2002 Stock Incentive and Non-Qualified Stock Option Plan - Alloy Inc.
ALLOY, INC.
AMENDED AND RESTATED
2002 STOCK INCENTIVE AND
NON-QUALIFIED STOCK OPTION PLAN
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TABLE OF CONTENTS
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1. DEFINITIONS.............................................................................................1
2. PURPOSES OF THE PLAN....................................................................................3
3. SHARES SUBJECT TO THE PLAN..............................................................................3
4. ADMINISTRATION OF THE PLAN..............................................................................4
5. ELIGIBILITY FOR PARTICIPATION...........................................................................4
6. TERMS AND CONDITIONS OF OPTIONS.........................................................................5
7. TERMS AND CONDITIONS OF STOCK GRANTS....................................................................5
8. EXERCISE OF OPTIONS AND ISSUANCE OF SHARES..............................................................6
9. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES...........................................................7
10. DEFERRAL OF AWARDS......................................................................................7
11. RIGHTS AS A SHAREHOLDER.................................................................................8
12. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.......................................................8
13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR DEATH OR DISABILITY...............8
14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE".................................................9
15. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.............................................10
16. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT...................................11
17. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.......................................................11
18. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR DEATH OR DISABILITY.........12
19. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE "FOR CAUSE"...........................................12
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TABLE OF CONTENTS
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20. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY........................................12
21. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT..............................12
22. EFFECT ON DEFERRED SHARES OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".............................13
23. EFFECT ON DEFERRED SHARES OF TERMINATION OF SERVICE "FOR CAUSE"........................................13
24. PURCHASE FOR INVESTMENT................................................................................13
25. DISSOLUTION OR LIQUIDATION OF THE COMPANY..............................................................14
26. ADJUSTMENTS............................................................................................14
A. Stock Dividends and Stock Splits..............................................................14
B. Consolidations or Mergers.....................................................................14
C. Recapitalization or Reorganization............................................................15
27. ISSUANCES OF SECURITIES................................................................................15
28. FRACTIONAL SHARES......................................................................................15
29. WITHHOLDING............................................................................................15
30. TERMINATION OF THE PLAN................................................................................16
31. AMENDMENT OF THE PLAN AND AGREEMENTS...................................................................16
32. EMPLOYMENT OR OTHER RELATIONSHIP.......................................................................16
33. GOVERNING LAW..........................................................................................17
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ALLOY, INC.
AMENDED AND RESTATED
2002 RESTRICTED STOCK AND
NON-QUALIFIED STOCK OPTION PLAN
1. DEFINITIONS.
Unless otherwise specified, or unless the context otherwise requires,
the following terms, as used in this Alloy, Inc. Amended and Restated
2002 Stock Incentive and Non-Qualified Stock Option Plan, have the
following meanings:
ADMINISTRATOR means the Board of Directors, unless it has
delegated power to act on its behalf to the Committee, in
which case the Administrator means the Committee.
AFFILIATE means a corporation or other entity which, for
purposes of Section 424 of the Code, is a parent or subsidiary
of the Company, direct or indirect.
BOARD OF DIRECTORS means the Board of Directors of the
Company.
CODE means the United States Internal Revenue Code of 1986, as
amended.
COMMITTEE means the Administration Committee of the Board of
Directors or any other committee of the Board of Directors to
which the Board of Directors has delegated power to act under
or pursuant to the provisions of the Plan.
COMMON STOCK means shares of the Company`s common stock, $.01
par value per share.
COMPANY means Alloy, Inc., a Delaware corporation.
DEFERRAL AGREEMENT means an agreement delivered pursuant to
the Plan between the Company and a Participant relating to the
establishment of a Deferred Shares Account, in such form as
the Administrator shall approve.
DEFERRED SHARES means Shares in respect of which receipt by
the Participant has been deferred in accordance with the
provisions of Paragraph 10.
DEFERRED SHARES ACCOUNT means an unfunded account created on
the books of the Company in which a Participant`s entitlement
to Deferred Shares shall be recorded. The Company may elect
to, but is not required to, actually hold Common Stock in an
amount equal to the number of Shares credited to a
Participant`s Deferred Shares Account.
