1999 Stock Option Plan - Chesapeake Energy Corp.
CHESAPEAKE ENERGY CORPORATION
1999 STOCK OPTION PLAN
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CHESAPEAKE ENERGY CORPORATION
1999 STOCK OPTION PLAN
Table of Contents
Page
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ARTICLE I PURPOSE....................................................................................1
SECTION 1.1 Purpose ......................................................................1
SECTION 1.2 Establishment ................................................................1
SECTION 1.3 Shares Subject to the Plan....................................................1
SECTION 1.4 Shareholder Approval..........................................................1
ARTICLE II DEFINITIONS................................................................................1
ARTICLE III ADMINISTRATION.............................................................................2
SECTION 3.1 Administration of the Plan; the Committee.....................................2
SECTION 3.2 Committee to Make Rules and Interpret Plan....................................3
ARTICLE IV GRANT OF OPTIONS...........................................................................3
ARTICLE V ELIGIBILITY................................................................................4
ARTICLE VI STOCK OPTIONS..............................................................................4
SECTION 6.1 Grant of Options .............................................................4
SECTION 6.2 Conditions of Options.........................................................4
SECTION 6.3 Options Not Qualifying as Incentive Stock Options.............................5
ARTICLE VII STOCK ADJUSTMENTS..........................................................................6
ARTICLE VIII GENERAL....................................................................................6
SECTION 8.1 Amendment or Termination of Plan..............................................7
SECTION 8.2 Acceleration of Otherwise Unexercisable Stock Options
on Death, Disability or Other Special Circumstances.........................7
SECTION 8.3 Nonassignability .............................................................7
SECTION 8.4 Withholding Taxes ............................................................7
SECTION 8.5 Amendments to Options.........................................................7
SECTION 8.6 Regulatory Approval and Listings..............................................7
SECTION 8.7 Right to Continued Employment.................................................7
SECTION 8.8 Reliance on Reports...........................................................8
SECTION 8.9 Construction..................................................................8
SECTION 8.10 Governing Law ................................................................8
ARTICLE IX ACCELERATION OF OPTIONS UPON CORPORATE EVENT...............................................8
SECTION 9.1 Procedures for Acceleration and Exercise......................................8
SECTION 9.2 Certain Additional Payments by the Company....................................8
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ARTICLE I
PURPOSE
SECTION 1.1 Purpose. This Stock Option Plan is established by
Chesapeake Energy Corporation (the "Company") to create incentives which are
designed to motivate Eligible Employees to put forth maximum effort toward the
success and growth of the Company and to enable the Company to attract and
retain experienced individuals who by their position, ability and diligence are
able to make important contributions to the Company's success. Toward these
objectives, the Plan provides for the granting of Options to Eligible Employees
on the terms and subject to the conditions set forth in the Plan.
SECTION 1.2 Establishment. The Plan is effective as of March 5, 1999
and for a period of 10 years from such date. The Plan will terminate on March 4,
2009; however, it will continue in effect until all matters relating to the
exercise of Options and administration of the Plan have been settled.
SECTION 1.3 Shares Subject to the Plan. Subject to Articles IV, VII and
IX of this Plan, shares of stock covered by Options shall consist of Three
Million (3,000,000) shares of Common Stock.
SECTION 1.4 Shareholder Approval. Nonqualified Stock Options under the
Plan may be granted to Participants prior to Shareholder Approval of the Plan,
but no Incentive Stock Options may be granted prior to Shareholder Approval. In
the event Shareholder Approval is not obtained within the twelve-month period
following the date the Plan is adopted by the Board, no Incentive Stock Options
may be granted under the Plan.
ARTICLE II
DEFINITIONS
SECTION 2.1 "Board" means the Board of Directors of the Company.
SECTION 2.2 "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any Section of the Code shall be deemed to include any
amendments or successor provisions to such Section and any regulations under
such Section.
SECTION 2.3 "Committee" has the meaning set forth in Section 3.1.
SECTION 2.4 "Common Stock" means the common stock, par value $.01 per
share, of the Company and, after substitution, such other stock as shall be
substituted therefor as provided in Article VII or Article IX of the Plan.
SECTION 2.5 "Date of Grant" means the date on which the granting of an
Option is authorized by the Committee or such later date as may be specified by
the Committee in such authorization.
SECTION 2.6 "Disability" has the meaning set forth in Section 22(e)(3)
of the Code.
