2000 Equity Participation Plan - Birch Telecom Inc.
2000 EQUITY PARTICIPATION PLAN
OF
BIRCH TELECOM, INC.
Birch Telecom, Inc., a Delaware corporation, has adopted the
2000 Equity Participation Plan of Birch Telecom, Inc. (the "Plan"), effective
March 30, 2000, for the benefit of its eligible employees, consultants and
directors.
The purposes of the Plan are as follows:
(1) To provide an additional incentive for directors,
Employees and Consultants (as such terms are defined below) to further the
growth, development and financial success of the Company by personally
benefiting through the ownership of Company stock and/or rights which recognize
such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
directors, Employees and Consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.
ARTICLE I.
DEFINITIONS
Whenever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly indicates
otherwise.
1.1. "ADMINISTRATOR" shall mean the entity that conducts the
general administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to Options granted to Independent
Directors, the term "Administrator" shall refer to the Board. With reference to
the administration of the Plan with respect to any other Award, the term
"Administrator" shall refer to the Committee unless the Board has assumed the
authority for administration of the Plan generally as provided in Section 10.1.
1.2. "AWARD" shall mean an Option, a Restricted Stock award, a
Performance Award, a Dividend Equivalents award, a Deferred Stock award, a Stock
Payment award or a Stock Appreciation Right which may be awarded or granted
under the Plan (collectively, "Awards").
1.3. "AWARD AGREEMENT" shall mean a written agreement executed
by an authorized officer of the Company and the Holder which shall contain such
terms and conditions with respect to an Award as the Administrator shall
determine, consistent with the Plan.
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1.4. "AWARD LIMIT" shall mean 1,000,000 shares of Common
Stock, as adjusted pursuant to Section 11.3 of the Plan.
1.5. "BOARD" shall mean the Board of Directors of the Company.
1.6. "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.7. "COMMITTEE" shall mean the Compensation Committee of the
Board, or another committee or subcommittee of the Board, appointed as provided
in Section 10.1.
1.8. "COMMON STOCK" shall mean the common stock of the
Company, par value $0.001 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any preferred
stock and any warrants, options or other rights to purchase Common Stock.
1.9. "COMPANY" shall mean Birch Telecom, Inc., a Delaware
corporation.
1.10. "CONSULTANT" shall mean any consultant or adviser if:
(a) The consultant or adviser renders bona fide services to
the Company;
(b) The services rendered by the consultant or adviser are not
in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company's securities; and
(c) The consultant or adviser is a natural person who has
contracted directly with the Company to render such services.
1.11. "DEFERRED STOCK" shall mean Common Stock awarded under
Article VIII of the Plan.
1.12. "DIRECTOr" shall mean a member of the Board.
1.13. "DIVIDEND EQUIVALENT" shall mean a right to receive the
equivalent value (in cash or Common Stock) of dividends paid on Common Stock,
awarded under Article VIII of the Plan.
1.14. "DRO" shall mean a domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder.
1.15. "EMPLOYEE" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any corporation which is a Subsidiary.
1.16. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
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1.17. "FAIR MARKET VALUE" of a share of Common Stock as of a
given date shall be (a) the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then trading, if any (or
as reported on any composite index which includes such principal exchange), on
the trading day previous to such date, or if shares were not traded on the
trading day previous to such date, then on the next preceding date on which a
trade occurred, or (b) if Common Stock is not traded on an exchange but is
quoted on Nasdaq or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by Nasdaq or such successor quotation system,
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
Nasdaq or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.
1.18. "HOLDER" shall mean a person who has been granted or
awarded an Award.
1.19. "INCENTIVE STOCK OPTION" shall mean an option which
conforms to the applicable provisions of Section 422 of the Code and which is
designated as an Incentive Stock Option by the Administrator.
1.20. "INDEPENDENT DIRECTOR" shall mean a member of the Board
who is not an Employee of the Company.
1.21. "NON-QUALIFIED STOCK OPTION" shall mean an Option which
is not designated as an Incentive Stock Option by the Administrator.
1.22. "OPTION" shall mean a stock option granted under Article
IV of the Plan. An Option granted under the Plan shall, as determined by the
Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; PROVIDED, HOWEVER, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.
1.23. "PERFORMANCE AWARD" shall mean a cash bonus, stock bonus
or other performance or incentive award that is paid in cash, Common Stock or a
combination of both, awarded under Article VIII of the Plan.
1.24. "PERFORMANCE CRITERIA" shall mean the following business
criteria with respect to the Company, any Subsidiary or any division or
operating unit: (a) net income, (b) pre-tax income, (c) operating income, (d)
cash flow, (e) earnings per share, (f) return on equity, (g) return on invested
capital or assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the fair market value of Common Stock, and (k) earnings
before any one or more of the following items: interest, taxes, depreciation or
amortization.
1.25. "PLAN" shall mean the 2000 Equity Participation Plan of
Birch Telecom, Inc.
1.26. "PUBLIC TRADING DATE" shall mean the first date upon
which Common Stock of the Company is listed (or approved for listing) upon
notice of issuance on any securities exchange or designated (or approved for
designation) upon notice of issuance as a national
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market security or an interdealer quotation system.
1.27. "RESTRICTED STOCK" shall mean Common Stock awarded under
Article VII of the Plan.
1.28. "RULE 16B-3" shall mean Rule 16b-3 under the Exchange
Act, as such Rule may be amended from time to time.
1.29. "SECTION 162(M) PARTICIPANT" shall mean any key
Employee designated by the Administrator as an Employee whose compensation
for the fiscal year in which the key Employee is so designated or a future
fiscal year may be subject to the limit on deductible compensation imposed by
Section 162(m) of the Code.
1.30. "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
1.31. "STOCK APPRECIATION RIGHT" shall mean a stock
appreciation right granted under Article IX of the Plan.
1.32. "STOCK PAYMENT" shall mean (a) a payment in the form of
shares of Common Stock, or (b) an option or other right to purchase shares of
Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
or Consultant in cash, awarded under Article VIII of the Plan.
1.33. "SUBSIDIARY" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
1.34. "SUBSTITUTE AWARD" shall mean an Option granted under
this Plan upon the assumption of, or in substitution for, outstanding equity
awards previously granted by a company or other entity in connection with a
corporate transaction, such as a merger, combination, consolidation or
acquisition of property or stock; PROVIDED, HOWEVER, that in no event shall the
term "Substitute Award" be construed to refer to an award made in connection
with the cancellation and repricing of an Option.