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DISABILITY or DISABLED means permanent and total disability as
defined in Section 22(e)(3) of the Code.
EMPLOYEE means an employee of the Company or of any Affiliate
(including, without limitation, an employee who is also
serving as an officer or director of the Company or an
Affiliate), designated by the Administrator to be eligible to
be granted one or more Stock Rights under the Plan.
FAIR MARKET VALUE of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market, and sales
prices are regularly reported for the Common Stock, the
closing or last price of the Common Stock on the Composite
Tape or other comparable reporting system for the trading day
immediately preceding the applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if
sales prices are not regularly reported for the Common Stock
for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the
mean between the bid and the asked price for the Common Stock
at the close of trading in the over-the-counter market for the
trading day on which Common Stock was traded immediately
preceding the applicable date; and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall
determine.
NEW EMPLOYEE means a new employee of the Company or of any
Affiliate who is entering into an employment arrangement with
the Company or any Affiliate which provides for the grant of
Stock Rights as an inducement essential to the individual`s
employment as a new employee.
NON-QUALIFIED OPTION means an option which is not intended to
qualify as an incentive stock option under Section 422 of the
Code.
OPTION means a Non-Qualified Option granted under the Plan.
OPTION AGREEMENT means an agreement delivered pursuant to the
Plan between the Company and a Participant relating to the
award and exercise of an Option, in such form as the
Administrator shall approve.
PARTICIPANT means an Employee, director or consultant of the
Company or an Affiliate to whom one or more Stock Rights are
granted under the Plan. As used herein, "Participant" shall
include "Participant`s Survivors" where the context requires.
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PLAN means this Amended and Restated 2002 Stock Incentive and
Non-Qualified Stock Option Plan.
SHARES means shares of the Common Stock as to which Stock
Rights have been or may be granted under the Plan or any
shares of capital stock into which the Shares are changed or
for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued under the Plan may
be authorized and unissued shares or shares held by the
Company in its treasury, or both.
STOCK GRANT means a grant by the Company of Shares under the
Plan.
STOCK GRANT AGREEMENT means an agreement delivered pursuant to
the Plan between the Company and a Participant relating to the
award and acceptance of a Stock Grant, in such form as the
Administrator shall approve.
STOCK RIGHT means a right to Shares of the Company granted
pursuant to the Plan -- a Non-Qualified Option or a Stock
Grant.
SURVIVORS means a deceased Participant`s legal representatives
and/or any person or persons who acquired the Participant`s
rights to an Option by will or by the laws of descent and
distribution.
2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Employees,
directors and consultants of the Company or an Affiliate in order to attract
such people to, and induce them to work for the benefit of, the Company or an
Affiliate, and to provide additional incentive for them to promote the success
of the Company and/or an Affiliate; PROVIDED, that it is the intention of the
Board of Directors that the primary Participants under the Plan be New Employees
who become such in connection with acquisitions by the Company of entities or
businesses by which such New Employees are employed or for which they perform
services at the time of such acquisition. The Plan provides for the granting of
Non-Qualified Options and Stock Grants only and for the deferral of the award of
Shares issued pursuant to Stock Grants.
3. SHARES SUBJECT TO THE PLAN.
The number of Shares which may be issued from time to time pursuant to
this Plan shall be 500,000 or the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted the effect of any stock
split, stock dividend, combination, recapitalization or similar transaction in
accordance with Paragraph 26 of the Plan.
If an Option ceases to be "outstanding", in whole or in part, or if the
Company shall reacquire any Shares issued pursuant to a Stock Grant or set aside
in a Deferred Shares Account, the Shares which were subject to such Option and
any Shares so reacquired by the Company shall be available for the granting of
other Stock Rights under the Plan. Any Stock Right shall be treated as
"outstanding" until such Stock Right is exercised in full, any applicable
repurchase rights lapse, or the Stock Right terminates or expires under the
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provisions of the Plan, or by agreement of the parties to the pertinent Option
Agreement, Stock Grant Agreement or Deferral Agreement.