SECTION 2.7 "Eligible Employee" means any employee of the Company, a
Subsidiary or a partnership or limited liability company which the Company
controls.
SECTION 2.8 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
SECTION 2.9 "Executive Officer Participants" means Participants who are
subject to the provisions of Section 16 of the Exchange Act.
SECTION 2.10 "Fair Market Value" means (A) during such time as the
Common Stock is listed on the New York Stock Exchange or other national
securities exchanges or the Nasdaq National Market (each, an "exchange"), the
closing price of the Common Stock on the New York Stock Exchange or, if no sale
of the Common
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Stock shall have been made on the New York Stock Exchange, such other principal
exchange on the day for which such value is to be determined, or if no sale of
the Common Stock shall have been made on any such exchange that day, on the next
preceding day on which there was a sale of such Common Stock or (B) during any
such time as the Common Stock is not listed upon an exchange, the mean between
dealer "bid" and "ask" prices of the Common Stock in the over-the-counter market
on the day for which such value is to be determined, as reported by the National
Association of Securities Dealers, Inc.
SECTION 2.11 "Incentive Stock Option" means an Option within the
meaning of Section 422 of the Code.
SECTION 2.12 "Non-Executive Officer Participants" means Participants
who are not subject to the provisions of Section 16 of the Exchange Act.
SECTION 2.13 "Nonqualified Stock Option" means an Option which is not
an Incentive Stock Option.
SECTION 2.14 "Option" means an Option granted under Article VI of the
Plan and includes both Nonqualified Stock Options and Incentive Stock Options to
purchase shares of Common Stock.
SECTION 2.15 "Option Agreement" means any written instrument that
establishes the terms, conditions, restrictions, and/or limitations applicable
to an Option in addition to those established by this Plan and by the
Committee's exercise of its administrative powers.
SECTION 2.16 "Participant" means an Eligible Employee to whom an Option
has been granted by the Committee under the Plan.
SECTION 2.17 "Plan" means the Chesapeake Energy Corporation 1999 Stock
Option Plan.
SECTION 2.18 "Regular Stock Option Committee" means a committee
designated by the Board which shall consist of not less than two members of the
Board.
SECTION 2.19 "Shareholder Approval" means approval by the holders of a
majority of the outstanding shares of Common Stock, present, or represented, and
entitled to vote at a meeting called for such purposes.
SECTION 2.20 "Special Stock Option Committee" means a committee
designated by the Board which shall consist of not less than two members of the
Board who meet the definition of "non-employee directors" pursuant to Rule
16b-3, or any successor rule, promulgated under Section 16 of the Exchange Act.
SECTION 2.21 "Subsidiary" shall have the same meaning set forth in
Section 424 of the Code.
ARTICLE III
ADMINISTRATION
SECTION 3.1 Administration of the Plan; the Committee. For purposes of
administration, the Plan shall be deemed to consist of two separate stock option
plans, a "Non-Executive Officer Participant Plan" which is limited to
Non-Executive Officer Participants, and an "Executive Officer Participant Plan"
which is limited to Executive Officer Participants. Except for administration
and the category of Participants eligible to receive Options, the terms of the
Non-Executive Officer Participant Plan and the Executive Officer Participant
Plan are identical.
The Non-Executive Officer Participant Plan shall be administered by the
Regular Stock Option Committee, and the Executive Officer Participant Plan shall
be administered by either the Special Stock Option Committee or the Board.
Accordingly, with respect to decisions relating to Non-Executive Officer
Participants, including the grant of
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Options, the term "Committee" shall mean only the Regular Stock Option
Committee; and, with respect to all decisions relating to Executive Officer
Participants, including the grant of Options, the term "Committee" shall mean
either the Special Stock Option Committee or the Board.
Unless otherwise provided in the by-laws of the Company or resolutions
adopted from time to time by the Board establishing the Committee, the Board may
from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, however caused, shall be filled by the Board. The
Committee shall hold meetings at such times and places as it may determine. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present or acts
reduced to or approved by the Committee in writing by a majority of the members
of the Committee shall be the valid acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have
exclusive power to:
(a) Select the Eligible Employees to participate in the Plan.
(b) Determine the time or times when Options will be granted.
