1999 Equity Compensation Plan - eMerge Interactive Inc.
eMERGE INTERACTIVE, INC.
1999 EQUITY COMPENSATION PLAN
THE PURPOSE OF THE EMERGE INTERACTIVE, INC. 1999 EQUITY COMPENSATION
PLAN (THE "PLAN") IS TO PROVIDE (I) DESIGNATED EMPLOYEES OF EMERGE INTERACTIVE,
INC. (THE "COMPANY") AND ITS SUBSIDIARIES, (II) INDIVIDUALS TO WHOM AN OFFER OF
EMPLOYMENT HAS BEEN EXTENDED, (III) CERTAIN ADVISORS WHO PERFORM SERVICES FOR
THE COMPANY OR ITS SUBSIDIARIES, AND (IV) NON-EMPLOYEE MEMBERS OF THE BOARD OF
DIRECTORS OF THE COMPANY (THE "BOARD") WITH THE OPPORTUNITY TO RECEIVE GRANTS OF
INCENTIVE STOCK OPTIONS, NONQUALIFIED STOCK OPTIONS, STOCK APPRECIATION RIGHTS,
RESTRICTED STOCK AND PERFORMANCE UNITS. THE COMPANY BELIEVES THAT THE PLAN WILL
ENCOURAGE THE PARTICIPANTS TO CONTRIBUTE MATERIALLY TO THE GROWTH OF THE
COMPANY, THEREBY BENEFITING THE COMPANY'S STOCKHOLDERS, AND WILL ALIGN THE
ECONOMIC INTERESTS OF THE PARTICIPANTS WITH THOSE OF THE STOCKHOLDERS.
1. Administration
(a) Committee. The Plan shall be administered and
interpreted by a committee appointed by the Board (the "Committee"). The
Committee shall consist of two or more persons appointed by the Board, all of
whom may be "outside directors" as defined under section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and related Treasury regulations
and may be "non-employee directors" as defined under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Except to the
extent prohibited by applicable law or the applicable rules of a stock exchange,
the Committee may allocate all or any portion of its responsibilities and powers
to any one or more of its members or may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any time. If the
Committee does not exist, or for any other reason determined by the Board, the
Board may take any action under the Plan that would otherwise be the
responsibility of the Committee.
(b) Committee Authority. The Committee shall have the
sole authority to (i) determine the individuals to whom grants shall be made
under the Plan, (ii) determine the type, size and terms of the grants to be made
to each such individual, (iii) determine the time when the grants will be made
and the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, and (iv)
deal with any other matters arising under the Plan.
(c) Committee Determinations. The Committee shall have
full power and authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The Committee's
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding on
all persons having any interest in the Plan or in any awards granted hereunder.
All powers of the Committee shall be executed in its sole discretion, in the
best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.
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2. Grants
Awards under the Plan may consist of grants of incentive stock options
as described in Section 5 ("Incentive Stock Options"), nonqualified stock
options as described in Section 5 ("Nonqualified Stock Options") (Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options"), restricted stock as described in Section 6 (Restricted Stock"),
stock appreciation rights as described in Section 7 ("SARs"), and performance
units as described in Section 8 ("Performance Units") (hereinafter collectively
referred to as "Grants"). All Grants shall be subject to the terms and
conditions set forth herein and to such other terms and conditions consistent
with this Plan as the Committee deems appropriate and as are specified in
writing by the Committee to the individual in a grant instrument (the "Grant
Instrument") or an amendment to the Grant Instrument. The Committee shall
approve the basic form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the grantees.
3. Shares Subject to the Plan
(a) Shares Authorized. Subject to the adjustment
specified below, the aggregate number of shares of common stock of the Company
("Company Stock") that may be issued or transferred under the Plan is 4,000,000
shares. The maximum aggregate number of shares of Company Stock that shall be
subject to Grants made under the Plan to any individual during any calendar year
shall be 625,000 shares. The shares may be authorized but unissued shares of
Company Stock or reacquired shares of Company Stock, including shares purchased
by the Company on the open market for purposes of the Plan. If and to the extent
Options or SARs granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, or if any
shares of Restricted Stock or Performance Units are forfeited, the shares
subject to such Grants shall again be available for purposes of the Plan.
(b) Adjustments. If there is any change in the number or
kind of shares of Company Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the Company
is the surviving corporation, (iii) by reason of a reclassification or change in
par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share or the applicable market value of such Grants
shall be appropriately adjusted by the Committee to reflect any increase or
decrease in the number of, or change in the kind or value of, issued shares of
Company Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under such Grants; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated by rounding
any portion of a share equal to .5 or greater up, and any portion of a share
equal to less than .5 down, in each case to the nearest whole number. Any
adjustments determined by the Committee shall be final, binding and conclusive.