4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to the Committee, in
which case the Committee shall be the Administrator. Subject to the provisions
of the Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Stock Right,
Option Agreement, Stock Grant Agreement or Deferral Agreement
and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which Participants shall be granted Stock Rights;
c. Determine the number of Shares for which a Stock Right or
Stock Rights shall be granted;
d. Specify the terms and conditions upon which a Stock Right or
Stock Rights may be granted; and
e. Create Deferred Shares Accounts pursuant to which
receipt of Shares to be issued hereunder as Stock Grants may
be deferred and determine which participants shall be offered
use of such Deferred Shares Accounts and
f. Adopt any sub-plans applicable to residents of any specified
jurisdiction as it deems necessary or appropriate in order to
comply with or take advantage of any tax laws applicable to
the Company or to Plan Participants or to otherwise.
Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under
the Plan or Deferred Shares Accounts created under the Plan shall be final,
unless otherwise determined by the Board of Directors if the Administrator is
the Committee. In addition, if the Administrator is the Committee, the Board of
Directors may take any action under the Plan that would otherwise be the
responsibility of the Committee.
If permissible under applicable law, the Board of Directors or the
Committee may allocate all or any portion of its responsibilities and powers to
any one or more of its members and may delegate all or any portion of its
responsibilities and powers to any other person selected by it. Any such
allocation or delegation may be revoked by the Board of Directors or the
Committee at any time.
5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants
in the Plan, PROVIDED, HOWEVER, that each Participant must be an Employee,
director or consultant of the Company or an Affiliate at the time a Stock Right
is granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of a Stock Right to a person not then an Employee, director or consultant;
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provided, however, that the actual grant of such Stock Right shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the delivery of the Option Agreement or Stock Grant
Agreement, as applicable, evidencing such Stock Right. The granting of any Stock
Right to any individual shall neither entitle that individual to, nor disqualify
him or her from, participation in any other grant of a Stock Right.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto.
a. Option Price: Each Option Agreement shall state the
option price (per share) of the Shares covered by
each Option, which option price shall be determined
by the Administrator but shall not be less than the
Fair Market Value per Share of Common Stock as of the
grant date.
b. Each Option Agreement shall state the number of
Shares to which it pertains.
c. Each Option Agreement shall state the date or dates
on which it first is exercisable and the date after
which it may no longer be exercised, and may provide
that the Option rights accrue or become exercisable
in installments over a period of months or years, or
upon the occurrence of certain conditions or the
attainment of stated goals or events.
d. Each Option shall terminate not more than ten (10)
years from the date of grant thereof or at such
earlier time as the Option Agreement may provide.
e. The Administrator shall have the right to accelerate
the date of exercise of any installment of any
Option.
7. TERMS AND CONDITIONS OF STOCK GRANTS.
Each offer of a Stock Grant to a Participant shall state the date prior
to which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Stock Grant Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:
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(a) Each Stock Grant Agreement shall state the purchase price (per
share), if any, of the Shares covered by each Stock Grant,
which purchase price shall be determined by the Administrator
but shall not be less than the par value per share of each
Share covered thereby on the date of the grant of the Stock
Grant;
(b) Each Stock Grant Agreement shall state the number of Shares to
which the Stock Grant pertains; and
(c) Each Stock Grant Agreement shall include the terms of any
right of the Company to restrict or reacquire the Shares
subject to the Stock Grant, including the time and events upon
which such reacquisition rights shall accrue and the purchase
price therefor, if any.