(c) Determine the form of an Option, whether an Incentive
Stock Option or a Nonqualified Stock Option, the number of shares of Common
Stock subject to the Option, all the terms, conditions (including performance
requirements), restrictions and/or limitations, if any, of an Option, including
the time and conditions of exercise or vesting, and the terms of any Option
Agreement, which may include the waiver or amendment of prior terms and
conditions or acceleration of the vesting or exercise of an Option under certain
circumstances determined by the Committee.
(d) Determine whether Options will be granted singly or in
combination.
(e) Take any and all other action it deems necessary or
advisable for the proper operation or administration of the Plan.
SECTION 3.2 Committee to Make Rules and Interpret Plan. The Committee
in its sole discretion shall have the authority, subject to the provisions of
the Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's interpretation of
the Plan or any Options granted pursuant hereto and all decisions and
determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties.
ARTICLE IV
GRANT OF OPTIONS
The Committee may, from time to time, grant Options to one or more
Participants, provided, however, that:
(a) Subject to Article VII, the aggregate number of shares of
Common Stock made subject to the grant of Options to any Participant in
any fiscal year of the Company may not exceed 500,000.
(b) Any shares of Common Stock related to Options which
terminate by expiration, forfeiture, cancellation or otherwise without
the issuance of shares of Common Stock shall be available again for
grant under the Plan.
(c) Common Stock delivered by the Company upon exercise of an
Option under the Plan may be authorized and unissued Common Stock or
Common Stock held in the treasury of the Company or may be purchased on
the open market or by private purchase.
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(d) The Committee shall, in its sole discretion, determine the
manner in which fractional shares arising under this Plan shall be
treated.
(e) Upon the exercise of any Option, the Company shall issue
and deliver to the Participant who exercised the Option a certificate
representing the number of shares of Common Stock purchased thereby.
ARTICLE V
ELIGIBILITY
Subject to the provisions of the Plan, the Committee shall, from time
to time, select from the Eligible Employees those to whom Options shall be
granted and shall determine the type or types of Options to be granted and shall
establish in the related Option Agreements the terms, conditions, restrictions
and/or limitations, if any, applicable to the Options in addition to those set
forth in the Plan and the administrative rules and regulations issued by the
Committee.
ARTICLE VI
STOCK OPTIONS
SECTION 6.1 Grant of Options. The Committee may, from time to time,
subject to the provisions of the Plan and such other terms and conditions as it
may determine, grant Options to Eligible Employees. These Options may be
Incentive Stock Options or Nonqualified Stock Options, or a combination of both.
Each grant of an Option shall be evidenced by an Option Agreement executed by
the Company and the Participant, and shall contain such terms and conditions and
be in such form as the Committee may from time to time approve, subject to the
requirements of Section 6.2.
SECTION 6.2 Conditions of Options. Each Option so granted shall be
subject to the following conditions:
(a) Exercise Price. As limited by Section 6.2(e) below, each
Option shall state the exercise price which shall be set by the
Committee on the Date of Grant. Except as provided below, no Option
shall be granted at an exercise price which is less than the Fair
Market Value of the Common Stock on the Date of Grant. Notwithstanding
the foregoing, Nonqualified Stock Options, not exceeding ten percent
(10%) of the Options which can be issued under this Plan, may be
granted at an exercise price which is not less than eighty-five percent
(85%) of the Fair Market Value of the Common Stock on the Date of
Grant.
(b) Form of Payment. The exercise price of an Option may be
paid (i) in cash or by check, bank draft or money order payable to the
order of the Company; (ii) by delivering shares of Common Stock having
a Fair Market Value on the date of payment equal to the amount of the
exercise price, provided that the Participant certifies that such
shares of Common Stock have been issued to the Participant for a period
of at least six months; or (iii) a combination of the foregoing. In
addition to the foregoing, any Option granted under the Plan may be
exercised by a broker-dealer acting on behalf of a Participant if (A)
the broker-dealer has received from the Participant or the Company a
notice evidencing the exercise of such Option and instructions signed
by the Participant requesting the Company to deliver the shares of
Common Stock subject to such Option to the broker-dealer on behalf of
the Participant and specifying the account into which such shares
should be deposited, (B) adequate provision has been made with respect
to the payment of any withholding taxes due upon such exercise or, in
the case of an Incentive Stock Option, upon the premature disposition
of such shares and (C) the broker-dealer and the Participant have
otherwise complied with Section
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220.3(e)(4) of Regulation T, 12 CFR, Part 220 and any successor rules
and regulations applicable to such exercise.