1.35. "TERMINATION OF CONSULTANCY" shall mean the time when
the engagement of a Holder as a Consultant to the Company or a Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, by resignation, discharge, death or retirement; but excluding
terminations where there is a simultaneous commencement of employment with the
Company or any Subsidiary. The Administrator, in its absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Consultancy, including, but not by way of limitation, the question of whether a
Termination of Consultancy resulted from a discharge for good cause, and all
questions of whether a particular leave of absence constitutes a Termination of
Consultancy. Notwithstanding any other provision of the Plan, the Company or any
Subsidiary has an absolute and unrestricted right to terminate a
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Consultant's service at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in writing.
1.36. "TERMINATION OF DIRECTORSHIP" shall mean the time when a
Holder who is an Independent Director ceases to be a Director for any reason,
including, but not by way of limitation, a termination by resignation, failure
to be elected, death or retirement. The Board, in its sole and absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Directorship with respect to Independent Directors.
1.37. "TERMINATION OF EMPLOYMENT" shall mean the time when the
employee-employer relationship between a Holder and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company or
any Subsidiary, (b) at the discretion of the Administrator, terminations which
result in a temporary severance of the employee-employer relationship, and (c)
at the discretion of the Administrator, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for good cause,
and all questions of whether a particular leave of absence constitutes a
Termination of Employment; PROVIDED, HOWEVER, that, with respect to Incentive
Stock Options, unless otherwise determined by the Administrator in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1. SHARES SUBJECT TO PLAN.
(a) The shares of stock subject to Awards shall be
Common Stock, initially shares of the Company's Common Stock, par value
$0.001 per share. The aggregate number of such shares which may be issued
upon exercise of such Options or rights or upon any such awards under the
Plan shall not exceed six million (6,000,000), subject to adjustment as
provided in Section 11.3. The shares of Common Stock issuable upon exercise
of such Options or rights or upon any such awards may be either previously
authorized but unissued shares or treasury shares.
(b) The maximum number of shares which may be subject
to Awards granted under the Plan to any individual in any calendar year shall
not exceed the Award Limit; PROVIDED, HOWEVER, that the foregoing limitation
shall not apply prior to the Public Trading Date and, following the Public
Trading Date, the foregoing limitation shall not apply until the earliest of:
(i) the first material modification of the Plan (within the meaning of Section
162(m) and the
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regulations issued thereunder); (ii) the issuance of all of the shares of Common
Stock reserved for issuance under the Plan; (iii) the expiration of the Plan;
(iv) the first meeting of stockholders at which Directors of the Company are to
be elected that occurs after the close of the third calendar year following the
calendar year in which occurred the first registration of an equity security of
the Company under Section 12 of the Exchange Act; or (v) such other date
required by Section 162(m) of the Code and the rules and regulations promulgated
thereunder. The foregoing limitation shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 11.3. For purposes of this Section 2.1(b), if an Option is canceled in
the same calendar year it was granted (other than in connection with a
transaction described in Section 11.3), the canceled Option will be counted
against the limit set forth in this Section 2.1(b). For this purpose, if the
exercise price of an Option is reduced, the transaction shall be treated as a
cancellation of the Option and the grant of a new Option.
2.2. ADD-BACK OF OPTIONS AND OTHER RIGHTS. If any Option, or
other right to acquire shares of Common Stock under any other Award under the
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by the Plan, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration, cancellation or exercise
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1. Furthermore, any shares subject to Awards which are adjusted
pursuant to Section 11.3 and become exercisable with respect to shares of stock
of another corporation shall be considered cancelled and may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. Shares
of Common Stock which are delivered by the Holder or withheld by the Company
upon the exercise of any Award under the Plan, in payment of the exercise price
thereof or tax withholding thereon, may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. If any shares of
Restricted Stock are surrendered by the Holder or repurchased by the Company
pursuant to Section 7.4 or 7.5 hereof, such shares may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.
ARTICLE III.
GRANTING OF AWARDS
3.1. AWARD AGREEMENT. Each Award shall be evidenced by an
Award Agreement. Award Agreements evidencing Awards intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code. Award Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422 of the Code.
3.2. PROVISIONS APPLICABLE TO SECTION 162(M) PARTICIPANTS.
(a) The Committee, in its discretion, may determine
whether an Award
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is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code.
(b) Notwithstanding anything in the Plan to the
contrary, the Committee may grant any Award to a Section 162(m) Participant,
including Restricted Stock the restrictions with respect to which lapse upon the
attainment of performance goals which are related to one or more of the
Performance Criteria and any performance or incentive award described in Article
VIII that vests or becomes exercisable or payable upon the attainment of
performance goals which are related to one or more of the Performance Criteria.
(c) To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of the Code,
with respect to any Award granted under Articles VII and VIII which may be
granted to one or more Section 162(m) Participants, no later than ninety (90)
days following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants, (ii) select the
Performance Criteria applicable to the fiscal year or other designated fiscal
period or period of service, (iii) establish the various performance targets, in
terms of an objective formula or standard, and amounts of such Awards, as
applicable, which may be earned for such fiscal year or other designated fiscal
period or period of service, and (iv) specify the relationship between
Performance Criteria and the performance targets and the amounts of such Awards,
as applicable, to be earned by each Section 162(m) Participant for such fiscal
year or other designated fiscal period or period of service. Following the
completion of each fiscal year or other designated fiscal period or period of
service, the Committee shall certify in writing whether the applicable
performance targets have been achieved for such fiscal year or other designated
fiscal period or period of service. In determining the amount earned by a
Section 162(m) Participant, the Committee shall have the right to reduce (but
not to increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.
(d) Furthermore, notwithstanding any other provision
of the Plan or any Award which is granted to a Section 162(m) Participant and is
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section 162(m)
of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the
extent necessary to conform to such requirements.
3.3. LIMITATIONS APPLICABLE TO SECTION 16 PERSONS.
Notwithstanding any other provision of the Plan, the Plan, and any Award granted
or awarded to any individual who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any
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amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.