4. Eligibility for Participation
(a) Eligible Persons. All employees of the Company and
its subsidiaries ("Employees"), including Employees who are officers or members
of the Board, individuals to whom an offer of employment has been extended ("New
Hire"), and members of the Board who are not Employees ("Non-Employee
Directors") shall be eligible to participate in the Plan. Advisors who perform
services to the Company or any of its
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subsidiaries ("Key Advisors") shall be eligible to participate in the Plan if
the Key Advisors render bona fide services and such services are not in
connection with the offer or sale of securities in a capital-raising
transaction.
(b) Selection of Grantees. The Committee shall select the
Employees, New Hires, Non-Employee Directors and Key Advisors to receive Grants
and shall determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Committee determines. Employees, New
Hires, Key Advisors, and Non-Employee Directors who receive Grants under this
Plan shall hereinafter be referred to as "Grantees."
5. Granting of Options
(a) Number of Shares. The Committee shall determine the
number of shares of Company Stock that will be subject to each Grant of Options
to Employees, New Hires, Non-Employee Directors, and Key Advisors.
(b) Type of Option and Price.
(i) The Committee may grant Incentive Stock
Options that are intended to qualify as "incentive stock options" within the
meaning of section 422 of the Code, Nonqualified Stock Options that are not
intended so to qualify, or any combination of Incentive Stock Options and
Nonqualified Stock Options, all in accordance with the terms and conditions set
forth herein. Incentive Stock Options may be granted only to Employees.
Nonqualified Stock Options may be granted to Employees, New Hires, Non-Employee
Directors, and Key Advisors.
(ii) The purchase price (the "Exercise Price") of
Company Stock subject to an Option shall be determined by the Committee and may
be equal to, greater than, or less than the Fair Market Value (as defined below)
of a share of Company Stock on the date the Option is granted, provided,
however, that (x) the Exercise Price of an Incentive Stock Option shall be equal
to, or greater than, the Fair Market Value of a share of Company Stock on the
date the Incentive Stock Option is granted and (y) an Incentive Stock Option may
not be granted to an Employee who, at the time of grant, owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or any parent or subsidiary of the Company, unless the Exercise
Price per share is not less than 110% of the Fair Market Value of Company Stock
on the date of grant.
(iii) If the Company Stock is publicly traded,
then, except as otherwise determined by the Committee, the following rules
regarding the determination of Fair Market Value per share apply:
(x) if the principal trading market for
the Company Stock is a national securities exchange
or the Nasdaq National Market, the mean between the
highest and lowest quoted selling prices on the
relevant date or (if there were no trades on that
date) the latest preceding date upon which a sale was
reported, or
(y) if the Company Stock is not
principally traded on such exchange or market, the
mean between the last reported "bid" and "asked"
prices of Company Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as
reported by the National Daily Quotation Bureau, Inc.
or as reported in a customary financial reporting
service, as applicable and as the Committee
determines. If the Company Stock is not publicly
traded or, if publicly traded, is not subject to
reported transactions or "bid" or "asked" quotations
as set forth above, the Fair Market Value per share
shall be as determined by the Committee.
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(c) Option Term. The Committee shall determine the term
of each Option. The term of any Option shall not exceed ten years from the date
of grant. However, an Incentive Stock Option that is granted to an Employee who,
at the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from the
date of grant.
(d) Exercisability of Options.
(i) Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee and specified in the Grant Instrument or an
amendment to the Grant Instrument. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.
(ii) Notwithstanding the foregoing, the Option
may, but need not, include a provision whereby the Grantee may elect at any time
while an Employee, Non-Employee Director, or Key Advisor to exercise the Option
as to any part or all of the shares subject to the Option prior to the full
vesting of the Option. Any unvested shares so purchased shall be subject to a
repurchase right in favor of the Company, with the repurchase price to be equal
to the original purchase price, and any other restrictions the Committee
determines to be appropriate.
(e) Termination of Employment, Disability or Death.
(i) Except as provided below, an Option may only
be exercised while the Grantee is employed by the Company as an Employee, Key
Advisor or member of the Board. In the event that a Grantee ceases to be
employed by the Company for any reason other than a "disability," death or
"termination for cause," any Option which is otherwise exercisable by the
Grantee shall terminate unless exercised within 90 days after the date on which
the Grantee ceases to be employed by the Company (or within such other period of
time as may be specified by the Committee), but in any event no later than the
date of expiration of the Option term. Any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by the Company shall terminate as of such date.