8. EXERCISE OF OPTIONS AND ISSUANCE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company or its designee, together with provision
for payment of the full purchase price in accordance with this Paragraph for the
Shares as to which the Option is being exercised, and upon compliance with any
other condition(s) set forth in the Option Agreement. Such notice shall be
signed by the person exercising the Option, shall state the number of Shares
with respect to which the Option is being exercised and shall contain any
representation required by the Plan or the Option Agreement. Payment of the
purchase price for the Shares as to which such Option is being exercised shall
be made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock
having a Fair Market Value equal, as of the date of the exercise, to the cash
exercise price of the Option and held for at least six months, or (c) at the
discretion of the Administrator, by delivery of the grantee`s personal note for
full, partial or no recourse, bearing interest payable not less than annually at
market rate on the date of exercise and at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, with or without the
pledge of the Shares as collateral or (d) at the discretion of the
Administrator, in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Administrator, or (e) at the
discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant`s
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the issuance and delivery of the
Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or "blue sky" laws)
which requires the Company to take any action with respect to the Shares prior
to their issuance. The Shares shall, upon delivery, be evidenced by fully paid,
non-assessable Shares.
The Administrator may, in its discretion, amend any term or condition
of an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, and (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant`s Survivors, if the amendment is
adverse to the Participant.
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9. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.
A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company or its
designee, together with provision for payment of the full purchase price in
accordance with this Paragraph for the Shares as to which such Stock Grant is
being accepted, and upon compliance with any other conditions set forth in the
Stock Grant Agreement.
A Stock Grant may be issued in exchange for any consideration which the
Administrator may deem appropriate in each individual instance, including,
without limitation:
a. cash or cash equivalents;
b. past services rendered to the Company or any Affiliate; or
c. future services to be rendered to the Company or any Affiliate
(provided that, in such case, the par value of the stock subject to such Stock
Grant shall be paid in cash or cash equivalents, unless the Administrator
provides otherwise).
A Stock Grant that is subject to restrictions on transfer and/or forfeiture
provisions may be referred to as an award of "Restricted Stock."
The Company shall then reasonably promptly deliver the Shares as to
which such Stock Grant was accepted to the Participant (or to the Participant`s
Survivors, as the case may be), subject to any escrow provision set forth in the
Stock Grant Agreement and the provisions of any applicable Deferral
Agreement executed pursuant to the provisions of Paragraph 10. In Determining
what constitutes "reasonably promptly," it is expressly understood that the
issuance and delivery of the Shares may be delayed by the Company in order to
comply with any law or regulation (including, without limitation, state
securities or "blue sky" laws) which requires the Company to take any action
with respect to the Shares prior to their issuance.
The Administrator may, in its discretion, amend any term or condition
of an outstanding Stock Grant or Stock Grant Agreement provided (i) such term or
condition as amended is permitted by the Plan, and (ii) any such amendment shall
be made only with the consent of the Participant to whom the Stock Grant was
made, if the amendment is adverse to the Participant.
10. DEFERRAL OF AWARDS.
The Administrator (in its sole discretion) may permit a Participant to
have Shares that otherwise would be delivered to such Participant as a result of
the exercise of a Stock Option or the settlement of a Stock Grant credited to a
Deferred Shares Account established for such Participant by the Administrator as
an entry on the Company`s books. A Participant for whom such an Account is
established shall have no rights other than those of a general creditor of the
Company. Such a Deferred Shares Account shall represent an unfunded and
unsecured obligation of the Company and shall be subject to the terms and
conditions of the applicable Deferral Agreement between such Participant and the
Company. If the deferral or conversion of Stock Rights is permitted or
required, the
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Administrator (in its sole discretion) may establish rules, procedures and forms
pertaining to such Stock Rights, including (without limitation) the settlement
of Deferred Shares Accounts established under this Paragraph 10.
11. RIGHTS AS A SHAREHOLDER.
No Participant to whom a Stock Right has been granted shall have rights
as a shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant and tender of
the full purchase price, if any, for the Shares being purchased pursuant to such
exercise or acceptance, expiration of any applicable deferral period and
registration of the Shares in the Company`s share register in the name of the
Participant.
12. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.
By its terms, a Stock Right granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as approved by the Administrator in its discretion and
set forth in the applicable Option Agreement or Stock Grant Agreement. The
designation of a beneficiary of a Stock Right by a Participant, with the prior
approval of the Administrator and in such form as the Administrator shall
prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except
as provided above, a Stock Right shall only be exercisable or may only be
accepted, during the Participant`s lifetime, only by such Participant (or by his
or her legal representative) and shall not be assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.