3.4. CONSIDERATION. In consideration of the granting of an
Award under the Plan, the Holder shall agree, in the Award Agreement, to remain
in the employ of (or to consult for or to serve as an Independent Director of,
as applicable) the Company or any Subsidiary for a period of at least one year
(or such shorter period as may be fixed in the Award Agreement or by action of
the Administrator following grant of the Award) after the Award is granted (or,
in the case of an Independent Director, until the next annual meeting of
stockholders of the Company).
3.5. AT-WILL EMPLOYMENT. Nothing in the Plan or in any Award
Agreement hereunder shall confer upon any Holder any right to continue in the
employ of, or as a Consultant for, the Company or any Subsidiary, or as a
director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Holder at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in a written employment
agreement between the Holder and the Company and any Subsidiary.
ARTICLE IV.
GRANTING OF OPTIONS TO EMPLOYEES,
CONSULTANTS AND INDEPENDENT DIRECTORS
4.1. ELIGIBILITY. Any Employee or Consultant selected by the
Committee pursuant to Section 4.4(a)(i) shall be eligible to be granted an
Option. Each Independent Director of the Company shall be eligible to be granted
Options at the times and in the manner set forth in Section 4.5.
4.2. DISQUALIFICATION FOR STOCK OWNERSHIP. No person may be
granted an Incentive Stock Option under the Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any then existing Subsidiary or parent corporation (within the meaning of
Section 422 of the Code) unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code.
4.3. QUALIFICATION OF INCENTIVE STOCK OPTIONS. No Incentive
Stock Option shall be granted to any person who is not an Employee.
4.4. GRANTING OF OPTIONS TO EMPLOYEES AND CONSULTANTS.
(a) The Committee shall from time to time, in its
absolute discretion, and subject to applicable limitations of the Plan:
(i) Select from among the Employees or
Consultants (including Employees or Consultants who
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have previously received Awards under the Plan) such of them as in its opinion
should be granted Options;
(ii) Subject to the Award Limit, determine
the number of shares to be subject to such Options granted to the selected
Employees or Consultants;
(iii) Subject to Section 4.3, determine
whether such Options are to be Incentive Stock Options or Non-Qualified Stock
Options and whether such Options are to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of
such Options, consistent with the Plan; PROVIDED, HOWEVER, that the terms and
conditions of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not be limited
to, such terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code.
(b) Upon the selection of a Employee or Consultant to
be granted an Option, the Committee shall instruct the Secretary of the Company
to issue the Option and may impose such conditions on the grant of the Option as
it deems appropriate.
(c) Any Incentive Stock Option granted under the Plan
may be modified by the Committee, with the consent of the Holder, to disqualify
such Option from treatment as an "incentive stock option" under Section 422 of
the Code.
4.5. GRANTING OF OPTIONS TO INDEPENDENT DIRECTORS.
(a) During the term of the Plan, each person who
is an Independent Director as of the date of the Public Trading Date
automatically shall be granted (a) an Option to purchase ten thousand
(10,000) shares of Common Stock (subject to adjustment as provided in Section
11.3) on the date of such date and (b) an Option to purchase 5,000 shares of
Common Stock (subject to adjustment as provided in Section 11.3) on the date
of each annual meeting of stockholders after the Public Offering Date at
which the Independent Director is reelected to the Board. During the term of
the Plan, a person who is initially elected to the Board after the Public
Offering Date and who is an Independent Director at the time of such initial
election automatically shall be granted (x) an Option to purchase ten
thousand (10,000) shares of Common Stock (subject to adjustment as provided
in Section 11.3) on the date of such initial election and (y) an Option to
purchase 5,000 shares of Common Stock (subject to adjustment as provided in
Section 11.3) on the date of each annual meeting of stockholders after such
initial election at which the Independent Director is reelected to the Board.
Members of the Board who are employees of the Company who subsequently retire
from the Company and remain on the Board will not receive an initial Option
grant pursuant to clause (x) of the preceding sentence, but to the extent
that they are otherwise eligible, will receive, after retirement from
employment with the Company, Options as described in clause (y) of the
preceding sentence. All the foregoing Option grants authorized by this
Section 4.5 are subject to stockholder approval of the Plan.
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4.6. OPTIONS IN LIEU OF CASH COMPENSATION. Options may be
granted under the Plan to Employees and Consultants in lieu of cash bonuses
which would otherwise be payable to such Employees and Consultants and to
Independent Directors in lieu of directors' fees which would otherwise be
payable to such Independent Directors, pursuant to such policies which may be
adopted by the Administrator from time to time.
ARTICLE V.
TERMS OF OPTIONS
5.1. OPTION PRICE. The price per share of the shares subject
to each Option granted to Employees and Consultants shall be set by the
Committee; PROVIDED, HOWEVER, that such price shall be no less than the par
value of a share of Common Stock, unless otherwise permitted by applicable state
law, and:
(a) In the case of Options intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
such price shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted;
(b) In the case of Incentive Stock Options such
price shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted (or the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code);
(c) In the case of Incentive Stock Options granted to
an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code).
5.2. OPTION TERM. The term of an Option granted to an Employee
or consultant shall be set by the Committee in its discretion; PROVIDED,
HOWEVER, that, in the case of Incentive Stock Options, the term shall not be
more than ten (10) years from the date the Incentive Stock Option is granted, or
five (5) years from the date the Incentive Stock Option is granted if the
Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the Code). Except as
limited by requirements of Section 422 of the Code and regulations and rulings
thereunder applicable to Incentive Stock Options, the Committee may extend the
term of any outstanding Option in connection with any Termination
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of Employment or Termination of Consultancy of the Holder, or amend any other
term or condition of such Option relating to such a termination.
5.3. OPTION VESTING
(a) The period during which the right to exercise, in
whole or in part, an Option granted to an Employee or a Consultant vests in the
Holder shall be set by the Committee and the Committee may determine that an
Option may not be exercised in whole or in part for a specified period after it
is granted. At any time after grant of an Option, the Committee may, in its sole
and absolute discretion and subject to whatever terms and conditions it selects,
accelerate the period during which an Option granted to an Employee or
Consultant vests.
(b) No portion of an Option granted to an Employee or
Consultant which is unexercisable at Termination of Employment or Termination of
Consultancy, as applicable, shall thereafter become exercisable, except as may
be otherwise provided by the Committee either in the Award Agreement or by
action of the Committee following the grant of the Option.