(ii) In the event the Grantee ceases to be
employed by the Company on account of a "termination for cause" by the Company,
any Option held by the Grantee shall terminate as of the date the Grantee ceases
to be employed by the Company. In addition to the immediate termination of all
Grants, the Grantee shall automatically forfeit all shares underlying any
exercised portion of an Option, upon refund by the Company of the Exercise Price
by the Grantee for such shares.
(iii) In the event the Grantee ceases to be
employed by the Company because the Grantee is "disabled," any Option which is
otherwise exercisable by the Grantee shall terminate unless exercised within one
year after the date on which the Grantee ceases to be employed by the Company
(or within such other period of time as may be specified by the Committee), but
in any event no later than the date of expiration of the Option term. Any of the
Grantee's Options which are not otherwise exercisable as of the date on which
the Grantee ceases to be employed by the Company shall terminate as of such
date.
(iv) If the Grantee dies while employed by the
Company or within 90 days after the date on which the Grantee ceases to be
employed on account of a termination of employment specified in Section 5(e)(i)
above (or within such other period of time as may be specified by the
Committee), any Option that is otherwise exercisable by the Grantee shall
terminate unless exercised within one year after the date on which the
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Grantee ceases to be employed by the Company (or within such other period of
time as may be specified by the Committee), but in any event no later than the
date of expiration of the Option term. Any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by the Company shall terminate as of such date.
(v) For purposes of Sections 5(e), 6, 7, and 8:
(A) "Company," when used in the phrase
"employed by the Company," shall mean the Company, its parent,
and any subsidiary corporations.
(B) "Employed by the Company" shall
mean employment or service as an Employee, Key Advisor, or
member of the Board (so that, for purposes of exercising
Options and SARs and satisfying conditions with respect to
Restricted Stock and Performance Units, a Grantee shall not be
considered to have terminated employment or service until the
Grantee ceases to be an Employee, Key Advisor, and member of
the Board), unless the Committee determines otherwise. The
Committee's determination as to a participant's employment or
other provision of services, termination of employment or
cessation of the provision of services, leave of absence, or
reemployment shall be conclusive on all persons unless
determined to be incorrect.
(C) "Disability" shall mean a Grantee's
becoming disabled within the meaning of section 22(e)(3) of
the Code.
(D) "Termination for cause" shall mean
the determination of the Committee that any one or more of the
following events has occurred:
(1) the Grantee's conviction of any act
which constitutes a felony under applicable federal or state
law, either in connection with the performance of the
Grantee's obligations on behalf of the Company or which
affects the Grantee's ability to perform his or her
obligations as an employee, board member or advisor of the
Company or under any employment agreement, non-competition
agreement, confidentiality agreement or like agreement or
covenant between the Grantee and the Company (any such
agreement or covenant being herein referred to as an
"Employment Agreement");
(2) the Grantee's willful misconduct in
connection with the performance of his or her duties and
responsibilities as an employee, board member or advisor of
the Company or under any Employment Agreement, which willful
misconduct is not cured by the Grantee within 10 days of his
or her receipt of written notice thereof from the Committee;
(3) the Grantee's commission of an act
of embezzlement, fraud or dishonesty which results in a loss,
damage or injury to the Company;
(4) the Grantee's substantial and
continuing neglect, gross negligence or inattention in the
performance of his or her duties as an employee, board member
or advisor of the Company or under any Employment Agreement
which is not cured by the Grantee within 10 days of his or her
receipt of written notice thereof from the Committee;
<PAGE> 6
(5) the Grantee's unauthorized use or
disclosure or any trade secret or confidential information of
the Company which adversely affects the business of the
Company, provided that any disclosure of any trade secret or
confidential information of the Company to a third party in
the ordinary course of business who signs a confidentiality
agreement shall not be deemed a breach of this subparagraph;
(6) the Grantee's material breach of
any of the provisions of any Employment Agreement, which
material breach is not cured by the Grantee within 10 days of
his or her receipt of a written notice from the Company
specifying such material breach; or
(7) the Grantee has voluntarily
terminated his or her employment or service with the Company
and breaches his or her noncompetition agreement with the
Company.
(f) Exercise of Options. A Grantee may exercise an Option
that has become exercisable, in whole or in part, by delivering a notice of
exercise to the Company with payment of the Exercise Price. The Grantee shall
pay the Exercise Price for an Option as specified by the Committee:
(i) in cash,
(ii) by delivering shares of Company Stock owned
by the Grantee for the period necessary to avoid a charge to the Company's
earnings for financial reporting purposes (including Company Stock acquired in
connection with the exercise of an Option, subject to such restrictions as the
Committee deems appropriate) and having a Fair Market Value on the date of
exercise equal to the Exercise Price,
(iii) after a Public Offering, by payment through
a broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board, or
(iv) by such other method of payment as the
Committee may approve.