13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR
DEATH OR DISABILITY.
Except as otherwise provided in a Participant`s Option Agreement, in
the event of a termination of service (whether as an Employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:
a. A Participant who ceases to be an Employee, director or
consultant of the Company or of an Affiliate (for any reason
other than termination "for cause", Disability, or death for
which events there are special rules in Paragraphs 14, 15 and
16, respectively), may exercise any Option granted to him or
her to the extent that the Option is exercisable on the date
of such termination of service, but only within such term as
the Administrator has designated in the a Participant`s Option
Agreement.
b. Except as provided in Subparagraph (c) below, or Paragraph 15
or 16, unless otherwise determined by the Administrator and
set forth in the applicable Option Agreement, the Participant
must exercise the Option within three months after the date of
the Participant`s termination of employment. Notwithstanding
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the foregoing, the Administrator may determine at any time
prior to expiration of an Option to extend the period during
which the Option may be exercised for a period not to exceed
the termination date of the Option as in effect immediately
preceding the date of such termination of employment, such
extension to be effected by written amendment to the
applicable Option Agreement.
c. The provisions of this Paragraph, and not the provisions of
Paragraph 15 or 16, shall apply to a Participant who
subsequently becomes Disabled or dies after the termination of
employment, director status or consultancy, provided, however,
in the case of a Participant`s Disability or death within
three months after the termination of employment, director
status or consultancy, the Participant or the Participant`s
Survivors may exercise the Option within one year after the
date of the Participant`s termination of employment, but in no
event after the date of expiration of the term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent
to a Participant`s termination of employment, termination of
director status or termination of consultancy, but prior to
the exercise of an Option, the Board of Directors determines
that, either prior or subsequent to the Participant`s
termination, the Participant engaged in conduct which would
constitute "cause", then such Participant shall forthwith
cease to have any right to exercise any Option.
e. A Participant to whom an Option has been granted under the
Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability
other than a permanent and total Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any
purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated
such Participant`s employment, director status or consultancy
with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
f. Except as required by law or as set forth in a Participant`s
Option Agreement, Options granted under the Plan shall not be
affected by any change of a Participant`s status within or
among the Company and any Affiliates, so long as the
Participant continues to be an employee, director or
consultant of the Company or any Affiliate.
14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in a Participant`s Option Agreement, the
following rules apply if the Participant`s service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated "for
cause" will immediately be forfeited.
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b. For purposes of this Plan, "cause" shall include (and is not
limited to) dishonesty with respect to the Company or any
Affiliate, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential
information, and conduct substantially prejudicial to the
business of the Company or any Affiliate. The determination of
the Administrator as to the existence of "cause" will be
conclusive on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to
a Participant`s termination of service, nor is it necessary
that the Administrator`s finding of "cause" occur prior to
termination. If the Administrator determines, subsequent to a
Participant`s termination of service but prior to the exercise
of an Option, that either prior or subsequent to the
Participant`s termination the Participant engaged in conduct
which would constitute "cause", then the right to exercise any
Option is forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting
definition of "cause" for termination and which is in effect
at the time of such termination, shall supersede the
definition in this Plan with respect to that Participant.
Notwithstanding the foregoing, the Administrator may, in its sole and
absolute direction, permit any Participant who is terminated for "cause" to
exercise any Options which are then exercisable as of the date of such
termination of employment during a period, not to exceed three months, after the
date of the Participant`s termination of employment.
15. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in a Participant`s Option Agreement, a
Participant who ceases to be an Employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on the date of
Disability; and
b. In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights as would have accrued had the Participant
not become Disabled prior to the end of the accrual period
which next ends following the date of Disability. The
proration shall be based upon the number of days of such
accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within the period
ending one year after the date of the Participant`s termination of employment,
directorship or consultancy, as the case may be, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of the
Shares on a later date if the Participant had not become Disabled and had
continued to be an Employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.