(c) Exercise of Options. Options granted under the Plan shall
be exercisable, in whole or in such installments and at such times, and
shall expire at such time, as shall be provided by the Committee in the
Option Agreement. Exercise of an Option shall be by written notice
stating the election to exercise in the form and manner determined by
the Committee. Every share of Common Stock acquired through the
exercise of an Option shall be deemed to be fully paid at the time of
exercise and payment of the exercise price.
(d) Other Terms and Conditions. Among other conditions that
may be imposed by the Committee, if deemed appropriate, are those
relating to (i) the period or periods and the conditions of
exercisability of any Option; (ii) the minimum periods during which
Participants must be employed by the Company or its Subsidiaries, or
must hold Options before they may be exercised; (iii) the minimum
periods during which shares acquired upon exercise must be held before
sale or transfer shall be permitted; (iv) conditions under which such
Options or shares may be subject to forfeiture; (v) the frequency of
exercise or the minimum or maximum number of shares that may be
acquired at any one time and (vi) the achievement by the Company of
specified performance criteria.
(e) Special Restrictions Relating to Incentive Stock Options.
In addition to being subject to all applicable terms, conditions,
restrictions and/or limitations established by the Committee, Options
issued in the form of Incentive Stock Options shall comply with the
requirements of Section 422 of the Code (or any successor Section
thereto), including, without limitation, the requirement that the
exercise price of an Incentive Stock Option not be less than 100% of
the Fair Market Value of the Common Stock on the Date of Grant, the
requirement that each Incentive Stock Option, unless sooner exercised,
terminated or cancelled, expire no later than 10 years from its Date of
Grant, the requirement that Incentive Stock Options be granted only to
Eligible Employees, and the requirement that the aggregate Fair Market
Value (determined on the Date of Grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year (under this Plan or any
other plan of the Company or any Subsidiary) not exceed $100,000.
Incentive Stock Options which are in excess of the applicable $100,000
limitation will be automatically recharacterized as Nonqualified Stock
Options as provided under Section 6.3 of this Plan. No Incentive Stock
Options shall be granted to any Eligible Employee if, immediately
before the grant of an Incentive Stock Option, such Eligible Employee
owns more than 10% of the total combined voting power of all classes of
stock of the Company or its Subsidiaries (as determined in accordance
with the stock attribution rules contained in Sections 422 and 424(d)
of the Code). Provided, the preceding sentence shall not apply if, at
the time the Incentive Stock Option is granted, the exercise price is
at least 110% of the Fair Market Value of the Common Stock subject to
the Incentive Stock Option, and such Incentive Stock Option by its
terms is exercisable no more than five years from the date such
Incentive Stock Option is granted.
(f) Application of Funds. The proceeds received by the Company
from the sale of Common Stock pursuant to Options will be used for
general corporate purposes.
(g) Shareholder Rights. No Participant shall have any rights
as a shareholder with respect to any share of Common Stock subject to
an Option prior to the purchase of such share of Common Stock by
exercise of the Option.
SECTION 6.3 Options Not Qualifying as Incentive Stock Options. With
respect to all or any portion of any Option granted under this Plan not
qualifying as an "incentive stock option" under Section 422 of the Code, such
Option shall be considered a Nonqualified Stock Option granted under this Plan
for all purposes. Further, this Plan and any Incentive Stock Options granted
hereunder shall be deemed to have incorporated by reference all the provisions
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and requirements of Section 422 of the Code (and the Treasury Regulations issued
thereunder) necessary to ensure that all Incentive Stock Options granted
hereunder shall be "incentive stock options" described in Section 422 of the
Code. Further, in the event that the $100,000 limitation contained in Section
6.2(e) herein is exceeded in any Incentive Stock Option granted under this Plan,
the portion of the Incentive Stock Option in excess of such limitation shall be
treated as a Nonqualified Stock Option under this Plan subject to the terms and
provisions of the applicable Option Agreement, except to the extent modified to
reflect recharacterization of the Incentive Stock Option as a Nonqualified Stock
Option.