Shares of Company Stock used to exercise an Option
shall have been held by the Grantee for the requisite period of time to avoid
adverse accounting consequences to the Company with respect to the Option. The
Grantee shall pay the Exercise Price and the amount of any withholding tax due
(pursuant to Section 9) at the time of exercise.
(g) Limits on Incentive Stock Options. Each Incentive
Stock Option shall provide that if the aggregate Fair Market Value of the stock
on the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year, under the
Plan or any other stock option plan of the Company or a parent or subsidiary,
exceeds $100,000, then the option, as to the excess, shall be treated as a
Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any
person who is not an Employee of the Company or a parent or subsidiary (within
the meaning of section 424(f) of the Code).
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6. Restricted Stock Grants
The Committee may issue or transfer shares of Company Stock to a
Grantee under a Grant of Restricted Stock upon such terms as the Committee deems
appropriate. The following provisions are applicable to Restricted Stock:
(a) General Requirements. Shares of Company Stock issued
or transferred pursuant to Restricted Stock Grants may be issued or transferred
for consideration or for no consideration, as determined by the Committee. The
Committee may establish conditions under which restrictions on shares of
Restricted Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate. The period of time during which the
Restricted Stock will remain subject to restrictions will be designated in the
Grant Instrument as the "Restriction Period."
(b) Number of Shares. The Committee shall determine the
number of shares of Company Stock to be issued or transferred pursuant to a
Restricted Stock Grant and the restrictions applicable to such shares.
(c) Requirement of Employment. If the Grantee ceases to
be employed by the Company (as defined in Section 5(e)) during a period
designated in the Grant Instrument as the Restriction Period, or if other
specified conditions are not met, the Restricted Stock Grant shall terminate as
to all shares covered by the Grant as to which the restrictions have not lapsed,
and those shares of Company Stock must be immediately returned to the Company.
The Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.
(d) Restrictions on Transfer and Legend on Stock
Certificate. During the Restriction Period, a Grantee may not sell, assign,
transfer, pledge or otherwise dispose of the shares of Restricted Stock except
to a Successor Grantee under Section 10(a). Each certificate for a share of
Restricted Stock shall contain a legend giving appropriate notice of the
restrictions in the Grant. The Grantee shall be entitled to have the legend
removed from the stock certificate covering the shares subject to restrictions
when all restrictions on such shares have lapsed. The Committee may determine
that the Company will not issue certificates for shares of Restricted Stock
until all restrictions on such shares have lapsed, or that the Company will
retain possession of certificates for shares of Restricted Stock until all
restrictions on such shares have lapsed.
(e) Right to Vote and to Receive Dividends. Unless the
Committee determines otherwise, during the Restriction Period, the Grantee shall
have the right to vote shares of Restricted Stock and to receive any dividends
or other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed on
Restricted Stock shall lapse upon the expiration of the applicable Restriction
Period and the satisfaction of all conditions imposed by the Committee. The
Committee may determine, as to any or all Restricted Stock Grants, that the
restrictions shall lapse without regard to any Restriction Period.
7. Stock Appreciation Rights
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(a) General Requirements. The Committee may grant stock
appreciation rights ("SARs") to a Grantee separately or in tandem with any
Option (for all or a portion of the applicable Option). Tandem SARs may be
granted either at the time the Option is granted or at any time thereafter while
the Option remains outstanding; provided, however, that, in the case of an
Incentive Stock Option, SARs may be granted only at the time of the Grant of the
Incentive Stock Option. The Committee shall establish the base amount of the SAR
at the time the SAR is granted. Unless the Committee determines otherwise, the
base amount of each SAR shall be equal to the per share Exercise Price of the
related Option or, if there is no related Option, the Fair Market Value of a
share of Company Stock as of the date of Grant of the SAR.
(b) Tandem SARs. In the case of tandem SARs, the number
of SARs granted to a Grantee that shall be exercisable during a specified period
shall not exceed the number of shares of Company Stock that the Grantee may
purchase upon the exercise of the related Option during such period. Upon the
exercise of an Option, the SARs relating to the Company Stock covered by such
Option shall terminate. Upon the exercise of SARs, the related Option shall
terminate to the extent of an equal number of shares of Company Stock.
(c) Exercisability. A SAR shall be exercisable during the
period specified by the Committee in the Grant Instrument and shall be subject
to such vesting and other restrictions as may be specified in the Grant
Instrument. The Committee may accelerate the exercisability of any or all
outstanding SARs at any time for any reason. SARs may only be exercised while
the Grantee is employed by the Company or during the applicable period after
termination of employment as described in Section 5(e). A tandem SAR shall be
exercisable only during the period when the Option to which it is related is
also exercisable. No SAR may be exercised for cash by an officer or director of
the Company or any of its subsidiaries who is subject to Section 16 of the
Exchange Act, except in accordance with Rule 16b-3 under the Exchange Act.
