee
may approve from time to time.
12.2 AUTHORITY TO VARY TERMS. The Committee shall have the authority
from time to time to vary the terms of any standard form of Award Agreement
either in connection with the grant or amendment of an individual Award or in
connection with the authorization of a new standard form or forms; provided,
however, that the terms and conditions of any such new, revised or amended
standard form or forms of Award Agreement are not inconsistent with the terms of
the Plan.
13. CHANGE IN CONTROL.
13.1 EFFECT OF CHANGE IN CONTROL ON OPTIONS AND SARS.
(a) ACCELERATED VESTING. Notwithstanding any other provision
of the Plan to the contrary except as provided in this Section 13.1(a), the
Committee, in its sole discretion, may provide in any Award Agreement or, in the
event of a Change in Control, may take such actions as it deems appropriate to
provide for the acceleration of the exercisability and vesting in connection
with such Change in Control of any or all outstanding Options and SARs and
shares acquired upon the exercise of such Options and SARs upon such conditions
and to
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such extent as the Committee shall determine. Any unexercisable or unvested
portion of each outstanding Nonemployee Director Option and any shares acquired
upon the exercise thereof shall be immediately exercisable and vested in full as
of the date ten (10) days prior to the date of the Change in Control but
conditioned upon the consummation of the Change in Control.
(b) ASSUMPTION OR SUBSTITUTION. In the event of a Change in
Control, the surviving, continuing, successor, or purchasing entity or parent
thereof, as the case may be (the "ACQUIROR"), may, without the consent of any
Participant, either assume the Company's rights and obligations under
outstanding Options and SARs or substitute for outstanding Options and SARs
substantially equivalent options and SARs (as the case may be) for the
Acquiror's stock. In the event that the Acquiring Corporation elects not to
assume or substitute for outstanding Options and SARs in connection with a
Change in Control the exercisability and vesting of each such outstanding
Option, SAR and any shares acquired upon the exercise thereof held by a
Participant whose Service has not terminated prior to such date shall be
accelerated, effective as of the date ten (10) days prior to the date of the
Change in Control. The exercise or vesting of any Option, SAR and any shares
acquired upon the exercise thereof that was permissible solely by reason of this
Section 13.1 and the provisions of such applicable Award Agreement shall be
conditioned upon the consummation of the Change in Control. Any Options or SARs
which are not assumed by the Acquiror in connection with the Change in Control
nor exercised as of the time of consummation of the Change in Control shall
terminate and cease to be outstanding effective as of the time of consummation
of the Change in Control.
(c) CASH-OUT OF OPTIONS. The Committee may, in its sole
discretion and without the consent of any Participant, determine that, upon the
occurrence of a Change in Control, each or any Option or SAR outstanding
immediately prior to the Change in Control shall be canceled in exchange for a
payment with respect to each vested share of Stock subject to such canceled
Option or SAR in (i) cash, (ii) stock of the Company or of a corporation or
other business entity a party to the Change in Control, or (iii) other property
which, in any such case, shall be in an amount having a Fair Market Value equal
to the excess of the Fair Market Value of the consideration to be paid per share
of Stock in the Change in Control over the exercise price per share under such
Option or SAR (the "SPREAD"). In the event such determination is made by the
Committee, the Spread (reduced by applicable withholding taxes, if any) shall be
paid to Participants in respect of their canceled Options and SARs as soon as
practicable following the date of the Change in Control.
13.2 EFFECT OF CHANGE IN CONTROL ON RESTRICTED STOCK AWARDS. The
Committee may, in its discretion, provide in any Award Agreement evidencing a
Restricted Stock Award that, in the event of a Change in Control, the lapsing of
the Restriction Period applicable to the shares subject to the Restricted Stock
Award held by a Participant whose Service has not terminated prior to the Change
in Control shall be accelerated effective immediately prior to the consummation
of the Change in Control to such extent as specified in such Award Agreement.
Any acceleration of the lapsing of the Restriction Period that was permissible
solely by reason of this Section 13.2 and the provisions of such Award Agreement
shall be conditioned upon the consummation of the Change in Control.
13.3 EFFECT OF CHANGE IN CONTROL ON RESTRICTED STOCK UNIT AWARDS.
The Committee may, in its discretion, provide in any Award Agreement evidencing
a Restricted
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Stock Unit Award that, in the event of a Change in Control, the Restricted Stock
Unit Award held by a Participant whose Service has not terminated prior to such
date shall be settled effective as of the date of the Change in Control to such
extent as specified in such Award Agreement.
13.4 EFFECT OF CHANGE IN CONTROL ON DEFERRED COMPENSATION AWARDS.
The Committee may, in its discretion, provide in any Award Agreement evidencing
a Deferred Compensation Award that, in the event of a Change in Control, the
Stock Units pursuant to such Award shall be settled effective as of the date of
the Change in Control to such extent as specified in such Award Agreement.
14. COMPLIANCE WITH SECURITIES LAW.
The grant of Awards and the issuance of shares of Stock pursuant to
any Award shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to such securities and the
requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, no Award may be exercised or shares issued pursuant
to an Award unless (a) a registration statement under the Securities Act shall
at the time of such exercise or issuance be in effect with respect to the shares
issuable pursuant to the Award or (b) in the opinion of legal counsel to the
Company, the shares issuable pursuant to the Award may be issued in accordance
with the terms of an applicable exemption from the registration requirements of
the Securities Act. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority, if any, deemed by the Company's legal
counsel to be necessary to the lawful issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been
obtained. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.