(c) To the extent that the aggregate Fair Market
Value of stock with respect to which "incentive stock options" (within the
meaning of Section 422 of the Code, but without regard to Section 422(d) of the
Code) are exercisable for the first time by a Holder during any calendar year
(under the Plan and all other incentive stock option plans of the Company and
any parent or subsidiary corporation, within the meaning of Section 422 of the
Code) of the Company, exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options to the extent required by Section 422 of the Code.
The rule set forth in the preceding sentence shall be applied by taking Options
into account in the order in which they were granted. For purposes of this
Section 5.3(c), the Fair Market Value of stock shall be determined as of the
time the Option with respect to such stock is granted.
5.4. TERMS OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS.
(a) The price per share of the shares subject to each
Option granted to an Independent Director shall equal 100% of the Fair Market
Value of a share of Common Stock on the date the Option is granted.
(b) Subject to Section 5.4(d) Options granted to
an Independent Director pursuant to Section 4.5 shall become exercisable in
cumulative annual installments of 25% each on the first, second, third and
fourth anniversary of the date of the Option grant.
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become immediately exercisable in full upon the retirement of the Independent
Director in accordance with the Company's retirement policy applicable to
directors.
(c) Subject to Section 6.6, the term of each Option
granted to an Independent Director shall be ten (10) years from the date the
Option is granted.
(d) No portion of an Option which is unexercisable at
Termination of Directorship shall thereafter become exercisable.
5.5. SUBSTITUTE AWARDS.
Notwithstanding the foregoing provisions of this Article V to
the contrary, in the case of an Option that is a Substitute Award, the price per
share of the shares subject to such Option may be less than the Fair Market
Value per share on the date of grant; PROVIDED, that the excess of:
(a) The aggregate Fair Market Value (as of the date
such Substitute Award is granted) of the shares subject to the
Substitute Award; over
(b) The aggregate exercise price thereof;
does not exceed the excess of:
(c) The aggregate fair market value (as of the time
immediately preceding the transaction giving rise to the Substitute
Award, such fair market value to be determined by the Committee) of the
shares of the predecessor entity that were subject to the grant assumed
or substituted for by the Company; over
(d) The aggregate exercise price of such shares.
ARTICLE VI.
EXERCISE OF OPTIONS
6.1. PARTIAL EXERCISE. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Administrator may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
6.2. MANNER OF EXERCISE. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his or her office:
(a) A written notice complying with the applicable
rules established by the Administrator stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Holder or other person
then entitled to exercise the Option or such portion of the
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Option;
(b) Such representations and documents as the
Administrator, in its absolute discretion, deems necessary or advisable to
effect compliance with all applicable provisions of the Securities Act and any
other federal or state securities laws or regulations. The Administrator may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;
(c) In the event that the Option shall be exercised
pursuant to Section 11.1 by any person or persons other than the Holder,
appropriate proof of the right of such person or persons to exercise the Option;
and
(d) Full cash payment to the Secretary of the Company
for the shares with respect to which the Option, or portion thereof, is
exercised. However, the Administrator may, in its discretion, (i) allow a delay
in payment up to thirty (30) days from the date the Option, or portion thereof,
is exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock which have been owned by the Holder for at least six
months, duly endorsed for transfer to the Company with a Fair Market Value on
the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part, through the
surrender of shares of Common Stock then issuable upon exercise of the Option
having a Fair Market Value on the date of Option exercise equal to the aggregate
exercise price of the Option or exercised portion thereof; (iv) allow payment,
in whole or in part, through the delivery of property of any kind which
constitutes good and valuable consideration; (v) allow payment, in whole or in
part, through the delivery of a full recourse promissory note bearing interest
(at no less than such rate as shall then preclude the imputation of interest
under the Code) and payable upon such terms as may be prescribed by the
Administrator; (vi) allow payment, in whole or in part, through the delivery of
a notice that the Holder has placed a market sell order with a broker with
respect to shares of Common Stock then issuable upon exercise of the Option, and
that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise
price, PROVIDED that payment of such proceeds is then made to the Company upon
settlement of such sale; or (vii) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (ii), (iii), (iv), (v) and
(vi). In the case of a promissory note, the Administrator may also prescribe the
form of such note and the security to be given for such note. The Option may not
be exercised, however, by delivery of a promissory note or by a loan from the
Company when or where such loan or other extension of credit is prohibited by
law.
6.3. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all
stock exchanges on which such class of stock is then listed;
(b) The completion of any registration or other
qualification of such
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shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Administrator shall, in its absolute discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance
from any state or federal governmental agency which the Administrator shall, in
its absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time
following the exercise of the Option as the Administrator may establish from
time to time for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for
such shares, including payment of any applicable withholding tax, which in the
discretion of the Administrator may be in the form of consideration used by the
Holder to pay for such shares under Section 6.2(d).
6.4. RIGHTS AS STOCKHOLDERS. Holders shall not be, nor have
any of the rights or privileges of, stockholders of the Company in respect of
any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such Holders.
6.5. OWNERSHIP AND TRANSFER RESTRICTIONS. The Administrator,
in its absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Award Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder, or (b) one year after the transfer of such shares to such
Holder.
6.6. LIMITATIONS ON EXERCISE OF OPTIONS GRANTED TO INDEPENDENT
DIRECTORS. No Option granted to an Independent Director may be exercised to any
extent by anyone after the first to occur of the following events:
(a) The expiration of twelve (12) months from the
date of the Holder's death;
(b) The expiration of twelve (12) months from the
date of the Holder's Termination of Directorship by reason of his or her
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code);
(c) The expiration of three (3) months from the date
of the Holder's Termination of Directorship for any reason other than such
Holder's death or his or her permanent and total disability, unless the Holder
dies within said three-month period; or
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(d) The expiration of ten (10) years from the date
the Option was granted.
6.7. ADDITIONAL LIMITATIONS ON EXERCISE OF OPTIONS. Holders
may be required to comply with any timing or other restrictions with respect to
the settlement or exercise of an Option, including a window-period limitation,
as may be imposed in the discretion of the Administrator.
ARTICLE VII.