(d) Value of SARs. When a Grantee exercises SARs, the
Grantee shall receive in settlement of such SARs an amount equal to the value of
the stock appreciation for the number of SARs exercised, payable in cash,
Company Stock or a combination thereof. The stock appreciation for a SAR is the
amount by which the Fair Market Value of the underlying Company Stock on the
date of exercise of the SAR exceeds the base amount of the SAR as described in
Subsection (a).
(e) Form of Payment. The Committee shall determine
whether the appreciation in a SAR shall be paid in the form of cash, shares of
Company Stock, or a combination of the two, in such proportion as the Committee
deems appropriate. For purposes of calculating the number of shares of Company
Stock to be received, shares of Company Stock shall be valued at their Fair
Market Value on the date of exercise of the SAR. If shares of Company Stock are
to be received upon exercise of an SAR, cash shall be delivered in lieu of any
fractional share.
8. Performance Units
(a) General Requirements. The Committee may grant
performance units ("Performance Units") to a Grantee. Each Performance Unit
shall represent the right of the Grantee to receive an amount based on the value
of the Performance Unit, if performance goals established by the Committee are
met. A Performance Unit shall be based on the Fair Market Value of a share of
Company Stock or on such other measurement base as the Committee deems
appropriate. The Committee shall determine the number of Performance Units to be
granted and the requirements applicable to such Units.
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(b) Performance Period and Performance Goals. When
Performance Units are granted, the Committee shall establish the performance
period during which performance shall be measured (the "Performance Period"),
performance goals applicable to the Units ("Performance Goals") and such other
conditions of the Grant as the Committee deems appropriate. Performance Goals
may relate to the financial performance of the Company or its operating units,
the performance of Company Stock, individual performance, or such other criteria
as the Committee deems appropriate.
(c) Payment with respect to Performance Units. At the end
of each Performance Period, the Committee shall determine to what extent the
Performance Goals and other conditions of the Performance Units are met and the
amount, if any, to be paid with respect to the Performance Units. Payments with
respect to Performance Units shall be made in cash, in Company Stock, or in a
combination of the two, as determined by the Committee.
(d) Requirement of Employment. If the Grantee ceases to
be employed by the Company (as defined in Section 5(e)) during a Performance
Period, or if other conditions established by the Committee are not met, the
Grantee's Performance Units shall be forfeited. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.
9. Qualified Performance-Based Compensation.
(a) Designation as Qualified Performance-Based
Compensation. The Committee may determine that Performance Units or Restricted
Stock granted to an Employee shall be considered "qualified performance-based
compensation" under Section 162(m) of the Code. The provisions of this Section 9
shall apply to Grants of Performance Units and Restricted Stock that are to be
considered "qualified performance-based compensation" under Section 162(m) of
the Code.
(b) Performance Goals. When Performance Units or
Restricted Stock that are to be considered "qualified performance-based
compensation" are granted, the Committee shall establish in writing (i) the
objective performance goals that must be met in order for restrictions on the
Restricted Stock to lapse or amounts to be paid under the Performance Units,
(ii) the Performance Period during which the performance goals must be met,
(iii) the threshold, target and maximum amounts that may be paid if the
performance goals are met, and (iv) any other conditions, including without
limitation provisions relating to death, disability, other termination of
employment or Reorganization, that the Committee deems appropriate and
consistent with the Plan and Section 162(m) of the Code. The performance goals
may relate to the Employee's business unit or the performance of the Company and
its subsidiaries as a whole, or any combination of the foregoing. The Committee
shall use objectively determinable performance goals based on one or more of the
following criteria: stock price, earnings per share, net earnings, operating
earnings, return on assets, stockholder return, return on equity, growth in
assets, unit volume, sales, market share, or strategic business criteria
consisting of one or more objectives based on meeting specific revenue goals,
market penetration goals, geographic business expansion goals, cost targets or
goals relating to acquisitions or divestitures.
(c) Establishment of Goals. The Committee shall establish
the performance goals in writing either before the beginning of the Performance
Period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the Performance Period or (ii) the date on which 25% of the
Performance Period has been completed, or such other date as may be required or
permitted under applicable regulations under Section 162(m) of the Code. The
performance goals shall satisfy the requirements for "qualified
performance-based
<PAGE> 10
compensation," including the requirement that the achievement of the goals be
substantially uncertain at the time they are established and that the goals be
established in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the performance goals have been
met. The Committee shall not have discretion to increase the amount of
compensation that is payable upon achievement of the designated performance
goals.