ARTICLE VII
STOCK ADJUSTMENTS
Subject to the provisions of Article IX of this Plan, in the event that
the shares of Common Stock, as presently constituted shall be changed into or
exchanged for a different number or kind or shares of stock or other securities
of the Company or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares or otherwise), or if the number of such shares of Common Stock shall be
increased through the payment of a stock dividend, or a dividend on the shares
of Common Stock or rights or warrants to purchase securities of the Company
shall be made, then there shall be substituted for or added to each share
available under and subject to the Plan as provided in Section 1.3 hereof, and
each share then subject or thereafter subject or which may become subject to
Options under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so changed
or for which each such share shall be exchanged or to which each such share
shall be entitled, as the case may be, on a fair and equivalent basis in
accordance with the applicable provisions of Section 424 of the Code; provided,
however, in no such event will such adjustment result in a modification of any
Option as defined in Section 424(h) of the Code. In the event there shall be any
other change in the number or kind of the outstanding shares of Common Stock, or
any stock or other securities into which the Common Stock shall have been
changed or for which it shall have been exchanged, then if the Committee shall,
in its sole discretion, determine that such change equitably requires an
adjustment in the shares available under and subject to the Plan, or in any
Option theretofore granted or which may be granted under the Plan, such
adjustments shall be made in accordance with such determination, except that no
adjustment of the number of shares of Common Stock available under the Plan or
to which any Option relates that would otherwise be required shall be made
unless and until such adjustment either by itself or with other adjustments not
previously made would require an increase or decrease of at least 1% of the
number of shares of Common Stock available under the Plan or to which any Option
relates immediately prior to the making of such adjustment (the "Minimum
Adjustment"). Any adjustment representing a change of less than such minimum
amount shall be carried forward and made as soon as such adjustment together
with other adjustments required by this Article VII and not previously made
would result in a Minimum Adjustment. Notwithstanding the foregoing, any
adjustment required by this Article VII which otherwise would not result in a
Minimum Adjustment shall be made with respect to shares of Common Stock relating
to any Option immediately prior to exercise of such Option.
No fractional shares of Common Stock or units of other securities shall
be issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.
ARTICLE VIII
GENERAL
SECTION 8.1 Amendment or Termination of Plan. The Board may suspend or
terminate the Plan at any time. In addition, the Board may, from time to time,
amend the Plan in any manner, but may not adopt any amendment without
Shareholder Approval if (i) the amendment relates to Incentive Stock Options and
Section 422 of the Code requires Shareholder Approval of such amendment, or (ii)
in the opinion of counsel to the Company, Shareholder Approval is required by
any Federal or state law or regulations or rules promulgated thereunder.
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SECTION 8.2 Acceleration of Otherwise Unexercisable Stock Options on
Death, Disability or Other Special Circumstances. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment due to a
Disability, (ii) the personal representative of a deceased Participant, or (iii)
any other Participant who terminates employment upon the occurrence of special
circumstances (as determined by the Committee) to purchase all or any part of
the shares subject to any unvested Option on the date of the Participant's
termination of employment due to a Disability, death or special circumstances,
or as the Committee otherwise so determines. With respect to Options which have
already vested at the date of such termination or the vesting of which is
accelerated by the Committee in accordance with the foregoing provision, the
Participant or the personal representative of a deceased Participant shall have
the right to exercise such vested Options which are Incentive Stock Options
within three months of such date of termination of employment or one year in the
case of a Participant suffering a Disability or three years in the case of a
deceased Participant. The Participant or the personal representative of a
deceased Participant shall have the right to exercise such vested Options which
are Nonqualified Stock Options within such period(s) as the Committee shall
determine.
SECTION 8.3 Nonassignability. No Option shall be subject in any manner
to alienation, anticipation, sale, transfer, assignment, pledge, or encumbrance,
except for transfer by will or the laws of descent and distribution. Any attempt
to transfer, assign, pledge, hypothecate or otherwise dispose of, or to subject
to execution, attachment or similar process, any Option contrary to the
provisions hereof, shall be void and ineffective, shall give no right to any
purported transferee, and may, at the sole discretion of the Committee, result
in forfeiture of the Option involved in such attempt.
SECTION 8.4 Withholding Taxes. A Participant must pay the amount of
taxes required by law upon the exercise of an Option in cash.
SECTION 8.5 Amendments to Options. The Committee may at any time
unilaterally amend the terms of any Option Agreement, whether or not the Option
granted thereunder is presently exercisable or vested, to the extent it deems
appropriate; provided, however, that any such amendment which is adverse to the
Participant shall require the Participant's consent.