AWARD OF RESTRICTED STOCK
7.1. ELIGIBILITY. Subject to the Award Limit, Restricted
Stock may be awarded to any Employee who the Committee determines is an
Employee or any Consultant who the Committee determines should receive such
an Award.
7.2. AWARD OF RESTRICTED STOCK
(a) The Committee may from time to time, in its
absolute discretion:
(i) Select from among the Employees or
Consultants (including Employees or Consultants who have previously received
other awards under the Plan) such of them as in its opinion should be awarded
Restricted Stock; and
(ii) Determine the purchase price, if any,
and other terms and conditions applicable to such Restricted Stock, consistent
with the Plan.
(b) The Committee shall establish the purchase price,
if any, and form of payment for Restricted Stock; PROVIDED, HOWEVER, that such
purchase price shall be no less than the par value of the Common Stock to be
purchased, unless otherwise permitted by applicable state law. In all cases,
legal consideration shall be required for each issuance of Restricted Stock.
(c) Upon the selection of an Employee or
Consultant to be awarded Restricted Stock, the Committee shall instruct the
Secretary of the Company to issue such Restricted Stock and may impose such
conditions on the issuance of such Restricted Stock as it deems appropriate.
7.3. RIGHTS AS STOCKHOLDERS. Subject to Section 7.4, upon
delivery of the shares of Restricted Stock to the escrow holder pursuant to
Section 7.6, the Holder shall have, unless otherwise provided by the Committee,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his or her Award Agreement, including the right to receive all
dividends and other distributions paid or made with respect to the shares;
PROVIDED, HOWEVER, that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 7.4.
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7.4. RESTRICTION. All shares of Restricted Stock issued under
the Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual Award
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; PROVIDED, HOWEVER,
that, except with respect to shares of Restricted Stock granted to Section
162(m) Participants, by action taken after the Restricted Stock is issued, the
Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Award Agreement. Restricted Stock may not be sold or encumbered until all
restrictions are terminated or expire. If no consideration was paid by the
Holder upon issuance, a Holder's rights in unvested Restricted Stock shall
lapse, and such Restricted Stock shall be surrendered to the Company without
consideration, upon Termination of Employment or, if applicable, upon
Termination of Consultancy with the Company; PROVIDED, HOWEVER, that the
Committee in its sole and absolute discretion may provide that such rights shall
not lapse in the event of a Termination of Employment following a "change of
ownership or control" (within the meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Holder's death or disability; PROVIDED, FURTHER, except with respect to
shares of Restricted Stock granted to Section 162(m) Participants, the Committee
in its sole and absolute discretion may provide that no such lapse or surrender
shall occur in the event of a Termination of Employment, or a Termination of
Consultancy, without cause or following any change in control of the Company
or because of the Holder's retirement, or otherwise.
7.5. REPURCHASE OF RESTRICTED STOCK. The Committee shall
provide in the terms of each individual Award Agreement that the Company shall
have the right to repurchase from the Holder the Restricted Stock then subject
to restrictions under the Award Agreement immediately upon a Termination of
Employment or, if applicable, upon a Termination of Consultancy between the
Holder and the Company, at a cash price per share equal to the price paid by the
Holder for such Restricted Stock; PROVIDED, HOWEVER, that the Committee in its
sole and absolute discretion may provide that no such right of repurchase shall
exist in the event of a Termination of Employment following a "change of
ownership or control" (within the meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Holder's death or disability; PROVIDED, FURTHER, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole and absolute discretion may provide that no such right
of repurchase shall exist in the event of a Termination of Employment or a
Termination of Consultancy without cause or following any change in control of
the Company or because of the Holder's retirement, or otherwise.
7.6. ESCROW. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Award Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
7.7. LEGEND. In order to enforce the restrictions imposed upon
shares of
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Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.
7.8. SECTION 83(B) ELECTION. If a Holder makes an election
under Section 83(b) of the Code, or any successor section thereto, to be taxed
with respect to the Restricted Stock as of the date of transfer of the
Restricted Stock rather than as of the date or dates upon which the Holder would
otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a
copy of such election to the Company immediately after filing such election with
the Internal Revenue Service.
ARTICLE VIII.
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
8.1. ELIGIBILITY. Subject to the Award Limit, one or more
Performance Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock
Payments may be granted to any Employee whom the Committee determines is an
Employee or any Consultant whom the Committee determines should receive such an
Award.
8.2. PERFORMANCE AWARDS. Any Employee or Consultant
selected by the Committee may be granted one or more Performance Awards. The
value of such Performance Awards may be linked to any one or more of the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular Employee or
Consultant.
8.3. DIVIDEND EQUIVALENTS.
(a) Any Employee or Consultant selected by the
Committee may be granted Dividend Equivalents based on the dividends declared on
Common Stock, to be credited as of dividend payment dates, during the period
between the date a Stock Appreciation Right, Deferred Stock or Performance Award
is granted, and the date such Stock Appreciation Right, Deferred Stock or
Performance Award is exercised, vests or expires, as determined by the
Committee. Such Dividend Equivalents shall be converted to cash or additional
shares of Common Stock by such formula and at such time and subject to such
limitations as may be determined by the Committee.
(b) Any Holder of an Option who is an Employee or
Consultant selected by the Committee may be granted Dividend Equivalents based
on the dividends declared on Common Stock, to be credited as of dividend payment
dates, during the period between the date an Option is granted, and the date
such Option is exercised, vests or expires, as determined by the Committee. Such
Dividend Equivalents shall be converted to cash or additional shares of
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Common Stock by such formula and at such time and subject to such limitations as
may be determined by the Committee.
(c) Any Holder of an Option who is an Independent
Director selected by the Board may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment dates,
during the period between the date an Option is granted and the date such Option
is exercised, vests or expires, as determined by the Board. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock by
such formula and at such time and subject to such limitations as may be
determined by the Board.
(d) Dividend Equivalents granted with respect to
Options intended to be qualified performance-based compensation for purposes of
Section 162(m) of the Code shall be payable, with respect to pre-exercise
periods, regardless of whether such Option is subsequently exercised.
8.4. STOCK PAYMENTS. Any Employee or Consultant selected
by the Committee may receive Stock Payments in the manner determined from time
to time by the Committee. The number of shares shall be determined by the
Committee and may be based upon the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.