(d) Maximum Payment. If Restricted Stock, or Performance
Units measured with respect to the fair market value of the Company Stock, are
granted, not more than 625,000 shares may be Granted to any Grantee for any
Performance Period. If Performance Units are measured with respect to other
criteria, the maximum amount that may be paid to an Employee with respect to a
Performance Period is $ 1,000,000.
(e) Announcement of Grants. The Committee shall certify
and announce the results for each Performance Period to all Grantees immediately
following the announcement of the Company's financial results for the
Performance Period. If and to the extent that the Committee does not certify
that the performance goals have been met, the grants of Restricted Stock or
Performance Units for the Performance Period shall be forfeited.
10. Withholding of Taxes
(a) Required Withholding. All Grants under the Plan shall
be subject to applicable federal (including FICA), state and local tax
withholding requirements. The Company shall have the right to deduct from all
Grants paid in cash, or from other wages paid to the Grantee, any federal, state
or local taxes required by law to be withheld with respect to such Grants. In
the case of Options and other Grants paid in Company Stock, the Company may
require the Grantee or other person receiving such shares to pay to the Company
the amount of any such taxes that the Company is required to withhold with
respect to such Grants, or the Company may deduct from other wages paid by the
Company the amount of any withholding taxes due with respect to such Grants.
(b) Election to Withhold Shares. If the Committee so
permits, a Grantee may elect to satisfy the Company's income tax withholding
obligation with respect to an Option, SAR, Restricted Stock or Performance Units
paid in Company Stock by having shares withheld up to an amount that does not
exceed the Grantee's maximum marginal tax rate for federal (including FICA),
state and local tax liabilities. The election must be in a form and manner
prescribed by the Committee and shall be subject to the prior approval of the
Committee.
11. Transferability of Grants
(a) Nontransferability of Grants. Except as provided
below, only the Grantee may exercise rights under a Grant during the Grantee's
lifetime. A Grantee may not transfer those rights except by will or by the laws
of descent and distribution or, with respect to Grants other than Incentive
Stock Options, if permitted in any specific case by the Committee, pursuant to a
domestic relations order (as defined under the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder). When a Grantee dies, the personal representative or other person
entitled to succeed to the rights of the Grantee ("Successor Grantee") may
exercise such rights. A Successor Grantee must furnish proof satisfactory to the
Company of his or her right to receive the Grant under the Grantee's will or
under the applicable laws of descent and distribution.
<PAGE> 11
(b) Transfer of Nonqualified Stock Options.
Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument,
that a Grantee may transfer Nonqualified Stock Options to family members or
other persons or entities according to such terms as the Committee may
determine; provided that the Grantee receives no consideration for the transfer
of an Option and the transferred Option shall continue to be subject to the same
terms and conditions as were applicable to the Option immediately before the
transfer.
12. Reorganization of the Company.
(a) Reorganization. As used herein, a "Reorganization"
shall be deemed to have occurred if the stockholders of the Company approve (or,
if stockholder approval is not required, the Board approves) an agreement
providing for (i) the merger or consolidation of the Company with another
corporation where the stockholders of the Company, immediately prior to the
merger or consolidation, will not beneficially own, immediately after the merger
or consolidation, shares entitling such stockholders to more than 50% of all
votes to which all stockholders of the surviving corporation would be entitled
in the election of directors (without consideration of the rights of any class
of stock to elect directors by a separate class vote), (ii) the sale or other
disposition of all or substantially all of the assets of the Company, or (iii) a
liquidation or dissolution of the Company.
(b) Assumption of Grants. Upon a Reorganization where the
Company is not the surviving corporation (or survives only as a subsidiary of
another corporation), unless the Committee determines otherwise, all outstanding
Options and SARs that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation.
(c) Other Alternatives. Notwithstanding the foregoing, in
the event of a Reorganization, the Committee may take one or both of the
following actions: the Committee may (i) require that Grantees surrender their
outstanding Options and SARs in exchange for a payment by the Company, in cash
or Company Stock as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee's unexercised Options and SARs exceeds the Exercise Price
of the Options or the base amount of the SARs, as applicable, or (ii) after
giving Grantees an opportunity to exercise their outstanding Options and SARs,
terminate any or all unexercised Options and SARs at such time as the Committee
deems appropriate. Such surrender or termination shall take place as of the date
of the Reorganization or such other date as the Committee may specify.
(d) Limitations. Notwithstanding anything in the Plan to
the contrary, in the event of a Reorganization, the Committee shall not have the
right to take any actions described in the Plan (including without limitation
actions described in Subsection (b) above) that would make the Reorganization
ineligible for pooling of interests accounting treatment or that would make the
Reorganization ineligible for desired tax treatment if, in the absence of such
right, the Reorganization would qualify for such treatment and the Company
intends to use such treatment with respect to the Reorganization.