SECTION 8.6 Regulatory Approval and Listings. The Company shall use its
best efforts to file with the Securities and Exchange Commission as soon as
practicable following the date this Plan is adopted by the Board, and keep
continuously effective and usable, a Registration Statement on Form S-8 with
respect to shares of Common Stock subject to Options hereunder. Notwithstanding
anything contained in this Plan to the contrary, the Company shall have no
obligation to issue or deliver certificates representing shares of Common Stock
evidencing Options prior to:
(a) the obtaining of any approval from, or satisfaction of any
waiting period or other condition imposed by, any governmental agency
which the Committee shall, in its sole discretion, determine to be
necessary or advisable;
(b) the admission of such shares to listing on any exchange on
which the Common Stock may be listed; and
(c) the completion of any registration or other qualification
of such shares under any state or Federal law or ruling of any
governmental body which the Committee shall, in its sole discretion,
determine to be necessary or advisable.
SECTION 8.7 Right to Continued Employment. Participation in the Plan
shall not give any Participant any right to remain in the employ of the Company
or any Subsidiary or any partnership or limited liability company controlled by
the Company. Further, the adoption of this Plan shall not be deemed to give any
Eligible Employee or any other individual any right to be selected as a
Participant or to be granted an Option.
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SECTION 8.8 Reliance on Reports. Each member of the Committee and each
member of the Board shall be fully justified in relying or acting in good faith
upon any report made by the independent public accountants of the Company and
its Subsidiaries and upon any other information furnished in connection with the
Plan by any person or persons other than the Committee or Board member. In no
event shall any person who is or shall have been a member of the Committee or of
the Board be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action taken, including the furnishing of information, or failure to act, if in
good faith.
SECTION 8.9 Construction. The titles and headings of the sections in
the Plan are for the convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
SECTION 8.10 Governing Law. The Plan shall be governed by and construed
in accordance with the laws of the State of Oklahoma except as superseded by
applicable Federal law.
ARTICLE IX
ACCELERATION OF OPTIONS UPON CORPORATE EVENT
SECTION 9.1 Procedures for Acceleration and Exercise. If the Company
shall, pursuant to action by the Board, at any time propose to dissolve or
liquidate or merge into, consolidate with, or sell or otherwise transfer all or
substantially all of its assets to another corporation and provision is not made
pursuant to the terms of such transaction for the assumption by the surviving,
resulting or acquiring corporation of outstanding Options under the Plan, or for
the substitution of new options therefor, the Committee shall cause written
notice of the proposed transaction to be given to each Participant no less than
forty days prior to the anticipated effective date of the proposed transaction,
and the Participant's Option shall become 100% vested. Prior to a date specified
in such notice, which shall be not more than ten days prior to the anticipated
effective date of the proposed transaction, each Participant shall have the
right to exercise his or her Option to purchase any or all of the Common Stock
then subject to such Option. Each Participant, by so notifying the Company in
writing, may, in exercising his or her Option, condition such exercise upon, and
provide that such exercise shall become effective immediately prior to the
consummation of the transaction, in which event such Participant need not make
payment for the Common Stock to be purchased upon exercise of such Option until
five days after receipt of written notice by the Company to such Participant
that the transaction has been consummated. If the transaction is consummated,
each Option, to the extent not previously exercised prior to the date specified
in the foregoing notice, shall terminate on the effective date such transaction
is consummated. If the transaction is abandoned, (i) any Common Stock not
purchased upon exercise of such Option shall continue to be available for
purchase in accordance with the other provisions of the Plan and (ii) to the
extent that any Option not exercised prior to such abandonment shall have vested
solely by operation of this Section 9.1, such vesting shall be deemed voided as
of the time such acceleration otherwise occurred pursuant to Section 9.1, and
the vesting schedule set forth in the Participant's Option Agreement shall be
reinstituted as of the date of such abandonment.
SECTION 9.2 Certain Additional Payments by the Company. The Committee
may, in its sole discretion, provide in any Option Agreement for certain
payments by the Company in the event that acceleration of vesting of any Option
under the Plan is subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties with respect to such excise tax (such excise tax,
interest and penalties, collectively, the "Excise Tax"). An Option Agreement may
provide that the Participant shall be entitled to receive a payment (a "Gross-Up
Payment") in an amount such that after payment by the Participant of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Participant
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
such acceleration of vesting of any Option.
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