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The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
16. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in a Participant`s Option Agreement, in
the event of the death of a Participant while the Participant is an Employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant`s Survivors:
a. To the extent exercisable but not exercised on the date of
death; and
b. In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights which would have accrued had the Participant
not died prior to the end of the accrual period which next
ends following the date of death. The proration shall be based
upon the number of days of such accrual period prior to the
Participant`s death.
If the Participant`s Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one year after the date
of death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
17. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.
In the event of a termination of service (whether as an employee,
director or consultant) with the Company or an Affiliate for any reason before
the Participant has accepted a Stock Grant, such offer shall terminate.
For purposes of this Paragraph 17 and Paragraph 18 below, a Participant
to whom a Stock Grant has been offered and accepted under the Plan who is absent
from work with the Company or with an Affiliate because of temporary disability
(any disability other than a permanent and total Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not,
during the period of any such absence, be deemed, by virtue of such absence
alone, to have terminated such Participant`s employment, director status or
consultancy with the Company or with an Affiliate, except as the Administrator
may otherwise expressly provide.
In addition, for purposes of this Paragraph 17 and Paragraph 18 below,
any change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.
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18. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE"
OR DEATH OR DISABILITY.
Except as otherwise provided in a Participant`s Stock Grant Agreement,
in the event of a termination of service (whether as an employee, director or
consultant), other than termination "for cause," Disability, or death for which
events there are special rules in Paragraphs 19, 20, and 21, respectively,
before all Company rights of repurchase, if any, shall have lapsed, then the
Company shall have the right to repurchase that number of Shares subject to a
Stock Grant as to which the Company`s repurchase rights have not lapsed.
19. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in a Participant`s Stock Grant Agreement,
if the Participant`s service (whether as an employee, director or consultant)
with the Company or an Affiliate is terminated "for cause", all Shares subject
to any Stock Grant shall be immediately subject to repurchase by the Company at
the purchase price thereof.
20. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in a Participant`s Stock Grant Agreement,
the following rules apply if a Participant ceases to be an employee, director or
consultant of the Company or of an Affiliate by reason of Disability: to the
extent the Company`s rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that if such rights of
repurchase lapse periodically, such rights shall lapse to the extent of a pro
rata portion of the Shares subject to such Stock Grant through the date of
Disability as would have lapsed had the Participant not become Disabled. The
proration shall be based upon the number of days accrued prior to the date of
Disability.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
21. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT.
Except as otherwise provided in a Participant`s Stock Grant Agreement,
the following rules apply in the event of the death of a Participant while the
Participant is an employee, director or consultant of the Company or of an
Affiliate: to the extent the Company`s rights of repurchase have not lapsed on
the date of death, they shall be exercisable; provided, however, that in the
event such rights of repurchase lapse periodically, such rights shall lapse to
the extent of a pro rata portion of the Shares subject to such Stock Grant
through the date of death as would have lapsed had the Participant not died. The
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proration shall be based upon the number of days accrued prior to the
Participant`s death.
22. EFFECT ON DEFERRED SHARES OF TERMINATION OF SERVICE OTHER THAN "FOR
CAUSE".
Except as otherwise provided in a Participant`s Deferral Agreement, all
Deferred Shares credited to a Participant`s Deferred Shares Account, if any,
shall be distributed in the form of Shares, and dividends relating thereto shall
be paid in a lump sum in cash, to the Participant on the date when the
Participant`s employment terminates for any reason other than "for cause"
including, without limitation, Death, retirement, resignation, discharge without
Cause, or Disability.
23. EFFECT ON DEFERRED SHARES OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in a Participant`s Deferral Agreement, all
Deferred Shares credited to a Participant`s Deferred Shares Account, if any, and
dividends relating thereto, if any, shall be forfeited and the purchase price,
if any, paid in cash or cash equivalents by such Participant for such Deferred
Shares shall paid in a lump sum in cash, without interest, to the Participant on
or prior to the 90th day after the date on which the Participant`s employment
terminates "for cause."
24. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the
particular exercise of a Stock Right shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended (the
"1933 Act"), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled:
a. The person(s) who exercise(s) or accept(s) such Stock Right
shall warrant to the Company, prior to the receipt of the
Shares relating to such Stock Right, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed
upon the certificate(s) evidencing their Shares issued
pursuant to such exercise or such grant:
"The shares represented by this certificate have been
taken for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be
effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an
exemption from registration under such Act is then
available, and (2) there shall have been compliance
with all applicable state securities laws."
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b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be
issued upon such particular exercise in compliance with the
1933 Act without registration thereunder.
25. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all
Stock Grants which have not been accepted will terminate and become null and
void; provided, however, that if the rights of a Participant or a Participant`s
Survivors have not otherwise terminated and expired, the Participant or the
Participant`s Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as of the date
immediately prior to such dissolution or liquidation.
26. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant`s
rights with respect to any Stock Right granted to him or her hereunder which has
not previously been exercised or accepted in full shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the pertinent
Option Agreement or Stock Grant Agreement:
A. STOCK DIVIDENDS AND STOCK SPLITS. If (i) the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased proportionately, and appropriate
adjustments may be made in the purchase price per share to reflect such events.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company`s assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
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purposes of this Subparagraph) within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the Shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this Subparagraph) over the exercise
price thereof.
With respect to outstanding Stock Grants, the Administrator or the
Successor Board, shall either (i) make appropriate provisions for the
continuation of such Stock Grants by substituting on an equitable basis for the
Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Acquisition or securities of any successor or acquiring entity; or (ii) upon
written notice to the Participants, provide that all Stock Grants must be
accepted (to the extent then subject to acceptance) within a specified number of
days of the date of such notice, at the end of which period the offer of the
Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Stock Grants over the purchase price thereof, if any. In
addition, in the event of an Acquisition, the Administrator may waive any or all
Company repurchase rights with respect to outstanding Stock Grants.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in Subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising a Stock Right shall be entitled to
receive for the purchase price, paid upon such exercise the securities which
would have been received if such Stock Right had been exercised prior to such
recapitalization or reorganization.
27. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Rights. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company
prior to any issuance of Shares pursuant to a Stock Right.
28. FRACTIONAL SHARES.
No fractional Shares shall be issued under the Plan and the person
exercising a Stock Right shall receive from the Company cash in lieu of such
fractional Shares equal to the Fair Market Value thereof.
29. WITHHOLDING.
If any federal, state, or local income taxes, employment taxes, Federal
Insurance Contributions Act ("F.I.C.A.") withholdings or other amounts are
required by applicable law or governmental regulation to be withheld from the
Participant`s salary, wages or other remuneration in connection with the
exercise of a Stock Right, the Company may withhold from the Participant`s
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a
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different withholding arrangement, including the use of shares of the Company`s
Common Stock or a promissory note, is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of a
Stock Right for less than the then Fair Market Value on the Participant`s
payment of such additional withholding.
30. TERMINATION OF THE PLAN.
The Plan will terminate on July 11, 2012, the date which is ten (10)
years from the date of its adoption. The Plan may be terminated at an earlier
date by vote of the shareholders or the Board of Directors of the Company;
provided, however, that any such earlier termination shall not affect any Option
Agreements or Stock Grant Agreements executed prior to the effective date of
such termination.
31. AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan
may also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify the shares issuable upon exercise or acceptance of
any outstanding Stock Rights granted, or Stock Rights to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers or to increase the
number of Shares which may be issued from time to time pursuant to this Plan.
Any amendment approved by the Administrator which the Administrator determines
is of a scope that requires shareholder approval shall be subject to obtaining
such shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under a
Stock Right previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Option Agreements
and Stock Grant Agreements in a manner which may be adverse to the Participant
but which is not inconsistent with the Plan. In the discretion of the
Administrator, outstanding Option Agreements and Stock Grant Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.
32. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Option Agreement, Stock Grant Agreement or
Deferral Agreement shall be deemed to prevent the Company or an Affiliate from
terminating the employment, consultancy or director status of a Participant, nor
to prevent a Participant from terminating his or her own employment, consultancy
or director status or to give any Participant a right to be retained in
employment or other service by the Company or any Affiliate for any period of
time.
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33. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of
the State of Delaware.
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