13. Change of Control of the Company.
(a) As used herein, a "Change of Control" shall be deemed
to have occurred if
(i) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
<PAGE> 12
securities of the Company representing a majority of the voting power of the
then outstanding securities of the Company except where the acquisition is
approved by the Board; or
(ii) Any person has commenced a tender offer or
exchange offer for a majority of the voting power of the then outstanding shares
of the Company.
(b) Notice and Acceleration. Unless the Committee
determines otherwise, a Change of Control shall not result in the acceleration
of vesting of outstanding Options and SARs, the removal of restrictions and
conditions on outstanding Restricted Stock grant, or any accelerated payments in
connection with outstanding Performance Units.
(c) Other Alternatives. Notwithstanding the foregoing, in
the event of a Change of Control, the Committee may take one or both of the
following actions: the Committee may (i) require that Grantees surrender their
outstanding Options and SARs in exchange for a payment by the Company, in cash
or Company Stock as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee's unexercised Options and SARs exceeds the Exercise Price
of the Options or the base amount of the SARs, as applicable, or (ii) after
giving Grantees an opportunity to exercise their outstanding Options and SARs,
terminate any or all unexercised Options and SARs at such time as the Committee
deems appropriate. Such surrender or termination shall take place as of the date
of the Change of Control or such other date as the Committee may specify.
(d) Limitations. Notwithstanding anything in the Plan to
the contrary, in the event of a Change of Control, the Committee shall not have
the right to take any actions described in the Plan (including without
limitation actions described in Subsection (c) above) that would make the Change
of Control ineligible for pooling of interests accounting treatment or that
would make the Change of Control ineligible for desired tax treatment if, in the
absence of such right, the Change of Control would qualify for such treatment
and the Company intends to use such treatment with respect to the Change of
Control.
14. Right of First Refusal
PRIOR TO A PUBLIC OFFERING, IF AT ANY TIME AN INDIVIDUAL DESIRES TO
SELL, ENCUMBER, OR OTHERWISE DISPOSE OF SHARES OF COMPANY STOCK DISTRIBUTED TO
HIM UNDER THIS PLAN, THE INDIVIDUAL SHALL FIRST OFFER THE SHARES TO THE COMPANY
BY GIVING THE COMPANY WRITTEN NOTICE DISCLOSING: (A) THE NAME OF THE PROPOSED
TRANSFEREE OF THE COMPANY STOCK; (B) THE CERTIFICATE NUMBER AND NUMBER OF SHARES
OF COMPANY STOCK PROPOSED TO BE TRANSFERRED OR ENCUMBERED; (C) THE PROPOSED
PRICE; (D) ALL OTHER TERMS OF THE PROPOSED TRANSFER; AND (E) A WRITTEN COPY OF
THE PROPOSED OFFER. WITHIN 30 DAYS AFTER RECEIPT OF SUCH NOTICE, THE COMPANY
SHALL HAVE THE OPTION TO PURCHASE ALL OR PART OF SUCH COMPANY STOCK AT THE SAME
PRICE AND ON THE SAME TERMS AS CONTAINED IN SUCH NOTICE.
IN THE EVENT THE COMPANY (OR A STOCKHOLDER, AS DESCRIBED BELOW) DOES
NOT EXERCISE THE OPTION TO PURCHASE COMPANY STOCK, AS PROVIDED ABOVE, THE
INDIVIDUAL SHALL HAVE THE RIGHT TO SELL, ENCUMBER OR OTHERWISE DISPOSE OF HIS
SHARES OF COMPANY STOCK ON THE TERMS OF THE TRANSFER SET FORTH IN THE WRITTEN
NOTICE TO THE COMPANY, PROVIDED SUCH TRANSFER IS EFFECTED WITHIN 30 DAYS AFTER
THE EXPIRATION OF THE OPTION PERIOD. IF THE TRANSFER IS NOT EFFECTED WITHIN SUCH
PERIOD, THE COMPANY MUST AGAIN BE GIVEN AN OPTION TO PURCHASE, AS PROVIDED
ABOVE.
The Board, in its sole discretion, may waive the Company's right of
first refusal pursuant to this Section 14 and the Company's repurchase right
pursuant to Section 15 below. If the Company's right of first refusal or
repurchase right is so waived, the Board may, in its sole discretion, pass
through such right to the remaining
<PAGE> 13
stockholders of the Company in the same proportion that each stockholder's stock
ownership bears to the stock ownership of all the stockholders of the Company,
as determined by the Board. To the extent that a stockholder has been given such
right and does not purchase his or her allotment, the other stockholders shall
have the right to purchase such allotment on the same basis.