8.5. DEFERRED STOCK. Any Employee or Consultant selected
by the Committee may be granted an award of Deferred Stock in the manner
determined from time to time by the Committee. The number of shares of Deferred
Stock shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by
the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. Common Stock underlying a Deferred Stock
award will not be issued until the Deferred Stock award has vested, pursuant to
a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Holder of Deferred Stock shall have no
rights as a Company stockholder with respect to such Deferred Stock until such
time as the Award has vested and the Common Stock underlying the Award has been
issued.
8.6. TERM. The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.
8.7. EXERCISE OR PURCHASE PRICE. The Committee may establish
the exercise or purchase price of a Performance Award, shares of Deferred Stock
or shares received as a Stock Payment; PROVIDED, HOWEVER, that such price shall
not be less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law.
8.8. EXERCISE UPON TERMINATION OF EMPLOYMENT, TERMINATION OF
CONSULTANCY OR TERMINATION OF DIRECTORSHIP. A Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment is exercisable or
payable only while the Holder is an Employee, Consultant or Independent
Director, as applicable; PROVIDED, HOWEVER, that the Administrator in
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its sole and absolute discretion may provide that the Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment may be
exercised or paid subsequent to a Termination of Employment following a
"change of control or ownership" (within the meaning of Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company;
PROVIDED, FURTHER, that except with respect to Performance Awards granted to
Section 162(m) Participants, the Administrator in its sole and absolute
discretion may provide that Performance Awards may be exercised or paid
following a Termination of Employment or a Termination of Consultancy without
cause, or following a change in control of the Company, or because of the
Holder's retirement, death or disability, or otherwise.
8.9. FORM OF PAYMENT. Payment of the amount determined under
Section 8.2 or 8.3 above shall be in cash, in Common Stock or a combination of
both, as determined by the Committee. To the extent any payment under this
Article VIII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 6.3.
ARTICLE IX.
STOCK APPRECIATION RIGHTS
9.1. GRANT OF STOCK APPRECIATION RIGHTS. A Stock
Appreciation Right may be granted to any Employee or Consultant selected by
the Committee. A Stock Appreciation Right may be granted (a) in connection
and simultaneously with the grant of an Option, (b) with respect to a
previously granted Option, or (c) independent of an Option. A Stock
Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and shall be
evidenced by an Award Agreement.
9.2. COUPLED STOCK APPRECIATION RIGHTS.
(a) A Coupled Stock Appreciation Right ("CSAR") shall
be related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.
(b) A CSAR may be granted to the Holder ffor no more
than the number of shares subject to the simultaneously or previously granted
Option to which it is coupled.
(c) A CSAR shall entitle the Holder (or other person
entitled to exercise the Option pursuant to the Plan) to surrender to the
Company unexercised a portion of the Option to which the CSAR relates (to the
extent then exercisable pursuant to its terms) and to receive from the Company
in exchange therefor an amount determined by multiplying the difference obtained
by subtracting the Option exercise price from the Fair Market Value of a share
of Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.
9.3. INDEPENDENT STOCK APPRECIATION RIGHTS.
(a) An Independent Stock Appreciation Right ("ISAR")
shall be
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unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine. The exercise price per share of Common Stock subject to each ISAR
shall be set by the Committee. An ISAR is exercisable only while the Holder
is an Employee or Consultant; PROVIDED, that the Committee may determine that
the ISAR may be exercised subsequent to Termination of Employment or
Termination of Consultancy without cause, or following a change in control of
the Company, or because of the Holder's retirement, death or disability, or
otherwise.
(b) An ISAR shall entitle the Holder (or other person
entitled to exercise the ISAR pursuant to the Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Common Stock on the date of exercise of the
ISAR by the number of shares of Common Stock with respect to which the ISAR
shall have been exercised, subject to any limitations the Committee may impose.
9.4. PAYMENT AND LIMITATIONS ON EXERCISE.
(a) Payment of the amounts determined under Section
9.2(c) and 9.3(b) above shall be in cash, in Common Stock (based on its Fair
Market Value as of the date the Stock Appreciation Right is exercised) or a
combination of both, as determined by the Committee. To the extent such payment
is effected in Common Stock it shall be made subject to satisfaction of all
provisions of Section 6.3 above pertaining to Options.
(b) Holders of Stock Appreciation Rights may be
required to comply with any timing or other restrictions with respect to the
settlement or exercise of a Stock Appreciation Right, including a window-period
limitation, as may be imposed in the discretion of the Committee.
ARTICLE X.
ADMINISTRATION
10.1. COMPENSATION COMMITTEE. Prior to the Company's
initial registration of Common Stock under Section 12 of the Exchange Act,
the Compensation Committee shall consist of the entire Board or any committee
thereof appointed by the Board. Following such registration, the Compensation
Committee (or another committee or a subcommittee of the Board assuming the
functions of the Committee under the Plan) shall consist solely of two or
more Independent Directors appointed by and holding office at the pleasure of
the Board, each of whom is both a "non-employee director" as defined by Rule
16b-3 and an "outside director" for purposes of Section 162(m) of the Code.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
10.2. DUTIES AND POWERS OF COMMITTEE. It shall be the duty of
the Committee to
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conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith, to interpret, amend or
revoke any such rules and to amend any Award Agreement provided that the rights
or obligations of the Holder of the Award that is the subject of any such Award
Agreement are not affected adversely. Any such grant or award under the Plan
need not be the same with respect to each Holder. Any such interpretations and
rules with respect to Incentive Stock Options shall be consistent with the
provisions of Section 422 of the Code. In its absolute discretion, the Board may
at any time and from time to time exercise any and all rights and duties of the
Committee under the Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code, or any regulations or rules issued thereunder,
are required to be determined in the sole discretion of the Committee.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Options and Dividend Equivalents granted to Independent Directors.
10.3. MAJORITY RULE; UNANIMOUS WRITTEN CONSENT. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by all
members of the Committee.
10.4. COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH
ACTIONS. Members of the Committee shall receive such compensation, if any, for
their services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Holders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all members of the Committee and the Board
shall be fully protected by the Company in respect of any such action,
determination or interpretation.