15. TAX WITHHOLDING.
15.1 TAX WITHHOLDING IN GENERAL. The Company shall have the right to
deduct from any and all payments made under the Plan, or to require the
Participant, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise of an Option, to make adequate provision for,
the federal, state, local and foreign taxes, if any, required by law to be
withheld by the Participating Company Group with respect to an Award or the
shares acquired pursuant thereto. The Company shall have no obligation to
deliver shares of Stock, to release shares of Stock from an escrow established
pursuant to an Award Agreement, or to make any payment in cash under the Plan
until the Participating Company Group's tax withholding obligations have been
satisfied by the Participant.
15.2 WITHHOLDING IN SHARES. The Company shall have the right, but
not the obligation, to deduct from the shares of Stock issuable to a Participant
upon the exercise or settlement of an Award, or to accept from the Participant
the tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of
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any shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.
16. AMENDMENT OR TERMINATION OF PLAN.
The Committee may amend, suspend or terminate the Plan at any time.
However, without the approval of the Company's stockholders, there shall be (a)
no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of Section 4.3),
(b) no change in the class of persons eligible to receive Incentive Stock
Options, (c) no Option and/or SAR repricing as described in Section 3.6, and (d)
no other amendment of the Plan that would require approval of the Company's
stockholders under any applicable law, regulation or rule. No amendment,
suspension or termination of the Plan shall affect any then outstanding Award
unless expressly provided by the Committee. In any event, no amendment,
suspension or termination of the Plan may adversely affect any then outstanding
Award without the consent of the Participant unless necessary to comply with any
applicable law, regulation or rule.
17. MISCELLANEOUS PROVISIONS.
17.1 REPURCHASE RIGHTS. Shares issued under the Plan may be subject
to one or more repurchase options, or other conditions and restrictions as
determined by the Committee in its discretion at the time the Award is granted.
The Company shall have the right to assign at any time any repurchase right it
may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant
shall execute any agreement evidencing such transfer restrictions prior to the
receipt of shares of Stock hereunder and shall promptly present to the Company
any and all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.
17.2 PROVISION OF INFORMATION. Each Participant shall be given
access to information concerning the Company equivalent to that information
generally made available to the Company's common stockholders.
17.3 RIGHTS AS EMPLOYEE, CONSULTANT OR DIRECTOR. No person, even
though eligible pursuant to Section 5, shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
Nothing in the Plan or any Award granted under the Plan shall confer on any
Participant a right to remain an Employee, Consultant or Director or interfere
with or limit in any way any right of a Participating Company to terminate the
Participant's Service at any time. To the extent that an Employee of a
Participating Company other than the Company receives an Award under the Plan,
that Award shall in no event be understood or interpreted to mean that the
Company is the Employee's employer or that the Employee has an employment
relationship with the Company.
17.4 RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as
a stockholder with respect to any shares covered by an Award until the date of
the issuance of such shares (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends,
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distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 4.3 or another provision
of the Plan.
17.5 FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise or settlement of any Award.
17.6 SEVERABILITY. If any one or more of the provisions (or any part
thereof) of this Plan shall be held invalid, illegal or unenforceable in any
respect, such provision shall be modified so as to make it valid, legal and
enforceable, and the validity, legality and enforceability of the remaining
provisions (or any part thereof) of the Plan shall not in any way be affected or
impaired thereby.
17.7 BENEFICIARY DESIGNATION. Subject to local laws and procedures,
each Participant may file with the Company a written designation of a
beneficiary who is to receive any benefit under the Plan to which the
Participant is entitled in the event of such Participant's death before he or
she receives any or all of such benefit. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. If a married Participant
designates a beneficiary other than the Participant's spouse, the effectiveness
of such designation may be subject to the consent of the Participant's spouse.
If a Participant dies without an effective designation of a beneficiary who is
living at the time of the Participant's death, the Company will pay any
remaining unpaid benefits to the Participant's legal representative.
17.8 UNFUNDED OBLIGATION. Participants shall have the status of
general unsecured creditors of the Company. Any amounts payable to Participants
pursuant to the Plan shall be unfunded and unsecured obligations for all
purposes, including, without limitation, Title I of the Employee Retirement
Income Security Act of 1974. No Participating Company shall be required to
segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company
shall retain at all times beneficial ownership of any investments, including
trust investments, which the Company may make to fulfill its payment obligations
hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary
relationship between the Committee or any Participating Company and a
Participant, or otherwise create any vested or beneficial interest in any
Participant or the Participant's creditors in any assets of any Participating
Company. The Participants shall have no claim against any Participating Company
for any changes in the value of any assets which may be invested or reinvested
by the Company with respect to the Plan.
17.9 CHOICE OF LAW. Except to the extent governed by applicable
federal law, the validity, interpretation, construction and performance of the
Plan and each Award Agreement shall be governed by the laws of the State of
Michigan, without regard to its conflict of law rules.
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