On and after a Public Offering, the Company shall have no further right
to purchase shares of Company Stock under this Section 14 and Section 15 below,
and its limitations shall be null and void.
Notwithstanding the foregoing, the Committee may require that a Grantee
execute a stockholder's agreement, with such terms as the Committee deems
appropriate, with respect to any Company Stock distributed pursuant to this
Plan. Such agreement may provide that the provisions of this Section 14 and
Section 15 below shall not apply to such Company Stock.
15. Purchase by the Company
PRIOR TO A PUBLIC OFFERING, IF A GRANTEE CEASES TO BE EMPLOYED BY THE
COMPANY, WHETHER TERMINATED FOR CAUSE OR VOLUNTARILY, THE COMPANY SHALL HAVE THE
RIGHT TO PURCHASE ALL OR PART OF ANY COMPANY STOCK DISTRIBUTED TO HIM UNDER THIS
PLAN AT THE EXERCISE PRICE PAID BY THE GRANTEE (UNLESS OTHERWISE DETERMINED BY
THE BOARD OR THE COMMITTEE), AND IN ALL OTHER CASES AT ITS THEN CURRENT FAIR
MARKET VALUE (AS DEFINED IN SECTION 5(B)); PROVIDED, HOWEVER, THAT SUCH
REPURCHASE SHALL BE MADE IN ACCORDANCE WITH APPLICABLE ACCOUNTING RULES TO AVOID
ADVERSE ACCOUNTING TREATMENT.
16. Requirements for Issuance or Transfer of Shares
(a) Stockholder's Agreement. The Committee may require
that a Grantee execute a stockholder's agreement, with such terms as the
Committee deems appropriate, with respect to any Company Stock distributed
pursuant to this Plan.
(b) Limitations on Issuance or Transfer of Shares. No
Company Stock shall be issued or transferred in connection with any Grant
hereunder unless and until all legal requirements applicable to the issuance or
transfer of such Company Stock have been complied with to the satisfaction of
the Committee. The Committee shall have the right to condition any Grant made to
any Grantee hereunder on such Grantee's undertaking in writing to comply with
such restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon.
17. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan
at any time.
(b) Termination of Plan. The Plan shall terminate on the
day immediately preceding the tenth anniversary of its effective date, unless
the Plan is terminated earlier by the Board or is extended by the Board with the
approval of the stockholders.
<PAGE> 14
(c) Termination and Amendment of Outstanding Grants. A
termination or amendment of the Plan that occurs after a Grant is made shall not
materially impair the rights of a Grantee unless the Grantee consents. The
termination of the Plan shall not impair the power and authority of the
Committee with respect to an outstanding Grant. Whether or not the Plan has
terminated, an outstanding Grant may be terminated or amended in accordance with
the Plan or may be amended by agreement of the Company and the Grantee
consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Company and its successors and assigns.
18. Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
19. Rights of Grantees
Nothing in this Plan shall entitle any Grantee or other person to any
claim or right to be granted a Grant under this Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving any individual any rights to
be retained by or in the employ of the Company or any other employment rights.
20. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
21. Headings
Section headings are for reference only. In the event of a conflict between a
title and the content of a Section, the content of the Section shall control.
22. Effective Date of the Plan
Subject to the approval of the Company's stockholders, the Plan
shall be effective on April 22, 1999.
23. Miscellaneous
(a) Grants in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the
right of the Committee to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including Grants to
employees thereof who become Employees of the Company, or for other proper
corporate purposes, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan. Without limiting the
foregoing, the Committee may make a Grant to an employee of
<PAGE> 15
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation. The terms and
conditions of the substitute grants may vary from the terms and conditions
required by the Plan and from those of the substituted stock incentives. The
Committee shall prescribe the provisions of the substitute grants.
(b) Compliance with Law. The Plan, the exercise of
Options and SARs and the obligations of the Company to issue or transfer shares
of Company Stock under Grants shall be subject to all applicable laws and to
approvals by any governmental or regulatory agency as may be required. With
respect to persons subject to section 16 of the Exchange Act, it is the intent
of the Company that the Plan and all transactions under the Plan comply with all
applicable provisions of Rule 16b-3 or its successors under the Exchange Act.
The Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation. The
Committee may also adopt rules regarding the withholding of taxes on payments to
Grantees. The Committee may, in its sole discretion, agree to limit its
authority under this Section.
(c) Governing Law. The validity, construction,
interpretation and effect of the Plan and Grant Instruments issued under the
Plan shall exclusively be governed by and determined in accordance with the law
of the State of Delaware.