10.5. DELEGATION OF AUTHORITY TO GRANT AWARDS. The Committee
may, but need not, delegate from time to time some or all of its authority to
grant Awards under the Plan to a committee consisting of one or more members of
the Committee or of one or more officers of the Company; provided, however, that
the Committee may not delegate its authority to grant Awards to individuals (a)
who are subject on the date of the grant to the reporting rules under Section
16(a) of the Exchange Act, (b) who are Section 162(m) Participants or (c) who
are officers of the Company who are delegated authority by the Committee
hereunder. Any delegation hereunder shall be subject to the restrictions and
limits that the Committee specifies at the time of such delegation of authority
and may be rescinded at any time by the Committee. At all times, any committee
appointed under this Section 10.5 shall serve in such capacity at the pleasure
of the Committee.
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ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1. TRANSFERABILTY.
(a) Except as otherwise provided in Section 11.1(b):
(i) No Award under the Plan may be sold,
pledged, assigned or transferred in any manner other than by will or the laws of
descent and distribution or, subject to the consent of the Administrator,
pursuant to a QDRO, unless and until such Award has been exercised, or the
shares underlying such Award have been issued, and all restrictions applicable
to such shares have lapsed;
(ii) No Option, Restricted Stock award,
Deferred Stock award, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment or interest or right therein shall be liable for the
debts, contracts or engagements of the Holder or his or her successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect, except to the extent that such disposition is permitted
by the preceding sentence; and
(iii) During the lifetime of the Holder,
only he or she may exercise an Option or other Award (or any portion thereof)
granted to him or her under the Plan, unless it has been disposed of pursuant to
QDRO; after the death of the Holder, any exercisable portion of an Option or
other Award may, prior to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by his or her personal
representative or by any person empowered to do so under the deceased Holder's
will or under the then applicable laws of descent and distribution.
(b) Notwithstanding Section 11.1(a), the
Administrator, in its sole discretion, may determine to permit a Holder to
transfer a Non-Qualified Stock Option to any one or more Permitted Transferees
(as defined below), subject to the following terms and conditions: (i) a
Non-Qualified Stock Option transferred to a Permitted Transferee shall not be
assignable or transferable by the Permitted Transferee other than by will or the
laws of descent and distribution; (ii) any Non-Qualified Stock Option which is
transferred to a Permitted Transferee shall continue to be subject to all the
terms and conditions of the Non-Qualified Stock Option as applicable to the
original Holder (other than the ability to further transfer the Non-Qualified
Stock Option); and (iii) the Holder and the Permitted Transferee shall execute
any and all documents requested by the Administrator, including without
limitation, documents to (A) confirm the status of the transferee as a Permitted
Transferee, (B) satisfy any requirements for an exemption for the transfer under
applicable federal and state securities laws, and (C) evidence the transfer. For
purposes of this Section 11.1(b), "Permitted Transferee" shall mean, with
respect to a Holder, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law,
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brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Holder's household (other than a tenant or employee), a trust in
which these persons have more than fifty percent of the beneficial interest, a
foundation in which these persons have more than fifty percent of the beneficial
interest, a foundation in which these persons (or the Holder) control the
management of assets, and any other entity in which these person (or the Holder)
own more than fifty percent of the voting interests or any other transferee
specifically approved by the Committee after taking into account any state or
federal tax or securities laws applicable to transferable Non-Qualified Stock
Options.
11.2. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. Except
as otherwise provided in this Section 11.2, the Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator. However, without approval of the Company's
stockholders given within twelve (12) months before or after the action by the
Administrator, no action of the Administrator may, except as provided in Section
11.3, increase the limits imposed in Section 2.1 on the maximum number of shares
which may be issued under the Plan. No amendment, suspension or termination of
the Plan shall, without the consent of the Holder, alter or impair any rights or
obligations under any Award theretofore granted or awarded, unless the Award
itself otherwise expressly so provides. No Awards may be granted or awarded
during any period of suspension or after termination of the Plan, and in no
event may any Incentive Stock Option be granted under the Plan after the first
to occur of the following events:
(a) The expiration of ten (10) years from the date
the Plan is adopted by the Board; or
(b) The expiration of ten (10) years from the date
the Plan is approved by the Company's stockholders under Section 11.4.
11.3. CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY,
ACQUISITION OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.
(a) Subject to Section 11.3(d), in the event that the
Administrator determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to an Award, then the Administrator shall, in
such manner as it may deem equitable, adjust any or all of:
(i) the number and kind of shares of Common Stock (or
other
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securities or property) with respect to which Awards may be granted or awarded
(including, but not limited to, adjustments of the limitations in Section 2.1 on
the maximum number and kind of shares which may be issued and adjustments of the
Award Limit);
(ii) the number and kind of shares of Common Stock
(or other securities or property) subject to outstanding Awards; and
(iii) the grant or exercise price with respect to any
Award.
(b) Subject to Section 11.3(d), in the event of any
transaction or event described in Section 11.3(a) or any unusual or nonrecurring
transactions or events affecting the Company, any affiliate of the Company, or
the financial statements of the Company or any affiliate, or of changes in
applicable laws, regulations or accounting principles, the Administrator, in its
sole and absolute discretion, and on such terms and conditions as it deems
appropriate, either by the terms of the Award or by action taken prior to the
occurrence of such transaction or event and either automatically or upon the
Holder's request, is hereby authorized to take any one or more of the following
actions whenever the Administrator determines that such action is appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to any Award under
the Plan, to facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles:
(i) To provide for either the purchase of any such
Award for an amount of cash equal to the amount that could have been attained
upon the exercise of such Award or realization of the Holder's rights had such
Award been currently exercisable or payable or fully vested or the replacement
of such Award with other rights or property selected by the Administrator in its
sole discretion;
(ii) To provide that the Award cannot vest, be
exercised or become payable after such event;
(iii) To provide that such Award shall be exercisable
as to all shares covered thereby, notwithstanding anything to the contrary in
Section 5.3 or 5.4 or the provisions of such Award;
(iv) To provide that such Award be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof, or shall
be substituted for by similar options, rights or awards covering the stock of
the successor or survivor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; and
(v) To make adjustments in the number and type of
shares of Common Stock (or other securities or property) subject to outstanding
Awards, and in the number and kind of outstanding Restricted Stock or Deferred
Stock and/or in the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding options, rights and awards and
options, rights and awards which may be granted in the future.
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(vi) To provide that, for a specified period of time
prior to such event, the restrictions imposed under an Award Agreement upon some
or all shares of Restricted Stock or Deferred Stock may be terminated, and, in
the case of Restricted Stock, some or all shares of such Restricted Stock may
cease to be subject to repurchase under Section 7.5 or forfeiture under Section
7.4 after such event.
(c) Subject to Sections 11.3(d), 3.2 and 3.3, the
Administrator may, in its discretion, include such further provisions and
limitations in any Award, agreement or certificate, as it may deem equitable and
in the best interests of the Company.
(d) With respect to Awards which are granted to
Section 162(m) Participants and are intended to qualify as performance-based
compensation under Section 162(m)(4)(C), no adjustment or action described in
this Section 11.3 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause such Award to fail to so
qualify under Section 162(m)(4)(C), or any successor provisions thereto. No
adjustment or action described in this Section 11.3 or in any other provision of
the Plan shall be authorized to the extent that such adjustment or action would
cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such
adjustment or action shall be authorized to the extent such adjustment or action
would result in short-swing profits liability under Section 16 or violate the
exemptive conditions of Rule 16b-3 unless the Administrator determines that the
Award is not to comply with such exemptive conditions. The number of shares of
Common Stock subject to any Award shall always be rounded to the next whole
number.
(e) Notwithstanding the foregoing, in the event that
the Company becomes a party to a transaction that is intended to qualify for
"pooling of interests" accounting treatment, and would so qualify but for one or
more of the provisions of this Plan or any Award Agreement, then this Plan and
any Award Agreement shall be interpreted so as to preserve such accounting
treatment, and to the extent that any provision of the Plan or any Award
Agreement would disqualify the transaction from pooling of interests accounting
treatment (including, if applicable, an entire Award Agreement), then such
provision shall be null and void. All determinations to be made in connection
with the preceding sentence shall be made by the independent accounting firm
whose opinion with respect to "pooling of interests" treatment is required as a
condition to the Company's consummation of such transaction.
(f) The existence of the Plan, the Award Agreement
and the Awards granted hereunder shall not affect or restrict in any way the
right or power of the Company or the shareholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or consolidation of
the Company, any issue of stock or of options, warrants or rights to purchase
stock or of bonds, debentures, preferred or prior preference stocks whose rights
are superior to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
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11.4. APPROVAL OF PLAN BY STOCKHOLDERS. The Plan will be
submitted for the approval of the Company's stockholders within twelve (12)
months after the date of the Board's initial adoption of the Plan. Awards may be
granted or awarded prior to such stockholder approval, provided that such Awards
shall not be exercisable nor shall such Awards vest prior to the time when the
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Awards
previously granted or awarded under the Plan shall thereupon be canceled and
become null and void. In addition, if the Board determines that Awards other
than Options or Stock Appreciation Rights which may be granted to Section 162(m)
Participants should continue to be eligible to qualify as performance-based
compensation under Section 162(m)(4)(C) of the Code, the Performance Criteria
must be disclosed to and approved by the Company's stockholders no later than
the first stockholder meeting that occurs in the fifth year following the year
in which the Company's stockholders previously approved the Performance
Criteria.
11.5. TAX WITHHOLDING. The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Holder of any sums required by federal, state or local tax law to be withheld
with respect to the issuance, vesting, exercise or payment of any Award. The
Administrator may in its discretion and in satisfaction of the foregoing
requirement allow such Holder to elect to have the Company withhold shares of
Common Stock otherwise issuable under such Award (or allow the return of shares
of Common Stock) having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the number of shares
of Common Stock which may be withheld with respect to the issuance, vesting,
exercise or payment of any Award (or which may be repurchased from the Holder of
such Award within six months after such shares of Common Stock were acquired by
the Holder from the Company) in order to satisfy the Holder's federal and state
income and payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Award shall be limited to the number of shares which
have a Fair Market Value on the date of withholding or repurchase equal to the
aggregate amount of such liabilities based on the minimum statutory withholding
rates for federal and state tax income and payroll tax purposes that are
applicable to such supplemental taxable income.
11.6. LOANS. The Committee may, in its discretion, extend one
or more loans to key Employees in connection with the exercise or receipt of an
Award granted or awarded under the Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under the Plan. The terms and conditions of any such loan
shall be set by the Committee.
11.7. FORFEITURE PROVISIONS. Pursuant to its general authority
to determine the terms and conditions applicable to Awards under the Plan, the
Administrator shall have the right to provide, in the terms of Awards made under
the Plan, or to require a Holder to agree by separate written instrument, that
(a)(i) any proceeds, gains or other economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the
receipt or resale of any Common Stock underlying the Award, must be paid to the
Company, and (ii) the Award shall terminate and any unexercised portion of the
Award (whether or not vested) shall be forfeited, if (b)(i) a Termination of
Employment, Termination of Consultancy or Termination of Directorship occurs
prior to a specified date, or within a specified time period
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following receipt or exercise of the Award, or (ii) the Holder at any time, or
during a specified time period, engages in any activity in competition with the
Company, or which is inimical, contrary or harmful to the interests of the
Company, as further defined by the Administrator or (iii) the Holder incurs a
Termination of Employment, Termination of Consultancy or Termination of
Directorship for cause.
11.8. EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The
adoption of the Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in the Plan shall be
construed to limit the right of the Company (a) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary, or (b) to grant or assume options or other rights or
awards otherwise than under the Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.
11.9. COMPLIANCE WITH LAWS. The Plan, the granting and vesting
of Awards under the Plan and the issuance and delivery of shares of Common Stock
and the payment of money under the Plan or under Awards granted or awarded
hereunder are subject to compliance with all applicable federal and state laws,
rules and regulations (including but not limited to state and federal securities
law and federal margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for the
Company, be necessary or advisable in connection therewith. Any securities
delivered under the Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal requirements. To the
extent permitted by applicable law, the Plan and Awards granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
11.10. TITLES. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.
11.11. GOVERNING LAW. The Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of Delaware without regard to conflicts of laws thereof.
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* * * * *
I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of Birch Telecom, Inc. on March 30, 2000.
* * * * *
I hereby certify that the foregoing Plan was approved by the
stockholders of Birch Telecom, Inc. on March 30, 2000.
Executed on this 30th day of March 2000.
-----------------------------------
Secretary
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